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MitKat's South Asia Risk Review 2017

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Malcolm Cooper

The security situation in Afghanistan deteriorated further in 2016 as the Taliban gained more territory and influence following the withdrawal of NATO troops. The Afghan National Security Forces struggled to combat the Taliban-led insurgency despite being trained and armed by the US. High levels of violence from the Taliban and other militant groups like the Islamic State continued to threaten stability. The country remains at risk of ongoing conflict and instability in 2017.

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South Asia Risk Review 2017 www.mitkatadvisoryservices.com
Making Business Sense in a Connected World... South Asia Risk Review 2017 www.mitkatadvisory.com The interdependence of geo‐politics and business interests creates opportunities and risks for businesses. A wide array of political, socio‐economic, societal, legal/regulatory and environmental risks impact businesses. Understanding and mitigating these risk isvitaltorunningabusiness. Geopolitical risk assessment allows business owners to track and analyze current global and local events/trends, to comprehend the impact of these as wellastheopportunitiestheypresent. Why CXOs rely on MitKat Information Services GlobalExposure; LocalExpertise Experienced, Leadership Predictive Trend Analysis Actionable Intelligence 1 23 4 Risk Monitoring & Advisory Services Annual India Risk Review South Asia Risk Review Monthly Risk Forecast Weekly Risk Round‐up Daily India Risk Tracker Travel Risk Management Emerging Markets Entry Support Research on Demand Geography & Industry Specific Reviews Business Risk Analysis Event Advisory 24x7 Control Centre & Assistance
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 downwardtrend. chairman’S message
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 intothespotlightofglobalaffairs. Stretching across 5.8 million square kilometers (including Myanmar), six time zones, 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 swathsofarea,andthereisstillno progressive trend seen uniformly a c r o s s t h e r e g i o n . T h e demographicandethnicdiversity has opened new markets and a dynamic trade pattern that differentiates itself distinctly fromtherestoftheworld. 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 regionalongwithplayingtherole of an economic gateway. 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 Association for Regional Association (SAARC). Myanmar has officially applied for membership within SAARC. Severalnationshaverealizedthat ExecutiveSummary South Asia Risk Review 2017 2 INDIA PAKISTAN AFGHANISTAN SRI LANKA MALDIVES BANGLADESH MYANMAR NEPAL BHUTAN
3 ExecutiveSummary South Asia Risk Review 2017 SouthAsiahashugeeconomicpotentialaswellasregionalsecurity implications,asaresultAustralia,UnitedStatesofAmerica,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 coveredinthisreport. Major Disruptors SouthAsiaseesavastgapininfrastructuredevelopmentpercapita. 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-developedeconomicframework,unpredictable localmarketsandalargelyunskilledworkforce. 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, preciousmineralsandweaponsthroughporousborderswithinthe region continues to fund anti-national and religious militant groups that are party to various conflicts. The lack of unemployment in many areas of the region continues to feed organizedandpettycrimeindenselypopulatedurbancentres. TheSouthAsianRegionhasseenanalarminglyincreasingtrendof ethnic and religious intolerance in 2016. Extremist religious indoctrination, social media misinformation, complex political motives,transforminggovernments,andwideningeconomicgaps 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. Naturaldisasters,bothcyclicandnon-cyclichavecostthousandsof livesintheregion.SouthAsiasitsonfouractivetectonicplates;and the variable ocean temperatures and meteorological anomalies have increased the intensity and occurrence of cyclones and other storms.Theregionstillneedstoadapttothesechangesintermsof infrastructure, emergency response procedures and public awareness.
Afghanistan In 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 beingtrainedandarmedbythe US,continuestofacechallengesin 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 targetedindiscriminately. Pakistan In 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 amplifiedbytheEasterattacksinLahoretargetingChristians.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 operationsintheNorthWest. India IndiaisontheroadtoeconomicrevivalwiththeGDPpeakingat7.3 % 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 throughouttheyear.TherewereattacksbyPakistan-basedterrorist groups not just in Jammu & Kashmir (J&K), but also in Punjab, when, on January 2nd, around four to six terrorists attacked the IndianAirForcebaseinPathankot.Twoarmycampswereattacked by terrorists,near Uri town in Baramulla district,and Nagrota near Jammu,bothinJ&K. 4 ExecutiveSummary South Asia Risk Review 2017
5 ExecutiveSummary South Asia Risk Review 2017 India is facing a rising number of Islamic State sympathizers, with morethan50keyarrestsindifferentpartsofthecountry.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 investorconfidenceinthecomingyear.However,withmajorstates such as Punjab heading for elections next year, issues such as sharing of river waters and caste-based reservation policies; the socio-economicandgeo-politicalscenarioin2017willmeritcareful monitoring. Nepal The 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 representationofminoritygroups(MadhesisandTharus).Thishas resultedinincidentsofviolenceinthesouthernfringeprovincesof 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, avalanchesandflashfloods. Bangladesh In Bangladesh the ruling Awami League (AL) led by Sheikh Hasina has come under domestic and international pressure due to the trendofincreasingIslamicreligiousradicalization,especiallyinthe 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 religioushard-linergroups. Bhutan Bhutan has the distinction of having the highest Gross National IncomepercapitainSouthAsia.Bhutan'sEleventhFiveYearPlanof “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,
6 ExecutiveSummary 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-floodsandavalanches. Myanmar In Myanmar, the Rohingya crisis continues to dominate the concerns of the international community.The countries citizen act doesnotrecognizetheRohingyaswhoareaMuslimminorityinthe 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 deeppoliticalpowersforthemilitarybyreservingoveraquarterof theparliamentseatsforunelectedmilitaryofficers,givingtheman 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 fromholdingtheofficialpositionofthePresidentduetoaprovision inthemilitary-draftedconstitution. SriLanka Sri 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 fiscalandpublicdebtowingtothedecade'syearoldwaragainstthe LTTEhaslimitedthegrowthofkeyinfrastructureprojects.Beingan island nation,Sri Lanka is especially at risk from natural calamities liketsunamis,floodsandcyclones. Maldives The 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 ofsoonturningintoapotentialsourceofIslamicextremists.Crime and civil unrest is at an all-time high in Male, due to the economic stagnation.
7 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
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.TheTalibanswiftlyannouncedMawlawiHaibatullah Akhundzada, a deputy to Mullah Mansour, as its new leader; his appointmentmetwithlittlecriticismwithintheTalibanranks. Eversincethe US and NATO handedoveroperationstotheAfghan 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 multipledistricts of Helmand,have fallen(atleasttemporarily)totheTalibansince2015.Furthermore, several districts and provinces face a threat from the ongoing Talibaninsurgency. 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,includingcourtsandadministratorsinseveralprovinces operated by anti-government groups, such as Taliban and other localmilitias. 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 drawdownthatbeganin2014.Thegrouphascrossedthebarriersof 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
9 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(Uozganprovinceinsouth). 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 theconflictinthecountrymayendanytimesoon. The Islamic StateandAlQaeda The Islamic State (IS) has established a small base in Afghanistan calledtheIslamicStateinKhorasanProvince(ISKP);inreferenceto the historical region covering parts of Iran, Central Asia, Afghanistan, and Pakistan. Nonetheless, the group wields its influenceonlyinpartsoftheeasternprovinceofNangarharandhas Controlled by Taliban Contested Previously controlled by Taliban Kabul Mazar‐i‐Sharif Jalalabad Kunduz Ghazni Herat Kandahar Taliban and Islamic State presence in Afghanistan Source: Institute for the Study of War
10 Afghanistan South Asia Risk Review 2017 failedtogarnerlocalsupportonthescaleachievedinSyriaandIraq. 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. AlQaeda(AQ)inAfghanistan,thereasonfortheUSinvasionofthat countryin2001,isstillactiveandposesaseriousthreat.Thegroup'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;thealliancehashowevermadedifficultfortheAfghanand USadministrationstoengageintalkswithTaliban. Political Instability After the bitter contested presidential polls held in 2014, the conflictbetweenthePresidentGhaniandChiefExecutiveAbdullah Abdullah,andtheirallieshasdominatedthepoliticallandscapeof the country.In August 2016,Abdullah denouncedGhani 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 negotiatewiththeTaliban. 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 appointlocalofficials,thusmarginalizingtheminoritysegmentsof thepopulation. Economic Instability Theeconomicconditionshavebeenweakduetothecurrentfragile 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-ledsecuritymissionaswellaswithdrawalofaround60,000
11 Afghanistan South Asia Risk Review 2017 UStroops.Thetransportsectoralone,whichconstitutedroughly22 percentofGDP,lost100,000jobs. According to the World Bank, private investments have slowed down whereas the registration of new firms has declined by half since2012.ItisbelievedthatsignificantamountsofprivateAfghan 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 significantinternationalaidtomeetsitsexpenditurein2017. The north-eastern region of the country bordering Pakistan is situatedonanactiveseismiczone.TheHindukushmountainrange 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. Avalanchesarecommoninmountainousareas.Itisestimatedthat atleast6,000families(over42,000individuals)across21provinces have been affected by avalanches, flooding, landslides and heavy snowfallinthelasttwoyears. Natural Disasters The north-eastern region of the country bordering Pakistan is situatedonanactiveseismiczone.TheHindukushmountainrange 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. Avalanchesarecommoninmountainousareas.Itisestimatedthat atleast6,000families(over42,000individuals)across21provinces have been affected by avalanches, flooding, landslides and heavy snowfallinthelasttwoyears. Effects of Conflicts in Afghanistan 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
12 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
13 TherulingpartyofPakistanMuslimLeague(PML–N),ledbyPrime Minister Nawaz Sharif, came under tremendous pressure with revelations of the Panama Papers (a leaked collection of documentspertainingtooffshorefinance)in2016.Theleaksreveal 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 membersandotherpartymemberswereprominentlymentioned. Therevelationpromptedtheoppositionparty,PakistanTehreek-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 commissionto scrutinize the leaks has reduced the pressure on PML-N over the PanamaPapers. TheSharifgovernmenthasdisplayeditsresentmentoflosingspace to the military establishment for making foreign and security policies both. Pakistan witnessed the usual discord between the civil-militaryinstitutionsaftertheremovalofInformationMinister 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 groupsoperatinginPakistanandAfghanistan. 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 todevelopamoreequitablesharingofpolicyanddecision-making with the civilian government, with whom General Raheel Sharif wasfrequentlyatodds.Infightingbetweenthempromptedsevere bouts of political and economic instability. Pakistan cannot stabiliseitspolityunlessamoreresponsibleciviliangovernmentis givengreaterauthorityoverpoliciesoftheArmy. 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 provinceanddedicatedtoattackingIndia. Political Instability Pakistan South Asia Risk Review 2017
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).Inoneoftheworstattacks,atleast72peoplewerekilled andover300injuredinasuicidebombingoutsideGulshan-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, sayingithadtargetedChristianswhowerecelebratingEaster. The security leadership in Pakistan has unfortunately chosen to differentiate between various terrorist groups as “good” and “bad” terrorists(thosethatservethePakistanistatelikeLeT;andtheones thatdon'tsuch,asTTP). TheIslamicState(IS)group,basedinIraqandSyriadoesnothavea 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 14 Pakistan South Asia Risk Review 2017 Fatalities in Terrorism Violence in Pakistan (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 2800 3007 732 2472 3001 676 1702 1781 533 3182 940 339 2403 532 204 783 2011 2012 2013 2014 2015 2016
15 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 betweenPakistanandAfghanistanaspartofbordermanagement. AtribalinsurgencywagedbytheethnicBalochinsurgentshasbeen 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 attacksusuallytargetingsecuritypersonnelandassets, andenergy infrastructure; though some have also taken place near governmentbuildingsandinmarketplaces. 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 provinceinthelimelight.TheBalochmilitantsviolentlyopposethe projectthattheyallegewillundulybenefitthefederalgovernment. Major Projects of the China­Pakistan Economic Corridor Suki Kinari Khyber Pakhtunkhwa 870MW Karot, Punjab/AJK 720MW Sahiwal, Punjab 1,320MW Bahawalpur, Punjab 1,000 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 Coal Hydro Solar Wind Northern Eastern Western Central Highway Routes Power Projects Insurgency Source: CPEC
16 Pakistan South Asia Risk Review 2017 The insurgency is likely to persist in the province with no tangible resolutioninsight. Themonsoonseason,whichlastsfromJulytoSeptember,resultsin 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.ThemonsoonflashfloodsinJulyintheKhyberPakhtunkhwa 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 electrocutionordebrisfallingrelatedincidents. Pakistan lies along the active seismic Chaman fault; and there are overtwentythreeactivefaultsstretchingacrosstheNorthtoSouth 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 expectedtoincrease. Successive governments in Pakistan have failed to devise a protracted strategy to develop the country'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 buildandsustaininfrastructure. 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 andrehabilitatinginfrastructure.Thetightfiscalsituationrequires an unprecedented approach that will ensure a regular flow of the investmentinpartnershipwiththeprivatesector. Inadequate InfrastructureEnvironmental Hazards
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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. Risk Rating Area Population GDP Growth Rate GDP 2.97 million sq km 1311 million 7.6 percent 2095 billion USD 2016 2017
18 Terrorism and InsurgencyTerrorism 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;followedbyanotherterroristattackonthearmygarrison atNagrotanearJammu.Theyear2016isbeingconsideredasoneof 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 forceskilled154terrorists,themostsince2010. ThestateofJ&Kalsowitnessedmassivecivilunrestafterthekilling 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 76locals.Theunrestinthevalleyisbeingusedbyterroristgroupsto push more militants into the region as well as to recruit local Kashmiri youths. Reportedly, around 23 Kashmiri youths have turnedtomilitancyfollowingtheoutbreakofunrestintheValley. The country's security agencies are also fighting the spread of radical ideology of the terrorist group, Islamic State (IS) or Daesh. EventhoughIShasnotyetclaimedanyattacksontheIndiansoil,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 Telanganahadthehighestarrestswith11each. 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- termintheregion.
19 Key Islamic State arrests in India India South Asia Risk Review 2017 Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat 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 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
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 couldbe attributed to government policies in Maoist-affected states,alongwiththepressurebuiltupbysecurityforces. 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 forceshave,inrecentyears,seenagrowingfootprintofMaoists. TheMaoistextremismremainsoneofthemajorsecurityandsocio- economicchallengeforIndia'shinterland,whichisnotexpectedto change in the coming year. Sustained government policies and securityoperationsarerequiredtotacklethisproblem. 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 withviolentprotestsbytheKapucommunityofAndhraPradeshin 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. Laterintheyear,thestateofMaharashtra,sawunprecedented(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
21 India South Asia Risk Review 2017 protests across the state, highlighting the deep caste divides that existinonethelargesstatesinthecountry.Suchmassmovements also indicate the disillusionment among dominant farming communitiesinsomeofIndia'sricheststates. Communal Conflicts Given India's multi-ethnic composition where communities of variousreligionsandcasteslivetogether,thecountry'shistoryisno 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 mostnumberofinstances;butWestBengalandAssamalsoremain communally sensitive. In October 2016, in West Bengal, several areassuchasHazinagarinNorth24Paraganas,ChanchalinMalda, Chandannagar in Hooghly and Kharagpur city in Paschim Medinipur,reportedcommunalviolenceduringthefestivalseason ofDurgaPujaandMuharram,whichcoincidedwitheachother. Everyyear,Indiareceivesrainfallfromthesouthwestandnortheast monsoons,whichleadstoheavyrainfallinseveralpartsofIndia.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-yearinIndia,and2016wasnotdifferent. 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 previousrecords.InBihar,around150losttheirlivesandnearlyhalf a million people were displaced. The unprecedented and unchecked population growth along the riverbanks has been one ofthemajorfactorscausingheavydamagetolifeandpropertydue to flooding. Another major factor for the flooding is increased incidents of landslides in the Himalayan region, which have resultedinincreasedsiltdepositionintheriver'sbeds. Natural Hazards
22 India South Asia Risk Review 2017 ReligionhasdominatedthepublicdiscourseinIndianotonlyduetomilitant 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 deadcowtobeskinned;thecowhaddiedofnaturalcauses.Theattackledto 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,signalingthegrowingstrengthofthemovementinIndia. 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 beefconsumptionarelegalinonlyfiveofIndia's29states. 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 Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat 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 Source: MitKat Advisory Services Incidents of Religious Intolerance 2016
23 India South Asia Risk Review 2017 Despite enactment of tougher laws; harassment, assaults, molestation and rape remain a real threat for women in India, especiallyinrapidlygrowingurbanagglomerates.Inkeyeconomic centresofIndia,likeDelhi,Mumbai,BengaluruandGurgaon,cases of harassment and molestation have continued to be on the rise. Domestic violence remains a major issue for Indian women; and statisticsrevealthatmostofthecrimesperpetratedagainstwomen arebysomeoneknowntothevictim.Officialfiguresmostoftenare not an accurate representation of the real scale of the issue, as the stigmasurroundingsexcrimesusuallymeansunder-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 safetymeasures. 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 thedevelopedurbancentres. Women Safety Malaria, Dengue, Japanese Encephalitis (JE) ­ cases and deaths recorded in India (2012 ­ 2016) 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
In September 2016, violent protest broke out in Bengaluru and otherregionsofsouthernKarnataka,overtheSupremeCourtorder on sharing of the Cauvery water between the states of Karnataka andTamilNadu.CurfewwasimposedinBengaluruandotherparts of Karnataka, major companies had to shut their offices and declare holidays as protestors defied the curfew to riot on the streetsofthestatecapital.Twopeoplelosttheirlivesinpolicefiring and over 78 vehicles were torched during the protest. The government had to deploy 1,700 paramilitary personnel and imposecurfewinpartsofthecitytocontaintheviolence. TheSutlej-YamunaLinkCanalissuebetweenPunjabandHaryana, 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 theseissuestoconsolidatethesevotes,byportrayingthemselvesas champions of these causes for their people. These disputes turn into now turned into a battle of identity politics between the two states,whicharethenexploitedforpoliticalgains. 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 neighbouringstates,andatoolforpoliticalpartiestogainvotes. 24 India South Asia Risk Review 2017 River water disputes Cauvery River Dispute 5 177 556 99.8 465 9.3 556 419 7 27030 KERALA KARNATAKA TAMIL NADU + PONDICHERRY KERALA KARNATAKA PONDICHERRY TAMIL NADU KERALA KARNATAKA PONDICHERRY TAMIL NADU TMC TMC TMC TMC TMC TMC TMC TMC TMC TMC TMC (as per Agreements of 1892 & 1924) AGREEMENTS OF 1892 & 1924 WHAT THE 4 STATES SOUGHT FROM THE CAUVERY WATER DISPUTES TRIBUNAL WHAT THE CAUVERY WATER DISPUTES TRIBUNAL AWARDED Source: Network 18
25 India South Asia Risk Review 2017 India Conflict Map Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Gujarat 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
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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
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 theirdemands,suchasanaffirmativeactionthroughproportional inclusioninStateorgans,andarevisionoftheboundariesofstates forpoliticalpower. Several groups have remained dissatisfied with the way the Madhesiagitationwascalledoff.FringeMadhesioutfitshavebeen competing with each other to engage in more radical politics. In May 2016, a series of capital-centric protests were held in Kathmandu,ledbyaloosecoalitionof29Madhesiandindigenous parties under the banner of Sanghiya Gatbandhan, or federal alliance. InAugust,theUnitedDemocraticMadhesiFront(UDMF)agreedto supportPushpaKamalDahalintheprimeministerialelection.The Nepali Congress, the Communist Party of Nepal-Maoist Centre (CPN-MC) and the UDMF have agreed that the new government wouldtableaConstitutionamendmentproposalattheParliament toaddressdemandsoftheagitatingparties.Itremainstobeseenif the present government can successfully address the concerns of theMadhesisandpreventfurtherunrest. 27 Madhesi agitation nepal South Asia Risk Review 2017 Jhapa Morang Sunsari Saptari Siraha Dhanusha Mahottari SarlahiRautahat Bara Parsa Chitwan Nawalparasi Rupendehi Kapilvastu Dang Banke Bardiya Kailali Khanchanpur Kathmandu Udayapur Surkhet Districts affected by Madhesi Agitation Source: Himalayan Times
28 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.TheIndiangovernmentdenieditsroleintheimpositionof 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 strategicinterests. While India's help was crucial in striking a peace deal in 2004 that led to the comprehensive peace deal between the Nepalese governmentandtheMaoists,therehasbeenagrowingperception in Nepal that India's involvement in the internal affairs of the country stems from the latter's interests over hydropower energy, developmentprojects,business,andtrade. Following the blockade along the border with India last year, economic and security analysts have emphasized the need for Nepalto engagewith China.While Nepalhas 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 1,400kilometerlongborderwithTibetAutonomousRegionwhich isasensitiveareafortheChineseintermsofsecurity. 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 HighwayhavebeenbuiltwithChineseaid. 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.ThetraditionalrulingclassBrahminsandChetrisfeel thatsuchconstitutionalmeasuresmayaggravatetheethnicdivide in a country that has already endured near-constant political turmoil. Changing dynamics of Nepal's relations with India and China
29 nepal South Asia Risk Review 2017 The government's failure to ensure equal access to political representation,publicservicesandopportunitiestothosefromthe Tarai and Madhes region has remained since long, and these protestswereamanifestationofthisdiscontent.Intheeasternpart 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 MithilaspeakinggroupwhohavebeendemandingaMithilastate. The present government has admitted that the purported federal structure as mentioned in the Constitution had failed to properly dividetheregionsandhasgivenanassurancetorectifythis. 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; includingthetwomajoronesin2015. The lower reaches of the Himalayan Range witness an unprecedented 75 percent of all natural landslides during the monsoonmonthsresultinginlossoflifeandproperty.In2016there were around 73 landslide related deaths during the monsoon season.Poorconstructionofroadsandunplannedcivilengineering regulations contribute to landslides especially in the Bajura and Gorkhadistricts. The aftershocks of the 7.8 magnitude earthquake that hit Nepal in 2015havecausedover4,000landslidesinthecountrysincethelast 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 regionsofthecountryasfallingdebrisoftenblocktheroads. 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 tomajorroadsandhydropowerprojects,includingtheBhotekoshi HydropowerProject.68peoplediedduetoflashfloodsandseveral othersmissing.
30 nepal South Asia Risk Review 2017 Landslide Susceptibility Map­Earthquake Triggered Landslide Susceptibility Map­Precipitation Triggered Low Medium HighNegligible Low Medium HighNegligible 1130‐4125 1‐33 Households Affected Districts Affected Flood Flood & Landslide Landslide Landslides and Seismic Hazards Source: Nepal Hazards Risk Assessment
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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. Risk Rating Area Population GDP Growth Rate GDP 0.130 million sq km 160.99 million 6.6 percent 195 billion USD 2016 2017
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 upmarketrestaurantinthediplomaticGulshanareaofDhaka,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,anditsmediaarm,Amaq,hadalsoreleasedphotosoffiveof the attackers. The attack has put Bangladesh firmly on the global terror map, alerting the international community to the growing influenceofISinoneofthemostpopulousMuslimcountriesinthe world. The political and security developments in Bangladesh indicate that the Dhaka attack was the next step in the steady escalationinterroristattacksoverthepastcoupleofyears. The government denies the involvement of IS and have declared that these were carried out by politically motivated local groups. TheNeo-Jamaat-ulMujahideenBangladesh(JMB)wasconsidered 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 educatedpeoplegettingattractedtoextremism. Since the attack on July 1st,the government began a crackdown on militant activities nationwide; and reportedly around 41 JMB terroristshavebeenkilledand80othershavebeenarrestedacross the country. Among those killed were Neo-JMB's financier, and mastermind of Gulshan attack, Tamim Ahmed Chowdhury, the IS chiefinBangladesh. TheattacksinBangladesharemanifestationsofthegrowingdivide between the secular and religious groups; with political space for the religious right being occupied by extremist groups, whose versionofIslamisattractingtheyouth.Theattacksarealsoaresult ofyoungradicalizedBangladeshiMuslimswantingtobepartofthe globaljihadmovement. 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
bangladesh South Asia Risk Review 2017 33 Dhaka Tangail Jhenaidah Kushti Pabna NatoreRajshahi Gaibandha Kurigram Panchagrah Bandarban 22 March Kurigram Christian convert Hossain Ali Sarker 30 April Tangail Tailor Tangail Nikhil Chandra Joarder 1 July Dhaka Holey Artisan Bakery, 22 Killed 21 February Panchagarh Temple priest Joggeshwar Roy 25 May Gaibandha Shoe trader Debesh Chandra Pramanik 8 February Gaibandha Businessman Tarun Datta 22 April Rajshahi University Prof AFM Rezaul Karim Siddique 5 June Natore Christian grocer Sunil Gomez 10 June Pabna Hindu priest Nityanando Pandey 20 May Kushtia Homoeopath Sanwar Hossain 7 January Jhenaidah Homoeopath Chhamir Uddun Mandal 14 March Jhenaidah Homoeopath Abdur Razzaq 7 June Jhenaidah Hindu priest Anando Gopal Ganguli 1 July Jhenaidah Hindu priest Shymanondo Das 14 May Bandarban Buddhist monk Maung Shue U 30 June Bandarban AL Leader Mong Sanu Marma 2014 Civilians | 29 Security Force Personnel | 9 Terrorists | 22 2015 Civilians | 23 Security Force Personnel | 2 Terrorists | 31 2016 Civilians | 42 Security Force Personnel | 4 Terrorists | 54 Fatalities‐Islamist Terrorism 2014 ‐ 2016 Islamic State Attacks in Bangladesh ­ 2016 Claimed Suspected Source : The Dhaka Tribune
34 bangladesh South Asia Risk Review 2017 sustained efforts from the government,which is likely to persist in 2017.Nonetheless,theauthoritiesmayfinditdifficulttodetectand preventone-offattacksagainstlesssecuresofttargets. 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. Thehistoricrivalrybetweenthemajorpoliticalpartieshasresulted 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 killedandover6,000otherswerereportedlyinjuredintheelection relatedviolence. 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 andthepoliticalopposition. Islamist extremists have taken the advantage of the on-going political conflict between the ruling AL and BNP opposition. They continuetodirecttheirwrathagainstanyindividualsorgroupsthat profess secularism, and have also expressed unrelenting hostility towards sectarian and religious minorities, prompting authorities to launch a nationwide anti-militant clampdown. Amidst the growingrateofextremisminthecountryandrelatedattacks,there has been a serious decline in respect with freedom of expression and the rights of freedom of association, religion or belief in Bangladesh. Themassivepoliticaldivideinthecountryhasalsothepotentialto 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 roadaccidents.56percentoftheaccidentstakeplaceonhighways, 23 percent in urban areas, and 21 percent in rural areas. The main
35 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 motorisedvehiclesonthesameroute.Theroadsafetyproblemhas becomeoneofthemajorissuesfortransportregulatorsandtraffic law enforcers. The World Health Organization pointed out that pedestrian mortality in Bangladesh is 10 per cent higher than the globalaverage. ThereisaheightenedriskofroadtrafficaccidentsduringRamadan, particularlyinthehoursprecedingthebreakingofthefast(Iftar)as people rush to get home. Blocking of roads by protesters is a common practice. Regular shutdown strikes and associated demonstrationscanimpactontheabilitytoconductintra-cityand intercity road travel. Furthermore, road travel may be disrupted during the monsoon season (June-September) in major urban centresduetoinundatedroadsandresultanttrafficjams. 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 (theGangesandtheBrahmaputra),muchofthecountryisproneto widespreadseasonalflooding.Floodscontinuetoremainaserious concerntolifeandpropertyinBangladesh,especiallyinthecentral and southern districts. A very high population density aggravates theimpactoflocalizeddisasters. 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 Overview of Road Accidents in Bangladesh
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 strikesin2016.ThistriggeredthegovernmenttoincludeLightning Strikestothecountry'slistofnaturaldisasters. 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 thegovernment. Flood Prone Areas
AspertheWorldEconomicForum'sGlobalCompetitivenessReport 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 requiredtofinancethecountry'sinfrastructure,twicethesizeofits GDP. Although the private sector can contribute to the public funding,nonethelessthecountryrequirespublicsectorfundingfor 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 supportingthecountry'sseabornetrade.Evenwiththeseandother projects, Bangladesh requires strong structural reforms and effectivepublicinvestmenteffortstorevamptheinfrastructure. 37 bangladesh South Asia Risk Review 2017 Lack of Infrastructure Barisal Bangladesh ChittagongDhaka KhulnaRajshahi SylhetRangpur 4.39% 4.23% 4.56% 5.05% 4.25% 5.12% 4.56% 4.63% Households in Disaster­Prone Areas Source : World Food Program Bangladesh
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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
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 governmentsupportingallitsfindings. 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 SouthernregionofBhutanisespeciallypronetoflashfloodingand 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 blockedatseveralplaces.InthebordertownofPhuentsholing,the Amochhu river washed away about 80 per cent of the road and the smalltownofSarpangwascompletelywashedaway.Anincreasein seismic activity and aftershocks from earthquakes in the surrounding Himalayan region also continue to be seen on a regularbasisinBhutan. Lack of infrastructure With the rapidly growing urban population, the urban centers, ThimphuandPhuntsholing,inparticular,areexperiencingadverse effects of urbanization such as water shortages, housing scarcity, sanitationandwastedisposalproblems,deteriorationofairquality through pollution and proliferation of squatter settlements in sensitiveenvironmentareas. Bhutan: Seismic Hazards Source : UNDP
The Gross National Income per capita is the highest in South Asia. Hydropowerexportscontributestoabout40%ofBhutan'srevenue 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, affectingdeforestation,dustpollutantsandwaterresources. The country embarked on a far-reaching development strategy thathasbeenarticulatedinaseriesoffive-yeardevelopmentplans. 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 tourismearningintheeventofaglobaleconomicslowdown. 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 influencethedrugtradeinthecountry. 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 violencehasbeenminimal,crimeanddrugabuserelatedincidents 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 Major Hydro Power Projects Small­Medium Projects Large­Medium Projects Existing­Medium Projects Source: Central Electricity Authority India Internal Security
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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
Myanmarisundergoingahistorictransformation.Thecountryhas faced political instability due to the call by many of its ethnic minoritiesforindependence.Thisresultedineconomicstagnation as well as estrangement from the international community. The country nonetheless has since 2011 embarked on economic and politicalreforms;thearmyostensiblyhandedoverpowertoaquasi -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) acceptedtheresultsandasmoothandpeacefultransitionofpower tookplace.TheNLDledgovernmentassumedofficeinMarch2016 as the first civilian government in five decades. The NLD wants to demilitarize Myanmar's politics, but effectively needs the support ofthemilitarytodothis. 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, KachinIndependenceOrganization(KIA)andTheUnitedWaState Army are not signatories of the 2015 NCA, and sporadic clashes between the rebels and security forces are reported in insurgency- affectedareas. 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 (MNDAA), the Ta'ang 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; thusfurtherarmedclashes are likely to persist mainly in the remote areas of these two states. An estimated 96,400 people remaindisplacedinKachin and Shan states as a result of the on-going armed conflicts between the Burmese army and ethnic armedgroups. 42 Political Processes myanmar South Asia Risk Review 2017 Ethnic insurgency Source : Economist
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 escapescrutiny,controlthejadeindustry,especiallyinthenorthern 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 Kachinstate,andtheUnitedWaStateArmyinnorthernShanstate. Rubies are the most expensive gems per carat, and Myanmar is blessedwithanabundanceofthem,especiallyintheMogokValley. However, the illegal mining of rubies, not only helped fund the militaryjunta,butalsoexacerbatedhumanrightsviolationsuchas child labour (children are used to reach the deepest, smallest, and mostdangerouspits). 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 environmentalimpact. Drug Trade The cultivation of opium poppy and production of 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 Opium poppy cultivation in Southeast Asia, 1998­2016 (Hectares) 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 1998 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Hactares Laos Myanmar Thailand 2016 Source: United Nation Office on Drugs and Crime
44 myanmar South Asia Risk Review 2017 decades. The total area under poppy cultivation in 2016 was some 55,500hectares,andhassteadilyrisensince2006,mostlyinKachin 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 amounts of drugs such as Yaba, which is a mix of methamphetamine and caffeine, made in mobile factories in the same regions. A burgeoning drug trade with southern China has addedtotheproblem. 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 indulgefreelyinthenarcoticstradeinreturnfortheirhelpfighting 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 borderguardshavealsobeenlinkedtothetradeofillicitnarcotics. Myanmar is a multicultural society with 135 communities; but the country'scitizenshipactdoesnotrecognisetheRohingyasasoneof 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 requirementthattheirancestorssettledinthecountrybefore1823. Despite Myanmar's transition towards democracy in the past five years,thecountry'sgovernmentrefusestoaddresstheissue. 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 floatadriftforweeksintheIndianOceanwaitingforthetensionto abate.ThishasbeenthefateoftheRohingyasfordecades. 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 Buddhisthardliners
Around 60 unidentified assailants ambushed at least two army personnelinMaungdawtowninNovember2016.Inretaliation,the security forces trained their guns on the Rohingyas. Further violence was reported in Maungdaw in the same month, when around500armedmenclashedwiththetroops;around70people were killed in the fighting.There is an elevated risk that the recent clashes could trigger violence between the Rakhine Buddhist majorityandtheRohingyaMuslimminority. 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 glaringfailureinviewoftheregion'sfragileethno-religousbalance. Radical Buddhists nationalism has been on rise in Myanmar especiallyinthepost-reforms,politicalliberalisationperiod. 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 recognizesthatprotectingtherightsoftheminoritiesholdsthekey topoliticalstability.. 45 myanmar South Asia Risk Review 2017 Rohingya Migration from Myanmar in South East Asia Source : Washington Times A boat of 300 migrants. Including women and children, was not given permission to land on May 14. 1,018 Rohingya and Bangladeshi refugees detained In Langkawi on May 11. Malaysia said it would push boats full of migrants back to sea. About 600 Rohingya refugees rescued on May 11. Indonesia provided food, water and medical supplies before sending the boat towards Malaysia.
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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
SriLankabeingasmallislandnation,locatedintheIndianOcean,fallsinthepath oftwomonsoons,thustriggeringweatherrelatedhazards.Themonsoonseasonis between December and March in the north-east region and between May and Octoberinthesouth-west.Floodsoccurmostlyduetomonsoonalrainoreffectsof lowpressuresystemsDroughtsinthecountryarealsoaseriousconcern,causedby thefailureofrainfall.SriLankaisalsopronetohazardssuchaslandslides,lightning strikes, coastal erosion, epidemics. In May 2016, Sri Lanka was hit by a severe tropicalstormthatcausedwidespreadfloodingandlandslidesin22districtsout25 districts;around100peoplewerekilledand300,000peopleweredisplaced.Since September 2016, a severe drought situation in Ampara, Polonnaruwa, Trincomalee,Hambantota,andMonaragaladistrictscausedwatershortages. 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 Floods and Landslides Source: OCHA The number of people affected More than 5,000 people Between 1,000‐5000 people Less than 1,000
48 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 needforamoreefficientroadnetworktofacilitatethemovements 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 underthedirectionofformerpresidentMahindaRajapaksa. Thereisanabsenceofcommittedeconomic/developmentplanfor the country; lack of coordination and integration among the relevant sectors and lack of policy instruments to govern infrastructuredevelopmentanditsshareinthenationaleconomy. 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 communityinSriLankahasproducedaconduciveenvironmentfor extremistelementstobreed. InNovember2015,theIslamicStaterevealedtheidentityofthefirst 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 communityinSriLankaamongitsvarioussub-groups.Thecivilwar pitted the Tamil militant group, the LTTE , against the Sri Lankan governmentforces.The26-yearcivilwarthatensued,whichended with the LTTE's military defeat in 2009, would come to claim the livesofbetween80,000and100,000people.Tensionshavealways run high in Jaffna peninsula on Martyrs' Day (27th November). For manyofthoseinthenorthandeastofthecountry,wheretheworst of the war was experienced, harmony cannot materialize when so manyscarsofwarremain.
49 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
50 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 overanallegedcoupplot.Prominentmembersoftheinternational community have denounced the defamation bill, labeling it as a serioussetbacktocivilliberties.. The department of immigration has also set new rules requiring background checks on foreign journalists and photographers visitingtheMaldives.Themovecomesamidgrowinginternational 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 yearandslappedwithaten-yearentryban. Political Instability The past year was yet again marked by political turmoil between the current government led by incumbent President Abdulla YameenandtheoppositionledbyformerPresidentNasheed.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
other leaders of the MUO. This sparked rumours of an imminent coupplot,whichledtoaraidattheex-President'sfamilyhouseand warrants being issued against opposition leaders. Meanwhile, former President Gayoom's statements providing tacit support to theopposition'sstandsonissueshavesuggestedthatthefactional strifebetweenloyalistsoftheformerPresidentandtheincumbent continuesunabated. 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 alsowarnedofsuspensionifstepswerenottakenbyMarch2017to resolve a protracted political crisis triggered by the imprisonment ofoppositionleaderslastyear. WiththeformerPresidentfilingacomplaintattheUnitedNations HumanRightsCommitteetobeallowedtocontestthepresidential electionsin2018,andwithnopoliticalsolutiontothecurrentcrises insight,thepoliticalturmoilisboundtospilloverinto2017. 51 maldives South Asia Risk Review 2017 Factors contributing to increase in ISIS recruits from Maldives 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 12.6 12.2 11.7 11.711.6 11.2 11.6 Unemployment Political Instability Religious Radicalization Increased Crime Rate 200 ISIS Recruits Source: MitKat Advisory Services
52 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: 643,800 India: 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 Nuclear Warheads: 250 INDIA PAKISTAN AFGHANISTAN SRI LANKA MALDIVES BANGLADESH MYANMAR NEPAL BHUTAN
53 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 significantlyfromthenationalaverage,forspecificregionswithincountries. Internal Security Political Stability Natural Disasters Safety Economic Stability Afghanistan Pakistan India Nepal Bangladesh Bhutan Myanmar SriLanka Maldives High Medium Low
54 Contributors South Asia Risk Review 2017 Pallavi Ade Suseendran Pandian SM Kumar Pawan Desai Sushil Pradhan Malcolm Cooper Arpita Roy Pankajam Devanandan Uday Deshwal Soheb Khan Salman Shaikh Ankit Jadhav
Mumbai 511 Ascot Center, Near Hilton Hotel, Andheri (E) Mumbai – 400 099 +91 22 2839 1243 Delhi NCR Suite# 009, 4th Floor, Time Square, Sushant Lok – 1 Gurgaon – 122 002 +91 124 455 9200 Bengaluru 127, 2nd Cross, 6th Block, Koramangala, Bengaluru – 560 095 +91 80 255 03300 Singapore 101, Cecil Street, #23-12, Tong Eng Building, Singapore - 069 533 +65 6224 2589 Offices Representative Offices Pune Kolkata Baroda Patna  Business Intelligence  IPR investigations  Fraud Risk Management  Due Diligence Integrity Risk Management  Training  Simulations and Exercising  Manuals and Handbooks  Veteran Empowerment and Transition  Skills and Entrepreneurship Development Workforce Development  Security‐ Advisory, Implementation and Sustenance  Cyber Security  BCM‐Advisory, Implementation and Sustenance  Managed Security Services (MSS)  NexGen SOC Cyber Security & Resilience  Risk Monitoring and Threat Intelligence  Research on Demand  Advisory Services  Travel Risk Management  Command Centre Support  External Environment Management  24x7 Helpline Information Services  Threat Vulnerability Risk Assessment  Security Engineering and Design  Project Management  Critical Infrastructure Protection  Safety and Security Audits  Protective Services  Cost Optimization and Performance Improvement Security Consulting & Design  Outsourced Security leadership  Security Operations Centre  Operational Support Services  Emergency Response  India Entry Support Managed Services
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MitKat's South Asia Risk Review 2017

  • 2.
  • 3. Making Business Sense in a Connected World... South Asia Risk Review 2017 www.mitkatadvisory.com The interdependence of geo‐politics and business interests creates opportunities and risks for businesses. A wide array of political, socio‐economic, societal, legal/regulatory and environmental risks impact businesses. Understanding and mitigating these risk isvitaltorunningabusiness. Geopolitical risk assessment allows business owners to track and analyze current global and local events/trends, to comprehend the impact of these as wellastheopportunitiestheypresent. Why CXOs rely on MitKat Information Services GlobalExposure; LocalExpertise Experienced, Leadership Predictive Trend Analysis Actionable Intelligence 1 23 4 Risk Monitoring & Advisory Services Annual India Risk Review South Asia Risk Review Monthly Risk Forecast Weekly Risk Round‐up Daily India Risk Tracker Travel Risk Management Emerging Markets Entry Support Research on Demand Geography & Industry Specific Reviews Business Risk Analysis Event Advisory 24x7 Control Centre & Assistance
  • 4. 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 downwardtrend. chairman’S message
  • 5. 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 intothespotlightofglobalaffairs. Stretching across 5.8 million square kilometers (including Myanmar), six time zones, 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 swathsofarea,andthereisstillno progressive trend seen uniformly a c r o s s t h e r e g i o n . T h e demographicandethnicdiversity has opened new markets and a dynamic trade pattern that differentiates itself distinctly fromtherestoftheworld. 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 regionalongwithplayingtherole of an economic gateway. 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 Association for Regional Association (SAARC). Myanmar has officially applied for membership within SAARC. Severalnationshaverealizedthat ExecutiveSummary South Asia Risk Review 2017 2 INDIA PAKISTAN AFGHANISTAN SRI LANKA MALDIVES BANGLADESH MYANMAR NEPAL BHUTAN
  • 6. 3 ExecutiveSummary South Asia Risk Review 2017 SouthAsiahashugeeconomicpotentialaswellasregionalsecurity implications,asaresultAustralia,UnitedStatesofAmerica,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 coveredinthisreport. Major Disruptors SouthAsiaseesavastgapininfrastructuredevelopmentpercapita. 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-developedeconomicframework,unpredictable localmarketsandalargelyunskilledworkforce. 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, preciousmineralsandweaponsthroughporousborderswithinthe region continues to fund anti-national and religious militant groups that are party to various conflicts. The lack of unemployment in many areas of the region continues to feed organizedandpettycrimeindenselypopulatedurbancentres. TheSouthAsianRegionhasseenanalarminglyincreasingtrendof ethnic and religious intolerance in 2016. Extremist religious indoctrination, social media misinformation, complex political motives,transforminggovernments,andwideningeconomicgaps 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. Naturaldisasters,bothcyclicandnon-cyclichavecostthousandsof livesintheregion.SouthAsiasitsonfouractivetectonicplates;and the variable ocean temperatures and meteorological anomalies have increased the intensity and occurrence of cyclones and other storms.Theregionstillneedstoadapttothesechangesintermsof infrastructure, emergency response procedures and public awareness.
  • 7. Afghanistan In 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 beingtrainedandarmedbythe US,continuestofacechallengesin 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 targetedindiscriminately. Pakistan In 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 amplifiedbytheEasterattacksinLahoretargetingChristians.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 operationsintheNorthWest. India IndiaisontheroadtoeconomicrevivalwiththeGDPpeakingat7.3 % 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 throughouttheyear.TherewereattacksbyPakistan-basedterrorist groups not just in Jammu & Kashmir (J&K), but also in Punjab, when, on January 2nd, around four to six terrorists attacked the IndianAirForcebaseinPathankot.Twoarmycampswereattacked by terrorists,near Uri town in Baramulla district,and Nagrota near Jammu,bothinJ&K. 4 ExecutiveSummary South Asia Risk Review 2017
  • 8. 5 ExecutiveSummary South Asia Risk Review 2017 India is facing a rising number of Islamic State sympathizers, with morethan50keyarrestsindifferentpartsofthecountry.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 investorconfidenceinthecomingyear.However,withmajorstates such as Punjab heading for elections next year, issues such as sharing of river waters and caste-based reservation policies; the socio-economicandgeo-politicalscenarioin2017willmeritcareful monitoring. Nepal The 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 representationofminoritygroups(MadhesisandTharus).Thishas resultedinincidentsofviolenceinthesouthernfringeprovincesof 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, avalanchesandflashfloods. Bangladesh In Bangladesh the ruling Awami League (AL) led by Sheikh Hasina has come under domestic and international pressure due to the trendofincreasingIslamicreligiousradicalization,especiallyinthe 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 religioushard-linergroups. Bhutan Bhutan has the distinction of having the highest Gross National IncomepercapitainSouthAsia.Bhutan'sEleventhFiveYearPlanof “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,
  • 9. 6 ExecutiveSummary 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-floodsandavalanches. Myanmar In Myanmar, the Rohingya crisis continues to dominate the concerns of the international community.The countries citizen act doesnotrecognizetheRohingyaswhoareaMuslimminorityinthe 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 deeppoliticalpowersforthemilitarybyreservingoveraquarterof theparliamentseatsforunelectedmilitaryofficers,givingtheman 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 fromholdingtheofficialpositionofthePresidentduetoaprovision inthemilitary-draftedconstitution. SriLanka Sri 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 fiscalandpublicdebtowingtothedecade'syearoldwaragainstthe LTTEhaslimitedthegrowthofkeyinfrastructureprojects.Beingan island nation,Sri Lanka is especially at risk from natural calamities liketsunamis,floodsandcyclones. Maldives The 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 ofsoonturningintoapotentialsourceofIslamicextremists.Crime and civil unrest is at an all-time high in Male, due to the economic stagnation.
  • 10.
  • 11. 7 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
  • 12. 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.TheTalibanswiftlyannouncedMawlawiHaibatullah Akhundzada, a deputy to Mullah Mansour, as its new leader; his appointmentmetwithlittlecriticismwithintheTalibanranks. Eversincethe US and NATO handedoveroperationstotheAfghan 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 multipledistricts of Helmand,have fallen(atleasttemporarily)totheTalibansince2015.Furthermore, several districts and provinces face a threat from the ongoing Talibaninsurgency. 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,includingcourtsandadministratorsinseveralprovinces operated by anti-government groups, such as Taliban and other localmilitias. 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 drawdownthatbeganin2014.Thegrouphascrossedthebarriersof 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
  • 13. 9 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(Uozganprovinceinsouth). 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 theconflictinthecountrymayendanytimesoon. The Islamic StateandAlQaeda The Islamic State (IS) has established a small base in Afghanistan calledtheIslamicStateinKhorasanProvince(ISKP);inreferenceto the historical region covering parts of Iran, Central Asia, Afghanistan, and Pakistan. Nonetheless, the group wields its influenceonlyinpartsoftheeasternprovinceofNangarharandhas Controlled by Taliban Contested Previously controlled by Taliban Kabul Mazar‐i‐Sharif Jalalabad Kunduz Ghazni Herat Kandahar Taliban and Islamic State presence in Afghanistan Source: Institute for the Study of War
  • 14. 10 Afghanistan South Asia Risk Review 2017 failedtogarnerlocalsupportonthescaleachievedinSyriaandIraq. 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. AlQaeda(AQ)inAfghanistan,thereasonfortheUSinvasionofthat countryin2001,isstillactiveandposesaseriousthreat.Thegroup'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;thealliancehashowevermadedifficultfortheAfghanand USadministrationstoengageintalkswithTaliban. Political Instability After the bitter contested presidential polls held in 2014, the conflictbetweenthePresidentGhaniandChiefExecutiveAbdullah Abdullah,andtheirallieshasdominatedthepoliticallandscapeof the country.In August 2016,Abdullah denouncedGhani 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 negotiatewiththeTaliban. 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 appointlocalofficials,thusmarginalizingtheminoritysegmentsof thepopulation. Economic Instability Theeconomicconditionshavebeenweakduetothecurrentfragile 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-ledsecuritymissionaswellaswithdrawalofaround60,000
  • 15. 11 Afghanistan South Asia Risk Review 2017 UStroops.Thetransportsectoralone,whichconstitutedroughly22 percentofGDP,lost100,000jobs. According to the World Bank, private investments have slowed down whereas the registration of new firms has declined by half since2012.ItisbelievedthatsignificantamountsofprivateAfghan 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 significantinternationalaidtomeetsitsexpenditurein2017. The north-eastern region of the country bordering Pakistan is situatedonanactiveseismiczone.TheHindukushmountainrange 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. Avalanchesarecommoninmountainousareas.Itisestimatedthat atleast6,000families(over42,000individuals)across21provinces have been affected by avalanches, flooding, landslides and heavy snowfallinthelasttwoyears. Natural Disasters The north-eastern region of the country bordering Pakistan is situatedonanactiveseismiczone.TheHindukushmountainrange 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. Avalanchesarecommoninmountainousareas.Itisestimatedthat atleast6,000families(over42,000individuals)across21provinces have been affected by avalanches, flooding, landslides and heavy snowfallinthelasttwoyears. Effects of Conflicts in Afghanistan 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
  • 16.
  • 17. 12 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
  • 18. 13 TherulingpartyofPakistanMuslimLeague(PML–N),ledbyPrime Minister Nawaz Sharif, came under tremendous pressure with revelations of the Panama Papers (a leaked collection of documentspertainingtooffshorefinance)in2016.Theleaksreveal 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 membersandotherpartymemberswereprominentlymentioned. Therevelationpromptedtheoppositionparty,PakistanTehreek-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 commissionto scrutinize the leaks has reduced the pressure on PML-N over the PanamaPapers. TheSharifgovernmenthasdisplayeditsresentmentoflosingspace to the military establishment for making foreign and security policies both. Pakistan witnessed the usual discord between the civil-militaryinstitutionsaftertheremovalofInformationMinister 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 groupsoperatinginPakistanandAfghanistan. 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 todevelopamoreequitablesharingofpolicyanddecision-making with the civilian government, with whom General Raheel Sharif wasfrequentlyatodds.Infightingbetweenthempromptedsevere bouts of political and economic instability. Pakistan cannot stabiliseitspolityunlessamoreresponsibleciviliangovernmentis givengreaterauthorityoverpoliciesoftheArmy. 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 provinceanddedicatedtoattackingIndia. Political Instability Pakistan South Asia Risk Review 2017
  • 19. 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).Inoneoftheworstattacks,atleast72peoplewerekilled andover300injuredinasuicidebombingoutsideGulshan-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, sayingithadtargetedChristianswhowerecelebratingEaster. The security leadership in Pakistan has unfortunately chosen to differentiate between various terrorist groups as “good” and “bad” terrorists(thosethatservethePakistanistatelikeLeT;andtheones thatdon'tsuch,asTTP). TheIslamicState(IS)group,basedinIraqandSyriadoesnothavea 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 14 Pakistan South Asia Risk Review 2017 Fatalities in Terrorism Violence in Pakistan (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 2800 3007 732 2472 3001 676 1702 1781 533 3182 940 339 2403 532 204 783 2011 2012 2013 2014 2015 2016
  • 20. 15 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 betweenPakistanandAfghanistanaspartofbordermanagement. AtribalinsurgencywagedbytheethnicBalochinsurgentshasbeen 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 attacksusuallytargetingsecuritypersonnelandassets, andenergy infrastructure; though some have also taken place near governmentbuildingsandinmarketplaces. 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 provinceinthelimelight.TheBalochmilitantsviolentlyopposethe projectthattheyallegewillundulybenefitthefederalgovernment. Major Projects of the China­Pakistan Economic Corridor Suki Kinari Khyber Pakhtunkhwa 870MW Karot, Punjab/AJK 720MW Sahiwal, Punjab 1,320MW Bahawalpur, Punjab 1,000 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 Coal Hydro Solar Wind Northern Eastern Western Central Highway Routes Power Projects Insurgency Source: CPEC
  • 21. 16 Pakistan South Asia Risk Review 2017 The insurgency is likely to persist in the province with no tangible resolutioninsight. Themonsoonseason,whichlastsfromJulytoSeptember,resultsin 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.ThemonsoonflashfloodsinJulyintheKhyberPakhtunkhwa 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 electrocutionordebrisfallingrelatedincidents. Pakistan lies along the active seismic Chaman fault; and there are overtwentythreeactivefaultsstretchingacrosstheNorthtoSouth 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 expectedtoincrease. Successive governments in Pakistan have failed to devise a protracted strategy to develop the country'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 buildandsustaininfrastructure. 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 andrehabilitatinginfrastructure.Thetightfiscalsituationrequires an unprecedented approach that will ensure a regular flow of the investmentinpartnershipwiththeprivatesector. Inadequate InfrastructureEnvironmental Hazards
  • 22.
  • 23. 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. Risk Rating Area Population GDP Growth Rate GDP 2.97 million sq km 1311 million 7.6 percent 2095 billion USD 2016 2017
  • 24. 18 Terrorism and InsurgencyTerrorism 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;followedbyanotherterroristattackonthearmygarrison atNagrotanearJammu.Theyear2016isbeingconsideredasoneof 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 forceskilled154terrorists,themostsince2010. ThestateofJ&Kalsowitnessedmassivecivilunrestafterthekilling 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 76locals.Theunrestinthevalleyisbeingusedbyterroristgroupsto push more militants into the region as well as to recruit local Kashmiri youths. Reportedly, around 23 Kashmiri youths have turnedtomilitancyfollowingtheoutbreakofunrestintheValley. The country's security agencies are also fighting the spread of radical ideology of the terrorist group, Islamic State (IS) or Daesh. EventhoughIShasnotyetclaimedanyattacksontheIndiansoil,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 Telanganahadthehighestarrestswith11each. 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- termintheregion.
  • 25. 19 Key Islamic State arrests in India India South Asia Risk Review 2017 Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat 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 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
  • 26. 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 couldbe attributed to government policies in Maoist-affected states,alongwiththepressurebuiltupbysecurityforces. 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 forceshave,inrecentyears,seenagrowingfootprintofMaoists. TheMaoistextremismremainsoneofthemajorsecurityandsocio- economicchallengeforIndia'shinterland,whichisnotexpectedto change in the coming year. Sustained government policies and securityoperationsarerequiredtotacklethisproblem. 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 withviolentprotestsbytheKapucommunityofAndhraPradeshin 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. Laterintheyear,thestateofMaharashtra,sawunprecedented(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
  • 27. 21 India South Asia Risk Review 2017 protests across the state, highlighting the deep caste divides that existinonethelargesstatesinthecountry.Suchmassmovements also indicate the disillusionment among dominant farming communitiesinsomeofIndia'sricheststates. Communal Conflicts Given India's multi-ethnic composition where communities of variousreligionsandcasteslivetogether,thecountry'shistoryisno 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 mostnumberofinstances;butWestBengalandAssamalsoremain communally sensitive. In October 2016, in West Bengal, several areassuchasHazinagarinNorth24Paraganas,ChanchalinMalda, Chandannagar in Hooghly and Kharagpur city in Paschim Medinipur,reportedcommunalviolenceduringthefestivalseason ofDurgaPujaandMuharram,whichcoincidedwitheachother. Everyyear,Indiareceivesrainfallfromthesouthwestandnortheast monsoons,whichleadstoheavyrainfallinseveralpartsofIndia.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-yearinIndia,and2016wasnotdifferent. 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 previousrecords.InBihar,around150losttheirlivesandnearlyhalf a million people were displaced. The unprecedented and unchecked population growth along the riverbanks has been one ofthemajorfactorscausingheavydamagetolifeandpropertydue to flooding. Another major factor for the flooding is increased incidents of landslides in the Himalayan region, which have resultedinincreasedsiltdepositionintheriver'sbeds. Natural Hazards
  • 28. 22 India South Asia Risk Review 2017 ReligionhasdominatedthepublicdiscourseinIndianotonlyduetomilitant 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 deadcowtobeskinned;thecowhaddiedofnaturalcauses.Theattackledto 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,signalingthegrowingstrengthofthemovementinIndia. 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 beefconsumptionarelegalinonlyfiveofIndia's29states. 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 Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat 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 Source: MitKat Advisory Services Incidents of Religious Intolerance 2016
  • 29. 23 India South Asia Risk Review 2017 Despite enactment of tougher laws; harassment, assaults, molestation and rape remain a real threat for women in India, especiallyinrapidlygrowingurbanagglomerates.Inkeyeconomic centresofIndia,likeDelhi,Mumbai,BengaluruandGurgaon,cases of harassment and molestation have continued to be on the rise. Domestic violence remains a major issue for Indian women; and statisticsrevealthatmostofthecrimesperpetratedagainstwomen arebysomeoneknowntothevictim.Officialfiguresmostoftenare not an accurate representation of the real scale of the issue, as the stigmasurroundingsexcrimesusuallymeansunder-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 safetymeasures. 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 thedevelopedurbancentres. Women Safety Malaria, Dengue, Japanese Encephalitis (JE) ­ cases and deaths recorded in India (2012 ­ 2016) 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
  • 30. In September 2016, violent protest broke out in Bengaluru and otherregionsofsouthernKarnataka,overtheSupremeCourtorder on sharing of the Cauvery water between the states of Karnataka andTamilNadu.CurfewwasimposedinBengaluruandotherparts of Karnataka, major companies had to shut their offices and declare holidays as protestors defied the curfew to riot on the streetsofthestatecapital.Twopeoplelosttheirlivesinpolicefiring and over 78 vehicles were torched during the protest. The government had to deploy 1,700 paramilitary personnel and imposecurfewinpartsofthecitytocontaintheviolence. TheSutlej-YamunaLinkCanalissuebetweenPunjabandHaryana, 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 theseissuestoconsolidatethesevotes,byportrayingthemselvesas champions of these causes for their people. These disputes turn into now turned into a battle of identity politics between the two states,whicharethenexploitedforpoliticalgains. 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 neighbouringstates,andatoolforpoliticalpartiestogainvotes. 24 India South Asia Risk Review 2017 River water disputes Cauvery River Dispute 5 177 556 99.8 465 9.3 556 419 7 27030 KERALA KARNATAKA TAMIL NADU + PONDICHERRY KERALA KARNATAKA PONDICHERRY TAMIL NADU KERALA KARNATAKA PONDICHERRY TAMIL NADU TMC TMC TMC TMC TMC TMC TMC TMC TMC TMC TMC (as per Agreements of 1892 & 1924) AGREEMENTS OF 1892 & 1924 WHAT THE 4 STATES SOUGHT FROM THE CAUVERY WATER DISPUTES TRIBUNAL WHAT THE CAUVERY WATER DISPUTES TRIBUNAL AWARDED Source: Network 18
  • 31. 25 India South Asia Risk Review 2017 India Conflict Map Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Gujarat 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
  • 32.
  • 33. 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
  • 34. 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 theirdemands,suchasanaffirmativeactionthroughproportional inclusioninStateorgans,andarevisionoftheboundariesofstates forpoliticalpower. Several groups have remained dissatisfied with the way the Madhesiagitationwascalledoff.FringeMadhesioutfitshavebeen competing with each other to engage in more radical politics. In May 2016, a series of capital-centric protests were held in Kathmandu,ledbyaloosecoalitionof29Madhesiandindigenous parties under the banner of Sanghiya Gatbandhan, or federal alliance. InAugust,theUnitedDemocraticMadhesiFront(UDMF)agreedto supportPushpaKamalDahalintheprimeministerialelection.The Nepali Congress, the Communist Party of Nepal-Maoist Centre (CPN-MC) and the UDMF have agreed that the new government wouldtableaConstitutionamendmentproposalattheParliament toaddressdemandsoftheagitatingparties.Itremainstobeseenif the present government can successfully address the concerns of theMadhesisandpreventfurtherunrest. 27 Madhesi agitation nepal South Asia Risk Review 2017 Jhapa Morang Sunsari Saptari Siraha Dhanusha Mahottari SarlahiRautahat Bara Parsa Chitwan Nawalparasi Rupendehi Kapilvastu Dang Banke Bardiya Kailali Khanchanpur Kathmandu Udayapur Surkhet Districts affected by Madhesi Agitation Source: Himalayan Times
  • 35. 28 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.TheIndiangovernmentdenieditsroleintheimpositionof 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 strategicinterests. While India's help was crucial in striking a peace deal in 2004 that led to the comprehensive peace deal between the Nepalese governmentandtheMaoists,therehasbeenagrowingperception in Nepal that India's involvement in the internal affairs of the country stems from the latter's interests over hydropower energy, developmentprojects,business,andtrade. Following the blockade along the border with India last year, economic and security analysts have emphasized the need for Nepalto engagewith China.While Nepalhas 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 1,400kilometerlongborderwithTibetAutonomousRegionwhich isasensitiveareafortheChineseintermsofsecurity. 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 HighwayhavebeenbuiltwithChineseaid. 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.ThetraditionalrulingclassBrahminsandChetrisfeel thatsuchconstitutionalmeasuresmayaggravatetheethnicdivide in a country that has already endured near-constant political turmoil. Changing dynamics of Nepal's relations with India and China
  • 36. 29 nepal South Asia Risk Review 2017 The government's failure to ensure equal access to political representation,publicservicesandopportunitiestothosefromthe Tarai and Madhes region has remained since long, and these protestswereamanifestationofthisdiscontent.Intheeasternpart 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 MithilaspeakinggroupwhohavebeendemandingaMithilastate. The present government has admitted that the purported federal structure as mentioned in the Constitution had failed to properly dividetheregionsandhasgivenanassurancetorectifythis. 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; includingthetwomajoronesin2015. The lower reaches of the Himalayan Range witness an unprecedented 75 percent of all natural landslides during the monsoonmonthsresultinginlossoflifeandproperty.In2016there were around 73 landslide related deaths during the monsoon season.Poorconstructionofroadsandunplannedcivilengineering regulations contribute to landslides especially in the Bajura and Gorkhadistricts. The aftershocks of the 7.8 magnitude earthquake that hit Nepal in 2015havecausedover4,000landslidesinthecountrysincethelast 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 regionsofthecountryasfallingdebrisoftenblocktheroads. 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 tomajorroadsandhydropowerprojects,includingtheBhotekoshi HydropowerProject.68peoplediedduetoflashfloodsandseveral othersmissing.
  • 37. 30 nepal South Asia Risk Review 2017 Landslide Susceptibility Map­Earthquake Triggered Landslide Susceptibility Map­Precipitation Triggered Low Medium HighNegligible Low Medium HighNegligible 1130‐4125 1‐33 Households Affected Districts Affected Flood Flood & Landslide Landslide Landslides and Seismic Hazards Source: Nepal Hazards Risk Assessment
  • 38.
  • 39. 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. Risk Rating Area Population GDP Growth Rate GDP 0.130 million sq km 160.99 million 6.6 percent 195 billion USD 2016 2017
  • 40. 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 upmarketrestaurantinthediplomaticGulshanareaofDhaka,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,anditsmediaarm,Amaq,hadalsoreleasedphotosoffiveof the attackers. The attack has put Bangladesh firmly on the global terror map, alerting the international community to the growing influenceofISinoneofthemostpopulousMuslimcountriesinthe world. The political and security developments in Bangladesh indicate that the Dhaka attack was the next step in the steady escalationinterroristattacksoverthepastcoupleofyears. The government denies the involvement of IS and have declared that these were carried out by politically motivated local groups. TheNeo-Jamaat-ulMujahideenBangladesh(JMB)wasconsidered 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 educatedpeoplegettingattractedtoextremism. Since the attack on July 1st,the government began a crackdown on militant activities nationwide; and reportedly around 41 JMB terroristshavebeenkilledand80othershavebeenarrestedacross the country. Among those killed were Neo-JMB's financier, and mastermind of Gulshan attack, Tamim Ahmed Chowdhury, the IS chiefinBangladesh. TheattacksinBangladesharemanifestationsofthegrowingdivide between the secular and religious groups; with political space for the religious right being occupied by extremist groups, whose versionofIslamisattractingtheyouth.Theattacksarealsoaresult ofyoungradicalizedBangladeshiMuslimswantingtobepartofthe globaljihadmovement. 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
  • 41. bangladesh South Asia Risk Review 2017 33 Dhaka Tangail Jhenaidah Kushti Pabna NatoreRajshahi Gaibandha Kurigram Panchagrah Bandarban 22 March Kurigram Christian convert Hossain Ali Sarker 30 April Tangail Tailor Tangail Nikhil Chandra Joarder 1 July Dhaka Holey Artisan Bakery, 22 Killed 21 February Panchagarh Temple priest Joggeshwar Roy 25 May Gaibandha Shoe trader Debesh Chandra Pramanik 8 February Gaibandha Businessman Tarun Datta 22 April Rajshahi University Prof AFM Rezaul Karim Siddique 5 June Natore Christian grocer Sunil Gomez 10 June Pabna Hindu priest Nityanando Pandey 20 May Kushtia Homoeopath Sanwar Hossain 7 January Jhenaidah Homoeopath Chhamir Uddun Mandal 14 March Jhenaidah Homoeopath Abdur Razzaq 7 June Jhenaidah Hindu priest Anando Gopal Ganguli 1 July Jhenaidah Hindu priest Shymanondo Das 14 May Bandarban Buddhist monk Maung Shue U 30 June Bandarban AL Leader Mong Sanu Marma 2014 Civilians | 29 Security Force Personnel | 9 Terrorists | 22 2015 Civilians | 23 Security Force Personnel | 2 Terrorists | 31 2016 Civilians | 42 Security Force Personnel | 4 Terrorists | 54 Fatalities‐Islamist Terrorism 2014 ‐ 2016 Islamic State Attacks in Bangladesh ­ 2016 Claimed Suspected Source : The Dhaka Tribune
  • 42. 34 bangladesh South Asia Risk Review 2017 sustained efforts from the government,which is likely to persist in 2017.Nonetheless,theauthoritiesmayfinditdifficulttodetectand preventone-offattacksagainstlesssecuresofttargets. 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. Thehistoricrivalrybetweenthemajorpoliticalpartieshasresulted 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 killedandover6,000otherswerereportedlyinjuredintheelection relatedviolence. 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 andthepoliticalopposition. Islamist extremists have taken the advantage of the on-going political conflict between the ruling AL and BNP opposition. They continuetodirecttheirwrathagainstanyindividualsorgroupsthat profess secularism, and have also expressed unrelenting hostility towards sectarian and religious minorities, prompting authorities to launch a nationwide anti-militant clampdown. Amidst the growingrateofextremisminthecountryandrelatedattacks,there has been a serious decline in respect with freedom of expression and the rights of freedom of association, religion or belief in Bangladesh. Themassivepoliticaldivideinthecountryhasalsothepotentialto 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 roadaccidents.56percentoftheaccidentstakeplaceonhighways, 23 percent in urban areas, and 21 percent in rural areas. The main
  • 43. 35 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 motorisedvehiclesonthesameroute.Theroadsafetyproblemhas becomeoneofthemajorissuesfortransportregulatorsandtraffic law enforcers. The World Health Organization pointed out that pedestrian mortality in Bangladesh is 10 per cent higher than the globalaverage. ThereisaheightenedriskofroadtrafficaccidentsduringRamadan, particularlyinthehoursprecedingthebreakingofthefast(Iftar)as people rush to get home. Blocking of roads by protesters is a common practice. Regular shutdown strikes and associated demonstrationscanimpactontheabilitytoconductintra-cityand intercity road travel. Furthermore, road travel may be disrupted during the monsoon season (June-September) in major urban centresduetoinundatedroadsandresultanttrafficjams. 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 (theGangesandtheBrahmaputra),muchofthecountryisproneto widespreadseasonalflooding.Floodscontinuetoremainaserious concerntolifeandpropertyinBangladesh,especiallyinthecentral and southern districts. A very high population density aggravates theimpactoflocalizeddisasters. 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 Overview of Road Accidents in Bangladesh
  • 44. 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 strikesin2016.ThistriggeredthegovernmenttoincludeLightning Strikestothecountry'slistofnaturaldisasters. 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 thegovernment. Flood Prone Areas
  • 45. AspertheWorldEconomicForum'sGlobalCompetitivenessReport 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 requiredtofinancethecountry'sinfrastructure,twicethesizeofits GDP. Although the private sector can contribute to the public funding,nonethelessthecountryrequirespublicsectorfundingfor 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 supportingthecountry'sseabornetrade.Evenwiththeseandother projects, Bangladesh requires strong structural reforms and effectivepublicinvestmenteffortstorevamptheinfrastructure. 37 bangladesh South Asia Risk Review 2017 Lack of Infrastructure Barisal Bangladesh ChittagongDhaka KhulnaRajshahi SylhetRangpur 4.39% 4.23% 4.56% 5.05% 4.25% 5.12% 4.56% 4.63% Households in Disaster­Prone Areas Source : World Food Program Bangladesh
  • 46.
  • 47. 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
  • 48. 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 governmentsupportingallitsfindings. 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 SouthernregionofBhutanisespeciallypronetoflashfloodingand 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 blockedatseveralplaces.InthebordertownofPhuentsholing,the Amochhu river washed away about 80 per cent of the road and the smalltownofSarpangwascompletelywashedaway.Anincreasein seismic activity and aftershocks from earthquakes in the surrounding Himalayan region also continue to be seen on a regularbasisinBhutan. Lack of infrastructure With the rapidly growing urban population, the urban centers, ThimphuandPhuntsholing,inparticular,areexperiencingadverse effects of urbanization such as water shortages, housing scarcity, sanitationandwastedisposalproblems,deteriorationofairquality through pollution and proliferation of squatter settlements in sensitiveenvironmentareas. Bhutan: Seismic Hazards Source : UNDP
  • 49. The Gross National Income per capita is the highest in South Asia. Hydropowerexportscontributestoabout40%ofBhutan'srevenue 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, affectingdeforestation,dustpollutantsandwaterresources. The country embarked on a far-reaching development strategy thathasbeenarticulatedinaseriesoffive-yeardevelopmentplans. 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 tourismearningintheeventofaglobaleconomicslowdown. 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 influencethedrugtradeinthecountry. 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 violencehasbeenminimal,crimeanddrugabuserelatedincidents 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 Major Hydro Power Projects Small­Medium Projects Large­Medium Projects Existing­Medium Projects Source: Central Electricity Authority India Internal Security
  • 50.
  • 51. 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
  • 52. Myanmarisundergoingahistorictransformation.Thecountryhas faced political instability due to the call by many of its ethnic minoritiesforindependence.Thisresultedineconomicstagnation as well as estrangement from the international community. The country nonetheless has since 2011 embarked on economic and politicalreforms;thearmyostensiblyhandedoverpowertoaquasi -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) acceptedtheresultsandasmoothandpeacefultransitionofpower tookplace.TheNLDledgovernmentassumedofficeinMarch2016 as the first civilian government in five decades. The NLD wants to demilitarize Myanmar's politics, but effectively needs the support ofthemilitarytodothis. 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, KachinIndependenceOrganization(KIA)andTheUnitedWaState Army are not signatories of the 2015 NCA, and sporadic clashes between the rebels and security forces are reported in insurgency- affectedareas. 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 (MNDAA), the Ta'ang 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; thusfurtherarmedclashes are likely to persist mainly in the remote areas of these two states. An estimated 96,400 people remaindisplacedinKachin and Shan states as a result of the on-going armed conflicts between the Burmese army and ethnic armedgroups. 42 Political Processes myanmar South Asia Risk Review 2017 Ethnic insurgency Source : Economist
  • 53. 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 escapescrutiny,controlthejadeindustry,especiallyinthenorthern 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 Kachinstate,andtheUnitedWaStateArmyinnorthernShanstate. Rubies are the most expensive gems per carat, and Myanmar is blessedwithanabundanceofthem,especiallyintheMogokValley. However, the illegal mining of rubies, not only helped fund the militaryjunta,butalsoexacerbatedhumanrightsviolationsuchas child labour (children are used to reach the deepest, smallest, and mostdangerouspits). 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 environmentalimpact. Drug Trade The cultivation of opium poppy and production of 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 Opium poppy cultivation in Southeast Asia, 1998­2016 (Hectares) 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 1998 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Hactares Laos Myanmar Thailand 2016 Source: United Nation Office on Drugs and Crime
  • 54. 44 myanmar South Asia Risk Review 2017 decades. The total area under poppy cultivation in 2016 was some 55,500hectares,andhassteadilyrisensince2006,mostlyinKachin 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 amounts of drugs such as Yaba, which is a mix of methamphetamine and caffeine, made in mobile factories in the same regions. A burgeoning drug trade with southern China has addedtotheproblem. 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 indulgefreelyinthenarcoticstradeinreturnfortheirhelpfighting 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 borderguardshavealsobeenlinkedtothetradeofillicitnarcotics. Myanmar is a multicultural society with 135 communities; but the country'scitizenshipactdoesnotrecognisetheRohingyasasoneof 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 requirementthattheirancestorssettledinthecountrybefore1823. Despite Myanmar's transition towards democracy in the past five years,thecountry'sgovernmentrefusestoaddresstheissue. 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 floatadriftforweeksintheIndianOceanwaitingforthetensionto abate.ThishasbeenthefateoftheRohingyasfordecades. 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 Buddhisthardliners
  • 55. Around 60 unidentified assailants ambushed at least two army personnelinMaungdawtowninNovember2016.Inretaliation,the security forces trained their guns on the Rohingyas. Further violence was reported in Maungdaw in the same month, when around500armedmenclashedwiththetroops;around70people were killed in the fighting.There is an elevated risk that the recent clashes could trigger violence between the Rakhine Buddhist majorityandtheRohingyaMuslimminority. 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 glaringfailureinviewoftheregion'sfragileethno-religousbalance. Radical Buddhists nationalism has been on rise in Myanmar especiallyinthepost-reforms,politicalliberalisationperiod. 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 recognizesthatprotectingtherightsoftheminoritiesholdsthekey topoliticalstability.. 45 myanmar South Asia Risk Review 2017 Rohingya Migration from Myanmar in South East Asia Source : Washington Times A boat of 300 migrants. Including women and children, was not given permission to land on May 14. 1,018 Rohingya and Bangladeshi refugees detained In Langkawi on May 11. Malaysia said it would push boats full of migrants back to sea. About 600 Rohingya refugees rescued on May 11. Indonesia provided food, water and medical supplies before sending the boat towards Malaysia.
  • 56.
  • 57. 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
  • 58. SriLankabeingasmallislandnation,locatedintheIndianOcean,fallsinthepath oftwomonsoons,thustriggeringweatherrelatedhazards.Themonsoonseasonis between December and March in the north-east region and between May and Octoberinthesouth-west.Floodsoccurmostlyduetomonsoonalrainoreffectsof lowpressuresystemsDroughtsinthecountryarealsoaseriousconcern,causedby thefailureofrainfall.SriLankaisalsopronetohazardssuchaslandslides,lightning strikes, coastal erosion, epidemics. In May 2016, Sri Lanka was hit by a severe tropicalstormthatcausedwidespreadfloodingandlandslidesin22districtsout25 districts;around100peoplewerekilledand300,000peopleweredisplaced.Since September 2016, a severe drought situation in Ampara, Polonnaruwa, Trincomalee,Hambantota,andMonaragaladistrictscausedwatershortages. 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 Floods and Landslides Source: OCHA The number of people affected More than 5,000 people Between 1,000‐5000 people Less than 1,000
  • 59. 48 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 needforamoreefficientroadnetworktofacilitatethemovements 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 underthedirectionofformerpresidentMahindaRajapaksa. Thereisanabsenceofcommittedeconomic/developmentplanfor the country; lack of coordination and integration among the relevant sectors and lack of policy instruments to govern infrastructuredevelopmentanditsshareinthenationaleconomy. 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 communityinSriLankahasproducedaconduciveenvironmentfor extremistelementstobreed. InNovember2015,theIslamicStaterevealedtheidentityofthefirst 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 communityinSriLankaamongitsvarioussub-groups.Thecivilwar pitted the Tamil militant group, the LTTE , against the Sri Lankan governmentforces.The26-yearcivilwarthatensued,whichended with the LTTE's military defeat in 2009, would come to claim the livesofbetween80,000and100,000people.Tensionshavealways run high in Jaffna peninsula on Martyrs' Day (27th November). For manyofthoseinthenorthandeastofthecountry,wheretheworst of the war was experienced, harmony cannot materialize when so manyscarsofwarremain.
  • 60.
  • 61. 49 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 significantlyfromthenationalaverage,forspecificregionswithinthecountry,andfromonebusinesstotheother. 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
  • 62. 50 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 overanallegedcoupplot.Prominentmembersoftheinternational community have denounced the defamation bill, labeling it as a serioussetbacktocivilliberties.. The department of immigration has also set new rules requiring background checks on foreign journalists and photographers visitingtheMaldives.Themovecomesamidgrowinginternational 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 yearandslappedwithaten-yearentryban. Political Instability The past year was yet again marked by political turmoil between the current government led by incumbent President Abdulla YameenandtheoppositionledbyformerPresidentNasheed.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
  • 63. other leaders of the MUO. This sparked rumours of an imminent coupplot,whichledtoaraidattheex-President'sfamilyhouseand warrants being issued against opposition leaders. Meanwhile, former President Gayoom's statements providing tacit support to theopposition'sstandsonissueshavesuggestedthatthefactional strifebetweenloyalistsoftheformerPresidentandtheincumbent continuesunabated. 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 alsowarnedofsuspensionifstepswerenottakenbyMarch2017to resolve a protracted political crisis triggered by the imprisonment ofoppositionleaderslastyear. WiththeformerPresidentfilingacomplaintattheUnitedNations HumanRightsCommitteetobeallowedtocontestthepresidential electionsin2018,andwithnopoliticalsolutiontothecurrentcrises insight,thepoliticalturmoilisboundtospilloverinto2017. 51 maldives South Asia Risk Review 2017 Factors contributing to increase in ISIS recruits from Maldives 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 12.6 12.2 11.7 11.711.6 11.2 11.6 Unemployment Political Instability Religious Radicalization Increased Crime Rate 200 ISIS Recruits Source: MitKat Advisory Services
  • 64. 52 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: 643,800 India: 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 Nuclear Warheads: 250 INDIA PAKISTAN AFGHANISTAN SRI LANKA MALDIVES BANGLADESH MYANMAR NEPAL BHUTAN
  • 65. 53 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 significantlyfromthenationalaverage,forspecificregionswithincountries. Internal Security Political Stability Natural Disasters Safety Economic Stability Afghanistan Pakistan India Nepal Bangladesh Bhutan Myanmar SriLanka Maldives High Medium Low
  • 66. 54 Contributors South Asia Risk Review 2017 Pallavi Ade Suseendran Pandian SM Kumar Pawan Desai Sushil Pradhan Malcolm Cooper Arpita Roy Pankajam Devanandan Uday Deshwal Soheb Khan Salman Shaikh Ankit Jadhav
  • 67. Mumbai 511 Ascot Center, Near Hilton Hotel, Andheri (E) Mumbai – 400 099 +91 22 2839 1243 Delhi NCR Suite# 009, 4th Floor, Time Square, Sushant Lok – 1 Gurgaon – 122 002 +91 124 455 9200 Bengaluru 127, 2nd Cross, 6th Block, Koramangala, Bengaluru – 560 095 +91 80 255 03300 Singapore 101, Cecil Street, #23-12, Tong Eng Building, Singapore - 069 533 +65 6224 2589 Offices Representative Offices Pune Kolkata Baroda Patna  Business Intelligence  IPR investigations  Fraud Risk Management  Due Diligence Integrity Risk Management  Training  Simulations and Exercising  Manuals and Handbooks  Veteran Empowerment and Transition  Skills and Entrepreneurship Development Workforce Development  Security‐ Advisory, Implementation and Sustenance  Cyber Security  BCM‐Advisory, Implementation and Sustenance  Managed Security Services (MSS)  NexGen SOC Cyber Security & Resilience  Risk Monitoring and Threat Intelligence  Research on Demand  Advisory Services  Travel Risk Management  Command Centre Support  External Environment Management  24x7 Helpline Information Services  Threat Vulnerability Risk Assessment  Security Engineering and Design  Project Management  Critical Infrastructure Protection  Safety and Security Audits  Protective Services  Cost Optimization and Performance Improvement Security Consulting & Design  Outsourced Security leadership  Security Operations Centre  Operational Support Services  Emergency Response  India Entry Support Managed Services
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