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Role of land ports in connectivity, trade promotion & economic growth

| Updated: June 19, 2022 20:23:18


Banapole is the largest land port of Bangladesh Banapole is the largest land port of Bangladesh

Bangladesh Land port Authority (BLPA) came into being in 2001 with the enactment of 'Bangladesh Land port Act, 2001 by the parliament. So, as an organisation BLPA is only two decades old. Nonetheless within these short span of time, it has put its footprint strongly in the economic development of the country by facilitating trade, fostering connectivity, and stimulating growth. This has been done by developing infrastructure, introducing technology and encouraging automaton for smooth movement of vehicles and passengers. This has created a multiplier effect on the growth of trade in the region especially with India and Nepal. Over the years, growing volume of trade between Bangladesh and India bear testimony to this fact.

Though two decades old, BLPA started its operation only with Benapole and Sonamosjid land port. With the passage of time more ports came under its fold. At present, BLPA has 24 declared land ports, of which 12 are in operation, 8 are being developed for operation and rest 4 (four) would be developed, based on the necessity.

Land ports of Bangladesh play an important role by facilitating movement of goods and passengers to and from Bangladesh to India and other neighbouring countries. Due to Bangladesh's unique geographical position with India, land ports bring opportunities for cross-border trade with the latter and the other neighbouring countries. Physical proximity has enabled neighbouring countries to trade with Bangladesh in an affordable, convenient, and efficient way. Geographically, India surrounds Bangladesh on the north, north-eastern and western sides, and Myanmar on the south-eastern side. Bangladesh- India land border is the 5th longest in the world, which brings opportunity for both the countries to set up land customs stations, ports and international passenger terminals for trade, movement of vehicles and passengers.  This strategical position and physical proximity of Bangladesh and India make it easier for both the countries to undertake mutually beneficial programmes and cooperate in border related trade.

It has been observed that Bangladesh's land ports bring benefits of varying degrees to the economy of Bangladesh. By supporting numerous economic activities in the bordering districts and ports helped to flourish small traders, tea stalls, saloon, garage, parking facilities and many more.  As supplier of jobs, land ports support social interactions too, in terms of creation of clubs, associations, gathering points, mosques etc.

With the higher movement of goods and passengers year on year, land ports of Bangladesh are preparing itself with more infrastructure, provisions, and associated services. Policy makers and stakeholders are now unanimous that the growth and development of land ports lead to greater trade activity, increased supply, job creation, and reduced prices for commodities. All over the world it is acknowledged that country's GDP is significantly affected by the ability of companies to export their goods and services regionally and globally. So, effective transportation facilities inland ports have the potential to significantly increase economic growth and success of nations (Sleeper, 2012). It is against this backdrop, this paper would like to highlight that land ports in Bangladesh are important set up to boost total trade (export-import), to flourish uninterrupted regional connectivity and to support higher GDP for the country.

INTER-REGIONAL CONNECTIVITY: Bangladesh's geographical location make it an ideal country to establish connectivity with the South Asian nations. Its sea ports, land ports and air ports are located strategically to foster interregional connectivity and reap benefit from this connectivity. It is now admitted that national and regional connectivity in South Asia helps drive socio-economic growth by creating economic opportunities for member states and poorer areas. Evidence also shows that improved connectivity within country between lagging and prosperous regions can help promote the transformation of the lagging regions. As this is true within the country, so it is in the inter-regional context, where land is locked or inaccessible due to difficult terrain.  Bangladesh and India have a land boundary of 4096 KM, which is 5th longest in the world. This long border boundary created opportunity as well challenges for both the countries. In terms of opportunity, it paved the opportunity for Bangladesh and India to establish road and rail links to transport and transit goods between India and Bangladesh and other neighbouring countries including Nepal and Bhutan. In the border area where vehicles and passengers pass through one country to another, land ports are built. These land ports in the border area make trade between Bangladesh, India, Nepal, and Bhutan much easier, less-costlier and predictable. Studies undertaken by WB and ADB show that there is an ample opportunity for the adjoining countries to commence trade amongst themselves in a more efficient, seamless, and hassle-free way.

A recent World Bank report also confirms that seamless transport connectivity between India and Bangladesh has the potential to increase national income by as much as 17 per cent in Bangladesh and 8 percent in India. Same report highlights that transport connectivity between Bangladesh and India could increase exports even further, yielding a 297 per cent increase in Bangladesh's exports to India and a 172 per cent increase in India's exports to Bangladesh. Another study conducted by ADB estimates that improvement of priority regional transport corridors in Bangladesh could facilitate movement of about 18 million tonnes of freight in Bhutan, India, and Nepal.

In fact, Bangladesh has the potential to become a major transport and transhipment hub in the subregion.  Keeping this in mind, Bangladesh, Bhutan, Indian and Nepal (BBIN) has signed the Motor Vehicle Agreement (MVA) to facilitate cargo and passenger movement in the BBIN subregion. But due to lukewarm support and many bottlenecks from other stakeholders, the agreement is yet to see the light of the day.

To strengthen interregional connectivity BLPA has undertaken a good number of projects with the support of the World Bank, Asian Development Bank and at its own financing. The most notable among them are ADB -- supported South Asia Sub-Regional Economic Cooperation (SASEC) project. This ADB-supported SASEC Programme aims to boost intra-regional trade in the SASEC subregion by improving cross-border connectivity, by facilitating structures and system development in the regional and national SASEC transport projects.  Under this project, BLPA is going to develop two important land ports in Bangladesh one at. Tamabil and the other at Akhaura. The Indian ICP against these two land ports are Dawki and Agartala. Once facilities are developed, these two land ports will contribute immensely to the connectivity between people and business communities of the two countries, ensure seamless movement of cargo and passengers and help flourish the hinterland economy of both the countries. This project has been approved recently at the ECNEC meeting presided over by the Prime Minister of Bangladesh.

Under the WB Bangladesh Regional Connectivity Project (Phase-1) (BRCP), BLPA has selected three (03) land ports namely Ramgarh, Sheola and Benapole for refurbishing and developing new infrastructures, streamlining border management, securing borders and ports, and harmonizing system with the Indian ICPs.  But as ill luck would have it, Bangladesh Land Port Authority is yet to get clearance from Indian border security force to start the work there. Though NOA has been issued by BLPA to the contractor, the latter is yet to start the work after receiving clearance from the BSF stationed at the border of point of Sabrum and Sutarkandi (situated against Bangladesh land ports Ramgarh and Sheola). Another flagship project, named Bangladesh Regional Trade Facilitation Project (BRTFP), also supported by WB, is about to be approved very soon by ECNEC. This milestone project will have immense impact on the performance of BLPA especially in the creation of infrastructure, delivering services, easing cross border movement through automation and use of modern technology in the four (04) land ports namely Bhomra, Burimari, Benapole and Bholaganj.

Once these Bangladeshi land ports are fully developed and functional, they will act as a hub and economic corridor for passenger and vehicle movement from Bangladesh to India and vice versa. These ports will also help Nepal and Bhutan to ferry their goods to and from Bangladesh using Indian land corridor. Since these ports are developed keeping in mind the future need of transit and transshipment, undoubtedly, they will act as a bridge of connectivity and friendship between people of Bangladesh and India and other neighboring countries Nepal and Bhutan.

The long-awaited Padma bridge is going to be inaugurated on the 25th June, 2022. It is expected that this bridge will bring immense opportunity for India to bring their goods using this bridge. Vehicles cleared either at Benapole or Bhomra or Hili or Banglabandha or Sonamosjid now will be able to use this bridge. This bridge is going to reduce the distance and transaction cost for carrying goods and passengers from Benapole, Bhomra or any other western or northern land ports of Bangladesh to Dhaka or further. If India wants to transit goods from Bangladeshi land ports to Agartala, Dawki or Sutarkandi, this bridge will be of great help for easy and less costly transportation. The North Eastern hilly states of India will benefit heavily from this connectivity. Passenger vehicles will be able to ferry between the two countries with less time and cost. This bridge will surely create multiplier effect in the whole economy of Bangladesh as well as in the region, which will allow Land ports of Bangladesh to get ready for the surge of passengers and goods to be ferried.

From the analysis and discussion, it is evident that Bangladesh will benefit from this connectivity and integration, especially south- western districts of Bangladesh will enjoy larger gains in real income. States bordering Bangladesh such as Assam, Meghalaya, Mizoram, and Tripura in the northeast, and West Bengal on the west, and states further away from Bangladesh such as Uttar Pradesh and Maharashtra would also gain huge economic benefits from seamless connectivity.  This will have spill-over effect on Nepal and Bhutan also. In fact, regional connectivity offers the promise of long term sustainable and inclusive growth in the region. To reap the benefit both Bangladesh and India must work together and mend the differences at the earliest.

PROMOTION OF TRADE: Trade between nations has always made a significant contribution in terms of increasing wealth among the world populations and there is strong correlation between trade and GDP (Smith, 1776). It is true that ports are important and necessary component in facilitating trade. In the case of Bangladesh and India, land ports are primary conduit for bilateral trade and important for the growth of our economies. The land ports are gateway to around 40 per cent trade by volume in between Bangladesh and India.

Geographically, Bangladesh's location makes it a strategic gateway to India, Nepal, Bhutan, and other East Asian countries. Bangladesh can also become an economic powerhouse by improving regional trade, transit, and logistics networks. But due to different tariff and non-tariff barriers this benefit is still a distant dream. Added to this is the malaise of inadequate infrastructure, poor road network, manual and paper heavy checking system, different office timing for the ports. The bilateral trade between Bangladesh and India accounts for only about 10 per cent of Bangladesh's trade and a mere 1 per cent of India's trade. Whereas, in East Asian and Sub-Saharan African economies, intraregional trade accounts for 50 per cent and 22 per cent of total trade, respectively. Hence promotion of trade for the mutual benefit of the people of Bangladesh and India is a must.  In fact,

Statistics show that total imports of Bangladesh are 9 to 10 times higher than total exports of Bangladesh to India. India imports around US$ 400 billon worth of commodities from the global market but of these big import market Bangladesh's contribution is very small, even not worth US$1 billion. Bangladesh's trade with India is only less than half of its current potential.

On the other side if we look at Nepal and Bhutan, we see India is the market for approximately 70 per cent and 90 per cent of Nepal and Bhutan's exports. Since the 2000s, India's trade with Nepal increased from US$ 0.3 million in 2000-2001 to US$7.9 billion in 2019-20. Furthermore, approximately 75 per cent of Nepal's and 100 per cent of Bhutan's global trade transits through India. Various tariff and non-tariff barriers, transport, and clearance delay along with infrastructure deficit particularly, harmonisation of regulations and customs procedures in designated border posts create obstacles for this poor performance (Sinha & Sareen, 2020).

However, the land ports of Bangladesh could be gateway for exports of Bangladeshi goods to the ever-expanding Indian market. Especially Bangladeshi goods can reach Indian seven north eastern states easily where difficult terrain is impeding communication and resultantly increased costs for Indian commodities to reach the far-flung states. Bangladesh's 5 to 7 land ports are geographically located to serve these states in a better way. In fact, at present Bangladesh's Akhaura, Sheola, Tamabil, Bibirbazar and Bilonia to some extent serving this need. But this is not to the optimum due to above mentioned impediments.

LAND PORTS IN ECONOMIC DEVELOPMENT: There is a strong correlation between trade growth, trade facilitation and economic growth. It has been pointed that expansion in trade due to enhanced trade facilitation could lead to increases in per capita GDP in Asia and Pacific countries by about 2.5 per cent (ADB, ESCAP, 2009). Ports play an important role as a gatekeeper and facilitator in this case.

Evidences of economic impact of land ports in terms of aggregate income generation, value addition and employment generation are convincing.  There is no denying the fact that land ports of Bangladesh are playing an important role in the economy of Bangladesh. During the last two decades BLPA is contributing exceptionally to the development of the country, especially by generating revenue and employment, fostering small businesses, flourishing growth centres, empowering men, and women in the locality where it operates. Statistics show that BLPA has earned Tk 13.7 billion as revenue and deposited government exchequer an amount Tk 500 million until 2021. It has a deposit of around 3.0 million in different banks as short- and long-term credits. It has also created job for more than ten thousand labourers in various land ports and nearly four hundred people work in BLPA permanently. The figure includes good number of women.

Land crossings account for nearly 40 per cent of all bilateral trade between Bangladesh and India, and play an important role in strengthening trade ties while reducing costs. The efficient movement of people and goods between the two countries is essential for reducing the costs of trade, fostering economic synergies to support growth, and driving inclusive socioeconomic development across the SASEC subregion. Goods travel between Bangladesh and India by road, rail, air, maritime, and inland waterways, with 38.5 per cent of all trade in 2018 crossed by land.

Most of the goods traveling from Bangladesh to India move by land, with 70.4 per cent of exports to India transported by road or rail. This is to confirm that with the growth of trade and trade facilitation, economic development follows logically. In the case of Asia and Pacific region, it is observed that expansion of trade and trade facilitation increased GDP per capita by about 2.5 per cent (ADB, ESCAP, 2009).

Similarly, it is also observed that decreasing direct and indirect trade transaction costs by 1.0 per cent can result in an average of 0.25-0.4 per cent increase in GDP (OECD Trade Policy Studies). This it is evident that improvements in trade facilitation can potentially generate not only more trade, but also raise the national GDP. The raw materials that are needed for industry is cleared through the land ports, used at the local factories and industries and after adding value these final products are then exported to the EU or US.

Usually, the border area of the country is mostly dull and moribund, having no industry, no market or growth centers. So, setting up of land ports in the border area creates lot of activity in the locality and the region. Gradually, it changes the socio-economic condition of the area completely. Once remained out of touch of modernity, land ports completely change the landscape of that area with small businesses, traders, tea stalls, clearing offices, saloons, school, colleges and what not. The socio-economic impact of the land ports is immense and far reaching in the economy and lives of the people in Bangladesh. So, there is more demand for setting up more land ports in other remote areas of Bangladesh where in die has LC stations or similar land ports.

From the above discussion, it is clear that land, ports are playing an important role in the trade facilitation and economic growth of Bangladesh. Whatever the percentage of growth is contributed by land ports, is mostly coming from the export-import of goods and provisioning of logistic services. Alongside this, generation of employment opportunities and addition of values in the vicinity also constituting this economic growth. It is now unanimously agreed upon by policy makers and stakeholders that land ports in Bangladesh are having a strong impact on the trade, regional growth, and people to people connectivity.  Situated in the border area far from the center, these land ports are seen as structuring elements within the surrounding area by promoting business, small trades, banks, offices, and many other supporting activities and organizations.

It is in this way-land ports are working as pillar to the development of the economy and connectivity of the region. Empirically, it is observed that land port infrastructure stimulates the process of economic growth and this is true that this growth is contingent upon production capacity, skill, and logistical prowess of the ports. New investment coming to ports through government and donor support helping to achieve this goal.   Through export-import of goods and services, supply of ancillary services, development of supporting rail and road infrastructures, land ports of Bangladesh are serving to a great extent to the bigger goal of achieving our vision- a prosperous, happy and develop nation by 2041.

It is also acknowledged that land ports of Bangladesh have great potential to contribute more to the socio-economic development of Bangladesh. But lack of big investments in infrastructures, lack of automation, slow introduction of automated border system, lack of coordination among the agencies have been leaving a detrimental effect on the overall performance of the land ports. The Perspective Plan of Bangladesh (2021-2041) aims to enhance export competitiveness by addressing cross-cutting issues.

To gain from the bilateral or multilateral trade, to ensure interregional connectivity and economic growth land port of Bangladesh must be ready to streamline its processes, set congenial policy framework and harmonize operating system. In an automated, digitized, and harmonized border management system trading countries will be able to benefit to the optimum since this system will reduce the transaction cost and waste of time.  Bangladesh land port authority is looking forward to charter a journey where border trade will be paperless, seamless, and hassle-free and participating countries will be able to reap the benefit by trading with each other efficiently and confidently.

 

The writer is Chairman of Bangladesh Land port Authority

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