1

A

GLOBAL / COUNTRY STUDY AND REPORT

ON

“CANADA COUNTRY ON CERAMIC INDUSTRY”

Submitted to

Gujarat Technological University

in partial fulfillment of the requirement of the award for the degree of

master of business administration

UNDER THE GUIDANCE OF

Faculty Guide

Prof. Navjyot Raval

Submitted by

Student Name Student Enrollment Number

1.Nilesh Kagthara 107400592003

2. Jignesh Rangani 107400592011

3. Maulik Acharya 097400592037

4. Kalpesh Kapadiya 107400592009

5. Piyush bhaliya 107400592010

Institute’s Name

OM shanti engg(MBA) college(740)

MBA PROGRAMME

Affiliated to Gujarat Technological University Ahmedabad

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Demographic

&

Geographic

Profile of Canada

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Canada's National Flag

"The Red Maple Leaf Flag"

Background:

A land of vast distances and rich natural resources, Canada became a self-

governing dominion in 1867 while retaining ties to the British crown.

Economically and technologically, the nation has developed in parallel with the

US, its neighbor to the south across the World's longest unfortified border.

Canada faces the political challenges of meeting public demands for quality

improvements in health care, and education, social services, and economic

competitiveness, as well as responding to the particular concerns of

predominantly francophone Quebec. Canada also aims to develop its diverse

energy resources while maintaining its commitment to the environment.

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GEOGRAPHIC FACTS

Location:

Northern North America, bordering the North Atlantic Ocean on the east, North

Pacific Ocean on the west, and the Arctic Ocean on the north, north of the

conterminous US

Geographic coordinates:

60 :00 N, 95: 00 W

Map references:

North America

Area:

total: 9,984,670 sq km

country comparison to the world: 2

land: 9,093,507 sq km

water: 891,163 sq km

Area - comparative:

slight ly larger than the US

Land boundaries:

total: 8,893 km

border countries: US 8,893 km (includes 2,477 km with Alaska)

note: Canada is the World's largest country that borders only one country

Coastline:

202,080 km

Maritime claims:

territorial sea: 12 nm

contiguous zone: 24 nm

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exclusive economic zone: 200 nm

continental shelf: 200 nm or to the edge of the continental margin

Climate:

varies from temperate in south to subarctic and arctic in north

Terrain:

mostly plains with mountains in west and lowlands in southeast

Elevation extremes:

lowest point: Atlantic Ocean 0 m

highest point: Mount Logan 5,959 m

Natural resources:

iron ore, nickel, zinc, copper, gold, lead, rare earth elements, molybdenum, potash,

diamonds, silver, fish, timber, wildlife, coal, petroleum, natural gas, hydropower

Land use:

arable land: 4.57%, permanent crops: 0.65%

other: 94.78% (2005)

Irrigated land:

8,550 sq km (2008)

Total renewable water resources:

3,300 cu km (1985)

Freshwater withdrawal (domestic/industrial/agricultural):

total: 44.72 cu km/yr (20%/69%/12%)

per capita: 1,386 cu m/yr (1996)

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Natural hazards:

continuous permafrost in north is a serious obstacle to development; cyclonic

storms form east of the Rocky Mountains, a result of the mixing of air masses from

the Arctic, Pacific, and North American interior, and produce most of the country's

rain and snow east of the mountains volcanism: the vast majority of volcanoes in

Western Canada's Coast Mountains remain dormant

Environment - current issues:

air pollution and resulting acid rain severely affecting lakes and damaging forests;

metal smelting, coal-burning utilities, and vehicle emissions impacting on

agricultural and forest productivity; ocean waters becoming contaminated due to

agricultural, industrial, mining, and forestry activities

Environment - international agreements:

party to: Air Pollution, Air Pollution-Nitrogen Oxides, Air Pollution-Persistent

Organic Pollutants, Air Pollution-Sulfur 85, Air Pollution-Sulfur 94, Antarctic-

Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Seals,

Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol,

Desertification, Endangered Species, Environmental Modification, Hazardous

Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship

Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands

signed, but not ratified: Air Pollution-Volatile Organic Compounds, Marine Life

Conservation

Geography - note:

second-largest country in world (after Russia); strategic location between Russia

and US via north polar route; approximately 90% of the population is concentrated

within 160 km of the US border

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DEMOGRAPHIC FACTS

Population

34,030,589 (July 2011 est.)

Age structure

0-14 years: 15.7% (male 2,736,737/female 2,602,342)

15-64 years: 68.5% (male 1,17,76,611/female 1,15,17,972)

65 years and over: 15.9% (male 2,372,356/female 3,024,571) (2011 est.)

Nationality

noun: Canadian(s)

adjective: Canadian

Ethnic groups

British Isles origin 28%, French origin 23%, other European 15%, Amerindian 2%, other, mostly

Asian, African, Arab 6%, mixed background 26%

Religions

Roman Catholic 42.6%, Protestant 23.3% (including United Church 9.5%, Anglican 6.8%,

Baptist 2.4%, Lutheran 2%), other Christian 4.4%, Muslim 1.9%, other and unspecified 11.8%,

none 16% (2001 census)

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Languages

English (official) 58.8%, French (official) 21.6%, other 19.6% (2006 Census)

Median age

total: 41 years

male: 39.8 years

female: 42.1 years (2011 est.)

Population growth rate: 0.794% (2011)

Birth rate: 10.28 births/1,000 population (2011)

Death rate: 7.98 deaths/1,000 population (July 2011)

Net migration rate: 5.65 migrant(s)/1,000 populations (2011)

Urbanization

Urban population: 81% of total population (2010)

rate of urbanization: 1.1% annual rate of change (2010-15)

Sex ratio

At birth: 1.056 male(s)/female

under 15 years: 1.05 male(s)/female

15-64 years: 1.02 male(s)/female

65 years and over: 0.78 male(s)/female

total population: 0.98 male(s)/female (2011 est.)

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Infant mortality rate

total: 4.92 deaths/1,000 live births

male: 5.26 deaths/1,000 live births

female: 4.56 deaths/1,000 live births (2011 est.)

Life expectancy at birth

total population: 81.38 years

male: 78.81 years

female: 84.1 years (2011 est.)

Total fertility rate: 1.58 children born/woman (2011 est.)

HIV/AIDS - adult prevalence rate: 0.3% (2009 est.)

HIV/AIDS - people living with HIV/AIDS: 68,000 (2009)

HIV/AIDS – deaths: Fewer than 1,000 (2009)

Literacy

definition: age 15 and over can read and write

total population: 99%

male: 99%

female: 99%

School life expectancy (primary to tertiary education)

total: 17 years

male: 17 years

female: 17 years

Education expenditures: 4.9% of GDP

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What is Ceramics?

– Glimpse of its history

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Ceramics - what is it?

Ceramics are classified as inorganic and nonmetallic materials that are essential to our

daily lifestyle. Ceramic and materials engineers are the people who design the processes in

which these products can be made, create new types of ceramic products, and find different uses

for ceramic products in everyday life.

Ceramics are all around us. This category of materials includes things like tile, bricks,

plates, glass, and toilets. Ceramics can be found in products like watches (quartz tuning forks-

the time keeping devices in watches), snow skies (piezoelectric-ceramics that stress when a

voltage is applied to them), automobiles (sparkplugs and ceramic engine parts found in racecars),

and phone lines. They can also be found on space shuttles, appliances (enamel coatings), and

airplanes (nose cones). Depending on their method of formation, ceramics can be dense or

lightweight. Typically, they will demonstrate excellent strength and hardness properties;

however, they are often brittle in nature. Ceramics can also be formed to serve as electrically

conductive materials, objects allowing electricity to pass through their mass, or insulators,

materials preventing the flow of electricity. Some ceramics, like superconductors, also display

magnetic properties.

Ceramics are generally made by taking mixtures of clay, earthen elements, powders, and water

and shaping them into desired forms. Once the ceramic has been shaped, it is fired in a high

temperature oven known as a kiln. Often, ceramics are covered in decorative, waterproof, paint-

like substances known as glazes.

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History of Ceramics

Archeologists have uncovered human-made ceramics that date back to at least 24,000

BC. These ceramics were found in Czechoslovakia and were in the form of animal and human

figurines, slabs, and balls. These ceramics were made of animal fat and bone mixed with bone

ash and a fine claylike material. After forming, the ceramics were fired at temperatures between

500-800°C in domed and horseshoe shaped kilns partially dug into the ground with loess walls.

While it is not clear what these ceramics were used for, it is not thought to have been a utilitarian

one. The first use of functional pottery vessels is thought to be in 9,000 BC. These vessels were

most likely used to hold and store grain and other foods.

It is thought that ancient glass manufacture is closely related to pottery making, which flourished

in Upper Egypt about 8,000 BC. While firing pottery, the presence of calcium oxide (CaO)

containing sand combined with soda and the overheating of the pottery kiln may have resulted in

a colored glaze on the ceramic pot. Experts believe that it was not until 1,500 BC that glass was

produced independently of ceramics and fashioned into separate items.

Since these ancient times, the technology and applications of ceramics (including glass) has

steadily increased.

Ceramic Properties

The properties of ceramic materials, like all materials, are dictated by the types of atoms present,

the types of bonding between the atoms, and the way the atoms are packed together. This is

known as the atomic scale structure. Most ceramics are made up of two or more elements. This is

called a compound. For example, alumina (Al2O3), is a compound made up of aluminum atoms

and oxygen atoms.

The atoms in ceramic materials are held together by a chemical bond. The two most common

chemical bonds for ceramic materials are covalent and ionic. For metals, the chemical bond is

called the metallic bond. The bonding of atoms together is much stronger in covalent and ionic

bonding than in metallic. That is why, generally speaking, metals are ductile and ceramics are

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brittle. Due to ceramic materials wide range of properties, they are used for a multitude of

applications. In general, most ceramics are:

• hard,

• wear-resistant,

• brittle,

• refractory,

• thermal insulators,

• electrical insulators,

• nonmagnetic,

• oxidation resistant,

• prone to thermal shock, and

• Chemically stable.

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Ceramic processing

It is used to produce commercial products that are very diverse in size, shape, detail,

complexity, and material composition, structure, and cost. The purpose of ceramics

processing to an applied science is the natural result of an increasing ability to refine,

develop, and characterize ceramic materials.

Ceramics are typically produced by the application of heat upon processed clays and other

natural raw materials to form a rigid product. Ceramic products that use naturally occurring

rocks and minerals as a starting material must undergo special processing in order to control

purity, particle size, particle size distribution, and heterogeneity. These attributes play a big

role in the final properties of the finished ceramic. Chemically prepared powders also are

used as starting materials for some ceramic products. These synthetic materials can be

controlled to produce powders with precise chemical compositions and particle size.

The next step is to form the ceramic particles into a desired shape. This is accomplished by

the addition of water and/or additives such as binders, followed by a shape forming process.

Some of the most common forming methods for ceramics include extrusion, slip casting,

pressing, tape casting and injection molding. After the particles are formed, these "green"

ceramics undergo a heat-treatment (called firing or sintering) to produce a rigid, finished

product. Some ceramic products such as electrical insulators, dinnerware and tile may then

undergo a glazing process. Some ceramics for advanced applications may undergo a

machining and/or polishing step in order meet specific engineering design criteria.

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Ceramic industry in India

A

Trade perspective

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Introduction Ceramics also known as fire clay is an inorganic, non-metallic solid article, which is produced

by the art or technique of heat and subsequent cooling. Ceramics is a diverse industry and

contains several categories of products, including sanitary ware, refractoriness, cement,

advanced ceramics and ceramic tiles. Ceramic products like crockery, sanitary ware, tiles etc

play a very important role in our daily life. This is because, apart from their decorative

look, ceramic products are primarily hygiene products. This is also one of the chief reasons

for their wide usage in bathrooms and kitchens in modern households to medical centers,

laboratories, milk booths, schools, public conveniences etc.

The ceramic industry has a long history, with the first instance of functional pottery

vessels being used for storing water and food, being thought to be around since 9,000 or

10,000 BC. Clay bricks were also made around the same time. The ceramic industry has

been modernizing continuously, by newer innovations in product design, quality etc.

Global Trade Profile

During the period from 2001 to 2008, total ceramics trade grew at a CAGR of 9.8%, from

US$ 39.6 billion to US$ 83.5 billion. During the period exports increased from US$ 19.8

billion to US$ 41.3 billion (CAGR of 9.7%), while imports increased from US$ 19.9 billion to

US$ 42.2 billion (CAGR of 9.9%).

China is the largest trader of ceramics in the world, with total trade of US$ 8.5 billion

during 2008, followed by Italy, US and Germany with total trade of US$ 7.4 billion, US$ 6.9

billion and US$ 6.8 billion, respectively.

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Major Exporters

China was the largest ceramic exporter during 2008, with exports of US$ 8

billion. Italy, Germany and Spain followed China with annual exports of US$ 6.3

billion, US$ 4.2 billion and US$ 3.9 billion, respectively. The top ten countries

together accounted for close to 72% of total ceramics exports during 2008.

Major Importers

United States was the world’s largest ceramic importer during 2008, with imports worth US$

5.4 billion. US rely heavily on imports of ceramic to meet its domestic ceramics

consumption. This is also reflected in its high ceramics trade deficit of close to US$ 4 billion.

US is followed by France, Germany and United Kingdom with annual imports of US$ 2.7

billion, US$ 2.6 billion and US$ 2.0 billion, respectively.

Trade situation in emerging markets

The global ceramic industry has undergone a period of significant change over the years,

driven by the demands of a globalised economy. While the traditional markets of Europe and

the US continue to grow, primarily led by public sector investment, the most significant

developments are however to be found in the emerging economies. They have, in recent

years become the most significant players in the ceramic market, in terms of consumption,

growth and investment. Since the future of the ceramic sector is so intricately linked with

the continued economic growth in emerging economies, the paper assesses the trade situation

in emerging markets, excluding India.

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Ceramic Industry in

Gujarat

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With the demand for ceramic products rising from rural areas and smaller cities, Morbi-based

ceramic industry is getting back to normal state after the slowdown had impacted the sector

in recent times. According to industry sources ceramic sector is now almost out of danger and

several units which had feared closure might regain their lost lustre.

"Impact of slow down is now almost stable and no further damage is seen in current scenario

as demand is increasing from rural areas and small cities across India. However, we will have

to play the wait and watch game for sometime as far as exports are concerned. During the

year, growth rate of industry had come down from 30-40 percent to 10 per cent. But the

position is pretty good after third quarter of 2008-09," said Girish Pethapara, managing

director of Deco light Ceramics Ltd.

There are around 270 ceramic units, 152 wall tiles units, 54 floor tiles units, 22 vitrified units,

and 42 sanitary ware units.

Turnover of Morbi ceramic industry is touched Rs.4000 crore in the year 2008-09 as

compared to Rs 4,000-4,500 crore for 2007-08. The industry offers more than 60,000 direct

and indirect employments.

"The sector is dependent on real estate. The slowdown in realty sector had badly affected the

ceramic industry in Morbi as well. But now situation is under control. Last year more than 40

per cent units were closed and rest were not working full force. At present almost all units are

in working condition at 80 to 90 per cent capacity," said Veljibhai Patel, president of Morbi

Ceramic Tiles Manufacturing Association.

According to Pethapara, recession is not only issue for the panic. Internal competition, value

added tax (VAT) and high gas price had also been hurting the business most. With the

Gujarat State Petroleum Corporation Ltd. (GSPC) being the only supplier of industrial gas to

Morbi,

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ECONOMIC RELATIONS OF

CANADA & INDIA

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The economic emergence of India holds importance for Canada and its business community.

Since India commenced its significant reform process in 1991, the country has moved from a

closed economic approach to one which is increasing, opened and engaged. This complex and

varied country still faces many economic, social and political challenges. It can present

frustrations to potential business applicants. But India is on a course which will make it a key

economic player in years to come.

For Canadian firms, India will present opportunities for lower cost production, R&D,

outsourcing business processes and investment opportunities. India’s many needs will be

markets for Canadian goods and services.

But an emerging and globalizing India should also have Canada on its radar screen.

Canada needs to ensure that it is attractive to Indian companies looking to expand beyond the

India subcontinent.

If the Canada-India economic partnership is to grow and prosper, the time for action is

now. Canadian interests face stiff competition from those who already have a substantive

presence there. Many other countries and their companies have a focus on India that greatly

exceeds what Canada has done to date.

Canadian goods and services are not well represented in this growing market. India has

been identified by both the Canadian business community and governments as an important

emerging market for Canadian companies, but we lag behind other countries in pursuing

opportunities. There is clearly room for growth.

Both governments and business have pointed to opportunities for Canadians in various sectors

financial services, telecommunications, information technology, software development,

environmental technologies, education, infrastructure, energy, agri-food, tourism, diamonds, light

manufacturing and auto parts. Our current economic interaction reflects activities in some of

these sectors but at low levels.

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Trade Currently bilateral trade with India is small, less than 0.5 percent of Canadian exports and less

than 1 percent of Canadian imports. Given the modest actual levels of trade relative to the size of

the two economies, there is substantial room for growth by both partners.

Canadian exports totalled $C1.67 billion in 2006, an increase of 54% over 2005, the largest

increase in recent times. Canada’s largest export components continue to be dominated by

products from the primary sectors, e.g., newsprint, metals, agricultural products. It should be

noted that large sales of wheat in 2006 topped Canadian export statistics because of India’s need

to import wheat due to domestic shortfalls. This opportunity may or may not continue. Exports

from aerospace, telecommunications and instruments are notable exceptions to the primary sector

products. Even so, Canada only represents about 1% of India’s trade.

The table below summarizes overall Canada-India trade. Detailed figures can be found in official

trade statistics available at www.strategis.ic.gc.ca

In import terms, India is less than 1% of our total imports and Canada ranked as India’s 24th

largest export market. Canada imported $C1.9 billion worth of goods in 2006, an increase of

7.4%. Key import sectors are clothing, diamonds, jewellery, diamonds, chemicals and textiles,

followed by a variety of manufactured items.

Canada’s strength in resources is normally a strong component of our bilateral economic

relationships. In many countries, Canadian presence is directly related to Canadian natural

resource companies using their Canadian base to not only sell products but to establish and

operate overseas. One only has to look at Canadian mining involvement in countries in Latin and

South America, Africa, Russia and increasingly China to see that our trade and exports of

primary commodities have led to significant Canadian investment and presence.

In the case of India, this model does not hold. Exports to India in primary commodities lead

our export profile but on global terms, these exports are small compared to our trade with other

markets (e.g., U.S., China, Europe). So, with Canada’s comparative strengths, our trade with

India is underwhelming in relative terms.

One of the most promising areas of increased trade involves services. The trade statistics cited

above do not show the value of services trade. Services imports and exports are very difficult

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to measure and capture fully. However, these products are significant and growing elements in

our bilateral economic interaction.

Canadian services exports to India have been dominated by financial services, energy,

engineering services, and information and communications technology, representing 31

percent, 28 percent, and 13 percent respectively, according to a 2002 report by the Asia Pacific

Foundation of Canada (note that this is higher than reported by Statistics Canada). Also,

financial services, power, and information and communications technology collectively

represented 85 percent of Canadian investment in India, valued at $150 million, $64 million,

and $30 million respectively. Overall, India represented only some 0.4% of Canada’s total

services exports in 2003. There should be significant opportunities for Canadian services

exporters given India’s highly-skilled and English- speaking workforce.

What also does not show up easily in services statistics are activities like outsourcing where

India has become an important centre, especially for IT services. This involves more than just

the call centres for computer support that many Canadians encounter. It includes design,

engineering, financial and other services which can easily be delivered electronically and

where firms can take advantage of global time zones to maximize their productivity. Canadian

firms are leveraging India’s capabilities in this regard but these activities are not captured by

traditional measurement techniques.

It must also be noted that India’s capabilities for providing outsourcing or back-office

capabilities will challenge Canadian capabilities as technology improves, skills levels and

aptitudes increase and Canadian cost competitiveness declines. A 2004 UNCTAD (United

Nations Conference on Trade and Development) survey suggests that Canada is “stuck” with

call centres at the low end of the value chain while India’s offerings are of higher value.

A cautionary note on bilateral trade statistics is required. Through the latter years of the

twentieth century, business platforms moved onto a global basis, locating production and

service facilities wherever the best efficiencies could be found. This trend has gone far beyond

just outsourcing or the development of branch plant facilities. The “integrative trade” approach

means using global approaches and strategies to manufacturing, sourcing, distribution and

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management. It also means corporations are combining both trade and investment into a

coordinated effort abroad.

Integrative trade has another dimension which means that bilateral trade statistics do not show

the true picture of economic relationships. Integrative trade brings together traditional export

trade with the importing of inputs of goods and services and the foreign investments required

to build global supply chains.

Investment

In investment terms, India is a small part of Canada’s destinations for foreign direct investment

(FDI), registering less than half a percent of Canada’s total FDI outflows.

While two-way investment interaction is increasing, it remains below what might be expected

given the size of the two economies. In 2005, Canadian FDI in India was some $204 million,

but it was 46th in terms of country rankings and only some 0.04% of total Canadian FDI

abroad. Key Canadian players with investments or partnerships in the India market include

SNC Lavalin, Nortel, RIM, McCain Foods, and many other small companies too.

Indian FDI into Canada has increased to some $145 million by 2005 but that total is only

0.03% of total FDI in Canada. India is the 30th largest investor in Canada. Indian companies

with substantial operations include Tata, BFL Software, Satyam Computer Services, Wipro,

Infosys and Aditya Birla Group. Recently Videsh Sanchar Nigam Ltd (VSNL) purchased

Teleglobe. Most recently, Hindalco has acquired Novelis.

A further caution about investment figures is that some Canadian FDI flows into India via

Mauritius, Singapore or other countries for tax reasons so the true number may be understated.

While there are notable exceptions in the investments noted above, the key point is that India

does not figure as significantly as it should or could in the business plans of many Canadian

companies.

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ISSUES AND INITIATIVES

The goal of this project is to outline some of the key issues that affect business’

strategic thinking about Canada’s economic relationship with India, and to offer suggestions

and recommendations on the way forward.

Canada has the products, services, skills and capacity to substantively assist India in meeting

its economic and social goals. Equally, India has skills, goods and services that Canada needs.

If the means can be found for increased economic interaction, both countries will prosper.

Profile and Visibility in Both Canada and India

India, like Canada, is an immense and diversified country. Given India’s rapidly growing

economy and the significant domestic and international competition, achieving visibility and

presence there is a daunting task, for both governments and business. So is differentiating

Canada in the Indian marketplace.

Enhancing Investment

There is a clear need for Canada to sell itself as an investment destination. Indian companies are

rapidly diversifying and reaching out. Global names such as Tata, Aditya Birla, Arcelor Mittal,

Ranbaxy, Reliance and Wipro are the Indian corporate titans seeking opportunities on a world-

wide scale. They are using economic strength derived from a strong domestic base and markets

to expand abroad. More importantly, they are bringing financial resources as well as technology,

management expertise and a competitive spirit to their international activities.

Bilateral Foreign Investment

Canada and India have been in discussions about a bilateral FIPA for some time and negotiations

will hopefully conclude in the near future. Throughout the negotiation process, the federal

government has openly sought business input to ensure that the proposed FIPA meets business’

key concerns and this has been welcome.

\

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Infrastructure Opportunities

Notwithstanding the growing opportunities in India as the economy expands, reforms are

pursued and the economic environment improves, India’s infrastructure is not capable of

sustaining the future prospects being touted for the country. Major shortfalls in transportation

(roads, rail, ports and airports), power, and telecommunications are hindering India’s economic

development.

A vital task for government representatives in India is to profile Canadian talent and expertise

with key Indian bodies. The major infrastructure investments in India will increasingly be made

not by the public sector but by large private sector Indian companies with economic and political

wherewithal [resources] to under- take the projects. Ensuring that Canadian companies and their

capabilities are visible and engaged with key Indian conglomerates is vital.

Labour Market Reforms

India’s growing population makes employment creation a social and political priority for the

country. Under the Indian Industrial Dispute Act of 1947, any registered firm employing more

than 100 employees requires formal approval from the respective state government to terminate

an employee and such permission is rarely given. Beyond removing needed corporate flexibility,

such laws decrease employee incentive and productivity since the future of their employment is

not based on performance.

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PEST ANALISIS The PEST Analysis is a framework that is used to scan the external macro-environment in

which the country / industry / organization / or a unit operates. PEST is an acronym for the

following factors:

§ Political factors

§ Economic factors

§ Social factors, and

§ Technological factors.

PEST factors play an important role in the value creation opportunities for ceramic industry.

However they are usually beyond the control of the single corporation and must normally be

considered as either threats or opportunities.

Political: Canada welcomes global business investment that contributes to nation’s growth,

jobs, innovation and enduring competitiveness.

Nearly 60% of Canada’s GDP is linked to trade, making Canada one of the most open

economies.

In 2009, FDI stock in Canada was equivalent to about 36% of GDP. Between 2003 and

2009, Canada was the world’s 7th largest recipient of FDI flows, ahead of Italy, Germany

& Japan.

Government of Canada offers export development opportunities and also provides

financing for new FDI projects in Canada.

Economic: Emerging from the global recession stronger than ever, Canada’s top performing

economy offers opportunities for those seeking to grow, innovate & succeed.

Throughout this year and next, Canada will have strongest average economic growth in

the G-7 over 2011-2012,

As per the Economist Intelligence Unit, Canada is the best place in G-7 to do business for

the next upcoming years.

Fiscal strength: Canada had entered the global recession with a strong record of balanced

budgets and low debt. The International Monetary Fund projects that Canadian

28

government finances will be largely balanced by 2015. This means that tax rates remain

down and provide stability for investors.

Social: Canada’s high quality of life provides a great backdrop for the success of individuals,

families and globally engaged companies. Canada leads the administration of justice, the

protection of personal security and private property. The top three cities for liveability are

Vancouver, Toronto, and Calgary. It is also ranked first in the Human Development Index,

2009.

Technological: Canada offers a winning environment for research and innovation, including

world – leading research and development infrastructure, technologies and scientific talent.

Canada is a home to highly educated and diverse workforce that is well suited for today’s

knowledge economy.

Global corporations are undertaking their research projects in Canada that can expect one

of the most world-class sciences & technologies.

Canada’s world-leading sectors are mainly automotive, aerospace & defense, machinery

and equipment, chemical and plastics industry, digital media, software, wireless

communications, and also world class services. These factors can ensure brighter business

opportunities.

Gate way to world: Canada’s unwavering commitment to free trade, advantageous

geographic location, status as a North American Free Trade Agreement partner and world-

class transportation infrastructure translate into cheap, fast and reliable access to North

American and global markets. It offers assured access to a lucrative North American market

of 448 million consumers with a combined GDP of US $16 trillion. Moreover, it has major

international shipping ports on both the Atlantic and pacific coasts, the world’s longest inland

water way and one that reaches into the economic heartlands of North America.

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Part II

30

Introduction of selected companies of

Ceramic sector in India and Canada

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Kajaria

Kajaria Ceramics is the largest manufacturers of ceramic/vitrified tiles in India. I thas an

annual capacity of 33.70 mn. sq. meters, distributed across three plants Sikandrabadin Uttar

Pradesh, Gailpur in Rajasthan and Morbi in Gujarat. The motivating factor remains the zeal,

the zeal to be the best, to be at the top and to achieve the highest echelons of excellence. The

manufacturing units are equipped with cutting edge technology. Intense automation, robotic

car application and a zero chance for human error are just few reasons why Kajaria remains at

the top in the industry. Founded two decades ago with a single-minded vision, to be the best

in providing tile solutions, Kajaria has since then grown stronger with its hard work,

innovations and patronage from our discerning customers.

The Indian consumers' rapidly growing appetite for style and aesthetics is the inspiration

behind every design of Kajaria Ceramics. Kajaria has today become a synonym for quality,

service and innovation – not only in the domestic market but in the international market too.

Kajaria finds an ever increasing market not just in India but also in 20 other countries all over

the world .Kajaria Ceramics has increased its capacity from 1 mn. sq. mtrs to 33.70 mn. sq.

mtrs. in last 22 years and offers more than 400 options in ceramic wall & floor tiles, vitrified

tiles, designer tiles and much more.

These tiles come in a wide range of colours and textures to complement bathrooms, living

rooms, corridors, study rooms & kitchen, born our of an inspired creativity of those who feel

that rooms should be an extension of the beauty reflected. With an unparalleled commitment

towards quality we have strived to adopt technologies and standards with the changing times.

Be it technology, research, design or quality, Kajaria has set its sight on all these factors

adopting new production techniques in order to enhance the quality of its Using robot car

application, new ratification technique and roto colour system, wear efficient to produce

quality products. Leveraging the two invaluable assets –

32

International de Ceramica

Inter ceramic began operations in Chihuahua, Canada in 1979 as a ceramic tile

manufacturing company with the most innovative technology at the time. Today it is one of

the largest ceramic tile manufacturers in North America with a total production capacity of

approximately 450 million sq ft per year in nine facilities housed in four different

manufacturing complexes: three in Chihuahua, Mexico and one in Garland, TX in the US.

With almost 30 years in the market, Inter ceramic has become a leader not only as a

manufacturer, but also as distributor of ceramic tile, bathroom fixtures, setting materials and

natural stone. To complement manufactured products, Inter ceramic also outsources

approximately 70 million sq ft of floor and wall tile annually. They have opened up North

American market through a unique franchised-store distribution system in Mexico comprised

of 230 stores and 27 wholesale showroom and warehouse facilities plus 65 independent

distributors in the US and Canada, also 2 stores with distribution center in Central America,

one in Panama and the other in Guatemala, annual sales nearing the $500 million mark.

Parcelanosa Ceramic

Parcelanosa group is today a leading tile manufacturing company in international market

based on values such as innovation and quality, but above all, based on confidence in his

extensive team, consisting of nearly 5000 people. The group is present in nearly 100

countries around the world. The company has developed a unique business model that relies

on the strategic action. The group had started production of ceramic tiles in its initial stage.

Currently, the company operates in different 8 groups of ceramic products ranging from

kitchenware to bathroom equipment and advance construction solution of projects.

33

Export & Import in

Ceramic sector

34

WHAT IS EXPORT?

This term export is derived from the conceptual meaning as to ship the goods and services out

of the port of a country. The seller of such goods and services is referred to as an "exporter"

who is based in the country of export whereas the overseas based buyer is referred to as an

"importer". In International Trade, "exports" refers to selling goods and services produced in

the home country to other markets .Any good or commodity, transported from one country to

another country in a legitimate fashion, typically for use in trade. Export goods or services

are provided to foreign consumers by domestic producers.

Export of commercial quantities of goods normally requires involvement of the customs

authorities in both the country of export and the country of import. There are number of items

in ceramic sector which can be exported or imported across the globe. Ceramic mainly

includes the following;

v Ceramic Ball Bearings

v Ceramic Glaze

v Ceramic Heaters

v Ceramic Kitchenwar

v Ceramic Lamp

v Ceramic Mugs

v Ceramic Nozzle

v Ceramic Painting

v Ceramic Pigment

v Ceramic Pipe

v Ceramic Planter

v Ceramic Pot

v Ceramic Pottery

v Ceramic Products

v Ceramic Sculpture

v Ceramic Sinks

v Ceramic Spoons

v Ceramic Tableware

v Ceramic Tile

35

v Ceramic Band Heater

v Ceramic Bong

v Ceramic Bowls

v Ceramic Capacitors

v Ceramic Coatings

v Ceramic Craft

v Ceramic Cutlery

v Ceramic Decorativ

v Ceramic Fiber

v Ceramic Floor Tiles

v Ceramic Flower Pot

v Ceramic Toilets

v Ceramic Vase

v Ceramic Wall Tiles

36

HS CODE / HSN CODE GENERAL CLASSIFICATION

Tariff nomenclature [categorization], customs valuation and procedures can be classified as

“non-border” areas of cooperation. These are an essential part of any free trade arrangement

being part of the technical, administrative and regulatory aspects of trade. Their

harmonization would contribute to the smooth flow of goods across borders. In fact, even in

the absence of any tariff reductions, harmonization in these areas can help facilitate or

increase the flow of trade. The significant rise in international trade and a more diversified

pattern of trade increased the need to simplify and harmonize these cross border measures,

and to revamp customs administration at the international level.

Product classification refers to the classification of goods using some criteria of description

eg. usage, function or measurement. It becomes tariff nomenclature [or tariff lines] when

tariff rates are attached to the classification of goods. In international trade, harmonization

and refinement of tariff nomenclature is necessary to ease the process of making products

comparable. This is especially true in the various Free Trade Agreements where certain tariff

concessions are only accorded to goods on a reciprocal basis. One would have to compare

like in order to determine if a particular product qualifies for concessions

The Harmonized System is a system which classifies and describes products based on various

criteria. The Customs Cooperation Council now the World Customs Organization, is

responsible for the administration and maintenance of the HS Convention and the

Harmonized System of nomenclature [HSN] appended to it.

India was amongst the first few countries to adopt it for customs tariff purposes. The

Harmonized Commodity Description and Coding System, commonly known as “HS

Nomenclature”, is an international multipurpose nomenclature. There are 116 Contracting

Countries to this convention. However, it is applied by more than 190 Governments

worldwide. The very purpose of having such nomenclature is to set up their national customs

tariff and for the collection of economic statistical data. The European Union and its member

states together represent a block of 26 contracting states to the aforementioned Convention

37

Comparative position of ceramic

Industry in Gujarat

38

Morbi Cluster

Morbi, the hub of ceramic products registered a highest growth in export market. The

following chart represents the export figures in different countries.

39

FIELD OBSERVATIONS

Morbi is the heart of Ceramic Industry in India with more than 70% of the

market share. The cluster of Ceramic industries in this region is spread over a stretch

of 10 Kms on the Morbi - Dhuva Highway. The major areas are on Morbi 8-A, National

Highway, Lalpar, Old Ghuntu road, Lakhdhirpur road, Dhuva road & Jambudiya area. The

main products are Vitrified tiles, Floor tiles & Wall tiles. The main reason for setting up

ceramic units in Morbi is raw material availability, local clay suitable for ceramic, Labour

also available easily.

Majority of the units are working since last 10-12 years and since last 7/8 years after several

trials have become leading world-class units, which are exporting to number of countries

also. All are family business having several units. Majority of the units are working round the

clock.

Major energy consuming equipment kiln, Press machine, Boil miller, Drier, 30 to 35%

Energy/Fuel cost out of total production cost The most important aspect of the entire tile

making process is grinding of the sand and biscuit preparation. Sand the most critical part

of the entire product, sand composition and mixing is the most essential part for the final

quality of the product, which requires vast experience.

The tile kilns are fired by natural gas. The industry is now seeking thestate government's

immediate intervention to make gas available at reasonableprices. About 80 per cent of

the units remain closed because during the last 18 months the fuel price has gone up by 120

per cent.

40

Policies and norms for

Ceramic Industry

41

1. Basis of Accounting:

The Export Company has to prepare its financial statements in accordance with

applicable accounting standards and generally accepted accounting principles and also in

accordance with the requirements of the Companies Act, 1956.

2. Income and Expenditure:

Accounting of Income & Expenditure is done on accrual basis except Interest on export

bills which is accounted for on actual realization.

3. Fixed Assets & Depreciation:

a) Fixed assets are stated at their original cost of acquisition inclusive of inward

freight, duties and expenditure incurred in the acquisition, construction/installation.

b) In case of assets acquired out of foreign currency loans, the increase/decrease in liability on

account of fluctuation in exchange rates have been charged to Profit & Loss Account.

c) CENVAT credit availed on capital equipment is accounted for by credit to

respective fixed assets.

d) Capital Work-in-progress includes project advances pending execution.

4. Investments:

Long term investments are stated at cost.

5. Excise & Custom Duty:

a) Custom Duty is accounted for at the time receipt of goods in custom warehouse.

b) CENVAT Credit, to the extent availed, is adjusted towards cost of materials.

6. Sales:

Sales are inclusive of excise duty and after deducting sales tax and discounts. Discounts

are recognized when substantially all conditions appurtenant thereto have been fulfilled.

42

7. Foreign Currency Transactions:

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing

on the date of the transaction or that approximates the actual rate at the date of the

transaction.

b) Monetary items denominated in foreign currencies at the end are restated at year end rates,

except in cases covered by forward exchange contracts.

c) Any income or expense on account of exchange difference either on settlement or on

translation is recognized in the Profit and Loss Account.

8. Export Benefits:

Export Benefits in respect of unutilized Advance Licenses under DEPB Scheme are

accounted for in the year of Export to the extent of duty livable on imports to be made in

future. The consumption of Raw Material, Stores and other inputs and the valuation of closing

stock are stated net of such export benefits.

India’s growth provides Canadian companies with opportunities to sell their goods

and services and to enhance their global competitiveness by outsourcing components of

their operations and becoming more integrated into the global supply chain.

43

PRESENT TRADE BARRIERS

44

Although, the sector that we have selected i.e. ceramic is not restricted to be traded

across the globe but there are certain policy barriers which reduce the growth of

business.

Even with the opportunities afforded by an average annual growth rate of approximately 8

percent in India, Canada is not well represented in this expanding economy. Currently, India

represents less than 0.5 percent of Canadian exports and less than 1 percent of Canadian

imports (Foreign Affairs and International Trade Canada). Moreover, India, as a

destination, represents less than half a percent of Canada’s total FDI outflows.

The discrepancy in these statistics could be due to investment originating from Canada

flowing through a third-party country prior to entering India and to the difficulty in

reporting the trade in services. An example of this would be the case of Mauritius, which

recorded 12 times more investment in India as Canada. However, the majority of investment

originating from Mauritius is global firms taking advantage of the India-Mauritius tax treaty,

which results in Canadian investment being under-recorded in India. Regardless of which

values are correct, the importance here is for Canada to expand on its current presence in the

Indian marketplace and venture into new sectors of opportunity.

45

Future of Ceramic Industry

46

Global ceramic tiles industry faced the world economic slowdown in 2000.Itadversely

affected the ceramic tiles sector, and the world tile production fell for the first time in the

sectors industrial history. Production: World tile production dropped to 8,515 mn sqm

against 8,520 mn sqm in 2008. There was a geographical shift in tile production from the

industry`s traditional European base to the nascent economies of Asia, North Africa and

the Middle East. The 27 EU nations, accounting for a substantial share in the global tile

production, reported a 25% production drop. Despite a sharp downturn in Europe and

America, there was a positive trend in Asia and Africa, which grew 7.1% and 11.9%

respectively. Asia produced 5,542 mn sqm, bringing its share of the world production to

65.1%. Of the total production in Asia, China alone accounted for nearly two-thirds of tile

production and 42.3% of the tile industry`s global output. India emerged as the world`s third-

largest manufacturer and consumer of ceramic tiles. The ceramic tile industry in the country grew in double digits for the last couple of years.

This trend is likely to continue due to rise in the income levels of middle class and huge

investments expected in real estate and infrastructure in the 12th Five Year Plan (2012-

17). Due to a proactive approach and sound marketing strategies, any firm may be able

to outperform the industry average of 12-15% and can be grown at a five year-CAGR

of 25.12%. The pressure on profit margins is likely to remain due to (i) increase in various cost

components like raw materials, energy, manpower and interest and (ii) the

competitive pressures due to continuing creation/expansion of more capacities. The creation of more capacities by the unbranded players continues to be an

opportunity for the leading manufacturers of branded products to expand and further

strengthen their outsourcing business.

47

Industry Growth Drivers: Rising discretionary spending: Per capita income grew from Rs. 46,492 in 2009-10 to Rs. 54,527 in 2010-11, increasing

affordability in the hands of the Indian consumers, who are gradually shifting to lifestyle

products (Source: Economic Times, 31 May, 2011). Discretionary spending in premium

products is expected to increase to 70% of household annual spending by 2025.

Growing urbanization:

Over the last decade, India`s population grew 1.38%, While urban population grew at 28%.

Urban India accounts for 28% of the total population, which is expected to touch

41% by 2030, resulting in further growth for the real estate sector (CRISIL Research,

December 2010).

Replacement demand:

With an increase in disposable incomes, urbanization and lifestyle changes, consumers are

replacing traditional low-end tiles with superior quality. The demand from the replacement

market is a mere 12% in India compared with 40% in Spain, Italy and China, indicating a

huge opportunity for high-end tile makers.

Growing middle-class:

The Indian middle-class (annual income of Rs. 3.5 to Rs. 17 lacs) is expected to increase

from 160 million people in 2009-10 to 267 million people by 2015-16. By 2025-26, the

number of middle-class Indian households is likely to double from 2015-16 levels to 547

million individuals (Source: Economic Times, 6 February 2011)

48

Conclusion

49

The economic emergence of India holds importance for Canada and its business

community.Since India commenced its significant reform process in 1991, the country has

moved from a closed economic approach to one which is increasing, opened and engaged. This

complex and varied country still faces many economic, social and political challenges. It can

present frustrations to potential business applicants. But India is on a course which will make it

a key economic player in years to come.

For Canadian firms, India will present opportunities for lower cost production, R&D,

outsourcing business processes and investment opportunities. India’s many needs will be

markets for Canadian goods and services.

But an emerging and globalizing India should also have Canada on its radar screen.

Canada needs to ensure that it is attractive to Indian companies looking to expand beyond the

India subcontinent.

If the Canada-India economic partnership is to grow and prosper, the time for action is

now. Canadian interests face stiff competition from those who already have a substantive

presence there. Many other countries and their companies have a focus on India that greatly

exceeds what Canada has done to date.

Canadian goods and services are not well represented in this growing market.

India has been identified by both the Canadian business community and governments

as an important emerging market for Canadian companies, but we lag behind other

countries in pursuing opportunities. There is clearly room for growth.

Both governments and business have pointed to opportunities for Canadians in

various sectors — financial services, telecommunications, information technology,

software development, environmental technologies, education, infrastructure, energy,

agri-food, tourism, diamonds, light

50

Suggestions / recommendation

During the study of GCR, we have approached following associations for

preparing this project and making it a success.

Ø Gujarat Ceramic Floor Tiles Manufacturers' Association Ø Old Ghuntu road, Morbi-363642, Mr. Girishbhai Pethapara,.

. Ø Thangadh Federation of Ceramic Industries,

Thangadh, Gujarat,.

Ø Morbi Dhuva Glaze Tiles Association, Mr.

Veljibhai Patel (President)

Ø Panchal Ceramic Association, Thangadh, Gujarat

We have collected some of their valuable suggestions which are as followed;

v Canadian education institutions should increase their

effortsin Ceramic Sector. They should attract Indian

students and in setting up satellite campuses to deliver

Canadian recognized diplomas and degrees. v The Federal government of Canada should provide

funding to establish an excellence-based scholarship

program specific to international businesses. v The Federal government must work with the international

markets and their associations to develop and market a

Canadian ceramic business. v The government of Canada must work within its goal set

out in Advantage Canada of making it easier for foreign

clients to enter Canada and stay in v Canada to work once their projects are completed.

51

BIBLIOGRAPHY

52

Books:

Foreign Trade Policy - by Mr. Rajesh

Kanani Export - do it your self

Magazines

EXIM BITS [all the latest editions of

2012] Global EXIM

Ceramic World Review, February 2011

EXIM Bank: Indian Ceramic Industry: Perspectives & Export Potential

Newspaper[s]

[of the last 3 months] Business Standards Economic Times Websites: For export data http://www.cybex.in/india-exports-data/Ceramic-Glaze-Tiles-Exports.aspx http://www.ctasc.com/Research_Reports/Ceramic_Tile_Report/ For demographic study http://www.ccsd.ca/factsheets/demographics/demographics.pdf https://www.cia.gov/library/publications/the-world-factbook/geos/ca.html

53

A

Partial Submission of

“Global Country Study”

Name of Country: Malaysia

College Code: 740

College Name: Om Shanti Engg.( MBA) College

Semester: MBA Sem -IV

Student Information:-

Student Name Student Enrollment Number 1. Dilip Baraiya 107400592005 2. Hardik Trivedi 097400592017 3. Sakina Bekriwala 107400592007 4. Chandani Budhadev 107400592002 5. Kiran Somaiya 107400592004

Faculty Guide: Navjyot Raval

Faculty`s Email: navjyot.raval@yahoo.com

Faculty`s Contact Number: (M:) 9909515615

Submitted To: Gujarat Technological University

54

PART-I

“Welcome to Malaysia”

“Malaysia Tourism is all about Fun & Adventure with Beaches & Historical Monuments”

Ø History

On 20 May, 1987, the Ministry of Culture, Arts and Tourism (MOCAT) was established and

TDC moved to this new ministry. TDC existed from 1972 to 1992, when it became the

Malaysia Tourism Promotion Board (MTPB), through the Malaysia Tourism Promotion

Board Act, 1992.

Tourism Malaysia has grown by leaps and bounds with its focus on promoting Malaysia at

the domestic and international levels. It aims to market Malaysia as a premier destination of

excellence in the region. Its vision is to make the tourism industry a prime contributor to the

socio-economic development of the nation.

With the growth of world tourism and Malaysia's potential as tourism destination, has

contributed to the change and focus in the country's tourism sector. It has helped generate

substantive foreign exchange earnings and employment. Tourism Malaysia now has 34

overseas and 11 marketing representative offices.

55

Tourism Malaysia or Malaysia Tourism Promotion Board (MTPB) is an agency under

the Ministry of Tourism, Malaysia.

Tourism Malaysia or formerly known as the Tourist Development Corporation of

Malaysia (TDC), was established on 10 August, 1972. It was then under the former Ministry

of Trade and Industry.

Ø Malaysia today

The country has made astonishing economic progress since independence and has become a

major centre for tourism in Asia.

Malaysia is one of the most wonderful beautiful cities in the Southeast Asia engrossed in rich

cultural and traditional heritage is considered as a great destination for tourists. Malaysia

tourism is interesting for those who love crystal clear water at beaches, water sports activities,

deep blue sea, stunning resorts and luxurious hotels. If you are night lover and want to enjoy

dinning and night parties with some exotic dance and dinner this city offer some of the best

restaurants and dinning places. Shopping complexes are also interesting here and you can

experience great hospitality during your Malaysia tour.

Holiday goers should not miss this place specially those who love travelling around the

world. This place is also famous for the ancient sculptors and traditional art which are mixed

with the modern technology which has establish some of the utmost skyscrapers. These

things are world famous and one must not miss them in their Malaysia tour.

Manufacturing constitutes the largest single component of Malaysia's economy. Tourism and

primary commodities such as petroleum, palm oil, natural rubber and timber are major

contributors to the economy.

Ø Promotional efforts

The success of the Visit Malaysia Year 2007, a celebration of Malaysia's diverse cultures,

beautiful holiday locations and unique attractions has helped propel the country to the

forefront in tourism.

56

In 2010 Tourism Malaysia announced that it would be making greater efforts to attract New

Zealanders. The government has started a campaign called "1Malaysia Green, 1Malaysia

Clean" in order to let tour operators and travelers understand the need to protect nature areas

while promoting eco-tourism.

Ø Leadership

As of August 2010 Dato' Sri Dr. Ng Yen Yen is the Minister of Tourism and Azizan Noordin

is Acting Director-General of Tourism Malaysia.

Ø 10 of Malaysia’s Best!

1. Petronas Twin Towers- Kuala Lumpur: Explore the world’s tallest twin structure with a

height of 452 metres (88 floors) located in the heart of Kuala Lumpur.

2. Sunway Lagoon- Kuala Lumpur : Sunway Lagoon Theme Park features the world’s largest surf wave pool and thrilling rides.

3. Mt. Kinabalu – Borneo: Explore South East Asia’s highest mountain. Those looking for a

challenge can take a two day hike to the summit and enjoy stunning views.

4. Sepilok Orangutan Rehabilitation Centre- Borneo: Visit the world’s largest orangutan

rehabilitation centre. See orphaned and injured orangutans be rehabilitated to return to their

natural environment.

5. Island Hopping- Langkawi : Langkawi has 99 islands waiting to be discovered. Island

hop, swim, snorkel or simply relax on the beaches.

6. George Town - Penang: Explore the winding streets with many grand colonial buildings,

temples, mosques.

7. Golfing: There are a variety of excellent golf courses around Malaysia with breathtaking

scenery.

8. National Parks: Visit one of Malaysia’s 19 national parks. Trek, spot wildlife including

the proboscis monkey, explore caves, waterfalls and discover rare species of plants.

9. Longhouse – Borneo: Visit a tribe in a wooden structure on stilts.

10. Turtle Island – Borneo: Take a trip to Turtle Island and get up close and personal with

turtles. Watch turtles laying eggs on the beach and help to release them back into the ocean.

57

COMPARISION BETWEEN MALAYSIA TOURISM AND INDIA TOURISM

SWOT ANALYSIS OF INDIA TOURISM STRENGTH

• Natural and cultural diversity • Demand-supply gap • Government support

WEAKNESS • Poor support infrastructure • Slow implementation • Susceptible to political events

OPPORTUNITIES • Rising income • Open sky benefits

THREATS • Fluctuations in international tourist

arrivals • Increasing competition

SWOT ANALYSIS OF MALAYSIA TOURISM

STRENGTH • Outstanding nature

• Cultural diversity

• Good accessibility & tourism facilities

• Safety

WEAKNESS • Service quality

• Low profit margin

• Environmental degradation

OPPORTUNITIES • Close proximity to Asian neighbors • Better access through budget carriers • World Heritage Site branding • Youth travel

THREATS • Regional safety • Ignorance and prejudices • Environmental degradation

Ø Tourist Arrival of India & Malaysia

Month (2010) India (In lakhs) Malaysia (In lakhs) Mar 4.72 20.22 Apr 3.54 18.77 May 3.45 19.92

58

Ø TRADE &COMMERCE OVERVIEW

Tourist Arrival of Malaysia

Year Arrival(million) Receipt(million)

2011 24.7 58.3

2010 24.6 56.5

2009 23.6 53.4

2008 22.0 49.6

2007 20.9 46.1

Trade of international level

Total arrivals volume declined in only three years during the decade.

59

• 2001: the devastating terrorist attack on 11 September (9/11) in the USA had a major

impact on global demand in the last quarter of 2011, but the final outcome was a year of

stagnation rather than real decline (-0.1%).

• 2003: a relatively modest 1.6% fall in arrivals was due to the combined effect of three

significant factors: the Iraq crisis, the SARS outbreak and a persistently weak global

economy.

• 2009: the global economic recession that started in the second half of 2008 resulted in a

3.8% decline in arrivals worldwide the following year.

"Education is the manifestation of the perfection already in man"

The draft intends to throw light on the World of Education between the two countries Malaysia

& India. As we all are living our live in the Global Age, it would be very interesting for all the

referrers of the report to have an idea for the same.

Following points have been covered under this draft.

1. Introduction to the System of Education in Malaysia and India

2. Categories of education system: private/public/grant aid, evolution of education in

Malaysia and India

3. Fee structure, admissions & student psychology at Malaysia & India

4. Future trend of education in Malaysia and India

5. Summary

Detailing:

Ø Introduction to the system of Education

Malaysia

Sekolah Pondok (literally, Hut school), Madras and other Islamic schools were the earliest forms

60

of schooling available in Malaysia . The oldest English-language school in Malaya is the Penang

Free School, founded in 1816, followed by Malacca High School, and Anglo Chinese School,

Klang. Many English-language schools are considered quite prestigious.

The current population of Malaysia is about 28.6 million There are approximately 2.9 million

children in primary schools; 2.3 million in secondary schools; 480,000 in public universities and

colleges; 550,000 in private universities and colleges; 90,000 in polytechnics and 18,000.

Various initiatives, such as the National Economic Model (NEM) and the Tenth Malaysia Plan

(2011 – 2015) are introduced by the government to make Malaysia an advanced and high

income nation by 2020. Bahasa Malaysia is the medium of instruction in most schools in

Malaysia.

The Indian Education System has many stages such as the Nursery, the Primary, the Secondary,

the Higher Secondary, the Graduation, and the Post Graduation. There are many different

streams available after secondary education. The Higher Education in India aims at providing

education to specialize in a field and includes many technical schools, colleges, and universities.

The schools in India are controlled by various boards such as the Central Board of Secondary

Education (CBSE) board, the Council for the Indian School Certificate Examinations (CISCE)

board, the state government boards, the National Open School and the International schools.

Ø Categories of education system: private/public/grant aid, evolution of

education in Malaysia and India

Malaysia

Private-funded Educational Institutions

India

For centuries, India has been a major centre for learning and many popular universities existed

here. Even today, the country has some of the best Universities in the world. Besides, it is also

facing many challenges in its primary education while striving to reach 100% literacy.

61

The private education providers in Malaysia can be broadly grouped into 2 categories

The Malaysian National Education System comprises of the following levels of education:

Pre-school / Kindergarten education for children aged 4 to 6

Primary education from age 7 to 1 2 (Standard 1 to Standard 6 for 6 years)

Secondary education from age 13 to 17 (Form 1 to Form 5 for 5 years)

India

The various types of schools offering secondary/higher secondary education are as follows.

• Central Government Funded and Managed Schools

• Central and State Funded Schools

• Private Schools

62

“FINANCIAL MARKET”

In economics, typically, the term market means the aggregate of possible buyers and sellers

of a certain good or service and the transactions between them.

The term "market" is sometimes used for what are more strictly exchanges, organizations that

facilitate the trade in financial securities. This may be a physical location or an electronic

system. Much trading of stocks takes place on an exchange; still, corporate actions are

outside an exchange, while any two companies or people, for whatever reason, may agree to

sell stock from the one to the other without using an exchange.Financial markets can be

domestic or they can be international.

Types of financial markets

The financial markets can be divided into different subtypes:

Ø Capital markets which consist of:

ü Stock markets, which provide financing through the issuance of shares or

common stock, and enable the subsequent trading thereof.

ü Bond markets, which provide financing through the issuance of bonds, and

enable the subsequent trading thereof.

Ø Commodity markets, which facilitate the trading of commodities.

Ø Money markets, which provide short term debt financing and investment.

Ø Derivatives markets, which provide instruments for the management of financial risk.

Ø Futures markets, which provide standardized forward contracts for trading products at

some future date; see also forward market.

Ø Insurance markets, which facilitate the redistribution of various risks.

Ø Foreign exchange markets, which facilitate the trading of foreign exchange.

Ø STOCK MARKET

63

INDIA

There are 22 stock exchanges in India, the first being the Bombay Stock Exchange (BSE),

which began formal trading in 1875, making it one of the oldest in Asia. Over the last few

years, there has been a rapid change in the Indian securities market, especially in the

secondary market.

The Securities and Exchange Board of India (SEBI) is the regulatory authority established

under the SEBI Act 1992, in order to protect the interests of the investors in securities as well

as promote the development of the capital market. It involves regulating the business in stock

exchanges; supervising the working of stock brokers, share transfer agents, merchant bankers,

underwriters. As well as prohibiting unfair trade practices in the securities market. The

following departments of SEBI take care of the activities in the secondary market

Growth Pattern of the Indian Stock Market

“Business Environment: India and Malaysia”

The major external and uncontrollable factors that influence the organization’s decision

making and affect its performance and strategies the development of the economy as well.

These factors include the economic factors, demographics, legal, industrial,and natural

forces.

The Business Environment is affected by various factors like: Economicalfactor,

Demographic Factor, Ecological factor, Geographical factor etc.

Ø INDIA

64

India has a mixed economy, with a government owned public sector and private

sector playing active roles.

The economy of India is the fourth largest in the world, with a GDP of $3.63 trillion

at PPP, and is the tenth largest in the world with a $691.9 billion at 2004 USD

exchange rates and has a real GDP growth rate of 6.2% at PPP.

Ø MALASIYA

Malaysia has a small and open economy.The GDP per capita (PPP US$) is 10,882, which

places the country on 57th rank out of total 177 nations.It is recognized as one of the leading

exporter of rubber, latex threads.

The Economy of Malaysia is a growing and relatively open state-oriented and newly

industrialized market economy. The state plays a significant but declining role in guiding

economic activity through macroeconomic plans.

A market-oriented economy and government policies that provide businesses with the

opportunity for growth and profits have made Malaysia a highly competitive manufacturing

and export base. Malaysia's rapid move towards the IT economy allows companies to do

business in an environment that is geared towards information technology.

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STATUS

India is 4th largest economy of the world by the purchasing power parity and 9th largest

economy in South-East Asia. While, Malaysia is 28th largest economy of the world by

purchasing power parity and 3rd largest economy in South-East Asia.

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“Human Development Index (HDI)”

The Human Development Index (HDI) is a composite statistic used to rank countries by

level of "human development" and separate "very high human development", "high human

development", "medium human development", and "low human development" countries.

The Human Development Index (HDI) is a comparative measure of life expectancy, literacy,

education and standards of living for countries worldwide. It is a standard means of

measuring well-being, especially child welfare. It is used to distinguish whether the country

is a developed, a developing or an under-developed country.

Malaysia’s 2011 HDI is 0.761, ranked 61out of 187 countries with High human

development.

India’s 2011 HDI is 0.547, ranked 134 out of 187 countries with Medium human

development.

Calculation of HDI includes Parameters like, education, Literacy, Standard of living, Child

welfare, Health facilities, etc.

Ø Education

School grades are,

Malaysia Grade Typical Age Preschool 3-6 Primary school 7-12 Secondary school 13-17 Post-secondary education

Ages vary

Post graduate Programs Ages vary

India Grade Typical Age Pre-primary school 2-4 Primary school 6-12 Secondary school 13-15 Higher Secondary 16-17

Graduation Ages vary

Post-graduation Ages vary

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Education in Malaysia

Ministry of Education Ministry of Higher Education

Minister of Education Minister of Higher Education

Muhyiddin Yassin Mohamed Khaled Nordin

General Details

Primary Languages

Malay, English Mandarin Chinese (Chinese schools) Tamil (Indian schools)

Education budget

Ministry of Education Ministry of Higher Education

RM29.3 billion

RM10.2 billion

Literacy

Total : 88.7%

Male : 92%

Female :85.4%

Education in India

Ministry of Human Resource Development

Minister of Human Resource Development

Kapil Sibbal

General Details

Primary Languages

Hindi, English, or State language

Education budget

Budget 52,057 crore

(US$11.61 billion)

Literacy

Total : 74%

Male : 82% Female : 65%

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Ø Child welfare:

Malaysia is committed to children's rights and welfare. Around 20% of the yearly national

budget is allocated to education, which is provided free for children through age 17. A variety of

programs provides low cost health care for most children.

There are several other laws affecting the welfare of children in Malaysia such as The Child Act

2001, the Adoption Ordinance 1960, Child Care Centers Act 1984 and Domestic Violence Act

1994.

Malaysia has Malaysian Council for Child Welfare (MKKM). It carries out activities like, career

guidance, community based rehabilitation, English language enrichment program, family and

community awareness program, health projects for rural children, Smart and sharp mind, study

trips and outings, youth development, etc.

Ø Standard of living:

After Singapore and Brunei, it is the most developed country in South-East Asia, with the

highest standard of living. The cost of living in Malaysia is exceptionally low considering that it

was newly referred to as a newly industrialized country. Taxation is kept at a minimum with no

inheritance tax and no capital gains on assets.

Ø Health facilities:

Healthcare in Malaysia is mainly under the responsibility of the government's Ministry of

Health. Malaysia generally has an efficient and widespread system of health care, operating a

two-tier health care system consisting of both a government-run universal healthcare system and

a co-existing private healthcare system.

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Healthcare in India features a universal health care system run by the constituent states and

territories of India. The Constitution charges every state with "raising of the level of nutrition

and the standard of living of its people and the improvement of public health as among its

primary duties.

Ø Future trends

According to the Indian Tourism ministry, the Indian tourism industry would be the third largest

foreign exchange earner in the country in the next three year. Till the end of 2012, foreign

tourists will grow at the fastest pace in comparison with the last decade and it is estimated that

tourism in India could contribute US$1.8 billion to India’s GDP. These statistics show the

seriousness of the Indian government towards tourism. Andhra Pradesh, Uttar Pradesh, Tamil

Nadu, Karnataka and Rajasthan are the leading tourism destinations in India in terms of total

tourist arrivals. In the next few years, some new states should come into the picture such as

Uttaranchal, Madhya Pradesh and a few others. According to the ministry, it is predicted that

around US$10 billion is required for the development of Indian tourism in the next five years.

When we think of long term capital requirements for all the states, it would be nearly US$56

billion in the next 20 years.

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PART-II

Ø OVERVIEW OF TOURISM INDUSTRY

Definition of tourism according to world tourism organization 1993,

The activities of persons travelling to and staying in place outside their usual environment for not

more than one consecutive year for leisure, business and purposes.

Tourism Products

India offers various tourism options due to its vastness and diversity, attracting tourists from all

over the world. The country boasts of natural treasures like mountains, ocean, seas, deserts,

rainforests, valleys etc. on one hand, while world-class healthcare infrastructure on the other,

which provides varied kinds of tourism options such as adventure and rural tourism, sustainable

tourism/eco-tourism, cruise tourism, golf tourism and medical tourism to the travellers.

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VISION

Developing Malaysia as a world class tourist destination.

MISSION

To work with all industry players to put the tourism industry as a facilitator for sustainable

economic growth.

NATIONAL TOURISM POLICY

Making the National Tourism Industry as a main sector, sustainable, viable and valuable in

contributing to national development.

OBJECTIVE

• To increase the contribution of tourism to the country economy.

• To empower rural communities through the rural tourism activities.

• To facilitate 1Malaysia development through tourism.

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QUALITY POLICY

Ministry of Tourism is committed to the delivery of excellent tourism services to the customers

based on MS ISO 9001:2000.

Ministry of Tourism always makes improvement continuously on the Quality Management

System to improve the effectiveness of the implemented system.

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Present trade relation between India & Malaysia

Malaysia and India have historical, political, economic, demographics, strategic and cultural

relations between the countries with mutual respect and benefits.

Malaysia ranks at 9th position country amongst top foreign tourist arrival in India and at the

top position in south East Asia region. During the year 2009, Malaysian numbers of tourists

visited India are 134,340. Most of the tourists’ purposes to visit India are leisure, holiday and

recreation (55.6%); visiting friends and relatives (19.2%) and business and professional

(13.1%). October-December months are peak period to Malaysian tourist arrival in India

whereas April-June are lean months. India is the sixth largest source country for inbound

tourism to Malaysia with about 600,000 Indian tourists visiting Malaysia in 2009, an increase

of 9% over figures of 2008. In terms of air passenger traffic to and from India, Malaysia is

ranked at 10th place during the year 2009-10. During mentioned period, 1112892 passenger

travelled to (558903) and from (553989) India between Malaysia whereas total freight traffic

is 31100 tone between the countries through air route. Direct flights are available from

Kualalumpur to Chennai, New Delhi, Tiruchirapally, Mumbai, Bangalore, Hyderabad,

Cochin, Kolkata and Trivandrum cities of India.

Such huge passenger and tourist traffic leads to a potential market of Halal travel and tourism

in India. Air India and other Indian domestic and international Airlines still have to confirm

about the authenticity to serve the Halal food during the travelling while starred hotels in

Indian cities are also not compliance to Halal conscious consumer and don’t have the

recognition of Muslim friendly services. Currently Halal authenticity is ensured verbally only

after getting enquired.

Strong bilateral trade, business, investment, travel and tourism relations between India and

Malaysia lead to a potential unprecedented market for Halal business too. Malaysia is known

as key leader country in promotion and expansion of Halal brand while India has the third

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largest demand market of Halal products with more than 160 Million Muslim consumer.

Halal opportunities exist in processed food, meat, Islamic finance and consultancy services.

Ø New opportunities of business (import, export, investment etc.)

Tourism in India

The Indian Tourism sector is one of the largest service industries in the country in terms of its

contribution to the Gross Domestic Product (GDP) and Foreign Exchange Earnings (FEE), as

well as for providing employment to millions. The sector in fact is expected to generate around

US$ 42.8 billion (INR 1,897.7 billion) by 2017, according to an industry research note by

auditing and consulting firm Deloitte Touche. Significantly, the Tourism and the Hospitality

sector generated a total of US$ 2,468.39 billion (INR 1,094, 48.4 billion) in Foreign Direct

Investment (FDI) during April 2000-April 2011, according to the Department of Industrial

Policy and Promotion (DIPP). Further, Foreign Tourist Arrivals (FTAs) are expected to grow to

10 million by 2010-12 and the domestic tourism is expected to increase by 15 per cent to 20 per

cent over the next five years as per the Ministry of Tourism.

Tourism in India is witnessing widespread growth on the back of increasing inbound tourism by

the burgeoning Indian middle class, rising inflow of foreign tourists and successful government

campaigns for promoting ‘Incredible India’. Infrastructure development holds the key to India’s

sustained growth in the Tourism sector. Therefore, Ministry of Tourism has made consistent

efforts to develop quality tourism infrastructure at tourist destinations and circuits. Further the

government has also allowed 100 per cent foreign investment under the automatic route in the

Hotel and Tourism related industry. Also, according to MrSubodh Kant Sahay, Minister of

Tourism, "Government is embarking upon the policy of developing integrated perspective

investment plans for key circuits and destinations in each state and Union Territory." He said

these investment plans would identify components requiring investments through the Centre, the

state governments, public private partnership and private sector.

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Significantly, the country has the potential to become a major global tourist destination, with the

Tourism sector expected to contribute around INR 3,414.8 billion (US$ 77.0 billion*) by 2021,

according to a report by the World Travel and Tourism Council (WTTC).

India is currently ranked 12th in the Asia Pacific region and 68th overall in the list of the world's

attractive destinations, according to the Travel and Tourism Competitiveness Report 2011 by the

World Economic Forum (WEF).

According to the Tourism Satellite Accounting (TSA) research, released by World Travel and

Tourism Council (WTTC) and its strategic partner Oxford Economics in 2011:

• The direct contribution of Travel &Tourism to GDP is expected to be INR 1,570.5 billion

(US$ 35.4 billion) (1.9 per cent of total GDP) in 2011, rising by 8.1 per cent per annum (pa)

to INR 3,414.8 billion (US$ 77.0 billion*) (2.0 per cent) in 2021

• The total contribution of Travel &Tourism to GDP, including its wider economic impacts, is

forecast to rise by 8.8 per cent pa from INR 3,680.4 billion (US$ 83.0 billion) (4.5 per cent of

GDP) in 2011 to INR 8,523.1 billion (US$ 191.2 billion*) (4.9 per cent) by 2021.

Total Contribution of Travel & Tourism to GDP

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Source: World Travel & Tourism Council

The TSA research also states that the sector is expected to support directly 24,931,000 jobs (5.0

per cent of total employment) in 2011, rising by 2.0 per cent pa to 30,439,000 jobs (5.2 per cent)

by 2021.

Investment Opportunities

The Tourism sector is expected to perform very well in future and the industry offers an

interesting investment opportunity for long-term investors.

According to the TSA research, the sector is expected to attract capital investment of INR

1,233.0 billion (US$ 27.8 billion), rising by 8.7 per cent pa to INR 2,827.5 billion (US$ 63.7

billion). This means that the sector’s share of total national investment will increase from 4.7 per

cent in 2011 to 4.8 per cent in 2021.

Capital Investment in Travel and Tourism

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Source: World Travel & Tourism Council

The Tourism industry in India provides opportunities in diverse fields such as tours and travel

circuit, hospitality and hotel sector and development of specialized tourisms such as medical

tourism, rural tourism, golf tourism, cruise tourism, adventure tourism, eco tourism and wellness

tourism.

The Tourism sector is witnessing fast growth due to the ever-growing number of participants in

allied businesses such as hotels, tour operators, airlines, shipping lines, among others. Therefore,

the sector is expected to witness high growth in the near future and offer varied opportunities to

the investors in all these areas of businesses. In fact, the hotel industry is one of the major areas

wherein investors can look for long-term opportunities.

Ø Hotel Industry

Due to increasing number of foreign tourist arrivals, together with the growth of domestic

tourism in the country, the hotel industry is also witnessing continued momentum.

The Indian Hospitality industry contributes around 2.2 per cent of India’s GDP. The industry is

expected to reach INR 230 billion (US$ 5.2 billion*) by 2015, growing at a robust CAGR of 12.2

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per cent. India will be investing around INR 448 billion (US$ 10.1 billion*) in the hospitality

industry in the next five years, according to a report ‘The Indian Hotel Industry Report - 2011

Edition’ by CYGNUS Business Consulting & Research Firm.

The industry also witnessed an increase in the number of hotel rooms with a growth of 5 per cent

during the last three to four years. In the next two years, a total investment of US$ 12.2 billion

(INR 545.2 billion*) is expected that will add over 20 new international brands in the hospitality

sector. Rise of budget hotels in the country, like Ginger Hotels, Lemon Tree, Sarovar Hotels,

Fortune Hotels, Ibis and Choice Hotels clearly suggest a huge growth potential in the sector.

Ø Malaysia's Hospitality Industry

Malaysia’s advantage in this sector lies in good value in terms of costs compared to the rest of

the region, its diversity of natural attractions such as beaches and mountains as well as solid

infrastructure and amenities.

A total of 23.6million tourists entered Malaysia in 2009, marking an increase of 7.3% y-o-y

compared to 2008. The tourism industry has rebounded quickly despite the effects of the global

economic crisis.

Currently, there are approximately 180 hotels of 4-star grade and above, contributing to a total

room supply of 54,175. The average hotel occupancy rate in 2009 was fairly stable at 60.9%.

According to the Malaysian Association of Hotels, average hotel room rates in Kuala Lumpur's

prime Golden Triangle location stands at approximately RM 221.10 (USD$ 70.00).

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2009 and 2010 will see the launch of more established hotel names such as:

• Thistle Johor Bahru and Thistle Port Dickson Resort

• Four Points by Sheraton in Kuching opened in July 2009, owned by the Starwood Hotels

& Resorts Worldwide

• Doubletree by Hilton in Kuala Lumpur

• The Hyatt at Kuala Lumpur

Hotels in Malaysia have been awarded accolades in award shows such as the the

16th World Travel Awards. In 2009, Pan Pacific KLIA was named Asia's Leading

Airport Hotel and the Hilton Kuala Lumpur won in the Leading City Hotel and Leading

Design Hotel categories. Such awards are testament to the world-class standards found in

Malaysia’s hospitality industry.

• FEE in INR terms during the month of June 2011 were INR 54.4 billion as compared to

INR 47.5 billion in June 2010 and INR 38.0 billion in June 2009. FEE in US$ terms

during the month of June 2011 were US$ 1.2 billion as compared to FEE of US$ 1.0

billion during the month of June 2010 and US$ 0.7 billion in June 2009.

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• The growth rate in FEE in INR terms in June 2011 over June 2010 was 14.5 per cent as

compared to 25.0 per cent in June 2010 over June 2009. The growth rate in FEE in US$

terms in June 2011 over June 2010 was 18.9 per cent as compared to the growth of 28.1

per cent in June 2010 over June 2009.

• FEE from Tourism in INR terms during January-June 2011 were INR 351.6 billion with a

growth of 12.1 per cent, as compared to the FEE of INR 313.7 billion with a growth of

27.1 per cent during January-June 2010 over the corresponding period of 2009.

• FEE from Tourism in terms of US$ during January-June 2011 were US$ 7.8 billion with

a growth of 14.2 per cent, as compared to US$ 6.8 billion with a growth of 36.6 per cent

during January-June 2010 over the corresponding period of 2009.

Visitor exports are a key component of the direct contribution of the sector. According to the

TSA research, India is expected to attract 6,179,000 international tourist (overnight visitor)

arrivals in 2011, generating INR 678.6 billion (US$ 15.3 billion) in visitor exports (foreign

visitor spending, including spending on transportation). By 2021, international tourist arrivals are

forecast to total 11,149,000, an increase of 6.1 per cent pa generating expenditure of INR 1,344.7

billion (US$ 30.3 billion*).

Visitor Exports and International Tourist Arrivals

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Source: World Travel & Tourism Council

Drivers behind increase in Tourist Traffic

The main reason for increase in tourist traffic to India has been the following factors:

Domestic Tourist Traffic

• Rapidly increasing purchasing power of the middle class

• Better road connectivity

• Evolving lifestyle

International Tourist Traffic

• Value for money/Economical destination

• Business cum pleasure destination

• Development of Kerala and Rajasthan as the most acclaimed tourist destinations in India

with their distinctive brand image

• Opening of the sectors of the economy to private sector/foreign investment

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• Reform in the aviation sector such as Open Skies Policy has led to better connectivity

with many countries with India

• Success of “Incredible India” campaign and other tourism promotion measures

Government Initiatives

According to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and

Industry, Government of India, the government has allowed 100 per cent foreign investment

under the automatic route in the Hotel and Tourism related industry. The terms hotel includes

restaurants, beach resorts and other tourism complexes providing accommodation and /or

catering and food facilities to tourists. The term tourism related industry includes:

• Travel agencies, tour operating agencies and tourist transport operating agencies

• Units providing facilities for cultural, adventure and wildlife experience to tourists

• Surface, air and water transport facilities for tourists

• Convention/seminar units and organisations

As a facilitative measure to make Tourism sector in India more attractive the following

initiatives are taken by Government:

• The Government has launched a Scheme of ‘Visa on Arrival’ (VoA) from January 2010

for citizens of five countries, viz. Finland, Japan, Luxembourg, New Zealand and

Singapore, visiting India for tourism purposes. The Government has now extended this

Scheme for the citizens of six more countries, namely Cambodia, Indonesia, Vietnam,

Philippines, Laos and Myanmar from January 2011. During the period January-June

2011, a cumulative figure of 5774 VoAs were issued, with a total of 865 & 770 VoAs

issued in the months of May & June respectively.

• The Ministry of Tourism has launched a scheme for development of nationally and

internationally important destinations and circuits through Mega Projects. As on

4.2.2011, 38 mega projects have been identified, out of which 26 projects have already

been sanctioned.

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• To overcome the bottlenecks of multiple inter – state road transport barriers, Ministry of

Tourism has been advocating implementation of seamless travel for commercial tourist

vehicles. This would facilitate smooth movement of tourist traffic and avoid delays and

inconvenience to tourists.

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Ø Medical Tourism Gujarat Gujarat government announced its Medical Tourism Policy in December-2006 through a press

release issued by the information department in the regular fold in the evening. It says that

Gujarat Medical Tourism Council will be formed for planned implementation of the policy. It

said that the policy is aimed at making Gujarat ultimate destination for people seeking medical

facility world over. It claimed that a growth of 33 percent has been registered in the number of

medical tourist in the state while the country has registered growth of 20 percent.

The policy is to create conducive atmosphere for medical tourism in the state. One of the

objectives is to develop a medicity in Gujarat. It is to see that medical facilities in Gujarat are

established in international field. One of the tasks of the policy is to plan international travel for

visitors convenient and cost effective.

Under the policy the government will help insurance companies develop different packages of

international standard. The policy also envisages world-class medical facilities with public

participation. It will also set up standards of hospital accreditation and entrepreneurs in the field

of medical tourism.

Available Medical Facilities

Most sought-after Super-Specialties: Cardiology, Neuro-Surgery, Infertility treatment,

Orthopedics, Eye Surgery, Dental treatment and Cosmetic Surgery, Gujarat offers holistic

medicinal service and cost effective treatment through various Districts Hospitals, Sub-districts

Hospitals and Private Specialty Hospitals.

• The most sought-after super-specialties in Gujarat include cardiology, neuro-surgery,

orthopaedics ,infertility treatment and eye surgery.

• Other services such as dental treatment and cosmetic surgery are also offered to

international patients.

• Most of the Private Specialty Hospitals in Gujarat are located in Ahmedabad, Surat and

Baroda.

• In addition, there are state-run hospitals for TB, Mental illness and Leprosy across the

state.

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• Traditional therapies such as yoga and ayurveda also available

• Multi-specialty hospitals with modern infrastructure

• MoUs signed with private hospitals for providing high-quality healthcare

MEDICAL FACILITIES

A combination of many factors including state of the art infrastructure, corporate set ups,

mediclaim and cashless facilities, well-trained and educated staff, latest and most modern

technological link-ups and easy and rapid modes of communication with link-ups to most

countries has led to availability of an array of medical tourism influx in Gujarat.

Inspite of all these, the economical and very affordable rates of medical testing and treatment has

bridged the gap between availability of most modern facilities to the most common individual.

Branches of medical science involved include:

1. Medicine

2. Surgery

3. Obstetrics and Gynaecology

4. Allied Branches

5. Alternative Medicine

Problem and prospects of business trade with Malaysia

The barriers that impede the growth in the tourism sector include the following:

• Provision of inappropriate infrastructure or facilities, owing to insufficient

understanding of the specific attractions that appeal to particular types of tourist

(e.g. crowding of chalets within very small areas, trends towards mass tourism at

specialist tourism sites)

• Visible environmental damage owing to inappropriate silting of roads, buildings,

accommodation on steep slopes and in high rainfall areas

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• Limitations of infrastructure for air travel, and differences of opinion over

questions of flight frequency and landing rights (e.g. frequency of flights between

Peninsular Malaysia, Sabah and Sarawak)

• Constraints on manpower and training, shortage of training opportunities, and

inadequate opportunities to learn and appreciate the specific requirements of

tourists

• Rising prices especially for accommodation due to shortage of hotels

• Isolation of the tourism industry from its social obligations, leading to conflicts or

lost opportunities for one or other party, e.g. between tourism developers and

local communities

Direction To Overcome The Barriers

A major direction to overcome the barriers is to form a smart partnership internally to benefit

from the economies of scale, improve in the flow of information and work together to create

value in the tourism products available to the tourists. In addition by enabling speedy response to

market opportunities by continuously calibrating tourism products to meet changing trends in

domestic and international tourists’ profile would enhance brand value of Malaysian tourism

product, reputation and market share.

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Ø FINANCIAL MARKET

INTRODUCTION OF BANKING SECTOR OF MALAYSIA

The Malaysian banking sector has played a most important role in indirect financing. For thelast

two decades, Malaysian banking systems have experience a deep transformationunder the

pressure of internal financial liberalisation, increased openness tointernational capital flows and

technological and financial innovations. The Asianfinancial crisis has also played a meaningful

role in the process. As a result, theMalaysian financial system has emerged stronger and more

diversified andcompetitive since the Asian financial crisis.

The banking system, comprising commercial banks, investment banks, and Islamic banks, is the

primary mobiliser of funds and the main source of financing which supports economic activities

in Malaysia. The non-bank financial intermediaries, comprising development financial

institutions, provident and pension funds insurance companies, and discreet operators,

complement the banking institutions in mobilising savings and meeting the financial needs of the

economy.

Malaysia has followed a slow liberalization process since imposing several restrictions during

the Asian crisis of 1997-98. Liberalization of some sectors and removal of preferential

treatment for ethnic groups by the new government in 2009 has helped attract more foreign

investment. The banking sector is sound compared to the Asian crisis and well capitalized to

withstand any deterioration in asset quality. The thriving Islamic Finance industry took a hit

from the global credit crisis while its adherence to Islamic rules has been subject to debate. The

central banks' various statements indicate that going forwardMalaysia will continue to follow a

sequenced liberalization process

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ROLE OF BANKING SECTOR IN MALAYSIAN ECONOMY

DEVELOPMENTAL ROLE

As a central bank in an emerging economy, Bank Negara Malaysia has an important

developmental role. This role ranges from developing the necessary institutions and market

infrastructure for the development of a modern and strong financial system to contributing to the

establishment of the foundation of the economy. In strengthening the financial market

infrastructure, Bank Negara Malaysia has built a strong payment systems. These systems are

regularly "upgraded" to address the impact of technology on the banking system. To promote a

good credit culture among banking institutions, Bank Negara Malaysia also operates the Central

Credit Reference Information System. The first of its kind in this region, this system collects and

distributes credit information on all borrowers. This allows banking institutions to make

informed decisions on loan applications. On the institutional front, Bank Negara Malaysia plays

a significant role in establishing new institutions.

Role of economic adviser

In its role as the economic and financial adviser to the Government, Bank Negara Malaysia

analyses and assesses the developments in the international and domestic economy and

highlights the areas that need to be addressed. Bank Negara Malaysia undertakes economic

intelligence and investigation and carries out forecasts on the economic condition of the country.

Based on these assessments, Bank Negara Malaysia presents policy recommendations at regular

briefings to the Minister of Finance as well as at various economic policy making forums at the

national level.

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Role of financial adviser

Bank Negara Malaysia does not provide financing to the Government. However, as the financial

adviser to the Government, Bank Negara Malaysia gives regular advice to the Government on

the management of its domestic and external debts and the terms and timing of Government loan

programmes. Bank Negara Malaysia also acts as the agent for the Government in negotiations

and ending of loan agreements. Bank Negara Malaysia is also responsible for trading,

registering, settlement and redemption of Government securities through its computerised

systems.

International Relations

Bank Negara Malaysia also participates in a number of international meetings. Amongst them

are the meetings of the South-East Asian Nations (ASEAN). ASEAN +3 (which includes China,

Korea and Japan), South-East Asian Central Banks (SEACEN), Executive Meeting of East Asia

and Pacific (EMEAP), the Asia-Pacific Economic Co-operation (APEC) and the international

agencies including the Bank for International Settlements. The participation in the meetings are

to strengthen co-operation with the international and financial community in key areas such as

surveillance, macroeconomic management and measures to enhance financial stability. It is to

bring key issues which are important from a national or regional perspective to the forefront in

order that Malaysian interests and interests of emerging market economies are given due

consideration.

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FUNCTIONS OF BANKING SECTOR

Deposit banking

By the seventeenth century English bankers had begun to develop a depositbanking business, and

the techniques evolved there and in Scotland were in due course to prove highly influential

elsewhere. As men of wealth and reputation, the London goldsmiths already kept money and

other valuables in safe custody for customers. They also dealt in bullion and foreign exchange

and this led to their acquiring and sorting coin for profit. In order to attract coin for sorting, they

offered to pay a rate of interest and, in this way, began to supplant as deposit bankers their great

rivals the “money scriveners.” These were notaries who had come to specialize in bringing

together borrowers and lenders and had themselves been accepting deposits.

Bank credit

In Britain the check proved to be such a convenient means of payment that gradually the public

came to prefer the use of checks for the larger part of their monetary transactions, using coin

(and, later, notes) for the smaller kinds of payments. In consequence of this development, the

banks grew bold and accorded their borrowers the right to draw checks far in excess of the

amount of cash actually held. In other words, the banks were then creating “money”—claims that

were generally accepted as means of payment. This money came to be known as “bank money”

or “credit.” If bank notes are excluded, this money consists of figures in bank ledgers and is

money only because of confidence in the ability of the banks to honor their liabilities when

called upon to do so.

When a check is drawn and passed to another party in payment for goods or services, the check

will usually be paid into another bank account, although certain checks may be cashed by direct

presentation. If the check has been drawn by a borrower (and assuming that the overdraft

technique is employed), the mere act of drawing and passing the check will create a loan as soon

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as the check is paid by the borrower’s banker. Because every loan so made tends to return to the

banking system as a deposit, deposits will tend, for the system as a whole, to increase (and to

decrease) approximately to the same extent as loans. If the money lent has been debited to a loan

account and the amount of the loan has been credited to the customer’s current account, a deposit

will be created immediately.

Bank deposits

Deposit banks, as their name suggests, operate largely on the basis of their deposits. These

consist of borrowed money (and therefore liabilities), but insofar as an increase in deposits

provides a banker with additional cash (an asset), this increase in cash will supplement his

loanable resources. Capital and reserve accounts, which are the other important liability item,

now serve primarily as the ultimate cover against losses (for example, on loans and investments).

But they usually represent only a small part of the total liabilities of deposit banks. In the United

States, the capital accounts are also significant as they provide the statutory basis of a bank’s

lending limit to the individual borrower. However, those institutions concerned with investment

banking (for example, the French banquesd’affaires), a proportion of whose loans and industrial

investment is likely to be long-term and therefore less liquid, must necessarily depend to a rather

greater extent on their own capital resources.

Bank investments

The commercial banks rightly regard their investments (often consisting largely of medium-term

government securities, but also sometimes including industrial shares and participations) as

rather less liquid than money-market assets (such as call money and treasury bills). Nevertheless,

by staggering their maturities, they are able to ensure that a portion of their holdings is regularly

approaching redemption, thereby constituting a secondary liquid reserve. Following redemption

at maturity, the banks usually reinvest all or most of this money by purchasing longerterm

securities that in due course themselves become increasingly shorter-term. (In Britain, the

average maturity of a bank investment portfolio is about five years; it is usually rather less in the

United States.) But selling before maturity is also quite common—in order to vary the spread of

maturities, or to restore a bank’s liquidity, or to expand loans. Because market conditions may be

93

variable and longer maturity dates give less opportunity to avoid loss by holding securities to

maturity, banks tend for balance-sheet purposes to “write down” the value of their investments

(and other assets) and thereby to create “hidden reserve.

COMPARATIVE POSITION OF BANKING SECTOR OF MALAYSIA WITH INDIA

Domestic credit provided by banking sector (% of GDP)

Domestic credit provided by the banking sector includes all credit to various sectors on a gross

basis, with the exception of credit to the central government, which is net. The banking sector

includes monetary authorities and deposit money banks, as well as other banking institutions

where data are available (including institutions that do not accept transferable deposits but do

incur such liabilities as time and savings deposits). Examples of other banking institutions are

savings and mortgage loan institutions and building and loan associations.

International Monetary Fund, International Financial Statistics and data files, and World Bank

and OECD GDP estimates.

2007 2008 2009 2010

INDIA 60.8 68.2 69.4 71.1

MALAYSIA 113.4 115 137.4 132.2

Source: www.world bank.org.in

INTRODUCTION OF BANKING SECTOR OF MALAYSIA

The Malaysian banking sector has played a most important role in indirect financing. For thelast

two decades, Malaysian banking systems have experience a deep transformationunder the

pressure of internal financial liberalisation, increased openness tointernational capital flows and

technological and financial innovations. The Asianfinancial crisis has also played a meaningful

role in the process. As a result, theMalaysian financial system has emerged stronger and more

diversified andcompetitive since the Asian financial crisis.

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The banking system, comprising commercial banks, investment banks, and Islamic banks, is the

primary mobiliser of funds and the main source of financing which supports economic activities

in Malaysia. The non-bank financial intermediaries, comprising development financial

institutions, provident and pension funds insurance companies, and discreet operators,

complement the banking institutions in mobilising savings and meeting the financial needs of the

economy.

Malaysia has followed a slow liberalization process since imposing several restrictions during

the Asian crisis of 1997-98. Liberalization of some sectors and removal of preferential

treatment for ethnic groups by the new government in 2009 has helped attract more foreign

investment. The banking sector is sound compared to the Asian crisis and well capitalized to

withstand any deterioration in asset quality. The thriving Islamic Finance industry took a hit

from the global credit crisis while its adherence to Islamic rules has been subject to debate. The

central banks' various statements indicate that going forwardMalaysia will continue to follow a

sequenced liberalization process

95

96

.

COMPARATIVE POSITION OF BANKING SECTOR OF MALAYSIA WITH INDIA

Domestic credit provided by banking sector (% of GDP)

Domestic credit provided by the banking sector includes all credit to various sectors on a gross

basis, with the exception of credit to the central government, which is net. The banking sector

includes monetary authorities and deposit money banks, as well as other banking institutions

where data are available (including institutions that do not accept transferable deposits but do

incur such liabilities as time and savings deposits). Examples of other banking institutions are

savings and mortgage loan institutions and building and loan associations.

International Monetary Fund, International Financial Statistics and data files, and World Bank

and OECD GDP estimates.

2007 2008 2009 2010

INDIA 60.8 68.2 69.4 71.1

MALAYSIA 113.4 115 137.4 132.2

Source: www.world bank.org.in

0

20

40

60

80

100

120

140

160

2007 2008 2009 2010

YEAR

INDIA

MALAYSIA

97

Bank nonperforming loans to total gross loans (%)

Bank nonperforming loans to total gross loans are the value of nonperforming loans divided by

the total value of the loan portfolio (including nonperforming loans before the deduction of

specific loan-loss provisions). The loan amount recorded as nonperforming should be the gross

value of the loan as recorded on the balance sheet, not just the amount that is overdue.

International Monetary Fund, Global Financial Stability Report.

2007 2008 2009 2010

INDIA 2.5 2.3 2.3

MALAYSIA 6.5 4.8 3.7 3.5

Source: www.world bank.org.in

MUTUAL FUND INDUSTRY IN WORLD MARKET

0

1

2

3

4

5

6

7

2007 2008 2009 2010

YEAR

INDIA

MALAYSIA

98

• MUTUAL FUND –A GLOBALLY PROVEN INVESTMENT

Worldwide, the Mutual Fund has a long and successful history. The popularity of the Mutual

Fund has increased manifold. In developed financial markets, like the United States, Mutual

Funds have almost overtaken bank deposits and total assets of insurance funds.

Internationally, on-line investing continues its meteoric rise. Many have debated about the

success of e-commerce and its breakthroughs, but it is true that this aspect of technology could

and will change the way financial sectors function. However advanced countries like US, mutual

funds buy-sell transactions have already begun on the net, while in India the net is used as a

source of information. Such changes could facilitate easy access, lower intermediation costs and

better services for all.

• MUTUAL FUND INDUSTRY IN INDIAN MARKET

The Indian mutual funds industry is witnessing a rapid growth as a result of infrastructural

development, increase in personal financial assets, and rise in foreign participation. With the

growing risk appetite, rising income, and increasing awareness, mutual funds in India are

becoming a preferred investment option compared to other investment vehicles like Fixed

Deposits (FDs) and postal savings that are considered safe but give comparatively low returns,

according to “Indian Mutual Fund Industry”.

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(SOURCE: AMFI)

• MUTUAL FUND INDUSTRY IN MALASIYA

In Malaysia, the unit trust schemes which are managed by experience fund managers are

governed by a legally binding deed registered with the Securities Commission under central

government.. The Securities Commission regulates the unit trust industry as well as the

operations and administration of unit trust schemes to protect the interest of unit holders. Private

Unit trust funds are classified as professionally managed, collective investment schemes that

pool unit holders monies and invest them towards the specified goals as declared by the

investment objectives of the schemes. The schemes aim to provide comparatively higher returns

in the form of income distributions and capital growth with reasonable risk. The investment

schemes are medium to long term in a broadly diversified portfolio of stocks and bonds, or other

specialized money market instruments.

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The growth of the IMFs in Malaysia, which is in a similar pattern, is expected to increase from a

higher demand from local and foreign markets, as well as from increasing level of awareness and

confidence among investors.

Abdullah in his research of the performance of the mutual fund,indicates that the MF industry in

Malaysia has the potential to grow even faster. This potential depends upon new catalysts, the

removal of the weaknesses by the SC, and the liberalization of foreign-exchange administration

rules by theMalaysian Central Bank in 2007 for MF investments in foreign markets, so that fund

managers can to invest up to 50% of net asset value in foreign currency.There is continuous

growth of IMFs in Malaysia. Data in April, 2009 indicated that there were 141 IMFs in

Malaysia, increasing from 13 funds in December 1999. The net asset values of these funds

increased from RM1.39billion to RM18.31billion, with a total NAV RM150.472billion, and

units in circulation amounting to 50.76billion units.

Cycle Mechanism:

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Growth in Malaysian unit trust fund /mutual fund industry

Led by a resilient domestic demand and government consumption, Malaysian economy staged a

strong recovery in the first half of 2010, rebounded to 9.5% from a negative 5.1% in the same

period last year before expanded further, albeit at a slower pace in the second half and recorded a

growth of 7.2% in 2010 as a whole. Against the positive backdrop, Net Asset Value (NAV) for

unit trust funds increased 18.3% to RM226.8 billion as at end of December 2010, representing

17.8% of market capitalization of Bursa Malaysia.

-Total NAV of Islamic funds amounted to RM26.6 billion as at end of 2010 - an increase of

22.6% over the course of last year, while assets of money market Funds added a marked 65.1%

to RM 20.8 billion in the corresponding period.

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Ø LEGAL ASPECT OF TRADE IN MALAYSIA:

PART I: PRELIMINARY

1. Short title

2. Interpretation

3. Power to designate tourism training institutions

4. The Commissioner of Tourism

PART II: LICENSING OF TOURISM ENTERPRISES

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5. Tourism enterprises to be licensed

6. Submission of application for licence to the Commissioner

7. Grant of or refusal to grant licence

8. Revocation of licence

9. Appeal

10. Surrender of licence

11. Effect of revocation, surrender or expiry of licence

12. Return of licence

13. Restriction on use of word “tour”, etc.

4 Laws of Malaysia ACT 482

PART III: REQUIREMENTS AND DUTIES ON LICENSED TOURISM

ENTERPRISES

14. Requirement to display licence

15. Duty to submit information and particulars relating to business operations

16. Inbound and outbound tours and other business activities

17. Notification of change of information

18. Requirements as to advertisement

19. Employment of licensed tourist guides

20. Use of excursion vehicles

PART IV: LICENSING OF TOURIST GUIDES

21. Persons providing services as tourist guides to be licensed

22. Register

23. Application for licence and qualification of applicants

24. Grant of licence

25. Validity of licence

26. Authorization card

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27. Duties imposed upon licensed tourist guides

28. Suspension or revocation of licence

29. Effect of suspension or revocation of licence

30. Right to appeal

31. Surrender of licence and authorization card

PART IVA: REGISTRATION OF ACCOMMODATION PREMISES

31A. Accommodation premises shall be registered

31B. Application for registration as tourist accommodation premises

31C. Power of Commissioner to determine registration

31D. Register

PART V: GENERAL

32. Renewal of licence

33. Lost licences

34. Power of Minister to make regulations

35. Obligation of secrecy

36. Inaccurate declaration, etc.

37. General penalty.

38. Liability of directors, etc.

39. Power to compound offences

40. Authorized officer.

41. Power to investigate.

42. Power to examine witnesses.

43. Admissibility of statement.

44. Search with warrant.

45. Search without warrant.

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46. List of things seized.

47. Additional powers.

48. Obstruction of search, etc.

49.. Conduct of prosecution.

FINDINGS Ø Lack of competition due to the closed system isreflected in the lack of dynamism in the

financial market.

Ø The liabilities of Banking Institutions are sources of banking business.The availability of

attractive deposit instruments and services is as crucial as the soundness of Banking

Institutionsfor operation. In the case of Malaysia, if the amount due to other financial

institutions is excluded, deposits are virtually the only source of funds.

Ø In Malaysia, the relative shares of M1 and M2 in M3 arestable. This indirectly proves not

only BNM’s tight control on Banking Institutions, but lack of competition among financial

assets.

Ø When the time comes to open up the financialmarket to foreigners, either by external

pressure orby an internal voluntary decision after the soundness of Banking Institutions is

secured, primary competition among Banking Institutionswill occur in deposit taking. In this

context, financial innovation surrounding deposits has to be encouraged far in advance.

Ø Currently, many Banking Institutions do not realizethe importance of financial innovation

and someeven worry about the adverse effects on their profits.However, competition needs to

be encouragedfor customers’ sake.

Ø An inner stimulus is not sufficientfor a fundamental structural change. Financial

institutionscannot be competitive enough without allowingforeign competition, even though

they agree onthe importance of competitiveness.

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SUGGESTIONS

Ø The domestic inflation rate, as well as the inflation rate of the trade partners is another

relevantfactor. In this case, the strategy is not straightforward. If the country remains with the

fixed rateit can stop the inflationary tendencies in the economy.

Ø Banking Institutions can invent good saving instruments,providing greater variety and profits

to depositors,by linking commercial banking business withsecurities business. Fortunately,

the current universalbanking system is better than a universal banking systemthat allows one

entity to engage in various businessesin terms of securing the stability of the bankingsystem

and reducing the cost of supervision.

Ø In order to avoid the excessively passive attitude of Banking Institutions towards lending,

BNMneeds to prepare a guideline that credit examinersshould be exempted from punishment

when the loanturns nonperforming. Their performance needs to beevaluated based on

achievement for a certain period,for example, three years.

Ø The Governmentneeds to increase the funds of CGC to promoteaccess to institutional credit

for small-scale enterprises.

Ø The burden to fulfill theBanking Institution’s capitaladequacy ratio needs to be lightened by

allowingthem to have a lower capital adequacy ratio than theinternational standard of 8

percent, if they give upriskier businesses such as foreign exchange tradesand derivatives.

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CONCLUSION

Ø There is a strong confidence in the country's future performance. Therefore, we find

Malaysia capable of revitalizing its economy to become one of the few strong economies in

Southeast Asia.

Ø This can be attributed to its well sounded financial and monetary policies as well as the

confidence the Malaysian people and surrounding country governments have in the

Malaysian administration.

Ø The regulators have performed commendably well to ensure the stability of the financial

sector.

Ø Stability of the Malaysian banking sector is underpinned by adequate capitalization, good

asset quality and decent earnings streams.