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Nepal And Bangladesh Could Benefit From Growing Trade Ties

Nepal and Bangladesh are two of South Asia’s closest friends and peace-loving neighbors, their ties made closer by recent high-level state visits. President of Bangladesh Abdul Hamid visited Nepal in 2019. Nepal’s President Bidya Devi Bhandari likewise visited Bangladesh in 2021 as a guest on the birth centenary of Father of the Nation Bangabandhu Sheikh Mujibur Rahman.

Nepal recognized Bangladesh as a sovereign state in 1971 and bilateral relations solidified after Bangladesh established six trade routes with Nepal in 1976. Relations were further enriched by the visit of King Birendra of Nepal to Dhaka in 1986. The two countries are currently members of several forums, including the United Nations, the WTO, BIMSTEC and SAARC and both Nepal and Bangladesh are on the way out of the club of LDCs.

In 2019, 40,000 Bangladeshi tourists went to Nepal. At present, nearly 4,000-5,000 Nepali students are studying in medical colleges and universities in Bangladesh. After joining workplaces in Nepal, these doctors are prescribing medicines for Bangladeshi companies. As a result, a good market for Bangladeshi medicines has been created in Nepal and currently eight companies export medicines to Nepal. Unfortunately, lack of the desired SAFTA agreement is hurting their trade potential even as the two countries are moving towards a bilateral free trade agreement.

Nepal has a free trade agreement with India. It has also expressed its interest in signing a preferential trade agreement or PTA with Bangladesh to boost bilateral trade. Although talks on this started last year, Nepal is frustrated that the agreement has not been finalized. As Nepal is a close country, Bangladesh can easily import fruits, herbs and spices. On the other hand, Bangladesh’s entry into the Nepali market has multidimensional potential as Nepal currently imports 90 percent of the goods it uses.

Nepal has a population of 29 million and a GDP of nearly $30 billion. Nepalis are a very fancy nation. As a result, Nepal can be a good market for Bangladesh’s electronics, ceramics, garments, furniture and local clothing brands. The completion of the desired PTA will open new horizons in trade between the two countries; Bhutan-Bangladesh trade has doubled since the signing of the PTA between them. The Kathmandu Post quoted the country’s foreign ministry as saying that Nepal had already sent a draft PTA to Bangladesh and now it is waiting for a response.

Bangladesh can export its apparels and fertilizers to Nepal. Some Nepali media outlets had reported that 52,000 metric tons of urea was imported from Bangladesh in July. Both countries are a short distance apart. The Siliguri corridor – also called the Indian Chicken Neck – in the northern part of India’s West Bengal state stands geographically between Bangladesh and Nepal.

The Nepal-Bangladesh ties have a lot of potentials. Bangladesh’s economy is booming day by day, and analysts feel It is going to be a South Asian superstar. Current rulers Bangladesh Awami league are trying to carry out massive industrialization to make it a high-income country by 2041.

Nepal is also a prosperous country. Its people are peace-loving and hard-working, just like those in Bangladesh. Bangladesh and Nepal can connect to raise the living standards of their people.

Nepal is a huge source of hydroelectricity, and the Himalayan nation can supply it to Bangladesh to help the latter meet its demands. Bangladesh needs more electricity to run its factories. Nepal can thus play a significant role to boost Bangladesh’s economic strength. Nepal will also benefit as its electricity market would grow.

Power imports could open up another horizon in relations between the two countries. Nepal has the capacity to export about 42,000 MW of hydropower. Bangladesh, which is on the path of rapid industrialization, can import electricity from Nepal, and India too seems to be positive on this.

For this, the power transmission line has to be installed and Bangladesh, Nepal and India have to work jointly. India also stands to benefit, and as the South Asian big brother, it should play a positive role to boost Nepal-Bangladesh ties and trade. A trilateral trade scheme can be initiated alongside the border markets. Bangladesh will be able to export its ‘surplus’ electricity to Nepal during the dry season. 

In June 2021, Bangladesh’s state minister for energy Nasrul Hamid announced the country will import around 700 megawatts (MW) of hydropower from Nepal to meet its future electricity demand. Bangladesh Foreign Minister A K Abdul Momen said a deal was in the final stages with Nepal and India allowing his country to import hydropower from the Himalayan state.

According to Bangladeshi Media, Bangladesh signed a Memorandum of Understanding (MoU) with Nepal in 2018 to oversee investment, development and trade in hydro-electricity between the two countries. Under this arrangement, Bangladesh will import up to 9,000 Megawatt of hydropower from Nepal by 2040. Bangladesh is also keen to invest in Nepal’s hydropower sector.

Vistas of cooperation 

Recently some Nepalese media reports said Bangladesh wanted to export its apparel and fertilizer to Nepal. A total of 52 thousand metric tonnes of urea imported from Bangladesh arrived in Nepal in July.

Bangladeshi conglomerate Walton Group, which deals in electronics, telecommunication, automobiles and computers, is active in Nepal. International NGO Brac and other Bangladeshi NGOs can play definitive roles to develop the mass education and health sectors in Nepal.

Bangladesh signed a Preferential Trade Agreement with Bhutan on December 06, 2020. A Preferential Trade Agreement with Nepal is also at the final stage and is likely to be signed soon. This would enable duty-free access to products of both countries.

As an addition to the Protocol of the Nepal-Bangladesh Transit Agreement signed in 1976, a letter of exchange has been inked between the two countries to include the Rohanpur-Singhabad Rail Link between India and Bangladesh. Nepal is also interested in using Chattogram, Mongla and Paira Seaports because it is a landlocked country. Bangladesh has agreed to work on the modalities for this during the visit of Nepali President Bidhya Devi Bhandari in March.

Nepal has also expressed its interest to use the inland waterways of Bangladesh. Besides, Nepal is also keen to use the Saidpur Airport in Bangladesh’s Nilphamari district for direct flights to Biratnagar (the capital of Nepal’s province no.1). Bangladesh is open to it.

Tourism, Covid-19, counter-terrorism, microfinance, exchange of training expertise and education are some sectors in which Bangladesh and Nepal can collaborate. Bangladesh faces a refugee problem after the massive influx of Rohingya refugees into the country in 2017. Now Bangladesh wants to repatriate them to Myanmar. Nepal should support Bangladesh at all international fora to repatriate them peacefully. Such a gesture will not go unnoticed in Dhaka.

The shortest distance between Nepal and Bangladesh is only 22 kilometers, and the road distance from Banglabandha in Bangladesh to Kakarvita in Nepal is just 39 km. In this connection, railways could offer much-needed connectivity. Nepal wants to join the rail link from Rohanpur in Chapainawabganj, Bangladesh to Singabad in India. Kathmandu’s distance from this railway will be only 216 km. On the other hand, China is building a railway from Lhasa in Tibet to Khasa, a border town in Nepal, and Nepal wants to bring that railway to Kathmandu. As a result, if there is effort and desire, Bangladesh can even establish a rail link to China via Kathmandu.

At present Dhaka is connected to Kathmandu by air and Nepal wants to expand air connectivity to Sylhet and Chittagong. Another option would be linking Syedpur in Bangladesh and Bhadrapur airport in Nepal, which would be just a 15 minutes flight. For those who want to avoid the hassle of a road transit visa on a business or leisure trip, this sky connectivity will be a huge relief. Both the governments may withdraw international tariffs on this route, in which case potentially millions of Bangladeshis could visit Nepal in coming years. Bangladesh could also help with the development of cricket in Nepal.

Many people think sending goods to Nepal is difficult but the task has been made much easier by the establishment of the Nepali warehouse at Banglabandha port. Bangladeshi products thus have great potential in Nepal and the private sector should be encouraged to join. In the end, again, the cooperation between the two countries will be useful in building a peaceful and prosperous South Asia.

Also Read: Sri Lanka and Bangladesh Can Also Take Benefit from Growing Trade Ties

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