Tk.1,330/ton Transit Fee Proposed for Indian Goods

[eastwatch]

Tk 1,330 per ton transit fee proposed

DHAKA, Apr 8: Bangladesh should charge Tk. 1,330 (US $19) per tonne of goods as transit fee for Indian, Nepalese and Bhutanese products to be moved through its territory, said the report on transit/transhipment guidelines, which was submitted to the commerce ministry. Bangladesh Tariff Commission on Wednesday submitted the report to the commerce ministry, suggesting different methods of realising transit fees and identified several routs.

The report also estimated infrastructure costs. Commerce minister Faruk Khan on Friday told The Independent that the department has received the report but is yet to go through it to make comments on that.

The report said North-east Indian states (Nagaland, Mizoram, Manipur, Tripura) especially the eastern part of Meghalaya, southern part of Assam besides Nepal and Bhutan could save costs, ranging between $4 and $50 per tonne of goods, by transiting products through Bangladesh territory.

Bangladesh should impose transit fees of a minimum 70 per cent of the savings the beneficiary countries would make by using direct routes through the country, the report suggested.

“India, Nepal and Bhutan will immensely benefit from using the facility while Bangladesh will not require similar facility from any of these countries/region, due to its direct access to sea, the report added.

It suggested that Bangladesh could charge transit fees to recover administrative expenses, uses of service, congestions and environmental pollution arising out of heavy transit traffic. The report recommended to form a Joint Working Group (JWG) among the participating member-states for initiating and finalizing an “Umbrella Agreement” for the proposed transit.

It also suggested that the agreement must clearly outline a win-win situation for the participating member-states. The JWG needs to determine the mechanism of cost recovery and other institutional costs and charges/fees to be collected towards materialisation.

“The participating member-countries should immediately take the initiative to create institutions for transit-related activities and monitor the whole operation,” it added.

It also recommended that the participating member-states should agree on a consensus to use more concessional fund for the projects, needed for much desired transit facilities, from the multilateral agencies on a regional basis.

Khan said the commerce ministry would, thoroughly, study the report to make it more comprehensive. The ministry will also soon convene a meeting of the shipping ministry, foreign ministry, finance ministry, National Board of Revenue and the law ministry to finalise the guidelines on transit/transhipment fees.

Khan said that once the guidelines have been finalized, the law ministry would be asked to vet them before the file goes to the Cabinet for approval. He said the government is mulling forming an expert team to negotiate transit issues with participating countries. The minister said the government will complete all tasks preparatory to signing the agreements with India, Nepal and Bhutan as soon as possible. He said Indian industry minister Anand Sharma is due to arrive in Dhaka on April 26
for a two-day official visit and the issue would get some momentum.
Earlier, the ministry had formed a core committee led by Tariff Commission chairman Mujibur Rahman and asked it to submit reports on routes and fees and assess the volume of transit traffic, by December 25, 2010. Later, the deadline was extended to January 15 and then to February 2011.

The government wants to approve the policy before May so that it can start with development of transit/transhipment roads and other related projects as per the guidelines, sources said.

Under the core committee, five sub-committees appointed to make economic analyses and examine finalisation of routes, required infrastructure, transit traffic and legal issues, prepared separate reports.
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[NALANDA]

^^^^
Charging 70pct of average saves is just too much, especially when india will invest in the infrastructure. For soem of the nearer states, saves could be in negative. I think :-
1) we should just make excellent , the best , expressway from Indian areas ( CHICKEN NECK) only. In the long run this is better. This will also result in Bangladeshi's not thinking that we are born to just exploit their awesome wealth.
2) If this is agreed, Indians will use the facility as a back up only and there will not be much traffic on this.....

Ideally, if India is investing in the infrastructure, the tariff should tak enot more than 20 pct of actual saves.

 

[CaPtAiN_pLaNeT]

^^^^
Charging 70pct of average saves is just too much, especially when india will invest in the infrastructure. For soem of the nearer states, saves could be in negative. I think :-
1) we should just make excellent , the best , expressway from Indian areas ( CHICKEN NECK) only. In the long run this is better. This will also result in Bangladeshi's not thinking that we are born to just exploit their awesome wealth.
2) If this is agreed, Indians will use the facility as a back up only and there will not be much traffic on this.....

Ideally, if India is investing in the infrastructure, the tariff should tak enot more than 20 pct of actual saves.

Come out of this illusion... India is not investing a dime instead promoting its sub standard companies to build the infrastructure needed with the 1 billion credit which bangladesh will have to pay with interest and will mostly be used by India.

Regarding this fee just wondering whether it will be implemented or just will be cancelled like the NBR's duty on water vessel... as both prime minister's economic adviser Mashiur Rahman and Finance minister Muhith are against any fees...

 

[eastwatch]

^^^^
Charging 70pct of average saves is just too much, especially when india will invest in the infrastructure. For soem of the nearer states, saves could be in negative. I think :-
1) we should just make excellent , the best , expressway from Indian areas ( CHICKEN NECK) only. In the long run this is better. This will also result in Bangladeshi's not thinking that we are born to just exploit their awesome wealth.
2) If this is agreed, Indians will use the facility as a back up only and there will not be much traffic on this.....

Ideally, if India is investing in the infrastructure, the tariff should tak enot more than 20 pct of actual saves.

1) 70% saving does not say the savings in time. Time is money. In an extreme case like Tripura delivery, India will save at least three days for each consignment.
2) India is not building the infrastructure, but BD is building the multi-billion dollar infra with its own money.
3) The $1 billion loan India is willing to provide will be paid back by BD with interest. So, this is BD money that will build the infra.
4) Building an overhead expressway through the chicken neck is not feasible for a poor economy like India. A truck's operating cost will be higher in a longer route.

 

[fallstuff]

Indians are not paying for any infrastructural build up. If India pays for something like a leasehold improvement, then they can get a better deal. I wonder what that idiot trade advisor is going to say about it.

The $19 per ton fee appears a be less then the 70% savings of trucking around the country. The savings are a good 400-500 miles in one way trip. Less gas, less wear and tear, no Naxal, no insurgency, less days on the road. We definitely would need a good truck weighing scale for this one. We don't want Indian trucks to get away by showing false invoices or Bill of Lading, case in point Pilots with fake degrees.

 

[NALANDA]

1) 70% saving does not say the savings in time. Time is money. In an extreme case like Tripura delivery, India will save at least three days for each consignment.
2) India is not building the infrastructure, but BD is building the multi-billion dollar infra with its own money.
3) The $1 billion loan India is willing to provide will be paid back by BD with interest. So, this is BD money that will build the infra.
4) Building an overhead expressway through the chicken neck is not feasible for a poor economy like India. A truck's operating cost will be higher in a longer route.

Eastwatch
Noted your points and appreciate.
I think a sensible negotiation will result in having 50:50 share of saves. But I must say, gains will be much more than what you see in the money terms.

Bangladesh, as you know, is turning out one hell of a country...progressing, becoming secular, NIL terrorism, democracy.....we are all watching your country and like it.

Have you noticed, NO.....I repeat....NO negative news on Bngladesh in Indian or other countries media....and only positive reporting..

now contrast this with another country in the Indian Sub-Continent.

 

[fallstuff]

Eastwatch
Noted your points and appreciate.
I think a sensible negotiation will result in having 50:50 share of saves. But I must say, gains will be much more than what you see in the money terms.

Bangladesh, as you know, is turning out one hell of a country...progressing, becoming secular, NIL terrorism, democracy.....we are all watching your country and like it.

Have you noticed, NO.....I repeat....NO negative news on Bngladesh in Indian or other countries media....and only positive reporting..

now contrast this with another country in the Indian Sub-Continent.

You can try selling your snake oil to the other country in the region. Your media better be nice after all these freebies from Hasina.

 

[eastwatch]

1) BD trucks will certainly operate inside Bangladesh to transport Indian goods. Indian trucks cannot be allowed to operate inside our country. Of course, trucking charge will be separate from the transit fee.
2) However, railway goods transit may be done by Indian railway. However, the operators, drivers and others, must be Bangladeshi when being transported to and from border. india then pays a separate money for using our operators.

BD and indian Govts should sit together and talk and resolve these issues before a full time transit starts. However, as the things stand now, BD govt has not finally decided if the country is willing to give India a transit facility. BD has recently decided to allow transit of machineries for the tripura power plant.

 

[Roybot]

Indians are not paying for any infrastructural build up. If India pays for something like a leasehold improvement, then they can get a better deal. I wonder what that idiot trade advisor is going to say about it.

The $19 per ton fee appears a be less then the 70% savings of trucking around the country. The savings are a good 400-500 miles in one way trip. Less gas, less wear and tear, no Naxal, no insurgency, less days on the road. We definitely would need a good truck weighing scale for this one. We don't want Indian trucks to get away by showing false invoices or Bill of Lading, case in point Pilots with fake degrees.

Where did you come up with that figure from? Distance from Guwahati(accesible by rail) to Agartala is 600Km. Distance trucks will have travel if tehy go through Bangladesh is about 450 Km. And mind you Indian government gives a 25% subsidy on transportation to and from North East Region.

Having said that, not all the goods will be transported through Bangladesh. Businesses will still prefer transporting goods to Assam through the Silliguri corridor, given its good rail connectivity with the rest of India and the 25% government subsidy on transportation. Roughly 12 Million tonnes/year of goods are transported between North East Region and the rest of India. And according to estimates only 1/3rd of that( 4million tonnes) will go through Bangladesh.

So at the rate of 19 USD per tonne, Bangladesh wants 76 Million USD from India/year for transit. Thats 10% of your Bangladesh's Road and Highway division's annual budget allocation Good one.

 

[CaPtAiN_pLaNeT]

Where did you come up with that figure from? Distance from Guwahati(accesible by rail) to Agartala is 600Km. Distance trucks will have travel if tehy go through Bangladesh is about 450 Km. And mind you Indian government gives a 25% subsidy on transportation to and from North East Region.

Having said that, not all the goods will be transported through Bangladesh. Businesses will still prefer transporting goods to Assam through the Silliguri corridor, given its good rail connectivity with the rest of India and the 25% government subsidy on transportation. Roughly 12 Million tonnes/year of goods are transported between North East Region and the rest of India. And according to estimates only 1/3rd of that( 4million tonnes) will go through Bangladesh.

So at the rate of 19 USD per tonne, Bangladesh wants 76 Million USD from India/year for transit. Thats 10% of your Bangladesh's Road and Highway division's annual budget allocation Good one.

What you are farting here... about gauhati to agartola... it is about going from mainland of India to ne India which takes 3 days and real km which I do not know but should be much much high then 600 km... N cost a lot to go there...

N who said that only 1/3 rd of the total demand will be transferred to NE ... if people see this route is cheap then the conventional one then every one will use this route and it will increase over the years...n it will also move from NE india to India... but I persoanlly believe if any on compare the total distace one need to travel from kolkata to gowhati it would be much higher then 600 km and savings would be much higher also... It makes the amount should be greater then 1300 taka... Finance ministry and board of revenue should do the calculation more carefully... n using port also should not made free as that should also be charged...

These are the issues which fallstuff asked to consider also during the calculation of transit fee...

It is not as simple as you think.

1) How far the trucks are going to travel ?

2) What are the actual cost savings for BD vs India

3) Sending trucks through insurgency infested area.

4) What is the expected value to be gained in terms of more export in next five years.

5) What is the expected value of lost business to NE after providing transit in next 5 years. ( the business class is against this deal)

6) How much of a threat this actually creates. ( SA is not EU).

7) The China factor.

 

[Roybot]

^^ Thanked by mistake. I would reply to whatever you said, but the way you talk its just not worth it.

 

[fallstuff]

Where did you come up with that figure from? Distance from Guwahati(accesible by rail) to Agartala is 600Km. Distance trucks will have travel if tehy go through Bangladesh is about 450 Km. And mind you Indian government gives a 25% subsidy on transportation to and from North East Region.

Having said that, not all the goods will be transported through Bangladesh. Businesses will still prefer transporting goods to Assam through the Silliguri corridor, given its good rail connectivity with the rest of India and the 25% government subsidy on transportation. Roughly 12 Million tonnes/year of goods are transported between North East Region and the rest of India. And according to estimates only 1/3rd of that( 4million tonnes) will go through Bangladesh.

So at the rate of 19 USD per tonne, Bangladesh wants 76 Million USD from India/year for transit. Thats 10% of your Bangladesh's Road and Highway division's annual budget allocation Good one.

Awesome, its going to be way more than that. This is demand based pricing. If you don't want it, its fine, no one is twisting your arm.

 

[Roybot]

Awesome, its going to be way more than that. This is demand based pricing. If you don't want it, its fine, no one is twisting your arm.

Too bad your government doesn't think like that.

 

[fallstuff]

Too bad your government doesn't think like that.

You do have a point there. Hasina would have to do something about that moron trade advisor.

 

[Roybot]

You do have a point there. Hasina would have to do something about that moron trade advisor.

Or you guys can pull a Mujib on Hasina ? Personally I would be happier if this transit deal never gets approved. Once all the heavy machinery for the power plants have reached the NER, thats job done. Sooner or later poor India will have enough money and will to improve the road and rail connectivity.