BGMEA POLLS: New panel demands election, not selection

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BGMEA POLLS: New panel demands election, not selection

Star Business Report
January 21, 2019

The Swadhinata Parishad, the third panel at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), has called for an election instead of a selection method for running the trade body for the next two years.

In recent years, with mutual understanding two panels, the Sammilito Parishad and the Forum, have been taking turns in running the apex trade body of the garment sector without holding any election.

Currently, Siddiqur Rahman, who belongs to the Sammilito Parishad, has been running the BGMEA as its president, meaning it is now the Forum panel’s turn to reign.

Rubana Huq, managing director of Mohammadi Group, a leading garment exporter, is the leader of the Forum Panel.

“But this time we want the election so that the general members can exercise their voting rights,” said Jahangir Alam, convener of the Swadhinata Parishad, at a press conference held at Dhaka Club yesterday.

He went on to make a threat of filing a case with the court if the election is not held. The BGMEA election is scheduled to be held on April 6 this year.

The election is needed as many general members are neglected by the BGMEA employees and the board of directors, said Alam.

He went on to cite his case as an example of the BGMEA’s apathy towards the general members.

The trade body had taken more than three months to enlist his newly constructed factory in Cumilla. As a result, he could not go into production as per schedule although he is still paying high interest rate for bank loans. “This shows the BGMEA is not serious about the concerns of general members.”

Alam said the current executive body does not know the real scenario of the garment sector.

“Many factories have faced closure for different reasons over the last few years, but they are not aware of it.”

He said Bangladesh has the opportunity to grab more work orders that are being shifted out of China because of tariff war with the US.  “We have the opportunity to grow more, but we have been failing at it.”

He said the sector’s target of exporting goods worth $50 billion by 2021 would not be achieved as the country could not improve its capacity. In fiscal 2017-18, garment export receipts amounted to $30.61 billion.

$100b garment export possible by 2024

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$100b garment export possible by 2024

Tipu Munshi says as yarn and fabrics show kicks off

Star Business Report
January 24, 2019

Bangladesh will be able to export $100 billion worth of garment items by 2024 as the international apparel retailers are placing an increasing number of work orders, said Commerce Minister Tipu Munshi.

“By 2021, when Bangladesh will also celebrate its 50th anniversary, we will be able to export garment items worth $50 billion.”

Last fiscal year, garment shipments fetched $30.61 billion, according to data from the Export Promotion Bureau.

Munshi’s comments came at the inauguration of the 15th Dhaka International Yarn and Fabrics Show at the International Convention City, Bashundhara in Dhaka.

“Now we are in the second position in garment exports globally after China. We have immense potential for bagging more work orders.”

But entrepreneurs need bank loans at lower interest rate for rapid expansion of the business, he said.

The government has been developing 100 special economic zones across the country.

The local and foreign investors are allowed to invest in them and contribute to export receipts, the minister added.

This year, 370 companies from 22 countries are participating at the four-day exhibition to showcase products like yarn, denim fabrics, knitted fabrics, yarn and fibres, dyes, chemicals and innovative raw materials.

The fair is open for all from 10:30am to 7:30pm, said Meherun N Islam, president and group managing director of CEMS Global, the organiser.

Shafiul Islam Mohiuddin, president of the Federation of Bangladesh Chambers of Commerce and Industry; Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association; Atiqul Islam, former BGMEA president; and Monsur Ahmed, vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association, also spoke.

Govt to build 590MW plant in Anwara

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Govt to build 590MW plant in Anwara

Star Business Report
January 24, 2019

A consortium of Bangladesh and Japan is going to set up a 590-megawatt gas-based power plant at Anwara in Chattogram.

The cabinet committee on purchase approved a Power Division’s proposal for the plant at a meeting at the secretariat yesterday, with Finance Minister AHM Mustafa Kamal in the chair.

The government will purchase power at Tk 2 to Tk 5.50 a kilowatt-hour unit for 22 years depending on the type of gas used in production.

The flow of foreign direct investment to the country would increase with the participation of the Japanese company in the project, Kamal told reporters after the meeting.

Dhaka-based industrial group United Enterprises & Co Ltd and Japanese companies Kyushu Electric Power Co Inc and Sojitz Corporation will operate the plant on a build-own-operate basis.

According to the proposal, if power is produced using local gas, the government will buy electricity from the consortium at $0.0368 (Tk 2.9493) per unit. The tariff will be $0.0680 (Tk 5.4435) if re-gasified liquefied natural gas (RLNG) is used.

If the plant uses gas, the government will pay about Tk 28,371 crore for 22 years and Tk 52,362 crore for the same period in case of RLNG usage.

The committee also gave its consent to another proposal to import 14.20 lakh tonnes of petroleum products from January to June this year at an estimated cost of Tk 6,772 crore.

Some 11.90 lakh tonnes of diesel will be imported with per barrel premium of $2.95. One lakh tonnes of jet fuel with a premium of $3.95 per barrel would be brought in.

For imports of 30,000 tonnes of octane, the premium will be $5.50 a barrel. It would be $29.75 per tonne for 1 lakh tonnes of furnace oil.

The petroleum products will be imported from Indonesia, Malaysia, Singapore, China, Kuwait and the Philippines under state-to-state arrangements, Nasima Begum, additional secretary of the cabinet division, told reporters.

The committee gave a nod to another proposal of the Power Division to buy 150,575 prepaid metres and related equipment for Cumilla and Mymensingh zone at Tk 137.75 crore. China-based company Shenziang Star Instrument Ltd got the job.

It also approved a proposal to award a Tk 101.98 crore component of the Elenga-Jamalpur national highway widening project to Wahid Construction Ltd.

Locally assembled electric cars to hit streets soon

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Locally assembled electric cars to hit streets soon

Jagaran Chakma
January 24, 2019

Nitol Motors is set to come with a locally-assembled electric vehicle by next year, in yet another big stride for Bangladesh’s fledgling automotive industry.

An electric vehicle uses chemical energy stored in rechargeable battery packs instead of fossil fuel to propel it.

Globally, electric car market share is on the rise: at the end of 2018 it stood at 4.6 percent, almost double from what it was in 2017, according to the Centre of Automotive Management (CAM), a German research and consultancy institute.

China has the leading position in electric car use, followed by the US, Norway, Japan and the UK. By 2025, one-fourth of all new registrations will be made of electric cars, according to CAM.

Nitol’s model, which will be called Suvare, will be the size and feel of regular cars and will cost about Tk 12 lakh, said Abdul Matlub Ahmad, chairman of Nitol-Niloy Group. The maximum speed of the car will be 150 kilometres (km) per hour.

“I have set a target to bring the car to market by March 2020,” he said, adding that the venture is in partnership with one American and two Chinese companies.

He, however, declined to name his foreign partners. The vehicles will be assembled at a plant spanning 10 acres in Pabna, the construction for which has already started. Soon, capital machinery will be imported.

The plant, which will cost Tk 350 crore, will have the capacity to assemble 20,000 units per year. Initially, about 5,000 units of only one model will be assembled.

Nitol Motors follows the lead of state-run Pragati Industries, PHP Family and Hyundai Motors in setting up assembly plants in Bangladesh.

The company has set up a research and development centre in the capital’s Uttara, where designs for the car and other components are being developed with the mechanical department of the Dhaka University of Engineering & Technology.

“We will import components of the cars, so it will not take us long to bring the car to market.”

The major bottleneck would be to get the EVs registered with the Bangladesh Road Transport Authority (BRTA) as there is no rule or policy for this new form of vehicle.

At present, BRTA gives registration on the basis of the engine of a car. Since EVs derive all power from battery packs they do not have any internal combustion engine, fuel cell or fuel tank.

With half an hour’s charge Suvare can run 200 km, according to Ahmad.

The battery capacity will be 25 kilowatt per hour and it will cost only Tk 170 to fully charge it each time as per present power tariff.

“So, Suvare will be very cost-effective and environmentally friendly,” Ahmad said, adding that the car can be charged at home with a fast-charging plug system.

The battery’s lifetime will be at least six years. In the near future EV owners can go for long drives as fast-charging stations will be set up at refilling stations along the highway.

In 2017, the car market size in Bangladesh hit Tk 5,000 crore, according to industry insiders.

Japan wants FTA with Bangladesh

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Japan wants FTA with Bangladesh

Says Kamal

Star Business Report
January 25, 2019

Japan has expressed its interest to sign a free trade agreement with Bangladesh, Finance Minister AHM Mustafa Kamal said yesterday.

Hiroyasu Izumi, Japanese ambassador to Bangladesh, showed the willingness when he met with the minister at his secretariat office on Wednesday, according to a statement of the ministry.

“Japan is a very trusted friend of Bangladesh and doesn’t have any political agenda. So, it is very easy to work with Japan,” he said.

Kamal said Japan is assisting Bangladesh in various mega projects. The Hazrat Shahjalal International Airport is being expanded with Japanese assistance. He said the way Bangladesh’s economy is growing, more than 80 lakh international passengers will use the airport annually.

In the statement, Izumi said the Japan International Cooperation Agency is Bangladesh’s biggest development partner and the assistance it provides is Japanese taxpayers’ money. “It is the reflection of love from the people of Japan,” he said.

Japan is giving 200 billion yen ($1.8 billion) in loan to Bangladesh in six projects, including the metro rail one, the envoy said. “The level of loan will increase in future through state-level visits between the two countries.”

The minister requested the ambassador to increase the foreign investment in Bangladesh – to which Izumi responded positively.

BB to guard against inflation in first half

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BB to guard against inflation in first half

Monetary policy to be announced today

AKM Zamir Uddin
January 30, 2019

  • KEY ASPECTS OF MPS

  • Repo, reverse repo rates and CRR to be kept unchanged 
  • Prices to be kept in check as inflation may rise
  • Disbursement of quality credit to be ensured to thwart loan scams 
  • Job creation to be encouraged by injecting funds into productive sector

 

The central bank is set to bring down the private sector credit growth target for the first half of 2019 slightly with a view to containing inflationary pressure.

The monetary policy for the January to June period will be announced today by Bangladesh Bank Governor Fazle Kabir.

Although inflation dropped to a 19-month low in December last year, there are fears it will surge surrounding the post-election optimism.

In the monetary policy for the second half of 2018, the private sector credit growth was set at 16.80 percent.

“It will be lowered by 0.10 to 0.20 percentage points,” Jamaluddin Ahmed, a director of the central bank board, told The Daily Star yesterday.

He, however, said the revised target will not raise the alarms on the private sector as it will be above 16 percent, which is good enough for achieving the 7.8 percent GDP growth the government is aiming for this fiscal year.

The forthcoming monetary policy will focus on ensuring the disbursement of quality credit and tackling the upward trend of core inflation, Ahmed said. The country’s foreign trade may reach $100 billion this year, which will play in important role in helping the BB take a cautious monetary policy for the first half of the year, said a BB official.

In the first four months of the fiscal year, exports soared 16.75 percent year-on-year to $16.77 billion. During the period, imports increased 6.64 percent to $23.43 billion.

Remittance, too, increased during the period: by 9.03 percent to $6.28 billion.

“That’s why caution is being exercised,” the BB official said, adding that the repurchase agreement (repo) and reverse repo policy rates and cash reserve requirement will be kept unchanged.

The central bank reduced its repo rate by 75 basis points to 6 percent and slashed the CRR by one percentage point to 5.5 percent on April 15 last year in the wake of huge pressure from the sponsors of private banks.

Majority of the banks are now keeping their attention to adjust their loan-deposit ratio by March this year in line with the central bank directive, which has subsequently put a negative impact on the private sector credit growth in recent months.

The private sector credit growth stood at 13.20 percent in December last year, after being on the slide since May.

As per the central bank’s instruction, conventional banks will have to bring down the loan-deposit ratio to within 83.50 percent from their existing ceiling of 85 percent and Shariah banks to 89 percent from 90 percent.

“Only disbursement of quality credit can ensure sustainable development and create more jobs in the productive sector. So, the upcoming MPS will focus on the issue,” the BB official added.

Food, hospitality expo begins Feb 14

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Food, hospitality expo begins Feb 14

Star Business Desk
January 30, 2019

A three-day Food and Hospitality Bangladesh Expo 2019 will be organised in Dhaka starting February 14.

Bangladesh International Hospitality Association (BIHA) and Wem Bangladesh Limited under the supervision of Bangladesh Parjatan Corporation will organise the fair at International Convention City Bashundhara.

Around 70 exhibitors from seven countries, including India, Thailand, Malaysia, China, Italy and Spain, 150 brands and 200 international delegates will take part, organisers told a press conference at the Radisson hotel in Dhaka yesterday.

The participants are representatives of hotels, restaurants, cafés, importers, distributors, housekeepers, spa specialists, architects and interior designers, hotel suppliers, chefs and government employees.

The fair is also going to have live shows such as chef challenges, workshops on food of different countries, roundtables with CEOs and job fairs.

Akhtaruz Zaman Khan Kabir, the Parjatan chairman; HM Hakim Ali, the BIHA chairperson, and Khandakar Ruhul Amin, chairperson of Bangladesh Restaurant Owners Association, attended the press conference.

Ecnec okays 9 projects worth Tk 16,433cr

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Ecnec okays 9 projects worth Tk 16,433cr

Star Business Report
January 30, 2019

The Ecnec in a meeting yesterday approved nine new and revised projects worth Tk 16,433 crore, with Prime Minister Sheikh Hasina directing that no structure could be built on haors and land which yields three crops a year.

The meeting of the Executive Committee of the National Economic Council (Ecnec) was held with the premier in the chair.

After the meeting, Planning Minister MA Mannan informed of the directives. He said Hasina had laid emphasis on hoars reasoning that those were resourceful areas.

The meeting approved a revised project to expand rural electrification where the cost was increased by 26 percent to Tk 8,691 crore to bring an additional 4.5 lakh subscribers under the programme.

Ecnec approved the project in March 2016 with a target of bringing 15 lakh subscribers under electricity network by December 2018.

Under the revised project, the total number of subscribers in rural areas will reach 19.5 lakh and the timeline has been extended to June 30, 2020.

Moreover, electricity lines would be set up on an additional 15,000 kilometres, taking the project’s reach to a total of 59,000 km.

Ecnec also approved a project to establish a 150 megawatt power plant at Sayedpur at a cost of Tk 1,001 crore by June 2021. A power division official said China-based Dongfang Electric Corporation would construct the plant.

Power Development Board signed an agreement with the company earlier this month. Ecnec approved two other projects on setting up and rehabilitating electricity distribution lines, one centring Rangpur division at a cost of Tk 1,124 crore and another Rajshahi division at a cost of Tk 1,091 crore.

It also approved a revised project for establishing a 99 Composite Brigade for ensuring overall security for Padma multipurpose bridge. The project cost was raised by 33 percent to Tk 1,320 crore and completion deadline extended from June 2015 to June 2021. According to the planning ministry proposal, delays in land acquisition and increase in project components raised the cost and tenure.

Ecnec also approved a project to elevate a stretch of road from Cox’s Bazar link road to Laboni crossing to four lanes at a cost of Tk 288 crore and construction of a 103-metre bridge with girders on the Aricha-Gheor-Daulatpur-Tangail road.

It okayed improving switching and transmission networks for strengthening digital connectivity at a cost of Tk 155 crore and increasing the tenure of a project for purchasing 70 train engines at a cost of Tk 2,659 crore from June 2017 to June 2024.

Infrastructure loans to be cheaper: AIIB

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Infrastructure loans to be cheaper: AIIB

Star Business Report
January 30, 2019

Bangladesh’s infrastructure borrowing costs will dip this year as lenders vie for a slice of the vast opportunities that the country’s fast-growing economy is presenting, said the Asian Infrastructure Investment Bank (AIIB) yesterday.

The proclamation was made in the lender’s first publication styled “Bridging Borders: Infrastructure to Connect Asia and Beyond”. The study profiled eight countries in the Asia-Pacific region with great need for infrastructure financing: Bangladesh, India, Pakistan, China, Indonesia, the Philippines, Turkey and Russia.

“In contrast to other countries in the report, a marginal reduction in infrastructure borrowing costs over the next 12 months is expected in Bangladesh due to a more competitive domestic financing environment,” the report said.

Lending spreads are expected to narrow as the financial sector strengthens thanks to more long-term lenders in the market.

“There is growing awareness of Bangladesh’s economic potential,” said Jang Ping Thia, principal economist of the AIIB.

At present, loans from the World Bank come with 2 percent interest, India 1 percent, China 2 percent, and the Japan International Cooperation Agency less than 1 percent.

Although infrastructure construction activities will scale up in Bangladesh this year, there are structural challenges in the form of high construction costs, delays and efficiency issues that can put a damper on the intentions.

“High costs pose an ongoing structural challenge to infrastructure development in Bangladesh,” the report said.

The World Bank found that per kilometre cost of road construction in Bangladesh is the highest in the world, which has been supported by the study’s findings too.

“Dhaka’s construction costs on a per metre basis are higher than the other seven focus countries and are significantly higher on a purchasing power basis.” Furthermore, the significant cost and time overruns for projects reduce cost efficiency, it said. The cost of construction materials is likely to rise in line with the projected depreciation of the taka as well as inflationary pressures due to expansionary policies.

The weakening of the taka against major currencies is due to the trade deficit, resulting from the significant imports needed to support the government’s plans for infrastructure development.

The bulk of costs in Bangladesh relate to material costs, and the market for construction materials is less stable due to the country’s high dependence on imports of items such as paving materials, aggregates, stones and structural steel.

Although Bangladesh is self-sufficient (or close to it) in cement and billets, it still requires imports of raw materials for these products, according to the study.

“The prices of industrial raw materials globally are projected to remain flat year-on-year but the projected depreciation of the taka is likely to lead to increased costs for construction materials in Bangladesh.”

Subsequently, Thia called for improvement in construction costs and project implementation to further accelerate government activities.

“Bangladesh is a fast-growing economy and its improving economic conditions present a great opportunity to address infrastructure shortfalls,” said Joachim von Amsberg, AIIB’s vice-president for policy and strategy.

The country will continue to be a priority market for the China-led multilateral lender in 2019, in what can be viewed as further endorsement of the country’s growing stature on the global stage.

The infrastructure-focused lender, which began its journey in 2016, has so far approved three projects amounting to $274 million in Bangladesh’s energy sector and is set to approve four more projects involving $640.60 million in transport, energy and water sectors. The projects under review include the Mymensingh-Kewatkhali bridge and the Sylhet-Tamabil road upgradation.

AIIB’s interest rate on loans for public sector projects is priced according to consensus among multilateral lenders: the lowest is 0.75 basis points over LIBOR (London Interbank Offered rate) and the maximum is 1.45 basis points for 35-year tenure, Najeeb Haider, its investment operations manager, told The Daily Star in June last year.

BB to crack down on habitual defaulters

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BB to crack down on habitual defaulters

Wants amendment to laws, will hold meet with bank MDs and experts on Feb 6

AKM Zamir Uddin

January 29, 2019

The central bank has moved to reform the existing acts to clamp down on habitual defaulters, whose tendency to go to courts to stall paying back loans has sent the sector’s non-performing loans to an alarming level.

As of September last year, the ratio of NPLs stood at 11.45 percent of the total outstanding loans. In terms of amount, it is Tk 99,370 crore.

The Bangladesh Bank is set to hold a meeting on February 6 with banks’ managing directors. Law Commission Chairman ABM Khairul Haque and Bangladesh International Arbitration Centre CEO Muhammad A (Rumee) Ali will explore all legal routes with a view to handing out exemplary punishment to habitual defaulters.

When banks step in to realise the defaulted loans the habitual defaulters go to courts, thwarting the move, said a BB paper. The trick used by the habitual defaulters has created an impediment to recovering the default loans.

More than Tk 75,000 crore of default loans is pending with the money loan courts because of the drawn-out process to settle the cases. Even then, the money loan court can give a maximum six-month civil imprisonment to a defaulter in line with the Artha Rin Adalat Ain 2003, said Imran Ahmed Bhuiyan, a deputy attorney general.

“There is an urgent requirement to reform the money loan court act to reduce NPLs,” he added.

Subsequently, the BB has asked the banks’ MDs to place their opinions on how to speed up recovery of default loans and ensure exemplary punishment for habitual defaulters at the meeting on February 6.

“We will give probable solutions upon hearing the proposals placed by banks,” Haque told The Daily Star.

As per the act, the courts issue decrees in favour of banks to float tenders to sell the mortgaged assets when defaulters fail to make payment in line with verdicts, according to Bhuiyan. In most of the cases, the banks fail to find buyers for the mortgaged assets, fearing it may invite trouble for them in future, he said. “And then the banks apply to the courts to get the ownership of the mortgaged properties. In my long experience I have seen that the ownership of the majority of the mortgaged assets remains disputed,” said Bhuiyan, also a financial lawsuit expert.

As a result, the lenders fail to enjoy the ownership status, and the cases remain stuck with the court.

So, there should be a provision in the law that will resolve the question of ownership of the mortgaged assets before floating the auction, which will help settle the cases at the earliest, he added.

Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), a platform of banks’ MDs, welcomed the central bank’s initiative. “This is long overdue.”

Lenders have been demanding for long to reform the acts in order to recover the default loans.

“It takes a long time to resolve the cases at the money loan courts because of the lengthy process of the Artha Rin Adalat Ain,” said Rahman, also the MD of Dhaka Bank.

The authority concerned should set up a dedicated bench with the High Court to settle the cases pertaining to default loans, he said.

In a joint meeting held on January 12, the Bangladesh Association of Banks, a platform of sponsors of private banks, asked the ABB chairman to prepare a working paper on how to recover default loans.

The two organisations have taken the decision as part of the instructions given by Finance Minister AHM Mustafa Kamal on January 8 to stem further rise in default loans.