Monthly Archives: June 2009

Jute bag exports rise as shopping goes eco-correct

Jute bag exports rise as shopping goes eco-correct

Kawsar Khan

Eco-concerns drive demand for biodegradable bags on the global market, giving rise to the exports of shopping jute bags from Bangladesh.

Jute goods makers export around 100,000 shopping bags a month on average to different countries. They hope scope for more shipments will widen next year, as some European countries are set to ban polythene bags in 2010.

“In our products line, shopping jute bags are the most popular among importers as European and American consumers are opting for environment-friendly bags which can be used repeatedly,” said Milton Suranjit Ratna, a senior officer of Corr-The Jute Works, the handicraft marketing and exporting trust of Caritas Bangladesh.

Corr-The Jute Works exported over 600,000 jute bags in 2008 mainly to Germany, the Netherlands, Sweden, UK, USA, Canada, Japan, Switzerland, South Korea, and France.

Creation Private Limited, a jute goods maker, exports around 50,000 shopping bags to those destinations a month.

Two years ago, the number of jute bags exported by Bangladesh would not exceed 100,000 annually, said the sector people.

A global initiative for banning environment-unfriendly shopping bags and declaring the year 2009 by the United Nations as International Year of Natural Fibres has fuelled demand for jute bags.

According to media reports, France and Germany will ban the use of non-biodegradable polythene bags next year. Also, the US is looking for a viable alternative to polythene bags.

San Francisco has completely banned plastic bags. Los Angeles will do so in 2010. Also, Washington, D.C.’s city council is set to vote on a five-cent-a-bag tax later this month.

Now the United States uses an estimated 90 billion thin bags a year, with most used to handle produce and groceries.

Achim Steiner, executive director of the UN Environment Programme, has recently called for a ban on polythene bags and said: “Single-use plastic bags which choke marine life should be banned or phased out rapidly everywhere. There is simply zero justification for manufacturing them anymore, anywhere.”

The global context has made a multi-billion dollar global shopping bag market, opening up a huge opportunity for the country’s golden fibre.

On the potential of jute bag exports from Bangladesh, the sector people viewed that non-perishable polythene bags will go out of market in the years to come, driving demand for Bangladeshi jute bags.

On the other hand, more and more chain shops around the world are phasing out the use of polythene bags in their shops and using bio-friendly natural fibre bags instead.

Ratna said only the UK-based retail chain Tesco requires around 1 million shopping bags — made of natural fibre — a month that it now buys from India.

“Tesco had approached us to buy bags but we could not take their order as our bags were costlier than in India,” said Rashidul Karim Munna, managing director of Creation Private Limited.

Munna said local bag makers buy jute fabric from the domestic market at higher prices than what foreign importers pay for the same fabric from Bangladesh — a setback that makes the local industry less competitive than its rival in India, the main importer of jute fabric.

“When we buy jute fabric, the jute mills add the money of export incentive to the cost of fabric as they don’t get any incentive when they sell to us,” Munna said.

“Unlike in India, jute bag makers in Bangladesh do not get export incentive,” he said.

“It is very sad that even after buying raw materials from Bangladesh, India can sell shopping bags at lower prices,” he said. A shopping bag sells at $1.

Despite having all the difficulties, however, increasing orders are pushing bag manufacturers to expand their capacity.

“Due to the increased demand we will set up a new bag manufacturing unit in Tongi, which will go into operation next month,” said Bertha Gity Baroi, acting director of Corr-The Jute Works.

The sector people believe Bangladesh has every chance to strengthen its foothold in the billion-dollar shopping bag market.

“We could easily double our production and exports if we got proper government support,” an official of Corr-The Jute Works which has long been reputed for exporting handicraft products.


Joint venture to invest $5m in AEPZ

Joint venture to invest $5m in AEPZ
Bangladesh Sangbad Sangstha . Dhaka

Bengal Pelli (BD) Limited, a Bangladesh-Portugal joint venture company, will set up a leather footwear industry in the Adamjee Export Processing Zone.

The joint venture company will invest about $5 million in establishing the plant to produce leather footwear, a news release said on Monday.

The company will also create employment opportunity for 621 Bangladeshi nationals, the release added.

An agreement to this effect was signed between the Bangladesh Export Processing Zones Authority and the Bengal Pelli (BD) Limited in BEPZA Complex in Dhaka on Monday.

Nasir Group eyes Tk 300cr in sales from new plant

Nasir Group eyes Tk 300cr in sales from new plant

Sajjadur Rahman

Nasir Glassware and Tube Industries is expected to earn nearly Tk 300 crore in annual sales from its new plant to be pressed into operation at the end of this year, a top official said yesterday.

The Tk 600 crore plant is being set up on a 125-bigha of land at Sohagpur under Mirzapur upazila of Tangail district. Some 85 percent of construction is complete.

“We expect Tk 15 crore in monthly sales from glassware and Tk 10 crore from tube lights,” Nasiruddin Biswas, managing director of Nasir Group, told The Daily Star, quoting a feasibility study on the new plant.

Around Tk 100 crore worth of letter of credits have been opened for import of machinery and equipment for the company, Biswas said. The company has invested another Tk 200 crore for construction and land acquisition.

Nasir Group, which started its business in a humble way with the making of biri (traditional handmade low-cost cigarette), now boasts glass, melamine, printing and packaging and footwear units.

The group’s annual turnover crosses Tk 2,000 crore. It pays a monthly average of Tk 13 crore in value added tax to the national exchequer, according to available statistics.

Nasir Glassware and Tube Industries will be the first of its kind in the country and will compete against a tide of imported goods now dominating the glass tableware, fluorescent and energy-saving bulb market here.

Glassware products that will be manufactured at the plant include tableware, flower vase, perfume bottle, bowl and candle stand. All of the items are imported from different countries such as China, Thailand, Malaysia and Indonesia.

The market size of fluorescent and energy-saving bulbs is also rising on the rise of the user’s consciousness about an efficient use of electricity. The energy-saving bulb market will boom once the government makes its use mandatory, officials said.

Citibank NA has recently arranged Tk 140 crore loans for Nasir Glassware and Tube Industries at a 12 percent interest rate.

“Both glassware and energy-saving bulbs will be import-substitution industries. They will also be able to export in the near future,” said Mamun Rashid, country officer of Citibank NA in Bangladesh.

Govt working to introduce industrial policy soon

Govt working to introduce industrial policy soon
Says Barua
Star Business Report

The government has taken initiatives to formulate an industrial policy immediately with an aim to create more employment and enhance the economic growth of the country, said the industries minister yesterday.

“We are trying hard to turn Bangladesh into a middle-income country by 2021 and for that we have to go for massive industrialisation soon,” said Dilip Barua.

“The new industrial policy has an aim to encourage establishing more industries and create more employment opportunities,” he added.

He was speaking at the annual general meeting (AGM) of SME Foundation in Dhaka.

Barua said the government is giving priority to the country’s small and medium enterprises (SMEs) through budgetary allocation and policy support to generate employment that would help eliminate poverty.

Dr Momtaz Uddin Ahmed, managing director of SME Foundation, and Dewan Zakir Hossain, secretary to industries ministry, were also present at the AGM.

Renata to export drugs to 15 more states

Renata to export drugs to 15 more states

Sarwar A Chowdhury

Renata Ltd, one of the leading pharmaceutical companies and a market leader of animal health products in Bangladesh, plans to export its medicines to 15 more countries in bid to strengthen its presence in global market.

The company is expecting to make a footstep in Afghanistan, Cambodia, Thailand, Benin, Burkina Faso, Congo, Togo, Mauritius, Malaysia, Nigeria, Ghana, Cameroon, Gabon, Senegal and Ivory Coast in the coming days, senior officials of Renata said.

Presently the company does business with Sri Lanka, Vietnam, Myanmar, Hong Kong, the Philippines, Macao, Jordan, Kenya, Guyana and the UK.

“We expect to be in those countries during 2009-10 fiscal year,” Syed S Kaiser Kabir, chief executive officer and managing director of the company, told The Daily Star.

When asked about potential export earnings from the new destinations, he said: “Export markets are uncertain and sales cannot be predicted with accuracy, especially in the pharmaceutical business.”

He however expected 30 percent to 35 percent growth in sales and profit in the coming year.

Renata, which registered a 65.5 percent export growth last year, has filed 300 product dossiers to 21 countries to accelerate its export growth this year.

“These products will drive future volumes,” according to Renata’s annual report, which was presented in the company’s annual general meeting recently.

A listed company, Renata exported products worth $815,660 last year.

The net profit of the company, which contributed Tk 61.76 crore to the national exchequer, grew by 28.9 percent to Tk 43.31 crore on a net turnover of Tk 380.97 crore in 2008.

“While this performance is quite modest in relation to the track record of Renata, it must be judged in light of the difficult circumstances that characterised the year,” the annual report said.

“By the middle of 2008 it appeared that our earnings growth estimates would have to be revised downward. Fortunately, better-than-expected figures for contract manufacturing, interest costs, exchange rate depreciation and inventory revision provided a cushion against the cost increases,” it said.

The onset of global recession reversed the trend in petrochemical prices that in turn eased the pressure on pharmaceutical raw materials’ costs, the report said.

Despite the unfavourable developments, outlook for Bangladeshi pharmaceutical companies remains positive, it said, adding that the industry has so far remained unaffected on the domestic front.

Mi3 raising equity to develop outsourcing and more in Bangladesh

Mi3 raising equity to develop outsourcing and more in Bangladesh

June 24, 2009

EXCLUSIVE REPORT ALPHARETTA, GA—Mi3, a company that offers IT outsourcing to Bangladesh as a less expensive alternative to India, China, the Philippines, and other countries, is raising a $6 million round of equity. The company is also developing IT products to sell in Bangladesh and envisions helping the country with healthcare and education, says founder and President Saiful Khandaker.

The company revealed that it is raising $6 million in equity in a filing with the U.S. Securities and Exchange Commission. It has raised $1 million so far.

Bangladesh, which borders India and Burma, is the seventh most populous country in the world and has a high poverty rate. Khandaker, who was born in Bangladesh but lived half his life in the United States, says he saw the potential for establishing outsourcing in Bangladesh while working for Delta Airlines as a software engineer.

“We founded the company with the vision of following the model India took in outsourcing,” he says. The vision includes helping Bangladesh play a greater role in the global economy, he adds. He emphasizes that the company has philanthropic goals as well as business goals.

In 2003, Khandaker took on two U.S. partners in the firm. The company has 12 U.S. employees and 300 in Bangladesh.

The company is talking with several Fortune 500 companies about doing outsourcing to Bangladesh. “We’re offering an alternative that is untapped and better in cost and quality than outsourcing to Russia, India, China, the Philippines and other established outsourcing countries,” says Khandaker.

The company is also working on a deal to develop a mobile phone payment system for people in Bangladesh who do or do not have banks. “People will be able to send and receive money or go to McDonald’s and buy a burger with their phone,” via the system, Khandaker says. Launching a product in Bangladesh is easier than in the U.S., he adds, because there aren’t many competitors.

The company is also in discussion with the Bangladesh government on several deals. It is bidding on a project to develop electronic passports.

It is also developing a project that could help entice U.S. firms to build manufacturing or distribution facilities there. “We’re working to build a high tech park in Bangladesh,” Khandaker says. “We would manage the park and lease out space. We’re putting the plan together next month.”


Knitwear on way to get a boost

Knitwear on way to get a boost

Colours of Merino wool

Colours of Merino wool

Kazi Azizul Islam

Bangladesh knitwear industry is on the way to get uplift from cotton-based produces to genuine woolen items as a leading organisation from Australia has established business relations with some leading local knitters.

The business relations will facilitate Bangladeshi knitters to produce woolen sweaters those will yield more business, extra profit and help increase manufacturers’ image abroad.

The organisation, Australian Wool Innovation, has recently grouped up with some Bangladeshi manufacturers to source Marino wool products from Bangladesh, said officials of the Bangladesh Garment Manufacturers and Exporters Association.

The officials said Bangladeshi knitwear exporters, who used to produce cotton-wear, would now be producing woolen-wear for exporting those to global market.

He said, some of the exporters had already started producing sample items for global marketing.

Originated in Australia and New Zealand, Merino wool is regarded finest and softest and economically viable variety of wool.

The AWI last week launched a programme titled ‘Out of Bangladesh’ to inform global importers that some Woolmark-accredited Bangladeshi knitters have proven performance in making fine-gauge Merino wool knitwear.

Woolmark is the globally recognised Australian accreditation that specifies pure new wool through a stringent testing for quality and performance of the finished garment.

After China and Turkey, Bangladesh has world’s third largest knitwear industry, but it so far concentrates on bulk quantity of cotton-based low-cost sweaters.

In 2008 sweater exports amounted at $1.8 billion, which was 15 per cent of Bangladesh’s entire apparel export earning.

A very few local sweater manufacturers are trying to produce high value cashmere sweaters by sourcing died wool yarns from Mongolia or India, the officials said.

The BGMEA officials said AWI already provided technical supports to their Bangladesh partners to produce sweaters with wool yarn.

‘Such tie-up will not only create market in Bangladesh for Australian wool yarn, also uplift Bangladesh’s sweater and knitwear industry,’ said Saifur Rahman, former chairman of the textile engineering department of the City University, a private university in the capital city.

Ghulam Faruq, chairman of SQ Group, one of the Woolmark licensed manufacturers, says, now importers pay between $60 and $72 for a dozen of cotton sweaters while export price for woolen sweaters ranges between $180 and $480.

‘High value cashmere and medium value Marino wool sweaters have tens of billion dollar worth market globally so Bangladesh should eye that market segment,’ said Faruq.

He added that machines generally used now by the Bangladeshi sweater manufacturers were compatible to Australian wool yarn so the industry could go for producing wool-based sweater easily.