Trust deficit blocking South Asian economic integration: Report

Economic integration among South Asian nations offers a huge potential for sustainable development in the region, according to a report of the UN Economic and Social Commission for Asia and the Pacific (ESCAP).

But experts opined that political will is pivotal in making economic integration successful, as lack of trust and confidence among the South Asian Association for Regional Cooperation (SAARC) nations still holds the region back from reaping its full potential.

"There is a need to reduce the trust deficit and build confidence to harness the economic potential of the region," said chairman of Institute for Policy Research and Development Dilliraj Khanal, during the launch of the UN ESCAP report ‘South and South West Asia Development Report 2012-13,’ in Dhaka today.

The Centre for Policy Dialogue, in association with various regional and international organisations, arranged a policy dialogue on ‘Value chains for inclusive development: Lessons and policies for South Asia’ during the report launching ceremony. "For far too long, politics has held back the progress in the sub-region," according to the report that called that the time has come to allow economics to play a greater role and for regional cooperation to finally take centre stage in the South and South West Asia.

The sub-region, which includes Iran, Turkey and eight SAARC nations, can become a $30-trillion market for the middle class by 2040-2050, according to the report that revealed that some 57 per cent of intra-regional trade potential remains unexploited in SAARC.

The report noted that countries in the sub-region can benefit from cooperation by facilitating regional investments and cross-border banking and raising capital. They will also benefit from cooperation in transport connectivity, food and energy security, agriculture and natural disasters, the UN ESCAP report said, arguing that sub-regional economic cooperation can become a shield for countries to withstand the global economic turmoil and slowdown.

"The report presents a very strong case, if the region wants to re-emerge as a hub," said executive director of Institute of Policy Studies, Sri Lanka Saman Kelegama. "The region shows enormous potential to take off," he said, "But what is needed is implementation. In this area, SAARC has been lagging behind."