MUMBAI: Inaugurating the ‘Asia Finance & Risk Mitigation Forum 2013’ organized jointly by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Asian Development Bank (ADB), Arvind Mayaram, Secretary – Economic Affairs, Ministry of Finance expressed his gratitude to the Asian Development Bank for having chosen India for its Annual Meetings this year.
Mayaram said that it was important to discuss issues, that were important for the global economy and trade in particular, such as risk mitigation tools and products to finance cross border investments; financing medium to long term trade; creating bank-bank links to facilitate South-South trade between Asia and other regions of the world and mitigating contractual risks.
Mayaram further said, “In the last twenty years, there has been a perceptible change in the fulcrum of the global economy. Today, the global economy is driven by the so-called developing economies. Even in the worst year for the global economy, which was last year, India grew at 5 per cent and China grew at 5.5 per cent.”
We believe India will grow at 6 per cent this year, 7 - 7.5 per cent next year and 8 per cent in the subsequent year, Mayaram said.
Clearly, growth impulses will come from the emerging economies. Therefore, south-south trade and investment is important, he added.
Although the past decade has seen a major expansion in trade between countries of the South, there are some perceived constraints and difficulties affecting South-South trade and investment.
Some of these are weaknesses in physical and institutional infrastructure such as port capacities, lower technological capabilities are lower as compared with the developed countries and reluctance to attract investment from Multi National Corporations (MNCs).
Being the bank for the Asian region, he urged ADB to help in greater integration of the financial institutions in developing countries.
It could also develop instruments through which capital can flow into infrastructure and other core industrial sectors in the developing countries.
Lakshmi Venkatachalam, Vice President - Private Sector and Cofinancing Operations of the Asian Development Bank (ADB) mentioned in her speech that developing countries are playing an increasingly important role in south-south trade and investments.
She said, "For developing countries, exports to other developing countries are now more important than exports to high-income countries. This is a positive development, as it is very well known to us that trade and investments are the real engines of economic growth.”
South-south trade and investments could in my view be characterized as the “turbo-engine” for economic growth in developing countries since it cuts both ways: it has social and economic benefits for two developing countries, she added.
Venkatachalam also said that ADB utilizes its guarantee products to catalyze private investment and trade.
In his message FICCI Secretary General A. Didar Singh said that FICCI and ADB work on a diversified portfolio of activities including: agriculture, water management, renewable energy, skill development and capacity building to take India’s development agenda forward.
He said that the fact that the 46th Annual Meetings of the Board of Governors of ADB are being held in India this time bears testimony to India’s increasingly high stakes in the region and its growing importance in global affairs.
He further said that multilateral institutions such as ADB can play an important role in facilitating enhanced South-South cooperation. They can provide financing in some of the more challenging markets and sectors. Multilateral organizations could also cooperate with domestic organizations (public and private) to provide risk mitigation products in the form of guarantees and political risk insurance.