SAARC: Retrospect and Prospects
Rajiv Kumar
Director & Chief Executive, ICRIER, New Delhi
Lecture at BIDS, Dhaka, 27 December 2009
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Promote welfare of people
Accelerate economic growth, social progress and cultural
development
Promote and strengthen collective self reliance among the South
Asian countries
Contribute to mutual trust and appreciation of one another’s
problem
Active mutual assistance in economic, social, cultural, technical
and scientific fields
Strengthen cooperation with other developing countries
Strengthen cooperation among themselves in international forums
Cooperate with international and regional organizations with
similar objectives
Promote and enhance mutual trade (since 1991)
• Agriculture and
Rural
Development.
• Health and
Population
Activities
• Women, Youth
and Children
• Environment and
Forestry
• Science and
Technology and
Meteorology;
• Human
Resources
Development
• Transport
• Economic
• Trade
facilitation
• Funding
mechanism
• Legal
• People to People
contacts
• Tourism
• Energy
• Biotechnology
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SAARC Secretariat:
• Located in Kathmandu, Nepal
• The Secretariat comprises the Secretary General,
seven Directors and the General Services Staff
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Seven Technical Committees under the Regional
Integrated Programme of Action (RIPA):
• Agriculture and Rural Development
• Health and Population Activities
• Women, Youth and Children
• Environment and Forestry
• Science and Technology, and Meteorology
• Human Resources Development
• Transport.
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Committee on Economic Cooperation (CEC) comprising Commerce/Trade
Secretaries of Member States established in 1991.
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SAARC Chamber of Commerce and Industry (SCCI), bringing together the
National Chambers of Commerce and Industry of Member States,
established in 1992.
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Eleven Regional Centres run by a Director from the host country and staff
from the member states:
Agricultural Information Centre (Dhaka); Meteorological Research Centre (Dhaka);
Human Resource Centre (Islamabad); Coastal Zone Management Centre
(Maldives); Information Centre (Nepal); Energy Centre (Pakistan); Tuberculosis and
HIV/AIDS Centre (Kathmandu); Documentation Centre (New Delhi); Disaster
Management Centre (India); Cultural Centre (India); Forestry Centre (Bhutan)
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Five Working Groups created in January 2004, to take forward
collaboration in new and emerging areas :
Telecommunication and Information and Communication Technology (ICT);
Biotechnology; Intellectual Property Rights (including Traditional Knowledge);
Tourism; Energy.
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SAARC STORM: Joint programme conducted by India,
Bangladesh, Nepal and Bhutan to monitor severe thunderstorm
in the region (2009).
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Telemedicine Project: Inaugurated in Bhutan in April (2009).
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SAARC Energy Trade Study (SRETS): Completed with the
assistance of the Asian Development Bank (ADB) (2009).
(Special Meeting of the Working Group to examine the trade options
identified by the SRETS and prepare an action plan)
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SAFAS: Agreement on trade in services likely to be finalised
soon.
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SARSO :Agreement on establishment of South Asian Regional
Standards Organisation signed: 4 countries have already
ratified it (2008).
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SAARC Development Fund (SDF): Agreement to establish
at the 15th Summit (2008).
(SDF now operational and India is the only SAARC member to have
contributed its full commitment of US$189.9 million)
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SAARC Regional Multimodal Transport Study (SRMTS) by
ADB (2007):
• Identified nine pilot, sub regional and regional project
• Included road, rail and air links
• Projects to link Afghanistan, Pakistan, India and Nepal
were identified in second ministerial meeting
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Regional Food Bank: Ratification by members (less
Afghanistan) to set up with total reserve of 2.43 ml.
tonnes of food stock (2007).
(Food bank did not prevent the steep rise in food prices in 2008)
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South Asian University :Agreement for setting up the
South Asian University was signed during the 14th
SAARC Summit (2007)
(A project office established in New Delhi, India,2009)
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SAFTA: Signed in 2004, became operational in 2006.
(Intra region trade still very low)
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Outcomes not commensurate with official statements:
• Projects have been identified under Technical Committees
and Working Groups, but the implementation is slow.
• Poor resources and technical capacities to monitor and
evaluate the activities of the Regional Centres.
• The projects of the Regional Centres not demand driven
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The SAARC Multimodal Transport Study completed in 2007 is
very promising, but the pace of progress is slow.
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Tangible gains though small are confined to trade.
Intra-regional trade as a proportion of the world
trade has remained low, 4.7% in 2008
 Informal trade accounts for 72 % ($1.5 bn) of
formal trade in the region
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Share of Intra-Regional Trade in Total SAARC Trade
1991-2008
5
4
3
2
1
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Percent
6
Years
 Barriers
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•
•
to formal trade:
Weak port and transport
infrastructure
Restrictive rules of origin
Persistence of high levels of
overall protection
Difficult business environment
South Asia
Bangladesh
India
Maldives
Nepal
Pakistan
Sri Lanka
Overall Ease of Doing
Business (Rank)
119
133
87
123
85
105
Trading Across
Borders (Rank)
107
94
126
161
78
65
8.5
6
8
8
9
9
8
32.4
25
17
21
41
22
21
Cost to Export (US$ per
container)
1,364.10
970
945
1,348
1,764
611
715
Number of Documents
for Import
9
8
9
9
10
8
6
32.2
29
20
20
35
18
20
1,509.10
1,375
960
1,348
1,825
680
745
Number of Documents
for Export
Days taken to Export
Days taken to Import
Cost to Import (US$ per
container)
Source: Doing Business Report, 2009, World Bank
Large Sensitive lists
Sensitive lists of SAARC Countries
Country
Non-LDC
Afghanistan
1072
Bangladesh
1254
Bhutan
156
India
865
Maldives
671
Nepal
1310
Pakistan
1191
Sri Lanka
1065
LDC
1249
480
1296
Low level of Intra –SAARC investment flows
Intra- Regional FDI (2007)
Bangladesh
Nepal
Sri Lanka
1.3
0.7
48.2
97.6
89.7
Pakistan
27
0.8
3.6
Sri Lanka
24.8
0.2
Bangladesh
India
Nepal
Source: ADB (2009)
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From perceiving SAARC as being against its interest to a
recognition of its assymetric role
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Since the formation of SAARC, neighbouring countries have
feared India’s hegemony in the region
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India now recognises that it should undertake asymmetrical
responsibility to assuage fears of member countries
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Unilaterally reduced negative list of items from 744 to 480 for
SAARC LDCs.
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A task force has been set up by the Ministry of Commerce to
address NTBs faced by partner countries.
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Agreement for setting up the South Asian University was
signed during the 14th SAARC Summit (3-4 April 2007).
India has enacted the SAU act (2009) and established a
project office in New Delhi.
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Has agreed to fund the Telemedicine project (inaugurated
in Bhutan, 2009) and also act as the hub.
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Plan to set up 50 automated weather stations in Nepal,
Bhutan, India and Bangladesh (2009).
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India voluntary allocated $100 million to the SAARC
Development Fund in addition to the assessed
contribution (2008).
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Since 2007, India-Bangladesh investment
restrictions removed.
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India-Pakistan investment decisions now
made on a case by case basis.
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Residual fears of India’s hegemonic
intentions need to be addressed.
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Confidence building measures to be undertaken:
• Trade expanding measures in place and in the pipeline to be
pursued with greater vigour.
• Strengthening of the SAARC secretariat by bringing in more
professional expertise and increasing the number of people.
• SAARC process to be made more broad based by including
professionals, business community and civil society.
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Successful completion of agreed initiatives:
• Starting the transport corridors identified in the SMRTC Study by
ADB.
• Early completion of the on going work on identifying and
eliminating non-tariff measures.
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Measurable indicators to evaluate the goals should be
initiated.
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The realization that a ‘relative over emphasis’
on border measures discourage regional cooperation.
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Regional cooperation needed to address
issues like poverty, mal-governance and
inequitable growth.
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Create a better understanding of neighbouring
cultures and societies.
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India-Bangladesh co-operation can set a new
paradigm for SAARC integration.
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Recent Initiatives:
• India has agreed to offer transit facilities to Bangladesh to access Nepal &
Bhutan.
• Both sides agreed to movement of containerised cargo by rail and water for
bilateral trade
• Bangladesh agreed to provide access to Ashuganj Port as a new port of call
as well as the use of Chittagong port by India
• Both sides have agreed to enhance cooperation in the power sector and
India has agreed to provide at least 100 MW to Bangladesh on a priority
basis.
• The renewal period of the Protocol on Inland Water Transport and Trade,
which governs the bilateral movement of goods through inland waterways,
has been extended from one month to two years
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Joint approach to Multilateral Development
Banks for regional cooperation required.
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Re-explore sub-cooperation among the four
Eastern member countries
Encourage cross-border cooperation between
neigboring countries.
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Pure Economic & non-traditional
gains
Strategic Gains
Developmental and
Environmental efficiency gains
Non-economic gains
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Greater regional output and resource utilization.
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Significant expansion of intra-industry trade and
commerce.
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Geographical specialization across the region
esp. in agricultural sector.
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Greater investment flows due to the creation of
larger market.
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Large country-small country dynamics.
• Large countries build new geopolitical alliances.
• Small countries learn to effectively deal with larger
trading blocs in multilateral negotiations.
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A unified market for hydrocarbon imports
from Central and West Asia.
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Negotiating advantage in multilateral
forums.
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Potential gains through alliance with
Central Asian countries –
Afghanistan’s membership
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Energy trade –
• Confidence-building measure
• Lock-in mechanism
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Integrated approach towards provision of regional
public goods like•
•
•
•
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Environment
Water conservation
Infrastructure
Natural resources – including regional ecosystems and
related bio-diversity.
Tackle the negative externalities• Drug and human trafficking
• Floods, pandemics
• Ecological degradation
 Politically
stable and tensionfree region would result in –
• Greater FDI, remittances
• Low defense budgets