Though, there is still some confusion over the implementation, the Bangladesh-Bhutan-India-Nepal Motor Vehicle Agreement (BBIN-MVA) will not only help increase intraregional trade in the South Asia but also key to diversify Nepal’s trade in the South Asian region apart from easing trading activities, according to experts.
Even four years after Bangladesh, Bhutan, India and Nepal signed a motor vehicles agreement to facilitate the seamless movement of cargo and passengers cross borders, there has hardly been any progress to sign the protocol, which experts and analysts say is causing losses to Nepal.
“Studies has indicated that BBIN-MVA will potentially boost intraregional trade within South Asia by almost 60 per cent and with the rest of the world by 30 per cent,” said a trade expert and former joint secretary at the Ministry of Industry, Commerce and Supplies Rabi Shankar Sainju, presenting a paper at an interaction organised by South Asia Watch on Trade, Economics an Environment (SAWTEE), in collaboration with the Asian Development Bank (ADB), in the Valley today.
“Intraregional trade accounts for a little more than 5 per cent of South Asia’s total trade, compared with 50 per cent in East Asia and the Pacific and 22 per cent in Sub-Saharan Africa,” he said, further elaborating on benefits to Nepal from the MVA including seamless connectivity, enhanced movement of containerised cargo, reduction in trade costs, transparency and uniformity in cross border practices, development of economic corridors, and improved people-to-people contact resulting in increased tourism and trade in services.
Sainju also pointed out that the reduction in trade costs could be as much as 30 per cent and recommended that a Memorandum of Understanding (MoU) be signed to implement the BBIN-MVA amongst three countries on a provisional basis.
Nepal's export shipments can directly enter Bangladesh without the cumbersome process of transloading at the border, and Nepal's cargo vehicles can carry export or transit cargo to the dry ports and ports in India and bring back India’s export cargo to Nepal or transit cargo from Indian ports, after Nepal implements BBIN-MVA, he argued.
Bangladesh, Bhutan, India and Nepal in June 2015 had signed a framework agreement for the regulation of passenger and cargo vehicular movement among these countries in a bid to enhance regional economic integration through transport and transit facilitation. However, further processes to operationalise the MVA, was stalled after Bhutan’s upper house failed to ratify the agreement. The other three countries – including Nepal, Bangladesh and India – are now exploring, with Bhutan’s consent, ways to move ahead with the agreement, as Bhutan's consent has been received, though Bhutan’s upper house did not ratify the agreement.
The BBIN was a concept floated by India as a sub-regional connectivity project after Pakistan’s reservations over a similar motor vehicles agreement under the South Asian Association for Regional Cooperation (SAARC). The MVA was one of the items on the agenda of the 18th SAARC Summit, held in Kathmandu in November 2014. The BBIN-MVA allows vehicles in any member countries to cross borders without hassles along the agreed routes. In doing so, the MVA gets rid of the cumbersome process of transloading and allows the entry of vehicles all the way to ICD, thus mitigating border congestion and reducing both time and trade cost.
The chief guest of the programme vice chair of the National Planning Commission (NPC) Prof Dr Puspa Raj Kadel, on the occasion, suggested conducting pilot programmes along certain routes for a few months, the experience obtained from which could be used to enhance the draft protocol of the MVA. “The MVA is crucial for expanding the trade relationship between member countries and needs to be executed soon,” he said.
Likewise, director at the Asian Development Bank (ADB) Ronald Antonio Butiong noted that the MVA would help reduce transshipment at the border, thereby leading to reduced logistics cost. However, he mentioned that there are misconceptions about the MVA, which he hoped the workshop was able to clarify. “For example, the MVA implementation would not result in a ‘free for all’ in cross-border transport operations,” according to him. “The MVA has restrictions on number of permitted vehicles, allowable routes and border crossing points and technical specifications of vehicles,” he said, adding that foreign transport operators will also not be allowed to conduct domestic transport in the host country.
He, on the occasion, also acknowledged that there are concerns among stakeholders, which may be addressed through refinements in the MVA’s implementing protocols that will soon be negotiated.
Asian Development Bank (ADB) is an important partner in this endeavour as BBIN-MVA is a priority initiative under the transport facilitation pillar of the ADB's South Asia Subregional Economic Cooperation (SASEC) Trade Facilitation Strategic Framework, now subsumed under the SASEC Operational Plan. It is also one of the major accomplishments under SASEC as it is the first official instrument to be signed by the Ministers of participating countries.
Likewise, secretary at the Ministry of Industry, Commerce and Supplies Kedar Bahadur Adhikari, on the occasion, emphasised that connectivity is Nepal’s priority. “The ministry has advocated for implementation of the MVA after certain ambiguities in the agreement are clarified in the protocols,” he said, adding that the charges and fees provisioned by the agreement, however, must not be so high as to impede movement and the provision of search and inspection must not be used in a way resulting in excessive checks. “The agreement should allay the concerns of our transport and logistics businesspersons.”
“The BBIN-MVA can open avenues for alternative routes and ports for overseas trade and unhindered movement of cargo and passenger vehicles to third countries through India,” chairman of SAWTEE Dr Posh Raj Pandey, said, underscoring that the ambiguities in the agreement can be and should be clarified in the Protocol.
Stressing the need for improved connectivity, the participants, on the occasion, highlighted some possible practical problems like lack of harmonisation regarding load factors, ambiguities in the provision of permit and transit fees and charges, the disparity in the cost of vehicles among the countries, and possible environmental concerns, addressing which will make the BBIN-MVA’s implementation beneficial to all the parties, resulting in seamless connectivity.
Joint Secretary at Ministry of Physical Infrastructure and Transport – who led Nepali delegate at the MVA negotiations – Gopal Prasad Sigdel, chairperson at Road Transport and Transit Committee (FNCCI) Ashok Kumar Temani, and former secretary at the Ministry of Commerce and Supplies Naindra Upadhyaya, also emphasised the need to implement the BBIN-MVA through signing the protocol agreements, after quickly clarifying some ambiguities and addressing concerns of the private sector.
Once Bangladesh, India, and Nepal finalise and sign these two protocols, the BBIN-MVA will formally operationalise, they added.
“Nepal will not benefit until the protocol incorporates inland waterways and railways, apart from trucks and passenger vehicles,” former commerce secretary Naindra Prasad Upadhyaya.
“With SAARC increasingly sidelined, the BBIN-MVA could offer an alternative platform for regional trade,” according to former under secretary-general of the United Nations Gyan Chandra Acharya. “It could help reduce logistics costs on trade, which are significantly higher in the South Asian region,” he said, adding that however, there are concerns, especially from the private sector, given how existing trade and transit treaties and agreements with India have been less than satisfactory.
Although Nepal and India have consented bilaterally to seamless vehicular movement, actual practice is less than smooth. Currently, Indian passenger and personal vehicles are given permits at border customs points while Nepali vehicles have to receive permission from the Embassy of India in Kathmandu to travel on Indian lands.
“Nepal has failed to benefit from a number of agreements signed with India,” according to chairperson of the Road Transport and Transit Committee of the FNCCI Ashok Temani. “Although Nepal and India have a trade and transit treaty, railway service agreement and a cargo agreement in place, they have failed to benefit Nepal,” he said, adding that poor infrastructure, poverty along the border areas, and a failure to implement necessary laws are among the primary obstacles to ensuring the free movement of vehicles and passengers cross the Nepal-India border.
“As Nepal and India share multiple entry and exit points along the border, the country will have a tough time enforcing cabotage restrictions,” said trade analyst Purushottam Ojha. “Cabotage rights allow a company from one country to trade in another country.”
Ojha also underscored the need to address transit and transport fees, visa facilitations, currency exchanges, and access to inland container depots to the member countries. “Until these issues are resolved, things will not move in the right direction, despite the agreement,” said Ojha.
The BBIN-MVA trial runs – for instance, cargo trial from Kolkata to Agartala in 2015 and from Dhaka to Delhi in 2016, and passenger bus trial from Khulna to Kolkata in 2016 and from Dhaka to Kathmandu in 2018 – offer evidence for the viability of the perceived benefits of the MVA.
