14-20 November 2014 #732

Land-locked to land-linked

The SAARC Summit could inspire a sense of what might be achieved if South Asian economies collaborate
David Seddon
In its preparations for the forthcoming meeting of SAARC in Kathmandu, the government is necessarily, and rightly, concerned about making a good impression. It is planting trees, painting walls and buildings, cleaning the streets and surfacing roads that should have been rehabilitated years ago. It is ensuring that conference venues are up to scratch, and preparing the agenda for the discussions that will take place over several days.

As the host, Nepal has already prepared a 31-point draft declaration. Three agreements on SAARC motor vehicles, railway services and energy cooperation aimed at building infrastructure and promoting regional connectivity are likely to be signed at the summit. This is important, and it is to be hoped that the delegates will urge the effective implementation of the many past declarations, resolutions and decisions as well as those proposed this time. All of this inevitably focuses attention on Nepal’s important relationship with its southern neighbours – and particularly on improving transport and communications links.

But a wider pan-Asian vision is also required. Prithivi Narayan Shah is often quoted as saying that Nepal was like ‘a yam between two boulders’ and its physical location between China/Tibet to the north and the Sub-continent to the south remains the same. But the political and economic geography of Nepal has changed a great deal over the last 200 years, and particularly in the last few decades as both India and China have emerged as regional and even potentially global powers.

Nepal still lies between these two economic giants, but today it needs to see itself not so much as land-locked and trapped, even crushed between two ‘boulders’, but as land-linked and needs to take advantage of its position and its resources (both natural and human) to build its exports, attract inward capital investment, welcome foreign skills and technologies, make maximum use of the flow of remittances and harness new skills of its own foreign workers across Asia.

Nepal’s future economy and society will take shape in part as a result of the development of its internal capacity, but also because of its relationships with all of its neighbours and the world beyond. The focus during the SAARC summit will inevitably be on links to the south and the potential for developing a more dynamic and integrated, and peaceful South Asia. But it is essential that political leaders, government officials and businessmen also recognise the importance to Nepal of also forging positive relationships with the countries of Central and South East Asia and, above all, with China.

The MoU signed on 24 October in Beijing to establish an Asian Infrastructure Investment Bank (AIIB) is a major step towards supporting future growth not only of the larger Asian economies that have helped found the bank to the tune of $50 billion, but also of the 20 or so Asian countries – including Nepal -- that are its anticipated beneficiaries. It is estimated that $8 trillion will need to be invested in infrastructure over the next decade if the Asian countries are to maintain current economic growth rates.

Infrastructural development is a government priority and some steps have been taken with recent agreements with India in the domain of hydro-electricity generation and distribution. Much more needs to be done, and there are indications that many crucial projects are delayed or discredited. Government disbursement remains well below the available funds for infrastructural (and other) capital projects, and implementation lags terribly. Even as regards the approval of projects by the National Planning Commission, there is a striking under-achievement of anticipated targets.

Nepal’s balance of trade, already deep in deficit, has deteriorated still further as the volume and value of exports are far outpaced by those of imports, notably fuel and energy. Remittance flows, which owe much more to individual enterprise and lack of employment alternatives than to government facilitation, cannot be relied upon to support the rest of the economy and the growing demands of the new consumer middle class. Investment in better infrastructure, to reduce the costs of travel and transport and of communication both within the country and across the borders is urgently needed.

Let us hope that at the SAARC Summit there will be heightened awareness both of the emerging opportunities and of the urgent need to make the most of them, through private and public investment, the cutting of red tape and speeding up of bureaucratic processes, the mobilisation of enthusiasm and enterprise in all the relevant sectors of economy and society.

he future of Nepal, and of the other Asian countries, does not of course depend on this or other similar meetings, but the summit could do much to set an agenda to be followed and inspire a sense of what might be achieved if the major Asian economies collaborate with their smaller neighbours and together create a new litter of Asian tigers.


Read also:

By car to India, From the Nepali Press

The New Silk Roads, Pradumna Rana

Bullying Nepal, Artha Beed

“It is a win-win situation”

In a state of transit, Shristi RL Rana

‘India-open’, Editorial

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