Unleashing East South Asia

The economic potential of East South Asia, or the region spanning the Bay of Bengal, northeast India, and its adjoining areas, makes a strong case for regional integration. Nepal, Bhutan, and the Himalayan region were historically connected via Kolkata and Dhaka to the Bay of Bengal until the middle of the twentieth century. This legacy of economic and cultural connectivity is now being restored, requiring India and Bangladesh to play a leading role to develop cooperative mechanisms, such as the Bangladesh, Bhutan, India, and Nepal (BBIN) Motor Vehicle Agreement, and offer preferential access to its sea ports for Nepalese and Bhutanese goods. Organizations like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) can play a key role in promoting integration in East South Asia.

Carnegie India hosted a private roundtable discussion on identifying opportunities for growth and development by viewing this region through new lenses. The discussion was led by Sujeev Shakya, chairman at the Nepal Economic Forum, and chaired by Constantino Xavier, a fellow at Carnegie India.

DISCUSSION HIGHLIGHTS

• Reimagining East South Asia: Participants emphasised the need to tap into the region’s tremendous economic potential. The region has a substantial population, they said, comparable to the size of the United States. This population is also very young, and, participants added, increasingly influenced by Korean culture in a way that creates a homogenous group around which products and services can be marketed. Participants speculated that the disconnect between the governments of Bangladesh, Bhutan, India, and Nepal, combined with this region’s distance from New Delhi, play a large role in the general neglect of this region. They added that Guwahati could be a potential center for trade and business, given its central location.
• Areas of Opportunity: Participants emphasised the region’s significant hydropower potential, which presents opportunities for energy cooperation, as well as the need for an integrated power market. With adventure tourism, heritage tourism, and religious tourism already on the rise, a participant also pointed to the potential for greater localized cross-border activities, such as Indian weddings taking place in Nepali resorts in the border areas. Participants also pointed to the opportunities emerging in the information technology and education sectors, with the spread of the internet and social media across the region.
• Cross-border Flows: Participants discussed the need to institutionalize the tremendous cross-border synergies that already exist. They agreed on the importance of having borders that are always open. They recommended the creation of integrated border check-posts and containerized movement of goods, along with tracking all cross-border movements to prevent any misuse of this openness. To bring all transactions above-board and formalize trade in goods and services, participants agreed on the importance of improving digital payment systems through greater electronic transactions or direct bank transfers. Participants also noted the existence of small cartels that control informal trade in the region, who owe their rise partly due to ambiguous laws, and underlined the importance of bringing in global standards to discourage such rent-seeking behaviour.
• Obstacles to Integration: Along with noting Bhutan’s worries regarding the Motor Vehicle Agreement that seeks to institutionalize open borders in a calibrated manner, participants also discussed possible local opposition in border areas, from truck and other lobbies to the cartels themselves. Participants disagreed on the impact of political instability in Nepal on regional integration. Some argued that progress with Nepal, in policy terms, requires a favorable governance discourse and central stability. Participants also discussed the avenues for progress at decentralized levels of governance.
• Backlash Against ‘Foreigners’: Most importantly, participants discussed the need to strike a balance between greater mobility and political backlash against immigrants. Participants underlined the need to be sensitive to historical animosities as well as the strong ethnic consciousness widespread in the region, cautioning that when economic benefits of migration are slow to accrue, an antagonistic political reaction is immediate. Given the backlash against globalization, a participant suggested shifting the focus towards ensuring shared prosperity rather than greater migration by creating opportunities in different parts of South Asia.

This event summary was prepared by Sharanya Rajiv, an intern at Carnegie India.