Tk 1,000 crore extra stimulus for export

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Tk 1,000 crore extra stimulus for export
Govt announces the package to help the sector offset global meltdown fallout

Staff Correspondent

The government yesterday announced a series of additional fiscal and policy stimulus packages worth over Tk 1,000 crore for export sectors to offset bad impacts of global recession from the domestic economy.

The facilities the exporters are enjoying at present will continue as usual, Finance Minister AMA Muhith said at a press briefing at his secretariat office.

“This is the second stimulus package of the government. We have announced the package so that the country remains unhurt from any bad impact of the global recession. But, things will change soon as the economies of advanced countries are peaking up,” Muhith said.

Under the new package, the government will pay the licence renewal fees of captive power plants used in industrial units from November 1, 2009 to June 2010 to compensate for the power crisis, he said.

The government will need Tk 7 crore more to pay the renewal fees, the finance minister said, adding that his ministry will pay the amount from the stimulus package of Tk 5,000 crore, an option kept in the national budget for the 2009-10 fiscal year.

In the package, the government has extended the bank loan re-scheduling facility without any down payment up to June 30, 2010 from October 2009 at a 10 percent interest rate instead of the current 13 percent for the RMG and textile sectors, Muhith said.

If any borrower defaults a loan during the proposed timeframe, extension of the re-scheduling facility will be considered under the bankers-clients relationship, he said.

Under the package, exporters will receive 5 percent cash incentives for new export destinations for three years while all export destinations, except the US, EU and Canada, will be considered as new, the minister said.

The exporters will get 5 percent cash incentives in the first year, 4 percent in the second year and 2 percent in the third and final year.

According to the package document, members of Bangladesh Textile Mills Association (BTMA) will receive this facility only for direct export of yarn.

Forward exchange booking is a must for exporting home textile in other currencies rather than dollar. This sub-sector will also receive the bank loan re-scheduling facility, the document says.

The government has also decided to give a special benefit to small and medium enterprises (SMEs). Companies that exported up to $3.5 million in FY2008-09 will be brought under the SME category, it says.

Such SMEs will receive 5 percent cash incentives if they can export more than the actual export of the last fiscal year in FY2009-10, Muhith said.

The government will also give 10 percent electricity bill to SMEs that do not have their own captive generators up to June 30, 2010, but the facility is subject to some conditions including non-availability of bank loan re-scheduling facility, not being an enterprise of the owner of a large industry and the basis of acceptance of real information, the finance minister said.

The government will introduce a uniform bank service charge after discussing with Bangladesh Bank and the Bankers’ Association of Bangladesh.

From now, an individual exporter can receive $10 million from the Export Development Fund through three banks; an exporter gets $1.5 million at present. The bank interest rate in this case will be London inter-bank offer rate (LIBOR) plus 2.5 percent and Bangladesh Bank will take necessary actions in this connection.

The BTMA members that import cotton and other fibres for producing yarn will also get the same benefits against a few conditions, the minister said.

He suggested forming a joint contributory fund for the export sector for improving market and quality of the products.

He said the government is ready to give Tk 300 crore to this fund and the private sector exporters have been asked to contribute at a rate of 0.1 percent on their free-on-board value of exportable products up to June 2010 and at 0.2 percent from July 2010.

The government will bear 50 percent cost of the operation of the National Institute of Textile Training, Research and Design from FY2010-11 although it bore 100 percent cost of the institution for FY 2008-09 and 60 percent for FY2009-10.

The government will also give cash incentives to shipbuilders and crust leather exporters as these sectors have potential. It has also declared bank loan moratorium facility for these sectors for a certain period, Muhith said.

On November 10, former finance minister M Syeduzzaman, chief of the working committee on recession, recommended that the government provide different facilities to exporters to offset the bad impacts of global recession from the domestic economy.

Citi projects GDP growth at 6.1pc for next fiscal year

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Citi projects GDP growth at 6.1pc for next fiscal year

Star Business Report

Bangladesh’s economy is expected to grow at 6.1 percent in the next fiscal year (2010-11) after two years’ growth of less than 6 percent, Citigroup forecasts on Bangladesh yesterday.

The economy grew at 5.9 percent in fiscal 2008-09 and set to grow 5.7 percent this year, according to the projection. Earlier, the economy had grown 6 percent plus rate since fiscal 2004-05.

“Trends so far indicate that estimates could be achieved, with industrial production growing at a healthy pace,” said the group in an outlook report.

Lauding the government’s thrust on infrastructure development, the Citigroup sees it as encouraging. It said this thrust could result in more investments.

However, there are some downside risks, including low agriculture production, poor implementation of the government’s various initiatives and a decline in manufacturing production, particularly due to sluggish demand for textile exports, it said.

The group has also identified inflation as a risk in future.

Growth in Bangladesh has historically remained firmly above 6 percent on year-on-year levels in spite of natural disasters, political volatility and governance issues.

In FY 2008-09, gross domestic product (GDP) was up 5.9 percent despite weak global growth. The group expects GDP to sustain at 5.7 percent growth this fiscal before recovering further to 6.1 percent in 2010-11.

Citigroup estimates are based on an upturn in industry and services. It said industry now comprises close to 30 percent of GDP from 20 percent levels earlier.

“We expect the government’s thrust on infrastructure development to fuel further growth, particularly in construction, manufacturing, and in the power sector,” it projects.

Growth in exports has been a major driver in Bangladesh economy during the recent years. Exports comprise around 17 percent of GDP and have been growing at an average rate of around 11percent year-on-year over the last ten years. And the key driver has been textile exports, which account for around 75 percent of total exports.

“Trends are erratic, but it should gather pace in fiscal 2010-11,” the group said in the outlook. Monthly trends have been extremely erratic with growth during July-September (FY10) down 11.7 percent.

While trends in remittances are expected to remain buoyant, rising imports could result in the current account surplus narrowing to 1.7 percent of GDP in the next fiscal year from estimated 2.5 percent this year.

On the currency, the group expects Taka to continue its depreciating trend, to average Tk 71.6/$ in FY 2009-10.

It said the recent success of the Grameenphone IPO (the biggest since independence in 1971) could enhance the attractiveness of the domestic equity market to foreign investors.

The projection also said the fiscal deficit will remain within the GDP target of 5 percent.

Dhaka fleshes out five points for WTO

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Dhaka fleshes out five points for WTO
Star Business Report

Bangladesh will push advanced countries to include its “commercially meaningful” products in the 97 percent duty-free category in the World Trade Organisation (WTO) ministerial meeting to be held in Geneva at the end of this month.

At a press conference, Commerce Minister Faruk Khan yesterday said the advanced countries had offered 97 percent duty-free facilities to the least developed countries (LDCs) at the Hong Kong ministerial meeting, but the inclusion of the major products in this category was not ensured.

As a result, Bangladesh, being one of the LDCs, failed to export its major exportable products duty-free to the developed world, Khan said.

According to an estimate, 30 major Bangladeshi exportable items were not included in the 97 percent duty-free category, although those products take up 70 percent of export volume.

Bangladesh paid $576 million as duties to the US in fiscal 2008-09 against exports, which is the same as the amount France paid in duties to the US despite being an advanced nation and exporting manifold to the country, according to trade body data.

Duty-free and quota-free access is among the five points Bangladesh is set to press at the WTO meeting.

Bangladesh will also highlight how to recover from global recession and tackle its impacts on the domestic economy.

Bangladesh will demand benefits from the developed world, as it is a “disproportionately affected country”. In the South Asian region, two countries — Sri Lanka and Pakistan — are enjoying benefits in exports as disproportionately affected countries.

As an agenda for negotiation, Bangladesh will also seek smooth export of human resources under WTO’s MODE-4, or free movement of natural persons to the developed world.

“It is our long cherished demand that the advanced countries will import skilled and semi-skilled workers from the LDCs under the WTO negotiation,” Khan said.

Bangladesh will ask the developed world to remove any restriction on the exports of food items to LDCs to avert any food crisis in poor countries.

Khan said representatives would hold several meetings on the sidelines with leaders of other LDCs, Saarc, BRIC (Brazil, Russia, India and China) leaders and Japan to harness economic, bilateral and multilateral trade benefits.

Exports await boost as west crawls out of recession

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Exports await boost as west crawls out of recession
Khawaza Main Uddin

The country’s economy may find stronger grounds for consolidating exports as a result of rising consumer demands in the west with the advanced economies crawling out of the recession.

In the coming months, economists anticipate positive implications of the recovery worldwide for Bangladesh, which remains largely insulated from the global financial meltdown.

They forecast that the national economy is most likely to escape the ‘tail effects’ of the recession as exports of both goods and manpower are expected to bounce back to normal trends cashing in on the latest economic growth in Europe and North America.

Demands for Bangladeshi garments in the west next summer and fall are high, say industry sources adding that exports of items such as frozen foods, jute and jute goods and leather products may also rebound, should the gains by mighty economies in terms of gross domestic product sustain.

However, the economists suggest that the government should now focus on long-term strategy for sustainable export earnings and remittances taking lessons from the country’s vulnerability to external shocks and also its resilience proven during the global recession spanning 2008 and 2009.

‘Demands for our products in the western markets are going to rise with the increasing consumer demands and if more employments are generated in the aftermath of the recession. Signs of an end to the financial crisis are there,’ said Ananya Raihan, executive director of research organisation D-Net.

Nazneen Ahmed, research fellow of the Bangladesh Institute of Development Studies, pointed out that the sales of goods and commodities in the run-up to the Christmas Day celebrations would ascertain whether the recession in Europe and America was over and the west could increase imports from countries such as Bangladesh.

Both the economists recommended that the government should always keep an eye on the latest developments in the global economy before taking any policy measures to support the exports and other sectors that might have impacts on taxpayers’ money.

A sub-committee of the officially-formed task force has recently advised the government to provide textiles and clothing units with partial interest waiver on bank loans and also cash incentive for exploring new markets, apart from floating a Tk 200 crore revolving fund to support the apparel sector. An amount of Tk 5,000 crore has been earmarked as stimulus package in the current budget.

In the past week, gross domestic products in the euro-zone area of 16 nations reportedly rose 0.4 per cent from the second quarter and joined the United States and Japan in returning to growth from the worst recession since the Second World War. Germany and France – two main destinations of Bangladeshi exports to the European Union – contributed more to compensating for households’ reluctance to spending.

The news of economic recovery in Europe in particular came in the wake of almost 12 per cent decline in Bangladesh exports in the first quarters.

When asked about the trends in export order receipts, Zafar Iqbal, director of a foreign company named Gooryong Dhaka Limited, mentioned that they had already witnessed approximately 40 per cent rise in the export orders targeting the next summer and fall.

‘Many factories especially larger ones are flooded with orders. However, the prices of garment items may vary and it depends on the capacity, including quality of products and bargaining power of individual entrepreneurs,’ he told New Age on Friday.

Nazneen Ahmed felt that Bangladesh was ‘perhaps’ going to avoid the ‘tail effects’ of the recession. ‘So, I believe, the government should maintain caution in paying direct stimulus with the taxpayers’ money,’ she said suggesting long-term measures to boost exports and remittances.

Ananya Raihan suggested trading with services instead of depending only on trade in goods and said Bangladesh had opportunities to export banking services to Africa, the Middle East and even South Asian countries.

He also recommended that the government could consider devaluation of Taka against dollar to give incentives to exports at a time when there was no pressure of higher import bills and foreign exchange reserves swelled to $10 billion mark.

Dhaka, Ankara strike deal on direct air link

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Dhaka, Ankara strike deal on direct air link
Unb, Dhaka

Bangladesh and Turkey have agreed to introduce direct air and banking links between the two countries at the earliest possible time to promote bilateral trade and economic cooperation.

The two sides also underscored the need for direct shipping link, as a protocol was signed between the two countries in Ankara, Turkey on Thursday.

Finance Minister AMA Muhith and Turkish Minister of State Mehmet Aydin signed the protocol on the concluding day of the third session of Bangladesh-Turkey Joint Commission for Trade, Economic and Technical Cooperation (JEC) held November 18-19.

According to the protocol received here Thursday night, the two sides agreed to cooperate with each other so they could raise the bilateral trade to $ 1 billion in the shortest possible time.

To achieve the target, they agreed to encourage their designated airlines to start direct flight between Bangladesh and Turkey at the earliest possible time under a memorandum of understanding signed in 1997.

The two countries would also consider establishing direct banking links through state-owned banks, suitable private banks or other financial institutions on a priority basis.

Other major areas the two sides have agreed to cooperate are agriculture and irrigation systems, contracting services, tourism, telecommunications, infrastructure projects, SMEs sector development, and standards and testing institutions.

The two sides agreed to explore the possibilities of joint venture in the fields of shipbuilding, heavy machinery industries, electronic appliances, textiles, pharmaceuticals, RMG, jute and jute products, and petrochemical products.

Both sides stressed the need for reciprocal visits of business delegations to promote bilateral trade, economic and technical cooperation, and also the need for holding trade fairs in each other’s country.

Bangladesh expressed interest to export medicines and pharmaceutical products. The country invited Turkish investors to relocate their labour-intensive industries like textile and construction to Bangladesh to utilise cheapest labour and other fiscal incentives.

Both sides agreed to examine the investment possibilities from Turkey in the oil, gas, refinery and power plant sectors in Bangladesh.

The two countries decided to hold the next meeting of the JEC in Bangladesh at a time to be mutually agreed upon.

BB chief says exporters will get incentive to enter new markets

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BB chief says exporters will get incentive to enter new markets
Star Business Report

Bangladesh Bank Governor Atiur Rahman said yesterday additional incentives would be offered to exporters to enter new markets with diversified products.

“We are ready to assist entrepreneurs. If needed, we will support our exporters from foreign exchange reserves,” said Rahman at a seminar on fallout of the global financial crisis on international trade financing.

Bangladesh Institute of Bank Management (BIBM) organised the programme where a study, conducted by BIBM academics — Dr Toufic Ahmad Choudhury and Dr Shah Md Ahsan Habib — observed that the meltdown has not left any significant impact on trade financing in Bangladesh.

Garment, the main export item, did not suffer significantly rather it gained a market share in large and developed economies compared with Bangladesh’s competitors.

But falling demand due to the global recession had earlier cast a negative impact on some major exporting sectors such as frozen foods, leather and jute.

“Despite challenges, the global recession has opened up a lot of opportunities. We have become number one in apparel exports to the US,” Rahman said.

The recent data shows signs of a fall in garment exports. Presenters at the seminar feared that garment exports might face pressure in the coming months, as there are instances that the volume of orders has declined.

“In Bangladesh, one observable change in export letters of credits (LCs) received by domestic traders is that the number of deferred LCs has increased remarkably over the last few months,” said BIBM Director Toufic Ahmad Choudhury.

Researchers suggested that a sufficient flow of credit should be ensured in the backdrop of falling export orders.

The BB governor said the central bank has increased the size of the Export Development Fund to facilitate exports.

“We will also give additional incentives to exporters for an entry to new markets.”

“At the same time, we will also help troubled exporters to return from losses, based on the suggestions from the task force,” he said.

“But our exporters should not depend on state assistance. They should have in mind that we want to win by competing with others.”

Referring to the issue of incentives, Centre for Policy Dialogue (CPD) Executive Director Mustafizur Rahman suggested offering economy- or region-wise incentives to encourage exports.

“We should look at economy-wise incentive policy.”

The CPD executive director also suggested the central bank enhance foreign exchange loan limits in favour of exporters.

He referred to the problems of loan rescheduling by small and medium exporters and importers and said: “We should also have a window for rescheduling their loans.”

BIBM Director General Dr Bandana Saha, Managing Director and Citi Country Officer Mamun Rashid, Prime Bank Managing Director Ehsanul Haque also spoke.

Dhaka targets rise in investment, trade with Turkey, UAE

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Dhaka targets rise in investment, trade with Turkey, UAE
Rejaul Karim Byron

Investments in Bangladesh’s energy and communications sectors will top the agenda of the upcoming meetings with Turkey and the United Arab Emirates separately.

In the Joint Economic Commission (JEC) meeting with Ankara, due on November 18-19, Bangladesh is going to propose these investments under public-private partnership (PPP).

A delegation, led by Finance Minister AMA Muhith, that left Dhaka yesterday for the Turkish capital will attend the JEC meet to be held after a long gap.

The last JEC meeting with Turkey was held in 1992.

Besides, the JEC meeting with the rich Gulf country, also a long overdue as the last one was held in 1991, will take place in Dubai on November 21-22.

Mainly migration of workers and exports of new products including medicine and jute goods will come up for discussion in the Dubai meet.

Official sources say a bilateral framework for Turkey’s investment in Bangladesh has also been prepared for placing before the Ankara meet.

The obstacles in the way of bilateral trade with Turkey will also be reviewed.

Bangladesh will propose that the UAE hire more workers. Enhancing trade between the two countries is another goal of the delegation attending Bangladesh-UAE economic talks.

About 10 lakh Bangladeshis now live in the UAE. However, the recent global recession has led to a drop in manpower exports.

Dhaka will also propose formation of a joint committee to make the MoU, inked between the two countries in 2007, more effective.

Bangladesh will try to validate the stay of the immigrants living in the UAE without valid documents.

A set of proposals on investment in tourism, energy and mineral resources, power and communications will also be placed from Bangladesh side.

Bangladesh also targets having a feedback of the parleys with both Turkey and UAE at Istanbul on the sidelines of the World Bank-IMF meeting.

Dhaka, Hanoi to boost business

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Dhaka, Hanoi to boost business
Staff Correspondent

Vietnamese vice-minister for trade and industry said potential of trade and investment between Bangladesh and his country remained unexplored mainly due to lack of business to business communications.

Le Doung Quang, the vice-minister, made the comment when he led a Vietnamese business delegation to the Federation of Bangladesh Chambers of Commerce and Industry on Sunday.

Vietnamese ambassador in Dhaka Nguyan Van That also addressed the meeting, presided over by FBBCI president Annisul Huq.

Bangladesh can import more commodities like rice and spices from Vietnam while the Bangladeshi and Vietnamese entrepreneurs can make partnerships in leather, fishing and jute sectors, said Doung Quang.

The Vietnamese business representatives showed their interest in making partnerships in steel industries, food processing, agricultures and shipping sectors.

Le Thi Hoang Oanh, director of a Hanoi based freight forwarding company, said her company got huge business response after appointing an agent in Dhaka.

Le, whose company started with electrical equipments, said many products could be traded between the two countries if business communication was developed.

Annisul Huq invited the Vietnamese entrepreneurs to explore Bangladesh’s very liberal policies regarding foreign direct investments.

He cited light engineering, livestock, rubber based industries and infrastructures projects as the potential sectors for investments.

Vietnam total import was $81 billion from global market when it exported $63 billion in 2008. But the trade between Bangladesh and Vietnam was only $65 million in the period.

Bangladesh exports to Vietnam include garment and shoe accessories, tobacco, iron, raw jute, pharmaceuticals, plastic materials, electric cable, fertiliser, steel, yarn, rice and machineries.

Referring to the agreement between Bangladesh and Vietnam on textile and direct LC settlement, the vice-minister said the two countries had not yet reap the benefit of the deal.

Six pc GDP growth likely: BB Governor

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Six pc GDP growth likely: BB Governor

BSS, Sherpur

Bangladesh Bank (BB) Governor Dr Atiur Rahman on Thursday said the GDP (gross domestic product) growth would be at least 6 percent in the current 2009-10 fiscal year.

He made the forecast at a function in Sherpur district where he launched a credit programme for marginal farmers.

His prediction dispelled the gloomy forecast made recently by the International Monetary (IMF). An IMF mission last month projected a GDP growth of less than 6 per cent for the current financial year.

Finance Minister Abul Maal Abdul Muhith, however, instantly dismissed the IMF projection saying the growth would be higher as the economy was going on the right track.

Citing some major developments in the country’s economy, the central bank governor substantiated the projection.

He said the foreign exchange reserves on Wednesday crossed $10 billion dollars for the first time in the country’s history. The crop production also showed a steady growth when the business and investment climate were improving.

Atiur said the central bank was endeavouring some major programmes towards boosting the growth in agriculture and investment.

He reiterated his commitment as an economist and the chief of the central bank to the farmers who contribute much to the country’s economy.

Atiur said the farmers would get continuous support from the banking system in achieving food security and making the country self-reliant.

Hundreds of sharecroppers in Sherpur district on Thursday got loans from the banking system for the first time in their life.

Bangladesh Krishi Bank (BKB) disbursed the loan to the cash- strapped farmers who usually do not qualify for any credit from commercial banks.

The sharecroppers who got the loan never thought before of getting money from banks because of their inability to provide any mortgage against their loans.

The BB’s initiative not only surprised the hundreds of sharecroppers of the district, but also renewed their dream of the days when they would be able to have enough food to enjoy happy meals with family.

The BKB disbursed Taka 1.91 crore among 603 farmers in Sherpur Sadar, Langarpara and Chikundi of the district. The loans at very low rate of interest will enable the sharecroppers to grow crops and establish small farms like fisheries and poultry.

The central bank for the first time allocated a fund of Taka 500 crore for sharecroppers. The BRAC, under an agreement with the central bank, would provide around 500,000 out of over 7,000,000 sharecroppers with such loan in 160 upazilas across the country.

The BRAC will borrow funds from the central bank under the refinancing scheme at 5 percent interest and distribute collateral-free loans to sharecroppers at 10 percent.

The central bank has also set a three-tier monitoring system to ensure distribution of such loans to the real sharecroppers.

The BB will also assess the overall performance of the scheme in the middle of next year to take a decision on expansion of the scheme.

The sharecroppers, who have never been given loan from banks and do not have a secondary school certificate and more than two acres of land for farming, will get the loan facility.

Forex reserve sets $10b benchmark

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Forex reserve sets $10b benchmark

Star Business Report

Bangladesh’s foreign exchange reserve yesterday crossed the $10 billion mark for the first time in history, riding on buoyant remittance inflows, moderate exports and declining import payments.

The Asian Development Bank’s budgetary support worth around $649 million released the same day also helped the reserve reach equivalent to five months’ import bills.

Central bank Governor Atiur Rahman termed it a ‘historic’ and ‘rare’ achievement for the country, as the reserve almost doubled in two years.

“This reflects the strength of our economy,” Rahman told reporters at a briefing at the Bangladesh Bank (BB) headquarters yesterday.

The governor however denied that the ADB loan has helped push the reserve to $10 billion and said it is the remittances that played the key role.

Deputy governors Murshid Kuli Khan and Ziaul Hassan Siddiqui also spoke.

The central bank expects the reserve to help the country achieve a better sovereign rating currently being conducted by two global firms — Moody’s and Standard and Poor’s.

“This reserve will also help the government bargain strongly with bilateral and multilateral development partners,” said the central bank chief.

“Foreign investors will also be encouraged,” Rahman added.

The foreign exchange reserve was $9 billion in September and $7.47 billion in June this year. But it was slightly over $5 billion in June 2007.

Bangladesh has an obligation imposed by the International Monetary Fund to maintain a reserve equivalent to three months’ import bills. According to IMF compulsion, $6 billion reserve is enough.

The reserve reached $10 billion mainly due to a significant rise in inward remittances despite the global economic slowdown that dealt a blow to many countries with negative growth in their remittances.

“Remittances rose by over 22 percent. This has happened as remittances came through banks,” said the central bank governor.

Quoting a recent World Bank report, Ziaul Hassan Siddiqui said only 9 percent remittances are now channelled through hundi, an illegal way of sending money home.

Although exports plummeted by over 11 percent in the first quarter of the current fiscal year compared to the same period last year, the governor termed it a reasonable growth considering other countries’ exports.

“Exports are reviving. A lot of orders are coming and we expect a substantial rise in investment demand in the current quarter,” said Rahman.

Replying to a query about the declining import of capital machinery, the governor said the country is already in excess capacity. “We don’t need capital machinery now,” he said.

However Rahman said: “Import of industrial raw materials increased significantly last month, reflecting a growing activities in the manufacturing sector.”

But he admitted a significant decline in import payments, mainly with the food grain imports. He has also given credit to farmers for bumper yield.

Rahman admitted the fear of inflationary pressure due to constant rise in remittances. “It creates inflationary pressure, but we are cautious,” he said.

Trade imbalance shrinks in Q1

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Trade imbalance shrinks in Q1
FHM Humayan Kabir

Bangladesh’s trade imbalance has contracted by US$650 million in the first quarter of the current fiscal compared to the corresponding period last fiscal, thanks to lower prices of goods because of the global economic meltdown, officials said Wednesday.

The trade gap between the incomes from import and export is accounts for $890 million in current FY2010 against that of $1.55 billion in the previous FY2009, official data showed.

During July-September period this fiscal, total shipment of Bangladeshi products was worth $3.87 billion while the country imported foreign goods worth $4.77 billion.

In the corresponding period of previous FY09, the export earnings were $4.38 billion against the import payments of $5.93 billion, the government statistics said.

Economic researchers and the central bank officials said the trade deficit has narrowed, as the volume of import by the country and prices of goods in the international market have fallen due to the impact of the global economic meltdown.

They said the trade gap could be thinner if the country’s export maintained growth in the first quarter (July-September) of this fiscal like previous periods.

The export earnings have contracted by 11.66 per cent in the first quarter of this fiscal as the global financial plunge has walloped the shipments.

Economic researcher Zaid Bakth said: “In a sense, lower import payment is good for the economy. But if the spending for capital machinery and industrial raw materials drops it will be bad news for the economy.”

The latest World Bank economic update released last month identified a number of reasons for the fall in import payments.

One of them is the drop in commodity prices in the world market and the another is decline in the quantity of some imported goods.

“Import payments and demand declined in FY2009, reflecting falling commodity prices,” the WB report said.

I think the trade imbalance could be narrowed further if the government could create a better atmosphere for investment augmenting public spending for infrastructure and energy development, and ensure social security, Mr. Bakth told the FE.

“Demand for Bangladeshi products both in the domestic and foreign markets needs to increase to boost the country’s economic growth. For this, more investment will have to be attracted,” he said.

Dhaka, Thimphu agree on energy cooperation

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Dhaka, Thimphu agree on energy cooperation
Focus on land connectivity, trade
Unb, Dhaka

Bangladesh and Bhutan have agreed to explore the possibility of cooperation in energy sector under Saarc regional collaboration.

The agreement came in the wake of growing demand for energy in Bangladesh and Bhutan’s high potential for production of hydroelectricity, according to a joint press release issued yesterday from Dhaka and Thimphu at the end of Prime Minister Sheikh Hasina’s visit to Bhutan.

Both sides agreed to explore the possibility of land connectivity between the two next-door neighbours under the aegis of Saarc transport connectivity to promote intra-regional trade and travel.

Dhaka and Thimphu also agreed to work together in promoting regional tourism recognising the potential of developing tourism packages, offering visits to the Himalayan mountains in Bhutan and with the golden sandy beaches of Cox’s Bazar and the world’s largest mangrove forest of the Sundarbans in Bangladesh.

Responding positively to Bhutanese request, Hasina agreed to raise the yearly reserved seats for Bhutanese students for MBBS courses in Bangladesh’s government medical colleges under Saarc quota.

During the visit, Dhaka and Thimphu signed a trade agreement. The joint release said the trade between the two countries has been steadily increasing over the years and making significant differences to the income of farmers in Bhutan and industries of Bangladesh.

Bhutan has waived all duties on imports from Bangladesh. Hasina has announced that Bangladesh will reduce tariff on 18 commodities imported from Bhutan from the existing rate of 15 percent to zero percent.

The trade agreement would also pave the way for cooperation in other sectors in the future.

Recognising that the full potential of the friendly relations between Bangladesh and Bhutan could not be tapped yet, the leaders of the two countries hoped that Bangladesh PM’s visit, which would remain as a milestone in the Bangladesh and Bhutan relationship, would usher in a new era of cooperation.

Meanwhile, the Bangladesh premier returned home yesterday afternoon. She arrived at 1:10pm by Druk Airlines. Earlier, the Bhutanese prime minister and his spouse saw her off at Paro International Airport.

BoI chief upbeat on FDI flow

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BoI chief upbeat on FDI flow

Star Business Report

The state-run investment promotional body chief is upbeat on foreign direct investment flow to Bangladesh at an amount of at least $5 billion a year, despite the present declining trend.

i”It is our target to receive a minimum of $ 3 billion and a maximum of $5 billion in oversees investment per year,” SA Samad told a meeting of foreign entrepreneurs in Dhaka yesterday.

Held at Radisson Water Garden Hotel, the monthly luncheon was organised by Foreign Investors’ Chamber of Commerce and Industry (Ficci).

The Board of Investment (BoI) executive chairman also drew the entrepreneurs’ attention to Bangladesh’s improving investment climate.

Pointing his finger at the present recovery from global recession by major economies, Samad hoped that the country would come out of the 2009 FDI trend.

The 2008 FDI was $1billion.

“We expect foreign investors to shift some of their investments to Bangladesh, considering the lesser impacts of global recession in the country,” the BoI chief said.

Referring to Ficci President Waliur Rahman Bhuiyan who suggested a double-digit growth for the alleviation of poverty, Samad said, “It is not easy. But we can be optimistic to achieve that if private sector investment gains momentum.”

Sri Lanka did not lose FDI despite having a civil war for the last 30 years, he pointed out.

He assured investors of government policy support.

Samad admitted to some hurdles in new investment, such as utilities. “A democratic government is more investment-friendly. We have to be more pragmatic.”

FDI is expected to grow steadily from low base but could pick up significantly if energy situation improves, said the Ficci president.

“Foreign investors have demonstrated widespread interest in Bangladesh after the new democratic government took over,” Bhuiyan said.

Bangladesh’s FDI registration in the January-July period stood at $ 573.60 million.

Although the country’s investment climate compares favourably with most other South Asian countries, particularly in terms of competitive labour costs and flexible labour laws, the cost of doing business in Bangladesh is perceived to be high, said Bhuiyan.

“The high cost is a reflection of corruption, a weak law and order situation, inadequate infrastructure and services, gaps in the skills base and distressed financial markets,” the Ficci president said.

“If the existing foreign investors are happy, then only will prospective investors be encouraged to invest. We feel BoI can play a significant role in this regard.”

Bangladesh to export $1b RMG to Japan in 2 years

http://www.thedailystar.net/newDesign/news-details.php?nid=112860

Bangladesh to export $1b RMG to Japan in 2 years
Visiting business tycoon hopes

Refayet Ullah Mirdha

Trends show that Bangladesh will be able to export apparel items worth about $1.0 billion to Japan in the next two years, said a Japanese business tycoon, now in Dhaka in connection with the biggest knitwear exposition held every year.

Hiroshi Okada, president of Japan Textile Products Quality and Technology Centre (QTEC), said Japanese lab testing and quality inspection companies are visiting Bangladesh to survey investment potential, as there is a strong presence of Japanese apparel buyers.

The QTEC will start operations in Dhaka from February 1, Okada said in an interview on the sidelines of the 5th knitexpo at Dhaka Sheraton Hotel.

Okada said at present, at least 20 Japanese companies are in Dhaka to procure Bangladesh made apparels. But lab test and quality inspection is important to Japanese buyers, as Japanese customers are highly quality-conscious, he said.

After conducting a market study, he said, it now takes a lot of time to complete lab tests and inspect quality for the Japanese market, as Japanese buyers test all apparels pieces, instead of following a sampling method.

Local manufacturers have to send fabrics to Hong Kong or other important destinations to test results, as there are no such facilities in Bangladesh to meet Japanese quality standards, Okada said.

“We will start operations with an investment of half a million US dollars in Bangladesh as lab tests do not need large investments at first. But we will employ a significant number of trained employees here,” he said.

QTEC, which has been testing garment, leather and jute goods worldwide over the last 64 years, will work in joint collaboration with the local Pacific Quality Control Centre Ltd.

At present, QTEC has operations in Japan, China, Korea and the fourth will be in Bangladesh, he said, adding that QTEC earned $38 million in 2008 in testing fees alone.

He said Japan is the latest avenue for Bangladeshi exports as a large number of Japanese customers are coming to Bangladesh after the Japanese government announced the China+1 Campaign.

Last year, Japanese entrepreneurs were advised to invest in other countries as well.

As a result, Japanese started relocating their factories in different countries, including Bangladesh. A strong presence of Japanese buyers was seen at the just concluded knitexpo, where more than 60 Japanese buyers and investors took part.

Leading Japanese socks maker Okamoto is also coming to set up a modern factory in Bangladesh.

BKMEA President Fazlul Hoque said the largest Japanese retail chain Uniqlo invested $70million in Bangladesh and they target purchase of apparel items in large huge volumes.

“Since Japanese customers are quality-conscious, setting up of such test labs and quality inspection companies will play a vital role in increasing exports to Japan,” Hoque said.

reefat@thedailystar.net

BD to sign investment accord to join big Asian economies

http://www.thefinancialexpress-bd.com/2009/11/06/83559.html

BD to sign investment accord to join big Asian economies

Nazmul Ahsan

Bangladesh is going to join the big Asian economies under a Framework Agreement on Promotion, Protection and Liberalisation of Investment to help boost foreign investment flow to the country and also its external trade in holistic and rule-based ways, trade officials said.

The high performing Asian economic like those of China, Korea and India, along with countries like Sri Lanka, Laos and Bangladesh that are also signatories to the Asia Pacific Trade Agreement (APTA), will sign the historic Investment agreement on December 15 in South Korean capital Seoul. The commerce ministers of member countries will attend the signing ceremony there on behalf their respective countries, sources said.

The officials of the Ministry of Commerce (MoC) said the APTA Standing Committee, comprising trade officials of the member countries in their latest round of negotiations finalised the draft deal in Bangkok.

An inter-ministerial meeting, held recently in the Ministry of Commerce (MoC), approved the draft agreement. This will be placed before the Cabinet Division soon for approval by the cabinet, a high official in the MoC said.

“The agreement will be a major tool to attract foreign direct investment from major Asian countries, particularly from China and Korea as it would provide protection of investment to the investors from APTA member countries,” another top official in the MoC told the FE.

“The country’s external trade is expected to increase manifold following signing of the groundbreaking agreement,” he added.

Commerce Minister Faruk Khan will attend the Ministerial Council

meeting in Seoul as the head of Bangladesh delegation.

The APTA was formerly known as the Bangkok Agreement, with officials holding meetings from time to time to discuss trade and economic ties among the six Asian nations.

According to the agreement, member countries will enact new laws to give full security and protection to investments to be made in the countries that are its members.

The contracting countries under the framework agreement will not practise any unreasonable or discriminatory measures, impairing the operations, management, maintenance, disposition or liquidation of investment to be made by member countries, said the agreement.

The member countries of the agreement will protect and uphold the principles of Intellectual Property Rights, in line with the spirit of the World Trade Organisation (WTO), the agreement said further.

No restriction could be imposed on transfer of capital, profit to be derived from such investment, royalties and other income, said the agreement referring to basic criteria of foreign investment.

All sorts of movable and immovable products, share, debenture and stock will be considered as investment, the agreement said.

The member countries of the Investment Pact will promote free flow of investments and encourage transfer of technology among participating countries, according to the regional investment agreement.

“The least developed countries (LDCs) will be provided flexibility, in terms of observing and maintaining the main features of the agreement,” a trade diplomat said.

“Technical cooperation relating to attracting investment and diversifying export-oriented sectors, will be provided by member countries of the big economies to the LDCs and Sri Lanka,” he added.