Speaking at the closing session of the two-day India Economic Summit of the World Economic Forum in New Delhi recently, Prime Minister Sheikh Hasina said the South Asian countries should eliminate 'misperceptions and false apprehensions' to strengthen regional cooperation and development.
In the past decades, nations have seen many lofty regional ideas and initiatives. Some succeeded, others could not deliver, she said, stressing the need for ensuring mutual trust among South Asian nations.
The revival of the ancient silk corridors within Bangladesh, China, India and Myanmar (BCIM) is now a hotly debated issue. It is an initiative conceptualised for significant gains through sub-regional economic cooperation.
Regional experts and analysts are now examining the pros and cons of the corridor which is expected to boost trade and investment in the belt. It transpires that such revival of ancient southern and western silk routes for transporting cargo through the said corridor will significantly reduce costs of movement, besides enhancing regional trade.
The ancient silk routes, to mention, once brought prosperity to the people of this region. Now these routes are being planned for expansion in the new and current context. Analysts think such modern-day silk corridor(s) will enhance trade connectivity of the region.
Under the Belt and Road Initiative (BRI), China is now working to build an economic land belt that includes countries of the original Silk Road through Central Asia, West Asia, the Middle East and Europe, as well as a maritime road that links China's port facilities with the African coast, pushing up through the Suez Canal into the Mediterranean.
Studies conducted in Bangladesh suggest that the revival of the Silk Route would lead to a considerable reduction in the lead time, which is a key factor of competitiveness in a rapidly changing world. Hence, it is necessary to identify and implement the BCIM corridor that could effectively enhance intra-regional trade, stimulate flow of investments, and deepen people-to-people connectivity.
During President Xi Jinping's visit to Dhaka, Bangladesh and China signed a memorandum of understanding (MoU) confirming Dhaka's engagement in BRI concept. This is a Chinese framework arrangement for organising multinational economic development primarily in Eurasia through two main components - the land-based Silk Road and Maritime Silk Road. It was unveiled by Chinese leader Xi in 2013.
With this, expectations are galore that implementation of the Silk Route and the economic corridor would usher in a new era of opportunities for this sub-region. It could also impact immensely Bangladesh's overall socio-economic condition.
Alongside such corridor initiative, there was also an agreement to establish a maritime Silk Route across the Bay of Bengal to link countries in the rims of the bay and the Indian Ocean.
The Silk Roads are expected to bring vital opportunities for Bangladesh's goal of becoming a middle-income country by 2021 and a developed country by 2041. Economic potential of the BCIM should be exploited through its quick establishment.
With a gross domestic product (GDP) of $10.9 trillion, China is the second largest economy in the world. The country exported $2.14 trillion and imported $1.58 trillion of goods and services in 2015. It shipped goods worth more than $13 billion to Bangladesh in 2015, while Bangladesh exported goods of $805 million to China in the same year. Bangladesh gets duty-free entry for 5,700 products to the huge Chinese market. Bangladesh should negotiate with China for flexible local value addition criteria. Efforts should also be made to attract more Chinese investment, particularly in machinery, light engineering and intermediate goods. The country also needs Chinese cooperation in exploring the potential of blue economy.
Cooperation in power and energy, transport infrastructure, shipping, tourism, business and investment will certainly gain momentum in the event the economic corridor becoming a reality. However, there is a need for more research and study on how to derive benefits from the initiative by making best use of comparative advantages.
However, there are hindrances too. Inadequate market access, non-tariff barriers, insufficient physical infrastructure and lack of favourable banking and financial mechanisms in the countries of the region might pose challenges. To get benefit from the initiative, there is a need for pursuing a new paradigm of foreign policy focusing more on balanced development diplomacy.
Analysts say the China-Pakistan Economic Corridor (CPEC) and the BCIM Economic Corridor are officially classified as closely related to the BRI. Concerned countries are willing to strengthen economic ties, promote infrastructure and industrialisation process together and they acknowledged the importance of building a platform for cooperation projects.
The fact remains that establishing the corridor requires big investments. Construction of roads might be 'technically feasible', but it will take time to get funding. Besides, coordination among the four governments could be time-consuming. But in the meantime, the planned corridor, pockets of economic activity and industrial park can be developed.
With roads, railways, airlines, water routes, telecommunication networks and energy pipelines, the corridor is expected to connect South-western China, Eastern and North-Eastern India, Myanmar and Bangladesh to form a thriving economic belt.
Bangladesh can benefit immensely from regional cooperation on energy, as it can purchase unused power from Sikkim in India that plans to exploit its hydrocarbon resources. The country can also increase trade with Myanmar, as the two countries share a border of 160 miles. It can also gain similar benefits from China and India.
The economic corridor, once built, is set to attract extensive trade and investments. Bangladesh will benefit from its location-- being right in the middle of the region. Since the BCIM region is considered to be one of the richest in the world in terms of natural, mineral and other resources, there will be enough scope to build manufacturing plants to use these resources.
It is too early to say when the economic corridor will be a reality. But given its economic prospects there is urgency in all the countries to see its completion. The big factor is where the financing will come from. However, for China with its experience in mega-projects and developing mechanisms to pay back investment, mobilising of a huge fund may not be impossible.
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