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History of SAES
Shedding light on how the summit conceptualised, Dr. Kelegama shared that the SAES is an outcome of an idea mooted by the South Asia Center for Policy Studies (SACEPS) in 2011 that the time has come for a South Asian Economic Forum, similar to the World Economic Forum that takes place annually in Davos, Switzerland. Even though the exercise couldn’t be attempted on a large scale at once due to various constraints, he said: “Some of the regionally well-networked research organisations took the initiative to launch the SAES as a building block for a future Davos-like forum to emerge in South Asia.”
In 2008, the summit was first launched in Colombo and was hosted by the IPS soon after the 15th SAARC Summit, which was also held in Sri Lanka at the time. From then on, the summit took off annually and the second was held in Delhi, India. The third took place in Kathmandu, Nepal, the fourth in Dhaka, Bangladesh, and the fifth was hosted in Islamabad, Pakistan.
“The incremental approach of the SAES over the years has seen the summit become a larger event that brings together academia, especially economists for the Government who are involved in the policy making process. It also brings in private sector leaders in the region to exchange contemporary economic issues facing South Asia,” said Dr. Kelegama, stating that the SAES has become a key track two process for highlighting South Asian economic issues and policy options to map the way forward with regard to regional cooperation.
Relevance of the SAES
The sisxth SAES is taking place after the SAFTA Ministerial Council Meeting and the SAARC Financial Ministers’ meeting which took place in Colombo over the past two weeks.
The SAES also takes place before the UN annual sessions in New York, Commonwealth Heads of Government Meeting, and Common Wealth Business Forum, which will be held in Colombo this year in November.
“With these pivotal meetings coming up, our deliberations at this summit will provide important input for these official meetings in the coming months,” expressed Dr. Kelegama, emphasising on the relevance of SAES 2013.
While over the past five years the summit mainly focused on regional economic cooperation, the sixth SAES has a different focus as it is motivated by the idea that faster economic growth that is inclusive and sustainable also depends on efforts made by individual countries to address specific constraints to growth.
“It is perhaps an appropriate time to take a broader approach in view of the current global economic turmoil that is exerting an adverse impact on the entire region.
However, the channels of exposure may differ across South Asian countries as will the policy responses to mitigate them and thereby ensure that longer term development goals are not compromised,” elaborated Dr. Kelegama.
This year the SAES has four plenary sessions, 14 parallel sessions, three special events and two guest speakers, which totals about 26 sessions.
The ‘Big’ Four
The sixth SAES will centre the discussion on four key issues concerning the growth in South Asian states. Referred to as ‘the Big Fours,’ the summit will explore making maximum use of the region’s human capital resource by creating productive employment for a growing labour force, more effective utilisation of water resources, ensuring food security and adapting to climate changes, addressing growing urbanisation and intra-country disparities, and ensuing continued competitiveness of the private sector in both domestic and external markets.
The four thematic presentations will be made by RIS, SWATEE, SDPI, and CDP. The presentations will be followed by expert panel discussions and parallel sessions.
New features brought in by SAES
Apart from the event being the first-ever carbon neutral event to take place in Sri Lanka, the summit attempts to take discussions beyond the boardroom as it will be available for viewing anywhere in the world via live webcast. The SAES will also be followed by a series of ‘Official Partner Events’ where some of the speakers will deliver guest lectures at leading Sri Lankan institutions such as the Lakshman Kadirgamar Institute and the University of Colombo.
The SAES 2013 is also the first to have a youth delegation, facilitated with the support extended by the World Bank. The summit has attracted a group of young participants from across South Asia who will be taking the message of the summit to the younger generation through blogs and social media.
Role of SAARC and SAES in the development of South Asia
Noting that it is timely that the SAES is taking place, SAARC Secretary General Ahmed Saleem acknowledged that the event suggests ways and means for further deepening the process of regional integration and cooperation. “The coming together of so many luminaries drawn from the region and beyond not only signifies the importance of this summit but also augurs well for its successful outcome,” he said, during his opening remarks.
He opined that the SAES held so far have been an important platform for South Asian researchers, academicians, business persons, and Government representatives to exchange views on issues having a direct bearing on economic integration on the region.
“It is common knowledge that South Asia is a reservoir of abundant human capital although the region occupies a small area of the world in terms of geography. This can be both an asset and a liability. Therefore, the question as to how to make the best use of this human capital poses a formidable challenge,” noted Saleem.
He elaborated that in this context, the establishment of the South Asian University, which is in its third year of operation, should be considered as a significant leap forward in not only addressing this challenge, but also harnessing human capital.
“Measures on making the best use of water resources, ensuring food security and addressing the adverse effects of climate change can effectively contribute towards the overall prosperity to the region,” opined Saleem. He pointed out that on the other hand, misuse of resources can endanger the overall progress and development in other areas. “We at SAARC look forward to benefiting from the suggestions emerging out of this event on this regard,” added Saleem.
Furthermore, he said the vast majority of the population in the South Asian region still depends on agriculture. He emphasised that it is a challenge for all governments of the region to provide this population with adequate nutritious food at affordable prices with easy access. “The agreements on the SAARC Food Bank and the SAARC Seed Bank are concrete measures initiated by the SAARS to contribute towards the overall objective of ensuring food security in the region. I am glad to inform that all member states have now ratified the agreement on SAARC Food Bank,” he shared.
However, he pointed out that the region must be cautious in this regard since the attempts ensuring food security might fail if countries are not prepared to face the consequences brought about by climate change and adverse environment.
Saleem revealed that studies have shown negative impacts of the phenomena in various parts of the region, be it landslides, frequent floods or droughts. “Regional cooperation becomes paramount in these areas over which advance preparations, timely help and cooperation are important when disaster strikes,” he asserted.
Pointing out intra-country growth disparity as another challenge to ensuring sustainable growth, he noted that a number of studies show that lopsided and non-inclusive growth create other problems in the long run which are not good for society.
“It is seen that unequal societies have a tendency to have more crime rates than the ones that have more equality and inclusive growth. The principle fortunately has been in the minds of our leaders. With SAFTA having divided countries into two categories as non-least developing and least developing nations, the latter is also encouraged to come up with ideas for their future development with the help of the other group,” said Saleem.
Having pointed out the role of SAARC in the development of the South Asia region, Saleem said more has to be done by the body. “It is nearly 28 years since SAARC was established but it has a long way to go to realise its true potential and promise. I believe that economic cooperation is the key to our (South Asia region) success,” he said.
Issues faced by the South Asia region
Stating that while there are national solutions that many countries experiment with, Government of Pakistan Minister Iqbal noted there is a substantial opportunity that is being missed out. Identifying the opportunity as the currently stifled potential of regional economic cooperation, Iqbal said the region’s constant struggle in prioritising between urgent and important issues should be acknowledged.
“While regional cooperation is important, addressing urgent domestic issues becomes a priority for all of us. However, at regional level too, there are certain urgent and pressing development challenges that South Asia faces today. It is important for us to give quality time and attention to deciding on the potential measures from the existing and emerging development discourse to address these challenges,” he said, delivering the keynote address.
Iqbal observed that as a region, South Asia was able to buffer the immediate shocks of the global financial crises and was able to become one of the fastest growing regions over the last decade. However, he said that the social impact of these growth trends, particularly in terms of development indicators such as poverty headcount, income inequality, food insecurity, climate risk reduction and female labour force participation, among others, remains questionable.
“Today, there still remains immense poverty in the region, child undernourishment is high, conflict continues to be rife and there has been slow progress towards the achievement of Millennium Development Goals (MDGs). This distinction in the accruing benefits from the region’s growth has not just been prevalent within member states but also amongst them,” asserted Iqbal. This, according to him, has given some countries in the region a lead while others continue to lag behind, consequently worsening the incidence of poverty as well as of income inequality across the region.
He explained that despite the region having achieved increasing growth rates, South Asian economies continue to ignore the basic norms of sustainable production and consumption patterns, which have led to a ‘shining’ South Asia and a ‘suffering’ South Asia.
“The suffering gets further aggravated due to the restricted access to basic services in most, if not all, South Asian economies. These inequalities are not just confined to income levels, but have a wider social and human rights connotation, including gender equality, and minority rights. Moreover, due to lower levels of literacy and even lesser exposure and access, demand-side accountability remains weak, leading to poor social service delivery and further exacerbating rent-seeking activities in the economy that carry negative long-term implications. This has made the growth process in South Asia less inclusive,” professed Iqbal.
Speaking about being excluded, he said the ‘excluded one,’ when it gets a collective identity – be it creed, ethnic, national, or any other – it immediately finds a group or a country which is usurping its rights and that is what leads to a conflict between ‘haves’ and ‘have-nots’ at societal level. This eventually is noted to lead to trans-boundary natural resources conflicts at regional level.
“We can never overcome the challenge of exclusion through a win-lose situation where victory of one group would be at the cost of loss of the second group. We have to adapt a win-win situation. Everyone wins when growth would be treated as more of an all-round inclusive process in each of these countries,” noted Iqbal.
“That is what the new development discourse dictates and that is what has now become the need of the hour: treating growth as a dimension of sustainable development that can extract masses from misery,” he added.
Challenges in the region
Iqbal pointed out that according to research conducted by SDPI in Pakistan, three development challenges which the region collectively faces have been identified. He noted the three challenges as rebalancing macroeconomic developments in favour of welfare impacts, thinking beyond MDGs, and working for a regional political stability to divert more resources on social development.
“We should also take stock of some of the emerging mega-trends across the region, which need to be treated with caution in order to capitalise for development across the region at large,” he advised.
According to him, South Asia seems to have experienced enhanced individual empowerment that has largely resulted from a rising middle-class, increased access to ICT, a vibrant civil society, and a relatively more independent media. Iqbal opined that one can attribute the anti-monarch movement in Nepal, the independence of the judiciary in Pakistan and the Anna Hazare movement in India to this individual empowerment that has led to popular mass movements.
Furthermore, he said there is also higher incidence of urbanisation in South Asia that continues to lead to increased internal as well as external migration. This has been captured by research studies as it is found that increased migration flows have led to not only an increase in the flow of foreign remittances but also in the transfer and diffusion of knowledge from advanced countries.
Iqbal stressed that reshuffling in traditional power structures should be taken into account. Highlighting a few, he said: “The Grameen Bank experience in Bangladesh which influences millions of lives across the country today should be considered. Similarly, in Pakistan the power centre has moved from military to parliament, provincial governments, superior judiciary and independent media. One observes similar examples in other countries in South Asia.”
He observed that there is also a rise of popular culture across the region that has resulted from improved access to ICT and higher literacy rates. “South Asia as a whole continues to be vulnerable to adverse climate change effects that increases sea level, erode cultivable land, suppress returns for farmers and exacerbate food insecurities in the region,” he said.
Vulnerabilities in the region
He said it is important to qualify at this point that there are important dimensions to South Asian regional development that need to be carefully borne to turn the trends in favour of the region. “South Asian governments have lagged in terms of investment in human capital, which has exacerbated not just the poor state of social service delivery but also the state of social justice across most South Asian countries. Going forward, such exclusions carry the potential of rising conflicts across these countries.”
Iqbal asserted that the region continues to be extremely vulnerable to natural and human made disasters and little has been done so far in terms of disaster management and minimisation of adverse after-effects.
Moreover, he said considering the track record of governing structures, South Asian nations have to be careful about how openness and transparency facilitate favourable democracies that should be more inclusive and less vulnerable to dictatorial tendencies within nations.
“The tendencies of conflict in South Asian economies continue to pose development challenges for the region. I must say that finally the region is thirsty for affordable and clean energy,” he expressed.
Importance of regional peace
“Regional peace and resolving political differences through negotiations would let us divert scarce resource on building human capital,” noted Iqbal. He said by doing so it will help the South Asia in implementing a regional disaster risk reduction strategy where upper and lower riverine countries would coordinate better and work together to avoid disasters like floods and water scarcity.
According to him, regional peace will help minimise the use of intra-regional hostilities in the domestic politics and in turn strengthen the democracies. “Inclusive and economically integrated South Asia is the answer to growing energy scarcity. We need to think of energy corridors within this region to meet each other’s energy needs.
At macro level, such integration is a must to cope with negative impacts of the financial crisis and recession, which are hitting our traditional trade partners, Europe and the USA,” stated Iqbal.
Need for making SAARC effective
Besides fostering peace, he said it is necessary for the region to think of new ways of making SAARC an effective forum. “We did agree on SAARC Development Goals. However, the fate of the SDGs was not much different than the MDGs. We often say that lack of political ownership of MDGs in member states led to slow progress on achieving them. However, SDGs were our indigenous and homegrown solutions, yet due to our lack of cooperation we failed more than 70% of South Asians who live below US$ 2 a day,” pointed out Iqbal.
He said it is time the region learns for the fate of MDGs and SDGs. According to him, South Asia should make collaborative efforts to meaningfully implement some of the agreed decisions such as the SAARC Development Fund, SAARC Food Bank and SAARC Disaster Reduction Strategy.
Given the South Asian context, he said governments need to adopt a more rigorous approach in developing social capital and expanding the resultant knowledge base. Iqbal observed that this would not only result in flourishing democratic norms in the region but will also significantly contribute towards long-term and inclusive economic growth.
He pointed out that there is also a persistent need for investing in and promoting social innovations such as modern tools in social accountability and micro-financing.
Importance of private sector in regional development
Iqbal stressed that the role of the private sector should not be discounted where growth is concerned.
“While the private sector is pivotal in accelerating growth and should be allowed to take lead in doing so, it is time for governments to reassess their own role so as to balance spending in favour of human development,” he said, adding that well thought-out policies and economic growth resulting from increased private sector-led activity can generate fiscal space for development spending.
Need for a long-term vision
During the keynote address, Iqbal requested the experts present at the SAES 2013 to come up with a South Asian Vision 2025, 2050 or 2075. “My belief is that only a vision of a region where the gap between the haves and have-nots could be narrowed, where there is a sense of shared destination, a common resolve to opportunity and fairness, and where we deliver on securing economic, social, cultural and political rights can help us in achieving an inclusive economic growth, a growth which would be much higher than what we can achieve if our region remains divided,” he asserted.
Pix by Lasantha Kumara
SL’s growth status in South Asia and future challenges
Addressing the gathering as Chief Guest, Senior Minister for Human Resources D.E.W. Gunasekera said: “Five years since the onset of the global economic meltdown, countries around the world are still reeling from the crisis. Questions are emerging about a ‘new normal’ setting in a prolonged period of subdued growth in the developed world. But emerging economies in Asia are proving to be centres of economic vitality amidst this gloomy outlook.”
Flaunting the progress made by Sri Lanka in the recent years, Gunasekera stressed that the nation is now on an ambitious growth path having come out from three decades of conflict, division, and war. “We (Sri Lanka) are proud to be hosting many international and regional conferences of this nature. This way we are able to show the world what the country is capable of doing in the absence of a war,” he expressed, with confidence.
Sri Lanka having made strong progress in terms of economic development in the recent years, Gunasekera said the nation has excelled at achieving the MDGs and is ahead of many peers in the South Asian region.
He shared that between 2006 and 2010 the poverty rate nearly halved, pulling up around one million people out of poverty. “Unemployment has fallen from 5.8% in 2009 to 4.0% in 2012. With a per capita GDP nearing US$ 2,900, Sri Lanka has now firmly entered middle-income country status,” said Gunasekera
He pointed out that the country’s achievements are going into Hambantota with an ambitious infrastructure investment drive that is in line vision of the President, the ‘Mahinda Chinthana’.
“In the past year, Sri Lanka commissioned a new international airport at Mattala, a new port in Hambantota and the new Colombo South Port just last month. All these are going to help position Sri Lanka as a leading hub for commerce in the South Asian region,” stated Gunasekera.
However, he said transition to a middle income status brings with it ‘growing pains’. To point out a few, he noted changes in aspirations of young people on the type of employment they seek. According to him, manufacturing enterprises are facing difficulties finding workers for the ‘factory floor’ work type.
“The new urban youth have new aspirations. But the shifting of preferences away from ‘blue-collar’ work comes with new pressures on the education system to deliver the required skills and training that gear workers to a new knowledge-led economy,” he expressed.
Gunasekera emphasised that for countries such as Sri Lanka, and others in the region, it is essential to focus on policies that fully harness human resource potential. He said the region requires policies that equip young people with the skills they need to compete in the global economy on a level-playing field with others in the West.
“This is the path to economic justice. The youth of our countries is the biggest asset we have. As the Senior Minister overseeing the area of human resources, I know firsthand how important it is to ensure that our youth are able to actively and productively contribute to socioeconomic development,” said Gunasekera. He added that without this, the region cannot achieve faster growth in a way that meets the aspirations of the younger population.
“Without this, our countries cannot ensure that all people are able to contribute to growth as well as benefit fully from it. Without this, there is a risk of discontent and unrest. Creating jobs that are good, safe, productive, and bringing prosperity to all citizens must be the focus of all of our countries,” he asserted.
Gunasekera opined that when talking about various human development challenges, it is meaningless without thinking about the financing aspect. Stating that taxation is an important part of the discussion, he said: “I started my public service career in the Inland Revenue Department and this topic is very close to my heart. Sri Lanka’s tax collection is low relative to its GDP and also compared to its peers. This is an important issue for us, especially at a time when concessional donor aid is declining,” he said.
Gunasekera emphasised that enhancing finances of a government is essential for both macroeconomic stability and to expand the fiscal space. For this he said the Government has to undertake investments to improve welfare, connectivity and competitiveness.
“As the Chair of the Committee on Public Enterprises (COPE) in Parliament, I have been pushing this agenda strongly. Focusing on where State machinery is losing valuable tax revenue due to various inefficiencies, the reports issued by this committee are comprehensive and influential and are bringing in a new consciousness in people’s minds on how public enterprises are managed,” stated Gunasekera.
Opining that the issues highlighted are common to all countries in the South Asia region, he said it is imperative for the region to work together to address them.
“Sri Lanka is committed to strengthening SAARC and to expanding our economic and social linkages with all of the countries in the region. We share strong roots in language, culture, and values. It is not just our economies that must be stronger, but also the traditional ties that bind us,” he said.
He pointed out that unlike the ASEAN region, South Asia is very diverse and has made very slow progress in regional cooperation. “Although there is a strong desire among SAARC professionals to come together, the problem is that their overall impact of the SAARC process has not been significant. The dialogue between the Track 2 and Track 1 activities have been either informal, ad-hoc or of a very personalised nature,” opined Gunasekera.
“In this context I see the South Asia Economic Summits as a key Track 2 activity that could influence the SAARC process. It is a Summit that promotes a tripartite dialogue among business, academia and government officials, which we do not find much in other Track 2 activities,” he said and added that the SAES is an “excellent” forum to discuss ideas and feed into the SAARC process to expedite closer economic cooperation and regional integration.
