South Asia Subregional Economic Cooperation

Economic Cooperation

It is important to extend assistance for subregional cooperation in South Asia, where there is a growing momentum of such cooperation. Recent developments in subregional economic cooperation include:

• Formation of the South Asian Association for Regional Cooperation (SAARC)

• Chukha Hydel Project for power delivery from Bhutan to India

• Signing of the Mahakali Treaty between India and Nepal

• Enhancement of the transit facility from Nepal to Bangladesh through the eastern corridor in India

• Signing of the Ganges Water-Sharing Agreement between India and Bangladesh

• Signing of the India-Sri Lanka Free Trade Agreement

• Activities initiated under the Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Cooperation (BIMSTEC) initiative

• Formation of the South Asia Growth Quadrangle (SAGQ)

ADB assistance for project-focused economic cooperation in the subregion has acquired a high priority with ADB's new poverty reduction strategy. Complementarities arising from contiguity and cross-country variations in natural endowments create enormous possibilities for cross-border investments and trade. These complementarities can be utilized through cross-border investments in transport, tourism, power, natural resource development, and environment protection. The corresponding expansion of cross-border trade could transform this area of low growth and high poverty into a dynamic region of high growth and rapidly declining poverty.

However, as a precondition for cross-border investments, it is necessary to support the dialogue on project-specific subregional cooperation in South Asia and help create an enabling environment to finance subregional projects.