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The transaction cost of shipping and logistics in South Asia is double that of the ASEAN region. If this gap alone is brought at par with ASEAN the export out of South Asia will increase by 7 per cent.
Asia continues to dominate global economic growth and South Asia as a sub sector of Asia is positively indicating over 6 per cent economic growth led by reforms made by the major economy of India. As at now the region is considered the poorest in Asia. A population of over 2 billion along with the BIMSTEC region will benefit if the economic activity is enhanced with greater connectivity through oceans, roadways, canal ways and air. Consumption and demand for goods and services will see a probable double digit annual growth of regional GDP with an increased middle class consumption. This growth will transform into a requirement to handle greater trade through multiple logistics corridors efficiently, which will be a challenge and a priority for all the South Asian nations in the coming years. Time is right that industry together must lobby for the right reforms and dialog with governments to move towards greater facilitation and integration of trade and logistics. South Asia among its neighbours trade very little compared to a region like ASEAN. Little or no communication means less business activity. Joining hands among all South Asian regions logistics and shipping industry can give the impetus to push towards the common goal and reduce the political rhetoric we hear more often than proper business plans.
Networking among stakeholders will create the needed platform
Thousands of shipping and logistics companies operate under difficult circumstances in South Asia due to lack of proper infrastructure, systems, skilled people, educational and technological gaps. This reflects as a cost to the manufacturers, exporters and consumers, also affecting profitability of shipping and logistics companies. A recent international report indicated that the transaction cost of shipping and logistics in South Asia is double that of the ASEAN region. It says that if this gap alone is brought in par with ASEAN the export out of South Asia will increase by 7 per cent. These are serious matters and numbers, where regional business leaders must discuss and go as one voice to the regional authorities to get their attention for the needed restructuring and reforms of the transportation sector. It was very recently that Prime Minister of India, Narendra Modi made a statement in Sri Lanka that India’s economic rise would help its neighbours as well. He requested greater cooperation and dialogue among stake holders to work towards a prosperous South Asia.
Bay of Bengal focus
As of now Colombo plays a key role as the leading hub of South Asia for containerised cargo, facilitating cargo transshipment to the South Asian container markets and the Bay of Bengal. Bay of Bengal region is now becoming a topic in geo strategic discussions and the economic corridors of the countries in the Bay of Bengal are seeing significant focus. International research organisations predict a minimum of doubling of cargo handling in all major ports of South Asia by 2030. These volumes will certainly grow from the Bay of Bengal and the BIMSTEC countries as well. Therefore, the maritime connectivity will be a crucial factor for trade growth in this region. Hence the need to upgrade the ports and facilities to service the Bay of Bengal maritime/logistics services is a priority.
South Asian countries need to work out a maritime and ocean framework cooperation policy and work as partners as the ocean economy of the Indian subcontinent will be a great strength for economic prosperity not only to the Bay of Bengal region but to South Asia. If infrastructure and economic corridors are properly understood and designed using technology for efficient connectivity, the ocean economy will help millions of South Asians to be lifted out of poverty. Therefore, a regional corporation body of South Asia and BIMSTEC countries should be established with private sector participation for planning as well as other reforms for ocean and land connectivity.
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