Transcript Document

Economic Synergies Between
Bangladesh and North East India
Dr. Atiur Rahman
Professor, Department of Development Studies,
University of Dhaka
& Chairman, Shamunnay
E-mail: [email protected]
13 March 2009
Guwahati, India
North East India (NEI)
☼ NEI is not only the next door neighbor of BD but
also shares a close relationship emanating from:
 Cultural
 Emotional and
 Historical heritage.
☼ This region is landlocked and distantly connected
with the rest of India only through a narrow Siliguri
corridor of 22 km stretch.
☼
BD is at the bridgehead point of SAARC and ASEAN.
Key Concerns
☼ Connectivity – the key concern.
☼Good prospects for Indian entrepreneurs to invest in
Bangladesh
☼ NEI does not have any seaport. In fact, all the state
capitals are at a distance varying from 1080 km to 1680
km from Kolkata.
☼NEI states have low production base for both
manufacturing and agricultural goods.
☼Tourism has a greater potentiality between Bangladesh and
NEI states
Border Area of BD and NEI
☼ 1880 km long border is shared with
four NEI States namely :
 Assam
 Meghalaya
 Tripura and
 Mizoram
☼ Out of total international border of NEI
nearly 37% is with Bangladesh.
State
.
Assam
Meghalaya
Tripura
Mizoram
Total
Land
border
160
443
773
58
1439
Reverivne
Total
103
83
260
446
263
443
856
318
1880
Capital Cities (NEI) and Distance to BD:
Capital cities of NEI
Kolkata(nearest Dhaka(Ca Chittagong (Seaport of BD)K.M.
port city from pital of
NEI)K.M.
BD)K.M.
Sylhet (an
important
divisional cities
of Bangladesh)
K.M.
Agartala (Capital of
Tripura)
1680
186
248
238
Aizawl (capital of
Mizoram)
1550
555
655
(but if reverine route of
Karnaphuli is used it will be less than
250)
255
Guwahati (capital of
Assam)
1080
580
675
236
Imphal (capital of
Manipur)
1565
635
735
335
Shillong (capital of
Meghalaya)
1180
480
575
136
Kohima (capital of
Nagaland)
1420
780
880
480
Transportation Cost:
☼
Trucking charge (per Kg ):
 From Kolkata to Guwahati is Rs 3.00 and
 It takes 7-8 days time for transportation.
☼ Per Kg transport charges from different LCS (Local Custom
Station) along BD border to Guwahati are –
 Sherpur: Rs 0.60
 Tamabil: Rs-0.70
 Agartala: Rs-1.25
 Burimari: Rs-1.0.
Export – Import Situation
☼ Based on a hypothetical calculation the potential size of the export
market in NEI may be at around US$700 million.
Export to NEI from BD
( Crore)
0.6
0.5
0.5
0.38
0.4
Value in US$
0.3
0.2
0.1
0.09
0.09
1999-2000
2000-2001
0
1997-98
1998-99
☼ But in reality the contribution of trade between BD and NEI is
meager compared to its potential as the above table showed.
☼And over the years a clear downward trend of the exported items is
also noticeable.
Export – Import situation
☼ Though the number of traded goods between BD and NEI is
increasing, the volume and value are still much below the
potential trade opportunities.
☼ Almost 12 years ago the highest amount of import was
recorded and after that the imported value has been showing a
downward movement.
Value in US$
( Crore)
Import from NEI to BD
7
6.3
6
5
3.92
3.5
4
3
2.29
2.15
1999-2000
2000-2001
2
1
0
1997-98
1998-99
2001-2002
☼ The export from Bangladesh to NEI has never surpassed 10
percentage points of its import from the same region.
Export – Import Gap
☼ As with India, trade with NEI is not at all balanced.
☼ In 1997-98 there was the highest trade gap. And the trade gap has
been increasing in recent years.
Informal Trade
☼ Total unofficial trade between BD and India
is more than
$2000 million per annum
☼ More than 1/3 (over $800 million) of it takes place between
BD and NEI.
☼ Informal trade is many times higher than that through
formal channel.
☼ This unofficial trade must be bridled in order to boost formal
trade and woo investment.
Direction of Trade
Informal Imports from NEI
Formal Imports from NEI
Total Imports
Informal Exports to NEI
Formal Exports to NEI
Total Exports
Total Trade with NEI
Source: Bayes, 2002
Tk/Million
1600
2301
3901
600
81
681
4582
percentage% US$/ Million
41
26
58.9
40
100
67
88.1
10
11.9
1.4
100
12
79
Product Concentration
Import Items from NEI to BD
Year/product
Coal
Fresh Fruit
Food Grain
Stone
Spice(Onion,Garlic,Ging
er, Chill)
Limestone
Total import from NEI
1996-97 1997-98
1998-99 1999-00 2000-01 2001-02
7120
95
85
5
220
9935
105
3305
240
250
10210
305
9070
165
914
615
615
10252 21318
6260
35
10
765
185
8255
45
485
180
16640
125
115
115
640
595
875
14744 10135 9924
1365
18794
☼ Primary goods (minerals and Agricultural products) constitute
more than 80% of our total import from NEI .
☼ Coal is at the top of the list.
Product Base
☼ Export from BD to NEI Comprises:
 Agricultural commodities
 Food Products
 Textiles
 Cosmetics
 Toiletries
 Simple Engineering Goods
 Jute Products
☼ Imported from NEI to BD Comprises:
Basically Primary Products
-- Minerals and
-- Agricultural Products
Product Base
Informally exported to NEI:
Mymensingh: Wood and Vegetable oil
Sylhet: Hilsha and Dry fish, Winter cloths, Juice, Biscuits,
Medicine, Soap, Vegetable oil, Pulses, Fuel, RMG, and Tea
Comilla: Hilsha/ Small/ Dry fish, Garlic, RMG, Mosquito
net, Bicycle, Electronics goods, Soyabean oil, Under cloths,
Toiletries, Cement, Pluses, Poultry, Feed, Juice, Soap, Battery,
Show pieces, Potato, Brass pitcher, Eggs, and Turtle
Khagrachari: Bangla wine and Corrugated tin.
Rangamati: Rice, Garlic, Corrugated tin, Cement, Shallow
engine and wooden boats.
Potential Products
Major Heads
Textiles
Potential products for export (From BD to NEI)
Zamdani saree ,Cotton waste, Fabrics, woven fabrics of paper
yearn, Staple fiber, Synthetic fibers
RMG
Readymade garments , Underclothes, sportswear,
Ceramics and porcelain Ceramic products
Jute
Jute yarn
Cosmetics and Toiletries Soap
Agro- based and Food
products
Battery
Electric Applications
Agriculture
Furniture
Construction Materials
Others
Biscuit, Dry fish, Fruit drinks, Ice cream, Mineral water, Molasses,
Potato crackers, Waffles and wafers, Soyabean oil
Dry Cell
Electrical and electronic goods, Brick crushing and cotton cutting
machine
Meat ( Chicken, Beef, Mutton), Eggs, Garlic, Potato, Pulses,
Hilsha,Puti and small fish, Tobacco leaf
Fittings for furniture, Foam, Furniture
Cement, MS road, PVC pipe, Tiles, Toilets fittings, Stone chips
Bicycle, Brass Pitcher, Filter, Mosquito net, Polythene(lay flat
tube), Tin foil, Poultry feed, Show piece
Barriers to bilateral trade
☼ Inadequate infrastructural facilities
 LCS of both the sides are not at all trade friendly. Don’t have any
warehouse or storage facility.
 Absence of electricity, telecommunication links, weighbridge,
parking lot, cold storage and accommodation facility
Riverine: The route is few and not fully utilized.
--Narayangonj, Bhairab, Ashugonj, Baghabari,Sherput-all need better
facilities.
Rail: Most of the rail lines are still snapped.
-- Rail is the least utilized transport facility.
Barriers to bilateral trade
☼ Permit and License, Pre-Shipment Inspection:
 The average time taking for issuance of the IEC (Import
Export Code) number is 10-30 days
 There is no office at all the state capitals of NEI for PSI
☼ Changing H.S. Code:
 In case of Fruits juice the Indian customs authority has
changed the H.S. Code of the product from 2009.80 to
2202.90
 Which has a 20% higher duty from the earlier H.S. Code.
In fact, Bangladesh has been exporting the same product
to 43 different countries under the same H.S. Code of
2009.80.
Barriers to bilateral trade
☼ Inadequate Banking Right& High L/C margin provision:
 No direct corresponding relationship of the bank of NEI and
BD.
 Sometimes it takes 20-40 days to reach a L/C
☼ High Tariff, Para-Tariff , Non-Tariff Barrier and Others charge:
 India imposed high tariff on some Bangladeshi goods, which
have good prospects to export to Northeast Region.
 RMG and CI sheet are the two examples of it.
It is reported that tariff value on CI Sheet is about US$ 590/MT
whereas the export value is simply US$ 450/MT.
Barriers to bilateral trade
☼ Non-tariff and Para-tariff barriers:
-- Antidumping Duty
-- Sales Tax
-- Health Test Report
-- ISI Certification requirement
-- Retail price marking
-- Lab Test Report etc.
☼ India imposed
-- 16% CUD (Countervailing Duty) for agro products and cosmetics
-- 4% SAD (Special Additional Duties) for Agro products, ceramics
and cosmetics
-- 16% Additional Duty for ceramics
-- 15% surcharge for dry cell battery.
Strategies for Cooperation
☼ Negotiations needed:
 Reducing/ removing CUD and SAD under bilateral or
regional trade agreements.
 Expanding the list of commodities receiving concessions
by India in the next route of SAPTA concessions.
 Tariff reduction on potential export products on bilateral
basis
 Product standards and tests can be harmonized between
two countries for facilitating trade.
Strategies for Cooperation
☼ LCS which have emerged as important export routes will
have to be developed. These are:
Akhaura, Bibirbazar, Juri and Sheola.
☼ Roads need to be developed: Construction/ Widening/
Straightening
Bharkhar to Akhaura ( 30 Kms) and alternative route
Sultanpur ( Brahmanbaria) and Akhaura
Phultali to Batuli( Juri) and alternative route connecting
Kulaura and Phultali via Gazipur
Sheola bridge to sheola LCS including the culvert on the road
Comilla to Bibirbazar
Strategies for Cooperation
☼ Facilities need to be provided/ reopened:
 Using the facilities of Chittagong Port
 Air link between Dhaka and Guwahati
 Both BD and India should issue multiple entry visa for one year to
business persons.
 Bangladesh should open a visa office in Guwahati in addition to the
one now existing in Agartala.
 Easing the restriction for banks in NEI in dealing foreign currency
 Direct bus service from Sylhet to Guwahati and Shillong
Strategies for Cooperation
☼ Facilities need to be provided/ reopened:
Setting up of Port Health office in every state of NEI >
presently it is only in Kolkata
 Signing Multi-modal transport Agreement and declaration
of Ashuganj as Port-of-Call
 Restoration of Agartala-Akhaura
Mohisashan rail link
and
Shahbazpur-
 Movement of vehicles up to transshipment point
 Bridge over Ragnachera
 Consulate Office at Sylhet
Strategies for Cooperation
Bangladesh can adopt policies which can
encourage investment from Indian companies.
It is required to create goodwill between the two
countries by bridging the trust deficit.
For that matter, there should be a regular
consultation between economic ministries of
both countries.
Encourage track –II diplomacy to remove
‘mindset’ barrier.
Explore the potential for greater energy
cooperation (particularly electricity) between the
two countries.