Dhaka, Bangladesh (BBN) – The much trumpeted visit of the Indian Prime Minister Dr. Manmohan Singh has a mixed reaction both in India and Bangladesh among public leaders, civil society, diplomats and businesses, as the two main issues —sharing of Teesta water and the transit protocol could not be agreed upon.

However, the MoUs signed between the two countries during the visit has had a number of encouraging promises, which if implemented, may bring in benefit to both, including Nepal and Bhutan, according to the Editorial of the current ICCB News bulletin of International Chamber of Commerce-Bangladesh (ICCB) released on Sunday.

It is heartening to note that in their desire for the common good, the two prime ministers recognized the need to exploit the synergies between the two countries for further deepening of cooperation and widening of the relationship into newer areas and towards that end, agreed on a number of measures.

According to some experts postponement of the Transit Agreement could be a blessing in disguise as it will give Bangladesh government time to re-visit the benefits to be derived from such a treaty, the ICCB said.

Now the government can undertake cost-benefit analysis.  Apparently, the transit facilities will give more benefits to India’s seven states in the north-east as the distance and time for transportation of goods will be reduced to almost one-third and thus save huge costs.  

“Indian producers will thus be able to sell their products in the region at a lesser price and consequently, Bangladeshi businesses will loose opportunities for expansion of trade to eastern India,” it added.

It has been mentioned in the past, on various occasions, in support of the Transit facilities that Bangladesh will earn hundreds of million dollars a year from India as transit fees and related activities. But a research finding by Centre for Policy Dialogue (CPD) recently stated that Bangladesh could expect no more than US$ 2.3 billion in 30 years by giving transit to India. This is really a pittance compared to investment required to be made for infrastructure development within the territory of Bangladesh.

According to recent ADB estimate, Bangladesh may earn $ 50 million per year from giving transit, while transhipment concept could be the best option for both Bangladesh and India.

The practice of transhipment has been in operation throughout the world ever since trade expanded beyond borders and as such, an agreement to this end will resolve the issue of long-awaited transit facilities being requested by India.

Such a treaty compared to the proposed transit plan will generate enhanced economic activity of several dimensions including creation of employment and business opportunity as well as ensure security concern of Bangladesh. In the event of transit, such a huge economic benefit will be completely denied to Bangladesh.

In case of transit to India, it is unknown who will pay for the development of massive infrastructure of multi-billion dollar and its regular maintenance when Indian cargoes start rolling on them. In the proposed transit plan, Indian trucks would be allowed to crisscross the territory of Bangladesh; while Bangladeshi trucks would have to stop at Indian border. This is, in fact, an asymmetric connectivity plan.

India has sought transit facilities to its north-eastern states through road, railway routes and ports in Bangladesh. India also has opened up rail and surface routes for transit to link Nepal and Bhutan with Bangladesh.

It is claimed that transit fees from Nepal and Bhutan would bring good revenue for Bangladesh. But consider the facts: Bhutan’s GDP is less than $2 billion and Nepal’s economy is not big either.

Besides, their economies are inextricably integrated with Indian economy. It is unlikely that a significant volume of cargo from Nepal or Bhutan (to & fro) would go through Bangladesh simply because they don’t manufacture much exportable goods, according to the ICCB.

The Asian Development Bank (ADB) and the development partners see Bangladeshi gains too, from better roads, ports, railways and much-needed trade.  In that event, movement of Indian goods from one part to another, by the Bangladeshi transport system could accrue huge economic benefit to Bangladesh and at the same time resolve long-awaited Indian request for transporting goods through Bangladesh to save time and money. Besides, in case of transhipment, India would not be required to pay any “Transit Fees”.  

“Therefore, the concept of transit should be re-visited and Bangladesh should go for Transhipment Agreement to help India gain access to their seven north-eastern states,” it noted.

BBN/SSR/AD-09Oct11-1:28 pm (BST)