Monthly Archives: March 2011

Five more global connectivity cables

Five more global connectivity cables

Abdullah Mamun

The government will provide licences for five more international connectivity cables — two submarine and three terrestrial — in the private sector.

The telecom ministry has recently taken the decision, as internet-based services are often disrupted with the country’s lone undersea cable, said Sunil Kanti Bose, secretary to the telecommunications ministry.

The cables will facilitate the growth of information and communication technology (ICT) and telecom sector through uninterrupted telecommunication services.

Another ministry official said the demand for bandwidth will rise in every sector in Bangladesh, which now uses 17 gigabyte of its 44 gigabyte bandwidth capacity, as the government aims to bring the whole country under fast internet connectivity.

Moreover, the Access to Information (A2I) project of the Prime Minister’s Office has initiated a move to connect the country’s 1.5 lakh to two lakh offices.

Telecom experts said the demand will also peak up when the government would issue third generation (3G) mobile licences.

Currently, Bangladesh subscribes to one submarine cable — SEMEWE-4 (South East Asia Middle East Western Europe) — without any backup support.

The new five licences would be issued under guideline prepared by the Bangladesh Telecommunication Regulatory Commission (BTRC).

The licences would be issued to operators to build, operate and maintain high capacity optical fibre cable system to connect Bangladesh internationally, according to BTRC officials.

The licensees will be able to sell or lease their capacity to the International Gateway (IGW), International Internet Gateway (IIG), and International Private Leased Circuit (IPLC) users.

Monwar Hossain, managing director of Bangladesh Submarine Cable Company Ltd that handles the lone undersea cable from Cox’s Bazar to Dhaka, said the licences would be awarded on the basis of the “expression of interest” of the applicants.

Arif Al Islam, chief executive officer of Summit Communications Ltd, said, if the country is connected through terrestrial cables, the connectivity with the neighboring countries would be better.

According to the industry people, there are three terrestrial cables on India-Bangladesh boarders in Jessore, Sylhet-Comilla and Kurigram.

“We need multiple connectivity with international fibre optic cables whether it is submarine or terrestrial,” said Sumon Ahmed Subir, managing director of BDCOM, an internet service provider.

“Also, there should not be any wastage of bandwidth.”


Accessories Growth tied to RMG

Ready Made Garments
Accessories Growth tied to RMG

Refayet Ullah Mirdha

Even for a local outfitter, making a dress is not just about taking measurements or cutting and stitching fabric. There are a lot of nitty-gritty elements that are needed to deliver a finished garment.

Large-scale manufacturers spend 50 percent on fabric and 18 percent on accessories to make a finished garment. In the readymade garments sector, the items other than fabrics are called ‘accessories’.

Accessories are as important as the fabric itself, manufacturers say. The garment accessories trade, therefore, has flourished worldwide along with the RMG sector, insiders say.

In Bangladesh, the garments sector grew rapidly over the last several years for a lower cost of production, but growth of the accessories industry crystallised later.

In the beginning, Bangladesh used to import almost all kinds of garment accessories. But as local companies thrived, dependency on imported accessories gradually subsided.

The country initially imported accessories from countries like China, Hong Kong, Singapore, Japan and India, spending a large portion of profits.

But now, the country is almost self-sufficient in garment accessory manufacturing, as the ancillary industries blossomed and flourished here, driven by high demand.

Zippers, buttons, labels, hooks, hangers, elastic bands, thread, backboards, butterfly pins, clips, collar stays, collarbones and cartons are the major garment accessories produced in Bangladesh.

The use of high-end accessories also adds value to the garment. As a result, large manufacturers and exporters try to use sophisticated accessories to pull in better prices from international buyers.

The import of accessories declined sharply as many local companies have developed the capacity to supply, said Shamim Iqbal, chairman of KDS Accessories, a leading accessory maker.

The accessory market is dominated by multinational companies operating in Bangladesh, because in majority cases, garment buyers prefer accessories from them over the locally available items, Iqbal said.

“The buyers prefer accessories from the multinational companies on the grounds of quality, although local companies have also stepped up to meet quality standards,” he adds.

The local accessories suppliers, however, dominate the low-end RMG segment, because the low-end manufacturers cannot pay big bucks for almost the same quality of accessories just because they carry the names of global giants, he says.

KDS Accessories, a Chittagong based factory, has set a target to export accessories worth $36 million in 2011, which was $24 million for 2010. He says the group expanded its production capacity recently to meet high demand.

Many small and medium accessory industries have grown here over the years, particularly to meet high demand from low-end garment makers, said Shafiullah Chowdhury, an adviser to Bangladesh Corrugated Carton Accessories Manufacturers and Exporters Association.

Two important industries — accessories and backward linkage — have flourished in Bangladesh to support the garments sector, he says.

“The contribution of accessories exports will be to the tune of $2 billion of the $16 billion garment export figures,” he says.

Local accessory makers are going for fully automated production systems from semi-automation modes to meet demand from international buyers, he says.

In January, the association set up a laboratory to test accessories at its office, said Chowdhury. Earlier, exporters had to have various accessories tested from Hong Kong, but now they can have it done in Bangladesh, he adds.

Bangladesh could explore Japanese apparel market

Ready Made Garments
From basic to upscale
Head of global accessory maker says Bangladesh could explore Japanese apparel market

Refayet Ullah Mirdha

Bangladesh should shift focus to heavy-duty or high-end garment items from basic products, to be more globally competitive in apparels, said a leading Japanese garment accessory maker.

“If the country does not shift focus to high-end garment items, other countries may take the lead on competition for price comparison,” says Hiroaki Nakamura, the outgoing president and chief executive of YKK Bangladesh Ltd.

Bangladesh is a lucrative place for the accessory business for the growing garments sector, he says.

Like YKK, many local factories have invested in the accessories business in Bangladesh. As a result, nearly 80 percent of the garment accessories in demand are available in the country at present, he says.

“Still, Bangladesh imports some rare and sophisticated accessories from other countries to meet demand,” Nakamura told The Daily Star recently in an interview.

YKK began production in its plant at the Dhaka Export Processing Zone (DEPZ) in 2002 and the company was registered in 2000 with Board of Investment (BoI).

Nakamura says YKK is going to expand operations in Bangladesh as demand of garment accessories is increasing with high growth in garment exports.

He says the company has already invested $40 million on the new plant inside DEPZ to produce zippers, buttons and hooks.

Construction of the new plant began in January this year, while production there will start in November, he says. A total of 1,000 workers are employed at YKK in Bangladesh, he adds.

“The company’s turnover stood at $57 million in 2010, which was only $5 million in 2002.”

“So, you can see the growth of business in Bangladesh. It is very high,” Nakamura says.

YKK is the largest single garment accessory maker worldwide. The group has operations in 71 countries,” he adds.

The company’s total turnover in Bangladesh will reach $70 million in 2011, if production starts in November of this year, he says.

On Japanese investment in Bangladesh and apparel exports to Japan, he says the arrival of Japanese investors in Bangladesh has increased over the last few years for the Japan government’s adaptation of the China plus one investment policy in 2008.

Currently, Japanese investors are shifting their investment focus in countries like Bangladesh, Cambodia, Vietnam and other nearby countries to adopt the policy.

“We are not confined to China now,” he says. Nakamura says local manufacturers could study the Japanese garments market over the last three years, because exports from Bangladesh to Japan are soaring. The local exporters could feel the pulse of the Japanese customers, he says.

Japanese customers are quality conscious, and as a result, many manufacturers do not want to tie up with the Japanese buyers, he adds.

The Japanese government was scheduled to relax the rules of origin (RoO) for knitwear products for the least developed countries (LDCs) from April 1, but it might not take place for the devastating tsunami and earthquake this month, he adds.

If the government relaxes the RoO, the export of knitwear products from Bangladesh will increase significantly as the country is a member of the LDCs.

Bapex enters new era of 3D seismic survey

Bapex enters new era of 3D seismic survey
Local engineers survey 700 sqKm areas a year at Rasidpur
Shamim Jahangir

State-owned company Bapex has entered into a new era by adopting 3-D seismic technology for the first time to explore energy and mineral resources.

Through adopting 3-D seismic survey, the officials of Bapex have set a record of 724 shots a day at Rasidpur gas field on January 29 whereas the record was about 500 plus a day by a multinational company.

The local engineers have already collected data at Rasidpur field and processing of the data is on progress, sources said.

After processing data at the field, officials will interpret those next month to confirm additional reserve of gas in the Rashidpur gas field.

Even after start of 3-D seismic survey, Bapex will require additional manpower to carry out data acquisition process more accurately, physicist Md Rafiqul Islam, a member of Bapex 3-D team told daily sun.

State minister for power and energy Muhammed Enamul Huq said the 3-D seismic survey will help find out accurate location of the gas reserve for reducing the drilling costs.

“The adaptation of the 3-D technology by local engineers would help us assess gas reserve here,” he said.

Petrobangla chairman Prof Hossain Monsur said the 3-D seismic survey is more scientific than that of 2-D survey as it helps perfectly assess the location of energy reserve.

Mortuza Ahmed Faruque, managing director of BAPEX said conducting deep drilling in state-owned gas fields would be possible if we have 3-D seismic survey system.

“We will use our own technology in the small gas fields to explore additional gas as the multinational companies are reluctant to conduct drilling in those fields,” he said.

He said the multinational companies conduct 3-D seismic surveys for three to four months a year whereas local engineers worked eight to nine months in a year.

“Foreign engineers have conducted 3-D seismic survey at 300 square kilometers (sqKm) in a year whereas the local experts conducted the survey in nearly 700 sqKm a year, he added.

Sylhet Gas Field Filed Limited is now conducting 3D seismic survey at 705 sqKm the Rashidpur, Kailash Tila and Sylhet gas fields.

The processing and interpretation of data of 325 sqKm of Rashidpur gas field will be completed by April this year while the location of the new well will be located by May next, officials said.

Besides, collection of data at 190 sqKm areas of Kailash Tila field is under process and data processing and interpretation will be completed by September this year and the location of the new well will be identified by October next, sources said.

Sylhet gas field authority is also preparing to conduct data acquisition, processing and interpretation in an area of 190 sqKm.

Bangladesh Gas Filed Company Limited (BGFCL), however, is preparing to start data acquisition at 210 sqKm of Bakharabad Gas filed on October next while 335 sqKm of Titas Gas filed on November next, Meherul Hasan, party chief of 3D seismic party, Geophysical Division of Bapex told reporters.

Earlier, total six 3-D surveys were conducted in the country by foreign engineers.

The Petrobangla invested multimillion dollars to conduct 3-D survey by foreign engineers, an official of Bapex told daily sun, adding, “By adopting the 3-D seismic survey by the local engineers the government has saved huge foreign currency.”

Govt to take foreign coalmines on lease to feed local power plants

Govt to take foreign coalmines on lease to feed local power plants
M Azizur Rahman

The government has entrusted the state-owned Power Development Board (PDB) to search out potential coalmines abroad, arrange their taking on lease and bring in the mineral resource for electricity generation within the country, a top government official said.

“We have started looking for coalmines abroad to explore the possibility of taking those under long-term lease agreements as we will require a large quantity of coal,” PDB Chairman ASM Alamgir Kabir told the FE Friday.

He said the government has a plan to generate around 4,500 megawatt (mw) of coal-fired electricity by 2015.

The tender evaluation of four coal-based power plants to generate around 1,900 mw of electricity is now in progress, he said.

Installation process of a 1,320mw joint venture coal-based power plant by PDB and India’s National Thermal Power Corporation (NTPC) has also progressed well, while a fresh tender will be floated to build another 1,320mw coal-based power plant, said the PDB chairman.

Besides, Japan International Cooperation Agency (JICA) is now at the last stage of finalising a coal sector master plan to help streamline the use of coal for domestic electricity generation.

Besides, the government has a mega plan to generate over 10,000 mw of electricity from coal-based power plants by 2021 under its ‘Vision 2021′.

Officials said the country will require over 50,000 tonnes of coal daily for electricity generation from the planned coal-based power plants from 2015 and the requirement will double by 2021.

But the country’s local coal production from the state-owned Barapukuria coalmine stands at a meagre amount of 3,000 tonnes a day and the production is also disrupted very often due to periodic workers’ unrest.

The idea of taking foreign coalmines on lease was first initiated by the Barapukuria Coal Mining Company Ltd (BCMCL) several months ago.

“In clear appreciation of the need for meeting the fast-growing demand for coal to generate electricity, we have suggested to the energy ministry to consider taking some overseas coalmines under lease arrangements, to meet the future requirements,” the managing director of the country’s loan operational coalmine in Barapukuria, Md Quamruzzaman told the FE Friday.

The BCMCL has proposed for coal outsourcing to ensure that electricity generation from the planned coal-based power plants is not hampered due to any coal shortage.

After getting the proposal, the energy ministry has taken the initiative to search out potential coalmines abroad for possible “leasing” arrangements with the PDB, which will ultimately purchase coal for electricity generation.

Officials said the government is eyeing coalmines of the Philippines, Indonesia and South Africa for taking ‘lease’.

Energy experts have endorsed the government plan about outsourcing coal supplies as a short-term solution to meet the immediate demand, especially when extraction of coal from domestic mines is facing problems.

“The government can rely on foreign coal to generate electricity up to 5,000 mw up to the maximum,” said Bangladesh University of Engineering and Technology (BUET) Professor Ijaz Hossain.

But to generate electricity beyond that capacity, the government will have to explore and extract the coal from the local mines, he said.

Country’s infrastructure especially, the port facility and transportation, will not make it possible to handle a heavy quantity of imported coal, he noted.

Besides, it will always be cost-effective to use local coal, he added.

The country has around 3.0 billion tonnes of coal reserves in five discovered coalmines.

Nitol-Niloy to set up joint venture poultry complex

Nitol-Niloy to set up joint venture poultry complex

Abdul Musabbir Ahmed, managing director of Nitol-Niloy, and Harish Bagla, managing director of India’s Amrit Group of Companies, exchanging documents after signing an agreement at a city hotel yesterday. Chairman of Nitol-Niloy Group Abdul Matlub Ahmad (left-front), and vice chairman Selima Matlub Ahmad are also seen.

Staff Correspondent

Nitol-Niloy Group will set up a poultry industry complex in the country, jointly with India’s Amrit Group of Companies, in a major move to meet the increasing demand for poultry and hatcheries.

The joint venture deal for investing around US$ 10 million was signed between the two companies at a local hotel yesterday.

Managing directors of the both sides—Abdul Musabbir Ahmed of Nitol-Niloy, and his Indian counterpart Harish Bagla inked the agreement.

Chairman of Nitol-Niloy Group Abdul Matlub Ahmad, and vice chairman Selima Matlub Ahmad were also present at the signing ceremony.

The investment plan includes feed manufacturing, breeding farm, hatchery, commercial farming and chicken processing, though it is being started with the installation of a modern feed plant in the northern part of the country. The full investment plan is likely to take two to three years.

The high-ups of the two companies said the investment will generate good nutrition at an affordable price to the common people in a hygienic way. It would also give a breakthrough to the local poultry industry, they hoped.

Amrit Group, one of the largest players in the animal feed industry, annually produces 7,00,000 tonnes of poultry, cattle and fish feed.

It will be a new move for Nitol-Niloy as they are already engaged in automobile, cement, paper, insurance and finance sectors.

Local clothing brands make their mark

Local clothing brands make their mark

Customers shuffle through items on display at a brand store in Dhaka.

Mir Fazla Rabby

Clothing brands in Bangladesh are drawing in a wider span of consumers over the last decade as they continue to offer fashion-rich items that conform to native tastes.

The affordable pricing range of the clothes has also been a key factor for the local brands’ growing popularity, especially among the youth.

Khalid Mahmood Khan, director of Kay Kraft, an emerging local brand, said they stepped into the market to change the cliché that rich people alone dominate clothing fashion.

“We focused on serving the middle-income groups of people with fashion-rich local clothes.”

Khan said they have experienced double-digit sales growth on an average over the last decade, and that indicates the increasing popularity of the local clothes — weaved, stitched, printed and embroidered in Bangladesh.

Kay Kraft currently has 15 outlets, including a recent one in Chittagong. The fashion house is also planning to open an outlet in Montreal, Canada, to satisfy the growing number of consumers abroad.

Cat’s Eye, another clothing brand that sells mostly menswear, saw 10-15 percent sales growth on an average in the last decade, said Ashraf Uddin Shiplu, the brand’s executive director.

The fashion house produced four lakh pieces of clothes last year, he said. Now, one of the biggest clothing brands, Cats Eye’s 37-outlet network covers five district headquarters, including Chittagong, Khulna, Sylhet, Cox’s Bazar and Bogra, in addition to the capital.

Local clothing brands, like Cat’s Eye, Westecs, and Artisti, produce goods with imported fabrics. But brands like Kay Kraft, Aarong and Banglar Mela are different, as they completely depend on local fabrics.

Aarong engages some 37,000 rural artisans and handicrafts producers to produce its fabrics, according to a statement by the leading fashion house. Last year, Aarong’s consumption stood at about three million yards of hand-woven fabric.

Aarong’s sales in 2010 stood at about Tk 339.5 crore, says Q Pushpita Alam, programme manager (communications). Currently, the fashion house employs 2,113 regular people, she added.

Bangladeshi brands that import fabrics hope to go global and plan to open outlets abroad. Cat’s Eye also mulls exporting its produces, and an outlet will be opened soon in the West, said the Cat’s Eye director.

On the other hand, Banglar Mela, a fashion house that depends on local fabrics, has no intention to become an international brand, other than expanding its market in Bangladesh, said Emdad Hoque, product development designer and director of the brand.

In addition to expanding their markets, Bangladeshi clothing brands encounter various other problems, mostly associated with taxing.

Shiplu said the government increased the VAT (value-added tax) on imported fabric from 1.5 percent to 5 percent in June 2010, without any prior notice, which put them in serious trouble.

Moreover, customs duty on imported fabric is around 89 percent, he said.

“If the government allows us to buy fabrics produced by Bangladeshi names, like Beximco or Monno Fabric, we will be able to serve our clientele better.”

But according to government restrictions, the garment factories cannot sell more than about three percent of its fabric inside the country and must export the rest, he said.

The local fashion houses, to share their internal and external problems, have recently decided to form a platform — Fashion Entrepreneurs Association of Bangladesh (Fahsion Udyog in Bangla).

Khan said primarily, 56 fashion houses are members of the association. “Fashion Udyog will soon come out after the commerce ministry accepts the application submitted this month, and related modalities are finished.”