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BIMSTEC: A Window of Opportunity for Win-Win Cooperation

Prof. Mustafizur Rahman
Introduction: BIMSTEC as an Emerging Opportunity
Bangladesh’s offer to host the Permanent Secretariat of the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) in Dhaka is indicative of the firm commitment of Bangladesh to advance the cause of deepening economic integration among the countries belonging to this regional grouping of high promise and significant potential. This first ever headquarter of any intergovernmental organization in Bangladesh needs to be seen as an important milestone in Bangladesh’s continuing quest to make regionalization and globalization work for the development of our economy and socio-economic upliftment of our people. Establishment of the Permanent Secretariat is also an opportunity to instill fresh momentum to an endeavor that got off the ground a decade and half back in 1997 as BIST-EC (Bangladesh, India, Sri Lanka and Thailand Economic Cooperation), informed by an ambition to forge closer cooperation among the countries of the Bay of Bengal region. As may be recalled, BIST-EC evolved into BIMSTEC or Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation in 2004 with Myanmar, Nepal and Bhutan joining the grouping over the subsequent years. With the inclusion of the new members, BIMSTEC is now in a position to service the needs of both a Bay of Bengal centric growth zone and also serve as a gateway with a larger hinterland. This provides the BIMSTEC with an added opportunity to leverage the attendant advantages of deepening cooperation on a more broader scale and with a wider scope and perspective.
BIMSTEC: Key Milestones
6 June 1997: Adoption of Bangkok declaration and formal launching of the BIST-EC
22 December 1997: Inclusion of Myanmar and renaming of the grouping as BIMST-EC
February 2004: Inclusion of Bhutan and Nepal as members at the Sixth Ministerial Meeting
8 February 2004: signing of Framework Agreement on BIMSTEC Free Trade Area (BFTA)
31 July 2004: First BIMSTEC Summit held in Bangkok, Thailand
13 November 2008: Second BIMSTEC Summit held in New Delhi, India 4 March 2014: Third BIMSTEC Summit held in Nay Pyi Taw, Myanmar 4 March 2014: Signing of Memorandum of Association (MOA) on the Establishment of BIMSTEC Secretariat in Dhaka, BIMSTEC Centre for Weather and Climate in India and Memorandum of Understanding on the Establishment of BIMSTEC Cultural Industries Commission and BIMSTEC Cultural Industries Observatory in Bhutan
13 September 2014: Inauguration of BIMSTEC Permanent Secretariat in Dhaka by the Hon’ble Prime Minister of Bangladesh.
At a time when regional integration is emerging as a key strategy to not only deepen intra-regional cooperation but also as a tool to facilitate strengthened inter-regional and global integration of economies, closer BIMSTEC cooperation could potentially play an important role in realizing the benefits of globalization and greater market access through strengthening of comparative advantages and establishing regional value chains.
Realising the Opportunities
Current State of Trade, Investment and Transport Connectivities
The BIMSTEC region offers a market of 1.6 billion people, about a-fifth of global population. However, BIMSTEC economies together account for only about 4 per cent of global GDP (2012) and 3.8 per cent (equivalent to about 1.8 trillion USD) of global trade. As it is, the seven countries of the BIMSTEC grouping are at different stages of economic development: three are developing economies (India, Sri Lanka, Thailand); four are LDCs (Bangladesh, Myanmar, Nepal and Bhutan, with the last two being land-locked LDCs). BIMSTEC-wide collaboration and connectivity leave much to desire. For example, share of intra-regional trade in BIMSTEC currently accounts for only about 4.2 per cent of the global trade of the member countries. One of the major reasons for low intra-regional trade flow is the low intra-regional investment flows in BIMSTEC, although investment regimes are quite liberal in the member countries. Weak transport connectivity and lack of multi-modal and seamless transportation of goods, lack of trade facilitation and weak infrastructure discourage cross border movement of investment and capital and adversely affect development of regional value chains. There is a need to also deepen people to people connectivity not only to stimulate tourism but also to encourage and promote the interests of trade, commerce and investment.
It is reckoned that deepening and broadening of five connectivities are key to BIMSTEC-wide integration: trade connectivity, transport connectivity, investment connectivity, energy connectivity and people to people connectivity. These should be seen as key drivers that could transform BIMSTEC into a vibrant regional grouping.
It is encouraging to see that, through successive expert group discussions, ministerial meetings and summits, BIMSTEC has been able to set concrete targets it would like to achieve in near and medium term future. If BIMSTEC is to realize its ambition of undertaking a transformative journey, it will need to speedily implement the initiatives and actions it has identified for itself.
Initiatives under the BIMSTEC
BIMSTEC has taken a number of important initiatives, and some new ones are being considered, with a view to deepening cooperation among the member countries. These cover a wide range of areas. The third BIMSTEC Summit held on 4 March 2014 in Nay Pyi Taw was a milestone in this regard, with concrete steps envisioned for institutionalization of the BIMSTEC architecture (establishment of Permanent Secretariat), deepening of sector-specific cooperation (in areas of poverty alleviation and health) and joint initiatives for delivery of public goods (particularly as regards climate change).
The declaration establishing BIST-EC set out its basic objective as ‘creation of enabling environment for rapid economic development through identification and implementation of specific projects in the sectors’. The aim was to ‘promote active collaboration and mutual assistance on matters of common interest in the economic, social, technical and scientific fields’. The second Ministerial Meeting in December 1997 selected six specific areas for cooperation: Trade and Investment; Technology; Transport and Communication; Fisheries; Energy and Tourism. The idea was to identify specific cooperation projects in each of these areas and implement those through concrete steps. Participation of the private sector was envisaged to play an important role in such endeavors. Later on, a number of other sectors were added: Agriculture, Cultural Cooperation; Environment and Disaster Management, Public Health; People-to-People Contact; Poverty Alleviation; Counter-Terrorism and Transnational Crime; Climate Change. Members were entrusted with the responsibility of taking the lead in particular areas. For example, Bangladesh is the lead country for “Trade and Investment” and “Climate Change”.
Whilst BIMSTEC’s primary goal is to promote region-wise cooperation, the idea is also to take up collaborative projects on sub-regional basis with a view ‘to make use of best available synergies’. The institutional architecture of the BIMSTEC envisages Specialized Task Forces, Working Group Meeting, Senior Officials’ Meeting, Ministerial Meeting and Summit which are entasked to ensure implementation of the identified activities. Summit is the highest policymaking body and the apex forum of BIMSTEC. Successive summits have played a crucial role by extending the needed political support in this regard.
A key ambition of BIMSTEC is to establish a free trade area, the BIMSTEC-FTA. The Framework Agreement on BIMSTEC-FTA covers trade in services and investment in addition to trade in goods. This gives BIMSTEC cooperation a distinct flavor. The framework requires member countries to conduct negotiations on a positive list approach. The schedule of tariff reduction envisages both fast track and normal track tariff liberalization, differentiated for non-LDCs and LDCs, with rules of origin and maximum ceiling of products in the negative list.
Over the past years, 3 Summits, 14 BIMSTEC Ministerial Meetings, 16 Senior Officials’ Meetings and a number of sectoral Ministerial Meetings have been held to advance the interests of economy-wide and sectoral cooperation among the member countries in light of BIMSTEC’s declared objectives. Other Specialized Task force Meetings, Joint Working Group Meetings and Expert Group Meetings have also been held on a regular basis to design concrete actions towards implementation of the agreed agendas and decisions. The challenge will now be to implement the decisions taken at various levels with due urgency and efficacy. The Secretariat will hopefully lead this exercise.
Going Forward
BIMTEC is a grouping that includes a major economic powerhouse of twenty-first century, India; the region that it encompasses is in the neighbourhood of another powerhouse economy, China. BIMSTEC straddles both SAARC and ASEAN. The grouping has five countries that belong to SAARC (Bangladesh, Bhutan, India, Nepal and Sri Lanka), and two that are members of ASEAN (Myanmar and Thailand). Whilst BIMSTEC offers the SAARC members an opportunity to look east to the ASEAN market, it also offers an opportunity to the ASEAN members to look west towards the SAARC. There is, thus, a confluence of interests that allows BIMSTEC members to widen and deepen cooperation covering a wide swathe of territory and a vast region with significant wealth of natural resources and a very large and growing market.
BIMSTEC could play an important role both from the perspective of exploiting the opportunities of the Bay of Bengal basin and also in taking advantage of the opportunities that could emerge from leveraging the economic needs of the hinterland that embraces not only BIMSTEC region but also beyond. The continuing negotiations as regards the BIMSTEC-FTA could prove to be important in terms of deepening BIMSTEC integration if countries demonstrate a readiness to be ambitious with respect to both goods and services sector integration. Implementation of BIMSTEC-FTA road map could play an important role in enhancing intra-regional flow of goods, services and investment and promoting regional value chains based on competitive advantages. Steps will need to be taken towards trade facilitation including development of infrastructure at the land customs stations, electronic data exchange, harmonization of sanitary-phytosanitary measures, standards, certification and documentation and standard operating procedures, and establishment of single windows.
From the Bangladesh country perspective, since BIMSTEC provides a gateway to the east, opportunities to deepen cooperation with ASEAN countries, by taking advantage of BIMSTEC, should receive special attention. BIMSTEC cooperation could be leveraged to get into the growing ASEAN market. BIMSTEC cooperation could also leverage initiatives such as the BCIM-Economic corridor. Coordination with initiatives such as BCIM-EC would allow BIMSTEC to take advantage of sub-regional cooperation and connectivity in and around the grouping.
The resolution of issues related to maritime boundary demarcation has now opened up new opportunities for collaboration, to explore and to take advantage of the vast resources of the Bay of Bengal by leveraging the BIMSTEC. The ‘Blue Economy’ could be the next great frontier for the BIMSTEC. Bangladesh has already shown keen interest in this regard. BIMSTEC members could take up bilateral and multilateral initiatives to harness marine mineral, fish and other resources towards long term energy security, economic growth and sustainable development of the region. Collaborative efforts to explore and develop the maritime resources of Bay of Bengal will not only generate rich dividends but also build trust and ensure rise of BIMSTEC as a region of permanent peace and shared prosperity.
Concluding Remarks
Establishment of the BIMSTEC Permanent Secretariat in Dhaka transmits a shared vision and reflects a collective commitment on the part of BIMSTEC leaders to transform BIMSTEC into a region of peace, prosperity, friendship and partnership. At the same time, it is important to recognise that in a fast-moving and fast-changing dynamic world there is no alternative to fast pacing our collective endeavours to realise this vision. It will be Secretariat which will need to spearhead the efforts to translate the vision of BIMSTEC into reality, a reality from which all member countries and their citizens will stand to gain.
Mindful of the formidable tasks that confront BIMSTEC, one is hopeful that with support from all key stakeholders the newly established Permanent Secretariat of the BIMSTEC will be able to rise up to these challenges.
The writer is the Executive Director of Centre for Policy Dialogue (CPD)