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Bcim Economic Cooperation: Prospects and Challenges

Mustafizur Rahman
Research Director
Centre for Policy Dialogue (CPD), House No 40/C, Road No 11 (new), Dhanmondi R/A, Dhaka-1209 Bangladesh

Habibur Rahman
Research Fellow
Centre for Policy Dialogue (CPD), House No 40/C, Road No 11 (new), Dhanmondi R/A, Dhaka-1209 Bangladesh

Wasel Bin Shadat
Senior Research Associate
Centre for Policy Dialogue (CPD), House No 40/C, Road No 11 (new), Dhanmondi R/A, Dhaka-1209 Bangladesh

Syed Motahar Samnan
Research Associate
Centre for Policy Dialogue (CPD), House No 40/C, Road No 11 (new), Dhanmondi R/A, Dhaka-1209 Bangladesh

Abstract/ Executive Summary:

The BCIM grouping includes two large emerging developing countries and two LDCs. It needs to be recognized that important hurdles are to be overcome if close cooperation among the countries of the grouping in the areas of trade and investment is to be ensured. However, it needs to be kept in mind that Bangladesh and India are already members of SAFTA, Bangladesh, Myanmar and India are members of BIMSTEC and Bangladesh, India and China are members of APTA. Important initiatives have already been set in notion towards closer cooperation involving BCIM members under the ambit of the aforesaid RTAs. SAFTA and BIMSTEC have chartered ways to establish free trade zones (in BIMSTEC-FTA, services area also included). Indeed both these groupings mention about cooperation in non-direct market access areas (preferential treatment through concessional tariffs) such as customs harmonization, investment promotion and trade facilitation. There are ambitious plans to transform the FTAs into a customs union. As far as economic cooperation under the rubrics of BCIM is concerned, the idea is to accelerate the cooperation between the four-member countries, by drawing synergies from the other aforesaid groupings. However, the major focus and point of departure and what gives the BCIM grouping its distinctive features is that the grouping aspires to build a growth triangle covering the region of Bangladesh, Myanmar, NE states of India and the Southern Chinese province of Yunnan. As the analysis presented in this study has pointed out, the NE and Southern China are soft underbellies of India and China respectively. Both these regions are lagging behind in terms of socio-economic development compared to the rest of their respective economies. Their geographical location, proximity to the other two LDCs (Bangladesh and Myanmar) and opportunities for trade and transport cooperation make them natural candidates for cooperation. Of special interest from the perspective of regional cooperation will be the establishment of transport cooperation in the BCIM growth triangle – Bangladesh’s interest in this enterprise is that it could allow Bangladesh to transform itself into a regional commercial hub with large potential gains from scale of transport and port services. For advancing the cause of cooperation in BCIM growth triangle the experience of other sub-regional cooperation, mentioned in the study, should be closely studied and appropriate lessons should be drawn.

Keywords: Potentials trade, Expanding trade, Ambit, Sub-regional, Eastern South Asia, Growing economies, BCIM

Location: In Bangladesh

Start Date: 00-00-2003

End Date: 00-00-2005

Program Area: Comparative study

Commodity: Business, Socioeconomic, Market analysis

Objectives:

To explore the potentials for expanding trade and investment under the ambit of sub-regional cooperation comprising four contiguous countries of Eastern South Asia which includes the two fast-growing economies -India and China and the two developing economies of Bangladesh and Myanmar (BCIM).

Methodology:

The BCIM concept draws its inspiration from the concept of Growth Zones. The idea of growth zones has been a relatively new introduction in the vocabulary of development economics. It involves cooperation between three or more countries for the development of a geographically contiguous region consisting of a part or the whole of each of the participating countries. Growth zones bring together resources of the neighboring countries to foster the economic development of the member countries. They provide a unique opportunity to blend cooperation in trade, investment, transport and communication in a comprehensive manner, in a planned way. In the developing world East and South-East Asia are regions where most of the growth zones have been established. Major growth zones in this region are the South China Growth Triangle; Growth Triangle comprising the Johor state of Malaysia, Singapore and the Riau Islands of Indonesia; the Greater Mekong Sub-region Growth Triangle, and the South Asian Growth Quadrangle. The proposed sub-regional growth zone comprising Bangladesh, China, India and Myanmar covers a total area of 13.7 million sq. kms (9% of world area) and serving a total population of about 2635 million which accounts for 40 percent of the world population. The GDP of these four constituent countries together is estimated at US$3485 billion which is 7.3 percent of the total GDP of the world. Population weighted average GDP per capita is estimated at US$1320. The socioeconomic profile of the constituent parts of the forum is discussed below. Profile of Bangladesh Bangladesh is located in South Asia surrounded mostly by India on all sides except for a small border with Myanmar to the far southeast and the Bay of Bengal to the South. It has boundaries with West Bengal and Meghalaya on the North, West Bengal on the west, Tripura, Assam of India and Myanmar on the East, Bay of Bengal on the South. The total population of the country is estimated at about 140 million (in 2006) who are living in a total area of 147,570 square km making it one of the ten most densely populated countries in the world. Official data on export and import between Bangladesh and North East India is hard to access. However, a couple of studies have been conducted focusing on trade between Bangladesh and NEI states. The information was generated through visits of land customs stations located in the border areas. The World Bank study, conducted under the Bangladesh Export Diversification Project in 2004, reveals large fluctuation in exports and imports over the years. During the first ten months of 2003/2004 total export from Bangladesh to NEIs was US$561,770 and the import from NEI was US$99,260. Firstly, the trade-weighted average for each country reveals that Bangladesh is the most intra-BCIM trade-oriented member followed by India, China and Myanmar. However, even for Bangladesh, the value of trade-weighted RTOI was well below unity (0.37) in 2005 indicating that BCIM countries are less oriented within themselves than nonmembers. the estimated TCI value between Bangladesh, China and India for 2005. Looking at these values, one can see that China and India would be benefited mostly from the BCIM regional cooperation with the current trade pattern with the TCI value of 48.60. On the other hand, trade complementarity between Bangladesh-India, Bangladesh-China and Bangladesh-India and China were very low. The reason behind these low TCI values lies in the fact that Bangladesh’s export basket is not very large and is highly concentrated on RMG products which as is well known is an insignificant import item for India.

Source of Information: CPD Occasional Paper Series 64, ISSN 1818-1570 (Print), ISSN 1818-1597 (Online)

Article Link (Online Journal):

Funding Source:

1.

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The BCIM grouping includes two large emerging developing countries and two LDCs. It needs to be recognised that important hurdles are to be overcome if close cooperation among the countries of the grouping in the areas of trade and investment is to be ensured. However, it needs to be kept in mind that Bangladesh and India are already members of SAFTA, Bangladesh, Myanmar and India are members of BIMSTEC and Bangladesh, India and China are members of APTA. Important initiatives have already been set in notion towards closer cooperation involving BCIM members under the ambit of the aforesaid RTAs. SAFTA and BIMSTEC have chartered ways to establish free trade zones (in BIMSTEC-FTA, services area also included). Indeed both these groupings mention about cooperation in non-direct market access areas (preferential treatment through concessional tariffs) such as customs harmonisation, investment promotion and trade facilitation. There are ambitious plans to transform the FTAs into customs union. As far as economic cooperation under the rubrics of BCIM is concerned, the idea is to accelerate the cooperation between the four member countries, by drawing synergies from the other aforesaid groupings. However, the major focus and point of departure and what gives the BCIM grouping its distinctive features is that the grouping aspires to build a growth triangle covering the region of Bangladesh, Myanmar, NE states of India and Southern Chinese province of Yunnan. As the analysis presented in this study has pointed out, the NE and Southern China are soft underbellies of India and China respectively. Both these regions are lagging behind in terms of socio-economic development compared to the rest of their respective economies.

Knowledge Management: Report/Proceedings