Presentation at RIS, New Delhi Economic Integration between South Asia and East Asia: A Perception Survey of Opinion Leaders Pradumna B. Rana Associate Professor RSIS-NTU Chia Wai Mun Assistant Professor NTU Presentation at RIS, New Delhi 29 January 2014

Outline Introduction Objectives Trends in SA/EA Economic Linkages Initiatives to Promote SA/EA Linkages Economic Integration in South Asia Policy Implications

I. Introduction Perception Survey was supported by the Academic Research Fund of Nanyang Technological University provided by the Ministry of Education, Singapore Survey will be a chapter of a book that we are co-authoring on “Jump-starting South Asia: Round Two of Reforms and Look East Policies”

II. Objectives of the Study Assess the views of stakeholders in South Asia and East Asia on integration between the two regions Test the relative strengths of the findings of our various papers

Our Papers Francois, J, PB Rana and G. Wignaraja (eds) (2009). Pan-Asian Integration: Linking East and South Asia. Basingstoke: Palgrave MacMillan. Rana, PB. 2012. Renaissance of Asia. World Scientific Publishers, Singapore. Rana, PB and WM Chia (2013). South Asia Needs Phase 2 of Look East Policies. Economic and Political Weekly 48(35). Rana, PB and WM Chia (2014). Perception Survey of Asian Opinion Leaders on Economic Linkages between South Asia and East Asia. Draft Rana, PB and WM Chia (2014). The Revival of the Silk Roads (Land Connectivity) in Asia. Draft Rana, PB and BKarmacharya (2013). A Connectivity-Driven Development Strategy for Nepal: From a Landlocked to a Land-linked State. Forthcoming ADBI

Profile of Respondents EAST ASIA   Academia Business Government Others Total N % Brunei Darussalam 0% 1 100% Cambodia 33% 3 China 19 90% 2 10% 21 Indonesia 12 46% 4% 9 35% 4 15% 26 Japan 11 79% 14% 7% 14 Lao PDR Malaysia 10 56% 11% 6 18 Myanmar 25% 50% Philippines 15 58% 38% Singapore 45% 19% 32% 3% 31 South Korea Thailand 55% 9% 36% Vietnam 13% 7 29% 24 East Asia 105 16 59 187 SOUTH ASIA   Academia Business Government Others Total N % Afghanistan 0% 1 100% Bangladesh 13 93% 7% 14 Bhutan 20% 2 40% 5 India 65 56% 9 8% 18 16% 24 21% 116 Maldives 33% 67% 3 Nepal 15 58% 19% 4 15% 26 Pakistan 75% 10% 20 Sri Lanka 8 44% 11% South Asia 118 39 13% 203   Academia Business Govt Others Total N % TOTAL 223 57% 36 9% 98 25% 33 8% 390 100% Total Respondents  390  Sample 5300 Response Rate 7%

III. SA/ EA Linkages: Need for LEPII in South Asia

Costs of Strengthening Economic Linkages

Benefits of Strengthening Economic Linkages

Modalities of Regional Cooperation

Obstacles and Barriers to Economic Linkages

Required Policy Actions in South Asia

IV. Initiatives to Promote SA/EA Economic Integration

Trade

Macroeconomic Policy Coordination in EA and the Possible Role for SA

Connectivity Issues: Northern and South-western Silk Road Source: Rana and Chia (2014)

Factors That Have Revived the Case for Land and Air Connectivity between SA and EA

Connectivity Issues

Connectivity Issues

Proposed Corridors in South Asia Source: Rana and Karmacharya (2013)

V. Economic Integration in South Asia

Income Effects of Alternative FTA Scenarios South Asia FTA East Asia FTA East Asia and India FTA South Asia and East Asia FTA   Value $ Mn % change South Asia 3,695 0.33 (3,620) (0.32) 16,199 1.44 22,423 1.99 Bangladesh 351 0.31 (297) (0.26) (355) (0.31) 1,874 1.66 India 1,138 0.14 (2,371) (0.30) 17,779 2.23 18,240 2.29 Sri Lanka 335 1.08 (117) (0.38) (123) (0.40) 631 2.03 Others 1,246 3.37 (12) (0.03) (240) (0.65) 1,380 3.73 East Asia (540) (0.01) 226,855 2.17 239,097 241,485 2.31 ROW 361 0.00 (9,316) (3,934) (3,001) World 3,516 0.01 213,919 0.45 251,363 0.52 260,907 0.54 Note: ROW is rest of the world. Changes are computed relative to 2017 baseline at constant 2001 prices. Source: Francois, Rana, and Wignaraja (2009)

VI. Policy Implications Market-led approaches (including connectivity) should drive South Asia/ East Asia integration. ASEAN-India connectivity and BCIM Economic Corridor are strongly supported. SASEC and BIMSTEC have strong potential in promoting SA/EA integration. Efforts must also be made to promote South Asia/ Southern China/ ASEAN Connectivity or the SSR: Nepal has a role to play. The proposed economic corridors in South Asia would help connect CAREC and GMS corridors, making Asia truly seamless (ADB should note). Just as in the case of the EAS, ASEAN must invite India to join the ERDP and India could pledge funds to the CMIM. At some stage, most South Asia countries must be invited in negotiating the RCEP.

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