Can SAARC Chamber be a game changer?

Despite being one of the most vibrant and emerging regions in the world, the SAARC countries have failed to explore their untapped trade potential so far. In the South Asia region lives about 1.92 billion people which amounts to nearly 24 per cent of the world’s population. This by any definition is a huge market.

But, the intra-trade among SAARC countries--- Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka---accounts low ranging between 5-7 per cent of the total trade. Even, this is coming down gradually with every passing year. On the other hand, intra-trade has increased at a steady rate in most other regional blocs.

According to relevant data, intra-regional trade is over 40 per cent in North American Free Trade Agreement (NAFTA), 68 per cent in European Union (EU), and 27 per cent in the Association of Southeast Asian Nations (ASEAN). The economic integration of the region is directly tied to their GDP per capita, higher productivity and, lower poverty and unemployment.

According to the World Bank, intra-regional trade accounts for barely 5 per cent of South Asia’s total trade, compared to the ASEAN region where intra-regional trade makes up 25 per cent. Trade among South Asian countries currently totals just $23 billion -- far below an estimated value of at least $67 billion.

We understood that trade and economic cooperation among the members of SAARC is hardly satisfactory. Bangladesh’s Foreign Minister AK Abdul Momen and many business leaders from the member countries at a recent programme on “harnessing regional strengths SAARC’s importance for South Asia’s growth” also expressed “unfortunate” not seeing enough progress in intra-regional trade after establishing the SAARC Chamber of Commerce and Industry (CCI) too.

Why the intra-regional trade is not growing despite diversified resources and skilled workforce in the South Asia region?

South Asian Association for Regional Cooperation (SAARC) was established with the signing of the SAARC Charter in Dhaka on 8 December 1985 aiming to accelerate economic growth, social progress and cultural development in the region, promote and strengthen collective self-reliance among the countries of South Asia, and promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields.

Later, in a bid to establish a SAARC Chamber of Commerce and Industry (SCCI), SAARC Secretariat commissioned a study on Trade, Manufactures and Services in 1988. The study was completed in 1991 and was concluded with a strong endorsement towards establishing an SCCI to bring about improvement in the business environment, disseminate information about potential tradable goods and identify joint ventures in the SAARC region.

According to the directive of the SAARC Secretariat, SCCI, assisted by the National Federations, submitted its draft constitution to the SAARC Secretariat and received its approval in December 1992. This signified the official recognition of the SCCI by all the national governments of SAARC as the apex body of all the National Federations of Chambers of Commerce and Industry of SAARC.

Presently all National Chambers/ Federations of the respective member countries serve as focal points to facilitate the SAARC, CCI Secretariat in Islamabad. Currently two new sub-offices; in Colombo and Mumbai, have been opened up and are functional.

However, as the consumer market of this region is growing fast, the SCCI has a lot to do particularly regarding untapped trade potential through effective collaboration. The business leaders of the chamber should rethink the regional integration strategies for leveraging relationships to new heights.

We know that there is a key challenge of political dispute in the South Asian region. Besides, climate change and security issues hold other challenges here as well. Resolving political disputes may help to mitigate the impact of natural disasters too. If other regions’ chambers of the globe can take more benefits from intra-regional trade, why can’t we?

We should start the initiative to strengthen the relationship among the SAARC member countries forgetting the previous disputes for the sake of future generations.

On May 25, FBCCI President Md Jashim Uddin has taken over charge as the new president of the SCCI for the 2023-24 tenure through a gala ceremony held in Dhaka.

During taking over, Jashim Uddin said that the private sector holds the key to unlocking this opportunity by venturing into new markets, diversifying product portfolios, nurturing cross-border business collaborations, and removing trade barriers including NTBs. Setting up B2B mutual trade facilitation committee of the SCCI may be established for support.

The private sector is keen to explore business collaborations in manufacturing, agro-processing, industrial machinery, clean energy, ICT, and fast-moving consumer goods (FMCG) among others with value chain linkages and market prospects.

South Asia has a unique opportunity to position itself as a major player in the global trade and investment arena. The region is also blessed with immense resources, and a young and talented workforce, he also pointed out.

The SCCI needs to activate its working groups and strengthen its capacity to in driving business conducive initiatives including transport and logistics infrastructure, harmonizing trade procedures, or promoting digital connectivity, or regional supply chains and private service sector collaborations.

Considering the close ties between Bangladesh and India, the two countries have huge potential to boost bilateral trade. We call upon both the governments of Bangladesh and India to enable an extension of LDC treatment to Bangladesh even after its graduation in 2026 up to the enforcement BD-India Comprehensive Economic Partnership Agreement (CEPA).

According to former President of SCCI (Sri Lanka) Ruwan Ediringehe, SAARC nations have all 4M (Manpower, Market, Money and Materials), we are yet to utilize it. SCCI has deliberately failed in the last decade to pressurize their national chamber to enhance trade between the regions. However, we need to take the necessary actions to minimize barriers.

We hope that cross-border investments, simplifying customs procedures, and developing efficient logistics networks within SAARC can facilitate trade.

As there is huge potential in the area of tourism, agriculture, fisheries, industries, human development and many more, it is time for the government of each country to seize the untapped opportunity in this region.

We expect that the new committee will take all necessary initiatives including setting a target to increase 20 per cent intra-regional trade from the existing 5 per cent in the next two years to explore untapped potential in the SAARC region.

The writer is a Dhaka based journalist. He can be contacted through rafikhasan90@gmail.com