In quest of peace and prosperity through regional cooperation

27 08 2009

In the middle of the scheme for Regional Corporation in the field of communication, education, sports, culture, tourism and business through which peace, progress and prosperity among South Asian countries under the banner of SAARC is moderately a new-fangled concept subject to the importance of socio-economic development of these regions. The framework for the SAARC programme was underway on in the early 1980 and afterwards it was shaped by the comprehensive economic and supporting progress for the preceding years. Due to cost effectiveness, the failures of the North- South tête-à-tête in the late seventies put together many early countries to travel around the promising areas of such co-operation within the countries of the South Asian regions. A number of scheme on regional co-operation were commenced at that period. For case in point, the Economic Community of West African States in 1975 and Southern African development Co-ordination Conference in 1980 were created. By integrating the strength and manpower of the daydream of an equitable global economic order, many states have turned their attention towards their own region for a settlement of an alliance by considering the basic and reliable support of the countries within the specific regions. Nearly every continent has some kind of regional management, now and then, more than one and even in principal, these associations may be intensified in the sense that they would play role in respect of socio-economic call-up through out the world.

It is noteworthy fact that SAARC is one of such performance where politically, the two-pronged ambience between India and some of its neighbouring countries deteriorated during 1974-76. Consequential upon such criteria, these two adjoining countries started gazing for regional and international loom to force India so as to take out alteration from it on their particular two-pronged issues. The first move of Bangladesh in order to raise the river-water sharing issue at the UN in 1976, Nepal’s suggestion to acquire it standard as a zone of peace and Pakistan’s active international relations at the United Nations to search out South Asia acknowledged as a nuclear-weapon free zone possibly will be evoked at this juncture. Soviet forces interference in Afghanistan in 1979 had conveyed about a serious flagging in the South Asian safekeeping state of affairs and shaped urgency for getting together in the region. Although it is factual that the peripheral pressures to form a South Asian regional system of government were not as great as it was in the case of the European Community, they were not absolutely gone astray or immaterial. Internal or external what ever was the cause the level of urgency for regional co-operation was not bedded on equal concepts in the midst of the South Asian states.
During May 1980, Bangladesh had contentious proposition for a South Asian regional system of government after squabble with some small South Asian states. India and Pakistan, the two life-size powers in South Asia, articulated strong uncertainties. This tentativeness reveals the survival of many suspicious questions among the South Asian states. India was highly hesitant of the submission and stance it as a new-fangled device to institutionalise the neighbours ‘ganging up’ in opposition to India to mine dispensation on issues heart-rending each of them independently. Pakistan trepidation that any South Asian forum would sooner or later India’s welfare and legitimises its regional ascendancy in South Asia. Also, in accordance with conceptual view of Pakistani authorities, in South Asia economic and political conditions for institutionalising regional co-operation were missing. Both India and Pakistan time-honoured the proposal for regional co-operation only ‘in principle’. They could accept a regional forum only when it did not seek to chip away at their respective interests. Accordingly, it was suggested that unanimity in taking decisions and avoidance of two-pronged and controversial issues should comprise the basic standard of the anticipated forum ahead.

In keeping with those diverse attitudes, the seven South Asian states (Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka) officially were underway in respect of their co-operation from their first apex supposed on 8th December 1985 in Dhaka. They were well conversant that heterogeneous issues might encumber their co-operation, but for accomplishing their relevant goals they thought within themselves to work jointly. Their longing for financial liberation, facilitated them to start off pondering and rethinking their available resources in question.
Even though the seven South Asian states as regards their integration, the prospect of SAARC as an effective body for regional integration continues to be reflected with cynicism. When countries in other regions were trying to minimise their differences, it is disconcerting to see that this region remains trapped in conflict of war, sapping its energy and resources that could be diverted to launching an unpleasant on poverty. In this post-cold war period, and at a time when we are at the threshold of a new century, South Asia should not be out of peace, harmony and development even for a single day. Analysis of differences surrounded by the SAARC states and symptomatic of solution is thus a very imperative and well-timed issue.
In relation to forming a forum of SAARC, required guidelines focussing the detailed issues on the basic importance SAARC was planned to be positioned on the heterogeneity among the countries of South Asians regions which envisages effect on the regional integration process in South Asia. There are of course some strong commonalties among the South Asian states, for example, their colonial past, a broadly common attitude towards Western countries, common needs development, common needs to alleviate poverty, some similarity in culture, etc. These similarities could be helpful for the states to minimise their differences. And one most positive aspect is that the member states of SAARC are hopeful about their success. In the paper I will also try to show that, if heterogeneity is greater in South Asia, the regional incorporation will be less effectual. In case those differences can be minimised, greater integration will be possible. Before tentative the specific case of SAARC as a regional amalgamation process, some discussion about the meaning of region and regional integration is necessary.
Regional addition has become a very common way of co-operation among states in present day worldwide relationships. Normally a ‘region’ is an area where some geographically adjacent states join together to achieve their common objectives. As I mentioned earlier, in the present time more or less every nation-state, strong or weak, is a member of a regional system. But there are some states which exist on the borderline between two regions. That is one of the reasons for those states not joining in any regional co-operation arrangements. Although geographical considerations are an important factor for the formation of a region, other factors-for example, social, economic, political, historical, and organisational – are also imperative. So we can say that a region consists of two or more adjoining states and interacting states which have some common ethnic, linguistic, cultural, social, and/or historical bonds, and whose sense of identity is sometimes increased by the actions and attitudes towards those of states external to the region.
The constituent states of SAARC are physically nearby with each other. These states have somewhat in widespread. For illustration, they have some frequent communal and chronological bonds. These states have common colonial past. Those states (for example Nepal) that were not under colonial rule have also been influenced by that rule owing to geographical proximity with India. There is some cultural commonality among the SAARC states. But where the region ends-for example, on the eastern side, erstwhile Burma, now Myanmar is neither a member of SAARC nor yet of ASEAN. On the western side Afghanistan neither belongs to the Middle East nor to the South Asian group. These states exist on the borderline between two regional systems. Ernst Haas distinct assimilation as a tendency towards the voluntary creation of generously proportioned political units, each of which self-consciously shun the use of force in the relations between the participating units and groups Leon N. Lindberg defines integration as the process whereby states miss out on the desire and ability to conduct foreign and key domestic policies independently of each other, seeking instead to make joint decisions or to delegate the decision making process to new central organs. He also defines integration as the process whereby political actors in several distinct settings are convinced to transfer their opportunity and political performance to a new midpoint. Lindberg provides such explanation in his work on the European neighbourhood. But he dispensed to give an all-inclusive classification about regional integration processes.

Regional Co-operation means the responsibility of accountability for originating regional policies, developing rules and regulations, and for applying these policies to all markets at a regional level, overriding national control. incorporation thus requires members of a grouping to cede sovereignty over particular economic functions and activities as well as policies and instruments to an authority or institution which exercises its power at a regional level. Integration thus means formulating and applying policies- for example, regarding trade, exchange, labour, fiscal and monetary policies- at the regional level. Integration may also imply the development of a common currency and a single central bank or monetary authority which regulates the monetary and indirectly the fiscal parameters within which national governments function. While being entirely proficient, integration implies the free movement of all factors of production and technology across boundaries within the region. In its ultimate form of political union, it would require a regional legislature. There are dissimilar schools of thought regarding the methods and approaches to integration. The Federalist school of thought sees integration in legal and institutional terms. For federalists integration is an end-product rather than a process. It stands for a political union among previously sovereign and independent states. Federalists recommend the adoption of their approach on both a regional and a global scale. They regard as the anarchic nation-state system to be primarily responsible for war. The functionalist knows that nation-state system is changeable and is the cause of violence divisions, which undermine the real needs and interests of human race. They tried to give importance on specific tasks of economic and welfare co-operation. This would pass up divisive political debate, but at the same time create a community of interest which would ultimately render national frontiers meaningless. According to the functionalist observation, technical group effort in one sector generates a felt need for functional collaboration in other sectors.

The common route to regional integration is through progressive liberalisation of trade relationships between members of a regional community, which could progress through various stages:
• A Preferential Trade Area with lower tariffs; then a Free Trade Area with no tariffs;
• A Custom Union with common external tariff useful for external trade;
• A Common Market with free progress of all factors of production and constancy in internal exchange rate with full convertibility;
• An Economic Union with common currency and a unified monetary policy and a Political Union with unified judicial and legislative process of members’ states.

Alternatively, the term regional co-operation is a slack make-up of integration. It indicates an enthusiasm on the part of countries to work together in attaining regional economic security on the postulation that, in the long run, this self-control end result in enhancing national economic interests and welfare even if national interests might need to be subordinated in the short run. In light of the above squabble, it is evident that the position of SAARC as a regional co-operation is based on feasible underpinning in quest of peace and prosperity of these regions. In December 2008 SAARC will be 20 years old and as such if we take stock of regional co-operation from inauguration to present time, we will see that, since inception, even though the organization has been focussed on core issues but from the very beginning core areas were excluded from SAARC schedule, and that position persists to this day. Thus after its hopeful launch, SAARC performances have vegetated and have botched to promote any noteworthy co-operation in the core political and economic areas. On the other hand, in other areas SAARC has recognized number of institutions. For example, in 1988 the SAARC Agricultural Information Centre was established in Dhaka. The Technical Committee on Education and the Technical Committee on Sports, Arts and Culture were merged into a single Technical Committee on Education and Culture. SAARC has also conventional the Technical Committee on Environment. The SAARC Meteorological Research Centre has previously been acknowledged for chipping in information data in this respect. The first meeting of the Technical Committee on Health and Population activities was held on 1984. Important activities undertaken by this committee include the setting up of the SAARC Tuberculosis Centre in Kathmandu in 1992. The SAARC Drug Offences Monitoring Desk has been established in Colombo to analyse and disseminate information on drug offences, and efforts have been directed for conclusion of regional drug convention and harmonisation and consolidation of national drug laws. The Technical Committee on Rural Development identified priority areas for implementing its programmes on poverty alleviation, employment generation, women development, environment and technology transfer. There are technical committees for Science and Technology; Tourism; Transport and Women Development etc. Core political and economic areas remain absent from their co-operation process. SAARC states have not assigned any responsibility to SAARC to develop rules and regulation, which they can apply for all. They did not ceded part of their sovereignty to their regional body. The SAARC states are working together to achieve their regional interest on the assumption that, in the long run, this will result in achieving harmony and welfare in the region. In this respect we can term SAARC as a mere regional organisation for co-operation .SAARC has a number of developments in its succession of incorporation. For case in point, the South Asian states signed the SAPTA on 11 April 1993 in Dhaka during their seventh summit. SAPTA is working towards removal of tariffs and non-tariff barriers. In May 1997 at the ninth SAARC Summit, member states agreed steadily to relax trade barriers until a Free Trade Area is established by the year 2001. So the eventual goal of the South Asian states is to establish South Asian Free Trade Area. Though the official name of organisation is SIn quest of peace and prosperity through regional cooperation

In the middle of the scheme for Regional Corporation in the field of communication, education, sports, culture, tourism and business through which peace, progress and prosperity among South Asian countries under the banner of SAARC is moderately a new-fangled concept subject to the importance of socio-economic development of these regions. The framework for the SAARC programme was underway on in the early 1980 and afterwards it was shaped by the comprehensive economic and supporting progress for the preceding years. Due to cost effectiveness, the failures of the North- South tête-à-tête in the late seventies put together many early countries to travel around the promising areas of such co-operation within the countries of the South Asian regions. A number of scheme on regional co-operation were commenced at that period. For case in point, the Economic Community of West African States in 1975 and Southern African development Co-ordination Conference in 1980 were created. By integrating the strength and manpower of the daydream of an equitable global economic order, many states have turned their attention towards their own region for a settlement of an alliance by considering the basic and reliable support of the countries within the specific regions. Nearly every continent has some kind of regional management, now and then, more than one and even in principal, these associations may be intensified in the sense that they would play role in respect of socio-economic call-up through out the world.

It is noteworthy fact that SAARC is one of such performance where politically, the two-pronged ambience between India and some of its neighbouring countries deteriorated during 1974-76. Consequential upon such criteria, these two adjoining countries started gazing for regional and international loom to force India so as to take out alteration from it on their particular two-pronged issues. The first move of Bangladesh in order to raise the river-water sharing issue at the UN in 1976, Nepal’s suggestion to acquire it standard as a zone of peace and Pakistan’s active international relations at the United Nations to search out South Asia acknowledged as a nuclear-weapon free zone possibly will be evoked at this juncture. Soviet forces interference in Afghanistan in 1979 had conveyed about a serious flagging in the South Asian safekeeping state of affairs and shaped urgency for getting together in the region. Although it is factual that the peripheral pressures to form a South Asian regional system of government were not as great as it was in the case of the European Community, they were not absolutely gone astray or immaterial. Internal or external what ever was the cause the level of urgency for regional co-operation was not bedded on equal concepts in the midst of the South Asian states.
During May 1980, Bangladesh had contentious proposition for a South Asian regional system of government after squabble with some small South Asian states. India and Pakistan, the two life-size powers in South Asia, articulated strong uncertainties. This tentativeness reveals the survival of many suspicious questions among the South Asian states. India was highly hesitant of the submission and stance it as a new-fangled device to institutionalise the neighbours ‘ganging up’ in opposition to India to mine dispensation on issues heart-rending each of them independently. Pakistan trepidation that any South Asian forum would sooner or later India’s welfare and legitimises its regional ascendancy in South Asia. Also, in accordance with conceptual view of Pakistani authorities, in South Asia economic and political conditions for institutionalising regional co-operation were missing. Both India and Pakistan time-honoured the proposal for regional co-operation only ‘in principle’. They could accept a regional forum only when it did not seek to chip away at their respective interests. Accordingly, it was suggested that unanimity in taking decisions and avoidance of two-pronged and controversial issues should comprise the basic standard of the anticipated forum ahead.

In keeping with those diverse attitudes, the seven South Asian states (Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka) officially were underway in respect of their co-operation from their first apex supposed on 8th December 1985 in Dhaka. They were well conversant that heterogeneous issues might encumber their co-operation, but for accomplishing their relevant goals they thought within themselves to work jointly. Their longing for financial liberation, facilitated them to start off pondering and rethinking their available resources in question.
Even though the seven South Asian states as regards their integration, the prospect of SAARC as an effective body for regional integration continues to be reflected with cynicism. When countries in other regions were trying to minimise their differences, it is disconcerting to see that this region remains trapped in conflict of war, sapping its energy and resources that could be diverted to launching an unpleasant on poverty. In this post-cold war period, and at a time when we are at the threshold of a new century, South Asia should not be out of peace, harmony and development even for a single day. Analysis of differences surrounded by the SAARC states and symptomatic of solution is thus a very imperative and well-timed issue.
In relation to forming a forum of SAARC, required guidelines focussing the detailed issues on the basic importance SAARC was planned to be positioned on the heterogeneity among the countries of South Asians regions which envisages effect on the regional integration process in South Asia. There are of course some strong commonalties among the South Asian states, for example, their colonial past, a broadly common attitude towards Western countries, common needs development, common needs to alleviate poverty, some similarity in culture, etc. These similarities could be helpful for the states to minimise their differences. And one most positive aspect is that the member states of SAARC are hopeful about their success. In the paper I will also try to show that, if heterogeneity is greater in South Asia, the regional incorporation will be less effectual. In case those differences can be minimised, greater integration will be possible. Before tentative the specific case of SAARC as a regional amalgamation process, some discussion about the meaning of region and regional integration is necessary.
Regional addition has become a very common way of co-operation among states in present day worldwide relationships. Normally a ‘region’ is an area where some geographically adjacent states join together to achieve their common objectives. As I mentioned earlier, in the present time more or less every nation-state, strong or weak, is a member of a regional system. But there are some states which exist on the borderline between two regions. That is one of the reasons for those states not joining in any regional co-operation arrangements. Although geographical considerations are an important factor for the formation of a region, other factors-for example, social, economic, political, historical, and organisational – are also imperative. So we can say that a region consists of two or more adjoining states and interacting states which have some common ethnic, linguistic, cultural, social, and/or historical bonds, and whose sense of identity is sometimes increased by the actions and attitudes towards those of states external to the region.
The constituent states of SAARC are physically nearby with each other. These states have somewhat in widespread. For illustration, they have some frequent communal and chronological bonds. These states have common colonial past. Those states (for example Nepal) that were not under colonial rule have also been influenced by that rule owing to geographical proximity with India. There is some cultural commonality among the SAARC states. But where the region ends-for example, on the eastern side, erstwhile Burma, now Myanmar is neither a member of SAARC nor yet of ASEAN. On the western side Afghanistan neither belongs to the Middle East nor to the South Asian group. These states exist on the borderline between two regional systems. Ernst Haas distinct assimilation as a tendency towards the voluntary creation of generously proportioned political units, each of which self-consciously shun the use of force in the relations between the participating units and groups Leon N. Lindberg defines integration as the process whereby states miss out on the desire and ability to conduct foreign and key domestic policies independently of each other, seeking instead to make joint decisions or to delegate the decision making process to new central organs. He also defines integration as the process whereby political actors in several distinct settings are convinced to transfer their opportunity and political performance to a new midpoint. Lindberg provides such explanation in his work on the European neighbourhood. But he dispensed to give an all-inclusive classification about regional integration processes.

Regional Co-operation means the responsibility of accountability for originating regional policies, developing rules and regulations, and for applying these policies to all markets at a regional level, overriding national control. incorporation thus requires members of a grouping to cede sovereignty over particular economic functions and activities as well as policies and instruments to an authority or institution which exercises its power at a regional level. Integration thus means formulating and applying policies- for example, regarding trade, exchange, labour, fiscal and monetary policies- at the regional level. Integration may also imply the development of a common currency and a single central bank or monetary authority which regulates the monetary and indirectly the fiscal parameters within which national governments function. While being entirely proficient, integration implies the free movement of all factors of production and technology across boundaries within the region. In its ultimate form of political union, it would require a regional legislature. There are dissimilar schools of thought regarding the methods and approaches to integration. The Federalist school of thought sees integration in legal and institutional terms. For federalists integration is an end-product rather than a process. It stands for a political union among previously sovereign and independent states. Federalists recommend the adoption of their approach on both a regional and a global scale. They regard as the anarchic nation-state system to be primarily responsible for war. The functionalist knows that nation-state system is changeable and is the cause of violence divisions, which undermine the real needs and interests of human race. They tried to give importance on specific tasks of economic and welfare co-operation. This would pass up divisive political debate, but at the same time create a community of interest which would ultimately render national frontiers meaningless. According to the functionalist observation, technical group effort in one sector generates a felt need for functional collaboration in other sectors.

The common route to regional integration is through progressive liberalisation of trade relationships between members of a regional community, which could progress through various stages:
• A Preferential Trade Area with lower tariffs; then a Free Trade Area with no tariffs;
• A Custom Union with common external tariff useful for external trade;
• A Common Market with free progress of all factors of production and constancy in internal exchange rate with full convertibility;
• An Economic Union with common currency and a unified monetary policy and a Political Union with unified judicial and legislative process of members’ states.

Alternatively, the term regional co-operation is a slack make-up of integration. It indicates an enthusiasm on the part of countries to work together in attaining regional economic security on the postulation that, in the long run, this self-control end result in enhancing national economic interests and welfare even if national interests might need to be subordinated in the short run. In light of the above squabble, it is evident that the position of SAARC as a regional co-operation is based on feasible underpinning in quest of peace and prosperity of these regions. In December 2008 SAARC will be 20 years old and as such if we take stock of regional co-operation from inauguration to present time, we will see that, since inception, even though the organization has been focussed on core issues but from the very beginning core areas were excluded from SAARC schedule, and that position persists to this day. Thus after its hopeful launch, SAARC performances have vegetated and have botched to promote any noteworthy co-operation in the core political and economic areas. On the other hand, in other areas SAARC has recognized number of institutions. For example, in 1988 the SAARC Agricultural Information Centre was established in Dhaka. The Technical Committee on Education and the Technical Committee on Sports, Arts and Culture were merged into a single Technical Committee on Education and Culture. SAARC has also conventional the Technical Committee on Environment. The SAARC Meteorological Research Centre has previously been acknowledged for chipping in information data in this respect. The first meeting of the Technical Committee on Health and Population activities was held on 1984. Important activities undertaken by this committee include the setting up of the SAARC Tuberculosis Centre in Kathmandu in 1992. The SAARC Drug Offences Monitoring Desk has been established in Colombo to analyse and disseminate information on drug offences, and efforts have been directed for conclusion of regional drug convention and harmonisation and consolidation of national drug laws. The Technical Committee on Rural Development identified priority areas for implementing its programmes on poverty alleviation, employment generation, women development, environment and technology transfer. There are technical committees for Science and Technology; Tourism; Transport and Women Development etc. Core political and economic areas remain absent from their co-operation process. SAARC states have not assigned any responsibility to SAARC to develop rules and regulation, which they can apply for all. They did not ceded part of their sovereignty to their regional body. The SAARC states are working together to achieve their regional interest on the assumption that, in the long run, this will result in achieving harmony and welfare in the region. In this respect we can term SAARC as a mere regional organisation for co-operation .SAARC has a number of developments in its succession of incorporation. For case in point, the South Asian states signed the SAPTA on 11 April 1993 in Dhaka during their seventh summit. SAPTA is working towards removal of tariffs and non-tariff barriers. In May 1997 at the ninth SAARC Summit, member states agreed steadily to relax trade barriers until a Free Trade Area is established by the year 2001. So the eventual goal of the South Asian states is to establish South Asian Free Trade Area. Though the official name of organisation is South Asian Association for Regional Co-operation, but we can consider it as a South Asian integration process. If South Asian states can minimise the opportunity of war among themselves, then the word ‘integration’ will be more appropriate for SAARC.

In view of the above discussion it is obvious that the fundamental demarcation in respect of religious way of life for a while creates serious irritant in South Asia. In terms of number of followers, Hinduism has the leading number of followers, with Islam and Buddhism being the two other major faiths. Even though a strong secular movement was launched by the Indian and numerous other South Asian governments, it failed to diminish cultural gaps along with the various religions. Most well-known clashes stuck between religious groups look like to absorb Hindus and Muslims, or one Muslim splinter group aligned with another, or Sikhs and Hindus, or Buddhists and Hindus. Associations between the two most powerful states of South Asia, India and Pakistan, have been to the highest degree convoluted by religious factors.
In quest of peace and prosperity through regional cooperation

In the middle of the scheme for Regional Corporation in the field of communication, education, sports, culture, tourism and business through which peace, progress and prosperity among South Asian countries under the banner of SAARC is moderately a new-fangled concept subject to the importance of socio-economic development of these regions. The framework for the SAARC programme was underway on in the early 1980 and afterwards it was shaped by the comprehensive economic and supporting progress for the preceding years. Due to cost effectiveness, the failures of the North- South tête-à-tête in the late seventies put together many early countries to travel around the promising areas of such co-operation within the countries of the South Asian regions. A number of scheme on regional co-operation were commenced at that period. For case in point, the Economic Community of West African States in 1975 and Southern African development Co-ordination Conference in 1980 were created. By integrating the strength and manpower of the daydream of an equitable global economic order, many states have turned their attention towards their own region for a settlement of an alliance by considering the basic and reliable support of the countries within the specific regions. Nearly every continent has some kind of regional management, now and then, more than one and even in principal, these associations may be intensified in the sense that they would play role in respect of socio-economic call-up through out the world.

It is noteworthy fact that SAARC is one of such performance where politically, the two-pronged ambience between India and some of its neighbouring countries deteriorated during 1974-76. Consequential upon such criteria, these two adjoining countries started gazing for regional and international loom to force India so as to take out alteration from it on their particular two-pronged issues. The first move of Bangladesh in order to raise the river-water sharing issue at the UN in 1976, Nepal’s suggestion to acquire it standard as a zone of peace and Pakistan’s active international relations at the United Nations to search out South Asia acknowledged as a nuclear-weapon free zone possibly will be evoked at this juncture. Soviet forces interference in Afghanistan in 1979 had conveyed about a serious flagging in the South Asian safekeeping state of affairs and shaped urgency for getting together in the region. Although it is factual that the peripheral pressures to form a South Asian regional system of government were not as great as it was in the case of the European Community, they were not absolutely gone astray or immaterial. Internal or external what ever was the cause the level of urgency for regional co-operation was not bedded on equal concepts in the midst of the South Asian states.
During May 1980, Bangladesh had contentious proposition for a South Asian regional system of government after squabble with some small South Asian states. India and Pakistan, the two life-size powers in South Asia, articulated strong uncertainties. This tentativeness reveals the survival of many suspicious questions among the South Asian states. India was highly hesitant of the submission and stance it as a new-fangled device to institutionalise the neighbours ‘ganging up’ in opposition to India to mine dispensation on issues heart-rending each of them independently. Pakistan trepidation that any South Asian forum would sooner or later India’s welfare and legitimises its regional ascendancy in South Asia. Also, in accordance with conceptual view of Pakistani authorities, in South Asia economic and political conditions for institutionalising regional co-operation were missing. Both India and Pakistan time-honoured the proposal for regional co-operation only ‘in principle’. They could accept a regional forum only when it did not seek to chip away at their respective interests. Accordingly, it was suggested that unanimity in taking decisions and avoidance of two-pronged and controversial issues should comprise the basic standard of the anticipated forum ahead.

In keeping with those diverse attitudes, the seven South Asian states (Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka) officially were underway in respect of their co-operation from their first apex supposed on 8th December 1985 in Dhaka. They were well conversant that heterogeneous issues might encumber their co-operation, but for accomplishing their relevant goals they thought within themselves to work jointly. Their longing for financial liberation, facilitated them to start off pondering and rethinking their available resources in question.
Even though the seven South Asian states as regards their integration, the prospect of SAARC as an effective body for regional integration continues to be reflected with cynicism. When countries in other regions were trying to minimise their differences, it is disconcerting to see that this region remains trapped in conflict of war, sapping its energy and resources that could be diverted to launching an unpleasant on poverty. In this post-cold war period, and at a time when we are at the threshold of a new century, South Asia should not be out of peace, harmony and development even for a single day. Analysis of differences surrounded by the SAARC states and symptomatic of solution is thus a very imperative and well-timed issue.
In relation to forming a forum of SAARC, required guidelines focussing the detailed issues on the basic importance SAARC was planned to be positioned on the heterogeneity among the countries of South Asians regions which envisages effect on the regional integration process in South Asia. There are of course some strong commonalties among the South Asian states, for example, their colonial past, a broadly common attitude towards Western countries, common needs development, common needs to alleviate poverty, some similarity in culture, etc. These similarities could be helpful for the states to minimise their differences. And one most positive aspect is that the member states of SAARC are hopeful about their success. In the paper I will also try to show that, if heterogeneity is greater in South Asia, the regional incorporation will be less effectual. In case those differences can be minimised, greater integration will be possible. Before tentative the specific case of SAARC as a regional amalgamation process, some discussion about the meaning of region and regional integration is necessary.
Regional addition has become a very common way of co-operation among states in present day worldwide relationships. Normally a ‘region’ is an area where some geographically adjacent states join together to achieve their common objectives. As I mentioned earlier, in the present time more or less every nation-state, strong or weak, is a member of a regional system. But there are some states which exist on the borderline between two regions. That is one of the reasons for those states not joining in any regional co-operation arrangements. Although geographical considerations are an important factor for the formation of a region, other factors-for example, social, economic, political, historical, and organisational – are also imperative. So we can say that a region consists of two or more adjoining states and interacting states which have some common ethnic, linguistic, cultural, social, and/or historical bonds, and whose sense of identity is sometimes increased by the actions and attitudes towards those of states external to the region.
The constituent states of SAARC are physically nearby with each other. These states have somewhat in widespread. For illustration, they have some frequent communal and chronological bonds. These states have common colonial past. Those states (for example Nepal) that were not under colonial rule have also been influenced by that rule owing to geographical proximity with India. There is some cultural commonality among the SAARC states. But where the region ends-for example, on the eastern side, erstwhile Burma, now Myanmar is neither a member of SAARC nor yet of ASEAN. On the western side Afghanistan neither belongs to the Middle East nor to the South Asian group. These states exist on the borderline between two regional systems. Ernst Haas distinct assimilation as a tendency towards the voluntary creation of generously proportioned political units, each of which self-consciously shun the use of force in the relations between the participating units and groups Leon N. Lindberg defines integration as the process whereby states miss out on the desire and ability to conduct foreign and key domestic policies independently of each other, seeking instead to make joint decisions or to delegate the decision making process to new central organs. He also defines integration as the process whereby political actors in several distinct settings are convinced to transfer their opportunity and political performance to a new midpoint. Lindberg provides such explanation in his work on the European neighbourhood. But he dispensed to give an all-inclusive classification about regional integration processes.

Regional Co-operation means the responsibility of accountability for originating regional policies, developing rules and regulations, and for applying these policies to all markets at a regional level, overriding national control. incorporation thus requires members of a grouping to cede sovereignty over particular economic functions and activities as well as policies and instruments to an authority or institution which exercises its power at a regional level. Integration thus means formulating and applying policies- for example, regarding trade, exchange, labour, fiscal and monetary policies- at the regional level. Integration may also imply the development of a common currency and a single central bank or monetary authority which regulates the monetary and indirectly the fiscal parameters within which national governments function. While being entirely proficient, integration implies the free movement of all factors of production and technology across boundaries within the region. In its ultimate form of political union, it would require a regional legislature. There are dissimilar schools of thought regarding the methods and approaches to integration. The Federalist school of thought sees integration in legal and institutional terms. For federalists integration is an end-product rather than a process. It stands for a political union among previously sovereign and independent states. Federalists recommend the adoption of their approach on both a regional and a global scale. They regard as the anarchic nation-state system to be primarily responsible for war. The functionalist knows that nation-state system is changeable and is the cause of violence divisions, which undermine the real needs and interests of human race. They tried to give importance on specific tasks of economic and welfare co-operation. This would pass up divisive political debate, but at the same time create a community of interest which would ultimately render national frontiers meaningless. According to the functionalist observation, technical group effort in one sector generates a felt need for functional collaboration in other sectors.

The common route to regional integration is through progressive liberalisation of trade relationships between members of a regional community, which could progress through various stages:
• A Preferential Trade Area with lower tariffs; then a Free Trade Area with no tariffs;
• A Custom Union with common external tariff useful for external trade;
• A Common Market with free progress of all factors of production and constancy in internal exchange rate with full convertibility;
• An Economic Union with common currency and a unified monetary policy and a Political Union with unified judicial and legislative process of members’ states.

Alternatively, the term regional co-operation is a slack make-up of integration. It indicates an enthusiasm on the part of countries to work together in attaining regional economic security on the postulation that, in the long run, this self-control end result in enhancing national economic interests and welfare even if national interests might need to be subordinated in the short run. In light of the above squabble, it is evident that the position of SAARC as a regional co-operation is based on feasible underpinning in quest of peace and prosperity of these regions. In December 2008 SAARC will be 20 years old and as such if we take stock of regional co-operation from inauguration to present time, we will see that, since inception, even though the organization has been focussed on core issues but from the very beginning core areas were excluded from SAARC schedule, and that position persists to this day. Thus after its hopeful launch, SAARC performances have vegetated and have botched to promote any noteworthy co-operation in the core political and economic areas. On the other hand, in other areas SAARC has recognized number of institutions. For example, in 1988 the SAARC Agricultural Information Centre was established in Dhaka. The Technical Committee on Education and the Technical Committee on Sports, Arts and Culture were merged into a single Technical Committee on Education and Culture. SAARC has also conventional the Technical Committee on Environment. The SAARC Meteorological Research Centre has previously been acknowledged for chipping in information data in this respect. The first meeting of the Technical Committee on Health and Population activities was held on 1984. Important activities undertaken by this committee include the setting up of the SAARC Tuberculosis Centre in Kathmandu in 1992. The SAARC Drug Offences Monitoring Desk has been established in Colombo to analyse and disseminate information on drug offences, and efforts have been directed for conclusion of regional drug convention and harmonisation and consolidation of national drug laws. The Technical Committee on Rural Development identified priority areas for implementing its programmes on poverty alleviation, employment generation, women development, environment and technology transfer. There are technical committees for Science and Technology; Tourism; Transport and Women Development etc. Core political and economic areas remain absent from their co-operation process. SAARC states have not assigned any responsibility to SAARC to develop rules and regulation, which they can apply for all. They did not ceded part of their sovereignty to their regional body. The SAARC states are working together to achieve their regional interest on the assumption that, in the long run, this will result in achieving harmony and welfare in the region. In this respect we can term SAARC as a mere regional organisation for co-operation .SAARC has a number of developments in its succession of incorporation. For case in point, the South Asian states signed the SAPTA on 11 April 1993 in Dhaka during their seventh summit. SAPTA is working towards removal of tariffs and non-tariff barriers. In May 1997 at the ninth SAARC Summit, member states agreed steadily to relax trade barriers until a Free Trade Area is established by the year 2001. So the eventual goal of the South Asian states is to establish South Asian Free Trade Area. Though the official name of organisation is South Asian Association for Regional Co-operation, but we can consider it as a South Asian integration process. If South Asian states can minimise the opportunity of war among themselves, then the word ‘integration’ will be more appropriate for SAARC.

In view of the above discussion it is obvious that the fundamental demarcation in respect of religious way of life for a while creates serious irritant in South Asia. In terms of number of followers, Hinduism has the leading number of followers, with Islam and Buddhism being the two other major faiths. Even though a strong secular movement was launched by the Indian and numerous other South Asian governments, it failed to diminish cultural gaps along with the various religions. Most well-known clashes stuck between religious groups look like to absorb Hindus and Muslims, or one Muslim splinter group aligned with another, or Sikhs and Hindus, or Buddhists and Hindus. Associations between the two most powerful states of South Asia, India and Pakistan, have been to the highest degree convoluted by religious factors.
outh Asian Association for Regional Co-operation, but we can consider it as a South Asian integration process. If South Asian states can minimise the opportunity of war among themselves, then the word ‘integration’ will be more appropriate for SAARC.

In view of the above discussion it is obvious that the fundamental demarcation in respect of religious way of life for a while creates serious irritant in South Asia. In terms of number of followers, Hinduism has the leading number of followers, with Islam and Buddhism being the two other major faiths. Even though a strong secular movement was launched by the Indian and numerous other South Asian governments, it failed to diminish cultural gaps along with the various religions. Most well-known clashes stuck between religious groups look like to absorb Hindus and Muslims, or one Muslim splinter group aligned with another, or Sikhs and Hindus, or Buddhists and Hindus. Associations between the two most powerful states of South Asia, India and Pakistan, have been to the highest degree convoluted by religious factors.





ACCOUNTING IMPLICATION OF GLOBAL FINANCIAL CRISIS

12 04 2009

Recent Global Financial Crisis

The term ‘Global Financial Crisis’ means economic scarcity where there exists a continuous drawback against strategic stable economic growth in the world. The underlying backgrounds with regard to the crisis had been reported in business journals for many months before September 2008, with the emphasis about the financial stringency of U.SA and world investment banks, insurance firms and mortgage Securities Companies consequent to the sub prime business crisis. Introducing with some evil critics against the business failures predominated by misapplication of risk controls for bad debts, collateralization of debt insurance and fraud, large financial institutions in the United States and other countries in the world had faced a credit crisis and a slowdown in economic activity. The impacts rapidly promoted and spread wide ranging into a global shock resulting in a number of European bank failures and declines in various stock indexes, correlated with numerous reductions in the market value of equities and commodities take place. The sub prime mortgage crisis arrived a critical stage during the first week of September 2008, featured by severely contracted liquidity in the global credit markets and insolvency threats to investment banks and other institutions. It is observed by a critical analysis that the position in respect of the reserve from banks in the Federal Reserve System began increasing over required levels of about $10 billion at the beginning of September 2008, just after the Democratic and Republican national conventions, and just before the stock market crash and presidential debates. Accounting Implication of Global Financial Crisis As a result of global financial crisis, there was great impact in accounting implication and in reference to world trade economy; there was scarcity of resource to measure the strength of the existing pose of the financial institutions. For such adverse connotation of Accounting, the International Accounting Standards Board and the Financial Accounting Standards Board (FASB) in the present day publicized supplementary steps in response to the global financial crisis following their joint board meeting held in London on 23 and 24 March 2009. These postulates have helped to establish the original form of financial statements. In former format of balanced sheet strategy, there was no scope to reflect some economic events like inflation/deflation, stock growth, currency fluctuation, interest rate and mortgage declining affairs but in the present reform strategy, sufficient changes based on accounting implication have been made with so many revolutionary altercations. In reference to global financial crisis, the IASB was accepted in 2001 and is the standard-setting establishment of the International Accounting Standards Committee (IASC) Foundation, and self-regulating private sector, not-for profit organization. The IASB is steadfast to mounting, in the public interest, a single set of high quality, global accounting standards that provide high quality crystal clear and equivalent in order in general purpose financial statements. With regard to the objective, the IASB demeanor wide-ranging public consultations and seeks the co-operation of intercontinental and national bodies around the world. Its 14 members are drawn from nine countries and have a variety of professional backgrounds. They are appointed by and accountable to the Trustees of the IASC Foundation, who are required to select the best available combination of technical expertise and diversity of international business and market experience. Since 1973, the US Financial Accounting Standards Board was elected organization in the private sector for establishing standards of financial accounting and reporting. Those standards administer the preparation of financial reports and are authoritatively recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are indispensable to the resourceful functioning of the cost-cutting measure for the reason that investors, creditors, auditors and others rely on credible, transparent and comparable economic information. Structuring on work underway, the two boards have agreed to work jointly and expeditiously towards common standards that deal with off balance sheet activity and the accounting for financial instrument. They will also work towards analyzing loan loss accounting within the financial instruments project. Furthermore, the boards have agreed to issue proposals to replace their respective financial instruments standards with a common standard in a matter of months, not years. As part of this project the boards will examine loan loss accounting, including the incurred and expected loss models. The boards will continue to draw on expertise provided by the Financial Crisis Advisory Group (FCAG), a high level advisory body formed to guide the boards in their joint response to the financial crisis. Composition of the FCAG includes current and former investors, regulators, central bankers, finance ministers and others from industry and the public sector. Steps taken by IASB and FASB The FCAG was established by the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) to advise the two boards about standard-setting implications of the global financial crisis and potential changes to the global regulatory environment. It consists of 18 senior leaders with broad international experience with financial markets, joined by official observers representing key global banking, insurance, and securities regulators. The chairmen and a few other board members from the IASB and the FASB also participate in the discussions. The FCAG has considered as to how improvements to financial reporting may help to enhance investor confidence in the financial markets and is seeking to identify, and endow with input and advice on, significant accounting issues that require the boards’ immediate attention or longer-term consideration. Topics being discussed include, among others, fair value accounting, loan provisioning, and structured entities and other off-balance sheet vehicles. The FCAG was also interested in exploratory the oversight of the boards, the standard-setting process in exigent situations, and the benefits of convergence of the two boards’ standards. As part of its work, the FCAG is considering various studies connected with the financial crisis, such as the US Securities and Exchange Commission’s study on ‘mark-to-market’ accounting, the UK Financial Services Authority’s Turner Review on the global banking crisis, and the Financial Stability Forum’s work on addressing procyclicality in the financial system. The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) this week announced the membership of the Financial Crisis Advisory Group (FCAG). The FCAG is the high-level advisory group set up by the boards to consider financial reporting issues arising from the global financial crisis. The group includes recognized leaders from the fields of business and government with a broad range of experience in international financial markets. Conclusion: In view of the above discussion it is evident that the criteria as set forth as per Accounting standard that the focus should now be on ensuring that IFRS continues to be a high quality principle based accounting language. The world trade authorities need to engage with the standard setting process, as more and more countries adopt IFRS. The steps relevant to financial crisis endorse an assurance to a joint approach to the financial crisis and to the overall goal of seeking convergence between International Financial Reporting Standards and US generally accepted accounting principles (GAAP). There is no denying the fact that in relation to global financial crisis, the IASB and FASB have significant role to switch over the difficulties in regard to world economic crisis. They have taken active steps to measure the risks and uncertainty of these areas. The required discussion for those with IFRS experience to share their views and knowledge. In areas such as accounting, being too prescriptive with global measures could backfire. Issuing guidance those results in mechanical rule-following could be a recipe for disaster. The underlying principles based standard setting and professional judgment has a vital role to play and should not stifle recovery. If this can be achieved through the consultative process, it should be possible for public and private sector parties to contribute to the evolution of individual standards, from the initial standard setting phase. In the majority cases, the concerning authorities should subsequently be in a position to give their support to new standards, as they are issued by the International Accounting Standards Board. However, the reforms strategy of change in present financial reporting system concludes that while the crisis has revealed flaws in the World’s own regulatory system, the concerning authoritative Board is still well positioned to play an active role in designing new global structures and ensuring that they are transparent and accountable and that developing countries as well as others are represented, in order to increase the legitimacy of the decision-making process. Bibliography 1. www.khatiar2012.wordpress.com 2. www.EzineArticles.com 3. www.wikipedia.com 4. FASB and IASB web page 5. www.shvoong.com 6. www.articlesbase,com 7. www.viralArticles moneymachine.com





The concept of first-rate supremacy

18 03 2009

There is no denying the fact that the concept of preeminence is not up-to-the-minute, rather it is a continuous process in which the whole system remains operative for value for money covering sequential effect of ideal management stringency. More or less each realm in the world has several forms of sub-national government structure. Suffice it to say that if it is crying need  to preserve management services crosswise the country, or mutually, sub-national structures variety from nominated states, local, municipal or local governments with high degrees of  self-sufficiency, to local agents of the central state with minimal discretion – with numerous variations in between. The devolution deliberate addresses the central dilemma of public management – that of ‘delegated discretion’.

 

The question of argument in respect of office bifurcation tends to be cyclic where the parts of fundamental governments have a natural tendency to integrate, until some counter forces predominate to smooth and effective supremacy of the government. Post-Colonial administration frequently used decentralized government provision as a means of stretching their control, that is to say, through ‘circumlocutory rule’ or as  long as ‘schooling for democracy’ in the run-up to autonomy. During the 1940s – 1970s, there was a centralizing predisposition in much of the world: under communalism in central ad eastern Europe, USSR and China; in just this minute independent country where governments sought to consolidate their authority; and as a result of attempts at central economic planning in much of the developing world.

 

In the 1970s in some countries and since the 1980s in many more, there has been a strong tendency to decentralize, with most countries adopting some form of decentralization. This has been driven by:

  • the failures of the central state to be sufficiently responsive to citizen needs and regional differences
  • the failure of centralized economic planning to deliver results
  • democratization in large parts of the world, bringing with it demands by local communities to control their own resources in accordance with local needs and priorities
  • urbanization and growth of large, complex cities, necessitating more responsive systems of city governance
  • budget problems of national governments for which decentralization of responsibilities is often seen (erroneously) as a solution
  • donor pressures on governments to decentralize as a way of improving service delivery at the periphery, and of getting around obstructions at the centre.

 

Often, adverse or limited results from earlier attempts result in renewed centralization, only to be followed by further attempts at decentralization when the shortcomings of excessive centralization become evident once more. Within Europe, the basic treaties of the European Union specify subsidiary as a principle- that is, that government functions should be carried out at the lowest level that can perform those functions effectively and efficiently.

 

In real life situation, transference of government structure is not a one-for-all modification but rather it is an unremitting process of modernization in regard to meticulous state of affairs as a tentative flow.





Application of Information System – a crucial task

18 03 2009
Implementing Information System in developing countries is an intricate task, predominantly in the public sector and as such with the budding requirements in the orbs of Modern Technology as well as the pressure from the international donors; large and go-getting venture has been commenced by the public sector in developing countries as a tentative flow. But owing to lack of actual measures and methodologies for IS development cause many projects to combat tribulations in the achievement phase. Many projects botched to accomplish their business desires, as they were too outsized and exceedingly determined and hence fundamental motivation for the project letdown in the developing countries can be typified as follows:

 

v     Unravel erroneous predicament;

v     Technology processed, not manually led business;

v     Entrainment of major stakeholder participation;

v     Experts guided, rather than facilitated;

v     Entrainment of commitment and veiled agenda;

v     Payback not being acknowledged

v     Disputable exchange of decision making

 

At the present time, the developing countries are pertaining to both PRINCE AND SSADM methodologies, the project management development techniques, specially designed for IT projects that are funded by the UK Department for International development. In Bangladesh, private sectors are moving on with IS development, but it is not the indistinguishable situation in the public sector. The causes following this possibly will be the poor salary configuration in the public service, which by no means provide self-belief to the forthcoming talents and system designers to bond the public services. Most of the IT projects are donor funded; domestically financed IT projects rarely experience success like the donor projects. However, Reforms in Budgeting and Expenditure Control and Financial Management Reform Programme project, funded by DFID, has been well thought-out as the most booming and integral part of Financial Reforms in Bangladesh.

 

At the early on stage of Reforms in Budgeting project  and Expenditure Control, it was pragmatic that, the project was premeditated to develop and modernize the budgeting and accounting system of the government of Bangladesh. The experts mainly dominated that phase, including lots of things to cover. There was lack of stakeholders’ involvement; problems were not recognized at the initial stage. Only a range of high-grade staff in the relevant field was given a general IT training. There was no follow up; no visible product was seen. Benefits were not identified. No system was developed to automate the budgeting and accounting system. So this phase 2 had experienced a massive failure.

 In view of the aforementioned discussion that having awful experience, the definitive phase, and a downsized project with specific output targets came up with scrutinizing, user requirements. This phase focused on sustainability and proved successful with sustainable solutions especially in the software development for budgeting and accounting. Substantive training had been accessible to the users of the systems. Stakeholders have been implicated in the software development process and the local vendors who came forward and led continuous efforts and developed the systems of Customized Software.

 





3 03 2009

The concept of first-rate supremacy

 There is no denying the fact that the concept of preeminence is not up-to-the-minute, rather it is a continuous process in which the whole system remains operative for value for money covering sequential effect of ideal management stringency. More or less each realm in the world has several forms of sub-national government structure. Suffice it to say that if it is crying need  to preserve management services crosswise the country, or mutually, sub-national structures variety from nominated states, local, municipal or local governments with high degrees of  self-sufficiency, to local agents of the central state with minimal discretion – with numerous variations in between. The devolution deliberate addresses the central dilemma of public management – that of ‘delegated discretion’.

 

The question of argument in respect of office bifurcation tends to be cyclic where the parts of fundamental governments have a natural tendency to integrate, until some counter forces predominate to smooth and effective supremacy of the government. Post-Colonial administration frequently used decentralized government provision as a means of stretching their control, that is to say, through ‘circumlocutory rule’ or as  long as ‘schooling for democracy’ in the run-up to autonomy. During the 1940s – 1970s, there was a centralizing predisposition in much of the world: under communalism in central ad eastern Europe, USSR and China; in just this minute independent country where governments sought to consolidate their authority; and as a result of attempts at central economic planning in much of the developing world.

 

In the 1970s in some countries and since the 1980s in many more, there has been a strong tendency to decentralize, with most countries adopting some form of decentralization. This has been driven by:

  • the failures of the central state to be sufficiently responsive to citizen needs and regional differences
  • the failure of centralized economic planning to deliver results
  • democratization in large parts of the world, bringing with it demands by local communities to control their own resources in accordance with local needs and priorities
  • urbanization and growth of large, complex cities, necessitating more responsive systems of city governance
  • budget problems of national governments for which decentralization of responsibilities is often seen (erroneously) as a solution
  • donor pressures on governments to decentralize as a way of improving service delivery at the periphery, and of getting around obstructions at the centre.

 

Often, adverse or limited results from earlier attempts result in renewed centralization, only to be followed by further attempts at decentralization when the shortcomings of excessive centralization become evident once more. Within Europe, the basic treaties of the European Union specify subsidiary as a principle- that is, that government functions should be carried out at the lowest level that can perform those functions effectively and efficiently.

 

In real life situation, transference of government structure is not a one-for-all modification but rather it is an unremitting process of modernization in regard to meticulous state of affairs as a tentative flow.





The fund growing strategy of South Asian Regions

3 03 2009

The fund growing strategy of South Asian Regions

 There is no denying the fact that the inflow of foreign funds in the society support the long- term objectives in regard to other characteristic of India’s approach has been promulgated to go forward compromise in SAARC on global economic and political issues. Such harmony would intensify India’s own barter position in international forum. This spirited game and diversity in objectives may help to sustain SAARC but is not congenial for effective regional integration.    

There are miscellanies in threat perceptions among the South Asian states. For example, the presence of a superpower in the Indian Ocean draws more fire from some South Asian neighbours than others. Practically, threat perceptions in South Asia seem to be quite a mixed issue. The smaller members of the community fear India and some of the South Asian states are concerned about American interests in the region. China figures as a possible threat in the Indian calculations, but China is uniformly absent from the threat perceptions of most of the other South Asian states. These differences in perception and response point to the absence of any kind of a regional outlook on defence issues. For this reason different military capabilities have emerged in the South Asian region, which is in no way congenial for effective regional integration.      

There is diversity in lawful arrangements among South Asian states. For example, India and Pakistan have regional government, but others lack these. It takes much time in India to ratify a treaty which as a corollary of having provincial governments. For smaller states it is very easy to get approval from their parliaments. Sometime in India central government’s willingness is not sufficient to get to the bottom of a problem without the help of provincial government and the Indian Supreme Court. Sometimes this time-consuming system creates mistrust amongst smaller treaty partners. This situation is also not congenial for effective regional integration in South Asia. Different attitudes among the ruling elite’s is further  factor that hinders effective regional integration in South Asia. For example, since 1971 the Indian ruling elite has gradually realised that if  outside powers could be excluded from the region, there would not be a single state in South Asia to challenge India either diplomatically or militarily, or both. On the other hand, the elite’s of Sri Lanka and Nepal have an attitude to seek assistance from extra-regional powers. In Pakistan and  to some extent in Bangladesh, the ruling elite’s hold anti-Indian attitudes. They frequently express and use those attitudes in their policies and politics.

 

The disproportionate size of the market appears to be one of the most important obstacles to the expansion of trade in South Asia. India is a great economic power in the region. It accounts for 59 percent of the import market, 62 percent of the export earnings, 41 percent the external reserves, 79 percent of industrialized value added and 68 percent of mechanized exports. In terms of exportable commodities, India owns over 5,600 commodities to export. Only Pakistan, which has about 4000 commodities, comes next in South Asia. Nevertheless, Pakistan is no match to India in industrial development and size of the market. But the positions of other smaller members of SAARC in this regard are not same.

 

In view of the above, it is evident that the horror of Indian economic supremacy over the economies of the smaller countries is a barrier to trade co-operation in South Asia. India’s economic ascendancy is reproduced in its trade imbalance with almost all the countries of South Asia, except Pakistan. In 1992, India exported US$ 258 million to Bangladesh, US$5 million to Maldives, US$ 85 million to Nepal, US$ 47 million to Pakistan, US$ 192 million to Sri Lanka. In the same year, India imported US$ 5 from Bangladesh, US$ 21 million from Nepal, US$ 149 million from Pakistan and US$ 13 million from Sri Lanka. The strong industrial base, technological development and its comparatively restricted market have given India a predominant position in South Asia. The spill-over effects of the fear of India’s economic domination is also reflected in its neighbour’s psyche. For instance, it is noticeable in the statement of a Pakistani psychoanalyst, who alleged: ‘It will be more apposite to say that Pakistan is not willing to have unregulated trade with India without adequate safeguards for its indigenous industries and comparatively high-wage labour force.’ If passable safeguarding measures that are incorporated in the South Asian Preferential Trading understanding for least developed members are not properly applied to them, the lopsided size of the market may generate the imbalance basis of trade among the South Asian countries.





Bank Reconciliation Statement

22 01 2009

        There is no denying the fact that Bank Reconciliation may be distinct as that process which reconciles the independently prepared accounting records of an entity with the bank statements and other bank generated documentation for the corresponding period. In normal circumstances, this procedure involves a series of individual calculations whereby consistency is ensured between two different sets of records, each prepared in isolation from the other. In the case of Government of Bangladesh transactions, this ideal situation does not exist, largely because of the Government of Bangladesh’s over-reliance on the Banking network which actually operates as an agent of the Government in terms of cash collection and disbursement. 

 

The process of bank reconciliation is essentially a procedure for substantiating the value and timing of cash movements for an entity, a procedure which in itself adds and a strong level of assurance about the accuracy and completeness of the accounting records and which consequently adds credibility to the whole accounting system itself.  Differences between an entity’s records for a particular period and the bank’s records for the corresponding period can arise for a variety of reasons, which fall into the following main categories :-

 

1.       Timing differences


- different period close off dates
- time taken for payments issued to reach banking system
- receipts in bank not notified to accounting office in same period
- cut off differences at separate stages in the bank reporting chain

 

2.       Errors in the accounts of Government of Bangladesh offices

- individual numerical mis-postings or transcription errors
- errors of addition of totals
- errors of omission i.e. some transactions not recorded
- errors of commission i.e. some transactions recorded which should not be included

 

3.       Errors in accounting statements from the banks

- individual numerical mis-postings or transcription errors
- errors of addition of totals
- errors of omission i.e. some transactions not recorded
- errors of commission i.e. some transactions recorded which should not be included

 

4.       Deliberate misstatement

- postings have been altered or adjusted for no accounting purpose
- entries have been falsified to conceal fraud
- collusion to misrepresent transactions
 

 

The whole issue of Bank Reconciliation, in the context of the Government of Bangladesh accounting system, is a complex one involving various interfaces between the banks and their branch networks, the local accounting offices, the numerous departmental offices operating under the CHIEF ACCOUNTS Officers, the CHIEF ACCOUNTS Officers themselves and the CGA. In addition, there are a range of commercial bank accounts which also exchange funds with the mainstream Government bank account held at the Bangladesh Bank. Most of these interfaces involve data flows if not the actual movement of funds, flows in both directions as well as with members of the public and other third parties.

 

. The main interfaces which should concern us in any preliminary attempt to rationalise the problem are as follows. Any failure to reconcile at each of these levels will create differences in the overall balancing process:-

 

1.       Between local accounting offices and the local branches of the SB or BB

2.       Between the local branches of the SB or BB and their Regional offices

3.       Between the Regional offices of the SB or BB and their Head offices in Dhaka

4.       Between the Head office of the SB in Dhaka and the Head office of the BB in Dhaka

5.       Between the Head office of the BB and the CGA

 

 

Major Elements of the Bank Reconciliation Problem

 

·         The overall issue of complete bank reconciliation is composed of numerous individual data inter-relationships between the various banks, the local accounting offices and the various departmental offices operating under the CHIEF ACCOUNTS Officers. Differences in cash movements reported can and do occur in all of these individual areas.

·         Traditionally, within certain sections of the Government of Bangladesh, there exists (often for understandable reasons) an over-reliance on the data being furnished by the various banks, which is often manifested in the imprudent assumption that data supplied to the Government of Bangladesh by the banks is accurate and complete. Evidence suggests that this is far from the truth and that there are regular errors, omissions and mis-statements from data transferred within both the Sonali and Bangladesh Bank networks and from transfers between the two.

·         Control & Suspense accounts are misused and not cleared on any regular basis. The lack of a systematic approach to the maintenance and regular clearing of these accounts contributes significantly to the differences recorded between bank and Government of Bangladesh figures, and this whole area is a major part of the problems being faced.

·         Widespread confusion still persists about the number of Government of Bangladesh bank accounts and their operation in the overall process.

·         A number of Government of Bangladesh departments and other agencies have access to commercial bank accounts and their impact on the reconciliation process is difficult to evaluate

·         The banks within the Government of Bangladesh processing cycle are currently obliged to sort and classify individual transactions by Ministry and to assign a ministry classification code to the appropriate bank posting. This creates an additional workload which inevitably contributes to misclassifications and mispostings of cash amounts.

·         The impact on the reconciliation process of commercial and quasi-commercial Government organisations (e.g. Postal, T & T, Railways) who operate accrual accounting systems in the generation of their accounts

·         The Bangladesh Bank maintains the one Government of Bangladesh account by stating a split between ‘No 1 Account and Railway’ on the one hand and ‘No 2 Account (Food)’ on the other. This distinction is not observed or recognised in the monthly CGA accounts.

·         Opening & closing bank balances at the year-end have not been reconciled since Bangladesh achieved independence in 1971. Both the Bangladesh bank and the Government of Bangladesh submit balances to the respective authority which are at significant variance with each other. This totally obscures the scale of the bank reconciliation problem on a year-on-year basis, since the balances brought forward are included in the respective balances of each as they are stated in the Monthly accounts.

·         ‘Ways and Means Advances’ i.e. loans, usually on a short-term basis, from the Bangladesh Bank to the Government of Bangladesh account to cover ‘temporary’ shortfalls are not reflected in the Government of Bangladesh accounts. Consequently, negative cash balances are frequently reported in closing and opening figures.

 

In view of the above, it is evident that in addressing the area of bank reconciliation then, it is necessary to look at all these individual interfaces and to construct, in a systematic and methodical way, some usable formula whereby all the transactions in these flows can be balanced and reconciled. In a double-entry accounting sense, the end result must be that all the entries, of the entire parties total to zero – that is to say, that the total receipts and the total payments reported by the banks in any given period are exactly equal to the total payments and total receipts reported in the Government of Bangladesh’s book-keeping records. Any distinction from this practical reality implies that full and complete reconciliation has not been achieved and consequently the accounts, of either or both parties, contain errors

 

There are no clearly prescribed procedures on Bank reconciliation which have evolved since the 1947 British structure.

 

Timing differences

 

      Differences between amounts shown in Government of Bangladesh accounts and the amounts derived from the statements of the BB

 

-           

 

From Minutes of Task Force Meeting 6/10/99

 

everyone was aware of the scale of the differences in reported cash balances

There were timing differences at all these levels .,He emphasised that it was important to remember that the banks were also responsible for a significant amount of errors and mis -statements within the system and that it was imprudent to expect total reconciliation by examining the returns of Government of Bangladesh offices in isolation. He informed the meeting that at the admission of the Deputy General Manager of the Sonali Bank Head Office in Dhaka, at least 15 of his 62 regional branches regularly furnished the head office with erroneous figures.

 

 


FROM RAY MORRIS FILES :-

AUDIT OF BANK RECONCILIATIONS    

INTRODUCTION

 

 A cash book/ cash account is the central pillar of any organisations accounting system. When linked to an equivalent bank account, together these can provide a fundamental check of the financial transactions of the organisation. For this reason it is essential that the accounting cash book/account is reconciled regularly with the related bank account.

 

Similarly it is important for these two records are balanced with the overall accounting system. This provides assurance that all cash/bank transactions have been accounted for, and all the entries in the accounting system have a basis in cash.

 

 

Cash/bank/accounting reconciliations have fraud prevention aspect also. Frauds committed through the amendment of cheques are becoming increasingly sophisticated. Some have successfully avoided detection by the banks’ own detection arrangements, resulting in substantial losses to the organisations concerned. Often these losses have not been noticed until bank statement and cashbooks have been reconciled, sometimes months later. Some organisations have introduced daily bank reconciliations to counter such frauds.

 

At the end of the financial year, at least, a statement should be prepared collating all the balances on all the Government’s cash/bank accounts to prove the total cash balance in the accounts, and to prove the validity of the overall accounting position.

 

AUDIT OBJECTIVES

 

The main audit objectives are to:

 

·         Confirm that regular, and up-to-date cash book/bank reconciliations are undertaken.

·         Check that a senior person reviews these reconciliations, and signs them

·         Check that all items in the reconciliations are cleared promptly in the next accounting period

·         Confirm that further reconciliations are undertaken to balance the overall accounting system with the cash book/bank statement reconciliations.

 

MAIN AUDIT RISKS

 

The main risks which arise if regular, up-to-date reconciliations are not in place are:

 

·         Errors, omissions or frauds involving cash will not be identified promptly, and so will be more difficult to prevent or follow-up

·         Errors by the bank will go undetected, leading to possible loss of Government funds

·         Errors in the accounting system will go undetected, leading to inaccurate Government accounts.

AUDIT OF CASH AND BANK RECONCILIATIONS

 

INTRODUCTION

 

Cash books/accounts are central to any system of accounting, and there completeness and accuracy are vital. Where a bank account is operated in conjunction with the cash book/account, as is often the case, the bank statement serves as an independent record against which the cash account can be verified. So up-to-date reconciliations between the cash book/account and the corresponding bank balance are essential. These act as a powerful safeguard against error, omission and fraud.

 

The balance on each cash book/account should be reconciled regularly with the balance on the equivalent

 

FROM JOHN WHITE DRAFT REPORT :-

 

Within the Government’s bank accounts there is no differentiation between Consolidated Fund balances and Public Account balances.  The entire cash balance with the Bangladesh Bank is treated as one

 

However, outside this system are a number of commercial bank accounts, maintained for a variety of purposes, as follows :-

·         Accounts of Development project implementing agencies, e.g. SAFE (Special Account in Foreign Exchange) and CONTASA ( Convertible Taka Special Account) that the Government has been encouraged to open by aid donors to speed up the use of funds.

·         bank accounts held in Districts for such purposes as land acquisition

·         accounts operated by Chief Accounts Officers through which project aid monies are passed to project bank accounts

·         the USAID deposit account with the American Express Bank

·         and more recently, imprest and revolving fund accounts set up by certain aid donors with the Bangladesh Bank but outside of the Government of Bangladesh’s main account

 

 

DAO & TAO transactions should flow to only one non-food bank account as opposed to the present practice of being debited or credited to the respective account for each ministry.

 

To ensure the accuracy of the Government’s accounts, it is essential that bank reconciliation is completed on a regular basis.

 

The current ‘system’ for bank reconciliation is effectively non-existent in that there are no clearly prescribed and defined procedures which are in operation across the accounting structure. The current reality is that any attempts at bank reconciliation are the result of a  hotchpotch of verbal understandings which have evolved piecemeal over several years and through various administrations. Since 1947 there has been no meaningful attempt to quantify the problem, to devise a coherent strategy for the implementation of procedures nor to introduce operational controls which would make proper reconciliation more readily achievable.

 

The latest edition of the Government of Bangladesh Account Code (issued by the C & AG in Sept 1996) makes only a passing reference to this important issue. Even then, it only includes a re-statement of existing procedures operated by the BB and SB in terms of what statements are issued to the local accounting offices. It offers no suggestions for actual operating procedures at the offices themselves.

 

The bank reconciliation statement reconciles the balance shown on the bank statement to the balance shown in the Government’s books of account. The difference between the 2 sets of records will be caused by a combination of the following factors :-

 

·         The Government’s books of account contain errors and/or are incomplete

·         The Bank statements contain errors and/or are incomplete

·         Timing differences in the transmission of data between the two

·         There has been fraud and misappropriation

 

In the accounts of May 97 there is an unexplained difference between the bank and the books of account of Taka 1,230 Crore (£154m). This represents approx 5% of revenue expenditure.

 

Bank reconciliation helps to ensure the accuracy of the Government’s accounts. A partial improvement to bank reconciliation will provide only limited improvements which means the accounts could well contain significant errors.


Extract from ‘Account Code’ (issued by the C & AG in Sept 1996)

 

 Account of the Government with the Bank

 

Government has an Agreement with Bangladesh Bank by virtue of which the general banking business of the Government (in which business is included the receipt, collection, payment and remittance of moneys on behalf of the Government) is carried on and transacted by the Bank in accordance with and subject to such Orders as may from time to time be given to the Bank by the Government. Government business is transacted in every office and branch of Bangladesh Bank and in  designated branches of Sonali Bank acting as the agent of Bangladesh Bank. Article 20 of the Bangladesh Bank Order 1972 requires the Government to deposit free of interest all its cash balances with Bangladesh Bank and directs the Bank to accept moneys for account of the Government and to make payments and carry out Government’s exchange, remittance and other banking operations including  management of the public debt.

 

Statement of cash transactions undertaken by Bangladesh Bank on behalf of the Government together with all supporting vouchers etc. are transmitted by each office and branch of the Bangladesh Bank to the Thana Accounts office, the District Accounts Office, the Chief Accounts Office and the Controller General of Accounts office, as the case may be.

 

Each branch of Sonali Bank transacting Government business as agent of Bangladesh Bank forwards daily a statement of transactions to the local Thana or District Accounts office along with all supporting vouchers. The totals of such transactions are also reported by Sonali Bank at the close of each day to the Public Accounts Department of Bangladesh Bank through the head office of Sonali Bank at Dhaka.

 

All transactions regarding Public Accounts taking place in the offices and branches of Bangladesh Bank and designated branches of Sonali Bank are consolidated in the Government Accounts Department of Bangladesh Bank. At the close of the accounts of each month, a statement of closing balance of the Government on the books of the Bank after taking into account all cash transactions in all of the offices, branches and agencies of the Bank and the adjusting transactions in its own books is forwarded by the Head Office of Bangladesh Bank to the Controller General of Accounts.

 

 


FROM MY REPORT – QUALITY & FLOW:-

 

Page 4

Full and effective bank reconciliation is a critical element of the above objective. Wherever possible, this process must always involve a reconciliation of banking records with independently prepared Government records. The automatic acceptance of bank information does not constitute proper reconciliation.

 

Page 6

The critical functions of bank reconciliation and maintenance of full double-entry will be centralised with the creation of two the new bodies, the ‘Central Data Processing Unit’ and the ‘Central Reconciliation Unit’.

 

Page 9

Under the existing structure, the CHIEF ACCOUNTS OFFICER’s play a limited role in the processing of individual transactions in that they only operate on the payments side of the cash reporting account, with all receipts transactions being handled by the TAO’s and the DAO’s in tandem with the banks. Consequently, the CHIEF ACCOUNTS OFFICER’s are never in a position to report the complete picture as regards cash balances at any point in time. On the other hand, outside Dhaka, the DAO’s and the TAO’s operate as Pay and Accounts Officers on behalf of all the departments of the Government and process transactions on both sides of the cash accounts, handling payments as well as receipts. In this way, they should theoretically be in a position to fully reflect the transactions themselves as well as the consequent balances at any particular time on the Consolidated Fund and the Public Account

 

Page 13

The current extent of bank reconciliation actually being carried out at the local level is unclear. Bank reconciliations of a sort are being performed regularly but the general consensus is that these contain a major ‘fudge’ element. There needs to be significant improvement at this level.

 

The current localised problems of reporting caused by a slow response time by the Bangladesh Bank to the DAO-Dhaka need to be resolved and the reasons for this particular problem identified

 

Page 14

Other factors result from the role played by third parties and are outside the direct control of the Government bodies involved. Nevertheless, they can and do have an impact on the overall quality of data which is just as critical to the system as the factors under direct control. Under this heading should be considered: -

·         The crucial role currently played by the banks in the collection of receipts, the processing of payments and the accounting information flow process.

·         In particular, the interaction between the Bangladesh Bank and the Sonali Bank and any potential ‘bottlenecks’ in this area.

 

A particular area for concern is the detailed role played by the banks in the crucial area of the actual coding of Government receipts and payments. While this is the only feasible approach at present, the bank’s involvement is currently at a level which is totally inappropriate in any well-controlled system. The Government accounting function should not be dependent on the banks for this aspect of financial processing.

 

 

 

Page 15

The banking system in Bangladesh does not operate a consistent clearing system

 

Pages 16 – 19

1.              BANK RECONCILIATIONS

 

(1)        The issue of the proper reconciliation of all bank balances and bank receipts and payments is absolutely fundamental to the integrity of the resulting accounting data, and monthly accounts from the CGA system cannot be considered as meaningful until this issue has been fully addressed.

(2)        This subject has already been identified as a high priority by the Government of Bangladesh and under paragraph 9 of the terms of reference of the RIBEC 2B phase a separate study has been commissioned to consider the scope for improvements in data quality in the area of bank reconciliations. The aim of the study will be “to identify significant improvements which can be made alongside the classification work, with only minor additional resource investment”.

(3)        Bank reconciliation, in the accepted sense, can be defined as a process which fully reconciles the balance shown on a bank statement at any one time with the balance reported in the entity’s own books of accounts at that same point in time.

(4)        Currently in the Government of Bangladesh, there exists a documented system for bank reconciliation but the procedures and processes detailed therein are not generating a satisfactory result. The system is clearly not working and urgent measures are required to install a policy on regular reconciliation, which is enforceable and workable.

 

(5)        The following points have emerged from an investigation of this area :-

·       The monthly accounts produced to date have all reported substantial unaccounted for differences in the Government bank account – the accounts for May 1997 show a variance of TK 1,229 Crore (£175 Million)

·       There are up to 5,000 individuals in the system who have access to cheque books for the Government account, and the main Government account is sub-divided into 30 different user codes, which effectively operate like sub-accounts. It would seem unlikely that all payments generated in this way are being properly accounted for and in the absence of an effective system of Internal Control it is a dangerous situation to maintain so many sub-accounts and to permit so many people to have direct access to these accounts.

·       Currently, TAO’s do not hold cheque books (although there are plans for them to do so) and all Government payments at the TAO level are made directly by the Sonali Bank. Conversely, all the DAO’s, with the notable exception of DAO-Dhaka, do maintain their own cheque books and are able to make payments directly. In addition, all CHIEF ACCOUNTS OFFICER’s and some other Government departments issue cheque payments directly.

·      

There is a substantial timing difference (60 days) before Sonali Bank branch transactions are reconciled in the Government account at the Bangladesh Bank.

 

(6)        The permanent differences between the balances reported by the Bangladesh Bank and the figures reported in the Government of Bangladesh monthly accounts are likely to be caused by a combination of the following factors: -

·         The Government books of accounts contain erroneous entries

·         The Government books of accounts are incomplete, i.e. for some reason certain transactions have not been processed or entered at all.

·         The Bank statements contain erroneous entries.

·         The Bank statements are incomplete.

·         There are significant timing differences in the transmission of data between the Government reporting chain and the banks’ reporting chain.

·         There is fraud, misappropriation and misrepresentation of the accounting records.

2.              THE ROLE OF THE BANKS IN THE ACCOUNTING FLOWS

2.1     Introduction

(7)        The Bangladesh Bank is the central bank of Bangladesh. In common with the system in many other countries, it is the banker of the Government and as such, the custodian and chief cashier of all Government funds.

(8)        Within the overall structure of the Governmental bank accounts there is no distinction made between balances on the Consolidated Fund and those on the Public Account. For banking purposes the entire cash balance is treated as one and the same.

(9)        Throughout the country the Bangladesh Bank has branches in only 7 places. In areas where there is no branch, a more comprehensive service is provided by the largest commercial bank in Bangladesh, the Sonali Bank, which has more than 1000 branches, 457 of which deal with government accounts. The Sonali acts as the agent for the Bangladesh Bank in all its transactions with the Government account in these areas.

(10)      In addition to the above central structure, there are other smaller commercial bank accounts maintained throughout the country, which handle Government funds. The majority of these relate to development projects where the appropriate Government agencies have been encouraged by aid donors to operate separate bank accounts in order to improve the ‘transparency’ of development transactions and speed up the funds appropriation process.

2.2     Banking Returns and Reports

(11)      At the District and Thana level, all transactions are handled by the Sonali Bank in its agency capacity. The bank issues a daily listing of all payments and receipts, known as a ‘scroll’, to the Accounts officer, together with a summary statement.

(12)      Each of the 457 branches of the Sonali Bank also makes a daily return to the Sonali Bank head office in Dhaka via the regional bank network. It takes 2-7 days (depending on area) for these daily returns to reach Head Office. This includes copies of the scrolls issued as well as the summaries of the transactions analysed by each Government account head. The individual returns are reconciled and consolidated in the head office computer system.

(13)      Head Office then generates a daily summary statement recording the receipts and payments, analysed by ‘Head of Account’, for each of the branches. It is important to appreciate that this daily summary does not represent the movements for all the branches for that particular day – it represents the totals of the returns received on that day. There is an inherent time lag in this process, varying according to regional location.

(14)      At the end of each month the bank branch also issues the local accounting officer with a statement showing total debits and credits for the month, analysed by ‘user code’, along with the closing balance. This document is what is usually termed the ‘bank statement’. Again this goes directly to the TAO or DAO as well as being copied to bank head office.

(15)      The Bangladesh Bank receives from the head office of the Sonali bank a compiled daily statement of the total returns from the branches, showing all receipts and payments, analysed both by bank branch and account head. There is also a summary statement showing the totals of debits and credits and net resulting balances against each of the 30 individual Government account ‘user codes’.

(16)      The above is accompanied by a daily debit or credit advice for effecting immediate cash settlement in the Sonali Bank’s account with the Bangladesh Bank. In most cases, the SB will have made payments in excess of receipts so an amount will be due to SB from BB. This settlement transfer is performed on a ‘same-day’ basis.

(17)      The BB relies on this summary from SB to make its daily funds transfer. It cannot substantiate the total amount billed by verifying individual balances and must accept the statement. A follow-up audit is performed by BB to confirm the figure.

(18)      The Bangladesh Bank, on the basis of the information collected from the Sonali Bank and from its own 7 branches and headquarters’ central accounts section, prepares a daily cash balance report for each of the 30 Government user codes, indicating the net cash position of the Government account. This report is issued to the CGA and the Ministry of Finance. Any inter-account adjustments are also incorporated in this statement.

(19)      Within 15 days of the end of each month, the BB stipulates that the SB must produce a monthly summary. This should finalise the full returns from the branches for the previous calendar month and include all amounts not yet listed on the daily returns.

2.3     Current Problems in the Banking Returns Process

(20)      In general, the banking returns process works in the manner prescribed and the daily summaries of receipts and payments (scrolls) are indeed supplied daily and act as an important control tool.

(21)      The major problem, which has become apparent in this area, is in the relationship between the DAO-Dhaka and the branch of the Bangladesh Bank, which handles all government transactions with this DAO (Motijheel). The issues can be summarised as follows: -

·         The Motijheel branch handles the following number of Government transactions, on average :-

Payments

1st Week of month :


Cheque payments                            -           8/9000  per day
Other payments                               -           500 per day

 

Other weeks :
Cheque payments                            -           4/5000 per day
Other payments                               -           500 per day

 

Receipts

Treasury chalans                             -           2,000 per day

 

·       The BB recognises that they have an obligation to provide a daily statement of receipts and payments and indeed this used to be the case with Dhaka-DAO

·       The volume of clearing house transactions has however increased dramatically in the last few years and the BB concedes that the daily service has ‘slackened’ somewhat, although the manager of the Motijheel branch does recognise that there is currently a problem and maintains that he is taking steps to rectify the situation. He maintains that there has been some improvement recently.

·       Currently 15 large ledger books are used for each set of daily transactions. The first week of the month sees the greatest amount of activity with all monthly payments (salaries etc), being processed.

·       The BB maintains that Government receipts are being reported the next day but that Government payments are being delayed by an average of 2/3 days

·       Manpower shortages and the number of transactions are being put forward as the main reasons for this delay and ‘over-the counter’ pay-ins have been stopped to help alleviate the problem.  The bank concedes that the main issue is with the preparation and the summarising of the receipts by Head of Account; this appears to be a very time consuming matter and bank staff are having problems with the workload implicit in this operation.

·       The process of actually balancing the daily account is not an issue; it is the coded classification, which causes the delay.

·       A FoxPro computer system is being introduced by the BB, which should be fully operational in the near future. This can be expected to reduce or eradicate some of the current delays in daily processing.

·       A further complication for the flow process is that from October 1997 transactions from 20 Sonali Bank branches in Dhaka will also be received by this branch of the BB.

 

Page 49

Although, as stated above, all Government transactions are processed through one Government bank account, under the current procedural system of data collection there is a requirement for transactions to be identified by bank user code. This distinguishes the transactions of one CHIEF ACCOUNTS OFFICER for example, against those of another CHIEF ACCOUNTS OFFICER. There should however be a serious review of the reasons for the existence of this requirement since essentially, it is an unnecessary duplication in a consolidation system, which will be able to distinguish between individual CHIEF ACCOUNTS OFFICER transactions via the code structure. 

 

Despite the vast number of transactions which the banking network reports on a daily basis via the scrolls sent to local accounting offices, in general the banks meet their obligations well. The only significant problem area, and the source of the particular problem with Dhaka-DAO, concerns the requirement to classify receipts and payments by bank user code. The sole purpose of this process is to permit the classification of transactions by CHIEF ACCOUNTS OFFICER head prior to input into the computer system. If this situation could be resolved or the requirement itself removed, dramatic improvement in the speed of data flows should follow

 

Page 50

The two most critical issues which currently affect the quality of accounting data from the Consolidated accounting system are: -

·         failure to maintain proper and complete double entry at all steps in the flow

·         failure to effect proper bank reconciliation at all stages in the recording process

 

Under the existing structural arrangements, it is unrealistic to expect the TAO’s and/or DAO’s to carry the full responsibility for the satisfactory attainment of the above two objectives. It is essential to consider that: -

 

·         there is effectively no further checking of double-entry or reconciliation of bank reports once data has left these offices.

·         there are a total of 464 DAO and TAO offices. Transactions at these cover varying degrees of complexity

·         staff at these local offices are generally not well trained in accounting

·         there are few or non-existent controls in place in these local offices

 

 

 

 

 In view of the above, it is evident that due to bank reconciliation, it is possible to prepare a correct accounts in each month for which value for money audit can be ensured systematically. The economy, efficiency and effectiveness lies in the financial consistent in between the bank the cash book virtually.

 

 





The fund growing strategy of South Asian Regions

22 01 2009

There is no denying the fact that the inflow of foreign funds in the society support the long- term objectives in regard to  other characteristic of India’s approach has been promulgated to go forward compromise in SAARC on global economic and political issues. Such harmony would intensify India’s own barter position in international forum. This spirited game and diversity in objectives may help to sustain SAARC but is not congenial for effective regional integration.    

There are miscellanies in threat perceptions among the South Asian states. For example, the presence of a superpower in the Indian Ocean draws more fire from some South Asian neighbours than others. Practically, threat perceptions in South Asia seem to be quite a mixed issue. The smaller members of the community fear India and some of the South Asian states are concerned about American interests in the region. China figures as a possible threat in the Indian calculations, but China is uniformly absent from the threat perceptions of most of the other South Asian states. These differences in perception and response point to the absence of any kind of a regional outlook on defence issues. For this reason different military capabilities have emerged in the South Asian region, which is in no way congenial for effective regional integration.      

There is diversity in lawful arrangements among South Asian states. For example, India and Pakistan have regional government, but others lack these. It takes much time in India to ratify a treaty which as a corollary of having provincial governments. For smaller states it is very easy to get approval from their parliaments. Sometime in India central government’s willingness is not sufficient to get to the bottom of a problem without the help of provincial government and the Indian Supreme Court. Sometimes this time-consuming system creates mistrust amongst smaller treaty partners. This situation is also not congenial for effective regional integration in South Asia. Different attitudes among the ruling elite’s is further  factor that hinders effective regional integration in South Asia. For example, since 1971 the Indian ruling elite has gradually realised that if  outside powers could be excluded from the region, there would not be a single state in South Asia to challenge India either diplomatically or militarily, or both. On the other hand, the elite’s of Sri Lanka and Nepal have an attitude to seek assistance from extra-regional powers. In Pakistan and  to some extent in Bangladesh, the ruling elite’s hold anti-Indian attitudes. They frequently express and use those attitudes in their policies and politics.

 

The disproportionate size of the market appears to be one of the most important obstacles to the expansion of trade in South Asia. India is a great economic power in the region. It accounts for 59 percent of the import market, 62 percent of the export earnings, 41 percent the external reserves, 79 percent of industrialized value added and 68 percent of mechanized exports. In terms of exportable commodities, India owns over 5,600 commodities to export. Only Pakistan, which has about 4000 commodities, comes next in South Asia. Nevertheless, Pakistan is no match to India in industrial development and size of the market. But the positions of other smaller members of SAARC in this regard are not same.

 

In view of the above, it is evident that the horror of Indian economic supremacy over the economies of the smaller countries is a barrier to trade co-operation in South Asia. India’s economic ascendancy is reproduced in its trade imbalance with almost all the countries of South Asia, except Pakistan. In 1992, India exported US$ 258 million to Bangladesh, US$5 million to Maldives, US$ 85 million to Nepal, US$ 47 million to Pakistan, US$ 192 million to Sri Lanka. In the same year, India imported US$ 5 from Bangladesh, US$ 21 million from Nepal, US$ 149 million from Pakistan and US$ 13 million from Sri Lanka. The strong industrial base, technological development and its comparatively restricted market have given India a predominant position in South Asia. The spill-over effects of the fear of India’s economic domination is also reflected in its neighbour’s psyche. For instance, it is noticeable in the statement of a Pakistani psychoanalyst, who alleged: ‘It will be more apposite to say that Pakistan is not willing to have unregulated trade with India without adequate safeguards for its indigenous industries and comparatively high-wage labour force.’ If passable safeguarding measures that are incorporated in the South Asian Preferential Trading understanding for least developed members are not properly applied to them, the lopsided size of the market may generate the imbalance basis of trade among the South Asian countries.

 





International business divergence

21 03 2008

There is no denying the fact that the United Nations Conference on Trade and Development was acknowledged in 1964 as an unwavering member of the General Assembly to buttress global trade, in particular the export trade of just beginning countries to pick up the pace of the economic development programme of those countries. Those countries actually craving to deal with development issues in a specially created body. It is their conviction that their development problems could not be attempted successfully through active worldwide economic institute due to fact that those countries influencing interrelated business activities were dominated by urbanized countries. Its objectives were to help to attain agreement on the stabilisation of commodity prices, investment, trade preferences and compensatory financing programmes. UNCTAD has long been served as a mouthpiece of the world’s poor and has been a central forum for the North- South dialogue. Although in its long existence it has taken up many issues for encouraging the interest of developing countries, but for some reasons it has changed its role considerably. UNCTAD is doing its business facing the reality of present international economic structure. It is very much necessary for the developing countries to fortify and make it resourceful. UNCTAD conferences from 1964 to 1996 make public that the Third World has transformed their situation significantly. In their first conference in 1964 the developing countries banded together to form the Group of 77 as a coalition of the world’s poor to press for concession from the rich. In UNCTAD 6, 1983 the recognition of the importance of the role of the World Bank and the International Monetary Fund (IMF) as multilateral development institution was made. In UNCTAD 8 in 1992 there was a broad consensus on importance of market oriented economic policies and political pluralism as basis for development. Most important decision was the reform and revitalisation of UNCTAD to ensure its continuing relevance on trade and development issues. The issues addressed in the UNCTAD forum have changed over time in response to changing international circumstances. Some of the causes will be described below.

One state one vote ethics of General Assembly gives the Third World nations advantages in the UN forums. Those who are the highest contributors to the UN command only fifteen votes. For that reason the North prefers small forums, usually outside the General Assembly. Indeed, in view of the charter of UN follows the one state one vote principle not weighted voting system like the IMF and the World Bank, so the North states reluctant to the activities of the UN General Assembly which has some influence on UNCTAD.

2) The major powers of the North made it clear that they were only prepared to deal with key economic problems of the South through the Bretton Woods’s institutions and WTO, which were fully under their control. In our country we have optimistic view in the sense that progressively more, thus, the developing countries, especially those with heavy balance burdens, were both nudged and drawn into embrace of these multilateral financial institutions. This is an important reason for which UNCTAD has changed. The Third World nation’s different level of development, different degrees of economic and political affiliation with the North, different colonial familiarity and different discernment of national interests have created diversified attitude towards North. That may also be a reason for change in UNCTAD.

4) The closing stages of cold war, the earth-shattering alteration in East West relations and the end of bloc politics modified the North- South relation, which has impact on UNCTAD activities.

5) In 1980’s the economic growth rate deteriorated in many Third world countries. The prices of the commodities exported by Third World nations fell sharply compared with the prices they had to pay for their imports. The debt burden of many Third World countries reduced their bargaining power. The erosion of their bargaining leverage added to the softening of its militancy and increased reluctance to fight against North. The changing economic climate of the 1980’s affected different countries in different way which created diversity within the Third World countries and affected the role of UNCTAD.

6) UNCTAD was subjected to increasing financial pressure, which affected programmes, performance, staffing morale and independence of the body.

7) The creation of the World Trade Organisation (WTO) has important impact on the change in UNCTAD’s role.

Although UNCTAD’s attitude towards Bretton Woods institutions and WTO has changed, but despite economic and political transformations in the world in the last thirty years, the essence of UNCTAD’s development mission has not changed. Although in recent years little has been achieved through UNCTAD in the area of consultation and negotiation on general economic issues, but negotiations in UNCTAD sometimes provide a starting point for concrete decisions elsewhere, and the organisation continues to play an important role as a forum for the discussion of development issues and a centre for the study of the problems facing developing Countries. The themes addressed by it over the years have include: a) The issue of expanding and diversifying the exports of goods and services of developing countries, which are the main sources of external finance for their development; b) The issue of expanding the export capacity of developing countries by mobilising domestic and external resources, including development assistance and foreign investment; c) Issue of strengthening technical capabilities and promoting appropriate national policies; d) Issue of alleviating the impact of debt on the economies of developing countries and reducing their debt burden’s) Issue of supporting expansion of trade and economic co-operation among developing countries as a beneficial complement to their traditional economic linkages with developed countries and f) issue of special measures in support of the world’s poorest and most vulnerable countries. It may be mentioned here that UNCTAD has become at once a negotiating instrument, a deliberative forum, a generator of new ideas and concepts and a provider of technical assistance. As a result of this multifaceted mandate, UNCTAD was entrusted with a wide spectrum of activities cutting across several dimensions of development.