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6 years ago

Role of BCIM-EC initiatives

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The Bangladesh-China-India-Myanmar (BCIM) economic connectivity forum for regional cooperation, well-known as Kunming Initiative, began its journey in August 1999 in the capital of China's south-western province of Yunnan province. After 14 years of intense dialogues and cooperation, the BCIM Forum has now become an important sub-regional cooperation mechanism. It is aimed at greater integration of trade and investment among the four countries. Subsequently, an organisation named 'China Kunming International Logistics & Finance Association' (ILFA) was set up in Kunming with the support of the Chinese government.

 

The ILFA aims at facilitating and consolidating the process of regional economic cooperation and creating cross-border trade and investment opportunities both at public and private sector levels. The initiative was manifestly mentioned at the recent summit of regional leaders in Beijing and was particularly pronounced during a bilateral meeting between Bangladesh and China.

 

The ILFA is working for connectivity and cooperation issues covering Southeast Asia, South Asia and Indian Ocean regions. It is also working towards infrastructure construction including roads, land and deep sea ports, significant projects, industrial parks, free trade zones etc. Among other objectives, the ILFA is also exploring the possibilities of creating platforms for international exchanges, researching on financial instruments, formation of international logistics organisations and a financial organisation for ensuring financial interconnectivity of the region.

 

Under the initiative of the BCIM Exchanges Forum, the ILFA and the South Asian Federation of Exchanges (SAFE), a brainstorming meeting was organised on June 9-10, 2014 in Kunming, China. The main theme of the meeting was 'Free Trade Zone and International Financial Opening Cooperation'. It referred to regional financial integration, BCIM economic corridor issues and formation of international financing mechanism for establishment of China-Bangladesh Economic Corridor connectivity issues. It sought to establish Free Trade Zones, form Pan Asia Stock Exchange, establish non-governmental financing mechanism, carry out research on how to promote regional finance opening and co-operation, create and market innovative financial products. The meeting emphasised, in particular, to support construction of the Silk Road Economic Belt and the 21st Century Maritime Silk Road. It agreed, guided by UN-ESCAP and joined by experts from relevant countries, to suggest plans for the Asian economic corridor transport facility which can act as the basis for making financing products through bilateral research.

 

The Kunming congregation agreed to support setting up of pilot projects of BCIM Free Trade Zones. It reached consensus on supporting the governments of four countries under the framework of the UN-ESCAP  Governmental Land-ports Agreement.  This aims to build all the land ports under the BCIM Free Trade Zones including international land ports like Dhaka/ Kamalapur Land Container Depot (Bangladesh), Kunming/Tengjun International Land Port (China), Kolkata/Durgapur International Land Port (India), Mandalay International Land Port (Myanmar) and others. The idea of setting up of a Pan Asia Stock Exchange took a turning point in the meeting. It decided to organise a joint committee to investigate as to how to develop stocks, bonds, futures, gold and other financial derivative instruments to be used for construction of the BCIM and other Asian Economic Corridors for regional countries (like railways, highways, rivers, and others),  industrial garden construction (like Sonadia Port, Chittagong Port, Kyaukpyu Port and others), energy development  (like electricity, natural gas and others) and other infrastructural fields. All these are to be supported through international financing mechanism for infrastructure connectivity construction possibly through cross-border investments between Chinese investors and other enterprises / entities. The meeting assumed that establishing the non-governmental financing mechanism would promote financial market, support commercialised services for the RMB (Renminbi) Settlement and RMB Clearance programme cooperation, advance mutual participation by banks, insurance and stock exchanges, build join transactional credit assessment system, build risk monitoring and controlling platform, a common regulatory framework, which shall cover all kinds of financial markets, financial organisations, financial products, financial instruments and settlements of transactions.

 

There is no denying that Bangladesh-China-India-Myanmar economic corridors need huge funds, both from private and public sectors, to support infrastructural constructions such as harbours, railways, highways and other areas like industrial parks/ free trade zones and many other projects related to BICM economic co-operation. Accelerating the much-needed cross-border infrastructure construction will effectively guarantee smooth, convenient and efficient cross-border logistics movement as well as improve human capital and prompt industrial development in BCIM region. With this in the mind, the concept of establishing a specialised regional stock exchange came into the scenario to serve as investment and trading platform, establish a cross-border opening of China-South Asian investment cooperation in both public and private sectors, determine appropriate method for financing and selection of currency denominations for projects undertaken under BICM and regional initiatives.

 

As such, ILFA, South Asian Federation of Exchanges (SAFE) and exchanges from BCIM member-countries and financial institutions mindfully have moved forward in forming a regional stock exchange related to BCIM Economic Cooperation. With the formal endorsement by respective governments and regulators, the proposed stock exchange will be set up in Kunming, China. There will initially be trading products including Yuan-denominated securities RMB bonds, RMB fund and RMB index products. These products can be listed in other partner exchanges which will then allow the community of the region to participate in cost and financial benefits of such economic corridor construction

 

It is very pertinent here to mention that after the colonisation era, most South Asian countries became independent and sovereign states. For being aligned to their legacy, the countries sought to form a small group aiming at establishing regional cooperation to enhance each member-state's security, economic growth and cultural harmonisation. After the Second World War, these countries gradually got independence from  colonial rule and became single countries but again tried to form regional unions or associations, virtually  to form a commonwealth or union out of diversities. Jawaharlal Nehru (14 November 1889 - 27 May 1964) convened the Asian Relations Conference even before the independence of India in 1947. The Asian Relations Conference was followed by a conference in 1949 in Indonesia and another one in Bandung in 1955. This became the pillar for establishment of the Non -Aligned Movement (NAM) in 1961. In late 1970s under the initiative of Bangladesh, seven South Asian countries  Bangladesh, Bhutan, India, the Maldives, Nepal   Pakistan and Sri Lanka , which were once colonies of the British government in India, formed the South Asian Association of Regional Cooperation ( SAARC). Again under the umbrella of SAARC, so many component-wise associations like SAFE, South Asian Federation of Accountants ( SAFA), South Asian Federation of Endocrine Society (SAFES) and SAF Games were formed.

 

The writer is former Secretary, former Chairman NBR and former Chairman of Chittagong Stock Exchange and South Asian Federation of Exchanges.

[email protected]

 

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