Smooth transport connectivity with India may raise Bangladesh’s income by 17%: World Bank

Seamless transport connectivity between India and Bangladesh has the potential to increase national income by as much as 17 percent for Bangladesh and eight percent for India, according to a new World Bank report.

The report titled "Connecting to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia," was launched today.

It analyses the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA), compares it with international best practices, and identifies its strengths as well as gaps for seamless regional connectivity.

Additionally, the report also discusses regional policy actions the countries can take to strengthen the MVA and proposes priorities for infrastructure investments that will help the countries maximise its benefits.

"Geographically, Bangladesh's location makes it a strategic gateway to India, Nepal, Bhutan, and other east Asian countries. Bangladesh can also become an economic powerhouse by improving regional trade, transit and logistics networks," said Mercy Tembon, World Bank country director for Bangladesh and Bhutan, during the launching of the report.

While trade between India and Bangladesh has increased substantially over the last decade, it is estimated to be $10 billion below its current potential, said the World Bank report. 

"The World Bank fully supports the Government of India's Act East and Neighbourhood First Policy. The MVA was a great first step. But more needs to be done for developing seamless connectivity in the sub-region, especially as it begins its economic recovery from the COVID-19 pandemic," said Junaid Ahmad, World Bank Country Director in India.

"States bordering Bangladesh such as Assam, Meghalaya, Mizoram, and Tripura in the northeast, and West Bengal on the west, and states further away from Bangladesh such as Uttar Pradesh and Maharashtra would gain huge economic benefits from seamless connectivity," he added.

However, unleashing the full potential of integration in the region requires strengthening the agreement signed in 2015. Countries need to address a number of challenges such as infrastructure deficits, particularly in designated border posts, harmonisation of regulations and customs procedures, the report says.

"The transport integration agreements in eastern South Asia represent a significant step toward the creation of a cross-border integrated transport market in the subregion, with the Motor Vehicles Agreement (MVA) being the cornerstone of that integration," said Matias Herrera Dappe, senior economist, and Charles Kunaka, lead private sector specialist -- authors of the report.

The agreement can achieve full potential by adopting good practices; addressing gaps and inconsistencies in infrastructure and market failures in transport services; and adopting complementary policies that remove binding constraints caused by market imperfections, they observed.