April 15, 2007	Sunday	Rabi-ul-Awwal 26, 1428

ISLAMABAD, April 14: The member states of the South Asian Association for Regional Cooperation (Saarc) will soon initiate negotiations on services sector for trading among each others as part of the South Asia Free Trade Agreement (Safta).

The need for inclusion of services chapter in the Safta agreement was felt following growing opportunities in the field of the services trade owing to increased tradability of services in the recent past.

A senior official told Dawn on Saturday that it is expected that a draft on services negotiations would be worked out before the next Saarc summit to be held in Maldives.

A formal decision for inclusion of services in the domain of Safta was reached in the two-day Saarc summit held in New Delhi recently. Services have come to occupy between 40 and 55pc of GDP in the South Asian countries.

The service sector is the second most important source of employment after agriculture in these countries, absorbing about 20-30 per cent of the labour force. Certain sectors, such as information technology (IT), business process outsourcing (BPO), tourism, construction, and energy services are important contributors to value-added, employment, exports, and investment flows in these countries.

According to the official, maximum South Asian countries, excluding India, have a one strong area of interest in exporting labour intensive services at all levels of skills. The main markets of interest are the Middle East, South East Asia and the industrialised countries, particularly the US, UK, Canada and Australia.

Sectors of interest include professional services, such as information technology, finance and engineering, as well as semi-skilled and low-skilled services, such as construction work, repair, nursing and domestic help.

According to official estimates, more than four million Pakistanis are working abroad in various countries and remitting more than $5 billion every year to Pakistan, or nearly half of Pakistan's foreign exchange earnings.

Although the Middle East dominates as the destination market, other countries, including industrialised countries in North America and Europe, are also important markets for Pakistani labour.

Analysts said opportunities through market opening would only be meaningful when there is an adequate supply of quality service providers in the South Asian countries. It is equally important for these countries to adopt appropriate strategies on the domestic front so as to improve quality, standards, and competitiveness of service providers.

Investment in training and education, establishment of independent regulatory bodies and monitoring mechanisms to ensure standards are some of the areas that need adequate policy focus in this context, added the analysts.

It would also be very difficult for reaching at a common draft on services as the least developed countries of the region would have the limited negotiating capacity.