Bhutan and Bangladesh to sign transit agreement alongside dialogues on trade

Chittagong sea port in Bangladesh

Bhutan is finally set to sign the long drawn out transit agreement with Bangladesh in the forthcoming meeting between the Ministry of Economic Affairs (MoEA) and the Bangladesh Ministry of Commerce (MoC).

The primary objective of the meeting is to heighten bilateral trade and expedite transit facility between the two South Asian nations.

Speaking to The Bhutanese, the MoEA Secretary, Dasho Sonam Tshering said, “We will basically revisit the list of goods that we have agreed to trade and non-taxed goods, but we are now also looking to sign the transit agreement.”

Bangladesh Commerce Secretary, Md. Ghulam Hussian will lead a six-member delegation for the talks. The Bhutanese delegation will comprise of officials from MoEA, Ministry of Finance and Ministry of Foreign Affairs led by the MoEA Secretary.  While the technical aspects will be covered at the secretary-level meeting, the MoEA minister, Lyonpo Khandu Wangchuk and Bangladesh MoC minister, Ghulam Muhammed Quader will meet to seal the deal after the discussions.

The secretary-level meeting between Bangladesh and Bhutan which was scheduled to be held on May 9 in the capital has been postponed to the second week of June, and the ministers’ meet towards the end of June. MoEA is yet to hear from MoC, Bangladesh on the confirmation of the meeting dates.

Bhutan’s exports to Bangladesh are more than imports as far as balance of trade is concerned. This is actually driven by more demand for specific goods.

The volume of trade between Bhutan and Bangladesh in 2010-2011 was valued at USD 22.12 million. Bhutan exported goods worth USD 19 million, while Bangladesh exported only USD 3.12 million to Bhutan during the year.

A recent post in the Bangladesh Financial Express stated that currently, trade between the two countries is rather negligible and heavily tilted towards Bhutan.

To this, Dasho Sonam Tshering said, “We have offered Bangladesh free trade without imposing any taxes on goods coming in from Bangladesh.”  He also referred to the proposals made by the MoEA to the Bangladesh MoC. “We have been telling them to probably look at sending their business delegates to Bhutan, and identify the opportunity areas for them to export to Bhutan.”

The Secretary also added that it has just been a few years since Bhutan enjoyed certain tax concessions for select products exported to Bangladesh.

During the Prime Minister of Bangladesh, Sheikh Hasina’s state visit in November 2010, a total of 18 Bhutanese products were given duty-free access. Earlier a 15% duty on the goods was charged.

According to MoEA officials, Bhutan has recently sent the draft protocol on transit to the Bangladesh Foreign Affairs Ministry ahead of the meeting between the two countries.

Bhutan is proposing to use seaports and airports in Bangladesh along with five additional land customs (LC) stations under the proposed protocol on transit.

Bhutan and Bangladesh’s export/import currently takes place through two LC stations; Burimari which approximately 400kms away from the southeastern town of Samdrup Jongkhar, and Tamabil, a route which passes through the Indian states of Assam and Meghalaya.

According to the MoEA Secretary, Bhutan is seeking to use the Chittagong seaport among others including airports for transit purpose in the draft protocol on transit.

Dasho Sonam Tshering said it will all depend on the viability and efficiency of the transit points. “At the moment, we are using the Kolkata port in India for any goods going or coming by sea, but we would now like to keep Bangladesh as an option, however, at the end of the day it is ultimately the cost which will determine which facility we will land up using.”

A transit agreement was signed in 1980 which failed to come into effect fully. MoEA Secretary said the Kolkata port has been used by the Bhutanese traditionally since the time Bhutan started exporting, whereas the ports in Bangladesh have never been used by Bhutan.

The Secretary also highlighted the importance of proper transit facilities such as fees and infrastructure in place which is not very developed in Bandgladesh. “They are probably currently working on it and finally it should make sense to our business people who will choose whether to use Chittagong or Kolkata depending on which one is cheaper,” he added.

Additional proposed LCs for trade and transit include Banglabandh via West Bengal, India and Nakugaon, and Halugat on the Meghalaya border that could be used by central Bhutan.  Moghalhat and Noonkhawa have also been identified for transit.

A senior Bangladeshi trade officer was quoted by the Financial Express as saying that they are waiting for the green signal from the Prime Minister’s office on initiating negotiations with the interested countries to strike a deal on transit agreements.

Bhutan imports items like fruit juice, garments, pharmaceuticals, toilet soap, melamine, etc. from Bangladesh, while exports are mainly fresh fruits, minerals, paper boards and spices.

The bilateral trade agreement between the two countries was renewed in November 2009 after it was first signed in 1988.

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