A myth and manifestation
THE “BCIM (Bangladesh-China-India-Myanmar) Economic Connectivity Forum for Regional Cooperation” is popularly called the Kunming Initiative, as it began its journey in August 1999 in Kunming, capital of China's southwestern Yunnan province. After 14 years of intense dialogue and cooperation, the BCIM Forum has now become an important sub-regional cooperation mechanism in the region, aimed at greater integration of trade and investment between 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 and Finance Association (ILFA)” has been set up in Kunming with the support of the Chinese government. The initiative has been mentioned at the recent summit of regional leaders in Beijing and highlighted during bilateral head of state level meetings between Bangladesh and China.
ILFA is working for connectivity and cooperation issues covering Southeast Asia, South Asia and Indian ocean regions and also working towards infrastructure construction including roads, land and deep sea ports, significant projects, construction of industrial parks, free trade zones etc. Among other objectives, ILFA is also exploring the possibilities of creating platforms for international exchanges, research on financial instruments and 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 during 9th - 10th June, 2014 in Kunming, China. 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 issues, suggesting international financing mechanisms for the establishment of China-Bangladesh economic corridor connectivity. In particular, it highlighted the need to establish Free Trade Zones, form Pan Asia Stock Exchange, establish non-governmental financing mechanism, research on how to promote the regional finance co-operation and create and market innovative financial products suitable for the objectives. The meeting emphasised, in particular, the importance of supporting the construction of Silk Road Economic Belt and the 21st Century Maritime Silk Road. It agreed, guided by UN-ESCAP and joined by experts from the relevant countries, to suggest plans for the Asian economic corridors transport facility which can act as the basis for making financing products through bilateral research.
The Kunming congregation agreed to support the suggestion of setting up the pilot projects of BCIM Free Trade Zones. It reached consensus on supporting the government of four countries under the framework of UN-ESCAP “Governmental Land-ports Agreement”. This aims to build all the land ports under the pilots of BCIM Free Trade Zones including international land ports like Dhaka - Kamlapur 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 of a Pan Asia Stock Exchange took a turning point in the meeting. It decided to organise a joint committee to investigate how to develop the stocks, bonds, futures, gold and other financial derivative instruments to be used for the construction of the BCIM and other Asian Economic Corridors for the regional nations (like railway, highway, river, and others), the industrial gardens construction (like Sonadia Port, Chittagong Port, Kyaukpyu Port and others), energy development (like electric power, natural gas and others) and other infrastructural fields. All of these are to be supported through international financing mechanism for infrastructure connectivity constructions possibly through cross-border investments between Chinese investors and other enterprises/entities. The meeting assumed that establishing the non-governmental financing mechanism would promote financial market for opening and cooperation, support commercialised services for the RMB Settlement and RMB clearance programme cooperation, advance the mutual participation of banks, insurance and stock exchanges, build join transactional credit assessment system and build risk monitoring and controlling platform, a common regulatory framework which shall cover all kinds of financial markets, financial organisations, financial products, financial instruments and settlements of transactions.
There is none to deny the fact that Bangladesh-China-India-Myanmar economic corridors need huge funds, both from private and public sector, to support infrastructural constructions such as harbour, railways, highways and other areas like industrial park/free trade zone and many other projects related to BICM economic co-operations. Accelerating the much needed cross-border infrastructure requirements construction can help ease the bottleneck of the regional infrastructure requirements which will effectively guarantee the smooth, convenient and efficient cross border logistics movement as well as improve human capital and prompt industrial development in BCIM region. With this in mind, the concept of establishing a specialised regional stock exchange was brought up to serve as an investment and trading platform, establish a cross border opening of China-South Asian investment cooperation in both public and private sector, determine appropriate method for financing and selection of currency denominations for the kind of projects undertaken under BICM and regional initiatives.
As such, ILFA, SAFE (now under Bangladesh leadership) and exchanges from BCIM member countries as well as exchanges from SAFE member countries and financial institutions can mindfully move forward in formation of a regional stock exchange with funding constructions related to BCIM Economic Cooperation. With formal endorsement by respective governments and regulators, the proposed stock exchange will be set up in Kunming, China and initially trading products will include Yuan denominated securities, RMB bonds, RMB fund and RMB index products. These products can be listed in other partner exchanges which will then allow the communities of the region to participate in the cost and financial benefits of such economic corridor construction.
The writer is Chairman, South Asian Federation of Exchanges (SAFE) and Chairman, Chittagong Stock Exchange.
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