Importance of Transport Integration

There is justified rationale for improvement of transportation not only in Sri Lanka but more importantly in the entirety of South Asia.

If we look at our own country the lack of adequate and developed transportation facilities has been one of the principal reasons affecting the full development of economic activity, more particularly trade.

On the other hand there is an obvious connection between infrastructure especially roads and highways and transportation.

If Sri Lanka had developed sufficiently her domestic roadways system two key elements namely time and costs of transportation would have been the victor.

To put it another way the wheels of the local economy would have turned faster as a result of quicker transportation and costs too would have been radically different.

This is unfortunately true of the rest of the regional grouping called SAARC as shown in the chart which is attached.

These figures provide telling evidence that both in respect of internal and international transportation the costs are very high in terms of the total costs of an end product.

From another perspective Sri Lanka ranks 53 in global infrastructure rankings (the main component of this is Highways and Roads – 2005 figures).

From yet another angle the Shipping Sector will necessarily have a special link and will be a definite beneficiary if Sri Lanka’s infrastructure improves both internally and in terms of foreign trade. The term greater opportunities for the Shipping Sector in case such improvements become a reality will be the happy outcome both from a short and long term perspective arising from resultant transportation cost reductions.

Given this brief back drop, let us examine macro factors connected to transportation corridors and what developments are likely in South Asia especially within the 8 nation SAARC group.

What are transportation corridors

a) Regional transportation corridors imply a road or highway connection that would link up nations within the region.

b) Do such connections currently exist could justifiably be the next query. Or to put it another way do physical gateways within the region linking nations exist.

c) Principally there are connections or corridors that more importantly transport goods between India and Pakistan the two largest nations within South Asia.

d) In point of fact one such is a conduit of great significance when considering the extent of invisible trade conducted between the two countries (Pakistan – India Attari Waugh Border).

e) Such invisible trade is estimated at several millions of dollars a day. This is of course free of duty and taxes which normally apply to formal trade between nations.

There are also corridors or overland routes between Afghanistan and Pakistan, India and Bangladesh, India and Myanmar and India and Nepal.

Of course, Sri Lanka being an island nation and consequently not sharing borders with other countries is out of this picture of overland connectivity. But as we go on with this presentation it will be realized how much this country could gain by the development of easier transportation through rapid connectivity between the nations that share common borders (within the region).

Sri Lanka is projected as a future Maritime Hub. If our unique position placed as we are at the epicenter of connective sea-lanes in South Asia could be properly and adequately exploited, we will not only be able to transform shipping and ancillary activities, but more importantly transform this nation economically. (see map attached as regards the maritime hub).

Border corridors – the ultimate solution

Transportation corridors especially those that are confined to borders of nations will undoubtedly drive South Asia towards greater prosperity through connectivity.

There are however, certain inherent and longstanding barriers that first needs to be addressed to capitalize on the full potential of transportation corridors.

Some of them are -

a) A political will to integrate within the region and the development of a sense of inter-nation trust.

b) Improvement of infrastructure

c) Behind the border and inside border issues

d) Greater flexibility in opening overland routes. The poor quality of roads prevents effective utilization for eg. Between Nepal and Bangladesh and Bhutan and Bangladesh.

e) Improvement of overland railways but lack of initiative in this regard.

f) In regard to Railways the harmonization of track gauges within the region should lead to better results.

In overall terms the availability of good overland infrastructure in South Asia would enable the smooth flow of goods and pave the way for more competition.

This in turn will create a free flow of South Asian goods across the borders and facilitate hubs that use multi-model means of transport. (Sri Lanka should stand to gain considerably from this).

The final result would be lowering of end price of products by the efficient use of an amalgam of means of transport Rail, Road and feeder routes. As shown earlier, transportation costs are a big component of overall expenditure of production. A lowering of such costs would have a deep impact on the marketability of South Asian goods/products in world markets.

Trade potential within the South Asian Region

Despite growing economic prosperity especially in countries like India and Sri Lanka to name just two countries within the region, the total intra-regional trade is far below its full potential.

a) For example in the year 2007 intra regional trade within South Asia was approximately US $ 11.6 billion.

b) But its full potential is in the region of US $ 40 billion.

c) An estimated 75% of intraregional trade remains unutilized.

Issues of concern

1) South Asian Nations especially the regions included in the main pact SAARC and its trade arm SAPTA are conscious of the fact that multi-lateral trade is dependent on the creation of fully liberal transit systems.

2) Such liberal transit towards which SAPTA has addressed itself will help the region, more precisely the countries concerned to earn revenue through transit fees.

3) Already moves are made to capitalize on the development of social infrastructure beside industry in border areas of the relevant countries.

4) Regional experts on transportation estimate that for example Bangladesh stands to earn US $ 1 billion as transit fees of Indian vehicles traveling from India (to its own North Eastern region through roads in Bangladesh.

5) New transit corridors within Sri Lanka for example the new highway – Hambantota to Colombo will within the next few years contribute to a paradigm shift in the development of the country.

6) Yet another significant change in this connection will be the saving effected in terms of energy and time; in the ultimate analysis leading to better productivity, employment and overall economic gain.

7) SAPTA has addressed the subject of improving the quality of services available at Land Custom’s Stations (LCS) and also border corridors.

8) Discussions have also been conducted as regards Cross Border Infrastructure Projects (CBIPs).

9) A regional infrastructure fund that has been subject to consideration should assist a nation such as Sri Lanka since it is estimated that Sri Lanka needs US $ 5 billion in investments to improve infrastructure to the desired level over 5 years (2008 to 2012). As it stands Sri Lanka is unable to find funds of its own for .such infrastructure development.