december 10-12, 2009, new delhi, india -...

2nd South Asia Economic SummitDecember 10-12, 2009, New Delhi, India

Strengthening Physical Connectivity in South Asia

Presented by

Dr. M. RahmatullahTransport Policy Advisor, TSMR

Bangladesh Planning Commissionand Former Director (Transport)

UN-ESCAP, Bangkok2

Presentation OutlineIntroductory RemarksCurrent State of Transport connectivityAdverse impacts of poor connectivity SAARC initiative towards Regional Connectivity-SRMTSImplementation of SRMTS: Issues for ConsiderationWay forward

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Introductory Remarks

• In a globalized economy, transport cost is a significant determinant of competitiveness

• Logistics costs in SA, ranges between 13-14% of the value, compared to 8% in USA

• Intra-regional trade in SAARC around 5%, compared to 26% in ASEAN, 58% in EU, and 62% in NAFTA.

• India-BD trade uni-directional, India’s export to BD was US$ 3,388 million in 2007-08 and US$ 2,828 million in 2008-09 and BD’s export to India only US$ 358 million in 2007-08 and US$ 276 million in 2008-09.

• Improvement in transport connectivity could open up opportunities for BD to trade in transport services, to reduce trade deficit with India.

• Strengthening regional connectivity may open up enhanced intra-regional trade.

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Current State of Transport Connectivity

• Transport connectivity between SAARC countries and in particular between India-BD continue to remain fragmented, despite existence of basic infrastructure

• No inter-country freight train except a passenger train between Dhaka-Kolkata

• No inter-country truck movement and goods are transshipped at the border

• Limited bus transport movement between India-Bangladesh, and India-Pakistan

• Before 1947, trade of NE-India used to move through the territory of what is now BD. Up to 1965, rail and IWT transit was allowed.

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Introductory Remarks

Consequences of poor connectivity are huge. A 20’ container takes at least 30-45 days to move between New Delhi-Dhaka, and costs around US$2500, but by rail it could reach in 4-5 days, and cost around US$850 (Map). A container from Dhaka to Lahore now needs to travel 7162 km by sea instead of 2300 km overland across India.Since transit not allowed through Pakistan to Afghanistan, New Delhi cooperating with Tehran to develop alternative route to Kabul and Central Asia through Chabahar (Map).Southern border of Tripura State only 75 km from Chittagong, but Indian goods travel 1645 km, and Assam tea travels 1400 km to Kolkata port through “chicken neck” (Map).In the absence of transit through Bangladesh, India cooperating with Myanmar to develop an alternative route through Sittwe port and Kaladan river (Map).

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Lack of regional Connectivities: The ConsequencesThe Trans-Asian Railway in SA

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Map 1: Asian Highway Route Map (UN 2004)

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MAP 2 : Bangladesh, Nepal and Bhutan

Map # 1B: Kaladan Project

Lungtian

Kalada

nRiver

Saiha

Aizawal

SITTWE

Teknaf

Lack of regional Connectivities: The Consequences

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SAARC Initiative Towards Regional Connecitvity- SRMTS

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• Islamabad Summit (2004) decided to develop Multi-modal transport connectivity among SAARC countries. This was followed up by SRMTS, completed by SAARC Secretariat with ADB funding, June, 2006.

• SRMTS identified 10-road corridors, 5-Rail, 2-IWT corridors, 10-Maritime and 16 Aviation Gateways, for regional transport connectivity (See Maps).

• Most crucial new routes among SAARC countries which could bring revolution in regional connectivity, when implemented, include the following:

SAARC REGIONAL ROAD CORRIDORSCorridor SH1: Lahore-New Delhi-Kolkata-Benapole-Dhaka-

Akhaura/Agartala

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Map : Direct links through Bangladesh to NE-India

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Implementation of SRMTS: Issues for consideration

SRMTS indentified barriers along each route/gateways and proposed remedial measures and a roadmap for implementation. An indepth analysis revealed that the barriers are not that critical and measures are affordable, and many of them are non-physical, which only need good intention and political commitment to resolve. Some of the priority actions recommended were:

Road corridors

Adoption of transport and transit agreementsDevelopment of modern facilities at all landports for both goods and passengersLast few Kms of all corridors near borders could adopt national highway standard

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Implementation of SRMTS: Issues for consideration

Rail CorridorsGauge standardisation along major corridors (BG/Dual) Standardize braking and coupling system of wagons Strengthen Jamuna Bridge/construct a Second Rail BridgeMultimodal Rail Transport Agreement Needed

Inland WaterwaysIntroduction of container transport in IWTRevitalize IWT based on joint study and investment. Designation of “Ashuganj” as a transshipment port.

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Roadmap Proposed by SRMTS

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Maritime GatewaysExpansion of port capacity to handle more container traffic (Col, Ctg, Hal, Male)Improve port and trade facilitation to ensure efficient cargo clearance and reduce dwell timesEncourage private sector investment in ports development and management.

Aviation Gateways

Expansion of terminal facilities. Simplify visa issuanceEncourage private sector investment in dev. & management of airports land in private airlines.

Implementation of SRMTS: Issues for Consideration

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Projects pursued by Member countries:

•14th SAARC Summit, New Delhi, 2007 adopted SRMTS and their Transport Ministers urged to oversee implementation.•Sub-regional projects were proposed by Bhutan, India and Sri Lanka, and their implementation reviewed by Transport Ministers Meeting, Colombo, July 2009.Bhutan project focused on improvement of

border crossing, immigration, parking, cargo handling at Phuentsholing.


Projects pursued by Member countries:India’s projects focused on (a) opening rail route:Birgunj-Katihar-Rohanpur-Mangla/ Chittagong with rail links to Biratnagar & Agartala(b) Agartala-Chittagong rail link (c) Improvement of Kathmandu-Birgunj-Kolkata/Haldia link and (d) Direct air connectivity: Male-New Delhi, Islamabad-New DelhiSri Lanka project focussed on opening up (a) rail corridor: Colombo-Chennai (b) Ferry service: Colombo-Cochin, and Colombo-TuticornSAARC transport Ministers Meeting, Colombo, July 2009 endorsed (i) identification of 3-road corridors from South Asia across Pakistan to Afghanistan through Attari-Wagah border, (ii) running of a demonstration container train from Pakistan to Bangladesh through India and Nepal (iii) that SAARC Council of Ministers be requested to declare next decade as “Decade of Intra-regional connectivity in SAARC”.

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Issues being pursued by SAARC Secretariat

“Motor vehicle agreement” among SAARC countries being pursued by SAARC Secretariat. Draft circulated, and currently being considered by member countries. Rail transport Agreement has also be proposed by SAARC Secretariat, and currently being reviewed by member countries.

Transport Ministers meeting in Colombo in July 2009, agreed to set up an Expert Group to negotiate the drafts. Member countries are in the process of nominating members, for 1st meet in mid-December, 2009 in SAARC, Secretariat, Kathmandu.

For adoption of such agreements, political understanding of member countries is a must. Various efforts must continue including dialogues to bring a change in mind set of policy makers/politicians.

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ADB/FICCI pursuing 3-transported related issues:

ADB/FCCI are jointly pursuing 3-issues, of which “Motor Vehicle Agreement” is one, which is also being pursued by SAARC Secretariat, through member countries. The other issues are indicated below.

“Improvement of Land Customs Stations/Land Ports”: LP generally lack in basic facilities. Access to L.P. needs to be upgraded to National Highway standards. And on-line customs IT connectivity needed to facilitate clearances.

“Expansion of SAARC Visa Scheme”: No. of visa issued needs to be increased from 100 per country and 30 days stay permit honoured. SAARC visa should cover other professional groups besides business. In fact visa on arrival, and sub-regional visa, like ASEAN, and Schengen visa could be considered for introduction by SAARC countries.

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Resolving connectivity Issues: What Bangladesh can do?

India has been asking for quite sometime, access of NE-India to Chittagongport. Similarly, Nepal and Bhutan have been asking for access to Monglaport.

If transport connectivity is provided to these countries, BD could benefit by trading in “Transport Services”, and these countries/ territories could get access to sea ports.

But there is Lack of an authentic study findings to substantiate the views about the benefits that BD could get by providing transport connectivity.

Currently BD has trade deficit with India, trading in “transport services”could reduce this deficit

BD can, therefore, resolve connectivity issue sub-regionally, by providing connectivity to all the 3-countries at a time.

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Resolving connectivity Issues: What hinterland countries can do?

Hinterland countries need to recognize that no country other than BD can provide these transport services. Bangladesh policy makers should also realise that the transport services referred to earlier have no market outside the sub-region. So it is a mutually beneficial proposal to open up transport connectivity.

Bangladesh is fortunate to have Mongla port with spare capacity, BD also have potential for developing a deep-sea port, but its development needs sub-regional patronage.

Hinterland countries (including India) should patronize development of deep sea port in Bangladesh, to encourage BD to open up efficient transport connectivity to those countries.

However, even if Bangladesh intends to offer to Nepal and Bhutan, their access to Mongla port for export/import traffic, it can not materialize unless India agrees. India, therefore needs to offer transit to Nepal and Bhutan for their third-country trade to pass through Mongla Port in BD.

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Resolving connectivity Issues: Improving connectivity to NE-India

Subject to political agreement on transit, India will have access to NE-India through Bangladesh only at Tamabil/Dawki and Akhaura.

Direct access from Bangladesh to Southern part of Assam and Manipur will be restricted, as the present route goes through Guwahati and Akhaura (Map)

• To resolve the problem, India and Bangladesh should jointly bring a proposal to add a new access road to NE-India, as part of BIMSTEC network, from Sylhet to Imphal through Austagram, Karimganj and Silchar.

• This new route would pass through a level terrain, and provide asavings of 400 km for international traffic, including Indian traffic from Mainland to Myanmar (Map).

Map : Direct links through Bangladesh to NE-India

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DawkiTamabil

Moreh Tamu

2 - Lane Road 1 - Lane Road

Map : Sylhet-Tamabil-Guwahati-Dimapur-Imphal-Tamu Route

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Resolving connectivity Issues: Selection of mode in BDIn view structural limitation of BD road network (12 tons vs 10 tons, vs 8 tons), railway should be preferred mode to carry regional traffic, and could be operational immediately, subject to political agreement.To facilitate movement of Indian high value and perishable goodsby road across BD, until expressways are built on higher specifications, following possibilities could be considered:

(a) Inter-district BD truckers could provide logistic support to carry goods across Bangladesh using medium sized multi-axle vehicles and/or truck-trailers to carry containers

(b) above operation could start immediately, as part of phase-I, once political decisions are taken in favour by both governments. Efficient transshipment facilities will be needed on both side of Bangladesh

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Resolving operational Problems across BD: An Alternative

(a) Establishment of a joint venture BD-India trucking company, with a fleet of medium sized multi-axle covered trucks, and/or truck-trailers having a special colour (for easy identification and security) to carry transit traffic, with ownership of the company mostly in Bangladesh hand but with shareholders in India, Nepal and Bhutan.

(b) Vehicles of the above joint company will need registration in both Bangladesh and India to facilitate carrying traffic from origin to destination, without transshipment. The company need patronage of all concerned governments.

(c) Transit traffic should be subjected to inspection, scanning (if required), weighing and sealing by Bangladesh authorities at boarder crossing, to avoid smuggling. 33


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Resolving connectivity Issues: What Pakistan can do?

Currently Pakistan does not allow any transit traffic to move between India-Afghanistan/ Iran and Central Asia, and vice-versa (see map).Lack of political understanding has been the root cause behind this situation. However, to bring a change in the mind set of politicians, dialogues need to be organized by civil society institutions to bring closer the people at large, to pursue a change.Since Afghanistan does not have any railway, connectivity shall have to be based on road transport, and Pakistan has very good quality road from Lahore to Peshawar and beyond.Subject to political understanding and commitment, Pakistan could have earned sizeable transit fees, if transit was allowed.

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Resolving connectivity Issues: What India can do?

India being surrounded by all SAARC countries, it needs to provide transit to them to facilitate movement of overland trade with each other.India needs to provide transit to Afghanistan to trade with other SAARC countries, and vice-sersaIndia needs to give transit to Nepal and Bhutan for their access to Bangladesh port of Mongla for third country trade, which has not been given as yet.In each case, India can also charge transit fees in foreign exchange, thus it would be a win-win for all.


Resolving connectivity Issues: What Afghanistan can do?

Although Afghanistan is a landlocked country, it is a gateway to Iran & Central Asia.Afghanistan needs to provide transit to other SAARC countries for access to Iran & C.A., and vice-versaAfghanistan needs to cooperate fully in above respect with Pakistan and vice-versaTo bring a change in mind-set of Afghanistan policy makers, civil society institutions need to organize dialogues involving all stakeholders.

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Way Forward

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Cost of non-cooperation being very high, all SAARC countries could gain considerably if they could consider providing connectivities to each other. It could bring a win-win situation for all.It was, however, recognized that an authentic study is needed toestimate actual benefits that could accrue to each of the countries involved if regional connectivities are established.For effective regional transport connectivity, political commitment is a must. Study findings mentioned above could be used to bring a change in the mind set of political leaders. Civil society institutions in each country have a role to play in thiscontext. Finally, transit and regional connectivity issues cannot be resolved in isolation. It needs to be considered together with unresolved issues in other sectors, which are working as irritants. Various issues need to be discussed together with an open mind so that something doable emerges, through a process of “give and take”.

Thank you for your kind Attention

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december 10-12, 2009, new delhi, india -...

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