After the colonial era, most countries of the South Asian region became independent and sovereign states. To remain aligned to their legacy, the nation states strived to form small groups aiming at establishing regional cooperation to enhance each member state's security, economic growth and cultural harmony.
Jawaharlal Nehru convened the Asian Relations Conference even before the independence of India in 1947. Asian Relations Conference of 1947 was followed by a conference in 1949 in Indonesia and another one in Bandung in 1955. These became the pillars for establishment of the Non-Aligned Movement (NAM) in 1961.
In the late 1970s under the initiative of Bangladesh seven South Asian nations -- Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka -- formed the South Asian Association of Regional Cooperation (SAARC). Under the umbrella of SAARC so many component-wise associations have been formed like South Asia Federation of Exchanges (SAFE), South Asian Federation of Accountants (SAFA), South Asian Federation of Endocrine Society ( SAFES), SAF games etc.
The commonality of culture, economy and religion provides a strong basis for regional cooperation. This cross-religious, cross-cultural relationship is further reinforced in recent times by the cross-economic interest.
A preeminent method to enhance regional cooperation in the South Asian region could be the creation of regional fund or regional bank to finance for mutually conducive projects, crisis prevention and also for the private sector. South Asia could take lessons from the experience of ASEAN states trying to attract intra-regional investments with the help of ASEAN Investment Area. Mobilising foreign exchange reserves for development projects and crisis prevention could also play an important role.
Regional institutions are not only outcome of negotiation processes but also drivers of negotiation processes. Good examples of regional bodies in other regions of the world are European Commission (EC) and European Central Bank (ECB) in EU, Chiang Mai Initiative Multilateralisation (CMIM) in East Asian and ASEAN+3 Macro-economic Research Office (AMRO), BIMSTEC, D8, BCIM-EC etc.
A possible approach to increase financial cooperation in the South Asia region can be the building and implementing the mechanisms like Asian Clearing Union (ACU). However, the idea does not provide enough incentives because of limited coverage of products and limited scope of agreements.
The Kunming Initiative, which is currently known as the BCIM (Bangladesh-China-India-Myanmar) Economic Connectivity Forum for Regional Cooperation is a notable move to harness cooperation among the four countries of the region. This Forum began its journey in August 1999 in Kunming, capital of China's southwestern province of Yunnan. After 14 years of intense dialogue and cooperation, today BCIM Forum has become an important sub-regional cooperation mechanism in the region aimed at greater integration of trade and investment between the four countries. Subsequently, to facilitate and consolidate the process of regional economic cooperation and create cross border trade and investment opportunities both at public and private sector level, an organisation named "China Kunming International Logistics & Finance Association (ILFA)" has been set up in Kunming with the support of the Chinese government.
The BCIM forum reached consensus on establishing non-governmental financing mechanism for China-South Asia International Finance Opening and Cooperation. The forum will also research on how to promote international finance opening and cooperation, creating and marketing innovative financial products. Decisions of all meetings of the forum will be submitted at quarterly meetings of BCIM governmental working group, China-Bangladesh governmental working groups, Greater Mekong Sub-region (GMS) leadership summit and other bilateral and multilateral economic events participated by China. The forum will work together on promoting BICM economic corridor building, China-Bangladesh Economic corridor building and China-South Asia International Finance Opening and Co-operation.
Cooperation could be more successful if there is scope for market driven integration. In South Asian region transaction costs are high due to high price of raw material, high transportation costs, weak infrastructure and fragile financial service. The lack of scope for direct investment has been another obstacle in market driven cooperation. Non-tariff barriers, such as inefficient border procedures, excessive documentations, burdensome custom procedures, inefficient port operations add significantly to the transaction costs of intra-regional trade.
South Asian economies under the current scenario have to play a firm role in the regional cooperation process. Member states have to be more forthcoming to grant unilateral concessions to each other.
Civil societies can act as a catalyst in the initiation of regional cooperation initiatives as they generally have a significant voice in the policy-making processes of their respective states. Civil societies can also influence the regional cooperation process by providing a vision, interpreting and explaining that vision to different stakeholders, especially multilateral parties in their respective countries. They can inform, educate and advocate the agenda of different groups to achieve consensus on several regional issues having economic importance.
Dr Muhammad Abdul Mazid, former Chairman, South Asian Federation of Exchanges (SAFE).