Regional Corridors in South Asia: Regional Cooperation Agenda

Transcription

1 Regional Corridors in South Asia: Regional Cooperation Agenda Prabir De RIS, New Delhi Presentation at 5 th South Asia Economic Summit (SAES) September 11-13, 2012 Islamabad, Pakistan

2 South Asia has high unrealised trade Country P/A Unrealized trade, 2010 (US$ billion) (US$ billion) (US$ billion) (2010) (%) Actual trade (A) Potential trade (P) Potential trade (P) Afghanistan Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka Total Note: Based on a gravity model Source: Author

3 Why so high unrealisation of trade? Large trade and investment barriers (NTBs, visa restrictions, etc.) Inadequate infrastructure national and regional (inadequate & poor stock and missing links in infrastructure) Absence of regional transit trade (no regional transit) High trade costs (transport costs outweigh tariffs) Inadequate funding for regional projects Poor or no institution for regional cooperation No initiative for SAARC community building process Others

4 Example - NTBs in India Pakistan trade (1/2) Tariff barriers Non-tariff barriers Customs duties Special additional duties (SAD) Countervailing duties Stringent visa regimes Trade distorting subsidies Overland transportation limitation Air travel restriction Sea transportation restriction Transit restriction Port of call restriction

5 Finance measures Quality control measures NTBs in India Pakistan trade (2/2) Technical barriers to trade Cumbersome payment systems Restrictive official foreign exchange allocation Regulations concerning terms of trade for import payments Non-acceptance of letter of credit High commission of foreign banks offering letter of credit Lack of bank branches License with no specific ex-ante criteria License for selected importers Sanitary and phytosanitary measures Marking requirements Labeling requirements Testing, inspection and quarantine requirements Pre-shipment inspection/certificate acquisition Source: De, Raihan and Ghani (2012) What does MFN Trade mean for India and Pakistan? Can MFN be a Panacea? Mimeo, World Bank, Washington, D.C based on Taneja (2012), Khan (2011), Husain (2012)

6 Example - Poor connectivity in India Sector Pakistan Particular Delhi Lahore Road transportation (passenger bus services) Amritsar-Nankana Sahib Amritsar Lahore Poonch Rawalakot* Srinagar Muzaffarabad* Rail transportation (passenger train services) Shipping links Delhi Lahore Munabao - Khokrapar Mumbai Karachi Delhi Lahore Air links Gas pipeline Electricity links Border (land) customs for trade Mumbai Karachi TAPI* Amritsar Lahore* Wagah Attari Poonch - Rawalakot Srinagar - Muzaffarabad Monabao- Khokhrapar* *Proposed / to be operational Source: Updated from De (2009)

7 Some major challenges (micro level) to trade in South Asia 1. Lack in simplification and harmonization of trade procedures, more particularly at the border. 2. No regional transit as yet 3. Absence of regional corridor and modern corridor management techniques 4. No master plan for SAARC connectivity as yet 5. Lack of financing and no resource mobilisation plan for implementing regional connectivity projects 6. No regional institution for trade facilitation.

8 Definition, Rationale, & Literature

9 Regional corridors - definition Transport corridor Logistics corridor Economic corridor Catalysts: Trade facilitation, logistics services, a.o. Transport corridor Institutional infrastructure Economic corridor = Sum over all public capital, national or otherwise X A Corridor Y C A +C B +C H C AB n i 1 B X i Y Trade corridor Human infrastructure Communication infrastructure Narrow vs. Broad Corridors GMS EWEC

10 Rationale - regional corridors 1. Sustained economic growth has increased the demand for transport and logistics services. 2. Efficient transport networks have become more important to regional cooperation, in both absolute and relative terms, as tariff-based barriers to economic cooperation have generally declined. 3. Better infrastructure would encourage fragmentation of production in the region, enhance the regional and global trade, and help realize South Asian integration process.

11 Supporting literature 1. Regional infrastructure has always played the key role in integrating the economies across a region (Vickerman, 2002). 2. Regional infrastructure s relations with the welfare can be seen in both direct terms through changes in distribution and indirect through the wider growth effects and higher economic activity stimulated by infrastructure (Venables, 2007). 3. Regional infrastructure has become an important building block of regional economic integration in the era of globalization (Kuroda, et al, 2008)

12 Regional corridors help enhance trade flows Regional Corridors Source: Brooks (2008)

13 Regional corridors strengthen production blocks and regional integration Corridor Source: Kimura et al (2009)

14 Regional corridors foster regional cooperation India x9 Afghanistan Nepal x10 x1 x2 x7 x5 Maldives SAARC Bhutan Corridor (s) x4 x6 Pakistan Banglad esh x8 x9 Sri Lanka X1, x2,.,xn: countries Source: De (2011)

15 List of select economic corridors in Asia Sr. No. Corridor Name Countries 1 North -South Economic Corridor PR China, Thailand, Lao PDR, Myanmar and Viet Nam 2 East-West Economic Corridor Viet Nam, Myanmar, Lao PDR, Thailand 3 South Economic Corridor Thailand, Cambodia, Viet Nam and Lao PDR 4 Kunming-Haiphong Transport Corridor- Noi Bai-Lao Cai Hway PR China, Viet Nam 5 GMS Southern Coastal Road Corridor II Viet Nam 6 CAREC Regional Road Corridor Improvement (Sary Tash-Karamik) Kyrgyz Republic 7 Mekong ICT Project Lao PDR 8 Indonesia/North Java Corridor Indonesia, Indonesia 9 Indonesia/Eastern Sumatra Corridor Indonesia, Sumatra 10 East Asia Industrial Corridor Viet Nam, India, Thailand 11 CAREC Transport Corridor 1b Kazakhstan, PR China, Russian Federation 12 Western Regional Road Corridor Mongolia, PR China, Russian Federation Source: Author based on ADB

16 Four zones of regional corridors Zone II National + Broad Zone IV Regional + Broad Narrow Broad (Area development, SMEs, rural roads) Zone I National + Narrow (Construction, upgrading) SAARC at here (Cross-border economic zones) Zone III Regional + Narrow (Trade facilitation, logistics) National Regional Source: Adapted from Srivastava (2011)

17 Regional corridors in neighbouring regions Central Asia CAREC Economic Corridors South Asia SRMTC? Southeast Asia IMT-GT Economic Corridors GMS Economic Corridors BIMP-EAGA Regional Corridors

18 Performance in trade facilitation mixed results, needs greater involvement of private sector in TF

19 South Asia has poor performance in trade facilitation Significant progress made in reducing time of import/export since 2005, but developed economies also improved during that period On average, it still takes 30 days to move goods from factory to deck-of-ship at the nearest seaport South Asia: 30 days South-East Asia: 20 days Developed economies: 10 days Improvements in TF could bring US$ 250 billion in additional trade for Asia and the Pacific (APEC, 2011)

20 Bilateral tariff cost in South Asia: Agriculture

21 Bilateral non-tariff trade costs in South Asia: Agriculture

22 Bilateral tariff cost in South Asia: Manufacturing

23 Bilateral non-tariff trade costs in South Asia: Manufacturing

24 What explains changes in the trade costs across countries?* Tariff costs 0-10% 10% 10% Availability/use of ICT services Business environment 25% Liner Shipping Connectivity (port and maritime services efficiency) Policy-related Non-Tariff trade costs 60-90% 1% 50+ % Direct cost of trade procedures Other factors, including: -Indirect cost of trade procedures -Currency / exchange rate -Non-tariff Measures (SPS, TBT) Natural trade costs (geographic and cultural distance between countries) 10-30% *simplified representation based on Duval and Uthoktham (2011)

25 Export takes longer time in LLDCs (Number of Days) Year Afghanistan Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka Source: Doing Business Database, The World Bank

26 Rising costs of export in LLDCs (US$ per container) Afghan istan Bangla desh Bhutan India Maldives Nepal Pakistan Sri Lanka , , ,200 1, , , ,200 1, , , ,200 1, , , ,348 1, , , ,348 1, , ,230 1,055 1,550 1, , ,230 1,095 1,550 1, Source: Doing Business Database, The World Bank

27 Improved, but documentation still a burdening issue Afghani stan Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka Source: Doing Business Database, The World Bank

28 Policy-related non-tariff trade costs more important in South Asia documentation and inland transit critical to export Export Time, 2011 Export Cost, 2011 Source: Doing Business Database, World Bank

29 Customs improved its performance: Export Field level data Export time for selected products and countries in Asia (adjusted), 2010 Source: ESCAP

30 Customs improved its performance: Import Field level data Import time for selected products and countries in Asia (adjusted), Days Fabrics Sugar Auto Parts Fabrics Rubber Tyres Tea Garments Fabrics Inland trasportation Terminal handling Customs Document preparation Fabrics Used Cars Electronics Bangladesh China India Japan Nepal Sri Lanka Thailand Source: ESCAP

31 Sr. No Process Days 1 Buy 2 2 Obtain export permit 1 3 Contract registration and inspection 4 4 Excise inspection 2 5 Obtain cargo insurance 1 6 Arrange pre-shipment inspection 1 7 Obtain certificate of origin 1 8 Obtain SAFTA certificate 1 9 Submit customs declaration online 1 10 Collect and endorse documents for import Arrange transport for loading 1 12 Prepare other import documents 2 13 Provide customs declaration Transfer to LCS 4 15 Parking of goods 2 16 Customs clearance 2 17 Send the goods to importer s warehouse 1 18 Clear goods through customs 2 19 Transport to importer's premise Pay 1.50* Total 28.50** Days days Export procedures in India Import procedures in Bangladesh Start Procedures 2 End Time Procedure Chart of Trade in Cotton Yarn Exporter = India Importer = Bangladesh

32 Sr. No Process Days 1 Buy - conclude sales and contract terms 3 2 Obtain IEC code 1 3 Obtain bank related documents Prepare all export documents 2 5 Lodge CUSDEC online Pass CUSDEC manually 1 7 Obtain cargo insurance Arrange transport and load on truck Transport to port of departure Clear goods through customs at seaport Port and terminal handling activities Loading container onto vessel Vessel information and filling IGM 1 14 Shipping 2 15 Allocation of berth 2 16 Filing Bill of entry & other import papers 1 17 Filing Delivery Order 1 18 Immigration 1 19 Plant quarantine 1 20 Unloading of goods fromvessel 2 21 Verification of cargo 2 22 Send the goods to importer s warehouse 2 23 Pay to exporter 7 Total days 25 Days days Export Procedures in Sri Lanka Import Procedures in India Shipping Start 1 Time Procedure Chart of Trade in Rubber Tires Exporter = Sri Lanka Importer = India Procedures End

33 Exporter Export process, Product exported Destination No. of Steps Business process No. of Parties Bangladesh Shrimp Japan Bangladesh Garments India 10 (8) 13 (12) China Garments Japan 9 11 China Electronics Thailand India Fabrics Bangladesh India Vegetables UAE India Fruits EU Nepal Veg. ghee India Nepal Veg. ghee China 5 10 Sri Lanka Rubber tyres India 7 13 Sri Lanka Tea Japan 7 12 Thailand Auto. parts India 7 11 Thailand Sugar Bangladesh Source: ESCAP,

34 Import process, Importer Product imported Origin Business process Steps involved India Rubber tyres Sri Lanka China Fabrics Japan 6 11 China Auto. parts Japan 6 11 Thailand Electronics China 6 12 Sri Lanka Fabrics India 7 13 Sri Lanka Used cars Japan 3 9 Bangladesh Fabrics India 5 8 Bangladesh Sugar Thailand 4 7 Nepal T&C India 5 10 Source: ESCAP, Parties involved

35 Export documents, Product exported Destination Documents Needed (No.) Bangladesh Shrimp Japan 24 Bangladesh Garments India 26 (17) China Garments Japan 14 China Electronics Thailand 17 India Fabrics Bangladesh 18 India Vegetables UAE 22 India Fruits EU 27 Nepal Veg. ghee India 26 Nepal Veg. ghee China 43 Sri Lanka Rubber tyres India 19 Sri Lanka Tea Japan 24 Thailand Auto. parts India 35 Thailand Sugar Bangladesh 39 Source: ESCAP,

36 Import documents, Product Imported Origin Documents Needed (No.) India Rub tyres Sri Lanka 9 China Fabrics Japan 13 China Auto. parts Japan 13 Thailand Electronics China 44 Sri Lanka Fabrics India 19 Sri Lanka Used cars Japan 18 Bangladesh Fabrics India 10 Bangladesh Sugar Thailand 11 Nepal T&C India 20 Source: ESCAP,

37 Requirement of export documents and copies, Export Product Documents Needed (No.) from to Types Copies China Japan Garments China Thailand Electronics India Bangladesh Fabrics India UAE Vegetables India EU Fruits Thailand India Automobile parts Thailand Bangladesh Sugar Source: ESCAP,

38 Requirement of import documents and copies, Import Documents Needed (No.) from to Product Types Copies India Sri Lanka Rubber tyres 9 17 China Japan Fabrics China Japan Automobile parts Thailand China Electronics Source: ESCAP,

39 Development of regional corridors some outcomes are building infrastructure, trade creation, generating production network (supply chain), improves global and regional competitiveness, narrowing development gaps,..

40 Intra-South Asia trade flow, 2011 AFG BDG IND MDS NPL PAK SL South Asia Total (US$ million) Share (%) AFG BDG IND MDS NPL PAK SL Source: DOTS, IMF Total

41 Trade and connectivity flow South Asia with neighbouring regions rising trade not supported by adequate connectivity Europe Southwest Asia Central Asia East Asia South Asia Strong Moderate Middle east/ Gulf Southeast Asia Weak ANZ + Pacific Africa Source: De (2012) Trade linkage (strong) Connectivity linkage (weak)

42 Trade and connectivity flow within South Asia lopsided flows, but having high subregional potential Central Asia WSAS ESAS AFG Nepal Bhutan Southwest and Gulf Pakistan India ILS Bangladesh 38% share in regional trade (2011) Corridor modes Source: De (2012) Air Ocean Land MDS Sri Lanka 29% share in regional trade (2011) Strong Moderate Weak Southeast and East Asia

43 Narrowing developmental gaps in three SAARC subregions through corridors Agglomeration and dispersion in new economic geography The fragmentation theory Large integrated factory Fragmentation PB SL SL PB SL PB PB SL SL PB: production blocks SL: service links PB Specify three sub-regions (ESAS, WSAS and ILS), which include multiple industrial corridors connecting countries/regions at different development stages in order to effectively utilize economic dynamism. Propose three tiers of development strategies. Tier 1: middle-income countries/subregions Innovative and value-added cluster (Less congestion and better business environment.) Tier 2: countries/regions close to industrial agglomerations Push out the frontier of production networks (Creation of new dev. center) Tier 3: remote countries/regions yet to start development process Employ logistics [South Asia] infrastructure as a trigger for a new perspective of industrial development. (Create critical mass of Source: Adapted from Kimura et al., ERIA economic activity)

44 What is the emerging direction of trade in South Asia? Economic welfare higher with improved connectivity and trade facilitation (i) Bangladesh India trade (ii) India Pakistan trade

45 General equilibrium simulation 1 Welfare Effects of Bangladesh India MFN Trade Effects on Total Imports (% change from the base) Effects on Total Exports (% change from the base) Source: De, Raihan and Kathuria (2012) World Bank WPS # 6155

46 General equilibrium simulation 2 Welfare Effects of India - Pakistan MFN Trade (Equivalent variation in US$ million at 2007 prices) Country MFN MFN+BTF Bangladesh India Nepal Pakistan Sri Lanka Rest of South Asia China USA EU Rest of the World Note: MFN = Most Favored Nation; BTF = Bilateral Trade Facilitation between India and Pakistan Source: GTAP simulation Source: De, Raihan and Ghani (2012) What does MFN Trade mean for India and Pakistan? Can MFN be a Panacea? Mimeo, World Bank, Washington, D.C

47 General equilibrium simulation 3 India Pakistan MFN and Welfare Effects of SAFTA (EV in million US$ at 2007 prices) Country SAFTA without MFN SAFTA with MFN SAFTA+MFN+STF Bangladesh India Nepal Pakistan Sri Lanka Rest of South Asia China USA EU Rest of the World Note: MFN = Most Favored Nation; STF = Trade facilitation among SAFTA member states Source: De, Raihan and Ghani (2012) What does MFN Trade mean for India and Pakistan? Can MFN be a Panacea? Mimeo, World Bank, Washington, D.C

48 Larger gains in trade facilitation would come from bigger economies more cooperation and unilateral actions must (a) India Reporter Partner Actual Trade Potential Trade Potential Trade P/A UT 2010 (A) 2010 (P) 2017 (P) (US$ million) (%) Afghanistan Bangladesh India Bhutan Maldives Nepal Pakistan Sri Lanka Note: Based on a gravity model Source: Author

49 Larger gains in trade facilitation would come from bigger economies more cooperation and unilateral actions must (b) Pakistan Reporter Partner Actual Trade Potential Trade Potential Trade P/A UT 2010 (A) 2010 (P) 2017 (P) (US$ million) (%) Afghanistan Bangladesh Bhutan Pakistan India Maldives Nepal Sri Lanka Note: Based on a gravity model Source: Author

50 Towards Regional Corridors - Trade (and Transport) Facilitation Progress so Far

51 SAARC connectivity mixed progress Negotiation of Regional Transport and Transit Agreement, and a Regional Motor Vehicle s Agreement (ongoing). SAARC Expert Group finalized the text of the Regional Agreement on Railways in August Launch of feasibility studies of pilot projects: Birganj and Kathmandu (160 km) completed in October 2008 negotiation ongoing Kathmandu-Birgunj-Kolkata/Haldia rail corridor Birgunj-Katihar-Singhabad-Rohanpur-Chittagong with links to Jogbani, Biratnagar and Agartala rail corridor Agartala-Akhaura-Chittagong rail corridor Construction between Agartala and Akhaura (14 km) is about to commence. Phuntsholing and Hashimara road corridor Ferry link - between Colombo and Tuticorin (started already) and Colombo and Cochin Karachi Mumbai ferry link Air link - Malé-New Delhi and Islamabad-New Delhi; Establishment of modern border crossing facility at Phuntsholing. Indian ocean cargo cooperation On-going projects: Feasibility study for India - Bhutan rail link Construction of railway line from Jiribam-Tupui (near to Imphal, India) has commenced Construction of Kaladan Multimodal Transport project has started in December 2010 Railway infrastructure improvement projects in Sri Lanka Intermodal connectivity Air Services Agreement (single ticket to fly between South Asian nations) Demonstration run of container train involving Bangladesh, India and Nepal is being planned

52 Demonstration run of container train between ECO and SAARC? Source: Drawn based on information of ECO & UNESCAP

53 Progress in modernizing and opening of land customs stations India s Integrated Check Post (ICPs) project Attari already started working since April 2012 [spread over 118 acres, a passenger terminal 9,600 s.m; cargo terminal 4,700 s.m; separate import and export warehouses, 10,000 s.m., parking space 50,000 s.m., etc.) Opening of Banglabandha Fulbari land port for trade Opening of border haat in Baliamari (Bangladesh) Kalaichar (India), and ffew more border haats (e.g. between India and Bangladesh) coming up

54 Progress in Customs cooperation SAARC Agreement on Mutual Administrative Assistance in Customs Matter, signed in 2005 The Seventh Meeting of the Sub-Group on Customs Cooperation (11-12 February 2010) made following recommendations with a view to facilitating trade in goods in SAARC. Building infrastructure including roads and railways networks near the LCSs. Customs clearance procedures at LCSs need to be smoothened; Customs Administrations may consider a system of customs facilitation in which export documentation of one Member State could be considered by the Customs Administration in the importing country for the purposes of assessing and clearing the consignment. Need for developing an Electronic Data Exchange System within the region, including at LCSs, with a view to ensure better facilitation of trade in goods among the SAARC countries including improved compliance. SAARC Secretariat to develop a regional/sub-regional project to set up automated customs clearing mechanism at the designated LCSs. Harmonisation of 8-digit tariff lines is needed, and in order to make this task easier, all Member States would further provide upto only digit tariff lines with a trade potential of 75% (in value terms) in the region.

55 Recent development in Customs cooperation Declaration of the Fifteenth Meeting of the Committee on Economic Cooperation - Maldives, July 2012 (Source: SAARC Secretariat Press Release July 24, 2012) The Meeting recognised delays in customs clearance procedures and decided that henceforth electronic copies of specimen signatures and seals of officials authorised to sign SAFTA Certificates of Origin may also be accepted in addition to sending the original copies of such documents in order to save time and to ensure that the consignments are not held up at the customs border points. India Pak customs cooperation agreement, mutual recognition of standards and redressal of trade disputes

56 Encouraging progress in transit Common transit is must for a common market All SAARC countries have in-principally agreed to regional transit. Motor Vehicle Agreement is being negotiated. SAARC Expert Group finalized the text of the Regional Agreement on Railways in August Sub-regional transit has been agreed between India, Nepal, Bhutan and Bangladesh. Bilateral document between India and Bangladesh signed during the state visit of Indian PM to Bangladesh in September 2011 to facilitate overland transit traffic between Bangladesh and India Demonstration run of container train between Bangladesh, India and Nepal is getting ready. Huge trade opportunities if Afghanistan Pakistan Transit Agreement covers Western South Asia and Central Asia

57 Subregional transit better option to open regional transit ESAS AGH NPL BHU PAK IND BDG Proposed transit WSAS SOUTH ASIA Source: Author ESAS: Eastern South Asia Subregion WSAS: Western South Asia Subregion

58 Linking South Asia with neighbours Uzbekistan Afghanistan railway line (a section till Mazar-i-Sharif already opened) Highway in Afghanistan, aided by India TAPI gas pipeline China Nepal highway and railway India Nepal railway project, India Bhutan railway project, etc. India Myanmar Thailand trilateral highway (a section already in operation) India ASEAN ocean shipping network India ASEAN open sky Others

59 Three important developments on regional connectivity (Strong Impact on South Asian Trade Flow) 1. Transit for traffic between India, Bangladesh, Nepal, and Bhutan. 2. Integrated check posts (ICP) in Attari in Punjab, Moreh in Manipur, Petrapole in West Bengal, and Raxul in Bihar. 3. Pakistan ECO and India ASEAN connectivity projects, particularly Mekong India Economic Corridor (MIEC) and BIMSTEC Trilateral Highway

60 Mekong India Economic Corridor Envisaged to support India-ASEAN connectivity Aims to strengthen production network regional and otherwise. MIEC involves integrating the four Mekong countries (Myanmar, Thailand, Cambodia and Vietnam) with India. It connects Ho Chi Minh City (Vietnam) with Dawei (Myanmar) via Bangkok (Thailand) and Phnom Penh (Cambodia) and further linking to Chennai in India. It is expected to augment trade with India by reducing travel distance between India and MIEC countries and removing supply side bottlenecks. Approx. investment US$ 88 billion.

61 Emerging Architecture, SAARC and ASEAN Source: ASEAN-India Connectivity Report 2012, RIS

62 Deepening South Asian Integration

63 The Renewed Vision 1. With SAFTA, South Asia has entered into the second era of regional integration 2. Vision is to achieve Common (Single) Market through Customs Union and then Economic Union

64 Milestones to Cross SAARC Integration Next Stages: Customs Union (2015) => Economic Union (2020) Harmonized & integrated road and railway network Maritime & waterways network Aviation policy One Customs Transit Competition Policy EU (10) ASEAN NAFTA * * SAARC * Except US and Mexico

65 The Agenda

66 Source: World Bank

67 Congested land borders Case of India (Petrapole) and Bangladesh (Benapole) Unplanned and informal market Loading at Kolkata 5.00 hrs Kolkata Kolkata to Petrapole h r s India Time at Petrapole h r s Long queue of trucks Unloading at Benapole h r s Crossing border returning from Benapole h r s International border Bangladesh Total Time = hrs. ( 4 days)

68 Multiple handling in rail and road Trade Procedures at South Asia border points Source: Based on ADB

69 Established railways, but gauge changes lead to multiple handling Source: taken from TAR, UNESCAP

70 Need to facilitate express delivery chain in South Asia Pick-up Local station Gateway export Hub Gateway import Local station Delivery Source: Author

71 Cumbersome trade procedures (i) BPA Charts of Cotton Yarn Export from India to Bangladesh Source: De (2011)

72 Cumbersome trade procedures (ii) BPA Charts of RMG Export from Bangladesh to India Source: Hossain and Rahman (2011)

73 Good progress, but manual handling of documentation still in South Asia Indian Export of Fabrics to Bangladesh, 2010 Sr. No. Process Submission of Documents 1 Buy Electronic and manual 2 Obtain export permit Electronic 3 Contract registration and inspection Electronic and manual 4 Excise inspection Manual 5 Obtain cargo insurance Electronic 6 Arrange pre-shipment inspection Manual 7 Obtain certificate of origin Electronic and manual 8 Obtain SAFTA certificate Electronic and manual 9 Submit customs declaration Electronic 10 Arrange transport for loading Manual 11 Transfer to LCS Manual 12 Parking of goods Manual 13 Customs clearance Electronic and manual 14 Send the goods to importer s warehouse Manual 15 Pay Electronic

74 Absence of international conventions on trade & transport facilitation Convention Afghanistan Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka Convention on Road Traffic (1968) Convention on Road Signs and Signals (1968) Customs Convention on Temporary Importation of Commercial Road Vehicles (1956) Customs Convention on Containers (1972) Convention on International Transport of Goods under Cover of TIR Carnets (1975) Convention on the Contract for the International Carriage of Goods by Road (1956) Convention on the Harmonization of Frontier Controls of Goods (1982) No Yes No Yes No No Yes Yes No No No Yes No No Yes No Yes No No No No No No No No No No No No No No No Yes No No No No No No No No No No No No No No No No No No No No No No No

75 Financing SAARC connectivity Set-up SAARC Infrastructure Fund (SIF) Look for traditional sources World Bank, ADB, Islamic Development Bank, countries like Japan, etc. Domestic resources for domestic components of connectivity Special project development facility (SPDF) for feasibility studies

76 South Asian corridor integration Three strategies: Asian level planning UNESCAP Regional / subregional level planning & implementations: SAARC Corridors, ADB [SASEC] National level planning & implementations: Individual countries, ADB, a.o

77 Subregional inter-linkages: ECO - SAARC BIMSTEC GMS/ASEAN Kabul Delhi Katmandu Thimpu Lahore Kolkata Dhaka Chitagong GMS EWEC Dawei Chennai

78 Policy options Overland connectivity is not a distant dream Strengthen Afghanistan - India Pakistan road, rail and air link South Asia Economic corridor! More direct links among ports. Few ports are directly connected No direct call of container shipping Open sky???. few airports are directly connected. New routes for cargo + passengers Complete ASA, & implement with all South Asian countries

79 Fostering South Asia Connectivity: The Enabling Environment 1. Accession to the International Conventions 2. Multimodal Transport and Transit 3. Strengthening and Harmonizing Rules, Regulations, and Standards 4. Demonstration Projects 5. Financing Cross-border Transport Projects 6. Strengthening Coordination among Countries and Stakeholders 7. Closer Cooperation on Security 8. Strengthening Regional Cooperation

80 Some specific recommendations 1. Strengthen cross-border infrastructure (move from road corridors to economic corridors) 2. Accept subregional and subsequently regional transit 3. Fast track lane and priority of goods in transit to cross the border 4. Set-up SAARC Single Window (Customs) (pilot run of authorized economic operator, AEO; and mutual recognition agreement) 5. Simplification and harmonization of trade procedures, more particularly at border. 6. Introduce modern corridor management techniques in selected corridors 7. Promote multimodal transportation (with rail transit, regular container train in the region) 8. Improve the efficiency of border corridors (both side of border improvement in ICP project in parallel) 9. Liberalize visa regime 10. Open sky in South Asia 11. Effective project coordination among government stakeholders 12. Stronger institution (public-private interface) for trade facilitation is urgently needed. 13. Regional study for SAARC Master Plan of Connectivity should be done. 14. Set-up SAARC connectivity coordination committee to coordinate the Master Plan and its feasibility.

81 Thank you

82 ADB-UNESCAP BPA Study Trade procedures harmonization study SASEC Corridors

83 Target Corridor 1 (Nepal Corridor) Kakarvitta-Panitanki-Fulbari-Banglabandha

84 Target Corridor 2 (Bhutan Corridor) Phuentsholing-Jaigaon-Hasimara-Changrabandha-Burimari

85 Target Corridor 3 (Nepal Corridor) Kathmandu-Birgunj-Kolkata

86 Team Members Name Prabir De Achyut Bhandari Abid Khan Tahseen Khan Pushpa Rajkarnikar Cuong Nguyen Tasneem Mirza Sangwon Lim Remarks Team leader Bhutan Bangladesh India Nepal ADB ESCAP