South Asian Economic Union by 2010

Columnist Dr. Khawaja Amjad Saeed discusses the possibility of an economic union in the region.

Prelude

South Asian Association for Regional Cooperation (SAARC) was set up in 1985. Since then, productive meetings were held to develop ideas for forging ahead. This unique forum has been struggling to bring home several messages of goodwill, peace and tranquillity in the region. On several occasions, heads of states of all SAARC countries met and agreed on several issues of mutual interest. This platform has enabled sharing of thoughts, exchange of ideas and creation of awareness regarding innovative initiatives to be taken for achieving the objectives of SAARC in the light of founding principles laid down for SAARC. Hopefully, these initiatives will continue in future so that efforts are solidly undertaken for alleviating poverty, accelerating socio-economic and scientific progress in SAARC region to pave the way for ushering in an era of prosperity on wider dimensions. The sincerity and commitment by the Governments and the people of SAARC region are the crying need of today. This piece presents some thoughts on the theme of a dream about SAARC Economic Union by 2010.

SAARC vision 2010

Status quo is never a permanent feature. Change is an on-going process. South Asian Economic Union by year 2010 can be the result of a positive thinking approach. An excellent debate has been initiated in this respect. It is hoped that this subject of vital importance will be discussed and debated at various levels namely Government, Private, Public, NGOs institutional and even individual levels. Ideas need to be pooled. Experiences need to be shared. Dimensions of cooperation need to be identified and a framework needs to be evolved to serve as a basis for the proposed South Asian Economic Union by 2010.

SAARC: Principles

Clear cut principles for SAARC were spelled out at the time of its establishment and these require firm commitment by all the SAARC countries. The cooperation among SAARC countries cannot be a substitute for bilateral and multi-lateral cooperation but shall complement them. Further, such cooperation shall not be inconsistent with bilateral and multi-lateral obligation.

Principles on which cooperation shall be based include respect to the following:

1)         Sovereign Equality.

2)         Territorial Integrity.

3)         Political independence.

4)         Non-interference in internal                     

            affairs of other states and mutual

            benefit.

The foregoing principles represent strong conceptual logistics on the basis of which South Asian Economic Union can be strongly visualized by 2010. All the SAARC countries must strictly adhere to the above principles as a mark of respect to each other and help realize the goals for which SAARC has been established.

SAARC: Objectives

Objectives of SAARC include promotion of socio-economic developments within SAARC countries and also develop a productive relationship with regional and international organizations. Based on this, objectives can be categorized as under:

1)         Inter-SAARC

            a)         To promote the welfare of the people of South-Asia and to improve their quality of life.

            b)         To accelerate economic growth.

            c)         To promote active collaboration and mutual assistance in the economic, social, cultural,                          technical and scientific fields.

            d)         To promote and strengthen collective self-reliance among the countries of South Asia.

            e)         To contribute to mutual trust, understanding and appreciation of one another’s problems.

2)         Intra-SAARC

            a)         To strengthen cooperation among themselves in international  forums and with other                         developing countries.

            b)         To strengthen cooperation with other developing countries.

            c)         To cooperate with international and regional organizations.

SAARC: Work Packages

Ten areas of work within SAARC region were identified and assignment were given to various SAARC countries. Topics were allocated together with the countries responsible for the same. India was given four assignments namely, Business Information and Data Networking, Human Resource Development, Science and Technology and Social Dimension of Business Development. Pakistan had two topics i.e., Trade and Investment. Sri Lanka was given an interesting topic namely, women entrepreneurs. Bangladesh was expected to handle telecommunication. Travel and Tourism were to be handled by Nepal. Bhutan and Nepal had joint responsibility for energy. There is a need for an accelerated effort to push ahead in respect of above assignments.

SAARC: Background for South Asian Economic Union by 2010

Regional Cooperation has been a subject of great interest in several parts of the world. However, the idea of regional cooperation in South Asia was first evolved during 1977-80 and Bangladesh took the initiative to bring up the idea of setting up SAARC. In August 1983, Foreign Ministers met in New Delhi and Declaration on South Asian Regional Cooperation (SAARC) was made and formally Integrated Programme of Action (IPA) was launched.

In 1985, Charter of SAARC was adopted in Dhaka. IPA, consisting of eleven areas of cooperation, is the key component of the SAARC’s functions. These include agriculture, communications, education, culture and sports, environment and meteorology, health and population activities, prevention of drug trafficking and drug abuse, rural development, science and technology, tourism, transport and women in development.

Initial steps taken for a long-term objective of South Asian Economic Union by 2010 so far have included the following:

1. Agreement on SAPTA (South Asian Preferential Trading Arrangement) was signed during the Seventh SAARC Summit in Dhaka. This entered into force on December 7, 1995. This had the following two forward linkages:

a)         Gradual reduction and eventual elimination of tariffs within SAARC.

b)         A step on the road to creating a SAFTA (South Asian Free Trade Area). Accelerated efforts              are needed to implement bilateral and multi-lateral initiatives to promote economic cooperation.

2. Bold initiatives have also been taken in respect of developing institutional framework. These institutions need to be strengthened for their vibrant functions so that positive steps are taken to crystallize the dream of South Asian Economic Union by 2010.

Some of the pertinent institutions include:

a)         Promoting people-to-people contact.

b)         SAARC Regional Institutions:

i)          SAARC Agricultural Information Centre (SIAC), Dhaka, Bangladesh.

ii)         SAARC Documentation Centre  (SDC), New Delhi, India.

c)         The following SAARC Funds have been established so far:

i)          SAARC Fund for Regional Projects (SFRP) (1991).

ii)         SAARC - Japan Special Fund (Sept. 27, 1993), Kathmandu, Nepal.

iii)         South Asian Development Fund (SADF)-(1995) New Delhi, India.

There is a need to consolidate gains from the above institutional framework and carry forward the same towards achieving the goal of South Asian Economic Union by 2010.

SAARC: Logistics for vision 2010

SAARC is the largest geo-economic block of the world with 1.2 billion people. Its GDP, based on purchasing power parity is $ 3.57 trillion. Its combined average growth is over 7%. Its plan includes a common market i.e. SAPTA. This represents a hope for the largest pool of poor people of the world, with a consumer base of over 425 million people in the middle class bracket. It is larger than any economic block of the world. It has the potential of contributing a great deal to the ever evolving global economy.

SAARC region has the following unique features of the world:

1.         It has one of the most ancient living civilizations in the world.

2.         It is a sleeping giant and has started to move its arms.

3.         All religions, faiths, and ideologies of the world live together.

4.         It is maturing and is poised to become an important economic force forming a common market called             SAPTA and later SAFTA. This is expected to usher in a new era which will change all traditionally             known economic parameters.

5.         It has the largest irrigated land areas in the world with over 67 million hectares.

6.         It has the second largest railway network of the world after the US.

7.         It offers one of the largest English speaking area.

8.         It has labour force of 423 million people. This is the largest of any other economic block in the world.

9.         It also is home to some of the poorest living people on the earth but has increased job               opportunities and self-employment schemes in all SAARC countries.

10.       Having a combined average growth rate of more than 7% by year 2000, SAARC will have a        combined population of 1.3 billion people and the total consumer base will surpass 750 million. This will be the largest number of consumers in a single economic block in the world.

SCCI: A strong logistic for South Asian Economic Union by 2010

SAARC Chamber of Commerce and Industry (SCCI) was set up in 1992 as the official recognition by all the regional governments and as the apex body of all the national federations of chambers of commerce and industry with its headquarters in Pakistan. It consists of seven component members representing each country. Its mission is to enhance economic cooperation with a view to improving SAARC’s position in the World trade as well as within SAARC itself.

SCCI’s philosophy is as under:

It will gradually endeavour to achieve SAARC Economic Union through:

1)         Economic Cooperation, and

2)         Bring about harmonious and

            healthy economic relations

            among the business communi-

            ties of the region.

The general belief is that the above Union will serve as a step forward to globalization and will help to overcome the socio-political differences within the region.

SCCI’s contributions towards establishment of South Asian Economic Union by 2010 are suggested to be in the following dimensions:

1)         Serve as voice of business community of the region at national, regional and global foram.

2)         Endeavour to bring about necessary      economic cooperation in all spheres of the SAARC region.

3)         Encourage investments and joint ventures within and outside the region to ensure that the benefits of               economic cooperation are realised for the region.

4)         Encourage private sector in the process of industrialisation and also to act as the change agent while allowing the governments to develop the infrastructure jointly with them and setting in place policies which can minimise dislocations to economic growth and social development.

Intra-Regional Investment

The business community of SAARC need to be encouraged to come forward with intra-regional investment proposals covering the following areas:

1)         Investment promotion.

2)         Investment protection.

3)         Repatriation of profits.

4)         Avoidance of double taxation.

5)         Arrangements for settlement of  

            trade disputes among SAARC 

            member states.

Strategy needs to be developed to evolve common agreements for the region as a whole or sub-region on bilateral basis for the above aspects. The share of SAARC in World Trade, based on the World Development Report 2002, is 1.03%. This shows that the scope of intra-regional trade is very big.

Agenda for South Asian Economic Union by 2010

Year 2001 was set as target date to achieve SAFTA. This was expected to set pace of development in core trade and economic cooperation in the member countries. However, the dream has not yet been realized.

The Ninth SAARC Summit was held in Male, Maldives during May 12 - 14, 1997 and directed the establishment of Group of Eminent Persons (GEP). This group was asked to undertake the following tasks:

1.         Develop a long range vision.

2.         Formulate a perspective plan

            of action including a SAARC

            agenda for 2000 and beyond.

3.         Spell out the targets that can

            and must be achieved by the

            year 2020.

The recommendations were presented in the two-day SAARC Summit held in January 5-6, 2002 in Kathmandu, Nepal. South Asian Economic Union by 2010 is expected to result as under:

1.         With new enthusiasm in the markets and shifting economies on combined scale, dependence of  

            their GNP will reduce in coming years.

2.         An increased collaboration and harmonious relationship could help reduce the defence budgets to             much lower points. On the assumption that these funds are allocated for developmental programmes,             the growth indicators will sharply move forward.

3.         Marketing plans for these countries can be more or less unique and specially for consumer products             and services like entertainment.

SAARC Summit January, 2002

Two days SAARC Summit was held in Kathmandu, Nepal during January 5-6, 2002. it visualized the establishment of South Asian Economic Union. Pre-requisites to this dream were identified as under:

1.         Promote mutual trust and understanding, peace, stability and amity and accelerated socio-economic             cooperation.

2.         Foster good neighbourly relations, relieving tensions and building confidence.

3.         Finalize a regionally agreed investment framework to meet investment needs of the member states.

4.         Promote South Asia has a common tourist destination by upgrading infrastructure, air linkages,             simplification and harmonization of administrative procedures and joint marketing.

5.         Combat the problem of poverty with a new sense of urgency.

6.         Focus on rural micro-credit programmes for women and disadvantaged, widen opportunities for             gainful employment and reconstitute the independent South Asian Commission on poverty alleviation.

7.         Finalize the SAARC Social Charter including:

a)         Poverty eradication.

b)         Population stabilization.

c)         Empowerment of women.

d)         Youth mobilization.

e)         Human resource development.

f)          Promotion of health and nutrition and projection of children.

Conclusion

It is high time that all the SAARC countries must respect each other and strive for developing peace and tranquillity in the region and give genuine tribute to the principles of SAARC and implement a plan paving the way for institutionalising South Asian Economic Union by 2010. This is needed to usher in a new era of prosperity for the teeming millions of the above region.

Selected Bibliography

A:         Books

1)         Chatterton, M, Herbert I, Templeman, G, Tempest, P, Business Environment and Information          Technology Knowledge, (1994) London: The Chartered Institute of Management Accountants of UK.

2)         Mahbub ul Haq, (1997) Human Development in South Asia, Karachi: Oxford University Press,1997.

3)         Mathew, K. M. (Chief Editor), Manaorama Year Book 1998, Kerala, 33rd edition.

4)         Saeed, Khawaja Amjad Saeed, (2002) Economy of Pakistan, Lahore: Institute of Business                  Management, 2002.

B:         Publications of Accredited Bodies

1)         Annual Report 1995-97, SAARC Chamber of Commerce and Industry:   

            Apex Trade Organization of SAARC, Dhaka, October 30, 1997.

2)         The European Community and Pakistan, Islamabad: The European Commission Delegation, n.d.

3)         Intergovernmental Conference 1996, Commission Report for the Reflection Group, Brussels:               European Commission, Director General for Information, Communication, Culture and Audiovisual   Media, May 1995.

4)         Free Trade with India: Its Raison D’etre and Impact, Karachi: Research and Economic Development Cell, Chamber of Commerce and Industry, Karachi, March, 1996.

5)         Information Handbook 1996-97, Dhaka: SAARC Chamber of Commerce and Industry.

6)         The Magic that is South Asia, Official publication of SAARC Chamber of Commerce and        Industry-Tourism Council, Bangkok: SURAPIM Co. Ltd., 1997.

7)         Statistical Outline of India 1997-98, Mumbai, Department of Economics and Statistics of Tata Services Limited, December 1997.

C:         Downloads from Internet

1)         SAARC - SAPTA - Largest geo-economic Block - South Asia wake up.

2)         Globalization, Regionalisation and Transit.

3)         SAARC Chamber of Commerce and Industry.

4)         Agreement on SAARC Preferential Trading Arrangement (SAPTA).

5)         SAARC-The Indian Response.

6)         The Fortnight that was Pak, India to jointly oppose EC’s anti-dumping duty.

7)         SAARC completes its 12 years.

8)         India, Pakistan keen to resume talks.

9)         SAARC: Progress Report, Home, History, Charter, Progress, Potential and Profile.

10)       Development of SAARC

11)       Harnessing the Potential of South Asia.

12)       Declarations of various SAARC Summits.

D:         NEWSPAPER

            Dawn, Karachi, January 6-7, 2002.

ABOUT THE AUTHOR

* President-Association of Management Development Institutions of South Asia (AMIDSA) (1993-96). Member, Governing Council, International Federation of Accountants (IFAC), New York (1997-2000). President, South Asian Federation of Accountants (SAFA) (1997). President, Institute of Cost and Management Accountants of Pakistan (ICMAP) (1997-99). Former Pro Vice Chancellor, University of the Punjab, New Campus, Lahore. Founder Director, Institute of Business Administration (IBA), University of the Punjab, Lahore.