Brief Note on BIMSTEC

8/12/2019 Brief Note on BIMSTEC

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International Division

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Regional cooperation is a stepping stone for economic integration within a geographic region. It may be market-

driven integration without any explicit agreement implying that private sector is actively engaged in bringing

convergence among the economies. Economic integration may also be pursued through cooperation agreements

among the countries of the region which are mainly policy induced integration. Many regions across the world are

engaged in comprehensive economic partnership agreements. This paper brings out the characteristics of BIMSTEC

and argues that the BIMSTEC focus area has strong impact on the Asian way of integration.

BIMSTEC

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is an internationalorganization involving a group of countries in South Asia and South East Asia. These are: Bangladesh, India,

Myanmar, Sri Lanka, Thailand, Bhutan and Nepal.

BIMSTEC: Building Br idges between South and South East Asia

BIMSTEC proposal was initiated in 1997 comprising Bangladesh, India, Myanmar, Sri Lanka, and Thailand. Though

stalled by the 1997-98 financial and economic crises, since the holding of the first summit meeting of the member

states in July 2004, BIMSTEC has come a long way to promote the idea of sub-regional cooperation comprising a

region that has enormous untapped potential. This is a unique initiative in the sense its membership consists of

nations from both South and Southeast Asian regions. The first level of convergence in consolidation of liberalization

benefits is expected out of this initiatives understanding that both SAARC and ASEAN are at different levels of

development in general. Later on, Nepal and Bhutan joined the initiative; the name has changed to Bay of Bengal

Initiative for Multi-sectoral Technical and Economic Cooperation. BIMSTEC has a potential to increase the trade

among member countries by taking advantage of their geographical location in the region of the Bay of Bengal and

the Eastern coast of the Indian Ocean.

The uniqueness of BIMSETC is in multi-sectoral approach compared to other Asian blocs. This creates another layerof cooperation to ensure quicker integration. It started with initially with six sectors; viz. trade, technology, energy,

transport, tourism and fisheries. These are extremely important sectors of this sub-region. Later other areas have

also been included such as agriculture, environment, culture, public health, people-to-people contact and counter-

terrorism. Complementarily in sectoral comparative advantage has been identified and proposed to ensure benefits

for other member countries.


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Background

On 6 June 1997, a new sub-regional grouping was formed in Bangkok and given the name BIST-EC (Bangladesh,

India, Sri Lanka, and Thailand Economic Cooperation). Myanmar attended the inaugural June Meeting as an

observer and joined the organization as a full member at a Special Ministerial Meeting held in Bangkok on 22

December 1997, upon which the name of the grouping was changed to BIMST-EC. Nepal was granted observer

status by the second Ministerial Meeting in Dhaka in December 1998. Subsequently, full membership has been

granted to Nepal and Bhutan in 2004.

In the first Summit on 31 July 2004, leaders of the group agreed that the name of the grouping should be known as

BIMSTEC or the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation.

BIMSTEC priority sectors

BIMSTEC has thirteen priority sectors cover all areas of cooperation. Six priority sectors of cooperation were

identified at the 2nd Ministerial Meeting in Dhaka on 19 November 1998. They include the followings:

Trade and Investment, led by Bangladesh Transport and Communication, led by India Energy, led by Myanmar Tourism, led by India Technology, led by Sri Lanka Fisheries, led by Thailand

After the 8th Ministerial Meeting in Dhaka on 1819 December 2005, a number of new areas of cooperation

emerged. The number of priority sectors of cooperation increased from 6 to 13. The 7 new sectors were discussed in

the 1st BIMSTEC Summit and there has been various activities to enhance those co-operations ever since. The

sectors are as follows,

Agriculture, led by Myanmar Public Health, led by Thailand Poverty Alleviation, led by Nepal Counter-Terrorism and Transnational Crime, led by India Environment and Natural Disaster Management, led by India Culture, led by Bhutan People to People contact, led by Thailand


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Chairmanship

BIMSTEC uses the alphabetical order for the Chairmanship. The Chairmanship of BIMSTEC has been taken in

rotation commencing with Bangladesh (19971999), India (2000) Myanmar (20012002), Sri Lanka (20022003),

Thailand (20032005), Bangladesh (20052006). Bhutan asked for the skip. So it's turned to India (20062009). In

November 2009, Myanmar hosted the 12th Ministerial Meeting and assumed BIMSTEC Chairmanship. The 13th

Ministerial Meeting also chaired by Myanmar, which was held in Nay Pyi Taw, Myanmar on 22 January 2011.

Cooperation with Asian Development Bank (ADB)

The ADB has become BIMSTEC's development partner since 2005, to undertake a study which is designed to help

promote and improve transport infrastructure and logistic among the BIMSTEC countries. So far, ADB has already

finished the project so called BIMSTEC Transport Infrastructure and Logistic Study (BTILS). The final report of the

said study from ADB has already been conveyed to all members and being awaited for the feedback. Other fields of

cooperation will be designed later on.

BIMSTEC Centre

At the Sixth BIMSTEC Ministerial Meeting on 8 February 2004 in Phuket, Ministers endorsed the setting up of a

Technical Support Facility (TSF). As reflected in the Ministerial Joint Statement, this Technical Support Facility would

"serve the BIMSTEC Working Group (BWG) and to coordinate BIMSTEC activities, including those of the BIMSTEC

Chamber of Commerce, for a trial period of the two years". The decision by the Ministers was based upon the

recommendation proposed by BIMSTEC Senior Officials who met in Bangkok during 1719 September 2003. On this

particular item, the SOM had with them a draft report prepared by Mr. David Oldfield, an ESCAP consultant, on

Towards Setting up a BIMSTEC Technical Support Facility and Permanent Secretariat: Considerations and

Options. The report recommended that a TSF should be set up in Bangkok and would initially serve just the BWG

during the trial period of 2 years.

Since the Establishment of the Permanent Secretariat is awaited to consider in the 2nd Summit, which was held on

1213 November 2008 in India, Thailand had already extended the contract of the BIMSTEC.

BIMSTEC Free Trade Area Framework Agreement


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BIMSTEC member countries agreed to establish the BIMSTEC Free Trade Area Framework Agreement in order to

stimulate trade and investment in the parties, and attract outsiders to trade with and invest in BIMSTEC at a higher

level. All members, except Bangladesh because of domestic procedure, became signatories to the Framework

Agreement in the 6th Ministerial Meeting, as witnessed by the Prime Minister of Thailand and BIMSTECs Foreign

Ministers.

Bangladesh later joined the Framework Agreement on 25 June 2004. The Trade Negotiating Committee (TNC) was

set up and had its 1st Meeting in Bangkok on 78 September 2004. As stated in the adopted Terms of Reference,

Thailand would be the permanent chair of TNC although the host country shall be rotated. The chair and each

countrys chief negotiator act as TNCs spokespersons, while TNCs chairperson will report the result via STEOM to

the Trade and Economic Ministerial Meeting. TNCs negotiation area covers trade in goods and services, investment,

economic cooperation, as well as trade facilitations and also technical assistance for LDCs in BIMSTEC. It was

agreed that once negotiation on trade in goods is completed, the TNC would then proceed with negotiation on trade

in services and investment.

Policy Making Body

BIMSTEC Summit:

Summit is the highest policy making and decision making body which is comprised of head of State or head of

government level delegation from member states.

Ministerial Meetings (MM):

Ministerial Meeting is divided into the area of foreign affairs (MM) and the area of trade and economic affairs

(TEMM). While the Foreign Ministerial Meeting acts as prime mover determining the overall policy as well as

recommendations for the Leaders' Summit, Trade and Economic Ministerial Meeting monitors the progress in the

Trade and Investment Sector as well as FTA policy.

Operational Body: Senior Officials' Meeting (SOM)

Senior Officials Meeting (SOM) is divided into the area of foreign affairs and the area of trade and economic affairs

(Senior Trade /Economic Officials Meeting - STEOM). Permanent secretaries of the foreign affairs and that of trade

and economic affairs will be the delegations to their respective forum. Senior Officials' Meetings (SOM) is assigned


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to monitor progress of the remaining sectors, which will be reported by the BWG, then forward to the Foreign

Ministerial Meeting.

Senior Trade/ Economic Officials' Meetings (STEOM):

Tasks belonging to the STEOM are the negotiation of the BIMSTEC FTA, cooperation in the Trade and Investment

Sector and its 15 sub-sectors, which are to be reported to the Trade and Economic Ministerial Meeting.

BIMSTEC Working Group

BIMSTEC Working Group in Bangkok is attended by the Director-General or Deputy Director-General of the

Department of International Economic Affairs of Thailand and the Ambassadors of BIMSTEC member countries to

Thailand or their representatives, as well as representatives from other concerned agencies. The meeting takes

place monthly at the Ministry of Foreign Affairs to follow up and push forward progress in each cooperation sector, as

well as to study prospects and policies of cooperation before reporting to the SOM. In this connection, the BIMSTEC

Center has been established in Bangkok since June 2004 to support works the BIMSTEC Working Group.

Joint Working Group

Joint Working Group would be formed to cover many thematic issues as identified in the areas of cooperation.

Director-General and experts from the member states on the subject matter take part in the JWG meeting.


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BANGLADESH

Geographic coordinates: 24 00 N, 90 00 E

Area:

total: 143,998 sq km

country comparison to the world: 95

land: 130,168 sq km

Land boundaries: total: 4,246 km

GDP (purchasing power parity):

$305.5 billion (2012 est.)


$288.1 billion (2011 est.)

$270.5 billion (2010 est.)

GDP (official exchange rate): $118.7 billion (2012 est.)

GDP - real growth rate:

6.1% (2012 est.)


6.5% (2011 est.)

6.4% (2010 est.

GDP - per capita (PPP):

$2,000 (2012 est.)


$1,900 (2011 est.)

$1,800 (2010 est.)

GDP - composition by sector:

agriculture: 17.3%

industry: 28.6%


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Services: 54.1% (2012 est.)

In real terms Bangladesh's economy has grown 5.8% per year since 1996. Although more than half of GDP is

generated through the service sector, 45% of Bangladeshis are employed in the agriculture sector with rice as the

single-most-important product. Bangladesh's growth was resilient during the 2008-09 global financial crisis and

recession. Garment exports, totaling $12.3 billion in FY09 and remittances from overseas Bangladeshis, totaling $11

billion in FY10, accounted for almost 12% of GDP.

The country's economy is based on agriculture. Rice, jute, tea, wheat, sugarcane, and tobacco are the chief crops.Bangladesh is the world's largest producer of jute. Fishing is also an important economic activity, and beef, dairy

products, and poultry are also produced. Except for natural gas (found along its eastern border), limited quantities of

oil (in the Bay of Bengal), coal, and some uranium, Bangladesh possesses few minerals.

Dhaka and Chittagong (the country's chief port) are the principal industrial centers; clothing and cotton textiles, jute

products, newsprint, and chemical fertilizers are manufactured, and tea is processed. In addition to clothing, jute, and

jute products, exports include tea, leather, fish, and shrimp

Economy of Bangladesh

The economy of Bangladesh is a rapidly developing market-based economy. According to the International Monetary

Fund, Bangladesh ranked as the 44th largest economy in the world in 2012 in PPP terms and 57th largest in nominal

terms, among the Next Eleven or N-11 of Goldman Sachs and D-8 economies, with a gross domestic product of

US$306 billion in PPP terms and US$153.6 billion in nominal terms. The economy has grown at the rate of 6-7% per

annum over the past few years. More than half of the GDP is generated by the service sector; while nearly half of

Bangladeshis are employed in the agriculture sector. Other goods produced are textiles, jute, fish, vegetables, fruit,

leather and leather goods, ceramics, ready-made good.

Selected Economic Indicato rs (%) - Bangladesh 2013 2014

GDP growth 5.7 6.0

Inflation 7.8 7.0


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Source: ADB estimates.

Economic forecasts for FY2013 and FY2014 rest on four assumptions. First, the central banks slight easing in

monetary policy announced in January 2013 will not stoke inflation, given the declining trend in international

commodity prices and a favorable domestic crop outlook. Second, the Government of Bangladesh will contain

subsidies by continuing to raise fuel and electricity prices and thus keep in check its need for bank borrowing. Third,

though political activity is expected to be volatile, social stability will be maintained. And, finally, weather will be

favorable. Principal Cropsof Bangladesh are Rice, wheat, jute, cotton, tea, tobacco, sugarcane, pulses, oil seeds,

spices, potatoes, green vegetables, banana, mango, coconut.

GDP growth is projected to edge lower in FY2013 to 5.7%. Export demand, a major contributor to GDP growth in

Bangladesh, is expected to slacken slightly, reflecting the Asian Development Outlook's baseline assumptions that

the euro area economy stagnates and the recovery of the United States remains frail. Despite higher remittances,

growth in demand for private consumption is expected to weaken as households adopt a cautious approach to

spending because of political uncertainties ahead of parliamentary elections expected by early 2014. GDP growth is

projected to recover moderately to 6.0% in that year on the back of gradual rises in exports, consumer spending, andinvestment.

Potential Sectors of Growth in Bangladesh

Bangladesh, traditionally known for jute and tea exports, has recently attracted worldwide attention for readymade

garments and leather exports. Bangladesh foresees an expansion of her agricultural sector, as well as increased

diversity in nontraditional industries and business. Below is a short account of a few potential investment areas.

Textile

Bangladesh is a land of nearly 112 million people with annual per capita income of US$ 386. Clothing being the

second basic need there exists a vast market for textile products in this country.

The readymade garments (RMG.) is the manufacturing success story in Bangladesh which exported total USD 19

billion worth of textile products which was around 6.5% of the USD 300 billion global market in 2012-13. Only knit

fabric for the knitted garments and hosiery are domestically produced. But the predominant raw materials for

readymade garments are woven fabrics, most of which are now imported. Due to lack of quality woven fabrics

Current account balance

(share of GDP) 2.0 1.0


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required by buyers, the readymade garments sector in Bangladesh. Currently 240 readymade garments units spend

approximately 65% of their export earnings on import of fabrics. It is estimated that in order to meet the demand gap

by the year 2015 additional investment in 256 spinning mills (each having 35000 spindles), 571 weaving mills (each

having 500 shuttles or 320 shuttles looms) and 671 dyeing, printing and finishing units (each having production

capacity of 10 million meters annually) will be required to setup.

Leather goods

There is already a substantial domestic leather industry, mostly export-oriented. The leather includes some

readymade garments, although that, aspect is confined mainly to a small export-trade in 'Italian made' garments for

the US market. Footwear is more important in terms of value added, accounting for over US$ 40 million exports in FY

2001-02. The figure rose at US$ 220 million in FY 2010-11. This is the fastest growing sector for leather products.

Bangladesh produces between 2 and 3 percent of the world's leather market. Most of the livestock base for this

production is domestic which is estimated as comprising 1.8 percent of the world's cattle stock and 3.7 percent of the

goat stock. The hides and skins (average annual output is 150 million sq.ft.) have a good international reputation.

Foreign direct investment in this sector along with the production of tanning chemicals appears to be highly

rewarding.

Having the basic raw materials for leather goods as well as for the production of leather shoe, a large pool of cheap

but trainable labor force together with tariff concession facility to major importing countries under GSP coverage

Bangladesh can be a potential off shore location for leather and leather products manufacturing with low cost but

high quality.

Frozen food

The frozen fish export sector is the second largest export sector of the country with annual turnover of US$ 27.02

billion in 2012-13. The average annual growth rate is 20%. This 100% export oriented industry includes the following

sub-sectors which need proper attention for augmentation of production and export earning. Hatcheries-sustainable

aqua-culture technology-feed meals plants-processing unit for value added products. Foreign investment with

technology in this potential sector has been recognized as most viable areas in Bangladesh. This sector has various

incentives for foreign investment/joint venture in one of the above mentioned areas or may be under a composite

project with potential high return.


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Jute goods

Bangladesh is one of the leading producers of jute in the world. At present the annual production is 890,000 MT. In

2012-13, Bangladesh exported raw jute and jute goods worth US$ 611 million in the form of sacking hessian, carpet

& carpet backing cloth, jute yarn/twine etc. This is one of the very prospective areas for investment with higher

technology.

Oil and Gas

Bangladesh has an estimated gas reserve of about 23 TCF. Out of this about 14 TCF is considered recoverable. So

far 57 wells have been drilled in 19 discovered gas fields and present production is about 280 BCF per annum. The

government of Bangladesh has decided that future exploration for oil and gas will be done through the private sector

to the maximum extent possible. With this end in view the first round of bidding took place in 1993 and 4 companies

eventually signed Production Sharing Contracts (PSCS) with Rexwood Okland, United Meridiam and Occidental.

Coal

Besides Oil and gas a contract has been signed to extract coal from Barapukuria coal mine in Dinajpur district with a

Chineses consortium designed to extract 1.0 million MT coal a year. Another contract has been signed with a North

Korean company for the extraction of 1.6 million MT hard rock per year at Madhyapara in the same district

Power

Bangladesh is still at a low level of electrification with only 46.5% of it population having access to electricity and per

capita generation is only 136 KW per annum. Hence, there is a great need and urgency to expand the electrification

programs. The government of Bangladesh has attached priority for the development of the power sector. The present

installed generation capacity is 8525MW. But the available generation capacity is about 8500 MW due to old age of

few power plants. The route length of transmission line is 3500 Km, the total length of distribution network is 1,28,000

KM and the number of consumers is 35,00,000 at present.

Bangladesh has amended its Industrial Policy and the power sector is open to private investment. The government

has approved the Private Sector Power Generation. Policy of Bangladesh to attract private investment in power

generation. Under the policy, the private power companies shall be exempted from corporate income tax for a period

of 15 years and the companies will be allowed to import plant and equipment without payment of custom duties and

VAT.Because of the favorable conditions for private investment a large number of Independent power producers

(IPPs) have shown interests for setting up power plants in Bangladesh. A Rural Power Plant is being implemented by


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RPC at Mymensingh. A Rural Power Company (RPC) has been created A 60 MW Gas Turbine Power Plant is being

implemented by RPC at Mymensingh. Contracts with four IPPs selected through competitive bidding have already

been negotiated and are expected to be signed shortly. Bids received for setting up a 360 MW combined cycle power

plant at Haripur and 450 MW combined cycle power plant at Meghna Ghat in the private sector are being evaluated.

There is need for more private investment in power generation to meet the increasing demand in future.

The government of Bangadesh has undertaken some reform measures with a view to achieving operational and

management efficiency and commercial characteristics in the power sector. Power Grid Company of Bangladesh

(PGCB) has been created. Initially PGCB will own the transmission lines associated with Meghna Ghat Power

Project. Ultimately it will take over the entire transmission system of the country. Dhaka Electric Supply Company

(DESCO) has been created to manage the distribution area of Mirpur. DESCO will eventually take over the entire

distribution responsibilities of Dhaka metropolitan city area.

Telecommunication

The recent revolution in information technology has opened up a new area for private investment in the

telecommunication sector. Previously in the public sector. this has now been opened up for private investment.

Bangladesh Telegraph and Telephone Board (BTTB) is developing communication facilities with modern technology,

Communications with the outside world are also being developed. Private sector operations in the rural

telecommunications, paging, cellular telephones and reverine radio trucking have already been allowed. BTTB has

already started providing VSAT (Very Small Aperture Terminals) facilities to the private sector. In the meantime two

private companies have been given license for providing telecommunication, till now they have covered 221 upa-

zillas. So far licenses have been issued to four private operators for cellular or mobile telephone services in the

country.

Tourism

With growing international interest in travelling through Asia tourism is taking roots in Bangladesh. Bangladesh offers

a variety of historically significant and culturally unique sites for tourists. Sylhet's tea gardens, Cox's Bazar sea-

beach, the Royal Bengal Tiger, Deer and the Sundarbans, the largest mangrove forest in the world with unique bio-

diversity offer tourist attractions. Ancient mosques, Buddhist monasteries, Hindu temples, monuments and other

landmarks dot the countryside. Additional hotel and resort facilities could be created for attracting tourists from home

and abroad. Dhaka and Chittagong also have an unmet demand for additional hotel rooms, restaurants,

entertainment and recreational facilities.


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Agricu lture

Raw jute, tea, tobacco, vegetables, spices and tropical fruits are the key potential products. Agiculture is the biggest

private sector operation contributing 35% of GDP. The government has gradually removed the contsraints imposed

by state intervention deregulated and liberalised the markets to allow further private participation particularly in the

supply of imputs and distribution of outpus. The govenment has drastically rediced duties and taxes on a rage of

agriculture imputs. Fertizer is exempted from customs duties and VAT.Bangladesh continues to grow about 2 percent

of the world's tea in some 150 plantations on the North-East region of Sylhet. Tropical fruits and vegetables are

grown seasonlly and have recently begun to be exported in various forms. Tobacco farming is also well established.

Agro based industr ies

Bangladesh has the basic attributes for successful agro based industries, namely, rich alluvial soil, a year-round frost

free environment, an adequate water supply and an abundance of cheap labour. Increased cultivation of vegetables,

spices and tropical fruits now grown in Bangladesh could supply raw materials to local agro processing industries for

both domestic and export markets. Progressive agricultural practices, improved marketing techniques and modern

processing facilities would enable the agro processing industry to improve its quality and expand production levels

significantly. Computer software development, data entry & data processing. Availability of substantial number of

unemployed qualified young people in various branches of engineering, science and technologies have opened up

the scope of profitable investment in these sectors. Comparatively short training period and low investment have

made such ventures highly profitable.

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BHUTAN


Area: total: 38,394 sq km


land: 38,394 sq km

water: 0 sq km

Natural resources: timber, hydropower, gypsum, calcium carbonate

GDP (purchasing power parity): $5.036 billion (2012 est.)


$4.591 billion (2011 est.)

$4.23 billion (2010 est.)


GDP - real growth rate: 9.7% (2012 est.)


8.5% (2011 est.)

11.7% (2010 est.)

GDP - per capita (PPP): $6,800 (2012 est.)


$6,200 (2011 est.)

$5,800 (2010 est.)

GDP - composition, by sector of origin: agriculture: 16.7%

industry: 45.4%

services: 37.9% (2011 est.)

GDP - composition, by end use: household consumption: 36.3%


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government consumption: 22.5%

investment in fixed capital: 63.6%

investment in inventories: 0%

exports of goods and services: 37.4%

imports of goods and services: -59.9%

Bhutan's economy is based on agriculture and forestry, which provide the main livelihood for more than 40% of the

population. Agriculture consists largely of subsistence farming and animal husbandry. The economy is closely

aligned with India's through strong trade and monetary links. Model education, social, and environment programs

are underway with support from multilateral development organizations. Each economic program takes into account

the governments desire to protect the country's environment and cultural traditions.

The 2010 FDI Policy of Bhutan is more liberal than the earlier one. It allows foreign investors 100 percent equity in

many of the priority activities in the service sector. In other priority sectors foreign investors are allowed to hold up to

74 percent equity. In keeping with the policy of promoting only high end tourism in Bhutan, they encourage

investment in hotels and resorts that are rated five stars and above. 100 percent equity is allowed for investment in

these high end facilities. The equity ceiling for 4 star hotels is 74 percent. On the other hand, 3 star hotels and below

fall in the negative list of our FDI Policy and building such facilities are discouraged.

They believe that the peace and political stability in the country against the backdrop of a pristine natural environment

with clean, fresh air makes Bhutan an ideal place to establish high quality educational institutions as well as high end

hospitals and wellness centers. Accordingly, investors are allowed up to 100 percent equity in establishing high

quality schools and colleges. Investors can also hold 100 percent equity in establishing specialized medical services.

Investors are also welcome to build industrial estates, knowledge cities, special economic zones, IT parks, dry ports,

outdoor sports and recreation centers like golf courses and sports cities with up to 100 percent equity on a public-

private partnership model.

Investment in activities where foreign equity is allowed up to 74 percent include construction services, waste

management services, recycling of domestic waste, water supply and management, urban water treatment and

supply and consultancy services. Investment in agro based production such as organic farms, agro processing,

poultry, fisheries, floriculture, health food, dairy and horticulture are also encouraged with up to 74 percent foreign


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equity holding. 74 percent foreign equity is also allowed in manufacturing activities such as electronics, computer

hardware and building materials. While Bhutans population is too small to be a significant market, there are several

advantages for those who are interested in exploring business opportunities in my country. Goods manufactured and

produced in Bhutan will have easy access to the large Indian market and through India to other neighbouring

countries and beyond. We enjoy peace and political stability and our natural environment is largely unspoiled. English

is spoken widely. Infrastructure is improving and there is reliable power supply at a very good price compared to

anywhere else in the world. For Indian investors, there is also the additional incentive

Economic performance

Economic growth moderated to 7.5% in fiscal year 2012 (ended 30 June 2012) from 10.0% a year earlier. The

slowdown reflected credit measures taken by the Royal Monetary Authority (RMA) to curb Bhutan's escalating

balance of payments deficit with India and alleviate the rupee liquidity crunch. Both general and specific credit

restrictions were implemented to constrain imports that are a large component of consumer and investment

spending. Reflecting the measures, growth in consumption, which accounts for about three-fifths of gross domestic

product (GDP), slowed to 7.8% in FY2012 from 10.0% in FY2011.

Selected Economic Indicato rs (%) - Bhutan 2013 2014

GDP growth 8.6 8.5

Inflation 9.3 7.4


(share of GDP)-20.0 -20.0


Growth is expected to recover in FY2013 and reach 8.6%, driven mainly by hydropower and tourism. The

contribution of the service sector to growth is expected to improve as the government develops the Bhutans tourismpotential. As this trend is likely to continue, 8.5% growth is expected in FY2014.

Potential Sectors of Growth in Bhutan

Bhutan has a competitive advantage to investors for the India companies to invest in Bhutan. Political and economic

stability, peace and security, and zero tolerance to corruption are some of the advantage investors can enjoy in


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Bhutan. Education, health, tourism and hospitality, IT and financial services are some of the sectors investors can

invest.

There is immense scope to further deepen the level of economic cooperation at the business-to-business level as

well as in partnership with the government to participate meaningfully in the industrialization process of Bhutan and to

reap mutual benefits, said the Prime Minister.

About 4/5th of imports into Bhutan are from India and India is engaged meaningfully in the energy sector but the

enormous hydel potential of Bhutan to the tune of 33,000 mega watt (MW) of which about 1,400 MW has been

harnessed and whatever more India do their in the sector that will actually change the numbers when it comes to

trade with more power getting exported to India and connecting to our grids and that would bring in a very healthy

economic partnership.

Information technology (IT) ITeS (information technology enabled services), Manufacturing, Engineering for infrastructure development, Hydropower

Are certain areas where Bhutan can further take the engagement for benefit and shared prosperity of people

Bhutan is extremely keen to attract more investments from India and they have made FDI (foreign direct investment)

regulations more conducive to Indian investors by permitting investment in Indian rupees and by allowing them for

majority shareholding.

The Kingdom of Bhutan, a tiny Himalayan nation with a population of just under 800,000, has long remained isolated

from global trade and foreign investment. Although Bhutans economy is one of the worlds smallest, it posted 9.9%

GDP growth in 2012 and is forecasted by the IMF to achieve 13.5% GDP growth in 2013. This economic expansion

is being driven by Bhutans sizeable hydropower potential, agriculture and forestry products, and tourism appeal. The

country has also pioneered the concept of Gross National Happiness and has taken measures to ensure that its

economic development aligns with its goals for environmental conservation, social well-being, and educational

attainment. With duty-free access to the vast Indian market and comparatively cheap energy costs, Bhutan is a

compelling frontier economy with a unique focus on sustainability.


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Hydropower Potentialo Prioritized in Bhutans Five-Year Plan, hydropower exports to India have steadily growno Hydropower generates over half of the governments annual revenues and accounts for 12% of

GDP

o Current installed capacity is only 6% of Bhutans total potential hydropower capacity Duty-Free Access to India

o Bhutan is surrounded on three sides by India, with 190 million people living near its southernborder

o Treaty of Friendship allows free trade between India and Bhutan and duty-free exports to theIndian market

o History of close bilateral economic, political, and military ties Advantageous Location & Geography

o Bordered by India, one of the worlds economic engines and a key trade partnero Growing regional trade ties with Bangladesh, Hong Kong, Japano Extensive hydropower potential; movement to brand Bhutan as an organic producero 71% of the country has forest cover; opportunities to export medicinal plants, oils, and nuts

At tract ive Dest ination fo r High-End Tourism o Bhutans tourism policy of low volume, high quality attracts well-heeled travelerso Average tourist spending is $1,300 versus the world average of $982o Prime destination for groups focusing on ecological, cultural, and religious attractionso Government aims to attract 100,000 tourists by 2013; opportunities for boutique hotels and eco-

lodges

Favorable Policies towards Foreign Investmento Liberal foreign ownership laws; 10-year corporate tax-holiday for exporterso Repatriation of invested capital and capital gainso Historic lack of FDI; government is eager to attract investment in priority industries


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Myanmar


Area:



land: 653,508 sq km



$89.23 billion (2012 est.)


$84.02 billion (2011 est.)

$79.67 billion (2010 est.)



7.6% (2013 est)

6.2% (2012 est.)


5.5% (2011 est.)

5.3% (2010 est.)


$1,400 (2012 est.)


$1,300 (2011 est.)

$1,300 (2010 est.)


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agriculture: 38.8%

industry: 19.3%


Burma is a resource-rich country and has initiated notable economic reforms. In October 2011, 11 private banks were

allowed to trade foreign currency. On April 2, 2012, Burma's multiple exchange rates were abolished and the Central

Bank of Myanmar established a managed float of the Burmese kyat. In November 2012, President THEIN SEIN

signed a new Foreign Investment Law. Despite these reforms, the Burmese government has not yet embarked on

broad-based macro-economic reforms or addressed key impediments to economic development such as Burma's

opaque revenue collection system. Key benchmarks of economic progress would include steps to ensure the

independence of the Central Bank, provide budget allocation for social services, and enact laws to protect intellectual

and real property. The most productive sectors will continue to be in extractive industries - especially oil and gas,

mining, and timber - with the latter two causing significant environmental degradation. In July 2012, as a result of

reforms undertaken by President THEIN SEIN and his nominally civilian government, the US broadly eased

restrictions on new investment in and the export of financial services to Burma. In November 2012, the US eased the

import bank on Burmese products to the US with the exception of jadeite and rubies. Although the Burmese

government has good economic relations with its neighbors, significant improvements in economic governance, the

business climate, and the political situation are needed to promote serious foreign investment. Natural gas, Jade,

Timber, Pulses & Beans Marine products, Raw Rubber, Garment, Rice. Main Imports: Petroleum products,

Machinery, Iron & Steel, Plastic raw, Palm oil, Vehicles & spares, Pharmaceuticals, Cement, Fertilizer.


Growth in Myanmar's gross domestic product (GDP) quickened to an estimated 6.3% in fiscal year 2012 (ended 31

March 2013) compared with an average of 5% in the previous 5 years. The pickup reflects business optimism buoyed

by the governments steps since 2011 to liberalize the economy and prospects for further reform. A modest

slowdown in agricultural growth in FY2012, partly reflecting floods in August 2012, was more than offset by increases

in industrial output and services.


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(Official national accounts data are available only on an annual basis with a 2-year lag and they show considerably

higher rates of GDP growth, which are inconsistent with correlates of growth such as energy use.)

Selected Economic Indicators (%) - Myanmar 2013 2014

GDP growth 6.5 6.7

Inflation 5.1 5.1




( US $ in million )

Sr. Existing Enterprises

Particulars No. Approved %

No. Amount

1 Oil and Gas 64 13665.028 41.54

2 Power 5 13207.921 40.15

3 Mining 9 2304.496 7.00

4 Hotel and Tourism 32 1335.475 4.06

5 Manufacturing 166 1528.472 4.65

6 Real Estate 7 275.000 0.84

7 Industrial Estate 2 179.113 0.54

8 Agriculture 7 156.670 0.48

9 Transport & Communication 7 137.676 0.42


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10 Livestock & Fisheries 8 87.712 0.27

11 Other Services 9 22.127 0.07

Total 316 32899.690 100.00

Economic prospects

Economic growth is forecast to rise gradually to 6.5% in FY2013 and 6.7% in FY2014. Projections assume the

government will maintain momentum on policy reform over the medium term.

Growth will get a lift from the European Unions proposed reinstatement of preferential access for Myanmars exports

under the Generalized System of Preferences and the United States suspension of its ban on imports from


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Myanmar. Two large gas fields, Shwe and Zawtika, are expected to come online in FY2013, more than doubling gas

production and raising exports to the People's Republic of China (PRC) and Thailand. Higher gas exports, greater

access to international markets, and faster economic growth in key markets such as the PRC will support growth in

exports. Visitor arrivals are likely to post further large gains.

Potential Sectors in Myanmar

Livestock and Fishery

a long sea coastline of 2,832 kilometers associated with 229,000 square kilometers of continental shelf and 486,000

square kilometers of exclusive economic zone potential in fresh water fisheries.

Fishing right is not granted to foreign investors Foreign investors are allowed for breeding in livestock and fisheries

sector such as freshwater fisheries and marine fisheries production of value added products together with ice plant,

processing plant and cold storage are allowed either in the form of hundred percent foreign- owned or joint venture

Production of animal feed products. Value-added marine products industries are very promising.

Forestry

Very rich in forest. Myanmar teak is highly reputable in the world market. It has a large variety of timber species with

some lesser known species. Production of value added wood based products is a prosperous business area for

investment

Mining

Rich in mineral resources such as copper, gold, lead, zinc, silver, tin and tungsten, antimony, chromium and nickel.

Energy Business

Rich natural energy resources. Abundant hydropower potential. FDI welcome from South Asian countries for energy

cooperation. Private companies to invest in offshore and onshore oil and gas exploration projects.

Hydropower projects

Several power plants are under implementation which respectively are located in Mandalay, Magway, Bago divisions,

and Rakhine state as well as Chindwin river valley.

Location


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Myanmar is the largest country on mainland Southeast Asia, sharing borders with Bangladesh, India, China,Laos and Thailand

Strategically located as the gateway to a potential market of 2 billion consumers, Myanmar links SoutheastAsia, China and the Indian sub-continent

Existing well-established trade channels link Myanmar to China, Singapore, Japan, Thailand, Malaysia andIndia and further regional links are being developed

Myanmar has a long coastline, with access to major Indian Ocean shipping lanes. It is developing newdeep-sea ports to take advantage of this. Ports development is being integrated with the enhancement ofregional trade corridors

Natural resources endowment

Much of Myanmar's economic development will be the result of the country's stock of natural resources Substantial reserves of relatively untapped natural resources exist, including petroleum, timber, tin, zinc,

coal, lead, marble, natural gas, hydropower and precious gems, such as rubies and jade


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NEPAL


Area:



land: 143,351 sq km



$40.49 billion (2012 est.)


$38.7 billion (2011 est.)

$37.25 billion (2010 est.)



4.6% (2012 est.)


3.9% (2011 est.)

4.8% (2010 est.)


$1,300 (2012 est.)


$1,300 (2011 est.)

$1,200 (2010 est.)


agriculture: 38.1%

industry: 15.3%


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In Nepal agriculture is the mainstay of the economy, providing a livelihood for three-fourths of the population and

accounting for a little over one-third of GDP. Industrial activity mainly involves the processing of agricultural products,

including pulses, jute, sugarcane, tobacco, and grain. Nepal has considerable scope for exploiting its potential in

hydropower, with an estimated 42,000 MW of feasible capacity. The economic structure of Nepal is also changing

gradually with a decreasing trend of contribution of agriculture and industry to the GDP while that of services sector

increasing. In 2012, agriculture accounted for 35.3%, services 50.3%, and industry 14.4% of Nepal's GDP.

Agriculture employs 76% of the workforce, services 18% and manufacturing/craft-based industry 6%.

Nepal's largest trading partner is India. The share of exports and imports of Nepal with India is very high. According

to Nepal Rastra Bank data in Fiscal Year 2010/11, share of Nepals trade with India is 67.5% of total trade while

share with other countries is 32.5%. Share of total Exports of Nepal to India is 66.9% and to other countries is 33.1%.

Likewise, the share of total Imports from India is 67.6% and from other countries is 32.4%.

Nepals Top 20 Exports and Imports Partner countries are the following:

Exports: India, USA, Bangladesh, Germany, China P.R., UK, France, Italy, Canada, UAE, Japan,Singapore, Turkey, Australia, Belgium, Hong Kong, Switzerland, Netherlands, Denmark, Spain.

Imports: India, China P.R., Saudi Arabia, Indonesia, Singapore, Thailand, UK, Argentina, Japan, Malaysia,USA, UAE, Korea R, France, Australia, Germany, Ukraine, Switzerland Taiwan, Hong Kong.

Nepalese export of major commodities to India are Textiles, Thread, Cardamom, Noodles, Polyster yarn, Juice, Zinc

sheet, Jute goods, M.S.pipe, Copper wire, tooth paste, Catechu, Herbs etc. Export of major commodities to other

countries are Pulses, Cardamom(large), Medicinal Herbs, Woollen goods, Nepalese paper, Carpets, readymade

Garments, Handicrafts, Ornaments and pashmina.

Import of selected commodities from India are Petroleum Products, Transport Equipments, M.S. Billet, Medicine,

Cement, Agricultural Spare Parts, Other Machinery Spare parts, Hot and Cold Roll sheet, M.S. ware Rod etc.

Likewise imports of selected commodities from other Countries are Gold, Electrical goods, Medicine, Transportation

equipments, Computer parts, Telecommunication accessories, Crude palm and Soybeans oil, Cloths, Aeroplane

spare parts etc.


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Gross domestic product (GDP) rebounded to 4.6% in fiscal year 2012 (ended 15 July 2012), boosted by a favorable

monsoon and robust services growth despite a slowdown in industry and lingering political uncertainties. Agricultural

output grew by 4.9%, the highest rate in 4 years, while the 5.1% advance in services reflected a pickup in tourism

and remittances-backed consumer spending.

Selected Economic Indicato rs (%) - Nepal 2013 2014

GDP growth 3.5 4.2

Inflation 10.5 9.0




Economic prospects

The economic outlook for Nepal hinges on how political uncertainties are resolved, the weather, and remittance

inflows. Investor confidence is depressed by concerns over the political transition, now in its fifth year, following the

dissolution in May 2012 of the Constituent Assembly, which failed to agree on a constitution. Recently, the political

parties agreed to form a caretaker government led by the Chief Justice.

In view of the unfavorable monsoon, the lack of a parliamentary-approved full budget, and subdued growth in India,

GDP is projected to slow to 3.5% in FY2013. Production of paddy is projected to fall by 11.3%, maize by 8%, and

millet by 2%. While the industry sector performance is expected to remain weak, services growth is expected to

continue to grow at around 5.4%. With a favorable monsoon, adequate fertilizer supplies, the timely adoption of a

budget, and moderate expansion of remittances, GDP growth would rebound to 4.2% in FY2014.

Potential Sector in Nepal

Sectors

Nepal has has great potential for investment, and the country is pursuing a liberal Foreign Direct Investment (FDI)

policy to create an investment-friendly environment to attract FDI. The major areas of investment include

hydropower, manufacturing, services, tourism, construction, agriculture, and mineral and mining.


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Hydropower

Nepal has the capacity to generate 83,000 MW of hydroelectricity, of which about 43,000 MW is techno-economically

feasible. At the end of 2011, only about 700 MW was generated from hydropower projects. Of that total, 174.53 MW

(24.9%) was generated through private investment. Nepalese industries and consumers suffer from huge power cuts

each year. The annual domestic energy demand is estimated at 4,833.35 GW, of which 3,850.87 GW is generated

from various sources and the remaining 982.48 GW is cut as load shedding. Nepal is unable to meet the demand,

and approximately 694.05 GW is imported from India annually.

The Government of Nepal (GON) has already declared a national power crisis. So far, the Nepal Electricity Authority

(NEA) has signed Power Purchasing Agreements (PPAs) worth 714.77 MW during 2011, which is almost double the

total capacity of power purchase agreements signed in the past. The total capacity of PPAs signed has reached

1118.35 MW

Tourism

Nepal's abundance of natural resources, diverse culture and ethnicity, numerous archaeological and heritage sites,

and diverse topography, including eight of the worlds ten highest peaks (including Mt. Everest), are some of the

attractions for potential investment.

World heritage sites such as Lumbini (the birth place of Buddha), Chitwan National Park, Sagarmatha National Park,

Pashupatinath, Swayambhunath, Bouddhanath, Changu Narayan, Kathmandu Durbar Square, Bhaktapur DurbarSquare, and Patan Durbar Square are attractions to tourists worldwide.

Nepal offers a variety of interests to tourists, ranging from cultural tourism, nature/eco-tourism, adventure tourism,

health and education tourism and religious tourism. The Himalayas, foot trails, rafting, paragliding, fauna, religious

sites, eco-tourism and biodiversity are potential areas for investment.

Industrial Manufacturing

The GON has promulgated a new Industrial Policy 2010 to develop the industrial sector and to provide protection and

facilities to investors. Similarly, the draft of a Foreign Investment Policy has been prepared. Industrialization isconsidered one of the most vital indicators of economic growth and prosperity of the nation. Therefore, the GON is

committed to supporing industrialization by establishing industries based on agriculture and local resources in rural

sector, and establishing and developing industrial zones in urban areas.

Steelrolling mills, cement, cigarettes, jute, sugar, tea, beer, carpets, garments, textiles, oilseed mills, and food mills

are some of the most viable areas for investment in manufacturing and production industries in Nepal.

Agricu lture


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Agriculture isthe mainstay of the Nepalese economy, contributing approximately one-third of total GDP. A total of

74% of the total population still depends on agriculture for their subsistence. However, the growth rate of agriculture

has not been encouraging, due to low investment both by the GON and the farmers themselves.

Nepal has great potential in tea, ginger, cardamom, and sugarcane production, which have high demand in the

international market. Rice, wheat, and maize are the main food crops, and mustard, soybean and sunflower are the

major oilseeds. Potato, lentil, tobacco and jute are the major cash crops, which have high demand in local market.

The Terai, Hills, and Mountains are suitable for various types of agriculture. There is considerable scope for

commercial farming, tea, cardamom, coffee, honey, and ginger.

Mine and Minerals

The GON has formulated acts and regulation to promote mineral exploration and development in the country. Two

separate acts and corresponding regulations exist to deal with different minerals. These are categorized into:

1. All mineral resources (except petroleum)2. Petroleum

There are several areas in which to invest in commercially viable mining and mineral industries. Limestone, dolomite,

quartz, talc, coal, peat, precious and semiprecious stones, and brine water (salt) are some of the economic minerals

used by cement, soap, marble, paper, dead burnt magnesite, and agriculture lime industries. The promotion of gum

industries is highly recommended. Ruby, sapphire, tourmaline, aquamarine, garnet, kyanite, and quartz crystals also

have high potential in Nepal. International companies can invest in cement, coal, petroleum exploration and

production, and precious and semiprecious stone.

Service

Possible sectors for investment in service industries inclue medical colleges, schools, hospitals, and IT businesses.

Information and Communication

IT includes telecommunications, electronic media, print media, postal services, and the development and production

of motion pictures in Nepal. The tele-density per hundred persons is 27, which includes the involvement of the private

sector. At present, 70% of the population has access to television; however, a much larger percentage has access to

mobile phone services. Difficulties have arisen in the expansion and development of these services to rural areas

due to geographical complexities and the lack of infrastructure development.


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The GON aims to promote national unification by providing access to all in the IT sector. The government plans to

establish a optical fiber network in all 75 districts of Nepal by 2015. Therefore, there is the increased opportunity for

private sector investment in this sector.

Infrastructure Development

Highways, airways, and rural roads connect all districts of Nepal. Hydroelectricity projects of varying scopes are in

process and construction, and various international organizations are engaged. Plans to build a fast-track road linking

the capital city to international airports and other locations are being formulated


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Sri Lanka


Area:

total: 65,610 sq km


land: 64,630 sq km

Land boundaries:


$125.3 billion (2012 est.)


$118.2 billion (2011 est.)

$109.2 billion (2010 est.)



6% (2012 est.)


8.3% (2011 est.)

7.8% (2010 est.)


$6,100 (2012 est.)


$5,800 (2011 est.)

$5,400 (2010 est.)


agriculture: 12%

industry: 30.1%


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Sri Lanka continues to experience strong economic growth following the end of the 26-year conflict with the

Liberation Tigers of Tamil Eelam (LTTE). The government has been pursuing large-scale reconstruction and

development projects in its efforts to spur growth in war-torn and disadvantaged areas, develop small and medium

enterprises and increase agricultural productivity. Fiscal consolidation efforts and strong GDP growth in recent years

have helped bring down the government's fiscal deficit. Growth slowed to 3.5% in 2009. Economic activity rebounded

with the end of the war and an IMF agreement, resulting in two straight years of 8% growth in 2010-11. Growth

moderated to about 6% in 2012. Agriculture slowed due to a drought and weak global demand affected exports andtrade. In early 2012, Sri Lanka floated the rupee, resulting in a sharp depreciation, and took steps to curb imports. A

large trade deficit remains a concern. Strong remittances from Sri Lankan workers abroad have helped to offset the

trade deficit.


After growing at a robust 7% in the first half of 2012, economic growth slowed in the second half to record annual

expansion of 6.4%. This was the first time growth fell below 8% since the civil conflict ended, largely reflecting weak

external demand, tight monetary conditions, and bad weather, as 15 of Sri Lanka's 25 districts suffered drought that

affected agriculture and hydropower generation.

Selected Economic Indicato rs (%) - Sri Lanka 2013 2014

Gross Domestic Product (GDP) growth 6.8 7.2

Inflation 7.5 6.5





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Economic prospects

Private consumption expenditure, which accounts for about 70% of GDP, will remain the main engine of economic

expansion, fuelled by rising incomes and remittances from Sri Lankans abroad. Investments are expected to expand

further in 2013, with higher growth in construction buoyed by large infrastructure projects. Slow recovery in the euro

area, Sri Lankas largest export market, would continue to constrain growth potential somewhat. Exports will have to

wait at least another year for a stronger recovery because weak external demand will continue in 2013. From the

supply side, expansion is expected in services, led by the hotels and other tourism-related activities, along with

growth in external and domestic trade. Agriculture is expected to improve with normal weather.

Economic growth will be subject to constraint from the balance of payments. Larger imports associated with high

economic growth will worsen the trade deficit and - unless financed by exports, workers remittance, and capital

inflow - depreciate the currency. Because of the need to address inflation, the monetary policy stance set at the end

of 2012 is not expected to be relaxed, which will restrain economic growth. As such, growth of Sri Lanka's gross

domestic product is expected to edge up to 6.8% in 2013 and then advance by 7.2% in 2014 on better external

conditions.

Tourism & Leisure


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The tourism sector has been experiencing an impressive growth both in terms of tourist arrivals and in foreign

exchange revenues after the restoration of peace and normalcy in the country in 2009. Achieving another remarkable

milestone in the country's booming tourism industry, tourist arrivals reached one million in 2012, an increase of 17%

over 2011 and foreign exchange earnings exceeded US$ 1 billion, an increase of 16% over 2011.

The Sri Lankan government has identified the Tourism sector as a key growth area in post-conflict development with

an ambitious target of attracting 2.5 million visitors by 2016. The Board of Investment (BOI), the agency tasked with

attracting Foreign Direct Investments (FDI) to Sri Lanka, has been playing a pivotal role in executing this strategy, by

attracting top tier tourism and hotel investors to the country. Companies that have already committed major

investments include the premier Asian luxury hotel chain, the Shangri-La Group (Hong Kong/Singapore), India's

upscale ITC Group, Thailand's Minor Group, Spain's RIU Hotels & Resorts, Singapore's Aman Resorts, Banyan Tree

Group Singapore and the Mustafa Group of Singapore

Infrastructure

The massive infrastructure development drive currently in progress is expected to support the country to maintain a

high and sustainable growth in the medium and long term. Timely development of economic infrastructure will help to

increase economic efficiency while expanding the production capacity of the economy, facilitate productivity

enhancement and reduction of regional disparity. In 2012, the economic infrastructure development programme of

the government focused on all areas of infrastructure; development of roads, water supply and sanitation, ports and

aviation, transport, housing and urban development, establishment of industrial zones, hospitals and warehousing

and logistic centres etc.

Sustaining the high growth momentum recorded during the past year, the construction sub sector recorded an

impressive growth of 21.6 per cent compared to 14.2 per cent in 2011. This is the highest growth registered by the

sub sector in the past ten years. The sub sector contributed to 8.1 per cent of the overall GDP and 23.9 per cent of

the change in GDP growth from 2011 to 2012 becoming the growth driving sub sector in the Industry sector.

Agricu lture

There are significant opportunities for investors in the agriculture sector both for the domestic market and for valueadded exports. The agriculture sector plays a key role in the country's economic development and its new role has

been redefined in the light of the development goals of the nation.

The agriculture sector contributes 11.1% to the GDP of the country, 23.9% of total export earnings and 31% of

national employment in the year 2012.

The three main traditional export crops from Sri Lanka are Tea, Rubber and Coconut. Since these industries are

already well established, the main focus of BOI is in terms of developing other agricultural crops particularly by


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enhancing domestic value addition. The government looks for specialised investment to improve productivity, level of

technology innovation, access to international markets, use of quality seeds and planting materials and improve

overall value addition.

Education

The role of especially Higher Education is a major driver of economic development in Sri Lanka. Higher Education in

the country is now in a unique position, as Sri Lanka's future in the global knowledge economy depends critically on

the country's human capital.

As the country is geared to take off and advance as a fast growing middle income country, it is critically important that

Sri Lanka has the human capital needed to compete with the global knowledge economy. Thus Sri Lanka needs a

higher education system which can produce skilled, hard working and enterprising graduates. Also the country needs

a research an innovation capacity capable of promoting dynamic economic development.

The knowledge hub initiative will help to develop Sri Lanka as a destination for investments in Higher Education and

position the nation as a centre of excellence and regional hub for learning and innovation.


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THAILAND


Area:



Land boundaries:

total: 5,413 km


$9.664 billion (2012 est.)


$21.47 billion (2011 est.)

$21.16 billion (2010 est.)

GDP (official exchange rate):

$11.45 billion (2012 est.)


-55% (2012 est.)


1.4% (2011 est.)


$900 (2012 est.)


$2,200 (2011 est.)

$2,500 (2010 est.)


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With a well-developed infrastructure, a free-enterprise economy, generally pro-investment policies, and strong export

industries, Thailand achieved steady growth due largely to industrial and agriculture exports - mostly electronics,

agricultural commodities, automobiles and parts, and processed foods. Thailand is trying to maintain growth by

encouraging domestic consumption and public investment to offset weak exports in 2012. Unemployment, at less

than 1% of the labor force, stands as one of the lowest levels in the world, which puts upward pressure on wages in

some industries. Thailand also attracts nearly 2.5 million migrant workers from neighboring countries. The Thai

government is implementing a nation-wide 300 baht ($10) per day minimum wage policy and deploying new taxreforms designed to lower rates on middle-income earners. The Thai economy has weathered internal and external

economic shocks in recent years. The global economic crisis severely cut Thailand's exports, with most sectors

experiencing double-digit drops. In 2009, the economy contracted 2.3%. However, in 2010, Thailand's economy

expanded 7.8%, its fastest pace since 1995, as exports rebounded. In late 2011 growth was interrupted by historic

flooding in the industrial areas in Bangkok and its five surrounding provinces, crippling the manufacturing sector.

Industry recovered from the second quarter of 2012 onward with GDP growth at 5.5% in 2012. The government has

approved flood mitigation projects worth $11.7 billion, which were started in 2012, to prevent similar economic

damage, and an additional $75 billion for infrastructure over the next seven years with a plan to start in 2013.


The economy rebounded last year from flooding that swamped industrial estates, farmland, and parts of the capital

Bangkok in late 2011. GDP rose by 6.4% in 2012 compared with just 0.1% in the previous year.

Private consumption increased by 6.6% to contribute about half of total GDP growth. Consumption was stimulated by

demand to replace household items after the floods and by several government policies. These included increases in

minimum wages by up to 40% in seven provinces and in public service salaries, a tax rebate to first-time buyers of

domestically made cars, which some 1.2 million car buyers took advantage of, tax breaks for first-time buyers of

houses, and a government decision to buy unmilled rice from farmers at prices well above international levels.

Growth in employment and wages supported consumption, as average wages rose by 11.8% and employment by

1.2%. The unemployment rate fell to just 0.5% by year-end.


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Fixed capital investment rose by 13.3%, propelled by the reconstruction of flood-damaged factories, houses, and

other infrastructure and the replacement of capital equipment. Public construction was spurred by the building of

mass rapid transit projects in Bangkok and mobile telecommunications networks.

However, external demand weakened last year due to sagging economic growth in major markets and disruption to

export-oriented manufacturing caused by the floods. Net exports of goods and services acted as a drag on GDP

growth.

Selected Economic Indicators (%) -

Thailand2013 2014

GDP growth 4.9 5.0

Inflation 3.2 3.1


(share of GDP)0.8 0.1


Economic prospects

After the rebound in 2012, economic growth is expected to moderate to about 5% this year and next, the pace seen

in the 3 years leading up to the global financial crisis. Projections assume the government follows through with large

public investments it plans in water management and transport infrastructure during the forecast period.

Private consumption will continue to benefit from a tight labor market and the minimum wage increases, which were

extended throughout the country from January 2013. A study by the Thailand Development Research Institute found

that last years 40% increase in minimum wages in seven provinces did not cause significant layoffs.

Potential Sectors in Thailand

Agricu lture, fo res try and f ishing

Thailand is the world's second-largest exporter of gypsum (after Canada), although government policy limits gypsum

exports to support prices. Thailand produces more than 40 different minerals, with an annual value of about

$740 million.

Industry and manufacturing


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INDIA

Geographic coordinates:

20 00 N, 77 00 E

Area:

total: 3,287,263 sq km


land: 2,973,193 sq km

water: 314,070 sq km

Land boundaries:

Total: 14,103 km

border countries: Bangladesh 4,053 km, Bhutan 605 km,

Burma 1,463 km, China 3,380 km, Nepal 1,690 km,

Pakistan 2,912 km


$4.761 trillion (2012 est.)




note:data are in 2012 US dollars

GDP (official exchange rate):



6.5% (2012 est.)


7.7% (2011 est.)

11.2% (2010 est.)


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$3,900 (2012 est.)


$3,800 (2011 est.)

$3,600 (2010 est.)

note:data are in 2012 US dollar


agriculture: 17.4%

industry: 26.1%


India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic

liberalization measures, including industrial deregulation, privatization of state-owned enterprises, and reduced

controls on foreign trade and investment, began in the early 1990s and have served to accelerate the country's

growth, which averaged fewer than 7% per year. India's diverse economy encompasses traditional village farming,

modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than

half of the work force is in agriculture, but services are the major source of economic growth, accounting for nearly

two-thirds of India's output, with less than one-third of its labor force. India has capitalized on its large educated

English-speaking population to become a major exporter of information technology services, business outsourcing

services, and software workers. In late 2012, the Indian Government announced additional reforms and deficit

reduction measures to reverse India's slowdown, including allowing higher levels of foreign participation in direct

investment in the economy.

South Asias largest economy, India, is expected to see growth moderate to 5.8% in 2013 against the earlier

projection of 6.0%. While this is higher than the 5.0% posted in 2012, growth remains constrained by supply-side

bottlenecks, as reflected in the continued slowdown in fixed capital formation, weakness in the industrial sector, and

sluggish progress in pushing through badly needed structural reforms. However, growth in India is expected to

accelerate in 2014 as slower inflation provides some scope for monetary easing that could boost investment and

consumption. Growth will be further boosted by pre-election spending, and the pickup in growth of the United States

economy will support Indian tech companies and related service sectors.


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GDP Growth (%) 2012

2013 2014

ADO

2013Revised

ADO

2013Revised

India 5.0 6.0 5 .8 6.5 6.5

South Asia 5.0 5.7 5.6 6.2 6.2

Source:; ADB estimates.

With expected declines in commodity prices and decelerating growth, inflationary pressures within developing Asia

will be generally less acute than anticipated in the Asian Development Outlook 2013-. India has bene-fited from a

favorable monsoon that pushed down domestic food prices, such that overall price increases should average 6.5%

this year.


Economic growth in fiscal year 2012 (ended 31 March 2013) decelerated to 5%, its lowest in a decade, from 6.2% in

FY2011. While tepid industrial growth and a downdraft in investment continued from FY2011, the downturn was

exacerbated by a slump in services activity, weakening consumption, and contracting exports.

Potential Sector in India

Infrastructure Roads

India has the second largest road network in the world (3.3 million kilometers). Roads carry about 65% of the freight

and 80% of passenger traffic. Highways / Expressways constitute about 66,000 km (2% of all roads) and carry 40%

of the road traffic. The union Cabinet approved the 12thfive year plan that seeks an average annual economic growth

of 8.2 percent and identifies infrastructure, health and education as thrust areas. The Indian Government, via the

National Highway Development Program (NHDP) is planning more the 200 projects representing around 13,000 km

of roads. The average project size is expected to US$ 150 to US$ 200 million. Larger projects are likely to reach the

US$ 700 to US$ 800 million range. 100% FDI under the automatic route is permitted for all road development

projects.

Indian Ports

India has 12 major ports and 187 minor ports along 7,517 km long Indian coastline. Of the 12 major ports, 11 ports

are run by Port Trusts while the port at Ennore is a corporation under the Central Government. Major ports handle

74% of the total traffic.


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Two major government projects underway :

1. Project Sethusamundram: Dredging of the Palk Strait in Southern India to facilitate maritime trade through it.

2. Project Sagarmala: US$22 billion project for the modernisation of major and minor ports.

Major ports to operate largely as landlord ports - international port operators have been invited to submit competitive

bids for BOT terminals on a revenue-sharing basis. Significant investment in port terminals on BOT basis by foreign

players include Maersk (Mumbai), Dubai Ports International (Mumbai, Chennai, Vizag and Kochi), and PSA

(Tuticorin, Chennai).100% FDI under the automatic route is permitted for port development projects.

Infrastructure Power

India has the fifth largest electricity generation, coupled with a transmission and distribution network of 6.6 million

circuit kilometers (the third largest in the world). Coal fired plants constitute 54% of the installed generation capacity,

followed by 25% from hydel power, 10% gas based, 3% from nuclear energy and 8% from renewable sources.

It is estimated that India will require an additional 78,000 MW of generation capacity and an additional 60,000 circuit

km of transmission network by 2012. This translates to an investment opportunity of about US$ 200 billion. It is

estimated that the total demand of electricity in India will cross 950,000 MW by 2030. Large demand-supply gap: All

India average energy shortfall of 9% and peak demand shortfall of 14%. Private sector participation possible through

JV and 100% equity mode. 100% FDI permitted in Generation, Transmission & Distribution - the Government is keen

to draw private investment into the sector. Major local players include: National Thermal Power Corporation, National

Hydro Electric Power Corporation, Tata Power, Reliance Energy, and RPG Group CESC.

Al ternat ive Energy and Clean Tech

Alternative Energy and Clean Tech is an important area of possible cooperation between India and Israel. India aims

at becoming a world leader in solar energy, and the target of adding 20,000 MW of solar energy generation capacity

by 2020 has become a high priority.

Civil Aviation and Airports

India has 454 airports and airstrips; of these, 16 are designated international airports. Currently 97 airports are

owned and operated by the Airports Authority of India (AAI). The government aims to attract private investment in

aviation infrastructure. India is the 9th largest aviation market in the world. Passenger traffic is projected to grow at a

CAGR of over 15% in the next 5 years. Vision 2020 envisages creating infrastructure to handle 280 million

passengers by 2020.


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Au tomobi les

India is the second largest two-wheeler market, the 4th largest commercial vehicle market and the 11th largest

passenger car market in the world. According to the International Yearbook of Industrial Statistics released by United

Nations Industrial Development Organisation (UNIDO), India ranks 12th in the list of the worlds top 15 automakers.

The growth rate for overall domestic sales for 2011-12 was 12.24 percent amounting to 17,376,624 vehicles. In the

month of only March 2012, domestic sales grew at a rate of 10.11 percent as compared to March 2011. Total Two

Wheelers sales registered a growth of 14.16 percent during April-March 2012. During April-March 2012, the industry

exported 2,910,055 automobiles registering a growth of 25.44 percent. Passenger Vehicles registered growth at

14.18 percent in this period. Commercial Vehicles, Three Wheelers and Two Wheelers segments recorded growth of

25.15 percent, 34.41 percent and 27.13 percent respectively during April-March 2012. For the first time in history car

exports crossed half a million in a financial year.

Agricu lture (including Water Technologies)

Agriculture in India is a major sector which offers huge opportunities for the foreign investor. India ranks second

worldwide in farm output. India is the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger,

turmeric and black pepper. It also has the world's largest cattle population (281 million). It is the second largest

producer of wheat, rice, sugar, groundnut and inland fish. It is the third largest producer of tobacco. India accounts for

10% of the world fruit production with first rank in the production of banana and sapota. With a population of over

1.17 billion, India is constantly looking for new and innovative technologies in Irrigation Systems, Greenhouses,

Seeds, Dairy Farms, Poultry Farms, Water Technologies, Fertilizers, and Plant Protection in order to better utilize its

resources.

Healthcare

The Indian healthcare industry is expected to reach US$ 160 billion by 2017. On the back of continuously rising

demand, the hospital services industry is expected to be worth US$ 81.2 billion by 2015. The Indian hospital services

sector generated revenue of over US$ 45 billion in 2012. This revenue is expected to increase at a compound annualgrowth rate (CAGR) of 20 per cent during 2012-2017. The Indian healthcare sector which employs around 4 million

people. The large domestic market is complemented by the inflow of medical tourists. The Number of medical tourists

has increased almost 20 folds from 10,000 in year 2000 to about 180,000-200,000 till now.

The industry is fragmented with a large number of independent, privately run hospitals and healthcare centers.

Private sector corporate entities like Apollo Hospitals, Wockhardt Hospitals and Fortis Healthcare have aggressive

expansion plans. 100% FDI is permitted for all health related services under the automatic route.


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Medical infrastructure forms the largest portion of the Indian healthcare sector. Beds in excess of 1 million need to be

added in order to reach the ratio of 1.85 per thousand at an investment of US$ 78 billion. The Indian medical

equipment industry is around US$ 2.17 billion and is growing at 15% per year.

Pharmaceuticals

India is now among the top five pharmaceutical emerging markets globally and is a front runner in a wide range of

specialties involving complex drugs' manufacture, development, and technology. The Indian pharmaceutical industry

is a highly knowledge based industry which is growing steadily and plays a major role in the Indian economy. As a

highly organised sector, the number of pharmaceutical companies are increasing their operations in India.

The domestic pharma market has reported total sales of Rs 6,370 crore (US$ 1.03 billion) in the month of May 2013,

registering a growth of 6.8 per cent.

According to some estimates, the Indian pharmaceutical industry is expected to reach US$ 30 billion in 2020. The

Pharmaceuticals industry in India is fragmented with over 3,000 small/medium sized generic pharma manufacturers.

There are about 34 foreign drug companies engaged in the Indian pharmaceutical industry. International

pharmaceuticals majors like Pfizer, Johnson & Johnson, Novartis, and Glaxo SmithKline have established presence

in India. Major local players include Ranbaxy, Dr. Reddys, and Cipla.

Biotechnology and Nanotechnology

The Indian Biotechnology industry which is estimated at around US$ 2.5 billion includes over 700 companies. Some

of these companies already either export to Israel biotechnology related products, utilize Israeli technologies and

cooperate with Israeli Biotechnology and Pharmaceutical companies. International majors like Monsanto, Syngenta

and Aventis are already in India and are focusing on the Bio-agriculture segment. Major opportunities in the

Biotechnology sector in India are in the areas of Bio-informatics, Bio-pharma, Bio-agriculture and Bio-services.

Nanotechnology is one of the main new developing areas recognized by the Indian government in past 5 years. The

Indian Nanotechnology industry which is still in its infancy is estimated at around US$ 200 million and is estimated to

grow at 35% per year.

Home Land Security (HLS)

After 26/11 (the terror attack in Mumbai in 2008), there is an increased awareness in India about home land security

(HLS) needs. India is aware that Israels HLS and Security manufacturers have gained expertise and a worldwide

reputation for developing leading-edge security solutions. The expertise developed by the Israeli companies based

on their experience and know how acquired through decades of combating internal security and terror threats can be

replicated for Indian conditions.

Brief Note on BIMSTEC

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