HEADLINE NEWS THE RISING NEPAL (DAILY)

XIth SAARC Summit
SAFTA benefits only if competitive edge is enhanced

BY A STAFF REPORTER

Kathmandu, Dec. 25: At a time when the SAARC Preferential Trading Arrangement (SAPTA) is already in operation and countries in the region are bracing for some sort of framework for free trade during the upcoming XIth SAARC summit, some prominent economists and business leaders voiced their concern as to how a land-locked country like Nepal could benefit from the new free trade regime.

Though it sounds challenging and an uphill task for the least developed countries (LDCs) in the region, they can accelerate their economy by selling their products and services in which they have more comparative advantages. "But the areas with comparative and competitive advantages should be identified first," they said.

The South Asian Free Trade Agreement (SAFTA), if it materialises, will give a boost to the economy of South Asia, the experts agreed. They added that LDCs like Nepal and Bhutan stand to benefit more.

But operationalization and success of the free trade concept largely depend upon various factors such as political relations, people-to-people approach and security issues in the region, they opined. "It is not only an economic exercise, various factors are associated with it."

Ratifying SAFTA during the XIth SAARC summit alone is not enough, the nations will have to strive to achieve their economic goals.

"For Nepal, it should work towards augmenting its competitive edge to benefit from SAFTA in real terms," said Padma Jyoti, vice chairman of the SAARC Chambers of Commerce (SCC).

Speaking at an interaction on "Relevance of SAFTA in the Present Context," organized by Mulyankan monthly magazine today, Padma Jyoti asserted that an effective operationalization of SAFTA could uplift the economy of the entire region making it at par with other developed nations. "But the countries in the region should identify and then develop the areas in which they can reap more benefits," he added.

Presenting his paper on the topic of discussion, Deependra Bahadur Kchhetry, a senior officer of Nepal Rastra Bank (NRB) said that Nepal has a number of reasons why it would benefit from SAFTA, but it has to develop its competitive strength in certain areas such as hydro-power, agricultural products and tourism. Gradually it should go into new areas like Information Technology (IT) and medical education, he added.

Regarding the prospects of SAFTA Prof. (Dr.) Guna Nidhi Sharma noted that it is essential to promote the economy of the LDCs in the region. The bilateral issues can be changed into multilaterlism, he said.

He said, " Apart from opportunities there are some complications - firstly it could trigger inequality among the people and the rate of unemployment could go up."

Prof. Sharma, who is also the member of Economic Advisory Committee of the XIth SAARC summit, reaffirmed that technical assistance for LDCs in the region is desirable. Given Nepal's present tariff rate at 12 per cent, other members should also review their tariffs as per the SAFTA rule, he added.

According to him the Advisory Committee has recommended more focus on Research and Development and Technical Assistance to the LDCs.

Former General Secretary of the SAARC Yadav Kant Silwal pointed out the need to generate mass awareness about the essence of SAFTA. The forthcoming SAARC summit will just prepare a Road Map for SAFTA, according to which each member nations will work how the idea should be put into force.

Pradip Kumar Shrestha, former President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) stressed the need to develop Nepal's competitive advantage.

Keshav Acharya, a senior official at Nepal Rastra Bank (NRB) pointed out the need for giving stress on green revolution to prop up economy. He also noted that LDCs would be provided with certain concessions for a certain period of time.

Prof. Chaitanya Mishra said that SAFTA should be linked with other areas as well. "It is not just an economic exercise, various things like political relations and security issues should be taken into considerations."

Sneha Sayami, Director of Industrial Information Center (IIC) said that private sectors like FNCCI and Nepal Chamber of Commerce should make efforts to generate mass awareness about SAFTA and SAPTA.

Shyam Shrestha, editor and publisher of Mulyankan, also spoke on the occasion.

The SAPTA came into force from December 7, 1995, with a view to prop up trade by providing preferential treatment on certain goods. But, according to experts, it has not been as effective as was expected.

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