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Euro zone growth slows more than expected

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Euro zone growth slows more than expected

Reuters, Brussels

The European statistics office Eurostat said economic growth in the 19 countries sharing the euro slowed to 0.2 percent in the third quarter against the previous three months, after a 0.4 percent expansion in the second quarter.

Year-on-year euro zone growth slowed to 1.7 percent from 2.2 percent in the second quarter. Economists polled by Reuters had expected a 0.4 percent quarterly expansion and a 1.8 percent year-on-year rise.

Eurostat does not provide national data in its flash estimates, but figures released earlier on Tuesday by the Italian statistics agency showed Italy’s growth had halted in the third quarter amid a row with the European Union over the country’s budget for next year.

In a separate release, the European Commission said on Tuesday economic sentiment dropped in the euro zone for the tenth consecutive month, and by more than expected by economists. The indicator, that shows managers and consumers’ morale, fell to 109.8 points in October from 110.9 in September in its biggest dip since March.

Although it remains above the long-term average, the indicator has been falling since the beginning of the year after having risen steadily in 2017.

In October the largest fall was recorded in retail services as managers held “much grimmer views on the present and expected business situation,” the Commission said and the indicator of selling price expectations dropped.

Confidence in industry and services also went down, while consumer sentiment grew slightly on improved savings expectations.

Among euro zone countries, economic morale fell in Germany, France and Italy, the three largest economies of the bloc, while it grew in Spain.

In Italy the downward trend, which is coupled with economic stagnation in the third quarter, began in July, the month after a eurosceptic government took office in Rome.

Yuan hits decade low on trade, economy fears

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Yuan hits decade low on trade, economy fears

Afp, Shanghai

The Chinese yuan weakened to a decade low on Tuesday on concerns over China’s slowing economy and the US trade war, but Beijing was expected to prevent it breaking the psychologically important 7 yuan per dollar barrier.

The yuan drifted past 6.96 to the dollar, hitting its weakest levels since May 2008.

Breaking 7 could further undermine market confidence and potentially trigger fresh US accusations that China was allowing the yuan to weaken to blunt the impact of tariffs that Washington has imposed on Chinese goods.

A weaker yuan makes Chinese exports less expensive overseas, ameliorating some of the higher costs brought by the tariffs.

China restricts the yuan’s daily trading band, and a front-page commentary on Tuesday in the state-run Economy Information Daily said authorities were unlikely to let it hit 7 to the dollar.

“China’s balance of payments situation won’t change in the short term. Current monetary officials have the strength and determination to stabilise the market. There also are enough policy tools to deal with changes in the situation,” it said.

Washington has imposed tariffs on billions of dollars worth of Chinese goods as President Donald Trump tries to pressure Beijing to change trade policies that he says are unfair to US companies.

The yuan is likely to remain weak as long as the trade row persists, Ben Kwong, executive director at KGI Asia, told Bloomberg News.

“Chinese officials have already indicated they don’t want the yuan to break through 7 this year. The yuan may fall very close to 7 but maybe not beyond that,” he said.

Washington recently declined to officially label China a currency manipulator — a designation that would have further escalated the trade fight — but expressed concern over the yuan’s weakness and Beijing’s foreign exchange policies.

Cut economic disparity to achieve SDGs by 2030

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Cut economic disparity to achieve SDGs by 2030

Experts suggest at PKSF’s conference

Star Business Report

The government should take steps to reduce economic disparity to achieve sustainable development goals by 2030, experts said yesterday.

Sustainable development aims at reducing economic disparity, said Qazi Kholiquzzaman Ahmad, chairman of Palli Karma-Sahayak Foundation (PKSF).

Corruption is the main barrier for the country’s economic development and the government will be able to achieve more growth only if corruption is cut, said Abdul Mannan, chairman of University Grants Commission.

Corruption is interrupting the development and widening the disparity, Ahmed said.

They spoke at a two-day international conference on “Pathways to a sustainable economy: Vision 2041 Agenda for Bangladesh” organised by the PKSF at its conference room in Dhaka.

Abdul Karim, managing director of the PKSF, gave a presentation on the economic progress of the country.

The growth of the country’s gross domestic product was 4 percent in 1990, which improved to 7.86 percent in 2018, Karim said.

At present, 12 percent people live below the poverty line in the United States while for Bangladesh it is 22 percent, he said.

The earnings of Bangladeshis have improved significantly but the development achieved is not balanced, he said.

He suggested that the government cut regional economic disparity to achieve sustainable development.

Bangladesh should give more focus on clean energy and develop micro entrepreneurship to make the development sustainable, said Moazzem Hossain, professor of Griffith University in Australia.

Hossain, who is also the convenor of the conference, stressed the need for women empowerment to accelerate the economic development.

Three sessions were held on the first day of the conference where three papers were presented by local and international experts.

BGMEA chief’s company gets IGW licence

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BGMEA chief’s company gets IGW licence

 

Muhammad Zahidul Islam

 

The government is set to award one more licence for the international voice call routing — a mindboggling move given the sector is already overcrowded and struggling.

The new licence was given to LR Telecom, a company owned by the president of the Bangladesh Garment Manufacturers and Exporters Association and his family.

Since 2013, the sector has been controlled by a cartel of International Gateway (IGW) operators.

Amidst the backdrop, two months ago, BGMEA President Siddiqur Rahman, chairman of LR Telecom Limited, suddenly applied to the Bangladesh Telecommunication Regulatory Commission for a licence.

This prompted the telecom regulator to open the procedure for licensing.

 

The BTRC, the licence awarding authority for telecom-related services, on September 19 invited applications for awarding IGW licence without mentioning the number of licences it would award.

Following the BTRC’s invitation, 14 companies, including LR Telecom, applied for IGW licence and the telecom regulator chose only one company and made the recommendation to the posts, telecommunication and information communication ministry, said official of the regulator.

Rahman yesterday said he has no idea whether he got the licence or not but he has grand plans for this industry.

His son will run the business as he is the managing director of LR Telecom. Rahman’s wife is also a director of the company while the fourth director is a family member too, said a top official of the BTRC.

The licence would be awarded upon fulfilment of licensing conditions by LR Telecom, he said.

The IGW business started in 2008 after an open auction. Only three private companies got the licence, with one being the government-owned Bangladesh Telecommunication Company Limited.

Then in 2010, the Awami League-led government, during the first of its two consecutive terms, issued 25 IGW licences, mostly for party-men, ignoring a BTRC assessment that informed that the sector could hardly accommodate four more entities.

The telecom regulator still issued the new licences following pressure from the politically-affiliated businesses.

Currently, there are 25 active licences running the IGW business. Four licences have already been cancelled for improperly sharing revenues, which is a violation of the rules.

Six companies, which have about Tk 1,000 crore in dues pertaining to licence fees and revenue share of the telecom regulator, have gone traceless after transferring the shares to unidentified persons.

Rahman said he is well aware of the industry and will try to match with the process.

After the increase in licence numbers, the operators pressurised the government to reduce its revenue-sharing portion to 40 percent from 51.75 percent for viability of their business.

Later, the operators created a cartel and increased the incoming international call routing rate to 2 cents per minute. However, they continued sharing revenue with the government at the previous rate of 1.5 cents per minute.

Currently, calls of about 4.5 crore minutes in duration are coming into the country every day. It was about 11 crore minutes on average every day in September 2014.

Despite the fall in the volume of international calls, the government in February this year increased the international call termination rate to 2.5 cents from 2 cents while the operators were asked to share revenue with the government at 1.75 cents per minute.

Pacific Jeans investing $100m to diversify products

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Pacific Jeans investing $100m to diversify products

Sajjadur Rahman and Dwaipayan Barua

Top denim maker Pacific Jeans is spending $100 million to set up two new factories in Chattogram in two years with the view to diversifying product base.

One of the units, Pacific Knitex, will produce fabrics, while the other, Pacific Casuals, will make activewear, which would help the company broaden its product offerings from denim.

“Active wear is not a traditional garment product. Rather, it is a specialised product that Bangladesh is yet to explore,” said Syed M Tanvir, a director of Pacific Jeans, which exported denim products worth $400 million in fiscal 2017-18.

He hopes a good business prospect in this segment after seeing the progressive shift towards an active and healthy lifestyle globally.

North America dominates the global activewear industry thanks to its endless appetite for the athleisure trend.

Athleisure is a trend in fashion in which clothing designed for workouts and other athletic activities is worn in other settings such as at the workplace, schools or other casual or social occasions.

The European activewear market is also growing exponentially due to high popularity of sporting events, which led to increased participation and high demand for replica team jerseys and outerwear.

Asia-Pacific, which lags behind the US and Europe in use of activewear, is also expected to witness significant growth from 2018 to 2024 due to an increase in awareness of health and wellness and a rise in participation of youth population in sports activities, said Allied Market Research, a US-based research and advisory company.

Improvement in living standards and the rise in disposable income are expected to boost the growth of activewear market in the years to come, it added.

Vietnam has done well in activewear, which is made out of man-made fibre, according to Tanvir. “But that’s because of Vietnam’s duty benefits in the US market.”

Tanvir, who joined Pacific Jeans after completing his postgraduation degree in international marketing in 2004, has made the company the country’s leading denim exporter in the last one decade.

Pacific Jeans, founded by his father M Nasir Uddin in a small scale in the Chattogram Export Processing Zone (CEPZ) in 1994, exports premium denim products. The price ranges from $50 to $180 a piece.

It employs 26,000 people in its five factories located in the CEPZ. The new facilities will create another 5,000 jobs.

The young entrepreneur sees a bright prospect for export of apparel products from Bangladesh, which according to him, is now the safest sourcing hub globally with skilled manpower.

“Bangladesh has set the standard, no matter how big or small a factory is,” said Tanvir, who works 11 to 12 hours a day.

But, there is no scope for complacency as Vietnam is going neck-to-neck with Bangladesh in the list of global apparel exporters.

“We have a good chance to boost our exports if we can utilise our opportunities,” he said.

Bangladesh has done fairly well in many economic indicators but the next 10 years will be crucial.

“We need the right infrastructure, energy and economic zones,” Tanvir added.

Early bitcoin investors count winnings after volatile decade

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Early bitcoin investors count winnings after volatile decade

 

Reuters, New York/London

SEVEN years ago, Marshall Hayner gave his grandfather one bitcoin, worth about $30. On the paper wallet he fashioned to commemorate the gift, the U.S. entrepreneur and software developer wrote: “Do not open until $100,000.”

It made Hayner’s grandparents laugh, and indeed bitcoin has not come anywhere near that level. But it is worth more than 200 times what it was in 2011 when Hayner made the gift.

Investors who took a chance on the fledgling currency and stuck with it have been on a rollercoaster ride – but are optimistic that they are still onto a winner.

“I have seen these run-ups and drops in bitcoin and I did not even flinch,” said 34-year old Hayner, who started mining bitcoins in 2009 when the granddaddy of all cryptocurrencies was worth nothing. He also founded payments company Metal Pay.

“I believe in this technology. I really believe that bitcoin is the next digital gold,” he said in an interview this week.

Bitcoin on Wednesday celebrates ten years since Satoshi Nakamoto, bitcoin’s mysterious founder, released a whitepaper outlining the need for an internet currency that could be used as payment without going through a third party like a bank. One bitcoin is now worth around $6,200. That is a steep 70 percent fall from its all-time high of near $20,000 in December last year, hurt by a more intense regulatory scrutiny around the world, as well as the rise of cryptocurrency crime including hacking, but a substantial boost for any early investors who bet on it.

“If the price goes down, I am happy because I was able to sell some,” said Israeli entrepreneur Daniel Peled, who has bought since late 2013 and believes another record peak is a few years away. “And if it goes up, I am happy too because I am still holding some.”

Peled’s optimism is partly based on his waiting for bitcoin’s next “halving,” which has constrained its supply and has caused its spike as demand increased.

Bitcoin relies on so-called “mining” computers that validate blocks of transactions by competing to solve mathematical puzzles every 10 minutes. In return, the first to solve the puzzle and clear the transaction is rewarded new bitcoins.

Bitcoin technology was designed in such a way that it cut the reward for miners in half every four years, a move that was meant to keep a lid on inflation.

The next halving is scheduled in 2020 and the following year should be a good year for bitcoin, Peled said. The same optimism has prompted London-based investor Nicholas Gregory to keep his bitcoins, which he bought heavily in early 2014.

Distrustful of exchanges, Gregory, currently chief executive of blockchain firm CommerceBlock, made his first purchase through a website that matched him to a man selling bitcoins on a memory stick in a New York cafe.

Since then, he has not sold any bitcoins, citing the potential of the digital currency to safely store value and transfer money across the internet.

Some investors, however, have become disillusioned, arguing that bitcoin has been held back and not reached its expected potential by taking off in the real world.

Vaughn Blake, a Los Angeles-based portfolio manager at private equity firm Echo Tree Capital, liquidated his cryptocurrency quantitative fund in January this year when bitcoin was at $13,000. He started investing in bitcoin in 2013 when it was around $120 but said he has been a victim of hacks and phishing attempts.

Bitcoin’s technology has also not always been an efficient means of processing payments. It can be slow, sometimes incurring higher fees than regular transactions, market participants said.

London-based entrepreneur Jez San, CEO of blockchain firm Funfair Technologies, started buying bitcoin in 2013, at around $50, but sold most of it well before the peak in December 2017.

He invested in Ethereum, the second-largest cryptocurrency that runs on another public blockchain network, instead.

“We all expected people would be buying coffees with it and they would use it instead of PayPal,” said San. “Bitcoin is way too hard to use – it’s so user unfriendly that the man in the street just can’t use it.”

Deal signed for Ctg elevated expressway

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Deal signed for Ctg elevated expressway

Star Business Desk

Max-Ranken Joint Venture on Tuesday signed a contract with Chittagong Development Authority (CDA) to construct a four-lane elevated expressway from Lalkhan Bazar to Hazrat Shah Amanat International Airport in Chattogram.

The project, including a 16-kilometre flyover and a 12-kilometre ramp, is scheduled to be complete in four years with government finance. The venture was the lowest bidder in an international tender, says a statement yesterday.

Abdus Salam, CDA chairman; Mohammed Mahafuzur Rahman, the project director, and Ghulam Mohammed Alomgir, chairman of Max Group, attended the signing at the CDA office in the port city.

“Very recentlywe have successfully completed the construction works of Chowdhury Akhtaruzzaman Flyover in Chattogram. The same way, we will complete this elevated expressway project in the stipulated time by introducing state-of-the-art technologies and equipment,” said Alomgir.

Time to be more innovative in fashion, design

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Time to be more innovative in fashion, design

Say apparel exporters, buyers
Star Business Report

After a journey of four decades of business, the time has come for Bangladesh to be more innovative in fashion and design for sustainability of garment business in the era of fierce competition in global apparel business, exporters and buyers said yesterday.

Also, Bangladesh’s garment manufacturers need to try to change the brand image of the country and the image of the garment sector, as a brighter image of the country and the sector helps get better prices for apparel items, said KM Rezaul Hasanat, chairman and CEO of Viyellatex Group, a leading exporter.

Bangladesh also needs to improve the negotiation and marketing skills so that manufacturers can grab more of the market share while receiving higher prices from retailers and brands, he told a seminar on “Leveraging sustainable supply chain” at the Westin Dhaka hotel as a panel discussant.

British banking giant HSBC and the United Nations Development Programme (UNDP) jointly organised the seminar participated by textile producers, garment exporters, representatives from different retailers, brands and donor agencies and bankers.

Hasanat sought cooperation from development agencies to help Bangladesh brighten its image and that of the garment sector for the sustainability of the apparel business.

Shwapna Bhowmick, country manager of British retail giant Marks & Spencer, suggested garment manufacturers and exporters change the traditional marketing system and shorten lead-time to capture more market share in global apparel business.

Bhowmick, who is a Bangladesh-born country manager for the M&S, also called for improving the capacity of the country’s premier Chattogram port as the volume of garment business is increasing.

Local garment manufacturers also need to increase the production volume of the value-added garment items like suits for which retailers, brands and customers pay more, aiding the sustainability of the garment business, she said.

The government is developing 100 special economic zones across the country to attract more investment from both domestic and overseas investors, Md Abul Kalam Azad, principal coordinator for SDG Affairs at the Prime Minister’s Office, said while addressing the seminar as the chief guest.

Moreover, the government has already allocated 500 acres of land at Mirsarai in Chattogram to garment manufacturers so that they could build factories there and another 500 acres have been set aside from where more allocation can be availed.

Calling for more investment in the potential agro-processed and pharmaceuticals sectors, Azad said the government has been planning to cultivate cotton—the basic raw material of finished garment products—in Africa to meet the growing demand for the white fibre.

Sustainability of the business mainly depends on the welfare of the employees, said Kutubuddin Ahmed, chairman of Envoy Group, another leading garment and textile producer. But at the same time good practices are required to protect the environment, he said.

Ahmed has launched a host of welfare package for his 2,800 employees at Envoy Textile, which has the world’s first Platinum rated LEED (Leadership in Energy and Environment Design) certified green building at Bhaluka.

“At HSBC, our aim is to support the development of sustainable supply chains for our clients, which will help them to grow internationally,” said Francois de Maricourt, CEO of HSBC Bangladesh.

“As the second largest apparel exporter, Bangladesh should continue to drive the sustainable supply chain practices, given the expected impact of climate change.”

“Inclusive business models have the potential to sustainably serve everyone through mutual benefit, be they the smallest enterprises or multinational giants, when tied together in a shared supply chain,” said Sudipto Mukerjee, country director of UNDP Bangladesh.

Impact measurements can help identify supply chain gaps in policy, infrastructure and/or resource and creatively plug them to maximise social benefits and profits for everyone, he said.

Linda Germanis, project manager of UNDP Innovation Hub, gave the keynote presentation.

Rensje Teerink, head of the European Union delegation to Bangladesh; Matthew K Lobner, group general manager, head of international and head of strategy and planning for HSBC Asia Pacific, and Md Mahbub Ur Rahman, deputy CEO and country head for wholesale banking at HSBC Bangladesh, moderated the session.

Bangladesh comes last in South Asia

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Bangladesh comes last in South Asia

Rejaul Karim Byron

Bangladesh ranked 176th out of 190 countries in the World Bank’s Ease of Doing Business index this year, which is the lowest ranking for a South Asian nation — an alarming development given the government’s claims of reforms to improve the score.

The Washington-based multilateral lender’s Doing Business report, which was published yesterday, sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-sized business when complying with relevant regulations.

The report points out changes in regulations affecting 10 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

Although Bangladesh’s ranking has gone up one notch this time, its score in seven out of the indicators has deteriorated compared to last year.

Bangladesh’s grade registered major fall in: starting a business (138 from last year’s 131), getting credit (161 from 159 last year), protecting minority investors (89 from 76 last year), dealing with construction permit (138 from 130 last year), and trading across borders (176 from 173 last year).

There were improvements in the areas of getting electricity (179 from 185 last year), registering property (183 from 185 last year) and paying taxes (151 from last year’s 152), which pulled up Bangladesh one notch this year.

Its grade remained the same in enforcing contract and resolving solvency although the scores were lower than last year.

The government has been pursuing reforms to improve Bangladesh’s ranking by developing indicator-specific action plans, said Zahid Hussain, lead economist at the WB’s Dhaka office.

“Despite these, the ranking has not improved much yet because of limited progress in implementation.”

Moving forward, the government will need to speed up implementation through stronger demonstration of high level commitment, regular follow-up, better inter agency coordination and effective accountability mechanisms, he added.

Last year, among the eight South Asian countries, Bangladesh was only ahead of Afghanistan. But this year, the war-torn country too left Bangladesh behind: it came in at 167th in contrast to 183rd last year.

India ranked the highest in South Asia this year, at 77th.

The top five countries on the list are New Zealand, Singapore, Denmark, Hong Kong and Korea. The worst five performers are Somalia, Eritrea, Venezuela, Yemen and Libya.

Mega steel plant in the works

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Mega steel plant in the works

Bangladesh-China JV to invest $3.5b

Jagaran Chakma

A consortium of 17 local companies and a Chinese steelmaker is set to invest $3.5 billion to establish a Bangladesh-China joint venture integrated steel plant in Moheshkhali.

Of the sum, Kunming Iron and Steel Holding Company (KISC), a leading steelmaker from China, will foot $2.4 billion.

The rest will be provided by Star Infrastructure Development Consortium (SIDC), a combination of 17 business groups including BRSM, Crown Cement, Nitol Niloy and Unique Group.

“We have a plan to build a plant that would provide all kinds of steel products,” said Abdul Matlub Ahmad, chairman of Nitol Niloy Group.

More than 20 lakh tonnes of steel products would be manufactured at the plant, according to the business proposal submitted to the Bangladesh Economic Zone Authority.

“This plant will be an import substitute, and it would save foreign exchange,” said Ashraful Haq Chowdhury, managing director of SIDC, adding that the plant will create employment for 20,000 directly.

The construction of the plant would not start for another year, he added.

Manwar Hossain, managing director of Anwar Group of Industries that owns Anwar Ispat, said foreign direct investment is always welcome.

“But we have to keep in mind that the foreign investments do not hurt the local players, especially small ones,” he added.

Meanwhile, two preliminary agreements were signed in November last year between BEZA, KISC and SIDC.

Ahmed said this would be a mega project comprising a port, a coal-fired power plant and a cement factory and the members of the consortium would invest in the plant as partners.

The project needs depth of the sea as they would anchor the mother vessel iron ore that would be used as raw material for the steel plant, said Paban Chowdhury, executive chairman of BEZA.

Subsequently, the China-Bangladesh joint venture sought 1,000 acres from the Bangladesh Economic Zone Authority in the Moheshkahli economic zone.

KISC is conducting feasibility study in two sites, Chowdhury said.

It wants to establish a cement factory to use the fly ash of the steel plant and a power plant to utilise the heat of the steel plant.