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Title: South Asia Intra-Regional Opportunities and Challenges


1
South AsiaIntra-Regional Opportunities and
Challenges
  • Debapriya Bhattacharya
  • Executive Director
  • Centre for Policy Dialogue (CPD)
  • Bangladesh

Presented at Fostering Trade through
Private-Public Dialogue Expert Meeting on
Regional Integration in Asia New Delhi,
India 28-29 March 2007
2
CONTENT
  • The Logic and Experience of Intra-Regional
    Investment
  • FDI Regime in South Asia Intra-Regional
    Investment
  • Intra-Regional Investment in Bangladesh
  • Proposed TATA Investment in Bangladesh A Case of
    Intra-Regional Investment
  • Intra-Regional Investment Policy Issues

3
1. THE LOGIC AND EXPERIENCE OF INTRA-REGIONAL
INVESTMENT
  • Regional economic integration accelerates
    liberalization, deregulation and privatisation
    policies across economies, markets and sectors,
    ensuring implementation of common trade policies,
    standards of treatment, reduced differences in
    business practices and regulations,
    administrative procedures and business support
    measures.
  • Consequently, flow of investment heightens
    between economies of a region by decreasing
    information, adaptation and transaction costs of
    trade.
  • Thus, economic integration flattens differences
    between member states in production factors like
    wages, interest rates, economic policies and so
    on, influencing the flows of intra-regional
    investments.

4
1. THE LOGIC AND EXPERIENCE OF INTRA-REGIONAL
INVESTMENT
  • Intra-regional investments can take place in two
    forms, either as vertical investment or as
    horizontal investment.
  • In vertical investment, different stages of
    production is localized in different economies to
    take advantage of the differences in factor
    prices, producing for both the domestic market
    and the source country market.
  • As for the horizontal investment, different
    production facilities are placed in different
    economies to take advantage of the local markets
    as well as the local production factors, mostly
    targeting the domestic market.

5
1. THE LOGIC AND EXPERIENCE OF INTRA-REGIONAL
INVESTMENT
  • Intra-regional investment within Asia has picked
    up rapidly in recent times as large multinational
    firms diversified across the region and new
    regional production networks and channels for
    intra-regional investment are being created.
  • According to the World Investment Report 2006,
    intra-regional investments in South, East and
    South-East Asia have grown over the last few
    years. Currently it accounts for almost half of
    the total FDI inflows to the region. However, the
    phenomenon is prominent between and within East
    Asia and South-East Asia.
  • Japan and Hong Kong (China) have been the
    forerunners in this process during 1990-2002.

6
1. THE LOGIC AND EXPERIENCE OF INTRA-REGIONAL
INVESTMENT
  • Hong Kong (China), Singapore, Taiwan Province of
    China, the Republic of Korea, China and Malaysia
    are leading investors in East Asia and South-East
    Asia. Most investments from East Asia went to the
    relatively high-income South-East Asian
    countries.
  • The largest FDI flows have been within East Asia
    and they had been rising until recently, largely
    dominated by China as a key destination.
  • Intra-ASEAN investment accounted for 13 per cent
    of cumulative FDI flows in this region between
    1995 and 2004, with Singapore as the leading
    investor.

7
2. FDI REGIME IN SOUTH ASIA INTRA-REGIONAL
INVESTMENT
  • South Asian countries have liberalised investment
    regime in varying degrees since the mid-1980s to
    attract more investment by the private sector in
    all major sectors.
  • South Asian countries have liberalised major
    manufacturing and service sectors for foreign
    investors with the expectation of large-scale
    investment, mainly in a) export-oriented
    industries, b) industries in the Export
    Processing Zones (EPZs), c) high technology
    products that will be either import substitute or
    export-oriented.
  • But within South Asia, intra-regional investment
    flows have not been significant compared with
    other regions of Asia. FDI flows between
    South-East Asia and South Asia as well as East
    Asia and South Asia have been less significant by
    far as those between East Asia and South-East
    Asia.

8
2. FDI REGIME IN SOUTH ASIA INTRA-REGIONAL
INVESTMENT
  • Nevertheless, liberalisation of FDI regime in
    South Asia has positively contributed to
    significant increase in overall flow of foreign
    investment to the region, rising from a mere US
    0.2 billion in 1980-85 to US1.7 billion in
    1991-96 and US 9.8 billion in 2005. But the
    major share of the inflow went to India (68)
    while India and Pakistan jointly holds 90 of the
    total inflow in South Asia in 2005 (WIR 2006).
  • Whether the developing countries of South Asia
    can follow the countries of other subregions of
    Asia in the process of intra-regional investment
    will depend on their capability to pursue deep
    integration and economic connectivity, as
    Integrated regional economies with minimum border
    barriers provide enterprises with the opportunity
    to reorganize their economic activities on
    various geographical scales.

9
2. FDI REGIME IN SOUTH ASIA INTRA-REGIONAL
INVESTMENT
Hosts of FDI  Sources of FDI  Intra regional FDI (US million) Intra regional FDI (US million) Intra regional FDI (US million) Intra regional FDI (US million) Intra regional FDI (US million)
Hosts of FDI  Sources of FDI  India Pakistan Sri Lanka Bangladesh Nepal
India n.a. 6.0 (2.6) 0.99 (0.2) 5.1 (51)
Pakistan n.a. (0.6) 0.59 (0.1) (0.03)
Sri Lanka (0.01) n.a. 0.52 (0.1) n.a.
Bangladesh 0.59 (0.01) 0.79 (0.08) 0.41 (0.18) n.a.
Nepal n.a. n.a. n.a. n.a.
Share of South Asia 0.04 n.a. 2.1 0.4 37.6
Source IPS (2000), World Investment Report
(2003), Bangladesh Bank (2006), Board of
Investment (2007), Moazzem K. (2006). Note
Figures in parenthesis indicates percentage share
of total FDI inflow to the respective country.
Data represents different sources and
different time periods and may not be always
comparable.
  • Only India has been investing to some extent
    among the South Asian countries within the
    region, investments directing mainly towards Sri
    Lanka and Nepal. 2.6 foreign investment in Sri
    Lanka has been coming from India, while for
    Nepal, Indian investments contribute to the
    extent of 51.

10
3. INTRA-REGIONAL INVESTMENT IN BANGLADESH
  • With the advent of economic liberalisation in
    Bangladesh since late 1980s, inflow of FDI
    registered an upward trend from a very low base.
  • Total FDI inflow increased from US 92 million in
    1995 to US 579 million in 2000 and reached to
    845 million in 2005. In 2006, however, this
    amount went down to US 490.27 million, which
    could be due to the political unrest prevailing
    in the country at that moment.
  • Most of the FDIs in Bangladesh are coming from
    extra-regional sources. However, the share of
    South Asian FDIs in the total inflow has shown
    upward trend during the last decade, increasing
    from 1.55 (US 1.4 mln) in 1995 to 1.60 (US
    9.3 mln) in 2000 and reaching 3.82 (US 32.3 mln)
    per cent in 2005.

11
3. INTRA-REGIONAL INVESTMENT IN BANGLADESH
FDI inflow in Bangladesh from South Asian Sources
FDI Source 1995 2000 2005 2006
India 0.3 (19) 8.4 (91) 2.7 (8) 1 (47)
Pakistan 1.2 (81) 0.8 (9) 25.5 (79) 0.6 (28)
Sri Lanka 0 0.1 (1) 4.1 (13) 0.5 (25)
Nepal 0 0 0.1 (0.2) 0
Bhutan 0 0 0 0
Maldives 0 0 0 0
South Asia Total 1.4 9.3 32.3 2.1
Global Total 92.3 578.6 845.3 490.3
Share of South Asia in Global Total of Bangladesh () 1.55 1.6 3.82 0.43
Source Compiled from enterprise survey conducted
by Statistics Department, Bangladesh Bank.
  • Within the total investment coming from the South
    Asia region to Bangladesh, Pakistan was the
    single largest source (79) in 2005 (US 25.5
    mln), while Indian investment of US 1 mln was
    the single largest source (47) in 2006 .

12
3. INTRA-REGIONAL INVESTMENT IN BANGLADESH
FDI Inflow 2006 Distribution by sectors
(Million US)
Sources Sectors Sectors Sectors Sectors Sectors
Sources Agri Food Industry Service Misc Total
South Asia Total 0.15 1.43 0.52 0 2.1
India 0.15 0.84     0.99
Pakistan   0.59     0.59
Sri Lanka     0.52   0.52
Nepal          
Bhutan          
Maldives          
Global Total 5.32 15.76 469.1 0.1 490.27
Share of South Asia in Global Total 2.70 9.10 0.10 0 0.40
  • South Asia contributed a negligible share of
    0.4 in total FDI inflow in 2006 (US 2.1 mln)
  • South Asian FDI mainly directed towards the
    industrial sector (chemical and engineering) with
    US 1.43 million.
  • This is reflected in the share of South Asia in
    the global total, consisting 9.10 per cent.

Source Compiled from Board of Investment (BOI).
13
3. INTRA-REGIONAL INVESTMENT IN BANGLADESH
Major Intra-Regional Investments in Bangladesh
(Implemented/Under Implementation)
Name of Projects Sector Investment Investment Employment Investing Country
Name of Projects Sector Local (mln Tk.) Foreign (mln US) Employment Investing Country
1 Delta Brac Housing Finance Corporation Ltd Services 1,300.00 23.64 53 India
2 STS Holding Limited Services 830.00 17.30 700 Sri Lanka
3 Cosmopolitan Industries (Pvt.) Ltd Textiles 650.00 10.00 3,850 India
4 American Efird Bangladesh Ltd Textiles 427.50 7.44 151 Sri Lanka
5 Bangladesh Fertilizers Agro Chemicals Ltd. Chemical 300.00 7.50 50 India
6 Marico Bangladesh Ltd. Chemical 162.39 2.39 103 India
7 Nilkamal Padma Plastic Pvt. Ltd Chemical 160.75 2.80 128 India
8 ACI Godrej Agrovet Private Ltd. Agro-based 153.95 2.44 114 India
9 Nandan Park Ltd Services 150.00 2.61 195 India
10 Asian Paints (Bangladesh) Limited Chemical 141.49 2.57 105 India
Source Board of Investment
14
3. INTRA-REGIONAL INVESTMENT IN BANGLADESH
FDI Inflow in EPZs of Bangladesh Distribution by
Sources
(Million US)
  • The share of FDI from South Asia increased in FY
    2006 compared to FY 2005.
  • India and Pakistan contributes almost the total
    South Asian FDI inflow in EPZ.
  • The South Asian FDI inflow share is more in the
    EPZs than that in the DTA.

Source 2004-05 2005-06 Cumulative total (as on Jan 07)
South Asia Total in Bangladesh 0.80 1.90 11.90
India 0.46 1.29 6.30
Pakistan 0.34 0.61 5.10
Sri Lanka      
Nepal      0.50
Bhutan      
Maldives      
Global Total 101.02 81.12 878.62
Share of South Asia in Global Total () of Bangladesh 0.79 2.34 1.35
Source Compiled from BEPZA
15
3. INTRA-REGIONAL INVESTMENT IN BANGLADESH
Cumulative South Asian FDI Inflow in EPZs
Distribution by Sectors (as on Jan 07)
(Mln US)
Source Sectors Sectors Sectors Sectors Total
Source Agro-based Manufacturing Manufacturing Misc/NEC Total
Source Agro-based Total RMG Misc/NEC Total
South Asia Total 2.17 3.21 2.32 6.51 11.89
India 1.67 (77) 2.97 (93) 2.08 (90) 1.65 (25) 6.29 (53)
Pakistan   0.24 (7) 0.24 (10) 4.86 (75) 5.10 (43)
Sri Lanka          
Nepal 0.50 (23)       0.50 (4)
Bhutan          
Maldives          
Global Total 2.96 422.80 270.78 453.86 879.62
Share of South Asia in Global Total () 73.31 0.76 0.86 1.43 1.35
Source BEPZA Note Figures in parenthesis
indicates percentage share of South Asian total
  • For the Agro-based sector, South Asian sources
    contributes the most (73.3 of the global total).
    But the region contributes only 1.35 of the
    total foreign investment in the EPZs.
  • 53 of the cumulative South Asian investments in
    the EPZs of Bangladesh has been made by India and
    43 by Pakistan.

16
3. INTRA-REGIONAL INVESTMENT IN BANGLADESH
FDI Inflow Distribution of Sanctioned Units in
EPZ by Sources
  2004-05 2005-06 Cumulative total (as on Jan 07)
South Asia Total 7 7 42
India 5 5 28
Pakistan 1 1 7
Sri Lanka     5
Nepal 1 1 2
Bhutan      
Maldives      
Global Total 33 25 288
Share of South Asia in Global Total 21.21 28.00 14.58
Source BEPZA
  • During 2005-06, 7 out of 25 sanction units at the
    EPZs came from the South Asian sources (5 from
    India, 1 from Pakistan and 1 from Nepal)
  • Out of the cumulative total of 288 sanction units
    made to the EPZs till January 2007, 42 has been
    invested by the South Asian countries (India 28,
    Pakistan 7, Sri Lanka 5 and Nepal 2)

17
4. PROPOSED TATA INVESTMENT IN BANGLADESHA CASE
OF INTRA-REGIONAL INVESTMENT
  • TATA submitted an expression of interest with the
    Bangladesh Board of Investment (BoI) in October,
    2004. TATAs US2 billion proposal included Steel
    Plant, Fertilizer, Coal Mine and Electricity.
  • After a long negotiation, a revised offer was
    submitted on April 30, 2006 amounting US3
    billion.
  • TATA group proposed a relatively higher gas price
    and some new package benefits in its revised
    proposal like share in the coal mining,
    initiatives under social corporate responsibility
    (CSR) - hospital, training institutes, etc.
  • Bangladesh Government would guarantee the supply
    of gas.
  • The previous government formed a secretary-level
    government negotiation committee that gave its
    report to the high powered ministerial committee
  • The ministerial committee was to place the
    proposal to the cabinet while the following
    elected government was to take the final
    decision. This did not happen.

18
4. TATAS REVISED PROPOSAL AT A GLANCE
Industry Investment (mil. ) Capacity Location Market Required Gas (TCF)
Steel 1200 2.4 MTPA Pabna Domestic Export 0.97
Steel 1200 2.4 MTPA (Northern BGD) Domestic Export 0.97
Fertilizer 600 1.0 MTPA Sangu Domestic Export 0.64
Fertilizer 600 1.0 MTPA (Southern BGD) Domestic Export 0.64
Electricity 600 475 MW Pabna (Northern BGD) Domestic Steel 0.53
Electricity   250-300 MW Dinajpur (Northern BGD) Domestic Coal Mine -
Electricity   (500 MW if needed) Dinajpur (Northern BGD) Domestic Coal Mine -
Coal 600 6.0 MTPA Dinajpur (Northern BGD) Domestic Electricity -
Total 3000 -  -   - 2.14
19
4. TATA PROPOSAL MAJOR DEBATES
  • Gas Price
  • Proposed gas pricing is based on product linked
    gas pricing formula (based on Urea and HR coil)
  • Gas price will vary in range of 2 - 4 / MMBTU
  • Initial period (1-6 years) floor price is 1.50 /
    MMBTU
  • The local experts think that the pricing should
    be based on the international oil price rather
    than the finished goods price
  • The initial floor price is too low than the
    market price.
  • One estimate shows that the highest proposed gas
    price from Tata is 4/mcf. This price of Tata
    would cause loss of 9,765 million (4.65/mcf).
  • The loss would be 15,015 million if we consider
    the minimum price of 1.50.

20
4. TATA PROPOSAL MAJOR DEBATES
  • Gas Price
  • According to a suggestion by the secretary level
    committee, the gas price would not have any upper
    limit and will be fixed on the basis of price
    fluctuation of the steel and fertiliser in the
    international market.
  • In this case there would be no upper limit for
    the gas prices, but there would always remain to
    lower ceiling.
  • The gas price would never go down below the
    gazetted prices for the local industries and
    secondly, the price would never be below the
    government's average purchase rate of gas from
    the international oil companies (IOCs).
  • Under the formula, as per present market rates of
    fertiliser, the price of gas per unit would be
    3.70 for fertiliser plant while about 3.30 for
    steel plant.
  • Price of gas for steel will be paid in local
    currency.

21
4. TATA PROPOSAL MAJOR DEBATES
  • Gas Security
  • The guarantee for gas supply is reduced to 10
    years.
  • Expert opinion is that it should be for five
    years. Then a revision should be done.
  • The secretary level committee suggested a
    ring-fencing formula in supplying gas to TATA,
    which means Petrobangla will supply gas to TATA
    from a dedicated gas field at its convenience.

22
4. TATA PROPOSAL MAJOR DEBATES
  • Coal Mine Lease
  • For coal mining TATA offered joint venture (JV)
    with Petrobangla (9010).
  • TATA will arrange 10 percent financing of
    Petrobangla also. TATA had proposed to develop 6
    MTPA open cast mine at Barapukuria. It had
    proposed not to disturb existing underground
    works during the tenure of the existing contract
    (up to 2011).
  • The open cast coal mining system is considered to
    be environmentally unsustainable in Bangladesh.
  • Question is raised why Petrobangla (and GOB)
    would allow 90 per cent ownership of an asset
    exclusively owned by Bangladesh.
  • The secretary level negotiation committee
    suggested the government to ask the Tata to pay
    250 million for the Barapukuria coal mine project
    as such amount had already been spent on the
    project.

23
4. TATA PROPOSAL MAJOR DEBATES
  • Equity Participation
  • One of the striking feature of the revised
    proposal is to offer up to 10 per cent of equity
    of each project company to GOB at par and to
    provide for placing of equity on the Dhaka /
    Chittagong stock exchange subject to market
    conditions.
  • The critics remark the ownership of government
    should be much higher than that.
  • Subsequently, the secretary level committee
    suggested that TATA should give 10 per cent
    equity share of the project free of cost to the
    Bangladesh government.

24
4. TATA PROPOSAL LATEST STATUS
  • On July 10, 2006 the TATA Group suspended the
    negotiation of its 3 billion investment
    proposal in Bangladesh due to "indecision of the
    Bangladesh government".
  • The TATA officials and BoI executives have
    started to revive the current proposal recently.
    Whether the Caretaker Government in Bangladesh
    will consider it to be its priority task is to be
    seen.
  • Regarding investment proposal of the TATA group,
    the new CTG may constitute a high-powered
    competent committee which, building on outcomes
    of earlier rounds of negotiations, should
    recommend best possible economic price for
    natural gas to be supplied, and to settle other
    issues.

25
5. INTRA-REGIONAL INVESTMENT POLICY ISSUES
  • Investment potential in South Asian countries
    emerges from resource availability, access to
    market, strategic locational advantage and
    technological aspects.
  • Under a common investment framework, investment
    potentials of all South Asian countries could be
    developed in a coordinated manner.
  • Unfortunately there are a number of challenges
    that exists as barriers to build strategic
    partnership among the countries within the region.

26
5. INTRA-REGIONAL INVESTMENT POLICY ISSUES
Apart from the general problems related to
investment in other regions, the obstacles with
the South Asian countries also contain some
distinguishing features.
  • Regulatory Barriers
  • Absence of a harmonized trade regime discourages
    investment in South Asia. Even signing an FTA
    would not necessarily ensure a higher level of
    intra-regional trade because of the diversified
    set of requirements. These include different
    kinds of standardization and certification
    processes, different custom rules and
    regulations, different tax laws and regulations
    and duty structures.
  • Thus, harmonization of the rules and procedures
    and mutual recognition of the rules and standards
    are some of the essential means for enhancing
    intra-regional investment in South Asia. Prior
    consultation in the case of imposing
    countervailing duty and antidumping duty is also
    required.

27
5. INTRA-REGIONAL INVESTMENT POLICY ISSUES
  • Restriction over Outward Flow in South Asian
    Countries
  • Outward FDI flow from India and Pakistan is
    controlled (restricted by means of minimum
    holding periods, classes of investors etc) and
    partly restricted (prohibited without permission)
    in countries like Sri Lanka and Bangladesh.
  • Without further liberalising the investment
    regimes (at least within), the region will barely
    be able to benefit from any industrial
    restructuring or trade.

28
5. INTRA-REGIONAL INVESTMENT POLICY ISSUES
  • Compliance with SAFTA
  • The objective of creation of SAFTA is to
    strengthen intra-SAARC economic cooperation to
    maximize the realization of the peoples
    potential for trade and the development of their
    people.
  • Regional economic integration in South Asia could
    work as a catalyst in improving intra-regional
    investment and generate billions of dollars of
    new income, employment, trade helping the region
    in its fight against poverty.
  • Studies have shown that removal of tariff and
    non-tariff barriers would increase intra-regional
    trade by 1.6 times the existing level. (Source
    The Daily Star, February 19 2006)
  • SAFTA was signed in 2004 but trade still remains
    stagnant mainly because of the existing political
    barriers between India and Pakistan.

29
5. INTRA-REGIONAL INVESTMENT POLICY ISSUES
  • Compliance with SAFTA
  • SAFTAs current foreign trade is only 0.8 per
    cent of the total global exports and 1.3 per cent
    of world imports.
  • Intra-SAARC trade is only 5.3 per cent of overall
    exports of the region.
  • Current bilateral official trade between India
    and Pakistan adds up to 1.35 billion.

30
5. INTRA-REGIONAL INVESTMENT POLICY ISSUES
  • Regional and Bilateral Investment Treaties
  • At present, three Bilateral Treaties exist in the
    South Asian region between Bangladesh-Pakistan,
    Pakistan-Sri Lanka and Sri Lanka-India.
  • The recent initiative in signing a Regional
    Investment Treaty has not been fulfilled due to
    the reluctance of countries within the block in
    opening all sectors for intra-regional and
    extra-regional investment.

31
5. INTRA-REGIONAL INVESTMENT POLICY
ISSUESCountries that have concluded BITs with
South Asia and South East Asia (as of 1 June,
2006)
Countries Developed Countries Developed Countries Developed Countries Developing Countries Developing Countries Developing Countries Developing Countries T O T A L
Countries Western Europe United States Other Developed countries Africa Asia and the Pacific Latin America and the Caribbean Central And Eastern Europe T O T A L
South Asia South Asia South Asia South Asia South Asia South Asia South Asia South Asia South Asia
Bangladesh 10 1 1 - 13 (1) - 5 25
India 19 - 2 7 21 (1) 1 6 57
Pakistan 14 - 2 4 26 (2) - 4 48
Sri Lanka 12 1 2 1 11 (2) - 3 25
Nepal 3 - - 1 - - 1 4
Source UNCTAD 2006
32
5. INTRA-REGIONAL INVESTMENT POLICY ISSUES
  • Implementation of the Regional Trade Agreements
    in South Asia can significantly give rise to
    intra-regional investment.
  • Signing of a Regional Investment Treaty and
    Double Taxation Treaties among the countries will
    be an important step to remove the obstacles to
    investment.
  • There is no confined evidence that shows that
    developing countries can make massive gains from
    BITs. In order to gain from BITs between the
    countries in South Asia, fast track trade
    liberalization (in form of reduction in tariff
    and non-tariff barriers) must be sought under
    SAFTA.

33
5. INTRA-REGIONAL INVESTMENT POLICY ISSUES
  • Infrastructural Connectivity
  • The South Asian countries are yet to build on
    their infrastructural facilities in order to
    operationalize intra-regional investment
    initiatives. Regional transport network, power
    grid, existence of and access to all ports by
    regional investors are some of the necessary
    elements in order to foster intra-regional
    investment.
  • Studies have shown that
  • The cost of industrial land is highest in Dhaka
    (64/sq.m).
  • Difficult to find suitable land for setting up
    industrial plant.
  • The cost of utilities for business is highest in
    Colombo.
  • The ports in South Asia are about 15-20 percent
    more expensive than the Chinese ports.

34
5. INTRA-REGIONAL INVESTMENT POLICY ISSUES
  • In order to improve infrastructure at the
    regional level, major industrial restructuring
    and large scale common projects need to be
    undertaken. These projects can then be
    implemented by South Asian Development Fund
    (SADF) set up under SAARC in order to promote
    industrial, infrastructural, institutional and
    human resource development.

Existence of small and large economies in the
regional block
  • There is no specific trend as far as the benefits
    received by small and large economies of
    different trading blocks are concerned. Among the
    South East Asian countries, FDI to the smaller
    economies have been observed to go down, while
    similar kinds of benefits were shared by the
    countries in NAFTA.
  • Concurrently, there is an apprehension that the
    smaller economies in South Asia would not receive
    much benefit from intra-regional investment.

35
5. INTRA-REGIONAL INVESTMENT POLICY ISSUES
  • Mindset
  • There are large differences between the size of
    the economies which sometimes can become a
    psychological barrier towards the smaller
    economies.
  • Reluctance of India as well as other states in
    opening up their economies to other neighbors is
    another barrier towards intra-regional
    investment.
  • Lack of appreciation for each other regarding the
    steps and policies initiated by member countries
    in the block leads to information failure between
    the countries.

36
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