What should be done to boost South Asia’s economies?

About 2 billion people live in South Asian countries. But the amount of mutual trade between the countries in this region is very low. Most of the people in these countries live in villages. They lack electricity and fuel. Most of these countries’ remittance or expatriate income earners are again unskilled. South Asia has tariff barriers as well as non-tariff barriers to intra-regional trade. South Asian countries account for only 8 percent of the world’s total trade.

Bangladesh has thousands of years of relationships with other countries, not just the colonial period. To increase regional trade, sea, road, and rail communications have been developed. Bangladesh has managed to reduce the poverty rate to 18 percent. The country is developing infrastructure and is interested in free movement in neighbouring countries like India, Nepal, and Bhutan. Since “South Asia” has not yet emerged as a powerful region, most trade in the area is conducted on a bilateral basis. However, there is a chance to improve it.

As much as the infrastructure development of Bangladesh and India has been done, its positive results will be available in the next few years. Emphasis should be placed on the political will to implement regional cooperation commitments. South Asia has less regional connectivity. This requires regional cooperation and commitment. Equally important is territorial integrity in terms of trade and economic benefits. The problems of South Asian countries are quite similar. These are food security, poverty, and tackling the effects of climate change. But there is very little interconnection between countries. A consensus is needed to address the issues through in-depth research. The importance of regional cooperation has been discussed many times in the past. Now is the new reality. So, it’s time to rethink.

Despite the potential, only 5 percent of South Asian countries’ trade is with each other. Therefore, to increase trade, it is necessary to get out of the colonial mentality. And economic growth requires a strong government. There are regional conflicts. There is climate change. These problems should go away. And for that, regional cooperation is needed.

Although the countries of South Asia are located on the same geographical line, economic and social realities such as the circulation of a single currency (common currency) have not yet been created among them. In this situation, trade between countries should be increased. Reduce business costs. Besides, regular mutual consultation should be introduced. A nation like India ought to be in charge of it. Circulating a single currency for a region takes several factors into consideration. These include free movement of money, freedom to cross borders, risk tolerance, mutual trust, the formation of a regulatory body, etc. Each country’s ability to cope with economic risks is different despite being located within the same geographical boundary. The Indian currency, the rupee, is quite volatile against the US dollar. So, if a bank buys and keeps Rs. Trade deficits between South Asian countries are large. It would not be advisable to put a single currency or a country’s currency in the driver’s seat with policymakers. Now is not the time to build a union, like a single currency. Transactions in taka-rupee and Chinese currency have been started, but there has been no response. Bangladesh and China have large trade deficits with India every month. For this, currency swaps can be introduced.

South Asia has not yet created a single-currency environment. Earlier, some South Asian countries wanted to introduce a currency called ‘Rupa’. That initiative did not bear fruit. Pakistan’s own currency is traded with Russia, Afghanistan, and China. Instead of giving up on the single currency, we should all look for alternatives. So that the dependence on the dollar is reduced. Despite the hurdles, instead of sitting, consider launching a new endeavour on a modest scale. A single currency may be introduced, albeit on a small scale, for South Asian countries in view of trade. More important than this is that the import-export and customs procedures of the countries should be similar. The number of documents or paper proofs used in the customs clearance process in each country is also different. It costs more time and money. If everyone is tolling at a fixed rate, it is easier to settle objections to it. All countries can do this. Costs will come down if dollar-alternative transactions are introduced. Dollar transactions are gradually decreasing in the global market. In December 2022, 14% of transactions were non-dollar, up from 9 percent in July last year.

Regional trade can play an important role in accelerating economic prosperity. The export of Bangladeshi products into the international market is now facing some challenges. At times, Dhaka’s export trade stumbles due to many obstacles. In such a context, initiatives should be taken to increase commercial transactions with neighbouring countries. Bangladesh will benefit from this. The socio-economic development of this region can happen through trade. Bangladesh can further increase its exports by exporting 500 crore rupees annually to India’s Tripura alone. Bangladesh has opportunities to export various products to several Indian states bordering Bangladesh. Since Bangladesh is border-adjacent to these states, the existing system for transporting goods is very favourable.

That is why it is possible to maintain the trade balance with India by exporting Bangladeshi products to these states. Various products are exported from Bangladesh to Myanmar. These include garments, agricultural products, frozen food, leather products, shoes, pharmaceuticals, etc. At present, the import-export trade between Myanmar and Bangladesh revolves around various complications. However, if the trade is simplified, the amount of this export trade can be increased many times. Myanmar’s drug market is mainly import-dependent. There is a huge drug market of about four billion dollars. They mainly import drugs from Thailand and China. Bangladesh has achieved remarkable success in pharmaceutical exports over the past few years. As a neighbouring country, Bangladesh has great potential to export medicine to Myanmar.

Nepal, Myanmar, Bhutan, and some bordering states of India are Bangladesh’s close neighbours. To increase bilateral and regional trade, first of all, it is necessary to increase connectivity with these countries and states. Especially if the proposed direct road communication system of four countries (India, Bangladesh, Nepal, and Bhutan) is strengthened, the export route from Bangladesh to these countries will be smooth, and the amount of export will also increase. Bangladesh can provide transit facilities to Nepal by increasing the capacity of Chittagong and Mongla ports. If commercial communication increases, the path of sustainable development for both countries will be smooth.

There is a wide scope for regional trade expansion in Bangladesh with neighbouring countries, India, Nepal, Myanmar, and Bhutan. Strong regional connectivity, cooperation, and facilitation of trade processes are essential to achieving economic progress in South Asia. Apart from this, in order to utilise the economic potential, infrastructure development and the adoption of technology should also come out of the bureaucratic thinking of the colonial era. Countries in the region must work together to achieve inclusive economic growth, embrace the fourth industrial revolution, and mitigate the effects of climate change. There are many races in South Asia. About 200 million people live here. But the identity of ‘South Asia’ is still not widely known. There is an opportunity to use SAARC for development in regional trade, investment flows, financial connectivity, etc. In such a reality, political consensus is needed to take the countries of this region upward. Besides, there should be an office for the economic and commercial development of South Asian countries.