Regional connectivity key to foster economic growth

In FY22 bilateral trade between India and Bangladesh was $11 billion (Bangladesh exporting $ 1.27 billion to India). The good thing is that two governments are showing an unprecedented level of willingness to cooperate.

Speaking to Bizz Buzz exclusively, Dr Atiur Rahman, former Governor of Bangladesh Central Bank, who is currently Advisor and G20 Sherpa to Bangladesh Prime Minister and also Bangabandhu Professor, Dhaka University, says regional connectivity will be the key to foster economic expansion.

The much-hyped opening of the Padma Bridge is believed to have opened new vistas. What is your take on this? Do you think it can be a real game changer in terms of facilitating economic expansion?

Yes, the Padma bridge has opened new windows. Three more bridges will soon be opened in Bangladesh. Efforts are also there to bolster multi-modal connectivity through which complementarities of railways and waterways will synergize the desired transportation.

I sincerely believe that The Padma Bridge is going to be a 'game changer'. And that's not without reasons.

Mind you that:

♦ It is a dual-purpose bridge (having both rail and road links)

♦ The old rail link between Sealdah and Khulna can be revived and extended to the bridge

♦ This could reduce the cost of trade exchange by more than 75 per cent

♦ It will also reduce the congestion at Petrapole-Benapole area

For quite some time, you have been advocating for regional cooperation and connectivity to foster economic expansion, how important is it?

Regional cooperation in South Asia, has become more pivotal than ever in the context of the global economic crisis precipitated by the after effects of the pandemic and the fall-outs of the Ukraine-Russia war.

Stakeholders ought to materialize the potential for regional cooperation (focusing particularly on India and Bangladesh) along with the imperative of transport connectivity which has significant implications for employment, women empowerment, and energy cooperation.

Focus should be on regional co-operation between India and Bangladesh or much beyond that?

Despite enormous potential, South Asia remains one of the least economically integrated regions. Of the region's total trade, intra-regional trade accounts for only 5 per cent. The ratios for East Asia and Sub-Saharan Africa stand to be 50 per cent and 22 per cent respectively. In 2016, BIMSTEC trade constituted a meager share of the global total- only 3.7 per cent. But BIMSTEC houses 20 per cent of the global population meaning there remains enormous untapped opportunities.

There is no doubt that despite enormous potential, South Asia remains one of the least economically integrated regions. One has to keep in mind that low level of regional connectivity results in tariff and non-tariff barriers and high cost of connectivity. An unprecedented level of political will is likely to overcome these barriers.

Coming back to Indo-Bangladesh issue, what are the various commitments made by the two governments to facilitate trade? And what are the support measures being initiated?

Let me outline them:

1) Joint survey for economic partnership

2) MoU between standards authorities of both countries

3) Reduction of tariff barriers

4) Cooperation in RMG and Jute sectors

Now various support measures being initiated by the two governments include:

1) Enhanced connectivity (road, air, and waterways)

2) Increasing development assistance (loans, partnerships)

3) Energy cooperation

4) Education and youth development

How important is the transport connectivity in the whole scheme of things?

Mind you that some initiatives are already in motion (for instance, BBIN-MVA, PIWTT, PIWTT - Protocol on Inland Waterways Transit & Trade). Transit facilities may reduce carrying time by half or more. Resulting benefits will ultimately reach consumers and it will also promote deepening value chains.

Road and Rail Connectivity: Operationalizing BBIN-MVA is pivotal (e.g. 'Maitree Setu' will connect Tripura with Chittagong port, which is only 75 km away). Bangladesh has received $510 million loan from India for three major railway projects (however implementation has been slow). Bangladesh is planning to revitalize all pre-1965 rail connections with India.

Inland Waterways Connectivity: Waterways connectivity initiatives are already in motion (in July 2019, Indian cargo ship arrived at Narayanganj for the first time). If adequately facilitated, waterways connectivity can reduce travel costs by 30 percent. Enhanced waterways connectivity can bolster MSMEs (mainly led by women) along the riverbanks. Development of inland waterways require new financial and technological investments (focused on infrastructure)

In Bangladesh, $753 million from ACCESS will upgrade 43-km two-lane Sylhet-Charkai-Sheola road to 4-lane to connect the Sheola land port. This will reduce travel time by 30 percent. The project will support digital systems, infrastructure,and more streamlined processes at Benapole, Bhomra,and Burimari land ports. It will also support the modernization of the Chattogram customs house. Another $275 million ACCESS Project in Nepal will upgrade the 69 km two-lane Butwal-Gorusinghe-Chanauta road, along the East-West Highway. The importance of transport connectivity can hardly be over-emphasised.

Many people think that while tapping the trade potential between the two countries, connectivity and co-operation between Bangladesh and North Eastern India is very important. What's your take?

North-East (NE) India has a strong advantage of supplying agro produces for the vibrant food processing industry in Bangladesh. NE India can also provide a market for the processed food exported by Bangladesh. Bangladesh-NE India connectivity needs to be further leveraged through extending railway networks and broad-gauging; making more airports operational and activating waterways.

Broadly, what are the opportunities before the two countries?

Both countries have burgeoning consumer bases. Collaboration will enhance competitiveness. India's vibrant IT, healthcare, education sector can utilize the tech-savvy youthful human resource of Bangladesh. Agricultural value chain development (Pran group from Bangladesh already doing very well in India). Potential for cooperation for faster and sustainable economic growth is therefore unlimited. Both countries are now politically poised to develop the infrastructures for desired level of cooperation.

What are the ways ahead?

The two countries must accelerate implementation of railways development projects initiated under LoC (delayed mainly due to bureaucratic complications). They must expedite twining of coastal and inland waterways transportation (e.g., Chittagong to Ashuganj). The two countries must make more border hats as entry points for people-to-people connectivity and transform border lines into free trade zones.