ADB s Initiatives for Transport and Trade Facilitation in South Asia and beyond
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1 ADB s Initiatives for Transport and Trade Facilitation in South Asia and beyond Kavita Iyengar India Resident Mission Asian Development Bank July 2016 Disclaimer: In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
2 The Challenges The Drivers for Creating Opportunities
3
4 Share of Major Regions in World GDP RoW, 5.4% US, 33% Asia, 34% EU, 28% Baseline 2009 Year 2014 Asian Century Scenario
5 South Asia: the Least Integrated Region in the World Intra-regional Trade Share (%) ASEAN+3 Central Asia Oceania South Asia East Asia 100 hours for trucks to cross between Petrapole & Benapole 200 signatures in Nepal to trade goods with India Source: ADB ARIC Trade and Integration database ( raw data from IMF DOTS 5
6 India s Merchandise Trade Region % exports % exports % imports % imports EU Countries (27) Other West and East European Ctys North America Latin America Africa Asia East Asia ASEAN WANA North East Asia South Asia Others Source: Ministry of Commerce and Industry, Government of India, website 6
7 Transport Road transport is the dominant mode (65 70% of movement) but substantial missing links across national boundaries Post 1947, border management led to closure of historical land routes IWT transit was restored in 1972 Transit through Pakistan from India to Afghanistan remains suspended Incompatible transport technology platforms emerged impairing interoperability, esp rail
8 Asian Highway 8
9 Trans-Asia Railway 9
10 Time to import: Border compliance (hours) Trade Facilitation Indicators India Bangladesh China 100 South Asia 50 0 Singapore Thailand Nepal OECD Time to export: Border compliance (hours) Source: Ease of doing business, World Bank
11
12 ADB s RCI Strategy Four key pillars of regional cooperation and economic integration: Cross-border infrastructure and associated software Money and finance Trade and investment Regional public goods 12
13 The Garland of an Integrated Asia SASEC ASEAN Association of Southeast Asian Nations BIMP-EAGA Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area BIMSTEC Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation CAREC Central Asia Regional Economic Cooperation GMS Greater Mekong Subregion IMT-GT Indonesia Malaysia Thailand Growth Triangle PIF Pacific Islands Forum SAARC South Disclaimer: Asian In Association preparing any for country Regional program Cooperation or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. 13
14 RCI in Practice in South Asia Afghanistan Pakistan Maldives Bhutan Nepal SASEC (2001) Bangladesh India Sri Lanka Myanmar Thailand SAARC (1985) BIMSTEC (1997) 14
15 BIMSTEC PRC 18.4% GDP India 12% GDP SE & E Asia 12% GDP BIMSTEC FTA Potential: $43B-$59B trade creation 15
16 Roads Telecommunications Power Transmission Line Infrastructure Development in GMS (1992)
17 Roads Telecommunications Power Transmission Line Infrastructure Development in GMS (2010)
18 Roads Telecommunications Power Transmission Line Infrastructure Development in GMS ( )
19 Institution-light; projects-heavy 37 investment projects US$ 6.7 billion since TA projects US$ 64.5 million since 2001 Focus on transport, trade facilitation, energy Additional areas supported: tourism, ICT Ensures private sector participation in SASEC activities Supports SAARC and BIMSTEC
20 SASEC Transport Corridors SAARC Corridors 4, 8 Bangladesh- Dhaka NW Corridor, Banglabandha-Mongla/ Chittagong Bhutan- Nanglam-Dewathang, Pasakha Access Rd./ Puentsholing Mini-Dry Port India- Panitanki-Fulbari/ Jaigaon- Changrabandha, LCS Nepal- Strategic Roads SASEC-Myanmar Corridor Improvement Bangladesh- Sylhet-Sheola/ Gundum-Chatta India- Imphal-Moreh (with Myanmar)/ Silchar-Karimganj (with Bangladesh) Other SASEC Transport Projects (Bridge, Rail, Port)
21 SASEC Trade Facilitation Source: UNESCAP 21
22 BBIN MVA, Thimphu, 15 June 2015
23
24 The Challenge: Poverty, Jobs, Productivity 500 million live below $1.25 a day Need to create 1 million jobs per month Better high productivity jobs are generated in industry and services Relative labor productivity by income and sector ( ) Source: UNIDO Industrial Development Report
25
26 Driver 1. Trade Facilitation Trade Facilitation Costs Per Subregion (2012) Ranking on the ease of trading across borders: South Asia Lags Real cost to export (man days) Real cost to import (man days) Time to export (days) Time to import (days) Documents to export (number) Documents to import (number) High-income countries Latin America Africa Asia East Asia Southeast Asia Central Asia South Asia ADB. July Asia Economic Integration Monito GDP effect of reducing supply chain barriers is much higher than for tariffs
27 Driver 2. GPNs Average cost of a telephone call to the US Freight costs own Share of South and Southeast Asia in World Total Production Network Exports, Source: Connecting South Asia and Southeast Asia Interim Report ARIC World Bank World Development Report
28 India remains a small player in GPNs 90 % Share of network products in manufacturing exports.despite huge shift in network exports from developed to developing countries % 90% 80% 70% % 50% Network exports from developed countries 20 40% Network exports from developing countries 10 30% 0 20% 10% 0% Source: Athukorala (2013), compiled from UNCOMTRADE database 28
29 $ billion Implications of limited participation in trade and GPNs Forgone opportunities in export markets and FDI Composition of FDI in India, FDI inflow in Manufacturing 60 17% Manufacturing PRC, % Non- Manufacturing Composition of FDI in PRC, India, % 58% Source: Hoda & Rai (2013), ADB Missing out on: Gains from trade through learning-by-exporting and disciplining effect of import competition Benchmark for assessing policy support 29
30 Driver 3. Economic Corridors Labour, Technology, Knowledge, Innovation, Commerce Industrial Clusters Urban Clusters Access to Markets, Gateways Trade and Transport Corridor Access, Distribution, Collection 30
31 Economic Corridors in India Deepen regional economic corridors, build on Myanmar s opening TAPI
32 For more information: 32
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