Nepal-Bangladesh-India initiative has major potential

22 December, 2017

Economics and Trade


The South Asian region is gaining momentum in economic progress. India is a fast growing economy while Bangladesh too has been achieving remarkable feat in its economic growth. As the closest neighbour of both India and Bangladesh, Nepal can benefit from the trilateral economic relationship. The Rising Nepal spoke with Sunil KC, CEO of the Asian Institute of Diplomacy and International Affairs (AIDIA), Nepal, on the potential and difficulties of the trilateral economic activities and investments among close neighbours. Excerpts:

Nepal-Bangladesh-India Initiative holds major potential. What’s pulling it back?
With Pakistan increasingly losing favour in the South Asian regional integration, which is institutionally called SAARC (South Asian Association for Regional Cooperation), and China focusing more on a mission to influence the region, a tendency to work towards a sub-regional integration is gradually making its presence felt. And this inclination is being boosted by the prospects of a trilateral cooperation featuring India – the region’s biggest power - Nepal and Bangladesh.
While India’s relations with Nepal and Bangladesh have been always close, the goodwill between Kathmandu and Dhaka is not new either, and they have shown enough intent to cement their relations in key sectors like trade and transit, despite having no common border. Nepal was quick to recognise Bangladesh’s independence in January 1972, less than a year after the latter became independent in March 1971 with India’s help. The two countries had flagged off their relations in important sectors like trade, transit and civil aviation in 1976 and have attached importance to them in the last four decades.

India factor in Nepal-Bangladesh relations?
Nepal and Bangladesh are physically separated by 45 kilometres of Indian landmass, and the former, being a landlocked country, has been overwhelmingly dependent on India for its trade and transit as it provides Kathmandu the shortest access to the sea for economic activities. But having said that the dependence on India has overshadowed Bangladesh’s significance for Nepal in terms of sea trade, one should not overlook the fact that as recent as 1999, Nepal was importing cement products from the Middle East via Chittagong port in Bangladesh. 
The Mongla port in Bangladesh is even closer to Nepal, but it is not up to the mark in terms of infrastructure although the Indian leadership has been eyeing using and developing the existing and new ports in Bangladesh to boost development in its landlocked north-east and also counter China’s growing clout in South Asia. Any betterment in the trade connectivity to and from Bangladesh will invariably benefit Nepal’s economic cause.

Why is trilateral investment still not getting a push?
India, Nepal and Bangladesh are members of SAARC as well as the sub-regional corridor in the region called BBIN (Bhutan being the other ‘B’) – an initiative taken by India to achieve regional integration, minus Pakistan, as well as world platforms like the United Nations and the World Trade Organisation. Surprisingly, these three countries have still not succeeded in working jointly for trilateral investment, which could be a game-changer in the regional politics. 
While India is a fast-emerging economy along with a massive population, Bangladesh, too, has shown enough promise of development (recently it overtook Pakistan, of which it was a part till 1971, in terms of GDP per person) while Nepal has been attracting considerable investment in sectors like energy and tourism. Yet, the three countries haven’t really shown interest in fulfilling the massive potential – economic and otherwise, in a trilateral venture.

How does trilateral cooperation among the three neighbours help each other?
Being a mountainous country, Nepal has a capacity to generate 42,000 MW of hydropower, but yet it, along with Bangladesh, have been importing cheap electricity from India. In the long run, this would not help either of the two developing economies, i.e., Nepal and Bangladesh. Why not, instead, set up a trilateral investment mechanism under the BIN (Bangladesh, India, Nepal) Initiative (the other B, which is Bhutan, hasn’t shown interest in the BBIN connectivity scheme owing to lack of internal consensus ahead of its national election in 2018)? 

Under the BIN, connectivity will be a major focus area besides hydropower investment in which Nepal, as a water reservoir country, can take the lead. In the hydropower investment scheme, all the three countries of the BIN club can see a development in government as well as private initiatives, ultimately making the common people of the region/sub-region optimistic about an overall development in the future.

Particularly for Nepal, if the cooperation in energy delivers, it would give a positive message to the world and subsequently, more and more private investment hands could be seen making a beeline to make ventures in other areas in Nepal, including tourism. This way, Nepal could make up for its dependence on a big economy like India and still make progress towards emerging as a vibrant economy in South Asia.
Bangladesh in recent times has also shown interest in investing in hydropower sectors in the Himalayan countries of Nepal and Bhutan. A key aspect of these ventures is that they would see transfer of power across borders in the BBIN region, facilitating the cause of all parties. 
While India would benefit from Bhutan’s supply of power to Bangladesh via its territory by helping the north-east, it would get cross-border facilitation cost from Bangladesh in exchange of facilitating transfer of power generated in Nepal to its eastern neighbour. The cooperation would see ancillary developments, as in terms of infrastructure like ports. Eventually, this would see overall sub-regional development and boost South Asia’s position in international power politics.

The soft side of sub-regional cooperation?
A unique feature of South Asian politics is that historically there have been a number of governments in the region, inhospitable to each other, but when it comes to people-to-people contacts, they have been particularly strong. It holds all the more true to India-Nepal, India-Bangladesh and Nepal-Bangladesh relations. India has porous borders with both Nepal and Bangladesh, with strong people-to-people cultural and socio-economic bonds, while in the case of Nepal and Bangladesh, their contradictory religious identities have not been a bar to a good relation. 
During the devastating earthquake of 2015, Bangladesh had given all-out support to Nepal. Also when there was a blockade after Kathmandu went for a new constitution for the country in the later part of the same year, it was Dhaka which had stood by Nepal at various platforms besides also reaching out to India to resolve the problem which was witnessed during the blockade. Even Bangladesh’s top leaders, including its prime minister, have spoken out in support of Nepal at times of need, proving its true face of friendship.
The onus also lies on India to ensure that the trilateral investment proposal from either Nepal or Bangladesh goes through smoothly. If the BIN can make this cooperation work, India’s leadership in South Asia will be reasserted once again, and it will facilitate New Delhi’s plans to put a robust Act East policy to reach out to other parts of Asia, in particular, and the world, in general.