'Regional Cooperation and Economic Integration are the Keys to Unlocking South Asia's Tremendous Potential.'
Special Features
Written by S.N Agarwal
November, 2009
How do you see the South Asian economies developing? Are they in the progressing phase?
South Asian countries have embarked on new higher growth trajectory since 2003 with an average rate of growth of 6.5%, making the region as one of the fastest growing in the World. South Asia has attracted global attention for demonstrating rapid growth. Among the contributing factors to the dynamism has been the ability of the region to mobilise domestic resources and structural transformation in favour of services and industry. The environment is changing with much stronger cooperation.
What has been the impact of Global Financial Crisis on the South Asian economies and how are they coping with it?
The outlook for growth continues to remain robust despite the global slowdown although some South Asian countries witnessed deceleration in growth. The downside risks posed by deepening of the US recession, rising oil and food prices were serious. The acceleration of growth is important for the region's ability to fight poverty and unemployment, and needs to be sustained and made more inclusive. For facing these downside risks, the development strategy in the South Asian countries will have to address the supply constraints on physical and social infrastructure, enhance inclusiveness of growth, address the growing menace of inflation, exploit the potential of non-conventional sources of energy and adopt environmental friendly technologies.
The majority population of South Asia lives under the poverty line. How can this problem be addressed through economic initiatives?
Reduction of poverty is vital for attainment of better economic indicators of the region. The objective underlying various poverty alleviation programmes in the region is to tackle poverty by endowing the poor with productive assets and training for skill development so as to assure a regular stream of employment and income in raising themselves above the poverty line. Better enforcement of existing laws, regulations and programmes in South Asia would help to strengthen positive outcomes.
What is the objective behind the SAARC Business Leaders' Conclave ‘09?
Third SAARC Business Leaders Conclave (SBLC) is being organised by SAARC Chamber of Commerce and Industry (SCCI) along with FICCI and other national chambers from SAARC. SAARC Business Leaders Conclave would provide a unique platform which would bring together business community, policy makers, think tanks, diplomatic and developmental community of the region. This Business Leaders Conclave would be inaugurated by Mr. Ratnasiri Wickramanayaka, Prime Minister of Sri Lanka. The World Bank is the Knowledge Partner of this Conclave and a large business representation from all the SAARC countries would participate for this important event. The objective of 3rd SBLC is to create synergies for regional integration and cooperation through effective networking of business community; to enhance trade and investment; encourage public private partnership for positive economic policy exchange and reforms. Also the objective is to identify and develop neglected sectors of diligence which have potential for growth and harnessing the comparative advantages of South Asia.
How important is regional integration in South Asia for economic activities to foster and develop?
Regional cooperation and economic integration are the keys to unlocking South Asia's tremendous potential. The deepening of regional economic integration would assist the region to consolidate and sustain its dynamism and attack the menace of poverty more effectively besides strengthening the region's place at international level. Regional integration will help unleash the existing tremendous potential. Though intra-regional trade in South Asia has begun to grow and has doubled over the past five years, nearly three-fourth of intra-regional trade potential remains to be exploited which SAFTA can hope to realize. I feel that if the geography has brought us together, it is the history that binds us together and it will be the business that will keep us together in future.
What is the investment climate in the region? And how far have our economies taken advantage of it?
Though the investment climate is good and a lot of untapped opportunities lie in the region, a lot has to be done in order to unleash the existing potential. There is a need to create awareness on the investment potential in the region. Investment policies needs to be synchronized, we must sign Investment Protection and Promotion Agreement in order to promote investment within the region.
Do you think that our economies implement economic policies properly?
A major factor contributing to the poor impact of huge public investments in critical sectors like health, education, and power across South Asia is the lack of effective monitoring systems. It is now a fairly established fact that corruption is severely undermining development objectives in South Asian countries by hindering economic growth, reducing efficiency, acting as a disincentive to potential investors and above all by diverting critical resources meant for poverty alleviation. Though of late there has been a growing awareness of the need to address the systemic spread of corruption, most of the reform agenda seems to be top-down and in many cases donor driven, with little or no space for civil society to play a meaningful role. This lacuna has led to a ‘demand deficit' in the overarching good governance agenda. Compounding the problem is the fact that the state in all South Asian countries is all-pervasive and, in most cases, the sole provider of basic public services like drinking water, power, health and education. Designing and strengthening ‘voice' mechanisms may in some cases be the only available strategy to raise the demand for good governance and anti-corruption reforms. Public participation is also very crucial as it would lead to improvement in the delivery of public services and would help in the greater accountability for services.
What should the respective governments of South Asian countries do to compete with the global economy and what can India's role be in this regard?
The respective governments of South Asian countries need to work on the following:
South Asian government should work more closely together in partnership to accelerate deregulation and economic liberalisation.
Its role should be as a facilitator and not as a regulator.
The government needs to look into the issues of poor connectivity and infrastructural bottlenecks within the region.
Create production networks in core export sectors like textiles and ready made garments.
Identify and address the non tariff barriers that exist within the region.
Horizontal and vertical integration in the manufacturing and service sector in the region.
Involve greater participation of private sector in all the economic agendas of the government thereby creating a sense of partnership in all the projects.
Considering India's potential strategic role in the region, it is imperative for India to adopt unilateral liberalisation to signal its commitment to the regional integration process and also to dispel uncertainty among her SAARC trading partners.
Trade facilitations, depleting water resources, climate concerns, socio-cultural ties - all these are issues that need to be tackled within the region so that we may emerge as a strong economic hub for the international world. Do you agree?
The region is home for 40% of the poor and socio-economic indicators in comparison with ASEAN and EU has not feared well in terms of education, health, nutrition and sanitation. The conference would deliberate on these important issues and also on the down risk posed by the deterioration of the external environment. The conference would stress on various issues strengthening energy security, trade facilitation as well as regional integration. These are very crucial issues and if these are addressed properly, there is no reason why South Asian economies should lag behind.
What has been the impact of Global Financial Crisis on the South Asian economies and how are they coping with it?
What is the objective behind the SAARC Business Leaders' Conclave ‘09? 
What is the investment climate in the region? And how far have our economies taken advantage of it? 
What should the respective governments of South Asian countries do to compete with the global economy and what can India's role be in this regard?
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