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ADB offers grant for cooperation between India, Pakistan

By Xinhua,

Manila : The Asian Development Bank (ADB) is supporting closer regional cooperation and integration in South Asia through a grant designed to help strengthen policy reforms in India and Pakistan, the bank said Wednesday.

ADB will provide technical assistance of $750,000 for the South Asian regional cooperation. The grant will identify constraints and promote policy reforms and other strategies needed to overcome the barriers to cooperation and integration in South Asia, the Manila-based bank said.

The grant is focused on India and Pakistan because they are the region’s two largest economies and both have been taking steps to promote stronger regional cooperation and integration, ADB said in a statement.

“India and Pakistan could potentially play a pivotal role in advancing wider Asian integration as well as catalysing South Asian regional cooperation,” said Jayant Menon, principal economist with ADB’s Office of Regional Economic Integration.

In the past, progress on cooperation has been slow and South Asia remains the least integrated region in the world with intra-regional trade, for example, accounting for just 2 percent of gross domestic product, compared to 20 percent in East Asia.

Challenges to closer ties include persistent poverty, rising inequality, civil conflict and at times, tense political relations. High levels of trade protectionism also persist despite the establishment of the South Asian Free Trade Area, the bank said.

However, there has been progress in recent years with a pickup in the level and pace of domestic policy reforms across South Asia- improved relations and increased levels of trade between India and Pakistan and a greater opening up of South Asian economies to other regions and the world, it said.

The grant will seek to support and accelerate domestic policy reforms that have begun in India and Pakistan, and to identify long-term strategies for closer regional cooperation that could maximize gains from the policy changes, according to the statement.

Two country studies will be carried out and an international conference is planned for October 2009 where the findings will be discussed and disseminated.

Another phase may be carried out examining similar issues in other South Asian countries, starting with Bangladesh, then Sri Lanka and the Maldives, followed by Nepal, Bhutan and Afghanistan.