SARPSCO -- Good for Indian Ocean trade

May 19, 2008

Half of the world's maritime trade is shipped through the Indian Ocean. A new organization comprised of the nine nations that border the Ocean met for the first time to work towards securing their ports. This issue even brought together India and its enemy Pakistan, as well as Bangladesh, Comoros, Madagascar, the Maldives, Mauritius, Oman and Sri Lanka.

The South Asia Regional Port Security Cooperative, (SARPSCO) is especially concerned about potential disruption to oil shipments.The United States attended the launch to pledge its support the new initiative, although it will not be a member. (Source: VOA.com, 9 Indian Ocean Nations Partner in Security Cooperative, May 19, 2008)

What the SARPSCO means:
There have been many criticisms of new Southeast Asian collaboratives, such as ASEAN. The critics say these organizations achieve little because they do not implement resolutions and are underfunded. For example, in 1985 the South Asian Association of Regional Cooperation was launched was formed to protect the Indian Ocean trade, only to collapse due to traditional rivalries between India and Pakistan.

However, India is focused on protecting its trade. In February, it organized an Indian Ocean naval symposium. Furthermore, these countries recognize that, despite their political rivalries, they need to work together to protect common economic interests. The global trend is towards more, not less, cooperation among nations, and SARPSCO is another example of that trend.

Action steps:
This action is good for your emerging market or Southeast Asian funds, and your commodities funds. My general rule of thumb is to have 1/3 of my total net worth in international funds, and 1/3 of that should be in emerging markets. Similarly, I generally have 1/3 of my net worth in hard assets, including commodities funds, REIT's and the equity in my home. Check with your financial planner before making any changes to your asset allocation.

For more information about the asset allocation model that allowed me to retire at age 50, see "Retirement Planning 101."

Related articles:

Growth of Chindia

Like this article? Sign up for your free email newsletter.