The main aim of this research is to analyze and present why and how China is trying to implement a plan with which it could become an independent financial pole. What kind of sources has Beijing gathered for financing BRI? Why and how should Armenia try to be involved in the financial sector of the BRI? What will Armenia and China get if they cooperate in the aforementioned sphere? why should China be interested in conversion of Chinese Renminbi to Armenian currency and why should it be interested in establishing a branch of any Chinese bank in Armenia?
China is trying to influence the world economy through BRI, with which it is creating a financial and economic platform that can act independently from the West, so that in the event of a China-US confrontation, China would not be isolated. In turn countries which will create ties with China through BRI will get Chinese loans and investments.
In order to implement the aforementioned strategy, thanks to the work of the Chinese diplomatic corps, on October 1, 2016, Chinese currency was included in the Special Drawing Rights (SDR) valuation basket by the International Monitory Fund.
From my point of view, one of the main aims of this step to strengthen the position of Chinese RENMINBI, which will provide an opportunity to Beijing to give loans and implement vast investment projects in states which are involved in the BRI, using its own national currency and in international trade grow the quantity of financial transfers with RENMINBI. Beijing also aims to reduce its dependence from the USD. As Chinese authors mention, “BRI will provide an opportunity to China to strengthen Renminbi role as a regional currency and afterwards as an international currency.
China’s investments in the framework of BRI rise the global meaning of Chinese initiative, as due to Asian Development Bank’s report, “Infrastructure needs in developing Asia and the Pacific will exceed from $1.5 to $1.7 trillion per year”.
In October 2015, China established “China International Payment Service (CIPS)”, which aims to make Chinese currency available at foreign banking systems and it will reduce also China’s dependence from “The Society for Worldwide Interbank Financial Telecommunication (SWIFT)”. Dozens of international banks have already joined and can use Chinese CIPS. It is worth noting also the importance of Yinilan (银联- Union Pay) payment service. It provides states which are participating in BRI with an opportunity to make interbank and international bank transfers using Chinese currency.
It is worth mentioning that already in the end of 2016 Chinese banks opened 62 branches in 26 states which participated in BRI. China officially mentioned in its “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road” document, that China must rise exchange of currencies with the BRI participants, create and develop Asian bond markets.” For implementing aforementioned aims, China creates financial system, in which joint financial structures, foundations established by Beijing and partners, several Chinese banks are playing leading and crucial roles. It is expected that China’s government will invest $ 1 trillion in total in its BRI. The research of BRI’s financial system is important, as it provides an opportunity to states which have stable financial systems to be involved in BRI’s financial-economic system and get benefits.
Silk Road Foundation
Until 2018 the main financial investments in BRI have been made by Chinese companies. It is clear that both interests, and resources of Chinese companies are limited. Thus, for continuation of Chinese investments in the framework of BRI and for financing projects of the foreign countries as well, on December 29, 2014, Beijing established Silk Road Foundation. The Main aim of this foundation is to make investments and develop infrastructure, industry and financial systems. It has $40 billion capital.It is also worth mentioning that until May 2017 it has provided $ 4 billion for investments within the framework of BRI.
Asian infrastructure Investment bank
Special importance was also ascribed to the establishment of The Asian Infrastructure Investment Bank (AIIB) in January 2016. It is worth mentioning that China was able to establish the AIIB under pressure from the US. AIIB authorized capital amounts to $ 100 billion.
According to Xi Jinping’s report, AIIB until 2017has provided $ 1.7bn for investments within the framework of BRI. From the South Caucasus, Georgia and Azerbaijan are members of AIIB. Representatives of these countries are also included in the Board of Governors. In 2016 November, Azerbaijan succeeded to receive $ 600 million from AIIB to build a trans-Anatolian gas pipeline, and Georgia received $ 114 million from the bank to build a bypass road.
On one hand, Armenia is a member of the EAEU, and on the other hand it is strengthening its cooperation with the EU. Yerevan also speaks about its commitment to strengthen cooperation with China in the field of transportation, in the framework of China’s BRI initiative. It is worth mentioning that to become a transit country in transportation corridors which unite different regions of the Eurasian continent, Armenia must at first develop and modernize its poorly developed transportation infrastructure. For this reason, Armenia is building the 556-kilometer North-South Road Corridor, which will start at the Armenian-Iranian border and stretch to the Armenian-Georgian border.In 2018 China’s lead Asian Infrastructure Investment Bank, which is investing mainly in transportation infrastructures in BRI participant countries, published its “Transport Sector Strategy: Sustainable and Integrated Transport for Trade and Economic Growth in Asia”. The research of this strategy shows that its main aims fully coincide with Armenian North-South Road Corridor Investment Program which is being implemented by Transport Project Implementation Organization. My recommendation is that at first Armenia can try to stand Regional member of the Asian Infrastructure Investment bank and after get sovereign backed or non-sovereign backed loans for its state-owned noncommercial organizations, private organizations, and international organizations which works in the territory of Armenia, that they invest this money in Armenian North-South Transportation Corridor, which will significantly enhance Armenia’s capabilities to be involved in the Silk Road Economic Belt’s China-Central Asia-West Asia Economic Belt.
I think that Armenia’s accession to AIIB will also allow to start negotiations for a possibility of getting a loan for the construction of the Armenian-Iranian railroad.
BRICS NEW DEVELOPMENT BANK
The other crucial step in this direction was the foundation of BRICS New Development Bank with the other members of BRICS. This international financial institution has its own monetary fund, and its main aim is to ensure the financial sustainability of its founders.
Within the period of 2016-2017 the Bank has approved a $ 3,4 billion credit line. The NDB aims to provide this amount for the development of communications, renewable energy, water purification, irrigation and other projects. It was confirmed that the initial capital of the NDB would be $ 50 billion, which would be shared by the Member States on a parity basis. It was also decided that the statutory capital of the bank should be raised to $ 100 billion. The NDB Center is located in Shanghai, China, with the ultimate goal of providing financial sustainability for its founders. In other words, the NDB will be financing most of the initiatives undertaken within the framework of BRI in China, Russia, India, Brazil and South African Republic.
Chinese banks financing BRI:
China Development Bank – 国家开发银行
Near the end of 2014th year the latest capital of the CDB reached the amount of 10.32 trillion Chinese Renminbi.
In 2014 the CDB has provided 1.56 trillion yuan for investments in foreign countries. The CDB declares that it serves China’s BRI and promotes the Chinese companies ‘Go Global’ policy. One of the CDB’s objectives is to deepen cooperation with foreign governments in financial institutions, industrial centers, infrastructures, finance, agriculture and energy. For example, the CDB has opened a $ 10 billion credit line for the ASEAN member states to develop their infrastructures. This line of credit can also be used by Chinese companies, which are going to build factories and develop industries in these countries.
The Export-Import Bank of China – 中国进出口银行
The Export-Import Bank of China is a state-funded and state-owned policy bank with the status of an independent legal entity. One of the main goals of this bank is to promote China’s foreign trade and the normal course of investments, the development of economic cooperation with the outside world, and the support of Chinese organizations in the framework of the “Go Global” policy.
For example, in 2013, this bank provided $ 385 million loan to Kyrgyzstan to modernize Bishkek thermal power plant.
China Bank – 中国银行
In 2014 the CB actives reached $ 2.458 trillion. The Bank has announced that the 2016-2018 China will provide $ 100 billion to Chinese companies to finance projects abroad within the framework of BRI.
Industrial and Commercial Bank of China – 中国工商银行 (ICBC)
The ICBC is the largest bank in the world. By the year of 2016, it has created 412 financial institutions in the world, 127 of which are located in the BRI countries. The ICBC declares that it will support the policy of Chinese organizations abroad.
In sum, China uses governmental, international and private financial resources for the successful implementation of BRI. It is worth mentioning that China combined the internationalization of the Renminbi with the globalization of the BRI initiative. For one thing, the implementation of BRI provides an added impetus and unique platform for continuation of the establishment of the Renminbi as an international currency, and for another, it fostersthe sustainable development of the financial sector of BRI outside of China, which provides an opportunity for China to turn into an independent financial pole.
Prospects for Sino-Armenian cooperation in the financial-banking sphere within the framework of the BRI
Taking into account international experience, based on which the CDB has agreed to provide Egypt’s SIBBANK funding for financing Egyptian enterprises, and financial support to Singaporean and Chinese companies should be provided to invest in the framework of BRI, I do believe, that it is possible to get a credit line from the Chinese banks for Armenian small and medium-sized businesses which are importing to Armenia Chinese high-technologies.
As a result, Armenia’s businessmen will be able to expand their business, with additional cash flows to Armenia, and China, in its turn, will be able to put its own money into circulation and increase interest in Chinese-made equipment and products in Armenia, which is a member of Eurasian Economic Union.
Armenian business companies can also start direct negotiations with Chinese companies for starting joint investments in Armenia, after the agreements between both sides’ entities in special projects, Chinese business companies can apply to the above-mentioned Chinese banks, that they provide them finances for investing in Armenian within the framework of BRI.
One of the best arguments for this hypothesis is the message of Xi Jinping to Chinese organizations, according to which the Chinese leadership is interested in the fact that Chinese companies are increasing their role in investing within the framework of the BRI, basing on the “Go Global” policy.
Assessment of the Establishment of a Chinese Bank in RA From the viewpoint of economic persistence of RA:
Internationalization of Chinese Renminbi provides a wide range of opportunities to countries with stable banking systems included in the BRI as they have the opportunity to engage Chinese banks in their own banking system or to establish intermediary banks operating in Chinese currency to provide a conversion of their currency by renminbi.
The following question arises: why should China be interested in conversion of Chinese Renminbi to Armenian currency and why should it be interested in establishing a branch of any Chinese banks in Armenia?
China will get an opportunity to trade with Armenia with Chinese currency, due to Ministry of Foreign Affairs of Armenia bilateral, direct trade between Armenia and China is worth 490 million USD. With this step, the role of the Renminbi will be strengthened in the global financial arena. Additionally, if the Chinese side establishes a bank in Armenia, Chinese capital will be involved in the Armenian financial-banking sphere.
The following question arises as well: what will Armenia get?
If a branch of one of the leading Chinese banks is opened or if Armenia and China establish a joint bank, the result will be significant financial investments in Armenia. The financial field of the country will be diversified, and if Dram-Renminbi conversion is introduced, bilateral trade between Armenia and China will be realized in their own currencies, thanks to which Armenian and Chinese businessman will no longer lose money in currency exchange.
According to our calculations, the Armenian side loses about $ 10mln annually due to the above-mentioned function, which can be ruled out if the Armenian banks are able to transfer their Chinese counterparts directly Renminbi. Chinese and Armenians living and studying in China and in Armenian will also benefit and be able to transfer Chinese currency to Armenia and to get money in the opposite direction without any additional losses of time and money.
China and Russia announced that they will try to deepen cooperation and reduce their tensions through the harmonization of the EAEU and BRI.Membership in the EAEU provides an opportunity to Armenia to defend its interests during negotiations with Big China more productively, as Armenia can first include the projects in the agenda of the EAEU in which it is interested, and after that, in from the name of the EAEU team, already from a strengthened position, introduce its projects to the Chinese side.
And the other recommendation is that that from time to time Armenia must invite Chinese businessmen and specialists to Armenia and offer them projects, which can bring bilateral benefit.
（*）Dr. Mher D. Sahakyan, The author of the book “Belt and Road Initiative and Armenia”, 2018, from which this essay is adapted. Translated from Armenian. Used by permission. All rights reserved.
Half a Decade On – Reflecting on Russia’s Unsung Successes
In 2016, as the incoming World Bank lead economist for Russia, I started writing about Russian economic issues. It is now time to bid goodbye. As a professional analyst of the Russian economy over the last 5 years, I can summarize my experience in one sentence: things in Russia are never as bad as they seem, but they are never as good as they can be, either.
Just in the last 6 years, Russia has managed to attain remarkable macro-stability. Inflation, which was in double digits, is in now in manageable territory. The country is less reliant on oil and gas today than 5 years back. These are no small achievements. On the other hand, as I – and many others have written – sagging potential growth holds progress back. But these issues are well-known. In this final column, I would like to recognize three lesser-known Russian developmental successes that often fly under the radar screen.
First is Russia’s increase in life expectancy – from 65.3 years in 2000 to 72.7 years in 2018. This has been mostly due to a drop in the number of deaths caused by non-communicable diseases (i.e. diseases that are not infectious or contagious such as heart attacks and stroke) and external causes (such as road accidents and homicides). Mortality rates for both adults and particularly children have also been decreasing since the 2000s. Even more recently, infant mortality decreased by 36 percent from 2011 to 2017 and maternal mortality decreased by 49 percent in the same period. While the pandemic engulfs us all, it is worth taking a longer-term perspective to recognize legitimate improvements in Russia’s life expectancy.
Second is Russia’s progress in financial literacy. Russia is no stranger to financial crises. While governments anywhere and everywhere have the primary responsibility in preventing and managing them, an important factor that is only being recognized is the need for individuals to become more informed about making financial decisions.
As an early adopter, Russia has recognized the benefits of financial literacy, and made remarkable strides in increasing literacy across both adult populations and school children. This is thanks to both top-down efforts by the Ministry of Finance and Central Bank of Russia, and bottom-up ones, which have included tapping into schools, libraries, and other community platforms to reach a large and diverse segment of the population. Indeed, Russia was ranked the first among 132 countries in the Child & Youth Finance International Global Inclusion Awards in 2016. It also ranks in the top 10 of G-20 countries for financial literacy.
Third is Russia’s progress in improving its tax administration. The history of taxes in Russia hark back to medieval times, with Prince Oleg imposing the first known “tribute” on dependent tribes. Catherine the Great is known to have said “Taxes for a government are same as sails for a boat. They serve to bring her faster into a harbor without flipping over by their burden”.
Building on lessons learnt over centuries, Russia today is at the global forefront of tapping technology and real-time source data and has managed to shift from a culture of tax evasion to tax compliance. Tax non-compliance, notably in value-added taxes, for instance, has shrunk from double digits a few years ago to less than 1 percent today, with minimal human involvement. Russia’s success in modernization of its tax services is not as well known as it ought to be, but global interest is slowly but steadily growing.
Surely, these achievements are not the end of the road. When it comes to life expectancy, male life expectancy is behind female life expectancy by almost 10 years, and this gap needs to be shrunk. Financial literacy, consumer protection, and safeguards for privacy and data protection need to keep pace as cryptocurrencies and digital fraud become more commonplace. And gains in tax administration may be washed out without complementary tax policies. Yet, these unsung successes deserve more recognition, both within and outside Russia.
One of the more unusual analysis the World Bank undertook was to figure out how wealthy is Russia. We found that Russia’s wealth lies not in its abundant natural resources (as important as they are), or its physical infrastructure (as mighty as some of it may be). Rather, Russia’s wealth derives from the ingenuity and creativity of its people. Indeed, almost half of all Russia’s wealth derives from its human capital — the cumulative experience, knowledge, and skills of Russians. Only then is it followed by physical capital (about a third), and natural capital (about a fifth). Anecdotally too, I can reaffirm that to be the case. In my interactions with students in various universities and high schools, I have witnessed their keen engagement, their sharp and pointed questions, their sense of humor, and above all, a passion to improve their country. I am indeed privileged to have played a small role in this journey.
PS: There is one other area I would like to draw your attention to, and that is climate change. While the politics are what they are, the science and economics are undeniable. In Russia, in addition to federal initiatives, it is encouraging to see positive signs emerging from within Russian regions, such as Sakhalin and Murmansk, which are vying to become carbon-free zones. As I had written earlier, the one mistake not to make about Russia is to treat it as a single unit of analysis. Doing so would be like being unaware that a Matryoshka doll is not empty! Indeed, Russian regions may be at the forefront of addressing climate change and we might be in for a (pleasant) surprise – this space is therefore worth keeping on an eye on.
First appeared in the Russian language on Kommersant.ru via World Bank
The Politico-Economic Crisis of Lebanon
Dubbed as a failed state. The Middle Eastern country, also known as the ‘Lebanese Republic’, is already leading towards a humanitarian crisis. The country is witnessing the worst financial crisis since the 1975-90 civil war. The financial catastrophe has done most of the damage as the country currently stands as one of the top 10 worst economic disasters witnessed over the past 150 years. If the economists are put true to their word, it means that Lebanon rates as the most dismal economic crash since the 19th century. As the state of Lebanon undergoes a significant political shift since last year, the social and economic fissures are subsequently broadening. A fragile democracy (for namesake) and a constant disequilibrium in the parliamentary stratosphere, have led to an economic depression that is rapidly expanding as the country fails to adopt a unified political stance and adhere to corrective measures to hold the toppling economy from a collapse.
More than half of the Lebanese population has slumped below the poverty line as escalating inflation continues to reel the populace. The main cause underpinning such brutal inflation is the hyper-devaluation of the Lebanese pound. The currency was originally pegged at a fixed rate of 1500 Lebanese pounds to the US dollar. However, over the past three decades, the economic crunch has crippled the economic nucleus of Lebanon. According to World Bank estimates, the Lebanese pound has devalued by 95% and currently trades at 22000 Lebanese pounds to the US dollar in the black market – roughly 15 times above the official rate. The resultant inflation has driven the government to push the prices to unfathomable levels – even pushing necessities beyond the reach of an average citizen. The fact could be witnessed by the rapid increase in the price of bread – which was hiked by another 5% last month to value at 4000 Lebanese pounds per loaf.
The dire social crisis could be gauged by the fact that an average Lebanese family requires a spending worth five times the minimum wage mandated by the government just to afford basic food requirements. Most of the families can’t suffice to consume utilities such as medicine, gas, or electricity. Astounding research revealed that even hospitals dealing with the Covid outbreak are not afforded gas and electricity which has led to a hike in petroleum consumption due to heavy usage of generators. The resulting shortage of petroleum has driven rage across the country as businesses fail to thrive while multiple wings of the airports are rendered powerless. The recent World Bank report signified that the food prices have inflated by roughly 700% over the past two years – a swell of 50% in just under a month. The regional countries have shown concern as Lebanon is heading towards a health crisis with a strengthening Delta variant in the Middle East and no room for recovery.
The main cause of such a debilitating situation is primarily the rampant corruption in the echelons of the government followed by the instability that ensued last year. Following the catastrophic blast in Beirut’s port that claimed an estimated 200 lives, the government resigned in the aftermath of virulent protests across Lebanon. The political vacuum, however, further pushed the state into despair. The caretaker government, led by the former Prime Minister, Saad Hariri, failed to consolidate a government as ideological differences between the President and the Prime Minister continued to displace the essential debates of the country. The contention between President Michel Aon, a stout supporter of the Shite militant group Hezbollah, and Prime Minister Saad al-Hariri, a Sunni Centrist, caused the efforts to falter as the country continued to plunge into crisis without an elected government to handle the office.
Hariri drove the narrative that due to President’s strong ties with the Hezbollah, which is arguably supported by Iran, Lebanon has suffered a shuffle of power to entrust financial support to the militant group. The narrative caused institutions like IMF and the World Bank to hesitate in injecting desperately needed social stimulus into the country despite continual warnings of an impending humanitarian crisis by France and the United States. A political vacuum coupled with the destruction caused last year along with the prudence of global financial institutions to pivot the country have ultimately resulted in the chaos that describes the landscape of Lebanon today.
However, Hariri resigned last month after failing to form a government even after nine months. The resulting political thaw helped President Aon to appoint Najib Mikati, a lucrative businessman, and former prime minister, as an interim Prime Minister entrusted to form a mandated government in Lebanon.
With a renewed Cabinet support, something that Hariri rarely enjoyed, Mikati is expected to assuage the concerns of the IMF and support economic reforms with the help of states like France. The Paris conference, scheduled on 4th August, is now the focal point as Mikati plans to convince the French diplomats regarding his schemes to pull Lebanon out of the puddle. Prime Minister Mikati recently reflected on his aspirations: “I come from the world of business and finance and I will have a say in all finance-related decisions”. He further stated: “I don’t have a magic wand and can’t perform miracles … but I have studied the situation for a while and have international guarantees”. It is clear that Mikati envisages repairing the economy which is already long overdue.
Under the French plan aiding Mikati’s regime, he would need to enforce significant political reforms to gain international aid. The diplomats, however, envision a far graver reality. It is touted that the IMF would likely focus on two facets before granting any leverage to the Mikati-regime: political-social reforms and progress towards parliamentary elections. However, with grueling Covid cases springing into action, the road to recovery would probably be highly tensile.
While Mikati doesn’t stem from any particular political bloc unlike his failed predecessors, he was elected primarily by the backing of Hezbollah. A question emerges: would Mikati be able to navigate through the interests of an organization subjected as a terrorist fraction by most of the Western world. An organization that arguably serves as the primary reason why Lebanon stands as one of the highly indebted countries in the world. An organization that could be the decisive factor of whether financial support flows to Lebanon or sanctions cripple the economy further similar to Iran. The question stands: would Mikati refuse the dictation of Hezbollah and what would be the consequences. The situation is highly complex and time is running out. If Mikati fails, much like his predecessors, then not only Lebanon but the proximate region would feel the tremors of a ‘Social Explosion’.
Bangladesh-Myanmar Economic Ties: Addressing the Next Generation Challenges
Bangladesh-Myanmar relations have developed through phases of cooperation and conflict. Conflict in this case is not meant in the sense of confrontation, but only in the sense of conflict of interests and resultant diplomatic face-offs. Myanmar is the only other neighbor that Bangladesh has on its border besides India. It is the potential gateway for an alternative land route opening towards China and South-East Asia other than the sea. Historically, these two countries have geographic and cultural linkages. These two bordering countries, located in separate geopolitical regions, have huge possibilities in developing their bilateral economic relations. At the initial phase of their statehood, both countries undertook numerous constructive initiatives to improve their relations. Nevertheless, different bilateral disputes and challenges troubled entire range of cooperation. Subsequent to these challenges, Bangladesh and Myanmar have started negotiation process on key dubious issues. The economic rationales over political tensions in Bangladesh-Myanmar relations prevail with new prospects and opportunities.
Bangladesh-Myanmar relations officially began from 13 January 1972, the date on which Myanmar, as the sixth state, recognized Bangladesh as a sovereign nation. They signed several agreements on trade and business such as general trade agreement in 1973. The two countries later initiated formal trade relations on 05 September 1995. To increase demand for Bangladeshi products in Myanmar, Bangladesh opened trade exhibitions from 1995 to 1996 in Yangon, former capital of Myanmar. However, that pleasant bilateral economic relations did not last for long, rather was soon interrupted mainly by Myanmar’s long term authoritarian rule and isolationist economic policy. In the twenty-first century, Bangladesh-Myanmar relations are expected to move towards greater economic cooperation facilitated by two significant factors. First, the victory of Myanmar’s pro-democratic leader, Aung San Suu Kyi, in 2011 has considerably brought new dimensions in the relations. Although this relation is now at stake since the state power has been taken over by military. Second, the peaceful settlement of Bangladesh-Myanmar maritime dispute in 2012 added new dimension in their economic relations.
Bangladesh and Myanmar don’t share a substantial volume of trade and neither is in the list of largest trading partners. Bangladesh’s total export and import with Myanmar is trifling compared to the total export and import and so do Myanmar’s. But gradually the trades between the countries are increasing and the trend is for the last 5 to 6 year is upward especially for Bangladesh; although Bangladesh is facing a negative trend in Balance of Payment. In 2018-2019 fiscal year, Bangladesh’s total export to Myanmar was $25.11 million which is more than double from that of the export in 2011-12. Bangladesh imported $90.91 million worth goods and services from Myanmar resulting in $65 Million deficit in Balance of Payment in 2018-2019 fiscal year. For the last six or seven years, Bangladesh’s Balance of Payment was continuously in deficit in case of trade with Myanmar. The outbreak of COVID-19, closure of border for eight months and recent coup in Myanmar have a negative impact on the trade between the countries.
Bangladesh mainly imports livestock, vegetable products including onion, prepared foodstuffs, beverages, tobacco, plastics, raw hides and skin, leather, wood and articles of woods, footwear, textiles and artificial human hair from Myanmar. Recently, due to India’s ban on cattle export, Myanmar has emerged as a new exporter of live animals to Bangladesh especially during the Eid ul-Adha with a cheaper rate than India. On the hand, Bangladesh exports frozen foods, chemicals, leather, agro-products, jute products, knitwear, fish, timber and woven garments to Myanmar.
Unresolved Rohingya crisis, Myanmar’s highly unpredictable political landscape, lack of bilateral connectivity, shadow economy created from illegal activities, distrust created due to different insurgent groups, maritime boundary dispute, illegal drugs and arms smuggling in border areas, skeptic mindset of the people in both fronts and alleged cross border movement of insurgents are acting as stumbling block in bolstering economic relations between Bangladesh and Myanmar.
Bangladesh-Myanmar relations are yet to blossom in full swing. The agreement signed by Sheikh Hasina in 2011 to establish a Joint Commission for Bilateral Cooperation is definitely a proactive step for enhancing trade. People to people contact can be increased for building mutual confidence and trust. Frequent visit by business, civil society, military and civil administration delegates may be organized for better understanding and communication. Both countries may explore economic potential and address common interest for enhancing economic co-operation. In order to augment trade, both countries may ease visa restrictions, deregulate currency restrictions and establish smooth channel of financial transactions. Coastal shipping (especially cargo vessels between Chittagong and Sittwe), air and road connectivity may be developed to inflate trade and tourism. Bangladesh and Myanmar may establish “Point of Contact” to facilitate first-hand information exchange for greater openness. Initiative may be taken to sign Preferential Trade Agreement (PTA) within the ambit of which potential export items from both countries would be allowed to enter duty free. In recent year, Bangladesh was badly affected by many unilateral decisions of India such as onion crisis. Myanmar can serve as an alternative import source of crops and animals for Bangladesh to lessen dependence upon India.
Myanmar’s currency is highly devaluated for a long time due to its political turmoil and sanctions by the west. Myanmar can strengthen its currency value by escalating trade volume with Bangladesh. These two countries can fortify their local economy in boarder areas by establishing border haats. Cooperation between these two countries on “Blue Economy” may be source of strategic advantages mainly by exporting marine goods and service. Last but not the least, the peaceful settlement of maritime boundary disputes between Bangladesh and Myanmar in 2012 may be capitalized to add new dimension in their bilateral economic relations. Both nations can expand trade and investment by utilizing the Memorandum of Understanding on the establishment of a Joint Business Council (JBC) between the Republic of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
With the start of a new phase in Bangladesh-Myanmar relations, which has put the bilateral relations on an upswing, it is only natural that both sides should try to give a boost to bilateral trade. Bilateral trade is not challenge free but the issue is far easier to resolve than others. At the same time, closer economic ties could also help in resolving other bilateral disputes. For Myanmar, as it is facing currency devaluation and losing market, increased trade volume will make their economy vibrant. For Bangladesh, it is a good opportunity to use the momentum to minimize trade deficits and reduce dependency on any specific country.
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