[Business Recorder 14 November 2019] ISLAMABAD: Pakistan’s non-performing loan ratio has increased from 6.9 percent of gross loans in 2006 to 8.4 percent in 2018, said Asian Development Bank on Wednesday.
The Asian Development Bank (ADB) report titled “Asian Economic Integration Report 2019-2020, demographic change, productivity, and the role of technology” states that Pakistan wants to introduce a single visa for tourists visiting the Central Asia Regional Economic Cooperation (CAREC) sub-region, to both facilitate tourist movement and increase the likelihood of tourists doing multi-country visits, increasing the average time of stay and spending per tourist.
The report further maintained that in strengthening intra-sub-regional ties, this would also help CAREC “brand” itself better as a future tourist destination for visitors from other countries in Asia—which make up at least 60 percent of its market.
Pakistan has recently introduced changes to its visa policy — 50 countries are eligible to apply for a visa-on-arrival under the tourist category, while its online visa system is open to 175 countries.
Visitors from Southeast Asia have become more Asian-centric. Its shares of intra-sub-regional (38.7%) and inter-sub-regional (43.4%) tourism have grown relative to 2010. Intra-sub-regional visitors increased by around half a million in 2017, while inter-sub-regional arrivals recorded brisk growth (7.2 million visitors more than in 2016), especially Myanmar and Viet Nam.
The report further stated that across Asian economies, Bangladesh has the highest intensity ratio, exceeding 1 which indicates stronger trade linkages with regional value chain (RVCs) than global value chain (GVCs). It was followed by Nepal with an intensity score of 0.88 and Pakistan at 0.87. These countries highly specialize in the textiles and textile products sector, and leather and footwear sector. Their production networks are mostly linked sub-regionally with India and intra-regionally with the PRC.
Among Asian economies, Myanmar saw its soybean exports to the PRC grow fivefold (from $16.9 million to $115.7 million), while Pakistan (52.6%) and Hong Kong, China (23.5%) also recorded higher growth. Meanwhile, some Asian countries—Bangladesh, Indonesia, Japan, Malaysia, Pakistan, Philippines, Republic of Korea, Thailand, and Vietnam — also benefited from the reallocation of US soybean exports. The countries received a combined share to the US total soybean exports of 26.2 percent in H2 2018, an increase from 17.1% in H2 2017 (equivalent to $584 million).
Large declines in PRC imports from the US also occurred in cotton, particularly on yarns used as intermediate goods. The US bilateral cotton exports declined by 27.1 percent in H2 2018 ($89.5 million). The PRC also reduced its imports from Pakistan, Australia, Japan, Italy, and Turkey (worth $385.3 million). However, this was more than offset by large exports of $534.9 million from India; Hong Kong, China; and Kazakhstan, and $388.1 million from Brazil. The US, on the other hand, diverted $163.4 million in cotton exports to the top Asian textile and garment exporters—Viet Nam, Pakistan, and Bangladesh.
The report further maintained that CAREC 2030 has a broader agenda which focuses on five operational clusters: (i) economic and financial stability; (ii) trade, tourism, and economic corridors; (iii) infrastructure and economic connectivity; (iv) agriculture and water; and (v) human development.
In August 2019, the First CAREC Capital Market Regulators’ Forum was convened with co-sponsorship of the Securities and Exchange Commission of Pakistan, where senior officials from CAREC member countries and business leaders discussed reforms promoting financial access and private sector development through strengthened regional cooperation and integration in capital markets.
In the energy sector, the flagship Turkmenistan– Uzbekistan–Tajikistan–Afghanistan–Pakistan power interconnection framework and Central Asia—South Asia Electricity Transmission and Trade Project continue to progress. Also, the Turkmenistan–Afghanistan– Pakistan–India (TAPI) Natural Gas Pipeline Investment Agreement was signed among pipeline shareholders in 2016, and investment for the first phase of TAPI project is under discussion.
Aging populations could be a boon to economies in the Asia and Pacific region if governments adopt technology policies that improve elderly people’s health, extend skills and working lives, and facilitate job matching, maintained the report.
“The aging trend is irreversible in much of Asia and the Pacific, but governments could turn that into a ‘silver dividend’,” said ADB Chief Economist Yasuyuki Sawada. “Today’s elderly are better educated and healthier than in the past. The right policies on technologies could extend working lives, generating a substantial contribution to the overall economy.”
The average healthy life span increased by nearly 7 years from 57.2 to 63.8 years between 1990 and 2017 for the economies in Asia and the Pacific. The average years of education among 55 to 64-year-old people also increased from 4.6 in 1990 to 7.8 in 2015.
Exact measures that should be taken depend on an economy’s specific aging and education profile but broadly one of four types: fast or slow aging and above or below median education levels.
Countries that are fast aging and have above-median education levels would benefit from adopting automation and labor augmenting technology to supplement the low supply of labor for routine work, while countries with slow aging and below-median education levels could prioritize technical applications in education to help a younger population access high-quality education.
Regardless of the aging and education profiles, the report calls for a rethink of education and skills training to include lifelong learning as well as the adoption of technologies and approaches to make work and workplaces more suitable for older employees. Labor market, social security, and tax system reform would also encourage older people to continue working. Lastly, policies that ease the movement of capital, labor and technology across borders would be useful to help countries at different stages of demographic transition and technological adoption to cope with.
The report notes that regional economic cooperation remains strong in Asia and the Pacific, providing a buffer against the effects of global trade tensions. The latest Asia-Pacific Regional Cooperation and Integration Index, based on 2017 data, shows infrastructure and connectivity made the largest advance but overall regional integration fell nonetheless due to a drop in the money and finance measure. East Asia and Southeast Asia are most integrated with Asia as a whole, while Central Asia and South Asia trail the region’s average.
Asia’s and the Pacific’s trade is expected to decelerate further in 2019 amid slowing global economic growth. The region’s share of intraregional trade by value remained a robust 57.5 percent of global trade in 2018, up from the average of 56.3 percent in 2012–2017. Asia’s inward and outward foreign direct investment grew in 2018, while remittance inflows hit a record $302.1 billion last year.