Emerging Multimodal Connectivity in the BBIN Sub-Region Possibilities for Competitive Linkages and Potential Benefits to Bhutan

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Emerging Multimodal Connectivity in the BBIN Sub-Region Possibilities for Competitive Linkages and Potential Benefits to Bhutan DISCUSSION PAPER #1/2020 Emerging Multimodal Connectivity in the BBIN Sub-region Possibilities for Competitive Linkages and Potential Benefits to Bhutan Bhimlal Suberi* India and Bangladesh are top two trading partners as well as pivotal transit countries for Bhutan and this will continue in the future. Kolkata-Siliguri-Guwahati road link is a crucial road transport corridor for bilateral trade with India and Bangladesh and facilitates access to the seaports. With Bhutan given access to Chittagong and Mongla seaports, international trade is likely to be less costly as these seaports are closer compared to the Indian seaports. Moreover, with strengthening inter-modal connectivity infrastructure in and between Bangladesh and India, Bhutan has tremendous potential to improve access to BBIN and global markets. In that context, this Discussion Paper reviews Bhutan’s access to such infrastructure while highlighting challenges as well as opportunities for the country to develop competitive linkages with existing and emerging corridors of trade and transport connectivity in the sub-region. Background barriers and prepared a roadmap1 for the development of multimodal connectivity in the The South Asian Association for Regional Cooperation region along the prioritised corridors. BBIN (SAARC), South-Asia Sub-regional Economic countries (Bangladesh, Bhutan, India and Nepal) are Cooperation (SASEC), Bay of Bengal Initiative for at the core of the SRMTS. Multi-Sectoral Trade & Economic Cooperation (BIMSTEC) and United Nations Economic and Social A similar study was undertaken for the SASEC sub- Commission for Asia and the Pacific (UN-ESCAP) region under the Sub-regional Corridor Operational provide a broad framework and building blocks for Efficiency Study,2 following a detailed assessment of regional integration and multimodal transport operational and institutional impediments, and connectivity in the region. The SAARC Regional offered recommendations for corridors identified Multimodal Transport Study (SRMTS) is one of the first as crucial to promoting integration and cross- comprehensive studies undertaken for all modes of border trade and transport in the BBIN countries. transport – road, rail, maritime, aviation and inland waterways for the SAARC region. Additionally, the draft BIMSTEC Transport Connectivity Masterplan 20193 has offered The study took stock of the existing arrangements for comprehensive policy recommendations, strategies cross-border transport on the most commonly used and action areas covering multimodal transport and corridors, identified major physical and non-physical * Former Chief Planning Officer, Policy & Planning Division Ministry of Information and Communications (MoIC), Government of Bhutan 1 trade facilitation aspects. Again, the primary focus was the Multimodal Corridors Identified BBIN sub-region, with the higher goal of linking with the under Different Initiatives ASEAN countries through Myanmar and Thailand. The above multimodal transport connectivity These sub-regional and regional initiatives essentially initiatives entail the development of transport build upon UNESCAP’s flagship infrastructure corridors and gateways through enhancement of development project comprising the Asian Highway infrastructure as well as facilitation measures to Network, Trans-Asian Railway and Dry Ports of ensure mutual benefits to all member countries. international importance and these continue to be a The following corridors and gateways have been priority of the UN system for integrating countries of the prioritised for Bhutan under different initiatives: Asia and Pacific region. SAARC Regional Multimodal Transport Study (SRMTS) Transport mode Corridors identified for Bhutan Comments Road transport • Thimphu–Phuentsholing–Jaigaon– • Road access to Indian ports corridors Hasimara– Kolkata/Haldia (India) • Road access to Bangladeshi ports • Thimphu–Phuentsholing–Jaigaon– • Access to markets in Bangladesh and its Burimari (Bangladesh)–Khulna–Dhaka– seaports from the eastern part of Bhutan Chittagong/Mongla (Bangladesh) • Samdrupjongkhar–Guwahati–Shillong– Sylhet (Bangladesh)–Dhaka–Kolkata Thimphu/Paro–Phuentsholing– Hasimara– Road transport corridor listed as having Siliguri–Kakarvita–Kathmandu potential for trade with Nepal Rail corridor Hasimara (West Bengal)–Phuentsholing/ Listed as a potential corridor for bilateral Pasakha trade, and beyond using the larger Trans- Asian Railway network Maritime Kolkata and Haldia (India) For international trade beyond India gateways Chittagong and Mongla Ports Alternate access to Bangladeshi seaports for (Bangladesh) international trade Aviation Paro International Airport For air connectivity to BBIN countries and gateway beyond South-Asia Sub-regional Economic Cooperation (SASEC) Transport mode Corridors identified for Bhutan Comments Road transport • Thimphu–Phuentsholing–Jaigaon– • For trade to and beyond India using the Siliguri–Kolkata/Haldia seaports, with the option of combining corridors, • Thimphu–Phuentsholing–Jaigaon– rail network between Siliguri/New combining rail Burimari (Bangladesh)–Khulna–Dhaka Jalpaiguri and Kolkata network or Chittagong (Bangladesh) • Possibility of using rail between Burimari • Indian Highways connecting Southern to Dhaka or Chittagong as an alternate Bhutan and Sikkim (Gateways: seaport Phuentsholing and other points on the • The highways in Assam and West Bengal Indian/Bhutanese border) to be used for access along Bhutan’s • Thimphu/Paro–Phuentsholing–Hasimara– southern border including Sikkim Siliguri–Kakarvita–Kathmandu • For trade with Nepal via India Inland Water Route covering Kolkata via Sunderbans This existing IWT corridor could be extended and bypassing Narayanganj (in from Guwahati to Samdrupjongkhar in Transport Bangladesh)–Brahmaputra–Guwahati Bhutan by road Corridor (Assam) 2 Bay of Bengal Initiative for Multi-Sectoral Trade & Economic Cooperation (BIMSTEC) Transport mode Corridors identified for Bhutan Comments Road transport Kolkata–Siliguri–[Jaigaon–Phuentsholing]– Covering the entire BIMSTEC network. corridors Guwahati–Imphal–Moreh–Tamu–Mandalay– Siliguri–Guwahati highway provides Meiktila–Tachelik–Chai Rai–Tak–Bangkok–Laem access to Bhutan Chabang Upgrading of north-south Gelephu–Trongsa For improved north-south connection National Highway to NH 31 in India and also to Gelephu Airport Kharbandi-Pasakha/Gedu Provision of an alternate route for Thimphu–Phuentsholing Highway Construction of Samrang–Jomotsangkha section Improved accessibility along the Indian border Construction of the Lhamoizhingkha-Sarpang Connectivity to Indian Highways in section of the SEWH (75 km) Assam and West Bengal Construction of the Gelephu–Panbang section of the SEWH (74 km) Construction of Nganglam–Dewathang section of the SEWH (75 km) Rail corridor Development of five rail links: Based on bilateral MoU signed in a) Kokhrajhar–Gelephu January 2005, the proposed links are b) Pathsala–Nanglam intended to provide rail connectivity c) Rangiya–SamdrupJongkhar for bilateral trade with India and d) Banarhat–Samtse beyond using the Trans-Asian Railway e) Hasimara–Phuentsholing/Pasakha network. Inland water Explore opportunity to improve inland water With potential benefit to Bhutan as transport transport in the BIMSTEC region, together with stated in SASEC roadmap above road transport for Bhutan Air transport Further expansion and development of Paro Domestic terminal, runway resurfacing Airport and widening Expansion of Gelephu Airport (feasibility and For handling larger aircraft to design studies, construction of new 3,000 m accommodate flight diversions during runway, river diversion, ILS andrunway lighting bad weather at Paro Airport and system, apron taxiway, terminal building, supplies during emergencies hanger, cargo building) Intermodal Development of Transport Hub including dry Diversification of entry/exit points for transport hub/ port/inland container depot in Gelegphu BIMSTEC trade and transport multimodal Development of dry port/inland container Diversification of entry/exit points for transport hub/ depot at Nganglam BIMSTEC trade and transport dry port United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP) Transport mode Corridors identified for Bhutan Remarks Road transport Thimphu–Phuentsholing Primary Connecting onward to the larger AH network via India National Highway AH48 Rail transport — Currently, Bhutan is not a member of the Trans-Asian Railway Network in the absence of rail transport in Bhutan 3 Trade, Transit and Transport bilateral transport agreement has not impeded the Arrangements movement of vehicles between the two countries. Trade with India and Bangladesh is governed by Bangladesh bilateral agreements on trade and commerce. Salient Bilateral trade between Bhutan and Bangladesh is features of these Agreements are summarised based on the “Agreement on Trade between the below: Royal Government of Bhutan and the Government of the People’s Republic of Bangladesh” signed on India December 06, 2014 and the accompanying Protocol. Bilateral trade with India is based on the “Agreement on Trade, Commerce and Transit between the Royal The Trade Agreement stipulates that: “Both Bhutan Government of Bhutan and the Government of the and Bangladesh shall accord each other the ‘most Republic of India” signed on November 12, 2016. favoured nation’ treatment in respect of the issue of The Agreement is accompanied by a Protocol that licenses, customs formalities, customs duties and other provides modalities
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