ADB to Help South Asia Clear Path for Intraregional Trade Expansion

News Release | 29 November 2012

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is providing $48 million to help goods move more smoothly in and out of Bangladesh, Bhutan, and Nepal, by overhauling time-consuming, costly, and often opaque customs procedures that are inhibiting intraregional trade.

"Removing the many non-tariff barriers which currently impede trade will have a major multiplier effect on trade volumes across South Asia," said Emil Bolongaita, Public Management Specialist in ADB's South Asia Department. "Automated, user-friendly, transparent customs systems will cut business costs, reduce informal activity, and give a real lift to importers and exporters, including women entrepreneurs."

The project will help the three countries, all members of the South Asia Subregional Economic Cooperation (SASEC) program, adopt an international customs administration protocol, upgrade existing automated customs management systems, and establish web-based electronic trade portals. These measures will give importers and exporters timely, accurate information. India, which is also a SASEC member, is not included in the program as it is funding its own trade facilitation reforms and is significantly ahead of its neighbors.

Despite healthy growth, South Asia's low levels of intraregional trade make it one of the least integrated regions in the world. Processing and export delivery times are more than 30% slower than in East Asia and the Pacific, while administrative fees and storage and handling costs are more than 40% more expensive. Weak logistics systems, poor infrastructure and a lack of cross border transit agreements are other impediments to trade which is nearly all land based.

Informal trading has sprung up to avoid excessive documentation and goods inspections, resulting in sizeable government revenue losses. The introduction of international customs practices, streamlined management systems―including the planned establishment of "single window" systems to simplify transactions―and web-based information for traders, will make cross border trade more efficient, cost-effective, transparent, and secure.

The program, which targets a 7.5% rise in intraregional trade volumes by 2018, will complement SASEC cross-border transport projects to improve connectivity, and planned investments in projects across the transport, trade facilitation and energy sectors. ADB, which acts as Secretariat for SASEC, has already provided $3.4 billion and has more commitments in the pipeline.

SASEC was set up in 2001 as an initiative of Bangladesh, Bhutan, India, and Nepal. It aims to promote domestic and regional prosperity through stronger transport links and increased trade and cooperation across sectors ranging from energy, tourism, the private sector and the environment.