Monthly Archives: January 2010

Economy shows signs of pick-up

Economy shows signs of pick-up
High-profile meeting reviews indicators today
Rejaul Karim Byron

The rise in collection of VAT and imports of capital machinery and industrial raw materials in the first six months this fiscal year showed clear signs that increased trade and commerce and investments are helping domestic economy pick up, officials say.

Data shows July-December earnings from value-added tax have marked 24 percent growth, while opening of letters of credit for the imports of capital machinery has grown by 28 percent and raw materials by 22 percent. However, these indicators were negative a month back.

This latest macroeconomic situation comes up for review today at a high-profile meeting with Prime Minister Sheikh Hasina in the chair, according to a finance ministry official.

The ministry will also report it to parliament later.

“There are clear signs that Bangladesh economy is picking up,” the official told The Daily Star, pointing to the necessity of adequate supply of gas and power to make such trends sustainable.

Meantime, revenue recorded 18 percent growth against the overall target of 15 percent.

According to the tax administration, increased VAT collection is the major contributor to such growth, which also indicates brisk economic activities.

Private sector credit, another indicator of the economy, posted 16.73 percent growth in November last. The June growth was 14.62 percent.

Today’s review meeting will also be informed that gross domestic product growth will be between 5.5 and 6 percent, despite global recession fallout.

Also, the finance ministry apprise the crucial sitting of the contributions of the sectors like agriculture, industries and services to the GDP.

The government expects that average inflation will not cross 6.6 percent, although it marked a slight upward trend in recent times.


Top DHL official speaks on efficiency of Bangladesh in trading goods

On course to a logistics hub
Top DHL official speaks on efficiency of Bangladesh in trading goods

Amadou Diallo

Sohel Parvez

Bangladesh is moving upward in the world ranking in logistics, and so is the confidence of the global logistics service providers operating here.

Bangladesh is an important market worldwide, says Amadou Diallo, chief executive of South Asia Pacific region of DHL Global Forwarding, one of the four divisions of DHL, the world’s leading logistics provider.

“If you consider the size of the market in Bangladesh and benchmark it, the country has almost double the population of Germany,” Diallo says in an interview with The Daily Star.

Bangladesh has improved in all dimensions in terms of air and sea freight, and customs operation.

Out of 155 countries, Bangladesh has emerged as an over-performing country in providing efficiency in trading goods.

Its ranking in the global Logistics Performance Index (LPI) is now 79, much above other South Asian countries such as Pakistan, Sri Lanka, Nepal, Bhutan and the Maldives.

In the LPI by the World Bank, Bangladesh retains the second position in South Asia after India.

Also, improved logistics efficiency is in the pipeline as the country moves to scale up infrastructure by investing in road network to join other Asian countries and build deep-sea port.

Bangladesh registered over 5 percent growth in annual output in the past decade.

“It’s all going to uplift Bangladesh,” says Diallo.

DHL, which was engaged in offering logistics services to local customers through representative since 1984, unveiled its plan last week to expand its reach in Bangladesh’s logistics market that is growing on a steady rise in exports and imports every year.

DHL teamed up with a local company — Trade Clippers Ltd.

The giant in global logistics service sector says it will invest $10 million in the next three to five years to upgrade its warehousing and cargo handling facilities, develop fashion and logistics industry and improve information system.

Diallo, the Senegal-born executive, says the entry of DHL Global Forwarding will enable Bangladesh to become more logistic-efficient.

“As we are investing and putting in place all the tools that we have and trained people, it will help Bangladesh proclaim to the world that it has the supply chain solutions that are comparable to those existing in the United States, Germany or any other places,” he says.

“We think that we can gain 10 percent efficiency in terms of logistics cost because barriers have been broken down.”

It is a few years back when DHL decided to invest in Bangladesh, one of the emerging markets because of its consistent economic growth, supported by increased exports and remittance earning.

In the last one decade, per capita GDP (gross domestic product) as well as consumption in the country has doubled, despite having a growing population — now around 150 million.

With all these factors, Bangladesh is becoming more attractive to foreign investors.

“If you ask the investment bankers, they will tell you that a lot of investors are planning to come for investing in Bangladesh,” the DHL top official says.

Diallo says DHL wants to organise itself in advance to understand the supply solution needs of both local and foreign investors within and beyond Bangladesh.

“We think if we want to help emerging markets grow and profit from those markets, we need to be there at the beginning than at the end,” he says. “We think this is the right time to come to Bangladesh.”

The DHL executive says Bangladesh’s main export earner apparel industry offers huge scope for logistics service sector.

The government move to link Bangladesh with the other Asian countries through the Asian highway, and allow India to use Bangladesh’s seaport also offers potential for a good logistic business in future.

“India has decided to use Bangladesh as a hub. So we, as a logistic company, will really be not so smart if we decide that we won’t consider using Bangladesh as a hub,” Diallo says.

“I think Bangladesh is a natural hub even for distribution from India to India,” he adds.

“Given the infrastructure that is put in place and more investments that are taking place in green areas, we think that in terms of effective supply chain, Bangladesh certainly will become a better hub.”

RMG looks to good time

RMG looks to good time

A worker runs a machine-check on garment products for needles at a factory. In the July-November period of the current fiscal year, Bangladesh exported woven garments worth $2.13 billion and knitwear items of $2.59 billion, with the share of garments in national exports increasing. Photo: STAR

Refayet Ullah Mirdha

The contribution of readymade garment (RMG) to the national export increases with the rebound of orders from international buyers following a recovery in the global economy, according to trade data of the Export Promotion Bureau.

The share of RMG products reached 77.17 percent in the July-November period from 77.15 percent in July-October of the current fiscal year.

During the July-November period, the country exported woven garments worth $2.13 billion and knitwear items of $2.59 billion totalling $4.72 billion.

The share of woven garments in the total exports of the country was 34.84 percent and that of knitwear (including sweater) was 42.34 percent, the data said.

During the five-month period, the total national export was worth $6.10 billion.

In fiscal 2008-09 the RMG contribution was 79.33 percent, while woven segment added 38.02 percent and knitwear items 41.30 percent.

Bangladesh exported woven garments worth $5.92 billion and knitwear worth $6.43 billion in 2008-09, registering growths of 14.54 percent and 16.48 percent respectively compared to the previous year.

Shahadat Hossain Kiron, managing director of Dekko Group, said the flow of orders from the international buyers was higher this winter compared to the last season as the global economy is recovering from the recession.

“The number of orders outpaced the capacity of my factories,” Kiron said.

Chairman and Managing Director of SQ Group Ghulam Faruque said the situation is improving as the buyers are placing more orders.

“The trend of order placement indicates that the country’s apparel export will go to its previous high level at the end of the year,” he said. But the perennial problem of offering low prices by the buyers remained the same, he added.

The sign of recovery in the RMG export is also seen in the increasing trend of consumption of Utilisation Declaration (UD) by the exporters from their respective trade bodies.

Bangladesh had been experiencing a negative growth in UD consumption for the last few months because of low orders following the global recession.

The UD consumption improved in January by 4.0-5.0 percent compared to the same month last year, according to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data.

“But the concerns for Bangladesh are the sudden price hike of cotton by 25 percent on international market and yarn price rise on the local market by 30 percent as the Free on Board (FoB) value remained static,” said BGMEA President Abdus Salam Murshedy.

If a commodity is quoted on an FoB basis it means the cost of the goods and their loading on to a ship are included but not the insurance or freight charges.

He said the exporters’ cost increased as they have to send the goods by air to maintain the lead-time.

Recently the exporters are continuously failing to maintain the lead-time due to failure in on-time production caused by low gas pressure in the plants, he said.

Dutch govt eager to work for expansion of local shipbuilding industry

Dutch govt eager to work for expansion of local shipbuilding industry

BSS, Dhaka

The Netherlands yesterday expressed its keen interest to work together with Bangladesh for expansion of shipbuilding industry here at a time when the world’s shipbuilding industry faces setback due to the financial crisis.

The interest was shown at a ‘matchmaking seminar’ for ‘Shipbuilding Sector of Bangladesh and the Netherlands’ at a city hotel here, said a Dutch Embassy press release.

Ananda Shipyard and Slipways Ltd (ASSL) and the Netherlands Embassy jointly organised the seminar backed by Holland Marine Equipment, a Dutch business group.

Charge d’Affairs of the Netherlands embassy Doris Voorbraak spoke on the occasion. ASSL chairman Dr. Abdullahel Bari delivered the welcome speech on the occasion, joined by Dutch shipbuilding companies.

The seminar was aimed at introducing the Dutch companies to the Bangladeshi shipbuilding companies and exploring the area of cooperation.

Participating Dutch companies were Vuyk Engineering Groningen, Dagin Marine Technology, Heatmaster, Rubber Design, Winteb, Eurovalve, Neddeck Marine, HRP and Gea Bloksma.

In her speech, Voorbraak said the world’s shipbuilding industry might appear gloomy as orders are cancelled and the overall trade volume is down due to the global financial meltdown.

Bangladesh is perceived 15 percent cheaper than its main components such as Vietnam mainly due to low labour cost, she said.

The Dutch companies are always eager to identify new business opportunities abroad, especially in the shipbuilding industry, which is strongly export focused, Voorbraak said.

She said the Dutch have a vast experience in shipbuilding sector which could be shared with Bangladesh for benefiting equally.

Bangladesh ‘road show’ in New York to attract FDI in power sector

Bangladesh ‘road show’ in New York to attract FDI in power sector
BSS, Dhaka

A two-day ‘road show’ of Bangladesh for attracting the foreign direct investment (FDI) to the power and energy sector started at Marriott Marquise Hotel in New York yesterday.

Bangladesh organized the show titled “Bangladesh Investment Conference and Road Show on Power and Energy Projects” for encouraging the participation of the private sector in the power and energy sector.

A total of 160 representatives from 78 organizations, including Morgan Stanley, Olstat, ARC, Caterpillar, Konco Philips, GoaldStar Energy and HSBC, are participating in the show, according to an official handout. One-to-one meetings have been organized after the main presentation. This road show has been organized for attracting the FDI for setting up new power plants with the capacity of 4,000 megawatts (MWs) of electricity and constructing an LNG terminal.

Adviser to the Prime Minister on Power Dr Toufiq-e-Elahi, Bir Bikram, was present at the function as the chief guest.

He said there are enormous investment potentials in Bangladesh.

State Minister for Power, Energy and Mineral Resources Mohammad Enamul Haque said Bangladesh has been maintaining economic stability for a last few years and it will be more dynamic in future.

Bangladesh Ambassador to the US Akramul Kader delivered the welcome address, while Chairman of the Board of Investment Dr SA Samad presented a paper titled “Macro Economic Stability and Investment Prospects”.

Energy Secretary Md Abul Kalam Azad presented a paper on “Power Sector of Bangladesh: Policy issues,” PDB Chairman ASM Alamgir Kabir presented “Power Sector of Bangladesh: General Expansion Plan, Private Participation and New BOO Projects” and Petrobangla Chairman Dr Hossain Mansur presented “LNG Terminal at Port City Chittagong in Bangladesh.”

Chairman of Parliamentary Standing Committee on Power, Energy and Mineral Resources Ministry Abdullah al Islam Jacob, Deputy Governor of Bangladesh Bank Ziaul Hasan Siddiqui, BPC’s Chairman Anwarul Karim, member of New York State Senate MalCom Smith, US- Bangladesh Partners President Aziz Ahmed, US-Pan Pacific Chamber of Commerce President Sevio Chan, World Bank’s Lead Energy Specialist Mac Cosgrov Davis and US State Department Representative Elena spoke.

Trust Bank to go big on biogas fund

Trust Bank to go big on biogas fund
Sajjadur Rahman

Trust Bank, a third generation private commercial bank, will fund for the first time biogas plants on a large scale to help rural people get renewable energy, which will ultimately make them more economically viable, said the bank’s chief executive.

Initially, under a pilot project the bank has allocated Tk 5 crore for the programme and the amount will go up on the basis of the feedback it receives.

“If we succeed, then such projects will proliferate,” Shah S Sarwar, managing director, told The Daily Star.

The programme will formally be inaugurated on February 8 in Manikganj district with handing over cheques to 16 beneficiaries, Tk 3 lakh for each.

A beneficiary will buy four cows with the money.

The Trust Bank MD firmly believes these biogas plants will be able to provide livestock farmers with a sustainable cooking fuel and potent organic fertiliser. This will help face power and gas crisis by using eco-friendly technology, Sarwar said.

The bank has taken up the project to avail of the refinancing facility introduced by Bangladesh Bank in August last year.

The central bank has formed a Tk 200 crore revolving fund to provide loans at low interest rate for setting up solar energy, biogas and effluent treatment plants through the commercial banks.

BB will charge 5 percent interest rates on commercial banks that will take 9 percent from the customers.

Biogas practices in poor African and Asian countries are on the rise, mainly with the help of the donor and nongovernmental organisations’ financial supports. Some NGOs in Bangladesh are also providing funds for the rural folk to implement biogas plants.

According to bankers, commercial banks took least interest in stepping into this area because of what they said high cost of delivery and supervisory role.

Trust Bank has made a strategic alliance with Enterprise Development Company Limited (EDCL) to reduce its costs for the loans.

“It’s a combination of commercial and social institutions to make the delivery easy,” said Sarwar.

The EDCL will help borrowers develop their business and commercialisation of biogas.

The move will also help the bank reach out to millions of the rural people who have less access to banking, Sarwar said.

BB expects remittance income to cross $11b mark this fiscal

BB expects remittance income to cross $11b mark this fiscal
Siddique Islam

Bangladesh Bank expects the inward remittance to record more than US$ 11 billion by the end of the current fiscal as a special move has already been made to increase its flow from different parts of the world.

“We expect that the inflow of remittances may cross $11 billion mark by the end of this fiscal,” a senior official of the Bangladesh Bank (BB) told the FE, adding that the central bank had estimated the figure on the basis of the last six months flow of remittances.

Bangladesh received $5.535 billion during the July-December period of fiscal 2009-10, registering a 22.89 per cent growth over the same period of the previous fiscal, according to the central bank statistics.

The latest figure shows that despite the slowdown of overseas jobs, inflow of remittance has maintained a robust growth — a continuation of the trend in last fiscal year when remittance grew 22.41 per cent, the BB officials said.

“We expect the upward trend of inward remittances to continue in the near future,” another BB official said, adding that the stable exchange rate of the local currency against the US dollar was also contributing to higher flow of inward remittances.

The central bank earlier took a series of measures to encourage expatriate Bangladeshis to send their hard earned money through formal banking channel instead of the illegal “hundi” system to boost the country’s foreign exchange reserves.

As part of the measures, the BB issued 26 more licences to 14 commercial banks recently for setting up exchange houses in different parts of the world aiming at expediting remittance inflow.

The central bank has, so far, given approval to establish 295 exchange houses and set up 840 drawing arrangements abroad to boost flow of remittance through formal channels.

Besides, the BB has given permissions to 13 both local and foreign commercial banks to disburse remittances using networks of 14 non-governmental organisations (NGOs.), including BRAC and ASA, across the country.

Four state-run commercial banks and dozens of private commercial banks have also stepped up efforts to increase remittance flow from the Middle East, the United Kingdom, Japan, Canada, Australia, Malaysia, Singapore, Italy and the United States.

“We’ve a plan to establish a good number of exchange houses at Canada, the United States, Europe, Australia and the countries in the Meddle East to speed up remittances from the counties using official channel,” Managing Director and Chief Executive Officer of the Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed told the FE Saturday.

He also said the board of directors of the state-owned bank has already given permission for setting up the exchange houses aboard. “We’re seeking permission from the central bank in this connection,” he added.

“Our efforts will continue to establish new contacts with overseas exchange houses so that our overseas workers can find it easier to send money back home,” a senior official of a private commercial bank said.

Some banks are trying to expand their network to expedite the delivery of remittances to the beneficiaries across the country, he added.