In the September 2023 issue of the South Asia Bulletin, NIPoRe’s researchers discuss the key events from August 2023 that continue to shape the South Asia region. Read the South Asia Bulletin for more.

In this issue of the South Asia Bulletin, contributors analyze the efforts South Asian countries have made to bring their citizens back from conflict-ridden Sudan. Other national, and transnational issues have been discussed, including Sri Lanka and Nepal’s economic crises, increased terror attacks in Pakistan, and the first Apple store in India. Read the South Asia Bulletin for more.

Most South Asian countries suffer from political and economic distress. But India and China increase their global footprint. Read the South Asia Bulletin for more.

In this issue of the South Asia Bulletin, contributors analyze the political, economic, and geostrategic issues in the region and the South Asian response to the Russian Invasion of Ukraine.

– SANTOSH SHARMA Poudel

The column originally appeared in The Diplomat on 9 August 2022. Please read the original article here.

On August 3, the U.N. aviation watchdog, the International Civil Aviation Organization (ICAO), formally asked the Nepali government to split the Civil Aviation Authority of Nepal (CAAN) into two separate entities — a service provider and a regulator. Nepal needed the restructuring to ensure a “clear separation of authority between service providers, operators and the regulatory authority” in order to improve air safety, ICAO said.

Back in 2009, during a safety audit by ICAO, Nepal had committed to work on legislation to split CAAN. However, 13 years later the proposed legislation remains in limbo.

Nepal has a poor aviation safety record. According to the Aviation Safety database, there have been 27 plane crashes in Nepal over the past three decades, 20 of them over the last 10 years. In May 2022, a Tara Air plane crashed in the mountainous Mustang district of Nepal, killing all 22 passengers and crew members, including six foreigners.

The European Commission (EC) imposed a blanket ban on Nepali airlines entering European airspace in 2013 after eight British nationals were killed in a Sita Air plane crash in 2012.

The rugged mountain terrain, a lack of investment in new planes, and poor infrastructure have contributed to dangerous air travel in Nepal. However, Nepal’s aviation governing structure shares some blame too.

CAAN is both the service provider and regulator in Nepal. That has engendered a conflict of interest, especially when it comes to safety regulations.

This prompted the EC to insist on CAAN splitting into two separate bodies before it considers lifting the ban on Nepali airlines. EU Ambassador Nona Deprez unequivocally stated that passing the bills to split CAAN is a “prerequisite” for Nepali airlines to be removed from the “air safety list.”

Nepali policymakers recognize the need to split CAAN. Since 2007, successive governments have put forward plans to end the dual functioning of the aviation regulator. Each government has expressed a commitment in bilateral (with the EU) and multilateral forums to split CAAN and urged the EC to revoke the ban. A subcommittee of the parliamentary International Relations Committee led by former Prime Minister Madhav Kumar Nepal even directed the government to split CAAN, saying it was mandatory.

Besides improving safety, restructuring CAAN has other tangible benefits for Nepal and Nepali aviation.

First, it will likely lead to the EC removing Nepal from its “air safety list,” opening European skies to Nepali airlines. It would boost revenue for Nepal’s struggling national carrier, Nepal Airlines. Nepal Airlines could not carry out chartered flights to the EU during COVID-19 rescue missions. As a result, the airline lost a big chunk of potential revenue, besides affecting the government’s ability to rescue Nepalis stranded in European countries during the pandemic.

Second, a restructuring would provide a shot in the arm to Nepal’s tourism industry. Around 15-20 percent of tourist arrivals to Nepal are from EU member countries. In 2019, almost a quarter of a million tourists from the EU visited Nepal. Nepal has announced a “Visit Nepal decade, 2023-2033” to revive the tourism sector. Without safe air services, the primary mode of transport for inbound tourists, the tourism decade cannot be successful. Nepal’s poor air safety record and the EU’s ban dissuaded many potential tourists from visiting Nepal. That would change if Nepal sets in motion the necessary changes to make flights safe.

Finally, the issue provides a litmus test of Nepali leaders’ commitment and delivery. Every government since 2007 has committed to and “prioritized” CAAN’s restructuring, but none have delivered.

On March 1 this year, the parliament secretariat included two aviation bills, the Civil Aviation Authority of Nepal Bill and the Air Service Authority of Nepal Bill, on the agenda for the meeting of the House of Representatives scheduled for the following day. However, then-Minister for Civil Aviation Prem Bahadur Ale did a volte-face and requested the parliament secretariat to hold back the bills. Some employees of the aviation regulator were opposed to the planned restructuring, he claimed.

The bills have not made any headway in the House of Representatives since, although the National Assembly, Nepal’s upper house, passed the bills unanimously.

On July 31, Jeevan Ram Shrestha, who succeeded Ale as aviation minister, said that Nepal would not immediately accept the EC’s condition and that CAAN would be restructured “according to need and at the appropriate time.”

Analysts attribute the lack of progress in passing the bills to the vested interest of some office holders and foreign airline operators. The existing system allows CAAN’s director-general to issue tenders and oversee compliance while issuing regulations governing the issues of licenses to airlines and crews. These officials would not want to give up this power.

Meanwhile, other international airlines have gained market share and revenue at the expense of Nepali airlines. Ale and Shrestha’s dilly-dallying shows the deep reach of such vested interests.

Going forward, the path for the government could not have been more straightforward. Yet vested interests have reigned over the common sense measure for 15 years. Shrestha’s statement provides little hope of a change to the status quo.

Sagoon Bhetwal

The World Economic Forum (WEF) annually releases the Global Gender Gap Report. WEF, with this report, helps the world leaders to understand better how their governments fare in terms of minimizing existing gender gaps. It published the first report in 2006 using indicators across four subindexes: Economic Participation and Opportunity, Education Attainment, Health and Survival, and Political Empowerment. In 2021, the report highlighted that it would take 135.6 years to close the existing global gender gap. With some improvements, the 2022 report was revised to 132 years. In this blog, I will try to answer questions like: Where does South Asia stand in terms of gender parity? Have we seen growth in our region, or rather, decline?

To begin with, the WEF defines the gender gap as “the difference between women and men as reflected in social, political, intellectual, cultural, or economic attainments and attitudes”. The subindexes receive scores from 0 (which indicates perfect gender imparity) to 1 (which indicates perfect gender parity). 

South Asia remains one of the poor performers in the analysis. In 2021, the region ranked second last among the eight regions considered for the analysis, with a parity score of 62.3 percent. The region’s performance further slided in 2022 and ranked the lowest.  has become the lowest performer with the same parity score. South Asia, in the Economic Participation and Opportunity subindex, has improved the region’s score from 33.8 percent in 2021 to 35.7 percent in 2022. Still, this is the lowest performance out of all the regions. North America is leading the progress with a parity of 77.4 percent. Afghanistan, one of the major ranked countries from South Asia, has been ranked in the last position (of the total 146 ranked countries) with a score of just 0.176. China, another key rising global economy, on the other hand, ranks in the 37th position (score 0.741). 

In 2022, South Asia  ranks in the second last position under the Educational Attainment subindex with the score from 93.3 percent in 2021 to 93.2 percent in 2022. Under this subindex as well, Afghanistan ranks in the last position further sliding in overall score from 0.514 in 2021 to 0.482 in 2022. China, on the other hand, has here managed to rank in 120th position (score 0.936), thus ranking above Bangladesh, Nepal, and Pakistan. 

Likewise, South Asia in the Health and Survival subindex has a parity of 94.2 percent for both the years. The score is still the lowest possible regional score. Under this subindex, India ranks in the last position (among all the ranked countries) with a score of 0.937. However, in 2021, India was just a step ahead of China (ranked last with a score of 0.935).

Finally, under the Political Empowerment subindex, parity score for South Asia has declined from 28.1 percent in 2021 to 26.2 percent in 2022. Despite this decline, the region still remains the fourth best performer in this subindex. Here, China ranks in 120th position (score 0.113), just ahead of Bhutan (score 0.093). Bhutan, as of 2022, remains the lowest performer for this subindex in the region while India is the best performer. 

South Asia, overall, has a parity score of 62.3 percent in 2022, which is 5.8 percent less than the global average of 68.1 percent. The parity score of the region was the same in 2021, against the global average score of 67.7 percent. The 2022 Report has highlighted that South Asia requires 197 years to close the gender gap in the region, far more years than that of global average. Hence, being the worst performing region in the world, it is high time that the governments in the region take national and well-coordinated regional approaches to minimize staggering gender-based gaps.

– NISCHAL Dhungel, Non-Resident Fellow

The column originally appeared in The Kathmandu Post on 4 August 2022. Read the original article here.

The geostrategic positioning of Nepal offers a unique opportunity to participate in numerous regional projects. Before engaging in such projects, it is essential to understand where our strengths lie concerning our connectivity, and the reasons holding back our connectivity with South Asian countries. In this regard, improving connectivity through sub-regional cooperation such as the Bangladesh, Bhutan, India, and Nepal Motor Vehicles Agreement (BBIN MVA) plays a crucial role in pushing forward social and economic development among these South Asian countries.

Following the failure of the South Asian Association for Regional Cooperation (SAARC) to reach a consensus on a regional motor vehicle accord at the Kathmandu Summit in 2014, primarily due to resistance from Pakistan, the BBIN MVA connectivity project was proposed. The BBIN MVA seeks to build a road-based economic corridor linking Bangladesh, Bhutan, India and Nepal. Bhutan has not ratified the agreement but encouraged the other three to approve and engage in the pact. The BBIN MVA aims to promote the smooth movement of passengers, personal and vehicular cargo traffic within and between the BBIN countries.

Intraregional trade

With only 5 percent of the total trade in the region, intraregional trade in South Asia is among the lowest in the world. Significant challenges lie before implementing massive connectivity projects like the BBIN MVA. Traders usually have to visit more than 10 agencies for documentation clearances. The lack of accredited laboratories to certify export products often delays shipments by weeks. The lengthy border hold-ups add to the enormous trade costs among BBIN member nations. Regarding infrastructure gaps, congested borders, long and diversionary transport routes, and low quality roads increase trade cost and transit time which directly hampers the transport of goods and services. Besides these challenges, the development of inter-modal transhipment facilities, modern warehouse capacities, and gender-friendly infrastructure and trade and transit-related offices should be considered.

As Nepal is a landlocked mountainous nation with poor transportation infrastructure, improving road and railway connectivity is essential for the smooth flow of goods and services. Simplifying paperwork, advancing risk management practices to reduce physical checks, facilitating cross-border transit and modernising sanitary and phytosanitary measures will help streamline trade processes. To enable importers and exporters to submit their paperwork electronically, the World Bank assists Bangladesh and Nepal in building single electronic gateways. These National Single Windows which are anticipated to decrease clearing times require strong implementation support. Upgradation of the roads connecting integrated check posts and inland container depots will help smoothen large volumes of cross-border trade.

Hence, modernising infrastructure and integrated border points, developing and upgrading cross-border and internal roads, and increasing multi-modal transport networks, including road and railways, helps to bridge the infrastructure gaps. Also, local concepts such as border “haat” practised at the India-Bangladesh and India-Myanmar border points should be adopted on the India-Nepal border to provide economic opportunities to small entrepreneurs and women traders.

Looking at the composition of transport connectivity in Nepal, 90 percent of goods and passenger transport services take place via road, 8 percent by air and 2 percent by rail, rope and others. Nepal should prioritise high-quality road infrastructure to increase connectivity in the short term. At present, the upgradation of the east-west highway, which connects significant land ports (Birgunj, Biratnagar and Bhairahawa) is crucial for transport connectivity. High quality road infrastructure could be initially expensive. However, investing in such massive projects is worthwhile in the long term. Several studies in high-, middle- and low-income countries show a positive relationship between transport infrastructure and economic development. Therefore, transport infrastructure becomes extremely important as it is the primary driver of economic growth. Nepal can tap into two huge markets—China and India—if she can develop advanced road and railway systems.

South and Southeast Asia

The Greater Mekong Sub-Region (GMS) in Southeast Asia and the BBIN MVA in South Asia operate under a similar model (project-based). The GMS comprises six countries and is regarded as a successful development story. The GMS countries share the Mekong River in implementing high priority projects to facilitate doing business, accessing markets and engaging in other activities that comprehensively support trade and development in addition to developing infrastructure. Similarly, the BBIN countries can follow in the footsteps of the GMS by leveraging their economic corridors and concentrating on priority sectors to foster regional harmony and integration by cementing strong ties between their peoples.

A recent World Bank report entitled Deepening Linkages between South Asia and Southeast Asia examines new strategies for reviving trade and economic ties between the two regions, concentrating on sectors including digital systems, environmental goods and services. The gross domestic product (GDP) gains would be significant, amounting to about 17.6 percent for South Asia and 15.7 percent for Southeast Asia. Nepal will benefit from such regional South Asia and Southeast Asia cooperation by engaging in high priority projects.

Nepal confronts significant economic development obstacles due to electricity supply. Recently, there has been some positive developments. Nepal and Bangladesh intend to hold meetings about bilateral power trade and Bangladeshi investment in Nepal’s hydropower industry. The positive side of the bilateral power trade is that Nepal can buy power from Bangladesh during the winter and sell its power dominance during the rainy season. This increases the prospect of improving energy trade not only with India but also with Bangladesh. In this regard, The Millennium Challenge Cooperation (MCC) Nepal Compact ushers in a new era in United States-Nepal Partnership, which aims to improve road quality, increase the availability and reliability of electricity, and facilitate cross-border electricity trade between Nepal and India.

The MCC Nepal Compact and bilateral power trade with Bangladesh will be an opportunity for Nepal to improve its connectivity and engage in power trade with India and Bangladesh respectively. Nepal can also benefit from new railway connectivity with another neighbouring country China. The feasibility study for the proposed Kerung-Kathmandu railway project would significantly boost the development of a “cross-Himalayan connectivity network” using transportation, ports for trade, roads and telecommunication. While implementing projects like the BBIN MVA, Nepal should be free from political ties and act in the country’s best interests. Swift implementation of high priority connectivity projects should be first on the agenda, bringing considerable macro economic benefits not limited to generating thousands of jobs for the Nepali people.