Graeme Wheeler

MUMBAI: Trade between Indian and Pakistan could rise to over $ 9 billion over the next five years from the current $ 1 billion if barriers relating to policies, infrastructure, corruption and red tape are eliminated, Graeme Wheeler, Managing Director, World Bank, said on Sunday.

"Despite a common location and history, South Asia remains the least integrated region in the world. Countries here have significantly opened up trade with the rest of the world but remain closed to each other. Protective policies, poor infrastructure, corruption and red tape hamper the growth of trade. Countries of the region now need to work towards reducing the costs of doing business, improving institutions and addressing infrastructure constraints," he said.

Mr. Wheeler was addressing a special valedictory session of the second SAARC Business Leaders' Conclave here.

Energy trade

Mr. Wheeler said the benefits of trade integration were dwarfed by potential gains from regional cooperation in areas such as energy and water.

"India, one of the most energy-hungry nations in the world, is sitting next to three energy-surplus countries — Bangladesh, Nepal and Bhutan. Yet, except with Bhutan, India's energy trade with these countries is miniscule. Just as cooperation between India and Pakistan on the Indus river ushered in the Green Revolution in the 60s, further cooperation by India, Bangladesh and Nepal on the same river as well as on the Ganga and Brahmaputra could herald a second green revolution for the whole sub-region," he said.

Earlier, External Affairs Minister Pranab Mukherjee and Praful Patel, Vice-President, South Asia Region, World Bank, launched a report, `South Asia — Growth and Regional Integration,' jointly prepared by the World Bank and the SAARC Chamber of Commerce and Industry (SCCI).

Policy reforms

The report, which examined the contribution of regional integration towards South Asia's growth, stated that growth in the past was aided by implementation of the first-generation policy reforms aimed at global integration, macro-economic stabilisation and reduction in the scope of the state while strengthening the role of the private sector.

These reforms made South Asia more competitive, stable and adaptable.

South Asia now faced increasing challenges such as the high cost of doing business, weak institutions, weak knowledge economy and infrastructure from second-generation policy reforms, it said.

Paul Volcker, former Chairman, U.S. Federal Reserve, noted that while India and the rest of South Asia were being seen as `a big opportunity' for international finance and technology, there was an urgent need for good governance in the entire framework in which government and businesses operate.

He called for open markets, rule of law, transparency in procedures and elimination of corruption to give a fillip to the manufacturing sector and make a dent on poverty.

National commitment

"You need to develop strong responses to specific instances of corruption and bribery, and revolutionise the accounting and auditing system. Above all, you need national commitment, which can only come if the people are made aware of the adverse effects of corruption on the growth process," Mr. Volcker said.

U.N. reform

Alluding to the reforms in the United Nations, he said there was a lot of resistance to change in the world body's structure. A system of transparent rules and procedures was in place now.

"But there has been no progress in implementation of reforms as the bigger countries have not shown the will to press ahead. I hope India, with its vast population and growth record, will be able to influence the international political leadership and take the lead in reform in the U.N."

The second SAARC Business Leaders' Conclave with the theme of `Regional cooperation — a springboard for growth and job creation' was held on February 17 and 18 in Mumbai.

This conclave aimed at setting the economic agenda for the SAARC Heads of State summit and giving practical inputs to policy makers at the highest level for business promotion in the SAARC.

The conclave, inaugurated by Mr. Mukherjee, saw the participation of business delegations from Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

Lyonpo Chenkyab Dorji, Secretary General, SAARC, also addressed the gathering. Ministers and senior officials from all member States discussed about creating an enabling policy environment in South Asia.

Mumbai Declaration

The conclave adopted a 13-point Policy Reform Agenda, known as `Mumbai Declaration,' to achieve intra-regional trade of $ 20 billion by 2010 for submission to the 14th SAARC Heads of State summit in New Delhi in April 2007.

The next such conclave would be held in Pakistan in 2008.

The SAARC Chamber of Commerce would immediately begin dialogue with policy makers to implement the reforms and report the progress at the next conclave.

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