Rise in cross-border trade to benefit businesses in South Asia: ADB

Small traders and producers of seasonal goods in South Asia would see more benefits of regional integration, after the bloc moved to enlarge the list of commodities that could be traded.

Customs officials from Bangladesh, Bhutan, India, the Maldives, Nepal and Sri Lanka recently gathered in the Maldives in May to discuss ways to help companies and individuals do more cross-border business, faster and at less cost.

The officials agreed that more commodities will be added to the product list and the value of the cargo able to use export declarations will be reduced, according to a write-up posted on the website of the Asian Development Bank.

“This will benefit smaller-scale traders and producers of seasonal goods. And more border crossings will be able to exchange export declarations as well,” the report said.

Allowing exporting customs to exchange export declarations for commodities with the receiving importing customs on a daily basis leads to faster cross-verification of data such as declared value, quantity, classification, and so forth.

The countries had already agreed to allow exchange of export declarations for specific commodities with a value of $15,000 or more at five border crossings.

The crossings are: Benapole, Bangladesh-Petrapole, India; Banglabandha, Bangladesh-Kakarbitta, Nepal; Panitanki, India–Kakarbitta; Phuentsholing, Bhutan-Burimari, Bangladesh; and Phuentsholing-Jaigaon, India.

“If both sides of a border accept documentation of each other it will cut both time and transaction cost,” said Khondaker Golam Moazzem, an expert of trade facilitation.

“It will help trade facilitation,” Moazzem, also an additional research director of the Centre for Policy Dialogue, told The Daily Star yesterday.

The economist also said if the value of the cargo able to use export declarations comes down, businesses on both sides of borders would benefit as they largely trade small amounts. Moazzem said all land ports linking Bangladesh and India should be allowed to trade more commodities and in small chunk. 

South Asia is one of the most dynamic regions in the world, but it is also one of the least economically integrated ones.

Intra-regional trade accounts for just 5 percent of total trade, compared with 25 percent in the Association of Southeast Nations. The ADB report said it is clear that getting customs officials from the six countries of the SASEC programme together reaps benefits.

Another project of the SASEC Customs Subgroup has agreed that field-level customs officials should meet at least once in every six months to talk about and decide the next steps in improving cross-border coordination and cooperation.

“Boosting trade between the SASEC countries would be a boon for all.”

The ADB report said countries in the sub-region trade amongst each other much less than they trade with countries outside South Asia, and much less than countries within other sub-regions.

Access to more markets throughout the region provides opportunities for businesses to grow, create jobs and ultimately helps create international economic ties that can outweigh geopolitical differences.

Bottlenecks for trade at the borders are common, cumbersome and expensive in much of South Asia.

The number of import/export documents and the time it takes to complete them is high in the SASEC countries compared with global trends.

It takes an average 60 hours and costs $345 to export a standard container in the region, and 112 hours and $569 to import.

Time-consuming inspections and testing at borders delay cargo clearance, often meaning the loss of perishable goods like food and agricultural produce, and cause unnecessary congestion. The ADB report said there has been some progress too.

Officials from India and Nepal at the Maldives meeting reported good progress in automating their customs systems to allow electronic sharing of customs transit data between the two countries. They expect to test this system by end of 2016.

Making sure that each checkpoint along the route taken by the cargo receives the data electronically means truck drivers waste less time waiting for often numerous documents to be processed in several offices.

This automated data sharing is likely to be extended to Bhutan as well.

India and Bangladesh also plan to pilot the electronic exchange of data between their respective customs administrations.

This means, among other things, they can ensure that cargoes declared for export are the same as the goods that are actually imported on the other side of the border.

This increased transparency will ensure the right tariffs are charged and give customs officials more time to target potentially illicit cargoes.

“Easier customs procedures mean that countries will be well placed to make the most of the landmark Motor Vehicles Agreement between Bangladesh, Bhutan, India and Nepal, as it is gradually being operationalised over the coming months.”

The agreement will allow a specific number of passenger and freight vehicles to travel even more easily between countries along certain routes.

In addition to these bilateral and multi-country projects, the six countries of the SASEC Customs Subgroup are also working on 20 national projects.

The national projects are supported by the ADB training in areas such as customs valuation, risk management, trusted traders programs, national single window and post clearance audit.