New Eco­nomic Op­por­tu­nity

The Bangladesh-China-In­dia-Myan­mar Eco­nomic Cor­ri­dor can make Bangladesh a hub be­tween South and South­east Asia.

Southasia - - CONTENTS - By Ha­roon Jan­jua The writer is a free­lancer and in­de­pen­dent re­searcher.

The BCIM eco­nomic cor­ri­dor can make Bangladesh a hub be­tween South and

South­east Asia.

In re­cent years, there has been much in­ter­est in ex­plor­ing the his­tor­i­cal links be­tween the coun­tries and peo­ples of South Asia and the people of China. There are calls to es­tab­lish closer bonds be­tween the Yun­nan Prov­ince in South West China, north­east In­dia, Bangladesh and Myan­mar. Yun­nan has a par­tic­u­lar in­ter­est in re­viv­ing links with As­sam as this could pro­vide it di­rect ac­cess to In­dian and western mar­kets, which other­wise would in­volve a 7,000-km de­tour via Hong Kong and Sin­ga­pore. There is an un­der­stand­ing that Myan­mar and Bangladesh too could reap the eco­nomic ben­e­fits through mu­tual co­op­er­a­tion.

This grow­ing in­ter­est has given birth to the pro­posed Bangladesh-Chi­naIn­dia-Myan­mar Eco­nomic Cor­ri­dor (BCIMEC). It in­cludes two fast-grow­ing economies – In­dia and China – and two de­vel­op­ing economies – Bangladesh and Myan­mar. The pro­posal re­ceived for­mal en­dorse­ment through the first in­ter-gov­ern­men­tal study group meet­ing that took place in Kun­ming in De­cem­ber 2013.

The BCIMEC draws its in­spi­ra­tion from the con­cept of growth zones. The idea of growth zones is rel­a­tively new in de­vel­op­ment eco­nom­ics. It in­volves co­op­er­a­tion be­tween three or more coun­tries for the de­vel­op­ment of a ge­o­graph­i­cally con­tigu­ous re­gion con­sist­ing of a part or the whole of each of the par­tic­i­pat­ing coun­tries. Growth zones bring to­gether re­sources of the

mem­ber coun­tries and pro­vide a unique op­por­tu­nity to use mu­tual co­op­er­a­tion in the ar­eas of trade, in­vest­ment, trans­port and com­mu­ni­ca­tions in a planned way.

The ma­jor ob­jec­tive of this ini­tia­tive is to pro­mote eco­nomic co­op­er­a­tion among the coun­tries of the sub-re­gion through deeper in­te­gra­tion of their economies. The cor­ri­dor forms a thriv­ing eco­nomic belt in the re­gion to en­hance people-topeo­ple con­tact. Greater con­nec­tiv­ity among Bangladesh, China, In­dia and Myan­mar, for ex­am­ple, could open new op­por­tu­ni­ties for trade and in­vest­ment.

Viewed from the per­spec­tive of Bangladesh, the deep­en­ing of BCIM co­op­er­a­tion is of spe­cial in­ter­est as it can greatly ben­e­fit from the mar­kets of China and In­dia. As is known, Bangladesh has a sig­nif­i­cant bi­lat­eral trade deficit with both In­dia and China. For ex­am­ple, Bangladesh's ex­ports to In­dia were $564.0 mil­lion as against im­ports 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 – 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 fig­ure to $100.0 bil­lion by 2015. How­ever, in­tra-re­gional trade in the BCIM re­gion continues to re­main at a low level.

There­fore, the politi­cians and govern­ment of­fi­cials of Bangladesh are striv­ing hard for a ma­jor break­through over the BCIM cor­ri­dor as it can open doors to a transna­tional high­way that will even­tu­ally turn Bangladesh into a hub be­tween South and South­east Asia. It will also help Bangladesh get the op­ti­mum re­turns from its pro­posed deep-sea port that could be used by all four coun­tries. In ad­di­tion to that, the coun­try can ben­e­fit im­mensely from re­gional co­op­er­a­tion on en­ergy, as it can pur­chase sur­plus elec­tric­ity from Sikkim in In­dia. More­over, Bangladesh can in­crease trade with Myan­mar, as the two coun­tries share a bor­der of 160 miles. It can also gain sim­i­lar ben­e­fits from China and In­dia.

How­ever, it needs to be kept in mind that the BCIM coun­tries are al­ready mem­bers of a num­ber of re­gional treaties. Bangladesh and In­dia are mem­bers of the South Asian Free Trade Area, Bangladesh, Myan­mar and In­dia are mem­bers of the Bay of Ben­gal Ini­tia­tive for Multi-Sec­toral Tech­ni­cal and Eco­nomic Co­op­er­a­tion and Bangladesh, In­dia and China are mem­bers of the Asia-Pa­cific Trade Agree­ment. How­ever, SAFTA is an off­shoot of SAARC which it­self is more or less mori­bund and has not lived up to its ex­pec­ta­tions. In­dia and Pak­istan, the two ma­jor mem­bers of SAARC, have not yet been able to lib­er­al­ize mu­tual trade. The BIMSTEC, which is a re­cent ini­tia­tive, is di­rected more to­wards com­bat­ing ter­ror­ism, il­licit drug smug­gling and the chal­lenges posed by cli­mate change. The APTA is a much larger agree­ment signed in 1975 and in­cludes coun­tries such as Korea, Philip­pines, Nepal and Sri Lanka.

None of these agree­ments have con­trib­uted much to the eco­nomic im­prove­ment of the mem­ber coun­tries be­cause they do not ad­dress the is­sue of in­creas­ing trade from the lo­gis­ti­cal an­gle. Un­less there are well-con­structed high­ways and free­ways to con­nect the coun­tries of the re­gion for quick move­ment of goods and per­son­nel, all agree­ments on tar­iffs and trade will re­main un­prof­itable. There­fore, re­gard­less of these mul­ti­lat­eral agree­ments, the need for an eco­nomic cor­ri­dor re­mains a sine qua non for in­creas­ing trade and com­merce in the sub-re­gion.

This is why the BCIMEC is so im­por­tant. The four mem­ber coun­tries, with their di­ver­si­fied land­scape, vast pop­u­la­tions, het­ero­ge­neous in­dus­tries, prod­uct spe­cial­iza­tions and coastal ac­cess, com­ple­ment each other. Though the huge trade deficit can be a ma­jor area of con­cern, the high in­ter-re­gional trade po­ten­tial among the four coun­tries re­mains un­re­al­ized. As far as BCIM coun­tries are con­cerned, in­creased mar­ket ac­cess, di­ver­si­fi­ca­tion and so­phis­ti­ca­tion of prod­ucts, har­mo­niza­tion of stan­dards and frag­men­ta­tion are the need of the hour.

In­dia and China con­sti­tute 40 per­cent of the world’s pop­u­la­tion and present enor­mous trade po­ten­tial and growth op­por­tu­ni­ties. China is In­dia's top trad­ing part­ner while In­dia is among China's top-ten trad­ing part­ners. In­dia is striv­ing to be in­cluded in the list of the top-five trad­ing part­ners of China. On the other hand, trade has re­mained more or less static be­tween In­dia and Bangladesh. There is a trade sur­plus be­tween In­dia and Myan­mar, but it needs to be fur­ther en­hanced. Bangladesh's ex­ports to China are 3.8 per­cent while im­ports are 32.8 per­cent. To the con­trary, China's im­ports from Bangladesh were 0.02 per­cent. Bangladesh's ex­ports to In­dia are 0.01 per­cent while im­ports are14 per­cent.

There are his­tor­i­cal path­ways be­tween Myan­mar and the Yun­nan prov­ince of China such as the Burma Road and the Ledo Road. China is in­vest­ing heav­ily in de­vel­op­ing ports in Myan­mar to gain greater ac­cess to the In­dian Ocean. Fur­ther­more, Bei­jing is in­vest­ing heav­ily in in­fra­struc­ture, min­ing projects, hy­dropower dams and oil and gas pipe­lines to help feed south­ern China's grow­ing en­ergy needs.

Of late, Myan­mar has also been look­ing to­wards In­dia for devel­op­men­tal as­sis­tance. In fact, In­dia's re­la­tion­ship with Myan­mar has been am­i­ca­ble de­spite the mil­i­tary rule in Myan­mar and notwith­stand­ing Aung San Suu Kyi’s in­car­cer­a­tion. More­over, in­sur­gents from the north-east­ern re­gion of In­dia take refuge in Myan­mar. There­fore, Myan­mar’s co­op­er­a­tion is vi­tal to In­dia from the se­cu­rity point of view as well.

Given that the in­ter­ests of In­dia and China over­lap in Myan­mar, build­ing the rail-road con­nec­tion is high on the pri­or­ity lists of both coun­tries, es­pe­cially for their land­locked prov­inces. Thus, the BCIMEC holds prospects of fur­ther­ing both the po­lit­i­cal and eco­nomic ties among the na­tions of the re­gion. In­vest­ment in build­ing in­fra­struc­ture will be a ma­jor is­sue and In­dia and China will have to play a ma­jor role in this area.

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