Nepal’s economic performance during the post-conflict period has been driven by remittances from the export of labor services and the improved performance of the agricultural sector, which is still very much weather dependent. The chapter makes the case for a connectivity-driven development strategy for the country. It argues that improved connectivity within Nepal and cross-border connectivity with its neighbors in South Asia, the Association of Southeast Asian Nations (ASEAN), and the People’s Republic of China (PRC) could be important ‘engines of growth’ for the country. Nepal has adopted a multi-track approach to promoting regional cooperation and integration in connectivity with its neighbors. However, a lot more needs to be done, especially in the context of the difficult political situation in the country, and donors have an important role to play in this regard. Ten priority projects to convert Nepal into a land-linked state are identified, but a detailed impact analysis of these projects is beyond the scope of this chapter.
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Pradumna B. Rana and Binod Karmacharya
This chapter discusses trade facilitation in the context of enhancing trading links between South and Southeast Asia. One of the reasons for the limited trade between the two regions is that trade facilitation with trade partners in developed countries is more user-friendly and stable. This suggests that enhancing trade facilitation within the two regions could promote intra- and inter-regional trade. The chapter identifies the scope of trade facilitation and profiles the current overall situation in the two regions. It highlights the key issues and constraints, often referred to as non-trade barriers, in terms of both ‘soft’ and ‘hard’ infrastructure, and highlights ongoing initiatives designed to promote change, especially through the application of new approaches and procedures. It concludes by discussing the key regional trade facilitation issues and proposing recommendations to eliminate the non-trade barriers that are adversely impacting on trade within and between the regions.
Dushni Weerakoon and Nipuni Perera
As an island economy, Sri Lanka’s regional connectivity has been mainly through its main seaport in Colombo, a transshipment hub port for South Asia. Investments to expand capacity at Colombo port are under way as part of Sri Lanka’s renewed efforts to develop its infrastructure following the long internal separatist conflict that ended in 2009. Despite significant improvements in physical infrastructure connectivity, Sri Lanka has made only limited headway in strengthening its trade and investment links with the rest of the region. Moreover, the country has seen a sharp decline in its overall exports-to-gross domestic product (GDP) ratio, which is worrying in view of the growing external debt financing of many large infrastructure projects through state-led investment initiatives. Thus, Sri Lanka needs to focus on two priority areas: engaging private investment in infrastructure by strengthening the country’s institutional and regulatory environment; and implementing a more strategic trade policy geared to enhance regional integration efforts.
Suthiphand Chirathivat and Kornkarun Cheewatrakoolpong
Thailand’s increasing importance as a regional co-production base, and growing intra-regional trade and border trade, are mainly due to recent changes in its economic structure, namely, lack of operational workers, rise in wages, and increase in outward FDI, together with a change of regional policies in Southeast Asia. As a result, improvements in physical connectivity, trade facilitation, energy cooperation and financing infrastructure play an important role. Extending such connectivity to South Asia could also complement the current promotion of regional trade and regional production networks. This chapter reviews the current stages of Thailand’s intra-regional trade, physical connectivity, trade facilitation, energy cooperation and infrastructure funding, as there are planned projects in all these areas which could have a tremendous impact on Thailand and its linkages to the whole Southeast Asian region and beyond, such as the South Asian region. However, Thailand’s political instability impedes the progress and implementation of such projects. The chapter also examines the current financing mechanism of Thailand’s infrastructure projects, which relies heavily on public spending. Suggestions for strategies are provided in order to promote physical infrastructure, trade facilitation and energy cooperation of Thailand with the mainland of Southeast Asia and South Asia.