'Bangladesh-India transit: Dhaka’s income will increase by 67pc'

Seamless transport connectivity between Bangladesh and India would benefit Dhaka, with an increase of district-based income by 67 per cent, followed by 59 per cent in Chattogram, says a new World Bank report.

Moreover, some eastern and western districts of Bangladesh would see 25 to 40 per cent of increase in the district-based income.

The report titled ‘Connecting to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia’ was published virtually on 9 March. It emphasises on the full operation of Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA).

Showing logic of the increase of internal income, the report says that the connectivity would increase trade and migration of workers. For example, workers from southwest Bangladesh would migrate to north and east of the country where real wages would increase by as much as 37 per cent.

Seamless road connectivity would increase Bangladesh’s exports to India by around 300 per cent.

The connectivity has the potential to increase national income by as much as 17 per cent in Bangladesh and eight per cent in India. Besides, Bangladesh and the north-eastern states of India would be benefited by the transit facilities, says the report.

World Bank’s senior economist Matias Herrera Dappe and lead private sector specialist Charles Kunaka, also the authors of the report, described dimensions during the virtual launching of the report.

The report recommends key policy actions the BBIN should take to strengthen the MVA. These include harmonising driver’s licensing and visa regimes, establishing an efficient regional transit regime, rationalising and digitising trade and transport documents, and liberalising the selection of trade routes.

Mercy Tembon, the World Bank country director for Bangladesh and Bhutan, said, “Geographically, Bangladesh’s location makes it a strategic gateway to India, Nepal, Bhutan, and other East Asian countries. Bangladesh can also become an economic powerhouse by improving regional trade, transit and logistics networks.”

Trade between Bangladesh and India is estimated to be $10 billion below its current potential, he added.

“The eastern sub-region is poised to become an economic growth pole for South Asia. An important component of this development potential is for countries to invest in connectivity – rail, inland waterways, and roads. Bangladesh and India are now investing on the inter-state connectivity,” said Junaid Ahmad, the World Bank’s country director for India.

To ease the shipment

For the smooth export and import, the report recommends for easing cross-border traffic movement. It also emphasises on better connectivity between the main land and north-east of India.

The report points out that it is about 15–20 per cent less expensive for a company in India to trade with a company in Brazil or Germany than with a company in Bangladesh. High tariffs, para-tariffs, and nontariff barriers also serve as major trade barriers. Simple average tariffs in Bangladesh and India are more than twice the world average.

Currently, bilateral trade accounts for only about 10 per cent of Bangladesh’s trade and a mere one per cent of India’s trade.

*This report appeared in Prothom Alo print and online editions, and has been rewritten in English by Sadiqur Rahman