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Govt vows to address private sector’s woes

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Govt vows to address private sector’s woes

Finance minister and prime minister’s key adviser meet business leaders

Star Business Report.

The finance minister and a key adviser of the prime minister yesterday came up with big promises to improve the business climate, reduce the interest rate on lending, bring down bad loans, boost revenue income and develop the capital market.

They vowed to carry on the promises for boosting economic growth and to live up to the expectations of the private sector.

“We have to reduce the interest rate or else doing business will be tough,” Finance Minister AHM Mustafa Kamal told reporters after a meeting with prominent business leaders at the NEC auditorium in the capital.

Prime Minister’s Private Industry and Investment Advisor Salman F Rahman accompanied the minister at the meeting, which had more than two dozen business leaders. The business leaders placed their problems at the meeting.

“We will not impose any tax target on the National Board of Revenue. Rather, they will let us know what they can achieve,” said Kamal, also a chartered account.

Tax office will be set up at 492 upazilas across the country to increase revenue, he said. “But that will be done without hiking the rates.”

The finance minister also vowed to reduce the non-performing loans. “Otherwise, the banking sector will be weakened.”

More such meetings will be held between the government and the private sector in the days ahead.

“No one will go empty-handed. We will work in a win-win partnership.”

But, they have to help the government to achieve its revenue target of Tk 296,000 crore for this fiscal year in exchange of the government’s initiatives.

“A frustration is observed amongst the businesses as we assured every year that we would fulfil their demands, but those are yet to be implemented.”

Their core demands are to bring down the existing high interest rate on lending and decrease the tax rates to a sensible level, he said.

The business leaders said there were some problems in doing business in the steel, cement, pharmaceuticals and some other sectors.

“Salman F Rahman has already started working with the Bangladesh Investment development Authority to improve the ease of doing business and you will see within three months what the outcome will be,” the finance minister added.

The government wants the economy to flourish by increasing the periphery of investment that will generate employment, said Md Shafiul Islam Mohiuddin, president of the Federation of Bangladesh Chambers of Commerce and Industry.

To help the government fulfil its revenue target, a business-friendly environment must be ensured. Mohiuddin went on to call for lowering of the interest rate without further ado. Otherwise, the investment momentum will come off.

“The minister has informed that the multiple rate of VAT would be established. But he has not given any indication when the rate will be effective,” he added.

Bangladesh Bank Governor Fazle Kabir, Finance Secretary Abdur Rouf Talukder and NBR Chairman Mosharraf Hossain Bhuiyan were present at the meeting.

Leaders of the FBCCI, the Dhaka Chamber of Commerce and Industry, the Metropolitan Chamber of Commerce and Industry, Dhaka Stock Exchange, leather and footwear manufacturers, agricultural businesses, real estate sectors and government stakeholders attended the meeting.

ADB gives $50m for development of microenterprise

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ADB gives $50m for development of microenterprise

Unb, Dhaka

The government and the Asian Development Bank (ADB) yesterday signed an agreement for a $50 million loan to promote microenterprise development for inclusive economic growth and poverty reduction.

The assistance will help improve microenterprises’ access to finance through Palli Karma Sahayak Foundation (PKSF)—an apex development finance and capacity building organisation—and its partners.

Monowar Ahmed, secretary of the Economic Relations Division, and Manmohan Parkash, country director of ADB, signed the agreement at a ceremony in the city.

The total cost of the project, which is due for completion at the end of 2020, is $62.5 million, of which the microenterprises will contribute $12.5 million.

“The greatest constraint in developing microenterprises in Bangladesh is the limited access to finance. This project will provide financing to ease this constraint,” said Parkash.

“The project also introduces an innovative mobile-based microenterprise financing application on a pilot basis, and boosts forward linkages to agriculture, thus promoting rural growth and income and job opportunities.”

The loan will be provided to PKSF to on-lend to partner organisations to sub-lend among about 40,000 microenterprises, of whom 70 percent are female.

To address medium-term challenges, the project will help PKSF to develop a financing strategy and carry out institutional strengthening.

For the longer term, ADB said, the project will develop microenterprise finance operational guidelines for microfinance institutions.

It will also assist in clustering microenterprises for business expansion and up-scaling with quality control, branding, packaging, and marketing.

The project is accompanied by an ADB technical assistance grant of $500,000 to enhance the capacity of PKSF and its partner organisations in microenterprise lending and promoting sustainable operations.

The grant is from ADB’s Financial Sector Development Partnership Special Fund, financed in partnership with the government of Luxembourg.

BB may seek opinions from minister, legal experts

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BB may seek opinions from minister, legal experts

Star Business Report

The central bank may hold a meeting with the law minister, the attorney general and judges to take their opinion on how to amend the existing laws with a view to clamping down on habitual defaulters.

At a meeting with the central bank yesterday, the chief executive officers of private banks proposed the Bangladesh Bank to sit with the people in the judiciary. The BB agreed to the proposal, meeting sources said.

BB Governor Fazle Kabir presided over the meeting, where Bangladesh Law Commission Chairman ABM Khairul Haque and Bangladesh International Arbitration Centre CEO Muhammad A (Rumee) Ali were also present.

The willful defaulters frequently file writs with the High Court to evade falling into the default zone.

So, banks will be able to secure help from the people in the judiciary if the meeting is organised, Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh, told reporters after the meeting.

The central bank has recently started working on amending three acts — the Bankruptcy Act, 1997, the Artha Rin Adalat Ain 2003 and the Negotiable Instruments Act, 1881 – to rein in the rising default loans.

Habitual defaulters should be barred from obtaining or renewing passports, purchasing land and getting licence for vehicles by way of amending the laws, Rahman said.

“The existing Bankruptcy Act has already failed to nab defaulters because of loopholes. So, the authorities should amend it immediately.” Some of the provisions of the Artha Rin Adalat Ain should be amended soon to recover the default loans, he added.

Exports rise 7.92pc

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Exports rise 7.92pc

Star Business report

Exports fetched $3.68 billion in January, up 7.92 percent year-on-year, on the back of robust growth of garment shipments.

With January proceeds, export earnings in the first seven months of the fiscal year come to $24.18 billion, up 13.41 percent from a year earlier and comfortably past the periodic target of $22.41 billion.

The jump in receipts come despite four major export earning sectors — leather and leather products, jute and jute goods, home textiles and shrimps — logging in lower shipments, according to data from the Export Promotion Bureau.

Earnings from leather and leather products, the second biggest export earner after the garment, dropped 11.71 percent year-on-year to $626 million between the months of July last year and January this year.

Export of jute and jute goods, which account for part of the livelihood of tens of thousands of growers, tumbled 24.66 percent to $498 million during the period.

The sector hit a rough patch earlier this fiscal year in the face of waning demand for economic slowdown in Turkey, one of its biggest market, and anti-dumping duty slapped by India.

Export of shrimp, which is grown in the southwest and southeast costal region by more than 8 lakh farmers, also continued to suffer for ample production of vannamei shrimp in other countries, particularly in India.

Processors bagged $257 million in the July-January period, which is 12.37 percent lower than a year earlier.

Home textiles exports declined 0.79 percent to $494.09 million.

And yet, a 14.51 percent spike in shipment of garment products helped the overall earning scenario to remain positive.

The apparel sector, which typically accounts for more than 80 percent of total export earnings, logged in $20.21 billion in export receipts in the first seven months of the year. Agricultural products extended additional support to the growth in export earnings.

Export of agricultural products such as dry food, vegetables and spices rose 61 percent to $579 million in the seven months to January.

In addition, export earnings from petroleum bi-products, pharmaceuticals, plastic products, paper and paper products, cotton and cotton product, specialised textiles, footwear other than leather and engineering products increased in the first seven months of fiscal 2018-19.

Factory owners want govt support for short period

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Factory owners want govt support for short period

Implementation of RMG workers’ new wage

Apparel sector leaders on Thursday demanded of the government to provide policy support, including cash incentive, to facilitate implementation of the recently revised wage structure for the readymade garment (RMG) workers.

“Government should come forward to support us, at least for a short period of one to two years, for implementation of the new wage structure,” said BGMEA President Md Siddiqur Rahman.

“We don’t want any factory to be closed or to lose any entrepreneur,” he told a discussion on work plan for the recently formed monitoring committees in the city.

The leader of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said the RMG exporters do not get any incentive, except for 4.0 per cent in case of new market exploration.

He said the backward linkage spinning or textile mills, members of Bangladesh Textile Mills Association (BTMA), also get 4.0 per cent cash incentive.

The labour and employment ministry on January 21 formed 29 committees mainly to monitor implementation of the latest wage structure and labour situation in different labour-intensive industrial hubs in Dhaka, Gazipur, Narayanganj, Chattogram, Khulna, Sylhet, Moulvibazar and Habiganj.

State Minister for Labour Monnujan Sufian was present as chief guest at the meeting while Labour Secretary Afroza Khan, Bangladesh Employers’ Federation President Kamran T Rahman, Bangladesh Knitwear Manufacturers and Exporters Association Vice President Mansur Ahmed, International Labour Organisation (ILO) Bangladesh Deputy Country Director Gagan Rajbhandari and labour leaders, among others, were present.

The minister launched the new toll-free hotline number (16357) administered by the Department of Inspection for Factories and Establishments (DIFE) at the meeting so that the workers could raise their concerns, which could be resolved through discussion.

Defending the recent workers termination in the RMG sector, the BGMEA president said the factory authorities have the right to terminate the workers on different grounds, but through abiding by the labour laws.

Citing media reports over termination of around 5,000 garment workers, he raised question about the percentage of the total 4.4 million workers.

The BKMEA vice president said the government should also consider the problems of the factory owners in implementing the new wage structure.

He demanded of the government to raise the cash incentive for new market exploration from existing 4.0 per cent to 20 per cent.

Terming wage implementation ‘a tough task’, the minister said capacities of all the factories are not same. “But, we don’t want any further anarchy over the wage implementation. We have formed 29 monitoring committees and launched the toll-free helpline service in this regard.”

Mr. Kamran T Rahman said that there are pressures from different arena because of the global spotlight on the RMG sector.

The government has recently amended the labour law, he said, adding: “What is needed now is to ensure the effective enforcement of the law. Otherwise, Bangladesh has to face international criticism.”

He, however, suggested holding bilateral dialogue and communication between the owners and workers’ representatives to solve issues, including wage negotiation.

“Like the BGMEA and BKMEA those represent garment factory owners, there should be two similar organisations for workers’ representatives to deal with and negotiate wage-related and other issues,” he said, recommending minimum wage fixation for the entry level workers.

He stressed on the need for the government’s support and increasing productivity for sustainability of the RMG industry.

Mr. Rajbhandari said they are ready to assist the government in developing a ‘wage policy’.

IndustriAll Bangladesh Council General Secretary Salahuddin Shapon said the single hotline number would be enough for the 4.4 million of workers and suggested including labour representatives in the wage implementation monitoring committee for effectively addressing the labour issues.

He also alleged that DIFE is not effectively functioning, saying that sometimes the rights organisations do not get any response from the authorities after lodging complaints – even the reasons for not taking the issue are explained.

Plan to create databank on blue economy hits snag

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Plan to create databank on blue economy hits snag

The government’s move to create a databank on the blue economy has hardly made any progress mainly due to lack of necessary information in this regard, officials said.

A coordination meeting on the blue economy was held recently with chief of the Blue Economy Cell (BEC) Golam Shafiudin in the chair.

The meeting was informed that the ministries, divisions and agencies were not providing their information on the blue economy regularly. Besides, they did not submit the implementation progress reports accordingly. For this, the move for creating the data bank on the blue economy was not progressing at expected level.

The blue economy cell chief asked all the ministries, divisions and agencies concerned to provide required information on the blue economy including work plan, different latest implementation progress reports and others.

He also asked the authorities concerned to take various steps to enhance the implementation rate of the decisions and projects taken on the blue economy.

The first meeting on the blue economy was held in August 2014 aiming to take up central strategic and action plans for the ministries, divisions and agencies concerned, a high official said.

A 25-member ‘Coordination Committee on Sea Resources Exploration and Fair Management’ headed by Principal Secretary to the Prime Minister’s Office (PMO) was formed on August 20 in 2014. Some 60 decisions were taken in different meetings, but most of them were not implemented to date.

The committee, comprising senior secretary, secretaries and top executives of different ministries and organisations, was supposed to sit in every three months, prepare strategies and monitor implementation of the decisions on the issue.

The rate of implementing the decisions was much below the expected level. For this, the PMO in a review meeting last year asked the ministries and departments concerned to enhance the implementation rate in future, the official said.

The government in January 2017 set up the BEC under Energy and Mineral Resources Division for exploration, conservation, and sustainable collection and management of natural and mineral resources in the Bangladesh territory of the Bay of Bengal.

The BEC could not advance as per the government plan due to lack of proper coordination among the implementing ministries, divisions and agencies. “It’s very difficult to work without coordination because it is a big task,” the official mentioned.

The Bangladesh Navy is working for fishing in deep areas and marine tourism to ensure security of sea resources, according to a source in the environment, forest and climate change ministry.

Three more ports are being set up for export-import activities in future. Skilled human resources are being developed through five marine institutes under the expatriates’ welfare and overseas employment ministry.

Besides, the industries ministry has taken initiative to set up two ship recycling factories in Barguna and Patuakhali.

When contacted, a high official of BEC said the progress in the blue economy was slow due to lack of coordination among the ministries/divisions concerned.

The PMO now coordinates the activities of the blue economy. Currently, the cell is under the Energy Division.

Bashundhara to invest Tk 447cr to boost cement production

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Bashundhara to invest Tk 447cr to boost cement production

Jebun Nesa Alo

Bashundhara Industrial Complex, the cement manufacturing arm of Bashundhara Group, is set to expand its production capacity with a view to meeting the fast-growing demand for the construction material amid mega project-implementation spree.

Located in Madanganj of Narayanganj, the factory’s production capacity at present is 21 lakh tonnes per year. But after the Tk 447.53 crore expansion project, the annual production capacity would go up to 30 lakh tonnes.

The new extension unit is expected to go for commercial operation next year, taking Bashundhara Group’s cement manufacturing capacity to 75.60 lakh tonnes.

Of the Tk 447.53 crore needed for the project, Tk 285 crore has already been raised from the financial sector, while the remaining amount will come from the business group’s coffer.

The demand-supply gap for cement widened to 1.47 crore tonnes last year and is expected to hit 1.8 crore tonnes this year, according to a survey by Bank Asia, which arranged the fund through syndication with three other banks — Pubali, NRB and Janata — and a financial institution, Uttara Finance.

By 2021 the gap is expected to be 2.17 crore tonnes.

The government’s huge spending to build the country’s infrastructure has been a boon for the cement industry, said Mohammed Belayet Hossain, senior deputy managing director of Bashundhara Group.

“We are enhancing our cement production capacity to meet the rising demand,” he added.

Globally, per capita cement consumption is 500 kilograms, whereas in Bangladesh it is 120 kg, said Md Arfan Ali, managing director of Bank Asia, which has given priority to bankrolling infrastructure projects.

“So, there is huge scope for growth,” he said, pointing out that the escalating demand for urbanisation is due to a rise in per capita income and an increase in remittance inflow. Bashundhara Group, one of the biggest business groups in the country, holds the second highest cement market share of 8.48 percent by way of its two brands, Bashundhara Cement and Meghna Cement.

Of the two companies, Meghna has been listed on the Dhaka Stock Exchange since 1995. Each share of Meghna Cement traded at more than Tk 90 in the last four months. Yesterday, it closed at Tk 95.50.

Food safety not possible overnight The BFSA chief says

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Food safety not possible overnight

The BFSA chief says

People’s expectation for safe food cannot be met overnight, said the chairman of the Bangladesh Food Safety Authority (BFSA).

“But it cannot be said that nothing is being done,” BFSA Chairman Mohammad Mahfuzul Hoque told The Daily Star in an interview recently. There will be no positive long-term outcome if quick measures are taken, so the BFSA has taken on a proactive approach to ensuring food safety from farm to plate.

So far, the BFSA, which began its journey on February 2, 2015, has set up 71 safe food courts across the country, framed eight rules — pertaining to labelling, contaminants and toxins, and the use of additives in food — and given nod to 10 local labs for testing parameters.

Through mobile court operation, the BSFA also filed more than 4,200 cases, fined offenders and sent some to jail.  It banned the import and use of meat and bone meal for feed and took measures to stop the sales of drinks in the name of energy drinks, among others.

The BFSA wants to bring about qualitative changes, which are not possible overnight, Hoque

“We have to train our people on good production practices. We frequently see excessive use of pesticides and chemical fertilisers in farming and the produce are harvested before the required interval period. As a result, the residue remains.”

The use of unauthorised chemicals, antibiotics, steroids and hormones; unhygienic preparation of foodstuffs in restaurants; the sales of street food in insanitary conditions; and the use of artificial ripening agent for fruits are the other challenges to food safety.

Another major challenge is ensuring coordination, Hoque said.

The BFSA works with other agencies such as the departments of fisheries, livestock and agricultural extension to ensure good production practices.

Recently, the BFSA has taken initiative to grade restaurants on the basis of quality of food and the overall hygiene of the establishments, particularly in the Motijheel area.

As part of the system, coloured stickers — green, blue, yellow and orange — will be used to signify the grades of A+, A, B and C respectively awarded to the restaurants after scrutiny.  A+ would mean excellent, A good, B average and C grade pending.

The BFSA graded 57 restaurants, including 18 excellent, as good.

“When consumers become conscious and stop eating at low-grade restaurants, owners will be compelled to improve their standards to attract customers,” Hoque said, adding that the BFSA is suggesting each establishment make a food safety plan.

It has also taken a step to make street food safe.  It has built three street food carts and trained the vendors.

“People are eating with interest and the owners are logging in higher sales now than in the past,” Hoque said.

The BFSA also runs campaigns to raise awareness along with observing February 2 as the National Safe Food Day.

“I am happy that people now realise that food safety is important. Once I had to explain to my colleagues about the work I do. Today, people, including the uneducated ones, are aware about food safety,” he said.

$200m ADB loans to improve rural roads

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$200m ADB loans to improve rural roads

Star Business Report

Asian Development Bank (ADB) is going to give Bangladesh $200 million in loans to help improve the country’s rural road network.

Monowar Ahmed, secretary to the Economic Relations Division (ERD), and ADB Country Director Manmohan Parkash yesterday signed the loan agreement at a ceremony in Dhaka.

“The assistance supports the government’s priority of delivering urban services in rural areas by increasing connectivity, providing greater access to social services and markets, and promoting the agriculture sector, benefitting over 51.5 million people,” said Parkash.

“It will also improve transport efficiency, generate 3.13 million person-days employment, introduce high-level technology to enhance road master planning, and create road safety awareness among rural population.”

The assistance will support the government’s Rural Connectivity Improvement Project (RCIP), upgrading about 1,700 kilometres of rural roads in 34 districts of five divisions to all-weather standards, according to an ADB statement.

The ADB said the project would also improve the capacity of the rural infrastructure agency for rural road development and enhance rural road master planning.

The GIS technology will help identify agricultural value chains, road conditions and mechanisms for allocating priorities, optimising the use of available resources for effective rural road network planning and improvement.

The roads will be designed with safety features, including signage, guard posts and speed breakers.

They will also adopt climate resilient designs incorporating features such as elevated paving, drainage, road foundations and earthworks to significantly reduce maintenance.

The roads will be covered under contractual maintenance for five years after the date of construction on a pilot basis. The project also prioritises repair of roads damaged by flashfloods in 2017.

The project will provide training to Local Government Engineering Department on road and financial management, road safety, climate resilient design and construction, improving road users’ awareness and enhancing women’s skills on road construction and maintenance.

An ADB technical assistance grant of $1 million will support these activities.

Over 2,400 women were consulted in the project area during project design and they appreciated that it will give them more access to economic opportunities and services, according to the ADB statement.

The ADB said only about 40 percent of the rural population in Bangladesh 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 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.

4TH INDUSTRIAL REVOLUTION Migrant workers’ jobs at stake

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4TH INDUSTRIAL REVOLUTION

Migrant workers’ jobs at stake

Star Business Report

A huge number of Bangladeshi expatriates employed in blue-collar jobs might have to return home as two billion jobs will be displaced by 2030 because of technological advancement, experts said yesterday.

“The fourth industrial revolution represents an existential threat to companies in every industry,” said Mushfiq Ahmed, director of Digital Transformation at eGeneration.

Lots of expatriates might also come back from the market as their skills will not match with the technological advancement.

At the same time, if the country’s youth can be equipped with the right skill set over the next five years, many new avenues for manpower export will open up.

At present, youth comprises 65 percent of the Bangladesh’s population.

“Countries like Saudi Arabia would be Bangladesh’s major market,” Ahmed said at a discussion styled “4th Industrial Revolution – Are we ready?” at Brac Centre Inn in Dhaka.

A study found that Bangladesh would lose some 53.8 lakh jobs by 2041 from only five areas for the advent of automation in industries, according to Md Mustafizur Rahman, project director of the Access to Information project under the Information Communication Technology Division.

Of the five sectors, garment will be the worst sufferer as there is a possibility of 27 lakh jobs being lost.

The furniture sector will lose 13.8 lakh jobs, agro-processing and tourism 6 lakh jobs each and leather another 1 lakh jobs.

“This is a huge threat for us. So, if we can’t turn this challenge into an opportunity, we will miss the train and we will not be able to make up for it anymore,” he added.

Telecom and ICT Minister Mustafa Jabbar acknowledged the challenges, saying Bangladesh missed the first three industrial revolutions.

“But the country will lead the world in the 4th industrial revolution. So, there is nothing to worry about. We will create more jobs and re-modify some jobs before the revolution hits.”

The minister said developing proper human resources is a challenge for Bangladesh, so the education system has to be made more technology-driven.

“We will make ICT education mandatory at the primary level at any cost, like we did at the secondary level a few years ago,” he added.

The fourth industrial revolution could contribute to sustainable development if both the private and public sectors adopt new technologies in the right way, said Osama Taseer, president of the Dhaka Chamber of Commerce and Industry.

“Adopting smart manufacturing, analytics and Internet of Things (IoT) can give a new lease of life to the industrialisation in Bangladesh,” he added.

Some institutions have already introduced high-class technology but merchants are not ready yet in many cases, said Anis A Khan, managing director of Mutual Trust Bank.

“Everybody is not ready to face the fourth revolution,” he added.

The very primary phase of the fourth industrial revolution has already arrived in Bangladesh as local IT companies have started making solutions using disruptive technologies like blockchain, IoT and artificial intelligence, said Shameem Ahsan, chairman of eGeneration Group.

Abdullah H Kafi, a former president of the Asian-Oceanian Computing Industry Organisation, emphasised on adoption of short- and long-term policies to face the challenges.