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Fresh congestion slows Ctg port

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Fresh congestion slows Ctg port

Chittagong Port has been facing container congestion for a week, the second this month, mainly because of slow delivery of import containers and transportation of containers to private inland container depots.

Import-laden containers lying in the port yards totalled 44,473 TEUs (twenty-foot equivalent units) till yesterday against the port’s storage facility of 37,620 TEUs.

A good portion of import containers are usually taken from the port to the ICDs from where importers receive the goods.

But the movement of the containers to the ICDs has been facing disruption for the last couple of days, after the Road, Transport and Highways Division banned trucks, covered vans and lorries from plying on the roads three days before Eid-ul-Azha.

As of yesterday, the number of ICD-bound containers lying at the port yards rose to 5,039 TEUs although the port doesn’t have designated space to store them.

The port experienced a similar congestion in the first week of August due to a transport crisis amid countrywide student protests demanding safe roads and an almost concurrently unannounced transport strike.

Although the Eid vacation ended, only a small number of vehicles plied as not all of the transport workers who had gone home to celebrate the vacation have returned, causing the poor delivery of imported goods.

Usually 3,000 TEUs to 4,000 TEUs of import-laden containers are delivered on a normal working day whereas only 3,000 TEUs were delivered in the five days to Saturday.

Abu Bakar Siddique, executive president of the Chittagong Prime Mover Owners Association, said a good number of containers were delivered from the port on Sunday as some vehicles have started plying.

Fazle Ekram Chowdhury, president of the Ship Handling and Terminal Operators Owners Association, said berth operators are working to ensure quick loading and unloading of containers but the handling has been disrupted because of the space shortage at the yards.

He called for a dedicated lane on the Dhaka-Chittagong highway for vehicles carrying goods to keep export-import activities unhurt.

Md Zafar Alam, member for administration and planning of the Chittagong Port Authority, said the situation has started improving as the delivery has been expedited since Sunday.

The situation would return to normalcy within a few days, he said.

Steelmakers flexing muscles

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Steelmakers flexing muscles

Large projects, housing sector boost demand

Sajjadur Rahman and Jagaran Chakma

Steelmakers are investing thousands of crores of taka either to expand existing capacity or set up new units as consumption is on the rise.

Per capital steel consumption in Bangladesh has grown more than 54 percent to 37kg in the last eight years thanks to the government’s large infrastructure projects and the thriving housing sector.

According to market players, per capita steel use was 24kg in 2010.

Market leader Bangladesh Steel Re-Rolling Mills (BSRM) and other top firms such as Anwar Ispat, AKS, GPH, KSRM and Bashundhara Steel have expanded their capacity in recent years.

PHP Family, a Chittagong-based business group, which has invested Tk 1,500 crore for a new unit in Feni, plans to invest about Tk 31,600 crore in the next five years to seven years to set up an integrated steel plant on 500 acres of land in the Mirsarai Economic Zone.

 

Chinese companies have also shown interest to invest in the steel sector.

Bangladesh’s steel sector has made great strides since the country’s independence.

In 1972, local millers used to produce a meagre 47,000 tonnes of steel. The figure rose to 55 lakh tonnes in 2017 and is expected to hit 70 lakh tonnes this year.

The sector turns over about Tk 30,000 crore a year in sales revenue.

The growing use may cheer up manufacturers and retailers, but Bangladesh lags far behind its peer countries and neighbour India when it comes to consumption. The country’s consumption is almost half of India’s 65kg and one-seventh of Asian average of 255kg, according to local companies and India-based information services provider SteelMint.

Still, local manufacturers are quite optimistic about a consistent and healthy growth of the industry in the years to come.

Tapan Sengupta, executive director of BSRM, said the sector is booming thanks to the high demand from large infrastructure projects and the housing sector.

The sector’s growth is mainly driven by the government’s spending on mega infrastructure projects, which account for more than 40 percent of the consumption, said Manwar Hossain, managing director of Anwar Group of Industries.

“The growth trend will continue for the next 20 years to 25 years and the steel demand will also increase in line with development activities of the government and the booming housing sector in both urban and rural areas.”

He said foreign investors have realized the potential of the market and are keen to invest in Bangladesh.

The demand has been growing at more than 15 percent annually for the last few years, said Md Ashrafuzzaman, director for marketing and sales of GPH Ispat.

“We predict the growth will reach 20 percent next year,” he said.

BSRM is the market leader with 25 percent share and produces about 15 lakh tonnes of steel every year.

There are some 400 big, medium- and small-sized steel mills in the country with a combined production capacity of 80 lakh tonnes. Of them, the top 10 companies hold more than 50 percent stakes.

Local millers manufacture mainly two types of products: flat steel (corrugated iron sheet and cold rolled coil) and long steel (mild steel rod and thermo-mechanically treated bar).

They primarily source raw materials from ship-breaking industry in Chittagong and also import 15 lakh tonnes of billets each year.

Nitol-Niloy to start assembling Tata pickups this month

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Nitol-Niloy to start assembling Tata pickups this month

Jagaran Chakma

 

A growing demand for commercial vehicles has encouraged Nitol-Niloy Group to start assembling Tata pickup trucks in Bangladesh from this month.

“Now we will assemble the pickup, but we have a target to manufacture at least 25 percent of the components locally by 2020,” said Abdul Matlub Ahmad, chairman of Nitol-Niloy Group.

The group initially plans to assemble 800 pickup trucks every month at a plant of Nita Company Ltd, a joint venture of Nitol and Tata, located in Jessore.

Currently, chassis of trucks, buses and minibuses are imported in completely knocked down (CKD) condition and assembled at this plant.

Bangladesh Road Transport Authority (BRTA) data showed that the demand for pickup trucks was over 1,000 units per month last year and the growth rate was over 18 percent.

BRTA gave registration to 13,512 units of pickup trucks of different manufacturers in 2017, up from 11,371 units in 2016; 10,257 in 2015 and 9,554 in 2014.

“We will start assembling pickups this month and it will be the beginning of automobile manufacturing in the country,” said Ahmad, also a former president of the Federation of Bangladesh Chambers of Commerce and Industry, the apex trade body.

He believes Nitol Motors would be able to introduce a “made-in-Bangladesh” pickup truck in January 2021.

Ahmad said as per international practice at least 25 percent of the components of a vehicle must be manufactured locally to call it a local product.

Nitol Motors would manufacture the chassis, body, pinion, wheel rim and brake components, which would be economically viable. Ahmad said Tata would directly supply the rest of the components to the manufacturing plant.

Nitol Motors started assembling Tata buses and trucks in 1991 and has been Tata Motors’ partner since 1988.

Now, it is the largest distributor of Tata Motors in South Asia, and the most dominant player in the country’s commercial vehicle market having over 40 percent of the market share. According to Nitol Motors, it accounts for over two-thirds of the pickup truck market in the country and it has been growing at a double digit rate for the past five years.

Ahmad said Nitol needs to invest around Tk 300 crore in the existing assembling plant to upgrade it for manufacturing pickup trucks and it would need Tk 800 crore to go for manufacturing trucks and buses in the future.

He said assembly of pickup trucks would reduce its present price in the domestic market by Tk 1 lakh per unit.

Nitol-Niloy Group has a diversified profile with exposure to assembling of vehicles, bus body making, after sales support, transport and aviation services, financial institutions, manufacturing industries, real state, properties development and sports promotion.

The group’s annual turnover was $128 million, equivalent to over Tk 1,000 crore, last year, according to its website. It has so far invested around $260 million and employs 3,170 people.

AIIB to bring $270m for water supply project

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AIIB to bring $270m for water supply project

Star Business Report

The Asian Infrastructure Investment Bank (AIIB) plans to bring $270 million to Bangladesh for a municipal water supply and sanitation project.

The project is expected to be approved at a board meeting in December this year, said Laurel Ostfield, head of communications and development of the Beijing-based lender, on Monday.

She shared the information while talking to The Daily Star when she and an AIIB delegation visited Savar to meet the beneficiaries of a power distribution system upgrade and expansion project, which was also financed by the lender.

The tentative investment will be co-financed by the World Bank, said Laurel.

Of the fund, the AIIB and the WB will contribute $130 million each and the Bangladesh government will chip in $10 million.

The project will be implemented from March 2019 to March 2024, according to the project proposal.

Currently, the AIIB has provided a total of $274 million in funding to three projects in Bangladesh. The Distribution System Upgrade and Expansion project is one of them and was completed in June this year.

The project is part of a national plan to provide about 2.5 million service connections to rural consumers, upgrade two grid substations and convert 85 kilometres of overhead distribution lines into underground cables.

The installation of the connections has been completed and about 12.5 million Bangladeshis are directly benefiting from the project, said SM Zafar Sadeque, chief engineer of Bangladesh Rural Electrification Board.

“We have provided electricity connections to 2.5 million new consumers under the project.”

The cost per connection was Tk 600, Sadeque told reporters during a meeting between the AIIB delegates and beneficiaries.

However, the beneficiaries complained that they had paid Tk 5,000 to Tk 10,000 per connection.

In response, Sadeque said local vested quarters had taken the extra money.

The AIIB delegates included directors Veronika Baumgartner-Putz, Emil Levendoḡlu, and Mark Dennis YC Joven and alternate directors Nikolai Putscher, Md Zahidul Haque and Prashant Goyal.

The AIIB is a multilateral development bank with a mission to improve social and economic outcomes in Asia and beyond.

It began operations in January 2016 and has now grown to 87 approved members from around the world.

NBR to narrow scope of tax evasion

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NBR to narrow scope of tax evasion

Star Business Report

Tax authorities plan to audit foreign companies’ transactions with their associated entities abroad from next year in order to reduce the scope for illicit fund transfer and tax evasion, said an official yesterday.

“We will start auditing cases that will be deemed high risk in terms of revenue losses,” said the official of the National Board of Revenue.

The NBR has reconstituted its Transfer Pricing Cell to bolster its operations to monitor international transactions by foreign companies in line with a law framed in 2012.

The tax authorities formed an eight-member cell, headed by Md Shabbir Ahmed, first secretary for tax policy, to examine any international transaction valued more than Tk 3 crore in a fiscal year by a multinational or its associated entities from Bangladesh to enforce the law, which has not been implemented fully yet.

Transfer pricing is an accounting method that allows multinational companies to shift net profits or losses to offshore or low-tax countries to maximize earnings.

For instance, two subsidiaries of a company, one based in a high-tax country and another in a low-tax haven, can engage in trade with one another.

The low-tax subsidiary can quote abnormally high prices for goods or services from the high-tax subsidiary to ensure maximum net profits for the parent company, an unethical practice many multinational firms may resort to.

The NBR has included the transfer pricing provision in the income tax law in the face of growing concerns of illegal outflow of funds from Bangladesh.

According to Washington-based research organisation Global Financial Integrity, $61.6 billion were siphoned out of Bangladesh between 2005 and 2014, equivalent to 25 percent of the country’s gross domestic product in 2016-17.

An NBR survey has found that 921 foreign companies, including multinationals, carry out transactions with their associated entities overseas to buy goods and services, said the official. Of them, 100-120 companies have been reporting international transactions for the last several years.

“We are examining the documents and we hope to complete the risk assessment by December to select cases for auditing,” he said.

The Netherlands is providing technical support to the revenue board to develop the capacity of tax officials on transfer pricing.

Runner allowed to make 500cc bikes

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Runner allowed to make 500cc bikes

The government has given the go-ahead to Runner Automobiles to import raw materials and components to make motorcycles of over 165cc to 500cc, widening export opportunities for the local company.

“We are very happy. The move will help us expand our export market and meet the growing demand of the international customers to a great extent,” said Hafizur Rahman Khan, chairman of the company.

The commerce ministry gave the import permission to Runner through a letter issued on August 30.

However, the letter attached a condition that no motorcycle above 165cc can be sold in the domestic market and none of the imported parts can be handed over to other companies.

Runner was also asked to take adequate safety measures to prevent sale of the higher capacity motorcycles and their components, according to the letter issued to the chief controller of the Office of the Chief Controller of Imports and Exports.  Runner started manufacturing two-wheelers in the country in 2010 and made its first shipment in January 2017.

“We have seen that there is demand for higher engine capacity motorcycles in Nepal, Bhutan, Sri Lanka and even in Myanmar,” Khan said. “There is demand for higher capacity bikes in African countries also.”

Khan said his company would be able to manufacture motorcycles of over 165cc from early next year to cater to the annual global demand of 2 crore units of two-wheelers.

“We will primarily focus on making 200cc to 250cc bikes.”

“It is a big achievement actually,” said Mukesh Sharma, managing director and chief executive of Runner Automobiles.

Runner has exported more than 1,000 units of motorcycles last fiscal year and aims to ship 2,000 units of higher capacity motorcycles by the end of 2019, Sharma said.

The withdrawal of the cap on import of components of over 165cc bikes came from the government as part of its efforts to diversify the export basket, an official of the commerce ministry said.

The government has cut supplementary duty on import of components for motorcycles by 25 percentage points to 20 percent in 2016-17 and framed a policy to develop a local industry for motorcycle manufacturing. Prices of motorcycles fell in Bangladesh thanks to the duty cut, which ultimately encouraged customers to buy more of such vehicles. The sale of motorcycles doubled to nearly 4 lakh units in the last five years, according to industry estimates.

Khan said five companies have already taken up bike manufacturing and five more plan to begin production.

He said Runner has a 14 percent share in the domestic market.

Ease trade rules to attract more US investment

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Ease trade rules to attract more US investment

Outgoing envoy suggests

Star Business Report

Bangladesh needs to reform its trade regulations for ease of doing business to attract more US investment, outgoing US ambassador Marcia Bernicat said yesterday.

“American businessmen and women have a lot of different choices. You want to bring them here. Once they get here they would be impressed, but once they are here the ease of doing business is the way to get them to stay here,” she said.

“Bangladesh’s ease of doing business is way too low. There is good money to be made here, there are a lot of great partners but 42 steps to open a business,” said Bernicat.

Addressing a farewell luncheon meeting of the American Chamber of Commerce in Bangladesh (AmCham) at The Westin Dhaka, she said reforms were needed to encourage businesses to flock here.

It is easy to do good business here and Bangladesh needs to do a better job at selling its story, she said, adding that Bangladesh is different now from what its story was in 1971. Bangladesh is not devastated by storms now.

“Too few people know about your consistent 6 percent or more growth rate over the years and vibrant sectors…Who has to tell the story? The government has to tell it, the industries have to sell it and the civil society has to sell it,” she said.

Regarding the safety progress in the garment sector, Bernicat said, “I would say the progress that has been made is enormous. But the safety has to be a part of the culture so that people know about it all the time. The Remediation Coordination Cell needs to be strengthened further to make it ready for operation.”

The ambassador—who completed a three-year tenure here—also said the US was by far the biggest investor for Bangladesh.

The US is also Bangladesh’s single largest export destination. In 2017, the bilateral trade between Bangladesh and the US stood at over $7 billion. US exports to Bangladesh grew 61 percent last year.

Clearly, the US firms are strongly interested to invest in this promising market, she said.

Bangladesh offered one of the world’s fastest growing economies, sustained impressive economic performance over the decades and the opportunity to enhance infrastructures and the burgeoning middle class, all key elements, said Bernicat.

She said both countries did a number of regional trade activities together and have highlighted the growing opportunities available for South Asia to trade with itself.

A lot more will be done under an Indo Pacific strategy, as US Foreign Secretary Michael R Pompeo stated recently. “Good part of the strategy is about keeping markets open, keeping sea lines open, keeping opportunities available for countries to attract investment to grow their business sectors. In Indo Pacific strategy, Bangladesh is considered as one of the strongest partners in South Asia,” she said.

“It is my expectation that Bangladesh will continue to grow. The next level of Trade and Investment Cooperation Forum Agreement (TICFA) talks will be held between September 13 and 14 in Washington where the bilateral trade issues would be discussed widely by both partners.”

Bernicat suggested strong corporate value that not only involves good products and a good price that was reliable but also improving the environmental value with corporate social responsibility and conducting business in a fair and transparent manner. Those practices and values about doing business are the right ways, she added.

Businesses have to use electronic fiscal devices from Nov 1

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Businesses have to use electronic fiscal devices from Nov 1

Star Business Report

Some 13 types of businesses, including hotels, restaurants and supermarkets, will have to begin using electronic fiscal devices from November 1 this year to record transactions and issue sales receipts to customers, said the revenue authority.

Businesses operating in district towns will have to start using EFDs, electronic fiscal printer (EFP) and point-of-sales (POS) from December 1, as per the order issued by the National Board of Revenue last week.

It means that businesses will have two to three months to comply with the order.

The revenue authority’s directive comes two months after Finance Minister AMA Muhith shared the plan to make use of EFDs in his budget speech for the fiscal 2018-19 to combat VAT evasion at the retail level.

The EFD, which will be connected with electronic fiscal device management systems (EFDMS) at the NBR, will replace the conventional electronic cash registers (ECR) that are now in use in many stores.

The NBR did not specify whether the ECRs that many firms installed in line with a 2008 order of the tax authority will be phased out immediately.

At present, several thousand shops use ECR and POS machines. However, not all use the device to issue sales invoices to customers in an attempt to appropriate the VAT and hide actual transaction figures from taxmen. The NBR has given technical specification of EFDs and EFPs for traders to ensure before installing in their stores to record sales.

The EFDs must be able to exchange data with EFDMS. Business will get code from EFDMS and issue sales receipts to customers.

Each EFD will be registered against one Business Identification Number (BIN). But if a business uses two or more EFDs, all will be registered against a single BIN.

If any business uses POS, the firm will have to have EFP and the device should have features to send data to EFDMS at the NBR.

Hotels, restaurants, supermarkets, clothing stores and shops in malls, sweet shops, furniture stores, beauty parlours, electronic or electrical household items sellers, community centres, department stores, small and medium wholesale stores and jewellery stores will have to use EFDs.

The NBR should have issued the order of implementing EFD after discussing it with businesses, said Helal Uddin, president of the Bangladesh Shop Owners Association.

“Discussion is necessary as many shop operators do not realise yet that the use of ECR allows them to keep accounts properly. It will not be possible to implement the system by force.”

Govt yet to decide on joining Belt and Road

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Govt yet to decide on joining Belt and Road

Tofail says

Star Business Report

Bangladesh has no plan to join the much-talked about Chinese flagship Belt and Road Initiative, which has been taken to rediscover the ancient Silk Road for trade across Asia and the Europe, Commerce Minister Tofail Ahmed said on Sunday.

The minister made the comments at a press meet at his secretariat office in Dhaka after a meeting with Zhang Zuo, the newly appointed Chinese ambassador to Bangladesh.

Ahmed said till now they did not think about joining the belt and road initiative of China.

The minister also talked on Bangladesh’s duty-free market access to China. Bangladesh as a least developed country (LDC) has been enjoying zero-duty benefit on export to China on 5,074 products, a majority of which are garment items.

But as per rules of the World Trade Organisation, LDCs are supposed to get duty-free market access on their 97 percent products.

The minister also hoped that China will continue to give duty benefit to Bangladesh even after the latter’s graduation to a developing nation in 2024. “We have already sent a letter to China to continue to getting the duty benefit on exports,” Ahmed told reporters.

Bangladesh has started taking efforts to enjoy the duty facility as the Chinese government said that it would cancel the benefits it gives under the existing Asia Pacific Trade Agreement (APTA), Ahmed said.

Bangladesh has also been trying to sign a free trade agreement (FTA) with the Asian economic giant to continue to get the duty benefit, the minister said. But the signing of an FTA generally takes a long time, he said. Bangladesh has been enjoying duty benefit on export of 83 products under the APTA to China.

China is the largest import destination for Bangladesh.

Poverty to end by 2024

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Poverty to end by 2024

Muhith says at BSEC’s National Mourning Day event

Star Business Report

Bangladesh will be free of poverty by 2023-24, Finance Minister AMA Muhith said yesterday.

Bangladesh is on course to maintain its present growth trajectory, and if everything goes right it will become a developed nation by 2041 and fulfil Bangabandhu’s dream of turning Bangladesh into Sonar Bangla (Golden Bengal), he said.

Muhith made the comments at a discussion on the National Mourning Day at the Bangladesh Securities and Exchange Commission (BSEC).

However, according to the Sustainable Development Goals, there will be no poverty after 2030, Muhith said.

Three-fifths of the national income was lost during the nine-month Liberation War of Bangladesh in 1971, he said mentioning a study.

Before being assassinated on August 15, 1975, Bangabandhu Sheikh Mujibur Rahman worked hard to give the war-torn country the right shape.

The country started falling following the brutal killing of the Father of the Nation in 1975, Muhith said.

Military rule started in the country, and it required 15 years to get out of that trap, he said.

Democracy was restored in 1990, especially during the period when the Awami League-led government was in power, he said.

In the period, Bangladesh graduated from the less developed country category to the developing one’s bloc, he said.

Showing respect to the memories of Bangabandhu, the finance minister said, “I am marching forward by turning the shock of losing Bangabandhu into strength with his blessings.”

BSEC Chairman M Khairul Hossain presided over the mourning day function.