Transit and transshipment
Tuesday, 19 April 2011
Mamun Rashid
Last week, I was invited to a TV talk show. The host was pushing me hard to comment on a recent observation made by an adviser to honorable prime minister on granting corridor to India to ship goods to its eastern states or through Bangladesh territory without any fee. Since I myself did not listen to the adviser's comment it was not possible for me to provide a direct reply to his question. However there have been several heated discussions revolving around the issues of "transit and transshipment" for years but without a concrete outcome. While many are not in favor of "transit and transshipment" on the plea that any agreement on the issue will go against national interest; some came up with the rationale that these treaties will bring positive outcomes for Bangladesh. Of late, this has again become a very important issue, in view of the improved Indo-Bangla relationship as well as our development partners' increased focus on more intra-regional trade including establishment of a deep seaport in the Bay of Bengal. From that anticipation, previous political governments could not take any decision and we lost the economic benefits of having our country connected to "Trans-Asian railways" or "Asian highways". The critical point is that each time we have been holding back these decisions on account of the speculation that our national security will be at stake. Our government failed to come out with a detailed analysis of the concerns and highlight the potential economic benefits that we may gain. We must acknowledge that things have changed in the era of globalization and things have changed for the better. Now, countries do not fight against each other with guns and ammunition, rather countries try to outperform each other with economic bargaining power. We have to acknowledge this reality and change our outlook accordingly. We need to come forward and think objectively on how to benefit by leaguing up with others. Talks over transit cover several arenas. Firstly, export by India, Nepal or Bhutan to any third country, using Bangladeshi space and second, transportation of goods from one part of India to another. While the first is an issue of transit, the second is known as a corridor facility. Objections are greater against corridors than transit, as the latter involves other countries as well. But in terms of corridor, we have to realize that there are small-scale road, rail and water transportation links between various cities of India and Bangladesh. So the corridor facility will only help streamline the network and enable Bangladesh to earn more fees and custom duties. Bangladesh signed transit treaties with Nepal in 1976 and with Bhutan in 1980. But Bangladesh does not have any treaty with India regarding transit or corridor. Due to a lack of any treaty, trade between the two countries is presently carried out by transshipment or by transporting goods from the cargo of one country to the cargo of another. Again, goods that come to Bangladesh from Nepal or Bhutan by road have to travel through Indian territories. Exporters from Nepal and Bhutan have to face several challenges in terms of pre-designated time for shipment, customs related complications and changing transport at different border areas. This way, the transportation of goods had become difficult for both importers and exporters. As there is no tripartite treaty regarding transit for goods transportation between Bangladesh-India-Bhutan and Bangladesh-India-Nepal, the trade bottlenecks have remained unresolved. Our governments have always behaved miserly in maximizing the benefits of our geographical location. The geographic location of our deep-sea ports may greatly influence trade expansion and Bangladesh has an immense opportunity to become a regional transport hub, not only for SAARC countries, but also for China and other Asian countries in future. A Bangladesh Institute of Development Studies (BIDS) study shows Bangladesh could have earned $430 million from road, rail, and port services in FY 2006, if we had allowed transit to our neighbors. Hence, the government should explore regional opportunities further. We should be well prepared for multilateral talks and strengthen our bargaining capacity while going for the transit negotiation, considering our geopolitical reality, which puts Bangladesh in an advantageous position. It appears that India will continue to do business with neighboring countries with or without Bangladesh approving transit for its next-door neighbors. If we are not pragmatic right now, we will lose out to our other neighbors. Hence, our policymakers must develop a focused and proactive "country-strategy" for our regional neighbors to maximize the economic co-operation and benefits and the transit issue should be resolved from that perspective. Having said so, we also need to understand and protect our interest better while looking objectively at our possible gains. If we have not misunderstood our young legislator speaking at the parliament, we have, possibly, given enough leeway to our` big neighbour'. Therefore, the question of giving them more free ride would not be politically right at all. Rather our big neighbour should come forward and make sure it opens up its market to us as well as pick up at least USD 1.0 billion worth of `Made in Bangladesh' products, if not by private sector, by public sector undertakings. Paying an attractive return on corridor facility, transit or transshipment is very much there on all the documents prepared by consultants, supported by development partners or the think tanks of the two countries. The policymakers or planners should only augment that for the greater benefit of the business in the region. (Mamun Rashid is a banker and economic analyst. He can be reached at:mamun1960@gmail.com)
Last week, I was invited to a TV talk show. The host was pushing me hard to comment on a recent observation made by an adviser to honorable prime minister on granting corridor to India to ship goods to its eastern states or through Bangladesh territory without any fee. Since I myself did not listen to the adviser's comment it was not possible for me to provide a direct reply to his question. However there have been several heated discussions revolving around the issues of "transit and transshipment" for years but without a concrete outcome. While many are not in favor of "transit and transshipment" on the plea that any agreement on the issue will go against national interest; some came up with the rationale that these treaties will bring positive outcomes for Bangladesh. Of late, this has again become a very important issue, in view of the improved Indo-Bangla relationship as well as our development partners' increased focus on more intra-regional trade including establishment of a deep seaport in the Bay of Bengal. From that anticipation, previous political governments could not take any decision and we lost the economic benefits of having our country connected to "Trans-Asian railways" or "Asian highways". The critical point is that each time we have been holding back these decisions on account of the speculation that our national security will be at stake. Our government failed to come out with a detailed analysis of the concerns and highlight the potential economic benefits that we may gain. We must acknowledge that things have changed in the era of globalization and things have changed for the better. Now, countries do not fight against each other with guns and ammunition, rather countries try to outperform each other with economic bargaining power. We have to acknowledge this reality and change our outlook accordingly. We need to come forward and think objectively on how to benefit by leaguing up with others. Talks over transit cover several arenas. Firstly, export by India, Nepal or Bhutan to any third country, using Bangladeshi space and second, transportation of goods from one part of India to another. While the first is an issue of transit, the second is known as a corridor facility. Objections are greater against corridors than transit, as the latter involves other countries as well. But in terms of corridor, we have to realize that there are small-scale road, rail and water transportation links between various cities of India and Bangladesh. So the corridor facility will only help streamline the network and enable Bangladesh to earn more fees and custom duties. Bangladesh signed transit treaties with Nepal in 1976 and with Bhutan in 1980. But Bangladesh does not have any treaty with India regarding transit or corridor. Due to a lack of any treaty, trade between the two countries is presently carried out by transshipment or by transporting goods from the cargo of one country to the cargo of another. Again, goods that come to Bangladesh from Nepal or Bhutan by road have to travel through Indian territories. Exporters from Nepal and Bhutan have to face several challenges in terms of pre-designated time for shipment, customs related complications and changing transport at different border areas. This way, the transportation of goods had become difficult for both importers and exporters. As there is no tripartite treaty regarding transit for goods transportation between Bangladesh-India-Bhutan and Bangladesh-India-Nepal, the trade bottlenecks have remained unresolved. Our governments have always behaved miserly in maximizing the benefits of our geographical location. The geographic location of our deep-sea ports may greatly influence trade expansion and Bangladesh has an immense opportunity to become a regional transport hub, not only for SAARC countries, but also for China and other Asian countries in future. A Bangladesh Institute of Development Studies (BIDS) study shows Bangladesh could have earned $430 million from road, rail, and port services in FY 2006, if we had allowed transit to our neighbors. Hence, the government should explore regional opportunities further. We should be well prepared for multilateral talks and strengthen our bargaining capacity while going for the transit negotiation, considering our geopolitical reality, which puts Bangladesh in an advantageous position. It appears that India will continue to do business with neighboring countries with or without Bangladesh approving transit for its next-door neighbors. If we are not pragmatic right now, we will lose out to our other neighbors. Hence, our policymakers must develop a focused and proactive "country-strategy" for our regional neighbors to maximize the economic co-operation and benefits and the transit issue should be resolved from that perspective. Having said so, we also need to understand and protect our interest better while looking objectively at our possible gains. If we have not misunderstood our young legislator speaking at the parliament, we have, possibly, given enough leeway to our` big neighbour'. Therefore, the question of giving them more free ride would not be politically right at all. Rather our big neighbour should come forward and make sure it opens up its market to us as well as pick up at least USD 1.0 billion worth of `Made in Bangladesh' products, if not by private sector, by public sector undertakings. Paying an attractive return on corridor facility, transit or transshipment is very much there on all the documents prepared by consultants, supported by development partners or the think tanks of the two countries. The policymakers or planners should only augment that for the greater benefit of the business in the region. (Mamun Rashid is a banker and economic analyst. He can be reached at:mamun1960@gmail.com)