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Special Report
BCIM Economic Corridor: Facilitating Sub-Regional Development
Roshan Iyer
IPCS_Special_Report187_BCIM_Economic_Corridor_RIyer_May2017.PDF
 


Introduction

The Bangladesh-China-India-Myanmar Forum for Regional Cooperation’s (BCIM) Economic Corridor (EC) initiative, a complex entanglement between security, economic and national interest, exemplifies Foreign Secretary Jaishankar's statement. This paper attempts to analyse the economic aspect of this cooperation, focusing on the reasons for stalling of the BCIM EC’s progress, and explores measures to take the initiative forward. Despite all four countries having agreed to implement the EC in principle, admittedly, there has been a lull in its progress. The EC’s route has been put in place and is almost completely motorable. However, an analysis of the trade intensities and patterns among the four countries demonstrates that potential trade volumes are inadequate to justify its implementation. Nonetheless, the EC continues to emphasise cooperation on the “Zone 3” pillars of Trade, Transport and Energy, which avoid addressing the existing realities of the BCIM countries’ underdevelopment.

It is for this reason that the “Zone 2” factor - ‘Human Development’ - must be brought into the ambit of the BCIM Forum framework, broadening its conceptual focus and ensuring that the EC’s infrastructure and economic initiatives also benefit people from these countries. This would require a closer study of three aspects - the security-development measures needed to overcome the drug economy in the BCIM sub-region; the integration of three ports into the EC; and gradual liberalisation to bring the four economies together while keeping their economic diversities in mind.

The overall lack of development contributes to varying degrees of instability and security challenges across the sub-region, creating a vicious cycle of stunted development and deteriorating security. The drug economy and cross-border crime fund a majority of the insurgencies in India’s Northeast region (NER) and Myanmar’s Shan State - both that lay on the BCIM EC route. The production of licit crops over illicit crops, mainly poppy, should be incentivised, along with the provision of the necessary transport and market infrastructure. Social support infrastructure to producers of lesser profitable licit crops is also important. Simultaneously, possible security mechanisms that could be implemented through BCIM cooperation should also be explored.

On the transport front, the sub-region is relatively land-locked, isolating it from much of the global economy. The lack of effective road networks reduces the mobility of goods, resources and people within the sub-region. The integration of the Kaladan Multi-Modal Transport Project (KMTP), Sittwe Port (Myanmar’s Rakhine State) and Chittagong Port (Bangladesh) would enable sea access, thereby addressing this problem. For this, about 500 kilometres of rail-links must be constructed, connecting these ports to the existing rail networks.

Soft infrastructure to facilitate trade also needs to be improved. Trade agreements and policies must be negotiated to protect smaller economies from succumbing to BCIM’s economic giants. A Modified Free Trade Agreement to allow the gradual liberalisation of local markets should be put in place. Simultaneously, an investment protection agreement, insuring local investments from the sub-region’s instability, will be necessary to build confidence among foreign investors. Both of these should be implemented alongside a policy focusing on community-building through both foreign investments and greater linkages between the communities and producers along the BCIM EC and regional value chains. This would facilitate the development of a sustainable economy.

A shift in the BCIM framework’s ambit to ‘Human Development’ would provide a stronger impetus for the EC’s implementation. These may also sow the seeds for regional cooperation in the future, bringing stability and prosperity to an otherwise unstable region.

 

 

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