Easing barriers can unlock S Asias vast trade potential
KATHMANDU: Lifting visa restrictions and non-tariff barriers, and improving customs procedures are among a host of steps South Asian countries can take to boost private sector-led growth, thus unlocking the region’s vast economic potential, says a report prepared by Asian Development Bank (ADB) and Federation of Indian Chambers of Commerce and Industry (FICCI).
The report — ‘Key Proposals for Harnessing Business Opportunities in South Asia’ — follows a conference held in New Delhi in November 2009 which looked at challenges to increased trade and investment links in the region, along with possible solutions. The conference was co-organised by ADB, FICCI, India’s Ministry of External Affairs and South Asian Association for Regional Cooperation (SAARC).
South Asia — with a potential market of 1.5 billion people — has significant 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 remains modest compared to other parts of the world, and numerous impediments prevent the private sector 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, lifting growth, cutting poverty and strengthening regional integration, the report says. Among the steps it suggests are liberalizing a South Asia visa exemption scheme, adopting a regional motor vehicular agreement to speed up passage of goods carriers across borders and streamlining procedures at land customs stations. It notes that while South Asia has made steady progress in cutting tariff barriers, it still needs to address non-tariff issues like inconsistencies in regulations and the imposition of product quotas.
“Unlocking South Asia’s potential lies in the ‘god of small things’ — small steps that can have an enormous impact. This joint ADB-FICCI report outlines small, actionable steps in eliminating trade and investment barriers that will go a long way in deepening South Asian economic integration and bettering the business environment,” said Srinivasa Madhur, senior director of ADB’s Office of Regional Economic Integration.
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 dispute-settlement mechanism would all help improve the situation.
The report also highlights the need for South Asia to remove barriers to intra-regional investment, and to promote cross-border investment in areas such as hydropower, and other energy sector projects, which could support regional trade in energy and aid integration. It suggests allowing foreign FDI in excluded, or sensitive, sectors in specific ci-ties, urges countries to conclude bilateral investment treaties and double tax avoidance treaties and calls for a study into the establishment of an umbrella investment body for the region.