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BIMSTEC: Unlocking the Future Potential – IMPRI Impact and Policy Research Institute

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BIMSTEC: Unlocking the Future Potential - IMPRI Impact and Policy Research Institute

Prabir De

Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation’s (BIMSTEC) journey since 1997 is reminiscent of many shared collective memories. Not only energetic engagements, the BIMSTEC activities underscored the benefits of staying together.

The gains from regional cooperation become stronger and wider when the bigger economy contributes more to regional community building compared to other members. In such a scenario, the neighborhood becomes irreversible and the region continues to witness a collective impact on community building. This is what we have been witnessing in BIMSTEC.

The BIMSTEC is home to around 1.6 billion people, which constitute around 23 percent of the world population and 4 percent of the world GDP, and 4.5 percent of the world trade.

This seven-nation organization of Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka, and Thailand enjoys a strategic location in the Bay of Bengal that others cannot match. BIMSTEC’s greatest strength is its strong colorful cultural threads that spread from the Himalayas in the North to the Bay of Bengal in the South.

The region shares a strong history and civilizational links and similarities in climate, food, cuisine, language, music, scripts, spirituality, clothing and textiles, and so on. A sense of common public goods (e.g. natural resources, security, education, cuisine, music) is quite distinctly visible in the region.

The Bay of Bengal countries are at different levels of development with different income levels. It has three developing countries (India, Sri Lanka, and Thailand) and four least developed countries (LDCs) (Bangladesh, Bhutan, Nepal, and Myanmar). The smaller economies in the Bay of Bengal region have managed to grow faster than the bigger economies, which is a positive sign of regional prosperity and inclusivity. Such a spectacular expansion of economic size was accompanied by higher openness to trade and a powerful regional partnership in the Bay of Bengal region.

Challenges Faced by BIMSTEC Countries

However, the journey is not smooth always. Today, as the world economy is passing through economic and political uncertainties, the BIMSTEC countries are facing huge challenges in coping with those uncertainties. The IMF in a recent post commented: “From Brexit and US-China trade tensions to the pandemic and war, successive shocks have combined to keep uncertainty elevated.” BIMSTEC countries today face

(i) high anti-globalisation measures; (ii) the Russia – Ukraine war and new threats; (iii) disruption of supply chains; (iv) unavailability of emerging and critical technologies; (v) climate change and environmental issues; (vi) maritime security issues. Uncertainties may come and go. Turning crises into opportunities, what matters most is how the countries in BIMSTEC face those in order to provide a mutually rewarding long-lasting effect. Regional integration is no longer an option but an essential part of a national policy in this age of shared challenges such as trade protectionism, war, climate issues, and energy security, among others.

Directions Provided by 4th & 5th BIMSTEC Summits

One can see a rejuvenated momentum to the BIMSTEC process at present due mainly to political directions as it has received at the BRICS-BIMSTEC Outreach Summit held at Goa in 2016. Thereafter, the 4th and 5th BIMSTEC Summits held at Kathmandu in 2018 and Colombo in 2022 respectively, have provided much-needed directions: (i) strengthening the BIMSTEC Secretariat; (ii) activating the BIMSTEC institutions; (iii) BIMSTEC Charter; (iv) BIMSTEC Connectivity Master Plan; (v) completion of the BIMSTEC maritime cooperation agreement, (vi) BIMSTEC Bangkok Vision 2030 to build a prosperous, resilient and open BIMSTEC, among others. Substantial progress has been made thereafter in terms of taking steps to energise the BIMSTEC integration.  

Trade is drying up worldwide. To our great satisfaction, some of the BIMSTEC countries, namely, Bangladesh and India have done well on the trade front in recent years. These two countries along with Thailand have been generously providing higher market access to the remaining Bay of Bengal countries, thus pulling up the regional demand and supply on a continuous basis. This regional contribution by bigger members helped Bhutan and Nepal to source their trade from the region.

BIMSTEC countries, however, have failed to negotiate a regional FTA. There are several differences among the member countries on the FTA front, particularly India on one side, and the rest of BIMSTEC on the other. It is high time that instead of completing other pillars, BIMSTEC countries implement the goods component of the FTA which has been negotiated already. In view of global trade rules making driven mainly by the United States through the USMCA (United States, Mexico, and Canada FTA), any further delay in completing the BIMSTEC FTA negotiations means the need for a regional FTA fully disappears.

The positive side is that some important instruments have been completed such as the BIMSTEC Agreement on Grid Inter-connection; BIMSTEC Convention on Mutual Legal Assistance in Criminal Matters; MoU on Mutual Cooperation between Diplomatic Academies/Training Institutions of BIMSTEC Member States, among others.

Behind the border, issues are most important in facilitating trade liberalisation. BIMSTEC countries need to re-work for simplification and harmonization of customs procedures, technical regulations, standards, and SPS measures, in administrative fees and charges, transparency of laws, regulations, and administrative rulings, risk management systems, and digitalization in trade procedures.

A regional trade facilitation agreement for trade facilitation will pave the way for unlocking the vast trade potential. For example, measures related to the electronic exchange of SPS certificates, electronic/ automated systems, electronic submission of customs declaration, internet availability to customs, and other trade bodies at border crossings also need to be streamlined for paperless trade in BIMSTEC. Besides, moving to a regional single window in customs and a paperless trade regime can help to reduce trade costs and facilitate cross-border business. These measures would pave the way for strengthening BIMSTEC’s participation in global value chains.

BIMSTEC countries may negotiate a BIMSTEC Railway Agreement. Along with it, a regional air transportation agreement in cargo and passenger services will lead to promoting faster mobility of goods and services like tourism, health, and education.

Quality of electricity is critical to fuel growth. The exchange of energy requires better attention. The region is going to face many new challenges in the next 25 years including those that are related to climate and biodiversity. BIMSTEC countries should work together on emission reduction, energy efficiency, and renewable energy targets.

India’s United Payments Interface could be a great lead for other BIMSTEC countries. Digital connectivity is a new hope for the BIMSTEC. Let BIMSTEC generate a regional payment system and agree to sign a framework agreement in the coming Summit in Bangkok.
Trade in local currency encourages higher trade. Trade in BIMSTEC may be denominated in Bangladeshi Taka, or Indian Rupee, or Thai Bhat.  

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BIMSTEC countries may also consider a common transit system. BIMSTEC Customs Transit System (BCTS) may offer strong catalytic power not only to facilitate trade among BIMSTEC but also to improve the region’s competitiveness. BCTS may help BIMSTEC countries with a single vehicle, a single transit, a single bank guarantee, and a single Customs declaration.

Under the Thai Chairmanship, completion of the BIMSTEC Highway projects may add high momentum to the BIMSTEC integration. Bay of Bengal countries also need development partners like Japan who can provide investment, technology, and infrastructure.

The Secretariat needs to be adequately resourced and has sufficient delegated powers to fulfill its role as a coordinator of activities across BIMSTEC members. The BIMSTEC Secretariat has been entrusted to come out with Plans of Action for the region in view of the reorganization of priority areas of cooperation. With increased resources, there is now a need to develop a roadmap for capacity building of the BIMSTEC Secretariat.

While hits are plenty, there are several misses. BIMSTEC countries have failed to institutionalise the BIMSTEC Development Fund. There has been no progress in engaging with civil society organisations. The BIMSTEC Network of Policy Think-Tanks needs complete overhauling.

The Secretariat does not have the needed freedom to run activities professionally. Secretaries General are of different types – sometimes seasoned diplomats and sometimes politicians. Priorities and preferences change quickly and tradition disobeys. A professional team contributes to the success of the EU or ASEAN. The task of the incumbent new Secretary General should be to completely overhaul the Secretariat.

Thailand, the current Chair of BIMSTEC, is going to host the 6th BIMSTEC Summit in November 2023. With the holding of the 6th BIMSTEC Summit, the chairmanship of the organization will go from Thailand to Bangladesh. These meetings are likely to add further momentum to regional cooperation and integration in the Bay of Bengal region.

The article was first published in The Daily Observer as “BIMSTEC needs to sink differences” on June 06, 2023

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