ADB Blog :
Historically, South Asia and Southeast Asia were isolated from one another, but increasingly leaders and business operators in both regions are seeing the benefit of greater connections, according to the ADB report, Connecting Asia: Infrastructure for Integrating South and Southeast Asia.
Most trade between South Asia and Southeast Asia is by sea, but with improved infrastructure and easier border crossing procedures, the volume of goods and passenger traffic by land would grow.”
Currently, sea freight is substantially cheaper per ton than road or rail when shipping goods between South Asia and Southeast Asia, due to limited roads and long distances.
South Asia and Southeast Asia will need at least $3.6 trillion from 2010 to 2020 in infrastructure investment to meet the needs of the growing populations in the two regions.
Asia has the money to build the critical infrastructure needed in these two regions. Savers in Asia put away $1.3 trillion in 2011 alone.
The region’s formidable savings can be leveraged to finance infrastructure, though instruments need to be developed to expedite the process.
Historically, South Asian and Southeast Asian economies were isolated from one another and there was little talk of inter-regional economic integration.
Prior to 1990, the only trade agreement that covered the two regions was the Bangkok Agreement signed in 1975 that included Bangladesh, India, the Lao People’s Democratic Republic and Sri Lanka as well as the Republic of Korea and the People’s Republic of China.
In recent years, six trade agreements have come into effect between South Asian and Southeast Asian economies, including the landmark Association of Southeast Asian Nations-India Comprehensive Economic Cooperation Agreement in 2010.
Myanmar is the only land bridge between South Asia and Southeast Asia, so it would play a critical role in connecting the two regions but its links to northeast India are weak because most of the borders are mountainous.
Combined, India and Southeast Asia are home to 1.8 billion people and have an economic size of $3.8 trillion, sharing substantial world resources, economic and otherwise.
Most of Thailand’s trade with South Asia is with India, standing at around 75 percent of total trade in 2012. Bangladesh, Nepal, Pakistan and Sri Lanka still trade very little with Thailand.
Bangladesh’s geographic location between South Asia and Southeast Asia provides a unique opportunity for the country to benefit from greater cross-border business.
The distances between cities in India and the inner cities of the People’s Republic of China would be greatly reduced if land routes through Nepal were used.
For example, the distance from New Delhi to Kunming via Hong Kong is about 10,345 km whereas through Nepal it would be only about a quarter of that distance.
