South Asia - Regional Cooperation on Trade Facilitation

Challenges

• South Asia ranks the last among all world regions in terms of road density, rail lines, and mobile tele-density per capita.

• Many of the region's competitors have dramatically reduced customs and port clearance times. South Asia risks being left behind.

• Poor transport and communications still hinder the integration of many rural areas into the wider economy.

• Presently, the trucks of one country are not allowed across the border to deliver cargo, with the exception of Nepal which allows Indian trucks to stay for 72 hours. Almost all road-based intra-regional trade has thus to be transshipped between one vehicle and another.

• An important impediment to both regional and international trade has been the regulatory constraints introduced at the gateways and border crossings.

• South Asian countries, with the exception of Sri Lanka, have costly domestic transport owing to the distance between the production area and the major ports.

• Trucking industries remain fragmented and truck fleets are old and inefficient.

• There are various bilateral agreements covering the trade between the South Asian countries as well as some multilateral agreements, which have been introduced though not fully adopted.

Opportunities

• In order to be effective, initiatives for trade facilitation need to be focused. A corridor focus is useful, since the majority of trade is concentrated along relatively few corridors.

• Bilateral or regional arrangements are needed which allow the vehicles of one country to collect/delivery cargo in other countries, together with bonding systems for the cargo.

• Perhaps the most important, but also the most difficult, is negotiation of effective bilateral and multilateral trade and transit agreements. These would facilitate trade in a more diverse range of goods.

• Simplification and harmonization of border procedures is critical for more trade. Currently there is a lack of transparency but there are ongoing efforts to reform customs and to standardize cargo documents.

• It is necessary for governments to recognize the importance of rail transport in international trade and to allow commercial operators to participate in the provision of unit container train operations.

• Construction of intercity expressways would allow high-speed travel with minimal roadside friction and thereby let long distance trucking operations flourish.

• It is important to develop high capacity, limited access highways along the major trade corridors in order to allow the introduction of modem truck transport.

• Private sector involvement in road construction and maintenance has been successful whereas its involvement in rail track construction and maintenance has had mixed results. Private operation of transport services has provided significant gains in efficiency.

More on Trade Facilitation

- The Role of Trade Facilitation in Export Growth and Inter-regional Trade

Additional Resources

- South Asia: Growth & Regional Integration
South Asia is the least integrated region in the world. Closer integration can be an effective tool in addressing energy shortage, improve connectivity, and promote peace and stability. (Read More »)

- South Asia: Development Data
A wide range of social and economic measures on South Asia, including links to the World Bank's most important online development databases. (Read More »)

- South Asia: Analysis and Research
Compilation of all the World Bank's publications on South Asia, with 'search' options and links to analysis and research on other South Asian countries. (Read More »)

- World Bank Program in South Asia
Launching pad to all information on World Bank activities in Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.(Read More »)