Written By: Nusanta Samayel Audri
The cost of doing business with a Bangladeshi firm is 15–20% higher for an Indian firm than it is for a German firm. The question is, “𝗛𝗼𝘄 𝗰𝗮𝗻 𝗶𝗺𝗽𝗿𝗼𝘃𝗲𝗱 𝗿𝗲𝗴𝗶𝗼𝗻𝗮𝗹 𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗶𝘃𝗶𝘁𝘆 𝗮𝗹𝘁𝗲𝗿 𝘁𝗵𝗶𝘀?”This question served as the unifying message for a 𝗪𝗼𝗿𝗹𝗱 𝗕𝗮𝗻𝗸 𝘄𝗲𝗯𝗶𝗻𝗮𝗿 held on May 24th, 2023.
The World Bank hosted this webinar and they streamed live from their Facebook page on the topic”𝐓𝐡𝐞 𝐑𝐨𝐚𝐝 𝐀𝐡𝐞𝐚𝐝: 𝐔𝐧𝐥𝐨𝐜𝐤𝐢𝐧𝐠 𝐂𝐨𝐧𝐧𝐞𝐜𝐭𝐢𝐯𝐢𝐭𝐲 𝐛𝐞𝐭𝐰𝐞𝐞𝐧 𝐁𝐚𝐧𝐠𝐥𝐚𝐝𝐞𝐬𝐡, 𝐈𝐧𝐝𝐢𝐚 𝐍𝐞𝐩𝐚𝐥”. This fantastic conversation was hosted by Cecile Fruman, who interviewed her two coworkers, Auguste Tano Kouamé and Abdoulaye Seck, and the level of participation from the audience was too high to allow for careful consideration of all of the comments. Some key points of this webinar were-
1. The benefits for Bangladesh can be its 𝐠𝐞𝐨𝐠𝐫𝐚𝐩𝐡𝐢𝐜𝐚𝐥 𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 as it could be the gate away for countries like Nepal and Bhutan, in fact, the gate away for the entire South Asian region. So, we can estimate the impact of the connectivity between Bangladesh and India. This can result in a 17% increase in national income (which indicates better job opportunities for the youth). Also, It means Bangladesh can increase its export to India by 300% but Bangladeshi people haven’t met the potential yet.
2. Under the 𝐌𝐕𝐀(𝐌𝐨𝐭𝐨𝐫 𝐕𝐞𝐡𝐢𝐜𝐥𝐞 𝐀𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭), India has signed a contract with us which will allow India to have access to our Mongla port and also Chattogram port in the context of transit and transshipment of Cargo vessel. Also, the acknowledgment of transit between Bangladesh and Bhutan makes it easier for them to have access to our Mongla port. Great facilitation and sub-infrastructure can help us to proceed with this MVA.
3. The 𝐍𝐨𝐫𝐭𝐡𝐞𝐚𝐬𝐭 𝐫𝐞𝐠𝐢𝐨𝐧 𝐨𝐟 𝐈𝐧𝐝𝐢𝐚 will be highly benefited from greater transport integration. Apart from focusing on the whole India’s benefit, the Assam region is specially focused on building the connection between Bhutan and Bangladesh. The GDP growth of the Northern side of India will be up to 11% then.
Traveling from the Northeastern portion of India to the rest of the country should take the absolute least amount of time if MVA is fully implemented. Connection point: The “chicken’s neck” or the Siliguri Corridor as it is formally known, will link Northeast India to the rest of India. India stands to save a significant amount of money, as much as 15% if the track is able to pass through Bangladesh when MVA is fully implemented and the truck is able to travel to the port.
4. Benefit in terms of 𝐣𝐨𝐛 𝐨𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐢𝐞𝐬- The private sector can be heavily involved through Northeast India’s excellent connectivity. The private sector’s contribution to GDP growth is substantial, and the roles played by the private sector can be improved upon.
5. 𝐒𝐭𝐚𝐭𝐮𝐬 𝐨𝐟 𝐌𝐕𝐀: It’s discussed amongst Bangladesh, India, Nepal but Bhutan is elected not to be a part of this conversation. There have been ongoing meetings among countries to finalise the Cargo protocols, and some testing has been done in preparation for implementation (with promising results, there is room for more to come).There are some misunderstandings that MVA could remove trucking opportunities from certain countries, it can threaten some industries etc. So the government should engage more with the stakeholders and more outreach under proper coordination can create a win-win situation.
6. 𝐖𝐨𝐫𝐥𝐝 𝐁𝐚𝐧𝐤𝐬 role in this: Accelerating transport and connectivity in Southeast Asia and the World Bank provided 1 billion of financing to Bangladesh, and Nepal. Bhutan also expressed interest.
𝐁𝐚𝐧𝐠𝐥𝐚𝐝𝐞𝐬𝐡’𝐬 𝐢𝐦𝐩𝐚𝐜𝐭- World Bank’s investment in upgrading the 43 kilometers two-lane road a.k.a turn the 43km Sylhet to Sheola Land Port road into a dual carriageway to improve regional connectivity bringing down the travel time by 30%. World Bank investments like this can support modern infrastructure.
7. 𝐁𝐞𝐧𝐚𝐩𝐨𝐥𝐞 𝐢𝐦𝐩𝐚𝐜𝐭- In a major development for the country’s infrastructure modernization, three ports in Bangladesh have taken control of the country’s 80% land-based trade.
Birgunj and Berbahaya, Nepal’s traditional border crossings, are also making preparations for MVA implementation. The vast potential and practical use of digitally enhanced improvement and access can be seen.
8. Apart from the road transportation,the waterways potential is also high in our SAARC region.70% of Bangladesh’s goods and passengers were connected through GBM (Ganga, Brahmaputra, Meghna) in the past, and this was the traditional mode of logistics in our subregion.
In the case of India, India could reduce the cost of logistics by 40% if transports move from the roads to rails. One of the significant World Bank investments was- 𝐂𝐨𝐦𝐩𝐫𝐞𝐡𝐞𝐧𝐬𝐢𝐯𝐞 𝐫𝐞𝐠𝐢𝐨𝐧𝐚𝐥 𝐰𝐚𝐭𝐞𝐫𝐰𝐚𝐲𝐬 𝐠𝐫𝐢𝐝 which will work with the India and Bangladesh’s interlinked rivers (budget of 1.7 Billion – enhanced 3,500 km waterways- will also benefit Bhutan and Nepal throughout the connectivity).
9. In India, “𝐃𝐞𝐝𝐢𝐜𝐚𝐭𝐞𝐝 𝐫𝐚𝐢𝐥 𝐟𝐫𝐞𝐢𝐠𝐡𝐭 𝐜𝐨𝐫𝐫𝐢𝐝𝐨𝐫”(a corridor connecting going all the way from Punjab to West Bengal and it’s dedicated to freight transportation – it means to speed up logistics and reduce the cost).
Beyond its direct involvement, the World Bank has two other knowledge-based initiatives, including a 15-kilometer train connecting India, Tripura, and Bangladesh. Another one is- six upcoming rail lines that will join Bangladesh and India. As a result, the World Bank is constantly working to strengthen ties across different areas.
10. Two significant questions were there that got the attention of the keynote speakers-
𝐀𝐫𝐞 𝐜𝐨𝐧𝐧𝐞𝐜𝐭𝐢𝐯𝐢𝐭𝐲 𝐢𝐧𝐢𝐭𝐢𝐚𝐭𝐢𝐯𝐞𝐬 𝐨𝐧𝐥𝐲 𝐢𝐧 𝐈𝐧𝐝𝐢𝐚’𝐬 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭(𝐁𝐚𝐧𝐠𝐥𝐚𝐝𝐞𝐬𝐡 𝐢𝐬𝐧’𝐭 𝐠𝐞𝐭𝐭𝐢𝐧𝐠 𝐛𝐞𝐧𝐞𝐟𝐢𝐭 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞 𝐜𝐨𝐧𝐧𝐞𝐜𝐭𝐢𝐯𝐢𝐭𝐲 𝐭𝐨 𝐍𝐞𝐩𝐚𝐥, 𝐁𝐡𝐮𝐭𝐚𝐧 𝐚𝐧𝐝 𝐈𝐧𝐝𝐢𝐚)?
-Interregional connectivity is the point of interest here, starting with bilateral interest – putting it the infrastructure, regulations and support programs like MVA- integrated market of the countries can bring a win-win situation for all.
𝐌𝐚𝐧𝐲 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭𝐬 𝐡𝐚𝐯𝐞 𝐛𝐞𝐞𝐧 𝐦𝐚𝐝𝐞 𝐢𝐧 𝐢𝐧𝐭𝐞𝐠𝐫𝐚𝐭𝐞𝐝 𝐜𝐡𝐞𝐜𝐤𝐩𝐨𝐢𝐧𝐭𝐬, 𝐛𝐮𝐭 𝐢𝐬 𝐭𝐡𝐞𝐫𝐞 𝐚𝐧𝐲 𝐩𝐥𝐚𝐧 𝐭𝐨 𝐬𝐭𝐮𝐝𝐲 𝐭𝐡𝐞 𝐟𝐞𝐚𝐬𝐢𝐛𝐢𝐥𝐢𝐭𝐲 𝐨𝐟 𝐚 𝐨𝐧𝐞-𝐬𝐭𝐨𝐩 𝐢𝐧𝐭𝐞𝐠𝐫𝐚𝐭𝐞𝐝 𝐛𝐨𝐫𝐝𝐞𝐫 𝐩𝐨𝐬𝐭 𝐢𝐧 𝐭𝐡𝐞 𝐁𝐁𝐈𝐍 (𝐁𝐚𝐧𝐠𝐥𝐚𝐝𝐞𝐬𝐡, 𝐁𝐡𝐮𝐭𝐚𝐧, 𝐈𝐧𝐝𝐢𝐚, 𝐍𝐞𝐩𝐚𝐥) 𝐫𝐞𝐠𝐢𝐨𝐧?
-Various land portal authorities are taking this seriously, state authorities like Indian government is already investing in “e-suvidha”(its aim is to provide ‘Single window all utilities’ system at all the counters of the systematic and well integrated Citizen Service Centres) project and this IT project is helping to reduce the time & cost for trucks to come to the integrated check post
11. 𝐈𝐧𝐝𝐢𝐚’𝐬 𝐩𝐨𝐭𝐞𝐧𝐭𝐢𝐚𝐥 𝐟𝐨𝐫 𝐞𝐱𝐩𝐨𝐫𝐭 – India’s trade is more into the gravity model, India’s characteristics show us how much India can benefit from trading in this south Asian region(GDP will be 8% higher). India’s export to Bangladesh has the potentiality to grow by 170%. Import will grow slightly less than export, but India can attract investments from Bangladesh and can easily have access to Bangladesh’s Garments market.
12. Game beyond import and export is there, Indian and other countries can get the full benefit with the full integrational support and World Bank can help in working collaboratively with relevant partners in the subregion.
13. Consumers will face- not only access to the broader market but they may have a chance of greater integration. Economic corridors, such as in the Indian border- people are ready to provide services (cash for work), road based markets and infrastructure have already been built.
14. The 𝐇𝐨𝐥𝐢𝐬𝐭𝐢𝐜 𝐚𝐩𝐩𝐫𝐨𝐚𝐜𝐡 is there to engage the non-state stakeholders- we are preparing a trade facilitation and logistic projecting in West Bengal.West Bengal’s ability to trade with Bangladesh and other subregions is the major focus here.
In this sense, we can learn from Germany and other countries’ experiences.The forced relocation of some populations had far-reaching consequences for society as a whole.
The facilitations, tariff, and non-tariff sectors of the trading sector are essentially all that the government may count on when intervening. Bangladesh’s trade with India accounts for only 1% of India’s total trade, but 10% of Bangladesh’s. This India–Bangladesh border, which is one of the biggest in the world, might be put to better use.
15. “𝐂𝐮𝐥𝐭𝐮𝐫𝐞 𝐨𝐟 𝐭𝐫𝐚𝐯𝐞𝐥𝐢𝐧𝐠 𝐜𝐫𝐨𝐬𝐬-𝐛𝐨𝐫𝐝𝐞𝐫𝐬”-The culture of trading is more into competence rather than maintaining consistency. So, there’s a need for consistency in terms of safety, and tradeable finance. Foreign direct investment is undervalued in comparison to its potential benefits and requires open borders. The importance of trade financing was stressed in the very last section. Successfully completing this trade finance transaction requires the use of cross-border payments. Taking advantage of the progress made in digital forms of payment between countries paves the way for remittances, tourism, e-commerce, and the ability for women business owners to sell their wares across borders.
More than a decade has gone by since the World Bank began focusing on transport connectivity, full integration of MVA in terms of growth, jobs, and opportunity. Foreign exchange has been a source of leverage here.
The write is a Deputy Lead of the YPF Foreign Policy Team.