Countries and Regions

	Table of Contents
p. 15 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Nepal

---

IV. Economic Regional Cooperation

82. ADB will build on bilateral partnerships to further enhance growth potential through regional cooperation between Bangladesh, Bhutan, India, and Nepal. The preference is to initially proceed with the approach based on project level initiatives involving bilateral and trilateral linkages. ADB aims to address constraints identified under past regional cooperation initiatives and to continue consultations with governments and other stakeholders on the modalities for pursuing economic cooperation under the South Asia Growth Quadrangle (SAGQ) initiative. ADB will continue to involve Nepal in regional technical assistance activities to disseminate information about regional best practices, particularly in relation to governance, institutional development, poverty reduction, financing and provision of social services, and private sector development. Potential areas of cooperation include multi-modal transport and communication, energy (particularly hydropower development), trade and investment facilitation and promotion, natural resource utilization and environmental management, and tourism.

83. The establishment of a better road network in the region will improve the access to markets and trade opportunities including ADB's recent assistance in providing support for the upgrading of the north-south transport corridor in West Bengal through a PPTA for West Bengal North-South Corridor²⁵, and an ADTA to establish public private ventures in the corridor²⁶. A loan for the West Bengal Transport Development Project is planned for 2001. It would have strong subregional linkages and benefits. It would improve Nepal road connections to the Indian road system in West Bengal and with the north-south corridor from Kakarbhitta in Nepal and Siliguri on the border in India, to the port of Haldia, which is under development in India. The proposed Fourth Road Improvement Project in 2001 will also include segments for rehabilitation and improvement of the east-west highway in Nepal, which will facilitate transportation to the border with India. A PPTA is also included in the 2002 program to look into the possibility of a subregional road connection.

84. Further support is being envisaged through a TA for an inland waterway in West Bengal (in 2002). ADB is also planning a regional technical assistance in 2000 to examine the potential of nontradable and service sectors for broadening the subregional initiatives among South Asian countries. Development of the Mahakali Basin will also be a potential area of cooperation between the Governments of Nepal and India in water resources management. ADB is working closely with chambers of commerce and industry of the four countries to strengthen their advocacy role in subregional cooperation and to promote closer cooperation among the private sectors groups in these countries. Further assistance will be planned to develop the policy and institutional framework needed to realize potential benefits from regional cooperation with project-level initiatives involving bilateral or trilateral linkages. An ADTA is proposed in 2001 for regional trade facilitation and an ADTA for a tourism sector review in 2003 that will include review of subregional cooperation to develop the sector.

85. As another building block for SAGQ subregional cooperation, ADB is considering assistance in the environment sector. Development of an SAGQ initiative to ascertain shared environmental problems and concerns within the macro basin-upper watershed ecosystem of the SAGQ is being considered. The first stage of this initiative may take the form of bilateral cooperation. Under such an arrangement, Nepal and Bhutan might cooperate on identification of upper watershed environmental management issues, for instance, with Bangladesh and India cooperating on identification of the basin (lower watershed) environmental management issues.

____________________

Back G. Private Sector Development	Next V. Donor Activities and Aid Coordination