Doing Business With SAARC Nation

Prepared By-(PGP IBM Student 2009-11 )

 Agenda:
 SAARC: Concept & Member countries.

 Key economic parameters.

 Key industry/business segments in countries.

 India-SAARC Trade:key features.

 Bilateral/Multilateral agreements(SAFTA).

 Institutional framework relevant to global trade.

 Major Challenges & Opportunities.

 Introduction

@ tra e
20 nt,
en Lat

07
Observers:

China,
Japan,
Korea,
USA,
SAARC Iran,
at Katmandu, Nepal Mauritius,
Since Australia,
8 December, 1985
Myanmar
& EU.

SAARC- SOUTH ASIA ASSOCIATION FOR REGIONAL CORPORATION

 Sovereign equality, Territorial
integrity, Political independence,
Non-interference in internal affairs
of the member states and Mutual
benefit.

Cooperation SAARC Collective

in Self-reliance
International OBJECTIVE: Among
forums Cooperation Countries

To promote the
Collaboration &
welfare of the
mutual assistance in
peoples of South
the economic, social,
Asia and to improve
cultural, technical
their quality of life
and scientific fields
 South Asian
Free Trade
Agreement
(SAFTA)

Tools to Convention
SAARC Food
achieve on Fighting
Bank
Terrorism
Cooperation

SAARC
SAARC
Development
Development
al Goals
Fund
(SDGs)
Key Feature-Demography
Cont…
Cont…
Key feature- Economy
Cont…
Key feature- Infrastructure
 Key feature- Political
Attributes Afghanistan Bangladesh Bhutan India

Capital Kabul Dhaka Thimphu New Delhi

Current President Hamid Karzai Zillur Rahman J.K.N. Wangchuck Pratibha Patil
Offi cial Languages Dari(Persian) & Pashto Bengali Dzongkha Hindi,English
Independence 19 Augest, 1919 March 26,1971 N.A. 15th August,1947
Currency Afghani Taka Ngultrum Indian rupee (INR)
Current Ruling Party N.A. Bangladesh Awami League Druk Phuensum Tshogpa United Progressive Alliance(UPA)

National Flag

Attributes Maldives Nepal Pakistan SriLanka

Capital Male Kathmandu Islamabad Colombo

Current President Mohamed Nasheed Ram Baran Yadav Asif Zardari Mahinda Rajapaska
Offi cial Languages Dhivehi(Mahi) Nepali Urdu(National),English Sinhala, Tamil
Independence 26th July,1965 28 May,2008 14 august,1947 4 February,1948
Currency Maldivian Rufiyaa (MVR) Nepalese Rupee (NPR) Pakistani Rupee(Rs.) Sri Lankan Rupee(LKR)
Current Ruling Party Maldivian Democratic Party Unified Communist Party Pakistan Peoples Party United People's Freedom Alliance

National Flag
 Key Feature- Trade Policy

Liberalising Trade Regimes Slashing Tariffs

Subsidies in
Simplification
terms of
of Procedures
Duty, Freight,
& Promoting
Loan, Income
Special Export
Tax etc.
Zones

Source: WTO 2006 Tariff Profiles, 2008

 Key Business Segments and Industries
Countries Industries
Small-scale production of textiles, soap, furniture, shoes, fertilizer, apparel, food-
products, non-alcoholic beverages, mineral water, cement; hand-woven carpets;
Afghanistan
natural gas, coal, copper.

Cotton textiles, jute, garments, tea processing, paper newsprint, cement, chemical
Bangladesh fertilizer, light engineering, and sugar.
Cement, wood products, processed fruits, alcoholic beverages, calcium carbide,
Bhutan tourism.
Textiles, chemicals, food processing, steel, transportation equipment, cement,
India mining, petroleum, machinery, software, pharmaceuticals.
Tourism, fish processing, shipping, boat building, coconut processing, garments,
Maldives woven mats, rope, handicrafts, coral and sand mining.
Tourism, carpets, textiles; small rice, jute, sugar, and oilseed mills; cigarettes,
Nepal cement and brick production.
Textiles and apparel, food processing, pharmaceuticals, construction materials,
Pakistan paper products, fertilizer, shrimp.
Processing of rubber, tea, coconuts, tobacco and other agricultural commodities;
telecommunications, insurance, banking; tourism, shipping; clothing, textiles;
Sri-Lanka
cement, petroleum refining, information technology services, construction.
Intra-SAARC Trade
 South Asian Trade
• Intraregional trade is less than 5% of total trade in South Asia
(World Bank, 2009)

• Presence of Tariff and non-tariff barriers

• Substantial potential for trade due to high population density and

geographical proximity.

• Trade essential to achieve investment, generate employment and

mitigate poverty in the region.
 Intra SAARC trade : exports
Growth in Intra-regional Flow of Exports (2003-5) in percent

Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka

Bangladesh 19.4 57.4 8.4 10.9 25.9

Bhutan

India 5.4 13.5 11.2 19.2 46.6 13.0

Maldives 25.1 6.3

Nepal -19.7 15.5 59.8 58.5

Pakistan -10.7 -15.2 57.9 -6.6 -13.9 41.8

Sri Lanka -9.1 14.3 13.3 -40.2 11.4

Source: Direction of Trade, 2006 IMF

 Intra SAARC trade: imports
Growth in Intra-regional Flow of Imports (2004-5) in percent

Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka

Bangladesh 86.1 15.3 -50.0 -19.7 25.3 4.3

Bhutan

India 38.7 11.2 32.8 15.5 40.1 59.0

Maldives -50.0 28.8 59.8 22.5 10.4

Nepal 8.4 19.2 -13.9 -40.2

Pakistan 16.6 -19.6 64.9 -33.5 58.5 10.8

Sri Lanka 35.9 26.4 0.0 36.9

Source: Direction of Trade, 2006 IMF

India- SAARC Trade
India-SAARC Trade (% Share of total
trade of India):
 Observations
 Total external trade of the region amounts 1.6 percent of the
world trade

 1.4 percent of the world exports 1.8 percent of world

imports.

 Its Intra-regional exchanges represent only 4 percent regional

trade - 5.3 percent (exports) and 4.8 percent (imports
Bilateral/Multilateral agreements(SAFTA)
among member countries.
 Bilateral agreements.
 Bilateral agreements covering trade:

1. India-Maldives Trade Agreement

2. Indo-Nepal Treaty of Trade
3. Bhutan-India Agreement on Trade Commerce
and Transit
4. Indo–Srilanka FTA.
5. Pakistan–Srilanka FTA.
 SAFTA Introduction
 SAFTA(South Asian Free Trade Agreement ) signed by
member states at Islamabad, Pakistan on the 6th of
January 2004.
SAFTA represents a positive indicator of enhanced and
mutually beneficial regional cooperation for the
countries and provides a framework for concrete
opportunities for trade between the signatory countries.
 SAFTA aims to – increase intra-regional trade and
efficiency-seeking restructuring of industry and creating
supply capacities in relatively lesser developed
members.
 Details of SAFTA.
Reduce the period (from 2013-2016 to 2010-2013) by which
the free trade regime should be established.

A time limit should be set for identifying and eliminating non-

tariff barriers (NTBs).

More developed member nations should undertake to provide

technical assistance to the least developed member countries.

More developed member States should assist the least

developed countries in enhancing their export production
capacity.
 Conclusion.
The philosophy of SAFTA should be to view it as a stepping
stone towards greater integration into the world economy and
the WTO.

 South Asian countries have many characteristics that would

enable them to go beyond the FTA framework and work for
deeper economic integration, such as the formation of a
common market and economic union.

Greater economic cooperation among SAFTA members holds

important implications in the form of a larger market,
economies of scale in production and improved resource
allocation.
Institutional Framework in Relation
with SAARC and Challenges and
Opportunities
 INSTITUTIONAL FRAME WORK IN RELATION WITH SAARC

UNCTAD (United Nations Conference on Trade and Development)

 first Agreement of cooperation to be signed by SAARC.

 (TRAINS) Trade Analysis and Information System.
 An updated copy of TRAINS CD-ROM .

ESCAP (Economic and Social Region for Asia and Pacific)

 Co-operation on development issues .

UNICEF ( United Nations International Children's Emergency Fund.)

 The Agreement envisages cooperation in implementing the relevant
SAARC decisions relating to Children .
 Continue..

APT (Asia Pacific Telecommunity)

 To promote the growth of telecommunications in order to
accelerate economic and social development in the region.

WTO Negotiations and SAARC Region

 bargaining clout

 Issues like labor or environmental standards or rules like anti-

dumping and anti-subsidy investigations are areas where
SAARC can stand together.
 Transport and
Energy Sector Trade facilitation
Challenges Opportunities Challenges Opportunities

Electricity is still not Significant South Asia ranks the Bilateral or regional
Energyto about
available opportunities for last among all world arrangements are
half of the region's cooperation and
regions in terms of needed which allow the
1.5 billion population trade in the energy
. sector road density, rail lines, vehicles of one country
and mobile tele- to collect/delivery
density per capita. cargo in other
countries.

Poor transport and In order to be effective,

little cross-border
communications still initiatives for trade
Win-win
trade in electricity. hinder the integration facilitation need to be
opportunities
of many rural areas focused. A corridor
abound.
focus is useful, since
the majority of trade is
concentrated along
relatively few
corridors.
 OVERALL CHALLENGES

 Eradicating extreme poverty and hunger.

 Achieve universal primary education.

 Promote gender equality and empower women.

 Combat HIV/AIDS malaria and other diseases.

 Ensure environmental sustainability

 References
www.saarc.org/
www.saarc-sec.org/
www.saarctrade.com/

How Promising is SAFTA?, Asia-Pacific Trade and Investment

Review, Nilanjan Banik.

Bilateral Free Trade Agreements in SAARC and Implications

for SAFTA.

 The Role of Trade Facilitation in Export Growth and

Interregional Trade John Arnold Consultant, The World Bank
THANK
YOU !