BCIM Economic Corridor for harmonious South Asia

One of the recent initiatives that warrants heightened attention and importance on the part of all concerned stakeholders in Bangladesh is the Bangladesh-China-India-Myanmar Economic Corridor (BCIM-EC) which received formal endorsement through the first inter-governmental study group meeting in Kunming held on December 18-19, 2013.
 The cause of deepening cooperation in the BCIM region had earlier received recognition at the highest political level through the communiqués issued following the visits of the Bangladesh Prime Minister to China in 2010, visit of Indian Prime Minister to China in 2012 and visit of the Chinese Prime Minister to India in 2013. The underlying assumption behind this proposed regional entity was that this particular grouping had some unique attributes which could potentially bring significant benefit to the four participating countries through deepening of economic cooperation and integration by leveraging on three connectivities: transport connectivity, trade connectivity and investment connectivity.
The BCIM region, inhabited by two-fifths of the world population, and producing one-tenth of the global GDP (gross domestic product), include two of the rising global power-houses of the twenty first century, India and China. There was a mutuality of interests between these two countries, on the one hand, and Bangladesh and Myanmar, the two Least Developed Countries (LDCs) in the group, on the other. The idea driving the proposed BCIM initiative was that, by drawing on respective comparative advantages, all the four BCIM countries could expect to make significant gains through operationalisation of the economic corridor, sub-regional cooperation within the BCIM, and BCIM-wide economic cooperation with the motto of making harmonious South Asia by closely working together.
 These gains are envisaged to accrue from greater market access for goods, services and energy, elimination of non-tariff barriers, better trade facilitation, investment in infrastructure development, joint exploration and development of mineral, water, and other natural resources, development of value and supply chains, based on comparative advantages. Comparative advantages can than be translated into competitive, advantages, besides forging closer people-to-people contact.
OBJECTIVE OF THE BLOC: The Bangladesh-China-India-Myanmar (BCIM) Economic Corridor will increase socio-economic development and trade in South Asia. The initiative seeks to improve connectivity and infrastructure, energy resources, agriculture, and trade and investment. It will connect India's Northeast, Bangladesh, Myanmar, and the Chinese province of Yunnan through a network of roads, railways, waterways, and airways under a proper regulatory framework. The current focus of BCIM-Economic Corridor initiative is on an inter-regional road network. This makes sense, as roads are the cheapest route of trade.
The BCIM Economic Corridor is a modern version of the Silk Road, and a revision of the 1999 Track II Kunming initiative between BCIM countries. It is planned to run from China's Kunming province to Kolkata in India, and link Mandalay in Myanmar and Dhaka and Chittagong in Bangladesh. BCIM initiatives have gained momentum since Chinese Premier Li Keqiang's visit to India and the conclusion of the first official meeting of the joint study group of the BCIM Economic Corridor on December 19, 2013.
The BCIM Corridor will allow all four countries to exploit existing complementarities in trade - in terms of both sectors and products. Myanmar is a primary goods exporter and has abundant cheap labour. India has positioned itself as a leading services exporter and is also emerging as a major economic power on a global scale and has a very large domestic market.
China is the largest manufacturing exporter in the world; and Bangladesh, like many other South Asian countries, engages in both services export and low-end manufactured goods.
Given the immense conventional and renewable energy resources in the region, one aspiration of the Corridor is collaboration in the power sector.
The BCIM Corridor aims to promote trade and investment in the region through trade facilitation measures and greater participation of the public and private sectors.
Bangladesh, with which India shares its longest border, could connect the Northeast to the rest of India. Access to the large Indian and Chinese markets will make Bangladesh an attractive destination for foreign direct investment. Bangladesh can also benefit from connecting to China through Myanmar and becoming a commercial hub for South and Southeast Asia.
Indian goods will also benefit from access to large markets in East Asia through Myanmar. The BCIM Economic Corridor, by creating trading opportunities for Myanmar, will help the country integrate into regional supply chains. In fact, the Dawei port in Myanmar, because of its strategic geographical position, could be a means to increase the country's international integration.
 Empirical studies suggest that improving transport infrastructure could have a direct bearing on the social and economic development of other sub-regions in Asia - for example, the Greater Mekong Sub-region (GMS). Given the historical and cultural commonalities, as well as institutional overlaps, between the BCIM and the GMS, the same result is expected in the former as well.
The BCIM  Economic Corridor is a win-win arrangement. The linkages of transport, energy, and telecommunications networks will enable the region to emerge as a thriving economic belt that will promote social development of communities along the Corridor. To date, South Asia has not come close to enjoying the same economic success that East Asia has reaped. BCIM might well be the game changer that South Asia needs.
THE RATIONALE: As is the case, several regional groupings have successfully developed and implemented the idea of economic corridor by building multimodal transport networks, setting up special economic zones, establishing industrial clusters, export processing zones and business hubs and by developing a diverse range of other economic activities along the corridors. In this region, the GMS economic cooperation, initiated in 1992, is an early example whose experience could inform and enrich the proposed BCIM-EC.
Viewed from the perspective of Bangladesh and Myanmar, deepening of BCIM cooperation should be of special interest to these two countries. It would offer them an opportunity to benefit from greater access to the growing markets of China and India if competitive strength could be raised by establishing seamless connectivity, reducing barriers to movement of goods and vehicles across borders and by attracting investment targeting the markets of the two neighbouring BRIC countries.
Both Bangladesh and Myanmar have large bilateral trade deficit with both India and China. For example, Bangladesh's export to India was $564.0 million as against an import of $4740 million in FY2013. The corresponding figures for China were $458.0 million and $6310.0 million.
On the other hand, it is interesting to note that, bilateral trade between India and China has been growing at an accelerated pace over the recent past - from less than $5.0 billion in 2000 to $60.0 billion in 2010 and about $70.0 billion in 2012; the target is to take this to $100.0 billion by 2015.
Bangladesh's unique geographical position makes it a major gateway for the land-locked regions of both India and China - more particularly, the North East seven sister states of India and Southern Chinese provinces such as Yunnan. Currently most of the trade of these sub-regions with rest of the country (in case of North Eastern States of India) and global markets, face formidable challenges because of the absence of access to more direct routes and lack of proximity to sea routes.  
Domestic trade of India's North East States with rest of India, or for that matter, its trade with outside world, is now contingent on movement of goods through the chicken neck (a distance of about 1200-1600 km). Trade of Yunnan Province of China with outside world is contingent on goods moving more than two thousand kilometres east to the South China Sea and thereon moving onward after transshipment.
 A Southern route for North East region and Kunming through Chittagong port would bring the distance down to 400-700 km if seamless multi-modal connectivity- by road, rail and waterways - could be established by investing in the development of the related infrastructure. Bangladesh would benefit significantly through export of services if the associated service charges were appropriately costed and negotiated. The multiplier economic benefits to Bangladesh would be significant.
For Bangladesh the East-West corridor is of special significance since the overwhelming share of Bangladesh's trade with India is carried out through land port and there is significant opportunities for reducing transport cost if land route is operationalised with China. However, of key interest to Bangladesh should be the North-South Economic Corridor (it is possible that there could be overlap between the two corridors) which would connect BCIM hinterland with the Chittagong and Mongla ports.
Studies indicate that East-West and North-South transport corridors within the BCIM region will bring down cost of moving goods significantly, and would lead to considerable reduction in the lead-time, which is becoming a core element of competitiveness in a fast changing world.
The corridor(s) could benefit not only by enhancing export opportunities but also by reducing cost of imports that would benefit consumers (in case of final goods) as well as producers (in case of raw materials).
The associated benefits can be estimated through appropriate exercise and these benefits can be shared in a win-win way between and among the collaborating countries. Indeed, this type of exercise was carried out some time back when Bangladesh was preparing for the envisaged connectivity deal with India which could serve as a reference point for any future exercise in this regard.
It is sometimes argued that East-West corridor would in essence provide India transit facility between North East and rest of India, through Bangladesh; and that this would lead to Bangladesh losing its captive market in the North-East Indian region. However, a closer look at the current trade flow between Bangladesh and North East clearly brings out two trends that demand careful consideration: firstly, the trade is rather low: it was only $290.0 million in FY2010; this was 8.2 per cent of Bangladesh's total trade with India. Secondly, Bangladesh had a trade deficit even with North East:  export from Bangladesh to North East was $50.0 million against import of $240.0 million.
If we appreciate the endeavour for connectivity through Bangladesh, the North East region can attract more investment and generate accelerated development, leading to higher standards of living of its people. The consequence of this initiative will create higher purchasing power in the North East which will enable these Indian states to import more from Bangladesh (transit facility provided by Bangladesh some time back, as a one-off facility, for moving cargo for Palatana power plant, may be recalled here). Indeed, it is by facilitating the development of North-East that Bangladesh could make the region a prospective market.
 Bangladesh is at present contemplating construction of a deep sea port at Sonadia. Indeed, economic viability of such mega-projects will rise significantly if the hinterland of this port has the widest possible geographical coverage. Bangladesh's strategy should be to enhance the volume of cargo to be handled by the deep sea port. In view of this, the North-South BCIM transport and economic corridor connecting Southern China and North East India could emerge as an important opportunity in terms of raising the viability of the Chittagong port and the deep-sea port.
As areas that merit close examination, experts have identified the opportunities for collaboration through joint exploitation and development of water and natural resources such as gas, and development of regional energy grid. Investment in developing transport infrastructures will call for mobilising significant resources. India's one billion dollar line of credit is an example of how projects of importance to regional and sub-regional cooperation could be facilitated though concessional resource flows from within the region. At present China is open for investment opportunities for its huge forex reserves.
If Bangladesh is able to deal with the attendant issues with intelligence and due diligence, it can mobilise the needed funds for the development of BCIM-EC-related infrastructure in a manner that safeguards its interests and at the same time promotes the cause of deepening BCIM-wide cooperation. Multilateral agencies such as the Asian Infrastructure Investment Bank (AIIB), ADB, the World Bank and the IDB could be the other potential sources for mobilising the needed resources. Indeed, it may be recalled here that the ADB has played a catalytic role in promoting regional cooperation in the GMS.
The BCIM Economic Corridor is progressing well. The third working group meeting will be held in India this year. CONCLUDING REMARKS: The present democratic government of Bangladesh under the dynamic and visionary leadership of Prime Minister Sheikh Hasina is working relentlessly with a view to bringing about a positive change in the society and the region. Under her able leadership, Bangladesh has set its target to be a middle-income country and graduate from the LDC status by the year 2021 & become a developed country by the year 2041.
On both counts, it is important that it prepares itself adequately for the time when its competitive power will mainly rest on its capacity to raise its competitive strength, rather than based on preferences enjoyed because of being an LDC. BCIM cooperation could be an important contributing factor in harnessing Bangladesh's potentials in view of the new realities.
Currently Bangladesh is the Chairman of the BCIM Buisness Forum. The Bangladesh government has been a strong believer in regional connectivity, and given its unique geographical position, the country can derive enormous benefits from regional connectivity. Connectivity through road, rivers, and railways is perceived as an economic necessity and constitutes a part of the service industry.  
BCIM-EC and BCIM-wide economic cooperation and integration could prove to be an important opportunity in the transformative journey that Bangladesh aspires to undertake over the near to medium-term future. Let us seize this opportunity of BCIM-EC by working together to establish a harmonious South Asia for the betterment of the South Asian region in general and for the four countries of this bloc in particular. [The article has been abridged]
The writer, a former Industries Minister, is the General Secretary of Bangladesher Samyabadi Dal (M.L).
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