During the 8th SAFTA (South Asia Free Trade Area) Ministerial Council meeting, the SAFTA ministers agreed to set up of the SAARC Development Bank, currency swap arrangement and improving inter-connectivity amongst the SAARC countries on July 24 at Thimphu.
There is to be further discussion on this outcome at the 18th SAARC Summit to be held in Nepal in November 22-27.
The Minister of Economic Affairs, Norbu Wangchuk, said the meeting discussed the important mandate of enhancing and deepening the economic integration among the eight SAFTA member countries.
The meeting also discussed the issues pertaining to the achieving economic integration, such as reducing the tariff barriers and non-tariff barriers.
Lyonpo said the SAARC countries have agreed to continue working on reducing the tariff and non-tariff barriers for the goods being exported and imported.
The non-tariff barriers, Lyonpo said, is burdensome during custom clearance for trade of goods and needs to be simplified.
There were three significant outcome of the meeting which was endorsed upon the recommendations passed by the experts’ committee in July 22-23.
One is to set up the SAARC Development Bank (SDB) on the model of the Asian Development Bank. Lyonpo said such a bank would be extremely important to finance the development and infrastructural activities of the respective countries.
Lyonpo also said with the setting of the SDB, the cost of finance in Bhutan would be cheaper and can speed up the development of infrastructural projects.
“Bhutan, being a developing country, needs lot of capital to finance our development and infrastructural work,” he added.
The meeting also agreed on the need for a currency swap arrangement. Lyonpo said the member countries would use their own currencies when they trade with other neighbouring countries in the region. This is expected to address the convertible currency needs being faced in the member countries.
Thirdly, there was an agreement on the need to improve the inter-connectivity amongst the eight SAARC countries through the rail network, seaport or usage of airports. Lyonpo said the agreement is in a draft stage and SAFTA ministers have decided that it needs to be signed at the earliest time possible. The improved connectivity will help landlocked countries, like Bhutan, to reduce the major costs incurred in delivering goods and services in the country as well as the markets outside.
“When we have this instrument to facilitate interconnectivity between various countries, that would be of tremendous support to Bhutan,” Lyonpo Norbu Wangchuk said.
The meeting also deliberated on the reduction of commodities in the sensitive list, where the country protects commodities so other countries cannot export easily to that country.
Bhutan has already made a drastic reduction of the sensitive list to about 18 items. In the earlier SAFTA meeting, India had reduced the sensitive list to almost zero to the least developed countries (LDCs). Pakistan had also offered to reduce the sensitive list to about zero. Sri Lanka and Bangladesh are to follow suit on the reduction of their sensitive list.
On July 23, Prime Minister Tshering Tobgye met with the Minister of Commerce of Bangladesh, Tofail Ahmed. They talked on strengthening the collaboration in agriculture, tourism, mining and other areas of shared interests.
On same day, the Minister of Commerce of Bangladesh also met with Lyonpo Norbu Wangchuk where they discussed trading using water ways in Chitagong and Mangla area for business people. Lyonpo said Bangladesh has considered it
favourably. They also discussed on the possibility of signing a free trade agreement as well the export of the Bhutanese boulders to Bangladeshi projects.
Lyonpo Norbu Wangchuk also met with the Minister of Commerce, Pakistan, Engr Khurram Dastgir Khan, where they agreed to further deepen the relationship between the two countries and enhance trade.
Lyonchhen Tshering Tobgay met with the commerce ministers of SAARC countries on July 24 and held discussions on the need for more economic integration, ensuring regional connectivity, increasing competitiveness and diversifying trade opportunities within the SAARC member countries.
“We are as common as no other place on earth and if there is a region that can rise up to fulfilling its potential, it is South Asia. We will be able to achieve our goals by SAARC and through SAARC,” Lyonchhen said.
Lyonpo Norbu Wangchuk also met with the Commerce and Supplies Minister of Nepal, Sunil Bahadur Thapa, and the discussion was mainly on the strengthening and exploring of the tourism, indigenous crafts and hydropower in both countries.
Bhutan is hosting the SAFTA Ministerial Council (SMC) meeting for the first time. The SMC is the highest decision making body of SAFTA and is responsible for the administration of the agreement and all decisions are made within its legal framework.
The 7th SMC meeting was held in Colombo, Sri Lanka last year. It is schedule to be held next in Afghanistan. The SAFTA was launched in January 1, 2006 and the body not only fosters regional economic cooperation, but also lays strong foundations in building of South Asia Economic Union.