The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is a regional organization comprising seven Member States lying in the adjacent areas of the Bay of Bengal constituting a unique regional unity.
This sub-regional organization came into being on 6 June 1997 through the Bangkok Declaration. It constitutes seven Member States: five deriving from South Asia, including Bangladesh, Bhutan, India, Nepal, Sri Lanka, and two from Southeast Asia, including Myanmar and Thailand.
The BIMSTEC region is home to more than 1.7 billion people which constitute around 23% of the global population with a combined GDP of US$3.7 trillion (around 4% of world GDP) economies. In the last five years, BIMSTEC Member States have been able to sustain an average 6.5% economic growth trajectory despite global financial meltdown.
According to industry insiders, Intra-regional trade among BIMSTEC countries is above US$40 billion and the potential trade opportunity evolving the BIMSTEC nations seems to be as high as US$250 billion. Notably, BIMSTEC countries constitute around 3.8% of world trade meaning that it has an immense potential to be a game-changer of the global south economy.
Presently, about 60% of BIMSTEC’s combined GDP at present comes from trade. Currently, India’s export share in BIMSTEC is about 50% (US$21 billion), followed by Thailand 30% (US$12.2 billion) and Myanmar 14% (US$6.1 billion). India and Thailand together account for more than 85% of intra-regional exports of BIMSTEC.
Coming to connectivity dynamics, over 40% of BIMSTEC’s intra-regional trade is ocean-borne, demonstrating the need for maritime connectivity.
However, the research identified three (03) strategies are essential to support and strengthen connectivity within the region: (i) enhanced physical infrastructure (economic corridor), (ii) effective institutions, rules and procedures (institutions), and (iii) knowledge and empower people (skill development) supported by required financial resources.
|BIMSTEC-identified 14 cooperation areas
|1. Trade and investment||Bangladesh|
|2. Technology||Sri Lanka|
|4. Transport & Communication||India|
|8. Cultural Cooperation||Bhutan|
|9. Environment & Disaster Management||India|
|10. Public Health||Thailand|
|11. People to People Contact||Thailand|
|12. Poverty Alleviation||Nepal|
|13. Counter-Terrorism and Transnational Crime||India|
|14. Climate change||Bangladesh|
It is encouraging to see that Bangladesh is in the leaderboard in the cooperation areas defined by BIMSTEC.
|Development and GDP indicators for BIMSTEC members
Sources: BBS, UNDP, WB
Average Annual GDP Growth (2012-2016)
|2019 UNDP Human Development Index Rank (Out of 188)||2020 World Bank Ease of Doing Business Rank (Out of 190)||Trade as a Percent of GDP
|2018 World Bank Logistics Performance Index Rank (Out of 160)|
|Sri Lanka||5.3%||71||99||53 (2018)||94|
FDI inflow to BIMSTEC has reached approx. US$ 60 billion in 2018-19. India is the highest recipient of FDI.
|Inward FDI trend in BIMSTEC member countries (value in million US$)
Source: UNCTAD, World Investment Report, 2019
Landmark agreements by BIMSTEC
- 2004 Framework Agreement on BIMSTEC Free Trade Area (FTA).
- BIMSTEC Convention on Cooperation in Combating International Terrorism, Transnational Organised Crime and Illicit Drug Trafficking (2009).
- A memorandum of understanding (MOU) to establish BIMSTEC Grid Interconnection (2018).
- Concluding Agreement on Cooperation and Mutual Assistance in Customs Matters.
- Concluding BIMSTEC Motor Vehicle Agreement.
- Concluding BIMSTEC Coastal Shipping Agreement.
- The Trade Negotiating Committee (TNC) have resumed negotiations to finalize the constituent agreements of the Framework Agreement on BIMSTEC FTA.
- Reached agreement on a number of core elements related to the Agreement on Trade in Goods, and its Rules of Origin and Product Specific Rules (PSR).
- Developing the BIMSTEC Transport Connectivity Master Plan.
- Exploring the possibility of establishing a BIMSTEC Development Fund (BDF).
- In the process of establishing closer collaboration with the UN system, Asian Development Bank and the World Bank in this regard.
Intra-regional trade and investment are relatively lower in the BIMSTEC region as compared to other regional blocs. One of the major reasons for this low level of trade and investment is inadequate infrastructure. Moreover, lack of connectivity and information dissemination in the region appears as a common barrier for tap BIMSTEC-led opportunities. Regarding border trade, lack of telecommunication links, parking space, warehouses and cold storage, accommodation facilities and power are major constraints.
Strategic areas to strengthen regional connectivity
- Developing Coastal and Border Economic Zones.
- Signing BIMSTEC MVA.
- Undertaking Reforms in Logistics.
- Negotiating New BIMSTEC Shipping Agreement.
- Strengthening Digital Connectivity.
- Designing a Connectivity Master Plan.
- Setting up BIMSTEC Airlines Group.
- Signing of BIMSTEC Framework Agreement on Transit, Trans-shipment and Movement of Vehicular Traffic.