Regional connectivity to boost economies
Wednesday, 11 November 2009
F.A. Hashim
THERE are some countries in the world that make a living mainly by providing services. Bangladesh's export products are limited to a few items. Furthermore, its comparative advantage in these few products are also facing a threat. The resources and know-how to develop and market new export products are otherwise found to be difficult by its entrepreneurs. Hence the new ways to earn foreign currency should be seriously and promptly considered by the government and the policy planners in Bangladesh.
Foreign investments in Bangladesh are less than a trickle compared to need. But such investments could have increased substantially in a short period of time, perhaps, if successive government had just not sat on the above possibilities but had been proactive in exploring them.
The states of India such as Assam, Tripura and Meghalya are located above Bangladesh on the north-east. Only a narrow strip of Indian territory, the Shiliguri corridor, links these seven states to the rest of India. Transportation of goods to, and from, these seven Indian states to the rest of that country can be much cheaper and much faster if overland routes through Bangladesh are used.
The government of India has been pressing Bangladesh for this transit facility for long. Allowing of the facility could lead to earning a good amount of money in foreign exchange as transit charge by Bangladesh on a regular basis. There are fears among some quarters in Bangladesh that the transit facility could be misused by India to transport military hardware as well as to quell insurgency in its north-eastern states and the consequences of this could be the spill-over of the troubles within Bangladesh. But such fears, real or perceived, could largely be overcome, if very strict agreements with India are concluded, making it clear for leaving no room for ambiguity over only commercial goods being transported with the support of transit facilities. India should have every reason to accept such an agreement because it has been stating that attaches importance only to finding shorter routes to the north-eastern states for the movement of commercial products.
However, providing transit to India for such commercial goods will require infrastructures such as roads and rail that will have to be increased and strengthened inside Bangladesh. For this purpose, Bangladesh does not certainly have enough public financial resources. There should be a deal with India in a win-win situation for both the countries, so that a substantial part of related investments is made by the Indian side. The investments in infrastructure building will generate income and jobs in Bangladesh. Even if Bangladesh is required to eventually pay a part of the costs of infrastructure building or development, it can make the payment by earmarking only a part of the charges that it will earn by extending the transit facility.
The seven north eastern Indian states and neighbouring Nepal and Bhutan are landlocked entities. They are presently using the far away Calcutta port for their external trade. But not only Calcutta port is distant from them but it also suffers from inadequate handling capacities. This port is also found rather unserviceable on a large scale, because of the falling level of the Hooghly channel and other natural disadvantages. The Chittagong port, by comparison, is much better situated to handle the trade of the seven Indian states, Nepal and Bhutan. It can be accessed relatively faster and cheaper by them. For this matter, India has to agree to facilitating transit of the external cargo, bound for, and leaving, Bhutan and Nepal through its territory, going from, or reaching, Bangladesh ports.
By allowing external users to use the Chittagong port, the regional economy can experience an uplift. Bangladesh can also then gain by obtaining good amounts from the users as service fees on a regular basis for the use of its port facilities. The wider use of Chittagong port will require expansion of its present capacities. Again, this expansion can be achieved through foreign investments. Such investments will have spin-offs in the from of creation of jobs and economic activities locally.
Bangladesh also can set up a viable deep sea port in the Bay of Bengal. All of these port facilities will make this country a sort of entreport for the entire region comprising the Indian states, Nepal, Bhutan and partly China as well, provided all countries agree on the modus operandi of the same in a win-win situation for all. The pressure will also ease then on Bangladesh's existing limited port facilities to service the region while it would earn a large amount of foreign currencies from the regional users by playing the role of the regional entreport.
Foreign investments will certainly play a vital role in the establishment of these new port facilities and spare Bangladesh of the need to make its own investments. In the process, the maintenance and operation of the infrastructures will create regular jobs for a large number of Bangladeshis. Besides, alongwith the establishment of new ports or increase in port capacities and the resultant expansion in regional trade and economic activities, services such as shipping, insurance, banking, etc., will expand. A large part of such expansions will have to occur in the territories of Bangladesh. Thus, the Bangladesh economy should benefit also from these multiplier effects.
Location-wise, Bangladesh is strategically situated like a gateway between south and south-east Asia. With the establishment of the Asian highway and the commercial significance of Bangladesh, having pivotal location between the two regions, could much increase as a staging area of sorts for trade between the two regions. Increased possibilities are there for more service industries to flourish in Bangladesh based on inter-regional trade.
There is apprehension on real or perceived grounds in some quarters in Bangladesh that implementation of such plans could threaten Bangladesh's sovereignty. One must not also fail to note here that 'insularity' for protecting sovereignty is somewhat an outdated thinking. Stepped-up transnational activities to facilitate trade and industry are the features of the times, worldwide. Countries that can grasp quickly the merit of proposals for transnational activities quickly and act on them swiftly in a win-win situation can expect to survive and prosper in the economic sense. Here, achieving such an accord that ensures win-win conditions for all is the real challenge here.
THERE are some countries in the world that make a living mainly by providing services. Bangladesh's export products are limited to a few items. Furthermore, its comparative advantage in these few products are also facing a threat. The resources and know-how to develop and market new export products are otherwise found to be difficult by its entrepreneurs. Hence the new ways to earn foreign currency should be seriously and promptly considered by the government and the policy planners in Bangladesh.
Foreign investments in Bangladesh are less than a trickle compared to need. But such investments could have increased substantially in a short period of time, perhaps, if successive government had just not sat on the above possibilities but had been proactive in exploring them.
The states of India such as Assam, Tripura and Meghalya are located above Bangladesh on the north-east. Only a narrow strip of Indian territory, the Shiliguri corridor, links these seven states to the rest of India. Transportation of goods to, and from, these seven Indian states to the rest of that country can be much cheaper and much faster if overland routes through Bangladesh are used.
The government of India has been pressing Bangladesh for this transit facility for long. Allowing of the facility could lead to earning a good amount of money in foreign exchange as transit charge by Bangladesh on a regular basis. There are fears among some quarters in Bangladesh that the transit facility could be misused by India to transport military hardware as well as to quell insurgency in its north-eastern states and the consequences of this could be the spill-over of the troubles within Bangladesh. But such fears, real or perceived, could largely be overcome, if very strict agreements with India are concluded, making it clear for leaving no room for ambiguity over only commercial goods being transported with the support of transit facilities. India should have every reason to accept such an agreement because it has been stating that attaches importance only to finding shorter routes to the north-eastern states for the movement of commercial products.
However, providing transit to India for such commercial goods will require infrastructures such as roads and rail that will have to be increased and strengthened inside Bangladesh. For this purpose, Bangladesh does not certainly have enough public financial resources. There should be a deal with India in a win-win situation for both the countries, so that a substantial part of related investments is made by the Indian side. The investments in infrastructure building will generate income and jobs in Bangladesh. Even if Bangladesh is required to eventually pay a part of the costs of infrastructure building or development, it can make the payment by earmarking only a part of the charges that it will earn by extending the transit facility.
The seven north eastern Indian states and neighbouring Nepal and Bhutan are landlocked entities. They are presently using the far away Calcutta port for their external trade. But not only Calcutta port is distant from them but it also suffers from inadequate handling capacities. This port is also found rather unserviceable on a large scale, because of the falling level of the Hooghly channel and other natural disadvantages. The Chittagong port, by comparison, is much better situated to handle the trade of the seven Indian states, Nepal and Bhutan. It can be accessed relatively faster and cheaper by them. For this matter, India has to agree to facilitating transit of the external cargo, bound for, and leaving, Bhutan and Nepal through its territory, going from, or reaching, Bangladesh ports.
By allowing external users to use the Chittagong port, the regional economy can experience an uplift. Bangladesh can also then gain by obtaining good amounts from the users as service fees on a regular basis for the use of its port facilities. The wider use of Chittagong port will require expansion of its present capacities. Again, this expansion can be achieved through foreign investments. Such investments will have spin-offs in the from of creation of jobs and economic activities locally.
Bangladesh also can set up a viable deep sea port in the Bay of Bengal. All of these port facilities will make this country a sort of entreport for the entire region comprising the Indian states, Nepal, Bhutan and partly China as well, provided all countries agree on the modus operandi of the same in a win-win situation for all. The pressure will also ease then on Bangladesh's existing limited port facilities to service the region while it would earn a large amount of foreign currencies from the regional users by playing the role of the regional entreport.
Foreign investments will certainly play a vital role in the establishment of these new port facilities and spare Bangladesh of the need to make its own investments. In the process, the maintenance and operation of the infrastructures will create regular jobs for a large number of Bangladeshis. Besides, alongwith the establishment of new ports or increase in port capacities and the resultant expansion in regional trade and economic activities, services such as shipping, insurance, banking, etc., will expand. A large part of such expansions will have to occur in the territories of Bangladesh. Thus, the Bangladesh economy should benefit also from these multiplier effects.
Location-wise, Bangladesh is strategically situated like a gateway between south and south-east Asia. With the establishment of the Asian highway and the commercial significance of Bangladesh, having pivotal location between the two regions, could much increase as a staging area of sorts for trade between the two regions. Increased possibilities are there for more service industries to flourish in Bangladesh based on inter-regional trade.
There is apprehension on real or perceived grounds in some quarters in Bangladesh that implementation of such plans could threaten Bangladesh's sovereignty. One must not also fail to note here that 'insularity' for protecting sovereignty is somewhat an outdated thinking. Stepped-up transnational activities to facilitate trade and industry are the features of the times, worldwide. Countries that can grasp quickly the merit of proposals for transnational activities quickly and act on them swiftly in a win-win situation can expect to survive and prosper in the economic sense. Here, achieving such an accord that ensures win-win conditions for all is the real challenge here.