Asian and the Pacific economies maintained 6 per cent growth in the year 2018 (other than the high-growth nations). Intraregional cooperation between the Asian nations is moving toward a positive trend even in presence of US-China Trade War. Asia’s international trade growth is higher than the global international trade trend in the same period. Asia’s international trade grown 7.1 per cent while global trade volume grown 4.7 per cent in 2018. Interregional trade between the Asian countries also increases to 57.8 per cent in 2017 from 55.9 per cent in 2010-2015. Asia’s participation in Global Value Chain is growing from any previous record. Asia’s Inward FDI volume remains stable or a little downward i.e. $ 517.5 billion in 2017 from $519.9 billion in 2016. But Asia’s share in global inwards FDI rose into 32.2 per cent in 2017 from 27.8 per cent in 2016. Another good piece of news in that, intraregional FDI in Asia rose from $ 254.7 billion in 2016 into $260 billion in 2017, it is 50.2 per cent of Asian FDI. Greenfield investments generated some 667,000 jobs in 2017; mainly in India, the PRC, Viet Nam, the Philippines, and Singaporean real estate, software and information technology (IT) services, and electronic components, among others. Almost half of jobs created through Greenfield investments in Asia originated within the region led by investments from Japan (28.0 per cent), China (15.0 per cent), and South Korea (14.2 per cent).
On the other hand Asian outward FDI reached into 34.1 per cent of global outwards FDI volume in 2017. Asian countries Japan, China, and Hong Kong were among the world’s top 10 global investors. Japan was second globally, investing $160.4 billion (30.6 per cent) invested in Asia. Emerging Asian investors boosted outward FDI in 2017, for example, India doubling its outward investments in sectors such as electronic components and rubber, and Thailand increasing by more than 50 per cent in building and construction material and chemicals, among others. Asian equity markets are attracting more investment from the US and European investors greater than before. Asian tourist spots are attracting more visitors from intraregional countries as well as rest of the world.
All of the above progress came into reality because Asian countries are more integrated than ever before. The Central Asia Regional Economic Cooperation (CAREC) programme (a partnership of 11 countries namely; Afghanistan, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, the People’s Republic of China, Tajikistan, Turkmenistan, and Uzbekistan, supported by six multilateral institutions) promotes regional economic integration through cooperation, leading to accelerated economic growth and poverty reduction. CAREC, guided by its overarching vision of “Good Neighbours, Good Partners, and Good Prospects,” has proven an effective honest broker as it continues to weave its network of transport and economic corridors across Eurasia. CAREC Vision 2030 was inspired by aspirations to connect people, policies, and projects for shared and sustainable development. The strategy aims to create an open and inclusive regional cooperation platform and prioritises five operational clusters for cooperation: (i) economic and financial stability; (ii) trade, tourism, and economic corridors; (iii) infrastructure and connectivity; (iv) agriculture and water; and (v) human development. Other priorities of CAREC initiatives are (a) developing cross-border agricultural value chains by establishing wholesale markets, collection centres, creating logistical infrastructure and providing export certification; (b) preparing reforms to ease border-crossing procedures; and (c) developing regional tourism and marketing.
Second worthy initiative of the East Asian nations is Southeast Asia: Greater Mekong Sub-region (GMS) Program. Cambodia, Yunnan Province and the Guangxi Zhuang Autonomous Region in the PRC, the Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand, and Viet Nam make up the Greater Mekong Sub-region (GMS) Program, an economic partnership guided by a strategy of enhancing connectivity, improving competitiveness, and fostering a sense of community. After 25 years of cooperation, the GMS has created an interconnected, competitive sub-region with generally robust economic growth. Through the end of 2017, GMS governments with multilateral and bilateral development partners approved 87 investment projects amounting to $20.8 billion. ADB contributed $8.2 billion, while GMS governments have contributed $5.5 billion and other development partners have contributed $7.1 billion. Since its inception, GMS has built, upgraded, or improved over 10,000 km of roads and 500 km of railway lines; built or added 3,000 km of power transmission and distribution lines; and installed 1,570 gigawatt-hours of power generation facilities.
The GMS Program takes on high priority sub-regional projects in both hard and soft infrastructure. One strategic priority is economic corridor development, an approach adopted in 1998. Economic corridors are designed to not only help participants improve physical connectivity, facilitate the movement of people, goods, and vehicles across borders, but also to develop border and corridor towns, and promote investment and enterprise development to ensure wider economic benefits to communities around the cross-border transport infrastructure. The economic corridors link GMS capitals and major urban centres to one another and to maritime gateways.
The newer and poor performing initiative in South Asia namely South Asia Sub-regional Economic Cooperation (SASEC) Program an alternative platform of SAARC. The Bangladesh, Bhutan, India, and Nepal established SASEC to strengthen sub-regional economic cooperation and address development challenges such as low intraregional trade and persistent poverty. Maldives and Sri Lanka joined in 2014 followed by Myanmar in 2017, expanding opportunities to improve cross-border connectivity, facilitate intraregional trade, and strengthen regional economic cooperation. ADB is lead financier, secretariat, and development partner, financing investments and technical assistance. SASEC added financing commitments for seven projects valued at $2.5 billion, including $1.3 billion in ADB financing. This brings investments in transport, trade facilitation, energy, and economic corridor development since 2001 to $10.72 billion. Its member countries are Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal, and Sri Lanka. SASEC endorsed a vision of “SASEC Powering Asia in the 21st Century” and fine-tuned its operational plan 2016–2025.
Besides these regional development initiatives there are a number of regional free trade agreements like, SAFTA, BIMSTEC, ASEANFTA, APEC, and EAEC etc. and a long list of bilateral free trade agreements between the Asian nations with a total of 764 regional, bilateral or multilateral free trade agreements. Most of these agreements are in effect or to be effect shortly. All these regional, cross regional initiatives made the platforms to seat and negotiation worthy other than few political clashes in South Asia. Countries like Singapore, India, Indonesia, Japan, Thailand, New Zealand and Pakistan are negotiating more FTAs with their existing and potential trade partners. As multilateral negotiations under the umbrella of WTO is taking time to be concluded and implemented bilateral and regional free trade agreements are offering quicker and deeper integration among the member countries.
As a result bilateral and regional free trade agreements are becoming popular day by day. Isolated countries like Bangladesh will be further isolated in terms of global economic integration if they fail to negotiate win-win economic ties with existing trade partners in near future. This economic isolation will lead them to isolation from the global Supply Chain / Value Chain. Furthermore their cost of doing international business will be costlier and make them uncompetitive in global business arena. Therefore countries like Bangladesh, going to be graduated from the LDC list, should be more conscious regarding their economic partnership within the region as well as outside the region. They should be more active to be part of regional physical infrastructure development project, become linked with the sub-regional infrastructure initiatives to become part of sub-regional value chain.
After the 11th Parliamentary election of Bangladesh a new government has taken charge of the government. This newly elected government should have two major visions to be part of sub-regional infrastructure development initiative with special care for being part of future value chain and supply chain of the region. Secondly they should be more active to tie up the country deeply with the major trading partners to counter after graduation preference erosion effect in 2014 onwards. A win-win regional and bilateral trade and economic integration could help Bangladesh to be in a secured position while post-LDC preference erosion will take place. Otherwise countries like Bangladesh will remain out of Asian Economic Integration and its positive outcomes in future.
The writer is an Executive Director, DCCI Business Institute (DBI). [DCCI or DBI is not responsible for the authors opinion here in this article]
