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Toward South Asian regional economic integration: A Bangladeshi perspective

Tariq Karim's picture
Motijheel commercial area
Mortijheel Commercial area Photo credit: Mahfuzul Hasan Bhuiyan


South Asia can become a powerful locomotive of global development but it could just as easily regress into becoming the crucible for global instability and insecurity

This blog is part of the series #OneSouthAsia exploring how South Asia can become a more integrated, thus more economically dynamic region. The blog series is a  lead up to the South Asia Economic Conclave, an event dedicated to deepening existing economic links through policy and investments in regional businesses.

SAARC countries need to think of pragmatic approaches and reimagine regional cooperation. One can conceive of SAARC as comprising three sub-regions within the larger South Asian landscape namely: the eastern sub-region of  Bangladesh, Bhutan, India and Nepal (BBIN); the southern sub -region of India, Maldives and Sri Lanka (IMS); and the western sub -region of Afghanistan, India and Pakistan (AIP). 

Each sub region could move forward at its own pace, in the process helping others to follow or  forge ahead in any given sector.  Such a process (as indeed was adopted by the EU and ASEAN) would lend flexibility within one’s comfort zone and would promote aggregation in an organic manner.
 
However, to get even a modicum of sub-regional cooperation in any of the smaller segments of SAARC, one would first need to have at least three sets of good bilateral relations between contiguously located countries.

In the east, for instance good bilateral relations between India and Bhutan,  Bangladesh and Bhutan, Bangladesh and Nepal already exist - but relations between Bangladesh and India had been quite protean since 1975 and were, in 2008, perhaps at their lowest nadir.

Bangladesh, by virtue of a large population that gives it gravitas in the regional context, perhaps held the key to redefining sub-regional cooperation and economic integration. Reconfiguring Bangladesh-India relations and getting them right was of critical importance.
 
During the last six years, there has been a dramatic transformation of relations between India and Bangladesh.  Security cooperation between the two is exemplary and has never been better. Bangladesh boldly took the first initiative in this area, creating an enabling environment.
 
Both countries have amicably resolved disputes and completed boundary demarcation on land, rivers and in the Bay of Bengal (a post-colonial first grand slam?)  India has unilaterally extended duty-free and quota free access to virtually all but 26 Bangladeshi products to the Indian market, as a result of which bilateral trade volumes have increased.
 
Eight border haats (markets) have been set up, to date, along Bangladesh’s borders with Meghalaya and Tripura, reconnecting and reviving historical economic connections. Indian investments in Bangladesh have surged dramatically, initially in the garments, textiles and telecom sectors and are now expanding steadily into the power and infrastructure sectors.  Bangladesh has offered to India an EPZ solely for setting up Indian industries.
 
Passenger bus services between Kolkata-Dhaka-Agartala and Dhaka-Sylhet-Shillong-Guwahati and rail services between Dhaka-Kolkata have been effectively operationalized. Several ports of call have been added on both sides in the Inland Waters Transport and Trade Agreement that had been in place since 1972.  A number of existing land ports have been upgraded and some new ones have been identified. These are in the process of upgradation, increasing the number of routes that will enhance land connectivity for trade and people-to-people connectivity. 
 
When they are all fully operational, movement of goods and people will no longer remain hostage to the principal entry-exit points at Benapole-Petrapole and Akhaura-Agartala in the east and west. Instead, the north-south connectivity corridors will be more effectively available, enabling land-locked Bhutan and Nepal to more efficiently use Bangladeshi routes and ports. Coastal and maritime shipping agreements that were signed very recently also dramatically augment the other existing connectivity points and modes.
 
The remarkable Framework Agreement signed by the heads of government of the two countries in September, 2011, enabled them to initiate discussions with Bhutan and Nepal and set the stage for sub-regional cooperation in multiple sectors, most importantly, in river basin management and energy cooperation. Without access to sufficient power, of which there is a notable deficit, ambitious development goals cannot be achieved.
 
The recent visit by Indian Prime Minister Modi to Bangladesh provides a road map that, if followed diligently, could witness the power grids of Bangladesh, Bhutan, India and Nepal (BBIN) being connected in the foreseeable future. I envision the ultimate linking of all these presently separate bilateral power grids into a sub-regional mesh of interlinking grids of symbiotic interdependence in the energy sector, forming the architecture of long-term energy security for this sub-region. 
 
Cooperation on river basin management will also enable the region to address larger issues: restoring river navigability (most eco-friendly and economic mode of transportation that had been in use since ancient times until the mid-1960s); better flood forecasting, and irrigation and drought management; preventing massive land loss along river embankments; reconnecting peoples along the rivers and giving them a sense of ownership of their rivers; and ultimately, harvesting clean renewable energy from these rivers. All these activities would create massive employment and revive lost upstream and downstream industries.
 
The Northeast of India has an untapped potential of around 80,000 MW of hydropower (at very conservative estimates). Nepal has similar potential while Bhutan has a potential of well over 23,000 MW. Switching to this vast reservoir of clean renewable energy would progressively reduce dependence on coal/hydrocarbon fuel-based power generation, reducing carbon emissions substantially. This is an important consideration as declining air quality is reducing the quality of life on the sub-continent.
 
So while several sets of good bilateral relations are catalyzing sub-regional cooperation, the latter will serve to further strengthen bilateral relations, thus creating a virtuous cycle of mutual reinforcement.
 
In contrast to other developed regions (notably Europe, Japan, and China), which have ageing populations, the South Asian region has a huge youth bulge that will continue to grow for the coming decade.  This can be a huge asset, but only if the countries of the region seize the present opportunity to tap into the vast potential of regional economic integration. 
 
South Asia can become a powerful locomotive of global development.  If it misses the present opportunity, it could just as easily regress into becoming the crucible for global instability and insecurity.

To read more about SAEC 2015, please read Recommendations of Conclave

This blog was originally published on Huffington Post on 30 September 2015

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