A Framework for Financing Transport Connectivity in the BIMSTEC Region

The BIMSTEC region needs significant improvements to achieve an efficient transport network. Photo credit: ADB.

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Involves economic analysis, capturing and enhancing project value, institutional collaboration, and financing through standardized processes and targeted funds.


Transport connectivity is essential for regional cooperation and integration. An efficient transport network boosts free trade area, promotes trade and investment, and advances cooperation in tourism and cultural exchanges. The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) region still has a long way to go to achieve an efficient transport network, as its infrastructure remains underdeveloped. To address this, BIMSTEC member countries adopted the BIMSTEC Master Plan for Transport Connectivity in March 2022.[1]

The Master Plan identifies 267 transport projects requiring about $124.4 billion in investments over 2018–2028. Viable financing remains a major challenge for developing and implementing these projects. A comprehensive and sustainable financing framework is vital for their success.  

Key Facets Affecting the Financing of Transport Projects

The financing of transport connectivity projects in the BIMSTEC region is influenced by four key facets: financing resources, financing, private sector participation, and regional institutional structure/enablers.

Figure 1: Key Facets Affecting the Financing of Transport Projects

PPP = public–private partnership, NBFI = nonbank financial institution
Source: ADB. 2023. Financing Transport Connectivity in the BIMSTEC Region. Manila.

  • Insufficient government funding. Government budgets, the primary funding source for transport projects, are constrained by rising debt and fiscal deficits. In 2023, all BIMSTEC member states had fiscal deficits exceeding the 3% of GDP threshold (Figure 2).
  • Limited financing options. Most BIMSTEC countries have nascent capital markets, relying mainly on over-the-counter lending by domestic commercial banks and specialized nonbank financial institutions. Institutional funds, such as pension, insurance, and private equity funds, have limited participation.
  • Lack of private sector interest. Transport projects often have difficulties to attract private investors due to long gestation periods and high construction risks. BIMSTEC countries generally lack experience with public–private partnerships (PPPs) in transport infrastructure. 
  • Inadequate institutional structure and enablers. The region lacks a comprehensive framework and sufficient institutional capacity for planning, preparing, implementing, and monitoring cross-border transport projects. Diverse technical standards and varying policy and regulatory environments further complicate regional transport projects.

Figure 2: Government Debt and Fiscal Deficits of BMSTEC Member States, 2023
(% of GDP)

Source: Central Banks of various countries.

Proposed Overarching Financing Framework

Developing an overarching financing framework for BIMSTEC transport connectivity projects involves interventions across five main segments and themes, as shown in Figure 3.

Figure 3: Segments and Themes to Develop an Overarching Financing Framework

Source: ADB. 2023. Financing Transport Connectivity in the BIMSTEC Region. Manila.

Measuring and allocating economic value. Over 50% of BIMSTEC Master Plan projects in the planning stage have significant cross-border implications. Current economic analyses are conducted at the national level, often excluding neighboring country impacts. BIMSTEC countries should adopt a broader economic analysis framework to measure the shared economic benefits of cross-border projects.

Capturing economic value. Project bankability is crucial for attracting financing. A project is bankable if it has reliable mechanisms within a supportive environment to capture its economic value and generate sufficient income to cover costs. Options for funding include user charges, capital grants, and operational support through revenue or foreign exchange risk guarantees. Due to budget constraints, BIMSTEC countries should explore asset recycling, securitization, land-value capture, non-toll revenue sources, targeted taxation, and carbon pricing to raise funds.

Enhancing value. Attracting private players through various PPP modalities can drive efficiency in developing and operating transport projects. BIMSTEC countries need to develop the capability to conduct financial and value-for-money assessments for PPP projects. Key considerations include robust project planning and preparation, risk-sharing model concession agreements, legal structures in concession agreements for special purpose vehicles, and effective dispute resolution systems.

Developing institutional capacity. Stakeholders, including project authorities, BIMSTEC governments, multilateral development banks, and development partners, must work together to improve project bankability. Country-level interventions should focus on enabling regulations for raising long-term capital and building institutional capacity. Multilateral and bilateral institutions can provide technical assistance to enhance project appraisal capacity. Multilateral development banks can offer credit and loan guarantees to deepen capital markets for institutional investors. Increasing the capacity of existing and new financing institutions and capital markets is crucial to fund transport infrastructure projects.

Channeling financing into projects. To enhance bankability, three interventions are proposed:

  1. Standardizing coordination and decision-making processes, following models like ASEAN and the EU.
  2. Encouraging BIMSTEC countries to create transnational regulatory regimes, standardized contract agreements, and harmonized technical standards.
  3. Recognizing BIMSTEC Master Plan projects as priority projects in member countries.

Ringfenced funding sources are needed for cross-border projects, often seen as high risk by commercial financers and competing with domestic infrastructure priorities. Two fund options under the proposed BIMSTEC Development Fund (BDF) are:

  • Fund A: Contributions from member governments to finance regional projects with significant social and economic benefits but limited commercial viability.
  • Fund B: Securing low-cost, long-term capital and attracting private sector investment for infrastructure development.

Additionally, establishing a regional financing hub in the BIMSTEC region can be considered.


Addressing the challenges in financing transport connectivity projects in the BIMSTEC region requires a multifaceted approach. The proposed financing framework offers strategies to bridge the financing gap. It is critical to maintain dialogues with BIMSTEC countries and other stakeholders to implement and refine this framework, overcoming financing bottlenecks to accelerate the implementation of transport connectivity projects.

[1] The BIMSTEC countries are Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka, and Thailand.


Asian Development Bank. 2023. Financing Transport Connectivity in the BIMSTEC Region. Manila.

Li Dongxiang
Lead Regional Cooperation Specialist, South Asia Department, Asian Development Bank

Li Dongxiang has 30 years of experience in development finance, project management, regional cooperation and integration, public-private partnership, and knowledge management. Mr. Li currently leads ADB’s support for the regional cooperation and integration initiatives of the BIMSTEC and the SAARC. He developed methodologies for cross-project learning, published prototype knowledge products, and established the Asian Think Tank Network. He served as director of the ADB Division in Ministry of Finance of the PRC, and advisor in the World Bank’s PRC Office.

Lani Garnace
Senior Economics Officer, South Asia Department, Asian Development Bank

Lani Garnace has over 15 years’ experience in the areas of socioeconomic research, project management, and knowledge management. She supports the regional cooperation and integration initiatives for BIMSTEC and SAARC, processing policy-based loan for Nepal, and other economic research work of SARC. She has a bachelor’s degree in statistics from the University of the Philippines and a master’s degree in public policy from Victoria University of Wellington.

Dhruv Gadh
Partner, PwC India

Dhruv Gadh oversees the transport and logistics practice at PwC India. He has worked with government institutions, multilateral agencies, and private sector players, advising them on policy, visioning, strategy, financing, and operations transformation. He has experience across various regions, including BIMSTEC, MENA, and Southeast Asia, and has closely worked on facilitating cross-border trade.

Asian Development Bank (ADB)

The Asian Development Bank is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

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