South Asia Can Serve as Key Link in Asia's Regional Integration, ADB President Tells Manila Meeting

MANILA, PHILIPPINES - Growing regional cooperation in South Asia can directly contribute to the physical integration of Asia because of its central position as a land bridge between neighboring regions, ADB President Haruhiko Kuroda told a meeting in Manila.

"For South Asia, the potential opportunities and benefits from regional cooperation will be significantly increased if this cooperation can be extended beyond the region's own geographical boundaries - to Southeast and East Asia in the east and Central Asia in the west," Mr. Kuroda said.

He was giving a welcome address on Friday to the meeting of Country Advisors to the South Asia Subregional Economic Cooperation (SASEC) Program, at ADB's Manila Headquarters. At the meeting, finance secretaries and senior officials from Bangladesh, Bhutan, India and Nepal gathered over two days to review the progress of the SASEC program, and discuss the way forward and scope of the next phase of work.

SASEC was initiated in 2001 in response to a request of the South Asia Growth Quadrangle, formed by the four countries to help facilitate and support their economic cooperation agenda. Since inception, the program has made significant progress, Mr. Kuroda told the officials, although the scope and pace of cooperation activities has been uneven.

With South Asia moving toward more market- and trade-oriented policies, this is providing the basic foundation for more effective regional cooperation and integration, he said.

"International experience has shown that regional cooperation can help eliminate physical and non-physical barriers, expand transport and communications connectivity, open up new markets for goods and services, promote the development of peripheral regions, and assist countries in identifying and promoting their wider common interests," Mr. Kuroda said.

"Regional cooperation can also be crucial to promoting peace and security without which, development efforts will achieve little."

Helped by its growing economic openness, Asia's unparalleled economic growth over the past four decades has fueled a significant decline in poverty that has improved the lives of millions of people in the region, he said. But despite being a vast region of 1.4 billion people, or almost one quarter of the world's population, South Asia accounts for only 2% of the world's GDP.

"The stark fact is that out of the almost 700 million people living in poverty throughout Asia, some 430 million live in South Asia - that is 40% of the world's poor," he said. "Clearly then, we cannot achieve the Millennium Development Goals (MDGs) in Asia, without achieving them in South Asia first. And there is much work to be done if this is going to happen."

While intra-regional trade in Asia now accounts for nearly half of all trade, this is not the case in South Asia, where intra-regional trade as a share of South Asia's total foreign trade is around 4%, compared to 20% for the Association of Southeast Asian Nations members.

He said the key challenge is how best to further develop the SASEC program so as to better meet the evolving needs of the participating countries while at the same time capitalizing on the emerging benefits of cooperation both within South Asia and neighboring regions. If this challenge can be met, the potential gains could be great.

For South Asia, subregional and project-based approaches are likely to remain the primary way forward for the present, he said. "In this context, SASEC can still provide an effective forum for advancing cooperation in selected high priority areas."

The Country Advisors Meeting concluded on Saturday with agreement on how best to carry forward and further strengthen the program, including building synergies with other neighboring regional cooperation groupings. The future scope of activities under the six priority sectors was also discussed. The Country Advisors also agreed on the need to meet more regularly to maintain the momentum and progress under the program.