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Page 1: South Asia - Vietnam Businessresearch.vietnambusiness.tv › 20acd6d8-0370-49ab... · South Asia Risk Review 2017 South Asia Risk Review 2016 1 Lt Gen Sudhir Sharma PVSM, AVSM, YSM,

S o u t h

As i a

Risk

Review

2017www.mitkatadvisoryservices.com

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Making Business Sense in a Connected World...

South Asia Risk Review 2017 www.mitkatadvisory.com

The interdependence of geo‐politics a n d b u s i n e s s i n te re st s c re ate s opportunities and risks for businesses. A wide array of political, socio‐economic, s o c i e t a l , l e g a l / r e g u l a t o r y a n d environmental risks impact businesses. Understanding and mitigating these risk is vital to running a business.

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South Asia Risk Review 2016 1South Asia Risk Review 2017

Lt Gen Sudhir Sharma PVSM, AVSM, YSM, VSM (Retd), Chairman

The endemic fault lines in the geo-political landscape of South Asia deepened further this year. New paradigms emerging from the jostling of influence by big powers like Russia, China and America in the region are bound to impact negatively on the already fragile interstate relations. The worsening of the security scenario in Afghanistan, continued terror related risks and the virtual breakup of SAARC, in the wake of rapidly deteriorating relations between India and Pakistan will see new strategic dynamics at play like BIMS, and other regional alliances taking shape. The year 2017 can be expected to be tumultuous for South Asia with the overall security scenario showing a downward trend.

chairman’S message

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South Asia has been the fastest growing sub-region in the world despite challenging conditions; and the year 2016 has seen the South Asian region being thrust into the spotlight of global affairs. Stretching across 5.8 million square kilometers (including M y a n m a r ) , s i x t i m e z o n e s , climatic conditions ranging from temperate tundra, deserts and tropical rainforests the South Asian region is the most diverse and densely populated region in the world. Economically the region is seeing development on a large scale despite the relative global slowdown; however, the fruits of this economic boom manifest in very concentrated swaths of area, and there is still no progressive trend seen uniformly a c r o s s t h e r e g i o n . T h e demographic and ethnic diversity

has opened new markets and a dynamic trade pattern that differentiates itself distinctly from the rest of the world.

South Asia is also susceptible to v a r i e d c l i m a t i c a n d environmental forces. The Indian Ocean dictates much of the seasonal proceedings within the region along with playing the role o f a n e c o n o m i c g a t e w a y. Shipping traffic passing through the South Asian Waters have gone up to constitute nearly 30% of the global traffic. The varied factors that dominate life in South Asia have also led to a scaling up of the South Asian A s s o c i a t i o n f o r R e g i o n a l Association (SAARC). Myanmar h a s o f f i c i a l l y a p p l i e d f o r membership within S A A RC. Several nations have realized that

Executive Summary

South Asia Risk Review 2017 2

INDIA

PAKISTAN

AFGHANISTAN

SRI LANKA

MALDIVES

BANGLADESH

MYANMAR

NEPALBHUTAN

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Executive Summary

South Asia Risk Review 2017

South Asia has huge economic potential as well as regional security implications, as a result Australia, United States of America, China, Japan, Iran, Mauritius and South Korea have been included as Observers.

The countries of Afghanistan, Pakistan, India, Nepal, Bhutan, Bangladesh, Sri Lanka and Myanmar have been comprehensively covered in this report.

Major Disruptors

South Asia sees a vast gap in infrastructure development per capita. Most nations within the region still rank very poorly on the Ease of Doing Business Index. This can be attributed to a combination of factors such as political volatility, corruption, nepotism, legal challenges, under-developed economic framework, unpredictable local markets and a largely unskilled work force.

The unstable political conditions in the region have led to a deviation from internationally acceptable norms and ethics in Myanmar, Bangladesh, Pakistan and Nepal. Illegal trade of drugs, precious minerals and weapons through porous borders within the region continues to fund anti-national and religious militant

groups that are par ty to various conflicts. The lack of unemployment in many areas of the region continues to feed organized and petty crime in densely populated urban centres.

The South Asian Region has seen an alarmingly increasing trend of ethnic and religious intolerance in 2016. Extremist religious indoctrination, social media misinformation, complex political motives, transforming governments, and widening economic gaps have compounded this trend. Persecution of minorities has now increased steadily in several countries. The presence of the Islamic State footprint within the region has been validated in 2016 after a string of devastating attacks in Bangladesh, Afghanistan and Pakistan. The Taliban and other Islamic militant groups have reestablished their authority post the withdrawal of US coalition forces.

Natural disasters, both cyclic and non-cyclic have cost thousands of lives in the region. South Asia sits on four active tectonic plates; and the variable ocean temperatures and meteorological anomalies have increased the intensity and occurrence of cyclones and other storms. The region still needs to adapt to these changes in terms of infrastructure, emergency response procedures and public awareness.

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AfghanistanIn 2016, Afghanistan witnessed the after-effects of the NATO withdrawal, especially in the Helmand province. The Taliban have capitalized on the reduced security cover and captured large swaths of land, and launched major offensives in Kunduz, Lashkar Gar and Tarinkot. The Afghan National Security Force, despite being trained and armed by the US, continues to face challenges in coping with the unconventional warfare of the Taliban. The Afghanistan government under President Ashraf Ghani is still in turmoil after the dismissal of seven key cabinet ministers. One of the gravest threats that Afghanistan has seen in recent months is the growing influence of the Islamic State and direct attacks on civilians. The Shia community and other minorities have been targeted indiscriminately.

PakistanIn 2016, Pakistan has seen over 800 fatalities in violence related activities. The Tehrek-e-Taliban have increased attacks on government targets in the North-Western provinces and major cities in reprisal against anti-militant operations. Attacks against religious minorities have increased considerably and this was amplified by the Easter attacks in Lahore targeting Christians. Shias have been targeted repeatedly by organizations such as the LeJ, TTP and the Islamic State. The Balochistan Province has come

increasingly into the spotlight due to various factors including the CPEC (China Pakistan Economic Project), attacks by the Balochistan Liberation Army, and attacks by the LeJ/Islamic State on security infrastructure as well as Shia shrines. A dangerous and strained rift has also developed between the Government and the Military with the general public supporting the decisive actions of outgoing Pakistani Army Chief – General Raheel Sharif. The appointment of General Qamar Javed Bajwa as Army Chief is not likely to affect the policy towards India; nor interrupt anti-militant operations in the North West.

India India is on the road to economic revival with the GDP peaking at 7.3 % in 2016. Radical economic policies such as the Demonetization Act and proposed GST Bill go towards more transparency within the national economy. However, cross border insurgency and terrorism continued to threaten the security of the nation throughout the year. There were attacks by Pakistan-based terrorist groups not just in Jammu & Kashmir (J&K), but also in Punjab, when, on January 2nd, around four to six terrorists attacked the Indian Air Force base in Pathankot. Two army camps were attacked by terrorists, near Uri town in Baramulla district, and Nagrota near Jammu, both in J&K.

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Executive Summary

South Asia Risk Review 2017

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Executive Summary

South Asia Risk Review 2017

India is facing a rising number of Islamic State sympathizers, with more than 50 key arrests in different parts of the country. Incidents of religious intolerance have also seen an upward trend, especially in the case of Gau-Rakshaks (cow-protectors) acting as an independent vigilante groups. The slew of economic reforms and well meaning governance incentives will continue to enhance investor confidence in the coming year. However, with major states such as Punjab heading for elections next year, issues such as sharing of river waters and caste-based reservation policies; the socio-economic and geo-political scenario in 2017 will merit careful monitoring.

NepalThe coalition government in Nepal of the CPN (M) and Nepali Congress has faced an administrative logjam in rebuilding the infrastructure in the country post the 2015 earthquake; and the proposed constitutional amendment that caters for the representation of minority groups (Madhesis and Tharus). This has resulted in incidents of violence in the southern fringe provinces of Nepal. The internal unrest has led to a shift in Nepal's precarious relations with India and China. The nation also remains highly susceptible to natural disasters like earthquakes, landslides, avalanches and flash floods.

BangladeshIn Bangladesh the ruling Awami League (AL) led by Sheikh Hasina has come under domestic and international pressure due to the trend of increasing Islamic religious radicalization, especially in the Northwestern part of the country. Political strikes and escalations of violence spurred by the Jamaat-e-Islami party leaders have disrupted economic progress and caused widespread destruction. The Islamic State threat in Bangladesh is ever increasing, with operatives being recruited from the educated urban youth. The rejuvenated militant organization, the Jamaat-ul-Mujahideen Bangladesh (JMB) has forged close ties with the IS and stepped up operations in the country. Religious minorities such as Christians and Hindus have come under attack from anti-government and religious hard-liner groups.

BhutanBhutan has the distinction of having the highest Gross National Income per capita in South Asia. Bhutan's Eleventh Five Year Plan of “Self-reliance and Green Socio- Economic development” has evolved in a positive manner owing to hydropower projects and a stable Bicameral Government. Corruption levels are the lowest in South Asia and the monarchy still enjoys popular public support. Urban infrastructure management, however, is an area of concern,

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Executive Summary

South Asia Risk Review 2017

especially in upcoming commercial hubs such as Thimpu and Phuntsholing. The geography of Bhutan presents major risk from landslides, flash-floods and avalanches.

MyanmarIn Myanmar, the Rohingya crisis continues to dominate the concerns of the international community. The countries citizen act does not recognize the Rohingyas who are a Muslim minority in the Rakhine state. Many within the national Buddhist population still consider the Rohingyas to be outsiders and oppose international intervention in solving the crisis. The 2008 constitution enshrines deep political powers for the military by reserving over a quarter of the parliament seats for unelected military officers, giving them an effective veto over constitution changes. Hence political reforms are slow, and despite having won the elections, the leader of National League for Democracy (NLD), Aung Suu Kyi is still barred from holding the official position of the President due to a provision in the military-drafted constitution.

Sri LankaSri Lanka has seen a relative high GDP growth rate of over 5% in 2016 which has however limited to the western part of the country. Much of the conflict based Eastern and North Eastern region has not seen any substantial growth due to the Sinhala-Tamil conflict.

Tensions between the Buddhist majority and the Muslim minority (9% of the population) remain serious. In addition, Sri Lanka is facing international pressure on the issue of the human rights violations; and the adoption of recommendations enabling permanent reconciliation between Tamils and Sinhalese. A high fiscal and public debt owing to the decade's year old war against the LTTE has limited the growth of key infrastructure projects. Being an island nation, Sri Lanka is especially at risk from natural calamities like tsunamis, floods and cyclones.

MaldivesThe Defamation and Freedom of Expression Act has severely limited the functioning of the media and other NGO's from operating in Maldives. President Abdulla Yameen's recent clamp down on civil liberties has ensured that the functioning of the opposition party, the Maldives United Opposition (MUO), is curtailed considerably. The recent exit of Maldives from the Commonwealth has further isolated the country that is also at risk of soon turning into a potential source of Islamic extremists. Crime and civil unrest is at an all-time high in Male, due to the economic stagnation.

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Afghanistan RISK MAP - 2017

South Asia Risk Review 2017

High Risk Medium Risk Low Risk

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within the country, and from one business to the other.

Risk Rating

Area

Population

GDP Growth Rate

GDP

652864 sq km

32.56 million

0.8 percent

19.33 billion USD

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

2016 2017

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The domestic security threat has increased significantly to levels witnessed at the peak of 2002 NATO occupation. However, the US drone that eliminated the Taliban leader Mullah Akhtar Mohammad Mansour in Baluchistan (Pakistan) in May 2016 provided a momentary respite to the embattled Afghan government. The Taliban swiftly announced Mawlawi Haibatullah Akhundzada, a deputy to Mullah Mansour, as its new leader; his appointment met with little criticism within the Taliban ranks.

Ever since the US and NATO handed over operations to the Afghan National Security Forces (ANSF), the Taliban have significantly increased their influence and capability throughout the country. Significant portions of Afghanistan's territory, including the provincial capital of Kunduz or multiple districts of Helmand, have fallen (at least temporarily) to the Taliban since 2015. Furthermore, several districts and provinces face a threat from the ongoing Taliban insurgency.

The US cut in troops to 3000, has left a 195,000 strong Afghan military struggling to lead the fight against the insurgents. The internal rule of law is further challenged by parallel governance structures, including courts and administrators in several provinces operated by anti-government groups, such as Taliban and other local militias.

Taliban

The largely Pashtun dominated group Taliban are active in the regions bordering Tajikistan, Uzbekistan and Turkmenistan. The group has gained momentum mainly due to the US-NATO drawdown that began in 2014. The group has crossed the barriers of ethno-linguistics and penetrated into the tribal population that

Afghan National Security Forces Fatalities

2013

0

1000

2000

3000

4000

5000

6000

7000

8000

2014 2015 2016

8

Internal Security

Afghanistan

South Asia Risk Review 2017

7000

4700

5300

Source : NSNBC International

4380

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Afghanistan

South Asia Risk Review 2017

has traditionally kept the country divided. Its regional leadership has local support and tactical knowledge of the areas. Despite recent reports of internal fighting, Taliban has been able to seize territory on multiple fronts simultaneously. They now are in command of more parts of northern Afghanistan than they did from 1996 to 2001. In 2016 they carried out multiple offensives and

threatened at least three provincial capitals – Kunduz (Kunduz province in north); Lashkar Gar (Helmand province in south) and TarinKot (Uozgan province in south).

The primary external factor for the group's success in 2016 is attributed to the poor leadership of the Afghan government. Following widespread allegations of fraud during the presidential polls in 2014, Ashraf Ghani was chosen as the president with his opponent and former foreign minister Abdullah Abdullah as his chief executive officer, in accordance with a deal to establish a national unity government. Nonetheless, the feud among the government still persists and there is clear lack of a mainstream force to combat Taliban. The Taliban continues to constitute a principal threat to the fragile government, making it unlikely that the conflict in the country may end any time soon.

The Islamic State and Al Qaeda

The Islamic State (IS) has established a small base in Afghanistan called the Islamic State in Khorasan Province (ISKP); in reference to the historical region covering parts of Iran, Central Asia, Afghanistan, and Pakistan. Nonetheless, the group wields its influence only in parts of the eastern province of Nangarhar and has

Controlled by Taliban

Contested

Previously controlled by Taliban

Kabul

Mazar‐i‐Sharif

Jalalabad

Kunduz

Ghazni

Herat

Kandahar

TalibanandIslamicStatepresenceinAfghanistan

Source: Institute for the Study of War

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Afghanistan

South Asia Risk Review 2017

failed to garner local support on the scale achieved in Syria and Iraq. Furthermore, the ISKP in Afghanistan has been weakened by the Taliban, who have killed and co-opt ISKP'S members and undermined its ideology. Additionally, the group has lost momentum due to the joint operations conducted by the Afghan and US forces against their stronghold areas in Nangarhar province.

Al Qaeda (AQ) in Afghanistan, the reason for the US invasion of that country in 2001, is still active and poses a serious threat. The group's senior leadership is believed to be present in the remote areas of Afghanistan. The Taliban under the leadership of former head Mullah Akhtar Mohammad Mansour became closer to AQ. There has been reportedly a growing partnership between the two groups; the alliance has however made difficult for the Afghan and US administrations to engage in talks with Taliban.

Political Instability

After the bitter contested presidential polls held in 2014, the conflict between the President Ghani and Chief Executive Abdullah Abdullah, and their allies has dominated the political landscape of the country. In August 2016, Abdullah denounced Ghani as unfit to

govern the country. The division within the government reached a new crisis point after the Parliament in November 2016 dismissed seven cabinet ministers who held key national portfolios such as foreign affairs and education, for their reported inability to spend the national development budget. The government has so far failed to win over the people and consequently has been unsuccessful to achieve the position of strength in order to negotiate with the Taliban.

Corruption is considered to be one of the main challenges for the government. It has been endemic throughout all layers of the government and institutions; and has exacerbated the existing divides along the ethnic and tribal lines, when corrupt governors appoint local officials, thus marginalizing the minority segments of the population.

Economic Instability

The economic conditions have been weak due to the current fragile political landscape of the country, coupled with diverse security challenges; with the country now relying heavily on international aid. Its economy has drastically contracted since the departure of NATO-led security mission as well as withdrawal of around 60,000

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Afghanistan

South Asia Risk Review 2017

US troops. The transport sector alone, which constituted roughly 22 percent of GDP, lost 100,000 jobs.

According to the World Bank, private investments have slowed down whereas the registration of new firms has declined by half since 2012. It is believed that significant amounts of private Afghan capital, potentially running into billions of dollars, are being held outside the country. With the drastic fall in revenue to the government coffers, Afghanistan will continue to depend on significant international aid to meets its expenditure in 2017.

The north-eastern region of the country bordering Pakistan is situated on an active seismic zone. The Hindukush mountain range is subject to frequent tremors and earthquakes; landslides and mudslides are also a characteristic hazard. The capital Kabul often witnesses tremors and a major earthquake in the city is possible. Avalanches are common in mountainous areas. It is estimated that at least 6,000 families (over 42,000 individuals) across 21 provinces have been affected by avalanches, flooding, landslides and heavy snowfall in the last two years.

Natural Disasters

The north-eastern region of the country bordering Pakistan is situated on an active seismic zone. The Hindukush mountain range is subject to frequent tremors and earthquakes; landslides and mudslides are also a characteristic hazard. The capital Kabul often witnesses tremors and a major earthquake in the city is possible. Avalanches are common in mountainous areas. It is estimated that at least 6,000 families (over 42,000 individuals) across 21 provinces have been affected by avalanches, flooding, landslides and heavy snowfall in the last two years.

EffectsofConflictsinAfghanistan

People reached by Humanitarian Aid (30 Jun 16)

2.1 Million

Civilians killed or injured in 2016 (30 Sep 2016)

8.4 Thousand

People internally displaced by conflict since January 2016 (30 Oct 2016)

411 Thousand

+

Source : OCHA

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pakistan RISK MAP - 2017

South Asia Risk Review 2017

High Risk Medium Risk Low Risk

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within the country, and from one business to the other.

Risk Rating

Area

Population

GDP Growth Rate

GDP

796095 sq km

188.92 million

4.7 percent

271 billion USD

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

2016 2017

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The ruling party of Pakistan Muslim League (PML – N), led by Prime Minister Nawaz Sharif, came under tremendous pressure with revelations of the Panama Papers (a leaked collection of documents pertaining to offshore finance) in 2016. The leaks reveal the involvement of several high profile Pakistanis, many with links to the ruling government, to tax-evasive offshore accounts. Although the PM was not directly linked to the report, his family members and other party members were prominently mentioned. The revelation prompted the opposition party, Pakistan Tehreek-e-Insaf (PTI) headed by Imran Khan, to launch attacks targeting the government as well as other political parties mentioned in the papers. Sharif, who is likely face a re-election in 2019, rejected the calls for his resignation; and the Supreme Court led commission to scrutinize the leaks has reduced the pressure on PML-N over the Panama Papers.

The Sharif government has displayed its resentment of losing space to the military establishment for making foreign and security policies both. Pakistan witnessed the usual discord between the civil-military institutions after the removal of Information Minister in October 2016 over a newspaper leak, which triggered a rift between the government and army. The minister is required to be out of the office until a commission confirms if he indeed was the source for a newspaper article detailing the differences between

the two institutions over the military's covert support to militant groups operating in Pakistan and Afghanistan.

Politicians and the public alike had awaited the appointment of Pakistan's new army chief, General Qamar Javed Bajwa, with interest. The reshuffle comes at a sensitive time when Pakistan's relations with India are near an all-time low. His first task must be to develop a more equitable sharing of policy and decision-making with the civilian government, with whom General Raheel Sharif was frequently at odds. Infighting between them prompted severe bouts of political and economic instability. Pakistan cannot stabilise its polity unless a more responsible civilian government is given greater authority over policies of the Army.

Islamic Terrorism

Two major sets of extremists exist in the country, which also negatively affect relations with two neighbours, India and Afghanistan. The first are the Afghan Taliban and its appendage, the Haqqani network, whose leaders remain ensconced in Peshawar and Quetta. The second group of militants, such as Lashkar-e-Tayaba and Jaish-e-Mohammed, are based in Punjab province and dedicated to attacking India.

Political Instability

Pakistan

South Asia Risk Review 2017

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Pakistan in 2016 has witnessed a record number of attacks conducted by various Islamist extremist groups. Militants, chiefly from the country's largest and most active terrorist group, the Tehrek-e-Taliban Pakistan (TTP), have increased attacks on government targets, including in major cities in reprisal for anti-militant operations in the Afghan border area and against other government policies. Furthermore, Sunni extremist groups have considerably amplified the frequency of attacks on the minority Shia Muslim community particularly in Quetta (Balochistan province). In one of the worst attacks, at least 72 people were killed and over 300 injured in a suicide bombing outside Gulshan-e-Iqbal Park in the upscale Allama Iqbal Town area of Lahore (Punjab province) in March 2016. The Islamist militant Jamaat-ul-Ahrar group, an offshoot of the TTP claimed responsibility for the attack, saying it had targeted Christians who were celebrating Easter.

The security leadership in Pakistan has unfortunately chosen to differentiate between various terrorist groups as “good” and “bad” terrorists (those that serve the Pakistani state like LeT; and the ones that don't such, as TTP).

The Islamic State (IS) group, based in Iraq and Syria does not have a strong presence in Pakistan. Nonetheless, local defectors from

other groups as well foreign fighters have pledged allegiance to IS and carried out attacks in the country. There have been reports of pro-IS leaflets and graffiti appearing in different parts of the country. There have been also reports of operational partnership between the IS and other militant groups. The group has believed to be also acted as an ideological catalyst among several religious organizations. In a recent attack in November 2016, IS targeted a Sufi Muslim shrine in Khuzdar district of Balochistan province. More than 50 people were killed and 100 others injured in the

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Pakistan

South Asia Risk Review 2017

FatalitiesinTerrorismViolenceinPakistan(2010­2016)

Source: South Asia Terrorism Portal

0

1000

2000

3000

4000

5000

6000

2010

Civilians Security Force Personnel Terrorists/Insurgents

1796

469

5170

2738

765

28003007

732

2472

3001

676

1702 1781

533

3182

940

339

2403

532204

783

2011 2012 2013 2014 2015 2016

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Pakistan

South Asia Risk Review 2017

explosion.

Pakistan has eventually admitted that the IS had a presence in the country. In this connection, 309 arrests have been made including 25 foreigners of Afghan, Syrian and Iraqi nationalities. They were involved in attacks on media and security personnel, and were planning attacks on government, diplomatic and civilian targets.

The threat of IS is now from Afghanistan where it is present in at least three border provinces of Kunar, Nangarhar and Khost; and the government plans install gates at 18 major crossing points between Pakistan and Afghanistan as part of border management.

A tribal insurgency waged by the ethnic Baloch insurgents has been running since long in the province of Balochistan. The province is rich with natural and mineral resources but one of the most backward regions of the country. The insurgents have been demanding greater political and economy autonomy from the central government and accuse the authorities of exploiting the region's natural resources. The current security situation in the province is tense and is exacerbated by the frequent insurgent attacks usually targeting security personnel and assets, and energy infrastructure; though some have also taken place near government buildings and in marketplaces.

Despite the federal government's development programs and packages for the province, the impact of such measures has been fairly negligible. The Pak-China Economic Corridor, which aims to connect port city Gwadar (located in Balochistan) to China's northwestern autonomous region of Xinjiang, has thrust the province in the limelight. The Baloch militants violently oppose the project that they allege will unduly benefit the federal government.

MajorProjectsoftheChina­PakistanEconomicCorridor

Suki KinariKhyber Pakhtunkhwa

870MW

Karot, Punjab/AJK720MW

Sahiwal, Punjab1,320MW

Bahawalpur, Punjab1,000 MW

Jhimpir, Bhambore and Thatta,

Sindh 350MW

Tharparkar District,Sindh 3,960MW

Muzalfargarh,Punjab 1,320MW

Rahim Yar Khan,Punjab 1,320MW

Port Qasim,Sindh 1,320MW

Gwadar, Balochistan 300MW

CoalHydro

Solar

Wind

NorthernEastern

Western

Central

Highway Routes Power Projects

Insurgency

Source: CPEC

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Pakistan

South Asia Risk Review 2017

The insurgency is likely to persist in the province with no tangible resolution in sight.The monsoon season, which lasts from July to September, results in severe disruption due to the country's poor infrastructure. Heavy flash floods in Balochistan, Rawalpindi, Peshawar and Chitral along the northern ranges occurred in 2016; over 290 people were killed. The monsoon flash floods in July in the Khyber Pakhtunkhwa province killed over 71 people. Severe rainfall in August 2016 in the major urban centre of Karachi in led to power outages in around 45% areas of the city; also, at least 10 people were killed in electrocution or debris falling related incidents.

Pakistan lies along the active seismic Chaman fault; and there are over twenty three active faults stretching across the North to South all the way to the Makran Coast. This makes the region susceptible to regular earthquakes. Recent seismic research indicates that the regularity of the occurrence and intensity of seismic events is also expected to increase.

Successive governments in Pakistan have failed to devise a protracted strateg y to develop the countr y's crippling infrastructure that has proved to be one of ist major growth constraints. The problem is not only compounded due to limited fiscal availability, but due to gaps in the public sector capacity to build and sustain infrastructure.

Pakistan's transportation infrastructure has suffered from government neglect, which inhibits economic growth potential. Improved quality and service coverage in power and water supply, sewerage treatment, transport and logistics are vital for Pakistan's economy and the livelihood of its people. Cities and industrial clusters need to be better interconnected by upgrading, extending and rehabilitating infrastructure. The tight fiscal situation requires an unprecedented approach that will ensure a regular flow of the investment in partnership with the private sector.

Inadequate InfrastructureEnvironmental Hazards

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Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

17

INDIA RISK MAP - 2017

South Asia Risk Review 2017

High Risk Medium Risk Low Risk

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within the country, and from one business to the other.

Risk Rating

Area

Population

GDP Growth Rate

GDP

2.97 million sq km

1311 million

7.6 percent

2095 billion USD

2016 2017

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18

Terrorism and Insurgency Terrorism and Insurgency

India

South Asia Risk Review 2017

India's internal security situation remains a key impediment to its growth. Terrorism remains a serious geo-political challenge to India's growth and stability. Cross-border terrorism showed no signs of abating in 2016, with Jammu and Kashmir (J&K) being the worst affected. In 2016 there were attacks by Pakistan-based terrorist groups not just in J&K, but also in Punjab, when, on January 2nd, around four to six terrorists attacked the Indian Air Force base in Pathankot. Attacks on India's security forces continued throughout the year, with the most brazen attack on September 18th when four militants attacked the army camp near Uri town in Baramulla district of J&K. The attack lead to “surgical strikes” by India on terrorist launch pads in Pakistan-occupied Kashmir; followed by another terrorist attack on the army garrison at Nagrota near Jammu. The year 2016 is being considered as one of the deadliest for J&K in half a decade, in terms of terror-related fatalities; 240 deaths reported in the state due to terrorism (till November). Between January and November 2016, Indian security forces killed 154 terrorists, the most since 2010.

The state of J&K also witnessed massive civil unrest after the killing a local terrorist, Burhan Wani, on July 8th, in an encounter with security forces. Kashmir valley remained under 53 days of consecutive curfew due to the unprecedented levels of violent protests that followed Wani's death; and led to the death of about

76 locals. The unrest in the valley is being used by terrorist groups to push more militants into the region as well as to recruit local Kashmiri youths. Reportedly, around 23 Kashmiri youths have turned to militancy following the outbreak of unrest in the Valley. The country's security agencies are also fighting the spread of radical ideology of the terrorist group, Islamic State (IS) or Daesh. Even though IS has not yet claimed any attacks on the Indian soil, as it has done in India's neighbourhood in Pakistan and Bangladesh, as many as 68 persons have been arrested across the country so far for being sympathisers or supporters of the IS; Maharashtra and Telangana had the highest arrests with 11 each.

In the northeastern region of the country, the age-old problem of insurgency continued to battle the Indian state. Six of the seven states are affected to varying degrees by active insurgencies of various hues and capabilities. NSCN(K), ULFA(I), GNLA, and NDFB(S) remain some of the most active insurgent groups in the region. Along with the issue of insurgency, the northeast region, especially the state of Assam, saw the presence of radical Islamist groups such as Jamaat-ul Mujahideen Bangladesh (JMB). The government needs to continue to work to bring the various insurgent groups to the negotiation table, so as to achieve long-term in the region.

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19

KeyIslamicStatearrestsinIndia

India

South Asia Risk Review 2017

AndhraPradesh

ArunachalPradesh

Assam

Bihar

Chhattisgarh

Goa

Gujarat

Haryana

Himachal Pradesh

Jammu & Kashmir

Jharkhand

Karnataka

Kerala

Madhya Pradesh

Maharashtra

ManipurMeghalaya

Mizoram

Nagaland

Orissa

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

Uttar Pradesh

Uttarakhand

WestBengal

Delhi

Telangana

February 6th – Two alleged IS operatives arrested in Delhi and Silchar

November 17th – Alleged IS operative arrested in Sikar. A Kashmir link connected to the Hyderabad module was uncovered

May 23rd – Two Kalyan youths who were promoted to head IS operations in India were arrested in Thane.

July 12th – A Parbhani based IS module was intercepted after an arrest by an IS recruit in Parbhani.

July 23rd – A suspected IS recruit was arrested in Kalyan on charges of carrying out attacks. Another individual with links to Islamic Research Foundation and IS was arrested in Navi Mumbai

February 4th – Indian Mujahideen connection in IS Recruitment within Bhatkal

July 8th – 20 people reported missing from Palakkad and are believed to have joint IS in Syria.

October 2nd – Six individuals were arrested on charges of terrorism with links to IS in Kannur

February 5th – Key arrest of an IS instigator in Hardoi

1st June- An engineering student was arrested in Hoogly with links to IS and for plotting to assassinate an MLA

July 5th- Suspected terrorist with links to IS and Bangladeshi terror group JMB arrested at Bardhaman. Another IS operative was arrested at Labhpur

February 1st 2016 - IS sympathizer arrested in Bhopal

June 29th – 11 suspected individuals with links to IS detained by NIA. Explosives and ammunitions were also recovered

October 6th – Key arrest of an IS fighter who fought in Iraq and Syria arrested in Tirunelvel

October 12th – Three suspected IS sympathizers arrested in Coimbatore

Source: MitKat Advisory Services

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20

India

South Asia Risk Review 2017

Sustained operations by the security forces, coupled with government policies, has meant that states like West Bengal, Maharashtra, Odisha, Andhra Pradesh, Telangana and Bihar have seen a significant reduction in the Maoists' activities. However, the movement remains active in parts of Jharkhand and Chhattisgarh. In addition, the operations by security forces along the Odisha – Andhra Pradesh border in late October, in which 24 Maoists were killed, showed signs that the Maoists were looking to consolidate lost ground in these regions. There were a record number of surrenders in November, of 564 Maoists and their sympathisers. This could be attributed to government policies in Maoist-affected states, along with the pressure built up by security forces.

Maoists look to establish themselves along the state borders, as a significant amount of coordination is required between different state security forces to manage security along these borders. This security loophole is what the Maoists look to exploit, to escape security operations in the Maoist strongholds, as well as to establish new bases.. Another such state border where Maoists have shown growing presence is the tri-junction area of Kerala, Karnataka and Tamil Nadu in South India; an area where security forces have, in recent years, seen a growing footprint of Maoists.

The Maoist extremism remains one of the major security and socio-economic challenge for India's hinterland, which is not expected to change in the coming year. Sustained government policies and security operations are required to tackle this problem.

Rise of Identity/Caste Politics

2016 saw an unprecedented rise in caste politics and identity politics, across the country. Upset by the high level of reservations (in the form of affirmative action) in government jobs for various disadvantaged groups, the 'higher' castes of Kapu, Jats and Marathas undertook agitations over reservations. The year started with violent protests by the Kapu community of Andhra Pradesh in East Godavari district. This was followed by the Jat community in Haryana in February, which nearly shutdown the state for several days, and led to the death of around 30 people and injuries to hundreds.

Later in the year, the state of Maharashtra, saw unprecedented (but non-violent) protests by the state's dominant community, Marathas, who comprise about 32% of the state's population. The Maratha agitation gave rise to similar agitations by the Dalit, OBC and Muslim communities in the state. All these communities held

maoism

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21

India

South Asia Risk Review 2017

protests across the state, highlighting the deep caste divides that exist in one the larges states in the country. Such mass movements also indicate the disillusionment among dominant farming communities in some of India's richest states.

Communal Conflicts

Given India's multi-ethnic composition where communities of various religions and castes live together, the country's history is no stranger to communal conflicts. Communal tension often prevails between the Hindu and Muslim communities, and are generally sparked due to some local issue which then takes on a communal colour. Groups with political affiliations often stoke tensions and incite rioters, to further their own agenda. However, there was a decline in incidents of communal violence in 2016 as compared to 2015. Uttar Pradesh, Karnataka and Maharashtra reported the most number of instances; but West Bengal and Assam also remain communally sensitive. In October 2016, in West Bengal, several areas such as Hazinagar in North 24 Paraganas, Chanchal in Malda, Chandannagar in Hooghly and Kharagpur city in Paschim Medinipur, reported communal violence during the festival season of Durga Puja and Muharram, which coincided with each other.

Every year, India receives rainfall from the southwest and northeast monsoons, which leads to heavy rainfall in several parts of India. As much as a good monsoon is required for India's agricultural and water needs, the monsoon season also brings with it massive flooding problems, not just along the regions which lie along the rivers in India but also in India's urban areas. This has been a trend year-on-year in India, and 2016 was not different.

The year saw massive deluges in the states of Assam, Andhra Pradesh, Bihar, Madhya Pradesh, Uttar Pradesh, and Telangana. The monsoon floods in the Ganga river, in August 2016, broke previous records. In Bihar, around 150 lost their lives and nearly half a million people were displaced. The unprecedented and unchecked population growth along the riverbanks has been one of the major factors causing heavy damage to life and property due to flooding. Another major factor for the flooding is increased incidents of landslides in the Himalayan region, which have resulted in increased silt deposition in the river's beds.

Natural Hazards

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India

South Asia Risk Review 2017

Religion has dominated the public discourse in India not only due to militant activities, but also because of the growing religious intolerance among various sections of the society. The year 2016 saw the rise of 'cow vigilantism' by far-right Hindu groups. In July 2016, seven members of family in Gujarat state's Una town were attacked by cow vigilantes, when they were taking a dead cow to be skinned; the cow had died of natural causes. The attack led to massive protests in Gujarat by members of the Dalit community, as well as activists and political parties demanding action against the perpetrators of this attack. Several such incidents were reported from various areas of the country, signaling the growing strength of the movement in India.

Gau Raksha or cow protection, has become both a religious and political matter in India's current political context. The Hindu-right groups such as Rashtriya Swayamsevak Sangh (RSS) and Vishwa Hindu Parishad (VHP) have been have been lobbying for a separate cow protection ministry. In Haryana, the BJP government of Manohar Lal Khattar has proposed a 'Gau-Rakshak' (cow protection) Task Force. Several Indian states have laws that make cow slaughter and consumption of beef illegal.. Cow slaughter and beef consumption are legal in only five of India's 29 states.

With no serious efforts by authorities to reign in these cow vigilantes, their strength and activities are expected to grow, posing a threat, which can manifest into violent assaults to people from lower castes and other religions.

Religious Intolerance

AndhraPradesh

ArunachalPradesh

Assam

Bihar

Chhattisgarh

Goa

Gujarat

Haryana

Himachal Pradesh

Jammu & Kashmir

Jharkhand

Karnataka

Kerala

Madhya Pradesh

Maharashtra

ManipurMeghalaya

Mizoram

Nagaland

Orissa

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

Uttar Pradesh

Uttarakhand

WestBengal

Delhi

Telangana

Source: MitKat Advisory Services

IncidentsofReligiousIntolerance2016

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India

South Asia Risk Review 2017

Despite enactment of tougher laws; harassment, assaults, molestation and rape remain a real threat for women in India, especially in rapidly growing urban agglomerates. In key economic centres of India, like Delhi, Mumbai, Bengaluru and Gurgaon, cases of harassment and molestation have continued to be on the rise. Domestic violence remains a major issue for Indian women; and statistics reveal that most of the crimes perpetrated against women are by someone known to the victim. Official figures most often are not an accurate representation of the real scale of the issue, as the stigma surrounding sex crimes usually means under-reporting.

Women's safety will remain a concern for the coming year till such time mechanisms by police forces to deal with the high rates of crime against women are strengthened; the societal attitude towards women changes, and women are made more aware of safety measures.

Health/Pandemics

Chikungunya had taken on epidemic proportions in Delhi in 2016, with almost 12,000 suspected cases recorded in the national capital.Apart from Delhi, several major cities in North India, including Chandigarh/Mohali and Lucknow witnessed a sharp

increase in dengue and chikungunya cases. Dengue has claimed 179 lives across the country in 2016. A Japanese encephalitis (JE) outbreak in Odisha's tribal-dominated Malkangiri district claimed about 100 lives. Even though JE traditionally attacks children, in recent years there have been several cases of adults dying to this viral brain infection. India's public health care system is not yet capable of handling hazards of pandemic proportions, except in the developed urban centres.

Women Safety

Malaria,Dengue,JapaneseEncephalitis(JE)­casesanddeathsrecordedinIndia(2012­2016) Cases Deaths

Malaria

Dengue

Japanese Encephalitis

1067824

2012

519

2013

881730

440 562

2014

1102205

2015

1169261

384

2016

849610

205

50222

2012

242

2013

75808

193 137

2014

40571

2015

99913

220

2016

97313

197

745

2012

140

2013

1086

202 293

2014

1661

2015

1730

291

2016

1474

256

Source: WHO

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In September 2016, violent protest broke out in Bengaluru and other regions of southern Karnataka, over the Supreme Court order on sharing of the Cauvery water between the states of Karnataka and Tamil Nadu. Curfew was imposed in Bengaluru and other parts of Karnataka, major companies had to shut their offices and declare holidays as protestors defied the curfew to riot on the streets of the state capital. Two people lost their lives in police firing and over 78 vehicles were torched during the protest. The government had to deploy 1,700 paramilitary personnel and impose curfew in parts of the city to contain the violence.

The Sutlej-Yamuna Link Canal issue between Punjab and Haryana, Mahadayi dispute between Goa and Karnataka, and the water-sharing dispute between Odisha and Chhattisgarh over the Mahanadi river, are some of the other river water disputes which remained in focus in 2016. These water disputes manifest beyond the simple disagreements between states over sharing of river waters into major political and social issues. Political groups use these issues to consolidate these votes, by portraying themselves as champions of these causes for their people. These disputes turn into now turned into a battle of identity politics between the two states, which are then exploited for political gains.

With the state of Punjab slated to head for elections next year, and other states to following the next year or two, these water disputes are expected to remain the issue of contention between neighbouring states, and a tool for political parties to gain votes.

24

India

South Asia Risk Review 2017

River water disputes

CauveryRiverDispute

5 177556

99.8465 9.3

556

419

727030

KERALAKARNATAKA

TAMIL NADU + PONDICHERRY

KERALAKARNATAKA PONDICHERRY

TAMIL NADU

KERALAKARNATAKA

PONDICHERRY

TAMIL NADU

TMCTMC

TMC

TMC TMC TMC

TMC

TMCTMC

TMC

TMC

(as per Agreements of 1892 & 1924)

AGREEMENTS OF 1892 & 1924

WHAT THE 4 STATESSOUGHT FROM THE

CAUVERY WATERDISPUTES TRIBUNAL

WHAT THE CAUVERY WATER DISPUTES

TRIBUNAL AWARDED

Source: Network 18

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India

South Asia Risk Review 2017

IndiaConflictMap

Andhra Pradesh

Arunachal Pradesh

Assam

Bihar

ChhattisgarhGujarat

Haryana

Himachal Pradesh

Jammu & Kashmir

Jharkhand

Karnataka

Kerala

Madhya Pradesh

Maharashtra

Manipur

Meghalaya

Mizoram

Nagaland

Orissa

Punjab

Rajasthan

Sikkim

Tamil Nadu

Tripura

Uttar Pradesh

Uttarakhand

West Bengal

Delhi

Telangana

Jammu & Kashmir

LeT, JeM, HuM, HM, UJC, JuM

Madhya Pradesh

CPI (Maoists)

Chhattisgarh

CPI (Maoists)

Maharashtra

CPI (Maoists)

Karnataka

CPI (Maoists)

Kerala

CPI (Maoists)

Tamil Nadu

CPI (Maoists)

Telangana

CPI (Maoists)

Andhra Pradesh

CPI (Maoists) Odisha

CPI (Maoists)

West Bengal

CPI (Maoists) JMB

Jharkhand

CPI (Maoists), TPC, PLFI, JMB

Tripura

ATTF, NLFT

Uttar Pradesh

CPI (Maoists)

Bihar

CPI (Maoists)

Meghalaya

ANLA, ASAK, ANLCA, ATF, ANUF, HNLC,

LAEF, GNLA

Uttarakhand

CPI (Maoists)

Assam

ULFA(I), JMB, NDFB-(S),CPI (Maoists), MULTA,

KPLT, PDCK

Arunachal Pradesh

NSCN(IM), NSCN(K),NLCT, TLNLT

Nagaland

FGN-NA, FGN-A, NSCN(K), NSCN(R),

NNC-NA, NNC-Accordist

Manipur

CorCom, MNRF, NSCN-IM, NSCN-K, PULF, ZUF, PLA, MNPF, KCP, KCP-PM, KCP-MJC, KCP-Tamganbaon, KCP-MC, KCP-Poirei Lup, KCP-Poirei Meitei, KCP-

Mangal, KCP-N, KCP-Nandu, PLA, PREPAK, PREPAK-Pro, KYKL, UNLF

Mizoram

HPC(D)

Source: MitKat Advisory Services

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Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

26

ne alp RISK MAP - 2017

South Asia Risk Review 2017

High Risk Medium Risk Low Risk

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within the country, and from one business to the other.

Risk Rating

Area

Population

GDP Growth Rate

GDP

0.143 million sq km

28.51 million

2.7 percent

21.19 billion USD

2016 2017

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The promulgation of a new constitution triggered the agitation by Madhesis (people of ethnic Indian origin, occupying the southern plains in Nepal) in September 2015 which lasted till early February 2016. The unrest had resulted in a border blockade of Nepal with India, severely affecting the supply of essential goods such as fuel, food and medical supplies, among other items. The Madhesi political parties continue to pressurize the government to meet their demands, such as an affirmative action through proportional inclusion in State organs, and a revision of the boundaries of states for political power.

Several groups have remained dissatisfied with the way the Madhesi agitation was called off. Fringe Madhesi outfits have been competing with each other to engage in more radical politics. In May 2016, a series of capital-centric protests were held in Kathmandu, led by a loose coalition of 29 Madhesi and indigenous parties under the banner of Sanghiya Gatbandhan, or federal alliance.

In August, the United Democratic Madhesi Front (UDMF) agreed to support Pushpa Kamal Dahal in the prime ministerial election. The Nepali Congress, the Communist Party of Nepal-Maoist Centre (CPN-MC) and the UDMF have agreed that the new government would table a Constitution amendment proposal at the Parliament

to address demands of the agitating parties. It remains to be seen if the present government can successfully address the concerns of the Madhesis and prevent further unrest.

27

Madhesi agitation

nepal

South Asia Risk Review 2017

Jhapa

Morang

Sunsari

Saptari

Siraha

DhanushaMahottari

SarlahiRautahatBara

ParsaChitwan

NawalparasiRupendehi

Kapilvastu

DangBanke

BardiyaKailali

Khanchanpur

Kathmandu

Udayapur

Surkhet

DistrictsaffectedbyMadhesiAgitation

Source: Himalayan Times

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nepal

South Asia Risk Review 2017

Following the 2015 earthquake, the country was confronted with another crisis triggered by the Madhesi blockade at a crucial crossing on the border with India, which resulted in the halting of oil and other essential supplies. The Nepal government called the standoff an “unofficial blockade” by India as it alleged that India had supported the Madhesis who are ethnically, linguistically and culturally close to the people of Indian states of Bihar and Uttar Pradesh. The Indian government denied its role in the imposition of a blockade on Nepal; but the feeling has taken root in Nepal that some of the Madhesi demands are framed in terms of India's strategic interests.

While India's help was crucial in striking a peace deal in 2004 that led to the comprehensive peace deal between the Nepalese government and the Maoists, there has been a growing perception in Nepal that India's involvement in the internal affairs of the country stems from the latter's interests over hydropower energy, development projects, business, and trade.

Following the blockade along the border with India last year, economic and security analysts have emphasized the need for Nepal to engage with China. While Nepal has an open border with India on three sides, it has only two open trade points with China.

China's interest in Nepal stems from the fact that Nepal shares a 1,400 kilometer long border with Tibet Autonomous Region which is a sensitive area for the Chinese in terms of security.

Over the last few years, China has also invested in infrastructure development in Nepal. Several of the highways in Nepal like the Kodari Highway, Prithvi Highway and Narayan Ghat-Gorkha Highway have been built with Chinese aid.

Ethnic Divide

In May 2016, 27 parties representing Madhesis, Janjatis and other Nepali ethnic minorities, under a loose coalition called the Sanghiya Gathbandhan, or Federal Alliance, marched through central Kathmandu; and presented a 26-point memorandum to the government demanding the redrawing of provincial boundaries and other crucial amendments to the current Constitution. The traditional ruling class Brahmins and Chetris feel that such constitutional measures may aggravate the ethnic divide in a country that has already endured near-constant political turmoil.

Changing dynamics of Nepal's relations with

India and China

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nepal

South Asia Risk Review 2017

The government's failure to ensure equal access to political representation, public services and opportunities to those from the Tarai and Madhes region has remained since long, and these protests were a manifestation of this discontent. In the eastern part of the country the members of the Tharu ethnic group shut down several districts with general strikes demanding Tharuhat state. Similar demands have been raised by members of the minority Mithila speaking group who have been demanding a Mithila state.

The present government has admitted that the purported federal structure as mentioned in the Constitution had failed to properly divide the regions and has given an assurance to rectify this.

Natural Disasters

Nepal is situated in an active seismic zone and the central regions, including the densely populated Kathmandu valley, are prone to tremors. Earthquakes of more than or equal to 5.0 on the Richter scale have occurred at least once every year since 1987, with the exception of 1989 and 1992 when no such events were recorded; including the two major ones in 2015.

The lower reaches of the Himalayan Range witness an

unprecedented 75 percent of all natural landslides during the monsoon months resulting in loss of life and property. In 2016 there were around 73 landslide related deaths during the monsoon season. Poor construction of roads and unplanned civil engineering regulations contribute to landslides especially in the Bajura and Gorkha districts.

The aftershocks of the 7.8 magnitude earthquake that hit Nepal in 2015 have caused over 4,000 landslides in the country since the last year. Landslides in Nepal not only result in loss of lives but also cause considerable damage to already inadequate infrastructure such as roads, hydropower plants, irrigation and drinking water facilities. Landslides make it difficult to access many remote regions of the country as falling debris often block the roads.

Flash floods in Nepal are often triggered by cloudbursts in the mountain areas on the Tibet side, bringing high-intensity rains within a short period of time. In 2016, flash floods caused damage to major roads and hydropower projects, including the Bhotekoshi Hydropower Project. 68 people died due to flash floods and several others missing.

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nepal

South Asia Risk Review 2017

LandslideSusceptibilityMap­EarthquakeTriggered LandslideSusceptibilityMap­PrecipitationTriggered

Low Medium HighNegligible Low Medium HighNegligible

1130‐41251‐33

Households Affected

Districts Affected

Flood Flood & Landslide Landslide

LandslidesandSeismicHazards

Source:NepalHazardsRiskAssessment

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Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

31

bangladesh RISK MAP - 2017

South Asia Risk Review 2017

High Risk Medium Risk Low Risk

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within the country, and from one business to the other.

Risk Rating

Area

Population

GDP Growth Rate

GDP

0.130 million sq km

160.99 million

6.6 percent

195 billion USD

2016 2017

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Terrorism

bangladesh

South Asia Risk Review 2017

Bangladesh witnessed a series of brutal attacks by machete wielding terrorists, against secularists, Buddhists, Hindus, Shias, foreign nationals, and other minorities in 2016. Several of these were claimed by IS and Al Qaeda (AQ) affiliates. Its worst terror attack was on 1st July 2016 when seven gunmen stormed an upmarket restaurant in the diplomatic Gulshan area of Dhaka, and shot dead foreign hostages, including nine Italians, seven Japanese, one US, and one Indian national. Two Bangladeshis and two policemen were also killed. Islamic State (IS) had claimed the attack, and its media arm, Amaq, had also released photos of five of the attackers. The attack has put Bangladesh firmly on the global terror map, alerting the international community to the growing influence of IS in one of the most populous Muslim countries in the world. The political and security developments in Bangladesh indicate that the Dhaka attack was the next step in the steady escalation in terrorist attacks over the past couple of years.

The government denies the involvement of IS and have declared that these were carried out by politically motivated local groups. The Neo-Jamaat-ul Mujahideen Bangladesh (JMB) was considered responsible for the Dhaka attack, as well as other previous attacks, including those targeting foreign nationals. The group is considered the resurfaced version of JMB, a local Islamist militant group, which carried out series of bomb blasts a decade ago.

However, Neo-JMB is purportedly inspired by the ideology of (IS), and recruits of the Neo-JMB include tech-savvy youngsters apart from madrassa students. This is in contrast to the older JMB that recruited madrassa students from rural and poor background. Bangladesh is witnessing a dangerous trend of affluent and educated people getting attracted to extremism.

Since the attack on July 1st, the government began a crackdown on militant activities nationwide; and reportedly around 41 JMB terrorists have been killed and 80 others have been arrested across the country. Among those killed were Neo-JMB's financier, and mastermind of Gulshan attack, Tamim Ahmed Chowdhury, the IS chief in Bangladesh.

The attacks in Bangladesh are manifestations of the growing divide between the secular and religious groups; with political space for the religious right being occupied by extremist groups, whose version of Islam is attracting the youth. The attacks are also a result of young radicalized Bangladeshi Muslims wanting to be part of the global jihad movement.

The government has managed to crackdown on the extremists' activities post the Dhaka attack, but the process of bringing long-term political and security stability in Bangladesh, would require

32

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bangladesh

South Asia Risk Review 2017 33

Dhaka

Tangail

Jhenaidah

KushtiPabna

NatoreRajshahi

Gaibandha

Kurigram

Panchagrah

Bandarban

22 March

KurigramChristian convertHossain Ali Sarker

30 April

TangailTailor Tangail Nikhil

Chandra Joarder

1 July

DhakaHoley Artisan Bakery,

22 Killed

21 February

PanchagarhTemple priest

Joggeshwar Roy

25 May

GaibandhaShoe trader DebeshChandra Pramanik

8 February

GaibandhaBusinessmanTarun Datta

22 April

Rajshahi UniversityProf AFM RezaulKarim Siddique 5 June

NatoreChristian grocer

Sunil Gomez

10 June

PabnaHindu priest

Nityanando Pandey

20 May

KushtiaHomoeopath

Sanwar Hossain

7 January

JhenaidahHomoeopath Chhamir

Uddun Mandal

14 March

JhenaidahHomoeopath Abdur Razzaq

7 June

JhenaidahHindu priest Anando

Gopal Ganguli

1 July

JhenaidahHindu priest

Shymanondo Das

14 May

BandarbanBuddhist monkMaung Shue U

30 June

BandarbanAL Leader Mong

Sanu Marma

2014Civilians | 29Security Force Personnel | 9Terrorists | 22

2015Civilians | 23Security Force Personnel | 2Terrorists | 31

2016Civilians | 42Security Force Personnel | 4Terrorists | 54

Fatalities‐Islamist Terrorism 2014 ‐ 2016

IslamicStateAttacksinBangladesh­2016

Claimed Suspected Source : The Dhaka Tribune

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34

bangladesh

South Asia Risk Review 2017

sustained efforts from the government, which is likely to persist in 2017. Nonetheless, the authorities may find it difficult to detect and prevent one-off attacks against less secure soft targets.

Political Instability

The Awami League (AL) led by Sheikh Hasina has consolidated its power since the 2014 national elections. However, the opposition Bangladesh Nationalist Party (BNP) of Khaleda Zia, does not have formal political representation owing to its boycott of the 2014 election.

The historic rivalry between the major political parties has resulted in regular strikes, often accompanied by violence. The local body polls held between March and June 2016 were marred by deadly clashes and widespread irregularities. At least 101 people were killed and over 6,000 others were reportedly injured in the election related violence.

Furthermore, the trial and execution of Jamaat-e-Islami (JeI) leaders, the religious party accused of war crimes, continued in 2016, causing massive rift between Sheikh Hasina's government and the political opposition.

Islamist extremists have taken the advantage of the on-going political conflict between the ruling AL and BNP opposition. They continue to direct their wrath against any individuals or groups that profess secularism, and have also expressed unrelenting hostility towards sectarian and religious minorities, prompting authorities to launch a nationwide anti-militant clampdown. Amidst the growing rate of extremism in the country and related attacks, there has been a serious decline in respect with freedom of expression and the rights of freedom of association, religion or belief in Bangladesh.

The massive political divide in the country has also the potential to threaten both the economic and social fabric. Regular periods of political instability combined with Islamist extremism, offers a fertile ground for terrorist groups to breed and develop in Bangladesh.

Road Safety

According to the Safe Roads and Transport Alliance (SROTA), on average nearly 4,000 people die every year in Bangladesh due to road accidents. 56 percent of the accidents take place on highways, 23 percent in urban areas, and 21 percent in rural areas. The main

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bangladesh

South Asia Risk Review 2017

causes for road accidents are lack of safety awareness, over-speeding, overloading, overtaking by motor vehicles; and the unregulated movement of non-motorised vehicles along with motorised vehicles on the same route. The road safety problem has become one of the major issues for transport regulators and traffic law enforcers. The World Health Organization pointed out that pedestrian mortality in Bangladesh is 10 per cent higher than the global average.

There is a heightened risk of road traffic accidents during Ramadan, particularly in the hours preceding the breaking of the fast (Iftar) as people rush to get home. Blocking of roads by protesters is a

common practice. Regular shutdown strikes and associated demonstrations can impact on the ability to conduct intra-city and intercity road travel. Furthermore, road travel may be disrupted during the monsoon season (June-September) in major urban centres due to inundated roads and resultant traffic jams.

Natural Hazards

Bangladesh faces extreme risks from climate change and ranks high on the Climate Change Vulnerability Index. Being mostly a low-lying area, situated at the confluence of two large Asian rivers (the Ganges and the Brahmaputra), much of the country is prone to widespread seasonal flooding. Floods continue to remain a serious concern to life and property in Bangladesh, especially in the central and southern districts. A very high population density aggravates the impact of localized disasters.

Several regions in the country face the threat of natural disasters, including floods, cyclones, drought, waterlogging, landslides, and salinity. An assessment of vulnerability according to divisions revealed that Dhaka and Sylhet are most vulnerable to floods, Rajshahi and Rangpur to drought, Chittagong and Khulna to waterlogging, Barisal and Chittagong to cyclones, Rangpur and

0

500

1000

1500

2000

2500

3000

3500

4000

Number of Accidents Death Injury Source : Bangladesh Police

2009 2010 2011 2012 2013 2014 2015 2016

OverviewofRoadAccidentsinBangladesh

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36

bangladesh

South Asia Risk Review 2017

Rajshahi to tornadoes, and Khulna and Chittagong to salinity. Bangladesh saw a record number of deaths (300) due to lightning strikes in 2016. This triggered the government to include Lightning Strikes to the country's list of natural disasters.

The frequency, unpredictability and severity of these disasters is likely to continue due to global warming, population growth, environmental degradation, and ill-maintained infrastructure. Contributory factors such as poor town planning, overcrowding and weak infrastructure amplify the threat of disasters to urban communities, particularly in cities vulnerable to earthquakes. Dealing with these many hazards remains a major challenge for the government.

FloodProneAreas

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As per the World Economic Forum's Global Competitiveness Report for 2016-17, the country's inadequate infrastructure was listed as one of the primary obstructions to doing business. The country's infrastructure competitiveness was positioned 114th out of 138 countries.

The 7th Five Year Plan assesses that about US$ 410 billion is required to finance the country's infrastructure, twice the size of its GDP. Although the private sector can contribute to the public funding, nonetheless the country requires public sector funding for investments in transport, river management and other infrastructures.

The government has undertaken several massive infrastructure projects to achieve the sustainable economic welfare. The Padma Padma Bridge is a rail road bridge planned to built across the Padma River. After its completion, the bridge will be the largest in the country linking Louhajong, Munshiganj to Shariatpur and Madaripur and connecting the south-west region to northern and eastern regions. Development of several seaports has been planned; which after completion will play a crucial role in supporting the country's seaborne trade. Even with these and other projects, Bangladesh requires strong structural reforms and effective public investment efforts to revamp the infrastructure.

37

bangladesh

South Asia Risk Review 2017

Lack of Infrastructure

Barisal

Bangladesh

Chittagong Dhaka Khulna Rajshahi Sylhet Rangpur

4.39% 4.23% 4.56% 5.05% 4.25% 5.12% 4.56% 4.63%

HouseholdsinDisaster­ProneAreas

Source : World Food Program Bangladesh

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Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

38

bhutan RISK MAP - 2017

South Asia Risk Review 2017

High Risk Medium Risk Low Risk

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within the country, and from one business to the other.

Risk Rating

Area

Population

GDP Growth Rate

GDP

0.038 million sq km

0.77 million

6.5 percent

2.05 billion USD

2016 2017

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39

Political Stability

bhutan

South Asia Risk Review 2017

The Bicameral Parliament in Bhutan has enjoyed success, with its transition from monarchy being peaceful and smooth. Corruption has also seen a drastic dip with the introduction of the ACC (Anti-Corruption Commission) in 2011 with the Monarchy and current government supporting all its findings.

Natural Calamities

Bhutan's geographical location, geology and climate make it extremely vulnerable to natural disasters. Seasonal calamities,

such as landslides, rock-slides, flash floods, GLOF (Glacier Lake Outburst Floods) and avalanches occur in a regular pattern. The Southern region of Bhutan is especially prone to flash flooding and landslides due to the gradient and soil profile. In August 2016, heavy rain caused flash floods in most of the country's rivers leading to severe damage in the southern foothills of the country. Several highways, the lifeline of the tiny Himalayan nation were blocked at several places. In the border town of Phuentsholing, the Amochhu river washed away about 80 per cent of the road and the small town of Sarpang was completely washed away. An increase in seismic activity and aftershocks from earthquakes in the surrounding Himalayan region also continue to be seen on a regular basis in Bhutan.

Lack of infrastructure

With the rapidly growing urban population, the urban centers, Thimphu and Phuntsholing, in particular, are experiencing adverse effects of urbanization such as water shortages, housing scarcity, sanitation and waste disposal problems, deterioration of air quality through pollution and proliferation of squatter settlements in sensitive environment areas.

Bhutan:SeismicHazards

Source : UNDP

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The Gross National Income per capita is the highest in South Asia. Hydropower exports contributes to about 40% of Bhutan's revenue and 25% of its GDP, but this increased dependence on hydropower sales has contributed to a steep rise in Bhutan's debt. These hydropower projects have also resulted in environmental impacts, affecting deforestation, dust pollutants and water resources.

The country embarked on a far-reaching development strategy that has been articulated in a series of five-year development plans. The impact of the ongoing turbulence in global financial and exchange markets is expected to remain moderate on Bhutan's economy, mostly through higher imported inflation and lesser tourism earning in the event of a global economic slowdown.

Bhutan being landlocked between China and India, has helped reduce its exposure to global terrorism, illegal arms and the drug trade. The country has also stringent measures in place for visa screening to limit the number of tourists who could potentially influence the drug trade in the country. Demographically, over two thirds of the population are Vajrayana Buddhists and one third Hindus, while Christians and other minorities form the remainder of the population. Secretarial violence has been minimal, crime and drug abuse related incidents are sporadic. Indian criminal groups have occasionally taken advantage of the porous border to operate in Bhutan's frontier regions.

40

bhutan

South Asia Risk Review 2017

Socio - economic outlook

MajorHydroPowerProjects

Small­MediumProjects

Large­MediumProjects

Existing­MediumProjects Source: Central Electricity Authority India

Internal Security

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Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

41

myanmar RISK MAP - 2017

South Asia Risk Review 2017

High Risk Medium Risk Low Risk

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within the country, and from one business to the other.

Risk Rating

Area

Population

GDP Growth Rate

GDP

0.65 million sq km

53.89 million

7.3 percent

62.6 million USD

2016 2017

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Myanmar is undergoing a historic transformation. The country has faced political instability due to the call by many of its ethnic minorities for independence. This resulted in economic stagnation as well as estrangement from the international community. The country nonetheless has since 2011 embarked on economic and political reforms; the army ostensibly handed over power to a quasi - civilian administration. General elections were held in November 2015, in which the opposition party, New League for Democracy (NLD), led by Aung San Suu Kyi won a landslide victory. The military-backed Union Solidarity and Development Party (USDP) accepted the results and a smooth and peaceful transition of power took place. The NLD led government assumed office in March 2016 as the first civilian government in five decades. The NLD wants to demilitarize Myanmar's politics, but effectively needs the support of the military to do this.

The government has signed peace accords with several ethnic-separatist groups since late 2011; a Nationwide Ceasefire Agreement (NCA) was signed in October 2015 with the major ethnic armed groups. The country's two major armed groups, Kachin Independence Organization (KIA) and The United Wa State Army are not signatories of the 2015 NCA, and sporadic clashes between the rebels and security forces are reported in insurgency-affected areas.

Sporadic clashes between rebel and armed forces have been reported in 2016 in northern Shan state as well as northern and eastern Kachin state. Groups such as Myanmar National Democratic Alliance Army ( M N D A A ) , t h e Ta' a n g National Liberation Army (TNLA), the Shan State Army-North (SSA-N) and the KIA are active in these two states. These groups have not signed the peace deal with the government; thus further armed clashes are likely to persist mainly in the remote areas of t h e s e t w o s t a t e s . A n estimated 96,400 people remain displaced in Kachin and Shan states as a result of the on-going armed c o nf l i c t s b e t we e n t h e Burmese army and ethnic armed groups.

42

Political Processes

myanmar

South Asia Risk Review 2017

Ethnic insurgency

Source : Economist

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Myanmar is also fighting illegal extractions of minerals in the country. China's jade obsession drives a multi-billion dollar black market that fuels a drug-infested jade mining industry in Myanmar. The country's most notorious army figures and drug lords, who use hidden company networks to cover their tracks and escape scrutiny, control the jade industry, especially in the northern Kachin state. Jade has been at the centre of one of Myanmar's longest running disputes between government forces and the rebel Kachin Independence Army/Organisation (KIA/KIO) in Kachin state, and the United Wa State Army in northern Shan state.

Rubies are the most expensive gems per carat, and Myanmar is blessed with an abundance of them, especially in the Mogok Valley. However, the illegal mining of rubies, not only helped fund the military junta, but also exacerbated human rights violation such as child labour (children are used to reach the deepest, smallest, and most dangerous pits).

Due to a United States embargo on the import of Myanmar jade and rubies, many stones were illegally smuggled out of Myanmar, and then sold on the international market. As part of the political and economic reform process, smaller local and non-military affiliated businesses are now mining jade and rubies, and there is greater focus on improving mining conditions and the

environmental impact.

Drug Trade

T h e c u l t i v a t i o n o f o p i u m p o p p y a n d p r o d u c t i o n o f methamphetamine in the lawless, northern hinterlands have long made Myanmar one of the centers of the world's drug trade. Narcotics politics have dominated the Golden Triangle region (where the borders of Myanmar, Laos and Thailand meet) for

43

myanmar

South Asia Risk Review 2017

Illegal mining

OpiumpoppycultivationinSoutheastAsia,1998­2016(Hectares)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

19981998

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

Hac

tare

s

Laos Myanmar Thailand

2016

Source: United Nation Office on Drugs and Crime

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44

myanmar

South Asia Risk Review 2017

decades. The total area under poppy cultivation in 2016 was some 55,500 hectares, and has steadily risen since 2006, mostly in Kachin and Shan states, where the government has long fought rebel groups. Opium in particular continues to be the mainstay of the local economy. Production of heroin, which is refined from opium sap tapped from the poppy plant, is second here only to Afghanistan. The country has seen almost-daily seizures of large a m o u n t s o f d r u g s s u c h a s Ya b a , w h i c h i s a m i x o f methamphetamine and caffeine, made in mobile factories in the same regions. A burgeoning drug trade with southern China has added to the problem.

Conflict is fueling the drugs, and the drugs are fueling the conflict. The vast profits have led to a variety of armed groups actually controlling the drug trade. Myanmar's northern border zones are controlled in part by armed ethnic groups, and none of these groups was among the factions that signed the cease-fire last year. Government-backed militias too have long been permitted to indulge freely in the narcotics trade in return for their help fighting ethnic armed groups. Border Guard Forces (BFG) are part of a government scheme introduced in 2009 and are ethnic armed groups that signed a ceasefire with the military government. The border guards have also been linked to the trade of illicit narcotics.

Myanmar is a multicultural society with 135 communities; but the country's citizenship act does not recognise the Rohingyas as one of the “national races”. The Rohingyas are a Muslim ethnic minority living in northern Arakan and Rakhine State in western Myanmar, and parts of Bangladesh. The 1.1 million people from the community lack documentation to satisfy the constitutional requirement that their ancestors settled in the country before 1823. Despite Myanmar's transition towards democracy in the past five years, the country's government refuses to address the issue.

The Rohingyas are a community whom no country wants. Myanmar, which they consider their home, calls them Bengalis, denies them citizenship rights, looks away as they become targets of ethnic violence, packs them in squalid camps, but refuses to let them leave the country. The Rohingyas pay human smugglers and make their way to neighbouring Bangladesh, where they are repulsed. Sick and starving, the people crowd rickety boats and float adrift for weeks in the Indian Ocean waiting for the tension to abate. This has been the fate of the Rohingyas for decades.

In the latest round of violence against them, the community has been targeted after Islamist militants attacked Myanmarese security forces, killing a dozen law enforcers early this month.

Conflict in Rakhine state and

Buddhist hardliners

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Around 60 unidentified assailants ambushed at least two army personnel in Maungdaw town in November 2016. In retaliation, the security forces trained their guns on the Rohingyas. Further violence was reported in Maungdaw in the same month, when around 500 armed men clashed with the troops; around 70 people were killed in the fighting. There is an elevated risk that the recent clashes could trigger violence between the Rakhine Buddhist majority and the Rohingya Muslim minority.

Ashin Wirathu, the Mandalay-based Buddhist monk who spearheads the anti-Rohingya campaign, warns of Myamar being threatened by an influx of “Muslim hordes”. The refusal of Suu Kyi and the Myanmarese leadership to condemn him (and the international community's apathy to the Rohingya problem) is a glaring failure in view of the region's fragile ethno-religous balance. Radical Buddhists nationalism has been on rise in Myanmar especially in the post-reforms, political liberalisation period.

Myanmar, Bangladesh and India are part of a geographical continuum; persecution of a community in one part has ripple effects in the rest of the region. It is time leadership in the region recognizes that protecting the rights of the minorities holds the key to political stability..

45

myanmar

South Asia Risk Review 2017

RohingyaMigrationfromMyanmarinSouthEastAsia

Source : Washington Times

A boat of 300migrants. Including

women andchildren, was not

given permission toland on May 14.

1,018 Rohingya andBangladeshi

refugees detainedIn Langkawi on May11. Malaysia said itwould push boats

full of migrantsback to sea.

About 600 Rohingyarefugees rescued on May

11. Indonesia providedfood, water and medicalsupplies before sending

the boat towardsMalaysia.

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Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

46

sri lanka RISK MAP - 2017

South Asia Risk Review 2017

High Risk Medium Risk Low Risk

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within the country, and from one business to the other.

Risk Rating

Area

Population

GDP Growth Rate

GDP

0.62 million sq km

20.96 million

4.8 percent

82.3 billion USD

2016 2017

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Sri Lanka being a small island nation, located in the Indian Ocean, falls in the path of two monsoons, thus triggering weather related hazards. The monsoon season is between December and March in the north-east region and between May and October in the south-west. Floods occur mostly due to monsoonal rain or effects of low pressure systems Droughts in the country are also a serious concern, caused by the failure of rainfall. Sri Lanka is also prone to hazards such as landslides, lightning strikes, coastal erosion, epidemics. In May 2016, Sri Lanka was hit by a severe tropical storm that caused widespread flooding and landslides in 22 districts out 25 districts; around 100 people were killed and 300,000people were displaced. Since September 2016, a severe drought situation in Ampara, Polonnaruwa, Trincomalee, Hambantota, and Monaragala districts caused water shortages.

Underdeveloped infrastructure

Sri Lanka has a huge backlog of infrastructure development, and a massive infrastructure push is required to enable regions outside the most socio-economically developed Western Province, to share the growth benefits. This is particularly true for areas affected by conflict, which have virtually fallen off the economic development map over the last two decades. A significant lack of infrastructure such as roads, electricity, and irrigation and communication facilities limits people's opportunities to earn income through non-agricultural activities.

47

Natural disasters

sri lanka

South Asia Risk Review 2017

FloodsandLandslides

Source: OCHA

The number of people affected

More than 5,000 people

Between 1,000‐5000 people

Less than 1,000

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sri lanka

South Asia Risk Review 2017

Road networks are under severe strain due to the rapid increase in the number of vehicles. With a rising number of vehicles, and the need for a more efficient road network to facilitate the movements of goods and services, the government is actively engaged in improving, rehabilitating, and extending the existing network. Trying to develop its infrastructure to increase its economic potential has plunged Sri into, and prompting an IMF bailout. In addition to racking up large amounts of government debt via the usual channels, it's now becoming evident that the previous government also utilized state-owned enterprises to take out additional loans on its behalf. Much of Sri Lanka's pile of debt accrued in the execution of large-scale infrastructure projects under the direction of former president Mahinda Rajapaksa.

There is an absence of committed economic/development plan for the country; lack of coordination and integration among the relevant sectors and lack of policy instruments to govern infrastructure development and its share in the national economy.

Civil disturbance

For the bulk of its post-independence history, Sri Lanka has been dominated by the conflict between the Sinhalese and the Tamils.

Since the mid 2000s, however, Sri Lanka has seen clashes between Buddhists and Christians or Muslims. Lately, several Buddhist nationalist groups have emerged, including the Bodu Bala Sena (BBS), which has adopted a militant position with considerable support from the authorities. Such groups have been known to engage in arson and vandalizing Muslim owned business and religious sites. Continued marginalization of the Muslim community in Sri Lanka has produced a conducive environment for extremist elements to breed.

In November 2015, the Islamic State revealed the identity of the first Sri Lankan national killed in Syria, fighting for the Islamic State. . This crisis is a result of raging conflicts; first, between Sri Lanka's Islamic minority against the Buddhist and the Tamil majority and the second, more importantly, conflicts within the Islamic community in Sri Lanka among its various sub-groups. The civil war pitted the Tamil militant group, the LTTE , against the Sri Lankan government forces. The 26-year civil war that ensued, which ended with the LTTE's military defeat in 2009, would come to claim the lives of between 80,000 and 100,000 people. Tensions have always run high in Jaffna peninsula on Martyrs' Day (27th November). For many of those in the north and east of the country, where the worst of the war was experienced, harmony cannot materialize when so many scars of war remain.

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maldives RISK MAP - 2017

South Asia Risk Review 2017

High Risk Medium Risk Low Risk

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within the country, and from one business to the other.

Risk Rating

Area

Population

GDP Growth Rate

GDP

300 sq km

0.37 million

3.5 percent

3.435 billion USD

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

2016 2017

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Islamic Terrorism

maldives

South Asia Risk Review 2017

The international community, national political and civil groups have censured the Maldives government under President Abdulla Yameen over the clampdown of civil liberties. Despite the constitutional guarantee of freedom of assembly without prior permission, a ban on street protests in the capital city of Malé has been in force since November 2015. In addition, the ruling party-dominated parliament also passed a controversial bill restricting protests and gatherings to few designated areas designated in Malé.

Another regressive development was the passage of the Defamation and Freedom of Expression Act, which became a law on August 11�� 2016. The defamation act prescribes steep fines for slander, and a jail term of up to six months for those unable to pay the fine. According to the provisions in the bill, journalists will be barred from reporting on allegations if the accused refuses to respond. Consequently, the bill's passage led to the abrupt closure of the Maldives' first private TV station, and police raids on the offices of media houses and NGOs in Malé with a court warrants over an alleged coup plot. Prominent members of the international community have denounced the defamation bill, labeling it as a serious set back to civil liberties. .

The department of immigration has also set new rules requiring background checks on foreign journalists and photographers visiting the Maldives. The move comes amid growing international press coverage of a protracted political crisis, including a documentary about alleged corruption and abuse of power by President Abdulla Yameen. At least four journalists and a photographer have been deported from the Maldives in the past year and slapped with a ten-year entry ban.

Political Instability

The past year was yet again marked by political turmoil between the current government led by incumbent President Abdulla Yameen and the opposition led by former President Nasheed. Anti-government sentiment remained high, fueled by the jailing and exile of key opposition leaders and an alleged corruption scandal that has mired President Abdulla Yameen and his loyalists. In June 2016, opposition leaders in exile formed The Maldives United Opposition (MUO), coalition to lead the fight for the restoration of democracy in the Maldives. Former President Nasheed, who was granted political refugee status by the British government in May 2016, was believed to have travelled to Sri Lanka in August, with

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other leaders of the MUO. This sparked rumours of an imminent coup plot, which led to a raid at the ex-President's family house and warrants being issued against opposition leaders. Meanwhile, former President Gayoom's statements providing tacit support to the opposition's stands on issues have suggested that the factional strife between loyalists of the former President and the incumbent continues unabated.

In a surprise development, Maldives quit the Commonwealth on October 13th after accusing the intergovernmental organisation of undermining its sovereignty and independence, interfering in its domestic affairs, and treating the country unfairly and unjustly. The move comes after the Commonwealth's democracy watchdog placed the Maldives on its formal agenda in late September. It had also warned of suspension if steps were not taken by March 2017 to resolve a protracted political crisis triggered by the imprisonment of opposition leaders last year.

With the former President filing a complaint at the United Nations Human Rights Committee to be allowed to contest the presidential elections in 2018, and with no political solution to the current crises in sight, the political turmoil is bound to spill over into 2017.

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maldives

South Asia Risk Review 2017

FactorscontributingtoincreaseinISISrecruitsfromMaldives

14.4 12.6 12.6 12.2 11.7 11.6 11.7 11.2 11.6

10

11

12

13

14

15

2006 2008 2010 2012 2014

14.4

12.6 12.612.2

11.7 11.711.6

11.2

11.6

Unemployment

Political Instability

Religious Radicalization

Increased Crime Rate

200 ISIS Recruits

Source: MitKat Advisory Services

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south asia

South Asia Risk Review 2017

Population: 40% of Asia’s and 25% of world’s population (India,

Bangladesh and Pakistan comprise of 92.2% of

South Asia’s population)

Military Power (Standing Army)

Pakistan: 643,800India: 1,350,000

Bangladesh: 157,000

Muslim Population: 500 million

(1.5 billion in Asia by 2050)

Growth Rate: 7.5 %

Area: 5.1 million sq km (12% of Asia)

GDP: $ 2.7 Trillion nominal and

(PPP) $5312.85

NuclearWarheads: 250

INDIA

PAKISTAN

AFGHANISTAN

SRI LANKA

MALDIVES

BANGLADESH

MYANMAR

NEPALBHUTAN

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risk matrix

South Asia Risk Review 2017

Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within countries.

Internal

Security

Political

Stability

Natural

DisastersSafety

Economic

Stability

Afghanistan

Pakistan

India

Nepal

Bangladesh

Bhutan

Myanmar

Sri Lanka

Maldives

High Medium Low

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54

Contributors

South Asia Risk Review 2017

PallaviAde

SuseendranPandian

SMKumar

PawanDesai

SushilPradhan

MalcolmCooper

ArpitaRoy

PankajamDevanandan

UdayDeshwal

SohebKhan

SalmanShaikh

AnkitJadhav

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Mumbai511 Ascot Center,

Near Hilton Hotel,

Andheri (E)

Mumbai – 400 099

+91 22 2839 1243

Delhi NCRSuite# 009, 4th Floor,

Time Square,

Sushant Lok – 1

Gurgaon – 122 002

+91 124 455 9200

Bengaluru127, 2nd Cross,

6th Block,

Koramangala,

Bengaluru – 560 095

+91 80 255 03300

Singapore101, Cecil Street,

#23-12,

Tong Eng Building,

Singapore - 069 533

+65 6224 2589

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