SA nations set to sign trade in services deal in Bhutan

---

FE Report
South Asian nations are set to sign an agreement on trade in services in the upcoming summit in Bhutan in an effort to allow unrestricted cross-border expansion of their transport, logistics, banking and insurance firms.
The move comes four years after the grouping of eight nations signed the South Asian Free Trade Agreement (SAFTA), which experts say have been bogged down by mistrust among its members.
Foreign ministry officials said the deal on trade in services would be "big leap forward" in cementing economic links among the South Asian nations ranging from fast-developing India to war-torn Afghanistan.
"We have been pressing home the trade in services deal for some time. The government will ratify it, if it is signed in the SAARC summit later this week," an official said.
Ministry officials see the new deal that would set deadline for gradual opening-up of the services sector in the region as a logical extension of the SAFTA deal.
"To some extent, the trade in services deal will complement SAFTA and make it workable. We hope it will allow increased access of Bangladesh's service firms in the region and create more opportunities for growth," an official said.
Services sector in India, Pakistan, Sri Lanka and Bangladesh are worth hundreds of billions of dollars and a small slice of the pie could transform a minor player into a giant.
"We shall be pressing for capacity building of our service sectors as a first step towards implementing the deal," the official said, without elaborating.
During the summit, the South Asian nations would also step up efforts to cut down their long and much-criticised "sensitive lists" - identified as the main stumbling block to the full implementation of the SAFTA.
"All eight members of SAARC (South Asian Association for Regional Cooperation) understand the urgency that the sensitive lists must be trimmed down. We hope the SAFTA working committees would cut it down."
Sensitive list is a tally of products to which a government does not entertain duty-free status.
Bangladesh will also be pressing for a multi-modal, i.e. rail-road-air-sea, transport connectivity deal in the summit although officials are not certain of its success in Thmphu.
There will also be talks on signing of an intra-region energy cooperation deal, which will pave the way for sharing electricity, gas and other fuels among the member nations.
Experts, however, cautioned that the trade in services accord could expose the country's banking, insurance and telecom sectors to "uneven competition" from their bigger rivals in the region.
"If you allow wholesale access of Indian banks here, it will be a catastrophe. We are just small fries compared to the size and strength of Indian banks, insurers or any of its services firms," said a private banker.
"I hope the government should think and study properly before making a judicious decision on the services deal," he added, speaking on condition of anonymity.
Ahsan H Mansur, executive director of private think tank Policy Research Initiative (PRI) welcomed the deal, saying it could boost local services firms.
"We have to open up services sector selectively. Protection does not help in the long run," Mansur, formerly International Monetary Fund's Middle East chief, said.
"We should accept the deal in a phased manner. But we need serious studies to find out which sectors can compete with their regional rivals or which sectors can't," he said.
"There are some sectors where we may have to allow only joint ventures," he said, adding the services deal is needed for expansion of local firms in India's north-east, which is seen as natural hinterland of Bangladeshi companies.
Local transport and logistics companies will also "greatly benefit" from the opportunities to be created by the deal. "It will help us find out how resilient our service sectors are."