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Regional analysis of
Asia Pacific Economic Cooperation (APEC)
(Global destination of Bangladesh to APEC)
Prepared for:
Professor
IBA, University of Dhaka
Prepared by:
Name
Md. Mostafijur Rahman
Tasfina Islam
Md Shah Aziz
ID
ZR1502017
RQ1502022
ZR1502013
LETTER OF TRANSMITTAL
Sincerely yours,
Md Mostafijur Rahman
EMBA program
22nd Batch
ZR 1502017
Tasfina Islam
EMBA program
22nd Batch
RQ 1502022
Md Shah Aziz
EMBA program
22nd Batch
ZR 1502013
Executive summary
Now a days trade block is very important for International
Trade of a country. APEC (Asia-Pacific Economic
Cooperation) is the largest economic forum of the world.
APEC consists of 21 members, including all the major
economies of the region and some of the most dynamic,
fastest growing economies in the world. APEC members
have 40% world population, a combined Gross Domestic
Product of over $45 trillion (55%) and carry out 44% of
world trade. Over the past decade, APEC has become the
primary vehicle in the region to promote open trade and
economic cooperation.
ii
Though RMG is the leading industry of Bangladesh, but we will focus on few industries
having tremendous potentiality in terms of local consumption or export:
ICT (out sourcing): Total IT and ITES exports from Bangladesh has been
increased about 24% from 2008 to 2011. Even crossed 1 billion $ land mark in 2015. USA,
the UK, Canada, Australia and Singapore are increasingly assigning local IT experts for
developing software for the last couple of years. Elance, oDesk and some other global
online employment platform have come forward to work with Bangladeshi IT experts.
Currently around 150 IT companies in Bangladesh are exporting to over 30 countries. More
than forty thousand local IT personnel have so far been employed in the sector and income
from the sector has reached about US$30 million till March of the current financial year.
Bangladesh, the third highest out sourcing country of the world, will forward a step ahead
on the arrival of Paypal.
FDI in Bangladesh: Bangladesh has witnessed the highest growth among the
South Asian countries as the rate of investment return is higher ranging 14% to 15%.
Countrys power, gas and petroleum sector have received highest FDI of $574 million
followed by textile and wearing $443 million, telecommunication $255 million and banking
$310 million.
Besides: We can consider more about Leather and Leather goods, Jute, Frozen foods,
Wigs, Furniture, Animal gut and so many.
iii
Table of Contents
LETTER OF TRANSMITTAL
EXECUTIVE SUMMARY
i
ii-iii
1.0 Introduction
1-8
9-17
17
References
17
1.0 Introduction
Bangladesh is the 4th fastest growing economy in the world which have reduced it
extreme poverty to 12.9% and expected GDP $5 trillion in 2050. Bangladesh has young
energetic population who are ready to grab the opportunity; only the need is a dynamic
leadership and market winning strategy to get the global leadership. In order to find out the
Global destination of Bangladesh, we need keen trade block analysis and placing our
competitiveness to the block where we want to be.
Objectives of the analysis
Institute of Business Administration, University of Dhaka has a huge role in this
journey by making and providing dynamic corporate and business leaders. This institute
also let the leaders to think about how to present Bangladesh in global. There are few
programs, among them International marketing is one of the best program to train the
generation to think broader and lead the nation in global perspective.
284 crore
$ 45 trillion
(approx.)
APEC supply chain connectivity framework action plan (SCFAP) initiated in 2010,
identified eight chokepointsranging from the lack of transparency in logistics regulatory
issues to inefficient clearance of goods at Customsthat need to be untangled to improve
supply-chain connectivity in the region. In measuring the progress of SCFAP, 2015 data
3
from World Banks Doing Business3 showed improvements in the quality and efficiency of
regulations affecting the business environment in the APEC region as a whole. In
particular, international trading costs have gone down in 2014 relative to 2009 baselines,
with reductions in the time and real costs to export and import.
2. Economic and technical cooperation
3. Business facilitation
From starting a business to dealing with permits APEC is improving by reforming
policies and regulations.
Weakness
1. Ad-valorem trade costs, which cover all costs involved in conducting transactions
across borders, including direct and indirect costs of fulfilling regulatory import and
export requirements; differences in currencies, languages, and culture;
geographical distance; and shipping and logistics costs.
2. Trade costs for agricultural products are almost double that for manufacturing
products, pointing to the many barriers (e.g., tariffs and non-tariff barriers) that still
constrains trade in agricultural products.
Opportunities
APEC economies have top three largest recipients of FDI inflows in 2015: the
United States USD 384 billion; Hong Kong, China USD 163 billion; China at
USD 136 billion.
During the period May 2015 to February 2016, APEC implemented 17 more
measures to ease the entry of FDI rather than restrict it.
APEC implemented 68 trade-related measures in mid-May to mid-October
2015, of which 28 measures were trade-facilitating and 40 measures had the
effect of discouraging trade.
5
Threats
1. APEC economies continue to be affected by the downward trend in commodity
prices. Of the 21 members of APEC, a little more than one-third are net
exporters of oil; some economies are producers of energy products besides
crude oil, such as natural gas and coal; others are major exporters of metals and
minerals; while there are also economies which rely on agriculture exports.
2. The growing military tensions between Washington and Beijing over freedom of
navigation and territorial disputes in the South China Sea.
If that region is militarized or it becomes an area of conflict there would be great
cost borne by everyone, as near this lanes 40% of world trade passes.
3. At the APEC forum that was founded in 1989 to promote free trade, the Trans
Pacific Partnership (TPP) will likely is a major focus of discussion, which could also
aggravate tensions between Beijing and Washington
Political Environment: All of the APEC countries except Thailand are politically stable
and change of government does not influence so much on trade and foreign policy. We
have a good relationship with China, Japan & Malaysia. Chinese Presidents visit indicates
that they are eager to improve trade and relationship, particularly after regime change of
Sri Lanka. Election of USA may affect many international issues if Trump wins instead of
Hilary. Lift of GSP in USA endangered our plastic industry, reduced 35 million US$ export.
Social Factor: Malaysia, Indonesia and Brunei are Muslim countries, having a brotherly
relationship with us. We get priority as Muslim country for overseas employment in
Malaysia. China has a historical bilateral relationship with us since thousand years. Atisha
went there for preaching Buddism. They eager to remake silk route and include
Bangladesh due to historical background as well as economic purpose. Forestation of
Malaysia needs a lot of semiskilled worker, which is good opportunity for BD. Many
countries like Japan have negative population growth rate and more aged population,
which renders opportunity for us to send their skilled work force.
Technological
Canada, Australia and China are also investing a big amount of money for this. For this
reason new products are coming every day in these countries. If APEC countries like
China, Vietnam and Cambodia launches technologically advanced machineries in RMG
sector and can improve productivity compared to us, we might be jeopardized. We should
remind how new technology made jute obsolete, once upon a time which was no-1 export
item of BD.
Legal factors: Legislative changes take place from time to time. Many of these changes
affect the business environment. This factors influence pharmaceutical sector maximum.
People of APEC, particularly USA, Canada and Australia are very conscious about human
right. Tajikistan & Uzbekistan cannot export cotton to many countries due to child labor.
Rana Plaza and Tazrin Fashion tragedy diminished our image in APEC countries as well
as international community. We had to invest a lot of money to improve working
environment, ensure workers safety and comply many guidelines prescribed by the buyer
organization, which diluted our competitiveness.
Environmental factors:
The location influences trades. Due to long distance we cannot export perishable
product to USA or Canada at competitive cost. People are now very environment
conscious. Thats why Jute is getting back international demand. China recently signed a
treaty to import a healthy amount of Jute products. Shifting of RMG industry to third world
from developed countries is not only due to higher wages but also environmental pollution.
7.05 %
4.3 %
5.53 %
6.75 %
-53.8 BDT Billion
27.3 %
182 BDT Billion
236 BDT Billion
773 USD Million
Last update
Dec/16
Dec/14
Sep/16
Sep/16
Jul/16
Jul/16
Jul/16
Jun/16
Remarks
China
15.03 %
APEC
USA
8.22 %
APEC
India
7.19 %
Germany
7.03 %
Singapore
6.07 %
APEC
UK
4.41 %
Hongkong
3.86 %
APEC
Malaysia
3.20 %
APEC
Japan
2.83 %
APEC
Canada
2.38 %
APEC
Innovation
Driven
Efficiency to
Innovation
Efficiency
Driven
Factor >>
Efficiency
USA
Japan
Australia
Singapore
New Zealand
Canada
Russia
Chile
Malaysia
Mexico
China
Thailand
Indonesia
Peru
Philippines
Vietnam
Bangladesh
Factor Driven
10
11
Member of BCIM
The BangladeshChinaIndiaMyanmar Forum for Regional Cooperation (BCIM)
is a sub-regional organization of Asian nations
Strategic partner
Defense cooperation
Defense Cooperation Agreement in 2002
Chinese tanks
Chinese frigates and missile boats
Chinese fighter jets
2008-an anti-ship missile launch pad near the
Chittagong Port with assistance from China
Economic cooperation
12
3.6
APEC Pharmaceuticals
Export
Import
Extra demand
Market Size:
Local: 1.6 B US$ in 2015 (with 15.21% growth)
Export: 93.98 US$ in 2015 (with a growth of 18.25%)
13
Bangladeshi Pharma companies have their footprints in more than 111 countries.
Top companies have accreditation from stringent regulatory bodies like USFDA,
TGA (Australia), Health Canada, Singapore MOH, Taiwan FDA, UKMHRA and
many more. Beximco Pharma has already started exporting cardiovascular drug this
year to the USA.
Bangladesh is capable of producing high quality Products as the industry employs
State-of-the-art manufacturing facilities with sophisticated production & analytical
equipment and apparatus and highly skilled human resources.
Bangladesh is capable to produce many specialized delivery products like Inhalers,
DPI, Pre-filled syringes, sustained release tablets, lyophilized injections etc.
API Industrial Park is under construction at 200-acre area in Gazaria, Munshiganj
where 40 API industries will be operating. Though this project was delayed due to
bureaucratic issues, Government is now focusing to complete this project within
2018. At present, earth development and other infrastructural work is going on. API
Park will enrich the industry with more productivity and cost efficiency. BAPI will aim
to produce about 800-1000 generic bulk drugs. Most of the bulk materials will
have DMF or EDMF to target regulated markets.
APEC members are mostly regulated and in regulated markets, after getting the
registration, least bidder will get the privilege for Government or institution supply.
Already we have presence in Australia, Singapore, USA, Canada, Philippines, and
Vietnam. Bangladeshi two manufacturer got USFDA approval, many are in
pipelines.
Rising cost of healthcare and medicines has become a global concern, and in order
to reduce cost across the value chain, pharmaceutical companies from developed
markets continue to look for suitable partners in developing countries for shifting or
outsourcing their production. Bangladesh is now the top choice in this regions due it
its world class manufacturing technology with quality people (Pharmacists). For
example, Beximco does for GSK, Incepta for Abon Pharmaceuticals Ltd (USA), ACI
for Novartis Bangladesh.
3.6.2 ICT (Out sourcing)
and Japan are increasingly assigning local IT experts for developing software for the last couple of
years.
Bangladesh has successful track records of working for reputed clients over the world.
Salary of programmers in Bangladesh is 50% of that in India, 40% of Philippines and
70% of the Vietnam. Charges for Internet bandwidth in Bangladesh is currently the
lowest on South Asia (50% of that in India). Rent for office space in Dhaka (Capital) is
below 20% of that in Delhi and 40% of Manila. Beside government initiative these
factors are secret of our success.
15
Highest investor countries of BD like USA, South Korea, China, Singapore and
Malaysia are member of APEC. Recently, Chinese President Xi Zing Ping signed more than
19 billion US$ investment treaty with BD.
16