Learn economic integration from Asia, expert tells GCC
Manama, March 25, 2008
The GCC countries should look to Asia for ideas on how to boost their economic integration, a Malaysian expert said in Manama.
Further economic 'consolidation' between the six member states would help tame soaring inflation in the region, which has reached double figures in Dubai and Qatar, said Malaysia-GCC Business Council deputy president Dr Mohammed Iqbal.
'I think the GCC is now moving to something similar to what the Association of South East Asian Nations (Asean) have done,' he said on the sidelines of the workshop.
'We in the Asean countries have not moved into a single currency as yet, but the economic integration is now a fact of life.'
Closer economic co-operation would also lay the foundations for initiatives such as currency union, said Dr Iqbal.
'Currently, we are talking about small countries with large gross domestic products (GDPs) as the result of oil being their main earner,' he said. 'So if consolidation takes place it will lead to strength and that strength can be transformed into a monetary union then that will be for the benefit of the region.'
In his presentation, Dr Iqbal told delegates about the steps Malaysia was taking to tackle inflation, including encouraging large co-operations to get involved in 'food cultivation' and mobilising up to 14,000 members of the public at a time in a voluntary price monitoring initiative, designed to 'avert irresponsible prices'.
Like the GCC, many essential commodities in Malaysia are subject to government subsidies to keep them affordable, but Dr Iqbal said questions were now being raised as to whether this was the best use of government funds.
Earlier this month Bahrain's Oil and Gas Affairs minister and Noga chairman Dr Abdulhussein Mirza revealed plans to slash subsidies on diesel and Jordan recently scrapped subsidies on petrol, diesel and kerosene - but backtracked on plans to lift subsidies on gas and barley.
Dr Iqbal said if subsidies were to become a thing of the past, steps must be taken to ensure their abolition does not unduly affect the poorest in society.
'There is a very big difference between the low end of the population - who are in some kind of impoverishment - and the very high level where the actual wealth creation is taking place because of this oil boom,' he said.
'If you remove subsidies right across the board, the cost to these low income people is going to be very heavy.
'These people may have to be subsidised in some way instead of right across the board, certain component parts of the society still will require it so that relative prices are kept at a reasonable level and it could be that targeted subsidies are the answer.'-TradeArabia News Service