Trade has been identified as a vehicle of inclusive and sustainable economic growth and poverty reduction mechanism in the Addis Ababa Action Agenda and the Agenda 2030 of the United Nations.

The South Asian Association for Regional Cooperation (Saarc) was created to neutralise the deep-rooted mistrust and asymmetries between the South Asian countries.

The main objective of the Saarc was to promote effective cooperation between the member states and these cooperative arrangements also encourage the member countries to formulate common positions on vital economic and social issues at global platforms.

Since its inception, the Saarc has been gradually developing in conjunction with the UN and other regional organisations. But ironically, the development of the Saarc has been symbolic rather than substantive.

Bilateral problems and unwillingness of political parties to integrate are the major problems in this region. This creates a gulf of difference between adoption of broader policies at the highest political levels and implementation of them at the root level.

Moreover, the Saarc Secretariat and other regional centres have not taken any proactive action like the Asean. If these basic flaws are not addressed and cured, the regional integration through South Asia will remain a distant dream.

There are substantial social and geographical gaps in different parts of states, which can increase transportation costs, decrease inter-connection and fuel institutional differences.

Intra-regional trade's performance may improve through the World Trade Organisation (WTO) initiative to develop the trade system between the Saarc states through regulations and governmental policies.

It is necessary to identify obstructions and possible assistance for trading within the Saarc.

Although South Asia is the world's fastest-growing region, it struggles because of decreasing capital inflow, increasing inflation and reduction in remittances from oil-exporting nations.

Economic growth rose from 6.8 percent in 2014 to 7 percent in 2015. South Asia's economic growth was projected to hit 7.1 percent in 2016 and 7.2 percent in 2017.

Presently, South Asia lags behind with low levels of trade in goods and performs very poorly in the ease of doing business where South Asian countries rank the lowest.

In 2011, the Saarc members pledged to promote a greater flow of financial capital and long-term investment. The South Asian Free Trade in Service focuses on issues like market access, progressive liberalisation, domestic regulations, recognition, dispute settlement, safeguarding measures and subsidies.

An investment-friendly environment is necessary because this region has failed to secure more than 2 percent of overall foreign direct investment (FDI). 

In order to attract FDI, the member states should focus on establishing regional value chains or regional value platforms like the Asean countries.

They should also work to remove the restrictions for incoming FDI, such as scarcity of land to set up business. They should also address frequent corruption, bureaucratic delays and property disputes, which harm investment environment.

To attract foreign investment, these countries can also take certain steps to reduce corporate and personal income taxes in high priority sectors, subject to avoiding counterproductive regional competition.

The South Asian countries should facilitate public-private investment partnerships, keeping in mind the need for developing regional and sub-regional energy and infrastructure projects. Such steps shall promote regional value chains in the apparel, service sector and other industries.

The Saarc countries should focus on reinforcing and streamlining existing value chains and developing new value chains.

Costa Rica is an example of new value chain possibilities.

In the country, coffee and banana export was the source of international business for 25 years. Then a massive economic boom occurred and it began exporting over 4,500 products to 150 nations.

This transformation is a result of innovative trade policies and trade agreements.

Proper application of the South Asian Free Trade Area (Safta) helped increase intra-regional trade by over $2 billion, according to the World Bank.

The ratio of the intra-regional trade for South Asia is less than 5 percent, well below East Asia's 32 percent. The implementation of the Safta remains sluggish compared to other regional trade agreements because South Asian countries are willing to do more trade with the US or the EU.

Nevertheless, South Asia took a step towards unifying the rest of Asia. The Saarc was established to achieve the goal of doing $100 billion worth of intra-regional trade.

They are required to give the inspiration to value chains, textile and clothing value chains, uphold intra-region investments, improve connectivity-financial trade, define the scope of economic corridors formation, encourage service trade, and resolve the India-Pakistan dispute through regularising their trade relationship.

Through moving towards a customs union, South Asia's future prospective trade will illuminate among the regions.

Statistics of the Asian Development Bank reveal that South Asian intra-regional trade has risen from 2 percent since 1967, but it remains below 6 percent.

South Asia's intra-region trade vis-à-vis its global trade rose from 4.55 percent in 2010 to 5.58 percent in 2015.

On the other hand, the Asean boasts an impressive intra-regional trade figure of about 24 percent of its total trade with the rest of the world.

Statistics indicate that trade within the South Asian countries is increasing slowly but steadily. The intra-regional trade increased from 2.7 percent in 1990 to 4.3 percent in 2011. However, the corresponding figures for the Asean and the Asean +3 were 26 percent and 39 percent respectively.

Various obstructions stand in the way of realising the true potential of this region. In trade liberalisation, there are always winners and losers.

Despite having a modest beginning, the Safta has set the pace for tariff reduction for least developed countries (LDCs) and non-LDC member states.

South Asian countries should come under the umbrella of harmonisation of rules and standards under a mutual recognition agreement.

To boost intra-regional investment, flagship investors should be proactively attracted, the idea of joint borders with single clearance should be explored and more attention should be given to establish a liberal visa policy.

The writer is a joint commissioner of customs at the National Board of Revenue.