Unproductive associations

  • Nepal should chart its own development course and not depend on Saarc or Bimstec
- Dwaipayan Regmi

Aug 10, 2017-

After India decided to boycott the South Asian Association for Regional Cooperation (Saarc) Summit in Islamabad last year, it received the immediate support of Afghanistan, Bhutan and Bangladesh. Despite being the Saarc chair, Nepal could not take a strong stand and assume leadership of the summit and the entire situation now seems to have deteriorated into confusion. India has been showing more interest in the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (Bimstec) than Saarc because China is not an observer and Pakistan is in no way associated with it. Sour diplomatic ties between India and Pakistan are the prime reason behind Saarc’s dark future. Problems between the two could have been addressed and discussed at the Saarc summit, but Saarc has a provision which states that bilateral matters cannot be discussed. 

Questionable benefits

Nepal’s major problems are: growing inflation, low economic growth rate, unemployment leading to youth migration, corruption, political insurgency, unstable government and dearth of investment. It has now been three full decades since Saarc was formed with Nepal as a founding member. It’s good to be part of an organisation, but how these regional blocs have benefited the country has to be gauged objectively. The unemployment rate has swelled to 3 percent from 1.79 percent in 1999. The economic growth rate has been estimated at 5 percent by the World Bank and 6.5 percent by the government. The growth rate was 8.6 percent in 1993. 

Even after the formation of Saarc in 1985, Nepal failed to renegotiate the trade and transit treaties with India in 1991; this resulted in economic disruption. Nepal also faced an economic blockade just a year ago. Whether or not Nepal actually benefited from Saarc remains questionable. Open trade among Saarc member nations remains farfetched when there is not even free and easy travel within the region. It’s unwise for Nepal to expect any benefits from Saarc.

Bimstec, on the other hand, is far from India’s antagonism and China’s influence; it concentrates more on economics, international trade and foreign direct investment (FDI), foreign trade, research, and economic integration. The basic problems effecting Nepal can be better addressed by Bimstec. Bimstec has been regarded as an opportunity hub. It is a step ahead as it not only talks about free trade, but also about investment and research. Nepal joined Bimstec with the aim of developing energy, agriculture, transportation and basic infrastructure, after initially being an observer. 

Lost opportunities

Nepal has also not been able to bring in any portfolio investment from member countries to date. Notable improvements in foreign investment cannot yet be seen, nor has any strong research work been conducted. Nepal has failed to bring about any revolution in agriculture, and infrastructural development has been moving at a snail’s pace despite the state’s association with Bimstec. Nepal has not seen a notable increase in the number of tourists arriving from Bimstec member countries, even though most of them are Buddhist. Thailand should have become a beneficial trade hub for Nepal, but this has not happened. The question is whether Bimstec has been moving slowly or whether Nepal has not been able to make the best use of it.

Had Nepal been strong like Britain, it could have thought about pulling out of Bimstec. But being a weak nation, it cannot do anything except hope to receive something beneficial. Nepal’s economic stand in these organisations depends entirely on other, stronger, nations’ decisions; it is important for the country to push strong nations like India, Thailand, Pakistan and China to get down to a practical level. 

Although the Saarc headquarter has been established in Kathmandu, no notable progress has been seen for three decades. The same can be said about Bimstec. However, there are organisations like the Organisation of the Petroleum Exporting Countries (Opec) and the European Union, that have been benefitting their member nations. Hence, it is important for Nepal to understand its economic position. Bhutan’s exemplary economic development is not a result of its membership in Bimstec or Saarc. Neither is Botswana progressing because it is part of the African Union or the Commonwealth of Nations. A country has to identify its major weakness and work on remedying it.

Nepal needs to understand that this is the age of trade and business. It is important to be part of groups such as Saarc and Bimstec, but Nepal should learn to make strategic moves. It is unwise to expect national development through cooperation and association alone. Therefore, instead of worrying about where Saarc will be in the next eight years, Nepal needs to focus on other things, such as finding ways to trade with Pakistan and forming a partnership with the Maldives to promote tourism. 

Also, staying away from China will be detrimental for Nepal. China is a world economic power and it is important for Nepal to make the best use of its northern neighbour. Hence, instead of concentrating on what Bimstec and Saarc summits declare, Nepal needs to follow its own path. 


Regmi is a business development analyst at the National Incubation and Research Centre (NIRC) and lecturer at Kathford International College

Published: 10-08-2017 07:47

User's Feedback

Click here for your comments

Comment via Facebook

Don't have facebook account? Use this form to comment