Red tape amounts to $ 350 bn annually

The hidden cost of red tape amounts to as much as 15 % of the value of goods being exported or over $ 350 billion in monetary terms, a year, in the developing Asia-Pacific region, said Ravi Ratnayake, Director, Trade and Investment Division, The Economic and Social Commission for Asia and the Pacific (ESCAP).

The Economic and Social Commission for Asia and the Pacific (ESCAP),Trade and Investment Division Director Ravi Ratnayake handing over a copy of the UNExt publication to Asian Development Bank Sri Lanka Country Director Rita A O’Sullivan. Senior Minister for
International Monetary Co-operation Dr. Sarath Amunugama and Industry and Commerce Minister Rishad Bathiudeen look on. Picture by Roshan Pitipana

He made these sentiments yesterday addressing the inaugural ceremony of Asia Pacific Trade Facilitation Forum 2012 held in Colombo. “There is enormous potential for promoting trade and investment but somewhat shocking reality is that Asia-Pacific is still more connected to Europe and America, than among the countries in the region.

The cost of procedures and administrative barriers, cumbersome documentation and processes accounts for 15 % of total value of exports in the region. Our challenge over the next two days is to identify ways to make fruitful solutions in terms of trade facilitation which is neglected by many countries over a period of time. Market access is useless if countries are not able to develop productive capacities to facilitate trade,” Ratnayake said.

He said, “ implementing trade facilitation reforms for regional connectivity in Asia and the Pacific is not only important but it is also urgent.

On the average, in the ESCAP region, it still takes 30 days to move goods from factory to the ship deck at the port-compared to that of just 10 days for OECD (Organization for Economic Co-operation and Development countries).

Many countries in the region have made significant progress in reducing trade transaction costs and time in absolute terms, but what really matters is how much progress a country makes relatively to others. And in relative terms, many countries in Asia have not made much progress and trade facilitation performance varies greatly from country to country.

It is also found that South Asian intra regional trade costs to be almost 50 % higher than those among neighboring ASEAN countries (Association of Southeast Asian Nations).

In that context, it is urgent to shift attention from negotiation on tariffs, which are often already low, to negotiating on simplifying and harmonizing intraregional trade and transport procedures.

Ratnayake added that ESCAP member countries should enable paperless trade and cross-border recognition of electronic data and documents for inclusive and sustainable intraregional trade facilitation.

However, the full benefits from developing these e-trade systems are therefore not yet captured and ESCAP member countries should address these issues by going forward through enhanced regional co-operation.

Asian Development Bank (ADB) Sri Lanka Country Director Rita A O’Sullivan said Regional co-operation and integration play a critical role to achieve trade and investments goals in any country and ADB is looking into increase regional co-operation and integration by 30 % of our total operations by 2020.