India, Bangladesh and Nepal on Tuesday finalised an enabling memorandum of understanding (MoU) for implementing the long-gestating Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA) that is aimed at boosting regional tradex and connectivity.

About BBIN Motor Vehicle Agreement (MVA)

  • Origin of BBIN connectivity project: The BBIN connectivity project was conceived after the South Asian Association for Regional Cooperation (SAARC) failed to agree on a regional motor vehicles agreement at a summit in Nepal in 2014, mainly because of opposition from Pakistan.
  • Bhutan opted out: Bhutan temporarily opted out of it after being unable to get parliamentary approval for the MVA in 2017.
  • Signing of Enabling MoU: Bhutan temporarily opted out of it after being unable to get parliamentary approval for the MVA, Bhutan participated in the meeting as an observer.
    • The Asian Development Bank provided technical and knowledge support to the meeting as part of its South Asian Subregional Economic Cooperation programme.

Significance of MVA

  • Seamless movement: It would enable seamless movement between countries for facilitating trade and people-to-people contact.
    • P2P contact, trade & economic exchanges: It would allow the countries to move forward with implementation of land transport facilitation arrangements, enable the exchange of traffic rights and ease cross-border movement of goods, vehicles and people thereby helping to expand people-to-people contact, trade and economic exchanges between them.
  • Benefits for north-eastern region of India: The BBIN MVA would make cross border trade and transport in and through the Northeastern region of India to and from Bangladesh, Bhutan and Nepal more efficient.
  • Sub-regional cooperation: the conclusion of passenger and cargo protocols to operationalise the MVA would also help to realise the full potential of trade and people-to-people connectivity between BBIN countries by fostering greater sub-regional cooperation.
  • Cultural cooperation: The easier travel requirements can unleash enormous cross-border tourism, it is well recognised that there is a huge potential for religious, cultural, adventure and ecotourism among the BBIN countries.
  • Estimates of the World Bank: the World Bank has estimated that the implementation of the MVA would potentially see an increase in traffic-regional trade within South Asia by nearly 60%.
    • The World Bank South Asia programme for BBIN has listed projects worth $750 million, for which loans were in the pipeline.
    • It includes upgrading border checkposts and land ports in Bangladesh with a view to upgrading both physical and commercial infrastructure.

About BBIN Initiative

  • Promotion of economic cooperation & connectivity: The Bangladesh, Bhutan, India, Nepal (BBIN) sub- regional initiative is envisioned to improve economic cooperation and connectivity among these four South Asian countries.
  • Lack of intra-regional trade among South Asian countries: The intra-regional trade among South Asian countries accounts for only about 5% of their total trade in spite of signing the South Asian Free Trade Agreement (SAFTA) in 2004 and various other bilateral and regional trade agreements.
    • For instance, the trade among the countries in the Association of Southeast Asian Nations (ASEAN) is about 25% of their total trade.
  • This low level of regional integration in South Asia is manifested by poor intra-regional investment, and even poorer intra-regional factor movements.
  • Lack of regional integration: The lack of regional integration hurts most the countries like Nepal and Bhutan which are less developed and landlocked, access to regional and international markets is crucial for their development.
  • The lack of economic and physical connectivity leaves them with little opportunity to create productive ties with the rest of the world.

The BBIN MVA can be seen as a first step towards a broader integration process from a wider perspective. The locational advantage of South Asia implies that it can serve as a gateway for connecting to SouthEast and East Asia.

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