8th China-South Asia Business Forum: Private Enterprises Going Global Md. Sabur Khan, President Dhaka Chamber of Commerce & Industry (DCCI) Kunming, China June 7, 2013

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.

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.

China-SABF Trade & Investment Relations

SAARC Imports from China Year Amount in Mn US$ 2003 7500 2004 12500 2005 17500 2006 24000 2007 36500 2008 45000 2009 42000 2010 58000 Source: IMF Direction of Trade Online Statistics,

SAARC Exports to China Year Amount in Mn US$ 2003 5000 2004 8000 2005 1000 2006 12000 2007 15000 2008 21500 2009 2010 23000 Source: IMF Direction of Trade Online Statistics,

Investment of China to SAARC Year Million US$ 2008 1600 2009 750 2010 2760 2011 4020 Source: www.heritage.org/research/reports/2012

Bangladesh-China Trade and Business Relation

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 Source: Bangladesh Bank

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 Source: Export Promotion Bureau

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 12.58 6.20 1.33 38.20 44.48 13.27 10.95 5.45 2.0 38.64 45.69 18.99 2008 12.81 6.26 1.39 36.65 44.21 12.76 11.63 5.8 2.31 37.42 45.51 17.69 2009 14.00 6.5 1.65 36.58 45.05 12.77 5.75 2.60 36.56 45.50 17.22 2010 15.13 6.93 1.80 33.93 47.66 12.93 14.28 2.73 34.21 48.26 17.43 Source: UNCTAD Handbook of Statistics-2011

Position of Bangladesh Among SAARC

Export of Bangladesh to SAARC Countries in 2010-11 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 Source: Export Promotion Bureau

Import of Bangladesh from SAARC Countries in 2010-11 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 Source: Bangladesh Bank

Globalization and Private Sector The 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.

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.

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.

South Asian Companies Going Global 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 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.

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

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

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.

Way Forward, Cont… 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… 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.

Concluding Remarks 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 Cont… 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.

Thank You Very Much