An Echelon Media Company
Monday May 17th, 2021

Private sector needs to do more in South Asia

ECONOMYNEXT, New Delhi — The first South Asia Economic Conclave got underway in New Delhi yesterday with a call for private businesses to take on a more active role in regional integration in the absence of inter-governmental initiative.

The eight-country South Asia Association for Regional Cooperation (SAARC) is in its thirtieth year and the region remains the least integrated in the world mainly because of persisting political tensions between the two biggest economies India and Pakistan and occasional irritations among the other countries.

The Confederation of Indian Industry and business chambers of the other member countries organised the conclave to help business leaders build person-to-person contacts and discover new ideas on how the private sector can push the South Asia integration agenda forward.

Business leaders, economists, academics, diplomats, policy makers and bureaucrats joined musicians and artists at the three-day conclave titled ‘Achieving Inclusive Growth through Deeper Economic Integration’.

“The SAARC region is home to the majority of the world’s poor and regional integration can improve a billion lives. The only way China or the ASEAN -bloc of East Asian countries made progress and became economic forces to reckon with was because they developed trade within the region, and these counties had very little in common when they started out” Ishrat Hussain, Dean Institute of Business Administration Pakistan told the conclave.

“At the time East Asia was divided, we had so much in common. South Asia had a shared culture, laws and we were a natural economic region before 1947, since then we created many man man-made barriers. But young people today don’t carry that baggage, they see these barriers as inconveniences to their aspirations,” he said.

“We shouldn’t leave regional integration with governments because narrow minded politicians could quickly and completely demolish any hopes of integration. It is up to the private sector, to take the initiative,” Hussain said.

Indrajit Coomaraswamy, Former Director of Economic Affairs Commonwealth Secretariat and former Sri Lankan central banker said it was natural for smaller countries to have concerns about being overwhelmed by a larger economy, but said the discussion needs to be based on facts.

“India has shown a willingness to accommodate the asymmetries of smaller economies, and now it is up to the smaller countries to negotiate effectively. And the onus is on India to address the trust deficit in the region,” he said.

Smaller economies in South Asia can only hope to grow their economies and uplift the lives of its people by attracting foreign direct investments and boosting exports in trade and services.

Research has shown that neighbouring countries are natural traders and are not held back by the fact that they produce the same goods and service, Coomaraswamy said adding that the smaller economies gained the most by integrating with larger economies.

India’s former Power Secretary R. V. Shahil said India should take the lead in regional integration not because it is the largest economy but because of its central location. “Not only will smaller economies benefit, but India stands to gain too”.

Tariq Karim, former Bangladesh High Commissioner to India and advisor to the World Bank, said the biggest problem to regional integration was the mind sets of the people. Citizens of SAARC countries must interact more amongst themselves and help demolish barriers put up by politicians. Businesses can lead the way by lobbying their respective governments.

The three-day conclave is supported by the World Bank. Its South Asia Vice President Annette Dixon said the private sector needed to do a lot more. Plagued by distrust, the region, home to 40% of the world’s poor, is the least integrated in the world, but the potential is great with India expected to lead the region to be the fastest growing in the world. Intraregional trade in goods and services will give consumers more choices and cheaper goods and services.

South East Asia’s intra-regional trade accounted for nearly 25% of its total trade, and for South Asia, it’s only 5% at US$ 25 billion and the World Bank believes trade could be increased to US$100 billion over the next five years, helping South Asian consumers save US$ 2 billion each year.

“In promoting regional integration, we should be aware that there will be losers as well as winners from greater transit and trade integration. Some will adapt, others will fail. But businesses need to adjust to a more competitive and open trade regime,” Dixon said.

Businesses and people can do a lot more to push governments on integration, and there is one place to start. South Asian countries love their bureaucracies and red tape and speakers at the conclave said getting visas were difficult, and said government’s needed to be more welcoming, treat people within the region with more respect and less suspicion.

While private sector investments around power and energy and roads dominated the discussions so far, it was highlighted that micro industries and small and medium businesses needed to benefit by integration.

“There are people in the region who have no notion that they are doing a business. They don’t understand what micro or small businesses even mean. To them, what they do is a livelihood. So we need to look at how integration can help them too,” Chimi Zangmo, who operates a hotel in Bhutan said. “There are people struggling to find the next meal or new clothes. So open trade must help them and not just focus on big business houses”.
(Colombo/September 30 2015)

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