The fifteenth BIMSTEC Ministerial meeting was held in Nepal, Kathmandu on 10-11 August 2017. The foreign Ministers of Bangladesh Mr. Abdul Hassan Mahmood, Lyono Damcho of Bhutan, Mr. Krishna Bhadur Mahara of Nepal, Mrs. Sushma Swaraj, External Affairs Minister of India, Mr. Kyaw Tin, Minister of State for Foreign Affairs of Myanmar, Mr. Vasantha Senanayake, State Minister of Foreign Affairs of Sri Lanka and Mr. Virasakdi Futrakul Deputy Foreign Minister of Thailand attended the meeting.
The meeting took place in the background of the 20th anniversary of BIMSTEC. The statements’ made by Ministers’ at the Ministerial meeting underscored the need for regional integration in the changing global scenario and the relevance of BIMSTEC in connecting South and South East Asia. For India, BIMSTEC is a “natural choice to fulfil key foreign policy priorities of Neighbourhood First and Act East”.1The Ministerial meeting approved the reports of the seventeenth and eighteenth sessions of the BIMSTEC Senior Officials Meetings held in Khatmandu, Nepal on 7th February and on 10th August 2017 respectively. The Ministerial meeting agreed upon sixteen areas of cooperation and these are mentioned below:
On Trade and Investment the meeting underscored the need for greater cooperation in order to deepen regional integration in the Bay of Bengal region. To realise the objective the meeting recognised the need for an early conclusion of BIMSTEC Free Trade Area as well as expedition on the negotiations on the Agreement on Services and Investment was emphasised. In addition early finalisation of BIMSTEC Trade Facilitation Agreement was also stressed.
On Climate Change and Energy the Ministerial meeting noted that countries ‘are committed to implement the Paris Agreement on Climate Change. The Memorandum Of Understanding (MOU) on establishment of the BIMSTEC Grid Interconnection will be a step forward in the direction of energy cooperation in the region. Outlining the importance of energy trade between India-Nepal and Bhutan -Bangladesh the External Affair Minister said that, ‘energy cooperation will build a strong renewable energy partnership to tackle climate change’.2
Agriculture and Public health are two other areas the meeting stressed upon for enhancing cooperation. In this regard the Ministers’ agreed upon exploring cooperation in plant bio diversity such as in plan germplasm. The need to establish alliances for both traditional and non-traditional medicine was also recognised and in this context the member states welcomed the launch of BIMSTEC Tele-medicine Network by JIPMER India to strengthen collaboration among premier medical colleagues in the region.
Cooperation in Transport and Communication was recognised as a key to regional integration. In this respect the member countries agreed to expedite comments and observations on the BIMSTEC Framework Agreement on Transit, Transhipment and Movement of Vehicular Traffic (BIMSTEC Motor Vehicle Agreement) as well as the BIMSTEC Coastal Shipping Agreement.
Technology, Poverty Alleviation, Counter Terrorism and Transnational Crime and People to People Contact are some other areas in which member countries agreed to enhance cooperation by establishing required institutions. For instance the meeting agreed to expedite the conclusion of the Memorandum of Association on the Establishment of the BIMSTEC Centre for Technology Transfer Facility in Sri Lanka. Implementation of poverty plan of action in line with the United Nations Sustainable Development Goals (SDGs) was also agreed upon.
While recognising terrorism as the single most significant threat to peace and stability of the region, the member states agreed to ratify the BIMSTEC Convention on Cooperation in Combating International Terrorism, Transnational Organised Crime and Illicit Drug Trafficking and agreed to sign the BIMSTEC Convention on Mutual legal Assistance in Criminal Matters.
Other areas in which the member countries have agreed to enhance cooperation in a sustainable manner were Fisheries, Tourism, Environment, Natural Disaster Management and Culture. On enhancing cooperation on Blue Economy and Mountain Economy the Ministerial meeting stressed upon the need to explore ways to deepen cooperation in areas of blue economy with the objective of holistic sustainable development. The Meeting also agreed to establish BIMSTEC Eminent Persons Group (EPG) to recommend a future road map for BIMSTEC 2030 Agenda and appreciated the efforts of BIMSTEC Network of Policy Think Tanks (BNPTT) in organising regular consultations to intensify people-to-people contact.
Significance of the Meeting
The region ‘represents one fifth of the world’s population and combined GDP of over USD $ 2.85 trillion’.3 The areas agreed upon to enhance cooperation are significant as each country had taken the responsibility to establish required institutions as well as institutional and logistic support to carry forward the cooperation. Some of the examples are, Bangladesh offered to host the first meeting of the Working Group to negotiate Trade Facilitation Agreement. Nepal will host the Third BIMSTEC Energy Ministers Meeting in early 2018, Sri Lanka will host the Fourth Meeting of the BIMSTEC Expert Group on the establishment of BIMSTEC Technology Transfer Facility in Colombo in 2107 and India hosted the first annual meeting of the National Security Chiefs in New Delhi in March 2017. Each sector is led by one of the seven countries of BIMSTEC. For instance, India is a lead country for counter-terrorism and transnational Crime, transport & communication, tourism, environment and disaster management; Bangladesh for Trade and investment and climate change; Nepal for poverty alleviation; Thailand is a lead country for fisheries, public health and people to people contact and Myanmar is a lead country for agriculture and energy. Sri Lanka is a lead country for Technology and Bhutan for cultural cooperation.
The meeting outcome is similar to the directives outlined in the Agenda of Action agreed upon by the leaders of BIMSTEC during the Goa Retreat Summit on 16th October 2016. The Goa Summit provided an opportunity to Heads of States to discuss matters of mutual interest and to reaffirm their commitment to principles enshrined in the 1997 Bangkok Declaration’4. Leaders had pledged towards making the organisation result oriented, effective and stronger.
Progress of Cooperation in Identified Areas
In the past 20 years the BIMSTEC countries made an attempt to enhance regional integration through continuous engagement at various levels. This has resulted in finalisation of MoU such as BIMSTEC Grid Interconnection, which the leaders are hoping to sign at the earliest. However, in most of the areas agreed upon, progress has been slow owing to internal apprehensions, slow progress in instituting required institutions as well as mechanisms. For example, the BIMSTEC Permanent Secretariat was established only in 2014 in Bangladesh. The Ministerial meeting hoped to address the issue of implementation and expedite the work of constituted Working Groups as well as Expert Groups for better regional integration. In this context progress in some of the sectors is discussed below.
Economic integration has been the priority area of BIMSTEC countries. In 2016 BIMSTEC intraregional trade stood at US $ 72.6 billion’.5 The ‘intra BIMSTEC cross border trade stood at US$ 38 billion in 2014’.6 Thus there is a significant scope for intraregional trade. The BIMSTEC Free Trade Agreement (FTA) was concluded in 2004 and the Trade Negotiating Committee (TNC) of BIMSTEC was set up thereafter. Twenty meetings took place up to 2015, to come to an agreement on trade related measures such as, tariff concessions on trade in goods, custom cooperation, trade in services, investments and dispute settlement mechanisms. The member countries are still to sign the final agreements on these areas, which might help to boost intraregional trade.
Below is the table of top export and import destinations for BIMSTEC countries in 2015
Country |
Export destination in 2015 |
Import destination in 2015 |
Bangladesh |
United States ($ 6.19 billion) |
China ($ 13.9 billion) |
Bhutan |
India ($ 181 million) |
India ($ 333 million) |
India |
United States ( $ 44.1 billion) |
China ($59 billion) |
Myanmar |
China ($ 5.03 billion) |
China ($ 9.4 billion) |
Nepal |
India ($561 million) |
India ($ 3.81 billion) |
Sri Lanka |
United States ($2.99 billion) |
India ($ 5.49 billion) |
Thailand |
United States ($ 28.6 billion) |
China ($ 40.9 billion) |
(Source: OEC data (Observatory of Economic Complexity)
The table shows that as far as trade (exports and imports) is concerned India is the largest trading partner for Nepal and Bhutan within BIMSTEC. For Myanmar China is the largest trading partner. For Thailand China and the US are the main trading partners. And for Bangladesh the US is the main export partner and China is the largest import partner followed by India ($5.51B)’7. For Sri Lanka China became the largest trading partner in 2016 (US $ 4.426 millions) and India is the second largest trading partner (US $ 4,369)8.
To enhance economic integration the Second Roundtable of BIMSTEC Networks of Think Tanks (BNTT) had proposed few measures which can be implemented for integration of various sectors in member countries such as creating several Common Economic Zones (CEZs) involving BIMSTEC countries along the borders. The round table also proposed to enhance intra industrial trade, integration of financial sector and investments in key sectors of each country that can boost competitive advantage’9.
Intraregional FDI
Strategic location of member states in the Indian Ocean Region (IOR) and rich resources are an attraction for inflow of Foreign Direct Investment (FDI). China and the US are two important external actors which are competing to increase their economic influence in the region. For example some reports suggest that ‘China invested $3.3 billion in Myanmar in 2015-16 when compared to India’s investment of over USD $ 224 million during the fiscal year 2015-16”.10 For ‘Nepal in 2015-16 China became the largest investor and its investments stood at Rs. 6,868.54 million. And India is the third largest investor in Nepal with total commitments of Rs. 2,349.70 million in the same year. The United Kingdom (UK) is the second largest investor with total commitment of Rs. 2,136.95 million’.11 Below is the table on total inflow FDI in BIMSTEC member countries and the top investor.
Country |
Total FDI inflow |
Top Investor |
Year |
Bangladesh |
USD 2235.5 million |
United States of America (USD 449.74 million) |
2015 |
Bhutan |
USD 13 million |
- |
2016 |
India |
USD 36,068 million |
Singapore (USD 12,479 million) |
2015-16 |
Myanmar |
USD 9481 million |
Singapore (USD 4246 million) |
2016 |
Nepal |
Rs. 20,498.89 million |
China (RS.6868.54 million) |
2016 |
Sri Lanka |
USD 681.2 million |
Hong Kong (USD 167 million) |
2015 |
Thailand |
USD 5700 million |
Japan (US D 3030 million) |
2015 |
Sources: Bank of Bangladesh, Royal Bank of Bhutan, Myanmar Central Statistical Year Book, Department of Industry: Government of Nepal, Reserve Bank of India, UNCTAD Thailand investment data and IFLR’s The Japanese Overseas Investment Report 2017:Thailand.
If we look at the intraregional FDI within BIMSTEC it is slowly picking up. India’s investments in Myanmar increased since 2016 and it amount to US$ 740.64 million at the beginning of 2017 and most of India’s investments have been in oil and gas sector’12. For Myanmar, Thailand is one of the largest sources of FDI. For example, from 2006-12 out of the total US$32,948.8 million approved FDI received by Myanmar, 25% of it came from Thailand’.13 In Sri Lanka “Thai investment value jumped 10 times from 70 million USD in 2015 to 700 million USD in 2016, mainly through the investment by Siam City Cement in Insee Company”.14 Sri Lankan investment in Bangladesh is estimated to be over US$ 300 million.15
The member countries Statements at the Ministerial Meeting stressed upon enhancing intraregional investments to boost economic integration. One of the challenges to economic integration in the region is to initiate required domestic reforms for trade facilitation and ease of restrictions for intraregional trade. Along with these issues the competitive domestic politics are also acting as impediments to initiate required reforms as in case of Sri Lanka and Myanmar. For example, Myanmar witnessed protest against India-Myanmar connectivity project, Kaladan Multi Model Transit Transport project due to environmental reasons. India-Sri Lanka efforts at enhancing economic cooperation through Comprehensive Economic Cooperation Agreement (CEPA) also faces domestic opposition. Therefore, enhancing intraregional FDI is another issue the member countries have to address in the future.
Facilitation of trade through connectivity is another important area the meeting touched upon as well as speedy implementation of connectivity projects. The BIMSTEC Transport Infrastructure and Logistics Study (BTILS) commissioned by the Asian Development Bank (ADB) had identified more than 100 projects in 2014. Thailand is taking the lead in ‘preparing a master plan for connectivity that can establish linkages with master plan of connectivity of IORA as well as that of BIMSTEC’.16 For instance, one of the important connectivity projects linking South and South East Asia is the under construction 1400 km trilateral highway (India-Myanmar-Thailand). This highway will link with the highway in Lao PDR and with the highway in Vietnam extending to Danang’17. In this connection Thailand had asked the government of Japan to invest in rail-road projects parallel to the trilateral highway. Another project is the Dawei Deep Seaport which will link Thailand’s border with Myanmar near Dawei and Bangkok. Japan is building a railroad link in support of the project. proposed development of Special Economic Zones (SEZs) in Myanmar such as Dawei, Kyaukphyu and Thilawa ports might boost trade and investments in the region’.18
Improving air connectivity is another aspect and recent announcement by India that it seeks to extend UDDAN scheme to BIMSTEC countries is a positive development. India is also ‘considering starting a Rail link that can connect Bhutan, Myanmar, Bangladesh and Nepal’.19 Improving connectivity under BIMSTEC will also further enhance economic access of India’s North-East to the region. Various reports on ‘BIMSTEC suggest that to improve connectivity in the region BIMSTEC has to supplement the already agreed arrangements on connectivity at bilateral and sub regional levels such as ‘Bangladesh-Bhutan-India-Nepal (BBIN) Corridor’ as well as ‘Bangladesh- China- India- Maynamar (BCIM) Corridor’.
Cooperation in disaster management is an area the countries are closely cooperating as well as helping the needy country at bilateral levels. Help extended by India, and Bangladesh to Sri Lanka to deal with the flood situation in May 2017 was an example. Another example is the relief and rescue response rendered by India to Nepal to deal with the effect of earth quake which stuck Nepal in April 2015. India was the first responder and its military aircraft carrying relief material and rescue teams landed in Nepal within six hours of earthquake. India ‘provided relief assistance to Nepal amounted to approx. US$ 67 million and a post–earthquake reconstruction package of US$ 1 billion for reconstruction’.20 In this context, agreement at the Ministerial meeting to establish an Expert Group on disaster management will help in streamlining disaster management among BIMSTEC countries.
Another important aspect that the meeting touched upon was the need to implement policies that are in line with the UN’s SDGs which can address issues of climate change, environment and poverty alleviation. BIMSTEC countries are home to large number of population lacking basic social and economic opportunities. For instance, according to the UNDP Development Index report of 2016, India (131), Bhutan (132), Bangladesh (139), Nepal (144) and Myanmar (145) are ranked as medium human development countries where as Sri Lanka (73) and Thailand (87) are ranked as high human development countries. Multidimensional poverty is considerably significant in these countries based on education, health, gender inequality and employment opportunities. Therefore, cooperation on sectors like fisheries and tourism promotion are stressed upon in statements made by Ministers as these sectors are providing employment opportunities as well as revenue for these governments’. Few of the examples are as follows;
Proposal to establish BIMSTEC Tourist Circuit and Temple Tourist Circuit in the region will boost tourism as well as cultural linkages. In addition the BIMSTEC Tourism Fund will further enhance cooperation in this sector.
The region’s rich marine resources are mostly untapped. Bay of Bengal is home to ‘thirty percent of world’s fish and significant number of population is dependent on fisheries for livelihood’.24 As the concept of blue economy is gaining momentum, need for sustainable fishing practices as well as harnessing of resources was acknowledged and it was felt that there is a need for developing a common policy in the region, apart from existing bilateral agreements such as India- Bangladesh joint research in oceanography.
The member countries of BIMSTEC have acknowledged that terrorism remains the‘single largest threat to peace and stability in the region’ and the Ministerial Meeting had proposed various measures in this direction as mentioned above. The volatile political States in the region and unstable political and economic environment has been providing impetus to extremists groups to survive as well as to unleash violence periodically. Cross border terrorism and insurgency faced by India, insurgency in Myanmar and Thailand, growing radical Islam in Bangladesh and politically sensitive atmosphere in Sri Lanka are some of the examples. Therefore, political solutions the member countries are going to adopt and pursue in the future to tackle political unrest in their respective countries would influence cooperation in this area. For example, bilateral project such as the Kaladan Multi Model Transit and Transport Project connecting India’s Kolkata port and Sitwee port in Myanmar in Rakhine State is still to be completed. The project is an important component of developing Blue Economy concept in the region. The project is located in sensitive Rakhine State which has been witnessing violence and clashes between Myanmar military as well as Arakan Rohingya Salvation Army (ARSA). Another issue is increasing transnational crime. Over ‘600 million circulation of small arms in the region are in the hands of non-state actors and pose a significant security threat’.25
The BIMSTEC Network of Policy Think Tanks (BNPTT) was established subsequent to the BIMSTEC summit in 2008 India. It consists of seven policy think tanks from the seven countries which include Centre for Policy Dialogue (CPD) of Bangladesh; Royal Institute for Governance and Strategic Studies (RIGSS) of Bhutan, Research and Information System for Developing Countries (RIS) of India; Myanmar Institute of Strategic and International Studies (MISIS) from Myanmar; Centre for Economic Development and Administration (CEDA) from Nepal; Institute of Policy Studies of Sri Lanka (IPS) and Indian Studies Center of Chulalongkorn University (ISCCU) of Thailand. The second meeting of the BNPTT was held in Thailand in 2015 and the meeting this meeting emphasizes on the need to foster people-to-people contacts at all levels and publishing books on BIMSTEC to increase the awareness’.26 The third meeting of the BNPTT was held in Dhaka in April 2017. The meeting discussed the celebration of the 20th Anniversary of the BIMSTEC, establishment of the Centre for Bay of Bengal Studies, funding, and new initiatives by the BNPTT as well promotion of areas agreed upon for cooperation among member states.27
Conclusion
The BIMSTEC platform provided an opportunity to ‘unlock opportunities at regional level for member states’.28 However, the progress has been slow in initialising and implementing measures at regional integration owing to domestic factors and lack of financial resources and political will. To enhance the integration, the mutually beneficial cooperation in identified areas and implementation process will have to supplement the already existing arrangements at bilateral, sub- regional and regional levels such as the Association of South East Asian Nations (ASEAN), South Asian Association for Regional Cooperation (SAARC), Indian Ocean Rim Association (IORA), Mekong-Ganga Cooperation and the UN SDG’s 2030 agenda. Achieving regional economic integration also needs domestic reforms at political and economic level to have convergence in polices in member states. This might take time as the reforms will have to be approved at the domestic level first. The fourth BIMSTEC Summit which is going to be held in Nepal might provide further impetus to regional integration through finalisation of agreements in identified areas.
***
*The Authoress, Research Fellow, Indian Council of World Affairs, New Delhi.
Disclaimer: The views expressed are that of the Researcher and not of the Council.
Endnotes
1 Ministry of External Affairs, Government of India, “Statement by External Affairs Minister at the 15th BIMSTEC Ministerial Meeting in Kathmandu (August 11,2017)”, http://www.mea.gov.in/Speeches-Statements.htm?dtl/288859/ Statement- by- External- Affairs- Minister- at- the- 15th BIMSTEC- Ministerial- Meeting- in- Kathmandu-...
2 ibid
3 Ministry of External Affairs, Government of India, “Statement by External Affairs Minister at the 15th BIMSTEC Ministerial Meeting in Kathmandu (August 11,2017)”, http://www.mea.gov.in/Speeches-Statements.htm?dtl/288859/ Statement- by- External- Affairs- Minister- at- the- 15th BIMSTEC- Ministerial- Meeting- in- Kathmandu-...
4 “BIMSTEC Leaders’ Retreat 2016 outcome Document”, 17th October 2016, http://pib.nic.in/newsite/PrintRelease.aspx?relid=151717
5 “BIMSTEC intra-regional trade drops”, 24th June 2017, http://www.thefinancialexpress-bd.com/2017/06/24/74822/BIMSTEC-intra-regional-trade-drops
6 Rahman Mohammed Masudur and Chanwahn Kim, “ Prospects for Economic Integration of BIMSTEC: Trade and Investment Scenario”, International Journal of Service, Science and Technology, Vol.9, No.4 (2016), pp:235-248.
7 Bangladesh, http://atlas.media.mit.edu/en/profile/country/bgd/
8 “China beats India as SL’s biggest trading partner”, 18 May 2017, http://www.ft.lk/article/616054/China-beats-India-as-SL-s-biggest-trading-partner
9 “BIMSTEC Integration: Challenges and tasks Ahead”, Second Roundtable of BIMSTEC Networks of Think-Tanks (BNTT) Report, April 2015, www.cippole.in/pdf/report-second.roundtable of BIMSTEC-networks of Think-Tanks.bntt.pdf
10 Sudha Ramachandran, “The Trouble With India's Projects in Myanmar”, 21st September 2016, http://thediplomat.com/2016/09/the-trouble-with-indias-projects-in-myanmar/
11 TOP 5 COUNTRIES OF FDI COMMITMENTS IN NEPAL - FISCAL YEAR AND COUNTRY WISE, http://www.nicci.org/pdf/Top%205%20countires%20of%20FDI%20Commitments%20in%20Nepal-FYwise%20and%20countrywise%20for%205%20years%20+9months%20-%202011-12%20to%202016-17%20(9%20months).pdf
12 Ministry of External Affairs, Government of India,” India-Myanmar bilateral Brief, August 2017”, http://www.mea.gov.in/Portal/ForeignRelation/MYANMAR_August_2017_new.pdf
13 WTO Trade Policy Review, Myanmar 2012, https://www.wto.org/english/tratop_e/tpr_e/s293_e.pdf.
14 “Sri Lanka Thailand Business Council 17th AGM”, Mirror Business, 30-8-2017, http://www.dailymirror.lk/article/Sri-Lanka-Thailand-Business-Council-th-AGM--135610.html
15 Bangladesh High Commission, Colombo, “Economic relations”, http://www.bhccolombo.lk/economic-cooperation/
16 Statement by H.E.Mr.Virasakdi Futrakul, Deputy Minister for Foreign Affairs of Thailand at the 15th BIMSTEC Ministerial Meeting 11, August 2017.
17 ibid
18 Khandelwal K Amit and Matthieu Teachout, IGC policy Note, Special Economic Zones of Myanmar, February 2016, https://www.theigc.org/wp-content/uploads/2016/03/SEZs-in-Myanmar.pdf
19 Economic Times, “Rail link plan with Bhutan, Myanmar, Bangladesh, Nepal: Suresh Prabhu”, 20th January 2017, http://economictimes.indiatimes.com/industry/transportation/railways/rail-link-plan-with-bhutan-myanmar-bangladesh-nepal-suresh-prabhu/articleshow/56688825.cms
20 Ministry of External Affairs, Government of India, “India-Nepal Brief February 2017”, http://www.mea.gov.in/Portal/ForeignRelation/India_Nepal_Relations_11_04_2017.pdf
21 World Travel and Tourism Council, Travel and Tourism Economic Impact 2017, Thailand, https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-2017/thailand2017.pdf
22 World Travel and Tourism Council, Travel and Tourism Economic Impact 2017, Sri Lanka, https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-2017/srilanka2017.pdf
23 World Travel and Tourism Council, Travel and Tourism Economic Impact 2017, India, https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-2017/india2017.pdf
24 Government of India, press Information Bureau, Prime Minister’s Office, “BIMSTEC Leaders’ Retreat 2016 outcome Document”, 17th October 2016, http://pib.nic.in/newsite/printRelease.aspx?relied=151717
25 “BIMSTEC Integration: Challenges and tasks Ahead”, Second Roundtable of BIMSTEC Networks of Think-Tanks (BNTT) Report, April 2015, p.10, www.cippole.in/pdf/report-second.roundtable of BIMSTEC-networks of Think-Tanks.bntt.pdf
26 Ministry of Foreign Affairs of the Kingdom of Thailand, “Press Releases : The 2nd BIMSTEC Network of Policy Think Tanks Meeting”, 8 October 2015, http://www.mfa.go.th/main/en/media-center/14/61181-The-2nd-BIMSTEC-Network-of-Policy-Think-Tanks-Meet.html
27 Third Meeting of the BIMSTEC Network of Policy Think Tanks, Dhaka , 22-23 April, 2017, http://www.ips.lk/third-meeting-of-the-bimstec-network-of-policy-think-tanks/
28 The Royal Government of Bhutan Statement, 6th June 2017, https://drive.google.com/file/d/0B8Fv9wDGJqx2bm9CRk9BNm5qeVE/view