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Despite exports under SAFTA showing a slight increase, the intra-SAARC trade is still far below its potential. And Elimination of Non-Tariff Barriers (NTBs) and implementation of trade facilitation are vital to develop this regional trade volume.
“Even though the exports under SAFTA show a slight increase, intra SAARC trade is still far below its potential, at $ 2.9 billion. This is a matter that warrants our urgent attention,” said Anura Siriwardena, Secretary, Ministry of Industry and Commerce, on 24 July in Thimpu, Bhutan, addressing the 8th Meeting of the SAFTA Ministerial Council (SMC) representing Minister of Industry and Commerce Rishad Bathiudeen.
Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka and Afghanistan are the members of SMC, the highest decision making body within SAFTA. Bhutan was hosting SMC for the first time. The SMC meet was preceded by SAFTA Committee of Experts meeting on 22-23 July in Thimpu.
According to the SAARC Secretariat, as of September 2013, the total f.o.b. value of exports by SAFTA Member States reached close to $ 3 b since launching of SAFTA Trade Liberalisation Program in July 2006. SAARC Secretariat also stresses that intra-SAARC trade flows under SAFTA to be ‘far below the potential’ and adds: “For smooth functioning of the SAFTA, customs notifications for implementing Trade Liberalisation Program (TLP) are issued as per the agreed timeline by the Member States.”
“Now it is the time for us to reassess achievements so far we have made” said Secretary Siriwardene. “South Asia holds a vast potential for economic development through intra-regional trade and investments. Even though the exports under SAFTA show a slight increase, the intra SAARC trade is still far below its potential, which means that we are yet to reach the full potential. SAFTA could contribute more to expand intra-regional trade. Elimination of Non-Tariff Barriers (NTBs) and implementation of trade facilitation measures are vital to develop intra-SAARC trade.
“I wish to state that reduction of tariffs itself is unlikely to bring the expected level of intra-SAARC trade. The lack of trade facilitation measures aggravates this situation. The possible gains from trade facilitation in the region are much higher, comparative to the gains from mere reduction of the Sensitive Lists. This council has identified that the successful implementation of the Trade Liberalisation Program is a necessity in order to make SAFTA effective, but this too may not be adequate to reach the desirable targets. I was informed that our member countries altogether account for a total trade figure of $ 900 b their trade with the rest of the world. However, intra SAARC trade remains at $ 2.9 b. This is a matter that warrants our urgent attention.
“We, the SAARC countries, are in different development levels and economic conditions and it is important to give due consideration to this reality when preparing modalities to implement trade liberalisation programs and trade facilitation measures. We could modify SAFTA towards attracting more Investments to our countries which would facilitate towards establishing sustainable agricultural, industrial and services for the economy. It is a fundamental necessity to intensify intra-regional investment flow for enhanced regional integration. Inflow of foreign investment will also have a favourable impact on exports and imports. It may also help horizontal and vertical integration of industries of SAARC countries, thereby strengthening competitiveness in the global markets.
“Although the SAARC region is a home for 1.6 billion people representing 23% of the world population, we are yet to develop a collective voice in these international forums. As for the development strategy that Sri Lanka has adopted with the aim of strengthening our trade, economic and investment relations, after three decades of difficult situation with brutal terrorism, Sri Lanka has now entered into a new era under the vision of President Mahinda Rajapaksa.
“The development strategy under the ‘Mahinda Chinthana – Development Policy Framework’ has been aimed at placing Sri Lanka as the business hub of Asia. Sri Lanka towards this objective has actively promoted the country as the aviation, commercial, energy, knowledge and maritime hub in Asia. The facilitating environment towards these objectives has been already established. The maritime hub expansion covers the projects including Hambantota Port development, the Colombo South Port development, expansion of the Colombo Port via new terminals and the development of port city in Colombo.
“These maritime development activities provide many opportunities for business community in the SAARC countries. The Hambantota port is situated at a strategic location along the ancient Silk Route for trade where one of the world’s biggest East-West shipping lanes crosses. It was designed to cater to the hundreds of ships that sail every day in the main East-West shipping route in the Indian Ocean, which is 12 kilometres away from the Hambantota Port. The port facilities could be utilised as a trans-shipment point. Sri Lanka has already become an attractive commercial hub in Asia. Under the energy hub concept, steps are being taken to meet the increasing power demand by establishing power stations while maintaining the right energy mix.
“The current computer literacy at 50% is also expected to increase to 75% shortly. I am pleased to mention here that the highest level of political commitments towards liberal trade policies, attractive investment environment with stable fiscal policies, establishment of necessary infrastructure in Sri Lanka have become great attraction to many business communities worldwide.”
