KATHMANDU, Nov 18: Nepal could soon make use of long-secured but never brought to use railways-based transit facility to trade with Bangladesh, something which can greatly facilitate trade with the country´s second largest trading partner in South Asia.
Such a situation surfaced after India, the transit providing country for Nepal, and Bangladesh decided to ink bilateral railways service agreement, starting operations of containerized cargo train service between the two countries. The two sides are inking the agreement during Bangladeshi Prime Minister´s visit to New Delhi on December 18 -21.
Nepal will mainly enjoy the new facility on the basis of Transit Treaty and Railways Service Agreement it has with India. Under the Transit Treaty, India has pledged Rohanpur-Singhbad railways route (connecting Bangladesh with India) as a transit corridor for Nepal for trade with Bangladesh.
Also the provisions of bilateral Railways Service Agreement links Nepal´s dry port in Birgunj with all transit ports and routes. Nepal further has an agreement with Bangladesh that recognizes bilateral trade through Rohanpur-Singhbad route.
Despite holding this transit rights, Nepal had not been able to make use of the facility so far due to the lack of train service between India and Bangladesh.
"Signing of Railways Agreement between India and Bangladesh will turn the situation in our favor," Commerce Secretary Purushottam Ojha told myrepublica.com.
He informed myrepublica.com that Nepal could start using the facility by exchanging letters of intent with India and Bangladesh, informing them that Nepal will be utilizing the facility for bilateral trade with Bangladesh. Exchange of letters will also be needed to initiate the process of customs and procedural harmonization.
Traders, too, stated that signing of railways agreement between the two neighbors will open new trading opportunities for them. Mainly, it will help Nepali traders escape problems and hassles that they are facing while conducting trade via road-based transit route of Kakarbhitta-Fulbari-Banglabandh (K-F-B).
According to a study carried out by Federation of Nepalese Chambers of Commerce and Industry (FNCCI), although Banglabandh is only 61 kilometers from Kakarbhitta border, bad roads conditions and hassles posed by Indian customs and security agencies make trading through K-F-B very difficult.
Poor implementation of one-time lock system, unnecessary procedural hassles, weak trade supporting logistics and infrastructure on the Indian side of Indo-Bangladesh border and restrictions imposed by the Indian customs to Nepali containers from entering Banglabandh dry port are other major factors hindering bilateral trade through this route.
All these problems ultimately add up to cost of trading, making exports expensive. As a result, trade between Nepal and Bangladesh stands at a mere Rs 5 billion a year, despite high potentials. According to the statistics of Trade and Export Promotion Center, Nepal exported commodities worth Rs 4.66 billion in Bangladesh in 2007/08 and imported goods worth Rs 491.21 million from it, enjoying trade surplus of Rs 4.17 billion.
Traders stated the opening of the new route and operations of cargo trains will give new impetus to Nepal´s trade with Bangladesh. However, they argued that the government should develop a railway terminal along the eastern border to make use of the facility more effectively.
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