Better connectivity
between South Asia and Southeast Asia — through hardware and associated
software — can unlock the full benefits of closer economic ties between the two
sub-regions and help re-balance Asian growth toward domestic and regional
markets, delegates at the 46th annual meeting of the Asian Development Bank
(ADB) were informed today.
'Connecting South Asia
and Southeast Asia,' an interim report by the ADB and ADB Institute (ADBI),
shows that South Asian and Southeast Asian economies have grown rapidly during
an era of fragile world economic growth beset by risks. "The process has
been fuelled by expanding regional production networks, integration into the
global economy, foreign direct investment, falling trade and investment
barriers, a commodity boom, and heightened demand from a rising Asian middle
class," it says.
However, integration of
trade and investment between the two sub-regions, while having made progress,
has been relatively limited, hindered by various bottlenecks in trade
infrastructure, residual trade barriers and insufficient regional cooperation.
"The time is ripe
for a study of South and Southeast Asia connectivity," said dean and chief
executive of ADBI Dr Masahiro Kawai. The political reform process in Myanmar
makes it possible to connect South and Southeast Asia, which was not feasible a
few years ago.
This is particularly the
case for land-based transportation — both highways and railroads — and energy
infrastructure. The prospect of further liberalisation between ASEAN and major
regional economies (including India) exists with the start of negotiations on a
Regional Comprehensive Economic Partnership. It is particularly important in
the context of India’s 'Look East' policy. And many South and Southeast
economies are contemplating second generation economic reforms to sustain
inclusive growth.
Connectivity and
associated software refers to physical infrastructure related to transport and
energy, as well as the linked issue of trade facilitation. Apart from a focus
on connectivity — particularly cross-border infrastructure and trade
facilitation — the study also covers the critical issues of infrastructure
financing, trade and investment reforms, and institutions for coordination.
The interim report sets
out key issues in relation to improving connectivity between South and
Southeast Asia and traces their implications. It first reviews evolving
economic ties between the two sub-regions and identifies benefits and costs of
greater connectivity, then identifies key issues and constraints to greater
economic integration.
Finally, it explores
implications for fostering better connectivity and closer economic integration,
as well as the next steps for the study.
Key preliminary findings
and recommendations include identifying specific gaps in road, railroad, and
economic corridor links between the two subregions; Myanmar’s potential as an
important source of energy trading with South Asia; promoting more automated
approaches to trade facilitation; identifying options to expand regional
capacity to finance cross-border infrastructure projects; promoting trade and
investment liberalisation; and supporting closer cooperation among regional
forums related to transport and energy infrastructure.
Speakers at the
seminar included ADB vice president Stephen Groff; ADB managing director
General Rajat Nag; ICRIER chair Dr Isher Ahluwalia; ICRIER prof Nisha Taneja;
Myanmar minister of National Planning and Economic Development Dr Kan Zaw; high
commissioner of Singapore to Malaysia Ong Keng Yong, and chief executive and
executive managing director of Japan Bank for International Cooperation Hiroshi
Watanabe.
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