The concept of regional connectivity is not new. As most of the countries of South Asia became independent and sovereign after the end of colonisation, these countries felt the need for being aligned to their legacy. They formed small groups aiming at establishing regional cooperation to enhance each other's security, economic growth and cultural harmonisation. Prior to 1950s and 1960s, the South Asian region was almost a single entity like the South East Asian nations starting from the Philippines to Pakistan, which were under the British administration.
After the Second World War, these countries gradually got independence from colonial rule and became independent. But again they tried to form regional unions or associations virtually to form a commonwealth or union out of diversities. Jawaharlal Nehru (November 14, 1889 - May 27, 1964) had convened the Asian Relations Conference even before the independence of India in 1947. It was followed by a conference in 1949 in Indonesia and another one in Bandung in 1955. These became the pillar for establishing the Non -Aligned Movement (NAM) in 1961. In the late 1970s under the initiative of Bangladesh, seven South Asian countries, which were once British colonies, formed the South Asian Association of Regional Cooperation (SAARC).
Again under the umbrella of SAARC, many component-wise associations were formed. Among these are South Asia Federation of Exchanges (SAFE) , South Asian Federation of Accountants ( SAFA), South Asian Federation of Endocrine Society ( SAFES) and SAF Games.
The commonality of culture, economy and religion provided a strong and sincere push for regional cooperation as these countries have similar lifestyles, fashions, marketing milieu, music, or food. Even the people have had family relations across the borders that were formed before partition and have sympathy towards them. So this cross-religious, cross-cultural pattern and obviously in recent times common economic interests also motivated the people of the region to forge proximity.
In this perspective, a very recent shift in Indian policy towards its neighbours could be observed in a few projects. For example, there has been cooperation to reduce energy shortage through gas pipelines. These projects, once implemented, could have brought three important results: reduction of mistrust, energy and economic gain and positive effects on different sectors of economies. India and Bangladesh have different energy endowments but their neighbours Myanmar, Bhutan and Nepal are in a position to fulfill energy requirements of India and Bangladesh. India needs to import hydrocarbon from Myanmar, but the adverse geographical position between the two countries, doing business is not easy. However, Bangladesh can bridge this gap owing to its excellent geographical location. Similarly, India is also in a position to mitigate Bangladesh's chronic power shortage to some degree by allowing the country to import hydro-power from Bhutan and Nepal as they have vast hydro energy potential. These arrangements could also assist the landlocked Himalayan states to develop their economies by selling hydro power to their neighbours.
Another example, in contrast, is Iran-Pakistan-India gas pipeline project that was conceived in 1989. A lot of discussion on technical, cost and economic issues had taken place but in 2006, after the US pressure, India came out of the project. The US was against Iran's nuclear projects and India's increasing close relationship with that country. The project could offer a win-win situation for both India and Pakistan as India could have fulfilled its energy needs while Pakistan could have got energy from Iran and transit fees from India. In 2005, the concept of a Myanmar-Bangladesh-India gas pipeline was floated but later no progress was made as Bangladesh tried to take into account bilateral issues with India in the discussion. So the hydro power web among India, Nepal and Bhutan can provide gains to all these three countries. India, Sri Lanka and Nepal have started moving forward in energy cooperation. Joint venture of Sri Lanka and India in electricity and India-Nepal joint venture on gas pipeline are examples that could be cited in this regard.
The BCIM (Bangladesh-China-India-Myanmar) Economic Connectivity Forum for Regional Cooperation became well-known as Kunming Initiative as it began its journey in August 1999 in the capital of China's southwestern province of Yunnan. After 14 years of intense dialogue and cooperation, now BCIM Forum has become an important sub-regional cooperation mechanism in the region, aimed at greater integration of trade and investment among the four countries. Subsequently, to facilitate and consolidate the process of regional economic cooperation and create cross-border trade and investment opportunities both at public and private sector level, an organisation named China Kunming International Logistics & Finance Association (ILFA) has been set up in Kunming with the support of the Chinese government. The initiative has been manifestly mentioned at the recent summit of regional leaders in Beijing and particularly pronounced during bilateral head-of-state level meeting between Bangladesh and China. In BCIM region, countries have enough funds. Yet, they have most avenues untapped to channel financial resources for their own mutual benefit.
The ILFA has set its sight on connectivity and cooperation covering Southeast Asia, South Asia and Indian Ocean regions and is also working towards infrastructure construction including roads, land and deep sea ports, vital projects, construction of industrial parks, free trade zones etc. Among other objectives, the ILFA is also exploring the possibility of creating platforms for international exchanges, research on financial instruments, formation of international logistics organisations and regional financial organisation for ensuring financial interconnectivity of the region.
Under the initiative of BCIM Exchanges Forum, ILFA and South Asian Federation of Exchanges (SAFE), a brain-storming meeting was organised in Kunming on June 9-10, 2014. The main theme of the meeting was 'Free Trade Zone and International Financial Opening Cooperation'. It referred to regional financial integration and BCIM economic corridor issue specially suggesting international financing mechanism for establishment of China-Bangladesh Economic Corridor, establishing Free Trade Zones, setting up non-governmental financing mechanism, carrying out research on how to promote regional finance opening and co-operation, creating and marketing innovative financial products suitable for meeting the objectives. The meeting emphasised, in particular, to support construction of Silk Road Economic Belt and 21st Century Maritime Silk Road. It agreed, guided by UN-ESCAP and joined by experts from the relevant countries, to suggest plans for Asian economic corridors' transport facility which can act as the basis for making financing products through bilateral research.
The Kunming congregation agreed to support setting up of pilot projects on BCIM Free Trade Zones. It reached consensus on supporting the governments of four countries under the framework of UN-ESCAP's 'Governmental Land Ports Agreement'. This aims to build all land ports under the BCIM Free Trade Zones including international land ports like Dhaka - Kamalapur Land Container Depot (Bangladesh), Kunming-Tengjun International Land Port (China), Kolkata-Durgapur International Land Port (India), Mandalay International Land Port (Myanmar) and others. The idea for setting up a Pan Asia Stock Exchange took a turning point in the meeting. It decided to organise the joint committee to investigate how to develop stocks, bonds, futures, gold and other financial derivative instruments to be used for construction of BCIM and other Asian Economic Corridors (like railway, highway, river, and others) for regional countries, building of Sonadia Port, Chittagong Port, Kyaukpyu Port and others, energy development like electricity, natural gas and others and other infrastructural fields. All these are to be supported through international financing mechanism for infrastructure connectivity possibly with cross-border investments by Chinese investors and other enterprises / entities. The meeting assumed that establishing the non-governmental financing mechanism would promote financial market for cooperation, support commercialised services for RMB Settlement and RMB Clearance cooperation, advance mutual participation by banks, insurance and stock exchanges, build join transactional credit assessment system, create risk monitoring and controlling platform, a common regulatory framework, which will cover all kinds of financial markets, financial organisations, financial products, financial instruments and settlements of transactions.
There is no denying the fact that Bangladesh-China-India-Myanmar Economic Corridor needs huge funds from both private and public sectors to support infrastructural construction such as harbours, railways, highways and other areas like industrial park/ free trade zone and many other projects related to BICM economic co-operation. Accelerating building of much-needed infrastructure can help effectively guarantee smooth, convenient and efficient cross-border logistics movement, improve human capital and prompt industrial development in BCIM region. With this in mind, the concept of establishing a specialised regional stock exchange has got currency to serve as investment and trading platform. It could lead to China-South Asian investment cooperation in both public and private sectors, determine appropriate methods of financing and select currency denominations for projects undertaken under BICM and regional initiatives.
The writer is former Secretary to the Government and former Chairman NBR .
mazid.muhammad @ gmail.com