What's new

Transit economy in Bangladesh - Facts from the PMO

EjazR

SENIOR MEMBER
May 3, 2009
5,148
1
6,076
Uninterrupted and increased cooperation would build up the trust

The Prime Minister's economic affairs adviser Mashiur Rahman says that if Bangladesh gives transit facility it will earn an enormous amount of money, but it depends on building up a relationship of trust with India. The Daily Star took a detailed interview of Mashiur Rahman on November 20.

The Daily Star (DS): Is Bangladesh going to give transit or transshipment facility to India?
Mashiur Rahman (MR): Transit and transshipment -- I have not been able to find a difference between the two. We already have an agreement -- the inland water protocol. We also have a railway protocol, but we do not have a protocol for truck movement. There is an ad-hoc arrangement for truck movement. So I am not referring to that. For inland water transport, as I said, the charges are fixed and they give us a fixed amount annually.

For railway, the agreement, which has been in existence since 1947-48, is that when Indian wagons come to the Bangladesh border the goods must be transferred to Bangladesh wagons, and the Bangladesh railway will be responsible for their maintenance. When Bangladeshi wagons go to the Indian border, the goods will be transferred to Indian wagons. It is their responsibility to maintain that.

There is a calculation based on usage. So, whoever uses more pays for the excess use based on the number of days and the quantity of cargo carried. Adjustments are made periodically and the payment is made. So, for railway and for road there is a protocol in existence.

DS: Now that we are expecting more cargo to move, what would be the modality and what is the difference between transit and transshipment?
MR: I have not been able to identify a significant difference between transit and transshipment. The WTO has a clause on transit and that clause includes transit and transshipment. Article 5 of WTO on freedom of transit says: "Goods, including baggage, and vessels and other means of transport shall be deemed to be in transit across the territory of a contracting party when the passage across such territory with or without transshipment, warehousing, breaking bulb or chain in the mode of transport is only a portion of a complete journey beginning and terminating beyond the frontier of the contracting party across whose territory the traffic passes."

Traffic of this nature is termed traffic in transit. So, according to this WTO definition, what is transit is clear. It is movement of goods from one country across another country. Transshipment is only a part of transit involving change of the mode of transportation.

I think the government of Bangladesh should follow the definition. Our government should also insist that India also accept this, because these are agreed principles in WTO to which both the countries are signatories.

If we act on this then the problem becomes simpler. Then we only need to see whether there is a change of the mode of transport during transit, whether warehouses are used, etc. Bangladesh is legally entitled to impose a charge and collect it from the Indian vessels using this service. WTO also lays down the principles on which the charges shall be calculated. It says clearly that the charges shall approximately be equal to the cost of the services rendered and shall not be used for augmentation of revenue or for protecting domestic services.

According to the WTO Article, all hidden charges of whatever character, other than import and export duty and other than taxes within the purview of Article 3, imposed by contracting parties on all connections with the importation and exportation shall be limited in amount to the approximate cost of service and shall not inherently protect domestic products or imports of fiscal purposes. So the main question is that if a country allows transit facilities to another country and that country takes advantages of the facilities, the spirit should be not to put up impediments or difficulties, not to use it as a source of augmentation of revenue, not to use as a fiscal tool, but the charges which do not exceed administrative cost or the cost of services shall be collected. There is also some approximation because it may not always be possible to calculate precisely what is the cost.

So if you take our inland water protocol as a model -- we do not know what is the exact cost of maintaining the river routes for India. We do not know whether we would maintain these routes if India were not using them.

DS: Would you please elaborate on the river transit facility given to India?
MR: Our protocol with India talks about movement of Indian cargo through river routes in Bangladesh and India gives us a fixed amount for the use of these routes. The routes are designated. They used to give us Tk.2 crore until 2008-09. In 2009-10 it has been raised to Tk.4.52 crore. It is a fixed amount they give, regardless of whatever the use is. For actual use we collect from them different charges, which are at the same rate that we charge our own vessels. The original agreement indicated that the cargo would be split 50-50 between Bangladesh and India. But Bangladesh recently has been carrying 99%-100% of the cargo -- and India is mostly using privately owned vessels of Bangladesh.

I do not know how much private vessels earn from India. Canal charge, parking charge, landing and shipping charge are collected by BIWTA. In 2001-02, our income on charges was Tk.2 crore, and it is Tk.4.52 crore in 2009-10. This does not include the income to the ship owners for providing services. The quantity of cargo carried has also increased. In 2001-02 it was 47,858 metric tonnes. In 2009-10, it was 12 lakh 77 thousand 446 metric tonnes. Our expectation is that if the movement is facilitated, the charges collected by BIWTA and the quantity of cargo will also increase. The income through vessels hired by India will also increase and will contribute to the national income.

DS: You are going to prepare a set of rules for fixing transit and transshipment fees and other related matters. How will you do that?
MR: The basic element of that is the cost for operation that is recovered, and there is a fixed amount of payment for maintenance, use of equipment and so on. If the same principle is applied, the only thing we need to look at is the method of calculation and the amount. What we should be careful about is that we don't inflate the amount.

We cannot underestimate, because we will not be able to recover the amount that we should. If we overestimate, we reduce India's incentive to use the facilities that we give to them. So there ought to be some balance. The question is, what is the additional cost Bangladesh will incur for providing that service? If India does not use the services will Bangladesh incur the cost? That is the additional cost.

For roads, right now, we do not have any problem because India will use the Ashuganj- Agortala road, which is already there. In order to carry the excess cargo some improvement and extension of the road is necessary, and the cost will be borne entirely by India. So we are not incurring any additional cost for that.

They are also bearing the cost for setting up the facility for transshipment at Ashuganj. The ODC cargo will be offloaded from vessel to a truck. The Ro-Ro ferry to be used will also be installed by India. So, we will not set up whatever will be used entirely by India. The entire cost will be borne by India.

So that part of the investment is not a problem now. All that India would give us is the berthing etc, which is the Indian protocol. If some additional measures that are not part of the investment are necessary the cost will be collected.

Finally, the rules will basically follow what is in the inland protocol. There is a railway protocol for movement of goods. For movement along the roads the WTO prescription should be applied and the numbers have to be calculated.

DS: Will you conduct a detailed study on what the pressure on our roads will be when heavy-duty Indian cargo trucks start plying? How much will we be benefited by this? How much load will our ports be able to take?
MR: The basic question is, do you start before the study or do you study first? The investment in all of this would depend on how much cargo will be transported through Bangladesh. There is, as of now, no basis for making calculations, so you make an assumption that x, y, z quantity will be transported.

Unless there is some basis for that calculation, all calculations have to be based on assumption. The critical factor is how much cargo can the Chittagong and Mongla ports handle?

If India, Nepal, Bhutan were not going to use these ports, would Bangladesh make an investment in these ports? So, these are difficult assumptions, difficult calculations. Supposing India, Nepal and Bhutan do not use our roads or ports, how much improvement and how much investment will we make? That will depend on our need. Then you add something for India, something for Nepal and something for Bhutan. So if we assume that we will handle, say, 10% more cargo, then the calculation should be on the additional cargo handled and an increase by 15% each year. That additional investment will be the on account of Bangladesh and10% will be for India, Nepal and Bhutan.

So that would be the additional investment required for that. That is something that we should collect. That calculation is based on an assumption. The important point right now would be to establish the principle and methodology of calculation. The calculations can be made once that is established and an approximate rate per unit is accepted.

DS: The government has charged the commerce ministry with the responsibility of formulating rules and related issues for giving transit and transhipment. How will the calculation be done? Will the help of an expert be taken in this regard?
MR: I do not know how much expertise and methodology is available with the commerce ministry. There may not be an expert available. So if necessary, we will take an expert.

DS: Will there be separate agreements for giving transit facilities for different modes and routes? For example, transit is going to be introduced at Ashuganj and Akhaura soon.
MR: For ODC cargo, they will use inland water routes. Ashuganj has been already declared as a port of call. And movement to Ashuganj does not need any significant additional investment for navigation. What is additional is the transfer of the ODC from a vessel to an automobile. That cost will be borne by India. Then the use of road -- the cost of whatever improvement is needed will be borne by India. Bangladesh will not incur any additional cost or investment.

So, for this, we don't need a new protocol. What we need is investment, and the additional cost involved for operation of that road. That is all that are needed. No additional protocol is needed for that additional cost.

DS: Will the amount of fees be fixed as per the new rules that will be formulated?
MR: I have not seen the terms of reference. This would be an extension of the protocol and the rules that we have now. If we follow the WTO, all that we need to do is to look at the cost for providing the service. And that cost has been defined in terms of efficiency.

Let us say, if the efficiency cost is calculated at Tk.100 and the inefficiency requires Tk.10 more, you cannot ask them to pay more. If you take the case of Chittagong port -- there will be demurrage charge and a waiting charge.

That is the loss because of inefficiency. If you are competing in the international market, you cannot ask anyone to pay for your inefficiency. You can only ask them to pay for your efficiency.

As for inefficiency part, you can say, OK, this is additional cost for inefficiency. If you use our port, that is something that cannot be avoided, and it is for you to decide. But your principle is very weak.

DS: Transport expert Dr Rahmatullah has shown in a study -- which is still in draft form -- that Bangladesh can make a profit of $2.3 billion over the next 30 years by giving transit and transshipment facility. If the calculation is correct, how beneficial will it be to the country?
MR: I have not seen that report, so I cannot comment on it. But as I said, these are all based on assumptions. If the assumptions are valid, then there is a use for them. If the capacity of Chittagong and Mongla ports does not increase significantly, you cannot handle one additional unit. So this assumes efficiency of the ports, efficiency of the transport from port to inland borders and across the Indian border. All these are assumptions. Dr. Rahmatullah had worked in Escap and he was also a very important player in the Asian railway and Asian highway. If Escap had made some assumptions, then some calculations are there. If the adjustment is consistent with the price changes so far, that might reflect the use of it. But as I have said I have not seen it, so I cannot comment.

DS: In your opinion how and to what extent can Bangladesh benefit by giving transit and transshipment facilities? Do you have any data in this regard?

MR: You can earn an enormous amount. I cannot accept any of the calculations done on so many assumptions. My accepting or rejecting does not reflect on the quality. But these are all based on assumptions. For instance, if the assumption is that all import to the northeastern states will be through Bangladesh, it will be a wrong one. These are wrong assumptions because if you want northeastern states to import everything through Chittagong port then you have to build up a relationship of trust, which is not there. Uninterrupted and increased cooperation, let us say for 10 years, would build up the trust. Then India can start importing all the goods for its northeastern states through Chittagong and Mongla ports.
 
In one sentence he says BD will not charge anything more than the cost of transfering the goods and maintenance. In the next sentence he is saying BD will earn enormous amount of money. Is he an idiot or what? Did he forget the simple profit and loss equation?
 
In one sentence he says BD will not charge anything more than the cost of transfering the goods and maintenance. In the next sentence he is saying BD will earn enormous amount of money. Is he an idiot or what? Did he forget the simple profit and loss equation?

Did you read the entire interview? I'm not sure where you got this impression from, can you highlight where he said what you are implying?
 
WTO also lays down the principles on which the charges shall be calculated. It says clearly that the charges shall approximately be equal to the cost of the services rendered and shall not be used for augmentation of revenue or for protecting domestic services.

Ahahahahahahahahahahahahahahahahahaha... *cough cough*

When did india, the superpower(!), abide by the rules of such international organizations? Please, give us our river water back that you are withdrawing unilaterally. :D Funny that you indian crybabies highlighted the WTO part.

'K let's get this straight: you have no cheaper alternative, and we will take advantage of it to the fullest. AL is either being very diplomatic or very submissive, in which case sooner or later they will 1) change their mind or 2) lose the next election. Whatever the consequence, there will be no free ride.

Now go on whining about why we should not make profit. :P
 
When did india, the superpower(!), abide by the rules of such international organizations? Please, give us our river water back that you are withdrawing unilaterally. Funny that you indian crybabies highlighted the WTO part.

How many times do I have to debunk this claim? :D
 
Uninterrupted and increased cooperation would build up the trust

The Prime Minister's economic affairs adviser Mashiur Rahman says that if Bangladesh gives transit facility it will earn an enormous amount of money, but it depends on building up a relationship of trust with India. The Daily Star took a detailed interview of Mashiur Rahman on November 20.

DS: Will you conduct a detailed study on what the pressure on our roads will be when heavy-duty Indian cargo trucks start plying? How much will we be benefited by this? How much load will our ports be able to take?

MR: The basic question is, do you start before the study or do you study first? The investment in all of this would DEPEND ON HOW MUCH CARGO WILL BE TRANSPORTED through Bangladesh. There is, as of now, no basis for making calculations, so you make an assumption that x, y, z quantity will be transported.

Unless there is some basis for that calculation, all calculations have to be based on assumption. The critical factor is how much cargo can the Chittagong and Mongla ports handle?

After reading the interview with (Pundit) Mashiur Rahman, it is very difficult to see what the GoB will charge or get by giving transit facilities to India. GoB led by AL is using cunning ways to answer a simple question by not answering the core question 'How much BD will be benefitted.'

AL govt said us in the past that India was waiting with $1billion of revenue (say it charge or fee) per year if we allow them transit. Now, we find this cow-eating stupid Hasina has signed some documents in Delhi without really understanding the meaning. She probably could understand the meaning of a few words, but not of the sentences or the content written by very experienced Indian (read Kautilla Hindu) bureaucrats.

Similar thing happened with the Berubari Treaty as well that was signed by his orator, but cow-eating simpleton father. It was the Mujib-Indira Treaty. Now, this Pundit MR has come out to say that the present maneuvering by the BD govt is only a relationship buildup act with India. It is funny, isn't it?

Note the highlighted portion where MR talks about how much cargo will be transported. He even does not know that by AASHO (Amercan Society of State Highway Officials) Standard, a 10 ton truck movement may be equal to the movement of a hundred passenger cars.

I do not have the exact formula right now in my hand to calculate the exact number of equivalent cars. But, the calculation is not that simple. Many other factorts are also considered, such as the soil parameters like CBR (California Bearing Ratio) value, and thickness and quality of pavement.

MR will have to calculate the volume of cargo in terms of road destruction and not by the simple calculation of total volume of cargo. Even a one time movement of a 20t truck may be equal to the movement of 300 passenger cars in terms of destruction of the asphalt road and the subsoil that supports the road. But, MR does not have this preliminary knowledge, and he is an adviser to the PM.

Pundit-like people like him surround the PM and gives her advice that go against the interest of the country.
 
After reading the interview with (Pundit) Mashiur Rahman, it is very difficult to see what the GoB will charge or get by giving transit facilities to India. GoB led by AL is using cunning ways to answer a simple question by not answering the core question 'How much BD will be benefitted.'

AL govt said us in the past that India was waiting with $1billion of revenue (say it charge or fee) per year if we allow them transit. Now, we find this cow-eating stupid Hasina has signed some documents in Delhi without really understanding the meaning. She probably could understand the meaning of a few words, but not of the sentences or the content written by very experienced Indian (read Kautilla Hindu) bureaucrats.

Similar thing happened with the Berubari Treaty as well that was signed by his orator, but cow-eating simpleton father. It was the Mujib-Indira Treaty. Now, this Pundit MR has come out to say that the present maneuvering by the BD govt is only a relationship buildup act with India. It is funny, isn't it?

Note the highlighted portion where MR talks about how much cargo will be transported. He even does not know that by AASHO (Amercan Society of State Highway Officials) Standard, a 10 ton truck movement may be equal to the movement of a hundred passenger cars.

I do not have the exact formula right now in my hand to calculate the exact number of equivalent cars. But, the calculation is not that simple. Many other factorts are also considered, such as the soil parameters like CBR (California Bearing Ratio) value, and thickness and quality of pavement.

MR will have to calculate the volume of cargo in terms of road destruction and not by the simple calculation of total volume of cargo. Even a one time movement of a 20t truck may be equal to the movement of 300 passenger cars in terms of destruction of the asphalt road and the subsoil that supports the road. But, MR does not have this preliminary knowledge, and he is an adviser to the PM.

Pundit-like people like him surround the PM and gives her advice that go against the interest of the country.

:rofl:

With brain like you its no wonder BD is still the poorest of the poor!!! First put aside the paranoid words you used that it may become little clear for you. :angel:

No country invest in other's infrastructure without benefit same goes to India as well as Japan. India is giving soft loans to BD for building those roads and bridges while BD's infrastructure improves as well as BD gets the transit fees while India get benefited from the shorter route. Now you bring the car calculation. lol India is not carrying car nor the way to calculate transit. All these including CBR is not coming here because the roads will be build in keeping mind the load it will carry and the money from us. BD is just getting benefit of its location.
 
Transit, not corridor: Muhith

Transit, not corridor: Muhith | Bangladesh | bdnews24.com
Tue, Dec 7th, 2010 8:35 pm BdST

Dial 2000 from your GP mobile for latest news
Dhaka, Dec 7 (bdnews24.com)—Bangladesh will give transit facility, not corridor, to ship goods of other countries, the finance minister has said.

"Bangladesh is a transit country and we will give transit facility under which goods of another country pass through using the territory," Abul Maal Abdul Muhith said on Tuesday at the plenary session of the conference on 'Bangladesh 2030: Strategy for Growth' in the city.

The government will take decision on transit fees by this month, he said.

Muhith said market will not be developed without equitable growth.

The minister lamented that there are many actors in the area of skilled development but there are tremendous lack of coordination there.

It is very important to have land use and urban planning as the country has limited land, he said.

Former caretaker government adviser Hossain Zillur Rahman in his presentation said the country is facing four risks in terms of power crisis, political instability, corruption and skill shortage.

Investment-GDP ratio has become stagnant at 24 percent and it poses a great risk for Bangladesh, he said.

Zillur said Bangladesh needs 8 percent growth rate for the next 20 years to become a trillion dollar PPP-adjusted economy by 2030.

Businessmen need to deepen its penetration to the US and EU markets and pursue new ones in Africa and Latin America.

"They should also target big trade partners of Bangladesh like China, India, Turkey, ASEAN, Japan and Turkey," he said.

President of Boston Institute for Development Economies Gustav F Papanek in his presentation said Bangladesh has an once-in-a-lifetime opportunity to transform the country.

China will no longer be competitive in labour-intensive sector and Bangladesh should grab the opportunity, he said.

CPD executive director Mustafizur Rahman said the country should capitalise on benefit of regional connectivity.

The programme was moderated by ICC,B president Mahbubur Rahman.
 
A brief summary for fellow members

Inland water-way use: fixed income for BD govt + shipment charge income for private BD companies (100% indian shipments will use private BD vessels)

Railway usage: charges based on usage

As per WTO rules the charges shall approximately be equal to the cost of the services rendered and shall not be used for augmentation of revenue or for protecting domestic services.

Private BD income from indian shipments
2001-02: 2Crore TK
2009-10: 4.52crore TK

Ashuganj- Agortala road
• Improvement-augmentation costs borne by india
• Cost for setting up transshipment facility borne by india
• Ro-Ro ferry installed by india

I hope the above information pacifies the upset BD members. Clearly more shipments will mean more income for the govt (rail use) and private BD companies (water vessels)
 
Last edited:
Private BD income from indian shipments,

2001-02: 2Crore TK
2009-10: 4.52crore TK

I hope the above information pacifies the upset BD members. Clearly more shipments will mean more income for the govt (rail use) and private BD companies (water vessels)
After reading the post above, I feel like dancing until the floor breaks down or it develops at least a crack. It is an unbelievable income of Taka6.52 crore?
 
@eastwatch

I think you havent understood the entire transit project yet. Please read with an open mind.

The 4.5 crore Taka is an annual payment by GoI to GoB as a flat payment regardless of what happens. Wether it is used or not. Other than that, local BD companies will be hired to transport the goods, they will make their own money. Then there will be insurance, repair and maintanance and so on. This will be private income on top of the 4.5 Crore Taka.

As the goods are not ending up within Bangladesh, there is obviously no Custom duties. Now for upgrading infrastructure, GoI is doing that free of cost to GoB govt. like road widening e.t.c.

Not only India, but Nepal and Bhutan will be using Bangladesh as transit. similarly, Burma might end up doing the same. But the infrastructure being upgraded by India will be the same. You might have to do more maintanance ofcourse depending on how many countries will be using it.

Similar reciprocation for Bangladeshi goods to Nepal, Bhutan and eventually Pakistan and Afghanistan would also hold true.
 

Users Who Are Viewing This Thread (Total: 2, Members: 0, Guests: 2)


Pakistan Defence Latest Posts

Back
Top Bottom