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Saarc Chamber’s report on investment

The News - International, Pakistan

Saarc Chamber’s report on investment

By Shahnawaz Akhter

24 May 2011

KARACHI: The SAARC Chamber of Commerce and Industry has urged the South Asian countries, particularly India and Pakistan to set aside political issues and introduce free trade policy to bring prosperity in the region.

“The World is passing through the era of globalisation, the South Asian countries, in general, and India and Pakistan, in particular, should set aside their critical political issues and start taking concrete steps to introduce free trade policy in the region to bring prosperity to their respective communities,” said a report on investment released by the SAARC Chamber on Monday.

The most important issue in the economic integration of South Asian countries relates to geo-political relations between India and Pakistan, which are the two largest countries of the region, it said.

The report analysed the possibility and consequences of economic integration and cross-border investment among the South Asian countries without considering the politico-strategic questions.

As a reference from the history of the region the report cited a few independent instances of economic cooperation, which did take place between India and Pakistan even in the presence of geo-political tensions.

Since 1947 to mid-60s, the mobility of capital and labour were not restricted between the two countries. Several business entities and funds have been transferred across the borders.

“This free movement of capital did not create any problem and provided facilitation in flourishing business empires across the borders,” it added.

The process of migration between the countries was not completed in months, it was not stopped till 1953 and even after that it was not stopped. The creation of Bangladesh in 1971 further contributed towards the inflow and outflow of investment in Pakistan and Bangladesh, it said.

In terms of economic cooperation, Indian demand for granting most favoured nation (MFN) status by Pakistan is still pending. India regards this non-reciprocity by Pakistan as one of the major reasons for not signing bilateral investment treaty between the two major players of South Asia, it said.

On the other hand, the economic integration of the European Union (EU) and NAFTA provides enough encouragement for the South Asian countries to initiate the process towards integrating economies through greater political will and resolution of problems.

“If the European countries such as France, Germany and The Netherlands can bury their centuries-old rivalry and transform enmity into economic prosperity of their community and countries can maintain economic integration after partition such as the United States of America and Canada, the South Asian countries, particularly India and Pakistan, can also follow these examples,” the report suggested.

The model for economic integration of the EU through resolution of political issue has seen the greater success and more effective mechanism to give immediate boost to the economic integration process.

“Thus, greater political will shall be required to gain maximum benefits as far as the promotion of intra-SAARC trade and investment is concerned,” the report added.