Strengthening regional trade crucial for progress: Malik

LAHORE: SAARC Chamber of Commerce and Industry former President Iftikhar Ali Malik has emphasised the need for strengthening regional trade that could be a more effective substitute for achieving comparative advantages in international trade and enhancing prosperity.

In a statement issued here on Sunday, he said South Asian countries can take all the advantages of regional economic integration that will enhance their bargaining power in international trade by representing a market that accounts for approximately 25.29 percent of the world’s population.

He said integration will also improve the region’s attractiveness for foreign and local investments, similar to EU, ASEAN and USMCA. Unfortunately, South Asia is currently the least economically integrated region in the world, with regional trade accounting for only about 5 percent of total trade, he added.

Iftikhar Ali Malik said the potential for intraregional trade in South Asia is estimated to be two times its current level which indicates a significant 67 percent of unrealised trade opportunities. If potentials are exploited, the region could see a benefit of approximately 3 percent of its GDP. He said the primary barrier to increased regional trade is political issues. When political considerations are prioritised over economic benefits, the costs can be significant for the region.

As a result, around 40 percent of the world’s poor reside in South Asia, making it the region with the second-highest poverty rate after Africa. He said Political leadership must recognise this reality and learn from the experiences of the EU and ASEAN understanding that economic development should not be sacrificed for political gain.

He said US President Donald Trump and other populist leaders in the West share a common goal of industrial policy (IP) which are state-led government programmes – such as trade protection, subsidies, tax incentives and R&D funding –that support strategic industries or sectors that aim to promote the competitiveness of local industry, protect jobs and enhance growth, he concluded.