ICC in favor of Integrating BIMSTEC 2022
Indian Chamber of Commerce under the aegis of the Ministry of External Affairs, Government of India organized “Integrating BIMSTEC 2022”
~ A Virtual Conference on ‘Paperless Trade” to facilitate trade and commerce within BIMSTEC countries ~
Highlights: Economic & Physical connectivity
India, 29 January 2022: Indian Chamber of Commerce, one of the leading national chambers of India, organized “Integrating BIMSTEC 2022” under the aegis of Ministry of External Affairs, Government of India on the importance of creating a common platform, for BIMSTEC countries to participate and carry forward paperless trade.
The session started with the address of the President of Indian Chamber of Commerce, Mr. Pradeep Sureka welcoming all the panelists and distinguished guests. He stated how the COVID-19 pandemic and the associated global recession had a devastating effect on international trade. In an attempt to control the spread of the pandemic, countries had to impose drastic measures including lockdowns, travel restrictions, border closures, airport shut downs, delaying entry for ships etc. These restricted measures affected the global supply chain. He said, “Though we have seen, the effect of Omicron is not that fatal, however there is no guarantee that a fresh pandemic will not cause any more disruptions. While these cannot be avoided, the effect on the economies of countries can be mitigated by generating appropriate solutions. One way is to strengthen the regional trade thereby limiting the physical boundaries of disruptions. BIMSTEC was established to leverage the geographical advantage to strengthen economic & physical connectivity through more trade, investments, travel and exchange among member countries. The current trade among the BIMSTEC members has the potential to grow 5-6 folds. It can make business transactions more convenient while ensuring regulatory compliances and improving the competitiveness of countries and their industries to move towards paperless chain. It has gained a considerable pace through the development of block chain based solutions, which is definitely more cost effective way of trading internationally. However, navigation through multiple platforms, e-filing of documents, to avail tax benefits causes hardships. Hence providing ease of compliance is one of the key objectives of the Govt. In this context the ambit of the current ice gate, Indian customs and electronic gateway and national portal of Indian customs is offering a e-filing service to the trade, cargo carriers and providing a centralized filing system for transactions related to cross border trade, SEZ’s etc. so to cover an integrated all related compliance under one umbrella. To summarize trade facilitation is a vital area for all policy makers going forward.”
Speaking on this occasion, the Chief Guest for the session, Mr. Rudrendra Tandon, Joint Secretary, AMEA, stated, “Economic integration with dynamic economy of the ASEAN region and the East Asian is the key pillar of the Govt’s ‘Act East’ policy. Govt’s vision is to ensure that Indian industry particularly those industries that are located in the eastern seaport rapidly become an integral part of the existing regional value chains that are already in operation in the ASEAN and East Asian region. This type of integration is the best way to leverage the advantageous geography of our North Eastern region and to foster rapid industrialization. I am delighted to be here because of the promotional work done by ICC, focused on BIMSTEC countries contributing to the policy changes. The platform brings together several countries located around the Bay of Bengal. There are of course extensive social, cultural linkages that go back centuries. More importantly for Indian industry BIMSTEC countries being geographically contiguous, economically diverse, factors of economic cost, competitive advantages are the key areas to take into consideration. With production technology, rapidly unbundling themselves, Indian companies cannot become world-class enterprises unless they are part of or at the center of regional value chains. Eventually the factories will have to be based partly in India, and their subsidiaries and partners spread out in low cost jurisdictions in contiguous neighborhood BIMSTEC countries. All this will not be possible unless goods and services can move rapidly across national boundaries. It is said that market access, trade facilitation, investment protection are the three most critical pillars of modern day trade agreements. The main aim is to create an ecosystem that will create regional and international value chain. Developing paperless trade has always been one of the main policy interventions that Govt. adorned to promote trade facilitation agenda. Paperless trade incorporates harmonization, simplification, standardization. ICC must utilize their considerable lobbying efforts to influence the Govt. ICC should be formally designated by the Govt. as the leading Chamber of Commerce for BIMSTEC related activities to be actively able to shape the agenda.”
Dr. Posh Raj Pandey, PhD Chairman South Asia Watch on Trade, Economics and Environment (SAWTEE) stressed that key driver of strengthening regional solidarity was trade. The actuate and relative amount of Intra Regional trade in BIMSTEC was miniscule but increasing Intra Regional Trade would contribute to economic growth and employment. It was also strategically important for South East Asian countries as BIMSTEC would act as a gateway to reach out to those markets.
Taking measures to reduce state cost in addition to or in conclusion of negotiation of BIMSTEC free trade idea would be a key step in promoting Intra Regional Trade. With a growth of multi country supply chain, revolution in information technology, digitalization of economic activity, advent of fourth industrial revolution and above all Covid pandemic, adoption of cross border paperless trade could be a perfect candidate for reducing trade cost and time. It was estimated that going paperless, could reduce the cost in South and South West Asia by 18% and would prove to be beneficial for Nepal and Bhutan. It will also increase revenue yields for government through electronic data access among exporting and importing countries by enabling better tracking of the goods. The adoption of blockchain will ensure integrity of data. The small and medium size enterprises can easily access international market through ecommerce platform. The paperless trade will also facilitate overcoming challenges of capacity gap, mutual recognition and harmonization.
Dr. Prabir De, Professor, RIS and Coordinator, ASEAN-India Centre (AIC) at Research and Information System for Developing Countries (RIS) shared his remarks on Paperless Trade for BIMSTEC countries. The trade facilitation he said had emerged as an important trade policy tool over the past decade. The cross paperless trade agreement was important not only from trade perspective but also bringing value chains within regions. The reduction expected in BIMSTEC trade cost post implementation of cross border would be around 10% -30% of existing transaction cost. The regional trade volume today is USD 60 billion which is lower as the potential of the countries is much higher. The regional trade was further affected by the pandemic but with implementation of paperless trade the volume can be scaled up. He said that he will try to initiate the implementation of paperless trade at the earliest at regional levels. He highlighted that previously a heavy documentation was needed for movement of people but now the same had been simplified. In the upcoming BIMSTEC Summit 2022 it is expected that master plan for transport connectivity will be implemented which has 267 projects worth of 124 billion. Further negotiations were also constantly being discussed like BIMSTEC Motor Vehicle Agreement, Postal Agreements etc. where paperless trade and document less and exchange of goods and trade would be highlighted and conferences like the one today highlighting paperless trades would further build the momentum. He added that Covid was a boon to facilitate paperless trade. He said all discussion around paperless trade should result in a suggestive way forward for the whole mechanism for both regional and international trade.
Mr. N. Ramesh, Deputy Managing Director, Export-Import Bank of India said, Exim Bank concentrated majorly on India’s experiences on paperless trade and attempts being made between the agencies. He began with a background that Intra trade between BIMSTEC countries had increased in the last decade from 30 billion in 2011 to 46 billion in 2019. There was a huge headroom for growth and countries like Nepal and Bhutan which have high trade dependency in the region. He stressed on requirement of harmonization at subregional level regulatory operations.
He cited examples of Korea where they had initiated national paperless trade platform which pushed Korea’s export interest ,reduced labour cost and also curbed the circulation of documents. These references could be helpful in setting up the reforms needed to expedite paperless trade. He spoke about an important development with respect to paperless trade in Asian countries like Bangladesh, Nepal and India which decided to exchange traffic rights to provide transit to cargo passenger vehicles across international borders thus further transforming the economic corridor. With such agreements in place, he believes comparative advantage of different nations in block will be better capitalized. India has an evolved financial sector and is playing a pivotal role in providing quality financial services to member countries. He spoke about the E-Certificate of Origin initiated by Director General of Foreign Trade in India was a glaring example of paperless documentation which had also reduced the cost and time of doing any business. He lastly mentioned that India Exim Bank had also started trade assistance program to support Intra Block trade recently.
Dr. Ganeshan Wignaraja, Senior Research Associate at the Overseas Institute (ODI) in London, Former Director of Research at the ADB Institute in Tokyo offered a macro-perspective to the integration of BIMSTEC where he addressed some concerning issues in paperless trade, regional trade and economic issues faced by BIMSTEC. “While I genuinely support the agenda of developing a single-integrated agreement in BIMSTEC as it reduces trade cost, lessens rent seeking behaviour and shifts towards digital economy and e-commerce, we also should be aware of three major issues. First of all, splitting up between private and public sector to set up the system is challenging – also, it should not be a free system and should maintain common regulatory standards without any operative issues. Increasing risk of cybercrime is another major issue to focus on where substantial investment is required to set up the right infrastructure of protecting the system. The third main issue will certainly be the aid for trade to be provided to smaller and LDC (Least Developed Countries) of the BIMSTEC region. Multilateral Development banks like AIIB, ADB, even the World Bank can come forward for the same. BIMSTEC countries need to promote the investment climate in a more open direction with a transparent and predictable regime where paperless trade would play a significant part. We need to support the National Debt Management to develop debt transparency management and extend support to provide required sources to the regions. We would request the intervention of Ministry of Health more often with BIMSTEC countries and ensure enhancement of public healthcare.”
Mr M K Saharia, Chairman, ICC N E Chapter concluded the session with a vote of thanks to Mr. Tandon for his enlightening session along with congratulating the other notable dignitaries’ joint perspective towards developing an effective framework to integrate BIMSTEC countries. It is encouraging to see Government of India’s timely action to use the pandemic opportunity to expedite the policies of digital operation, which has already brought transformation across many sectors and expected to boost the mode of trade among the countries.