Foreign Minister Rohitha Bogollagama delivering the inaugural address at the 1st South Asian Economic Summit organized by the Institute of Policy Studies in collaboration with the Federation of Chambers of Commerce and Industry said that the South Asian Economic Summit will assure the South Asian Countries at the opportunity to improve, enhance and expand connectivity in the South Asian region.
Address by the Foreign Minister;
It gives me great pleasure to deliver the inaugural address at the 1st South Asian Economic Summit organized by the Institute of Policy Studies in collaboration with the Federation of Chambers of Commerce and Industry of Sri Lanka.
The South Asia is just emerging from the successful conclusion of an extremely significant and momentous regional integration exercise – the 15th SAARC Summit - held in Colombo in the latter half of July and early August. The 1st South Asian Economic Summit, which commences today, will afford us the opportunity to improve, enhance and expand connectivity in the South Asian region, by adhering to the theme of the Colombo SAARC Summit i.e. “Partnership for our People”.
The theme of the 14th SAARC Summit, which was held in New Delhi, was “Connectivity”. The theme of Connectivity was defined as free flow of goods, services, people and ideas between and among the member States of the SAARC. It is understood that Connectivity is crucial and indispensable to the future of the development and advancement of the region of South Asia. Allow me to state that the recent Colombo SAARC Summit chose the theme “SAARC Partnership for our People” in order to have a sense of continuity and extend greater efficacy to the previous theme of “Connectivity”. I am happy to be associated with this event as it is a vital platform, bringing together South Asian political leaders, senior government officials, corporate sector, and civil society among others. The Government of Sri Lanka, in the capacity of the Chair of the SAARC, is placed at a vantage point to play a pivotal role with regard to economic integration of South Asia.
As the Chair of SAARC, Sri Lanka endeavors’ to build on the successes of previous summits in strengthening the SAARC process. Our objective is to ensure that the decisions taken and agreed upon at the Summit are efficaciously implemented and executed, thus delivering tangible economic benefits to the region of South Asia. The 15th SAARC Summit addressed and deliberated some of the pressing and key regional issues such as regional cooperation and trade, trade facilitation, connectivity, energy and power, food security and establishment of food bank, SAARC Development Fund, poverty alleviation, education, tourism, environment, transfer of technology and ICT, South Asian regional standardization and combating of terrorism among others.
The four key concepts of the era of 1980s and 1990s were globalization, liberalization, integration and regionalism. The Colombo Summit increasingly extended and focused on enhancing connectivity not only air connectivity but by land and by sea as well. The benefit of greater connectivity between and among the member States, in particular, would make a strong economic impingement in the region with regard to trade, services, food security, tourism, international joint ventures, oil and natural gas and investment as well as foreign direct investments/foreign institutional investments. Connectivity is often described as the common thread or the common denominator of the four concepts of globalization, liberalization, integration and regionalism.
The region of South Asia has one of the highest numbers of people under the poverty line and current economic advancement of the region is far from satisfactory. The region of South Asia is also one of the less integrated regions in the world. The connectivity, if and when transformed into physical connectivity, it could visibly alleviate poverty from the region of South Asia as well. It may also be reasonable to state that the rapid development and advancement of the EU was due to physical connectivity and it is not alien to many regions, which have developed, in the world. On the same vein, may I add that the region of South Asia, unfortunately, is not integrated similar to other regional blocs such as ASEAN, the EU, Mercusor, GCC and NAFTA to name a few. As we are well aware that the intra regional trade of the SAARC region is still less than 6% of the total trade. This is despite the fact that the region of South Asia is one of the most endowed regions in natural and human resources.
Most of the other established regional blocs have intra regional trade ranging from 20% to over 60%. In order to have greater and deeper economic integration in South Asia, the public and corporate sector as well as the respective governments would have to tenaciously focus on the concepts of regionalism, integration, liberalization and globalization. The share of global trade of the SAARC region, despite being the most populous regional bloc consisting 23% of humanity, is barely 1.45% and the share of global GDP is only 2.8%. Having stated these cogent, yet disturbing, facts of the economic integration of South Asia, the region is well endowed, as stated earlier, and poses increasing economic opportunities, potential and vistas for closer and deeper integration. The region of South Asia possesses a myriad of complementarities, which could be leveraged and mutually exploited through the SAARC as well as through the SAFTA process.
At the Colombo SAARC Summit, the leaders of the member countries were of the conviction that the process of regional cooperation should be people centered since it would strengthen the SAARC as a ‘robust’ partnership for growth for the peoples of South Asia. I am happy to state as the Chair of the Council of Ministers of SAARC that the SAARC mechanisms did identify and recognize other areas of cooperation, where people centric partnership projects could be initiated. Further, issues such as affordable regional telecommunication are an imperative ingredient of connectivity, thus encouraging growth of people-to-people partnership and augmenting economic integration as well as economic activity. The Colombo SAARC Summit further recognized the indispensability of connectivity in order to realize the objectives of the SAARC. On the same note, I am heartened to state that air connectivity between Colombo and Dhaka has already commenced. The national carrier of Sri Lanka i.e. SriLankan Airlines is today the largest foreign carrier to India, having over 120 flights per week to 10 cities in India
The Foreign Direct Investments (FDIs), Foreign Institutional Investments (FIIs) and International Joint Ventures (IJVs) as well as mergers and acquisitions between nations in the region of South Asia are minimal compared to many other developed and developing regions of the world. The intra-regional investment is a key factor for the leaders of the countries of South Asia as well as the corporate sector to focus and address. Sri Lanka has concluded a successful and highly productive Free Trade Agreement (FTA) with India in December 1998 and is about to sign the Comprehensive Economic Partnership Agreement (CEPA) with India. The CEPA would encompass not only the goods which are in the existing FTA, but services as well. In other words, the CEPA would consist of facilitation of investments, extension of services of many a disciplines and trades, and international joint ventures between the two countries.
The bilateral trade between India and Sri Lanka is approximately close to USD 3 billion and is envisaged to reach higher, once the CEPA were operational. Further, I wish to add that Sri Lanka has an FTA with Pakistan as well and is poised to be yet another success, similar to the FTA between India and Sri Lanka. The FTAs can be described as a prelude for greater expansion of economic dimensions between the countries. The Partnership Agreements, such as the imminent CEPA between India and Sri Lanka, could make a marked economic impingement on the commercial and trade fabric of the two respective countries. The South Asia Free Trade Agreement would lead to deeper, pro-active and comprehensive economic integration, once it becomes fully operational.
In order to evolve greater economic integration, it is necessary for the respective governments of South Asia to address trade facilitation, in all its aspects. At the Colombo Summit, the leaders of the SAARC countries agreed to implement the SAFTA, which would significantly contribute to the SAARC process. Further, it was heartening to note that the leaders of SAARC member countries recognized the necessity to address major and potent impediments, which are hindering trade liberalization between and among the nations in the region. The Colombo Summit deliberated on measures to address the non tariff barriers (NTBs) as well. I wish to broach the importance of the Agreement on South Asian Regional Standards Organization, which was signed at the Colombo Summit. The intrinsic utility of this initiative would be that the standards of the goods and services would be consonant with each of the countries of South Asia, thus increasing bilateral and multilateral trade as well as integration. Also, the standardization would reduce the cost of production, which would particularly be of benefit to small and medium enterprises (SMEs) as well.
The issue of Food Security was foremost on the agenda of the Colombo Summit highlighting the resolve of member countries to ensure region-wide food security. The adoption of the Colombo Statement on Food Security is a clear depiction of the emphasis placed on this crucial matter. It was agreed that all efforts should be directed towards making South Asia the granary of the world once again. Identifying the uncertainties associated with the emerging global situation of reduced food availability, the member states agreed to convene a meeting of the Minister of Agriculture in November 2008 in New Delhi.
The purpose of this Meeting would be to evolve and implement a people-centred short to medium term regional strategy and collaborative projects to address core issues including the increase in food production; Investment in agriculture and agro-based industries; Agriculture research and prevention of soil health degradation; Development and sharing of agricultural technologies; Sharing of best practices in procurement and distribution; and Management of the climatic and disease-related risks in agriculture.
Another significant step was the agreement reached to urgently operationalise the SAARC Food Bank and the early drawing up of the SAARC Agriculture Perspective 2020. The leaders also agreed that synergies should be built with the international community to ensure food and nutrition security in South Asia.
The Colombo Summit inked the SAARC Development Fund (SDF). The SDF would be utilized for projects on empowerment of women, maternal and child health care, teachers’ training as well as rehabilitation of the infrastructure and poverty alleviation in South Asia. This could be considered as a momentous step towards development of the region since the SAARC Development Fund consists of USD 300 million.
In order to have effective economic integration and advancement in South Asia, it is vital to have access to power and energy at affordable and economical prices. On the same note, Sri Lanka imports approximately 2.6 million barrels of oil per year, which would translate to USD 3.5 billion a year, at the current price of approximately USD 110 per barrel. The progress of the mega tri-lateral gas projects among Iran-Pakistan-India and developing of regional hydro power and grid connectivity could lead to greater economic integration and access to energy.
The Colombo Summit unequivocally noted the vitality of energy for growth and development in South Asia. Needless to state at this juncture, the unprecedented rise of oil in the recent past has created an economic disequilibrium not only in South Asia but in the entire world. In order to address this issue, the Colombo Summit focused on conservation of conventional source of energy and developing renewable alternative energy resources such as hydro power, solar, wind and bio. Further, the Summit discussed and mapped out measures to introduce energy reforms, and trade and sharing of technology and expertise in the realm of energy and power. It was proposed that Sri Lanka would host the Third Meeting of SAARC Energy Ministers next year.
South Asian University
The establishment of the South Asian University in New Delhi would benefit all the member countries in enhancing the human resource development and marketable skills and knowledge. It is envisaged that this University would be on par with some of the top universities in the world. For any given country, particularly the member countries of SAARC, the human resource base would be of paramount significance and importance for the development and advancement of the respective countries. The South Asian University is envisaged to commence by year 2010.
The Colombo Summit discussed and deliberated increased interaction between and among students and academia as well as to develop youth exchange programmes. I may also add that the Colombo Summit discussed closer regional cooperation in Information and Communication Technology (ICT). It is anticipated that the enhanced digital connectivity and Regional Communication Infrastructure among the States of South Asia too would be enhanced and upgraded. The improvement of ICT and bio-technology could make a positive impact on the quality of life of the peoples of South Asia, thus facilitating to uplift their standards of living.
The recent SAARC Summit, succeeded in signing the Agreement on Mutual Assistance on Criminal Matters, which would be beneficial in addressing terrorism and terrorism related activities in the region. It was interesting to note, yet not surprising, that almost all the members of the SAARC as well as some of the Observer States of the Summit vehemently condemned terrorist activities unconditionally. Unfortunately, today terrorism has become ubiquitous and is not alien to any part of South Asia.
In conclusion, I listed out the agreements, accomplishments and developments of the Colombo SAARC Summit in the context of the First South Asia Economic Summit in order to accentuate and impress the manner in which they would contribute to greater economic integration in the region of South Asia. Nevertheless, the South Asia needs to integrate economically, if South Asia were to develop and advance itself similar to her neighbors in South East and Far East Asia, in particular. Historically, nations around the world have developed and advanced in blocs or regions and seldom in isolation. It is also interesting to note that when nations are committed and engaged in dynamics of economics and business to a great extent, they would diminish and dilute any other differences.
It is also often stated that economics would not take place in a political vacuum and vice versa. Having stated this premise, the economic integration in South Asia is indispensable not only for advancement but also to establish a sense of stability and predictability. I may also add that given the degree of poverty in the region, the economic integration in South Asia could be a powerful and compelling instrument to lift the underprivileged from the shackles of poverty. Further, the economic integration could integrate a large percentage, which is approximately 64% of the populace who dwell in villages in South Asia, to the economic mainstream, thus extending dividends of economic integration.
I take this opportunity to acknowledge the role played by the Institute of Policy Studies (IPS) and the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL), in initiating and hosting this important Summit. Events of this nature and this scale can educate and edify the leaders of South Asia as well as corporate and public sector to extend greater focus and place more importance on economic integration of the region.