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Director & Chief Executive, ICRIER, New Delhi
Lecture at BIDS, Dhaka, 27 December 2009
Promote welfare of people Accelerate economic growth, social progress and cultural development Promote and strengthen collective self reliance among the South Asian countries Contribute to mutual trust and appreciation of one another’s problem Active mutual assistance in economic, social, cultural, technical and scientific fields Strengthen cooperation with other developing countries Strengthen cooperation among themselves in international forums Cooperate with international and regional organizations with similar objectives Promote and enhance mutual trade (since 1991)
• Agriculture and Rural Development. • Health and Population Activities • Women, Youth and Children • Environment and Forestry
• Science and Technology and Meteorology; • Human Resources Development • Transport • Economic • Trade facilitation
• Funding mechanism • Legal • People to People contacts • Tourism • Energy • Biotechnology
SAARC Secretariat: • Located in Kathmandu, Nepal • The Secretariat comprises the Secretary General, seven Directors and the General Services Staff
Seven Technical Committees under the Regional Integrated Programme of Action (RIPA): • Agriculture and Rural Development • Health and Population Activities • Women, Youth and Children • Environment and Forestry • Science and Technology, and Meteorology • Human Resources Development • Transport.
Committee on Economic Cooperation (CEC) comprising Commerce/Trade Secretaries of Member States established in 1991. SAARC Chamber of Commerce and Industry (SCCI), bringing together the National Chambers of Commerce and Industry of Member States, established in 1992. Eleven Regional Centres run by a Director from the host country and staff from the member states:
Agricultural Information Centre (Dhaka); Meteorological Research Centre (Dhaka); Human Resource Centre (Islamabad); Coastal Zone Management Centre (Maldives); Information Centre (Nepal); Energy Centre (Pakistan); Tuberculosis and HIV/AIDS Centre (Kathmandu); Documentation Centre (New Delhi); Disaster Management Centre (India); Cultural Centre (India); Forestry Centre (Bhutan)
Five Working Groups created in January 2004, to take forward collaboration in new and emerging areas :
Telecommunication and Information and Communication Technology (ICT); Biotechnology; Intellectual Property Rights (including Traditional Knowledge); Tourism; Energy.
SAARC STORM: Joint programme conducted by India, Bangladesh, Nepal and Bhutan to monitor severe thunderstorm in the region (2009). Telemedicine Project: Inaugurated in Bhutan in April (2009).
SAARC Energy Trade Study (SRETS): Completed with the assistance of the Asian Development Bank (ADB) (2009).
(Special Meeting of the Working Group to examine the trade options identified by the SRETS and prepare an action plan)
SAFAS: Agreement on trade in services likely to be finalised soon.
SARSO :Agreement on establishment of South Asian Regional Standards Organisation signed: 4 countries have already ratified it (2008).
SAARC Development Fund (SDF): Agreement to establish at the 15th Summit (2008). (SDF now operational and India is the only SAARC member to have
contributed its full commitment of US$189.9 million)
SAARC Regional Multimodal Transport Study (SRMTS) by ADB (2007): • Identified nine pilot, sub regional and regional project • Included road, rail and air links • Projects to link Afghanistan, Pakistan, India and Nepal were identified in second ministerial meeting
Regional Food Bank: Ratification by members (less Afghanistan) to set up with total reserve of 2.43 ml. tonnes of food stock (2007).
(Food bank did not prevent the steep rise in food prices in 2008)
South Asian University :Agreement for setting up the South Asian University was signed during the 14th SAARC Summit (2007)
(A project office established in New Delhi, India,2009)
SAFTA: Signed in 2004, became operational in 2006.
(Intra region trade still very low)
Outcomes not commensurate with official statements:
• Projects have been identified under Technical Committees
and Working Groups, but the implementation is slow.
• Poor resources and technical capacities to monitor and
evaluate the activities of the Regional Centres.
• The projects of the Regional Centres not demand driven
The SAARC Multimodal Transport Study completed in 2007 is very promising, but the pace of progress is slow.
Tangible gains though small are confined to trade.
Intra-regional trade as a proportion of the world trade has remained low, 4.7% in 2008 Informal trade accounts for 72 % ($1.5 bn) of formal trade in the region
Share of Intra-Regional Trade in Total SAARC Trade 1991-2008
6 5 4 3 2 1 0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
• • •
to formal trade:
Weak port and transport infrastructure Restrictive rules of origin Persistence of high levels of overall protection
Difficult business environment
South Asia Bangladesh India Maldives Nepal Pakistan Sri Lanka
Overall Ease of Doing Business (Rank) Trading Across Borders (Rank) Number of Documents for Export Days taken to Export Cost to Export (US$ per container) Number of Documents for Import Days taken to Import Cost to Import (US$ per container)
119 107 8.5 32.4 1,364.10 9 32.2 1,509.10 6 25 970 8 29 1,375
133 94 8 17 945 9 20 960
87 126 8 21 1,348 9 20 1,348
123 161 9 41 1,764 10 35 1,825
85 78 9 22 611 8 18 680
105 65 8 21 715 6 20 745
Source: Doing Business Report, 2009, World Bank
Large Sensitive lists
Sensitive lists of SAARC Countries
Country Afghanistan Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka Non-LDC 1072 1254 156 865 671 1310 1191 1065 1296 480 1249 LDC
Low level of Intra –SAARC investment flows Intra- Regional FDI (2007)
Bangladesh India 48.2 27 24.8
1.3 97.6 0.8 0.2
0.7 89.7 3.6
Pakistan Sri Lanka
Source: ADB (2009)
From perceiving SAARC as being against its interest to a recognition of its assymetric role Since the formation of SAARC, neighbouring countries have feared India’s hegemony in the region India now recognises that it should undertake asymmetrical responsibility to assuage fears of member countries Unilaterally reduced negative list of items from 744 to 480 for SAARC LDCs. A task force has been set up by the Ministry of Commerce to address NTBs faced by partner countries.
Agreement for setting up the South Asian University was signed during the 14th SAARC Summit (3-4 April 2007). India has enacted the SAU act (2009) and established a project office in New Delhi.
Has agreed to fund the Telemedicine project (inaugurated in Bhutan, 2009) and also act as the hub.
Plan to set up 50 automated weather stations in Nepal, Bhutan, India and Bangladesh (2009). India voluntary allocated $100 million to the SAARC Development Fund in addition to the assessed contribution (2008).
Since 2007, India-Bangladesh investment restrictions removed. India-Pakistan investment decisions now made on a case by case basis. Residual fears of India’s hegemonic intentions need to be addressed.
Confidence building measures to be undertaken:
• Trade expanding measures in place and in the pipeline to be pursued with greater vigour. • Strengthening of the SAARC secretariat by bringing in more professional expertise and increasing the number of people. • SAARC process to be made more broad based by including professionals, business community and civil society.
Successful completion of agreed initiatives:
• Starting the transport corridors identified in the SMRTC Study by ADB. • Early completion of the on going work on identifying and eliminating non-tariff measures.
Measurable indicators to evaluate the goals should be initiated.
The realization that a ‘relative over emphasis’ on border measures discourage regional cooperation. Regional cooperation needed to address issues like poverty, mal-governance and inequitable growth.
Create a better understanding of neighbouring cultures and societies.
India-Bangladesh co-operation can set a new paradigm for SAARC integration. Recent Initiatives:
• India has agreed to offer transit facilities to Bangladesh to access Nepal &
• Both sides agreed to movement of containerised cargo by rail and water for
• Bangladesh agreed to provide access to Ashuganj Port as a new port of call
as well as the use of Chittagong port by India
• Both sides have agreed to enhance cooperation in the power sector and
India has agreed to provide at least 100 MW to Bangladesh on a priority basis.
• The renewal period of the Protocol on Inland Water Transport and Trade,
which governs the bilateral movement of goods through inland waterways, has been extended from one month to two years
Joint approach to Multilateral Development Banks for regional cooperation required. Re-explore sub-cooperation among the four Eastern member countries Encourage cross-border cooperation between neigboring countries.
Pure Economic & non-traditional gains Strategic Gains Developmental and Environmental efficiency gains Non-economic gains
Greater regional output and resource utilization.
Significant expansion of intra-industry trade and commerce. Geographical specialization across the region esp. in agricultural sector. Greater investment flows due to the creation of larger market.
Large country-small country dynamics.
• Large countries build new geopolitical alliances. • Small countries learn to effectively deal with larger trading blocs in multilateral negotiations.
A unified market for hydrocarbon imports from Central and West Asia. Negotiating advantage in multilateral forums.
Potential gains through alliance with Central Asian countries – Afghanistan’s membership
Energy trade – • Confidence-building measure • Lock-in mechanism
Integrated approach towards provision of regional public goods like• • • • Environment Water conservation Infrastructure Natural resources – including regional ecosystems and related bio-diversity.
Tackle the negative externalities• Drug and human trafficking • Floods, pandemics • Ecological degradation
stable and tensionfree region would result in –
• Greater FDI, remittances • Low defense budgets
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