South Asia Economy and trade 10 October 2018 Shailesh Garg Director General Manager Drewry Maritime Services Pvt. Ltd. +91 124 497 4950 shailesh@drewry.co.uk
Agenda Global & regional overview Country overview Bangladesh-Key trends and issues South Asia- Untapped potential 2
Global & regional overview
9.0% Global economy and trade Global & South Asia GDP growth Signs of recovery in global economy 6.0% 3.0% 0.0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 South Asia World Emerging markets to drive growth and outlook for South Asia remain Strong Global & South Asia trade growth (in value terms) 40% 30% 20% South Asia GDP expected to grow around 7% between 2018-21 10% 0% -10% -20% 2010 2011 2012 2013 2014 2015 2016 2017 Global trade grew by 10% in 2017 Source: IMF, Drewry Global Trade Total South Asia 4
South Asia overview $373 billion 2% of world import GDP $3.3 trillion 4.1% of world GDP $599 billion 3% of world exports Intra-SAARC trade ($bn) - 6% 56 47 41 29 15 2004 2008 2012 2016 2017 Share of intra-regional trade of SAARC countries Country Export market Import source Afghanistan 79% 17% Bangladesh 1% 22% Bhutan 96% 90% India 5% 1% Maldives 19% 20% Nepal 56% 66% Pakistan 12% 4% Sri Lanka 9% 25% Source: IMF, 2018 5
Country overview
India overview GDP growth in India 10.0% 8.0% Rising trade demand 6.0% 4.0% 2.0% 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 GST implementation and cabotage relaxation Source: IMF Total trade (USD Billion) 1,000.00 800.00 600.00 400.00 Regional Trade Partners Bangladesh Sri Lanka Total trade CAGR (2012-17): -1.4% 200.00 0.00 2012 2013 2014 2015 2016 2017 Export Import Total Container Port utilisation: 60% Total container trade (CAGR 2012-17) : 8.5% 7
Pakistan overview GDP growth in Pakistan 6.0% 5.0% 4.0% 3.0% Increasing domestic consumption High external debt 2.0% 1.0% 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total trade (USD Billion) China Pakistan Economic Corridor is good but has many apprehensions 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 CAGR (2012-17): 2.8% 2012 2013 2014 2015 2016 2017 Regional Trade Partners India Afghanistan Rising Imports Declining Exports Export Import Total Source: IMF, WTO 8 Total container trade CAGR (2012-17): 9.4%
Sri Lanka overview GDP growth in Sri Lanka 10.0% 8.0% 6.0% 4.0% 2.0% GDP to rebound in 2018 after falling to a 16 year low in 2017 External debt to reach US$3.8 billion in 2019 according to US State Department 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Growing Middle Class Total trade (USD Billion) 35.00 CAGR (2012-17): 4.2% 28.00 21.00 14.00 7.00 0.00 2012 2013 2014 2015 2016 2017 Export Import Total Source: IMF, WTO 9 Regional Trade Partners India Total trade CAGR (2012-17): 4.2% Total container trade CAGR (2012-17): 8.2% Development of : Colombo port Hambantota port Colombo Port city
Myanmar overview GDP growth in Myanmar 9.0% GDP to grow at 7% in 2018 6.0% 3.0% Total trade CAGR (2012-17):14.8% 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total trade (USD Billion) 40.00 CAGR (2012-17): 14.8% Container trade CARG (2012-17):11.4% 30.00 20.00 10.00 Special economic zones developed 0.00 2012 2013 2014 2015 2016 2017 Export Import Total 10 Source: IMF,WTO
Nepal and Bhutan overview GDP growth in Nepal Total trade (USD Billion) 8.0% 7.0% 6.0% 5.0% 4.0% 12.00 10.00 8.00 6.00 CAGR (2012-17): 9.3% 3.0% 2.0% 1.0% 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 GDP growth in Bhutan 4.00 2.00 0.00 2011 2012 2013 2014 2015 2016 2017 Export Import Total Total trade (USD Billion) 14.0% 12.0% 10.0% 8.0% 2.50 2.00 1.50 CAGR (2012-17): 6.8% 6.0% 4.0% 2.0% 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: IMF,WTO 1.00 0.50 0.00 2011 2012 2013 2014 2015 2016 2017 Export Import Total 11
Afghanistan and Maldives overview GDP growth in Afghanistan 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 GDP growth in Maldives 10.00 8.00 6.00 4.00 2.00 0.00 Total trade (USD Billion) CAGR (2012-17): 6.8% 2011 2012 2013 2014 2015 2016 2017 Export Import Total Total trade (USD Billion) 8.0% 3.00 CAGR (2012-17): 8.4% 7.0% 2.50 6.0% 5.0% 4.0% 3.0% 2.00 1.50 1.00 2.0% 0.50 1.0% 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0.00 2012 2013 2014 2015 2016 2017 Export Import Total Source: IMF,WTO 12
Bangladesh-Key trends and issues 13
Bangladesh overview GDP growth in Bangladesh 8.0% 6.0% GDP to grow at 7% in 2018 4.0% 2.0% 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Export growth depending on RMG 100 80 60 40 Total trade (USD Billion) CAGR (2012-17): 7.8% Regional Trade Partners India Total trade CAGR (2012-17):7.8% Total container trade CAGR (2012-17): 13.1% 20 14 0 2012 2013 2014 2015 2016 2017 Export Import Total Source: IMF, WTO Additional port capacity required
Bangladesh Emerging Opportunities Robust Economic Growth Growing Trade Port capacity development Hinterland Connectivity Increasing demand for consumer goods Infrastructure development RMG exports Demand for bulk and raw material Rising imports for project cargo Port Mechanization New Port development India- Bangladesh Coastal Shipping Agreement Inland Terminals Rail and Road capacity augmentation 15 Higher income levels leading to demand for white goods, packaged and processed food Demand for housing, support infrastructure Demand for construction material Port development- Laldia Terminal, Bay Terminal, Patenga Terminal IWT terminals Development of Chittagong coastal road Bangladesh rail- Modernisation Plan, Dhaka Chittagong rail project
Score Bangladesh Key Challenges in logistics sector 5 Marine access 4 Policy/PPP Liner Connectivity 3 2 Inland Connectivity Terminal capacity 1 High Supply Chain Cost Project Delays Limited Coastal movement 16 Port Congestion Decision-making delays Due to lack of return cargo Inadequate Inland Connectivity Lack of planning Low vessel frequency & services Source: Results of the survey conducted by Drewry and Gateway Media in Bangladesh in 2018
Bangladesh Recommendations Policy initiatives Removing operational, fiscal and legislative constraints Model concession agreement Land Lord Port model Planning and Capacity development Integrated development approach Setting efficiency benchmarks Project due diligence Public Private Partnership Modernization of existing ports New port development Support infrastructure International terminal operator Tariff Guidelines Tariff fixation and escalation framework Incentivizing efficiency 17
South Asia- Untapped potential 18
South Asia Intraregional trade Estimated Trade potential $67 billion Actual trade estimated at around $23 billion Accounting for just 5% of total South Asian Trade Source : World Bank Actions required Removing Trade barriers Reducing cost of trade Building trust Import Tariff Non-Tariff Border access Improved connectivity Clearance process Documentation Political initiatives People to people interaction 19
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