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Business Opportunities & Challenges – Focus on South Asian Countries

South Asia typically consists of Bangladesh, Bhutan, the Maldives, Nepal, Pakistan and Sri Lanka, also includes Afghanistan, and Iran. The global economy has gone into recession with developed economies recording negative growth and substantial slowdown of emerging economies. The global trade is forecasted to decline by 7% in 2010, as more and more countries adopt import substitution and protectionist policies. Although the decline in international commodity prices have helped to curb domestic inflation and averted a supply side shock, the decline in demand for both export goods and private remittances has reduced foreign exchange inflows, the global economy is still witnessing mergers & acquisitions.

Bangladesh offers opportunities for foreign investors in important sectors, including power, steel, fertilizer, hotel, tourism, and petrochemicals. These opportunities are reflected in the inflows of foreign direct investment (FDI), which increased from virtually zero in the early 1980s to $760 million in FY2007.. To meet the challenge, market-oriented liberalizing policy reforms were saudi arabia mobile number list initiated in the mid-1980s and were pursued much more vigorously in the 1990s. These reforms were particularly aimed at moving towards an open economic regime and integrating with the global economy. Bhutan, one of the world’s smallest and least developed, is based on agriculture and forestry, which provide the main livelihood for more than 60% of the population. Hydropower exports to India have boosted Bhutan’s GDP growth. Bhutan’s hydropower potential and its attraction for tourists are key resources. The Bhutanese Government has made some progress in expanding the nation’s productive base and improving social welfare.

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Sri Lanka, the region’s leading reformer of business regulations, made it easier to obtain credit by strengthening the legal rights of creditors and enhancing the availability of credit information.The structure of the Pakistan economy has changed from a mainly agricultural base to a strong service base. Agriculture now only accounts for roughly 20% of the GDP, while the service sector accounts for 53% of the GDP Significant foreign investments have been made in several areas including telecommunications, real estate and energy. Other important industries include apparel and textiles (accounting for nearly 60% of exports), food processing, chemicals manufacture, and the iron and steel industries.. Iran is a founding member of OPEC and the Organization of Gas Exporting Countries. Petroleum constitutes the bulk of Iran’s exports (80%), valued at $46.9 billion in 2006 Since the mid 90’s, Iran has increased its economic cooperation with other developing countries in “south-south integration” including Syria, India, China, South Africa, Cuba and Venezuela. Iran is expanding its trade ties with Turkey and Pakistan and shares with its partners the common objective for the creation of a single economic market in West and Central Asia.

BANGLADESH: BUSINESS OPPORTUNITIES AND CHALLENGES

BUSINESS OPPORTUNITIES

1. The present government has adopted an economic strategy to create a suitable environment to make Bangladesh a very attractive destination for foreign investors in the South Asian region.
2. Bangladesh wants to be an active partner in the world economic community. It is one of the most open economies among the developing countries. The Bangladesh economy has already been liberalized extensively and it is vigorously pursuing a private sector-led, export oriented growth strategy.
3. Private investment both local and foreign is welcome in areas with the exception of only rive sectors on strategic grounds There is no restriction on the amount of investment or in the share of equity. Full 100 percent foreign investment and joint venture with local private partners or with the public sector is freely allowed.Foreign investors now enjoy the same treatment as provided to the domestic investors.

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CHALLENGES

1. Food security and inflation are pressing concerns
The unusual rise of food prices in the recent time, which has been a world phenomenon, has really hard hit the poorest and the marginalized groups. This price hike was caused by domestic production shortfall following successive natural disasters and also by international higher prices. The food price rise has severe human dimension and has seriously eroded the purchasing capacity of people living below the poverty line and government employees, industrial workers, and others with fixed incomes. Addressing the hardship of poor people affected by higher food prices remains a challenge.

2. Environment and climate change pose a serious development challenge
The climate change also poses a major development challenge for Bangladesh. Bangladesh’s vulnerability to natural disasters also poses a risk. The recent severe flooding and cyclone are premonitions of future possible catastrophe. According to the United Nations Human Development Report 2007/2008, one meter rise in sea level would inundate 18% of land area in Bangladesh, directly threatening 11% of the population. Rising sea levels and exposure to climate disasters could result over 70 million people being permanently or temporarily displaced.

3. Foreign Investment
Private investment from overseas sources is welcome in all areas of the economy with the exception of only five industrial sectors (reserved for public sector) as mentioned earlier. 100% foreign direct investment as well as joint venture both with local private sponsor or with public sector is allowed.

Foreign investment, however, is specially desired in the following categories:
• Export-oriented industries;-industries in the Export Processing Zones;
• High technology products that will be either import-substitute or export-oriented;-undertaking in which more diversified use of indigenous natural resources is possible;

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