Digital Connectivity is the Future of South Asia’s Integration

Opening Remarks of Regional Director Dr. Ronald Meinardus at the SAARC Investment Forum, Colombo, September 6, 2017
SAARC Investment Forum 2017

Throughout the years, the SAARC Chamber of Commerce and Industry (SCCI) has been our most important regional partner. We support the vision and aspirations of this organization. We are committed to continue the support – knowing very well that there lie many challenges in the way of regional economic integration.

Let me start with the good news: With a growth rate of 6.5%, the SAARC region in 2016 has been among the fastest growing areas in the world. The not so good news is: intra-regional cooperation is lacking as only about 5% of the trade takes place between the South Asian neighbors. South Asia remains among the least integrated regions globally.

To add to the challenges: we see signs that regional economic integration is weakened by alternative projects which are not fully inclusive – such as BIMSTEC or the “Indian Ocean Rim Association”. Also, major infrastructure projects – foremost the China-Pakistan Economic Corridor – do not aim at strengthening connectivity among SAARC members, but have different motivations.

As in other parts of the world, also in South Asia, politics is getting in the way. “Politics of the region is the biggest problem. If the leading countries of India, Pakistan and Bangladesh decide to allow business to prosper without interference of politics, it (regional integration) will succeed”, says Macky Hashim who served as SCCI president from 2004 to 2006 in a recent interview.

“National mind-sets have to be changed and old concepts of dealing between nation states have to be slowly replaced by collective regional decision making”, says acting SCCI President Suraj Vaidya from Nepal.  These are wise words. They may sound visionary.  But having a vision is always the outset of a successful campaign. I hail the SCCI leadership for this commitment.

South Asia is confronted with many challenges. These challenges may be overcome with the application of economic freedom and regional cooperation.  Free trade has brought enormous growth to our societies and led hundreds of millions of people out of poverty.

South Asia is often termed a poor region. To this I answer: No, South Asia is not poor, South Asia has too many poor people. The drama may be overcome when the powers of the market and economic freedom are unleashed:  Regional cooperation and integration are essential engines of economic growth and development.

The private sector and the business community are key players. Economic development and wealth creation will never materialize against the private sector. They will only come about when entrepreneurs are given space to prosper. This region has made its own – costly - experiences with failed experiments of over-regulations.  At the same time, it is essential that the challenges of globalization are addressed – on a national, and also on a regional level. Here, organizations such as SCCI play a vital role.

My enthusiasm and belief in the power of the markets does not mean that I disregard the importance of government interventions.  Without the cooperation of the state, the visions we are talking about will never materialize. Regional connectivity will never materialize if investing in roads, rails and ports does not become a government priority. Arguably, the deficits of regional connectivity together with the lack of political will are the most serious challenges the supporters of regional integration need to overcome.

I will end with a message of optimism. I spent the weekend not far from here together with a group of 25 young South Asian digital activists at the “Liberal Video Bootcamp”. This is the generation which sooner than later will take up the positions you are now holding. These young people have to a large extent already overcome the challenges of connectivity and moved most of their interactions to the digital space. It is here that I see the future of South Asia – and also a very important area of economic integration.

Already today, 45% of the world population buy and sell products and services online. e-Commerce is also picking up in South Asia. While building bridges and roads will remain important, I encourage the business leaders to reach out to the ever growing digital communities where cross-border cooperation and integration may be much easier than in the analogue reality we live in.