Bhutan: South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project

Industry and trade / Trade and services

Transport / Road transport (non-urban)

The SASEC Transport, Trade Facilitation and Logistics Project is designed to improve transport efficiency and cross border trade by (i) rehabilitating existing roads and constructing missing link sections on the strategic southern east-west highway between Lhamoizingkha and Sarpang, and (ii) constructing new logistics and cross border facilities at selected locations in Phuentsholing, Nganglam and Gelephu.

The project will have three outputs: a) improved road network (b) improved logistics and trade facilitation facilities and (c) enhanced capacity of implementing agencies to operate and maintain the road network and trade facilitation facilities and related equipment. The project impact will be improved domestic and cross border movement of goods and passengers. The project outcome will be improved efficiency of land transportation and more efficient and secure cross border trade.

The potential implementing agency for the road component and trade facilitation component are the Department of Roads (DOR) and Department of Revenue and Customs (DRC) respectively. The project is expected to be implemented over 6 years from 2016 to 2022.

Road transport is the dominant mode of transport for passengers and freight within Bhutan and the neighboring countries of India, Bangladesh and Nepal. However, the southern east-west highway (SEWH) is currently incomplete; east-west connection in the south now often relies on long and indirect routes. This constrains economic and social development in the southeastern parts of Bhutan that are poorer than most other regions. Recognizing these physical constraints on economic development, the Royal Government of Bhutan''s 11th Five Year Plan states its key priority is completing construction of the strategic SEWH corridor totaling about 717km in length. This is critical in enhancing east-west transport efficiency which will promote inclusive socio-economic development, particularly opening up access to the less developed central region.

The Government has further requested ADB to assist in developing an additional dry port and Integrated Check Posts at suitable locations along the SEWH corridor parallel to the international border. The additional dry port will provide opportunity for consolidation of freight logistics for export, reduce transport costs for freight, and enhance efficiency of freight logistics thereby lowering freight costs significantly. The ICPs - each housing multiple agencies - will play an important role in enhancing national security and facilitating trade.