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.
The Challenges The Drivers for Creating Opportunities
Share of Major Regions in World GDP RoW, 5.4% US, 33% Asia, 34% EU, 28% Baseline 2009 Year 2014 Asian Century Scenario 2050 4
South Asia: the Least Integrated Region in the World 50 45 40 35 30 25 20 15 10 5 0 45.5 Intra-regional Trade Share (%) 37.5 7.1 7.4 0.1 1990 2014 4.8 5.3 2.7 35.50 29.20 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 (www.aric.adb.org); raw data from IMF DOTS 5
India s Merchandise Trade Region 1997-98 % exports 2014-15 % exports 1997-98 % imports 2014-15 % imports EU Countries (27) 26.50 15.90 27.16 11.00 Other West and East European Ctys 1.77 2.20 3.20 5.80 North America 20.64 15.30 10.04 6.50 Latin America 1.42 3.70 1.46 6.00 Africa 4.03 10.60 5.85 8.60 Asia 41.48 49.60 39.35 58.90 East Asia 1.36 1.00 3.58 2.50 ASEAN 8.67 10.30 7.50 10.00 WANA 9.99 19.50 15.89 24.80 North East Asia 16.31 12.20 11.76 20.90 South Asia 5.15 6.60 0.62 0.70 Others 4.28 1.10 12.92 1.70 Source: Ministry of Commerce and Industry, Government of India, website 6
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
Asian Highway 8
Trans-Asia Railway 9
Time to import: Border compliance (hours) Trade Facilitation Indicators 350 300 India 250 200 150 Bangladesh China 100 South Asia 50 0 Singapore Thailand Nepal OECD 0 20 40 60 80 100 120 Time to export: Border compliance (hours) Source: Ease of doing business, World Bank 2015. 10
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
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
RCI in Practice in South Asia Afghanistan Pakistan Maldives Bhutan Nepal SASEC (2001) Bangladesh India Sri Lanka Myanmar Thailand SAARC (1985) BIMSTEC (1997) 14
BIMSTEC PRC 18.4% GDP India 12% GDP SE & E Asia 12% GDP BIMSTEC FTA Potential: $43B-$59B trade creation 15
Roads Telecommunications Power Transmission Line Infrastructure Development in GMS (1992)
Roads Telecommunications Power Transmission Line Infrastructure Development in GMS (2010)
Roads Telecommunications Power Transmission Line Infrastructure Development in GMS (2015 2020)
Institution-light; projects-heavy 37 investment projects US$ 6.7 billion since 2001 69 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
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)
SASEC Trade Facilitation Source: UNESCAP 21
BBIN MVA, Thimphu, 15 June 2015
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 (1991-2010) Source: UNIDO. 2014. Industrial Development Report
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 6 6.4 8.9 8.6 4 4.7 Latin America 25.1 28.5 20.7 15.2 6.2 6.3 Africa 114.7 152.3 38.3 29.5 9.1 8.2 Asia 9.9 12 16.4 14.8 5.7 5.4 East Asia 7.2 7.6 16 14.1 5.7 4.7 Southeast Asia 9.4 11.7 13.2 13.2 4.9 5.9 Central Asia 41.4 64.8 56.5 59.9 8.6 10.2 South Asia 34.5 35.6 20.4 17.2 7.8 8.7 ADB. July 2012. Asia Economic Integration Monito GDP effect of reducing supply chain barriers is much higher than for tariffs
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, 1992 2011 Source: Connecting South Asia and Southeast Asia Interim Report ARIC World Bank. 2009. World Development Report
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 80 70 60 50 100% 90% 80% 70% 40 30 1990-91 2000-01 2010-11 60% 50% Network exports from developed countries 20 40% Network exports from developing countries 10 30% 0 20% 10% 0% 1990-91 2010-11 Source: Athukorala (2013), compiled from UNCOMTRADE database 28
$ billion Implications of limited participation in trade and GPNs Forgone opportunities in export markets and FDI Composition of FDI in India, 2003-2010 FDI inflow in Manufacturing 60 17% Manufacturing 50 40 PRC, 49.6 83% Non- Manufacturing 30 20 Composition of FDI in PRC, 2003-2010 10 India, 7.5 0 2003 2004 2005 2006 2007 2008 2009 2010 42% 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
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
Economic Corridors in India Deepen regional economic corridors, build on Myanmar s opening TAPI
For more information: www.sasec.asia email sasec@adb.org 32