Trade war threatens global economy

/0 Comments/in /by

Trade war threatens global economy

Experts tell media workshop in China

Mir Mostafizur Rahaman, from Boao Island, Hinan, China

Rising oil prices, high debt level, trade war and low productivity pose serious threat to the world economy, experts warned on Monday.

They said Asian countries need to be united to face this looming uncertainty.

“Oil prices may shoot up to $ 100 per barrel by 2020 and the global commodity market will also be volatile,” Zhang Yuyan, director of the Institute of World Economic and Politics, Chinese Academy of Social Sciences, said.

His comments came at a panel discussion on Asian economy during the inauguration of the Asia Media Cooperation Workshop held at the State Guest House in Boao Island.

Zhang said the global debt level is increasing and has increased by $ 75 trillion in the last 10 years.

This rise in debt level dwarfed the global GDP, which rose by only $ 24 trillion during the same period, he noted.

He argued that rising fluctuations in exchange rates and volatility in property prices were also matters of concern for the global economy.

In developing countries like Argentina, exchange rate fell by 50 per cent and in Turkey it went down by 30 per cent.

Such fluctuations cause confidence crisis among people on the world economic order, he noted.

Referring to the present US policy towards world trade, he said this affects the World Trade Organisation (WTO) and Asian countries need to be united for their common cause of reform in the WTO mechanism to avert the negative impact of American policy.

Zhao said that despite spending in research and development, world productivity was not increasing.

In the United States, it fell by 1.7 per cent last year, he said.

According to him, rising population, especially the aged, is also a major concern.

In India alone 16 million babies born every year and its population will cross 1.4 billion by 2025. So creating employment for such a large number will be a serious challenge for them, he said.

Senior research fellow of East Asia Institute at Singapore National University Dr Lam Peng Er urged the Asian policy makers to take decisive steps to absorb the shock of the global economic uncertainty.

Fang Jiangshan, deputy editor in chief of the Peoples Daily, Lee Jong Heon, secretary-general of the Trilateral Cooperation Secretariat, and Ng Yat Chung, CEO of Singapore Press Holdings Ltd spoke on the occasion.

They stressed the responsibility of the media is to build mutual trust among the people through objective reporting to promote trade in the region.

Mr Feng said since the opening up of China 40 years ago, the world’s most populous nation has prospered dramatically and it made a positive impact not only on its Asian neighbours but also on the global economy.

At a separate function, vice governor of Hinan province Wang Lu explained the main features of the government’s plan for a free trade zone (FTZ) in Hinan and the advantages the prospective investors would enjoy there.

The Chinese government is working on a pilot project for this zone and if it turns successful, it would be built on an area of 12,000 square kilometres, which would be 32 times bigger than Hong Kong. China has 11 such zones.

Mr Lu was briefing the media leaders and journalists gathered at Boao to attend the Media Cooperation Forum on Belt and Road about the Hinan FTZ. He sought their support in the province’s bid to attract investors.

Skill shortage hampers RMG sector’s climb up the value chain

/0 Comments/in /by

Skill shortage hampers RMG sector’s climb up the value chain

Economists tell SANEM seminar

FE Report

Bangladesh’s garment industry needs to move up the value chain to remain competitive in the global market, experts said on Monday.

They also underlined the need for enhancing negotiation capacity of entrepreneurs.

The suggestions came at a seminar organised by private think tank South Asian Network for Economic Modeling (SANEM) in Dhaka.

“We need to focus not only on price competitiveness but also on quality,” said Dr. Selim Raihan, executive director of SANEM.

He was presenting a keynote paper on the future of RMG industry in Bangladesh.

“We need to move up the value chain. From traditional products, we need to move to branded products,” he added.

Dr. Raihan noted that the ongoing trade war between the United States (US) and China was already posing some uncertainties to the global trade regime.

“We are going to enter an era where lead time is going to matter, distance is going to matter,” he said.

“In the future, the US may tend to ship much more of its imports from Mexico or Europe will ship much more of its imports from Turkey due to lower lead time and geographical proximity,” he added.

The SANEM executive director noted Bangladesh’s apparel industry is seriously lacking skilled labour force, which is hurting the scope of moving up the value chain.

“In near future, Vietnam is going to pose a threat to our RMG market and that threat would come not in terms of price competitiveness but in terms of quality,” Dr Raihan said.

“Already, a good portion of manufacturing jobs is shifting from China to countries like Vietnam and Cambodia but Bangladesh is yet to take benefit of that,” he added.

Dr. Raihan noted managing the labour regime is an issue of serious concern for the local garment industry.

“Apart from ensuring adequate wage for the garment workers, workplace safety and compliance issues need to be addressed to remain competitive in the global apparel market,” he said.

Quoting an ongoing international study, chairman of SANEM Dr. Bazlul Haque Khondker said apparel workers in Bangladesh work for 60 hours per week while it is 47 hours in Cambodia and 46 hours in India.

“At the same time, 54 per cent of garment workers are living below the minimum wage,” he said, quoting the study.

Former governor of Bangladesh Bank Dr. Atiur Rahman, who chaired the event, called for introducing a pension scheme for the garments workers.

“Government, garment factory owners and workers need to work together to introduce this pension scheme in the apparel industry,” Atiur said.

The former central bank governor also called for establishing a green transformation fund to encourage the industries to go green.

“We need to have a dedicated green transformation fund not only in Bangladesh Bank but also from the government,” he said.

“We need to brand Bangladesh as a source of green textiles,” Atiur added.

Experts at the seminar also emphasised incentivising other potential sectors to diversify the export basket.

“Bangladesh is struggling with its policy regime,” said Dr. Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh (PRI).

“We have hundreds of exportable items but we are not giving them the same incentives and policy regimes that we gave to the garment sector back in the early 80s”, he added.

Speakers at the seminar also called for better integration with regional and international market to expand the export market.

“We need to integrate our economy regionally through platforms like the SAARC and the BIMSTEC,” said member of the Planning Commission Professor Dr. Shamsul Alam.

“This, in turn, would help us expand our market within the region,” he added.

Professor Alam noted Bangladesh’s lack of Free Trade Agreements with countries around the world.

“While Vietnam has free trade agreements with around 20 countries, we have none”, he said.

“There is a serious lack of marketing and negotiation capacity from Bangladesh side,” said Fazlee Shamim Ehsan, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

Chief executive officer of Bangladesh Foreign Trade Institute Ali Ahmed also spoke at the event.

Climate change may cause BD $121b losses in 45 yrs: Study

/0 Comments/in /by

Climate change may cause BD $121b losses in 45 yrs: Study

FE Report

The country may suffer total US$ 121 billion worth of losses and damage due to climate change impacts in forty-five years- from 2005 to 2050- asses a study.

“Climate change may cause up to US$ 112 billion loss and damage to Bangladesh, which is equivalent to around 5 per cent of the country’s Gross Domestic Product (GDP), the study said, adding the estimation has been made based on the rise in temperature.

Climate change will also frustrate the country’s attainment of the sustainable development goals (SDGs) and undermine poverty eradication and progress made on food security, the study fears.

The study suggested that the government set a ‘national mechanism on loss and damage’ caused by the climate change through a technical team.

Findings of the study were made public at a dialogue styled Climate Change Induced Disaster Loss and Damage held at the National Disaster Management Institute and Training Centre in the capital’s Mohakhali area.

ActionAid Bangladesh and Ministry of Disaster Management and Relief jointly organised the function.

A part of the initiative to establish a ‘national mechanism on loss and damage’, led by the Ministry of Disaster Management of Relief, the dialogue was arranged to address losses and damage caused by natural calamites under the influence of climate change.

Satya Brata Saha, additional secretary of the Ministry of Disaster Management and Relief presented the study report.

Abu Syed Mohammad Hashim, director general of the Department of Disaster Management, chaired the event.

Dr Saleemul Huq, director of the International Centre for Climate Change and Development of Independent University (ICCCAD), and Hasin Jahan, country director of Practical Action Bangladesh, addressed it as special guests.

Farah Kabir, country director of ActionAid Bangladesh, moderated the function.

Tanjir Hossain, head of Resilience and Climate Justice, ActionAid Bangladesh, made a presentation on Community Led Assessment of Loss and Damage to Climate Change: A 7 Step Guide.

The study emphasised stronger coordination among the ministries, removing institutional barriers in responding to loss and damage, availability of more data on potential loss and damage, addressing climate risks, enhancing institutional capacity and so on, and increasing technical capacity and skills.

Mr Dr. Saleemul Huq said it is high time to establish a national structure to asses the exact and specific losses and damage due to the climate change induced disasters.

Mr Abu Syed Mohammad Hashim said the ministry is leading a short-term project on the basis of the scoping study and ongoing progress of the executive committee of Warsaw International Mechanism, which will contribute to designing the National Mechanism on Climate Induced Disaster Loss and Damage.

The dialogue called for coordination among all the ministries and departments concerned to make the project successful.

The dialogue brought together policymakers, scientists, practitioners and other stakeholders to share the progress and seek guidelines from the participants about the next steps.

The initiative started in 2016 post Paris Agreement on Climate Change and over the past two years, significant progress has been made in terms of deepening understanding of the issue and identifying ways to address economic and social losses and damage.

World food prices fall

/0 Comments/in /by

World food prices fall

Reuters, Milan

World food prices fell 0.9 percent in October from the month before, reflecting lower values for meat, dairy and oils, the United Nations food agency said on Thursday.

The Food and Agriculture Organization’s (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 163.5 points last month, against a slightly revised 164.9 in September.

The September figure was previously given as 165.4.

FAO said global cereals output in 2018 was seen at 2.601 billion tonnes, up nearly 10 million tonnes on the previous forecast given in October, but still down 57 million tonnes, or 2.1 percent, from 2017’s record production level.

FAO’s forecast for world wheat production in 2018 was 728 million tonnes, down 4.3 percent from last year.

Four firms get tower licences

/0 Comments/in /by

Four firms get tower licences

Star Business Report

Four joint ventures of local and foreign businesses were presented licences yesterday to manage the country’s cellphone towers, ending mobile operators’ ownership of those and paving the way for enhancement of the overall network service quality.

Once all the tower companies start running, mobile operators which are comparatively weak will be able to expand coverage with minimum investment, thus ensuring better service quality, said Telecom Minister Mustafa Jabbar.

“Afterwards the regulator will take tough action against mobile operators for poor quality of service,” he said while presenting the licences at Bangladesh Telecommunication Regulatory Commission.

The four are edotco Bangladesh, Summit Tower Limited, Kirtonkhola Tower Bangladesh and AB Hightech Consortium.

All stated that they would need to buy towers from the mobile operators and build new ones across the country alongside investing a few thousand crore taka over the next couple of years to make the business viable.

Robi sold most of its towers to edotco Bangladesh, which is its sister company, a couple of years ago, while Banglalink is taking initiatives to sell theirs, said industry insiders.

However, Grameenphone and Teletalk are yet to decide what to do with their towers.

Currently there are about 34,000 towers in the country and the new tower companies also need to build 10,000 to 15,000 more to improve service quality, especially of 4G, said Arif Al Islam, chief executive officer of Summit Towers.

“This is a difficult market for running tower business as a licensee has already been running business for some years,” he said. Telecom Secretary Shyam Sunder Sikder, BTRC acting chairman Md Jahurul Haque and senior officials were present.

The four, chosen from eight that had applied for the licences to the BTRC in June, paid Tk 25 crore as licence fee, including 15 percent VAT. Conditions stipulate that they would have to start operations within six months.

The service must reach all divisional headquarters within one year, district headquarters in two years, 30 percent of upazilas in three years, 60 percent of upazilas in four years and all upazilas in five years.

Efforts falter on slow reforms

/0 Comments/in /by

Efforts falter on slow reforms

Jagaran Chakma

Bangladesh has posted impressive numbers in the last 10 years, be it GDP growth, per capita income, external trade, foreign exchange reserves and many more.

Yet, the country’s sorry state of economic reforms and poor corporate governance have put it at the 176th position out of 190 countries in the 2019 edition of the World Bank’s Ease of Doing Business rankings, which was released on Wednesday.

Even the war-torn Afghanistan, troubled Pakistan and Myanmar are well ahead of Bangladesh.

India, which has carried out reforms to facilitate economic activities, was up 23 notches in the rankings to 77th. The neighbouring country has targeted to be amongst the top 50 countries in the next three years.

Two years ago, Bangladesh also set a task of making it to the top 100 in the next five years, meaning the country has to move up at least 15 spots each year to reach the target.

But, it managed to climb only one notch in one year. In contrast, Afghanistan advanced 16 spots to 167th.

Without improving the ease of doing business, Bangladesh’s aspiration to draw foreign and local investments will never be achieved, analysts said.

Bangladesh’s investment to GDP ratio stands at 31.23 percent, according to the data from the Bangladesh Bureau of Statistic.

In contrast, Bhutan’s ratio is 57.62 percent, the highest in South Asia, followed by Nepal at 43.01 percent, Sri Lanka at 32.29 percent and India at 32.04 percent, a recent report of the International Monetary Fund (IMF) showed.

The government has set a target to raise the investment-GDP ratio to 34 percent by 2020.

The Bangladesh Investment Development Authority (BIDA) has taken a major initiative to ease doing business but no qualitative improvement is visible yet, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh.

“I don’t blame the BIDA as the job is related with a number of ministries and agencies. If the ministries and other authorities concerned do not cooperate with the BIDA, the situation will not improve.”

Private investment did not accelerate significantly in the one decade as the government has failed to create a business-friendly environment and develop infrastructure. Without an increase in private investment the economic growth may not sustain in the long run.

“The scenario will not improve unless the Prime Minister intervenes,” said Mansur, also a former top official of the IMF.

Bangladesh’s soft infrastructure — which refers to all the institutions that are essential to the economy and the quality of life such as government, health, education, financial and legal systems — has not improved at all, according to Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue.

“Physical infrastructure has slightly improved in the last few years whereas soft infrastructure hasn’t — this is a major hindrance in doing business.”

Big businesses can achieve their goal at any cost but the small ones cannot as they have financial limitations, he added. Time has not passed yet to improve the country’s ranking in the ease of doing business, said Kazi M Aminul Islam, executive chairman of the BIDA.

“Nothing can change overnight. It will take time to change the scenario. I believe in the near future Bangladesh will reach the double-digit ranking.”

It is true that two years ago the BIDA has taken a massive action plan after consulting with all ministries, relevant agencies and private sector stakeholders in order to reform some policies and provide services to entrepreneurs and investors.

“Still, I don’t want to blame anybody because these two years were the initial stage,” said Islam, also a former top bureaucrat.

Investors in the economic zones do not face any bureaucratic hassles, said Paban Chowdhury, executive chairman of the Bangladesh Economic Zones Authority.

“If the entities concerned become sincere and change their mindsets, Bangladesh will improve in the rankings rapidly,” he added.

Sugar import from India to be duty-free

/0 Comments/in /by

Sugar import from India to be duty-free

Local refiners furious

Refayet Ullah Mirdha and Sohel Parvez

The commerce ministry yesterday agreed to withdraw the 40 percent duty on sugar imports from India, much to the ire of the local refiners.

Until now, Bangladesh has kept sugar out of the South Asian Free Trade Agreement mainly to protect the local industry.

“The Indian sugar will be dumped here,” said Mostafa Kamal, managing director of Meghna Group of Industries and one of the major sugar refiners, adding that the commerce ministry did not discuss the issue with the refinery association leaders and the local sugar traders before taking the decision.

The decision for duty withdrawal was taken at a meeting between Commerce Minister Tofail Ahmed and Indian Food and Public Distribution Secretary Ravi Kant at Ahmed’s secretariat office in Dhaka.

The neighbouring country, which happens to be the world’s second biggest sugar producer, is set to produce 35.5 million tonnes of sugar between October 2018 and September 2019 and surpass Brazil as the world’s top sugar producer, according to the India Sugar Mills Association.

But the demand in India is only at 25 million tonnes. India is now trying to reduce a growing stockpile by incentivising exports, and the rise in shipments could put pressure on global prices that are now hovering around near their lowest level in a decade.

A 14-member Indian delegation is visiting Bangladesh to lobby with the government and other refiners to sell the stockpiled sugar in Bangladesh, according to industry people.

If the low-cost Indian sugar is dumped here, the eight local refining mills, which employed thousands of workers and have invested millions of dollars, will face closure, they said.

Moreover, state-run Bangladesh Sugar and Food Industries Corporation, which runs 15 sugar mills, is sitting on 1.39 lakh tonnes of sugar and has been struggling to clear the stock in the last several months, according to its Chairman AKM Delwer Hussain.

At present, sugar is selling at Tk 44-Tk 45 each kilogram at the wholesale level.

“We cannot sell our sugar,” he said, adding that the sugar industry will suffer if the duty is reduced from the existing level.

In its latest plea in September, BSFIC called upon the government for increasing the specific duty on raw sugar to Tk 4,000 per tonne from existing Tk 2,000 and imposing 25 percent supplementary duty apart from maintaining the present VAT and regulatory duty.

The demand came with the view to clearing its unsold stock and purchasing sugarcane from farmers for crushing, which is expected to start this month.

BSFIC has targeted to produce 1.25 lakh tonnes of sugar in the current crushing season, up from 69,000 tonnes the previous year, he said, adding that the state sugar mills could help in keeping the prices of the sweetener stable.

The retail price of sugar declined 8.7 percent year-on-year to Tk 50-55 a kg in Dhaka, according to data from the Trading Corporation of Bangladesh.

Sugarcane acreage almost halved in two and a half decades to 2.33 lakh acres in fiscal 2016-17 as farmers are getting reluctant to grow the crop that takes more than a year to mature but brings lower returns compared to other crops.

The import of raw sugar rose 20 percent year-on-year to 26.15 lakh tonnes in fiscal 2017-18, according to the Bangladesh Bureau of Statistics.

In May this year, the US Department of Agriculture estimated Bangladesh’s sugar consumption at 26.95 lakh tonnes in fiscal 2017-18, up 20 percent year-on-year. It forecasted that total consumption would rise 10 percent to 29.80 lakh tonnes in fiscal 2018-19. TCB and the State Trading Corporation of India are scheduled to sign the preliminary agreement on the 40 percent duty withdrawal in Dhaka today, according to a statement from the commerce ministry.

Following the duty withdrawal, sugar imports from India will only be subjected to the specific duty, according to a commerce ministry official. The specific duty for refined sugar is Tk 4,500 per tonne.

/0 Comments/in /by

Robi gains, GP loses

 

PM launches mobile number portability service officially

Prime Minister Sheikh Hasina speaks at the launch of mobile number portability service at Gono Bhaban yesterday. Telecom Minister Mustafa Jabbar and ICT State Minister Junaid Ahmed Palak were present. PID
Star Business Report

Robi has pulled in 16,916 customers to its network from three rivals in the first three weeks after the mobile number portability was rolled out, according to a report of the telecom regulator.

Bangladesh Telecommuni-cation Regulatory Commission (BTRC) yesterday published a report that showed 11,676 Grameenphone customers left the market leader retaining their existing 11-digit number. On the other hand, it drew 4,041 new customers from its competitors.

Robi, the second largest operator, lost 5,973 customers since the MNP was introduced on October 1 “commercially but on a trial” basis. Bangladesh is the 72nd country in the world that makes the service available.

The MNP allows a subscriber to change telecom carrier keeping the same phone number.

According to the BTRC, 47,090 users tried to switch their network providers, but only 26,817 of them were successful.

Some 8,642 users tried to leave Grameenphone but failed because of a number of reasons. In case of Robi, 2,693 subscribers attempted in vain to leave.

For Banglalink, 8,916 users left its network and 5,526 joined from other networks, showed the regulator’s report. State-owned Teletalk found 252 customers from other networks joining its network while 334 users switched to rival operators.

Customers are charged Tk 50 alongside a 15 percent value-added tax for changing networks within 72 hours. To do so within 24 hours, another Tk 100 has to be paid. In both cases, users require a visit to the new operator’s customer care centre.

Customers have to wait at least 90 days to make another switch. Infozillion BD Teletech, a joint venture between a Bangladeshi firm and a Slovenian firm, is providing the service.

PM OFFICIALLY LAUNCHES MNP

Prime Minister Sheikh Hasina yesterday opened the service officially at a function at her official Gono Bhaban residence.

“To cope with the fast-changing world, we’ll surely take the steps which are needed for the brighter and beautiful future of the young generation,” she said, reports news agency the UNB.

Hasina said youths were the biggest strength of a country and if they could be raised up with proper education, they would have a beautiful life.

She said new technologies have opened up immense opportunities for the socioeconomic development of the country. “We’re utilising these and will do the same in the future too.”

The prime minister said science and technology were like flowing rivers that never stop and continually adopt change.

“And we’ll have to follow that as the new generation needs to be groomed in that way so that they can build the modern technology-based ‘Sonar Bangla’.”

Sheikh Hasina said she sacrificed her present life and future times for the young generation who would lead the country in the coming days.

“The country’s progress, what we have achieved, must not stop…we want to maintain (the pace),” she said.

Posts and Telecommunications Secretary Shyam Sunder Sikder said the finance ministry has agreed to waive the SIM tax for getting new connections to help customers avail the MNP service.

He said the National Board of Revenue would issue a circular very soon in this connection.

Mustafa Jabbar, posts and telecommunications and ICT minister; Junaid Ahmed Palak, state minister for ICT; Md Jahurul Haque, chairman of the BTRC, and Md Nojibur Rahman, principal secretary to the prime minister, also spoke.

Imran Ahmed, chairman of the parliamentary standing committee on posts, telecommunications and ICT ministry, and Nahim Razzaq, a lawmaker, were present.

/0 Comments/in /by

No FTAs before LDC graduation

Refayet Ullah Mirdha

The government is approaching the preparations to negate the erosion of trade privileges following graduation to a developing country at a leisurely pace, with no free trade agreement yet to be signed with any of the important trading partners.

Bangladesh will graduate from the least-developed country bracket in 2024 as it has already met all three criteria of the United Nations.

But it will enjoy preferential trade treatment for three more years, after which free trade agreements will be crucial in maintaining its comparative advantage in international trade.

Thanks to the guarantee of concessional duty benefit until 2027, the government is taking the matter of sealing free trade deals with no urgency.

“Our target is to sign and make effective the FTAs with some important countries. The negotiations have started,” said Md Shafiqul Islam, additional secretary for FTA of the commerce ministry.

Last month, during the visit of Indian Commerce Minister Suresh Prabhu, both Bangladesh and India agreed to sign the Comprehensive Economic Partnership Agreement (CEPA) as the neighbouring country is an important trading partner.

The CEPA will be more comprehensive than a FTA, according to Islam. “Both Bangladesh and India want to take the bilateral relations between the two countries beyond the FTA.”

But there has been no progress on that front thus far.

Similarly, Bangladesh and Sri Lanka have been working to sign a comprehensive FTA, which is also similar to the CEPA. The government also started talks with China to sign the FTA.

Earlier, initiatives to sign FTAs with countries such as Malaysia and Turkey were taken but no deal could be reached.

Upon graduation, Bangladesh’s exports will face an additional 6.7 percent tariff, which could result in an estimated export loss of about $2.7 billion in a year, according to a report from the United Nations.

The amount of loss is equivalent to 8 percent of Bangladesh’s export receipts in 2015.

The United Nations Conference on Trade and Development estimated that exports may fall 5.5 percentage points to 7.5 percent after graduation.

In 2016, the value of exports from Bangladesh to the countries granting preferential trade treatment was $24.7 billion, which accounted for 72 percent of the total exports of the country.

Regional trade agreements and bilateral initiatives cover about 90 percent of the exports, the report said.

Bilateral FTAs have been becoming instrumental in the global trading system as the prospects of multilateral trading systems under the World Trade Organisation are decaying gradually. There are more than 200 such deals worldwide.

Even neighbouring India has already signed an FTA with the Association of South East Asian Nations and was trying to sign another with the EU.

China firm keen to invest $200m

/0 Comments/in /by

China firm keen to invest $200m

Plans petrochemical tie-up with Deshbandhu

Jagaran Chakma

Jiangsu Sanfangxiang Group (SFX Group), a Chinese conglomerate, is keen to invest $200 million in Bangladesh to set up a petrochemical and chemical fibre production park in a joint venture with Deshbandhu Group.

The parties are holding talks with the Bangladesh Economic Zones Authority seeking to get more than 100 acres of land at the Mirsarai economic zone in Chattogram for the complex.

“Deshbandhu Group will only bear the costs associated with the land and SFX Group will bring technologies and the remaining investment for the project,” said Golam Mostafa, chairman of the Bangladeshi company.

The target is to produce raw materials for the textile sector as well as export-oriented products, he noted.

Referring to SFX Group’s proposal, Mostafa said in the first phase a complex would be constructed with a daily production capacity of 900 tonnes of polyester.

Of it, 600 tonnes will be PET (polyethylene terephthalate) bottle grade chips while the remaining 300 tonnes polyester staple, which are short lengths of filaments easily capable of blending with other fibres.

In the second phase, a petrochemical plant would be established with local infrastructure and investment, said the entrepreneur. Mostafa said they would eventually require $2 billion in investment and a minimum of 1,000 acres of land, creating 2,500 jobs directly.

Bangladesh needs to import 4 lakh tonnes of polyester staple and 1.5 lakh tonnes of PET chips annually.

As Bangladesh is vying to generate $50 billion through exports per year, it needs backward linkage facilities and import substitutes to minimise lead time, Mostafa said.

An agreement will be signed next month to form the joint venture with a view to becoming a pioneer in the export of raw materials for textiles in the near future, making use of Bangladesh’s duty-free access to many countries.

With a production capacity of 2 million tonnes of polyester per year, SFX Group’s annual sales amount to $8.62 billion while export earnings standing at $900 million.

Deshbandhu, a leading corporate house in Bangladesh, earns $30 million per year exporting edible oil, sugar and sweaters to European countries.