Member's Area
Indian Ocean Rim Association
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Trade & Investment Prospects

Study on Trade and Investment Prospects of the IORA in the New Millennium: New Economic Frontiers of the Region

The Study was conducted by the Research and Information System for Developing Countries (RIS), India, a think-tank under the Ministry of External Affairs, Government of India. The study observes that IORA can be a mutually beneficial regional economic grouping expanding regional economic linkages. One of the key findings of the study is that the region has potential economic complementarities, which can be effectively realised by the Member countries.  This observation is backed by the fact that the members of IORA have not only been dynamic and resilient, they have been able to insulate themselves from the recurrent exogenous shocks. Most significantly, the IORA members have reversed the economic slump following the recent episode of "global financial crisis" faster than most other regions. Based on the findings of the study, the following recommendations are suggested for improving performances of the regional caucus in fulfilling its mandates

Trade

A measure of potential of IORA as an economic region is that intra-regional trade is rising faster than total trade of the region with the rest of the world during the last decade. 

Tariff 

IORA should adopt the framework of 'open regionalism' with sectoral liberalization as its key policy for regional cooperation. 

Processed Food

IORA may set up a 'Joint Task Force' to identify and address various non-tariff barriers affecting regional trade. The mandate of the task force should be to promote cooperation between the standard setting bodies, responsible of setting standards in processed food sectors. IORA may consider adoption of a pre-shipment inspection agreement to facilitate movement of goods within the region. 

Standards

Institutional mechanisms are to be set up to make available relevant information and documents on laws, rules and regulations affecting trade to the member countries on a regular basis. 

Regional Value Chain

Firms in the region can cooperate in contracting and outsourcing business in several sectors in agriculture, manufacturing and services for mutual benefit. 

Mining

Mining sector has emerged as an important sector for trade and investment in the region. Some mechanism, including setting up of a task force, may help in providing a framework to encourage regional enterprises for strengthening their trade and investments in mining. 

Pharmaceutical Sector

Cooperation may be extended to traditional systems of medicine, where rich traditional knowledge from the region is shared. 

Coordination among EXIM Banks

close coordination between EXIM banks of the region is required to undertake direct banking links and bilateral confirmation of L/Cs by these institutions of regional economies to strengthened regional trade activities. 

Investment

For encouraging regional flow of investment, measures such as regular interaction between government, business and industry on an institutional basis; exchange of information on foreign investment laws and regulations; sector-specific cooperation measures for investment and technical collaboration in infrastructure sector and establishment of a Joint Investment Promotion mechanism may be undertaken.

Trade & Investment