Multilateral Newsletter Aug-Sep 2015

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The August-September 2015 edition of the CII's Multilateral Newsletter focuses on the economic integration of the South Asian Region. In addition, the newsletter also covers some of the key highlights and happenings at International Trade Centre (ITC), B20 Coalition, World Bank (WB), Asian Development Bank (ADB) and the World Trade Organization (WTO).
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  • 1. 1Multilateral Newsletter this IssueInside Focus Story Achieving Inclusive Growth through Deeper Economic Integration............................................................................2 International Trade Centre World Export Development Forum: Accountability, Competitiveness and Innovation Key To Making Trade Sustainable And Inclusive.......................................................7 B 20 B20 Conference: Ankara, Turkey������������������������������������������� 9 B20 Digital Economy Conference��������������������������������������� 10 August-September 2015, Volume 3, Issue 7 Message from Mr Chandrajit Banerjee, Director General, CII Indian Industry firmly believes that South Asia has immense potential to be a major source of global growth. It has strong consumer markets with a quarter of the world’s middle- class consumers residing in the region. With consistent GDP growth rates of 5 - 6% over the past couple of decades, it is one of the fastest growing regions of the world consisting of largest working-age population; right culture to foster entrepreneurship; a dynamic industry; and geographical proximity of the member countries and more importantly, the right combination of resources to boost agriculture and investments. CII also believes that regional integration led by the private sector can realize this immense potential and eliminate some of the developmental challenges that the region is facing for decades. It is with this objective that the South Asia Economic Conclave was initiated. The South Asia Economic Conclave held from 28-30 September 2015 (in New Delhi) created a structured public private dialogue (PPD). The dialogue led to greater understanding about architecture, dynamics and policies that work in favour of regional integration, how countries deal with these issues, and moreover, how the forces of globalization influence integration outcomes and helped to enhance understanding of the regional integration process. The August-September issue of the Multilateral Newsletter provides an insight towards the key happening at the South Asia Economic Conclave. In addition to this, the newsletter provides the key highlights to the World Export Development Forum (WEDF), the flagship event of International Trade Centre which aimed to open up new trade and investment opportunities to encourage sustainable growth and also highlights the key happenings at the B20, Asian Development Bank (ADB) and The World Bank (WB). Chandrajit Banerjee Multilateral ADB ADB to Help Scale Up India-Bangladesh Cross-Border Power Exchanges��������������������������������������������������������������������11 ADB India Sign $123.5 Million Loan to Upgrade Tourism Infrastructure in 3 States��������������������������������������������������������12 WTO Indian Cities Can Take More Advantage of Urbanization for Economic Growth�������������������������������������������������������������������13 NEWSLETTER
  • 2. 2 Multilateral Newsletter The first edition of South Asia Economic Conclave (SAEC) was organized by the Confederation of Indian Industry (CII) in partnership with the Department of Commerce, Ministry of Commerce and Industry, Government of India and counterpart business associations of South Asia with support from the World Bank Group from Monday, 28 September to Wednesday, 30 September 2015 in New Delhi, India. The theme of the Conclave was ‘Achieving Inclusive Growth through Deeper Economic Integration’. The objective of this Conclave was to stimulate informed dialogue between the private sector and government to promote regional trade and investment, which would in turn help catalyze higher growth and new job opportunities and help achieve inclusive growth through deeper economic integration of the South Asia. Over 300 delegates from all eight South Asian countries participated in the Conclave where Ministers from six South Asian countries have addressed the Conclave as well as experts from diverse fields including industry, think tanks, policymakers, multilateral organizations, and media and entertainment leaders. The Conclave discussed the most crucial issues of regional integration. Speaking at the Inaugural Session, Mr Suresh Prabhu, Hon’ble Minister of Railways, Government of India, stated that the SAARC member nations would benefit exponentially by deepening regional cooperation in area of agriculture which is the main source of livelihood for the majority of people living in the region. Mr Prabhu laid emphasis on the need for deep regional cooperation in energy development, especially renewables like hydropower, wind energy, etc. He cited the example of how Bhutan is now exporting hydropower to India in a win-win arrangement. He also urged the governments in South Asia to promote the documentation of traditional knowledge, especially with respect to biodiversity. Ms Annette Dixon, Vice President – South Asia, The World Bank, said that closer regional cooperation will not only deliver economic benefits to the people but also help the member states to deal with natural disasters more effectively. Ms Dixon further added that the private sector – including SMEs – could play a catalytic role in the region’s economic progress through FDI. Earlier, Mr Sunil Kant Munjal, Chairman – Steering Committee South Asia Economic Conclave, Past President, CII and Chairman, Hero Corporate Services, suggested that the South Asian countries could consider developing a regional ‘Ease of Doing Business’ ranking index, such that it helps the regional economies in their growth process. Expanding Intraregional Trade: Drawing Lessons from ASEAN and NAFTA Dr Arvind Subramanian, Chief Economic Advisor, Ministry of Finance, India, stated how the dissimilarities between the economies involved in NAFTA and ASEAN compared to the South Asian economies point towards limited adoption of the NAFTA model in the South Asian economic scenario. Dr Ishrat Husain, Dean and Director, Institute of Business Administration (IBA), Pakistan stated the poverty reduction properties of free trade agreement which included generation of employment, elevated growth rate, etc. should be given due attention. Focus Story Achieving Inclusive Growth through Deeper Economic Integration
  • 3. 3Multilateral Newsletter Ms Beatriz Leycegui Gardoqui, Former Undersecretary for Foreign Trade, Ministry of Economy, Mexico and Partner, SAI Law Economics, Mexico, pointed out the changes in the Mexican economy and a significant hike in exports during the post-NAFTA period. Dr Harsha Vardhana Singh, Former Deputy Director General, WTO, highlighted the importance of influential and directive policy making and increased effort in the business to business engagements. The session was also addressed by Prof Abdul Wassay Haqiqi, Senior Advisor, Afghanistan Chamber of Commerce and Industry, Dr Saman Kalegama, Executive Director, Institute of Policy Studies, Sri Lanka and Dr Jayant Menon, Lead Economist, Asian Development Bank. The session was chaired by Mr T V Narendran, Co-Chairman – Steering Committee, South Asia Economic Conclave and MD, Tata Steel. The Power of 1.6 billion: A Blueprint for Prosperity Ms Nirmala Sitharaman, Hon’ble Minister of State for Commerce Industry, Government of India, said that the re-integration will gain traction as the regional economies do away with the negative lists for bilateral trade. Ms Sitharaman noted that after India extended the Duty Free Quote Free facility to the least developed countries in South Asia region, exports from these countries to India has increased. To accelerate intra-regional trade and regional economic integration, the minister underlined the need for the region to establish free trade areas. Ms Sitharaman urged the regional governments to prepare a roadmap for establishing a South Asian Development Bank. Mr Tofail Ahmed, Hon’ble Commerce Minister, Government of People’s Republic of Bangladesh, said that countries of the region should take active measures to bring down tariff and non-tariff barriers that limit the expansion of regional trade. Mr Sunil Bahadur Thapa, Hon’ble Minister of Commerce and Supplies, Government of Nepal, said in his address that if the European Union could achieve deep economic integration, so can the South Asia. Mr Lyonpo Norbu Wangchuk, Hon’ble Minister of Economic Affairs, Government of Bhutan, said that the road to regional prosperity lies in facilitating seamless movement of goods, capital and people across the entire region. Mr Abdulla Jihad, Hon’ble Minister of Finance, Government of Maldives, pointed out that although intra-regional trade has not picked up, duty concessions have been extended by India to some of the regional economies. He urged the SAARC governments to find ways to accelerate regional trade flows. Dr Sanjay Kathuria, Lead Economist, South Asia Regional Integration, the World Bank, spoke about the steps needed for the region to achieve intra-regional trade target of $100 billion in the next 5 years. Dr C Raja Mohan, Head – Strategic Studies and Distinguished Fellow, Observer Research Foundation, India, provided a historical perspective as well as a political background to the regional trade scenario. Mr Chandrajit Banerjee, Director General, CII, spoke about the key role that private sector has assumed in furthering South Asian intra-regional trade and economic integration. Focus Story
  • 4. 4 Multilateral Newsletter Focus Story Special Plenary Session Mr Nitin Gadkari, Hon’ble Minister of Road Transport and Highways, Government of India, said that the ministry is working towards establishing a ‘waterport’ – a waterways port – in Sahibganj in the state of Jharkhand that will accelerate import and export of goods between India and Bangladesh. Mr Gadkari said that the Government has planned for establishing multi-modal hubs in Varanasi in Uttar Pradesh, Sahibganj, and Haldia in West Bengal. Stating that the use of inland waterways will bring down the logistics costs for industry, he said that profits accrued from the Indian ports and Shipping Corporation of India will be channeled for inland waterways development. Mr Sunil Kant Munjal stated that the roads infrastructure network that connects the South Asian countries has paved the way for a planned car rally that will be conducted across the South Asian region. CII has in the past organized car rallies that went all the way from India to Indonesia. Mr Chandrajit Banerjee underscored the importance of physical infrastructure development across the South Asian region in promoting people-to-people contacts between the South Asian societies. Valedictory Session Addressing the Valedictory Session of the Conclave, Mr Piyush Goyal, Hon’ble Minister of State for Power, Coal and New and Renewable Energy, Government of India, stated that stronger economic cooperation between the South Asian countries will not only help the governments in meeting the inclusivity goals but also bring about sustained peace and security across the region. According to the Minister, the regional economies could leverage the unique strengths of each other to drive growth and development in the region. He said that such a concerted effort will resonate with Prime Minister Narendra Modi’s vision of one-ness of South Asia. Mr Goyal underlined the enormous potential for extensive energy cooperation between the South Asian economies. He made a mention of the strident progress achieved in India’s bilateral energy cooperation with Bangladesh, Bhutan and Nepal and the ongoing efforts to build similar engagements with Sri Lanka. He said that India has assured maximum support to Sri Lanka in fast-tracking the establishment of a 500MW power plant in Sri Lanka. He added that India has assured Maldives of all support to promote renewable energy development in the island nation. Later while addressing some of the questions raised by the audience, Mr Goyal said that the SAARC countries could support each other in collectively meeting power-related challenges and to bridge the deficits caused by seasonality factors, etc. He acknowledged the grave concerns expressed over water management and said that all efforts have to be directed to conserve water resources in the region. While stating that the developed countries should bear a large part of the burden for emissions reduction as per the ‘polluter pays principle’, Mr Goyal said that the South Asian countries should also come together for the reduction of carbon emissions and greenhouse gases. Mr Onno Ruhl, Country Director, the World Bank, said in his address that regional economic integration is a long-drawn process. It took perhaps 300 years for the EU to take its present shape. He said that World Bank will play an active part in catalysing the South Asian economic integration and could put up monitoring mechanisms for the same.
  • 5. 5Multilateral Newsletter Focus Story Dr Naushad Forbes, President Designate, CII and Director, Forbes Marshall Pvt Ltd, said in his opening remarks that greater people-to-people contacts will go a long way toward deepening the regional cooperation. He said that visas to travel across the region should be more easily available to the people of the region. He called for due measures to help businesses to set up their operations in each other’s countries. Key Recommendations Doing Business in South Asia • The imperatives for building an enabling environment for cross-border business are liberal visa arrangements, seamless movement of goods by road and rail, electronic data exchange at all major ports, harmonization of standards pertaining to items of trade, improved customs infrastructure, etc. • The regional governments should facilitate freer movement of capital across the region, which may be achieved through harmonization trade practices, better trade facilitation and improvements in transit infrastructure. • South Asia can emerge as the global production hub. For this, focus upon building a digital neighborhood. Role of Media in Economic Integration • India should take a lead in promoting the exchange of media professionals across the region The Power of 1.6 billion people • The South Asian regional governments should look to prepare a roadmap for establishing a South Asian Development Bank. • A key part of the Indian outbound FDI should be directed to the South Asian economies. Currently, 95% of India’s outbound FDI goes to markets well beyond South Asia. • Tourism is another area where the South Asian economies can achieve significant dividends through joint initiatives and cooperation endeavours. • Key steps are needed for the region to achieve intra-regional trade target of $100 billion in the next 5 years. Physical infrastructure • Inland waterways will not only offer economical transportation of passengers and bulk cargo between different parts of India but could also facilitate greater trade flows with the neighbouring countries like Bangladesh. • An international arm of NHA is being planned to extend expertise to the South Asian countries for the development of roads, highways, expressways, bridges, etc. Powering South Asia • South Asian region will require investment of up to $300 billion over the next 10-15 years to build reliable power infrastructure across the region
  • 6. 6 Multilateral Newsletter Focus Story • Bilateral energy cooperation models can be developed to build a regional energy cooperation model. Nodal agencies may be developed to drive the regional energy cooperation, to oversee matters like regulatory provisions, commercial arrangements, etc. • Risks in power need to be appropriately bundled to attract private investments in the power sector. Agriculture • SAARC member nations would benefit exponentially by deepening regional cooperation in area of agriculture. The SAARC countries would do well to learn from each other’s strengths in the agriculture sector, as well as adopt cropping patterns that are suited to the agro-climate zones of each of the countries. This would greatly enhance the overall agriculture productivity in the region. • There is the need for deeper regional cooperation in the area of agriculture research and sharing of expertise in pre- and post-harvest practices for the common good of the region. Renewables • Promote deep regional cooperation in energy development, especially renewables like hydropower, wind energy, etc. SMEs • The private sector – including SMEs – could play a catalytic role in the region’s economic progress through FDI. Currently, intra-regional FDI is a mere 2% of the overall FDI inflows into the region.
  • 7. 7Multilateral Newsletter International Trade Centre Tentative deals worth more than US$ 80 million were made during business-to-business (B2B) meetings at the World Export Development Forum (WEDF) in Doha, Qatar, which was organized by the International Trade Centre (ITC) and hosted by the Ministry of Economy and Commerce of the State of Qatar through the Qatar Development Bank. Following two days of meetings between companies from across the world, around 90 letters of intent were announced cutting across a variety of sectors. Pledges were made food and beverage, plastics, services and tourism sectors. More than 700 people from 92 countries attended the event, including 26 least developed countries. Five trade promotion organizations from Bangladesh, Egypt, Georgia, Nigeria and Viet Nam, signed an agreement to support trade development among each other. During the two-day event in Doha, speakers addressed the unique challenges and opportunities faced by SMEs in developing countries and economies in transition. They explored how these businesses, which account for the bulk of employment around the world, can be empowered to use international trade and investment to drive growth and job creation. WEDF consisted of four plenary sessions and four parallel breakout sessions, alongside structured and informal B2B meetings that allowed participating SMEs to meet potential customers, suppliers, and investors. The first day of the World Export Development Forum (WEDF) 2015, held in Doha, Qatar, heard policymakers and trade practitioners call for a range measures to ensure that trade becomes more sustainable and more inclusive. World Export Development Forum: Accountability, Competitiveness and Innovation Key to Making Trade Sustainable And Inclusive
  • 8. 8 Multilateral Newsletter At a session looking at ‘Unlocking the Potential of the Post-2015 Development Agenda’, speakers pointed to the need of reducing trade costs. This, they agreed, could play a key role for developing countries and their small and medium-sized enterprises (SMEs) to reap the benefits of connecting to international trade and investment, they said. And while Aid for Trade and public-private partnerships (especially at the local level) had an essential role to play in trade inclusion and the new Global Goals more broadly, they said that nothing could replace determined domestic policymaking, implementation and accountability. SME competitiveness WEDF’s second plenary session, ‘SME Competitiveness: Why it Matters’, took its cue from the recent launch of ITC’s new flagship publication, the SME Competitiveness Outlook. During the session, speakers pointed for the need to identify constraints to trade which will allow for small and medium-sized enterprises to flourish. They also agreed that greater e-connectivity and internet access are not only closely connected to innovation and economic growth, but also help reduce conflict. Innovative funding For SMEs to thrive, there is a need to think more creatively to on how to improve access to finance and making credit more available. This was the unison message of speakers during the session on ‘Innovative Funding to Internationalize SMEs’, who also said special attention must be placed on making funding available to women- owned businesses. But it is not j
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