Developing Corridors for Growthris.org.in/aic/sites/default/files/programme_and...Indo-BD BD-Pak...
Transcript of Developing Corridors for Growthris.org.in/aic/sites/default/files/programme_and...Indo-BD BD-Pak...
Developing Corridors for Growth South Asia Regional Transport and Trade Facilitation Program
May 12, 2014
1
World Bank
In South Asia, the most binding infrastructure constraints to growth for firms are:
2
0
10
20
30
40
50
60
70
80
90
100
Afghanistan2005
Afghanistan2007
Bangladesh2002
Bangladesh2007
India 2002 India 2005 Pakistan 2002 Pakistan 2007 Sri Lanka2004
Total
%
Electricity
Transport
Telecommunication
1.
2.
3.
World Bank firm survey
% o
f firm
s w
ho re
port
ele
ctric
ity, t
rans
port
or T
elec
omm
unica
tion
as a
con
stra
int
3
In 1909, freight could move by rail and road seamlessly from Karachi to Lahore to Delhi to Dhaka, and by inland waterways on the Brahmaputra and Jamuna Rivers (India and Bangladesh)
4
However, barriers erected since Partition have made it harder than ever to trade in South Asia
A container takes 6-7 times as long to get from New Delhi to Dhaka using current indirect routes through Singapore and Colombo
Cut travel time down by 30 days (from 35 days to 5 days) via direct rail connectivity between Kolkata and Dhaka
Current Inefficiencies Potential Savings/Impact
A container travels 3 times the distance to get from Dhaka to Lahore using the maritime route
Cut travel distance by 4900 km (from 7200 km to 2300km) by using direct overland routes through India
Goods from Agartala (NE India) travel 8 times the distance to reach Kolkata Port instead of using Chittagong Port in Bangladesh
Cut travel distance by 1400 km (1600km to 200 km) by travel through Bangladesh
Inefficient circuitous routes impose high costs on traders and the economy
Indo-BD
BD-Pak
Indo-Pak A container costs 4-6 times more to travel the indirect maritime route than the direct route between India and Pakistan
Cut costs by $3200 to $4300 per 40ft container by taking the Mumbai-Karachi direct route rather than through Dubai
No wonder South Asia’s intraregional trade is the lowest in the world
5
Region Intra-Regional Trade
as a share of total trade (%)
EU 60 EAP 40
NAFTA 35 ASEAN 25
MERCOSUR 15 ECOWAS 10
SAARC 5
World Bank (2012): “Preferential Trading Arrangements. Policies for Development.”
Zhai (2010): investments in transport infrastructure to increase Pan-Asian connectivity could reduce trade costs by more than 20% in India, and12.5% in Bangladesh and Pakistan. The lower trade costs would yield annual gains of around 6% of 2020 GDP for India and Bangladesh, and 4% for Pakistan.
(in 2008 prices).
Research Information Systems (RIS),
India: Intra-regional trade can more than double if constraints are removed (US$ 15 billion to US$ 40 billion annually)
6
McKinsey 2010 Infrastructure Study estimates that logistics inefficiencies account for 4-5% of India’s GDP (US$45 billion in 2013, US$140 billion in 2020)
Figures for other economies in South Asia are likely comparable
Transport and Logistics inefficiencies impose high costs on South Asia’s economies
7
South Asia is among the bottom three regions for logistics performance, and the 3 landlocked countries rank among the poorest performers
Region/ Country LPI Score
LPI Rank*
Customs Infra-structure
International shipments
Logistics competence
Tracking & tracing
Timeliness
East Asia & Pacific
2.84 2.57 2.66 2.82 2.72 2.91 3.32
Europe & Central Asia
2.71 2.47 2.6 2.66 2.65 2.75 3.14
Latin America & Caribbean
2.71 2.45 2.57 2.71 2.64 2.73 3.12
Middle East & North Africa
2.58 2.29 2.4 2.68 2.49 2.56 3.02
Sub-Saharan Africa
2.46 2.27 2.29 2.47 2.43 2.41 2.85
South Asia 2.58 2.47 2.39 2.59 2.58 2.49 2.93
Afghanistan 2.07 158 2.16 1.82 1.99 2.12 1.85 2.48 Bangladesh 2.56 108 2.09 2.11 2.82 2.64 2.45 3.18 Bhutan 2.29 143 2.09 2.18 2.38 2.48 2.28 2.28 India 3.08 54 2.72 2.88 3.20 3.03 3.11 3.51 Maldives 2.75 82 2.95 2.56 2.92 2.79 2.70 2.51 Nepal 2.59 105 2.31 2.26 2.64 2.50 2.72 3.06 Pakistan 2.83 72 2.84 2.67 3.08 2.79 2.73 2.79 Sri Lanka 2.70 89 2.56 2.23 2.56 2.91 2.76 3.12
World Bank Logistics Performance Index 2014: Regional and SAR Countries
*LPI rank is out of a total 160 countries.
8 Source: Doing Business 2014: Trading Across Borders
Time to import-export is higher than most other regions, and the landlocked countries are at a disadvantage
Rank of total189 countries Bhutan: 172 Nepal: 177 Afghanistan: 184
9
The poorest and most deprived populations in South Asia are concentrated in the Ganga Basin
World Bank, 2011 South Asia Poverty Rate map
McKinsey, India Deprived Services map* *food, energy, housing, drinking water, sanitation, health care, education, and social security
Nepal, Bhutan, NE India, Bangladesh, Bihar
10
Where World Bank corridor development and connectivity projects are focused…
Proposed Bhutan project Proposed Bangladesh projects India projects Nepal project
Unblocking trade barriers in the poorest and most densely populated regions has positive impact on poverty alleviation
11
12
The World Bank’s investment and analytical program seeks to address key policy, procedural and infrastructure barriers along
SAARC priority corridors focusing on three key objectives:
Facilitating connectivity to the nearest ports, and to regional and global markets for the 4 landlocked areas in SAR.
Investments in missing links and especially last-mile links to establish multi-modal connectivity along strategic regional corridors.
Addressing policy and procedural issues to seamless cross-border transit.
13
connectivity for landlocked states
multi-modal connectivity along strategic regional corridors
Bangladesh India Bhutan Nepal
Improve national and regional
connectivity for isolated
Chittagong Hill Tracts Districts
Improve national and regional connectivity for
landlocked NE India states
Address missing transport links and trade infrastructure along Southern E-W
Highway
Improve road and trade
infrastructure along
Kathmandu-Birgunj-Kolkata
Corridor
Leverage IWT for national and
regional transport
Multi-modal connectivity for NE India states to
Bangladesh Develop alternative trade routes incl. along Thimphu-
Phuentsholing C.
Explore alternative
trade routes through
Bangladesh
Multi-modal connectivity to Myanmar and East
Asia
Explore alternative multi-modal (road, IWT) trade routes through Bangladesh
Develop economic centers of growth along
the Golden Quadrilateral
Implement Eastern Dedicated Freight
Corridor
Multi-modal connectivity to
Myanmar and East Asia
14
constraints to seamless cross-border transit
Bangladesh India Bhutan Nepal
Bangladesh to allow free transit of Indian trucks
across its territory?
Consider joint/ co-located
border post with India?
India to allow free transit of trucks from Bangladesh, Bhutan and Nepal across Siliguri Corridor?
Consider joint/ co-located
border post with India?
Consider joint/ co-located
border post with India?
Consider joint/ co-located border post
with neighboring countries?
Implement the GST?
India to allow alternative trade routes for Bhutan
and Nepal?
WB Program to Facilitate South Asia Transit and Trade
Afghanistan Second Customs Reform and Trade Facilitation Project Karachi Port Improvement Project Eastern Corridor Transport and Trade Facilitation Program NLTA
◦ Regional railway, IWT and trade potential/livelihood development studies and TA
Nepal-India Regional Trade and Transport Project Nepal Regional Trade Technical Assistance Project India: Eastern Dedicated Freight Corridor Program (incl Development Corridor
approach) India: Mizoram State Roads II Regional Connectivity Project India: Support to National Transport Development Policy Committee NE India Multimodal Transport Technical Assistance Project (proposed) India: National IWT Corridors Project (proposed) Bangladesh Regional Trade and Transport Project (proposed) Bhutan Regional Trade and Transport Project And supporting development of trade with Myanmar “Breaking Barriers” book/analytical work on supporting regional trade in South Asia Competitiveness studies in Afghanistan, Bhutan, Nepal, Pakistan
15
Projects in the Program address key barriers along SAARC priority multimodal transport corridors to facilitate trade
16
Anchor & “cluster”
Anchor & “cluster”
Stranded investment
Problem feeder
Stranded investment
Agri-node & “cluster”
Problem feeder
“DENSIFICATION” Feeders often
need to be funded thru’ fiscus/grant
DC logistics “catchment”
The spatial development approach is an attempt initially by the Government of South Africa to "unlock the inherent capital potential" of specific spatial locations in Southern Africa. The approach has since been adopted regionally in Southern Africa and continental by the African Union.
Source: Jourdan, 2008
World Bank using Development Corridor Approach to support Golden Quadrilateral Development
MAPUTO
Pande-Secunda Gas line. PPP Sasol completed
Coal-based Power Station 2 transmission lines to Matola
completed
Liquid Fuels & Petro-chemicals: Sasol
Al smelter 500ktpa BHPB completed
Joburg-Maputo Highway PPP- BOT completed
Port of Matola/Maputo Upgrades, PPP
Joburg to Maputo Railway line: Upgrade
Sout
h A
fric
a
17 Source: Jourdan, 2008
Anchor Projects to Crowd in Private Sector Investment, plus services and economic opportunities for local communities
Lessons Learned from Other Projects/Regions
Must be carefully planned: mapping what the potential is, where it lies, institutional and policy bottlenecks, grounded in economics
Three tiers of institutional collaboration ◦ Across Countries: Government-to-Government ◦ Within Countries: Inter-ministry Coordination ◦ Local Participation: Province-to-Province (Punjab-Punjab)
A catalytic event to focus energies ANCHOR PROJECT/s that can crowd in investment Benefit sharing and backward linkages: local communities
can benefit from SME and job creation Government must take the lead: Private sector should
participate but cannot do it alone (too many policy/regulatory issues, magnitude of investment too high)
Addressing core connectivity and services gaps is key to unlocking the latent potential of economic corridors
19
US$101m in IDA-IFC investments & TA Board approval June 2013 Challenges: Long dwell time at Kolkata/Haldia ports Bilateral transit agreement limits Nepali transit
to only one corridor, and only containerized cargo for rail
Poor and narrow roads in Nepal and India No through bill of lading and inland clearance Duplicative domestic licensing/documentation/
customs procedures No cross-border electronic data interchange No mutual recognition of collaboration on SPS
and standards Insufficient parking/warehousing facilities Development Objective: Decrease transport time and logistics costs for bilateral trade between Nepal and India and transit trade along the Kathmandu-Kolkata corridor for the benefit of traders by reducing key infrastructure bottlenecks in Nepal and by supporting the adoption of modern approaches to border management.
Nepal-India Regional Trade and Transport Project addresses challenges along a typical SAARC Priority Corridor: Kolkata/Haldia-Raxaul-Birgunj-Kathmandu: Road, Rail, Border/Trade Infras, Procedural Reforms
20
Inland waterways need development to exploit potential World Bank supporting efforts in both Bangladesh and India
Ashuganj Port needs better terminals, equipment, operations, Need rail connectivity from Tripura
Akhaura could soon become one of the main doorways to a $1billion/year trade corridor, but need wider approach roads on both sides, India building ICP
Short term of Bilateral Protocol prevents private sector investment; no night-time navigation permitted; dredging needed esp Nov-May; more and better navigational aids, safety and cargo handling equipment and terminals needed, esp in Bangladesh.
21
US$107 regional and national IDA Board date June 2014 Challenges: Low road density in state Poor connectivity Difficult terrain Low level of trade and availability of jobs Low trade production capacity Development Objective: Increase transport connectivity along
regional trade corridors in Mizoram through (i) Improvement of Priority Cross-border Roads and Trade-Related Infrastructure; and (ii) Road Sector Modernization and Performance Enhancement through Institutional Strengthening
Mizoram State Roads II Regional Transport Connectivity Project: Enhancing connectivity to Bangladesh and Myanmar
22
Infrastructure Gaps exist but the real challenge is no freedom of transit, protectionist policies and NTBs
Rail Road IWT
Gauge/Equipment Standards
Harmonization Regional Agreement
TIR Carnet Motor Vehicle Agreement
Road Design Harmonization
Longer-term IWT Protocol/
Agreement More Investments
Regional Bond
Through Bill of Lading
Customs Simplification, Harmonization, and Cross-border Cooperation
Simplification, Harmonization and Mutual Recognition of Quality and Technical Standards
Removal of NTBs (rules of origin, standards, etc..)
Restrictive Trade Agreements (positive list, etc..)
In addition to investments in infrastructure, policy reforms are needed for high impact:
Diep Nguyen-van Houtte Senior Transport Specialist Trade and Transport Facilitation World Bank [email protected] +1-202-473-7213
23
Thank you!