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Bangladesh Economy: News & Updates

I am posting two stories of recent export processing zone or special economic zone (EPZ or SEZ) developments in the region.
  1. One is Amata Corporation in Thailand (in the cities of Rayong and Chonburi among other Thai and Vietnamese cities) and
  2. The second is Mundra port and SEZ (flagship port of Adani Ports and SEZ Ltd) in Mundra, Gujarat.
By level of sophistication Amata's SEZ facilities are more sophisticated than those in Mundra (or anywhere in India) - yet Mundra's port is also spectacular in it's deep sea capabilities as well as being a privately operated port in India. Both should be studied and bench-marked by business people and students of economics in Bangladesh on how to set up facilities which attract Japanese, Korean and Chinese sunset industries re-locating due to higher wages, which should be our prime focus at this time.

Our EPZ's are (still) as usual run by numbskull bureaucrats with scarce global exposure and even more scarce capability of planning and bold vision. The best they know to do is to hamper industrialization. Witness the Korean and Japanese EPZ fiascoes a la our corrupt PM and bureaucrats down the chain of command. It comes to me as amazement when I see that Koreans and Japanese are still keen to set up industries in Bangladesh due to wages that are half or one-third that of neighboring countries.

I'd say Bangladeshi workers are way more capable in intelligence and skills aptitude for the same wages than workers in either of these locations so the only blame goes to the bureaucrats and their numbskull ineptitude and slowness to build infrastructure compared to neighboring countries. Amata and Mundra's promoters (Adani) are both private companies by the way.


 
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'Abul Khair Group' going for massive investments in Hot rolled steel sheet

AKSPL is a 6 HI continual varying crown (CVC) new steel sheet Project (2 stands) that started production this year. 4 feet wide sheet. Thickness ranges from .20 mm to 2.00 mm.
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KDS Group of companies setup a subsidiary KYCR Coil Industries Ltd., a state-of-the art Cold rolling Mill complex in 2000 at Kumira, 25 KM from Chittagong. The plant had been setup as a backward integration effort to provide necessary raw material for KDS Group's own Galvanizing plant and as a supplier to other consumers in the industry. Recently the plant has gone through modernization and significant expansion.

The plant is notably the only European plant of its kind in the country, supplied by SMS DEMAG Germany, a world leader in this sector. The Complex is built on a 10 acre site, houses a pickling line, 6 Hi CVC cold rolling Mill Slitting and rewinding lines with an annual capacity of 250000 MT. Commissioned in 18 months under supervision and technical assistance of SMS DEMAG Germany, the result is a continuous and efficient supply of flawless quality product unrivaled by others in the industry, thus enabling KDS to be the most reliable supplier of cold-rolled sheet in the region.
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Some of the many local luxury sanitaryware brands

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RAK Ceramics Sanitaryware
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Businessmen expect sharp rise in bicycle exports
Abdur Rahim Harmachi, Chief Economics Correspondent, bdnews24.com

Published: 2015-03-23 11:11:47.0 BdST Updated: 2015-03-23 23:12:32.0 BdST

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Bangladesh is currently the fifth top bicycle exporter to Europe, though it was itself an importer a decade back.

Businessmen in the country see a huge export potential for bicycles because of their growing popularity in developed nations as an environment-friendly mode of transport.

They expect a sharp rise in bike exports to the European market following its economic recovery.

Bangladesh follows Taiwan, Thailand, Sri Lanka and Indonesia in cycle exports to Europe.

According to the Export Promotion Bureau (EPB), Bangladesh exported bicycles worth $84.7 million in the first eight months of the current fiscal year, beginning on July 1, against the year’s target of $121.5 million.

The July-February export figure was 30.23 percent higher than the previous corresponding period.

Bicycle exports began in 2000 and picked up speed in 2008.

EPB Vice-Chairman Shubhashish Bose told bdnews24.com: “An increase in bicycle exports shows a diversification of our export basket.”

Exporters expect Bangladesh-made bikes will grab the ‘entire European market’, just as readymade garments (RMG) have done, in another 10 years.


According to the EPB, the country fetched $20.31 billion from the July-February exports of RMG alone, accounting for 81 percent of the total export earnings.

The bureau said around 80 percent of bicycle exports was to the European Union countries, and the rest to India, the UAE, Australia and other nations.

According to a report of the US-based research organisation, Lucintel, the global market size of bicycles may reach $68 billion in 2018.

Former Bangladesh Bank governor Mohammed Farasuddin feels the country should grab a large portion of the market.

He told bdnews24.com: “Labour cost is low here. No country can export cycles at prices we can offer. We have to exploit this potential keeping in mind the issue of quality.”

The beginning

A Taiwan-based company, Alita Bangladesh Limited, started bicycle exports in the 1995-96 FY on a small scale.

Alita, later joined by the Meghna Group, accounts for around 90 percent of country’s cycle exports.

The manufactures said six types of cycles were being exported -- freestyle, mountain trekking, folding, chopper, road racing, and tandem.

Bangladesh imports some of the cycle spares and locally produces the rest -- particularly wheels, tubes, pedals, handles, bearings and seats.

Meghna Group commenced bicycle exports in 1999 from its factory at Dhaka’s Tajgaon, taken over from the government in 1996.

It exports cycles at prices ranging from $100 to $500.

Group officials said they hoped to export 600,000 cycles in the current year.

Its Marketing Manager Moinul Islam Rahat told bdnews24.com they produced bikes at six factories in Gazipur, employing around 7,000 people.

Rangpur Metal Industries Limited, a unit of the Pran-RFL Group, has invested Tk one billion in a cycle-making factory at Habiganj, sensing robust domestic and overseas markets.

The factory, with an installed capacity to manufacture 500,000 bicycles a year, began production last year.
The company’s marketing head, Kamruzzaman Kamal, said they would begin exports to Europe in April next year.

The European market

According to Eurostat, EU’s statistical office, Bangladesh advanced to the fifth position in bike exports to the European market in 2010 from the ninth place in 2009.

The country maintained the fifth position until last year, when it exported over 600,000 cycles.

Bangladesh exported around 355,000 bikes in 2007, 371,000 in 2008 and 419,000 in 2009.

The number was over 500,000 in 2010, around 550,000 in 2011 and 2012 and 600,000 in 2013.

Imports still on

Though the country’s cycle exports are increasing yearly, the lion’s share of the domestic market is still met by imports.

Exporters are blaming the previous import trend for the situation.
Meghna Group Manager Rahat said: “Demand for imported cycles are high as their prices are comparatively low. Besides, selling imported cycles has been a trend among our traders.”

He said their group was manufacturing bikes for domestic market, taking into consideration road conditions and people’s buying capacity.

During visits to Meghna Group’s cycle showrooms, this correspondent found cycles being sold there at prices ranging from Tk 13,500 to Tk 280,000.
 
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Biman's fleet expansion forges ahead, with twin regional 74-seater Dash-8 Q400s added, Short hop Int'l flights to be bolstered soon with twin 737-800's. (S2-AGQ & S2-AGR below)

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Image copyright Sazzad Hossain


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Bridge piling continues (some 200 meter deep) to build piers over the mighty river Padma (10 km wide). Sorry mostly in Bangla (but one can easily make out the activity).

 
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Refrigerator market Heyday for local brands


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Local brands are dominating domestic refrigerator market due to price advantage and prompt after sales services

M. Abdul Wahab, a mid-level worker in a private firm, was in a quandary. He wanted to buy a refrigerator, but the foreign brands were too expensive for him.

Finally, he opted for an 8 CFT. refrigerator manufactured by a local company, as he found the home appliance affordable for people who belong to the low-income bracket. He compared it with the prices of the foreign brands available, and was delighted.

Besides, he found that the Bangladeshi manufacturers of electronic appliances are offering speedy after-sales services, with many service centers in the city.

Moreover, payments through the monthly installment scheme encouraged him to purchase a fridge belonging to a local brand; he realized it would be very difficult for him to pay the entire amount at one go, for buying a refrigerator of an overseas brand.

The country’s local refrigerator manufacturing companies have made extraordinary progress in the last decade, as Abdul Wahab realized.

Nowadays, the five refrigerator manufacturing companies of the country—including Walton Hi-Tech Industries, Jamuna Electronics and Automobile Company Ltd, Butterfly Manufacturing Company, RFL Electronics Company, and MyOne Electronics Industries—are producing a wide range of refrigerators and freezers.

According to the Bangladesh Refrigerator Manufacturers’ Association (BRMA), the annual production capacity of the domestic refrigerator manufacturing companies has doubled, compared to annual demand.

Local refrigerator manufacturers have an annual production capacity of 23 lakh refrigerators, against the annual demand for 11 lakh refrigerators, BRMA noted.

Among the five companies, Walton Hi-Tech Industries Limited has an annual production capacity of 14 lakh refrigerators, under the Walton brand, Jamuna Electronics and Automobiles Company Ltd has an annual production capacity of three lakh, under the Jamuna brand, Butterfly Manufacturing Company Ltd, two lakh, RFL Electronics Ltd, three lakh, and MyOne Electronics Industries has an annual capacity of around one-and-a-half lakh, under the Minister brand.

BRMA sources said around 10.77 lakh refrigerators have been sold across the country, in the last fiscal year, 2013–'14, showing a 32.9 per cent growth over sales in FY 2012–'13.

Among the 10.77 lakh refrigerators sold in 2013–'14, the number of locally made refrigerators was 8.37 lakh and imported refrigerators numbered 2.4 lakh, BRMA statistics show. The market share of local refrigerator manufacturing companies therefore was 77.73 per cent, while 22.27 per cent of the market was captured by refrigerator importers.

In 2013–'14, sales of imported refrigerators came down by 24.29 per cent, compared to those of the previous fiscal year (2012–'13). Around 3.17 lakh imported refrigerators were sold in 2012–'13 while the figure fell to 2.4 lakh in 2013–'14.

On the other hand, sales of different brands of locally manufactured refrigerators increased by 3.44 lakh units in 2013–'14. The local refrigerator manufacturers have sold around 8.37 lakh refrigerators in 2013–'14, as against 4.93 refrigerators in the previous fiscal year, marking a 70 per cent rise.

Local refrigerator manufacturers said the growth in turnover will increase in the current fiscal year, if the political situation remains stable across the country. They are projecting a 40 per cent growth in annual turnover in 2014-'15.

BRMA general secretary Lokman Hossain Akash said the country’s refrigerator manufacturing sector has emerged as an exemplar of the smooth industrialization process.

Earlier, different brands of imported refrigerators met the country’s entire demand for refrigerators, he pointed out.
But now, the market share of locally manufactured refrigerators is gradually increasing, as local manufacturers are supplying quality refrigerators at affordable prices, compared to those of imported refrigerators, Akash added.

In addition, speedy after-sales service and easy availability of spare parts are also actuating consumers, to buy locally made refrigerators, he pointed out.

Local refrigerator manufacturing companies are now not only meeting the total domestic demand, but also exporting their manufactured refrigerators to different countries of the world, Akash explained. The markets of imported refrigerators have now been taken by the local brands of refrigerators, he said, adding that it is high time imports of refrigerators were discouraged by imposing high import duties.

Uday Hakim, operative director of Walton Hi-Tech Industries, told The Independent that Walton is now manufacturing nearly 80 per cent of the raw materials of a refrigerator, including chemicals, mould-dies, all kinds of plastic accessories, and some other kinds of machinery. “We also have the capacity to export these items,” he added.
At present, the lion’s share of the local refrigerator markets is occupied by refrigerators of the Walton brand, he said.
The annual production capacity of Walton Hi-Tech Industries has crossed the domestic demand for refrigerators, he said, adding, “We are now exporting our Walton brand of refrigerators to different Asian, African and Middle Eastern countries, after meeting domestic demand.”

Besides, the company has taken an initiative to set up another refrigerator factory, with a view to export the appliances to countries in Europe and North America.

In the new factory, state-of-the art no-frost refrigerators will be manufactured; its annual production capacity will be 10 lakh, he added.

Moreover, the company has taken up a project to manufacture the main component of refrigerators—compressors—with a production capacity of 20 lakh annually, he noted.

Abdur Razzak Khan, managing director of MyOne Electronics Industries Ltd, said the company has a the capacity to produce 500 fridges per day.

More than 50 per cent of the accessories, including the air conditioning cord, the internal white part of the fridge, metal items, screws and all kinds of plastic accessories, such as trays, vegetable boxes and racks, are now being produced locally, he said.

The company is now importing compressors from China, Malaysia and Thailand, he said, adding that in the coming future, compressors will be produced in Bangladesh, too.

The time has come to provide full policy support to the local refrigerator manufacturers, he added. “If the government wants to help the local refrigerator manufacturing sector to move ahead, imports will have to be discouraged by imposing high import duties on imported fridges,” he observed.

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Bangladesh self-sufficient in fridge production


Economic Correspondent: Bangladesh has become self-sufficient in manufacturing fridges or refrigerators in the country. Currently the country is capable of manufacturing 23 lakh refrigerators against the annual demand of 11 lakh. Which means in comparison to the present demand, the country’s production capacity is more than double.

Consumers are benefited of the development as they can purchase high standard local products at reasonable and affordable prices. The market of the sector is fully dominated by the local companies which indicates that no other foreign products will be able to compete in the country if the manufacturing of standard products witness a boost here as the patriotic consumers prefer local products.

According to the data provided by Bangladesh Refrigerator Manufactures Association, a total of 10 lakh 77 thousand refrigerators were sold in last fiscal year which is 32.9 percent higher than the previous fiscal. Among them, the percentage of local made refrigerators was 77.73 (8.37 lakh) while the sale of imported refrigerators was only 22.27 percent (2.8 lakh). In the previous fiscal, 3.17 lakh imported refrigerators were sold which means in the current fiscal the sales of imported refrigerators declined to 77 thousand units. However, the sales of local made refrigerators increased to 3 lakh and 44 thousand units.

Source concerned in the sector said the growth rate of local refrigerator sales will increase more if the stable political situation continues. Local manufacturers are expecting 40 percent growth in this year refrigerator sales. In that case, reducing the market of imported refrigerators sales the sales of local made refrigerators will cross 14 lakh in the end of the year.

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According to the sources, the annual refrigerator production capability of the country is now 23 lakh units. The prominent local brands are Walton, Marcel, Eco Plus, Jamuna, RFL, MyOne and Minister. Among them, the annual production capacity of Walton Hi-Tech Industries is 14 lakh units, Jamuna Electronics 3 lakh, Butterfly Manufacturing Company Ltd (Eco Plus) 2 lakh, RFL Electronics 3 lakh while MyOne and Minister’s capacity are 1 lakh. Walton branded products are now being exported to several countries of Asia, Africa and Middle East while the process of entering in the European market is on.

Lokman Hossain Akash, General Secretary of Bangladesh Refrigerator Manufactures Association, said “Refrigerator sector is a major and positive segment in country’s industrialization. In the recent past the refrigerator demands of the country had to be met by imports - but now after meeting local demand refrigerators are being exported to other countries. Local products have captured the refrigerator market driving away foreign brands. This trend of importing foreign-branded refrigerators need to be discouraged.”

Meanwhile, Walton has bagged a major part of the country’s refrigerator market. Sources at the company said it has taken initiatives to set up a new refrigerator factory in a bid to export its products to developed countries of Europe and America. With 6 lakh annual production capacity, no-frost refrigerators will be manufactured in the new factory. Walton has already started manufacturing die-mould, chemicals and machinery of refrigerators and freezers including all sheet-metal components. The company is also working on a project to manufacture 20 lakh high quality compressors every year.

According to a report of the Research Cell of Bangladesh Refrigerator Manufactures Association, refrigerator market in Bangladesh expanded to 33 percent in the 2013-14 fiscal year compared to the 2012-13 fiscal. 78 percent of this expansion is due to production expansion by local producers.

Fiscal_____Imported Fridge__Local Made Fridge__Total Market__Rate of increase/decrease

2010-11___72.29%_________27.71%___________7.97 lakh_____12.3%

2011-12___49.25%_________50.75%___________7.53 lakh_____- 5.5%

2012-13___39.16%_________60.84%___________8.11 lakh_____7.6%

2013-14___ 22.27%_________77.73%__________10.77 lakh_____32.9%

Sources said high prices, low standard products (in certain cases) and insufficient after sales service are the main reasons behind the sales decline of imported refrigerators. On the other hand, local-made high standard refrigerators can be purchased at comparatively low prices while getting better after sales service along with spare parts from the local companies.

Prominent economist Dr. Akbar Ali Khan, a former adviser to the caretaker government, views development of the refrigerator sector as a massive success for the country. “This is certainly a positive fact for the country. The country will be economically independent and more scope of employment will be created if other products like refrigerators are manufactured here.”

Stressing on setting up new industries, the well-known economist said the government should increase infrastructure facilities and other related items to make it easy for investors to recoup their investments.
 
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Dhaka-Ctg train trip gets faster

Train journeys to and from Chittagong are to be faster as a 61-kilometre double-line, between Laksham and Chinki Astana, and the remodelled Chittagong Railway Station yard is set to open today.

According to officials of the railways ministry, the travel time between Dhaka and Chittagong would be 30 minutes shorter due the new line.

From today, 153km of the 321km Dhaka-Chittagong route would be double-line.

The number of trains running between the capital and the port city would increase up to 70 with this boost in line capacity. Now, 36 trains run between Dhaka and Chittagong.

The officials believe trains would be able to maintain schedules better since they would travel up to 100kmph on the new line.

Though the new double line is meter gauge, it has the provision for transformation into dual gauge, on which broad gauge and meter gauge trains can ply.

The double line was installed as part of a sub-project of Dhaka-Chittagong Railway Development Project aimed at increasing frequency and establishing faster railway connectivity between the two cities.

Construction of the Tk 1,749-crore Laksham-Chinki Astana double line started on November 2, 2011, and completed on March 31, 2015.

Eight major bridges, 45 culverts, four new station buildings, 13 new platforms, eight footbridges and 13 level crossings had been built. Computerised interlinking signalling system at 11 stations and central traffic control with telecommunications facilities at 12 stations have also been introduced under the project.

Construction of additional three loop, one-shade platforms, triangle train line for moving the engines have also been done along with refurbishing 800 metres of rail lines between the station yard and Pahartali station under the Chittagong Station Yard Remodelling Project.

Around 50 pairs of trains would be able to move after construction of the new station yard. This would increase operational facilities, according to the officials.

Project Director of the two projects SM Liaqat Ali said the projects, costing over Tk 2,000 crore, had been completed on time.

“With the inauguration of the new double line, at least 30 minutes would be saved for Dhaka-Chittagong intercity trains, one hour for local trains and two hours for freight trains as there will be no stoppages at stations for crossings,” he observed.

Ali, also one of the general managers of Bangladesh Railways, said the projects had been implemented by local Max Group. “It is a milestone that a local company has developed the capacity to build rail lines of international standards,” he added.

Prime Minister Sheikh Hasina is set to inaugurate the new double-line and the remodelled Chittagong station yard via a videoconference with Railways Minister Md Mazibul Hoque at 5:00pm from Gono Bhaban.

The minister along with Director General Md Amzad Hossain and Project Director SM Liaqat Ali would be at Laksham junction.

She would also open the foundation stone for the construction of a 72km Laksham-Akhaura dual-gauge double-line and transformation of the existing line into dual-gauge. This would be done with joint financing by the Asian Development Bank, European Investment Bank and the Government of Bangladesh.

The construction work would begin in October this year and is expected to be finished in four years, SK Chakraborty, general manager and project director, told The Daily Star.

Dhaka-Ctg train trip gets faster | The Daily Star
 
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Skilled Women Are Breaking Labor Force Barriers in Bangladesh

Dolly owns and runs “Lovely Fashion,” a tailoring shop in Tongi near Dhaka, the capital of Bangladesh. She is in her mid-twenties and earns around BDT 12,000 (USD 150) a month. “I work hard. I can support my family to live with dignity in the society,” says Dolly. “Finally I have peace of mind and financial independence.”

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Dolly working in her tailoring shop

From childhood, Dolly was self-motivated. She struggled against the barriers that held back her. The lack of economic opportunities is an obvious barrier for the many women belonging to earlier generations. Dolly first experienced her mother’s life, who got married at an early age and could not finish her secondary school. After marriage, she faced the challenge to feed and fulfill the basic needs of her family with her husband’s limited income. Her mother wanted to financially support the family but lacked the opportunity. She aspired for her daughter’s life to be different. Dolly’s mother motivated her to build her career and become financially independent. After completing secondary schooling, Dolly was looking for entrepreneurial opportunities. She came to know about the Montage Training and Certification (MTC) – a private vocational training institute. The institution provides a number of free short-courses and stipend with support from the Skills and Training Enhancement Project (STEP). She enrolled herself in dress making and tailoring courses from July to December 2012.

With assistance from the STEP, more than 100 institutes like MTC provides free skills training and financial support to the students. This made it possible for Dolly and hundreds of young women like her from low income families to enroll in technical and vocational courses and gain valuable market oriented skills that later turned their lives around.

The Government of Bangladesh is implementing STEP with financial assistance of $100 million from the World Bank and the Government of Canada. One of the activities of STEP is to support six months short-course training programs to develop skills and increase employment opportunities for those who are interested in entering the labor market. Until December 2014, 12,763 female students received support from the project. Among them, around 25% graduates get job within 6 months of the course completion and about 40% are in further education and training aspiring for skills of even higher levels. Dress making and tailoring, computer technology, beautification, and garments are some of the programs that are particularly popular among women.

After completing the six-month course, Dolly started a tailoring shop with the stipend money and her mother’s savings. Despite initial struggle of running a new business, her hard work, diligent and welcoming personality attracted an increasing number of customers. After five months, she needed additional support for running her expanding business. She even trained and employed two more women.

Women in the past could hardly think about going to vocational training schools or starting up their own businesses. The series of awareness campaign, financial and policy support from the Government of Bangladesh are the recent game changers. All these ignited the idea of independence and self-reliance among the women in Bangladesh. They have now broken the mold and come forward with innovative, employment and entrepreneurial skills to create their own livelihood and even support their families.

The benefits of female empowerment through skills training are visible all over Bangladesh.

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The contribution of women in the national economy between the ages of 20 and 50 has increased. Growing number of educated women, coupled with the increasing opportunities in the labor market have contributed in increasing the female labor force participation rate, which has increased from 26.1 to 36.0 percent in between 2003-2010 (The World Bank, 2013). It is just one step towards female empowerment, yet a steady and big one for shaping their futures.

Source: WorldBank
 
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Recent TV specials highlighting infrastructure news ... (sorry all in Bengali but Urdu/Hindi speakers can probably get most of it).






 
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One more about the Dhaka Elevated Expressway (Using the existing flyovers).

 
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See S&P's report on Bangladesh in the attachment.
 

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