Opening Remarks by Wencai Zhang, Vice President, Operations 1, Asian Development Bank, at the Meeting of the Honorable Ministers of Transport of Bangladesh, Bhutan, India, and Nepal on Regional Road Transport Connectivity in Thimphu, Bhutan on 15 June 2015
Good morning and a very warm welcome to all of you.
On behalf of ADB, I would like to express my appreciation to the Royal Government of Bhutan, particularly the Ministry of Information and Communication, for hosting this important meeting.
Today, the governments of Bhutan, Bangladesh, India and Nepal—or the BBIN countries—will sign a landmark agreement for the regulation of passenger, personal and cargo vehicular traffic. I am very pleased to offer our sincere congratulations to all of you on this major achievement.
II. The importance of the BBIN Motor Vehicle Agreement
Finalization of the BBIN Motor Vehicle Agreement represents the considerable efforts of South Asian countries to facilitate cross-border trade and travel. It will allow passenger, personal, and cargo vehicles to cross international borders and traverse key trade routes in the participating countries. Once implemented, the agreement will reduce costly and time-consuming transshipment of people and goods at border crossings.
This agreement comes at the most opportune time, when the BBIN countries are physically better connected than ever before. There are more and better roads, bridges, dry ports and border crossing facilities. ADB is pleased to support ongoing road connectivity projects in each of the four countries through the South Asia Subregional Economic Cooperation (SASEC) program. These projects will upgrade and complete transport routes that broadly cover SAARC corridors 4 and 8. They will also include facilities to enhance cross-border activities, such as access roads, dry ports and land customs stations.
SASEC member countries have concrete plans to continue building and upgrading regional physical connectivity. For the next five years, a total of 30 priority road projects totaling over 8 billion US dollars have been identified to fill and upgrade critical connections in the BBIN area. However, to maximize the benefits of increased connectivity, it is important for the BBIN countries to implement appropriate transport facilitation measures.
III. Benefits of transport facilitation
Since the 1980s, tariffs within the region have been gradually reduced. Following the signing of the South Asian Free Trade Area (SAFTA) agreement, intraregional trade in South Asia doubled from $10 billion in 2006 to $20 billion in 2012. However, nontariff barriers continue to impede growth of intra-regional trade. One UNESCAP-World Bank trade database shows that it can cost much more for a South Asian country to trade with another country within the sub-region than with one outside. In fact, bilateral trade costs within South Asia were, on average, 244% of the value of goods, in contrast to the figure of 121% for the region’s trade with the East Asia/ Pacific region. This high cost of trade is attributed to a variety of non-tariff barriers. The planned BBIN agreement is envisaged to address many of these by providing a framework for exchange of commercial traffic rights arrangements.
A 2014 JICA study calculated the benefits of such arrangements for the BBIN countries. The bottom line is that every country has much to gain, regardless of its position in the road corridors.
IV. ADB’s role in transport facilitation
For many years, ADB has provided support to a variety of transport facilitation initiatives through its regional cooperation programs. A prime example of this is the Cross Border Transport Agreement of the Greater Mekong Subregion, or GMS. As the Secretariat for SASEC, ADB provided support in formulating the SASEC Trade Facilitation Strategic Framework 2014-2018, which identified the lack of efficient “through transport” arrangements as a key challenge in the region. The development and piloting of transport facilitation arrangements was therefore identified as one of the four pillars of the strategy. Since the strategy was endorsed in March 2014, ADB, in partnership with UNESCAP, has provided technical assistance to the governments of India and Bhutan to pilot an electronic cargo tracking system along the Kolkata to Phuentsholing corridor.
Today’s signing of the BBIN Motor Vehicle Agreement will bring SASEC significantly closer to achieving the stated objectives of its Trade Facilitation Strategic Framework. These objectives are to ease the cross-border movement of people, goods and vehicles; and to enhance trade and economic exchanges among the participating countries. We understand that in order to effectively realize the agreement’s goals, much more will need to be done, starting with formalizing protocols and bilateral arrangements, and establishing systems and mechanisms for implementation.
I wish to reiterate ADB’s commitment to support this process. We can draw on our extensive experience in supporting physical and non-physical connectivity in other subregions such as the GMS and the Central Asia subregion. ADB has also provided technical assistance to help finalize a motor vehicles agreement between India, Myanmar and Thailand. A Secretary-level meeting was held on this subject earlier this month in Bengaluru, chaired by the Honorable Secretary of Ministry of Road Transport and Highways of India, who is with us here today.
Your Excellencies, ladies and gentlemen:
Once again, I congratulate the delegations here today for your strong commitment to finalize the BBIN motor vehicles agreement. I am very impressed with your genuine desire to liberalize cross-border transport of cargo and passengers, to promote freer trade and economic exchanges. The groundswell of goodwill among the BBIN countries has been instrumental in the achievement that we are celebrating today. I sincerely hope that this momentum will be sustained in the future and lead to an effective and efficient implementation of the BBIN agreement.
I look forward to today’s discussion and signing of this landmark accord.