Category Archives: Economic Growth/GDP/Exports and Foreign Trade

Will Bangladesh replace China in low-value manufacturing?

Bangladesh: a Chinese stitch-up?

Bangladesh could be this decade’s great usurper if it manages to sidle into the low-value manufacturing gap China is leaving in its wake as it moves up the value-adding ladder. And if a report by McKinsey, the consultancy, is correct the ready made garment sector is one place where Bangladesh is ready to strike.

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RMG export may cross $30b in next 3 years

RMG export may cross $30b in next 3 years
Batexpo receives $66.35m spot orders
FE report

Export earnings from country’s ready made garments (RMG) might cross $30 billion within next three calendar years, industry leaders said.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) leaders at a post-BATEXPO-2011 press briefing at BGMEA conference room in the city on Tuesday said that the sector had the capability to earn more than $30 billion subject to having moral support and sufficient infrastructural development.

The audience in the press conference was also informed that the industry has received spot orders over $66.35 million worth of readymade garments in the BATEXPO-2011 which is $1.35 million higher than that of the last year’s fair. In the BATEXPO – 2010, the country had got spot orders worth $65.00 million.

“We are happy to inform that we have succeeded in completing the fair successfully with attractive spot orders worth $66.35 million which is more than our expectation despite the recession in the developed countries,” President of BGMEA, Shafiul Islam (Mohiuddin). said.

Mr Mohiuddin also said, “The number of visitors, including buyers and their representatives, in the fair was beyond our expectation.”

A total of 175 buyers and 3015 representatives of buyers have visited the fair which is also higher than that of last year.

“Besides, a total of 15,690 visitors have visited the fair. In the last year’s BATEXPO fair, a total of 14,990 visitors had visited the fair of which 162 were buyers and 2,870 were their representatives”, the press conference was told.

The BGMEA president also said, “A good number of prospective buyers from Latin from some other new countries have visited the fair and gave orders to some of our local garments owners.”

The BGMEA leaders have emphasized on skill development, infrastructural development and development of compliance for a sustainable growth of the industry.

The sector leaders have also informed that the buyers have emphasized on arranging such fair twice a year. Besides, they have also informed the audience that the buyers have demanded several overseas fashion shows for exposure of Bangladesh garment items.

Prime Minister Sheikh Hasina inaugurated the three-day BATEXPO-2011 fair arranged by BGMEA from December 10 to 12 and leader of the opposition Khaleda Zia attended the concluding ceremony.

Vice -president of BGMEA, Siddiqur Rahman, Director of BGMEA, Atiur Rahman Dipu, chairman and director of BGMEA, Md Nasir Uddin and others were present at the press conference.

Apparel makers get $66.35m export orders from ‘BATEXPO 2011’

Apparel makers get $66.35m export orders from ‘BATEXPO 2011’

DHAKA, Dec 13 (BSS) – The country’s apparel makers got export orders worth 66.35 million US dollars from the just concluded three-day annual exposition ‘BATEXPO 2011’ that ended here on Monday (December 10).

“Bangladesh received spot orders of apparel products worth $66.35 million from foreign buyers,” Shafiul Islam Mohiuddin, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said this at a press briefing in the association’s conference room here today.

Mohiuddin said the country also received $1.58 million as stock lot orders from the mega Readymade Garment (RMG) event.

Last year, the spot and stock lot orders were worth $63.50 million and $1.50 million respectively.

Mohiuddin said as many as 15,690 people visited the fair besides 175 foreign buyers and 3,015 representatives.

BGMEA organized the Bangladesh Apparel and Textile Exposition (BATEXPO) at the Bangabandhu International Conference Centre.

Dhaka prefers economic coop deal to FTA with KL

Dhaka prefers economic coop deal to FTA with KL
Doulot Akter Mala

Dhaka will send a proposal of signing an economic cooperation agreement instead of free trade agreement (FTA) with Kuala Lumpur, considering revenue aspects and incorporating manpower export issue.

The government has estimated a significant amount of revenue loss, if FTA is signed with Malaysia.

“We are working on an economic cooperation agreement. Very soon we will send it to the Malaysian government,” commerce secretary Ghulam Hossain told the FE Tuesday before leaving to Geneva for joining the WTO (World Trade Organisation) conference.

Bangladesh will not be benefited without a service agreement with Malaysia, he added.

According to an estimation of the National Board of Revenue (NBR), if FTA is signed with Malaysia, the government will lose Tk 29.94 billion tax, of which, Tk 9.88 billion as customs revenue and Tk 20.06 billion as supplementary duty (SD).

Earlier, Malaysia sent a template with its proposal of signing FTA with Bangladesh. However, following strong opposition of the revenue board, the Ministry of Commerce has recently taken the move to send a ‘counter template’ to Malaysia, preferring signing of an economic cooperation agreement instead of FTA, a senior NBR official said.

“We have opposed the move of signing FTA with Malaysia, as a large number of importers will be diverted to Kuala Lumpur from China for importing duty-free products,” said a senior revenue board official.

Bangladesh customs will lose a significant amount of revenue, if such an agreement is signed, posing a threat to achieving the import revenue collection target, he also said.

Besides, the NBR is not in favour of signing any trade agreement with Malaysia without incorporating the manpower export issue, he added.

There is a huge trade imbalance between Bangladesh and Malaysia. Bangladesh imported goods worth $1.762 billion from Malaysia in the fiscal year 2010-11, while it exported goods worth $43.87 million in the same fiscal.

Bangladesh mainly imports edible oil, vegetable fat, machinery, mechanical equipments, electrical goods, base metal, wood and wood articles, sulphur, organic chemicals, plastic, textile and textile articles from Malaysia.

On the other hand, major export items from Bangladesh to Malaysia include knitwear, woven garments, tobacco, home textile, raw jute, jute goods, dry food, agro-products and frozen fish.

Export earning posts 17.33pc growth

Export earning posts 17.33pc growth

Country’s export earnings during the first five months (July-Nov) of the current fiscal year stood at $ 9709.75 million, showing a growth of 17.33 percent, driven by good performance of RMG, frozen food, leather and leather products, reports UNB.

The figure is 3.55 percent lower than the strategic target of $ 10067.35 million, according to the latest figures released by the Export Promotion Bureau (EPB).

The export growth in November, however, witnessed a slight growth of 2.40 percent compared to the figure of November last year fetching $ 1591.24 million, but fell 16.95 percent short of the target of $ 1915.95 million.

The total exports during the last fiscal stood at $ 22924.38 million, exceeding the target by 23.92 percent and crossing well over the annual target of $ 18,500 million.

When contacted, Exporters Association of Bangladesh (EAB) president Abdus Salam Murshedy apprehended that the export growth might slow down in the coming months due to the present economic situation in the EU and the USA.

He said the EU and the US accounted for over 80 percent of the country’s total export, but their demand in the recent times has declined so as the price.

He also cited insignificant improvement in power and energy situation, fuel price hike, high bank interest rate and liquidity crisis for which the export-oriented sectors, including RMG, cannot gain their full competitiveness.

Urging the government to give priority to the export-oriented sectors, the former BGMEA president also emphasised the need for forming an immediate task force to face the economic ‘meltdown’.

Murshedy also suggested that the task force should comprise representatives from the export-oriented sectors like RMG, leather and jute.

According to the EPB statistics for the July-November period, knitwear fetched the bulk of the earnings with $ 3997.30 million, representing a 13.14 percent growth over the same period last year while woven garments earned $ 3566.17 million, a growth of 23.64 percent.

The export of home textiles totalled $ 307.71 million with a healthy growth of 37.26 percent; footwear exports earned $ 159.60 million, primary commodities $ 485.02 million, frozen foods, including frozen fish, shrimps and others $ 306.48 million, and agricultural products $ 178.54 million.

The export trend for leather and leather products and plastic products maintained their upward trend during the July-November period.

Leather exports totalled $ 130.70 million, while leather products $ 28.89 million, cotton and cotton products together earned $ 43.06 million, plastic products $ 37.12 million while rubber exports fetched $ 4.18 million.

The country also earned $ 15.02 million from ceramic exports, and clock, watches and parts combined to earn over $ 12.84 million.

The export of jute and jute goods in July-November period declined totaling $ 410.30 million, registering a minus 5.60 percent fall. Raw jute exports fetched $ 113.66 million with a 21.65 percent decline, jute yarn and twine $ 193.24 million, jute sacks and bags $ 84.85 million and other items brought in some $ 18.55 million.

Engineering products, including iron and steel, bicycle and electronic products fetched almost $ 135.33 million.

The export of man-made filaments and staple fibres totalled $ 27.59 million, caps $ 15.17 million while other manufactured products earned the country $ 29.65 million.

The export of ships, boats and floating structures, which notched an eye catching 332.98 percent growth in the last fiscal, bagged $ 22.67 million.

The export of handicrafts totalled $ 2.08 million, while paper and paper products $ 10.85 million, furniture $ 7.89 million, chemical products amounted to $ 56.76 million, pharmaceuticals $ 18.75 million while ores, slag and ash bagged $ 13.56 million- a 50.67 percent growth during July-November.

Specialised textiles, including terry towel, notched a negative growth of 21.22 percent, earning $ 55.08 million during July-November while export of petroleum by-products accounted for just $ 128.55 million.

$32m surplus earnings from shrimp exports in 5 months

$32m surplus earnings from shrimp exports in 5 months

DHAKA, Dec 11 (BSS) – The country earned US$ 32 million surpass earnings from shrimp exports during the five months of the current fiscal leaving aside the financial constraints facing the European countries, the major destinations for Bangladesh’s shrimp export.

Bangladesh maintained the positive growth in the export earnings during the period at a time when the country’s competitors such as India and Vietnam could not perform up to the mark, thanks to the government steps for export promotion.

Bangladesh earned US$240.19 against the target of US$208m during the period registering 15 per cent growth, according to the Export Promotion Bureau (EPB) latest data.

“We got good price of shrimps in the global market. Country’s export performance is good compared to our competitors India and Vietnam,” M Kazi Shanewaz, President of Bangladesh Frozen Foods Exporters Association (BFFEA), told BSS today.

Shanewaz said the association has targeted Taka 6,000 crore earnings from frozen food exports this fiscal.

The export earnings could be increased to a large extent subject to adoption of modern technology both in fish production and processing, he added.

Referring to the natural disasters including cyclone Aila, the BFFEA chief said shrimp producers incurred huge loss of money due to the natural calamities.

The sector needs government support to offset the loss of exporters and increase production for maintaining steady growth in the years to come.

The EU is the largest market for the country’s frozen fish, followed by the USA.

Bangladesh registered a 40 percent rise in export earnings from frozen foods mainly shrimp to $625 million in fiscal 2010-11 from $445 million in the previous year, according to the EPB.

German firm comes up with export finance offer

German firm comes up with export finance offer
Author / Source : Sherpa Hossainy

Dhaka, Dec 4: While booming export is becoming Bangladesh’s bedrock for a strong economy, it comes with an irksome catch for exporters — getting the pay for shipped goods. Several international payment methods are in practice, but in most cases, cash is hard to come straightaway. In case of deferred payments, the wait could be as long as 180 days.

To give exporters a respite, a German-based trade financing company, DS-Concept Factoring (DSCF) has introduced a new concept in Bangladesh — factoring, which helps exporters get paid in a quick, secured and hassle-free way.

Factoring is a financial transaction where a business job sells its accounts receivable (invoices) to a third party (factor) at a discount. The factor provides financing to the seller of the accounts in cash, often 70-85 per cent of the purchase price of the accounts, with the balance paid upon collection. Factoring differs from a bank loan — the emphasis is on the value of the receivables, whereas a bank focuses more on the value of any borrower’s total asset.

“Our core business is to buy receivables. We buy deferred letters of credit (LCs) and change them into sight LCs,” said Alexander Pinkas, managing director of DSCF.

In a deferred LC, payment is done after a fixed number of days after shipment or presentation of prescribed documents, whereas a sight LC is payable immediately once it is presented along with necessary documents.

“A lot of export businesses are also made in contracts nowadays in Bangladesh. Importers are providing a 20 per cent down payment in advance and want to close the invoice while it’s matured, which could take 30 to 120 days,” Pinkas said.

Pinkas said small and medium companies face problems because banks don’t allow them to have back-to-back (two LCs used together to help a seller finance the purchase of equipment or services from a subcontractor) facilities.

“We take 20 per cent down payment, open a sight LC to the exporter and the remaining 80 per cent is paid from the importer after maturity.”

Describing factoring’s advantages, Pinkas said this trade tool eliminates nagging negotiations about credit periods with suppliers, the administrative efforts to open LCs and carrying out documentary collections. “Exporters immediately receive 80 per cent of the invoice value after shipment has been made and the remaining 20 per cent balance on maturity of the invoice. This enables exporters to receive discounts from suppliers as they have sufficient liquidity,” he said.

After making a contract with the exporter, DSCF makes a credit worthiness check of the importer through Euler Hermes, one of the biggest backup insurance companies worldwide, who has access to profit and loss statements as well as yearly bank statements of the companies.

“We provide transparency and security for the exporters as they know if they are exposed to risk or not. We guarantee 100 per cent payment even if the importer goes bankrupt,” Pinkas said. He said DSCF clients are also connected to its legal department in case there is any dispute. “When we buy the receivables the exporter is released from the deferred payment as we pay at sight. Whenever the importer goes bankrupt we will not collect the money from the exporter as payment is covered through Euler Hermes.”

DSCF, headquartered in Mönchengladbach in Germany, was founded in 2000 and presence in the USA, Turkey, Bulgaria, Egypt, Pakistan and the UAE. The Bangladesh operation started in 2008 and DSCF is now doing business with sixteen companies.

“Our real operations started two years ago, and up till now we have provided $15 million in credit,” he said.

Pinkas said DSCF has chosen Bangladesh because it is an emerging market, where exports are booming and more exporters need intelligent cash solutions. Currently DSCF is financing shrimp and garments sector as two stalwarts of exports in Bangladesh. Besides the company is financing bicycle export (German-Bangla bike) and some other buying houses such as ZXY Ltd. Recently DSCF also signed a contract with a German importer who delivers goods to Karstadt, a big chain store in Germany.

However, Pinkas said DSCF doesn’t have any priority while financing exports. “Every export is possible to finance.

It could be porcelain, tableware or food, wherever there is deferred payment, we can take care of it.” DSCF starts providing service from $50,000 up to $40-50 million, which means besides small and medium exporters big corporations can also avail credit from us, he said.

Factoring is still a new concept in international trade and very new in Bangladesh, Pinkas said. “Factoring as a trade finance tool immerged in the USA and it is very common there. But in Bangladesh we are the only factoring company.” Pinkas believes there is a great chance for factoring business to flourish in Bangladesh but the unfamiliarity with the concept poses a big hurdle. Bangladesh has a lot of potential for this business but sometimes we face a lack of knowledge about international trade, he said.

Despite being a fairly new concept, factoring has been in existence for a long time in some other shape or form in the world of trade.

The DSCF managing director opined that some export finance policies and practices are holding back exports from Bangladesh in a certain way.

“Bangladesh is still one of the last countries where payment of exports is requested through letter of credit. Some policies have to be eased for exports to register more growth,” he said.