1 8 th China-South Asia Business Forum: Private Enterprises Going Global Md. Sabur Khan, President Dhaka Chamber of Commerce & Industry (DCCI) Kunming,

1

8th China-South Asia Business Forum:Private Enterprises Going Global

Md. Sabur Khan, PresidentDhaka Chamber of Commerce & Industry (DCCI)

Kunming, China June 7, 2013

2

8th China-South Asia Business Forum (SABF)

China-SABF

an important cooperation platform between Chambers of Commerce and Industry both of China and South Asian Countries.

regional economic cooperation between Chinese and SAARC Industrial and Commercial circles.

3

Importance of China-SABF

• SAARC and China account for approximately one third of the global population.

• SAARC accounts for 4.5% of total global trade.

• China accounts for -----% of total global trade.

• Trade and business between China and SAARC has been increasing day by day.

4

China-SABF Trade &

Investment Relations

5

SAARC Imports from ChinaSAARC Import From China

0

10000

20000

30000

40000

50000

60000

70000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In M

illio

n U

S$

SAARC Import FromChina

Source: IMF Direction of Trade Online Statistics,

YearAmount in Mn US$

2003 7500

2004 12500

2005 17500

2006 24000

2007 36500

2008 45000

2009 42000

2010 58000

6

SAARC Exports to ChinaSAARC Export to China

0

5000

10000

15000

20000

25000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In M

illio

n U

S$

SAARC Export toChina

Source: IMF Direction of Trade Online Statistics,

YearAmount in

Mn US$

2003 5000

2004 8000

2005 1000

2006 12000

2007 15000

2008 21500

2009 15000

2010 23000

7

Investment of China to SAARC

China's Investment to SAARC

0

5001000

1500

20002500

3000

35004000

4500

2008 2009 2010 2011

Million U

S$

China'sInvestment toSAARC

YearMillion

US$

2008 1600

2009 750

2010 2760

2011 4020

Source: www.heritage.org/research/reports/2012

8

Bangladesh-ChinaTrade and Business

Relation

9

Import of Bangladesh from China

Year Amount (Million

US$)

% of Total Import

2010-11 5906 20

2009-10 3790 17.7

2008-09 3418 15.18

2007-08 3136 14.35

2006-07 2572 14.98

Bangladesh Import from China as % of Total Import

0

5

10

15

20

25

2010-11 2009-10 2008-09 2007-08 2006-07

Perc

enta

ge % of Total Import

Source: Bangladesh Bank

10

Export of Bangladesh to China

Year Amount (Million

US$)

% of Total Export

2010-11 319 1.39

2009-10 179 1.10

2008-09 97 0.62

2007-08 107 0.76

2006-07 93 0.76

Bangladesh Export to China as % of Total Export

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2010-11 2009-10 2008-09 2007-08 2006-07

Perc

entag

e % of Total Export

Source: Export Promotion Bureau

11

Exports and Imports share of Major Trade Groups (%)

Year/Trade Groups

APTA ASEAN SAARC EU APEC NAFTA

2006 Exports 11.83 6.35 1.31 37.82 45.07 13.84

Imports 10.52 5.55 1.92 38.21 47.19 20.55

2007 Exports 12.58 6.20 1.33 38.20 44.48 13.27

Imports 10.95 5.45 2.0 38.64 45.69 18.99

2008 Exports 12.81 6.26 1.39 36.65 44.21 12.76

Imports 11.63 5.8 2.31 37.42 45.51 17.69

2009 Exports 14.00 6.5 1.65 36.58 45.05 12.81

Imports 12.77 5.75 2.60 36.56 45.50 17.22

2010 Exports 15.13 6.93 1.80 33.93 47.66 12.93

Imports 14.28 6.20 2.73 34.21 48.26 17.43

Source: UNCTAD Handbook of Statistics-2011

12

Position of BangladeshAmong SAARC

13

Export of Bangladesh to SAARC Countries in 2010-11

Countries Amount in

Mn.US$

Percentage(%)

India 512.50 78.55

Pakistan 86.79 13.30

Sri Lanka 34.73 5.32

Nepal 10.84 1.67

Afghanistan

3.5 0.54

Bhutan 3.12 0.47

Maldives 0.92 0.15

India79%

Pakistan13%

Sri Lanka5%

Nepal2%

Afghanistan1%

Bhutan0%

Maldives0%

India

Pakistan

Sri Lanka

Nepal

Afghanistan

Bhutan

Maldives

Source: Export Promotion Bureau

14

Import of Bangladesh from SAARC Countries in 2010-11

Countries

Amount (Mn. US$)

Percentage (%)

India 4564.14 85.41

Pakistan 670.81 12.55

Nepal 48.46 0.90

Sri Lanka 27.57 0.52

Bhutan 18.58 0.34

Afghanistan

12.62 0.23

Maldives 1.5 0.02

Maldives0%

Bhutan0%

Afghanistan0%

Nepal1%

Sri Lanka1%Pakistan

13%

India85%

India

Pakistan

Sri Lanka

Nepal

Afghanistan

Bhutan

Maldives

Source: Bangladesh Bank

15

Globalization and Private SectorThe tremendous speed and the wide range for moving

real and financial capital made the private business sector consider the whole world as the field for its operations and reorganize its capital and changes its production locations. The private sector is the center of the global economy, while all the other sectors are still far, even though they are connected. This resulted in rapid growth of production and employment in some parts of the world, but on the other hand, it also caused increasing inequalities between countries, and within the countries themselves, and the financial crises of South East Asia, and the collapse of the average standard of living in parts of the ex- Soviet Union and in Sub-Saharan Africa.

16

Driving forces of globalization• Private sector emphasis

increased private sector activity powered by measures such as privatization and tax reduction;

• Public deregulation lowering of government-imposed regulatory barriers which have formerly impeded market entry;

• Technological changes significant reduction of costs to enter international markets and expand respective activities.

17

South Asian Companies Going Global• According to a report published by The Boston Consulting

Group (BCG), more than fifty companies of the Southeast Asia have been rapidly expanding and competing in the Asian and global economy, and throwing a spotlight on a region that has experienced an economic renaissance

• These companies range in size from US$ 500 million to US$ 63 billion in annual sales.

• Among them Malaysia and Indonesia each have 12 companies on the list;

• Singapore and Thailand each have 11 on the list; • The Philippines and Vietnam each have 2 on the list; • 11 Companies from the food and beverage and 8

agricultural-commodity industries are most represented on the list,

• The real estate and construction, transportation and logistics, and utilities industries each represent 4 four companies on the list.

18

While China and India have been receiving most of the headlines over the past ten years, many Southeast Asia companies have been quietly and confidently creating international businesses. The success of the Southeast Asia challengers and the region they represent is one of the world’s best-kept secrets. Southeast Asia is becoming a fast integrated region, with Singapore as the hub of financial and logistics activity and an example to other nations of what they might achieve.

South Asian Companies Going Global

19

Today, the region is on much stronger footing. For example, the capital ratio of banks—a measure of their ability to withstand losses—is much higher today than prior to the Asian financial crisis. Among banks headquartered in emerging markets, Southeast Asia recorded some of the highest total shareholder returns between 2005 and 2010. These structural improvements helped Southeast Asia weather the recent global crisis better than most other regions.

South Asian Companies Going Global

20

Advantages of Private Enterprises Going Global

• Access to new customers and markets• Globalization offers growth

opportunities and a larger growth potential than the domestic market;

• Cost efficiency and competitiveness• Better access to suppliers and materials• Reduce risks• Develop and sell new products and

services

21

Impediments to Internationalization

• Financial factors,• Regulation/bureaucracy,• Language/cultural parameters,• Engineering and technical capability; • Competitive concerns,• Managing Income Tax Implications • Management capability and resources

(difficulty to find the adequate senior management )

• Transport/logistics problems;• Currency problems;• Political risks

22

Way Forward• Internationally minded people should be hired for

globalized business. • Cooperation with an international network might be a

clever idea to improve the quality of the relationship with the global counterparts.

• Information should be gathered about the targeted country

• A collaborative approach to the issues of poverty alleviation and disaster relief, as well as an attempt at promoting a multilateral human resources training program, bilateral infrastructure development and bilateral energy cooperation can be done through the integration of China with South Asian countries and internationalization of private enterprises.

23

• Some measures may be taken to improve China-SAARC trade such as: removal of non-tariff and Para-tariff barriers, the granting of preferential market access to South Asian states and the relocation of labor-intensive industries from China to South Asia.

• Some measures may also be taken to improve investment such as the sharing of information and the exchange of fact-finding missions to uncover potential investment opportunities, investment in infrastructure-building projects and a general increase in investment flows from China to South Asia.

Way Forward, Cont…

24

• SAARC not only lacks the resources to initiate meaningful projects for regional integration and going global but also misses out on a large proportion of the spill-over benefits. China's engagement with SAARC could, therefore, address some of these shortfalls.

• Successful transition from extreme poverty to impressive growth since the beginning of its market reforms in 1978 with the member states of SAARC, China nowadays is viewed as a desirable role model for the collectivity of South Asian states.

• China's reduction of extreme poverty from 40% to 8% of its total population over the last two decades as being 'perhaps one of the wonders of the 21st century‘. So, China may help the region in this respect to reduce poverty level.

Way Forward, Cont…

25

• If SAARC is truly to benefit from, for instance, Chinese investment in regional energy and infrastructure development projects, it must be prepared to take collective action to facilitate such initiatives.

• Involvement of the civil society in policy-making and project development should be highlighted in furthering SAARC's interactions with China. Such efforts could go some way towards countering stagnation in official channels.

• Chamber-to-Chamber relation among these countries should be strengthened.

Concluding Remarks

26

• Most of the SAARC LDCs are suffering from supply side constraints – two important BRIC members, e.g. China and India could join hands to support LDCs.

• An effective study can be commissioned to identify common areas of actions to move forward.

• Secretariat of China-SABF should maintain close cooperation with all leading chambers of SAARC countries so that similar type of useful programs can be done throughout the year.

Concluding Remarks Cont…

27

Thank You Very Much