A powerhouse of eminent businesses and media got together recently to carve an agenda for the private sector of South Asia. While economic integration of the region is not exactly a new slogan, the erstwhile silent private sector has now jumped in as a serious actor to support regional cooperation. First of its kind, the congregation took place in Delhi as the South Asia Economic Conclave – SAEC.
South Asia happens to be the world’s youngest region but also the poorest and least connected. For decades government-driven market access negotiations have focused on trade policy as a tool to make South Asia a viable economic unit. This has not worked, and for forty years the young region’s collective economic potential has remained untapped.
Meanwhile the world has moved forward. Neighbourhood trade has increased from 28 percent to 72 percent in the last twenty years. The conventional top 50 trade routes have dropped to 50 percent because the world is preparing new business corridors and therefore new trade routes are emerging.
Annual spending by the world’s middle class is likely to increase to $30 trillion by 2020; this demand will create new opportunities for regions to become production hubs. How can South Asia collectively leapfrog and be part of this global prosperity?
The answer lies in connectivity within the region and to the world. The solution to connectivity is simple, it is Indian Prime Minister Narendra Modi’s narrative on “our new digital neighbourhood”. Being the youngest region, South Asia has a large number of young digital natives. All it requires is a roadmap to kick-start the region to use this cost effective, accessible space. The Chinese example is a roaring role model and very soon East Asia will conquer the digital galaxy.
Can there be a digital South Asia? How can it help unleash the economic potential of our youth and micro, small and medium enterprises (MSMEs)? How can a digital South Asia be carved? Will it have to rely completely on traditional concepts of trade policy and market access of governments?
The private sector today cannot have ‘government’ as an excuse for market access barriers. The focus should be on finding economic growth models for the region and not just on relying on trade policies. Creating a connectivity roadmap to local markets will go a long way, rather than just waiting for market access issues to be solved.
These might not sound and feel doable but the length and breadth of such targets can unbridle South Asia as it has done for the young entrepreneurs and MSMEs of some regions. They say an MSME benefits 40 percent more by being connected to markets, rather than mere market access earned by it’s government. According to eBay, digital connectivity benefits an MSME 90 percent more compared to traditional marketing tools.
Digital trade is the fastest and most cost effective way to developing a digital South Asian economy. The increase in mobility and the growth of the internet twenty-folds in the last ten years shows it’s growth, pace and accessibility. Examples like the Chinese Taobao online marketplace selling 1200 units per second are significant.
Most South Asian countries’ digital trade growth is far above their GDP growths. Bangladesh’s growth in online transactions grew 25 percent the last three years. India’s growth rate in digital trade is 15 percent. Kaymu reports that Sri Lanka has 51 percent new visitors on its digital platform, while Pakistan’s digital trade market, according to Kaymu, is expected to increase 72 percent in the next few years. Overall in 2014, 35 percent of the world’s e-commerce turnover came from Asia. This technology orientation of Asia is transforming the continent with e-commerce leading the way.
The private sector in South Asia, with the support of the Saarc Chamber, can start a ‘communications campaign’ across the region; encouraging youth and MSMEs to form online platforms and communities for online trade – digital trade – in South Asia.
A digital trade committee at the Saarc Chamber level, with national chapters, can kick-start reviewing the ICT law requirements of a digital South Asian economy. At the same time Saarc can consider a digital trade complaint unit. All the above efforts require minimum resources to launch a digital economy.
There is a phenomenal opportunity on the horizon for this region to connect to each other and to the world through the digital neighbourhood. A digital neighbourhood can make up for the decades lost in being away from each other and each other’s markets. All it requires is a consolidation effort – more so by the private sector to highlight its importance.
A digital South Asia is taking shape anyway, but it is very slow and without direction. South Asian leaders owe it to their generations to create the momentum and the speed to set free the economic destiny of millions.
The writer is a businesswoman based in Lahore. She analyses digital trends globally. Email: [email protected]