Regional integration to boost South Asia's growth: ICCB
Regional integration among the South Asian nations is a must for increased trade and investment in order to achieve sustainable growth, said the International Chamber of Commerce Bangladesh (ICCB).
“Regional integration impacts trade facilitation in several ways. It helps in inclusive growth and poverty reduction, reallocating capital and labour toward sectors holding a comparative advantage,” said the local chapter of the Paris-based body in its July-September bulletin released last week.
“Trade facilitation and regional integration are two important factors for achieving the Sustainable Development Goals.”
According to the association, the beneficial link between trade and investment catalyses economic transformation, job creation and skill development.
It said strengthening regional integration for trade facilitation is particularly crucial for three reasons -- it can foster economic diversification and transformation, increase resilience to global economic shocks, and generate significant economies of scale through the widening of markets.
The ICCB said trade facilitation has a direct impact on trade costs and an indirect impact on the price of traded goods.
“It increases trade flows and ultimately leads to higher growth. Trade facilitation eases the cross-border movement of goods by cutting costs and simplifying trade procedures.”
Quoting experts, the ICCB editorial said furthering the case for regional approaches, cooperation on many aspects of trade facilitation makes sense from an economic point of view.
Experience from the Association of Southeast Asian Nations suggests that moving forward on a regional basis might be a viable option, through pooling resources, opening markets to private multinational actors, and judicious use of mechanisms like mutual recognition.
The ICCB talked about the low level of trade among South Asian countries.
According to the World Bank, South Asia is one of the most dynamic regions in the world, with a population of 1.67 billion and economic growth of 7.1 percent over the last decade.
But South Asia is one of the least integrated regions. Intra-regional trade accounts for only 5 percent of South Asia's total trade, compared to 25 percent in the ASEAN.
The main reasons behind the lesser integration in South Asia, according to the WB, are high trade costs, investment restrictions and insufficient policy-relevant analytical work on gains of both trade and investment.
It is expected that with the gradual removal of these barriers, intra-regional trade in South Asia could increase from the current $28 billion to $100 billion, added the ICCB.