Developing Corridors for Growth South Asia Regional Transport and Trade Facilitation Program. May 12, World Bank

Transcription

1 Developing Corridors for Growth South Asia Regional Transport and Trade Facilitation Program May 12, 2014 World Bank 1

2 In South Asia, the most binding infrastructure constraints to growth for firms are: Electricity % of firms who report electricity, transport or Telecommunication as a constraint % Transport Telecommunication 0 Afghanistan 2005 Afghanistan 2007 Bangladesh 2002 Bangladesh 2007 India 2002 India 2005 Pakistan 2002 Pakistan 2007 Sri Lanka 2004 Total World Bank firm survey 2

3 In 1909, freight could move by rail and road seamlessly from Karachi to Lahore to Delhi to Dhaka, and by inland waterways on the Brahmaputra and Jamuna Rivers (India and Bangladesh) 3

4 However, barriers erected since Partition have made it harder than ever to trade in South Asia Inefficient circuitous routes impose high costs on traders and the economy Indo-BD Indo-Pak BD-Pak Current Inefficiencies A container takes 6-7 times as long to get from New Delhi to Dhaka using current indirect routes through Singapore and Colombo Goods from Agartala (NE India) travel 8 times the distance to reach Kolkata Port instead of using Chittagong Port in Bangladesh A container costs 4-6 times more to travel the indirect maritime route than the direct route between India and Pakistan A container travels 3 times the distance to get from Dhaka to Lahore using the maritime route Potential Savings/Impact Cut travel time down by 30 days (from 35 days to 5 days) via direct rail connectivity between Kolkata and Dhaka Cut travel distance by 1400 km (1600km to 200 km) by travel through Bangladesh Cut costs by $3200 to $4300 per 40ft container by taking the Mumbai-Karachi direct route rather than through Dubai Cut travel distance by 4900 km (from 7200 km to 2300km) by using direct overland routes through India 4

5 No wonder South Asia s intraregional trade is the lowest in the world Intra-Regional Trade Region as a share of total trade (%) EU 60 EAP 40 NAFTA 35 ASEAN 25 MERCOSUR 15 ECOWAS 10 SAARC 5 World Bank (2012): Preferential Trading Arrangements. Policies for Development. Zhai (2010): investments in transport infrastructure to increase Pan-Asian connectivity could reduce trade costs by more than 20% in India, and12.5% in Bangladesh and Pakistan. The lower trade costs would yield annual gains of around 6% of 2020 GDP for India and Bangladesh, and 4% for Pakistan. (in 2008 prices). Research Information Systems (RIS), India: Intra-regional trade can more than double if constraints are removed (US$ 15 billion to US$ 40 billion annually) 5

6 Transport and Logistics inefficiencies impose high costs on South Asia s economies McKinsey 2010 Infrastructure Study estimates that logistics inefficiencies account for 4-5% of India s GDP (US$45 billion in 2013, US$140 billion in 2020) Figures for other economies in South Asia are likely comparable 6

7 South Asia is among the bottom three regions for logistics performance, and the 3 landlocked countries rank among the poorest performers World Bank Logistics Performance Index 2014: Regional and SAR Countries Region/ Country LPI Score LPI Rank* Customs Infrastructure International shipments Logistics competence Tracking & tracing Timeliness East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & North Africa Sub-Saharan Africa South Asia Afghanistan Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka *LPI rank is out of a total 160 countries. 7

8 Time to import-export is higher than most other regions, and the landlocked countries are at a disadvantage Rank of total189 countries Bhutan: 172 Nepal: 177 Afghanistan: 184 Source: Doing Business 2014: Trading Across Borders 8

9 The poorest and most deprived populations in South Asia are concentrated in the Ganga Basin McKinsey, India Deprived Services map* *food, energy, housing, drinking water, sanitation, health care, education, and social security World Bank, 2011 South Asia Poverty Rate map Nepal, Bhutan, NE India, Bangladesh, Bihar 9

10 Where World Bank corridor development and connectivity projects are focused Proposed Bhutan project Proposed Bangladesh projects India projects Unblocking trade barriers in the poorest and most densely populated regions has positive impact on poverty alleviation Nepal project 10

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12 The World Bank s investment and analytical program seeks to address key policy, procedural and infrastructure barriers along SAARC priority corridors focusing on three key objectives: Facilitating connectivity to the nearest ports, and to regional and global markets for the 4 landlocked areas in SAR. Investments in missing links and especially last-mile links to establish multi-modal connectivity along strategic regional corridors. Addressing policy and procedural issues to seamless crossborder transit. 12

13 Bangladesh India Bhutan Nepal connectivity for landlocked states Improve national and regional connectivity for isolated Chittagong Hill Tracts Districts Improve national and regional connectivity for landlocked NE India states Multi-modal connectivity for NE India states to Bangladesh Multi-modal connectivity to Myanmar and East Asia Address missing transport links and trade infrastructure along Southern E-W Highway Develop alternative trade routes incl. along Thimphu- Phuentsholing C. Improve road and trade infrastructure along Kathmandu- Birgunj-Kolkata Corridor multi-modal connectivity along strategic regional corridors Multi-modal connectivity to Myanmar and East Asia Leverage IWT for national and regional transport Implement Eastern Dedicated Freight Corridor Develop economic centers of growth along the Golden Quadrilateral Explore alternative multi-modal (road, IWT) trade routes through Bangladesh Explore alternative trade routes through Bangladesh 13

14 Bangladesh India Bhutan Nepal constraints to seamless cross-border transit Bangladesh to allow free transit of Indian trucks across its territory? India to allow free transit of trucks from Bangladesh, Bhutan and Nepal across Siliguri Corridor? India to allow alternative trade routes for Bhutan and Nepal? Consider joint/ co-located border post with India? Consider joint/ colocated border post with neighboring countries? Consider joint/ co-located border post with India? Consider joint/ co-located border post with India? Implement the GST? 14

15 WB Program to Facilitate South Asia Transit and Trade Projects in the Program address key barriers along SAARC priority multimodal transport corridors to facilitate trade Afghanistan Second Customs Reform and Trade Facilitation Project Karachi Port Improvement Project Eastern Corridor Transport and Trade Facilitation Program NLTA Regional railway, IWT and trade potential/livelihood development studies and TA Nepal-India Regional Trade and Transport Project Nepal Regional Trade Technical Assistance Project India: Eastern Dedicated Freight Corridor Program (incl Development Corridor approach) India: Mizoram State Roads II Regional Connectivity Project India: Support to National Transport Development Policy Committee NE India Multimodal Transport Technical Assistance Project (proposed) India: National IWT Corridors Project (proposed) Bangladesh Regional Trade and Transport Project (proposed) Bhutan Regional Trade and Transport Project And supporting development of trade with Myanmar Breaking Barriers book/analytical work on supporting regional trade in South Asia Competitiveness studies in Afghanistan, Bhutan, Nepal, Pakistan 15

16 World Bank using Development Corridor Approach to support Golden Quadrilateral Development DC logistics catchment Problem feeder Stranded investment Anchor & cluster DENSIFICATION Feeders often need to be funded thru fiscus/grant Anchor & cluster Agri-node & cluster Stranded investment Problem feeder The spatial development approach is an attempt initially by the Government of South Africa to "unlock the inherent capital potential" of specific spatial locations in Southern Africa. The approach has since been adopted regionally in Southern Africa and continental by the African Union. Source: Jourdan,

17 Anchor Projects to Crowd in Private Sector Investment, plus services and economic opportunities for local communities Coal-based Power Station 2 transmission lines to Matola completed Joburg-Maputo Highway PPP- BOT completed Port of Matola/Maputo Upgrades, PPP South Africa MAPUTO Joburg to Maputo Railway line: Upgrade Liquid Fuels & Petrochemicals: Sasol Pande-Secunda Gas line. PPP Sasol completed Al smelter 500ktpa BHPB completed 17

18 Lessons Learned from Other Projects/Regions Addressing core connectivity and services gaps is key to unlocking the latent potential of economic corridors Must be carefully planned: mapping what the potential is, where it lies, institutional and policy bottlenecks, grounded in economics Three tiers of institutional collaboration Across Countries: Government-to-Government Within Countries: Inter-ministry Coordination Local Participation: Province-to-Province (Punjab-Punjab) A catalytic event to focus energies ANCHOR PROJECT/s that can crowd in investment Benefit sharing and backward linkages: local communities can benefit from SME and job creation Government must take the lead: Private sector should participate but cannot do it alone (too many policy/regulatory issues, magnitude of investment too high)

19 Nepal-India Regional Trade and Transport Project addresses challenges along a typical SAARC Priority Corridor: Kolkata/Haldia-Raxaul-Birgunj-Kathmandu: Road, Rail, Border/Trade Infras, Procedural Reforms US$101m in IDA-IFC investments & TA Board approval June 2013 Challenges: Long dwell time at Kolkata/Haldia ports Bilateral transit agreement limits Nepali transit to only one corridor, and only containerized cargo for rail Poor and narrow roads in Nepal and India No through bill of lading and inland clearance Duplicative domestic licensing/documentation/ customs procedures No cross-border electronic data interchange No mutual recognition of collaboration on SPS and standards Insufficient parking/warehousing facilities Development Objective: Decrease transport time and logistics costs for bilateral trade between Nepal and India and transit trade along the Kathmandu- Kolkata corridor for the benefit of traders by reducing key infrastructure bottlenecks in Nepal and by supporting the adoption of modern approaches to border management. 19

20 Inland waterways need development to exploit potential World Bank supporting efforts in both Bangladesh and India Short term of Bilateral Protocol prevents private sector investment; no night-time navigation permitted; dredging needed esp Nov-May; more and better navigational aids, safety and cargo handling equipment and terminals needed, esp in Bangladesh. Akhaura could soon become one of the main doorways to a $1billion/year trade corridor, but need wider approach roads on both sides, India building ICP Ashuganj Port needs better terminals, equipment, operations, Need rail connectivity from Tripura 20

21 Mizoram State Roads II Regional Transport Connectivity Project: Enhancing connectivity to Bangladesh and Myanmar US$107 regional and national IDA Board date June 2014 Challenges: Low road density in state Poor connectivity Difficult terrain Low level of trade and availability of jobs Low trade production capacity Development Objective: Increase transport connectivity along regional trade corridors in Mizoram through (i) Improvement of Priority Cross-border Roads and Trade-Related Infrastructure; and (ii) Road Sector Modernization and Performance Enhancement through Institutional Strengthening 21

22 Infrastructure Gaps exist but the real challenge is no freedom of transit, protectionist policies and NTBs In addition to investments in infrastructure, policy reforms are needed for high impact: Rail Road IWT Gauge/Equipment Standards Harmonization Regional Agreement TIR Carnet Motor Vehicle Agreement Road Design Harmonization Regional Bond Through Bill of Lading Longer-term IWT Protocol/ Agreement More Investments Customs Simplification, Harmonization, and Cross-border Cooperation Simplification, Harmonization and Mutual Recognition of Quality and Technical Standards Removal of NTBs (rules of origin, standards, etc..) Restrictive Trade Agreements (positive list, etc..) 22

23 Thank you! Diep Nguyen-van Houtte Senior Transport Specialist Trade and Transport Facilitation World Bank