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Infrastructure and Logistics Gaps to Regional Trade and Cooperation in South Asia Region 12 June, 2013 1 World Bank, Washington DC.

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Presentation on theme: "Infrastructure and Logistics Gaps to Regional Trade and Cooperation in South Asia Region 12 June, 2013 1 World Bank, Washington DC."— Presentation transcript:

1 Infrastructure and Logistics Gaps to Regional Trade and Cooperation in South Asia Region 12 June, 2013 1 World Bank, Washington DC

2 SAR also lags behind other regions in terms of logistics performance… 2

3 especially among the landlocked states/regions 3

4 4 In 1909, freight could move by rail and road seamlessly from Karachi to Lahore to Delhi to Dhaka

5 In 2013, lack of regional transit agreement leads to significant inefficiencies in transport routes used for trade A container takes 35 days to get from New Delhi to Dhaka Rail: New Delhi-Bombay Maritime: Bombay-Colombo/Singapore- Chittagong Rail: Chittagong-Dhaka 5 5 days transit time via direct rail connectivity from New Delhi to Kolkata over Jamuna Bridge to Dhaka CurrentPotential A container travels 7162km to get from Dhaka to Lahore using Maritime Route 2300km overland through India A container traded between Afghanistan to India must travel through ports in Iran Overland transit through Pakistan would shorten distances significantly Assam tea travels 1400km to get to Kolkata Port Goods from Agartala (NE India) travel 1645km to reach Kolkata Port The southern border of Tripura State of NE India is only 75km from Chittagong Port if travel through Bangladesh is permitted

6 6 Country Rail Network (Total Route Km) Bangladesh2,835 India63,974 Pakistan7791 Sri Lanka1463 Source: World Development Indicators The rail network in SAR  Major trade corridors in India, Pakistan and Bangladesh are connected to rail networks  But the landlocked states have no rail network  Gauge differences, missing links, insufficient equipment and incompatibility but most of all lack of transit agreement prevent seamless cross-border movement

7 7 Challenges along SAARC Rail Priority Corridor 1: Lahore-Delhi-Kolkata-Dhaka-Mahishasan-Imphal PR financial and ops problems, trains return empty to Amritsar Shortage of airbraked locos and wagons. Only BCX covered wagons permitted. Train interchange daylight only. No thru transit – transloading required Kolkata: Long dwell time Insufficient capacity at Jamuna Bridge Rolling stock and gauge differences. Shortage of locos and wagons. Only BCX wagons allowed. Train interchange daylight only Ranaghat-Gede: duplicative inspection, rake marshalling/ deconsolidation, shortage of locos

8 8 Challenges along SAARC Rail Priority Corridor 4: Birgunj/Raxaul-Katihar-Rohanpur-Chittagong with links to Jogbani and Agartala Missing rail link at Jogbani- Biratnagar, gauge incompatibility Missing rail link at Akhaura- Agartala, gauge incompatibility Rohanpur-Singhabad: gauge differences, insufficient BR rail lines cause deconsolidation, shortage of BR locos

9 9 Country Total Roads (Km) Paved roads as % of total roads Road Density (km of road per 100 sq km of land area) Afghanistan 42,15029.306.0 Bangladesh 239.2269.5014.8 Bhutan 8.05062.018.0 India 4,109,59 2 49.5125.0 Maldives 8810029.0 Nepal 19,87553.914.0 Pakistan 258,35065.432.9 Sri Lanka 97,28681.0173.9 Source: Latest World Development Indicators, 2008-10  Bangladesh, India, Pakistan and Sri Lanka have extensive road networks; road density highest in India and Sri Lanka  Landlocked States: Afghanistan, Bhutan and Nepal, have limited networks and lower levels of access.  Most countries need to increase proportion of paved roads  Main roads on major trade corridors narrow and of low quality: < 10,000km are multi-lane.  All ports were served by two lane roads with high traffic flows competing with pedestrians, bicycles, non-motorized vehicles, especially around urban areas. The road network in SAR

10 Priority SAARC Road Corridors 10 CORRIDORSCOUNTRIES 1 Lahore–New Delhi–Kolkata– Petrapole– Benapole–Dhaka (2,322 kms) - Agartala Pakistan, India, Banladesh 2 Kathmandu– Birgunj/Raxaul– Kolkata/ Haldia Nepal, India 3 Thimphu– Phuentsholing– Jaigon– Kolkata/Haldia Bhutan, India 4 Kathmandu– Kakarvitta– Phulbari– Banglabandha- Mongla (1,362kms) or ii) Dhaka– Chittagong (1,442kms) Nepal, India, Bangladesh 5 Sandrop Jongkhar– Guwahati– Shillong– Sylhet– Dhaka–Kolkata Bhutan, India, Bangladesh 6Agartala– Akhaura– Chittagong Bhutan, India, Bangladesh Wagah-Attari: transloading, no customs at border, insufficient border post infrastructure, positive list of 137 products, duplicative and manual procedures, no EDI, no thru transit of Afghan- India bilateral trade Raxaul-Birgunj: transloading, duplicative and manual procedures, no EDI Petrapole-Benapole: transloading, 600 trucks/day, 80% of bilateral trade, duplicative/manual procedures, no EDI Barasat-Petrapole narrow congested road section Phulbari- Banglabandha: Nepali and Bangla goods must move by convoy thru Indian territory Mongla and Chittagong Ports insufficient capacity, rail missing link at Khulna-Mongla No transit through Bangladesh for Indian goods from Kolkata to reach NE through Petrapole- Benapole-Akhaura- Agartala

11 11 Indo-Bangladesh IWT Protocol Route 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, cargo handling equipment and terminals needed, esp in Bangladesh

12 Infrastructure Gaps exist but the real challenge is no freedom of transit, protectionist policies and NTBs 12 RailRoadIWT Gauge/Equipment Standards Harmonization TIR Carnet Motor Vehicle Agreement Road Design Harmonization Longer-term IWT Protocol/ Agreement 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, High Impact Solutions include:

13 Political Economy Considerations 13 LevelIssues Global-China vs. India competition for spheres of influence -Smaller countries benefit from cheap capital/investments RegionalCountries using transit rights as political or negotiation bargaining chip NationalEthnic tensions and political disputes within national boundaries, lobbying power and resistance to change by vested interests Subnational-Local-Corruption by officials and informal groups -weak regulation/monopolies (e.g. trucking services)

14 Corridor management Economic cluster Road and Rail Transport services Customs and border management Gateway / Economic cluster Mode interface Dry port ICD Seaport and shipping Access to port Transit Customs and border management Vehicle change Customs and border management Storage Consolidation Clearing and forwarding International transitNational transit Seaport/ Economic cluster Air freight Customs and border management Transit Clearing and Forwarding Border Institutions Services Infrastructure A corridor approach focuses implementation efforts on one particular geographical area while addressing multiple sources of congestion – a supply chain is only as good as its weakest link

15 15 Challenges along a typical SAARC Priority Corridor: Kolkata/Haldia-Raxaul-Birgunj-Kathmandu: Road and Rail 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 rail link in Nepal  No through bill of lading and inland clearance  Duplicative domestic licensing/documentation  Duplicative and manual customs procedures  Corruption/informal payments at border and along road corridor  No cross-border electronic data interchange  No mutual recognition of collaboration on SPS and standards  Insufficient parking/warehousing facilities

16 16 A Corridor Approach to tackle multiple sources of congestion along a supply chain Strengthening Bilateral Coordination Mechanisms Strengthening National Multi-Sector Coordination Mechanisms: Role of National Trade and Transport Facilitation Committee (NTTFC) Tacking Complex Multi-sector Project in a Weak Capacity Environment: trust fund support essential, significant resources devoted to capacity support during project preparation Relationship and Confidence building ◦ Big vs. Small country: letting smaller country take the lead and provide capacity/knowledge support ◦ Showing early signs of success: the project design focused on showing early results (low hanging fruits) as well as long-term success ◦ A regional study tour was key: to forming amicable relationships away from the negotiating table WB Approach and Lessons

17 17 Nepal-India Regional Trade and Transport Project Component 1 Modernize transport and transit arrangements between Nepal and India  TA for modernization of bilateral trade and transit framework  Automating of Customs Transit Document  Transport management regulations -Axle load control -Road safety Component 2 ICT systems to automate processes for documents related to imports, exports and transit  Single Window  Trade Portal  PCO/NTTFC Institutional Strengthening Component 3 Trade-Related Infrastructure  Expand and upgrade the Narayanghat- Mugling road  Kathmandu Inland Clearance Depot (ICD) Development  Birgunj and Bhairahawa ICD Improvement  Multi-agency Labs Joint IDA-IFC Project: $101 million: financing $99m IDA, $2m IFC parallel co- financing First regional trade and transport facilitation project in South Asia Region Negotiations: May 17, 2013, Board: June 28, 2013 PDO: 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.

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