Atiur Rahman
Professor
University of Dhaka
Introduction
Bangladesh and India share the same rivers, same eco-systems, same culture and heritage. Bangladesh together with India also shared a political and economic history for centuries. The paths of economic growth for Bangladesh and India, therefore, must converge in order to make the Indian sub-continent the future hub of economic activities of the world. This is indeed an Asian century and if we can play our cards with prudence and smartness this sub-region is destined to be the center-piece of exciting sustainable development.
Economic integration is a process of living together towards a common goal. Our common goal should be Sustainable Economic Growth. After 45 years of our cooperation, though at varied speed, it is high time for both the countries to develop a common strategy for accelerating this in the economic front. Without setting up a common strategy, we probably will compromise the well-being of our future generations. This is not just a concept; it is a reality. I believe it is for this we must stay together and build a common platform.
Potential for Sub-Regional Cooperation between two Countries
Bangladesh is now a fertile base for massive volumes of new investments in the areas of manufacturing, infrastructure, education and technology which are growing in a synchronized manner. India, our closest large neighbor, is partnering with us in promoting trade and investment linkages, with much needed investments in railway and other communication related infrastructures. In addition, both countries have opted for inclusion of other neighbors like Nepal and Bhutan in expanding cooperation in further development of railway lines and hydro-electricity plants. Particular, in the background of rapidly growing demands for electricity , significant complementarities those demands and potential for availability of large but unevenly distributed primary energy resources for generation of electricity across countries and seasons (e.g. abundance of hydro-electric resources in Bhutan and Nepal) there are certainly many opportunities of taking further steps toward greater electricity sector interconnectedness and power trade among South Asian neighboring countries to address the challenges of low and interrupted supply of electricity and underutilization of available resources. Cooperation in trade and investment will further expand and deepen following development of new Special Economic Zones (SEZs) where India is also participating. Here lies the strategic importance of Indo-Bangladesh economic engagements which will lead to win-win outcome for people of both countries.
Let us now focus on some other possible areas which can help improve the burgeoning Bangladesh-India economic relationship:
- Indian authorities can encourage their businesses to utilize Bangladesh as low cost manufacturing base to produce goods for local, Indian, and external markets, taking into account favored market access for exports from Bangladesh. For that to happen Bangladesh needs energy to accelerate investment in manufacturing. Given the opportunities for cooperation of sharing electricity from the region through desired interconnectedness of grid and enhancing trade the region could generate, on average cost savings of approximately $9 billion per annum relative to the status quo. A recent World Bank estimate shows that Bangladesh, with regional electricity cooperation and trade, could satisfy as high as 40% of total consumption of imported energy during 2015-40.
- Deepening and widening of trade and economic cooperation in our region requires major simplification and facilitation of customs clearance procedures in overland goods flows in the trade value chains, allowing cross-border movement of cargo laden vehicles. Experts from both ends have identified this to be a major challenge.
- Bangladesh’s seaports, land ports and rail/road arteries need major expansion and modernization for handling increasing cargo volumes of regional transit trade traffic. Here, Indian investors, both public and private will be most welcome.
- The potential for bilateral trade between India and Bangladesh via water routes largely remains untapped due to poor navigability of the rivers, port handling problems, and cumbersome customs procedures. A new era has begun when Indo-Bangladesh Protocol on Inland Water Transit and Trade was signed last year by the Prime Ministers of the two nations last year. Experts have opined that shifting to water transport from road option can cut costs of transporting by $3 per metric ton.
- India’s vibrant IT sector, healthcare, education, training and other service sectors are much welcome to take advantage of Bangladesh’s large pool of relatively low-cost youthful tech savvy manpower to set up product research/design/development, world class tertiary education, training and healthcare facilities in Bangladesh, on joint venture or wholly foreign owned basis.
- Deputing renowned Indian scholars in the faculty of Bangladesh’s newly established Rabindra Biswabidyala, and in our technical universities will go a long way in reinforcing cultural bonds and in R&D cooperation between the two neighbors.
- Like most other countries of the world, both India and Bangladesh, are aiming to go more for green energy or renewable energy sources. India is one of the pioneers in this sector. India’s cumulative grid interactive or grid tied renewable energy capacity (excluding large hydro projects) has already surpassed 42,000 megawatts. The Indian government is aiming for 40% cumulative electric power capacity from renewable sources by 2030. Bangladesh as a country also has ambitious renewable energy targets: it aims to meet at least 10% of its projected electricity demand of 24,000 megawatts in 2021 by renewable energy sources. Government and non-government bodies are working relentlessly to achieve this and has achieved commendable success so far. In particular, Bangladesh’s emphasis on developing Solar Home System (already crossing four million plus) and micro-solar greed for the use of rural remote growth centers and the community at large has been lauded by the green observers from all around the world. Also Bangladesh’s record of adopting strategies against climate change has been acknowledged by the relevant global community. The proactive central bank of Bangladesh has also been pushing green financing and motivating financial institutions to align their financial products for sustainable development. Both countries can learn from each other’s successes in the field of generating renewable energy to meet the aspiration of SDGs.
- It is obvious that Bangladesh could benefit to a great extent through technical support from India as well as learn from the Indian renewable energy experience. Same is true for India in learning from Bangladesh’s grassroots initiatives on this.
Scope of cooperation in the power sector is not limited to renewable energy only. Bangladesh is already importing electricity from India which has been helping Bangladesh’s development significantly. An Indian company is setting up a coal based power plant which will be playing a vital role in meeting the energy demands of the south western part of Bangladesh, provided we can make sure of taking necessary environmental safeguards. On the other hand, there are other two BBIN countries, Bhutan and Nepal, who have potential of producing excess electricity. India can surely facilitate channeling that excess electricity from Bhutan and Nepal to Bangladesh’s Northern parts. Cooperation between the private sectors of the countries need to be encouraged in this regard.
- Agricultural value-chain development is another area where cooperation between the two economies can yield great results which may be equally beneficial to both ends. Pran group from Bangladesh has more than tripled its processed food exports to India in between FY 2010-11 and FY 2014-15 (from $15.5 million to $49.15 million). Bangladeshi companies are claiming they could expand their businesses further in Indian market if they are allowed to invest and build factories there. Similarly, Godrej group of India in collaboration with ACI group of Bangladesh initiated a joint venture in 2004 and since then providing quality poultry, fish, cattle and shrimp feed for Bangladesh market. This joint venture has benefited Bangladesh agriculture not only by providing quality agro-inputs but also educating the farming community on world-class farming practices. Many other similar win-win invest initiatives are indeed desirable for this cooperation journey.
- Indian tour operators including travel spots of Bangladesh in itineraries of inbound tourists will likewise be mutually beneficial. I am very heartened by the news of India deciding to facilitate visa procedure for visitors from Bangladesh, including offering special facilities for the senior citizens to obtain visa with ease.
- Indian investments in development of sea port/land port and transport arteries in Bangladesh will greatly facilitate export and intra-regional trade flows. In addition, the potential for development of blue economy, following settlement of maritime coastline dispute, has increased significantly. Both countries can now invest in joint exploitation of oceanic resources by sharing their technical expertise and develop processing and other industries for meeting both local and international demand.
- Bangladesh and India are already cooperating in strengthening AML/CFT surveillance in our region. We are also working together in meeting the challenges of thwarting terrorist financing. This will help promote a regional environment that both regional and external investors will feel more secure and safe in.
Conclusion
The potential for cooperation for faster and sustainable economic growth between India and Bangladesh is indeed unlimited. With its common heritage and proven history of sharing blood in the critical time of Bangladesh’s war of liberation in 1971, there is a built-in imperative for further deepening of cooperation for mutual economic gains. Both countries are now politically poised to develop the infrastructures for the desired level of economic cooperation. Now that the mind-set of the policy makers of both the countries has changed for greater cooperation, the challenge is how to design doable projects and programs for mutual economic gains. There are enough areas of such cooperation if we are really serious in learning from each other’s success stories, as well as occasional failures. Let’s think about the road ahead which is long, bumpy and steep. Together we can certainly move ahead with caution and humility.
The article is based on the writer’s keynote address presented at a Workshop organized by The Daily Asian Age
