Intervention Summary
Title: South Asia Regional Trade and Integration Programme (SARTIP) June 2012 – 2016
What support will the UK provide?
The UK will provide £21.21 million in grant assistance, over 4 years, to support the Asian Development
Bank (ADB), World Bank (WB) and International Finance Corporation (IFC) to increase regional trade
and economic integration in South Asia (from Central Asia to Bangladesh).
Specifically, the preparation of IFI investments in infrastructure and institutions is dependent on grant
finance, and providing this through a single coordinated initiative will help DFID shape the various
investments into an overall coherent process where the sum exceeds the value of the parts.
Why is UK support required?
What needs are DFID trying to address?
DFID’s support will address the low levels of regional economic integration in South Asia, which is a
constraint to growth and wealth creation for the poor in one of the world’s poorest regions. Specifically
DFID will help the multilateral banks to effectively support increasing demand from countries in the
region to reduce the time and cost its takes to trade across their borders.
What will DFID do?
DFID will establish a comprehensive programme of support to advance the regional trade and
investment agenda in South Asia. The absence of such engagement to-date has long been identified,
but the timing has not been right. Now, in line with growing political momentum and increasing
multilateral interest, DFID will provide support to this agenda primarily through multilateral institutions
who need grant finance to prepare investments and associated institutional capacity.
Specifically DFID will provide:
 £21.21 million (£17.69 million of new money) to strengthen DFID’s contribution to the efforts of
the ADB, WB and IFC to promote increased trade and economic integration within the region. Of
the £17.69 million, £7.39 million is for full approval with this business case and £10.3 million is for
approval in principle, subject to full approval once interventions with the IFC and World Bank in
Central Asia are fully designed;
 £900,000 to a Strategic Bilateral Fund to support trade between India and Pakistan, and to
enhance the poverty reducing impact of regional trade and economic integration;
 Two programme staff to support implementation, coordination and lesson learning;
 £150,000 to support monitoring and evaluation; and
 Broader support to programme implementation, including through DFID’s large bilateral presence
in the region and the UK’s shareholding in each multilateral institution being supported.
DFID’s Value Added
Although the bulk of proposed support is going through multilateral channels to enable them to use
grant finance to develop their investment pipeline, DFID will add value to the effectiveness this support
through the following channels:
Coordination
 Committing dedicated resources to this issue will improve the effectiveness of multilateral delivery
through avoiding duplication and maximising opportunities.
Outreach
 Strengthening relationships between the regional programme, relevant DFID country offices and
HQ, and other platforms, will create the following benefits: i) Link regional initiatives to national and
broader policy programmes focused on poverty reduction, ii) Link regional initiatives to broader
HMG priorities, for example through relationships with the FCO, and iii) Act as a check and
balance to assess the progress and performance of the regional work.
Who will implement the support DFID provide?
Day to day implementation will be managed by the multilateral institutions through a series of
coordinated and results focused interventions. DFID will largely rely on the expertise of multilateral
institutions to develop programmes with partners, manage implementation, ensure cross cutting social,
governance and environmental issues are addressed, and measure outcomes and impact. DFID will
provide specific resources primarily to coordinate across the agenda, to ensure effective
implementation and maximise value added.
What are the expected results?
What will change as a result of our support
DFID support will contribute to an improvement (i.e. an absolute increase) in regional trade, investment
and connectivity. In 2011, South Asian intra-regional trade was $33.39bn (c. £20.9bn) rising steadily
(2009 excepted) from $6.88bn in 2000. In the same year, South Asian intra-regional (green field)
investment was $1942.8m (c. £1215m), rising from a low of $367m in 2003. There is presently
negligible power connectivity in the region.
What are the planned results
1. To reduce the time and cost of trading goods across 4 key border posts. At present custom
procedures at border posts are inefficient, with an average of 9 documents being required to export
goods from one South Asian country to the next. The latest World Bank Doing Business Statistics
suggest that on average it takes a Nepalese company 41 days to export a container load of goods at a
cost of USD 1,960. A 10% saving in these costs will spur exports by over 5% and thereby contribute to
increasing the wealth of the region.
2. Increased electricity connectivity, and in particular link increasing demand in South Asia to clean
forms of power supply available from the poorer Himalaya states. Specifically the programme will look
at increasing the present level of connectivity between Pakistan and its neighbours to the north,
between India, Nepal, Bhutan and Bangladesh, and between Pakistan and India by 1300MW.
How will DFID determine whether the expected results have been achieved
Each of the institutional partnerships will have their own results frameworks, and - generally – a six
monthly work programme/disbursement profile, approved at the time of signing the each partnership.
These will be pulled together into a single overarching log frame. The overarching framework will be
reviewed by the three key implementing partners and DFID on an annual basis, to realign inputs as
necessary and to ensure that the minimum expected level of results are achieved.
Business Case for: South Asia Regional Trade and Integration Programme (SARTIP)
Strategic Case
A. Context and need for a DFID intervention
Regional Context
Despite strong growth rates, 40% of the world’s population living on less than $1.25 a day are based
in South Asia (some 600m).1Growth in the region is increasingly concentrated, with poverty
concentrated in the lagging regions in the northern border areas of Afghanistan, Pakistan,
Bangladesh, India, and Nepal. A priority for the region is therefore to connect the benefits of growth
to larger segments of the population. Given the location of the lagging areas, improved regional
economic integration is one way to help achieve this. Evidence shows that poverty reduction in these
areas is impeded by the lack of exposure to international markets.2
The region’s Free Trade Agreement (SAFTA) has failed to raise growth in intra-regional trade in a
significant way. SAFTA remains only partially implemented and the region’s un-weighted average
tariffs of 28% are high compared to 14% in East Asia and the Pacific.3The share of intra-regional
trade only marginally improved from 2.5% to 4.8% between 1995 and 2010,4 compared to 50% in
East Asia. Weak infrastructure, in particular in the transport and energy sectors, combined with
logistics, regulatory and business environment challenges are binding constraints to regional growth
in the region.5
Non-barriers to trade are pervasive. Many of the region’s border crossings have inefficient customs
procedures – averaging 9 documents to export - compared to 6 in East Asia and the Pacific – and
weak risk management procedures.6 Corruption is a problem, amounting to 16% of the cost of
exporting from India to Bangladesh at one border post.7In place of a regional transit agreement are
disparate bilateral arrangements which provide incomplete coverage. Challenges behind the border
(after traversing the bureaucratic barriers) include poor infrastructure. South Asia has just 70m of
road for every 100km2 of land, compared to 100km in East Asia and 340km in the OECD.
In addition to policy and technical impediments to trade, there are significant energy constraints in the
region. These include:8



Peak shortages of 1 GigaWatt (GW) in Bangladesh, 2-4 GW in Pakistan and 12 GW in India;
60% of Indian firms relying on captive or back-up generation compared to 20% in China;
In Pakistan, industrial load shedding (power outages)costs the economy 400,000 jobs and
US$1 billion of exports;
 In Bangladesh, power shortages account for GDP losses of 1-2%;9 and
 In Nepal, load shedding of up to 19 hours a day in the dry season.
For Central Asia, energy and water management is a key development10 challenge. These are
intertwined due to the central role played by hydropower (and its potential to be expanded). The
difficulty lies in the way that this potential is unlocked. The ‘upstream countries’ (Kyrgyz Republic and
Tajikistan) have enormous untapped hydropower potential and these countries want to exploit this
resource to earn revenues particularly over the wetter summer months when demand is at its peak in
South Asia. In contrast, ‘downstream’ countries (Kazakhstan, Turkmenistan and Uzbekistan) want
water released in summer to support irrigated agriculture. The lack of agreement on how to manage
this water-energy nexus has led to inefficient use of water, a lack of coordination to meet energy
needs and rising political tensions. This in turn undermines development efforts, wastes scarce
financial resources and reduces economic growth –all of which constrain progress in poverty
reduction.
All these constraints to regional trade lower economic growth rates below potential. There remains a
debate about the nature of the causal link between trade and growth. It is generally accepted that
increased facilitation and levels of trade act as a spur to economic growth11. For example, it has been
estimated that a 10% increase in the volume of trade raises output by around 5%.12This trade induced increase in output and average incomes is achieved primarily through raising productivity.
The competition that firms are exposed to in a more open economy drive this growth in productivity.
Additional gains in productivity are achieved via the importation of superior technology – a knowledge
spill-over effect.13
When economies open up to trade, countries are able to exploit their comparative advantage,
enabling re-allocation of resources to more productive uses – again spurring economic growth.14 It is
generally accepted that causality runs both ways, i.e, Trade  Growth 15hence a virtuous cycle of
increasing trade and growth can evolve.
Economic growth, other things being equal,16 will lead to growth in average incomes, which will, on
average, lead to reductions in the level of poverty. If the headcount measure of poverty is used then
one study has found poverty levels attributable to economic growth is 70% in the short-term and 97%
in the long-run.17Rising average incomes, stimulated by economic growth is key to sustainable
poverty reduction. China is the most powerful example18 of growth-led reduction in poverty levels,
elevating some 600 million people out of poverty between 1981 and 2004.
At the micro level, the relationship between trade, growth and poverty reduction is complex.
Generally, the poor are impacted by trade reform through one or more of the following mechanisms:




The prices of goods and services that the poor consume and produce, benefiting those who
are net consumers of goods and services that become cheaper as a result of trade
liberalisation, as well as those who can obtain higher prices for their products in international
markets;
The demand for, and returns to, factors of production that poor people and poor households
have to offer, notably unskilled labour;
Government revenue and the resources available to promote growth and poverty reduction,
which can be at risk during trade liberalisation in poor countries; and
Risks and volatility, which can tend to increase as economies become more exposed to global
forces and markets.
There can therefore be positive and negative effects on poor people from trade liberalisation –
particularly tariff reductions. This calls for an approach that takes development concerns explicitly into
account, and monitors the impacts of reform. Trade facilitation interventions are in fact one way to
address these concerns through building infrastructure (better roads, faster ports) which help lagging
regions and poorer areas to exploit the gains from international trade.19
Opportunity for Intervention:
Growing momentum for regional economic integration in South Asia
Recent years have seen growing political momentum for regional economic integration in South Asia.
Central to this is the rapid and, just a few years ago, unthinkable progress on India-Pakistan trade
relations. Pakistan’s commitment to offer Most Favoured Nation (MFN) status to India will increase
the potential to implement SAFTA, currently constrained by the difficult relationship between the
region’s two largest economies. India’s commerce minister, Anand Sharma, described the Pakistani
decision to grant India MFN as a ‘paradigm shift’ that ‘will be hugely beneficial for both countries’.20
Over the past year, every few months has seen a high-level trade meeting between India and
Pakistan in an effort to normalise trade relations. Major intended policy changes have been
announced in sensitive areas such as Foreign and Direct Investment (FDI), market access and visas.
Scarce resources have already been invested in upgrading border posts between the two countries.
Improved Indo-Pak relations should have positive externalities as other governments in the region
see what is possible and can be achieved. India and Pakistan’s progress resonates with the IndoChina model of de-linking political and economic relations to the extent that the former does not
constrain the latter. If this model takes hold in the rest of South Asia, particularly driven by India,
momentum for regional economic integration will increase. With it will come demand for increased
levels of assistance from trusted partners.
Other signs of progress in South Asia’s regional economic integration include:21
 January 2010: Joint Communiqué by Prime Ministers of Bangladesh and India22covering the
transit of goods between Bangladesh and India, Bhutan and Nepal;
 July 2010: Bangladesh signed a 35-year power transmission agreement with India with
Bangladesh importing electricity from India;
 June 2011: Full implementation of Afghan-Pakistan Transit Trade Agreement (APTTA)
announced. This will help both countries improve export competitiveness and increase
government revenues from legitimate trade;
 September 2011: Sri Lanka and India formed a joint venture to produce electricity through a
coal power plant in Sri Lanka;
 A new railway link connecting Nepal to the Indian rail network (BirgunjwithRaxaul);
 Elevation of India's engagement with Afghanistan to a formal strategic partnership;
 Several cross-border energy projects including; electricity imports from Bhutan to India
generated by three hydro-power stations constructed with Indian assistance. Four hydro-electric
schemes in Nepal have also benefitted from Indian assistance. Bilateral exchange of power
between India and Nepal is now at about 50MW.23DFID is now supporting a World Bank loan to
build a 400Kv high transmission line between them to increase this trade;
 India reducing the sensitive trade list for South Asian Association on Regional Cooperation
(SAARC) Less Developed Countries (LDCs) from 480 to 25 tariff lines with zero basic customs
duty access; and
 India further opening its market to garments from Bangladesh, in direct competition with their
own domestic producers.
This momentum may be accelerated by exogenous factors, such as the current Euro-zone crisis. For
example, in 2010 64% of Bangladeshi exports were destined for the US and EU.24 This leaves
Bangladesh exposed to the economic downturn and should incentivise its search to markets closer to
home.
However, as progress between India and Pakistan also demonstrates, the region still largely turns to
bilateral processes to address regional issues. Truly regional approaches are still lacking in some
areas and perhaps may never emerge. For example Bangladesh’s reluctance to offer India’s trade
transit rights could be linked to its concerns over water sharing.
Economic cooperation between groups of countries requires collective action, but as the dominant
economic, political and security power in the region, India has a major influence on the potential for
regional approaches. SAARC and SAFTA have been undermined primarily due to Indo-Pakistan
relations; reinforcing incentives for individual members to advance their economic interests through
bilateral agreements. Whilst improved Indo-Pakistan relations should help unblock regional progress
in some areas, there are still historical and political issues that put economic integration in this region
far behind what is being achieved in East Asia with ASEAN, or in much of Africa. The Central Asian
Regional Economic Co-operation (CAREC)25 was only founded in 1997 and progress has yet to show
substantive results as demonstrated from low levels of intra-regional trade, especially compared to
how these countries have integrated into the global economy. South and Central Asia are therefore a
long way from becoming unified and coherent regions, but, as detailed above, there are promising
signs of progress.
In this context, the multilaterals (World Bank, ADB and IFC) are well placed to respond to the growing
but fragile demand for assistance to progress regional economic integration in South Asia. The
multilaterals can accommodate sensitive political realities through leveraging different relationships
across countries. They are trusted and accepted partners across the region and have the range of
expertise and coverage required to progress regional issues. Multilateral engagement on this agenda
is steadily increasing, some with DFID support. They are well positioned to establish platforms and
nurture dialogue on regional issues, and in some cases have been central in supporting agreements
between countries for new cross-border investments (e.g. power transmission between India and
Nepal, and India and Bangladesh).
Why UK support is required
This shifting landscape presents an opportunity for targeted external assistance. Multilaterals are
driving this work but lack the operational budgets to fully exploit the possibilities. For example to
produce feasibility studies, undertake analysis, pilot interventions and engage with non-state actors,
whilst also responding to government requests, takes considerable staffing and operational
resources. Whilst large loans are available, their small operational budgets constrain their ability to
undertake the necessary preparatory work or due diligence to pursue major interventions.
DFID is currently the only bilateral donor supporting the multilaterals region wide. AusAid, USAID and
the Swiss provide some support to either specific sub-regions (e.g. the Swiss operate in Central Asia)
or sectors (e.g. USAID on energy and trade facilitation in the western corridor- Central Asia to
Pakistan). AusAid is in the early stages of designing a regional trade support programme.
Supporting multilateral engagement on this agenda is consistent with DFID’s Operational Plan for the
Asia Regional Programme. The Plan envisages interventions designed to unlock much larger
resources (loans) from the multilaterals; leveraging large investments from relatively minor financial
inputs from DFID. Without this support, project pipelines may be delayed or scrapped as countries
become disengaged from the process and potential investors lack the necessary information to
commit capital to projects.
As described in the Appraisal section, DFID has £3.53m of on-going support to the World Bank and
ADB for regional interventions in South Asia, approved in December 2011 and January 2012
respectively.
These interventions build on and relate to three previous – or about to complete - interventions that
provided support to power and trade facilitation between India, Nepal and Bangladesh (£635,000)
water and energy development in Central Asia (£1.45 million), and to the IFC (£938,000).In more
detail:
DFID had provided support to the World Bank to encourage trade between India, Nepal and
Bangladesh. This grant finance supported the:

Design and development of implementation plans for an India-Nepal high voltage
transmission project (400 kV) in both countries and securing of IDA (and other) financing for
project construction under IDA-15;

Design of the framework conditions for the India-Nepal transmission interconnection as set
out in a Memorandum of Understanding (MoU) between the two countries;

Initial technical, organisational and commercial structuring of the first 750 to 1500 MW of
hydropower projects in Nepal which will utilise transmission lines (and thereby underpin the
economic viability of the lines); and

Bangladeshi authorities to advance their negotiations with private and public sector power
companies in India, Bhutan, and Nepal towards contracting power supplies to relieve the
prevailing energy crisis in the country, including through identifying new transmission lines.
In addition the intervention also supported the Government of Nepal to develop its national trade
facilitation strategy, especially in view of enhancing trade with India.
The overall development objective of the programme was to support sustainable economic growth
and inclusive development in the Northeast sub-region of South-Asia (India, Nepal and Bangladesh)
by (i) promoting specific cooperation ventures in cross-border electricity trade; and (ii) improving the
overall performance of the trade and transport logistics system.
The World Bank review of the programme in November 2011 indicated that 3 out of the 4 planned
outcomes had been achieved, with the remaining outcome partially achieved. Notably, IDA funds of
$99 million equivalent for the first India-Nepal high voltage transmission project were approved by the
Board of Executive Directors of the World Bank on June 21, 2011. DFID will formally review the
programme in October 2012.
DFID has also supported the Central Asia Energy and Water Development Programme (CAEWDP),
the Bank’s major regional initiative in Central Asia, aimed at addressing the region’s water and
energy development challenges. It supports opportunities for regional cooperation through technical
assistance, analytical work, support to regional institutions and facilitating future investments.
CAEWDP has received start-up funding from DFID as well as substantial seed funds from the Swiss.
CAEWDP envisages three main outcomes:
Increasing electricity availability in upstream countries (Kyrgyz Republic and Tajikistan);
•
•
Improving water management at both farm and basin level in downstream countries
(Kazakhstan, Uzbekistan and Turkmenistan); and
•
Improving the knowledge base for joint projects and supporting regional institutions engaged
in energy and water.
The focus is primarily the five Central Asian countries but there are important linkages to the South
Asia programme. Both the CASA 1000 project and CAREC depend on CAEWDP to expand
electricity trade options beyond CASA 1000.
Outputs will include:
Energy Development:
Analysis: (i) Power supply options (Tajikistan), (ii) Industrial energy audit (Tajikistan), (iii) feasibility
assessments, (iv) CASA 1000 preparation, (v) winter energy management assistance.
Energy-Water Linkages
Analysis and institutional strengthening – including reviewing existing models.
Water Productivity
Analysis: (i) Planning methodology for irrigation efficiency investments and (ii) Assessment of remote
sensing data. (iii) Preparing investments on carbon credit methodology, (iv) National Action Plan for
irrigation efficiency.
DFID support was reviewed at the end of 2011. The review noted that whilst it was too early to make
confident predictions regarding the extent to which the intervention outcomes will be met, progress
against output milestones and current and planned activities showed early signs of promise. A
Project Completion Report is due by mid-July.
DFID has also provided £938,000 to the IFC to establish a South Asia Regional Trade and
Integration (SARTI) Facility. SARTI was established as an intervention in August 2010 with the
objective to facilitate trade in South Asia’s eastern corridor. Two phases were established. Phase I
comprises preparatory and scoping work to establish the feasibility and content of a larger regional
trade intervention – Phase II. Phase I will be completed in June this year. Phase II of SARTI is
considered under options 1, 2 and 3.
Phase I has concentrated on three key areas:
Public Private Dialogues
Successful partnerships with public and private stakeholders to advocate reform, discuss priorities
and identify solutions have been held in Kathmandu, Kolkata and Dhaka. A regional event is planned
for June 2012. The Nepal Public Private Dialogue (PPD) event in particular appeared to have real
traction on the thinking and behaviour of the Ministry of Commerce and Prime Minister’s Office.
These events have given the intervention a solid basis from which to identify and support reform
champions.
Supporting Solution Design & Implementation of Reforms
Thorough evidence and analysis of trade facilitation-related constraints have been developed,
disseminated and used as a basis for discussions around reform. These include: Background studies
on comparative scenarios across North East. India, Nepal and Bangladesh, inventory of trading
documents, protocol issues, identification of specific corridors - product flows and preferred routes,
process maps, containerisation, and automation/ICT. National action plans for Nepal and Bangladesh
are in their final stages of approval. This will form the basis of the proposed Phase II.
Development of a regional investment feasibility fund
Extensive background studies and consultations have taken place and this Fund will be presented for
approval in Phase II.
The multilaterals are continuing to respond to demand from regional governments and DFID could
help accelerate this process by providing grant funding through interventions with the ADB, World
Bank and IFC.
This business case recommends that DFID expands and deepens engagement on this agenda
through multilateral support along both South Asia’s ‘eastern’ and ‘western’ corridors, bridged by
India and Pakistan, as depicted below.
Figure 1
The ‘corridors’ of South Asia
[Western]
Central Asian
Republics
[Eastern]
Nepal
Bhutan
Afghanistan
Bangladesh
Pakistan
India
DFID’s Value Added
To-date, DFID’s support has been most valuable (and used) where there has been an opportunity
that required quick action – whether this ensured that the necessary due diligence (in the form of
environmental assessments) was prepared and ready for working group discussions26 or that Trade
Forums were held successfully.27 DFID funds allow multilaterals to react quickly to opportunities or
unforeseen difficulties in a fast moving landscape.
Although the bulk of proposed support is going through multilateral channels, DFID will add value to
the effectiveness to this support through the following channels:
Coordination
 Committing dedicated resources to this issue will improve the effectiveness of multilateral
delivery through avoiding duplication and maximising opportunities.
Outreach
 Strengthening relationships between the regional programme relevant DFID country offices and
teams in HQ and other platforms will create the following benefits: i) Link regional initiatives to
national programmes focused on poverty reduction (e.g. with the hydro programme in Nepal, or
with the infrastructure programme in Bangladesh), ii) Link regional initiatives to broader HMG
priorities, for example through relationships with the FCO, and iii) Act as a check and balance on
assessing the progress and performance of the regional work (e.g. by linking the programme to
resources available through broader DFID Aid for Trade programmes).
In some areas DFID country offices are more engaged than the multilaterals and are therefore in a
stronger position to help take the agenda forward. For instance, DFID Pakistan and India are
developing strong ties with business organisations and think tanks on the trade agenda and are
therefore well-placed to provide more direct support (in collaboration with the FCO).
DFID can also engage with the UK’s strong diplomatic presence to support the regional agenda. Well
established diplomatic links with business, politicians and policy makers means that information
(analysis/studies/advice) can be shared with a broader range of actors.
The UK’s shareholding in the ADB, WB and IFC makes DFID well placed to engage not only at an
operational level, but also at a Board level, where decisions on strategic direction, the ‘rules of the
game’ and funding are made. DFID – and the UK’s - strong relationship with the multilaterals can
therefore be used – where helpful – to convene, encourage, cajole and ensure effective cooperation
occurs in practice.
Lastly, DFID can provide staff with a specific remit to implement, coordinate and manage the various
strands of work being undertaken through the programme. Within SARTIP two staff will be placed in
the region, one to assist with delivery, and one specifically to promote co-ordination and lessonlearning among the various implementation partners.
B. Impact and Outcome that DFID expect to achieve
The outputs of this business case will be essential products in building consensus for, and practical
steps towards, greater co-operation in the region.
The impact will be a contribution to an improvement in regional trade, investment and electricity
connectivity. Annual growth rates in trade, investment and connectivity should rise (above trend),
promoting growth (above trend) and reducing the percentage of people living below the poverty line
(faster than trend).
The outcome of this intervention will be a reduction in the time and costs of trade in goods and
power in the region. The region should experience a growth of cross-border energy infrastructure and
a reduction in the time (and cost) of goods to cross several important border posts in the region. The
increase in energy supply should help to alleviate the chronic power shortages in the region and
loosen this constraint on growth; the greater efficiency of border-crossings should facilitate and
incentivise greater volumes of trade.
Appraisal Case
A. What are the feasible options that address the need set out in the Strategic case?
The strategic case highlighted the sub-optimal trading patterns, prevalent in South Asia that
constrain economic growth and poverty reduction. In order to promote greater regional trade, there
is a need for greater regional interaction and co-operation. This primarily requires multilateral
engagement to prepare, support and implement trade orientated programmes.
Why work through the multilaterals (ADB, WB and IFC?)
There are three key reasons why supporting this agenda through multilaterals organisations is more
effective than doing so bilaterally.
1. Demand
Governments in the region have actively requested28 the involvement of multilaterals to prepare and
develop regional trade interventions – highlighting that their involvement is productive and highly
valued. In turn the multilaterals need grant finance from donors such as DFID to develop high
quality interventions.
2. Results to date
The multilaterals are well placed to respond to this demand and have already demonstrated results.
For example, agreement to build electricity transmission lines linking India-Nepal, and BangladeshIndia are the result of support and financing from the WB and ADB respectively. These successes
highlight their experience in building consensus around regional trade interventions and arranging
the capital investments to facilitate implementation.
3. Trusted Partners that take value for money seriously
DFID’s Multilateral Aid Review found that the WB, ADB and IFC were relatively strong and offered
value for money. Previous DFID partnerships with these multilaterals offer reassurances that DFID’s
support will be used economically and outputs delivered to high quality.
At a regional level, DFID already has solid and growing relationships with these multilaterals and it
makes sense to continue delivering support through these channels.
Previous dividends, the engagement strategy of multilaterals, and increasing opportunities to
support regional trade all indicate that scaling up support for regional integration through the
multilateralswill bear fruit.
Why not just support one multilateral?
We have not explicitly considered this option for the following reasons. Firstly, it is clear that each
multilateral provides a different comparative advantage, set of relationships and entry points. For
example the IFC works extensively with the private sector and has invested time and resources in
establishing platforms for private sector dialogue with respective governments. The ADB has good
relations with governments in the region and is the multilateral closest to the region’s official regional
integration machinery such as SAARC and CAREC. The WB provides a vision and strategy that
encompass both the eastern and western corridors in South Asia - reinforced by their Network of
Champion’s across the region. The World Bank also has a commitment to analysis, and
engagement with civil society, the private sector, and non-traditional stakeholders.
Political will for economic integration in South Asia is strengthening, but remains fragile. Given this
fragility, creating a diversified portfolio through supporting several organisations to work on the same
overall goals - but through different mechanisms and stakeholders (whilst also coordinating) - will
help both manage risk and assess and leverage emerging opportunities. It also ensures that we
direct the multilateral’s to engage and respond to demands in areas where they have the greatest
expertise.
The Theory of Change (Figure 2 below) illustrates how support through the multilaterals will deliver
the desired results. The theory is that the multilaterals will produce high quality trade proposals
(outputs), valued and backed by regional governments and businesses. The multilaterals will use
their established relationships under the current (relatively conducive) political climate to ensure that
governments ‘sign-off’ on these proposals and investments flow, stimulating regional trade and
integration and economic growth. This economic and income growth will play an important part in
reducing poverty across the region.
Figure 2Theory of Change
Inputs…
OUTCOME
OUTPUTS
IMPACT
CapacityBuilding/
Technical Assistance
£
Contribute to an
Improvement in
regional trade,
investment and
connectivity in
The Central and
South Asia
region
Pilot projects
Feasibility Studies/
Project preparation
H
R
Information
sharing
Reduced
time and
cost
of trade in
goods and
power
Communications/
Information dissemination
ConsensusBuilding
Evidence
1. History of MO success in
developing and financing
regional trade projects.
2. Continuing improvement in
trade relations in South Asia
3. Demand from governments
for multilateral support
Assumptions
1. Regional macroeconomic stability
2. Regional conflicts are resolved
within normal timeframes
3. Domestic and foreign private
sector willing to invest in production
Assumptions
1. Strong political will exists
with governments willing to
implement agreements
2. MOs strongly manage
projects and support proposals
3. Proposals are of high quality
The Options
Annex A attached and Table 1 below depict the options considered. These have been constructed
around which and how many multilaterals to support, and how to manage and coordinate this
support. Option 1 is about extending current support to establish deeper partnerships with all three
multilaterals, and in additional to create a strategic bilateral fund specifically to work on IndiaPakistan trade and the links between regional trade and poverty reduction. Options 2 and 3 present
alternative models for managing and coordinating these new interventions.
Table 1: Overview of Options
Total Budget
Counterfactual
£3.525 million.
No new money.
Management /
Coordination
Partnerships
Posts Created
Existing only:
 ADB
 WB (about to close)
0
No additional
resources.
3 (implementation), 2
WB Funded, 1 DFID
Programme Funded.
No additional
resources.
3 (implementation)
1 coordination
Option 1
£17.036 million
Existing plus:
 WB extended
 IFC
 Strategic Bilateral Fund
Option 2
£17.686 million
As Option 1
Some additional
resources
Option 3
£20.036 million
>3 implementation
>1 coordination)
As Option 1
Further
additional
resources
COUNTERFACTUAL
The counterfactual is to provide no new money to this agenda (i.e. not to build on existing and
evolving partnerships with the WB and IFC). In practice this means only continuing to fund two ongoing initiatives. One of these, the ADB Partnership Agreement, is a comprehensive intervention.
The other is a small start-up intervention to support the WB undertake specific activities. The
counterfactual is in line with DFID’s pre-Operational Plan strategy to begin building partnerships with
multilaterals to support this evolving agenda. The initiatives that come under the counterfactual are:
1. ADB
DFID-ADB Economic Integration Partnership(£3.125m)
This partnership has been approved and runs until 2016. It is proposed that this be subsumed within
the management structure of the wider programme.
This partnership focuses largely on cross-border trade facilitation with an emphasis on four priority
issues along South Asia’s eastern corridor29:(i) customs modernisation and harmonisation; (ii)
strengthening logistics services and facilities; (iii) integrating cross border management and (iv)
facilitating transit agreements.
The four major outputs of the partnership are:
Project Interventions
Projects to address the binding constraints to regional integration with the potential for successful
replication, mainstreaming, and/or up-scaling in other countries.
Pre-feasibility Studies/Technical Work.
Activities that identify design proposals, analyse options, and other technical studies to facilitate
future investment.
Technical Advisory and Capacity Building Support
Institutional strengthening and support to implement regulatory and policy reform, including
development of management systems and operational procedures.
Information Dissemination
Awareness campaigns, conferences and workshops, publication of lessons learned, and other
communication and dissemination activities that highlight practical success stories.
There is a large demand for intervention orientated work on trade facilitation. ADB have worked
closely with the South Asia Sub-regional Economic Co-operation (SASEC) members (Bangladesh,
Bhutan, India and Nepal) to develop investment interventions of regional significance in transport,
trade facilitation and energy.It is anticipated that the partnership will help the ADB to fund the reform
of three key border posts along the eastern corridor. These reforms, in procedures, riskmanagement, infrastructure and documentation will lead to time and cost savings30 to trading across
borders.
2. World Bank
Expanding Trade in
neighbours(£400,000)
Electricity,
Goods
and
Services
between
Pakistan
and
its
This existing initiative covers two externally financed output (EFO) arrangements with the WB that
run to the end of 2012. The support covers regional trade and energy in the western corridor.
£300,000 is for the Bank to help the Kyrgyz Republic, Tajikistan, Afghanistan and Pakistanto
implement electricity trading arrangements and establish a Central Asia–South Asia Regional
Electricity Market (CASAREM). Support covers technical assistance, advisory and project
preparation.
A key aim of the CASAREM initiative is the development of a 1,200km cross-border, electrical
interconnection linking all four countries (CASA 1000). This will facilitate the transfer of surplus
summer power from the Kyrgyz Republic (utilising its large hydro-electric capacity) and Tajikistan, to
Afghanistan and Pakistan. This energy trade will alleviate electricity shortages in Pakistan during the
summer and/or reduce its dependence on costly oil-based generation – and ensure a steady source
of revenues to the Central Asian countries from exporting their summer energy surpluses. It will also
help establish Afghanistan as a reliable transit country for trade. Early feasibility studies suggest that
the implementation of this project will see USD 953m (£c.596m) of investment spread across the
four countries.
DFID funding was required as the Bank’s operational budget was insufficient to cover the necessary
due diligence to develop the CASA 1000 project. DFID support will enable the Bank to build
momentum for this ambitious project by sufficiently informing potential financiers due to meet later
this year.31
DFID is also providing £100,000 to enable the Bank to respond to Pakistan’s request for support to
regional cooperation, including a Pakistan Trade Forum to be held in October this year.
3. World Bank
Previous Support(£635,000 and £1,450,000)
As mentioned above DFID has provided £635,000 of support to the World Bank to promote trade
between India, Bangladesh and Nepal. DFID has also provided £1,450,000 to support the Central
Asia Energy and Water Development Programme (CAEWDP).
4. IFC
Start up Support(£938,000)
As mentioned above DFID has provided £938,000 to the IFC to establish a South Asia Regional
Trade and Integration (SARTI) Facility
New Initiatives
Options 1, 2 and 3 all involve extending DFID’s multilateral partnerships in the following ways: i)
Current support to the World Bank South Asia will be expanded into a larger and more
comprehensive regional trade and energy project covering both the eastern and western corridors.
ii) Support to the World Bank’s Central Asia initiative, CAEWDP, will be continued, and iii) Phase II
of the IFC intervention will be supported.
In addition, all the options also include a new Bilateral Strategic Fund. This will be used to support
India-Pakistan trade– an important ministerial priority across HMG, as well as addressing in more
depth the links between regional trade and poverty alleviation, and understanding the regional social
dimensions of trade.
Of these four new initiatives, three are not yet ready for full approval: the World Bank Central Asia
CAEWDP intervention, IFCSARTI intervention and Strategic Bilateral Fund. For these three
interventions approval in principle is sought. Separate work programmes for the IFC and World Bank
CAEWDP will be submitted for approval to the Director AsCOT – following guidance from the Asia
Regional Board -, and proposals under the Bilateral Strategic Fund to the Head of DFID’s Asia
Regional Team.
Within the new initiatives being proposed one DFID-funded programme post will be extended to
assist with the implementation of CAEWDP and coordination with CAREC, and one with overall
programme coordination. Two further long term posts will be funded under the WB South Asia
Programme (one on the western corridor and one on the eastern corridor, both with a focus on trade
facilitation).
Given the recommendation to support all these new initiatives, the options have been structured to
differ in the way that they are managed and co-ordinated in order to maximise aid effectiveness and
produce results.
Prior to discussion of the options, the following section details the content of the proposed new
initiatives:
5. World Bank
South Asia Regional Integration Partnership (SARIP)(£6.586m –SARIP and one programme post
to assist – in part - with coordination with CAREC) (See Annex B)
This Partnership Framework is the most comprehensive of all those being proposed, covering both
the eastern and western corridors and focusing on facilitating energy trade and trade in goods. The
Partnership will absorb and expand DFID’s current and previous support to the Bank’s South Asia
work detailed under the counterfactual: covering support to CASA 1000, India-Pakistan trade and
electricity and goods trade in the eastern corridor. The generic activities pursued will be similar to
those of the ADB, with each organisation leveraging their own entry points and stakeholder
relationships. Examples include:





Trade project identification, preparation, appraisal and implementation;
Trade policy-related analysis;
Institutional design, capacity building and implementation support;
Knowledge generation, dissemination and communications; and
Developing “networks of practice” across borders to foster collaboration in the priority areas.
Eastern Corridor – Energy Trade
The largest strand of work on the eastern corridor will be facilitating electricity trade between NepalIndia and India-Bangladesh. On-going construction of transmissions lines across these two borders
is the result of previous DFID support. Key results in this area will be facilitating the structuring of 2-3
export-orientated hydropower projects from Nepal including support for developing additional
transmission capacity as required. The Bank will also support consensus-building around priority
opportunities for sub-regional electricity co-operation, harmonisation of cross-border regulatory
systems to facilitate (competitive) electricity trade and strengthening in-country institutional capacity
(particularly in Nepal and Bangladesh), to enable countries to better analyse the costs and benefits
of energy co-operation and to develop policy.
Eastern Corridor – Trade Facilitation
The Bank will work closely with the IFC on this component given the complementarity with the
SARTI intervention. Support will identify trade barriers between India-Bangladesh-Nepal and further
implementation and consensus for a new transit pricing regime. Activities will also include preparing
and supporting suitable transport projects (such as inland water transport in Bangladesh, and
upgrading the Birjung border post between India and Nepal).
Western Corridor– Energy Trade
As on the eastern corridor, the primary engagement will be on energy trade. The aim is to improve
institutional capacity and attitudes to facilitate electricity trade between Central Asia, Afghanistan
and Pakistan. DFID funding will allow the Bank to continue to respond to demand from governments
for support and technical assistance in preparing and developing the CASA 1000 project. DFID
support to-date was essentially a stop-gap enabling the process to continue and avoid delay. Much
work is still needed to bring this project to fruition. The Bank will undertake analysis (political
economy, economic and financial cost-benefit), provide technical assistance and information on
developing and completing the financing, legal agreements and commercial (operational) strands of
this project. These are vital and necessary assessments that inform and motivate investors and
signatory countries, and propel the project forward towards its eventual construction (envisaged for
mid-2015).
There is also a smaller component to improve policy conditions for energy trade between Central
and South Asia. This will support multi-country dialogue to build in-country and regional consensus
for energy co-operation. Country energy assessments will be produced (highlighting energy
deficits/surpluses and subsequent trade potential) and investment programme linkages to other
regional structures (e.g. CAREC32) will be made (the four western corridor (CASA 1000) countries
are all members of CAREC). These events and linkages will provide space for lessons on benefitsharing arrangements and early cross-border projects in the region. The energy assessments
should ignite dialogue and interest that improves policy attitudes towards regional energy
integration.
Western Corridor – Trade Facilitation
The focus here is on improving Pakistan’s trade competiveness, with emphasis on economic
relations and reducing trade barriers between Pakistan and its neighbours. DFID has already
contributed £100,000 to this initiative (part of the counterfactual) which will support a trade forum in
Pakistan. Support under this intervention will follow-up the conference to assist Pakistan’s
Government to prepare a trade enhancement strategy to help broaden economic integration along
the corridor, including Pakistan and India. Priority investment programmes arising from the
consultation process will be developed. The Bank will also assist Pakistan in securing finance for
priority trade infrastructure investments.
There will also be a specific Afghanistan–Pakistan element to this project. The signing and
declaration of effectiveness of APTTA signals the intent of both countries to improve trade relations.
Through analysis, establishing baseline indicators and designing a monitoring and evaluation
system, support will help improve the Afghanistan–Pakistan border management system –
facilitating truck and goods transit through Pakistan. Technical assistance will help align customs
policies and systems on both sides of the border. There will also be multi-stakeholder meetings and
project preparation/support for selected key interventions.
Within this Partnership Framework the World Bank will fund two long term posts, one on the eastern
corridor and one on the western corridor. The eastern corridor post will be filled by a trade
facilitation expert, whilst the western corridor post will be filled by a trade policy competent individual
who can work with senior officials in government, the private sector, and civil society to enhance
Pakistan’s trade and economic relations with other South Asian countries.
Beyond the Partnership Framework DFID will fund one long term post – based in Almaty – to
coordinate WB support for CAREC as well as support the Bank’s regional work on water and energy.
6. World Bank
Central Asia Energy and Water Development Programme (CAEWDP)(£3.15m)
DFID received a request from the World Bank in February 2012 for longer term support to CAEWDP,
which is emerging as the regional knowledge platform to support analytical work, institutional
development, and investment project preparation in the energy and water sectors in Central Asia.
The World Bank considers this programme central to its capacity to strengthen bilateral and regional
dialogue with Central Asian countries. CAEWDP is also aligned with CAREC processes, linking
Central Asia and South Asia trade and energy issues within one institutional framework.
The design of further support to CAEWDP has not yet been undertaken. It is therefore proposed
that an in-principle agreement be given to this project with the actual intervention subject to approval
by the Director AsCOT – following guidance from the Asia Regional Board.
7. IFC
South Asia Regional Trade and Integration (SARTI) Facility (£6.25m)
As detailed in the counterfactual above, Phase I of this intervention has already produced some
concrete analysis, partnerships, dialogue and reform plans to take forward in Phase II. Phase II will
constitute a larger regional intervention with the same objectives as Phase I – trade and investment
facilitation in the eastern corridor. The design of Phase II is not yet complete. Is it therefore proposed
that an in-principle agreement be given to this intervention, with the actual intervention subject to
approval by the Director AsCOT – following guidance from the Asia Regional Board.
This intervention will comprise three key components:
Trade Facilitation
Whereas the ADB and (to a lesser extent) WB work mostly with governments, the IFC engage
primarily with the private sector. IFC will concentrate on enabling the faster movement of goods
across borders. Building on the progress under Phase I, IFC will support formulation and
implementation of national action plans. Reforms will include increasing efficiency of border
processes, elimination of unnecessary documentary requirements, fees, charges and procedural
stepsetc, harmonisation of customs operation between the three countries, and adoption of
coordinated border management.
At specific major regional border crossings – including Birgunj–the IFC will support automation to
speed up slow processes by using e-processing and e-signatures. An IFC devised risk-management
strategy – stressing common methodology and policy for the three countries - will complement this
automation; meaning a smaller percentage of containers are stopped and searched. These reforms
will create efficiency gains in the time taken to move goods across borders.
Investment Policy
IFC will develop a regional integration scorecard to ‘benchmark’ investment policies in the region.
They will also support progress of SAARC’s regional investment code currently being explored.
Regional Investment Facilitation
The IFC will also set up a Regional Investment Feasibility Fund (Challenge Fund) to incentivise
companies to engage in cross-border trade. The aim of the fund33will be to improve businesses and
business linkages across the eastern corridor and demonstrate what the private sector can do to
accelerate intra-regional trade and investment, despite current constraints.
8. DFID
Strategic Bilateral Fund(£900,000)
This is the creation of a small fund to be managed directly by DFID to encourage and inform the
regional multilateral interventions in key areas, and also respond to HMG priorities. Support will be
primarily directed to enhancing India-Pakistan trade and strengthening the link between regional
trade and poverty reduction.
Indo-Pak Trade
The past year has seen historic progress on trade normalisation between India and Pakistan. As
political momentum has picked up pace, HMG has experienced increasing requests for support.
Given the significance of this agenda for peace, security and economic development in the region,
there is naturally broader HMG interest in this agenda. The proposed new World Bank intervention
will cover some work in this area, but it is proposed that DFID also maintains access to bilateral
funds to support this agenda.
Much of the current UK support is being delivered through the FCO’s Conflict Prevention Pool. Any
additional DFID engagement will complement and be coordinated with that assistance.
DFID Pakistan is currently developing two interventions to respond to demand from ‘Track-II’
partners to support this agenda. These interventions will work with local think tanks and the business
community to identify cross-border trade needs including, (i) policy/sector level research; (ii)
research dissemination/constituency building; (iii) project delivery (for example a cross-border
payments system, remittance corridor and capital market integration); and iv) analysis on political
and defence related concerns regarding opening up of strategic sectors (transport, cement,
fertilizers etc). DFID Pakistan are coordinating with both DFID India and the FCO to ensure that
these interventions contribute to a comprehensive package of UK support.
Regional Trade and Poverty Linkages
As mentioned in the strategic case, there can be both positive and negative effects on poor people
from trade liberalisation. This calls for an approach that explicitly takes development concerns into
account, and monitors the impact of reform interventions on the poor.
Trade interventions should also take gender-related constraints and effects into account, to monitor
the economic and social gains. Issues include the substantial proportion of women traders involved
in informal trade and the fact that women traders face particular constraints when it comes to
customs, for example, due to low literacy levels. The Strategic Bilateral Fund could help support civil
society, academic institutions and policy think tanks to work with the multilaterals in understanding
and enhancing the poverty-reducing impact of their interventions.
There is increasing awareness among donors and policy makers of the need to target and monitor
the impact of trade reforms on the poor, including women and girls. DFID will contribute and help
implement this important agenda; commissioning research where there are gaps, sharing
information and lessons learned, and piloting and assessing different approaches.
The Fund could also support the multilateral efforts to facilitate dialogue, policy engagement and
participation of non-state actors in the programme,. Ensuring that they engage on policy and hold
governments to account, ensuring transparency and real outcomes for the poor.
A key responsibility of the proposed regional coordinator will be to link the Strategic Bilateral Fund to
i) other interventions that can also support this agenda, and to ii) regional events (conferences etc.)
and networks that help build momentum behind these agendas.
Option 1:
Under Option 1, all four new initiatives would be approved. Of these, one is ready to be approved in
full - the World Bank South Asia SARIP intervention. The other three projects would be approved in
principle, with full approval sought before the end of 2012; 1) WB Central Asia CAEWDP top-up, ii)
IFC SARTI Phase II, and iii) a new Bilateral Strategic Fund, once it is clear how these work
programmes interact with and add value to the WB SARIP programme. In this option, no additional
coordination or management costs will be incurred by DFID. The cost of this option is therefore the
sum of each individual new intervention which is £17,036 million. Whilst the multilateral’s are likely to
coordinate on some issues, each intervention will work independently and DFID will not provide any
resources dedicated to ensuing overall strategic coherence across the agendas.
The Need for Coordination
In reality, coordination will be essential in delivery of an effective programme. DFID has signed up to
the Busan Partnership for Effective Development Cooperation which sets out shared principles to
achieve common goals, such as ownership of development priorities by developing partners, a focus
on results, inclusive development partnerships, and transparency and accountability to each other.
Figure 3 below depicts an example of the importance of coordination. The World Bank, ADB and IFC
are all supporting elements of reform in the eastern corridor (for example logistics support and
customs automation). It is clear that a coordinated approach, where the WB will work at particular
border posts and along particular corridors, whilst the ADB will work at other border posts and other
corridors, will minimise the risk of duplication and maximise opportunities that can be derived from
lesson learning. An example of lesson learning could be exposing Parliamentarians – paid for under
a World Bank programme – to the trading and investment opportunities being encouraged through
an ADB trade facilitation programme.
This case for coordination – both as a check and as an opportunity to share lessons - is all the more
important as the regional trade and integration programme is evolving through multiple
implementation channels. These channels include:






Formal regional structures such as CAREC and SASEC that link priorities to finance in both
the trade facilitation and energy sectors;
Formal bilateral trade agreements, usually coordinated by Commerce Ministries;
Formal bilateral agreements that address a range of non-tariff issues. These agreements are
coordinated by a range of Ministries and bodies including Finance, Agriculture, Internal
Security, Customs, and Agriculture;
Formal bilateral agreements that address regional energy issues;
Engagement by various umbrella private sector groupings, some which operate at a national
level and some of which operate at a state or provincial level; and
Engagement by various regional think tanks and civil society organisations, which have
considerable scope to communicate the gains from trade to political leaders and to the
general public.
Such complex coordination mechanisms reinforce the importance for the each multilateral to have a
different comparative advantage and set of relationships and entry points, and for DFID to support a
diversified portfolio through supporting several organisations to work on the same overall goals - but
through different mechanisms and stakeholders. However it also points to the importance of
coordination to minimise the likelihood of duplication and maximise opportunities.
Figure 3: The need for Coordination across the Eastern Corridor
Donor coordination does already occur. For instance:



On the western corridor, CAREC coordinates donor activities in the energy and trade
facilitation sectors. The provision of DFID programme resources to the WB in Almaty, and
through the funding of long term posts through the Partnership Framework is in part a
recognition of the need to support these existing processes;
On the eastern corridor, SASEC, in time might become a mechanism to formally coordinate
donor activities; and
Coordination also occurs at a country level, through various country led processes.
However there is still plenty of scope to improve information flows, particularly in areas where formal
coordination mechanisms are still evolving. This needs to occur at three levels:



Level 1: Formal programme coordination between the various intervention managers, to
monitor progress, avoid duplication and promote linkages, and adjust outputs based on
changes in demand and information on results;
Level 2: Strategic coordination through formal and informal mechanisms managed along the
western and eastern corridors; and
Level 3: Regional wide where regional champions and think tanks – for instance - can
promote and challenge the scope and pace of regional integration.
There is also a need to ensure coordination within DFID. The UK’s joint DFID/BIS Trade Policy Unit
(TPU) has a wealth of experience supporting trade facilitation and policy reform in developing
countries. Various TPU partnerships with multilaterals support research that can usefully inform
SARTIP, such as the World Bank Global Trade and Financial Architecture programme. DFID’s Africa
Regional Department also has growing experience in supporting the regional trade agenda, for
example through the Africa Free Trade Initiative which aims to cut transport costs, join up border
crossings and unify the plethora of African regional economic blocs. Sharing lessons and
coordinating between all of DFID’s relevant trade and development-related initiatives will help
maximise the effectiveness of support under SARTIP.
However, coordination is not a cost free exercise. It takes time and resources to assembly the right
actors together to discuss the right issues at the right moment in time. In saying this the case for
even simple coordination can be highlighted through the below qualitative examples:







Duplication reduces effectiveness of engagement. It wastes resources and undermines
credibility with stakeholders who go through similar processes more than once. (e.g.
potentially with IFC/ADB private sector meetings on trade facilitation);
The opportunities to develop synergies and piggy-backing are missed, particularly on key
linkage issues;
Managing everything individually might create higher transaction costs for relatively small
monetary interventions;
Missed opportunities and consistency through lack of common shared analysis on key
issues, such as political economy and baseline assessments;
There are other existing regional initiatives that our partners should also draw on/ensure
consistency with. For example, the Bay of Bengal Initiative for Multi-Sectoral Technical &
Economic Cooperation (BIMSTEC) - Bhutan, Nepal, India, Sri Lanka, Myanmar and Thailand
could learn for SASEC and vice versa;
Difficulty of DFID country offices engaging on regional issues when they have numerous
entry points through which to engage – with limited resources; and
Streamlining engagement with multilaterals on the regional agenda will help them channel
their advice and expertise to help identify new opportunities and feedback on progress.
Option 2:
This option involves all the initiatives under Option 1 and in addition DFID will commit some
resources to coordination in the form of one full-time post based in the region. This person will:
 Coordinate programme management, particularly on the eastern corridor where formal
coordination mechanisms are weaker and multilateral engagement the most advanced;
 Liaise between the regional programme and key actors at country level (e.g. Hydro Sector in
Nepal and the Infrastructure Sector in Bangladesh) and at a HQ level (e.g. with the BIS/DFID
TPU);
 Provide direct support and ideas to those managing strategic dialogue processes; and
 Promote lesson learning through various donor and non-donor regional platforms.
This post would facilitate a single management structure and the ability to co-ordinate across the
various programmes. Central co-ordination of the four programmes would ensure that there is
effective communication and information sharing between the various multilaterals. This would also
avoid duplication (or significant overlap) – maximising the value obtained from each single
intervention.
Managing these four programmes collectively would also reduce time and administrative costs for
DFID. For instance, instead of the need for four separate annual reviews each year, there would be
just one.
Over the longer term, this person would play a key role in enhancing the coherence of DFID’s
regional support. Evolving the partnerships with each individual multilateral towards a truly
collaborative approach will take time and resources. The coordination post holder would head the
work needed to advance this agenda. For example through:
1. Examining more closely at DFID’s Trade Mark model and how that could be adapted and
applied to Asia over time;
2. Drawing on lessons across DFID where more than one multilateral is working from a
common workplan;
3. Liaison – say - with AusAid as they design and launch their regional programme.
Option 2 is the recommended option.
Option 3:
Under this option, DFID will go one step further with coordination and management to establish a
comprehensive and integrated regional trade intervention along the lines of DFID’s TradeMark
model – named ‘TrademarkLite’ (to reflect South Asia’s far looser economic integration than
Southern or Eastern Africa (where TradeMark is currently established).
This approach would provide a robust institutional mechanism for coordination of DFID’s multilateral
support to regional economic integration in South Asia. This could raise aid effectiveness by not just
avoiding duplication, but also facilitating shared analysis, solutions, platforms for dialogue, and
prioritising and sequencing of reforms. It would bring together all support around a shared regional
workplan – with the demands and needs of countries at the centre. TradeMarkLite Asia would also
provide a simple mechanism to attract additional donors.
It would also create a platform through which to support and enhance coordination with relevant
regional fora such as SAARC – who, in the first instance, would be part of the design of this new
institution that would serve their needs. It would also facilitate additional stakeholder engagement –
civil society, academia, media, private sector etc. Importantly TradeMarkLite Asia could have the
flexibility to support opportunistic work such as one-off pieces of research or events within clear
objectives and strategies.
Finally, it would ensure a robust institutional mechanism, and additional staff resources, to
coordinate with national programmes. For example DFID’s investment climate work in Nepal and
Bangladesh. It could also be used to scale-up support and fill any gaps. For example establishing
capacity building support for individual trade Ministries to manage and progress regional
developments. TradeMark could also help fill critical human resource gaps in regional organisations.
Despite the potential, this option is not recommended at this point in time. Politically the time is not
right for such an institution. South Asia remains significantly less integrated than Africa. Whilst
political momentum is building and regional institutions such as SAARC do exist, much of the current
progress is happening on a bilateral level. Forcing too quickly a regional approach may be
ineffective both politically and institutionally, incurring political costs that outweigh monetary benefits.
There would also be significant hurdles at the operational level. The existing TradeMark projects are
aligned to the region’s priorities – as laid out by SADC, COMESA etc. SAARC does not have
priorities to that level of detail. In addition the geographical spread of DFID’s support does not fit
neatly into existing regional institutions. For example SAARC covers Sri Lanka and the Maldives
which are not DFID priority countries. The broad geographical coverage of DFID’s engagement
would therefore raise the challenge/ambition of establishing an all-encompassing institutional
framework.
The multilaterals and governments in the region may take time to get on board with this option, and
may ultimately not support this approach. Finally, the current volume of proposed support is small.
The additional coordination and transaction costs of establishing a whole new institution may
therefore not be justified.
However, growing political momentum combined with successful DFID support through SARTIP and
increasing interest from other donors to provide support in this area may create an environment
where a more consolidated regional approach such as this could be a feasible option at some future
point in time. DFID could invest time and resources (for example through the coordinator role if
Option 2 is chosen), to more fully explore, prepare the ground and design in full a more
institutionalised approach such as the one outlined here, over time.
B. Strength of the evidence base for each feasible option
Sections 1 to 3 below present the evidence to support all the proposed new interventions (featured
in all of the options). Section 4 provides the evidence on coordination effort which is the key
distinguishing element between the options.
1) Trade Facilitation enhances overall Trade Performance
There is general consensus that development of good quality and appropriate infrastructure, coupled
with better trade facilitation, is effective in improving trade performance and competitiveness.34With
respect to South Asia, the World Bank recognise that ‘measures to facilitate trade and lower logistics
costs are among the most important steps to promote intraregional trade and economic integration.35
Research has found strong empirical evidence that aid directed at trade facilitation interventions has
a small, but significant and positive impact on trade flows. Certain studies of trade facilitation
measures – streamlining customs procedures, improving port efficiency, harmonising to international
standards, and other reforms — found that these resulted in lower trade costs. For some countries,
the trade gains from these reforms could exceed benefits coming from tariff reductions.36
Using a cross-section gravity model, it has been demonstrated37 that:
 Domestic trade costs are a significant determinant of trade volume (a more limiting factor for
international trade than tariffs);
 Improving the Logistics Performance Index of low-income countries to the level observed in
high-income ones would increase their trade flows by more than 50%; and
 A 10% reduction in the costs associated with importing (or exporting) would increase imports
(or exports) by about 5%.
One study38 estimated that a $US1 million increase in trade facilitation support would reduce the percontainer cost of transport from factory to the port of departure by 6% (or about US$70).
2) Improved Trade Performance leads to Poverty Reduction
The strategic case provided and overview of the links between improved trade performance and
poverty reduction. At the macro level the relationship is generally positive, but it is complex, and will
make the poor winners or losers, depending on the type of reforms and political economy context.
At the macro level, trade facilitation can play an important role in strengthening the positive
correlation between trade and poverty reduction. Recent evidence shows that the effects of trade
liberalisation on poverty differs by the proportion of the population living in lagging regions.39Weak
infrastructure means that firms in these regions have lower productivity and incur higher costs in
accessing national, regional and international markets.40The efficiency of border corridors is also a
critical factor for a region’s competitiveness and trade prospects.41Trade facilitating reforms, such as
better roads and more efficient ports can help these lagging regions contribute to, and share in the
benefits of economic growth (partly generated by trade liberalisation). Figure 3 below depicts this
relationship.
Figure 3: Relationship between Trade Facilitation and Poverty Reduction
Source: Presentation at a UNESCAP High-level expert meeting on reducing poverty by promoting industrial development
through trade facilitation, Lao, 2007
At the micro level, women, informal traders and people in rural and remote regions experience the
most significant obstacles to accessing and benefiting from trade facilitation services and traderelated infrastructure.42It is therefore important to understand and address these particular
constraints. The proposed Bilateral Strategic Fund will help build the evidence base on what types of
interventions in this area have the greatest impact on wealth creation for the poor.
3) Importance of improved energy trade
A recent World Bank43 study found that regional energy trade provides a win-win situation to all
participants of the region and is a logical and rational public policy choice, for the following reasons:
• The mismatch between energy demand growth and energy resource endowments. Relatively
smaller and poorer economies (Tajikistan, Kyrgyzstan, Nepal, Bhutan etc) have hydropower
resources far in excess of their energy demand whilst in India, Pakistan, and Bangladesh energy
demand growth far outstrips domestic supply. The demand–supply gap will only become wider,
unless the domestic supplies are supplemented by imports;
• Implications of trade to energy security. Reliance on energy trade for meeting a part of domestic
demand can actually enhance national energy security by diversifying energy forms and supply
sources and lowering the cost of energy supply;
• Substantial benefits to smaller exporting economies. Energy exports could make dramatically
significant contributions to the GDP growth of economies like Bhutan, Nepal, Tajikistan, and
Kyrgyzstan, and enable their export-led growth. For example, Bhutan’s electricity export in FY2007
is expected to constitute nearly 25 percent of its GDP and 60 percent of its state revenues;
• The significant relief from energy constraints to rapid economic growth. This is especially true in
the importing economies of, India, Pakistan, and Afghanistan. In India alone, the volume of unserved electricity in FY 2007 is estimated at 54,916 GWh valued at $12.1 billion on the basis of the
short-term marginal cost in the Indian grid. The value of the corresponding industrial production
forgone would be several times more;
• Environmental imperatives. This is especially relevant for India, which relies heavily on domestic
coal. Its carbon dioxide emissions will rise from 4 percent of the world total today to about 13 percent
by 2030 unless low-carbon strategies are adopted. Imported hydropower and natural gas would help
in moderating this increase to some extent;
Climate change imperatives. Carbon emissions are increasing and Himalayan glacial resources are
shrinking. The management of regional water resources and the use of other primary energy
sources have to be optimised for the benefit of the region as a whole. Trade facilitates this;
• Reduction of supply costs. Trade could reduce system development costs and enable lower-cost
supply. Nepal, for example, could dramatically reduce its cost of power supply (compared to its
attempt to meet its demand by the expensive all-hydro generation option) by optimising its power
system with sale of hydropower to, and import of thermal power from, India; and
• Cash flow implications. Often energy import options improve cash flow and enable postponement
of lumpy and large domestic capital investment needs that would otherwise crowd out other
important investment needs (the classic make or buy choice).
4) Multilaterals are best positioned to achieve results on this agenda
The appraisal section presented the evidence for supporting this agenda through three specific
multilateral institutions. This is based on evidence of successful partnerships to-date, both through
this emerging workstream and DFID’s broader experiences as captured through the MAR.
Below are some specific examples of the results achieved by multilaterals through turning outputs
into substantive positive trade outcomes.
i)
ii)
ADB
i) Approved a US$100 million loan for constructing a cross-border transmission line44 (proposed 125
km) between India and Bangladesh, enabling electricity transfer from the former to the latter.
iii)
iv)
v)
World Bank – with DFID support
ii) Progress under the CASA 1000 project has benefitted from the project development capabilities of
the World Bank. The four governments all signed a MoU for the development of the power
transmission project in Bishkek in September 2011.
vi)
iii) Bilateral exchange of power between India and Nepal is now at about 50MW.45DFID support
(£640,000) helped facilitate a US$99 million (c.£62m) World Bank loan to build a 400Kv high
transmission line between the two countries.
5) Coordination costs worthwhile due to aid effectiveness benefits
Key to appraising the different options presented is evidence that spending resources on
coordination mechanisms enhances aid effectiveness. Drawing on the evaluation of the Paris
Declaration46 there is evidence that aid coordination:
 Clarifies and strengthens norms of good practice, contributing progress towards the 11
outcomes set in the 2005 Paris Declaration (which includes outcomes on alignment and
harmonisation), and in the process contributing to better development results. Significant
positive contributions to results can be traced, particularly in the health sector; and
 Holds out a vision of much better conditions for aid and ultimately for development without
aid.
In summary, there is medium evidence across the key elements that support all of the options of this
business case; that 1) trade facilitation interventions improve trade performance, 2) trade can lead to
economic growth and wealth creation for the poor, 3) regional energy trade is key to addressing one
of the region’s binding constraints to growth and 4) multilaterals are well placed to respond to this
need. In addition there is medium evidence that allocating resources to coordination among
implementation partners will improve aid effectiveness and value for money of interventions.
Option
Counterfactual
1(4 new interventions, no coordination)
2(4 new interventions, some coordination)
3(4 new interventions, high coordination)
Evidence Rating
Medium
Medium
Medium
Medium
Climate and Environment categorisation
Analysis of risks impacts and opportunities
This business case recommends a number of activities ranging from feasibility studies and capacity
building activities to large infrastructure projects (i.e. CASA 1000). This latter portion of the proposed
interventions will require careful handling and consideration to ensure that all possible impacts, risks
and opportunities are identified and mitigated and -in the case of opportunities- maximised.
Infrastructure projects such as power plants, roads, bridges and waterways have a direct and
indirect effect on the ecosystem (APERC, 2004; 2007). In the case of CASA 1000, which is very
likely to involve the construction of double circuit transmission line to transmit power from the Kyrgyz
Republic to Pakistan and Afghanistan, there are a number of specific impacts to be considered.
The primary impacts associated with this kind of projects are environmental, arising from changes in
land use, loss of forest and vegetation coverage, disturbance of ecosystems and biodiversity spots,
and forced relocation of human settlements (APERC, 2004; 2007).
In the specific case of CASA 1000, the transmission line will require a right of way (ROW), which for
projects of this nature and size is usually around 70 meters wide and will run along a corridor at least
3000km (1,900 miles) long, amounting to at least 210km2 of land. To this should be added the
construction of a large number of transmission lines towers which will require the permanent
acquisition of several hectares of land and the imposition of restrictions on adjacent land. These
usually include limits in vegetation height and man-made structures, thus reducing the agricultural
capacity of the land in rural areas and causing a loss of tree density in forested areas. The
construction of energy lines is also proven to have detrimental effects to local fauna (especially
birds) and disrupts ecosystems by creating vegetation free corridors and fragmenting natural
habitats.
These changes may put the affected regions, in particular those already vulnerable to climate
change, at great risk, and affect their abilities to adapt to climate change and maintain carbon sinks
(AEEP, 2008). However, on the other hand, this project will enable a large number of existing and
prospective energy consumers to use hydropower in place of coal and/or oil. This will have a
positive environmental impact by reducing emissions of the pollutants produced by coal-fired power
stations (e.g. sulphur dioxide [SO2]). It will also reduce significantly emissions of carbon dioxide
[CO2]and other greenhouse gases (GHGs) such as nitrogen oxide [NOx], which are responsible for
climate change. However, because climate issues have not been at the top of the agenda in this
region, very few cross-border infrastructure projects have to-date factored climate adaptation and
mitigation into overall considerations (Zhang, 2011). It is therefore very important that any
environmental impact analysis carried out for this intervention takes into account climate change
adaptation and mitigation issues, as well as environmental degradation and pollution.
Because current developments will set the patterns for energy and transport use in this region, and
will have a lasting effect on climate change, there is a great need to thoroughly document both the
negative implications for climate change that arise from cross-border infrastructure projects and the
potential climate benefits that these projects can bring in terms of reduced GHGs and the
maintenance of carbon sinks (for example, through the preservation of land and forest coverage).
However, it should be pointed out that while it is relatively easy to calculate the reduced GHG
emissions that result from replacing the existing use of coal and/or oil with cross-border hydropower,
it is very difficult to estimate other climate impacts, such as the impact on carbon sinks, particularly
when a project involves huge changes in land use, forest and vegetation coverage, ecosystems and
biodiversity spots, and relocation of human settlements (Zhang, 2011). Estimating these costs will
pose a huge challenge, even for the most thorough and detailed of environmental and climate
change impacts analysis.
In operational terms all the options considered under this business case will involve a certain
amount of travel across the region for analysts, advisors and trade officials; although in terms of
sheer volume, option 3 would instigate the most while option 1, the least. These are not likely to
have a great impact on either the environment or climate change, but it is nevertheless important to
apply measures to limit them as much as possible.
Recommendations
In order to assess these effects and try to minimise, or ultimately compensate them, the
environmental legislation of most countries requires the mandatory application of environmental
impact assessments (EIA) for projects that are potentially damaging to the environment.
The CASA 1000 project contains a component that will undertake analytical work (approved under
the counterfactual option) to assess the environmental impact of the final project when the route of
the transmission line has been decided. It is therefore recommended that the commissioning and
design process for this piece of work takes into account all the concerns highlighted above and that
a DFID adviser has the opportunity to comment and/or feed into this.
Furthermore it is recommended that a strategic impact assessment (SIA) is also undertaken in the
context of the EIA to identify potential impacts at the sector- and/or economy-wide level, as well as
the options available to avoid the impacts identified. This should integrate environmental issues with
economic and sectoral policies and be used as a tool to align the policies and operations of
government institutions and private sector companies responsible for economic planning and
implementation, with those of the agencies in charge of environmental protection. It should consider
the trade-offs between the best alternative scenarios: e.g. loss of income to the Governments of the
countries involved, versus a reduction in the number of people to be resettled; or the amount of km2
degraded or rendered unusable by the construction of infrastructure versus the potential benefits
accruing from the foreseen reduction in pollution and GHGs emissions.
Carbon emission from travel can be mitigated by using economy class flights47 and video
conferencing facilities whenever possible. In this respect the policy of the Bank to contract/sub
contract data gathering to local firms will help to mitigate the projects’ carbon foot print associated
with air travel.
Furthermore all documents, reports and paper outputs funded by the programme should be printed
on paper made from sustainably managed forests and/or recycled paper in order to mitigate the
environmental impact of running the project operations. The multilateral systems display all these
necessary attributes.
Option
Climate change and environment
risks and impacts, Category (A, B,
C, D)
Climate change and environment
opportunities, Category (A, B, C, D)
C
C
B
B
B
B
B
B
1 (Counterfactual)
2 (4 new
interventions, no
coordination)
3 (4 new
interventions, some
coordination)
4 (4 new
interventions, high
coordination)
C. Cost and benefits of each feasible option
Interventions will be prepared that – ex ante – are expected to materialise by the end of the
programme.
If positive developments did materialise, the issue of attribution would be incredibly sensitive to any
underlying assumptions. There are some components, such as the CASA 1000 project, which are
closer to certainty in producing results (as in actual investments). But even here the issue of
attribution would hold. So, DFID costs will contribute towards the realisation of trade benefits but
attribution rates cannot be defined.
It is therefore not feasible to conduct a full cost-benefit analysis for any of the options. Not all the
(future) costs or potential benefits are known with a fair degree of certainty– so creating a useful net
present value (NPV) or benefit-cost ratio (BCR) for DFID’s contribution is not possible. The worth of
any of these interventions are more credibly established by setting out the costs of each option and
the potential returns that projects at the most advanced stages are expected to deliver. A discount
rate of 10% has been used to provide present values for the costs and benefits.
Costs
The financial costs (grant funding) of the various options are captured in Table 2 below. The table
shows both nominal and discounted costs (present value).
Table 2:Financial Costs of each Option
C
O
S
T
S
Option
Counterfactual
Option 1
Option 2
Option 3
Total
£3,525,000
£20,561,000
£21,211,000
£23,561,000
Present
Value
£2,964,080
£17,189,074
£17,727,892
£19,675,926
The counterfactual, spending that has already been approved, costs DFID £3.53 million. This cost is
also included within the total costs of the other 3 options. Hence, whilst the costliest option (Option
3) totals £23.56 million, the amount of new spending that could be approved is £20.03 million.
The three interventions and the Strategic Bilateral Fund are contained within options 1, 2 and 3.
These four components will cost £16.88 million. Each option also contains another £150,000 for
DFID’s monitoring and evaluation of the projects – this is in addition to the internal monitoring and
evaluation conducted by each multilateral on their own interventions.
Co-ordination
Co-ordination costs create the difference in total costs between Options 2, 3 and the ‘uncoordinated’
Option 1. These additional costs are £650,000 for Option 2 - to place a DFID adviser in Delhi, and
£3 million for the higher co-ordinated Option 3 – the TradeMark approach. This would cover a
central team established alongside country presence.
Contribution
The present value of the costs for the preferred Option 2 is £17.73 million which will fund the
programme’s outputs. These outputs (effectively ‘sunk’ costs being borne by DFID) will contribute to
the multi-stakeholder endeavour in the region to promote intra-regional trade. The benefits (of
regional trading agreements) will be brought tangibly closer to fruition because of these
interventions. However, in order for the benefits (from trade) to be realised, there will need to be
further investments (costs) in the future – for example, financing the construction of a transmission
line. Hence, the project costs, (whilst contributing towards), are not the full costs that will be made in
order to realise the benefits. There will need to be additional (and much greater) investment, made
by regional governments and private investors. Programme interventions will help inform these
financing decisions and leverage this required investment.
Benefits
Any potential benefits identified in this section should be viewed as entirely indicative. Any benefits
will require further investment (in addition to this intervention) to be realised.
This section will present evidence of the value for money from partnerships with multilaterals on this
agenda. The various activities envisaged under the four options should lead to investments, policy
changes and efficiency gains that promote and facilitate trade.
Counterfactual
As an indicative tool, the benefits from a successful ADB brokered development in the region is
highlighted below:
Bangladesh-India Electrical Grid Interconnection Project
The ADB report48for this project has economic analysis highlighting these returns:
The economic analysis conducted for the project considered only power generation cost savings
using power imported from India over alternative sources. The project’s economic feasibility was
assessed both for the region and for Bangladesh. The project is estimated to cost $158.6 million (c.
£100m). The project provided an economic internal rate of return (EIRR) of 31% for the region
whereas it provided an EIRR of 27% for Bangladesh. These estimates were based on conservative
assumptions of resource cost savings. A much higher EIRR would be achieved if prevented outage
costs were used for economic analysis. The project provides an acceptable EIRR even if only 250
MW (500MW is envisaged) is delivered at the currently proposed rates. The project returns are
stable against the relevant risk factors.
This IRR of 31% suggests a very healthy return on the investment, being much larger than the
opportunity costs of funds – as measured by borrowing (loan) rates in the region. Additionally, the
£100m pounds of investment will provide employment and these incomes will be subject to a
multiplier effect, spreading wealth across the region.
The ADB intervention is expected to contribute towards the realisation of similar projects and
benefits as the above. Specifically there is the potential to provide finance to upgrade 3 border posts
as indicated in Figure 2 above.
Options 1, 2 and 3
In addition to the scale of gains highlighted under the counterfactual, there are activities envisaged
under all three options that will increase investment in the region. The single activity that is most
advanced is the CASA1000 transmission line project. The analysis and studies being funded by
DFID under this option will inform and help influence the investment required to make this project a
reality – and realise the benefits envisaged below.
CASA – 1000 project
The feasibility work commissioned by the WB suggests that on conservative estimates, investment
in the line will give a benefit to cost ratio of 1.34 and an economic rate of return of 15.6%. The total
cost is estimated at $953m (c. £596m). This suggests net benefits of about £202.5m.
The trade investments generated by DFID’s multilateral partners in South Asia are characterised by
large rates of return and are indicative of the great changes and benefits that multilaterals can
engineer. It is clear, at this stage, that if the ADB or WB is successful in garnering another regional
energy line, it is highly likely to promote investment and huge benefits in the region.
If the unexpected were to materialise, (the CASA-1000 project did not proceed as planned) then
there are other areas of engagement that lend themselves to more credible inferences of potential
benefits.
The WB will be actively engaged (with IFC involvement also) in attempting to reduce the time (via
reduced documentation) at key border posts in the region. They will focus on the main Nepal-India
border post, Birgunj, which is the route through which 50% of Nepal’s exports traverse.
Birgunj border post
Nepalese exports totalled $834m (£521m), in 2010, 50% of which were processed via Birgunj
($417m49 (£261m)). For simplicity, it is assumed that export levels remain fixed at $417m per year. It
is further assumed that the reforms suggested lead to a 10% reduction in the time in trading at
Birgunj which should lead to an increase50 in Nepalese exports of 5.8% - the assumed elasticity. The
reduction in time to trade translates into reduced inventory holdings in storage, reduced capital
carrying charge in transit and a decrease in cargo loss or damage for traders. This will induce trade
growth. Conservatively assuming that there is no increase in exports until 2016 and only calculating
until 2026, there is expected to be a (nominal) increase in exports of £165.9m. The present value of
these extra exports – accruing until 2026 – is some £66.9m. If the elasticity is assumed to be lower
(half the amount) so that the 10% reduction in trading time translates to just a 2.9% increase in
Nepalese exports, this would still amount to an extra £82.9m in extra exports (under these
conservative assumptions).
There is likely to be further costs borne in investment (one off, probably in customs software) before
these extra exports materialise – but these are envisaged to cost in the region of single-digit millions
(a fraction of the gains in exports). Reform at this one border post would more than outweigh (under
conservative assumptions) the investment by all multilaterals in developing these proposals.
If DFID does fund all the activities then the greater strands of engagement should create extra
momentum in the region, building critical mass. This greater engagement at different areas and with
diverse agents should mean that more can be obtained from any single activity because other
activities are working alongside them in a complementary fashion – which could be critical when
seeking to enact reforms.
Coordination (Options 2 and 3)
The preferred Option 2 envisages an extra post in the region to coordinate programme
management, particularly on the eastern corridor where formal coordination mechanisms are weaker
and multilateral engagement is the most advanced. It is assumed that they will also act as a liaison
between the regional programme and key actors at country level, provide direct support and ideas to
those managing strategic dialogue processes and promote lesson learning through various donor
platforms.
This central co-ordination of the four programmes would ensure that there is effective
communication and information sharing between the various multilaterals. This would also avoid
duplication (or significant overlap) – maximising the value obtained from each agency’s respective
studies and analysis. The value, in saved time and costs and the benefits of having free flowing
information between multilaterals is difficult to calculate but expected to be significant.
Managing these four programmes collectively would also reduce time and administrative costs for
DFID. For instance, instead of having four separate annual reviews each year, there would be just
one. This could save about £45,000 on consultancy fees (and reduced DFID resources) over the
project lifespan.
Option 3 provides an institutional mechanism for coordinating DFID’s multilateral support to regional
economic integration. This could avoid duplication, and facilitate shared analysis, solutions and
platforms for dialogue, and help prioritise and sequence trade reforms. It would bring together all
support around a shared regional workplan - also providing a simple mechanism to attract additional
donors.
It would also create a platform through which to support and enhance coordination with relevant
regional fora such as SAARC. It would also facilitate additional stakeholder engagement – civil
society, academia, media and the private sector. It could also be used to scale-up support and fill
any gaps. For example establishing capacity building support for individual trade Ministries to
enhance their capacity to manage and progress regional developments. TradeMark could also help
fill critical human resource gaps in regional organisations.
This greater co-ordination has the potential to attain greater aid effectiveness in promoting regional
trade than under Option 2. However, this is a relatively high-risk strategy. Whilst there is
encouraging political momentum currently, the time may be (politically) too soon for such an
institution. South Asia remains significantly less integrated than Africa and much of the current
progress is happening on a bilateral level. Prematurely adopting a regional approach may be
ineffective both politically and institutionally. The political costs (unquantifiable) of moving too quickly
on still sensitive ground could be very high. The potentially greater benefits are assumed unlikely to
be realised under this approach.
Costs and Benefits
In summary, all the options (counterfactual included) are expected to realise benefits considerably
higher than their costs. It has also been stated that there is a gap (potentially to be filled with future
funding if governments agree) between the outputs and the expected outcome – the building of
transmission lines and restructuring of border post infrastructure and systems etc. This eliminates
the possibility of producing a credible or full cost-benefit analysis capturing a NPV, BCR or IRR. The
types of benefits that can be reasonably expected to materialise have been highlighted to compare
against the costs of the intervention.
The potential benefits from just two of the areas (CASA – 1000 and Birgunj) that the various
interventions will work upon are many times greater than the costs of the intervention. Under these
reasonable expectations, this means that Options 1, 2 and 3 should be preferred to the
counterfactual. Counterfactual is rejected.
It is further assessed that the complexity involved in having many organisations working to a
common objective, but with minimal communication between them, will most probably lead to
operational inefficiency – as work is duplicated and information is not shared. The costs in
duplication and missed benefits in the sub-optimal application of multilateral resources are
considered to be significant. These costs have not been quantified but are assumed to be
considerably greater than differences in funding between Option 1 and option 2 and 3. Option 1 is
rejected.
The greater co-ordination element in Option 3 should lead to an expectation of greater overall
benefits than under Option 2. However, it is also assessed that the current political environment in
the region is not yet ready for the scale of involvement envisaged under Option 3. The political risks
are assessed to be too high which reduces the certainty in reaching those ‘greater’ benefits. Option
3 will take time to design – requiring analysis, changing relationships with partners – we can start
this under Option 2 but we cannot move straight to Option 3. Whilst acknowledging the potential
superiority of this approach in better political climes, it is assessed that the risks involved are too
high. Option 3 is rejected.
Hence, Option 2 is the recommended option for this intervention.
D. Measures to be used or developed to assess value for money
The potential benefits arising from this intervention could be significant. Given a potential DFID
outlay of £21.21m, the possibility of leveraging investments of hundreds of millions of pounds
suggests that there are not alternatives that could have this sort of return.
The multilateral partners (ADB, WB and IFC) have been assessed within DFID’s Multilateral Aid
Review (MAR) to be dependable partners who can secure value for money.
As part of programme management (see below), DFID will assess value for money by tracking the
cost/effectiveness along the chain from input to output and expected outcome/impact.
The economy of the inputs used for this intervention can be measured by tracking, (i) technical
advisor rates, (ii) cost per study/analysis piece produced, and (iii) costs involved with holding
forums/conferences for information dissemination.
The efficiency of these inputs in creating outputs can be measured by tracking, (i) the number,
timeliness and quality of studies/analysis pieces, and (ii) the number, timeliness and quality of
forums/conferences.
The effectiveness of the overall project can be measured by tracking the number of trade-enhancing
reforms initiated and the volume of intra-regional trade.
Overall programme coordination will also contribute to value for money through reduced duplication
and improved opportunities for lesson learning.
E. Summary Value for Money Statement for the preferred option
In assessing value for money, the three multilaterals (ADB, WB and IFC) will report against the
performance indicators agreed in their own results frameworks that will be pulled together into a
single overarching SARTIP logframe.
Each of these multilaterals was assessed within the Multilateral Aid Review (MAR) to perform well
and offer value for money. If these new interventions can generate an investment in regional trade,
the programme will have delivered value for money. Over the course of the programme, the money
and sum of investments generated because of this intervention will be the key indicator in the
assessment of value for money.
Much of the programme to be delivered is work that governments in the region have explicitly asked
the multilaterals to undertake. This ensures that we are funding the supply of work that there is
demand for. We can be confident that the analysis and studies will have an impact and provide
value for money. The success of similar programmes undertaken by our partners in the region adds
to the expectation that we are funding work that will lead to greater investments in the future –
leading to increased regional trade. The co-ordination provided by the DFID post will ensure that
each bit of work undertaken adds value.
The expertise held by these multilaterals in leveraging intra-regional trade investments coupled with
their strong ties with partner countries is strongly indicative that DFID’s money will be used
economically, efficiently and effectively.
Commercial Case
Direct procurement
A. Clearly state the procurement/commercial requirements for intervention
DFID will provide funding to be directly managed by the WB, ADB and IFC. Any procurement will be
made through multilateral systems and subject to the respective organisation’s procedures and rules.
Indirect procurement
A. Why is the proposed funding mechanism/form of arrangement the right one for this
intervention, with this development partner?
The WB, ADB and IFC are uniquely placed to undertake the work proposed under this programme.
Supporting these multilaterals through partnership agreements, as mentioned above, is entirely
consistent with DFID’s Operational Plan for the Asia Regional Programme. The Plan envisages
interventions that are designed to unlock much larger resources (loans) from multilaterals leveraging
large investments from relatively minor financial inputs from DFID. Without this support, project
pipelines may be delayed or scrapped as countries become disengaged from the process and
potential investors do not have the necessary information in order to commit capital to projects.
The MAR confirmed that, overall, the WB Group is one of the most effective multilateral institutions
that DFID funds. It is closely aligned to UK development priorities and is an important partner in the
UK’s global efforts to reduce poverty. Recent trends in the Bank on results, private sector
development, fragile states and gender are all consistent with the priorities of the UK Coalition
Government.
B. Value for money through procurement
The UK Multilateral Aid Review (MAR) provides a comprehensive assessment of the value for money
and reform priorities of forty three multilateral organisations (including the WB, IFC and ADB)
supported by the British taxpayer.
The IFC’s past performance was assessed as showing relatively good overall control of the
administrative budget. The IFC’s strengths were identified as: i) good overall cost control; ii) tracking
of financial and economic returns; and iii) strong procurement guidelines, evaluation and audit
processes. The main weakness was identified as staff-pay mechanisms which inflate salaries at the
WB Group.
The MAR assessed the performance of the International Development Association part of the WB,
which provides assistance in the poorest countries of the World. Usefully, the MAR assessed VfM
systems that are applicable across the WB (IDA and IBRD) and are therefore relevant for this
appraisal.
The WB’s strengths were identified as: i) adequate cost control systems to ensure costs do not
inflate; ii) robust financial accountability process and policies; and iii) largely predictable, transparent
financing and extensive financial policies. Weaknesses were identified as: i) limited incentives to
generate cost savings in projects; ii) staff pay mechanisms leading to automatic increases; and iii)
perceptions that the Bank has high transaction costs. According to the report, the WB was rated as
offering very good value for money to UK aid. Its Corporate Procurement Unit works with Bank Group
clients to ensure the Group receives the best value for money in terms of price, fitness for use,
environmental efficiency, maintenance provisions, operating costs, guarantees, delivery and
installation, and payment terms. These activities are accomplished applying the highest level of
ethical standards for fair and equitable treatment of suppliers providing goods, works and services to
the Bank Group.
The ADB scored highly in DFID’s Multilateral Aid Review, creating confidence that the ADB has
robust procedures that will ensure production of quality outputs – securing value for money for DFID
funds.
Financial Case
A. What are the costs, how are they profiled and how will you ensure accurate
forecasting?
This programme of work is estimated to cost approximately £21.2m over the spending review period
(2011/12 – 2014/15) – with a small proportion being disbursed in 2015/16.
Table 3: Profile of Costs (£)
Component
2011/12
ADB: Economic Integration
Partnership(£3.125m approved)
World Bank: Expanding Trade in
Electricity, Goods and Services
(£400k approved)
2012/13
2013/14
2014/15
2015/16
TOTAL
1,170,000
780,000
780,000
395,000
3,125,000
400,000
400,000
World Bank; South Asia Regional
Integration Partnership (SARIP)
2,247,000
2,457,000
1,882,000
6,586,000
IFC; Inclusive Growth in South
Asia through Regional Trade and
Investment (SARTI)
2,500,000
1,900,000
1,850,000
6,250,000
World Bank: Central Asia Energy
and Water Development Program
(CAEWDP)
1,250,000
950,000
950,000
3,150,000
Strategic Bilateral Fund (DFID)
Programme implementation
&M&E support
Co-ordination post
TOTAL
400,000
300,000
300,000
300,000
900,000
50,000
50,000
50,000
150,000
216,667
216,667
216,667
650,000
7,517,000
6,437,000
5,812,000
395,000
21,211,000
Costs will be broadly broken down as above.
ADB funding (£3.125m) was approved under a separate business case in December 2011.
£400,000 WB allocation under a separate business case approved in January 2012 for the South Asia
Regional Integration Programme of expanding Trade in electricity and goods and services. The
remaining allocation to the WB will support the Partnership Framework for South Asia Trade
Expansion Programme, and a secondment to the WB office in Almaty to assist primarily with regional
energy coordination.
Provision has been made within the budget for independent monitoring and evaluation against agreed
results, should that become necessary. Programme funds have also been earmarked to enable one
person to assist with programme coordination, lesson learning and delivery.
The allocations for support to the IFC managed SARTI and WB managed CAEWDP will be provided
to each agency once separate interventions and work programmes for funding have been prepared.
These interventions will be considered with guidance by the Asia Regional Board to the Director of
AsCOT.
The allocation for the Strategic Bilateral Fund will be agreed based on separate interventions being
considered by ART’s Team Leader.
B. How it will be funded: capital/programme/admin
Funding will be drawn from the programme budget agreed within the Asia Regional Operational Plan
under the wealth creation pillar.
C. How funds will be paid out
DFID will transfer funds to the WB, ADB, IFC in instalments upon written request for payment by these
organisations based on an agreed payment schedule. Payments will be made subject to proof of
need and to the DFID lead adviser and programme manager’s satisfaction.
DFID funding for local think tanks and business organisations will be managed through standard DFID
contracts and payment against those contracts will be administered in line with blue book procedures
and ADAMANT principles.
D. What is the assessment of financial risk and fraud?
Partnership agreements between DFID and the WB, IFC and ADB will clearly set out the purposes for
which DFID’s funds should be used. If at any stage DFID believes that its funds have not been used
for the intended purposes, DFID will have the right to terminate funding and seek to recover those
funds.
E. How expenditure will be monitored, reported, and accounted for?
Monitoring, reporting and accounting will follow WB, IFC and ADB standard policies for partnerships of
this nature. As such, the multilaterals will be responsible for the supervision and execution of activities
for each of their respective partnerships. Each organisation will provide one financial report, on an
annual basis. The format and content of the financial report shall be consistent with their accounting
systems and will include progress against the logframe indicators.
The WB, IFC and ADB will provide DFID with an annual audit report (within six months following the
end of each fiscal year).
Monitoring procedures for funding to think tanks and business organisations will be set out in the
terms and conditions of the contracts agreed. Payment to suppliers will be made on the basis of
completion of work against agreed milestones and a statement of accounts clearly showing how DFID
funding has been utilised. Final statement of accounts would also be expected on contract completion.
In addition, DFID can request, on an exceptional basis, a financial statement audit from the WB, IFC
and ADB external auditors. DFID and the relevant institution will first consult as to whether such an
external audit is necessary. Following agreement on the scope and terms of reference, the relevant
institution will arrange for such external audit. The costs of which will be borne by DFID.
Management Case
A. What are the Management Arrangements for implementing the intervention?
Overall programme management of the trade programme will reside with the A1 Team Leader and Senior
Economics Adviser within DFID’s Asia Regional Team, with support from the B1 programme manager (on
financial and project management issues), a B1(D) economist and A2 Results Adviser. Day to day
management will be delegated to the Programme Coordinator who will be based in Delhi. The Team
Leader will report to and seek guidance from the Asia Regional Board on a 6 monthly basis, using a
common reporting structure (with a clear line of site from activities to outputs to results), which has been
agreed with each implementing partner. Reporting in this manner will provide the opportunity to not only
consider progress against results but to also ensure that this is done in a manner that promotes value for
money (from an economy, efficiency and effectiveness perspective).
Delivery of the programme will occur at three levels, Level 1 technical coordination, Level 2 strategic
engagement with senior managers and partners at a sub-regional level and Level 3 strategic engagement
with senior managers and other partners at a regional level. Within each level, management will occur
through:




Delivery of programmes – within an agreed and shared format for each intervention;
The management of points of interaction between each intervention;
The role of the regional coordinator/programme delivery staff to manage interaction not only
between each intervention but also with broader platforms for engagement; and
Assembly points to agree on progress against results, and decide next steps.
Level 1: Formal programme coordination will occur between the managers of the various interventions –
and the regional coordinator on an annual basis to monitor progress and adjust outputs based on changes
in demand and information on results. Within year, there is also scope to reallocate resources to maximise
the potential impact of each programme, and generate synergies between the various work programmes.
The actual management arrangements for each intervention are/will be set out within the Memorandum of
Understanding, or similar agreement, that DFID will have with each multilateral.
For the WB SARIP programme, given the ‘start up’ nature of the programme, the reallocation of resources
to different outputs/work activities within year is expected to occur while respecting broader programme
objectives. To manage this, every 6 months a progress report will be submitted and used as a basis for
refining the annual work programme and preparing the subsequent year’s work programme. This process
will also allow for the identification of new work activities/outputs and provide scope to refine or drop others.
An example of this is if progress on a particular activity was slower than anticipated (e.g. electricity trade in
the eastern corridor) then resources could be reallocated to another outcome area where events were
proceeding at a faster pace.
For the ADB programme there is scope to participate in supervision missions of a particular output/work
activity, and to amend or make modifications to the work programme. The outcomes from these processes
of engagement will help inform choices surrounding future clusters of work.
These types of flexible management arrangement will be built into the interventions underpinning potential
support to the IFC and to the World Bank in Central Asia.
Discussions and the sharing of information will also occur with each intervention manager to identify key
inter-linkage points between programmes. An example of this could be how the World Bank in Central Asia
will coordinate activities with the World Bank on the CASA1000 programme: another could be between the
World Bank, IFC and ADB on trade facilitation along the eastern corridor.
The various programme posts, funded both by the World Bank and DFID, will have a key role in anchoring
and coordinating points of intersection, both between the interventions and with broader platforms of
engagement. Examples of how this could be achieved are:
 The DFID funded post in Central Asia in Almaty can provide the interface between the WB interventions
for Central Asia and South Asia and with CAREC;
 The WB funded post in Islamabad can provide the interface between donors on enhancing Pakistan’s
trade and economic relations with other South Asian countries and beyond (including energy trade with
Central Asia and India);
 The WB funded post in Delhi can provide the interface between the IFC, WB and ADB working on trade
facilitation issues along the eastern corridor; and
 The DFID funded coordination adviser in Delhi can i) coordinate work between the 4 intervention
managers, including the conduct of the formal Annual Review, ii) act as the liaison person between the
intervention managers, the Strategic Bilateral Fund, Country Offices and HQ (e.g. TPU), iii) identify key
issues for presentation and discussion at a strategic and regional level (see below), and iv) develop a
grid of regional trade conferences and events, and use the grid to maximise the opportunities for lesson
learning, not only between donors but also governments, parliamentarians, the private sector, think
tanks and civil society.
Level 2: Broader strategic coordination will occur on a regular basis through formal and informal
mechanisms managed along the western and eastern corridors (e.g. CAREC Annual Ministerial).
Senior managers, from the ADB, IFC, WB and DFID assemble at least annually at various regional events
such as the CAREC Annual Ministerial. Based on information provided through level 1 processes, these
events will provide an opportunity to i) shape the future direction of the programme ii) consider value for
money issues and iii) discuss the effectiveness of coordination mechanisms.
Level 3: Regional wide discussion - where say regional champions and think tanks can promote and
challenge the scope and pace of regional integration – will also occur at least twice a year.
There are a number of regional wide events, where regional issues can be discussed informally between
donors, think tanks and civil society organisations. These events can help formulate donor strategy
regarding regional cooperation, and help engage key stakeholders in the process of creating and
implementing strategy. One such event is the WB regional champions network which meets twice a year.
Management of the Initiative by World Bank, IFC and ADB
The programme will build on existing IFC, ADB and WB staffing and resources, except for the two
programme posts mentioned elsewhere.
For the ADB, the secretariat to be established within SARD and with Director/SARC as Head will be
responsible for the day-to-day management of the Facility, including the utilisation of funds. The secretariat
will regularly collaborate with relevant departments and offices to eliminate any duplication and/or conflict
with other similar fund operations or research activities promoted by ADB or other donors. The secretariat
will work with DFID and with ADB’s Department of External Relations to develop and implement an
information dissemination plan to identify effective dissemination venues and methods. Proposals will be
processed following the standard ADB procedures and will be administered by the proponent divisions
and/or Resident Missions. In line with the established ADB procedures, the second and third batches of
proposals will be circulated across the departments and shared with DFID for comments as part of the ADB
inter departmental review.
The WB South Asia Regional Integration Unit (SACRI) will be the managing unit for the WB element of this
programme. The WB will manage its programme in accordance with the Bank's policies and procedures
including the framework regarding anti-corruption and subject to the screening procedures that protect the
Bank from terrorist financing, as amended from time to time.
B. What are the risks and how these will be managed?
The key risks to successful completion of the intervention are set out within the project logframe, and are
captured in the matrix below.
Risk
Outcome to Impact
New major economic shocks affect
macro-economic stability in the
region
Governments do not pursue sound
macro-economic management and
other policies
Withdrawal of political support to
the regional agenda.
Political momentum is disrupted by
conflict or terrorism
Domestic and foreign private sector
are not able or willing to invest in
expanded economic production in
the region
Output to Outcome
Weak management of partnerships
by multilateral partners, leading to
sub-standard proposals and
analysis that do not inform or
inspire confidence in governments
and financiers.
Impact
Probability
High
Low
High
Medium
High
Low
High
Medium
Medium
Low
High
Low
Mitigation
The record of multilaterals in
managing these types of projects is
exemplary - they are the strongest
partners on offer. However, DFID will
have a co-ordinating team that will
continually review progress
The risks relating to macro-economic environment and conflicts are risks that all programmes will have to
work under. The multilaterals have sufficient experience in successful project completion and leveraging
private investment to manage these types of risks. Multilateral records in producing these results are strong
– if they cannot succeed, it is unlikely others could.
C. What conditions apply (for financial aid only)?
N/A
D. Monitoring and Evaluation
Programme interventions will be wholly managed by the WB, IFC and ADB, and DFID to a large extent will
rely on their internal monitoring and evaluation procedures for this programme.
DFID will play an active role in bringing these processes together through i) establishing baseline indicators
(with the WB and others) at a workshop to be held in around December 2012, and ii) participating in and
bringing together the annual reviews being conducted by each multilateral to assess progress against
milestones and consider necessary changes to maximise the likelihood that the outcomes will be achieved.
By these means – and with the support of the coordination post - it is expected that over time the outputs of
the programme may not have to be set out in the logframe on an agency by agency basis, but in line with
the 5 outcome areas described in the WB Partnership document (See Annex B)
Monitoring the progress of the programme will take place through standard DFID reporting processes.
There will be an end of programme report evaluating the success of the intervention and annual reviews
will be completed using reporting provided by multilateral partners with progress towards results measured
against the overarching logframe.
Further independent evaluation will be considered as the programme progresses. Whether or not this is
necessary will be considered by DFID in consultation with its multilateral partners, but the expectation is
evaluation will be a feature of the programme. A budget has been included within the business case for
this eventuality.
E. Risk Assessment
Overall the programme is assessed to be of medium risk.
The key risk to the programme is that interventions do not lead to regional programmes. The commitment
of the region to implement regional programmes can be complicated by the vested interests of certain
parties. Historically this risk would be judged to be high, and on balance probably remains so. However
the increasing number of cross border investments – implemented with support from a range of agencies is testimony to the increasing likelihood that the undertakings of the programme will lead to downstream
investments.
The ability of multilaterals to engage with the region to develop sound programmes is also a high impact
risk. It is however judged to be low due to multilateral partner links to the region through SAARC and in
particular SASEC. As part of this process, and as set out in the partnership agreements, DFID will expect
that all multilateral partners do not duplicate and/or conflict with other similar fund operations.
The results and benefits of the programme will be managed jointly by DFID, the WB, IFC and ADB through
the use of a logframe (attached at annex C). This has been developed in consultation with the multilateral
partners and will be reviewed at regular intervals throughout the life of the programme and used for the
completion of annual reviews. DFID, where possible and relevant, have the option of joining review
missions carried out by multilaterals related to grant agreements and in addition will receive reports of the
main findings and results of such missions.
Attachments
Annex A:
Annex B:
Annex C:
SARTIP Intervention Summary
WB: Partnership Agreement and Work Programme.
SARTIP Logframe
1DfID
Bilateral Aid Review
Krishna, Devashish Mitra, and Asha Sundaram, ‘Trade, Poverty and the Lagging Regions of South Asia’,
NBER Working Paper No. 16322, September 2010
3 Ahmed and Ghani, South Asia’s Growth and Regional Integration, in ‘South Asia – Growth and Regional
Integration’, p31
2Pravin
4CUTS and the Asia Foundation, ‘Cost of economic non-cooperation to consumers in South Asia’.draft
report, February 2012.
5ADB 2011. Binding Constraints to Regional Cooperation and Integration in South Asia
6WB, Doing Business, 2011
7PrabirDe and Biswa N. Bhattacharyay, ADB Institute Discussion Paper No.78: Prospects of India-Bangladesh
Economic Cooperation, p31
8Kochhar, Kalpana (2012), WB presentation at Chief Economist Advisory Committee
9WB. 2007. SouthAsia Growth and Regional Cooperation. Washington, DC.
10(WB Document), Central Asia Energy Development and Water Programme, Multilateralving Forward, 2011-14.
11 L Alan Winters (2004). ‘Trade liberalisation and economic Performance: an overview*’. The Economic Journal,
114 (February), F4–F21
12Winters, A. L. and Masters A. (2010) “Openness and Growth: Still an Open Question?”
13Winters, A. L. and Masters A. (2010) “Openness and Growth: Still an Open Question?”
14Kowalski, P. (2011), “Comparative Advantage and Trade Performance: Policy Implications”, OECD Trade
Policy Working Papers, No. 121, OECD Publishing.
15Winters, A. L. and Masters A. (2010) “Openness and Growth: Still an Open Question?”
16 In particular requiring the economic growth rate to be greater than the growth rate of the population
17Kraay, Aart (2005). ‘When is growth pro-poor? Evidence from a panel of countries’.Journal of Development
Economics 80 (2006) 198– 227
18 http://www.worldbank.org/en/news/2010/03/19/results-profile-china-poverty-reduction
19Pravin Krishna, Devashish Mitra, and Asha Sundaram, ‘Trade, Poverty and the Lagging Regions of South
Asia’, NBER Working Paper No. 16322, September 2010
20 Taken from Financial Times website on 2 nd November 2011: http://www.ft.com/cms/s/0/3b65d332-0567-11e1a429-00144feabdc0.html#axzz1lDrht8Kc
21 As noted in Kochhar, Kalpana (2012), WB presentation at Chief Economist Advisory Committee
22 Accessed from http://www.newagebd.com/2010/jan/14/oped.html
23Llanto, Gilbert. 2010. Binding Constraints to Regional Cooperation and Integration in SouthAsia. Chapter 2,
page 76 (unpublished paper prepared for SARD/ADB).
24UNCTAD Statistics
25 The Asian Development Bank serves as the secretariat for CAREC
26 As in the work being conducted under ‘Expanding Trade in Electricity, Goods and Services between Pakistan
and its neighbours’
27 Ibid
28CASAREM request for WB involvement in CASA 1000 project
29 The four countries along this ‘corridor’ are India, Bangladesh, Nepal and Bhutan
30 All else being equal; particularly inputs like oil prices
31 The conference is scheduled for mid-2012 with the objective of leveraging investment
32CAREC; member countries are Afghanistan, Azerbaijan, China, Kazakhstan, Kyrgyz Republic, Mongolia,
Pakistan, Tajikistan, Turkmenistan and Uzbekistan
33Arora, Sukhwinder (2011).Inclusive growth in South Asia through regional trade and investment regional
investment facilitation fund
34ODI, ‘Integrating poverty and social analysis into Aid for Trade programmes: trade facilitation and trade-related
infrastructure’, Tips and tools for Aid for Trade, inclusive growth and poverty reduction, Brief 3, September 2010
35 John S. Wilson and TsunehiroOtsuki, ‘Cutting Trade Costs and Improved Business Facilitation in South Asia,’
in South Asia Growth and Regional Integration, 2007
36For example see; Hummels, David; Minor, Peter; Reisman, Matthew; and Endean, Erin. 2007.
“Calculating Tariff Equivalents for Time in Trade.”Prepared for USAID Bureau of Economic Growth, Agriculture
and Trade Arlington, VA: Nathan Associates Inc.
37 Bernard Hoekman& Alessandro Nicita, ‘Assessing the Doha Round: Market access, transactions costs and aid
for trade facilitation,’ Journal of International Trade & Economic Development, Vol. 19(1), 2010.
38Massimiliano Cali, Dirk Willem teVelde, Does Aid for Trade Really Improve Trade Performance?,LSE, ODI,
June 30, 2009
39Pravin Krishna, Devashish Mitra, and Asha Sundaram, ‘Trade, Poverty and the Lagging Regions of South
Asia’, NBERWorking Paper No. 16322, September 2010
John S. Wilson and TsunehiroOtsuki, ‘Cutting Trade Costs and Improved Business Facilitation in South Asia,’
in South Asia Growth and Regional Integration, 2007
41Prabir De, Abdur Rob Khan and Sachin Chaturvedi, ‘Transit and Trade Barriers in Eastern South Asia: A
Review of the Transit Regime and Performance of Strategic Border-Crossings’, Asia-Pacific Research and
Training Network on Trade Working Paper Series, No. 56, June 2008.
42ODI, ‘Integrating poverty and social analysis into Aid for Trade programmes: trade facilitation and trade-related
infrastructure’, Tips and tools for Aid for Trade, inclusive growth and poverty reduction, Brief 3, September 2010
40
43
World Bank (2008) Potential and Prospects for Regional Energy Trade in the South Asia Region.
South Asia Regional Cooperation Programme.
44
http://www.globaltransmission.info/archive.php?id=3976
Gilbert. 2010. Binding Constraints to Regional Cooperation and Integration in South Asia. Chapter 2,
page 76 (unpublished paper prepared for SARD/ADB).
45Llanto,
46Evaluation
47
of the Paris Declaration (2011). OECD/DAC
Recent evidence suggests that, for long haul flights, business class and first class seats account for GHGs
emissions that are respectively 2.9 times and 4 times greater than those for economy seats (DEFRA, 2009;
Kollmuss&Crimmins, 2009
48 (ADB), (Aug 2010)Report and Recommendation of the President to the Board of Directors: Proposed Loan
People's Republic of Bangladesh: Bangladesh–India Electrical Grid Interconnection Project
49Accessed from http://unctadstat.unctad.org/TableViewer/tableView.aspx.
50IFC presentation; Figures sourced from a forthcoming research paper (Subramanian, Anderson and Lee (2011)