Regional collaboration will unlock investment opportunities for domestic firms and would attract more investments from the rest of the region by creating more stable financial markets and by opening a wide range of funding sources, Central Bank Governor Indrajit Coomaraswamy said.
Governor Coomaraswamy was speaking at the 15th South Asian Economic Students’ meet organised by the Department of Economics, University of Colombo and the World Bank, in Colombo recently.
“India will play an important role in promoting greater regional cooperation. There have been changes in India over the recent years which I think are conducive for greater regional cooperation,” he said.
“India as a rising global power with global conditions has an interest in the stability of its neighbourhood, and it doesn’t want to be disturbed by minor irritations in the neighborhood while it pursues its global agenda.
India’s neighbourhood choice policy is aligned with those objectives.” he said.
The South Asian region has had a challenging and troubled history.The Nation building process in other countries has created tensions for decades.
“But we need to look at East Asia. You look at Japan, China and South Korea. Those countries too have had a troubled history, but they have been able to rise above those tensions and to be pragmatic.
Today, these countries make billions of dollars worth of trade among China, Korea and Japan. The troubled history has not held them back. Somehow, they have the capacity to be pragmatic,” he said.
“But, we tend to be far more emotional and allow that to get in the way of commercial opportunity. We need to learn to look at what’s happening in East Asia.
It is the young people who do not carry the negative baggage of troubled histories, and they create a new path which would reduce the unwarranted gap between potential and reality in our region. Young people have a special responsibility to take Sri Lanka on a better journey.”
He said with the India’s ‘Make in India’ Strategy and its liberalisation process, the experience of East and Southeast Asia can be re-created in the region.
“When Japan and China developed all the countries in East and Southeast Asia, they plug into the supply chains of Japanese and Chinese companies and they all rose together.
If the ‘Make in India’ initiative gathers momentum, it will result in supply chains and cross-border production sharing networks.
Countries in the region may have new opportunities which they may not have had in the past.” Governor Coomaraswamy said.
Speaking on General State Tax (GST) in India, Governor Coomarasawamy said the GST will also reduce transaction costs of doing business in India and exporting to India.
“Another factor for greater integration is the improvement of infrastructure around the region. In the past, due to poor infrastructure in countries in the region, the transaction costs of moving goods across borders were high, but now with infrastructure developing across the region, those transaction costs are dropping,” he said.