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BBIN - Motor Vehicle Agreement : A Brief

What is Bangladesh, Bhutan, India, Nepal motor vehicles agreement (BBIN-MVA):

The BBIN-MVA is a response to the Belt and Road Initiative (BRI) project initiated by China. It aims to develop economic corridors by linking Bangladesh, Bhutan, India, Nepal and Myanmar via roadways. As the world’s center of economic gravity is shifting from west to east, the objective of developing such economic corridors is to explore economic opportunities in the region. In this regard, the BBIN aims to improve the livelihood of people living in the area through connectivity. 

Significance of BBIN-MVA to Nepal:

The economic corridors as proposed by Nepal includes: Kathmandu-Birgunj-Rasual-Kolkota; Kathmandu-Bhairawa-Sunauli-Kolkota and Kathmandu-Kakarvitta-Panitakki-Bangabandu-Dhaka. The corridors provide an ideal opportunity to link South Asian economies. Apart from expanding our trade links, the corridor must be used to develop the required infrastructure. Given the limitations of Nepal’s economy, where import to export ratio is 12:1[1], the country’s focus should be on developing infrastructure and creating job opportunities rather than competing with the partners in terms of trade.

Likewise, it is equally important for Nepal to take initiatives to promote its own industries.  Competing with our neighboring partners that have such inept industries could further derail our economic outlook. In this regard, local Nepali companies must think globally and embrace a competitive working standard by institutionalizing a cartel free business environment. Additionally, notwithstanding to the notion of traditional economic theories, economic landscape of Nepal should focus beyond agriculture; possibly on exporting locally manufactured products. Such shift of economic sphere from agriculture to production and services is essential to reap the benefit of such economic corridors.   

Similarly, with BRI project firmly in place to provide Nepal’s economy with the much needed push, BBIN-MVA should be viewed as an additional leverage to keep our economy moving.

Significance of BBIN-MVA to India:

In the midst of difficult geopolitical relationship with China and Pakistan, BBIN-MVA is an opportunity for India to build regional and economic alliance with its South Asian counterparts. The idea of BBIN-MVA is to promote connectivity and improve economic cooperation among the participating countries by developing economic corridors. However, the success of the project is crucial in establishing India’s stance in South Asia. At a time when China is vibrantly promoting economic cooperation with multiple countries from Asia, Africa and Europe (including Nepal, Bangladesh and Myanmar), it is vital for India to lobby its own initiatives to promote sub-regional integration. Moreover, the proposed corridors can be used by India to maintain its geopolitical influence in the region.

Challenges:

Transport syndicate in Nepal could turn out to be a major headache while implementing the BBIN-MVA project. As the main purpose of the project is to allow free movement of vehicles which in turn can disturb the playing ground of such syndicate associates, the project could get fierce hindrance from such groups. Likewise, it is yet not clear how the proposed federal structure of Nepal is going to affect its economic stance.

Outlook:

Nepal is party to many agreements, their implementation however is far from ideal. Nepal cannot continue this trend if it wants to achieve the target of a middle income nation by FY 2030. Assuming right economic vision and implementation of such projects will help the country mobilise its major economic resources, including financial and human resources, and achieve the desired economic growth. Major studies have shown that a well-integrated market increases the commercial activities by almost 30%.  [2]

Moreover, apart from increment in trade and commercial activities, implementation of BBIN will reduce the probability of Nepal facing another economic sanction in the future.


[1]“Current Macroeconomic and Financial Situation Table 50 (Based on 9 months data)”, Nepal Rastra Bank, accessed on June 26, 2017, https://www.nrb.org.np/

[2]“India, Nepal, Bhutan and Bangladesh Sign a Landmark Motor Vehicles Agreement for Seamless movement of road traffic among Four SAARC Countries in Thimpu”, Press Information Bureau, Government of India, June 15, 2015, accessed on May 26, 2017, http://pib.nic.in/newsite/PrintRelease.aspx?relid=122516

 

Niraj K.C
Niraj is currently working as an economist beed and has over three years of experience working in the financial sector. He holds a M.sc in International Business and Economics from University of Hohenheim, Stuttgart, Germany with specialization in International Trade and Financial Econometrics. He is also a MBA graduate from Kathmandu University School of Management (KUSOM) with a major in Finance.
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