Fifty years of Nepal-Bangladesh relations: a friendship with great potential

President Abdul Hamid during a meeting with his Nepalese counterpart, Bidhya Devi Bhandari, at his residence in Kathmandu on November 13, 2019. Photo: PID

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President Abdul Hamid during a meeting with his Nepalese counterpart, Bidhya Devi Bhandari, at his residence in Kathmandu on November 13, 2019. Photo: PID

Nepal and Bangladesh celebrated 50 years of diplomatic relations on April 8, 2022. Nepal was the seventh country to recognize Bangladesh as an independent country in 1972. During the Bangladesh Liberation War, Nepalese political leaders lent support ideological and material to a free Bangladesh. Nepal recognizing the independence of Bangladesh, the Pakistani leaders of the time severed their relations with Bangladesh. The government of Bangladesh has always held Nepali politicians in high regard for their contribution to the independence of Bangladesh.

Since the establishment of diplomatic relations, the two countries have maintained excellent relations and supported each other in various international and regional political and economic forums. Nepal and Bangladesh started their official trade with the opening of the Kakarvitta-Phulbari-Banglabandha transit road in 1997. Bangladesh invited Nepal to use Mongla Port facilities for its trade with a third country as well as rail transit via Rohanpur for easy and cost effective transportation. bilateral exchange. In 1978, the two countries established a Joint Economic Commission (JEC) at the Ministry of Finance to enhance bilateral trade and investment. A Ministry of Foreign Affairs consultation mechanism was also established in July 2012 in Dhaka at the level of the Ministry of Foreign Affairs to discuss and review bilateral relations.

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Energy is key to strengthening ties in the days to come, due to Bangladesh’s huge energy needs for its rapidly growing industries. Bangladesh could invest in Nepal’s hydroelectricity and import excess energy from Nepal, as the latter has the potential to produce 43,000 MW, while Bangladesh’s needs in 2035 will be 35,000 MW. Dhaka has already formulated a strategic energy policy to import 10,000 MW from Nepal. Last year, the Bangladesh Power Development Board asked India’s energy ministry to allow Bangladesh to import 450 MW of hydropower from Nepal. India has given a positive response to the proposal and soon cross-border power trade could start.

The first Nepal-Bangladesh Business Forum was jointly organized by the Bangladesh Embassy headed by Ambassador Mashfee Binte Shams and the Asian Institute of Diplomacy and International Affairs (AIDIA) in Kathmandu a few years ago. AIDIA has facilitated field visits to different hydropower sites for business leaders. AIDIA played a key role in bringing FNCCI-FBCCI together on the same table for the signing of a Memorandum of Understanding on January 24, 2016. The Government of Nepal must pay attention to the signing of the Bilateral Promotion and Protection Agreement (BIPPA) with Bangladesh to secure the USD 1 billion in FDI from the Government of Bangladesh, and an additional USD 2 billion from the private sector that will help generate and export power to Bangladesh from Nepal. It will enable Nepal to be a net energy exporting country in South Asia and will help reduce its trade deficit with Bangladesh and improve its foreign exchange reserves.

To advance bilateral relations and create a strong bond, the two countries need to review the past five decades of their travels and formulate active policies in the field of hydropower, trade, infrastructure development, etc. Nepal must learn from the rapid rise of Bangladesh and must harness the potential of bilateral engagements. For example, Bangladeshi conglomerate Summit Power has invested in West Bengal for power generation and another company, Summit Alliance Port Limited, operates inland waterway terminals in Kolkata and Kalughat. Similarly, Pran RFL has established food processing factories in some states of Nepal, but we are still unable to tap into the opportunities offered by Bangladesh due to our weak economic strategies. Therefore, the government should encourage and support the Nepalese private sector to engage with Bangladeshi businesses.

Sunil K.C. is Managing Director of the Asian Institute of Diplomacy and International Affairs (AIDIA), a Kathmandu-based foreign policy think tank, and Advisor to the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).