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By Cementing ties with Bangladesh and Myanmar should be a top economic and political goal of the Indian government, writes Jayanta Roy The author is a well known trade economist
  • Published 1.05.12

India’s Look East policy has already yielded impressive results. Successful trade agreements have been signed with Singapore, the Association of Southeast Asian Nations, Korea, Japan, and Malaysia, and ongoing negotiations are at an advanced stage with Thailand and Indonesia. India has also made a legitimate claim to be a part of the broader Asian Economic Community. As a result, East and Southeast Asia now account for over a third of India’s exports compared to just about a fourth a decade ago when the Look East policy was initiated. ASEAN economies today are more important for our exports than North America, and Northeast Asia almost as important as EU27.

This success has been achieved without really penetrating into Southeast Asia through an integrated transport infrastructure. Southeast Asia is already developing a regionally integrated transport infrastructure under the aegis of the Greater Mekong Sub-region initiative. The trans-ASEAN pipeline project also aims to develop a regional gas grid by 2020, by linking the existing and planned gas pipeline networks of the ASEAN member states. India needs to be an integral part of these projects, and ensure that the transport and energy grids in Southeast Asia are part of a larger southern Asian system of which India is a critical hub.

The only way this is possible is through close cooperation with Bangladesh and Myanmar which are the critical links to the regionally integrated infrastructure network. The opportune time is now for India to forge strategic partnerships with both Bangladesh and Myanmar. The Sheikh Hasina Wajed-led government in Bangladesh has firmly put that country back on the path of democracy, secularism, and economic growth. Myanmar saw a historic transition to multi-party democracy without all the violence and rancour witnessed in the Arab Springs revolt of the Middle East. India should immediately seize upon this unique opportunity. It will be beneficial for all the three countries. Myanmar and Bangladesh will have easy market access to one of the largest and fastest growing countries in the world, with a middle class estimated at around 400 million. India also is regarded as the leading South Asian country in information technology, innovation and entrepreneurship. Myanmar and Bangladesh can provide India the corridor for trade with Southeast Asia, and help secure energy security by bringing gas from Southeast Asia through them.

Pipelines, roads, and railway connectivity with the wider ASEAN community is not possible without overland routes through Bangladesh and Myanmar. But these two countries are not just transit stops in India’s wider outreach to Southeast Asia. They are crucial to energy security and the development of new markets. The two countries have a combined population of 310 million with a gross domestic product of $305 billion and excellent growth prospects in the medium term.

Besides, Myanmar has the world’s 10th largest natural gas reserves, estimated at over 90 trillion cubic feet in 19 onshore and three major offshore fields. Bangladesh also has significant gas resources that can be jointly exploited if India can assure Bangladesh of long-term sustainable exploitation of that resource in a manner that takes into account Bangladesh’s future needs. Myanmar potentially can also become an important producer and exporter of coal.

Regional cooperation can create tremendous new opportunities for development of integrated supply-chains in textiles, jute, chemicals, bamboo, timber, and organic agro products. Low cost connectivity would allow Buddhist tourists from Myanmar, Thailand, Cambodia, Vietnam, and the Chittagong hill tracts to travel to the Buddhist circuit in Uttar Pradesh and Bihar. India boasts of top quality institutes of technology and management, and state-of-the-art hospitals. It could become an education and health cluster servicing Bangladesh and Myanmar.

The major benefit of a strong partnership with Bangladesh is trade and transport facilitation. This will immensely benefit both countries since the trade corridors are associated with massive transaction costs in terms of long delays at the border crossings, time-consuming inspection and documentation, rent-seeking activities of transporters, officials and middlemen and lack of warehousing facilities. The time is ripe for state-of-the-art joint border posts with a single harmonized set of documents and one-stop cargo clearance with joint customs and inspection facilities. India should provide an impetus to Bangladesh to collaborate in this venture by allowing Bangladeshi exports destined for Nepal and Bhutan transit through the Siliguri and Benapole corridors. Minimal inspections should be done at the borders to ensure that no third-country exports are finding a way into India without payment of duty. One can also work on sealing of the goods in transit to avoid any pilferage en route to the destination. This will be a boon to Bangladesh’s exporters with no cost to India, and help boost goodwill.

This will motivate Bangladesh to allow passage of exports and imports of the Northeast through its Chittagong port. The Northeast is also connected to the rest of India by a narrow and congested land corridor referred to as the “chicken’s neck”. The transport cost would fall substantially if goods from and to the rest of India are allowed transit through Bangladesh’s territory. It has been estimated that the Northeast was spending almost as much in transporting commodities from the rest of India as the cost of commodities themselves. Routing goods through Bangladesh will be a major factor in the development of the depressed and isolated Northeast region.

Western countries are fast lining up in Myanmar. China is already an overwhelming presence in that country. But Myanmar would be more comfortable within a regional arrangement where no one country can call the shots and become a dominant presence. Bangladesh has time and again indicated that it wants to be part of a vibrant regional arrangement. The currently inactive Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation offers a platform that brings together India, Bangladesh, Nepal, Bhutan, Sri Lanka, Thailand and Myanmar, and includes energy and transport development, key Indian strategic goals, as a part of its mandate. It is time for India to take the lead and transform the currently stagnant BIMSTEC into a force of change in the region. The body, with the presence of Myanmar and Thailand, can link South Asia with the trade and energy centres in Southeast Asia. South Asian member countries of the BIMSTEC, in conjunction with Thailand and Myanmar, should consider extending the membership of the group to Laos, Cambodia, Vietnam, Malaysia and Singapore and reorient the focus of this grouping (following the foot-steps of GMS) as a nodal agreement on trade facilitation.

The Bangladesh foreign minister is expected in Delhi on May 7. Hopefully, the government of India will then sign the Teesta water sharing agreement, and also agree to satisfactorily resolving the other pending issues. In return, Bangladesh should allow goods to flow freely through Chittagong port and through land areas, and agree to eventually share border customs facilities.

Soon thereafter, the Indian prime minister should visit Yangon with a large business delegation comprising the top CEOs of Indian companies in energy, information technology, healthcare and infrastructure, and make a firm pledge of full Indian support to the development of the new Myanmar.

One hopes that cementing strategic partnerships with Bangladesh and Myanmar remains a top economic and political agenda of the Indian government.