FREE TRADE AGREEMENT
Overseas investors support
By AMANULLAH BASHAR
Jan 26 - Feb 01, 2004
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 region.
In this backdrop, the US Chamber of Commerce is encouraging American businessmen to investment in Pakistan in various sectors.
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 American investment.
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.