BIMSTEC: AN ENGINE OF PROGRESS
Navigating regional crises and charting a path to integration.
By Nalin Herath
It would be difficult to describe the state of world affairs today, with over 120 conflicts being waged all over the globe. Out of these, over 60 involve non-state actors. South Asia is equally afflicted with this phenomenon and must try to overcome it collectively.
Challenges and Opportunities
The lofty ambitions behind BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) aimed to bring about regional integration and economic growth. However, there have been major obstacles, especially after the pandemic when global growth dramatically slowed; as per IMF, in 2024, it will be just 3 per cent! Like all other areas of the globe, South Asia also suffers from serious economic affliction brought about by the pandemic and the changing nature of contemporary geopolitics.
It is for this reason that regional integration becomes important. BIMSTEC nations must coordinate, collaborate, and invest to strengthen the integration of their economies, mitigate shared risks, avoid conflicts, assist neighbours in fragile situations, and preserve common resources. ASEAN’s experience provides a broader perspective. ASEAN is a good example of how integration and common goals can work together. Multilateralism promotes mutual prosperity and peace.
Even though it's a young organization, BIMSTEC, established in 1997, has significant potential. However, two members are in trouble right now: Myanmar and Bangladesh. Bangladesh needs help as it's undergoing an economic crisis. Sri Lanka is just recovering from an economic crisis. Myanmar is in conflict involving a lot of non-state actors and the government.
BIMSTEC has been lackadaisical in helping its members when they have required it the most. Both Myanmar and Bangladesh have grave issues that they are currently dealing with, but India and Thailand share the blame with their neighbouring countries for their non-interventional stance. The ongoing economic hardships in Bangladesh and conflict in Myanmar call for immediate regional help and backing.
A prime example of effective regional intervention was when India stepped in during the apex of Sri Lanka's economic crisis in 2023. India helped stabilize the Sri Lankan economy by providing $3.9 billion in loans and grants. Given the crisis, BIMSTEC needs to re-assess its approach to crisis management as Bangladesh is knocking at the IMF door to seek a $8 billion loan.
Making BIMSTEC Work
As Indian Prime Minister Narendra Modi succinctly summarized during his visit to Ukraine, "This is not an era of wars." We are in an era of integration, collaboration and pursuing peace and harmony. For BIMSTEC to flourish in the new era of modernity, funding the master plan is crucial. Such reforms must specifically focus on intermodal transportation issues, trade facilitation improvements and a handful of missing key implementations. Moreover, the huge infrastructure investment gap needed to link South Asia and Southeast Asia physically continues to pose a formidable challenge.Overcoming these challenges will require mobilizing private financing through infrastructure bonds, public-private partnerships (PPPs), and intergovernmental cooperation.
As per Dr. Ananda Vignarajah, a renowned economist and advisor to the Asian Development Bank (ADB) and the Central Bank of Sri Lanka (CBSL), BIMSTEC is yet another failed regional organization similar to SAARC.As long as India and Pakistan aren’t on the same page, SAARC will remain ineffective. Dr.Vignaraja proposed one option: setting a one-year timeline. Most trade pacts and trade negotiations take a long time. For example, the trade pact between Sri Lanka and Thailand took 15 years and is still not finalized. The first option is to set a timeline—maybe one year or two years—and finalize the pact.The second option is to declare a failure and start fresh free trade talks. We should approach free trade agreements (FTAs) geared for the 21st century with supply chains for like-minded countries within two years. Otherwise, we can negotiate with whoever is ready and willing to proceed.
One major area that needs to be addressed is digitalization.Digitalization continues to be a grave issue in the BIMSTEC region, especially in South Asia. While mobile phone penetration is quite high, some 100 million South Asian people do not use the internet, illustrating a critical digital divide. Unfortunately, the lack of internet access continues to hamper its value in digital trade and e-commerce. In the upcoming years, BIMSTEC should address this issue through using digitization as an enabler for trade and economic expansion.
The region cannot develop without investing in 5G technology and essential digital infrastructure. Finally, since we are talking about the future, investment in digital skills and building a cadre of artificial intelligence (AI) literate workforce is also essential to consider. With India and other BIMSTEC members leading the way, building tighter digital bonds and economic collaboration in the region can be an opportunity.
BIMSTEC has political support and has shown progress amid global uncertainty. However, there is a problem with BIMSTEC staffing. The BIMSTEC office in Dhaka has only 10 to 15 staff members. However, ASEAN has 270 staff members who are fully dedicated to the betterment of the organization.Indian Prime Minister Modi plans to increase the number of BIMSTEC staff and give the organization momentum. If that plan works, it will benefit the organization significantly. BIMSTEC needs to retool itself to address today's economic challenges.
Conclusion
To conclude, BIMSTEC remains a "work in progress", and at this stage, it struggles notably with the crisis-ridden member states and its inability to respond effectively without adequate capacity. There is indeed a lot to be done in integration, collaboration and digitalization by BIMSTEC.
