South Asian Economic Powerhouse Prime Minister of Pakistan, Mr. Shaukat Aziz

The world's economic centre of gravity is fast shifting to Asia. Our continent is seeing important processes of regional and sub-regional economic cooperation. North East and South East Asia are forging cooperation in trade, investment and technology. China, Japan, South Korea and ASEAN are major success stories in terms of economic and technological advancement. These countries have been able to benefit from the processes of globalisation and have positioned themselves to optimise gains.

The resource rich regions of Central and West Asia are also embarked on important cooperative ventures indicated by the Shanghai Cooperation Organization, the Economic Cooperation Organization and the Gulf Cooperation Council.

Pakistan is situated in South Asia, Central Asia and the Gulf regions simultaneously. Our strategic location makes it possible for us to play a critical role in advancing cooperation in these regions and we are determined to contribute to their peace, stability and prosperity. We look at Pakistan as an anchor of stability at the crossroads of South Asia, Central Asia and the Gulf region.

We are forging close cooperative links with all these regions. We want to build positive links with the process of globalisation and believe that regional cooperation is a necessary ingredient in maximising dividends in an increasingly inter-dependent world.

Pakistan has worked towards the creation of South Asia Free Trade Area (SAFTA) and major progress was made at the 12th SAARC Summit in Islamabad. We have also started consultations to enter into preferential tariff and even free trade arrangements with several important economies of the Asia Pacific region. Pakistan will host the Ministerial Meeting of the Asia Cooperation Dialogue in Islamabad in April, 2005. A major theme at the Islamabad ACD meeting is Economic Cooperation in Asia. As Chairman of SAARC, Pakistan has made efforts towards the realisation of its goals. Enormous challenges confront South Asia. It has the largest number of poor in the world; FDIs are at a low level, but a vast unrealised potential exists.

South Asia, home to one-sixth of humanity, cannot remain indefinitely mired in poverty and affliction. We have resources, talent, skills and industrious peoples. We have a great capital -- our human resource. It is second to none. We have the ability to turn South Asia into an economic powerhouse of the world.

Central to SAARC's functioning is the Pakistan-India equation. The recent improvement in atmospherics between India and Pakistan helped propel the process of regional cooperation in South Asia. Under SAARC we are coming together in trade with SAFTA, a very attractive arrangement for all of us. We are also working towards Customs cooperation; setting up an Arbitration Council; working instrument on Avoidance of Double Taxation; and on promotion and protection of Investments.

SAARCFINANCE enables the heads of our Central Banks to develop closer understanding and cooperation. There is also the overarching objective of poverty alleviation as well as mechanisms for technical cooperation. Social Charter sets the regional markers for lifting the quality of life in the region. In SAARC we should share best practices and create mutual dependencies and linkages. All this would create South Asian dynamics for growth and development.

On the India-Pakistan bilateral plane there is a lot that can be done. To begin with the Gas Pipeline Project could be a huge and successful CBM. We envisage this as a stand-alone project of great significance, where India and Pakistan and gas suppliers can benefit. We believe that both Pakistan and India can gain a lot by cooperating in the field of energy. We can offer India an energy corridor, if it so wants. We could promote tourism and trade and many other areas of cooperation.

Bilaterally, India has a huge advantage in terms of balance of trade. It is important to identify reasons that make it difficult for Pakistan to get access to the Indian market. We hope the study group set up in Islamabad in November last year would assist us to do so. We hope that the Economic Experts Committee would be able to deal with these issues effectively. It is important to create a level playing field and facilitate private sector interaction.

Investments and joint ventures could take-off in a big way if we are able to create an enabling political environment of peace, stability, trust and confidence. We should work towards attaining these objectives and I don't think they are difficult to achieve.

I discern distinct warmth in sentiments in Pakistan and India to engage constructively. Constructive engagement requires vision, sagacity and sense of purpose. There is a huge area of convergence. Divergences can be minimised. The parameters of engagement as far as Pakistan is concerned are simple and straightforward. Let me share them with you: We must cultivate good neighbourly relations. We must respect each other's sovereignty, territorial integrity and base our relations on sovereign equality. We should respect the principles of non-intervention and non-interference. We must endeavor to win each other's trust and confidence.

Respect for these basic principles of inter-state conduct is the safe and sure foundation on which Pakistan-India relations will thrive and prosper. Pakistan looks forward with confidence to engaging India on the whole range of issues. Pakistan and India must lead South Asia to new horizons of economic development. Our basic economic indicators are impressive. India's growth rate has been very healthy. We expect ours to grow.
The macro-economic indicators for Pakistan are all positive. The investment climate is attractive; the Stock Exchange is buoyant and interest rates are down. The exports and foreign exchange reserves are healthy. Fiscal deficit is contained at 3.3 per cent of GDP. Per capita income has risen to US$ 650 and is destined to go higher. This year the GDP was 6 per cent. We have undertaken across the board reforms in our financial and banking sectors and many foreign banks are operating in the private sector. Pakistan is now out of the IMF-PRGF and in fact returned -- with thanks -- two tranches offered by the IMF recently. Pakistan is accessing global capital market. Last year Pakistan floated its first Euro bond. And Pakistan's rating has improved since to B plus.

Our privatisation program has progressed well. Major banks have been privatised. The telecom sector is being de-regulated. Mobile telephony has seen a quantum jump. A new paradigm has been introduced to encourage the private sector to leverage the opportunities for commercial and economic activity. The government's role is now only confined to that of a policymaker. We have left the entire business activity with the private sector.

The government is also paying greater attention to the social sector. Education is high priority as is agriculture. Major infrastructure projects are taking shape in the form of electricity generating powerhouses, ports, and road and rail networks.

Pakistan is well positioned geographically to emerge as a commercial hub for landlocked Central Asia and beyond. Our experience in Afghanistan has been very encouraging. Our trade with Afghanistan has reached US$ 1 billion mark and is growing. Our banks have opened branches in Afghanistan recently. This has further generated economic and commercial activity between Afghanistan and Pakistan.

The Karakoram highway links us overland across the Himalayas to China. Our seaports are equidistant from Europe and the Far East. We are, therefore, paying special attention to becoming an important trans-shipment point for flow of goods and resources especially energy. The port of Gwadar has created history. From the beginning to the end it would be completed within three years.

We are conscious of our geo-strategic and geo-economic significance. We are equally conscious of our credentials as a progressive, moderate Islamic state, which can be a model to other countries. We are committed to pursuing the policy of enlightened moderation at home and abroad, a policy discussed and introduced to the world, and particularly the Muslim world by the President of Pakistan, Mr. Pervez Musharraf. We believe that at this critical juncture of contemporary history, it is important to debunk the theory about clash of civilisations. I have no disagreement with Huntington but I disagree with his concept of clash of civilisations.

Pakistan, today, is engaged simultaneously at home and abroad on defending basic human values and to avert conflicts and crises. Our role in countering terrorism is well acknowledged and appreciated. We are committed to promoting peace in our adjoining regions. A vision of peaceful cooperation must imbue our efforts to leverage the full potential of South Asia for progress and development.

As Chairman of SAARC, Pakistan has been pro-active in promoting regional cooperation. There is a clear recognition all around that SAARC's success is a function of Pakistan-India relations. When Pakistan-India relations seem to be on the mend, SAARC moves up. Whenever Pakistan-India relations get cool, SAARC becomes inactive.

Both regional and bilateral processes are mutually reinforcing. On the bilateral track, the CBMs and Composite Dialogue process with India have been sustained and should be made more substantive and purposeful. Pakistan is prepared to make its earnest contribution to the success of these endeavors. We need to move from tactical to strategic discussions. This is a process that has already started.

Pakistan-India relations are not ordained to remain adversarial perpetually. A sense of confidence in our common destiny coupled with the courage to take bold decisions to turn the corner is required. It is time for a strategic re-think. It is time to move away from rigid mindset. We must be realistic and pragmatic. The time has come to bridge the trust deficit. Both sides must move away from conditioned reflexes to open new avenues and cover fresh ground in our bilateral relations.

We must learn from history and experience of other nations in managing our region and our relations. We need to seek just and durable solutions of all outstanding issues including Jammu and Kashmir. It is time to accommodate in full the aspirations of the Kashmiri people. This is an imperative of justice, history and democracy. My visit to New Delhi last November has been useful. The dialogue we have had with Indian leadership has been very constructive. I have conveyed to the Indian leadership that Pakistan sincerely desires peace. We want good neighbourly relations based on sovereign equality. We have the courage to take bold decisions to move the relations forward. We must think 'out of the box'. By adhering to old mindsets the present opportunities could easily be lost.

If India takes a step forward, Pakistan will respond by two. We will demonstrate flexibility, if India chooses to show the same. In short, we are sincere and serious and expect this to be reciprocated. Let us both prove the pundits of gloom and doom wrong. A new beginning, a new dawn awaits the peoples of South Asia. Let's work together for a promising tomorrow.