ONE BELT ONE ROAD Opportunities for Nepal

by: B360 Correspondent

The government of China's initiative to revive the ancient Silk Route has received momentum as the number of countries and international organizations supporting 'One Belt One Road' (OBOR)' is on the rise. Initiated by Chinese President Xi Jinping in 2013, OBOR is a massive infrastructure project spanning 66 countries and has so far garnered support from more than 100 countries and global organisations.

Nepal has also signed the OBOR cooperation pact on May 12 this year to participate in the initiative of its northern neighbour. The revival of the Silk Route will enhance connectivity, boost trade and investments, mobility of the people and most importantly foster the economic opportunities primarily integrating trade and investment in Eurasia. Nepal used to be an important thoroughfare of the historic commercial silk route and its revival is expected to benefit the economy.

Experts suggest that the initiative will propel Nepal’s prospects to benefit from the economic development taking place in China and will cumulate the positive spillovers from China’s development. Most importantly, OBOR provides connectivity, which is fundamental for any economy to move forward. Connectivity in all forms - physical, digital and people to people is a must to achieve benefit from the economic giant China and economies connected to the Silk Route.

As Nepal prepares to utilise the transit facility from its northern neighbour, it could be the bridge for India-China trade in future if it is able to develop robust infrastructures, shares Purushottam Ojha, former Commerce Secretary.

Nepal needs to be connected with BCIM (Bangladesh – China – India -Myanmar) corridor, which is a part of ‘One Belt, One Road’ initiative to link South Asia with China. "The BCIM will link Kolkata (India) to Kathmandu, Kathmandu to Lhasa (China), and Lhasa to Kunming (Kunming), to make a complete circle and that will bring Nepal within the ‘One Belt, One Road’ initiative," Ojha elaborated, adding "Then Nepal will be linked in the multimodal transport network and could be the transit for China and India."

Role of AIIB

China has set up the multilateral development bank, Asian Infrastructure Development Bank (AIIB), to fund the infrastructure gap of member countries. The AIIB is a major spare part for the Chinese government's Belt and Road Initiative. One of the major objectives of the AIIB is to support connectivity projects — developing roads, railways, ports, and energy corridors in Asia and beyond. Nepal as founding member of the AIIB will also be able to mobilise funding from the China-sponsored multilateral bank. According to Baikuntha Aryal, Joint Secretary of the International Economic Cooperation Coordination Division (IECCD), the country has proposed upgradation of a section of the road that connects the country with its northern neighbour. The AIIB has already started funding China-Pakistan Economic Corridor (CPEC) as part of the Silk Route which connects Asian countries with Europe via Middle East. During his visit to Nepal few months back, AIIB President Jin Liqun had also suggested the government design and propose connectivity projects that can be the part of the Silk Road. As per its aspiration to graduate in the league of developing nations by 2022, Nepal has been making efforts to enhance all forms of connectivity - road, rail, electricity grid, digital connectivity - with neighbouring India and China.

"Nepal's participation in OBOR will provide an opportunity to develop cross border highways, railways, transmission lines and internet connectivity, which will bring transformative changes in Nepal's socio-economic landscape," said Surya Raj Acharya, connectivity expert, "This initiative will enhance physical connectivity as well as deepen integration among Asian countries and thereby unleash the full potential of Asia as it emerges as a global economic hub."

Route Politics and Nepal

Along with China's move to develop China Pakistan Economic Corridor (CPEC) as a vibrant economic corridor, another economic giant India shows reluctance in joining the Chinese government's Belt and Road Initiative due to rivalry with Pakistan. To engage the regional economies, BBIN (Bangladesh-Bhutan-India-Nepal) Motor Vehicle Agreement has been initiated and another multimodal regional connectivity agreement is proposed under BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation). The route politics is primarily due to who will obtain optimum economic benefit from trade with other states. As China moves ahead with its plan, India has also started strengthening regional groupings in a bid to increase productivity, security and expand market size. According to Madhu Raman Acharya, former Ambassador to the United Nations and former Foreign Secretary, Nepal can enhance connectivity and get an opportunity to participate in regional and global value chains from the initiatives of both neighbours, India and China, and the country must balance relations with both neighbours.

Suraj Vaidya, President of SAARC Chamber of Commerce and Industries has also opined that Nepal should take benefit from both China and India as it lies between the two countries. "Bilateral trade between China and India is going to top $200 billion in the next few years. Development of infrastructure in Nepal under the One Belt, One Road could help this bilateral trade to happen through Nepal, which will ultimately benefit Nepal’s economy," said Vaidya.

The United States has also taken forward the concept of Indo-Pacific Economic Corridor, to counter the China’s Silk Road initiative. The Trump administration has given priority to the Indo-Pacific Economic Corridor linking South and Southeast Asia, according to international media reports.

Private Sector Initiative To Support OBOR

To promote trade, tourism and investment from the countries within the Silk Route initiative, Nepal-China Chamber of Commerce and Industry has formed the Silk Road Chamber of Commerce Council (SRCCC) in the country. Rajesh Kazi Shrestha, President of SRCCC Nepal chapter has said that the private sector is encouraged by the Belt and Road Initiative of the government of China, which will unleash full economic potential of Asia and provide opportunity for the private sector to grow further.

Similarly, the government of China has been encouraging Chinese investors to invest in countries linked to the Silk Route. Trade and investment platforms have been established in various countries to facilitate investors. Chinese investors are exploring investment opportunities in various areas like tourism, energy and services among others while experts visualise that Chinese investment is expected to play the role of catalyst in attracting investment in the countries.