Establishing the connection

Font Size

Print

Feedback

Email

Discuss

: Lack of connectivity between South Asian countries is a key impediment to the region’s economic growth. Creating connectivity so that people can engage in economic exchange is in itself a development strategy; unfortunately, such a strategy has not got the importance it deserves from the policy-makers in South Asia. Border crossings in many parts of the region involve some of the highest transaction costs in the world. There is not a single star performer in the region. South Asia can equal East Asia in terms of growth and global integration if this problem is given the attention it deserves.

In each of the South Asian countries, transaction costs across the border and behind the border rank much lower than the average in emerging countries. Each country fares poorly in trade procedures, transport formalities, domestic transport and logistics infrastructure, and regulatory policies that impact the flow of goods and services within the countries own boundaries.

The connectivity between South Asian countries to a large extent explains why inter-regional trade in South Asia, especially through formal channels, remains the lowest in the world at 2% of the total trade. A World Bank 2007 study estimated that improvements in regulatory and logistical issues can lead to a substantive gain of $2.6 billion in inter-regional trade, an increase of more than half of the current levels of trade.

Unilateral reform in trade facilitation calls for:

* Reducing extensive documentation requirements

* Ensuring full use of information technology

* Bringing about transparency and accountability

* Introducing audit-based controls

* Introducing cooperation among all the Government agencies involved in clearance of cargo.

* Introducing self-assessment.

* Reducing examination of goods to a minimum

* Introducing modern risk assessment techniques

* Introducing Single Window in each port and airport

* Reducing the cargo dwell time

The most important step towards meeting these objectives is to create an Inter-Ministerial Trade Facilitation Committee chaired by a cabinet minister with strong representation from the private sector. The Committee must meet quarterly to review the progress towards the above objectives, examine the causes of delays at every step in the process of cargo clearance and put the guilty parties at task and ask them to show improvement. A smaller level Trade Facilitation Committee must work at every customs point also to resolve simple issues at the source.