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Local e-commerce leaders seek protection to offset risk of losing business

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Amazon, Walmart to enter Bangladesh in two years

Local e-commerce leaders seek protection to offset risk of losing business

Star Business Report
American e-commerce giant Amazon and retail heavyweight Walmart will start operations in Bangladesh within a couple of years as the global companies are increasingly making foray into the market, said a Bangladeshi entrepreneur yesterday.

Walmart already has a very big office in Dhaka and is planning to start business while Amazon is in talks with the government, said Rezwanul Haque Jami, vice-president of the e-Commerce Association of Bangladesh (e-Cab).

With the launch of their operations, the market ecosystem will change and the local players will feel the heat, he said. Chinese e-commerce giant Alibaba is already operating in Bangladesh through Daraz, said Jami, also the coordinator of the government’s e-commerce project Eakshop.

He spoke at a roundtable on “Local e-commerce industry: issues, challenges and solutions” at The Daily Star Centre in Dhaka. At the discussion, local e-commerce companies called for protection in the fast-expanding online market as the government plans to allow foreign companies to own 100 percent stakes in local ventures.

They said they are not against foreign investment but the government needs to protect local investors.

“We need foreign investments. At the same time, local companies which have been nursing the market for the last seven years also have a right to get protected,” said Muhammad Abdul Wahed Tomal, general secretary of e-Cab. The country’s top 10 homegrown online ventures organised the discussion in the backdrop of the government’s initiative to amend the recently approved Digital Commerce Policy.

On July 16, the cabinet had approved the Digital Commerce Policy, limiting foreign investment at no more than 49 percent in local e-commerce ventures.

But the government decided to reconsider the limit when some global players operating in Bangladesh voiced concerns about it. The government plans to allow foreign companies to own 100 percent shares in local e-commerce ventures.

The size of the local e-commerce market size is about Tk 1,000 crore and about 100 ventures account for Tk 700 crore in annual sales. Currently, the market is catering 30,000 orders a day and it is more than doubling every year.

“The market has been growing at more than 100 percent every year and has enormous opportunity to grow further,” said Tomal.

Local ventures said the government needs to clear its position on whether only two or three foreign players will dominate the market and grab all the businesses after two years or there will be some local ventures alongside the foreign entities.

Global players usually enter a market and capture it within a couple of years through price dumping like they did in Pakistan, Sri Lanka and some countries in Africa, said AKM Fahim Mashroor, founder of ajkerdeal.com, one of the leading local e-commerce ventures.

The e-Cab is preparing a list of recommendations about the policy which will be sent to the government. The e-Cab will propose foreign companies recruit 90 percent of their staff from locals to run operations in Bangladesh, said Tomal.

Other recommendations will include: foreign firms will have to host their websites locally and ensure warehouse’s presence and customer data security.

Zeeshan Kingshuk Huq, co-founder and chief executive of kiksha.com, said foreign investment is needed to develop the local market, not to destroy it.

“The US, the UK, China and India are the most protected market. Thanks to this protection, their local firms are capturing the rest of the markets in the world.”

Asikul Alam Khan, founder and CEO of PriyoShop, said new challenges have emerged at a time when the market is just getting ready to take off.  “We have nurtured the market and it is moving towards maturity. Now, some global giants want to capture it.”

Mahmudul Hasan Sohag, chairman of OnnoRokom Group, said foreign companies want a level-playing field through a brutal process.

“But the government should understand the level-playing field by looking at historical context and country perspective.”

Syed Mohammad Kamal, country manager of MasterCard Bangladesh, said the Digital Commerce Policy was passed following a huge consultation process.

The government should follow the same before amending it, he said.

Senior officials of e-commerce firms such as bagdoom, pickaboo, othoba, nrbbazaar, and HungryNaki were also present.

Private sector can help improve infrastructure: IDB president

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Private sector can help improve infrastructure: IDB president

Star Business Report

Islamic Development Bank President Bandar Hajjar yesterday stressed the importance of the private sector to improve the basic infrastructure in its member countries and achieve the Sustainable Development Goals (SDGs).

Fifty-seven member countries of the IDB require $1 trillion per annum to achieve the SDGs and $700 billion to meet the growing demand for basic infrastructures, he said.

He said the multilateral development banks have a financing capacity of $147 billion per annum for the IDB’s members.

“How will we fill up the gap? A vibrant private sector can only fill up the vacuum,” he said at a press conference at the IDB Bhaban after the opening of the bank’s regional hub in Dhaka.

Earlier, Prime Minister Sheikh Hasina opened the regional hub of the bank. Bangladesh is the largest beneficiary of financing from the multilateral bank, with its total financing for the country being in excess of $21.7 billion.

Of the funds, 80 percent went to the private sector, Hajjar said. He said the IDB has adopted a new model to encourage the private sector which will play a vital role in developing the human capital of the member countries.

The member countries will have to extend support to give a boost to investment in the private sector, he said, adding that the MDBs should also help them transform their economies with market-oriented growth.

“We are transforming our bank not only for finance; we have focused on increasing the capacity of human capital and build the institutional capacity of our member countries,” he said. The IDB president said the volume of the global capital market has gone beyond $2 trillion and the private sector can get support from the window.

There is a requirement to develop an investment-friendly environment to use the fund of the capital market, he said. Speaking at the briefing, Finance Minister AMA Muhith said over the years, the IDB has gradually established itself as one of the leading multilateral development banks in the world.

The bank has embraced new ideas, come up with innovative financial instruments and expanded its remit substantially, he said. He said the scope for Bangladesh to get soft loans is gradually shrinking as it has become a lower-middle country from a low income nation.

The country has ability to take loans at higher interest rate than the rate entailed with soft loans offered by the MDBs, he said. The regional hub in Dhaka will cover 19 countries, including Singapore, Australia, Thailand and India.

Asked why the IDB chose Bangladesh to set up the regional hub, Hajjar said geographical location was one of the major reasons. Besides, a strong growth of Bangladesh and its skilled workforce, educated people, resources and leadership have also been considered, he said. “The IDB has long held a close relationship with Bangladesh as it continues to move towards a prosperous future.”

“Our regional hub will focus on partnering with local stakeholders to drive the socio-economic development in the country and provide a platform for Bangladesh’s people to build a prosperous future,” he said.

Fourteen people, including four foreign nationals will initially work at the regional office and the number will increase if required, Hajjar said.

No VAT on computer parts at trading stage: NBR

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No VAT on computer parts at trading stage: NBR

Star Business Report
The revenue authority has withdrawn value-added tax (VAT) on computer parts and accessories at the trading stage to help consumers enjoy low prices.

The move comes three months after the imposition of a 15 percent VAT on parts and accessories of computers at the trading stage.

In the past two fiscal years since 2016-17, the NBR had been offering exemptions on computer parts and accessories. Bangladesh Computer Samity, the apex trade body for ICT business in Bangladesh, has been demanding removal of such VAT, which, it thinks, would fuel the prices of computers.

Use of laptops and computers is increasing in Bangladesh. The market for laptops is annually growing by 12 percent, driven by a growing middle and affluent class and overall income, International Data Corporation, a Singapore-based consulting firm, found in a survey.

The laptop market in Bangladesh was worth $165 million in 2017, according to the IDC.

Private sector can help improve infrastructure: IDB president

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Private sector can help improve infrastructure: IDB president

Star Business Report

Islamic Development Bank President Bandar Hajjar yesterday stressed the importance of the private sector to improve the basic infrastructure in its member countries and achieve the Sustainable Development Goals (SDGs).

Fifty-seven member countries of the IDB require $1 trillion per annum to achieve the SDGs and $700 billion to meet the growing demand for basic infrastructures, he said.

He said the multilateral development banks have a financing capacity of $147 billion per annum for the IDB’s members.

“How will we fill up the gap? A vibrant private sector can only fill up the vacuum,” he said at a press conference at the IDB Bhaban after the opening of the bank’s regional hub in Dhaka.

Earlier, Prime Minister Sheikh Hasina opened the regional hub of the bank. Bangladesh is the largest beneficiary of financing from the multilateral bank, with its total financing for the country being in excess of $21.7 billion.

Of the funds, 80 percent went to the private sector, Hajjar said. He said the IDB has adopted a new model to encourage the private sector which will play a vital role in developing the human capital of the member countries.

The member countries will have to extend support to give a boost to investment in the private sector, he said, adding that the MDBs should also help them transform their economies with market-oriented growth.

“We are transforming our bank not only for finance; we have focused on increasing the capacity of human capital and build the institutional capacity of our member countries,” he said. The IDB president said the volume of the global capital market has gone beyond $2 trillion and the private sector can get support from the window.

There is a requirement to develop an investment-friendly environment to use the fund of the capital market, he said. Speaking at the briefing, Finance Minister AMA Muhith said over the years, the IDB has gradually established itself as one of the leading multilateral development banks in the world.

The bank has embraced new ideas, come up with innovative financial instruments and expanded its remit substantially, he said. He said the scope for Bangladesh to get soft loans is gradually shrinking as it has become a lower-middle country from a low income nation.

The country has ability to take loans at higher interest rate than the rate entailed with soft loans offered by the MDBs, he said. The regional hub in Dhaka will cover 19 countries, including Singapore, Australia, Thailand and India.

Asked why the IDB chose Bangladesh to set up the regional hub, Hajjar said geographical location was one of the major reasons. Besides, a strong growth of Bangladesh and its skilled workforce, educated people, resources and leadership have also been considered, he said. “The IDB has long held a close relationship with Bangladesh as it continues to move towards a prosperous future.”

“Our regional hub will focus on partnering with local stakeholders to drive the socio-economic development in the country and provide a platform for Bangladesh’s people to build a prosperous future,” he said.

Fourteen people, including four foreign nationals will initially work at the regional office and the number will increase if required, Hajjar said.

No gain from going green

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No gain from going green

RMG exporters don’t get price benefit for environment-friendly production

Star Business Report

Bangladesh’s garment exporters are now regretting for establishing green factories as they are not getting the benefits of the huge investment they made to make their industrial units environment-friendly.

“The cost of setting up a garment unit went up by a third in case of a green factory,” said KM Rezaul Hasanat, CEO of Viyellatex Group, one of the leading Bangladeshi exporters with green factories.

“We could have invested the extra money to employ a one-third more workers.”

Per capita carbon emission in Bangladesh is 0.46 tonnes a year whereas in the US, the EU and Canada the figure ranges between 10 tonnes to 25 tonnes, he said.

So, Bangladesh’s factories do not even need to get green certification from other countries or companies, Hasanat opined.

“Bangladesh is naturally green and the products we make here are also naturally green.”

“I regret that I have set up green garment factories. The buyers do not want to pay even a single cent more for sourcing from a green garment factory,” he said, while speaking at a dialogue on green compliance at the Metropolitan Chamber of Commerce and Industry (MCCI) in Dhaka yesterday.

The MCCI, in collaboration with the Adam Smith International and the UKAID, Bangladesh organised the dialogue where retailers, exporters, executives of different garment factories and researchers spoke.

Currently, Bangladesh has the highest number of green garment factories along with top ranking units in the globe, said Shwapna Bhowmick, country head of Marks & Spencer.

Bangladesh has outperformed its competitor countries in green compliance for garment factories and the nation should highlight its success stories to the world, she said.

In Bangladesh, 67 green garment factories have already obtained the LEED (Leadership in Energy and Environmental Design) certification from the US Green Building Council (USGBC) and over 300 more are waiting to be certified.

“Bangladesh should market its great achievements with effective communication skills,” Bhowmick said. Marks & Spencer sources 40 percent of its garment items from Bangladesh, she said.

“The country produces a lot of value-added garment items although it was previously known as the producer of basic garment items only.”

“However, we [Bangladesh] have broken this barrier as the producer of the highest selling value-added garment items.”

For instance, Bhowmick said her company sources 90 percent of denim items from Bangladesh while local mills supply 70 percent of the fabrics needed to produce these denim items. However, Bangladesh needs to shorten its lead-time and improve the skills of the workers for higher productivity, she said.

The garment sector’s strong green initiative was also noticed in the survey of the Partnership for a Cleaner Textile (PaCT) of the International Finance Corporation.

Local suppliers are doing great work in saving water, energy and environment, said Nishat Shahid Chowdhury, programme manager of Bangladesh PaCT.

In Bangladesh, 250 textile factories have invested a total of $39 million to save 21 billion litres of water a year thanks to the use of modern technologies, said Chowdhury.

Time has come to adopt the green compliance voluntarily, said Fahmida Khatun, executive director of the Centre for Policy Dialogue, a think-tank. The whole green concept was largely implemented during the global financial crisis mainly to save food and fuel, she said. Currently, 1,700 factories are running effluent treatment plants (ETPs) in their factories to save the environment.

Although the factory managements of these units regularly report to the Department of Environment (DoE), they need to improve the performance of the ETPs, said Syed Nazmul Ahsan, director of the state agency.

The DoE will start monitoring of the operations of the ETPs online in 500 factories to obtain better results from the plants, Ahsan said.

He said the high-ups of the factories are interested in setting up and running of the ETPs whereas the mid- and lower-level managers are less keen.

The government should formulate policies to encourage private sector entrepreneurs to invest in green garment factories, said Shahpar Selim, a consultant of the Economic Dialogue on Green Growth, UKAID, while presenting the keynote paper on “Environmental compliance opportunities in Bangladesh’s readymade garments industry: lessons from the green high achievers”. Currently, two kinds of funds are available for setting up green factories but it is difficult to avail the fund, she said.

Of the funds, the green refinancing fund of the central bank is relatively easier to avail, she said.

Still, factory owners struggle to apply for this fund and the central bank should make the process easy, she said. Golam Mainuddin, MCCI vice-president; Miran Ali, managing director of Bitopi Group, and  Suvojit Chattopadhyay, country manager of the Adam Smith International, also spoke.

India’s rupee hits record low against dollar

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India’s rupee hits record low against dollar

Afp, Mumbai

India’s rupee hit a new record low of 72 to the dollar on Thursday as emerging market currencies suffered more losses.

The under-pressure currency of Asia’s third-largest economy slid to 72.12 to the greenback in afternoon trade.

The rupee has steadily fallen by about 10 percent throughout 2018, after starting the year at 63.67. Last month it crossed 70 for the first time as India was buffeted by the turbulence of the Turkish financial crisis.

The Turkish lira was sent into a tailspin in August by a bitter diplomatic spat with the United States over Turkey’s detention of an American pastor for almost two years on terror-related charges.

The currencies of other emerging economies heavily dependent on dollar-dominated foreign capital like Brazil, South Africa and Argentina also slipped in August.

The rupee slump is widening India’s current account deficit.

India is a massive net importer of oil, which is priced in dollars, securing more than two-thirds of its needs from abroad. High oil prices have been squeezing the rupee, making it less appealing to investors, analysts say. India’s central bank has raised interest rates this year in part to help increase the value of the rupee.

Bangladesh on way to be a gadget-making hub

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Bangladesh on way to be a gadget-making hub

Star Business Report

The availability of workforce at a competitive wage, growing domestic market demand and a favourable policy are some of the key factors that make Bangladesh an attractive hub for high-tech manufacturing, according to a survey.

In its report, International Data Corporation (IDC) found success stories of local and international manufacturing companies, such as Walton and Samsung.

Global tech leader Samsung has started producing mobile phones in Bangladesh following in the footsteps of three local firms—Walton, Aamra Companies and Symphony—and a China-Bangladesh joint venture, Transsion Holdings, it said in the report.

The Singapore-based firm also showed evidence of the support provided by the government in driving the growth of the high-tech industry in Bangladesh.

The government has reduced duties on import of raw materials for the tech industry, exempted 100 percent value added tax on rents along with providing cash incentives and 100 percent tax discounts, it said.

“Population is the main strength of Bangladesh, home to around 80 million people under 25 years of age,” according to the IDC report launched yesterday.

Gadgets and laptops worth around $1.5 billion are sold in the country every year; about 34 million mobile handsets worth $1.18 billion and laptops worth $300 million were sold last year, IDC found.

The youths are giving a boost to the sector, where the gadget and laptop market is growing at around 12-20 percent every year, said Zarif Munir, partner and managing director of the Boston Consulting Group.

The officials of the group presented the findings of the report as one of the partners of the survey, at a programme held in the ICT Division in Dhaka.

The IDC is a premier global provider of market intelligence, advisory services and events for the information technology, telecom and consumer technology markets.

Local companies are not lagging behind foreign peers. Walton has already completed production and shipment of laptops to Nepal, a major stride for a Bangladeshi company, the IDC report said.

Huawei Technologies, the largest telecom equipment maker based in China, has been investing to provide high-quality ICT infrastructure and network enhancement services in Bangladesh, the report reads. Another Chinese giant, Xiaomi, also plans to set up a plant in Bangladesh in the next two years, the IDC said.

“We have a huge local market and scopes are there to export tech products to the neighbouring countries like Nepal, Bhutan, Myanmar and even India’s seven-sister states,” Mustafa Jabbar, telecom and ICT minister, said at the report launching ceremony.

He said the government is developing 28 high-tech parks, all of which would be ready for use in the next two years.

“Some of the parks have already started manufacturing and exporting different ICT products.” Smartphone penetration in Bangladesh stands at about 30 percent now and will hit 80 percent in the next few years, he said.

The government is giving tax holiday and cash incentive to assemblers with high quality infrastructure support and now seeking global leaders’ investments, said Zuena Aziz, secretary to the ICT Division.

“Some developed nations, including China, are shutting down gadget plants due to the rising cost of production,” said Rezwanul Haque, CEO of Transsion Bangladesh and the former general secretary of Bangladesh Mobile Phone Importers Association.

The government has developed 79 economic zones spanning over 30,000 hectares and foreign companies will get all-out support if they want to invest in Bangladesh, said Kazi M Aminul Islam, executive chairman of Bangladesh Investment Development Authority.

GDP growth in FY18 to be near 8pc: minister

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GDP growth in FY18 to be near 8pc: minister

Inflation falls to 5.48pc in August
Star Business Report

The country’s economic growth could hit a record high of about 8 percent in the last fiscal year in the final count, Planning Minister AHM Mustafa Kamal said yesterday.

“Prime Minister Sheikh Hasina will announce the actual figure soon,” he told reporters at the auditorium of the National Economic Council.

As per the preliminary estimate, the gross domestic product growth was 7.65 percent in 2017-18, but in the final count it will be much higher, Kamal said.

He said he knew about the final GDP figure, but declined to disclose it. It will be something near 8 percent, he said.

In the current fiscal year, the growth will be 8.25 percent, he said.  The government has targeted to achieve 7.8 percent economic growth in 2018-19.

The planning minister said there will be no problem in implementing the annual development programme (ADP) in the current fiscal year.

Kamal said he had met with the secretaries of all ministries and issued a directive so that the ADP implementation is not hampered by the election, due in December.

The government has put in place a new rule that exempts files from coming to the finance minister or the planning minister for release of project funds in the first and second quarters of the fiscal year, he said.

“Funds will automatically be deposited to the accounts of the projects. So, the implementation of the ADP will not be hampered.” During the briefing, Kamal also released the inflation data.

Inflation fell slightly to 5.48 percent in August thanks to a fall in food prices. It was 5.51 percent in July.

Kamal said inflation did not increase as an adequate amount of imported goods was in stock. On the other hand, the government was active during the Eid period and the prices of essential items did not go up consequently.

In August, food inflation fell 21 basis points to 5.48 percent. In July, it rose 20 basis points to 6.18 percent.

Non-food inflation went up by 24 basis points to 4.73 percent last month. In July, it declined 62 basis points to 4.49 percent.

Zahid Hussain, lead economist of the World Bank’s Dhaka office, said, “The good news is the headline inflation has continued to fall driven entirely by the decline in food inflation.”  He said it appears that the drop in rice prices played a major role. 

In August, the average price of coarse rice in Dhaka was 0.2 percent lower than in July this year and 3.2 percent lower than in August 2017.

Hussain said, “The bad news is there is further increase in non-food inflation, which has been rising since reaching its low of 3.2 percent last January.”

“It has now surpassed 4.7 percent perhaps because of a sustained high domestic demand, resulting from increased remittances and private credit growth, as well as exchange rate depreciation and seasonal factors such as Eid in August.”

The economist said demand pressures are likely to deepen in the run up to elections. 

“Continued vigilance on the part of the Bangladesh Bank particularly in maintaining prudential control over domestic credit growth will be very important in the days ahead.”

Call for ensuring safe food production

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Call for ensuring safe food production

Three-day BAPA FoodPro International Expo 2018 concludes

FE Report

 

Speakers at a function on Saturday laid emphasis on ensuring safe food production to compete and tap the local and international markets.

They also made a call to promote exports and the food processing sector for giving an impetus to the country’s economy.

They made the call at the concluding ceremony of the sixth BAPA FoodPro International Expo 2018 at Bangabandhu International Conference Centre (BICC).

The Bangladesh Agro-Processors Association (BAPA) and the Extreme Exhibition and Event Management Solution Limited, an event management company, organised the three-day international fair.

Bangladesh Food Safety Authority Mohammad Mahfuzul Hoque was present as the chief guest with BAPA President A F M Fakhrul Islam Munshi in the chair.

BAPA General Secretary Md Iqtadul Hoque, among others, was present at the function.

A total of 147 organisations from home and abroad showcased various types of agro and food processing technology, and packaged foods such as snacks, frozen meat, frozen vegetables, soft drinks, juice, sauce, dairy products, sweet and species.

Some 117 foreign entrepreneurs from 15 countries put agro and food processing machinery on display.

A huge number of visitors visited the show with much enthusiasm on the last day of the exhibition as the stall owners offered discounts on various products, said the organisers.

Besides, the visitors were seen visiting at the two other concurrent events ‘5th Rice and Grain Tech Expo Bangladesh’ and ‘8th Agro Bangladesh Expo’ at the same venue.

Technical and business sessions also took place on the sidelines of the fair.

 

WB approves $515m for three projects

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WB approves $515m for three projects

FE Report

The World Bank has approved $515 million for three projects in Bangladesh to aid improvement in the areas of coastal and marine fisheries, forest management, and rural roads.

The financing will benefit rural people by reducing poverty and creating new livelihood opportunities, including for local communities in Cox’s Bazar district hosting Rohingya people who fled violence in Myanmar.

“These three projects will create opportunities for the rural population and especially help the vulnerable people come out of poverty,” said Qimiao Fan, World Bank Country Director for Bangladesh, Bhutan and Nepal. “At the same time, they will improve the country’s resilience to climate change.”

The $175 million Sustainable Forests and Livelihoods Project will help improve forest cover through a collaborative forest management approach involving local communities.

Under the project trees will be planted on about 79,000 hectares of forest, including a coastal green belt that will also help increase climate change resilience, said the WB on Saturday.

“The project will support increasing income through alternative income generation activities for about 40,000 households in the coastal, hill and central districts of the country,” said Madhavi Pillai, World Bank Senior Natural Resources Management Specialist and Task Team Leader for the project.

This will include Cox’s Bazar where nearly one million Rohingyas took shelter.

The project will particularly help the host communities through its income generation activities, improving the availability of wood for fuel in a sustainable way and reducing human-wild elephant conflict which has affected parts of the district.

The project will develop and implement Protected Area management plans for about 10 Protected Forest Areas with involvement of community members.

The $240 million Sustainable Coastal and Marine Fisheries Project will help improve fisheries management, expand mariculture and strengthen aquaculture biosecurity and productivity.

In 10 coastal districts, the project will set up community co-management associations with the fishing communities, enabling them to adopt supplementary and alternative livelihoods.

It will also empower female workers through alternative livelihoods support, skills development, and nutrition awareness.

“Fisheries are vital to the country’s food security and the sector employs more than 18 million people. After garments, fishery is the country’s second largest export earning sector,” said Milen Dyoulgerov, World Bank Senior Environment Specialist and Task Team Leader for the project.

“The project will help improve fisheries management systems, infrastructure, and other value chain investments. This will result in better productivity and availability of fish.”

The project will also help expand the current fisher ID card system, which will be linked with the geographic information system platform.

It will also improve vessel registration and licensing for fishing.

The $100 million additional financing to the Second Rural Transport Improvement Project will help rehabilitate rural roads in 26 districts that were damaged from last year’s heavy rainfall and floods.

The ongoing project has improved and repaired more than 5,000 km rural roads that helped millions of people access markets, hospitals, and schools.

The financing will factor in climate-resilience in planning, technical design, implementation and maintenance of the roads.

“The financing will continue a road safety programme to ensure traffic safety as the rural roads are facing increased motorized traffic,” said Dung Anh Hoang, World Bank Senior Transport Specialist and Task Team Leader for the project.