High Level Policy Dialogue on Regional Cooperation and Inclusive Development in SSWA

18-19 October, 2012, New Delhi

Regional Economic Cooperation and Connectivity in the sub-region: Potential

and ChallengesPresented by

Dr. M. RahmatullahSenior Visiting Fellow, CPD

andFormer Director, UN-ESCAP, Bangkok

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Presentation Outline

v Introductory Remarks

vEarlier initiatives to improve connectivity

vRecent initiatives in North Eastern Sub-region of South

Asia

vHow to move forward?

- Operationalization of identified routes

- Adoption of facilitation measures

vConcluding Remarks

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Introductory Remarks

� In a highly competitive world economy, transport costs aresignificant determinantof competitiveness.

� Although maritime transport has traditionally been the maincarrier of international trade, with the advent of “container”,over-land transportis now proving extremely useful for:

(a) Landlocked countries located far away from ports(b) Bulk movement over long distances (particularly Railway) both

nationally and regionally(c) For door to door delivery of high value and perishable

commodities � In South Asia, surface transport network still continue to remain

fragmented despite existence of basic facilities andinfrastructure.

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Introductory Remarks

� Due to lack of transport connectivity, in South Asia, goods aretransshipped at the border between trucks in BD-India-Pakistanborders. No inter-country freight train except a passenger trainbetween Dhaka-Kolkata. In BD-India border, rail wagons arepulled by Indian Locos up to the border and Bangladesh Locospull these to destinations inside. Passengers also get transferredat BD-India-Pakistan borders.

� NE-India virtually a landlocked territory; and traffic from NE-India is required to travel 1400-1650 km to reach Kolkata Port. Iftransit is allowed, distances would be around 450-700 km (seeMap-1).

� Consequences of poor connectivity are huge for Bangladesh aswell. A 20’ container takes at least 30 days to move between NewDelhi and Dhaka, and costs around US$2500, but by rail it couldreach in 4-5 days, and cost around US$850 ( see Map-2).

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Map-1: Bangladesh, Nepal, Bhutan and NE-India Location in

SOUTH ASIA SUBREGIONAL ECONOMIC COOPERATION TRANSPORT SECTOR

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Map-2: Asian Highway Network

TamuDhak

a

KathmanduNew Delhi

Mumbai

IslamabadKabul

Karachi

Chabahar

Introductory Remarks

� In the absence of direct connectivity between India andAfghanistan through Pakistan, goods are moved throughMumbai-Chabahar (Iran), see Map-2.

� Due to lack of transport connectivity in South Asia, logistic costsare very high and range between 13-14% of the commodity value,compared to 8% in USA.

� Intra-regional trade in SAARC around 5% only, compared to 26%in ASEAN, 58% in EU, and 62% in NAFTA. Improved connectivitycould enhance intra-regional trade.

� To improve connectivity, infrastructure development, however, isonly part of the solution. Equal emphasis needed onimprovement of facilitation measures.

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Earlier initiatives to improve connectivity

ESCAP Initiatives� Long before start of globalization process, UN-ESCAP took

pioneering efforts through its AH (1959) and TAR (1960) projectsfor promoting regional connectivity.

� Network Agreement of AH (141,000 km long) has been signed by29 countries out of 32, while TAR Agreement was signed by 22countries out of 26 countries, but operationalization of thenetworks have not taken place as yet in South Asia. (See AH &TAR routeMaps)

� Lack of political commitment has slowed downoperationalization of both road and rail routes across South Asia,as a result direct overland movement from Bangladesh toPakistan and beyond not possibleat this moment.

� To strengthen intra and inter-regional transportconnectivity, ESCAP initiated in 1992 an ALTID projectcomprising AH, TAR and facilitation measures.

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Map-3: Asian Highway Network – Southwest Corridor: Shenzhen to Istanbul

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Map-4: Trans-Asian Railway Network

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Earlier initiatives to improve connectivity

� ALTID got renewed support in 1996 from New Delhi Action Plan(1997-2006) for infrastructure development across ESCAP region.

� ESCAP and concerned member countries have so far established 3-Asia-Europe continental routes through TAR (see Map-5)

� ESCAP undertook a study on Northern corridor of TAR, the firstAsia-Europe continental route in 1996.

� ESCAP/OSShD (organization of Railways Cooperation) supporteddemonstration container train moved along that corridor in 1998/99and since then, the route is operating commercially as RussianTrans-Siberian Rail road.

� Another initiative was taken by China involving six other nationsRussia, Kazakhstan, Belarus, Poland, Mongolia and Germany toestablish Second Euro-Asian Continental Land Bridge. In January2008, a pilot container train traveled between Beijing and Hamburg.

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Map-5: Trans-Asian Railway Network

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Earlier initiatives to improve connectivity

� In 1999, ESCAP undertook another study for Southern corridor ofTAR, to connect Kunming (China) with Turkey through Myanmar,Bangladesh, India, Pakistan and Islamic Republic of Iran (seeMap-6)

� The “Third Asia-Europe Continental Land Bridge” covers both thesouthern corridor of TAR (Map-6) and the AH routes betweenShenzhen-Istanbul (see Map-7).

� 3-missing rail links (China-Myanmar, Myanmar-India andPakistan-Iran (see Map-8)

� 3-different gauges involved, where transshipment would beneeded.

� Through movement on limited stretches possible: such asbetween NE India-Bangladesh to Pakistan and beyond. Butinitiative needs to come from an international body, to getcountriestogether.

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Map-6: Trans-Asian Railway Network

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Map-7: Asian Highway Network – Southwest Corridor: Shenzhen to Istanbul

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Map 8: Trans-Asian Railway

Lack of Connectivities: The Consequences

Earlier initiatives to improve connectivity

Present hurdles in promoting connectivity in SSWA� Silchar-Imphal in NE India under construction � Kulaura-shahbazpur/Mahishasan- 39 km needs

recommissioning� Load restriction on Jamuna Bridge – A new bridge for

railway only is needed.� Missing link Kerman-Zahedan (535 km) between Pak-Iran

needs to be completed.� Transshipment facility needed due to gauge difference at

the border stations between NE-India-BD and Pak-Iran� Ferries still to be crossed at “Lake Van” in Turkey. No

initiative as yet to build a by-pass rail route.�

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Earlier initiatives to improve connectivity

SAARC Initiatives� In pursuance Islamabad SAARC Summit of 2004, SAARC

Secretariat with financial and technical support from ADB, initiated SAARC Regional Multimodal Transport Study (SRMTS) to enhance transport connectivity among SAARC members states.

� In 2006, SRMTS identified 10-Road corridors, 5-Rail, 2-IWTcorridors, 10-Maritime and 16 Aviation Gateways, for effectiveregional transportconnectivity.

� The SRMTS networks were built on the foundation provided bythe AH and TAR networks.

� SRMTS recommendations were approved by New Delhi, SAARCSummit in 2007, and SAARC transport ministers were maderesponsibleto pursuetheir implementation.

� Implementation of SRMTS recommendations is, however, slowdue to lack of political commitments.

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Recent initiatives in North-Eastern Sub-region of South Asia

Recent initiatives� Real break through in regional connectivity came when ‘Joint

Communique’ was signed between BD and India and agreements reached in New Delhi in January 2010 for: – Use of Mongla and Chittagong sea ports by India, Nepal and

Bhutan. – Rohanpur-Kathihar-Rauxal-Birgunj BG rail link to be available

for transit traffic movement between Nepal and Mongla Port. – Construction of Akhaura-Agartala rail link– Designating and developing Ashuganj as a new port of call and

transshipment port for onward connectivity by road to Agartala– Allowing bilateral container traffic to be carried by both rail and

IWT.

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Recent initiatives in North-Eastern Sub-region of South Asia

Recent initiatives

� Following joint communique, 13 routes (Road-7, rail-5, IWT-1)wereidentified by Bangladesh forregional connectivity.

� Essential rail, road and IWT projects within BD were identified toimprove regional connectivity.

� To assist in infrastructure development in BD, India offered US$1.0 billion ($ 800 million as soft loan and $200 million as grant).

� Bangladesh, however, shall have to mobilize around US$5.0 to 6.0billion to improve its transport system. This is indeed a bigchallenge for Bangladesh.

� While awaiting improvement of rail & IWT routes, initiallyaround 10% of transit traffic could perhaps be carried byBangladesh road transporters until expressways are built alongnational highway alignments.

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How to Move Forward?

Operationalization of identified routes

� Urgent initiatives needed to complete missing links andessential identified projects in Bangladesh to operationalize TARroutes for through movement across BD-India and India-Pakistan borders, where infrastructurealreadyexists.

� Since UN-ESCAP was instrumental in promoting AH and TARroutes through the cooperation of member countries, it shouldtake renewed interest in getting countries together to resolve thepresent dead-lock, on economic and commercial grounds, asmany othercountrieshave done, including China and Taiwan.

� For movement along TAR route between Pakistan and Turkeythrough Iran, there should be no problem once the missing linkbetween Kerman and Zahidan is fully restored. A containertransshipment facility for change of rail gauge would, however,be needed at Kerman point.

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How to Move Forward?

Adoption of facilitation measures

� Member countries concerned need to take a major politicaldecision to operationalize also the AH routes, so thatvehicles can move across the border freely.

� To facilitate through movement across Benapole (BD)/Petorpole (India) and Attari (India)/Wagha (Pakistan)borders, member countries concerned need to go for a“Regional Transit Transport Framework Agreement”(RTTFA) similar to those adopted by member countries ofASEAN, GMS and ECO.

� To facilitate movement of Afghanistan’s transit trafficthrough Pakistan, ESCAP could provide a forum and bringtogether representatives of Pakistan, India andAfghanistan for a political negotiation to resolve the issue.

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Concluding Remarks

� Improvement of regional connectivity among South and South-West Asian countries will cut down logistic costs and enhance intra-regional trade and tourism.� Since UN-ESCAP was instrumental in getting the AH

and TAR member countries together to sign the AH and TAR Agreements, it should again come forward to generate political consensus in operationalizing the AH and TAR routes within SSWA sub-region, just for economic benefit of the countries, while discussions could continue to resolve other political differences.� Finally, I would like to say that the above tasks are

difficult, but not impossible or insurmountable.

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