The World Bank has planned a $1.4 billion project to accelerate trade and transport connectivity in Eastern South Asia- a development that can increase Bangladesh’s regional trade by a staggering 93%. According to the WB, regional trade in South Asia accounts for just 5% of total trade, which compares poorly to East Asia and Sub-Saharan Africa, where regional trade accounts for 50% and 22% of total trade, respectively.
A high cost of connectivity is responsible for the low level of regional trade. Trade conditions with distant economies are generally better than those with neighbours in the region. According to the WB’s 2021 Connecting to Thrive report, trade between Brazil and Germany is approximately 15–20 percent less expensive for an Indian company than with a Bangladeshi company.
The WB has taken up a project initially involving $1.4 billion to increase the efficiency and resilience of trade and transportation along selected corridors in Bangladesh, Nepal, and Bhutan.
In phase 1 of the project: The World Bank will provide $1.03 billion of the $1.4 billion, while the governments of Nepal and Bangladesh will provide the rest. The World Bank has sanctioned $753.45 million for Bangladesh and Nepal will receive $275 million of the $1.03 billion allocated to phase 1 of the program. The $753.45 million to be given to Bangladesh will be used to implement projects by the Bangladesh Land Port Authority, the National Board of Revenue, and the Road and Highways Department by 2029.
43 km of two-lane Sylhet Charkai Sheola road will be upgraded to a four-lane that will connect the port with the Dhaka-Sylhet Highway, expected to reduce the travel time by 30%. An electronic tracking system will be installed to track truck entry and exit at the Benapole, Bhomra, and Burimari land ports. Customs infrastructure will be upgraded along with smart parking.
The second phase of the project will include India; the amount of funding will be determined based on its needs, while Bhutan will receive $100 million.
According to the World Bank, Bangladesh’s exports to India could increase by 182% from the current levels and India’s exports to Bangladesh by 126% under a free trade agreement. By improving transport connectivity between the two countries, which share a 4,100-kilometre border, exports could increase, even more, yielding a 297% increase in Bangladesh’s exports to India and a 172% increase in India’s exports to Bangladesh. Untapped potential for regional trade is estimated at 93% for Bangladesh, 9% for Bhutan, 50% for India, and 76% for Nepal.