– Chandi Raj Dhakal

SAARC countries have established a number of institutional frameworks to promote regional economic integration over the last three decades. However, the share of intraregional trade in the total trade of the South Asian countries is stagnating at 5% only, less than one third of its potential. One of the major impediments in unleashing the true potential of the region is lack of an integrated transport and people to people connectivity.

Connectivity links both places and people by creating the physical infrastructure necessary for the flow of goods, labour and information. Connectivity is the cornerstone of regional economic integration, shaping regional production networks and trade patterns through its impact on competitiveness. Connectivity has psychological implications and extends beyond people’s mental boundaries. Improving people-to-people connectivity and removing physical and mental borders could lead to meaningful cooperation.

Chandiraj Dhakal

Cross-border transportation facilitation is still lacking despite improvements in transportation infrastructure and services in all South Asian countries at different paces. Regardless of their size, member nations of SAARC could benefit greatly from improving transport connectivity. For instance, Nepal has the potential to see GDP gains of up to 14%.

Costs of trading within South Asia remain high at 114% of the value of the goods being exported, making trading with neighboring nations more expensive or less competitive, compared to trading with distant partners and discourages the formation of regional value chains despite the geographic contiguity. Poorly developed land transportation infrastructure is a key reason behind high trade costs which is further exacerbated by strict visa regimes and non-existence of air connectivity within the region.

Even though South Asia is blessed with a long coastline and access to international shipping routes, the region’s overall trade costs remain comparable to those of the landlocked countries of Central Asia, which suffer from severe transport constraints. These are indicative of the prevalent shortcomings related to both transport and trade facilitation in the region, which hurt its trade prospects.

Lack of integrated connectivity is not only restraining the economic integration of South Asian region rather restricting the people of the region to revel the socio-cultural festivities together. Despite of the fact that SAARC being home to marvels like Taj Mahal, Ajanta, Sigiriya, Timpu, and Taxila, home to the highest and the second highest mountain peaks of the world Everest and K2 and with an unmatched biodiversity South Asian region has the key ingredients to delight its visitors.

The tourism potential of the region is unmatched and yet waits to be unleashed, lack of transport routes, non-existence of air connectivity and strict visa regimes not only restricts the flow of intra-regional tourist across the region rather restricts the movement of international tourists visiting the region.

Restrictive policy regimes have restrained the beneficial effects of common cultural affinity and geographical proximity, and the ‘gravitational’ pull of proximity on movement of goods and people. In 1948 the intra-regional trade of South Asia was more than 20% that has reduced to mere 5% today. Over the past seven decades only half-hearted steps have been made to restore or build transport linkages.

Due to inefficient transport infrastructure trade transactions in South Asia are high ranging between 13-15% as compared to 5-6% in the neighboring trading blocs. Similarly, air connectivity within the region has rather decreased significantly over the years. Major flights between South Asian capitals have ceased, therefore the people of South Asia have to travel to via Middle East, with exorbitant time and monetary costs.

South Asia today is most disconnected region in the world, not mere physically or in terms of infrastructure but in our commitment toward regional prosperity promised in the SAARC Charter. The Summit is due for almost a decade now, the regional committees are hardly meeting even in this digital era, the reginal recognized bodies are paralyzed and regional activities have ceased. The member states need to move SAARC from declaratory to implementation phase, and that requires political will from the political leadership of the South Asian member countries.

Regional connectivity in the region needs integrations of not only business, commerce and trade but for the people who actually move. Extensive modernization of trade and transit facilities between Afghanistan-Pakistan, Bangladesh-Nepal, India-Pakistan and Bhutan to Bangladesh are needed to be built with economic rational on the lead.

(The writer is Vice President SCCI and former President of FNCCI.)