The South Asia Free Trade Agreement (SAFTA) signed in
the recently concluded SAARC Summit has been supported by the
multi-national companies and overseas investors in Pakistan.
The Overseas Chamber of Commerce and Industry (OCCI)
while supporting the agreement said that in fact the agreement is too
late as the developed economies had realized the importance of such
facilities much earlier which is evident in the formation of NAFA, ASEAN
and EEC. The South Asia region in fact has missed the bus as over 80
percent of the economic opportunities have already been grabbed by the
existing economic bloc leaving a little for the new comers.
The South Asian Region, despite a delayed decision to
form a free trade bloc, still offers tremendous economic opportunities
supported by a huge consumer market in view of the massive population in
the countries like India, Pakistan and Bangladesh supported by Sri Lanka
and remaining smaller countries.
The signing of a free trade agreement in South Asia
delayed at least by ten years apparently because of an atmosphere of
mistrust in the region due to strained political conditions and tense
border situation between India and Pakistan. It is the persistent air of
mistrust that even today the progress towards the goal was too slow, as
the member countries have asked another two years for implementation of
SAFTA in 2006.
The aggregate exports of the SAARC region exceeds $80
billion especially by India, Pakistan, Bangladesh and Sri Lanka. This
huge export potential does not translate the actual economic depth of
the member countries. If they get united on various issues, the economic
growth of the region could take the world by surprise.
The free trade facility could also attract the
foreign investment in the region at a massive scale because of the
higher rate of returns in this region.
The foreign investors looking for global economic
opportunities view the positive development in the region with great
interest, and the recently signed agreement among the South Asian
countries has attracted attention of the overseas investors in this
In this backdrop, the US Chamber of Commerce is
encouraging American businessmen to investment in Pakistan in various
Dr. Herbert J. Davis, Managing Director, South Asia
Affairs of the US Chamber of Commerce in his recent press briefing urged
the Pakistan government for early implementation of intellectual
property rights laws, which was a major concern of American businessmen.
A US business delegation consisting of
representatives from the telecommunications, information technology and
energy sectors will be visiting Pakistan in March this year with an
interest to investment in these areas. Davis said that there are great
possibilities of joint ventures between US-Pakistan private sector
especially in the areas of IT sector, Software, Surgical goods and many
other areas. Had this region declared a free trade block, the foreign
investors could have come in this region at massive scale much earlier.
The US government interest is also growing in South
Asia particularly in Pakistan following the 9/11 incident. This is clear
from the fact, that the US Chamber has appointed Ms. Esperanza Gomez, as
executive director of US-Pakistan business. Ms. Gomez speaking on the
occasion said that currently she was visiting Pakistan to have a close
coordination with all the chambers of commerce and industry in Pakistan
for exchange of information on trade and investment. Another purpose of
the visit was to create contacts with Pakistani officials and the
private sector people to get their feedback and identify areas for
During the visit of President Pervez Musharraf, a
pact called the Trade and Investment Facilitation Agreement (TIFA) was
signed which would facilitate investment between the two countries. The
first meeting of the TIFA council is scheduled in March next.
Davis indicated that Washington in particular, is
very much interested in the recent talks held between India and
Pakistan. It considers that dialogues are very essential for peace,
development and maintaining stability in the region. These talks may
prove to be the precursor of lasting peace in the days to come.
The free trade agreement among the South Asian
Countries is aimed to pave way for simplification and harmonization of
standards, customs clearance, import licensing, import financing by
banks, transit facilities, promoting investments, development of
communication and transport and speedy grant of business visas.
One of the far reaching impacts of the agreement is
the change of the social and political image which so far features as a
hostile region among the comity of the nations. Harmony is the
pre-requisite for doing business, as well as attracting new investment
in any country. Unfortunately, this region was known as a place full of
tension which obviously gives a negative image to the potential
investors. Hopefully, the process of dialogue would greatly help in
making things bright in this region.