Opportunities for Nepal in Bangladesh

  11 min 29 sec to read

By Sushila Budhathoki
This year marks the 41st anniversary of Nepal- Bangladesh diplomatic relations. Separated by 22 kilometers of Indian land, the two countries had established diplomatic relations on 8 April, 1972. Nepal was the 7th country to recognize Bangladesh shortly after its independence from Pakistan on 25 March 1971. 
Since then, both countries have taken concerted efforts to further consolidate the diplomatic ties. The exchange of visits at various levels has further strengthened the relations between the two countries creating an atmosphere conducive for upgrading political ties, improving trade and commercial relations. According to the Trade and Export Promotion Centre (TEPC), there have been around 6-7 visits - some at the highest political level - between the two countries after the year 2000. Lately, during the fourth Nepal- Bangladesh Commerce Secretary-level talks in 2013, both the countries have agreed to expand bilateral trade and transport facilities. In the meeting, Bangladesh agreed to provide duty-free entry into its market to 108 Nepali products. These products include handmade paper, dairy items, cereals, vegetables, lentil, wheat flour, fruits and fresh juice, among others. Bangladesh has requested Nepal to provide similar treatment to 153 Bangladeshi products. 
An earlier bilateral meeting held in July 2012 had focused on regional connectivity, starting a bus service between the two countries, joint hydroelectricity projects, and using Bangladesh ports by landlocked Nepal. In that meeting, the two countries agreed on a permanent framework for holding regular foreign office consultations (FOC) - a vital platform to bolster bilateral ties and promote economical interests. Held once a year, the FOC reviews the status of bilateral relations and explore ways to promote bilateral trade and investment. Bangladesh has FOC arrangement only with three SAARC countries – India, Nepal and Pakistan. Nepal-Bangladesh Joint Economic Commission (JEC) was set up in 1978 at the level of Finance Minister. 
Both the nations are members of the South Asian Association for Regional Cooperation (SAARC) and Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation (BIMSTEC). Bangladesh is a member of Multi-Lateral Investment Guarantee Agency (MIGA), Overseas Private Investment Corporation (OPIC) of USA and International Centre for Settlement of Industrial Disputes (ICSID). It is also a member of World Intellectual Property Organization (WIPO) and World Association of Investment Promotion Agencies (WAIPA). 
Emerging economy 
Bangladesh is among the rising economies in South East Asia and has the potential to become a regional manufacturing hub due to cheap labour cost as well as cost of living. 
The UN forecasts Dhaka will be the world’s 5th largest city with a population of 19 million by 2019. ‘World Urbanization Prospects: The 2011 Revision’ has also listed Dhaka as one of the emerging megacities. Increasing urbanization, industrialization, infrastructure development and demographic forces have made Bangladesh one of the emerging economies of South East Asia. Bangladesh is the ninth largest and one of the most densely-populated countries in the world. With around US$ 110 billion economy, 160 million people - 90 million of them are below 25 - and a FY2012 growth projected at 7 per cent, Bangladesh possesses the key attributes of an emerging market poised for an extended period of high-growth. 
Bangladesh gradually decreased its dependency on foreign grants and loans from 85 percent in 1988 to 2 per cent in 2010 for its annual development budget. According to the National Web Portal of Bangladesh, the country is now trying to establish itself as the next rising star in South Asia for foreign investment. The government has implemented a number of policy reforms designed to create a more open and competitive climate for private investment, both foreign and local. A direct (100%) foreign investment or joint venture investment in the Export Processing Zones (EPZs) or outside EPZs, portfolio investment by purchasing shares in publicly listed companies through the stock exchange, investment in infrastructure projects such as power generation (private power generation policy announced); oil, gas and mineral exploration, telecommunication, ports, roads and highways, outright purchase or purchase of shares of state-owned enterprises etc are some of the opportunities in foreign private investment in Bangladesh. 
Economic relations 
The opening of Kakarbhitta- Phulbari-Banglabandha transit following the 1998 Treaty between Bangladesh and India was a major development in the trade between Nepal and Bangladesh. This agreement allowed Nepali goods an access to Bangladesh through a transit route in India. Bangladesh has also permitted Nepal to use the Mongla Port since September 1997. Nepal exports mainly agricultural products such as pulses, lentils, rice and wheat. 
The volume of trade between the two countries stands at less than $60 million per year (See Table). According to TEPC, Nepal exported a total of 33,151,322 kg lentils in FY 2011/12 of which 29,579,700 kg lentil worth Rs. 2,453,246. Lentils worth Rs. 3,315,567 were exported to Bangladesh in the previous year. Imports from Bangladesh include industrial raw material, chemicals fertilizers, fabrics and textile material, jute products and electric and electronic items. 
In South Asia, Bangladeshi tourists are the second largest group after Indian tourists visiting Nepal (See table). Nepal organized tourism fairs and road shows in major cities of Bangladesh in 2007 and 2008. Bangladesh too offers many tourist attractions, including archaeological sites, historical mosques and monuments, longest natural beach in the world, picturesque landscape, hill forests and wildlife, rolling tea gardens and tribes. The longest, unbroken, sandy sea beach of the world (120 Kms long at Cox’s Bazar), the largest mangrove forest of the world (the Sundarbans ) and the largest deltaic plain of the world (the Bengal delta) are some of the major attractions for international and domestic tourists in Bangladesh. 
Both the countries are seeking cooperation in the fields of power generation and development of water resources. Foreign Minister of Bangladesh, Dr Dipu Moni, reiterated Bangladesh’s interest in importing 1,000MW electricity from the Sapta- Koshi high-dam project. To take this matter forward, Bangladesh sent a high-level delegation to Nepal on 25 July 2012 for further discussion. Bangladesh has proposed to form a Joint Working Group (JWG) from each country including India, Bhutan and Nepal to sort out the possibilities of joint ventures in hydropower and to explore the water resources of this region for mutual benefit. Some joint-venture initiatives between Nepal and Bangladesh are in the areas of banking, finance and insurance. New initiatives are being taken in the fields of readymade garments, leather goods, pharmaceuticals and PVC pipes. 
The state-owned Biman Bangladesh and private airlines such as GMG have been designated to extend their services to the Kathmandu-Dhaka sector following an Air Service Agreement between the two countries in May 2005. Moreover, the Transport Agreement between Nepal and Bangladesh to operate a direct bus service between Dhaka and Kathmandu is expected to facilitate trade, tourism and people-to-people contact. 
Under the Technical Cooperation Agreement signed between Nepal and Bangladesh in April 1976, Bangladesh offers some scholarships every year to Nepali students in the field of medicine. Besides, every year hundreds of Nepali students go to Bangladesh to study medicine, nursing, dentistry, engineering and other courses. According to the website of Nepali Embassy in Dhaka, around 2,500 Nepali students are pursuing higher studies in various cities in Bangladesh at present.
Minister & Charge d’Affaires a.i. 
Bangladesh Embassy
‘Hydropower could be the foremost sector where Bangladesh can co-operate’
How was the outcome of fifth Nepal- Bangladesh Commerce Secretary-level talks on Feb 2013? 
In February 2013 Joint Secretary at the Ministry of Commerce and Supplies (MoCS), Naindra Prasad Upadhyay, visited Bangladesh with his team. They have finalized the list of duty free access of 108 items from Bangladesh to Nepal unilaterally. They have also finalized the list of items for preferential access from both the sides. Now they have to finalize appropriate modalities. Issues such as transportation modalities, direct bus services between Nepal and Bangladesh and Taka and Rupee conversion were also discussed widely. 
The next Joint Secretary level meeting is scheduled to take place in March 2013 in Nepal where the duty free access modality will be finalized. 
Are there any possibilities where both the countries tie up for the development of tourism sector? 
I understand that travel and tourism has emerged as a major job provider in Nepal with the sector accounting for about 20 percent of economically active population and 3.0 percent of gross domestic product (GDP). Tourism is also a promising sector in Bangladesh. It is a growing sector with an increasing contribution to GDP (2.3%) in 2011. Therefore, if the Nepali and Bangladeshi tour operators as well as concerned ministry of both countries work together and link themselves, advertise or brand together, it will benefit both countries. 
Different types of tourism packages can be developed. In addition to site tourism, we can develop business, education, religious and medical tourism. If both countries jointly offer lucrative packages to European, American, Indian, Chinese or tourists from other parts of the world, it can give tourism industry a boost. Given that, air fare is very cheap between Kathmandu and Dhaka, packaging the two countries together will be cost effective. 
For this, government and private sectors of both countries should sit together and develop packages for mutual benefits. 
Remittance has been one of the income sources of both the countries. How can both the countries work closely on the mutual benefit in this regard? 
Bangladesh has sent more than 6.7 million workers to over 140 countries since mid-1970s. Most of these workers temporarily migrate to work in Middle East and Southeast Asia. More importantly, the remittance transfers received from these migrant workers have reached a phenomenal level of over 10 billion US dollar in 2009, approximately 12 percent of GDP in Bangladesh. I understand that Nepal was one of the highest receivers of remittance on the basis of contribution to gross domestic product (GDP) in 2011. 
Nepal has potential and Bangladesh has expertise. If both the countries work together again from the government and private sectors, they can work on sharing their experiences, human resources development, and training. If they can even search market together for employment, that can be helpful for both the countries. 
The recruiting agencies or the Bureau of Manpower Employment and Training of Bangladesh and Labor Department of Nepal can work together for market research, human resources development and to find potential market for all of them and to train their people accordingly. 
Recently some Bangladeshi people were caught with fake Nepali passport. How can this problem be solved? 
I don’t have any such information available with me about how many Bangladeshis are arrested so far for passport fraudulence. If I get that information clearly, I could check it accordingly and find out how it happened. Both Nepal and Bangladesh need to work together to find out why this is happening and how this can be resolved amicably. 
What are the other possible areas where Nepal and Bangladesh may have joint ventures? 
The hydropower sector can be the foremost sector where Bangladesh can co-operate. Education might be another sector to work in collaboration. Another sector may be human resource development. 
What progresses have been made in improving transport connectivity between two countries? 
So far as I know, drafts of the Transportation Modalities and Direct Bus Service (Kathmandu to Dhaka) Agreements have been under consideration of Nepal Government. Both the countries have been working on finalizing the agreements as soon as possible. 
What are the progresses in the expansion and promotion of bilateral trade between Nepal and Bangladesh? 
The technical committees have been working on it now. Commerce Secretaries of both countries have held several rounds of discussions on various issues. 
How can both the countries expand their relation in a people to people level? 
Nepal and Bangladesh have many things in common such as: culture, heritage, geographical ties. When direct bus services will be available between Kathmandu and Dhaka, much effective interaction between people from two countries can take place. There are already about ten flights a week between Bangladesh and Nepal and a huge number of Bangladeshi tourists visit Nepal every year. With the implementation of the agreements under consideration, greater number of people will be able to travel and that may help boost people to people contact even further.