14 December 2023, NIICE Commentary 8867
Dr. Mohammad Tarikul Islam
Context of the Relationships
The most cordial bilateral ties between two nations may be seen in the Bangladesh-Nepal relationship, which is marked by sincere and equitable treatment, reciprocal cooperation, and friendship across generations. With Bangladesh, Nepal has a special relationship that has been progressively strengthening over time in both economic and commercial spheres. Even while there is a great deal of opportunity for bilateral trade to grow and diversify, the volume of trade between them has not increased significantly. There has been an expansion of grassroots exchanges and a developing trade and economic relationship between Bangladesh and Nepal.
Fostering People-to-people Contact
People-to-people interactions and contacts have been a defining feature of Bangladesh-Nepal relations since the start of diplomatic relations. The relationship has improved, and the main goals now are to fortify the border regions, enhance interpersonal communication, and advance trade and commercial ties. The corridor, which was previously only used for freight movement, can now be used for passenger traffic thanks to the offices’ setup. The bilateral relations between Bangladesh and Nepal have been marked by amity, goodwill, mutual understanding, and shared ideals and aspirations of the people ever since diplomatic connections were established.
Regional and Global Factors Influencing Bilateral Relations
In a number of regional and global fora, such as the UN, Non-Aligned Movement, South Asian Association for Regional Cooperation (SAARC), and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), Nepal and Bangladesh collaborate closely and hold similar opinions on a range of topics of mutual interest. In April 1976, the two nations inked four agreements pertaining to technological cooperation, trade, transit, and civil aviation. The trade and economic ties between Bangladesh and Nepal are steadily expanding, and there has been an increase in grassroots interactions. In Nepal, where India dominates the market, almost 90% of the items imported are used to suit local wants. Bangladesh thus stands to gain a significant portion of the market.
Current Exchange and Trade Volume Trends
After the Kakarbhitta-Phulbari-Banglabandha transit route opened in September 1997, the government of Bangladesh has allowed Nepal to use the port facilities at Mongla Port. The Joint Economic Commission (JEC) between Bangladesh and Nepal was established in 1978 at the level of Finance Ministers. Both nations have been eager to collaborate in order to further deepen their economic connections ever since JEC was activated. Joint ventures in the banking, finance, and insurance industries have been the focus of this cooperation.Over the past 24 years, Bangladesh’s exports to Nepal have increased by 17 percent annually, from US$1.12 million (S$1.58 million) in 1995 to US$48.6 million (S$68.56 million) in 2019. According to the UN Comtrade database on international trade, Nepal’s exports to Bangladesh in 2021 were US$5.94 million (S$8.74 million), while its imports were US$128.8 million (S$174.5 million).
Education Influences two-way Relationships
Another significant area that plays a key role in the bilateral relations between Bangladesh and Nepal is education. A total of four thousand Nepalese students are studying medicine, engineering, law, and other topics in Bangladesh, while a similar number of Bangladeshi students are studying development studies and fine arts in Nepal. Future college and university affiliations, mutual recognition of each other’s degrees, and accreditation of degrees will create new avenues for opportunities.
Time is Really needed for Energy Cooperation
The energy sector is one of the most promising sectors of cooperation between Bangladesh and Nepal. Plans are outlined in Nepal’s 15th Five-Year Development Plan (2019–2024) to turn electricity into a commodity that can be exported. Nepal hopes to become an energy surplus country in five years by increasing its 1,250 megawatts (MW) of electricity generation to more than 5,000 MW. Bangladesh, on the other hand, wants to invest, produce, and import excess energy from Nepal, despite the opinion of some experts that the country’s power consumption should increase rather than be diverted for export and revenue. Bangladesh and Nepal have already made the decision to work together to develop the energy sector and related trade. Both Bangladesh’s gas and Nepal’s hydropower provide a bright future for development; if these natural resources are used wisely, they will see substantial growth.
The Next Step is to Encourage Economic Diplomacy
Bangladesh needs to ensure that its imports are not held hostage to the monopoly of a selected group of producers, but are instead received through rigorous international competition. Even though the economic logic is to strengthen trade and transit between Nepal and Bangladesh, little has happened so far other than policy concessions which seem different from the ground reality. Nepal and Bangladesh are separated by 22 kilometers of the Indian Territory.
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. The positive attitude of both the countries to give the final shape to a deal on operational modalities for goods-carrying vehicles in order to ease transit facility to Chittagong and Mongla port remains to assent sign in strengthening trade relations. Similarly, both the countries have proposed bus service between Dhaka and Kathmandu to facilitate trade and tourism.
Preserving Trust with India to Strengthen Commercial Relations
As there is no border between Bangladesh and Nepal, the two governments should emphasise to India the value of South Asian sub-regional cooperation, in which India serves as a facilitator because it is not only the region’s largest economy but also the only nation that lies between Dhaka and Kathmandu. Economic diplomacy is one of the most important means by which governments comprehend their national interests. Bangladesh Government has to focus on convincing people, even some of her neighbors, as well as the South Asian Free Trade Area (SAFTA) framework of SAARC that Bangladesh offers excellent investment opportunities and that the overall investment climate is conducive to foreign investment.
In the Direction of Strengthening Bilateral Ties
Closer ties between the government of Bangladesh and several international and regional economic forums demonstrate Bangladesh’s determined efforts to maximise its economic gains through the promotion of economic diplomacy. Excellent investment opportunities that potentially multiply rewards should not be passed up by the Nepalese business community. Bangladesh’s Export Processing Zones are another example of a successful initiative. We must emphasize that LDC graduation is an important developmental milestone for Bangladesh and Nepal, and that close collaboration is required to guarantee a seamless, long-lasting, and irreversible graduation process.
Dr Mohammad Tarikul Islam is Professor at the Department of Government and Politics in Jahangirnagar University, Bangladesh.
