Report

More documents

Recommendations

Info

188 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA ISSUANCE OF VISA Visa and work permit systems vary widely between countries and opaque and cumbersome administrative procedures for entry can undermine market access granted under Mode 4. Enterprises frequently face the loss of business because the current visa regimes of countries make it impossible for them to deploy resources to meet business needs. In order to address such entry related issues, the idea of a single visa available for entry in all WTO member countries has been discussed for quite a while now (Kumar 2005). Thus, while the Indian negotiating proposal (India 2000) has elaborated this idea in the form of a GATS visa, the World Bank (World Bank 2004) has proposed a service provider visa (SPV). The GATS visa or SPV can certainly bring about considerable improvement over the existing system in regard to gaining temporary access by service providers in WTO member countries. The idea of a single visa for service providers can be proposed for South Asia also where it would be far easier to arrive at consensus in view a small number of countries involved compared to the entire WTO membership. As has already been discussed that in recent years countries such as Sri Lanka and to a limited extent India have relaxed their visa regime for South Asian people particularly tourists. The SAARC has also made some efforts to ease the visa regime in the region. Thus, in order to make huge gains from services trade, it would be necessary to have a liberal visa regime in place. There are other regional groupings which have developed this kind of facility and there is every reason why this region too should have similar arrangement in place. FDI REGIME While Mode 4 could benefit most from developing MRAs and having a liberal visa regime, it is the FDI regime that affects Mode 3. In recent years, South Asia as a whole has taken a number of steps to liberalise its FDI regime. However, from the low level of intraregional FDI flows it appears that still a lot needs to be done. Bhattacharya (2007) suggests that only India has been investing to some extent among the South Asian countries within the region, investments directing mainly towards Sri Lanka and Nepal. A foreign investment of 2.6% in Sri Lanka has been coming from India, while for Nepal Indian investments contribute to the extent of 51%. Most of the FDIs in Bangladesh are coming from extra-regional sources. However, the share of South Asian FDIs in the total inflow has shown upward trend during the last decade, increasing from 1.55% ($1.4 million) in 1995 to 1.60% ($9.3 million) in 2000 and reaching 3.82% ($32.3 million) in 2005. Within the total investment coming from the South Asia region to Bangladesh, Pakistan was the single largest source (79%) in 2005 ($25.5 million), while Indian investment of $1 million was the single largest source (47%) in 2006. Apart from the general problems related to investment in other regions, the obstacles with the South Asian countries contain some distinguishing features. In this regard, Bhattacharya argues that FDI outflow from India and Pakistan is controlled (restricted by means of minimum holding periods, classes of investors, etc.) and partly restricted (prohibited without permission) in countries like Sri Lanka and Bangladesh. It is interesting to note that services account for a growing share of outward FDI flows from the Indian economy, constituting 45% of total FDI outflows for the 1999- 2003 period (Chanda 2005). In view of various obstacles to FDI, Bhattacharya suggests that implementation of RTAs in South Asia can significantly give rise to intraregional investment. At present, three bilateral treaties exist in the South Asian region between Bangladesh– Pakistan, Pakistan–Sri Lanka and Sri Lanka–India. Signing of a regional investment treaty and double taxation treaties among the countries will be an important step to remove the obstacles to investment. Under a common investment framework, investment potentials of all South Asian countries could be developed in a coordinated manner. Thus, he suggests, harmonisation of the rules and procedures and mutual recognition of the rules and standards are some of the essential means for enhancing intra-regional investment in South Asia. Regional economic integration in South Asia could work as a catalyst in improving intraregional investment and generate new incomes, employment, and trade helping the region in its fight against poverty. TAXATION POLICY Uniform taxation policy is another area that plays a significant role in the transaction of services. Under GATS there is a provision on national treatment that requires member countries not to discriminate between foreign services and domestic services. However, the provision on national treatment is not the same as is in the case of GATT where this is a non-negotiable
CROSS-CUTTING ISSUES AND CONCLUSION 189 principle. Under the GATS national treatment is thus a negotiated principle. Though many member countries provide national treatment in many services sectors, this cannot be taken for granted and members at large still seem to consider that full national treatment may not be accorded in services. In the South Asian context given varied sizes of countries and differences in the level of economic development across the region, different forms of taxation policy can arguably be one of the major barriers to trade in services. Taxation policy seems to be more complicated in those countries where states have federal structure as taxes are levied at various levels. India and Pakistan are the prime examples having federal structure. Other countries like the Maldives, Bhutan and to a limited extent Nepal, Sri Lanka and Bangladesh tend to have a taxation policy which seems to apply to only one or two levels. Although taxation policy is fairly complex area, regional integration may bring about some amount of uniformity across the region. In addition, countries can also learn from one-another’s experience. CONCLUSION South Asia is home to 21% of the world’s population. However, the total income here is merely a little over 2% of the world’s total income (CENTAD 2006). On the positive side, South Asia is growing faster than the rest of the world. With a population of 1.5 billion South Asia is a significant market. Even conceding that per capita income in the region is relatively low ($766 in 2006), the collective purchasing power is so large that the world can ill afford to ignore it. In addition, at present this region may not look very attractive but in view of its high growth rate it is likely to become far more important market in the near future. Overall, the services sector is growing faster than manufacturing and agriculture in the region. Services constitute a major sector in all South Asian countries contributing 54.3% to the total GDP of the region (South Asia Data Profile, The World Bank). However, this sector’s contribution to GDP in individual countries varies from as low as about 37% in Bhutan to as high as 82% in the Maldives (The World Bank 2007). Bhutan and Nepal are the only two countries from the region where contribution of services is well below 50% of GDP and this should not surprise us because in these countries the services sector is largely dominated by tourism and owing to different reasons tourism has not yet played the desired role. In the case of Bhutan, it is relevant to point out that the country had been relatively conservative in opening its tourism sector. However, since it liberalised its tourism, the sector has grown exponentially albeit from a very low base which is likely to be reflected in the form of increased share of services in GDP only in due course. Whereas Nepal, a tourismdependent country, has been facing difficult times and as a result the number of tourist arrivals has rather declined in recent years. In South Asia, India clearly stands out as the largest services exporting and importing country. With a share of 2.7% of world exports of services, India was the tenth largest services exporting country in the world in 2006 (WTO 2007). In addition, as the balance of services trade has been in favour of India, this has largely offset the deficit in goods trade in recent years. However, India is a major services importing country as well and with some improvement in their supply capacity other South Asian countries can grab a portion of this large pie. After India, Pakistan is a major services importing country in the region. In 2006, Pakistan imported $8.1 billion of services and was the 34th largest services importing country in the list of leading importers in world services imports (excluding intra-EU (25) trade). It has been suggested that though there has been a significant increase in the share of services in output of all South Asian economies, there is tremendous ‘asymmetry’ in South Asian services trade: The output and characteristics of this trade are largely driven by rapid growth of this sector in India (CENTAD 2007). In India, the structure of services trade has shifted from traditional sectors like travel and transport towards business services. However, as CENTAD suggests, there has been no such major shift in the services trade of other South Asian countries. Nevertheless, the latest data suggest that in other countries too a shift could be seen in the composition of services exports. In the case of Pakistan the share of finance & insurance and wholesale & retail trade sub-sectors increased in the overall services sector in recent years (State Bank of Pakistan 2007). Likewise, share of other commercial services (other than transport and travel) has increased from 50 to 61% in Bangladesh export of services (WTO 2007). In the case of the Maldives where tourism overwhelmingly dominates the economy, share of other commercial services in its total exports was almost negligible at 1% in 2000, but has now increased to 3% of the total services exports. However, in Nepal a reverse trend has been seen because share of other commercial services in its overall services exports has rather declined from 47% in 2000 to 40% in 2005.
Page 3 and 4:
QUANTIFICATION OF BENEFITS FROM ECO
Page 5 and 6:
QUANTIFICATION OF BENEFITS FROM ECO
Page 7:
Preface Our consultations with seni
Page 10 and 11:
viii CONTENTS 7. Revenue and Welfar
Page 13 and 14:
Executive Summary OBJECTIVE This st
Page 15 and 16:
EXECUTIVE SUMMARY xiii Table 1 EAMA
Page 17 and 18:
EXECUTIVE SUMMARY xv India A full S
Page 19 and 20:
EXECUTIVE SUMMARY xvii indicates th
Page 21 and 22:
EXECUTIVE SUMMARY xix ments on basi
Page 23:
Part I BENEFITS FROM TRADE, INVESTM
Page 26 and 27:
4 QUANTIFICATION OF BENEFITS FROM E
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
10 QUANTIFICATION OF BENEFITS FROM
Page 34 and 35:
Page 36 and 37:
Page 38 and 39:
Page 40 and 41:
Page 42 and 43:
Page 44 and 45:
Page 46 and 47:
2 Literature Review and Rationale f
Page 48 and 49:
Page 50 and 51:
Page 52 and 53:
Page 54 and 55:
Page 56 and 57:
Page 58 and 59:
Page 60 and 61:
4 Effective Additional Market Acces
Page 62 and 63:
Page 64 and 65:
Page 66 and 67:
Page 68 and 69:
Page 70 and 71:
6 Impact of SAFTA on Member Countri
Page 72 and 73:
Page 74 and 75:
Page 76 and 77:
7 Revenue and Welfare Implications
Page 78 and 79:
Page 80 and 81:
Page 82 and 83:
8 Impact of SAFTA on Inward and Out
Page 84 and 85:
Page 86 and 87:
Page 88 and 89:
Page 90 and 91:
Page 92 and 93:
9 Quantification of Benefits from T
Page 94 and 95:
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
Page 110 and 111:
Page 112 and 113:
Page 115:
Part II BENEFITS FROM DEEPENING INT
Page 118 and 119:
Page 120 and 121:
Page 122 and 123:
Page 124 and 125:
Page 126 and 127:
11 Construction and Related Enginee
Page 128 and 129:
Page 130 and 131:
Page 132 and 133:
Page 134 and 135:
Page 136 and 137:
Page 138 and 139:
Page 140 and 141:
12 Tourism and Travel Related Servi
Page 142 and 143:
Page 144 and 145:
Page 146 and 147:
Page 148 and 149:
Page 150 and 151:
Page 152 and 153:
Page 154 and 155:
Page 156 and 157:
Page 158 and 159:
Page 160 and 161: 138 QUANTIFICATION OF BENEFITS FROM
Page 172 and 173: 14 Health and Related Services 1 IN
Page 186 and 187: 15 Prospects for the Telecommunicat
Page 223: APPENDICES
Page 236 and 237: Appendix 8 Intra SAARC FDI Collabor
Page 238 and 239: Appendix 11 Table A11.1 On an Emplo
Page 240 and 241: Appendix 12 Original Commitments/In
Page 252 and 253: Appendix 14 Table A14.1 Telecommuni
Page 258 and 259: Appendix 15 REFERENCE PAPER Scope T
Page 261 and 262:
Bibliography Abelson, P. (1996),
Page 263 and 264:
BIBLIOGRAPHY 241 Cuba (2002), Negot
Page 265 and 266:
BIBLIOGRAPHY 243 (2004), Impacts of
Page 267 and 268:
BIBLIOGRAPHY 245 Silva, Patricia an
Page 269 and 270:
BIBLIOGRAPHY 247 (1998), Tourism Se
show all

Report

Create successful ePaper yourself

Delete template?

Save as template?