Vol. 5 Num 583 Wed. January 18, 2006  

Bottom Line
Asian Highway Network

Is bigger geo-economic picture being ignored?

Transportation is considered, both nationally and regionally, as a link in the supply chains between the centres of production, distribution and consumption to reduce the transit time and cost. Transport infrastructure brings, invariably, economic opportunity and improved quality of life. The improved transport facilities have direct impact on faster mobility of labour, materials, and goods, thereby reducing transaction costs.

Gone is the era of considering transport networking system purely as a national issue. The South Asian countries face a challenge of physically integrating their transport infrastructure principally for economic reasons.

In an age of increased regional cooperation, Asian Highway roadmap between Bangladesh and northeastern Indian states can be easily converted into an advantage for trade and investment.

Bangladesh's position
It has been reported that Bangladesh government decided not to sign the Asian Highway Agreement because the entry and exit of the Highway would be in India from Bangladesh. The government wants it enters from Myanmar to Bangladesh and exits through India.

Admittedly it is an ideal situation for Bangladesh if the road map connects both India and Myanmar. But the question is, can it be done? In other words, will Myanmar agree to its use as transnational route?

Informed sources believe that the route from Myanmar to Bangladesh was consistently objected to by Myanmar from late 70s during ESCAP meetings. The objection is believed to be for reasons of national security. It continues to remain the same.

Rakhine (Arakan) province has been troublesome for Yangon (Rangoon) for some years. It is reported that 40 percent of its population is Muslim, known as Rohingya, derived from "Rohang", ancient name of the Rakhine province.

All is not well in that province because thousands of Rohingyas have occasionally fled from Myanmar and taken refuge in Bangladesh, first in 1978 and then in 1991 and in 1997.

It is reported that Myanmar does not agree on transnational route through Arakan province to Bangladesh and has been comfortable to re-route the Highway through India's northeastern states.

It seems the construction of the 130-kilometre "Bangladesh and Myanmar Friendship" road has been stalled, although Bangladesh committed to construct with Bangladesh's funds 43 kilometre road in the first phase, out of which 23-kilometre would be in Bangladesh and 20-kilometre including a 100-feet long bridge in Myanmar.

This road is to connect Gundum in Bangladesh and Bawli Bazar in Myanmar. It is reportedly to be used for transportation between Bangladesh and Myanmar. It is doubtful whether Thailand or any other third country will be permitted to use it, even if and when they seek to use it.

Transit rights
The proposed Asian Highway route provides transit rights to India through Bangladesh because both the entry and exit are with India from Bangladesh. Bangladesh government is naturally concerned about it without reciprocal transit rights from India.

It seems that this is a misplaced concern in view of the fact that at the Dhaka SAARC Summit, India's Prime Minister made it clear that India was agreeable to provide transit rights to SAARC countries.

He proposed: "Let us agree, at this Summit, that all South Asian countries would provide to each other, reciprocally, transit facilities to third countries, not connecting one another but also connecting to the larger Asian neighbourhood, in Gulf, Central Asia and South East Asia".

Obviously the Prime Minister had in his mind not only transit rights within South Asia but also the road connecting 23 countries through proposed Asian Highway network.

Geo-political reality
Bangladesh and India are neighbours. This geographical reality cannot be changed. Bangladesh is roughly 4.380 percent of the size of India's territory. India is a regional power and Bangladesh has to live with it. Many small-sized countries live with bigger neighbours, for example, Switzerland with France and Austria with Germany.

The challenge for Bangladesh is how to develop a range and pattern of economic relations with India that will help Bangladesh to achieve a high rate of economic growth.

Because of the economic size and strength of India, the distribution of gains from economic cooperation will not always be equal between the two countries. Bangladesh may gain more than India in some sectors and India may gain more than Bangladesh in other sectors. It is acknowledged that gains may not evenly be distributed in Bangladesh and India.

The bottom line is whether Bangladesh has gains or not. Bangladesh may not compare its gains with that for India on each sector. To evaluate differential gains for each country is a challenge for Bangladesh policy makers. It is a delicate balancing act and does not correspond to a neat mathematical formula.

Bigger geo-economic picture
There is a bigger geo-economic picture involved in assessing the significance of the Asian Highway which will connect 23 countries from Japan to Russia. Some of them deserve mention:

  1. Emergence of China and India as major industrial powers within a few decades. (China has replaced Italy as the sixth largest economy in the world with total GDP of more than US$1.97 trillion dollars).
  2. Both China and India are emerging as strategic partners, not as strategic competitors, in quest for energy import and in other economic sectors.
  3. Both China and India have locked their economy with that of ASEAN.
  4. ASEAN wants to get access to huge market of both China and India.

Given the above scenario, Bangladesh needs to integrate its economy with India, ASEAN and China. It would not be prudent to wall itself off from the rest of Asia and the Asian Highway network offers an excellent opportunity to be in the loop with the rest of Asia.

Furthermore, Bangladesh's well-known "Look East" foreign policy will find its relevance in joining the Highway with other Asian countries as it will certainly boost trade and economic growth in the country.

Impact of SAFTA and BIMSTEC
SAFTA came into effect notionally from 1st January of this year. Reportedly it will come into force from 1st July, 2006. SAFTA is a milestone towards South Asia Economic Union as per commitments of SAARC member-countries at the 2002 Kathmandu Summit.

Under SAFTA (South Asia Free Trade Agreement), the member countries will gradually cut down tariffs to 5 percent (India, Pakistan and Sri Lanka by 2013 and LDCs, Bangladesh, Bhutan, Maldives and Nepal by 2016).

The December 21-27 meeting of Trade Negotiating Committee of BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), comprising Bangladesh, Bhutan, India, Myanmar, Nepal, Thailand and Sri Lanka set July 1, 2006 to implement FTA (Free Trade Agreement) on trade goods in the region. The Committee also decided to prepare a draft of investment promotion and protection agreement and exchange lists of service sectors.

SAFTA and BIMSTEC will facilitate trade flow among SAARC and ASEAN countries only when a forward looking approach is undertaken towards integrating the transport network in the region. In this context the Asian Highway assumes its significance in boosting economic development of the region.

Bangladesh stands between India and ASEAN. China is only 100 kilometres north across the Himalayas from Bangladesh's borders. For reasons of its strategic position and for the bigger geo-economic scenario emerging in Asia, it is argued that Bangladesh government may seriously reconsider its position in respect of signing the Asian Highway network for long-term interest. The public have the right to know from the government how refusal to sign the Asian Highway agreement serves the national interest. Let there be a public debate on this important issue, if it does not take place in the Parliament.

Barrister Harun ur Rashid is a former Bangladesh Ambassador to the UN, Geneva.