Takeaways – Enhancing BIMSTEC Connectivity in the New Era

September 22, 2022   Reading Time: 14 minutes

Reading Time: 14 min read

Three key takeaways from the Conference

1. Declaration of the BIMSTEC charter in the Fifth Summit held virtually in Colombo, Sri Lanka paves the way for greater connectivity of BIMSTEC within a regulated framework. Conclusion of a free trade agreement (FTA) among BIMSTEC members seems to be the most crucial undertaking for greater economic integration. An FTA will facilitate global supply chains and attract foreign investments into the region.
2. People-to-people contact can be fostered by educating young people on the significance of BIMSTEC and by investing in infrastructure on shared border regions to allow for tourism and cultural exchange.
3. Facilitating the digital economy is crucial for greater intra-regional economic connectivity. Provision of a harmonised regulatory framework, ensuring access to the digital market and promoting technical know-how will be the key aspects in promoting the digital economy within BIMSTEC.

______________________________________________________________________________________________________________________________________

Introduction

• The Lakshman Kadirgamar Institute of International Relations and Strategic Studies hosted a conference on ‘Enhancing BIMSTEC Connectivity in the New Era’ in collaboration with the South Asian Network on Economic Modelling (SANEM) and USAID.
• The conference was inaugurated on 30th March 2022, following the declaration of the BIMSTEC Charter at the Fifth BIMSTEC Summit held virtually in Colombo, Sri Lanka. The opening ceremony was followed by a full day panel discussion on 31st of March 2022 under different themes related to BIMSTEC and its future.
• Dayantha Laksiri Mendis, Executive Director of LKI delivered the welcome remarks in the inauguration session. Hon. Prof. G.L. Pieris, Minister of Foreign Affairs gave the keynote address. Mr. Reed Aeschliman, the Mission Director of USAID to Sri Lanka and Maldives delivered special remarks. This was followed by a brief recap on the Summit, Charter and the orientation of the panel discussion. The panellists were Dr. Selim Raihan, Executive Director, SANEM, Bangladesh, Dr. Nihal Pitigala, Lead Economist, WBD and InReach Global, Dr. Prabir De, Research and Information System for Developing Countries, (RIS) India and Dr. Watcharas Leelawath, Honorary Advisor, Bolliger and Company, Thailand.

Takeaways from the Panel discussions: 

Panel One -Trade and Investment.

• Nihal Pitigala, Lead Economist, Washington Business Dynamics & InReach Global chaired the Panel.
• Selim Raihan, Professor, Department of Economics, University of Dhaka and Executive Director, South Asian Network on Economic Modeling, (Bangladesh), Dr. Mustafizur Rahman, Distinguished Fellow, Centre for Policy Dialogue (CPD), Bangladesh, Dr. Nisha Taneja, Professor, Indian Council for Research on International Economic Relations, India and Dr. Watcharas Leelawath, Honorary Advisor, Bolliger and Company, Thailand were the panellists for the 1^st Panel.

Professor Selim Raihan

• Raihan remarked that engaging in global competition is crucial in augmenting and diversifying exports of a country. While free trade agreements ensure opening of global competition, challenges of domestic stakeholders, particularly ones related to high cost of doing business, regulatory barriers, bureaucratic red tapes and institutional corruption need to be addressed domestically.
• He highlighted that with the increase of regional economic blogs seen in regional economic comprehensive partnership agreements and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the member states need to understand the significance of free trade agreement for the region not to be excluded from the rising regional economic cooperation.
• Raihan suggested that in order to get the maximum benefit of the FTAs, the trade and investment nexus needs to be very much emphasised. The member states need to step on the opportunities to attract foreign direct investments not just from the region but also from outside, particularly by de-regulating the investment regime.

Dr. Mustafizur Rahman

• Rahman emphasised that, rather than being focused on trade integration alone, negotiating a Comprehensive Economic Partnership Agreement is the need of the hour. For this comprehensive mechanism of economic integration, digital connectivity, transport connectivity and people-to-people connectivity have to be triangulated within the BIMSTEC region.
• BIMSTEC members will not be able to translate their comparative advantage into competitive advantage without reorienting their tariff regime, including non-tariff barriers.
• He stressed the adverse effect of the member states having an autonomous tariff liberalisation on any aspiration of a comprehensive economic connectivity.
• Rahman concluded that initiatives pertaining to trade facilitation need to be “at the border, beyond the border and behind the border”.
  • BIMSTEC needs to ensure interoperability of the systems and seamless connectivity “at the border” and reforms “behind the border” on tariff with particular emphasis on less dependence on customs duties and more dependence on direct taxes. The member states also have to go “beyond the border” for a sustained coordination so as to verify harmonisation of national standards.

Dr. Nisha Taneja

• Taneja underscored the necessity of perceiving intra-regional trade vis-à-vis its other linkages like climate change, gender and all other sustainable development goals.
• In the context of intra-investment flows being limited in BIMSTEC, opportunities for intra-investment need to be explored particularly by creating channels for greater information flows to forge business partnerships. Dr. Taneja traced the example of Bangladesh investments in the state of Tripura in the North Eastern region of India.
• She also highlighted the need to perceive BIMSTEC as “glass half empty and not as glass half full”, since the region has to steer its integration in many aspects and has to design the right benchmark for its regionalism.

Dr. Watcharas Leelawath

• Leelawath brought out the significance of regulatory and digital connectivity along with the physical connectivity.
  • He remarked that while physical connectivity is crucial for BIMSTEC, and is being realised with projects like the trilateral highway across India, Myanmar and Thailand, ensuring regulatory connectivity with a free trade agreement and digital connectivity across the region is sine qua non to reap the benefits of economic integration via BIMSTEC.
• He noted that harmonising customs procedures and implementing one stop inspection at member states’ borders would guarantee greater facilitation for regulatory connectivity within the region.
• An analysis of digital infrastructure of the member states would evince the digital gap in between the states. As per Dr. Leelawath, such analysis is needed for capacity building in order to implement electronic document submission and electronic verification for pre-arrival customs processing across the member states.

______________________________________________________________________________________________________________________________________

Panel Two- Infrastructure and Multi-model Connectivity

• Achyut Bhandari, Founder, Centre for Research on Bhutanese Society, Bhutan chaired the panel.
• The panellists were Dr. Ganeshan Wignaraja, Senior Fellow, Institute of South Asian Studies, National University of Singapore, Dr. Prabir De, Professor, Research and Information System for Developing Countries (RIS), India and Professor Dr. Ruth Banomyong, Dean, Thammasat Business School, Thammasat University, Thailand.

Dr. Ganeshan Wignaraja

• Wignaraja began by highlighting the status quo of regional infrastructure developments and initiatives.
  • Costs and benefits of regional infrastructure projects are at 8:1 in calculating the benefits from investing in the regional infrastructure and the financial cost. There is an asymmetric distribution between the South and SouthEast Asia in investing in regional infrastructure with adverse effects on trust between member states.
• He reflected that financing infrastructure needs in the region remains challenging.
  • An infrastructure investment gap around 120b USD per year lies in BIMSTEC which appears to be widening over time. Based on the estimations pertaining to this gap, BIMSTEC has to calculate which infrastructure projects that need to be prioritised which address both the landlocked and sea locked member states.
• Highlighting the need of ensuring both hardware and software aspects of infrastructure facilitation, Dr. Wignaraja remarked that the sea locked member states need to bring reforms on paperless trade. However, he noted that there are several challenges posed in this pursuit, including but not limited to operational challenges, interoperability of the multiple systems, need to have a regulatory body and the rising threat of cybercrimes.

Dr. Prabir De

• De underscored the prospects of having a regional single window of customs among the member states so as to facilitate greater integrated trade in the BIMSTEC. The promising example of ASEAN Single Window of Customs that collaborated with USAID shows some guidance in achieving this goal which would be most beneficial for the BIMSTEC.
• He also emphasised the significance of the implementation of the Coastal Shipping Agreement as a leap forward for greater connectivity in BIMSTEC.
• De also observed that in order to make the most out of the trilateral highway under construction, the member states need to expedite the conclusion of Motor Vehicles Agreement.

Professor Dr. Ruth Banomyong

• Banomyong examines that BIMSTEC does not need to conclude a new free trade agreement unless and until BIMSTEC plans to pursue beyond the Trade Facilitation Agreement of the World Trade Organization (WTO TFA). He opines that implementation of the WTO TFA in all seven countries is crucial as an initial step in facilitating intra-regional trade.
• Banomyong noted that in implementing Infrastructure and Multimodal Connectivity, due attention should be paid on the legal aspect of the concept, rather than perceiving it purely with its operational perspective. BIMSTEC should address issues related to liability regime, documentation needed and legal status of the multimodal transport operations if it steers for a pragmatic approach in enabling the infrastructure and multi-model connectivity.
• He also emphasised that given the intra-regional trade only amounting to 6%, it is questionable if it is worth enough to invest in an inter-model facility which needs to be developed within the overall logistic network in BIMSTEC.

______________________________________________________________________________________________________________________________________

Panel Three – Digital Economy

• Oshada Senanayake, Chairman, Information and Communication Technology Agency (ICTA), Sri Lanka chaired the panel.
• The panellists were Dr. Arpita Mukherjee, Professor, Indian Council for Research on International Economic Relations (ICRIER), India, Dr. Surat Teerakapibal, Associate Professor, Department of Marketing, Thammasat University, Thailand, Dr. Mona Shrestha Adhikari, Chief Executive Officer, Enterprise for Management, Economic Reform & Gender Equality (EMERGE), Nepal and Dr. Tshering Cigay Dorji, Former Chief Executive Officer, Thimphu TechPark Limited, Bhutan.

Dr. Arpita Mukherjee

• Mukherjee observed that there is a gap between the customs digital infrastructure and digital infrastructure of allied agencies like the food safety authority or the drug authority. This void needs to be filled with more collaboration and robust risk management.
• India has included a digital trade chapter for the first time in its free trade agreement with the United Arab Emirates. This Chapter includes cyber security, cross-border information flow, data sharing, paperless trade, which can be initiated in BIMSTEC as well, in its integration via digital economy.
• She emphasised that digital trade has expedited while its regulatory framework has lagged behind and stressed the need of BIMSTEC member states to make commitments in order to ensure regulatory framework in par with the digital trade.

Dr. Surat Teerakapibal

• Teerakapibal observed the tendency of smart phone adoption and the usage of internet getting more popular on the global level, notwithstanding the degree of development or economic strength of a country.
• He advanced that this tendency has resulted in private and public enterprises investing in artificial intelligence and machine learning.
  • He also remarked that owing to this trend, advertising has transcended to more digital versions, reflecting the spillover effects of popularity of digital communication platforms into many strata.
• Given that eighty five million jobs are at stake in their demand and ninety seven million jobs; all of which are IT related, are more in demand, Dr. Teerakapibal noted the tendency of employees in (re)starting their higher education, so as to upgrade their skills in order to be in line with the newly demanding jobs.

Dr. Mona Shrestha Adhikari

• Highlighting the impact of COVID-19 pandemic on women entrepreneurship, Dr. Adhikari noted that empowering women in business leads to achieving multiple productive outcomes such as boosting productivity, promoting inclusive economic growth, increasing economic diversification and meeting sustainable development goals.
• She observed that there is a significant decrease in women’s active participation in the global market and widening financial disparities among genders.
  • As per the World Economic Forum, this trend is owing to increased automation of sectors in which women are mostly employed. This is particularly the issue with the COVID-19 pandemic compelling many businesses to engage in e-commerce platforms.
• It is evident that the pandemic has disproportionately impacted women in general and women’s businesses in particular. This is mostly due to women entrepreneurs being compelled to use the digital market place with challenges pertaining to patriarchy in the digital market platforms, access to digital resources, digital skills and knowledge and the leadership and network of women businesses online.

Dr. Tshering Cigay Dorji

• Dorji identified initiatives towards the digital economy from a Bhutanese perspective under five key pillars. He observed communication infrastructure, capacity building and industry development with the Bhutanese small market, ecosystem and government initiatives for digitalisation of economy to be the most crucial aspects in initiatives for digital economy in the country.
• Highlighting the challenges that Bhutan faces in implementation of the digital economy, Dr. Dorji explained that Bhutan being a small landlocked and mountainous country faces issues pertaining to logistics, small market, lack of required skill sets and small private sector. He believed that greater connectivity via BIMSTEC would propel means with which these challenges could be met.
• He also remarked that inclusivity of all sectors in the society into digital economy is a must in this endeavour of digitalisation of economy and that it requires deliberate actions from all stakeholders.

______________________________________________________________________________________________________________________________________

Panel Four: BIMSTEC Charter, fund and institutions

• Dr Selim Raihan, Executive Director of SANEM chaired the panel discussion.
• The panellists were Ambassador Sumith Nakandala, Senior Director Bandaranaike Centre for International Studies (BCIS) and Former Secretary General of BIMSTEC, Dr Posh Raj Panday, Chairman,South Asia Watch on Trade Economics and Environment (SAWTEE), Nepal, Dr Bipul Chatterjee, Executive Director, CUTS International, India.

Ambassador Sumith Nakandala

• Nakandala began by elaborating on the importance of the BIMSTEC Charter.
  • On the 30th of March 2022, the BIMSTEC charter was signed and adopted during the Fifth BIMSTEC Summit held in virtual format in Colombo, Sri Lanka.
  • As such, Amb.Nakandala considered the criticism as to why it took 25             years to introduce a charter. His argument was that there is a certain element of understanding and maturity that is needed among the member states to enter into a legal framework which was lacking in the past.

• Amb. Nakandala proceeded to explicate on the role of the secretariat and he also emphasised the need for a well-established secretariat.
  • The secretariat’s role is to manage intergovernmental affairs but apart from that the secretariat has also started the BIMSTEC foundation lecture, roundtable meetings and outreach activities. The BIMSTEC Film Festival in 2017 inside the BIMSTEC secretariat was an example of such an activity which was bequeathed by the government of Bangladesh.

• Amb. Nakandala concluded by reflecting that regional integration is not a new phenomenon but has existed since time immemorial.
  • Centuries ago, the Bay of Bengal was the centre of the world economy. There were several trade networks from 1300 and 1500 AD. So, the wheel is not being reinvented in terms of regional integration but instead the wheel is being reinvented in terms of a common cultural heritage.
  • Nakandala argued that since regional integration in the Bay of Bengal has succeeded in the past, it is but natural that the integration process via BIMSTEC in the Bay of Bengal will succeed.

Dr Posh Raj Pandey

• Dr Pandey’s initial remarks reflected that after 25 years, the signing of the BIMSTEC charter is a turning point for the regional organisation
  • In light of the challenges of COVID-19 and the Ukraine war, the charter provides a new hope for the possibility of socio-economic transformation and the progress of BIMSTEC member countries.
• The charter stands for flexibility, pragmatism and progress in the process of regional cooperation.
• Dr Pandey highlighted a few limitations to the charter.
  • In particular, the charter failed to mention the need to uphold democracy, human rights and the rule of law as well as the principle of respecting members’ independent sovereignty, non-aggression and the need to refrain from intervening in the domestic affairs of member countries.
  • Dr Pandey also mentioned that a more effective dispute settlement provision is needed as the current provision merely states that member states shall endeavour to resolve all disputes peacefully through dialogue and negotiation. There is no strong provision for compliance and accountability in the charter itself.
• It is also important to identify key infrastructure projects in the areas of road transport, railway transport, maritime transport and other areas.
  • Setting up a BIMSTEC Infrastructure fund would be appropriate for BIMSTEC countries as to implement those projects, resources would need to be allocated.
  • The private sector can be mobilised to establish a BIMSTEC infrastructure fund.
  • A common BIMSTEC standard operating procedure for public-private partnerships would be advisable to allow for effective private sector engagement.

Dr Bipul Chatterjee

• Dr Chatterjee commenced by noticing that BIMSTEC has its own unique identity which is centred around the Bay of Bengal.
  • In fact, the Bay of Bengal is the binding factor which has been there for centuries allowing for trade, connectivity and the exchange of religion.
• Dr Chatterjee emphasised the importance of strengthening the secretariat as the role of secretariat is crucial in ensuring that BIMSTEC makes incremental progress.
• The next issue that was considered by Dr Chatterjee was how connectivity can be enhanced between BIMSTEC member countries.
  • Trade and connectivity are inextricably linked, countries tend to be less integrated because of a lack of connectivity through trade. Until progress is made in this domain, the Bay of Bengal region will continue to remain less integrated. 

______________________________________________________________________________________________________________________________________

Panel Five: People to People Contacts

• The panel was chaired by Dr Posh Raj Pandey, Chairman, South Asia Watch on Trade Economics and Environment (SAWTEE), Nepal.
• The panellists were Mr Sabyasachi Dutta, Executive Director, Asian Confluence, India and Dr Jirayudh Sinthuphan, Assistant Professor, Institute of Asian Studies, Chulalongkorn University, Thailand.

Mr Sabyasachi Dutta

• Dr Sabyasachi Dutta highlighted the need for public awareness and education on BIMSTEC.
  • Dr Dutta reflected that it is quite likely that the general public is unaware of the benefits of the cooperation and integration that BIMSTEC member countries can enjoy. In fact, many might be unaware of the importance of the Bay of Bengal region.
  • Educating the youth in schools about the geography and merits of the Bay of Bengal region and embedding knowledge of BIMSTEC in the educational system would allow for a well-informed society.
  • If the educational systems in each BIMSTEC member country inculcates an awareness of BIMSTEC, this would increase each member country’s willingness to cooperate with one another.
• Another avenue to explore when considering people to people connectivity would be for the BIMSTEC secretariat to connect entrepreneurs across the region.
• People-to people connectivity is more likely to improve when infrastructure on shared border regions is established as this would allow for greater tourism opportunities and cultural exchange.

Dr Jirayudh Sinthuphan

• Firstly, BIMSTEC is still an obscure notion to the general public at the grassroots or business level.
  • Thus, it is necessary to create a need to connect by raising awareness of the importance of the BIMSTEC region.
  • Without the willingness of the people of each member country, it would be difficult to truly foster lasting connectivity.
• In order to improve connectivity an increased awareness of culture can prove useful.
  • Investing in educating young people by translating books and written works from other BIMSTEC countries into the relevant local languages can allow for cultural exchange and the willingness to connect with other countries.
• Dr Sinthuphan concluded on an optimistic note by mentioning that once people cross borders either physically or mentally, there will no longer be regions such as South East Asia but instead it would be a unified Bay of Bengal region.

______________________________________________________________________________________________________________________________________

Closing Panel: Way Forward: 2047: Fifty Years of BIMSTEC

• The panel was chaired by Dr Selim Raihan, Executive Director, SANEM and Amb Sumith Nakandala, Senior Director, BCIS and Former Secretary General of BIMSTEC.
• The panellists were Dr Selim Raihan, Executive Director, SANEM, Mr Achyut Bandari, Founder, Centre for Research on Bhutanese Society, Bhutan chaired the panel, Dr Prabhir De, Professor, Research and Information System for Developing Countries (RIS), India. Dr Posh Raj Pandey, Chairman, South Asia Watch on Trade Economics and Environment (SAWTEE), Nepal. Dr Nihal Pitigala, Lead Economist, World Bank and InReach Global, Dr Jirayudh Sinthuphan, Assistant Professor, Institute of Asian Studies, Chulalongkorn University, Thailand.

Bangladesh – Dr Selim Raihan

• Dr Raihan spoke about the practicalities of creating a successful BIMSTEC growth trajectory.
• First, it would be important to set certain goals and targets on what needs to be achieved. This is crucial in catalysing structural changes over the next 25 years.
• Second, once the targets have been set, a roadmap would need to be prepared to consider how those goals could be achieved.

Bhutan – Mr Achyut Bandari

• Mr Bandari noted the difficulty of envisioning BIMSTEC’s progress in 2047 but proceeded to mention his hopes for the regional organisation.
• His hopes are for large-scale improvements in trade within the region from 5-6 % to 25%.
• Increased air connectivity between member countries, especially direct flights. This would allow for people to people contact, knowledge and a higher level of integration between the member countries.
  • A BIMSTEC travel card would be ideal for convenient travel across the region.
• Enhancements in cross-border exchange of information through access to newspapers and channels of other member countries.
• The establishment of a BIMSTEC development bank would allow for the financing of crucial infrastructure projects.

India – Dr Prabhir De

• On an optimistic note, the charter and other instruments in place would hopefully allow for free trade agreements (FTA) and a motor vehicle agreement.
• Improved summit frequency would be needed to strengthen regional integration.
• Regional integration would be of considerable benefit to landlocked countries as resources can be shared to alleviate the burden of such countries.
• Enhanced people to people connectivity would be brought to fruition through visas and easier access to travel.
• There is no reason to assume that greater integration would change patterns of inequality. There is a possibility that inequality may compromise the integration process. However, there is also the possibility that an increase in integration could mitigate poverty through job opportunities.
• As climate change is causing rising sea levels, some member countries run the risk of being submerged. This would make migration to other countries likely. Thus, critical thinking is required to consider how the BIMSTEC secretariat could anticipate and respond to such challenges.

Nepal – Dr Posh Raj Pandey

• Even as globalisation and technological development will contribute to human progress within the BIMSTEC region, many member countries will continue to suffer from multiple inequalities.
• However, on an optimistic note, BIMSTEC would be at the centre stage of the global economy.
• In the process of greater prosperity, member countries could fall into the middle income trap which raises the challenge of increasing efficiency and productivity of the economy.
• Climate change could be a major existential threat to some countries, raising threats to food, security, water, energy and health for the unaffected countries. This would pose a threat to sustainable development.
• Robust people to people contacts and strong political commitment for regional integration between BIMSTEC member countries would hopefully be realized by 2047.

Sri Lanka – Dr Nihal Pitigala

• Dr Pitigala reflected from his personal experience that trade has progressed despite the frictions that countries have had in the past. The same will hold true for the BIMSTEC region.
• The pandemic has had a debilitating effect on trade, leaving very few choices. Increased trade within the region would provide a safety valve for member countries, allowing them to rely on regional sources for solutions.
• Dr Pitigala reflected on the role that economists can play in training, capacity building and network building for each of member countries to allow for a well-equipped BIMSTEC region.

Dr Dayantha Laksiri Mendis, Executive Director, LKI

• Dr Mendis reflected on the fact that people of Indian origin are at the helm of politics.Thus, if BIMSTEC becomes a force to reckon with, India will be a supreme country in the Asian continent.
• He foresees that there is likely to be a huge division between India and China in another 25 years.
• Dr Mendis concluded by reiterating that the future of the Asian continent depends on this emerging community.

Thailand – Dr Jirayudh Sinthuphan

• Dr Sintuphan began by noting that BIMSTEC has achieved a lot in the past 5 years,even while conceding that a lot remains to be achieved in the next 25 years.
• For one, a funding institute would need to be established to support member states in carrying out various projects to allow for increased connectivity through trade, infrastructure and people to people contacts.
• Dr Sintuphan concluded by noting that there needs to be a change from a solid approach to a collaborative mindset that thinks in terms of improving common prosperity within the region.