INDIA, PAKISTAN AND BANGLADESH ECONOMIC UNION

Excerpts from an exclusive interview with A. R. Jumabhoy

By SHABBIR H. KAZMI
Jan 05 - 11, 2004

A. R. Jumabhoy was born in Singapore in 1925. He did his Senior Cambridge from Anglo Chinese School of Singapore in 1942. For a brief period his family went to Bombay due to war in the pacific peninsula. He did his B. Sc. from Bombay University. His family returned to Singapore in 1946. He is a businessman and actively participates in seminars on socio-economic issues. He has often travelled as a member of Singapore Prime Minister's entourage. His latest contribution is 'India, Pakistan and Bangladesh: Moving Towards New Horizons'. These three countries are part of SAARC and if they form an economic union, the alliance has all the potential to become an economic power. Jumabhoy recently visited Pakistan. Following are excerpts from an exclusive interview with him.

I strongly believe in formation of an economic union of India, Pakistan and Bangladesh. The confidence building measures taken by India and Pakistan can hopefully dismantle artificial barriers, but the best has to come yet. Both the countries have been paying enormous cost of persistent hostility. It is being argued that political differences should not stand in the way of exploiting the full potential of the region for socio-economic progress.

The South Asian region accounts for 21% of the global population. The region is rich in human and natural resources but remains impoverished with high unemployment rate, limited social progress and economic under development. The region is also characterised by political strife, communal and ethnic violence and a legacy of mistrust between two of the largest countries of the region, India and Pakistan.

I strongly believe that India, Pakistan and Bangladesh should first enter into sub-regional economic co-operation to achieve the ultimate objective of establishing a common market. This will in turn create conditions for political harmony and stability in the entire region. However, to move in this direction, the first step is to examine the constraints in the way of furthering co-operative relations in South Asia. It is also necessary to study the potential for interdependence and economic co-operation among the three countries. Only then efforts can be made to facilitate the creation of a sub-regional grouping of these countries.

The compulsions to formla regional group and optimise the benefits arising from it are immense and should not be ignored. There is hardly any part of the world that has not formed a regional trading group of its own. Some of the important regional trading agreements include the North American Free Trade Agreement (NAFTA), the European Union (EU) and Asia Pacific Economic Co-operation Forum (APEC). At a time when even the neighbouring regions such as ASEAN are building upon existing linkages to expand their regional identity in economic and security matters, South Asia cannot afford to be left behind.

There is a great potential for sub-regional grouping with contiguous border states benefiting from their proximate status for mutual gains and accelerated economic growth. The three countries were part of one political unit under British Raj and shared similar administrative machinery, infrastructure and means of communication. The whole sub-continent was incorporated within an integrated market for the purpose of trade, capital and labour flows. These countries also have strong cultural linkages with each other and enjoy common languages.

India, Pakistan and Bangladesh inhibit a vast and contiguous landmass, having access to vast natural resources` They have a population of close to 1.5 billion people with a fairly impressive combined GDP, and can offer large sized markets for trade and industry. If the three countries came together they would be the biggest consumer market in the world.

Some signs of change in the mindset of people from India and Pakistan can already be seen. There is increasing pressure from business lobbies for the liberalisation of trade. Business communities on both sides of borber are eager to diversify and expand the existing trade linkages. It has also been pointed out the three principal economic groups expected to gain are the consumers, the producers and the governments.

In addition to increasing trade, there exists tremendous potential for economic gains in the joint exploration of natural gas, electricity and water resources. India being the larger partner will have to bear the prime responsibility for initiating co-operative linkages in the region. Being the largest economy it can even take some non-reciprocal and unilateral measures for accelerating investment and trade flows with its neighbouring countries. The short-term costs of any such unilateral gestures would be more than offset by the long-term advantages.

Boosting economic co-operation is a win-win situation for the three countries. If France and Germany in Europe, and now India and China can bury their political differences and co-operate economically, there is no reason why India, Pakistan and Bangladesh cannot do the same. Engagement in the area of trade co-operation and infrastructure development will lead to greater economic prosperity for the whole region. This in turn will go a long way and help resolved longstanding political conflicts in the sub-continent.