South Asia Subregional Economic Cooperation (SASEC)

Introduction

The South Asia Subregional Economic Cooperation (SASEC) program is a project-based initiative started in 2001 with the objective of facilitating regional prosperity through enhanced cross-border connectivity, trade, and economic cooperation between member countries. SASEC assists its members to harness natural resources and industrial potential through inclusive growth with the Asian Development Bank (ADB) as its secretariat and the main financier.

Countries of the Membership and Evolution.

Founding Members (2001): Bangladesh, Bhutan, India and Nepal.

Expansion: In 2014, Maldives and Sri Lanka became members and in 2017, Myanmar was the seventh member, enhancing relations between South and Southeast Asia.

Origin: It came out of the South Asian Growth Quadrangle (SAGQ) constituted in 1996.

Basic Elements of collaboration.

SASEC is run on the basis of the SASEC Operational Plan 20162025 and four main pillars:

• Transport: The creation of multi-modal transport networks (road, rail, air and sea ports) to improve connectivity across borders and lower logistics expenses.
• Trade Facilitation: A modernization of the administration of customs, streamlining of documentation, and harmonization of regulations to accelerate international trade.
• Energy: Enhancing the regional energy security through the development of cross-border power trade infrastructure, energy efficiency and renewable energy resources.
• Economic Corridor Development (ECD): Integrating industrial regions with transport networks to enhance productivity and establishment of regional value chains.

Significance of SASEC

• Clear Regional Integration: SASEC is project-driven unlike SAARC, which tends to fail because of political problems and concerns a real benefit to the economy.
• Bridge to southeast Asia: including Myanmar, in conjunction with the India- Myanmar-Thailand Trilateral Highway ties South Asia to Southeast Asian markets.
• Alternative Connectivity: Is a substitute of the One Belt One Road (OBOR) by China in the region and has been advanced to allow infrastructure development as part of an open ADB model.
• Infrastructure Development: SASECs, like the East Coast Economic Corridor in India, contribute to industrial development of landlocked regions and the North Eastern region of India.

Challenges

• Dependence on ADB: Over dependence on ADB, instead of independent financial mechanisms.
• Infrastructure Deficit: The absence of cross-border connectivity and up-to-date border operations, which leads to an increase in transaction costs.
• Low Intra-regional Trade: South Asia Intra-regional trade is low (~5%) relative to the ASEAN region (25%).
• Security Issues: Opening up borders poses a threat of human, drug, and arms trafficking that is not yet in the functional scope of SASEC.

India and SASEC

India is an important participant and the biggest economy in the group. According to SASEC status, as of March 2025, the organization has been able to finance 91 investment projects, most of which in India are aimed at the road network improvement and connection of the region. The operation plan of SASEC to enhance connectivity to the northeast and southeast Asia significantly resonates with the Act East policy of India.

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