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By Shabbir H. Kazmi
The term South Asia commonly refers to seven countries namely: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. These countries are also part of South Asian Association for Regional Cooperation (SAARC), a bloc established in 1985. Afghanistan was included as the 8th member of SAARC in 2006 and China, Iran and Myanmar are also seeking full member status of the bloc.
According to various reports, SAARC member countries have millions of acres of cultivable land, reasonably robust agriculture and manufacturing base, but a very large percentage of the population of these countries live below the poverty line. Often South Asia is termed the poorest region in the world after Sub-Saharan Africa. While over a quarter of the world’s poor people live in Africa, half of them live in South Asia. According to one report there are more poor people in eight Indian states than in the 26 poorest African countries.
According to a World Bank report released in 2007, South Asia was the least integrated region in the world. Trade among countries in the region is around 2% of the region’s combined GDP, compared to 20% in East Asia. According to some analysts due to similar climatic conditions, soil composition and the mindset of ruling junta these countries still compete with each other in the global markets. Despite enjoying close proximity and often common borders, these countries have failed in complementing each other due to hostilities against each other.
Three of the largest countries by population, Bangladesh, India and Pakistan have elaborate agriculture and manufacturing bases, but hardly enjoy cordial diplomatic relations. This virtually closes down doors for economic cooperation, particularly sectors like agriculture, manufacturing and even services. One of the reasons for the prevailing situation is a ‘trust deficit’ as the hawks present in these countries try to portray that economic cooperation among the member countries will make the smaller countries subservient to those that have more robust economies.
All the countries of the region suffer from acute shortage of energy products, the lifeline of economy. With a closer look at the power generation potential, installed capacities and actual output, one could say without mincing words that the energy crisis looming for nearly three decade is the outcome of following inconsistent policies and gross mismanagement. Below optimum capacity utilization of power generation capacity is partly due to the non-availability of fuel and partly because of the inadequate maintenance of power plants as poor cash flow is the mother of all evils.
Pakistan has an aggregate installed electricity generation capacity of nearly 30,000MW, but average output hovers around 15,000MW or 50 percent capacity utilization. Equally shocking is the news that India also suffers from the same contentious problem. The third largest economy of the world has an aggregate installed generation capacity of 250,000MW, but actual generation hovers around 150,000MW. A point that distinguishes the two countries is that while efforts are being made in India to overcome looming energy crisis, little effort is being made in Pakistan.
With respect to two of the gas pipeline projects — Iran-Pakistan-India (IPI) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) — both pipelines were aimed at catering to India’s gas requirement, but Pakistan was to benefit in two ways: 1) getting millions of dollars in transit fees and 2) also gas for meeting domestic requirements. It was believed that after the easing of economic sanctions on Iran, Pakistan would succeed in completing a portion of gas pipeline located in its territory. However, it seems that Government of Pakistan (GoP) does not wish to complete this project due to the US pressure.
The fate of TAPI is also in the doldrums as NATO forces are likely to vacate Afghanistan in 2014. Therefore, Pakistan will have to accelerate oil and gas exploration activities in the country and also complete LNG project on war footings.
Pakistan is a natural corridor for energy supply because on one side are energy-rich countries and on the other side are energy-starved ones. Pakistan can also follow Singapore’s example and establish state-of-the art refineries on the coastal belt. In this regards help can be sought from China, Russia and other Central Asian countries. Pakistan already has a mid-country refinery and two pipelines to carry black and white oil products up to Multan. This can pave way for export of white oil products to Afghanistan and Chinese cities enjoying common border with Pakistan. Realization of all these projects could help the country in earning millions of dollars in transit fees.
Ironically, the Gwadar port project has been put on back burner after the departure of Pervez Musharraf. In fact the project should have been completed prior to the transfer of management control to China. While India is facilitating in the construction of Chabahar port in Iran, Pakistan will continue to offer the shortest and most cost effective route up to Central Asian countries passing through Afghanistan.
Lately, some Middle Eastern countries have shown keen interest in acquiring agriculture land in Pakistan, but local feudal lords have emerged to be the biggest opponents to leasing of cultivable lands to other countries. Pakistan has millions of acres of land that is not cultivated, mainly due to a shortage of irrigation water. Leasing out land to other countries would not be a bad proposal because it would help in improving the infrastructure, i.e. construction of farm to market roads, and modern warehouses. Construction of water courses and installation of wells would have helped in raising sub-soil water levels in arid zones.
Pakistan produces huge quantities of wheat, rice, sugar and fertilizer, but a significant portion of these commodities are smuggled to neighboring countries. The plugging of the porous border and formalizing trade with India, Iran and Afghanistan would increase Pakistan’s export manifold. It is estimated that nearly one million tons wheat and half a million tons rice and sugar each is smuggled to the neighboring countries.
The increase in lending to farmers has started yielding benefits with Pakistan joining the club of wheat exporting countries. The recent initiative of State Bank of Pakistan, Warehouse Receipt Financing and trading of these receipts at Pakistan Mercantile Exchange is likely to improve earnings of farmers, through the reduction in wastage and better price discovery. It is encouraging that the British Government has offered assistance equivalent to Rs240 million to complete the project at a faster pace. The key hurdle in the realization of this project is the lack of modern warehouses and an absence of collateral management companies.
Perhaps it is necessary to remind the GoP that nearly 1,000 palm oil plants were grown in Sindh near the coastal line. While a large percentage of plants have died due to improper management, extracting oil is almost impossible because no crushers have been installed. Achieving self-sufficiency in edible oil could help in saving over US$2 billion currently being spent on the import of palm oil.
Pakistan often faces bans on the export of seafood because it is not abiding by international laws. While local fishermen face starvation, deep sea trawlers from other countries intrude into Pakistan’s territorial waters and take away huge catches. On top of all this, the use of banned nets results in the killing of smaller fish that are ultimately used in the production of chickenfeed. This practice, going on for decades, deprives Pakistan from earning a huge foreign exchange, besides committing the ‘economic assassination’ of poor fishermen.
Pakistan’s agri- and industrial production has remained low due to the absence of policies encouraging greater value addition. Pakistan is among the top five largest cotton producing countries, but its share in the global trade of textiles and clothing is around two percent. The country needs to establish industries that can achieve a higher value addition. Pakistan should export pulp rather than exporting fruits that have shorter shelf life.
Pakistan has an overwhelming majority of Muslims, but the country still imports goods worth billions of dollars that are not Halal. Ideally, Pakistan should be exporting Halal food products to other Muslim countries. The country needs to focus on the breeding of animals (i.e. chicken, goat, cows) and the export of frozen meat and dairy products. If countries like Australia, and Holland can produce Halal Products then what is stopping Pakistan?
Another example is to follow Bangladesh, which does not produce cotton but its export of textiles and clothing is more than that of Pakistan. This is because Bangladesh has focused on achieving a higher value addition, while Pakistan continues to produce low quality and low priced items. This is a waste of a precious resource and to be honest, the value addition is negative.
Pakistan has also not been able to benefit from being a member of SAARC. Some analysts say it is difficult to compete with India, but has Pakistan really made any effort to achieve a higher value addition? The reply is in negative — perhaps due to the prevailing mindset of Pakistanis who want to lead an ‘easy life’.
Pakistan: Geopolitical Importance - Analysis - Eurasia Review
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interesting read....everything is relevant hence I haven't highlighted
enjoy 
