Promoting Enhanced Regional Connectivity in South Asia
31 May 2024 . #2405
Akshaya S analyzes the challenges of regional connectivity in South Asia and explores strategies to enhance it.
Despite the significant advantage of geographical proximity, South Asia has long grappled with the lack of connectivity within the region. This has resulted in subpar levels of intra-regional trade and transport facilitation, attributable to inadequate infrastructure and procedural inefficiencies. This concerning and unsatisfactory state of infrastructure has led to South Asia being recognized as one of the world’s least integrated regions. In this context, the imperative for overland transport corridors, enhanced land-border management, and infrastructural advancements such as integrated checkpoints to bolster regional integration and address this issue cannot be overstated. The region, home to some of the fastest-growing economies, teeters on the edge where the prioritization of regional connectivity, or the lack thereof, has the potential to shape the trajectory of its future for better or for worse.
In light of the aforementioned facts, this article argues that it is essential to strengthen regional connectivity to fully utilize the collective potential of South Asia and to tackle common challenges while achieving sustainable growth. It highlights India and Bangladesh as crucial players in driving greater regional integration in South Asia to new levels. Furthermore, it states that collaborative efforts, backed by regional and global institutions, are vital for realizing a vision of a connected, prosperous, and unified South Asia, offering not only economic benefits but also nurturing stronger ties among neighboring countries.
Introduction
Emerging economies, aspirant powers, and the intricate network of geopolitical strategies define South Asia, placing it on a crucial trajectory where the progression of regional connectivity will significantly impact its future course. Despite the benefit of geographical proximity and the presence of numerous free trade agreements, the region’s total trade volume remains unacceptably low at 5%, failing to fully realize its potential. This alarming statistic warrants serious attention, especially in a region that accommodates roughly 20% of the global population, where nearly 29% of its residents live below the poverty line. Unlike in East Asia and the Pacific, where trade among neighboring countries constitutes approximately 50% of their total trade volume, intra-regional trade in South Asia continues to remain significantly lower. Substandard trade and transportation facilitation mechanisms have been identified as the contributing factor to the erosion of the trade liberalization benefits envisioned by the South Asian Free Trade Agreement and other regional accords. For this very reason, the World Bank has acknowledged South Asia as “one of the least integrated regions in the world.”
Prerequisites for Regional Integration in South Asia
Regional integration refers to the deliberate process through which two or more nation-states come to an agreement to cooperate closely in order to achieve peace, stability, and prosperity as divisions between countries created by geography, poor infrastructure and inefficient policies are an impediment to economic growth. Regional integration allows countries to overcome expensive divisions by integrating the markets for goods, services, and factors. This process facilitates the flow of trade, capital, energy, people, and ideas, leading to increased interconnectedness and mutual benefits.
Leveraging geographical proximity in South Asia necessitates the prioritization of overland transport corridors to foster regional integration. In this context, efficient land-border management and infrastructure development have the potential to decrease the time and costs linked to these initiatives. It is widely recognized that bolstering cross-border infrastructure, such as Integrated Check-Posts (ICPs), and expanding road, air, and rail links are essential prerequisites for creating a tightly interconnected South Asian region.
This assertion is supported by the comprehensive body of literature on trade facilitation, emphasizing the crucial role of establishing adequate physical infrastructure, suitable customs clearance frameworks, a unified single window system, and supplementary facilitation measures like ICPs in realizing significant intra-regional trade benefits. The development of such infrastructure can bring about numerous benefits, as it not only enhances trade but also fosters interpersonal connections within the region. With a heightened focus on land infrastructure, it is important to highlight that improving the inland waterway network provides a practical solution to ease congestion on land routes while aligning with India’s objective of effectively connecting the northeast with the broader hinterland through waterways. These infrastructure enhancements not only improve regional connectivity but also reinforce production networks and value chains.
Driving Forces Behind South Asia’s Connectivity Agenda
In any analysis focused on advancing regional connectivity in South Asia, it is essential to acknowledge the pivotal role of India as a fundamental factor that significantly influences the outcome. Over the past decade, India’s endeavors to improve infrastructure have encompassed the modernization of customs stations into Integrated Check Posts (ICPs) and the expansion of rail networks such as the Agartala–Akhaura (India-Bangladesh) and Jogbani–Biratnagar (India-Nepal) lines, in addition to the establishment of new border checkposts, particularly between India and Myanmar.
India and Bhutan have recently reached an agreement to establish a cross-border railway link connecting Kokrajhar in Assam to Gelephu in Bhutan. With the intention of establishing additional cross-border rail connections and immigration checkpoints, there is a clear anticipation that economic trade, interpersonal relationships, cultural exchanges, and tourism between the two nations will undergo a substantial upturn in the forthcoming years.
This has been the realized consequence in Europe subsequent to the establishment of the Schengen Area. The Schengen Agreement, which eliminates internal border controls among the participating nations, has enabled the smooth transit of commodities, services, and people across a large part of Europe, thereby enhancing trade by an average of approximately 2.8%. By drawing comparisons to the accomplishments of the Schengen Area, India’s initiatives in the region are positioned to bring about comparable favorable results, fostering enhanced regional collaboration and prosperity in South Asia.
Moreover, India’s pivotal role in these connectivity initiatives is not only acknowledged within the country, but also by other nations. India is recognized as central in supporting and propelling these projects forward, with the understanding that its involvement is crucial for the successful implementation of such measures in the sub-continent. An illustrative example is the announcement made by King Jigme Khesar Namgyel Wangchuck of Bhutan regarding the creation of the Gelephu Special Administrative Region (SAR) as part of the Gelephu Smartcity Project.
Through this undertaking, an economic corridor connecting Bhutan with Assam and South Asia with Southeast Asia will be feasible and is poised to attract quality investments to the region. Nepal has also secured India’s commitment to provide the landlocked country with the use of its internal waterways for trade along with the development of two hydropower projects and the construction of a petroleum pipeline. By tapping into India’s transmission grid, Nepal also plans to supply Bangladesh with up to 500 megawatts (MW) of hydropower, an initiative that is expected to amplify cross-border electricity trading within the South Asian vicinity. These activities, along with aligned policies and development efforts, show a promising path toward increased regional integration. As India engages in these regional initiatives, it’s crucial to promote collaboration and avoid any impression of a dominant ‘big brother’ position.
Likewise, the strategic geographical positioning of Bangladesh establishes it as a pivotal entity in numerous connectivity projects both within the region and inter-regionally, notably the Trans-Asian Railway and the Asian Highway. Sharing borders with India and Myanmar, Bangladesh plays a vital role in connecting South and Southeast Asia. The nation focuses on improving physical infrastructure and promoting interpersonal interactions within the region.
The pressing necessity for enhanced regional connectivity has been widely acknowledged by the senior political leadership in Bangladesh, reflecting similar sentiments across the region. Prime Minister Sheikh Hasina, for instance, eloquently emphasized the significance of improved regional connectivity during her address at the 18th SAARC Summit in Kathmandu in 2014, where she said “well-connected regions are crucial for the promotion of peace and stability within communities.”
Regional and Global Efforts to Enhance Connectivity in South Asia
Despite enduring political deadlocks between nations, regional alliances such as the South Asian Association for Regional Cooperation have played a significant role in enhancing regional connectivity through various initiatives. Examples of these initiatives include the enforcement of the BBIN (Bangladesh, Bhutan, India, and Nepal) Motor Vehicle Agreement, the SAARC Regional Railways Agreement, and the SAARC Regional Multi-modal Transport Study. Initiatives at the international level, such as those led by the World Bank, also play a crucial role in improving regional connectivity in South Asia, with the World Bank allocating a substantial financing of $1.03 billion for enhancing regional trade in Bangladesh and Nepal.
According to the World Bank, the objective of this initiative is to decrease trade and transportation costs and to diminish transit duration along crucial regional routes. Moreover, the Bank’s ACCESS Program, geared towards expediting transport and trade connectivity in Eastern South Asia, is tailored to aid the respective governments in surmounting significant barriers to regional trade. Transitioning from manual and paper-based trade processes to more efficient systems, upgrading insufficient transport and trade infrastructure, and reforming restrictive trade and transport regulations and procedures are essential parts of this program. The program also seeks to facilitate the integration of landlocked nations such as Bhutan and Nepal with gateway countries like Bangladesh and India, thereby enhancing their connectivity and trade prospects.
Challenges in Achieving Regional Connectivity in South Asia
The vision of seamless regional connectivity in South Asia faces a multitude of challenges. Firstly, political divergences and historical tensions between India and Pakistan have resulted in the absence of transit rights and limited trade agreements between them. Across subregions, infrastructure development initiatives are underway, with India focusing on projects to its east while Pakistan explores prospects in Afghanistan and Central Asia. This has inadvertently emerged as a new arena of rivalry between New Delhi and Islamabad, further complicated by China’s involvement with Pakistan under the Belt and Road Initiative (BRI). Secondly, while countries like India have made significant progress in infrastructure development, others in the region lag behind. The infrastructure disparity, particularly in transportation and digital networks, hinders efficient regional integration and must be addressed as a priority. While constructing high-end infrastructure may involve substantial initial expenses, the long-term benefits underscore the value of these significant investments. Furthermore, the region’s trade potential is underutilized due to varying customs procedures, bureaucratic delays, and inconsistent trade policies. This regulatory disharmony discourages businesses from engaging in regional ventures and affects the flow of foreign direct investments. Thus, overcoming these obstacles must be the foremost priority for all South Asian countries in their pursuit of enhanced regional connectivity.
Conclusion
In a region with rapidly growing economies like India and Bangladesh, improving regional connectivity is crucial for addressing common issues such as poverty, border conflicts, and climate change. In today’s interconnected world, better connectivity is not just about economic transactions; it is essential for deeper regional integration, achieving common goals, and fostering positive political dialogues. Although enhancing regional connectivity in South Asia poses challenges, the potential rewards are significant and extend beyond economic gains. The collective efforts of South Asian countries, supported by institutions like SAARC and the World Bank, are vital for realizing a vision of a connected, prosperous, and unified South Asia. This approach not only promises to bridge physical distances but also to strengthen socio-economic bonds among the nations in the region, setting a precedent for collaborative success globally.
Akshaya S is a Post-Graduate Student at the Department of International Studies in Stella Maris College (Autonomous), Chennai, India.
Views expressed are of the author and do not necessarily reflect the views of the CHSIA.