Honorable Ministers, Excellencies, Ladies and Gentlemen. Good Evening and thank you for inviting me to speak here today.
I feel honored to represent the World Bank Group at the inauguration of the first South Asia Economic Conclave, bringing together leading private sector and Government agencies from across the sub-continent under the theme of "Achieving Growth Through Deeper Economic Integration".
At the outset, I would like to thank the hosts - the Government of India’s Ministry of Commerce and Industry and the Confederation of Indian Industry, their partners and sponsors - for the diligence with which they have worked to reconvene this event after it was postponed in April, following the tragic earthquake in Nepal.
I attended the conference in June that brought Nepal's partners together, including many countries in South Asia, to pledge generous amounts to help the country recover.
It reminds us that regional cooperation is not just an economic aspiration. It can save lives and offer long-term solutions to natural disasters in one of the most disaster-prone regions in the world.
During the past decade, every year on average, more than 200 million citizens of Asia-Pacific have accounted for 90% of those devastated by disasters globally. Billions of dollars of hard won economic gains are irreparably destroyed. This is nothing short of a catastrophe for human security and development.
The anguish that lies in those statistics, must spur us to find regional solutions to common problems such as natural disasters and other risks. Climate change respects no boundaries and pollution does not require a customs clearance or a visa.
Similarly, we look at poverty as a regional problem in a globalized world because vast areas of the sub-continent still remain outside South Asia’s impressive growth story.
Today as the UNGA has just agreed to new Sustainable Development Goals, we are reminded that about 40 percent of the world’s poor are living in South Asia. This is in a region heavily endowed with natural assets, talented people and a rich ancient civilization. In fact, historians note that when the British arrived in undivided India in the 17thcentury, the country accounted for 23% of global economic output.
After two centuries of turbulence, the long arc of history is bending once again in favor of an Asian Century and it’s not just China and ASEAN propelling global growth.
Today, South Asia is the fastest growing region in the world, with average economic growth forecast at 7% in 2016.
It is not a coincidence that this impetus for growth is supported by governments in many South Asian countries that are responding to their citizens' aspirations for a better life and the search for opportunities beyond their borders.
Unfortunately, those economic opportunities are seldom found in the near neighborhood because conditions are such that it is 85% more expensive to trade within SAARC than with Europe or America. This can be changed.
Growth can be boosted by securing opportunities much closer to home. These can be found in the hydropower potential of Bhutan and Nepal, the textiles of Bangladesh, the IT and services sector in India, the resource corridors of Afghanistan and Sri Lanka, tourism from Maldives and light manufacturing from Pakistan.
Imagine a South Asia where people, industries, goods and services can flow freely in the most profitable way for all. According to a recent World Bank study, unrestricted electricity trade provision could save $9 billion a year of electricity supply costs in South Asia, and also reduce carbon dioxide emissions. This could help transform the lives of some 400 million citizens who still live without electricity.
Another example is the World Bank funded Central Asia South Asia Transmission Project, involving 4 countries, 2 regions and several development partners. The project enables the Kyrgyz Republic and Tajikistan to export 1300 megawatts of surplus power to Afghanistan and Pakistan, while helping establish Afghanistan as a viable land link instead of a land-locked country.
As an illustration of how difficult it can be to work across borders in the region, it took us nine years to get this project off the ground, so one needs a little patience.
Economists believe that removing barriers could power intra-regional trade from $28 billion today to $100 billion within 5 years. In the next 2 days we will be deliberating on mechanisms that can turn this vision into reality.
The World Bank Group has been working with determination towards the goal of regional cooperation for the last five years with our partners. Our portfolio of regional projects includes policy and analytical work and on-the ground initiatives for wildlife and environmental protection, energy and improving trade and transport connectivity on the other.
For instance, the Mizoram Roads Regional Connectivity project is designed to increase transport connectivity along regional trade corridors in Mizoram, and to provide quicker and safer access to all parts of the state and to neighboring states as well as to Bangladesh and Myanmar.
This brings us to the very important role that the private sector must play in providing the nuts and bolts that help integrate economies. This is the important focus of this Conclave.
It is the private sector, big and small entities alike, that must increase regional investment. Less than 2 percent of total foreign investment in South Asia is intra-regional, denoting a historical mindset that has missed investment opportunities and kept the region poor despite its innate wealth.
We can change this narrative and reap the dividends of trust. Francis Fukuyama called trust the very basis, “the improbable power of culture in the making of an economic society.”
South Asians are asking their leaders to establish that trust so that the Asian Century will not leave them on the sidelines. The private sector can build regional value chains that weave the sub-continent together, providing the best solutions for boosting regional production, labor markets, the movement of goods and services and investment.
We can take inspiration from several remarkable regional initiatives already changing the lives of millions of poor for the better.
The region has already lifted the second largest number of people out of poverty in history but we have still to unleash the full potential of the region with its 1.7 billion people, and which includes 26% of the world’s youth and 40% of the world's poor. Their tomorrow is in our hands today and we are in the right place at the right time to make this happen. Not only can it happen, it is imperative that it happens for their sake.