Eye on India, Bangladesh is now open for business
Ishita Ayan Dutt / Dhaka December 03, 2010, 0:37 IST
Follow-up action on both sides of the border is gaining momentum, with focus on transit and transshipment.
Bangladesh Prime Minister Hasina has just cleared a proposal for a 20-storey Board of Investment office. The grubby incumbent was never fit for her to visit. Leave alone the foreign investors that she’s betting on, to turn Bangladesh into a middle-income country by 2021.
Headed by an investor-friendly Prime Minister, who doubles up as chairman of the Board of Investment (BOI), Bangladesh is now open for business. And, Indo-Bangla economic and business relations is central to it.
“Since Prime Minister Hasina’s visit to India in January this year, business proposals have increased significantly, almost 34 per cent,” BOI Additional Secretary Mohammed Liaquat Ali said.
About three months ago, India’s Finance Minister Pranab Mukherjee signed a $1-billion credit line for financing 14 infrastructure projects. Follow-up action on both sides of the border is gaining momentum, with a focus on transit and transshipment.
Bangladesh could provide better connectivity for North East India, or NE, to the rest of India by land and through Chittagong Port to the rest of the world.
“The trade between NE and the rest of India stands at 38 million tonnes (mt), of which 33 mt is with Assam. Not everything, but about half of it will be viable through Bangladesh,” Centre for Policy Dialogue Bangladesh Executive Director, Mustafizur Rahman, said.
Headway in quite a few of the projects has been made. The fifth port of call in Bangladesh, Ashuganj, has been taken. About 30 km from Agartala, Ashuganj can facilitate movement by road and onwards from the port by river.
A bridge over the Feni river — about 75 km from the Chittagong Port — will be financed, and can serve as a potential trading gateway between Bangladesh and Tripura/NE. Modalities are being worked out for use of Mongla and Chittagong ports.
Opportunities are enormous, but to make transit a success would mean huge investments.
“It’s going to involve an investment of $5 billion in road, rail and river. But once created, it can be used for flow of goods through Bangladesh in general and the country can either charge maintenance fees or levy toll,” Rahman said.
The fees or toll could help bridge the more than $3-billion trade deficit between India and Bangladesh, a sore point and an emotive issue with the latter.
The will is evident — on the political and business fronts — from the exchange of visits since earlier this year. But there are outstanding problems, a legacy of the past 30 years.
“India should take a lead role in dismantling tariff and non-tariff barriers not just with Bangladesh but surrounding nations. India has done to a large extent for Nepal and Bhutan. As another least developed country, it should be done for Bangladesh as well. In the past, bureaucracy was a good distance behind the political leadership,” Bangladesh Enterprise Institute President Farooq Sobhan said.
The immediate concerns include improving infrastructure and customs facilities on both sides, facilitation of goods movement, and unhindered access, which means doing away with quotas.
“One of the key issues has been standards and certification. The Bureau of Indian Standards (BIS) and its counterpart in Bangladesh should work in tandem. There is some progress on that front now. In the past, it’s been a major impediment,” Sobhan added.
A BIS team is expected to visit Bangladesh soon.
Business proposals from both sides are also picking up. “The process of integration of the two economies, especially in the area of investment, has now reached a new height,” one of the leading industrialists Abdul Matlub Ahmad, chairman of Nitol-Niloy group and president India-Bangladesh Chamber of Commerce and Industry, said.
Yet, investments registered with the BOI show that China has made deeper inroads. During January to October 2010, Indian investments stood at $14.52 million, while China’s was at $78.18 million.
But then it’s not mandatory to register investment proposals with BOI, so comparative figures for proposals from India and China are not strictly comparable. Some solace for India.