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Maldives

How South Asia can become a free trade area

Sanjay Kathuria's picture
Women knit handicrafts for export at Everest Fashion Fair Craft in Lalitpur, Nepal
Women knit handicrafts for export at Everest Fashion Fair Craft in Lalitpur, Nepal. Photo: Peter Kapuscinski / World Bank

The South Asian Free Trade Area (SAFTA) agreement has been in effect since 2006—with little success.

This is in sharp contrast to the ASEAN free trade area (AFTA), which started in 1992 with six six countries and later added more members, completing the ASEAN ten by 1999.

Between 1992 and 2017, intraregional imports as a share of global imports in ASEAN increased from 17 to 24 percent, and exports from 21 to 27 percent.

In South Asia, these shares were largely stagnant since SAFTA came into effect, at 3 percent for intraregional imports and 6-7 percent for intraregional exports.

In fact, intraregional trade in South Asia has been the lowest among world regions for quite some time, hovering around 5 percent of its overall trade with the world.

The rising cost of nutritious food in South Asia

Felipe F. Dizon's picture
 World Bank
A malnourished child will face poorer outcomes as an adult. In South Asia, where malnutrition persists in multiple forms, improving nutrition in the early stages of life is critical to a child's future development and health. Credit: World Bank

A malnourished child will face poorer outcomes as an adult.
 
That’s why improving nutrition, especially in the early stages of life, is critical.
 
The path toward better nutrition includes adequate maternal and child care, access to better sanitation facilities, health services, and naturally, nutritious foods.
 
But whether an individual consumes—or not—nutritious food is contingent upon a myriad of factors, ranging from the availability of certain foods, how convenient they can be turned into meals, or simply, if they meet consumers’ tastes.
 
But above all, the high cost of food remains the most critical barrier to proper nutrition and affects the poor more than the rich.
 
And in South Asia, where malnutrition persists in multiple forms, the cost of nutritious food is prohibitive.

Bracing for climate change is a matter of survival for the Maldives

Hartwig Schafer's picture
The Maldives is no stranger to the risks from climate change. It is already witnessing an increase in intense rainfall and resultant flooding, cyclonic winds and storm surges.
The Maldives is no stranger to the risks from climate change. It is already witnessing an increase in intense rainfall and resultant flooding, cyclonic winds and storm surges.


For low-lying island states, the impacts of global warming and climate change can be a matter of survival.

The irony is that while these states have not contributed much to greenhouse emissions, as they produce very little, they may face some of the worst consequences. 
 
Maldives is no stranger to the risks from climate change. It is already witnessing an increase in intense rainfall and resultant flooding, cyclonic winds and storm surges.

As one of the lowest-lying countries in the world, with all its people living a few meters above sea level and over two-thirds of its critical infrastructure lying within 100 meters of the shoreline, a sea level rise of just a few meters will put the nation further at risk, endangering its relative prosperity. 
 
Thankfully Maldives is beginning to turn the tide.

Yesterday I visited Fuvahmulah, in one of the southernmost atolls where the Mayor and the Ministry of Environment, have been working closely with local communities to manage the wetlands, critical for reducing climate change impacts.

I saw scores of young Maldivians enjoying the facilities and learning about conservation. A true win-win. Community participation has helped enhance the design and acceptability of this initiative.

Scaled up, such initiatives can have a transformational impact and it is imperative that the Government of Maldives take the lessons from this Bank supported initiative to 19 other atolls.
 
Creating a safer archipelago
 
The Indian Ocean tsunami that battered the islands in 2004 provided a glimpse of what can happen – a clear wake-up call.

The government responded by increasing its emphasis on building resilience in infrastructure and providing its people with early warnings in the event of an underwater earthquake.
 
Today, in the Greater Malé region, the reclaimed island of Hulhumalé is being developed with better sea defenses and elevated buildings from where people can be evacuated as needed. 

The government is also raising people’s understanding of the causes and effects of natural disasters, particularly those that come on suddenly, such as tsunamis and flooding.

Celebrating 40 years of engagement with Maldives

Idah Z. Pswarayi-Riddihough's picture
The World Bank Group (WBG) and Maldives have had a trusted partnership for the past 40 years, which has seen tremendous growth and development in the country.

Over this period, Maldives has transformed from being among the poorest countries in the world to having a per capita GDP of over $10,000 and boasts impressive human development achievements, with a life expectancy of over 77 years and nearly 100% literacy.

However, vulnerability to environmental sustainability and climate change are among the challenges that the country faces. 

To help respond to them, the WBG continues to work closely with Maldives to help realize the aspirations of its people through enhancing employment and economic opportunities, strengthening natural resources management and climate resilience, while improving public financial management and policy-making through strengthening institutions.

Here are five milestones of our engagement:

1. Joining the World Bank
Maldives joins World Bank
Photo Credit: World Bank Group Archives
On January 13, 1978, Maldives became the 131st member of the World Bank and the International Development Association (IDA), the fund that helps the poorest countries through interest-free credits.

The Articles of Agreements were signed by His Excellency Fathulla Jameel, Permanent Representative of the Republic of Maldives to the United Nations. At that time, Maldives had a GDP per capita of just over $200 and had achieved independence only 13 years prior.

2. First project signing
Maldives 1st Project Signing
Photo Credit: World Bank Group Archives

 Maldives signed its first project to help increase fisheries production with the World Bank on June 4, 1979.

The project helped mechanize fishing craft, established repair centers, and installed navigational aids to increase the safety of fishing operations.

Those present for the signing from left to right, Said El-Naggar, Executive Director of the World Bank for Maldives, His Excellency Ahamed Zaki, Ambassador and Permanent Representative of Maldives to the United Nations, and Robert Picciottto, Projects Director for South Asia.

South Asia: A bright spot in darkening economic skies?

Hartwig Schafer's picture
South Asia is set to remain relatively insulated from some of the rising uncertainties that are looming large on the global economic horizon. The region will retain its top spot as the world’s fastest-growing region. The Siddhirganj Power Project in Bangladesh. Credit: Ismail Ferdous/World Bank

If, like me, you’re a firm believer in New Year’s resolutions, early January ushers in the prospect of renewed energy and exciting opportunities. And as tradition has it, it’s also a time to enter the prediction game.
 
Sadly, when it comes to the global economy, this year’s outlook is taking a somber turn.
 
In the aptly titled Darkening Skies, the World Bank’s new edition of its twice-a-year Global Economic Prospects report shows that risks are looming large on the economic horizon.
 
To sum up:  In emerging market and developing economies, the lingering effects of recent financial market stress on several large economies, a further deceleration in commodity exporters are likely to stall growth at a weaker-than-expected 4.2 percent this year.
 
On a positive note, South Asia is set to remain relatively insulated from some of these rising global uncertainties and will retain its top spot as the world’s fastest-growing region.
 
Bucking the global decelerating trend, growth in South Asia is expected to accelerate to 7.1 percent in 2019 from 6.9 percent in the year just ended, bolstered in part by stronger investments and robust consumption.  

Among the region’s largest economies, India is forecast to grow at 7.5 percent in fiscal year 2019-20 while Bangladesh is expected to moderate to 7 percent in fiscal year 2018-19. Sri Lanka is seen speeding up slightly to 4 percent in 2019.
 
Notably, and despite increasing conflicts and growing fragility, Afghanistan is expected to increase its growth to  2.7 percent rate this year.

In this otherwise positive outlook, Pakistan’s growth is projected to slow to 3.7 percent in fiscal year 2018-19 as the country is tightening its financial conditions to help counter rising inflation and external vulnerabilities.

However, activity is projected to rebound and average 4.6 percent over the medium term.

Commitment to reforms improves business climate in South Asia

Hartwig Schafer's picture
 
Rikweda, an Afghan fruit processing company in the Kabul Province is well on its way to restoring Afghanistan as a raisin exporting powerhouse—a status the country held until the 1970s when it claimed about 20 percent of the global market. Credit World Bank


Imagine a state-of-the-art processing plant that harnesses laser-sorting technology to produce a whopping 15,000 tons of raisins a year, linking up thousands of local farmers to international markets and providing job opportunities to women.
 
To find such a world-class facility, look no further than Rikweda, an Afghan fruit processing company in the Kabul Province that’s well on its way to restoring Afghanistan as a raisin exporting powerhouse—a status the country held until the 1970s when it claimed about 20 percent of the global market.
 
In Afghanistan’s volatile business environment, let alone its deteriorating security, Rikweda’s story is an inspiration for budding entrepreneurs and investors.
 
It also is an illustration of the government’s reform efforts to create more opportunities for Afghan businesses to open and grow, which were reflected in the country’s record advancement in the Doing Business 2019 index, launched today by the World Bank.
 
Despite the increasing conflicts and growing fragility, and thanks to a record five reforms that have moved Afghanistan up to the rank of 167th from 183rd last year, the country became a top improver for the first time in the report’s history.
 
And Afghanistan is not the only South Asian country this year that took a prominent place among top 10 improvers globally.
 
India – which holds the title for the second consecutive year – is a striking example of how persistence pays off, and the high-level ownership and championship of reforms are critical for success. Its ranking has improved by 23 places this year and puts India ahead of all other countries in South Asia. This year, India is ranked 77th, up from 100th last year. 

Five takeaways for better nutrition in South Asia—and beyond

Felipe F. Dizon's picture
In many developing countries, governments and health authorities face the dilemma of how to feed their growing population while ensuring their food is nutritious. Credit: World Bank

Together with more than 1,500 academics, scientists, and policymakers, we participated last week in the Rice Olympics.
 
The event—formally known as the International Rice Congress (IRC)—provides a unique window on the latest innovations and policies about the globe’s most important staple crop.
 
For many, rice may not seem worth the cost of a conference trip. Yet, half of the world’s population depend on it as their main supply of nutrients and energy.  
 
Rice isn’t just a crop,” said Rajan Garjaria, Executive Vice President for Business Platforms at Corteva Agriscience. “It’s a way of life. A place can be made or broken, based on their rice crop.
 
The Congress discussed a breadth of topics, but what stood out the most is that rice can be instrumental in making people healthier and in sustaining the planet.
 
The South Asia Food and Nutrition Security Initiative (SAFANSI), a World Bank partnership that aims to improve food and nutrition security across the region, participated in the Symposium on Sustainable Food Systems and Diets and presented its latest research on linkages among food prices, diet quality, and nutrition security.  
 
Overall, the event underscored how governments and health authorities in many developing countries face the dilemma of how to feed their growing population while ensuring their food is nutritious and discussed relevant strategies to transform nutrition security challenges into opportunities.

Finishing the job of ending poverty in South Asia

Hartwig Schafer's picture
This Bangladeshi woman was born in poverty. With the right kind of education, life in poverty quickly became a story from the past for her. Credit: World Bank

"I have a four-year-old son back in my village. I want to make a better life for him,” says Sharmin Akhtar, a 19-year-old employee in one of Dhaka’s many flourishing garment factories.

Like thousands of other poor women, Sharmin came down to Bangladesh’s capital from her village in the country’s north to seek a better job and create a more prosperous future for her family—leaving behind a life of crushing poverty.

Today, as we mark End Poverty Day 2018, it’s important to note that Sharmin’s heartening story is one of many in Bangladesh and the rest of South Asia, where economic growth has spurred a dramatic decline in extreme poverty in the last 25 years.

And the numbers are striking: In South Asia, the number of extreme poor living on less than $1.90 a day dropped to 216 million people in 2015 from 275 million in 2013 and 536 million in 1990.

Even more remarkable, South Asian countries experienced an increase in incomes among the poorest 40 percent of 2.6 percent a year between 2010-2015, faster than the global average of 1.9 percent.

On a global scale, the highest concentration of poor shifted from South Asia to Sub-Saharan Africa in 2012. And India is likely to be overtaken, if it has not already been, by Nigeria as the country with the most people living in extreme poverty.

It’s worth thinking about how far South Asia has come – but remaining clear-eyed about how far we must go to finish the fight against extreme poverty.

Indeed, it is increasingly clear that poverty is more entrenched and harder to root out in certain areas, particularly in rural areas and in countries burdened by violent conflict and weak institutions.

Estimates for 2015 indicate that India, with 176 million poor people, continued to have the highest number of people in poverty and accounted for nearly a quarter of the global poor.

True, the extreme poverty rate is significantly lower in India relative to the average rate in Sub-Saharan Africa. But because of its large population, India’s total number of poor is still large.

And while there has been a substantial decline in the numbers and rate of people living below $1.90 in South Asia, the number of people living on less than $3.20 has declined by only 8 percent over 1990-2015 because of the growing population.

In 2015, 49 percent of the population of South Asia were living on less than $3.20 a day, and 80 percent were living on less than $5.50 a day.

Investing in people of South Asia for prosperity and quality of life

Hartwig Schafer's picture
A little girl in Balochistan, Pakistan, who now receives a quality education thanks to World Bank support. 
A little girl in Balochistan, Pakistan, who now receives a quality education thanks to World Bank support. Credit: World Bank 

Human capital – the potential of individuals – is going to be the most important long-term investment any country can make for its people’s future prosperity and quality of life.

Just look around the world: Technology is reshaping every industry and setting new demands for skills in every profession. The frontier for skills is moving faster than ever before.

To meet that challenge and be able to compete in the global economy, countries need to prepare their workforces now for the tremendous challenges and opportunities driven by technological change.  

To that end, the World Bank will launch next week its highly anticipated Human Capital Index to measure countries’ contribution of health and education to the productivity of the next generation of their workers.

The Index will be released on October 11 at the Bank’s Annual Meetings in Bali as part of the Human Capital Project, a global effort led by the Bank to accelerate investments in people for greater equity and economic growth.

No doubt, any country ranking gets high visibility and, sometimes, meets controversy. But I hope it triggers a dialogue about policies to promote investments in people.

To be clear, the important purpose of the Human Capital Index is to measure the distance of each country to the highest standard of complete education and full health—or the “frontier”.

The index, irrespective of whether it is high or low, is not an indication of a country’s current policies or initiatives, but rather reflects where it has emerged over years and decades.

Put simply, the index measures what the productivity of a generation is, compared to what it could be, if they had benefitted from complete education and good health.

The index ranges from 0 to 1 and takes the highest value of 1 only if a child born today can expect to achieve full health (defined as no stunting and survival up to at least age 60) and complete her education potential (defined as 14 years of high-quality school by age 18).

Announcing the winners of the 2018 #OneSouthAsia Photo Contest

World Bank South Asia's picture


Home to Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, South Asia is one of the world’s most dynamic regions.

It's also one of the least integrated.

A few numbers say it all: Intra-regional trade accounts for only 5 percent of South Asia’s total trade; Intra-regional investment is smaller than 1 percent of overall investment.


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