Harnessing South Asia'a economic potentials
Private sector-led growth in South Asian countries can receive a major fillip and unlock the region's vast economic potential provided member-countries of the South Asian Association for Regional Cooperation (SAARC) initiate steps like reducing visa restrictions and non-tariff barriers, and improving customs procedures. There are, obviously, many promising areas for effective and fruitful cooperation in private sector in the whole of South Asia.Writes Tareque Ahmed
Private sector-led growth in South Asian countries can receive a major fillip and unlock the region's vast economic potential provided member-countries of the South Asian Association for Regional Cooperation (SAARC) initiate steps like reducing visa restrictions and non-tariff barriers, and improving customs procedures.
The SAARC Chamber of Commerce (SAARC CCI), in collaboration with the Federation of Indian Chambers of Commerce & Industry and the Asian Development Bank (ADB), was earlier reported to have made a study on the prospects and problems of such a growth process. But effective follow-up actions are yet to come on the findings of the report.
There are, obviously, many promising areas for effective and fruitful cooperation in private sector in the whole of South Asia. However, challenges to increased trade and investment links in the region are also there. Those challenges need to be effectively addressed to harness the potential of growth.
South Asia has a potential market of 1.5 billion people. It has significantly comparative advantages in industries ranging from textiles and garments, to tourism, pharmaceuticals and information technology. But it is also home to half of the world's extreme poor, with 40 per cent of its total population living on less than $1.25 a day. Intra-regional trade in South Asia, however, remains still modest compared to other parts of the world. Numerous impediments prevent the private sector in this region from taking a bigger economic role.
Cutting non-physical barriers to trade and improving the climate for investment across borders will encourage greater private sector activity leading to economic growth, and regional integration. A South Asia visa exemption scheme, adoption of a regional motor vehicular agreement to speed up movement of vehicles carrying goods across borders, and to streamline procedures at land customs stations can be considered pro-active steps in this context.
South Asia has already made steady progress in cutting tariff barriers. But it still needs to address non-tariff issues such as inconsistencies in regulations, and the imposition of product quotas.
As the business leaders have been pointing out, time and again, the South Asian region is affected by various barriers to outward-looking private sector-led development and regional integration. It is also imperative that there is a strong accent on building robust infrastructure for connectivity.
Unlocking South Asia's potential lies in the 'good of small things' - small steps that can have an enormous impact. Small, actionable steps in eliminating trade and investment barriers can go a long way in deepening South Asian economic integration and bettering the business environment.
Creating a database and notification system for monitoring non-tariff barriers, improving the capacity for data collection, giving companies assistance to meet product standards, and establishing a disputes settlement mechanism would all help improve the situation.
There is no denying the need for the member-countries of the SAARC to remove barriers to intra-regional investment. If this need is effectively addressed, this can help promote cross-border investments in areas such as hydropower, and other energy sector projects. This will, in turn, support regional trade in energy and aid integration.
Allowing foreign direct investment in all areas excluding some sensitive sectors, should also be considered on a priority basis by the member-countries of the SAARC. Furthermore, accord on bilateral investment facilities and treaties on avoidance of double taxation can be the stepping-stones for promotion of intra-regional flow of capital for investment purposes. To deal with all such matters properly and effectively, the establishment of an umbrella investment body for the region deserves a favourable consideration.
( The Financial Express)
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