May 2, 2022

The Role and Future of BIMSTEC:An Interview with Shri Gautam Mukhopadhaya

Written By: Gaurie Dwivedi

Gaurie Dwivedi

You have been Ambassador to Myanmar, Afghanistan and Syria, and Myanmar is one of the member nations for BIMSTEC. After the BIMSTEC Summit, which recently concluded in Colombo, there are more issues, challenges and opportunities to discuss. Do you think it’s a reset as far as BIMSTEC is concerned because the regional grouping has not really performed as much as what many assumed it to and it languished in terms of the role it could play in the region? Do you think the summit could act as a reset, as an inflexion point going forward?

Gautam Mukhopadhaya

Let me begin by saying that yes, we all have to acknowledge the founders, as well as the later members, that BIMSTEC is a very prominent grouping of countries. It lies at the fulcrum of South Asia, South-East Asia, in the middle of our Neighbourhood-First, Act-East and Indo-Pacific strategies, and overall sort of a very important location in the Bay of Bengal. But it has been slow to start, and you know, we saw that it went into summit mode sometime around 2004. We had another summit in 2008 and 2014 and since then in fact, actually, it has been India that has injected a little life into it, when the Prime Minister invited the BIMSTEC leaders to the BRICS summit in Goa in 2016. Subsequently, we had the Kathmandu summit in 2018, and in between, of course, we’ve had the covid pandemic. So, I do believe that there have been steady incremental moves since about 2014. Before that, it was a little more deeply in slumber. Since 2014, a Secretariat has come up in Bangladesh and this time, a very major step was taken in adopting the Charter of the BIMSTEC. I think along with that they also adopted a couple of important MOUs and agreements, particularly some that have been in the works for some time such as the master plan on transport and connectivity. So, there is a kind of push by India and there is a movement within the BIMSTEC. But we are a far cry from where we want to be or where we should be, given the fact that the heart of this lies in the Bay of Bengal, and we have not really seen any major lift in Bay of Bengal trade and the Bay of Bengal economy. We talk about the Blue Economy,but in fact there has not been much movement in terms of overall Bay of Bengal trade. And, I think it would be useful actually to go back to the colonial period, you know when the British were effectively the drivers of the economy of the subcontinent. And radiating out from Calcutta, you had a whole series of port connectivity, down to Malaysia and Singapore. But that was part of a colonial economy. Now we are in a different situation. There has been partition and subsequently Bangladesh, so there has been a fracturing of the political geography of this area. But at the same time, we have this synergy coming from India’s Look East and now Act East policy. And there is a desire to look towards South-East Asia as a kind of growth engine for the region. So, I think the conditions are there, the actual chemistry still needs to take place.

Gaurie Dwivedi

There is a lot in terms of maritime cooperation that needs to be done. I remember, first I heard about BIMSTEC was almost 20 years back and even then, there was talk about how there is a huge trade opportunity that exists. It’s unfortunate that two decades later we are still talking about an opportunity. It’s frankly an opportunity lost. But you know, I was just looking at the ASEAN trade and comparing it to BIMSTEC just to get a sense of how much regional groupings can really contribute to each other’s economy. ASEAN trade is up by USD 600 billion and BIMSTEC trade is sub USD 70 billion. So, A, of course there is no comparison, and B, it also does suggest that the region must now grab the trading opportunities with both hands. Do you think that can now happen? Again, I am talking in the backdrop of the Summit because there is now more sense of optimism in terms of the future that holds for the grouping.

Gautam Mukhopadhaya

So let us talk of a couple of things. One is, let’s not forget that for a greater part of the last 20 years, political conditions have not been very ripe. Myanmar was more or less stuck in its insular period. Relations with Bangladesh were not that great, and the Bangladeshi economy is only now beginning to really move. For a long time, it languished in the category of Least Developed Countries. Now it has very high human development indices and the growth is also good. Myanmar looked up in between, during the 10 years between military governments and the first NLD government, but right now is in a state of severe political crisis. And by and large, a lot of the economies other than India and say Thailand on the other side, are not very highly developed economies, or economies that can make a big impression regionally such as Nepal, Bhutan, Sri Lanka, and Sri Lanka too is in an economic crisis. On the other side, ASEAN is still moving ahead, and you have international crisis like the pandemic of covid and as well as now the Ukraine crisis which in some ways is pushing us towards much greater regional supply chains, much greater regional cooperation, may be even a degree of integration. You were right in pointing out the trade statistics. You know, if you look at it, actually our intra-BIMSTEC trade is 5% and I think even ASEAN is much more—about 30% within the ASEAN itself. So there is a huge deficit to overcome. But I think the problem really lies in the fact that much of these economies are still very highly under-developed. They haven’t tapped their biggest potentials. And when I say big potential, I say one is, of course, the Blue-Economy. Bay of Bengal has not really been exploited in a sustainable way, because today we can’t do plain rampant extraction and extraction alone. We have to think in terms of how you build natural capital as well, but also the agricultural economy. We tend to focus a lot on the industries without realising that 70% of the economies of these countries are largely rural and agri-based. And we haven’t yet invested sufficiently in the agri-base of these economies. If we were to do this, then there would be a natural kind of momentum to the economies.

Gaurie Dwivedi

We are talking at a time when there is so much expectation of maritime cooperation, more so given that this region is achieving a lot of prominence, with the Indo-Pacific, the South China Sea, and the whole region is now in discussions for various reasons. Do you see that having an overhang in nations coming together for greater maritime cooperation, whether it is Sri Lanka, Thailand, Myanmar? All of them do have requirements of greater maritime cooperation more so given what’s happening in the Indo-Pacific region. Do you think that the marine economy could act as a catalyst?

Gautam Mukhopadhaya

Very often, a lot of what we are talking about is maritime cooperation for let’s say shipping, or essentially security based. But yes, I think there is the marine economy that as I mentioned, the Bay of Bengal marine economy is very important. The other thing you were alluding to was that, suddenly, the region has become much more strategically important. Not only is there a greater consciousness of the importance of Indian Ocean trade, but also of trade through these areas. The overarching presence of China, now the activities of the Quad, the Americans, the Brits, and the Australians with AUKUS, Japan becoming a much more active partner of India, the Chinese active on the Belt-and-Road initiative, after all they have something called the China-Myanmar Economic Corridor, deep-sea port in Myanmar, and on the western side which we can leave out. Butso, there is suddenly a lot more activity on the Indian Ocean and the Indo-Pacific, and I think that this is enhancing the profile of this region, and having the effect of taking a greater interest in the economy as well. But you know, we still don’t have the kind of business-to-business relations that will actually kick start the Blue Economy. Even much of the soft infrastructure that is required, for example, a lot of the shipping in this area would be coastal shipping. I know that the BIMSTEC have been working on a postal shipping agreement, largely pushed by Thailand, but we haven’t yet reached that. Even the coastal shipping agreements between the countries of the region are not yet very mature enough. So, a lot of the trade, just as we talk about building an economy from the bottom, a lot of the trade that will take place will be coastal trade, between one part of the Bay of Bengal to another part. And if we go back a little bit into history, we shouldn’t’t forget that the Bay of Bengal was a very thriving trade area. Traditionally, we had the Arabs, the Tamils, who were traversing this area you know, connecting to Indonesia, Malaysia, present-day Malaysia, even in Myanmar there were Tamil communities that traded with these areas. So in any kind of trade revival involving literal communities, coastal communities are still waiting to be.

Gaurie Dwivedi

So, what do you think should be the next few steps, and you know a lot of this has to be driven by India? It is like the real elder brother taking all the nations together, and India has to play that role? What do you think would be those 3-4 important milestones that India needs to reach for lifting BIMSTEC?

Gautam Mukhopadhaya

The first one that I mentioned, is a coastal shipping agreement. The second I would say is another thing that I think we have been working on but not reached anywhere which is a free trade agreement, and a free trade meaning free trade in goods, services and investment. So again, what tends to happen is we tend to go for FTAs with the more advanced and developed economies because we’re looking for technology, capital know-how and things like that. But actually, we tend to ignore the lower hanging fruit, which is you know FTAs with countries that are actually in a less well-developed state than us. So, for example, though it does not directly connect to the CLMV countries, Myanmar is a least developed country in that area, so I was actually coming to the role of investment and cross-investment. For example, you know we tend to talk a lot in trade but we tend to think in terms of trade by manufacture year and then exporting or importing between countries. But you know, what many of these free trade agreements particularly in investments offer, or these comprehensive economic partnerships that we offer, is the opportunity of investment led trade. In other words, country like India which is a stronger economy, can invest in the less developed economies of the BIMSTEC region and create a market for those products in this entire BIMSTEC region. And you know, you’re talking about a market of over USD 3 trillion economy, and a population of about 1.6/1.7 billion. So, it is a huge market for investment-led trade and within that investment, it wouldn’t surprise you that I would emphasise actually invest in the Agri-economies, in the rural economies because that is where 70% of the people are earning their livelihood. And that’s on one side. On the other side, you have, of course, the marine economy that you mentioned. The marine economy means many things. It means the coastal shipping agreement, it means ports, it means actually shipping services, it means the goods that you can have to exchange with each other and again that can be helped by investments, cross-investments. So, I think we need to work much more overall I would say on much greater volumes of investment by the countries of BIMSTEC and within the region.

Gaurie Dwivedi

And then, how much are we talking in terms of sizeable investments to really make a dent for this to sort of be worth everybody’s?

Gautam Mukhopadhaya

I think you’re touching my sort of pet themes now. One is sizeable investments. So you know there are two kinds again, one can have large investments, a few large investments, or one can help small investments on a large scale. Now when you’re thinking of an agri-rural economy, mostly what you would be thinking of is processing, the producer of that economy and actually you don’t need very large capitals, you don’t need very large projects, you don’t need all the sort of destructive consequences that come out of that. You can do a lot by doing small things on a large scale, which means that there is a tremendous opportunity for things like small and medium enterprises or creative entrepreneurship, creative businesses and innovation. I forgot to mention one area – services. You know, India is strong on services. We are particularly strong on IT based services. We have evolved, we have developed IT based apps for governance, for commerce and for a number of other things. I don’t think we have really fully made some steps with things like extending Rupay to Myanmar, and to Bhutan and so on. But I think there’s a lot more scope in broadly what I would call the IT economy which includes everything, going up to e-commerce, payment systems, financial systems.  So, there’s another huge opportunity. You know we have health-based apps. We can have many more…

Gaurie Dwivedi

In fact, health is a huge area where you know, post-covid, there has to be a lot of focus and India can really play the lead there. This is a region where there are deep cultural links, deep civilisational links, and ideally there should be very deep people-to-people connect, paving the way for trade to happen. But that isn’t the case. Trade is not flourishing despite deep civilisation links because those people-to-people connect, I believe, is still not where it can be. Do you think that also needs to be worked at and again India needs to sort of really play the role of setting the stage for that to happen?

Gautam Mukhopadhaya

Absolutely! You know we already have one platform, which is the fact that a lot of these countries are Buddhist, for many of them Bodhgaya or the Buddhist pilgrimage is a very important part of their aspirations. So, you already have a basic platform that is provided by these, what you call cultural, religious and civilisational links. Obviously, these need to be supplemented and augmented by much more tourist traffic. You know, a country like Myanmar has close to 2 million people of Indian origin. Right? Just imagine the sheer traffic coming out of just that, a lot of them are originally Tamil. And we still don’t have an air connection between let’s say Yangon and Chennai or something like that. So, there are huge gaps in the air services that we can provide. I think Vietnam has taken a leaf out of the book and has recently resumed some services which had suffered on account of covid. But you know, clearly, what happens is air services and connectivity very often flow from people to people or business ties and then contribute to it in return. So that kind of dialectic you know, that kind of dynamic somehow escaped so far, and partly because there’s already very well-developedcentres like Singapore and Thailand which tend to act as hubs and tend to attract all the traffic. Initially, Rangoon used to be the Bangkok of South East Asia. All the airlines used to actually fly through Rangoon. But over the period of military dictatorship, you know, it has surrendered that advantage and now it’s not so easy to get it back.

Gaurie Dwivedi

No, it isn’t. And more so you know since we’re talking about Myanmar, I want to also touch upon the security aspect of it. I was speaking to several diplomats and several experts and they did point out that when you talk about this region, one cannot undermine the security challenges that you’re talking about. There is the Rohingyas, then there are the security challenges that come out of political upheaval. We’re seeing that in Nepal, we’re seeing that in Sri Lanka over and above what is happening in Myanmar. So that also needs to be considered, when you’re talking about a future of BIMSTEC. Now, I want to ask you, how can India overcome those challenges, because it’s primarily New Delhi that has to shoulder this burden?

Gautam Mukhopadhaya

I think it was because of the consciousness of this, that somewhere, I think with the Kathmandu summit, security and counter-terrorism, which had not been ready elements of what was essentially a Technical and Economic Cooperation body, were brought into it. But I would be cautious ofboth over-securitising the issue or of underpaying the security aspects.Security is important and no doubt there are political problems that do need to be addressed, but there’s a lot of scope for business. I would say trade and investment is the backbone. I’m not saying trade and investment can cure and solve all the political and security problems, but they do mitigate them to some extent. Clearly, political and security problems do need to be addressed, but that must not come in the way of greater regional cooperation.

There are Indian insurgent groups that are active in Myanmar, they have been Indian insurgent groups that have been active in Bangladesh and Bhutan as well. At the same time, we have been able to develop our relationships with these counties.

Gaurie Dwivedi

A BIMSTEC charter has been adopted and architecture has been institutionalised. Now there’s going to be a summit every two years and there will be periodic ministerial meetings. Where do you see BIMSTEC, 2 years from now, after the architecture has beeninstitutionalised, with a fresh commitment from all the member countries?

Gautam Mukhopadhaya

I would really like to see movement on the free trade agreement, you know we’ve had a problem with the RCEP, right? I mentioned to you a bias that we have towards FTAs with the more advanced economies. I think we need to really look at FTAs with the smaller economies, because they don’t have as many hang-ups about issues like protectionism and so on because they don’t have the industries to protect. To them, it does not matter whether they import from China or from India if they don’t produce that good, because they would actually like to have both markets to the extent possible. So, I would say that you know all those things that I mentioned, that coastal agreement, investment in the agri-rural sector, investment in general in the smaller economies. I think these are the ways that are generally a much stronger road to investment. That means, from India’s point of view, it has to be much more external investment from India outwards into the region, and we should not count it as a net loss because, you know, these are opportunity costs, these are competitive advantages that we would be taking advantage of, and we would be linking those geographies as part of this regional value chain, and that is really what is real integration. We talk about globalisation, we talk about global value chains but we need to really begin from the region. So, I would like to see the BIMSTEC evolve in that area where we think of this area as a common investment area. If we actually start off with these economies, we’ll be much better prepared to integrate with RCEP and other sort of trade linkages in the region.

Brief Bio:

Amb Gautam Mukhopadhaya is a career diplomat and has served Indian embassies and missions. He is a former ambassador to Myanmar, Syria, and Afghanistan

MsGaurie Dwivedi is an Author and Senior Journalist covering economy, policy and politics.

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