Blending Borders #12
Blending Borders #12
Blending Borders
A Fortnightly Newsletter
November 16th, 2021
Issue #12
This Newsletter explores ongoing issues and perspectives from India’s neighbouring countries, including - Sri Lanka, Bangladesh, Nepal, Myanmar, Bhutan, Maldives and Afghanistan.
In brief, I discuss:- Vaccine updates, DOD report on China’s military developments, Sri Lanka budget 2022, Bangladesh Islamic finance sector, India-Bangladesh energy, Sri Lanka organic farming industry, Regional Security Dialogue on Afghanistan
The Raging Pandemic
According to a local report, Sri Lankan Health Minister Dr. Keheliya Rambukwella said that the country is preparing to start administering a booster COVID-19 vaccine to its people and pointed out that very few countries have initiated booster shots to its citizens. The report says that the Minister stated that only two or three countries have resorted to such a program and regarded this move as a victory for the people of Sri Lanka.
Meanwhile, vaccines continue to be flown into the other neighbouring countries. On November 10th, Bangladesh received 3.2 million doses of the AstraZeneca vaccine from Poland. The consignment was divided into three batches and brought into Dhaka individually over a period of three days. Dhaka is set to receive vaccines from other countries as well. According to The Daily Star, the Asian Infrastructure Investment Bank (AIIB) will provide $750 million for vaccine purchase and help the country revive its economy while fighting the pandemic. Of the $750 million, AIIB will most likely provide $500 million for procuring vaccines under the 'Bangladesh Responsive Covid-19 Vaccines for Recovery Project'. Another report stated that Bangladeshi Foreign Minister Dr Abdul Momen said on November 11th that the U.S will be providing 14 million additional vaccines to Bangladesh under the COVAX scheme. Finally, France made an announcement of sending 2 million vaccines to Bangladesh following a meeting between French President Emmanuel Macron and Bangladesh Prime Minister Sheikh Hasina on November 9th.
The Kathmandu Post (TKP) reported that Nepal received 492,000 doses of the AstraZeneca vaccine on November 10th, provided by the Swiss government and the COVAX facility. On the same day, the Himalayan nation also received 1.6 million doses of the Vero Cell vaccine from China. Additionally, the Chinese army gifted 300,000 doses of the Vero Cell vaccine as a friendly gesture to the Nepali army, according to TKP.
A local report stated that a batch of 2 million doses of the Chinese Sinopharm vaccine arrived in Myanmar on November 12th. And finally, the Northeast Indian state of Mizoram is planning to extend a helping hand to those refugees taking shelter in the state by providing COVID-19 vaccines, according to a health department official as stated in a report.
DOD Report on China’s Military and Security Developments
The Department of Defense released its annual report to the Congress titled ‘Military and Security Developments Involving the People’s Republic of China (PRC) 2021’. The report provides a comprehensive look at the military developments in China and its future strategies so it is definitely worth a read. There is minimal information in the report on China’s security strategy towards the Indian subcontinent but there are a few noteworthy points I would like to include here. First and foremost is regarding the possible construction of naval or military bases in Sri Lanka and Myanmar. A point in the report under a section titled ‘PLA’s Overseas Basing and Access’ says:
''Beyond its base in Djibouti, the PRC is pursuing additional military facilities to support naval, air, ground, cyber, and space power projection. The PRC has likely considered a number of countries, including Cambodia, Myanmar, Thailand, Singapore, Indonesia, Pakistan, Sri Lanka, United Arab Emirates, Kenya, Seychelles, Tanzania, Angola, and Tajikistan, as locations for PLA facilities''
Although this was the only point mentioned, it is of utmost significance as it indicates a profound Chinese interest in strengthening its military strategy in the Indian subcontinent and the conversion of infrastructure facilities for military purposes, which could be seen as a dangerous move in the eyes of India and the West. Do read the full report here if you are interested in knowing more details.
Highlights from Sri Lanka’s 2022 Budget Report
The 76th budget report was recently presented by Finance Minister Basil Rajapaksa under the policy framework of the government of HE the President Gotabaya Rajapaksa, “Vistas of Prosperity and Splendour”. The budget proposed to raise revenues from a revised 1,556 billion rupees in 2021 (9.4 percent of GDP) to 2,284 billion rupees (12.3 percent of GDP) in 2022. The aim is to reduce the budget deficit down from 1,826 billion rupees (11.1 percent of GDP) to 1,628 billion rupees (8.8 percent of GDP). The report included a bunch of key tax-related and non-tax related provisions that I will include below:
* Imposition of a Surcharge Tax at the rate of 25 percent on individuals or companies who have earned a taxable income over Rs. 2,000 million for the year of assessment 2020/2021
* Charging “Social Security Contribution” on the liable turnover over Rs. 120 million per annum at the rate of 3 percent. This contribution is charged with effect from April 1, 2022
* Increase of Value Added Tax charged on supply of financial services by financial institutions from 15 percent to 18 percent. The levy is to be paid every month from January 1, 2022 to December 31, 2022
* Excise Duty (Special Provisions) of Cigarettes Revision of Excise Duty on Cigarettes
* Excise Duty on Liquor under Excise Ordinance Revision of Excise Duty on Liquor
* Levying a fee in respect of vehicles which undergo motor traffic accidents and allowing the insurer to reimburse the fee from the insurance
* Levying a fee for modernization, modification or upgrading of vehicles
* Legalizing all unauthorized roadworthy motor vehicles and motorcycles by paying a penalty during a period of amnesty
* Release all vehicles stationed at Sri Lanka Customs because of non-payment of tax or other reasons for release after charging relevant taxes and a fine
* Issuing a licence for conducting leisure-related activities for special premises which are developed as special zones
You can read the full budget speech (in English) here to know more.
Also, Deloitte has prepared an excellent review of the important highlights from the budget 2022 for its clients and staff that you can additionally read here.
Prospects for Sri Lanka’s Digital Economy
The Information and Communication Technology Agency (ICTA) of Sri Lanka in collaboration with UNCTAD (United Nations Conference on Trade and Development) launched a Policy Paper on the Digital Economy of Sri Lanka at a virtual event held recently. The paper is titled ‘Digital Economy of Sri Lanka: National Goals and Lessons from the South’. To briefly summarise, the paper talks about the positive prospects of Sri Lanka’s digital economy in contributing to its overall GDP. The Digital Economy in Sri Lanka, estimated to be USD 3.47 billion or 4.37% of GDP, is gradually emerging. The paper discusses Sri Lanka's lessons from the most advanced digital economy in the South, the People’s Republic of China. (PRC), in context of its national policy framework of ‘‘Vistas of Prosperity and Splendour’’ that the recent budget is based on. Under this framework, Sri Lanka identified ‘Building a Technology-based society’ as a key national initiative.
The paper finds that:
*in size and administration, the two nations (China and Sri Lanka) are hardly comparable. Still, there are many lessons in moving towards an advanced digital economy. Replicating these lessons does not depend only on willingness but also on the country’s readiness. Given Sri Lanka’s current capabilities, it could take some measures immediately, but others would have to wait. For example, Sri Lanka may not be prepared to immediately supply AI products or autonomous electrical vehicles to the global market. On the other hand, there is a mature market for e-commerce, education technology, or fintech. It is essential that the successful international approaches are correctly identified and integrated into the digital economy strategy of Sri Lanka for achieving the stipulated targets*
You can view and read the full paper here.
Bangladesh Islamic Finance Development
A recent report by Fitch Ratings stated that a recent policy push by the Bangladesh government to develop Islamic finance could if sustained, spur the industry’s growth. According to the report, the Islamic finance sector has immense potential to drive economic growth, with strong public demand for Islamic products and the country’s robust economic prospects. It further states that Bangladeshi authorities have approved a number of conventional banks to convert into Islamic banks in the last few years, stimulating the sector’s expansion. In fact, Islamic banks constitute over 95% of the country’s Islamic finance industry. Within Bangladesh’s banking sector, Islamic banks accounted for around 27% of deposits, 28% of loans and advances, and 38% of remittance handling.
The report also talks about the long-standing constraints that have stood in the way of the Islamic finance sectors growth in the last few years. Some of these include:- the lack of comprehensive regulations governing the industry and weak enforcement of financial regulation in general, a dearth of Islamic liquidity management and investment products, a lack of standardisation in the country’s Islamic finance sector, limited skilled human capital, and inadequate use of fintech solutions by stakeholders.
India-Bangladesh Energy Infrastructure Project
A report by Mint said that India’s Tata Projects Limited has received an order for a 400kV double circuit transmission line project valued at around $120 million (around ₹900 crores) from the Power Grid Company of Bangladesh Limited (PGCB). The development comes as India extended its Line of Credit to Bangladesh on energy investments. The report quoted excerpts from a statement by Tata projects saying, “The transmission line shall result in the expansion of high-voltage transmission infrastructure in the northern parts of Bangladesh. It will also facilitate 1,600MW power transmission from a power plant based in Jharkhand to Bangladesh.”
Moving on, The Daily Star (TDS) reported that a few Japanese firms are keen on entering Bangladesh’s e-commerce market, according to the Japanese Ambassador to Bangladesh Ito Naoki. Despite some challenges, some Japanese companies will be visible through e-commerce platforms in Bangladesh, he said while addressing a session on "Ecommerce & Digital Business - Flourishing Sector to Lead the Future" at a four-day World Congress on Information Technology (WCIT) Bangladesh 2021 at Bangabandhu International Conference Center.
Finally, a local Indonesian news report said that the country is keen on enhancing industrial cooperation with Bangladesh and Sri Lanka as agreed upon during the second Regional Conference on Industrial Development (RCID), held on November 10-11, 2021 in Jakarta. Apart from cooperation in the industrial sector, Indonesia is also looking at strengthening ties with Sri Lanka on education and vocational training in schools and polytechnics as well as cooperation on research and development and textile industry innovation, said Sri Lankan Industry Minister Wimal Weerawansha, Kartasasmita in the report.
Sri Lanka’s Organic Farming Industry
The Hindustan Times reported that India recently supported Sri Lanka’s organic farming industry by delivering 100 tonnes of Nano Nitrogen liquid fertilizers on November 4th. Sri Lanka is facing a severe shortage of fertilizers after the ban imposed on chemical fertilizers by President Gotbaya Rajapaksa. India, therefore, stepped in to support the fertilizer industry.
Meanwhile, the Sri Lankan government has approved a series of policy guidelines with regard to power generation including a proposal to generate 70 percent of the country’s electricity from renewable sources by 2030. Some of the other proposals include a decision to forego the construction of new coal power plants and to neutralise net carbon emissions from power generation by 2050, said a report.
Nepal too is stepping up in its energy relations as it plans to sell its surplus electricity to India at a competitive rate after the Indian government allowed it to indulge in power trade in the Indian power exchange market. MoneyControl reported that in the first phase, 39MW power, including 24MW produced by NEA-owned Trishuli hydropower and 15MW Devighat powerhouse, has been permitted for trading in Indian Energy Exchange. This is a positive development in energy relations between the two neighbours.
Bangladesh, Maldives Commit to Develop a Climate-Smart Health Care System
The World Health Organization (WHO) put out a press release on November 9th saying that a group of 50 countries committed to developing climate-resilient and low-carbon health systems at the UN Climate Change Conference in Glasgow (COP26), in response to the growing threat of climate change. Of these countries, Bangladesh and the Maldives are committed to enhancing the climate resilience of their health systems.
''The Maldives Health Sector is fully committed to executing the National Green Climate Smart Hospital Policy and Strategy to establish a climate change resilient health system with environment friendly technologies resulting in energy-efficient services and a low-carbon footprint'', said Ahmed Naseem, Minister of Health in the Maldives.
Also, check out this very insightful National Climate Funds Tracker created by the Global Policy Development Center, Boston University. It is an interactive graph that presents the first inventory of national climate funds across 39 countries and tracks their major attributes, including scope, legal form, host country and more.
Regional Security Dialogue on Afghanistan
The Third Regional Security Dialogue on Afghanistan was held on November 10th in New Delhi. According to a press release published by the Ministry of External Affairs in India, the key aspects discussed included the current political scenario in Afghanistan, threats of terrorism, drug trafficking and the need for humanitarian relief. Some of the key points agreed upon (as stated in the press release) by officials who took part in the dialogue include:
- Emphasized the importance of ensuring that the fundamental rights of women, children and minority communities are not violated.
- Expressed concern over the deteriorating socio-economic and humanitarian situation in Afghanistan, and underlined the need to provide urgent humanitarian assistance to the people of Afghanistan
- Called for a collective cooperation against the menace of radicalization, extremism, separatism and drug trafficking in the region
- Reiterated strong support for a peaceful, secure and stable Afghanistan while emphasizing the respect for sovereignty, unity and territorial integrity and non-interference in its internal affairs
- Recalling the relevant UN Resolutions on Afghanistan, the participants noted that the United Nations has a central role to play in Afghanistan and that its continued presence in the country must be preserved
That’s it for today! I hope you enjoyed this issue.
Suggested Reads
1. U.S. Policy Toward Myanmar’s Military Junta - Zachary Abuza - War on the Rocks
2. Threat and Perceptions in the Himalayas: The complexity of Bhutan - Harsh V. Pant and Aditya Gowdara Shivamurthy - ORF
3. India Has Lost its Leverage in Afghanistan - Michael Kugelman - Foreign Policy
4. Too Close for Comfort: Southeast Asia’s Attempt to Balance with Russia Against China - Lucas Myers - Wilson Centre
5. Takshashila Discussion Document – Taliban’s Afghanistan Takeover - Shrey Khanna - The Takshashila Institution
6. Nepal and a Feminist Foreign Policy - Avasna Pandey - South Asian Voices
7. COP26 is a Chance to Protect the Most Valuable and Vulnerable: The effects of climate change in coastal Bangladesh - MD Roushon Jamal - Asia & The Pacific Policy Society
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This Newsletter is written by Ameera Rao, a Research Assistant at the Takshashila Institution. She has previously completed a BA (Hons) in International Relations from King’s College London.