Thursday Nov 14, 2024
Thursday Nov 14, 2024
Tuesday, 27 May 2014 00:14 - - {{hitsCtrl.values.hits}}
In this backdrop, the invite extended to the SAARC leaders is an interesting gesture given that the world is focusing at South Asia for its future growth. Let me share the key challenges that Modi is up against in South Asia.
Business challenge – SAARC
Apart from the political challenges that Modi will have to manage with Pakistan on terrorism and the Sri Lankan issue fuelled by Jayalalithaa of Tamil Nadu, Modi will have to focus on South Asia’s integration of economies so that SAARC can be the powerhouse of the world.
The issue at hand for Prime Minister Modi will be how he is going to develop trade given that total external trade of the region is at a low ebb of 0.8% of worlds exports, 1.3% of world imports whilst intra-regional trade represents only a meagre 5.5% (Exports) and 4.8% (Imports).
In contrast if we take the EU, 58% of the total trade comes from within the EU whilst in ASEAN a 38% of the total trade comes from within which explains the strong integration that exists between countries, in comparison to South Asia. If we take NAFTA, the integration is so strong that 62% of the trade comes from within the region.
"The $ 5 billion marketing spend at the 2014 Indian elections is the cost of democracy when having to reach 800 million people. Can Modi now unleash a lifeline for SAARC and make South Asia the economic power house of the world by making it the best place for business?"
Doing Business – SAARC
If I focus on the Doing Business challenge, we find that Sri Lanka way up on the index for South Asia, which means the rest of the regional counterparts are struggling with very poor scores that reflects the Ease of Doing Business in such countries being very rough. This in turn will become a major barrier for integration of the economies apart from the bigger macro issues that SAARC is up against.
Sri Lanka – driving the agenda
Whilst we can be happy with the above data, I guess if we are to really take advantage with the Modi initiative in the SAARC region we must take 
the high ground on competitiveness by becoming a top 50 country in the Doing Business index so that we are a clear preference in the SAARC region. Some of the reforms that are in play for the 2015 ranking to go up are as follows:
1. Dealing with construction permits
CMC in collaboration with the Information and Communication Technology Agency (ICTA) has introduced an online system, for Colombo City Tax Payers to pay tax payments online.
2. Trading across borders
Sri Lanka has banned all shipping lines from levying terminal handling and other charges in addition to freight and specified international charges for container cargo. The Sri Lanka Ports Authority (SLPA) has implemented development of the South Terminal, automated customs-port terminal data exchange system and automated e-manifest verification for shipping agents, cargo agents.
3. Protecting investors
The SEC has issued directions on ‘Related Party Transactions’ and the other on ‘Rules on Minimum Public Float’.
4. Getting electricity
The electricity utility by CEB at concessionary terms or SMEs to obtain electricity supply. Data shows that on average it has taken only 47 days to complete procedure.
Whilst we push for the above with a private-public sector partnership, let me now share some key regional issues in view of the bilateral discussion between Prime Minister Modi and President Rajapaksa that is planned for today.
1. SAARC – Anti-Terrorism Unit
It is very clear that the deteriorating situation with regard to terrorism in South Asia is due to a lack of political consensus, a non-comprehensive strategy, and the absence of a will to implement and provide capacity building to counter terrorism in the region. The first key discussion point at Modi meeting can be to develop a clear road map with specific implantation plans that a SAARC anti-terrorism unit to be set up.
2. SAARC – Food Bank
The SAARC food security reserve was established as far back as 1988 to meet the emergencies of member countries. However, it has taken a full 14 years to make this operational like identifying institutions which will manage this and requirements for withdrawal from the reserve, which 
explains how slow the decision making has been. If we go into the details even as at today after a 20-year time horizon there has been a non-implementation of the SAARC food reserve which can be the second discussion point.
3. SAARC – Disaster Management Centre
After the Indian Ocean tsunami in 2004, a special session was held among SAARC Environmental Ministers that gave birth to the Malé declaration on setting up an early warning system and disaster management and disaster prevention systems but yet this has not become totally operational. It can be the third decision point with Modi.
4. SAARC – Poverty fund
Poverty eradication is key for South Asia but what is lacking is launching of one or two ‘key’ poverty alleviation projects for the region and driving it. Even if it’s not possible to be implemented across the region, maybe the best is to drive a project at the sub-regional level, which can be the fourth discussion point in the agenda
5. SAARC – Energy Market
With over 72% of the South Asian region’s people living in rural areas without adequate access to electricity, it is time that South Asia develops an integrated strategy , however the challenge is making major structural reforms in each country so that South Asia can insulate itself from an energy crunch, which can be discussion point five.
6. SAARC – Anti Narcotics and Drugs Task Force
Given the menace of drugs and narcotics, which has resulted in an abuse of public health, a convention was signed at the 5th SAARC summit in 1991. However, this has not been operationalised in its totality. This can be the sixth discussion point with Modi.
7. SAARC – Free Trade Secretariat
SAARC trade as a percentage of South Asia’s world trade has steadily recorded an upward trend from 2.42% in 1990 to 8.5% today, which is commendable even though the progress has been very slow. One area that can be focused on is dispute settlement. Disputes of SAARC countries are expected to be resolved within 330 days, whilst in the case of our counterparts it’s different and more efficient – ASEAN countries resolve disputes within 290 days and NAFTA in 310 days.
8. SAARC – Development Fund
The idea of establishing a South Asian Development Fund was mooted as way back as 1991 and thereafter the SAARC Finance Ministers endorsed a road map for the creation of the SDF but is yet to be operationalised. This clearly does not augur well for SAARC and this can be discussion point eight.
Conclusion – What next?
It is often said that one can choose one’s friends but not one’s neighbours. That to my mind is not a palatable statement. The challenge is how we make our neighbours are friends. For this to happen, there has to be two hands to clap and that’s what SAARC requires.
What the region requires is the wisdom and foresight to work together so that South Asia can one day be a super power region on the world stage, for which I believe Prime Minister Modi can give the leadership. The challenge will be the political will from the counterparts to take the opportunity on behalf of the 1.6 billion people in South Asia.
(The author serves on many company boards as a Director in the private and public sector whilst being an award winning business personality in his tenure of working in top global multinationals and the international public sector. He is a sought-after speaker and thought leader in Sri Lanka. The ideas shared are strictly his personal views.)
