Country Risk Management Presented by : Rupali Howal. Roll no. 15.

Guided by : Prof:S.B.Choughule.

Rajeev Ghandhi College of Management Study.

Ghansoli, Navimumbai.

Bhutan country profile• Bhutan is a tiny, remote and impoverished kingdom

nestling in the Himalayas between its powerful neighbours, India and China.

• Almost completely cut off for centuries, it has tried to let in some aspects of the outside world while fiercely guarding its ancient traditions.

• The Bhutanese name for Bhutan, Druk Yul, means "Land of the Thunder Dragon" and it only began to open up to outsiders in the 1970s.

Cont…• Full name: Kingdom of Bhutan.

• Population: 708,500 (UN, 2010).

• Capital and largest city: Thimphu.

• Area: 38,394 sq km.

• Major language: Dzongkha (official).

• Major religions: Buddhism (official), Hinduism.

• Currency : Ngultrum

• Life expectancy: 66 years .(men), 70 years (women) (UN)

• GNI per capita: US $2,020 (World Bank, 2009).

• Internet domain: .bt

• International dialing code: +975

PEST ANALYSIS OF BHUTAN BEFOR INVESTMENT IN

COUNTRY.

Political• 2008 January and February - A string of bomb blasts hits the country

ahead of elections set for March 24. The attacks are blamed on groups fighting for the rights of ethnic Nepalis exiled in 1991.

• 2008 March - Pro-monarchy Bhutan Harmony Party wins 44 out of the 47 seats in the country's first parliamentary elections. Another pro-monarchy party wins the remaining seats.

• 2008 November - Jigme Khesar Namgyel Wangchuck is crowned king.

• Good Political stability.

• Peace and security.

Economical• Monetary unit: 1 ngultrum = 100 chetrum.

• In 2008, the country’s per capita income was US$ 2152.

• The economic growth is largely financed by external aid.

• The fiscal deficit is high, balance of payment situation is weak, public debt is mounting, and foreign exchange reserves are difficult to sustain as it is not built through exports.

• Small domestic market.

• Inadequate infrastructure.

• High transportation cost.

• Difficult access to finance.

• Inconsistent policies.

• Different types of tax holidays are provided for investment in the country.

• Inflation rate (consumer prices)3%

• GDP - real growth rate 5.30%

Social• Population (2008-2009) :683,407

Male:357,305.

Female:326,102.

• Health:

Doctors:171.

Hospitals:30.

BHUs:178.

Indigenous Hospitals:35

Safe Drinking Water (%):83.2

Health Coverage (%):90

• Lack of management skills.

• Shortage of professionals.

• Low productivity of labour.

• Access to land

Cont…

• Natural and pristine environment.

• A vibrant and living culture.

• Access to land

• Geo-economic location and open access to the emerging Indian market.

• Reliable and competitively priced energy.

• Wide use of English language.

• More than 75% of the population is engaged in agriculture.

• INCOME CATEGORY : Lower middle income

• Unemployment: 3.7%

Technical• Industries (2008-2009).

Production &Manufacturing:1,389.

Services:16,253Contract:10,431.

All Sectors:28,073.

• Transport & Communications (2008-2009)

All Roads (km):5,363.

Bridges:265.

Registered Vechiles:40,659.

Telephone Connections:27,937.

Postal Infrastructure:127.

• Energy (2008-2009)

Towns Electrified:71.

Village Electrified:1,934.

Consumers ('000):81.2.

Electricity generated (MU):6,564.2.

• Absence of R&D capability.

Cont..• Television did not come to Bhutan until 1999. For years, the country

cut itself off, fearing that outside influences would undermine its monarchy an

• Radio broadcasting began in 1973 and the internet arrived in 1999.

• Media freedom is restricted. Reporters Without Borders says the monarchy "makes few allowances for pluralist news".

• There are no private broadcasters, but cable TV thrives, with rival services offering dozens of Indian and international chann

• The first daily newspaper was launched in October 2008.

• There were some 40,000 internet users by March 2008 (ITU).

• Bank Of Bhutan 17 June, 2010 - Less than a week after the oldest bank, Bank of Bhutan became a member of MasterCard, it has now become a primary member of Visa. Visa like MasterCard provides financial institutions the right to issue Visa-branded credit and debit cards used to its customers.

Natural• 2009 April - Huanglongbing virus wipes out much of orange crop.

Oranges are an important export for Bhutan.

• Climate Change has accelerated the rate of global warming which has resulted in the speedy changes of our natural surroundings like to fast melting of the glaciers in the Himalayas. “The Cost of Climate Change, The Story of Thorthomi lake in Bhutan”is a compilation of reports on the dangers of the melting glaciers in the Himalayan regions of Bhutan, India and Nepal and will provide information on the high risk glacial lakes in the region. The report showcases the difficulties, affects and dangers associated with the GLOF (Glacial Lake Outburst Flood), a result of melting glaciers and how Bhutan has been coping with adaptation works in GLOF.

Foreing trade

• Main exports: Electricity, timber, cement, agricultural products, handicrafts.

• The country's principal imports are fuel and lubricants, grain, machinery and parts, vehicles, fabrics, and rice.

• Bhutan's principal exports include electric power (to India), cement, cardamom, timber, gypsum, dolomite, coal, handicrafts, cement, fruit, vegetables, precious stones, spices, ferrosilicon, calcium carbide, particle board, some preserved food, alcoholic beverages, yak tails for fly whisks, and yak hair.

• The 2001 trade deficit amounted to $81.7 million, according to the IMF, 56% of which ($45.7 million) was attributable to a trade deficit with India

Areas of Economic Opportunities

• High Quality Green Services

a. High end education

b. High-end health services and traditional medicines.

c. ICT (BPOs, KPOs, Data centres, etc)

d. Tourism and hospitality with emphasis on high value low impact

e. Financial services

f. R&D and consultancy services

Cont….• Agro and Forest based production

a. Organic farming

b. Agro-processing

c. Biotechnology including pharmaceutical, nutraceuticals, traditional and herbal medicines

d. Forest based products

e. Poultry

f. Fisheries

g. Floriculture

h. Health food

i. Animal feed

j. Apiculture

k. Horticulture

l. Dairy

cont…..

• Energy

a. Hydro electricity

b. Solar and wind energy

c. Other sources of renewable energy

Cont…

• Information and Cultural Industry

a. Film and media including animation

b. Handicrafts

c. Textiles

d. Fine art including the performing arts

e. Publishing

f. Festivals, spiritual centres, etc

Cont…

• Natural Resources

a. Select mineral-based products

b. Water-based products

Cont…

• Transportation and Related Services

a. Green and non fossil fuel based modes of transportation

b. Mass transportation

c. Railways, ropeways and cable cars

Cont..

• Construction

a. Mechanization

b. Green technology

Cont…

• Other Manufacturing

a. Electronics

b. Electricals

c. Computer hardware

d. Building materials

e. Power intensive industries

f. Waste Management Services

Ranking of Bhutan• DOING BUSINESS 2011 RANK 142(2010-140) out of 183

economies.

• Bhutan’s economic freedom score is 57.0, making its economy the 103rd freest in the 2010 Index.

• Bhutan is ranked 17th freest among the 41 countries in the Asia–Pacific region, and its overall score is slightly below the global average.

• Bhutan remains an underdeveloped economy with a poverty rate of around 30 percent.

• Starting a business takes an average of 46 days, compared to the world average of 35 days. Obtaining a business license requires 25 procedures, compared to the world average of 18.

• Foreign direct investment has been a sensitive issue, largely because of concerns about its effect on culture and traditions and possibly because of the domestic private sector’s unwillingness to lose the benefits that restrictions provide. Foreign exchange and capital transactions are subject to government controls. Foreign investors may not purchase land.

ANALYSIS

• Political : Moderate.(political stability but rigid govt. policy.

• Economical : High.(deficit problem, very less population.)

• Social : High.(no professional,skill employee.)

• Technological : High.(no updated technology, no R & D, not having any patent, brand etc., no infrastructure, no transport facility)

Since there is high risk in three areas. Country is not good for investment presently.

Scale : Low, Moderate, High , Very High.