Saarc looks to a new era of economic prosperity

Sunil Bahadur Thapa

The upcoming Saarc Summit in Kathmandu could mark the beginning of a new era as leaders are gradually moving away from political issues to economic matters to bolster growth in the region, which is home to more than half a billion poor people.

Sunil Bahadur Thapa, minister for commerce and supplies of Nepal, said there has been a change of heart in the countries of the eight-member bloc, and it would be manifested in the 18th edition of the summit to be held later this month.

The gathering at the Nepalese capital will be dominated by economic and social agenda, not political agenda, he told The Daily Star in an interview on the sidelines of the International Chamber of Commerce Bangladesh's international conference last week in Dhaka.  

“Peace and prosperity and economic agenda have overshadowed the political school of thought. Now Saarc will be going more towards prosperity and development, rather than confining itself to political agenda. It is high time we move out from that narrow vision.”

South Asia has experienced a long period of robust economic growth, averaging 6 percent a year over the past 20 years. This strong growth has translated into declining poverty and impressive improvements in human development.

Still, the region is home to many of the developing world's poor. About 571 million people in the region survive on less than $1.25 a day, and they make up more than 44 percent of the developing world's poor, according to the World Bank's most recent poverty estimates.

Thapa, also a former senior executive of the United Nations High Commission for Refugees, said the South Asian Association for Regional Cooperation (Saarc) should look to emulate the success of other transformational regional economic blocs.

Set up in 1985 with a lot of enthusiasm, so far Saarc has failed to live up to its expectation, let alone be as effective as the EU and Asean. At present, intraregional trade stands at only 5 percent of their global trade.

“What has happened over the years is that Saarc was basically more focused on its own political agenda than on economic progress. As a result, its activities were limited to the heads of states, bureaucrats and politicians only,” he said, while citing the number of boards under the Saarc framework in areas of trade, commerce and tourism as a case in point. The bodies were not given the resources to function properly.

“Saarc has great potential in the region if you look at the amount of natural and human resources, and wealth we are sitting on. We have got more than what the EU holds, but unfortunately we have not been able to put it together. But time has come to heighten our integration.”

The change in guard in India, the region's economic giant, has given the union a fresh impetus, according to Thapa.

The new Indian government led by Narendra Modi is more focused on economic prosperity, development and connectivity within his country and with neighbours, and not on political agenda. “When India itself has opened up, why should we have the old mindset? Let's move forward with a clear and better view of it.”

For a start, he said Saarc's multiple visa, which allows holders to roam freely in the region, should be open to all and not just limited to diplomats, business people, journalists, bureaucrats and sportspersons. The planned power transmission line can also link the region effectively. And not least, the South Asian Free Trade Area, which is punctuating bilateral issues with a Saarc accent, he said.

Going forward, the Nepalese minister called for removal of tariff and non-tariff barriers, both of which have barred the nations from conducting more trade between themselves.

Thapa, who has an MA in government and public administration from Claremont Graduate School in California, however admitted that some Saarc countries produce certain commodities that need home trade protection; if they are removed, the countries would face difficulties.

“That is one of the reasons why India has not agreed to the World Trade Organisation on food security and food subsidies. We have our own sensitive list and tariff and non-tariff barrier issues. But once economies in the region start to open up, we will see more trade in the region.”

The minister also said Saarc Development Bank is also possible to meet the financing need of the region.

“If the regional leaders can go all the way to Brazil and South Africa to set up BRICS and later the Asian Infrastructure Investment Bank, then I think something along the lines of Saarc Development Bank, right in our own heart, has a future.”

The only son of former five-time Nepalese Prime Minister Surya Bahadur Thapa, Thapa cited cases in which the absence of a regional bank is hampering trade and commerce. For instance, if a purchase is made from Bhutan, problems arise when it comes to making the payment. The same is true in China as well. “So there is a need for a bank like that.”

Hari Kumar Shrestha, Nepalese ambassador to Bangladesh, who accompanied the minister during the interview, said there is a Saarc Development Fund, but the subscribed capital is too small. “So, there is a possibility to transform the fund into a Saarc   Bank,” he said, adding that a proposal has already been placed at the Saarc secretariat.

Thapa added: “The foundation for the bank has already been laid -- we just need to build on that.”

The minister said his country has already come up with some ideas for Saarc that can bring the nations closer than before, such as the two agreements signed with India on electricity cooperation. One agreement will allow Nepal and India to trade power, and the other will let an Indian private company to produce 900 megawatts of hydroelectricity in Nepal.

“This has opened the scope for investment from other countries. All countries can come, invest and develop power in Nepal -- we are just sitting on hydropower resources.”

Some 81,000mw of electricity can be generated in the Himalayan nation -- which is more than ten times of what Bangladesh is producing today -- but it is only producing 1,200mw for lack of funds. “We have made a landmark departure in our trade outlook -- we have now opened up Nepal for trade and investment,” Thapa said.

He said Nepal is the only country in the region which provides visa without any fee, while calling for this practice to be incorporated in the Saarc framework.

On trading relationship between Bangladesh and Nepal, the 55-year-old said there are some issues that need to be addressed to boost bilateral trade. “On the sidelines of the Saarc Summit, the leaders will also address the issues collectively and bilaterally.”

Nepal imports pharmaceuticals, processed food, electrical transformers and plastic goods from Bangladesh, while Nepalese lentil is very popular in the country, he added.

Meanwhile, Shrestha said there is ample scope for trade between Nepal and Bangladesh, adding that his government has requested for preferential treatment for its primary products from Bangladesh.

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