Regional Trade and Connectivity in South Asia Gets More Than $1 Billion Boost from World Bank

Regional Trade and Connectivity in South Asia Gets More Than $1 Billion Boost from World Bank

June 29, 2022, 11:23 a.m.

WASHINGTON, June 28, 2022— The World Bank today approved $1.03 billion of financing to help improve regional trade in Bangladesh and Nepal by reducing trade and transport costs and transit time along the regional corridors.

The Accelerating Transport and Trade Connectivity in Eastern South Asia (ACCESS) Program Phase 1 will help the respective governments address the key barriers to regional trade ─ manual and paper-based trade processes, inadequate transport and trade infrastructure, and restrictive trade and transport regulations and processes.

The Phase 1 program will help replace lengthy manual and paper-based trade processes with digitized automated solutions in Bangladesh and Nepal. The automation will enable faster border crossing times and install electronic tracking of truck entry and exit, electronic queuing, smart parking, and CCTV cameras. The program will also help improve selected road corridors and upgrade key land ports and custom infrastructure, while ensuring green and climate-resilient construction. This will help the integration of landlocked Bhutan and Nepal with the gateway countries of Bangladesh and India.

“Regional trade offers enormous untapped potential for the countries of South Asia. Today, regional trade accounts for only 5 percent of South Asia’s total trade, while in East Asia it accounts for 50 percent,” said Hartwig Schafer, World Bank Vice President for South Asia. “South Asia can boost economic growth significantly and create opportunities for millions of people by increasing regional trade and connectivity.”

The $753.45 million financing for the ACCESS Project in Bangladesh will upgrade the 43 Km section of the two-lane Sylhet-Charkai-Sheola to a climate-resilient four-lane road, connecting the Sheola Land Port with the Dhaka-Sylhet Highway. This will cut down travel time by 30 percent. The project will support digital systems, infrastructure, and more streamlined processes at Benapole, Bhomra, and Burimari land ports, the three largest land ports in Bangladesh handling approximately 80 percent of land-based trade. It will also support the modernization of the Chattogram customs house which handles 90 percent of all import/export declarations in Bangladesh.

“While the trade between Bangladesh, Bhutan, India, and Nepal grew six times from 2015 to 2019, the unexploited potential for regional trade is estimated at 93 percent for Bangladesh,” said Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan. “The project will help Bangladesh improve regional trade and transport and automation of processes will build resilience to crises like the COVID-19 pandemic.”

The $275 million ACCESS Project in Nepal will upgrade 69 km two-lane section of Butwal—Gorusinghe—Chanauta road along the East-West Highway to a climate-resilient four-lane highway, with a focus on ensuring better road safety. This is expected to reduce travel time by 30 percent, thus providing better access to India’s western seaports. The project will construct at least three market areas along the highway with dedicated areas for women entrepreneurs and traders to ensure that women can benefit from the enhanced economic opportunities. The market areas will be equipped with separate toilets for women, free Wi-Fi, and digital bulletin boards with timely trade and market information. It will also support capacity building to enhance trade and customs processes at Birgunj and Bhairahawa border points. The project will also help advance Nepal’s preparedness and subsequent implementation of the Motor Vehicle Agreement (MVA).

“Nepal has large untapped potential for regional trade and exports. Low regional trade is often a result of the high cost of connectivity,” said Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka. “The project will help unlock Nepal’s economic potential through better connectivity and trade, both between the provinces as well as regionally among Nepal and other countries to support a green, resilient, and inclusive development.”

It is highly critical to ensure trade growth, long-term sustainability and resilience of investments, while minimizing actual degradations on the environment, wildlife and ecosystems along the Nepal’s road network, which carries 90 percent of passengers and goods movement,” said Oceane Keou, World Bank Task Team Leader of the Nepal Project and co-Task Team Leader of the Program. “The project will adopt and implement an innovative green and resilient highway corridor concept in Nepal, based on a landscape-level development approach.”

In the second phase, the program will include Bhutan.

“A key focus of the ACCESS program is to support solutions that can most effectively reduce dwell times at trade gateways, which is vital to lowering trade costs. This entails greater border cooperation and coordination within and between countries, cutting down the physical inspection of goods, and simplifying regulations and processes,” said Erik Nora, World Bank Task Team Leader of the program.

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