Now, it’s South Asia’s turn to lead global businesses
Located as it is at the crossroads of South asia, central asia, China and the Middle East, Pakistan is at the heart of a regional market with a vast population and diverse resources, and untapped potential for trade Illango Patchamuthu, World Bank country director for Pakistan
Its now South Asia’s turn to become global business leader. This is what the latest World Bank assessment says, applauding Pakistan as its hub. The report is entitled ‘South Asia’s turn: Policies to boost competitiveness and create the next export powerhouse’. Is it linked to fast track implementation of China-Pakistan Economic Corridor (CPEC), as the number of countries who wish to join it swelling by the day? Those wishing to joint it include nations ranging from nations located as far flung as Saudi Arabia, Russia, EU and Iran.
Or, is it to the fact that South Asia’s historic productivity is once again reviving after a general slowdown? If the new zone comes in place, imagine what the South Asia zone can turn into with $51 billion CPEC coming on stream by 2018, active cooperation with the UAE, and Saudi Arabia in the South, Iran in the West, Russia and Central Asian Republics in North-west, Turkey and EU in the far West, and huge and booming China in the East.
Chinese President XI’s launch of the CPEC and plans to establish connectivity, will turn real. There are big hopes that the UAE will prove to be the anchor sheet of a bigger boom than Singapore and its ties with the Asian continent and the West. The UAE is, and will attain that stature because trillions of dollars worth of oil, industrial output, consumer products and farm-and-food products will see this trade sailing through its waters, feeding from booming China to industrial Japan, with huge consumer markets like Pakistan and India lying in between.
Illango Patchamuthu, World Bank country director for Pakistan, said Pakistan, in particular, has important strategic endowment and development potential.
“Located as it is at the crossroads of South Asia, central Asia, China and the Middle East, Pakistan is at the heart of a regional market with a vast population and diverse resources, and untapped potential for trade,” Patchamuthu said.
South Asia can turn into the fastest growing exporting region of the world if authorities in Pakistan and its South Asian neighbours implement a set of policy actions aimed at improving the business environment, connecting to global value chains, leveraging clusters, and strengthening firm capabilities, the bank recommends.
The bank’s diagnosis of South Asia is that “increasing productivity of firms in Pakistan and the rest of South Asia is the only sustainable path to improve its competitive potential”.
The report mildly admonishes the region’s countries for the fact that, as of now, a set of constraint limit “the growth and export potential Pakistani firms in relation to their competitors in East Asia and rest of the world.”
In order to address such issues, it underlines the existing challenges like problems faced by prospective investors and the overall investment climate, the role of clusters, global value chains, and ability of companies and businesses to innovate in their fields of production and efficient utilisation of resources, plus fast occurring new, and state-of-art cost cutting technology. The bank reports bemoans the fact tax and customs rules which slow down textile exports for two to four months for delivery to the importer.
Apparel makers in India and Pakistan use 6.5 month of their installed capacity compared to the global average of nine months. The auto makers use 66 per cent of their capacity in India and 44 per cent in Pakistan versus 75 per cent plus in China. Only four out of 18 auto akers in India and Pakistan produce less than 100,000 units per model which is the auto industry standard. The use of computes, soft ware and IT facilities is low n Nepal, Bangladesh, and Pakistan. Some effort is underway to reduce he cost and ease of doing business to improve competitiveness as undertaken by Pakistan.
“Pakistan leads many global competitors when it comes to wage competitiveness and proximity to key markets yet continues to experience weakness in exports competitiveness. Exports remain concentrated in textiles and food sectors and investment in global value capabilities including physical capital, human capital, institutions and logistics remain limited,” according to the report. The bank says “firms realise significant productivity benefits from locating areas with a wide diversity of workers, suppliers and customers.”
Lets see how soon the Asia hub is born.