The Hindu Business Line : `South Asia is least-integrated region'

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Mumbai Feb. 18 The annual trade between India and Pakistan which is currently at about $1billion has the potential to grow in excess of $9 billion over the next five years, if barriers relating to policy, infrastructure, corruption and red-tape are adequately addressed, said Mr Graeme Wheeler, World Bank's Managing Director.

Speaking at the valedictory session of the Second SAARC Business Conclave, Mr Wheeler said that despite a common location and history, South Asia is the least integrated region in the world. While these countries have significantly opened up trade with the rest of the world, they remain closed to each other.

Barriers of policies, infrastructure and corruption hamper the growth of trade. Countries now need to work towards reducing costs of doing business, improving institutions and addressing infrastructure constraints, he said.

"Trade integration is a major opportunity. But, regional cooperation in energy and water could produce even bigger returns. India, one of the most energy-hungry nations in the world, sits next to three energy-surplus countries — Bangladesh, Nepal and Bhutan. Yet, except for Bhutan, energy trade between them is minuscule," Mr Wheeler pointed out.

He said that all countries can win from cooperation. The cooperation between India and Pakistan on the Indus River ushered in the Green Revolution during the 1960s.

New revolution

Further cooperation on that same river, as well as on the Ganges-Brahmaputra by India, Bangladesh and Nepal, could create a new revolution for the whole sub-region. Regional cooperation can open many doors to prosperity.

The welfare of the 1.5 billion South Asian people depends on it, he said.

Mr Wheeler pointed out that Himalayan rivers are the lifelines of the region's economies and populations. A seven-country meeting in Abu Dhabi last year, identified climate change impact on the Himalayan waters as a major unifying challenge for the region. It is clear that cooperation is essential for understanding and addressing this challenge, he said.

Mr Wheeler also said that South Asia's service sector has grown much faster than manufacturing because it's less dependent on infrastructure, which is a serious bottleneck for manufacturing firms.

To transport garments from China to the United States takes an average of 15 days; from India it takes 24 days, he said, and added that regulations need to be replaced with safety-net programmes that protect workers, not jobs. Programmes are needed that make firms to expand employment and help workers enter the formal labour market, he stated.

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