ADB: South Asian economies can become "New Tigers" with better governance

The Asian Development Bank (ADB) said Thursday improved governance, better quality of regulation and infrastructure can help South Asian economies emerge as "New Tigers" of Asia.

The South Asia Economic Report (SAER) of ADB said South Asia, led by India and Pakistan, posted stellar growth in 2005 and has registered higher growth than its peers in Southeast Asia in the past five years, while high growth is forecast to continue through 2007.

"While developments in India are clearly the predominant factor in the improved economic performance of South Asia, most other countries in the region have been on a similar trend, although their improvements generally are more modest," said the report.

The banking sectors in South Asia have not only improved their performance over the recent past, but have also reduced the performance gap between themselves and other economies in Asia, said the report.

However, the performance in state-owned banks has generally been weaker than that of private and foreign banks, so restructuring and privatizing state-owned banks should remain a high priority on the reform agenda, it said.

"Despite a shift towards market liberalization, South Asia continues to be overregulated. As a result, it is not fully realizing its growth potential," said the report.

"South Asia stands at critical juncture today, where the potential for sustained high growth and poverty reduction is excellent. A unique opportunity exists to drastically reduce poverty over the next decade, provided the right choices are made," said Kunio Senga, Director General of ADB's South Asia Department.

The SAER, the first in a series of biannual reports on economic and development issues in the South Asia region, also said there is considerable scope for improvement in the effectiveness and efficiency of government interventions.

Common problems among South Asian countries include the highly bureaucratic nature of government administration, a lack of coordination between different ministries and government agencies, and overstaffing and inadequate pay and benefit levels in the public sector, it said.

Source: Xinhua