Controversy over connectivity charges
Syed Jamaluddin | Friday, 8 April 2011
Syed Jamaluddin
India is being given connectivity without any charges. The word connectivity is used because transit is given to a third country. No third country is involved here. What is being given to India is a corridor facility. The recent statement by the economic adviser to the Prime Minister on not seeking transit charges from India has raised a storm. Although there was a government decision to allow movement of Indian goods via Bangladesh through land and water routes after collection of certain charges, this decision is now suspended with the help of some influential government quarters. This will result in a loss of a substantial amount of money in the form of legitimate earnings for Bangladesh. It is argued that realisation of fees on connectivity will not be proper for Bangladesh. This is a strange argument by a Bangladeshi. It is feared that the recommendations of the committee on transit may be opposed. Even it is doubtful if the committee can make independent recommendations. These recommendations may protect the interest of India only and lose sight of the long-term interest of Bangladesh. The Chairman of the Tariff Commission as head of the committee to fix charges on connectivity is likely to submit his report next week. The Asian Development Bank (ADB) in its report showed that Bangladesh could earn US $50 million annually. In the long run, this amount could reach one billion dollars. The Centre for Policy Dialogue (CPD) has stated in its report that a part of the amount of money India, Bhutan and Nepal would save by transiting goods through Bangladesh, would come as fees to Bangladesh. The government is now divided on the issue of charging fees from India for using connectivity. In the past, a number of ministers commented that connectivity would be subject to collection of fees. Rules were being framed for fixing fees and charges. When the Indian High Commissioner in Dhaka met the finance minister last year, the minister told journalists that transit fees must be realised. The foreign minister also said that transit will be given after realisation of fees and charges. An agreement will be signed with the Indian government after preparation of the rules. The National Board of Revenue (NRB) prepared a favourable report on collecting charges and fees from India and submitted the report to the finance minister on October 20 last year. The minister expressed his views in favour of collecting the necessary fees and charges. The government has allowed the Indians to send their cargo to Tripura without finalising the rules. So, India is having a free ride. The prime minister's adviser even warned the NBR officials not to show much enthusiasm about collection of the connectivity charges. According to WTO rules, a country can realise charges for transportation and administrative costs. It may not be termed as transit fee. In other words, we can realise charges for services rendered. Those who are saying that no charges can be collected for connectivity are not saying the truth. When Bangladeshi cargo goes to Nepal or Bhutan using Indian territory, then it is called transit given to Bangladesh by India. When Bangladesh allows cargo from Kolkata to go to Agartala via Bangladesh, then this is a corridor facility. This conceptual clarity is necessary for the readers. This is a special facility given to India. No third country is involved in the process. Bangladesh has to assess its gains for giving this advantage to India. In an article published in an English daily recently, a Bangladeshi connectivity expert has shown that Bangladesh could get transport charges, port charges, border crossing charges, toll charges and transit fees depending on the routes and facilities used. But the view of the adviser contradicts the findings of the connectivity specialist. India has provided a loan of US$1.0 billion to Bangladesh to improve connectivity. It is paraded that this is the biggest loan ever received by Bangladesh. Under this loan, goods and services will have to be procured from India. There must be some earning to repay this loan. Transit fee is the earning in this case. Otherwise, what is the point in taking this loan? How a government adviser can argue not to charge any fee from India is not understandable. The connectivity expert has shown that over next five to seven years, an investment of about $5.0-7.0 billion dollars would be needed to bring the Bangladesh transport system into full gear to carry the entire transit traffic. Of course, this will also help the Bangladesh economy. But resources need to be generated to pay for the investment. Transit fee should bear the main burden here. In the case of movement of goods to Tripura, a few hundred police had to remain engaged in round-the-clock duty. Who will bear the cost of this? There was heavy traffic jam in the feeder roads. Who will bear the losses that will be caused to roads and ports? It is only sensible that such costs should be borne by the users. Therefore, there is no logic for not asking any service charge from India. There is a huge trade deficit with India. This issue is now almost forgotten because there was plenty of discussion on this subject in the past at various levels without any success. There is no hope that we can make any progress in this regard. Now transit is the most important opportunity for Bangladesh to collect some earnings from the India. There is no other means of doing it. If we miss this opportunity, this will never come again. So, our policymakers may have to think again as to what decision they will take in charging connectivity charges. We have very few options to generate resources. Let good sense prevail. The country's interest should be uppermost in the minds of all. The writer is an economist and columnist. He can be reached at E-mail : [email protected]
India is being given connectivity without any charges. The word connectivity is used because transit is given to a third country. No third country is involved here. What is being given to India is a corridor facility. The recent statement by the economic adviser to the Prime Minister on not seeking transit charges from India has raised a storm. Although there was a government decision to allow movement of Indian goods via Bangladesh through land and water routes after collection of certain charges, this decision is now suspended with the help of some influential government quarters. This will result in a loss of a substantial amount of money in the form of legitimate earnings for Bangladesh. It is argued that realisation of fees on connectivity will not be proper for Bangladesh. This is a strange argument by a Bangladeshi. It is feared that the recommendations of the committee on transit may be opposed. Even it is doubtful if the committee can make independent recommendations. These recommendations may protect the interest of India only and lose sight of the long-term interest of Bangladesh. The Chairman of the Tariff Commission as head of the committee to fix charges on connectivity is likely to submit his report next week. The Asian Development Bank (ADB) in its report showed that Bangladesh could earn US $50 million annually. In the long run, this amount could reach one billion dollars. The Centre for Policy Dialogue (CPD) has stated in its report that a part of the amount of money India, Bhutan and Nepal would save by transiting goods through Bangladesh, would come as fees to Bangladesh. The government is now divided on the issue of charging fees from India for using connectivity. In the past, a number of ministers commented that connectivity would be subject to collection of fees. Rules were being framed for fixing fees and charges. When the Indian High Commissioner in Dhaka met the finance minister last year, the minister told journalists that transit fees must be realised. The foreign minister also said that transit will be given after realisation of fees and charges. An agreement will be signed with the Indian government after preparation of the rules. The National Board of Revenue (NRB) prepared a favourable report on collecting charges and fees from India and submitted the report to the finance minister on October 20 last year. The minister expressed his views in favour of collecting the necessary fees and charges. The government has allowed the Indians to send their cargo to Tripura without finalising the rules. So, India is having a free ride. The prime minister's adviser even warned the NBR officials not to show much enthusiasm about collection of the connectivity charges. According to WTO rules, a country can realise charges for transportation and administrative costs. It may not be termed as transit fee. In other words, we can realise charges for services rendered. Those who are saying that no charges can be collected for connectivity are not saying the truth. When Bangladeshi cargo goes to Nepal or Bhutan using Indian territory, then it is called transit given to Bangladesh by India. When Bangladesh allows cargo from Kolkata to go to Agartala via Bangladesh, then this is a corridor facility. This conceptual clarity is necessary for the readers. This is a special facility given to India. No third country is involved in the process. Bangladesh has to assess its gains for giving this advantage to India. In an article published in an English daily recently, a Bangladeshi connectivity expert has shown that Bangladesh could get transport charges, port charges, border crossing charges, toll charges and transit fees depending on the routes and facilities used. But the view of the adviser contradicts the findings of the connectivity specialist. India has provided a loan of US$1.0 billion to Bangladesh to improve connectivity. It is paraded that this is the biggest loan ever received by Bangladesh. Under this loan, goods and services will have to be procured from India. There must be some earning to repay this loan. Transit fee is the earning in this case. Otherwise, what is the point in taking this loan? How a government adviser can argue not to charge any fee from India is not understandable. The connectivity expert has shown that over next five to seven years, an investment of about $5.0-7.0 billion dollars would be needed to bring the Bangladesh transport system into full gear to carry the entire transit traffic. Of course, this will also help the Bangladesh economy. But resources need to be generated to pay for the investment. Transit fee should bear the main burden here. In the case of movement of goods to Tripura, a few hundred police had to remain engaged in round-the-clock duty. Who will bear the cost of this? There was heavy traffic jam in the feeder roads. Who will bear the losses that will be caused to roads and ports? It is only sensible that such costs should be borne by the users. Therefore, there is no logic for not asking any service charge from India. There is a huge trade deficit with India. This issue is now almost forgotten because there was plenty of discussion on this subject in the past at various levels without any success. There is no hope that we can make any progress in this regard. Now transit is the most important opportunity for Bangladesh to collect some earnings from the India. There is no other means of doing it. If we miss this opportunity, this will never come again. So, our policymakers may have to think again as to what decision they will take in charging connectivity charges. We have very few options to generate resources. Let good sense prevail. The country's interest should be uppermost in the minds of all. The writer is an economist and columnist. He can be reached at E-mail : [email protected]