• Wednesday, November 26, 2014

Sunday Pouch

Transhipment is better option than transit

Ashfaqur Rahman

We are happy to learn that Commerce Minister Tofail Ahmed has been talking of offering transshipment of Indian goods from northeast Indian states through Bangladesh. He has requested the Indian high commissioner to revive talks on this issue. This is indeed a mature move to help India to move her products out of these landlocked states to Bangladesh ports or the rest of India. There are several reasons why transshipment is more acceptable to us than giving road or train transit for Indian goods. This proposition will have positive effect in our bilateral relations.
Transshipment is the movement of goods or containers to an intermediate destination for final delivery to another destination. Thus, Indian trucks would unload goods at the Bangladesh border custom port. Then our trucks will carry these sealed containers over to the northeast Indian states.
This arrangement, if agreed to by both parties, would be in sharp contrast to the controversial transit discussed by the last Awami League government between 2009 and 2013. There were a number of objections raised by Bangladesh, none of which was addressed seriously by India. It caused the government to face a lot of flak from the general public. It is only because of India's failure to give Bangladesh fair share of the Teesta waters from West Bengal that transit was politically scuttled by Bangladesh. Later, the matter was left on the backburner.
Transit with India by road or rail is not the best option available to us. If we allow Indian trucks to run through our country and cross over to the northeast Indian states there could be serious security threats. The northeast is a politically unstable area infested with several armed insurgencies. It is not sure how India can ensure that the trucks would not be carrying arms and ammunition for insurgent groups there. Bangladesh could very well be at the receiving end of this insecure state of things. There are also cost factors which if factored in will not make giving transit an economically viable proposition for Bangladesh. We have to build new highways for the heavy multi-axle Indian trucks immediately to cater to the transit. They have to be maintained at great expense without being able to recover the huge investment made from the fees received from India.
Other infrastructure including railway lines and goods stations have to be built. Custom checkposts and refueling facilities have to be made available for Indian vehicles. Pollution, congestion as well social problems would be other serious side effects. India would pay us perhaps a flat rate which would not cover 1/3 of our costs. Transit would not benefit our drivers and trucking companies. All the money would go to the Indian drivers.
Transshipment would also mean building infrastructure at intermediate destinations for the time being. Since Bangladeshi trucks would carry Indian goods most of the way we would not require massive investments immediately. There would not be attending social and security problems. Our drivers would be able to maintain greater transparency about Indian goods moving in and out under this arrangement.
Some of the largest transshipment destinations have kept trade moving swiftly and efficiently around the world. There are several such hubs, like Singapore, Hong Kong, Shanghai that have thrived on transshipment revenue. However, transshipment presupposes several things. These include an excellent bilateral relations with the neighbouring country for whom transshipment is offered. Unless relations are friendly there would be endless saga of bilateral incidents preventing smooth operation of transshipment.
Again, a set of regulations based on legislation would have to be introduced that would govern detailed operations of transshipment through Bangladesh. These regulations need to be strictly followed with provisions for penalty if infringed. However, such regulations should have provision to be interpreted in a flexible way to meet changing circumstances. Revenue earned from transshipment would have to be kept exclusively to reinvest in transshipment infrastructure. They would need constant upkeep so the money earned must be to maintain the high standards. In our case, the highways carrying Indian goods have to be kept upgraded and in tip-top condition.
Transshipment can bring in substantial revenue to a state as well as to the private sector. This can be more if the arrangement is decentralised. It will make the service not only smooth but also efficient. We need to study how some of the major transshipment hubs in our region operate to understand how we should begin.
We have a river transit system operating with India for many years now. But this is not in popular use as the infrastructure is poor and not efficient. It does not fetch much revenue for us. The Indians are also not happy as this system is antiquated and not commercially beneficial to them. There are many regulations that hamstring freer flow of goods. We need to see how we can integrate this system with a modern transshipment network that we are likely to introduce with India.
It would not be wise to delay implementation of a transshipment arrangement with India. Whatever is the present state of our bilateral relations an initiative by Bangladesh will go a long way in creating goodwill for Bangladesh in India, and vice versa.
Now that we have a senior minister like Tofail Ahmed to steer things forward it is appropriate that Bangladesh should move speedily ahead. India is expected to go to the national polls soon. Any new government there must be offered transshipment so that our bilateral relations can move ahead. Our foreign office should pick the cue and see if we can move forward quickly on transshipment with India.


The writer is a former ambassador and a commentator on current issues.
E-mail: Ashfaque303@gmail.com

Published: 12:00 am Sunday, February 02, 2014

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