Despite having steadily growing economic relations, bilateral trade between Bangladesh and Nepal has not reached the desired volume. The solution could lie in major thrust of economic diplomacy
Bangladesh and Nepal, two South Asian countries having different ecological conditions, social systems as well as historical and cultural backgrounds, are perceived to have sound and smooth progress of their bilateral relations.
These bilateral relations, featuring equal and sincere treatment, mutual support and friendship for generations, can be an example of good associations between two countries.
Nepal's relationship with Bangladesh is unique. Economic and commercial relations between these neighbours have been growing steadily over the years.
However, the volume of bilateral trade has not seen much improvement despite tremendous potentials for expanding and diversifying trade between the two countries.
Essential thrust of our economic diplomacy should be increased in an effort to enhance the image of the country.
Bilateral relations based on mutual trust and confidence
It is noticeable that since the very beginning of the establishment of diplomatic relations, Bangladesh-Nepal relations were characterised by ties at the people's level.
The relations have improved and the major stake in them lies in strengthening border areas and in improving people-to-people contact and furthering economic relations and trade.
For example, India and Bangladesh have opened immigration offices on their respective sides of the Phulbari-Banglabandha border point enabling Nepal and Bangladesh to expedite their trade exchange.
Setting up of offices has enabled passenger movement through the route – so far being used only for cargo movement.
Since the establishment of diplomatic ties, bilateral relations between Nepal and Bangladesh have been characterised by cordiality, goodwill, mutual understanding and shared values and aspirations of the people.
Nepal and Bangladesh share similar views on various issues and work closely in many regional and international forums, including the UN, NAM, SAARC and BIMSTEC.
Trade relations: Influences of economic diplomacy
The two countries signed four agreements in April 1976 relating to trade, transit, civil aviation and technical cooperation.
Nepal-Bangladesh commercial and economic relations are increasingly growing to our mutual benefits and exchanges at the people to people level are expanding.
The Bangladesh government permitted Nepal to use the port facilities at Mongla since September 1997, following the opening of Kakarbhitta-Phulbari-Banglabandha transit route.
Nepal-Bangladesh Joint Economic Commission (JEC) was set up in 1978 at the level of Finance Ministers. Since activation of JEC, both countries have been keen on further strengthening economic ties.
The areas of such cooperation have been joint venture sectors like banking, finance and insurance.
New initiatives are being undertaken in the field of readymade garments, leather goods, pharmaceuticals and PVC pipes.
Commerce Secretaries of both countries held discussions at Kathmandu on 29-30 July 2012. It was agreed to bind a timeframe for conclusion of operational modalities for the carriage of transport between two countries.
The prevailing relations between two neighbouring countries are also guided by the SAARC mandate and diplomatic affiliation with the regional force, India.
Significant challenges enumerated from discussion such as: India has agreed to allow Nepal to trade with Bangladesh through its territory, but bureaucratic hurdles and lack of infrastructure have not allowed the arrangement to work.
Perhaps the India-Bangladesh memorandum of January 2010 indicates New Delhi's commitment to force compliance its bureaucracy, and kick-start a process on infrastructure building.
Bangladesh and Nepal have a very good bilateral trade relation. Nepal imports around 90 percent goods to meet local demands. The market is dominated by India but Bangladesh has a big opportunity to grab market share.
Consumer goods, plastic products, battery, construction materials, furniture, electronic goods including refrigerator, television and home appliance, motorcycle, melamine products and footwear are being exported here.
Bangladesh needs to ensure that its imports are not held hostage to the monopoly of a selected few producers, but are instead received through rigorous international competition.
Even though the economic logic in strengthening trade and transit relations between Nepal and Bangladesh is clear enough, little has happened so far other than policy concessions that seem out of touch with ground reality.
Nepal is separated from Bangladesh by only 22 kilometers of Indian Territory between them. The interactions between the people of Bangladesh and Nepal go back thousands of years.
Discussion and concurrence of both countries in principle for use of Mongla port in Bangladesh for transporting goods to and from Nepal at a concession rate would help promote tourism, travel agents and tour operators from both countries could also jointly coordinate necessary steps.
Positive attitude of both countries to give final shape to a deal on operational modalities for goods-carrying vehicles in order to ease transit facility to Chittagong and Mongla port remains an assenting sign in strengthening trade relations.
Both countries have proposed bus service between Dhaka and Kathmandu to facilitate trade, tourism and contact among people. The official and institutional ties are endless and grow as time passes.
The way forward
Economic diplomacy is one of the most important means through which governments comprehend their national interests.
Bangladesh government has to focus on convincing people, even some of her neighbours, as well as SAFTA framework of SAARC that it offers excellent investment opportunities and that the overall investment climate is conducive to foreign investment.
Economic diplomacy of Bangladesh should go beyond political relations and help pave a way for globalisation.
Nepal and Bangladesh have to keep friendly relations with India due to the similar cultural and religious traditions and geographical attachment. Momentum gained from people to people contact between two countries is to be consolidated in coming years.
Being a sandwiched and landlocked country, Nepal's bilateral trade agreements with India and China are of paramount importance. Nepal should always be aware of its geographic reality, national interest, socio-cultural settings and economic dimension.
Regional cooperation is of growing importance in economic diplomacy. Opening of borders and markets become easier within a regional framework.
Bangladesh, at the beginning of 21st century, is striving hard to attain her maximum economic benefit through instigation of economic diplomacy which is evident from closer relations of its government with different global and regional economic forums.
Nepal and Bangladesh now need to work to bring India fully on board in helping to develop new trade and transit routes. In this, sector-specific trade policies are necessary components if Nepal is to truly pursue export competitiveness.
Today, Bangladesh has emerged as a regional hub for ready-made garments, pharmaceutical, ceramic tiles, chinaware, cement and light engineering products.
The Nepalese business community should not miss out on excellent investment opportunities there, which could multiply benefits.
Bangladesh is a good investment venue, with variety of sectors to invest in, such as cement, ceramics, electronics, electrical items, pharmaceuticals, fertiliser, food processing and garments, among others. Export Processing Zones (EPZ) in Bangladesh are success stories.
The decision-makers must be pro-active rather than reactive in their actions. Despite having otherwise potential to grow, Bangladesh continues to lag behind its competitors for missing out on opportunities and because of its policy-makers' indecisions.
Private sector should have a lead role in economic activities. Economic diplomacy is the best carried out through public-private partnership forum.
Dr Mohammad Tarikul Islam is an associate professor of Government and Politics at Jahangirnagar University.