Regional: Support for South Asia Regional Economic Cooperation

Sovereign Project | 37549-012

Summary

South Asia has posted strong economic growth in recent years and has increased its share of the world output from 4.4% in 1997 to almost 6% in 2008. However, South Asia is not the only region with the largest number of people living below the poverty line; it is also the least integrated region in Asia with only 5.5% of intra-regional trade share in 2008. Furthermore, the recent uncertainties caused by various shocks including climate change , spike in food prices, volatile energy prices, and the global economic crisis have challenged the growth potential and have adversely impacted the lives of the region's poor. Increased regional cooperation in South Asia and beyond, particularly increased regional connectivity, allows for inclusive growth by producing increased access to markets, goods, and services across borders.

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Project Name Support for South Asia Regional Economic Cooperation
Project Number 37549-012
Country Regional
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7491-REG: Support for South Asia Regional Economic Cooperation
Technical Assistance Special Fund US$ 1.50 million
TA 7491-REG: Support for South Asia Regional Economic Cooperation (Supplementary)
Technical Assistance Special Fund US$ 225,000.00
TA 7491-REG: Support for South Asia Regional Economic Cooperation (Supplementary)
Technical Assistance Special Fund US$ 3.00 million
TA 7491-REG: Support for South Asia Regional Economic Cooperation (Supplementary)
Technical Assistance Special Fund US$ 695,000.00
TA: Support for South Asia Regional Economic Cooperation (Supplementary)
Technical Assistance Special Fund US$ 1.50 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Sector / Subsector

Energy - Electricity transmission and distribution

Transport - Rail transport (non-urban) - Road transport (non-urban) - Transport policies and institutional development

Gender Equity and Mainstreaming No gender elements
Description

South Asia has posted strong economic growth in recent years and has increased its share of the world output from 4.4% in 1997 to almost 6% in 2008. However, South Asia is not the only region with the largest number of people living below the poverty line; it is also the least integrated region in Asia with only 5.5% of intra-regional trade share in 2008. Furthermore, the recent uncertainties caused by various shocks including climate change , spike in food prices, volatile energy prices, and the global economic crisis have challenged the growth potential and have adversely impacted the lives of the region's poor. Increased regional cooperation in South Asia and beyond, particularly increased regional connectivity, allows for inclusive growth by producing increased access to markets, goods, and services across borders. Regional cooperation could also mobilize private investments, counter the impact of declining financial flows, and significantly reduce the share of population living below the poverty line. The recent shocks together with changes in the political landscape provide a window of opportunity for countries in South Asia to revisit and possibly strive to deepen regional cooperation.

Regional cooperation has recently been gaining momentum in South Asia. While regional cooperation initiatives have successfully identified potential regional projects in key sectors such as transport and trade facilitation, energy, tourism, and ICT, implementation of tangible regional projects have not yet fully materialized. There is also a growing notion of the incoherence of regional projects with national programs and the belief that national priorities should also take precedence over regional ones. The main challenges facing regional cooperation in South Asia are the operationalization and implementation of the regional vision and regional cooperation agenda, including the limited capacity to prioritize and implement specific projects. Synergy between national and regional programs has not been maximized. Concerns on the negative effect of regional cooperation on national priorities and interests have to be addressed by demonstrating the benefits of regional cooperation to the general public and key policymakers alike. Based on lessons learned from previous RETAs, discussing the benefits of regional cooperation and effectively disseminating findings of RCI studies could aid in (i) increasing political and public awareness and support for regional cooperation initiatives in South Asia to help advance regional cooperation with less resistance; (ii) promoting greater interest and involvement from development partners and the private sector to contribute more significantly to funding regional projects in the region.

Project Rationale and Linkage to Country/Regional Strategy

The TA is in line with ADB's Regional Cooperation Strategy and Program (RCSP) for South Asia (2006-2008) that supports regional cooperation through the South Asian Association Regional Cooperation (SAARC), interregional cooperation through the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), and subregional cooperation through the South Asia Subregional Economic Cooperation (SASEC) Program.

In line with ADB?s commitment under Strategy 2020 to allocate at least 30% of its overall operations for regional cooperation, this TA will support participating countries and regional organizations in further identifying, prioritizing, and preparing regional projects and national projects with regional implications to move forward regional cooperation in South Asia.

The TA adopts a flexible, pragmatic, multi-track approach to advance regional, subregional, interregional and bilateral cooperation in South Asia with focus on fast-tracking the implementation of tangible projects particularly in transport, energy, and trade facilitation as agreed at the High Level Forum on Emerging Vision for Shared Prosperity: South Asia and Beyond, held on 16-17 April 2009.

ADB has also provided support for networking among think tanks to provide governments with policy recommendations on regional cooperation and integration issues (Track 2 approach).

Impact Enhanced support for regional economic cooperation in South Asia.
Project Outcome
Description of Outcome Agreed priority regional projects and activities and national projects with regional implications
Progress Toward Outcome

Regional cooperation initiative in South Asia is slowly gaining momentum. Working Groups on important sectors such as Trade Facilitation, Transport, and Energy are meeting on a more regular basis to discuss existing and planned projects in the subregion.

The RETA has been instrumental in countries reaching agreement on important SASEC projects such as:

1. The Trade Facilitation Program loan covering Bhutan, Nepal, and Bangladesh

2. SASEC Road Network for Bhutan to be processed in 2014

3. The Subregional Railway Connectivity that will improve the railway transport capacity along the Dhaka-Chittagong rail corridor.

4. The SASEC Trade Facilitation Strategic Framework

Implementation Progress
Description of Project Outputs

Facilitated discussions and agreements on priority regional projects

Studies and papers on regional cooperation topics, with a focus on prefeasibility studies of priority regional projects

Awareness building regional conferences and forums

Status of Implementation Progress (Outputs, Activities, and Issues)

Several working group meetings were held recently, including:

1. Trade Facilitation and Transport Working Group; and Energy Working Group met on 20-21 October 2011 and 21-22 October 2011, respectively, in Bangkok to (i) finalize the scope of regional transport projects for ADB financing in 2012 with focus on high priority regional road networks; (ii) agree on a priority list of projects in trade facilitation for investment and technical assistance; and (iii) finalize a short list of specific investments from a pipeline of energy projects identified earlier, which can be implemented in collaboration with ADB.

2. In March 2012 the Trade Facilitation and Transport Working Group again met in Kolkata, India. The Meeting agreed on the scope of the transport connectivity project and development of associated land customs stations with improved facilities and procedures that will lower costs of trade and ensure efficient flow of goods and people across the borders. The Meeting also considered the framework for trade facilitation program support for Bangladesh, Bhutan, and Nepal; and technical assistance to support capacity building for trade facilitation.

3. To maintain the momentum, a Trade Facilitation and Transport Working Group; and Energy Working Group Meetings will be held in Thimphu Bhutan in November 2012.

A regional conference on RCI knowledge sharing was held in Kunming, PRC in March 2012 attended by senior officials from the various regional cooperation initiatives supported by ADB, including CAREC, GMS, and SASEC.

ADB also collaborated with the Center for Policy Dialogue of Bangladesh in organizing a workshop on Recent Developments in Myanmar held on 15 March 2012 in Dhaka, Bangladesh. The workshop reviewed new developments in Myanmar and identify opportunities to facilitate regional cooperation in the region.

The study on Food Security has been completed while the Indian Ocean Cargo and Ferry Services Study is in the process of being undertaken by the consultants.

Working group meetings were also held in 2012 to dicuss plans under the RETA

The Meetings of the Working Groups on Trade Facilitation and Transport , and Energy were successfully held on 5-6 November 2014 in Kathmandu, Nepal. They reached agreement of priority SASEC projects and activities for the next three years.

The SASEC Nodal Officials' Meeting has held last 4 May 2015 in Baku, Azerbaijan.

Preparation of priority SASEC economic corridor projects is under way.

Geographical Location South Asian countries and its neighbors
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services A total of 133 person-months of consultancy services will be engaged for this TA. Of the 133 person-months, a total of 108 person-months of consultancy services will be needed for 3 national consultants who will be based in ADB Headquarters. The national consultants will be engaged as (i) regional cooperation advisor; (ii) senior regional cooperation specialist; and (iii) senior programs analyst/regional cooperation expert. They will provide technical and logistical inputs and assistance to TA-related activities. National consultants who will be In-country regional cooperation specialist(s) will be engaged in resident mission(s) for 12 person-months each while 13 person-months of international consultancy will be required fro thematic experts and capacity development specialists. Consultants will be engaged in accordance with the Guidelines on the Use of Consultants.
Responsible ADB Officer Ronald Antonio Q. Butiong
Responsible ADB Department South Asia Department
Responsible ADB Division Regional Cooperation and Operations Coordination Div, SARD
Executing Agencies
Asian Development BankCuong Minh Nguyencuongnguyen@adb.org6 ADB Avenue, Mandaluyong
Metro Manila, Philippines
P.O. Box 789, 1099 Manila,
Philippines
Timetable
Concept Clearance 22 Sep 2009
Fact Finding 11 Mar 2010 to 25 Mar 2010
MRM -
Approval 27 Jan 2010
Last Review Mission -
PDS Creation Date 05 Jun 2009
Last PDS Update 22 May 2015

TA 7491-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Jan 2010 - 27 Jan 2010 31 Dec 2012 31 Dec 2018 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
5,420,000.00 0.00 0.00 0.00 0.00 0.00 5,420,000.00 27 Jan 2010 3,190,683.93
Title Document Type Document Date
Support for South Asia Regional Economic Cooperation TA Change in Scope, Amount, and Implementation Arrangements Mar 2013
Support for South Asia Regional Economic Cooperation Technical Assistance Reports Jan 2010

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