For some time, developing Nepal as a transit country for trade between India and China has been a matter of public discussion. Though this idea had been under consideration for the past couple of years, the King floated the idea some time back, and most recently at the SAARC summit in Dhaka. Any idea, before it is implemented, needs to be explored for its full implications, and it requires proper planning and the building of infrastructure of both hardware and software nature. Indeed, experts at a national seminar in the capital on Sunday stressed homework to enable Nepal to take full advantage of trade between the world’s two most populous and among the fastest growing economies, with their bilateral trade increasing at a fast rate each year, given their aggressive policies of economic liberalisation and trade promotion.

Suitability of Nepal as a transit point between the two is stressed on account of the distance between them through Nepal being 300 km. Indeed, Nepal’s transit role could greatly boost economic activities within the country itself, thereby promoting its rural economy and helping reduce poverty as a result. Other sectors such as tourism, communications, transport and warehousing, insurance, local business, and foreign direct investment would stand brighter chances for development, creating more jobs and income for the Nepalis. According to officials, taking this prospect into account, the government is upgrading the Arniko Highway and speeding up the construction of the Syabrubeshi-Rasuwagadhi Highway.

The need for Nepal is, therefore, to develop the proper infrastructure, facilities and policies that should make it sufficiently more attractive for the two neighbours to transact their business through its territory than through other points. The more Nepal could do it, the better for it. It should also take measures to free traders from hassles in customs handling, provide efficient and reliable banking services, provide security to businessmen as well as to the goods in transit. A fuller integration of Nepal into regional and global economy is also being emphasised by experts. Optimists have even indicated the possibility of Nepal expanding its trade beyond once it gathers momentum as a viable transit country. While the importance of infrastructure and ancillary services is vital, the resolution of the Maoist insurgency seems to be no less important to attract neighbouring and even domestic traders.