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1,200 factories shuttered in four years

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1,200 factories shuttered in four years

BGMEA says

Star Business Report

Some 1,200 garment factories have been closed down over the last four years because of their lack of compliance and falling behind in the competitive landscape, BGMEA said

yesterday.

“It is our apprehension that some more factories will be shuttered soon as they are failing to make profits,” said Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association, the garment makers’ platform, at a press conference at its office in Dhaka.

Bangladeshi garment products have been losing competitiveness because of longer lead time, poor productivity and poor demand for apparel worldwide, Rahman said.

In 2014, the global market size for apparel was $483 billion; in 2017, the figure declined to $454 billion.

Between 2014 and 2018, the prices of Bangladeshi garment items declined in the US market by 11.72 percent while the cost of production increased 29.54 percent, the BGMEA chief said. Similarly, the prices of locally made garment items declined in the EU markets.

But at the same time, each of the garment owners has spent Tk 3-5 crore for fixing the electrical and structural loopholes as per the recommendations of the Accord and Alliance experts.

The cost of production will go up further after the implementation of the recommended minimum wage of Tk 8,000 from December this year, Rahman said. At present, the garments sector’s minimum wage is Tk 5,300.

The wage comprises nearly 5 percent of the total production cost of garment items, according to industry insiders.

However, a section of people have been disseminating wrong information for creating a chaotic situation in the garment sector ahead of the implementation of the proposed wage structure, he said.

For instance, the National Garment Workers Federation at a recent press conference said only 3 to 5 percent of the total workers in the garment sector are in the seventh grade.

“This information is wrong,” Rahman said, adding that more than 20 percent of the workers belong to the seventh grade or the entry level now.

The BGMEA leader also praised the statement of the Clean Clothes Campaign, the International Labour Rights Forum and the Maquila Solidarity Network, which urged 25 international retailers to hike the prices of garment items sourced from Bangladesh.

At the same time, American Apparel and Footwear Association, which last year sent a letter to the prime minister of Bangladesh for increasing the wage of the workers, should now urge the buyers to increase the prices of the products.

The garment sector has been witnessing a peaceful and calm situation over the last four years as there were no incidents of unrest. But, if a section of trade unions disseminates wrong information there is a possibility of unrest in the sector, he said.

A lot of workers will lose their jobs if any garment factory is shut down for any reason, he added.

SDGs not possible without youth uplift: experts

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SDGs not possible without youth uplift: experts

Star Business Report

The Sustainable Development Goals will not be achieved without ensuring quality education and employment for the youth, experts said yesterday.

There is no doubt that the country is facing different challenges when it comes to the youth, said Gowher Rizvi, the prime minister’s foreign affairs adviser.

“We have to resolve the problems of the young generation as they will play a crucial role in implementing the SDGs within 2030,” he said at the inaugural session of a conference titled “Youth Conference 2018 – Bangladesh and Agenda 2030: Aspiration of the Youth”.

Citizen’s Platform for SDGs, Bangladesh organised the conference at the Krishibid Institution Bangladesh in Dhaka. This is a requirement to ensure balanced development.

In many cases, the potential of the youths remain unused, said Debapriya Bhattacharya, convener of the Citizen’s Platform for SDGs.

One in 10 young people are unemployed; and one in three highly educated youths also cannot manage jobs, he said.

In fiscal 2016-17, the rate of unemployment among persons with education of up to tertiary level stood at 11.2 percent, up 9 percent from a year earlier, according to data from the Bangladesh Bureau of Statistics.

The society is yet to ensure the rights of youth, including providing quality education, he said.

Bhattacharya, also a distinguished fellow of the Centre for Policy Dialogue, said the political parties will have to address the rights of the youths in their respective election manifesto for the upcoming national polls.

The country’s young voters now range from 4 crore to 5 crore.

After assuming power, the new government should implement the commitments made to the youths.

“The latest youth movements for quota reform in civil services, ensuring safe roads, withdrawing the VAT on education and the Shahbagh movement have inspired us,” he added.

The society would have to use the youths properly to ensure the country’s prosperity, said Biren Sikder, state minister for youth and sports.

“We will become a developed country by 2041 based on the power of youth,” he added.

To successfully implement the SDGs, every person in the country need to be honourable citizens, said Sultana Kamal, core group member of the Citizen’s Platform for SDGs.

“We should not tolerate any corruption,” said Kamal, also a human rights activist.

Among others, Sudipto Mukerjee, country director of UNDP in Bangladesh; Anisatul Fatema Yousuf, convenor of the Citizen’s Platform for SDGs; Hanif Sanket, a popular TV host; and Sabina Khatun, captain of the Bangladesh national women’s football team, also spoke.

In another session, discussants underscored the need for science-based education systems as it would ensure the required skilled manpower for industries.

The country does not need more commerce graduates at this moment; it requires science-based graduates and skilled manpower for managerial positions, said Syed Nasim Manzur, managing director of Apex Footwear.

Bangladesh has to pay $4.5 to $6 billion per year for hiring foreigners for managerial posts in different industries.

The youths can take over these positions if they groom themselves, he said while moderating a session styled “Bangladesh and Agenda 2030: expectation of youth”.

He suggested that the students study in physics, chemistry, mathematics and English to fulfil the demands of skilled manpower. Now, employers do not put much stress on a candidate’s academic background; rather, they look at the skills and potential of the job seekers, he added.

Globally, efficiency is given preference over educational pedigree, said Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue.

Students should look to gather skills and knowledge through the internet instead of wasting time on social media.

There is now a need to bring in massive changes to tertiary education to build skilled manpower, he added.

Youths should have the option of employment and entrepreneurship, said Bertha Gity Baroi, director of Caritas Bangladesh.

They should prepare themselves as per their aim in life from the beginning of their university life, she added.

Kaniz Fatema, president of Junior Chamber International, Dhaka North; and Banani Biswas, representative of Avizan, a non government organisation, spoke among others.

Garment makers mull tie-up with Sri Lankan firms

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Garment makers mull tie-up with Sri Lankan firms

They aim to add value, cut lead time

Refayet Ullah Mirdha

Bangladeshi garment manufacturers want to tie up with their Sri Lankan counterparts to add more value to the garment supply chain and reduce the lead time by at least 10 days.

The development comes after Malik Samarawickrama, Sri Lankan minister for development strategies, put forward the idea in a meeting with the leaders of Bangladesh Garment Manufacturers and Exporters Association last week.

“The business can happen in joint venture as well if we agree,” said Siddiqur Rahman, president of BGMEA, the garment sector’s apex trade body.

Under the agreement, the Bangladeshi garment manufacturers will send the basic items to different garment factories in Sri Lanka for finer washing, remaking and adding more value as Bangladesh has abundance of work orders now.

After remaking and finishing of the goods, Sri Lanka will ship them off with the ‘Made in Bangladesh’ label to different European markets from their deep sea port.

“This will take less time than if we do it all by ourselves. Plus, we will be able to sell the garment items at higher prices to retailers.”

A group of BGMEA leaders are scheduled to visit Sri Lanka soon to discuss the issue, according to Rahman.

Due to proximity of the Sri Lankan deep sea port to Europe, the lead time will be cut by at least 10 days.

“In the era of fast fashion, shorter lead time is very important as there are so many competitors.”

Any kind of garment products can be sent from Bangladesh to Sri Lanka to be re-exported.

However, Bangladeshi garment makers will primarily send the items that the local manufacturers are particularly not strong at.

For instance, Sri Lanka has an edge in innerwear, so if Bangladesh gets a lot of work orders for them, they would be sent to Sri Lanka for further value addition.

“We do not see any possibility of losing buyers from Bangladesh due to this initiative. Still, we are in the initial stage of the process,” Rahman added.

Regarding the initiative, Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said there is nothing wrong with the initiative. “It can happen in international business. It is one kind of sub-contracting business but it will be done in between two states.” Mainly the small and medium garment factories that are not so much compliant and failing to make good profit would be interested in the business model.

“This is the automobile industry’s model.”

For instance, some parts of the automobile are made in China and some in Malaysia or in some other countries. But after the finished goods are assembled, they have one company’s brand.

“By doing so, both Bangladeshi and Sri Lankan businessmen will divide the profit. We need not be worried about losing buyers,” he said.

Currently, Sri Lankan’s market share in global apparel trade is 1.2 percent and Bangladesh’s stake is 6.5 percent.

Sri Lanka exports nearly $5 billion worth of garment items in a year while Bangladesh’s export last year hit $30.61 billion.

Bangladesh Delta Plan 2100 – making growth sustainable

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Bangladesh Delta Plan 2100 – making growth sustainable

Shamsul Alam

 

Bangladesh crossed over from a low-income economy to a lower middle-income economy in 2015. The country has already fulfilled all the criteria of graduating from least developed country (LDC) to a developing country.

Making this growth sustainable is challenging in the face of extreme adverse climate variability – frequent storms and tidal surges, flooding and droughts. Climate change is a serious threat to sustainable development. If nothing is done by 2050, climate change impact could make an additional 14 per cent area of the country extremely vulnerable to floods and dislocate more than 35 million people in the coastal districts.

At the macro-level, combined effects of climate change could range from a loss of 1.3 per cent of gross domestic product (GDP) per year in a moderate climate change environment to 2.0 per cent of GDP per year in an extreme climate change environment. In order to materialise the goal of becoming a developed country by 2041, addressing the likely impacts of climate change calls for an integrated approach for future land and water management in relation to water safety, agricultural growth and food security. The recent and future anthropogenic changes in the hydrological cycle due to climate change, construction of dams and barrages in the upstream countries in combination with increasing water demand are expected to make future water governance and management even more challenging. Climate issue is all-encompassing and often requires long time to understand its patterns and impact, and therefore, a long term plan is needed to address climate adverse impacts.

A number of sectoral plans have been developed so far in Bangladesh, but they tend to be short term oriented and are independently run by different ministries. It need not be emphasised that the issue, given its crucial importance, requires long term strategies and multi-sectoral coordinated policy management. Being one of the largest as well as most dynamic deltas of the world built by the confluence of the three mighty rivers– Ganges, Brahmaputra and Meghna– the country faces major inter-related delta challenges in water safety, food security and land degradation, and is prone to natural calamities such as floods, river erosion, cyclones and droughts. The challenges are both man-made and natural. The country is equally characterised by its resilience, the ability to adapt to changing climatic and economic conditions and advantage gained from the abundant natural resources available in the delta.

In view of the long-term challenges presented by climate change and natural hazards, the General Economics Division (GED) of the Bangladesh Planning Commission has formulated ‘Bangladesh Delta Plan (BDP)-2100’ with support from the government of the Netherlands. The Memorandum of Understanding (MoU) signed between Bangladesh and the Netherlands in 2012 on delta planning laid the foundation of BDP-2100.The preparation of BDP-2100 was officially launched in August 2014.

Management of this delta has therefore always been a key concern in both political and development agenda since long. Almost all the political movements during the pre-independence period invariably included demand for flood control, disaster management and irrigation measures; it is so because those were the major causes of extreme poverty prevailing at that period within this delta. The election manifesto of the United Front in 1954 advocated for protection of the country from extreme floods and famine and improving irrigation systems. Father of the Nation Bangabandhu Sheikh Mujibur Rahman was always committed to develop flood control, drainage and irrigation facilities in the country and repeatedly demanded implementation of the Krug Mission report. Immediately after independence, Bangabandhu established the relief ministry giving special attention to building a disaster resilient country through minimising losses of lives and properties caused by different natural hazards including cyclone and floods. He established Bangladesh Water Development Board (BWDB) in 1972 materialising the recommendation of the Krug Mission, bifurcating the then East Pakistan Water and Power Development Board (EPWAPDA) to accelerate the implementation of the flood control, drainage and irrigation measures. He took keen interest in solving the transboundary water issues and established Joint Rivers Commission on a permanent basis in 1972. Bangabandhu had installed earthen forts locally known as ‘Mujib Killa’ in coastal regions aiming to provide shelter to coastal flood and cyclone affected people along with their livestock. The First Five Year Plan of Bangladesh (1973-1978) that was prepared under his guidance as the Chairman of the Planning Commission put strong emphasis on sound management of water resources. Many of the strategies and policies for sound management of water resources highlighted in the first five year plan are as relevant today as they were then suggesting the far-sightedness of Bangabandhu in identifying the need for holistic management of water resources and flood management.

BDP-2100 has been conceived as a techno-economic, long-term, holistic, water-centric integrated plan. An interactive planning process has been followed for the finalisation of this mega plan over last four years. BDP-2100 focuses on how to enable socio-economic development under uncertain changing conditions, especially regarding climate change and scarce water resources. The plan is holistic, considering many themes and sectors and bringing together individual strategies as well as integrated ones for the whole country in a single plan.

BDP-2100 sets up a long-term vision for the evolution of the Bangladesh Delta by the end of the 21st century towards ‘achieving a safe, climate resilient and prosperous delta’. As steps to reach that vision, it envisages short to medium term goals to achieve upper middle income status eliminating extreme poverty by 2030 and become a prosperous country by 2041 with the longer term challenge of sustainable management of water, ecology, environment and land resources in the context of their inter-relation with natural disasters and climate change. The BDP-2100, therefore, seeks to ensure long term water and food security, economic growth and environmental sustainability while effectively reducing vulnerability to natural disasters and building resilience to climate change and other delta challenges through robust, adaptive and integrated strategies and equitable water governance. Socio-economic transformation has been visualised in this plan keeping in consideration climate change as an exogenous variable in growth equations.

Implementation of the BDP-2100 involves total spending on delta-related interventions, through new projects and maintenance of new and old projects, which will gradually increase up to a level of 2.5 per cent of GDP per annum by 2030– of which 2.0 per cent of GDP would be from public funding and rest 0.5 per cent would be from the private sector. The strategy for public funding involves a combination of tax financing, application of cost recovery based on ‘beneficiary pays principle’ and mobilising foreign funding including tapping the global Green Climate Fund (GCF) initiative. The BDP-2100 Investment Plan up to the year 2030, prepared in cooperation with World Bank group, consists of a total of 80 projects: 65 are physical projects, and 15 are institutional and knowledge development projects. Its total capital investment is estimated at Tk 2,978 billion ($37 billion). The investment plan projects have been selected following multi-criteria analysis and in-depth consultation with the stakeholders. The six hotspots are i) Haor and Flash Flood Area, ii) Coastal Zone iii), Chattogram Hill Tracts, iv) Urban Areas, v) Drought prone Areas, vi) River Systems and Estuaries. BDP 2100 took almost four years to give it a final shape to kick off. This comprehensive, techno-economic mega plan stretching a period to the end of the current century is the best gift to the future generations by the present generation.

Dr. Shamsul Alam is Member (Senior Secretary), General Economics Division, Bangladesh Planning Commission and

lead author of Bangladesh

$200m ADB loan to improve rural roads

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$200m ADB loan to improve rural roads

Star Business Report

Asian Development Bank (ADB) has approved a loan of over $200 million to improve rural road networks that may benefit 51.5 million people in Bangladesh.

“Rural roads are critical to supporting the country’s agriculture sector, which accounted for more than 15 percent of the country’s gross domestic product in 2015,” said Lee Ming Tai, ADB senior rural development specialist, yesterday.

The sector also employs—directly or indirectly—about half of the workforce, said Tai in a statement.

ADB’s Rural Connectivity Improvement Project will support the government’s current Seventh Five Year Plan, which focuses on boosting rural incomes as well as agriculture’s contribution to economic development, reads the statement.

The Manila-based multilateral lender also said about 80 percent of the country’s population lives in rural areas and depends on agriculture for its livelihood.

But the sector is held back by several major constraints, including insufficient rural transport, inadequate market infrastructure, and more intense floods and cyclones related to climate change, it said. According to the ADB, only about 40 percent of the rural population has access to all-weather roads, and these roads make up only 28 percent of the total length of rural roads in the country.

The aim is to increase the percentage of rural roads classified as good from 43 percent in 2016 to 80 percent in 2020.

The ADB project will support this by improving about 1,700 kilometres of rural roads to all-weather standards in 34 districts.

Selection of roads takes into consideration factors such as population size, agricultural potential, the number of farms and commercial establishments, and economic potential.

A particular priority is those roads damaged by flashfloods in 2017. The roads will be designed with safety features, including signage, guard posts, and speed breakers.

The roads will be covered under contractual maintenance for five years after the date of construction on a pilot basis.

The total cost of the project, which is due for completion in November 2023, is $285.31 million.

The ADB will provide a concessional loan of $100 million and a regular loan of $100 million. The government will provide the remaining $85.31 million.

Low-cost loans empower women

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Low-cost loans empower women

Speakers at a dialogue say

Star Business Desk

 

Lower interest rates have a direct impact on women empowerment and ensure their active participation in the financial sector, said speakers at a dialogue.

They spoke at the National Dialogue for Women Entrepreneurs at the Midas Convention Centre in Dhaka on Friday.

Midas Financing Ltd (MFL), one of the top non-bank financial institutions in the country, organised the event to acknowledge achievements of women entrepreneurs and encourage them.

Women entrepreneurs at the grassroots who achieved remarkable success shared their stories and the support they received from the MFL in their journey, according to a statement.

The MFL has distributed SME loans among 887 women entrepreneurs, who accounted for 20 percent of the total amount disbursed. Besides, there are a huge number of women who availed other loan products and expanded their business successfully.

Apart from providing financial services and benefits, the MFL has extended support in the form of training programmes, investment plans, management guidance and marketing strategies.

“In this aspect its parent organisation Midas is playing an important role to groom entrepreneurs,” said the statement.

“From the very beginning, they are providing intellectual support to the entrepreneurs by arranging comprehensive trainings on different contemporary issues and developing them for taking on the challenge of the global economy,” said the statement. 

Rokia Afzal Rahman, chairperson of MFL and a former caretaker government adviser; Parveen Mahmud, chairman of Micro Industries Development Assistance and Services (Midas); Tina Jabeen, adviser of the IDEA Project under the ICT ministry; Md Safiqul Islam, managing director of SME Foundation; Md Ashraf Hossain, managing director of Joyeeta Foundation; Shaikh Md Salim, general manager of the SME & Special Programs Department of the central bank; and ASM Mashi-ur-Rahman, managing director of Midas, spoke.

Shafique-ul-Azam, managing director of MFL, and Shameem Ahmed, head of administration, were also present at the event, which was moderated by Zareen Mahmud, a chartered accountant.

PepsiCo sees massive potential in Bangladesh

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PepsiCo sees massive potential in Bangladesh

CEO of PepsiCo’s franchise Transcom Beverages sheds light on soft drinks industry

Khondoker Md Shoyeb

The soft drinks industry has tremendous potential in Bangladesh, which is a home to a big pool of young population and has posted healthy economic growth in the last 10 years.

The industry normally grows along with the economy, which is evident from annual per capita consumption of soft drinks in developed countries: it is 450 bottles in Germany, 550 in the US and 600 in Mexico but only 17 in Bangladesh.

Bangladesh also lags behind its peers in Saarc — India 25 bottles, Vietnam 45 and Sri Lanka 40.

“Now the CSD [carbonated soft drinks] manufacturers need some policy support to make the most of this opportunity and achieve exponential growth,” said Khurshid Irfan Chowdhury, managing director of Transcom Beverages Ltd, the franchise of PepsiCo in Bangladesh.

Consumption of hard drinks in Bangladesh is highly regulated whereas it is widely consumed in developed countries – another factor that offers immense opportunities for the sector to grow, he told The Daily Star in an interview last week.

The CSD manufacturers in Bangladesh are burdened with a whopping 43.75 percent value-added tax and supplementary duty, which is much lower in other Saarc nations.

Such taxes hover around 35.3 percent in India, 29.2 percent in Sri Lanka, 24.2 percent in Nepal and 30 percent in Bhutan, according to Chowdhury.

The government should lower the existing 25 percent supplementary duty on the CSD, which was 15 percent four to five years ago, he said.

In the last six years, the CSD manufacturers have invested around Tk 4,000 crore in the industry, he said.

“If the taxes are cut, the sales of soft drinks will increase manifold, more jobs will be created and more new investment will be made.”

The sector has grown at 7-8 percent annually in the last five years whereas Transcom Beverages has grown more than 18 times since its inception in 2000, he said.

“PepsiCo is now the strong CSD market leader in Bangladesh with a huge gap in market share with its competitors,” said Chowdhury, who has 28 years of experience in the fast moving consumer goods industry.

A majority of the remittance recipients and families of garment workers live in rural areas, where soft drinks consumption is growing very fast, he said.

“We are basically involved in the carbonated soft drinks business and water segment.”

“The list of our products include Pepsi, 7 Up, Mirinda, Mountain Dew, Slice, Pepsi Diet, Pepsi Black, 7 Up Lite and Aquafina. PepsiCo now occupies over 50 percent market share in the CSD clear category thanks mainly to the champion brand 7 Up.”

7 Up has been adjudged the most loved brand and the Best Beverage Brand in Bangladesh for the last eight years by Bangladesh Brand Forum.

Transcom Beverages became the best bottler in the world and won the International Bottler of the Year award twice — in 2009 and 2016.

In the Indian region, Transcom Beverages won the Best Bottler of the Year award six times. “Our plants in Dhaka and Chattogram have also won Best Plant awards twice.”

Chowdhury said Transcom Beverages has a special place in the world as a marketer of Pepsi-branded soft drinks.

Transcom Beverages has so far invested close to $180 million in the industry, said Chowdhury, who is one of the global recipients of the PepsiCo President’s Ring of Honor award for his performance in 2010.

This is the highest award for a person in the soft drinks industry given by PepsiCo among its operations in the globe.

Transcom Beverages is also a top taxpayer in the country, he said.

It won the award as the highest taxpayer company in fiscal 2014-15 and 2016-17 in the food and allied category and achieved “AAA” credit rating from 2012 to 2017.

“All these were possible because of the continuous support and guidance of Transcom Group’s Chairman Latifur Rahman, who has also been awarded as one of the top taxpayers of the country for years,” he said.

“Latifur Rahman along with his Transcom Group is widely respected in Bangladesh for maintaining business ethics, which has paid off for Transcom Beverages.”

The soft drinks industry entered Bangladesh with returnable glass bottles when there were only Pepsi and Coca-Cola, he said.

It flourished after the introduction of soft drinks in plastic bottles in the early 2000s, said the veteran marketer, who started his career with Unilever and worked in different capacities, including regional sales manager and brand manager.

Transcom Beverages has three plants: two in Dhaka and one in Chattogram, said Chowdhury, who was the sales director of Reckitt Benckiser before joining Transcom Beverages as general manager for sales and marketing.

“Despite being a franchise, we are self-sufficient in many cases. We have our own preform manufacturing plant, shrink wrapping machine, filling machine and carbon dioxide plant.”

“We have to bring in the concentrate from the mother organisation. Our main source is Singapore and one of the main hubs is Ireland.”

Transcom Beverages always believed in giving back to the society as the company strictly follows its motto “Performance with Purpose”, said Chowdhury, who hails from Chattogram.

The company regularly provides scholarships to meritorious students among the children of its employees.

“We have also extended funds among the Rohingyas through Transcom Group’s Faraaz Hossain Foundation. We have also been there for the victims of the recent flood in the country.”

Malaysia’s new approved direct investments rise to $19.18b

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Malaysia’s new approved direct investments rise to $19.18b

KUALA LUMPUR, Oct 29 (Xinhua): Malaysia’s new approved direct investments in the services, manufacturing and primary sectors rose by 17.7 per cent year-on-year to 80.2 billion ringgit (about 19.18 billion US dollars) in the first half of 2018, according to data released Monday.

Malaysian Investment Development Authority (MIDA) said in a statement that the approved investments come from 2,346 projects, and are expected to generate 60,181 job opportunities for Malaysia.

The domestic investments which contribute 67 per cent to the total approved investments, expanded 10.5 per cent year-on-year to 53.7 billion ringgit.

Meanwhile, foreign investments grew 35.3 per cent year-on-year to 26.5 billion ringgit, mainly driven by investments in the manufacturing and primary sectors.

The services sector remains as the key driver, with its approved investments standing at 50.9 billion ringgit.

The approved investments for the manufacturing industry increased 21.2 per cent year-on-year to 20.2 billion ringgit. The primary sector contributed 9.1 billion ringgit or 11.3 per cent to the total approved projects.

The foreign investments in approved manufacturing projects surged 63.1 per cent year-on-year to 15.2 billion ringgit, mainly supported by Chinese investment.

China accounted for 6.5 billion ringgit, or 43 per cent of the total foreign investments, in the manufacturing sector, followed by South Korea (16 per cent), Japan (10 per cent), Singapore (5 per cent) and France (4 per cent).

According to MIDA, the notable investments include a new manufacturing project from China for the basic metals industry that involves utilising “blast furnace” technology that not only produces quality end-products at a cheaper cost but can also contribute to a greener steel-making process.

This project, which offers 98 per cent of its total job opportunities to Malaysians, is expected to reduce imports of intermediate goods and will strengthen the metal and steel industry, it said.

Trade war threatens global economy

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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

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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.