BBIN corridor proposal

Author: 
Ashis Biswas

Even as the $46 billion China-sponsored CPEC (China Pakistan Economic Corridor) project is about to go functional, with Russia and Iran expressing their interest to participate, India faces a minor setback in developing its regional transport network. Bhutan has expressed its reservations about the India-backed BBIN (Bangladesh Bhutan India Nepal) Motor Vehicle Agreement initiative in South Asia. The contrast could not be more embarrassing for the Government of India.

The CPEC forms part of Beijing’s ambitious OBOR (one belt one road) global initiative in connectivity. It seeks to connect China with 65 countries, with a combined population of 4.4 billion people and accounts for 40 per cent of the world’s GDP.

In South Asia, China had proposed a similar economic corridor BCIM before India, Bangladesh, Nepal and Bhutan came together to set up the BBIN. The economic scope and ambit of the BCIM whose members are China, Bangladesh, Myanmar and India, are far more ambitious than that of the BBIN. The BCIM economic corridor, one of the six such projects within the OBOR, brings together 40 per cent of the world’s population, and accounts for 10 per cent of the world’s GDP.

Trade and business among BBIN countries is around $28/29 billion annually, while that among BCIM members it should be much more, simply because of the China factor. However, BBIN members also account for informal trade and business to the tune of $25 billion or so, according to analysts. India is the clear leader in the group, accounting for 75 per cent of the cumulative GDP.

Similarly, India’s exports to its fellow BBIN members accounts for 6 per cent of its aggregate, while its imports from them accounts to only 0.65 per cent of its total requirements. Naturally Nepal, Bhutan and Bangladesh have been pointing to the large gap in their bilateral trade with India, pressing for tariff reduction and other concessions to ensure a more equitable arrangement. India has withdrawn or reduced tariff levels imposed on a variety of items for Bangladesh and Nepal in recent years. 

Bangladesh authorities are hopeful about the BBIN because it brings it in touch with the biggest market and economy in the region, India. For the expanding Indian economy too, the 160 million strong Bangladesh market is an attractive proposition. Before 1970-71, regional political and other compulsions had kept all contact between East Pakistan and East Indian States to a minimum.

Bangladesh authorities now expect, with most artificial barriers gone, a rapidly increasing economic turnover and more business generated from larger contact with India, the exchange/sharing of technologies, goods and products, as trade time and formalities are reduced to a bare minimum.

No wonder, the relative size of their economies being larger than those of the two landlocked, Himalayan countries, Nepal and Bhutan, brings some built-in advantages for India and Bangladesh. However, this has not dampened Nepal’s hopes about the BBIN initiative. Nepalese authorities point out that the BBIN mostly is about implementing transport linkages and infrastructure upgradation schemes that were already part of the SAARC charter. Most schemes had been finalised after long discussion and consultations, incorporating the elements of mutual benefits and accommodation among member countries.

With Bangladesh already sending certain products by road to Nepal via North Bengal and exploring possibilities of securing hydropower from the Himalayas and Nepal being able to access the Chittagong and Mongla ports in addition to the facilities it enjoys in Kolkata port, all three countries view the BBIN as a win-win option.

The Asian Development Bank too had been examining the economic possibilities of South Asia for some time. The Bank agreed to finance 10 road networks to link the countries in this region so as to facilitate more regional trade and business. BBIN members have included seven of these projects for implementation.

But Bhutan’s reservations and its go-slow on the BBIN projects for reasons that are difficult to ignore, make it clear that the initial regional target – the implementation of infrastructure improvement by upgrading/executing 30 specific projects over the next five years, with an investment of $8 billion – will not be met.    

The fears expressed by Bhutan, with its smallest population of barely 1 million people in South Asia, and a very small production base, are genuine. There are apprehensions that the Shangri-la of the East, which attaches far more importance to its top position in the world in terms of the human happiness/contentment index, may well lose its distinct identity unless the BBIN initiative clearly spells out certain measures in concrete terms, ensuring a protection for Bhutan from any eventual economic or population invasion from its more populous neighbours, particularly India.

Even as certain measures are under discussion, no solution has been found to Bhutan’s worries. Transport operators in Bhutan are upset because they fear the country’s difficult hill roads will be damaged by the movement of heavyweight cargo, or put to strain by the movement of too many passenger/tourist vehicles. This would cause severe jams, endanger the environment and the ecology Bhutan has been able to preserve for itself through the ages.

Understandably, Bhutanese authorities are sceptical about the possibilities of economic development and progress. A section of its politicians are worried about the outcome of the BBIN projects, particularly in the country's upper house. While the Bhutanese Chamber of Commerce has welcomed the BBIN proposals cautiously, policymakers wonder how Bhutan would gain in trade through improved connectivity. Bhutan can export its hydropower, its fruits and food products and earn good revenues from its regulated tourism trade, which is not as freely conducted as freely it is in Nepal, chiefly to maintain its enduring idyllic charms. But what other items it can send or sell to, its neighbours?

Now with Iran and Russia showing their interest in the CPEC and expressing their keenness to join the project, China has clear sent a clear message to the world that it means business when it talks of economic growth in its immediate neighbourhood. (IPA) 

Friday, 30 December, 2016