impact of regional connectivity

7/25/2019 Impact of Regional Connectivity

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South Asia is the next world economic driver. It has immense potential to be the

frontrunner of growth and prosperity. South Asia has positioned itself as a strong

consumer market base with a quarter of the worlds middle-class consumers

residing there. It has the largest working-age population the right culture to foster

entrepreneurship and a dynamic industry sector. !ore importantly South Asia has

the right combination of resources to boost agriculture industry and investment.

"he region also faces some of the worlds worst challenges#poverty

unemployment and illiteracy. It is at the bottom of the pyramid in terms of trade

investment and finance. $ne way in which the region can address these challengesis through the process of regional connectivity.

%egional connectivity can be defined as the ease with which people materials and

information can be moved from one location to another within and between

regions.

&onvenient location of 'angladesh offers her a unique opportunity to cataly(e

connectivity for linking up to multiple centers of economic growth in a dynamic

and creative Asian century. 'angladesh views the issue of connectivity a from

holistic perspective. 'angladesh could act as a bridge between mainland India and

its )orth *astern region. %ecent political developments in !yanmar created a new

incentive for exploring a cooperative economic paradigm among 'angladesh India

and !yanmar. &hina could also be brought into this mix. South +estern &hina

)orth *astern India and South +est of !yanmar and 'angladesh could gainfully

leverage on their shared resources and common goals.


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'angladesh,s geographical location between three maor regions of Asia provides a

unique opportunity for cross-border movement of goods and services and

investment flows. It will boost sustainable growth by promoting regional economic

integration. 'angladesh,s real income gains will be ./ percent of its gross

domestic product and export will grow 0 percent by 1232 if connectivity between

South Asia and Southeast Asia improves.

Regional connections of Bangladesh:

*ffective regional connectivity and better trade facilitation are being given higherprominence at the policy level of 'angladesh. 'angladesh is a member of a

number of regional and sub regional trade arrangements and initiatives. "hese are4-

South Asian Free Trade Area: agreement to promote competition increase the

level of trade and economic cooperation and to provide equitable benefits to the

countries involved.

TheBangladesh, Bhutan, India, Nepal(BBIN): agreement to promote safe

economical efficient and environmentally sound road transport in the sub-region

South Asia Sub regional Econoic !ooperation: aims to promote regional

prosperity improves economic opportunities and builds a better quality of life for

the people of the sub region.

South Asia !o"operati#e En#ironent $rogra SA!E$: to promote andsupport protection management and enhancement of the environment in the

region.


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BI%STE!: to harness shared and accelerated growth through mutual cooperation

in different areas of common interests by mitigating the onslaught of globali(ation

and by utili(ing regional resources and geographical advantages.

A!&:Asian &learing 5nion 6A&57 is the simplest form of payment arrangements

whereby the participants settle payments for intra-regional transactions among the

participating central banks on a multilateral basis.

South Asian Sea $rogra (SAS$):"he Sea 8rogram is based on the regions

environmental challenges as well as its socioeconomic and political situation. It

may cover issues ranging from chemical wastes and coastal development to the

conservation of marine species and ecosystems.

Benefits fro regional connecti#it'

"he potential benefits are best appreciated by looking at geography. 'angladesh

has two natural positional advantages4 open access to the sea in the South9 and

providing a bridge between *ast Asia and the rest of South Asia leading on to

&entral Asia and *urope. 'angladesh is situated in a unique location with two

land-locked countries )epal and 'hutan. "herefore the country also bears huge

geographic potential of regional connectivity with )epal 'hutan and )orth *ast

India.

'angladesh can be benefitted from regional connectivity in the following sectors-

Eport"Iport:

:ue to transit facility 'angladesh can expand export and import in )epal 'hutan

and !yanmar. 'angladesh now export 1;.< million= in )epal and > million= in

'hutan. )ew construction of railway and opening road transit will increase this


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export time. Inland waterway connectivity between India and 'angladesh will

boost up trade and reduce cost and time of export-import. 'angladesh can import

goods from )epal and 'hutan. 'angladesh can import gas from !yanmar through

the proposed tripartite gas line. 'angladesh can import cheapest hydropower from

'hutan.

o*er cost of transportation:

South Asia has logistic costs that range between ;3? -;@? of :8. If regional

connectivity increased this cost will be reduced and make export-import more

favorable.

Boost Re#enue Earning:

Transit-As 'angladesh is providing transit facility to India )epal and 'hutan it

can impose transit charges that will yield si(eable revenue. 'angladesh can impose

charges based on emissions and si(e of transit vehicles as measured by the number

of axles. It can also levy toll charges on transit traffic.

Seaport"Band locked )epal9 'hutan and )orth *ast Indian states can be extremely

benefited from two sea ports of 'angladesh. At present 'angladesh makes use of

only 2 percent and 1> percent of the total capacity of &hittagong and !ongla

ports. 'angladesh can sell off the remaining @2 and percent of the services of

the two seaports and earn revenue. "he potential of developing a deep sea port is

under active planning which may be used by other countries of the region

including &hina India and !yanmar and boost up our revenue earning.

Air port"'hutan wants to use the airports of 'angladesh along with five new land

customs 6B&7 stations under a proposed ,8rotocol on "ransit, between 'hutan and

'angladesh. 'angladesh can sell the service of airports and earn revenue.


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Ser#ice sector"'angladesh can also be benefited from service sector. "ourism is a

potential sector for 'angladesh. It can explore different tourist spots and increase

facilities for tourists of neighboring countries. 'angladesh can also enhance

banking facilities for neighboring countries.

Blue econo':

'angladesh can utili(e the resource of blue economy. It can provide feeder

services inland waterway transport facility to the neighboring country. It can

explore the gas reserve in 'ay of 'engal with the help of regional connectivity. It

can provide coastal tourism cruise tourism and arrange recreational water sports

yachting and marinas for tourist.

Increase foreign direct in#estent:

%egional connectivity will attract the foreign investors to invest in potential

sectors. &hina is interested to invest in deep sea port India is providing ; billion

dollar for communication infrastructure development. Cor developing the transit

infrastructure 'angladesh need 1.3 billion dollar. +orld 'ank and Asian

:evelopment 'ank will finance for transit corridor development enhancing the

capacity of sea port and developing land port. DI&A is also interested in investing.

"his huge investment will change our economic scenario.

Ipact of regional connecti#it' on Balance of $a'ent:

%egional connectivity has a significant impact on balance of payment. It will

enhance trading and foreign investment which will reduce the disequilibrium in

balance of payment.

Balance of pa'ent contains details of all the economic transactions of a country

with the rest of the world for a given period of time.


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'alance of payment has two main components-

&urrent account4 &urrent account includes international trade in goods and

services and income from investment and gifts.

&apital account4 &apital account includes i7 :irect investment ii7 8ortfolio

investment iii7 &apital movements and iv7 &ountrys official reserve.

Ipact on current account:"he balance of current account will be increased.

%egional connectivity will increase export-import and boost up revenue earnings

from selling different services which will lead to surplus in current aEc balance.

Ipact on capital a+c: "he balance of capital aEc will also be increased.

&onnectivity will attract more foreign investment and capital movement for our

infrastructural development and potential business sectors which will make capital

aEc surplus.

Ipact of Regional connecti#it' on foreign echange reser#e:

%egional connectivity has a direct impact on forex reserve. "he relationship can be

shown as F

%egional connectivity

Surplus production

*xport


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Corex reserve

%egional connectivity will enable 'angladesh to produce more goods as theinvestment will increase. 'angladesh can export the surplus production 6goods and

services7 as well as expand export to newly connected territory. It also can import

products cheaply from neighboring countries. "his will lead '$8 position to

surplus. Coreign exchange earnings will increase and thus forex reserve will be

increased.

"his higher reserve will serve F

;. "o stabili(e exchange rate during high volatility and financial crisis1. 8rovide support in terms of foreign liquidity crisis3. Increase confidence to pay all the external obligations and debt@. Increase foreign investors confidence to get more C:I inflow>. Gelps to pay import bill during the crisis time.

%egional connectivity will make 'angladesh a well-connected and open country

and facilitate economic integration greater regional trade and investment. "his will

help 'angladesh to earn more foreign currency and boost up foreign exchange

reserve.

impact of regional connectivity

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