Bangladesh Economy: News & Updates

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Bangladesh' extreme poverty rate has dropped to 12.9 percent of the total population in 2015-16, the World Bank says.

In its 'Bangladesh Development Update', released on Monday, the multi lateral lending agency said it has come down from 13.8 percent in the previous 2014-15.

WB Dhaka office's Lead Economist Zahid Hussain highlighted the key features of the report on Monday at a media conference.

He said they have calculated the rate of extreme poverty based on Bangladesh's 7.1 percent GDP growth in FY 2016.

"Bangladesh's achievement is better than India, Pakistan and Bhutan," said Hussain, the author of the report launched on Monday.

The World Bank said in a statement that under the new poverty line based on 2011 purchasing power, 28 million, or 18.5 percent of Bangladeshis lived in extreme poverty in 2010.

More than 16 million people in Bangladesh graduated from extreme poverty between 2000 and 2010.

“The success of Bangladesh’s development experience in innovations such as conditional cash transfers, gender equity in education, and successful family planning is reflected in its notable reduction of poverty and improvement in the lives of its citizens,” the statement quoted WB Country Director Qimiao Fan saying.

 

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A citizen is providing her iris impression for updated NID card at Siddheswari Girls' College centre on Monday. Photo: abdul mannan

 

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BANGLADESH’S HIDDEN STORY: A BOOMING ECONOMY

SAJEEB WAZED

A significant piece of news emerged from Bangladesh recently that received little notice outside the country. Last year for the first time, foreign direct investment from other countries into Bangladesh surpassed $2 billion, a 44 percent increase from the year before.

In other words, investors increasingly see Bangladesh as a smart place to put their money. And they aren’t alone.

According to a March poll by the U.S.-based International Republican Institute, 83 percent of Bangladeshis surveyed said the security situation in Bangladesh is very good or somewhat good and 77 percent believe the country is politically stable. In addition, 72 percent are optimistic that their personal economic situation will improve.

Top sectors for direct investment last year in Bangladesh included the ready-made garment industry, of course. But investors also poured money into oil and gas, banking, telecommunication and power generation. One reason is, unlike many of its neighbors, Bangladesh has a liberal investment regime that allows 100 percent foreign investment in many sectors and an unrestricted exit policy.

Stacking Intermodal container in Port of Chittagong

In recent years, Bangladesh’s economy has grown at a consistent, blistering rate of more than 6 percent, making it one of the fastest growing economies in the world. Over the past nine months, that pace accelerated to 7 percent. Today, the Bangladeshi economy stands at about $180 billion. According to the World Bank, that will rise to $322 billion by 2021, creating many more scalable investment opportunities.

Growth is driven by the already-well-known ready-made garment industry. But it’s a more dynamic industry than most people know. In fact, it’s a mistake to continue to think of Bangladesh as t-shirt maker to the world. Bangladesh garment manufacturers produce high-end clothing that sells in Europe’s best boutiques.

The garment industry has fostered more than pure economic gains. Demography has also been a winner. Garment factories have become the great gender leveler in society. Most employees and managers are women, which has led to their economic empowerment and rise in stature in society.

At the same time, the Bangladesh garment industry is developing an international reputation for being smart and nimble. “Bangladesh offers ease of doing business, importing-exporting is faster. R&D on new styles is faster as you can import fabrics in three days. In India, it would take 10 days,” Vijay Mathur, an official with the Indian Apparel Export Promotion Council, recently told the Business Standard.

As a result, Bangladesh garment exports are likely to hit $27 billion this year, up 10 percent from 2015.

The economic success story of Bangladesh has also improved the health of its citizens.

Twenty-five years ago the average Bangladeshi could hope to live only to age 56. Today, that figure is over 70, which is among the most notable improvements in modern history, according to the Asia Foundation. In fact, expected longevity in Bangladesh is more than four years longer than in neighboring India and Pakistan.

Between 2000 and 2010, the number of poor in Bangladesh dropped 26 percent from 63 million to 47 million. Today, the overall rate of poverty in the country is 22 percent, down from 40 percent a decade ago.

The World Bank reports that labor income has risen while birth rates have dropped, leading to lower dependency ratios and higher per capita income. The World Bank recently ranked Bangladesh as a lower middle-income nation for the first time.

The economic surge started after the Awami League, the nation’s ruling party, won in a 2008 landslide. The impressive growth has been nurtured and sustained by smart government programs, savvy foreign investment and the entrepreneurial spirit of Bangladeshis, especially its young people who are increasingly English speaking and digitally savvy.

The bottom line is that Bangladesh is a legitimate – if under-reported – economic success story, and one that is only in its beginning.

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Sajeeb Wazed is the chief information technology adviser to the government of Bangladesh and the son of Prime Minister Sheikh Hasina.

MAY 02, 2016

 

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BANGLADESH’S GROWTH STORY IMPRESSIVE

MD FAZLUR RAHMAN

In conversation with The Daily Star, Standard Chartered CEO Bill Winters speaks on both local and global economies

The brutal militant attack on the Holey Artisan Bakery that killed 17 foreign citizens suddenly made Bangladesh a scary place to do business.

The July 1 attack had stoked doubts whether foreigners would keep visiting Bangladesh or working in the country.

Despite a feeling of unease in the air, top officials of foreign companies continued coming to Bangladesh, thanks to stern responses by the government following the attack — to tackle the rise of militancy.

One of those officials is Bill Winters, a star banker and group chief executive of Standard Chartered, who came to Bangladesh on Tuesday on a two-day visit delivering a positive signal to the local market.

“I am happy to see a serious response from the government. I know there is no easy fix to this. It is a global phenomenon,” Winters told The Daily Star in an interview.

“It is a concern in Bangladesh as it is in many of our other markets.”

“The human cost is enormous. Its economic cost is huge,” he said.

Winters said he is sure there are steps that can be taken to mitigate the most calamitous effect on local or global economy.

Winters joined the London-based but Asia and Africa-focused bank in June last year as its new chief executive.

He said he is familiar with Bangladesh and impressed by the progress the country has made in the past several decades, especially in the past several years.

Standard Chartered Bangladesh has become a strong local bank, promoting trade, investment and exports and bringing in capital to the country, he said.

The American banker, who spent 26 years with JPMorgan in diverse leadership roles, said South Asia is a bit of an oasis as it is largely free from geopolitical tensions.

South Asian economies have remained strong partly due to good policies and the import of commodities whose prices are falling, he said.

“Our Bangladesh business remains very strong. No complaints… I know that our team is focused on ways to do better, and we are doing better on the back of the investments we are making.”

In South Asia, the bank’s position is strong in Bangladesh, Pakistan and Nepal while there are challenges in India.

“But our programme remains the same: to invest in technology and people so that we can become a best-in-class service provider and gradually redeploy our capital to higher returning areas from lower returning areas.”

He said, like in India, the bank has repositioned itself quite well in countries like the United Arab Emirates, Kuwait and Qatar. He praised Africa, saying the continent offers a fabulous position for the bank.

He said Bangladesh Bank is very professional when it comes to supervision. “As an organisation, they are quite professional. I don’t think there is a supervision deficit in the country,” he said, adding that there is always room for improvement.

When asked about the health of state-run banks in Bangladesh, he said he has seen in a number of markets around the world that when “you have reasonably high level of government interference in a bank, accidents tend to happen.”

He said, during the financial crisis the US government’s interference came in the form of massive subsidies to the US housing market.

“As a result of the subsidies the housing market created the biggest bubble in the financial history, probably. It caused an extraordinary amount of pain everywhere in the world,” he said.

“I am a very strong advocate of governments staying out of markets because when they are getting into markets bad things tend to happen.”

After taking the helm of the British bank, Winters laid out an aggressive strategy to ensure that the bank is financially strong, raised enough capital from shareholders to dispel capital risks and began the process of cleaning up the balance sheet.

He said, in the last one year the bank made great progress and returned to profitability in the first half of 2016. “Our income is growing albeit slowly. Our expenses and risks are under control, and the investments are beginning to bear fruit. We have quite a bright future.

“We are concentrating on getting it right. We don’t have to look further than Bangladesh where we have a strong market with high customer satisfaction.”

He, however, said the bank takes risks and operates in markets that are risky themselves. “I expect to have some higher than normal level of non-performing loans for a bit longer. But it is under control.”

But he said the bank has to be more efficient. Winters has set a target to slash expenses by $3 billion by 2018, and the bank is halfway done and most of that came from trimming the management ranks.

“The flip side of saving the $3 billion is that the bank is investing every penny of the savings back into its business. Half of the investment will go into technology to be the best-in-class digital bank.”

Winters said the bank is already the best in mobile banking and online banking. “We need to automate not just the frontline but also our entire process.”

Winters said the bank is investing in new capabilities and Bangladesh is already a recipient of significant amount of the new investments.

“We are hoping to add branches and corporate client base. We are making investment in technology here. We would like to ensure that we remain at the leading edge of digital banking in Bangladesh.”

Winters said the bank has very strong business in Bangladesh and high customer satisfaction in a growing population. “We are very happy to be part of that.”

Bangladesh is, in some ways, a role model for Standard Chartered, he said. “The country is a core market.”

Ajay Kanwal, chief executive officer of Standard Chartered for Asean and South Asia region, who was also present during the interview, said it is fair to see that Bangladesh will be among the bank’s top ten markets. “It continues to be a strong investment destination for us.”

Apart from catering for local economy and businesses, the bank is successfully bringing in international businesses, capital and investors to Bangladesh. Half of the capital coming to Bangladesh is coming through Standard Chartered, according to Winters. “We are a big promoter of capital coming into the country and a big promoter of exports going out of the country.”

He said China plans to shift its excess manufacturing capacity and capital to other countries such as Bangladesh.

When the Chinese are looking to finance infrastructure projects in Bangladesh, Pakistan, the UAE, Nigeria or Kenya, the natural partner for them is Standard Chartered because it has a big operation in the world’s second-largest economy and also operates in the countries where China wants to invest in.

“We are a very natural arranger of those sorts of financing. That’s exactly what we are doing.”

Winters said as the remotest part of the population is getting access to digital economy through mobile phones, there is opportunity for the bank to bring in a much larger portion of the unbanked population under the banking operation.

He also thinks that it is not a big issue for Bangladesh that local firms are borrowing from external sources to benefit from low-cost funds.

Abrar A Anwar, CEO of Standard Chartered Bangladesh, said the country’s total debt is 15 percent of its gross domestic product.

“It is very low. Sometimes we wonder whether it is detrimental to our own growth as we have been so conservative and don’t borrow to grow.”

Of the $8 billion that entered Bangladesh’s private sector as loans from international sources, $3.5 billion has been raised by Standard Chartered for power projects, aviation and export-oriented industries.

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SEPTEMBER 08, 2016

 

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BANGLADESH AMONG 10 COUNTRIES SET TO BECOME NEW DRIVERS OF GLOBAL GROWTH

KAYES SOHEL

Bangladesh’s export-oriented industrial sector already accounts for more than a quarter of GDP and will continue to develop as a global manufacturing hub in the coming years

Bangladesh has been named one of 10 emerging markets that are set become new drivers of global economic growth over the next 10 years.

BMI Research report says the economy is heading for impressive growth, lifted by the apparel and construction sectors.

The report released last month by the US-based research firm of the Fitch Group has identified Bangladesh, Philippines, Indonesia, Myanmar, Vietnam, Egypt, Ethiopia, Kenya, Nigeria and Pakistan as “10 emerging markets of the future.”

The countries will add about $4.3tn to the global gross domestic product by 2025, providing significant opportunities for investors and roughly the equivalent of Japan’s current economy, the report said.

“Bangladesh’s export-oriented industrial sector already accounts for more than a quarter of GDP and will continue to develop as a global manufacturing hub in the coming years,” according to the report.

In general, manufacturing and construction are the sectors that will drive the economies.

BMI reports that new manufacturing hubs are set to emerge in Bangladesh, Myanmar, and Pakistan, and that these countries will see particularly strong growth in exporting manufacturing industries.

And construction growth is going to be widespread throughout all the countries — partly to facilitate increases in urban populations and partly to help develop the manufacturing sector, it said.

On the other hand, extractive industries — like mining, oil, and gas — are going to play a far smaller role in driving growth than they have in the past 15 years.

While it might provide bright spots for some countries, the report stated: “The ubiquitous commodity-driven growth model that was derailed by the 2012-15 collapse in commodity prices is not coming back.”

“In order to shortlist the countries, we considered those with per capita income of about $3,500 and below, that enjoy strong enough economic and political institutions to enact reforms, are set to enjoy rapid economic growth, boast a potentially large domestic market and have an infrastructure deficit that will lead to productivity-enhancing investment,” it explained.

BMI said a large domestic market implies strong growth opportunities for consumer industries.

“Moreover, large populations will provide significant opportunities for infrastructure and construction as urbanization rates rise,” it said.

Stronger institutions are typically associated with better policymaking, the protection of property rights and reform, which help to underpin growth, it added.

The think tank said the countries that experience strong economic growth will provide strong investment opportunities and returns.

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JULY 14, 2016

 

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BR to purchase 200 more new coaches.

http://www.observerbd.com/details.php?id=36609

Bangladesh Railway will purchase 200 new passenger coaches (meter gauge), worth of Tk 927 crore 51 lakh to its fleet as part of reform activities to provide passengers modern, safe and quality services.

China will provide Tk 713 crore 51 lakh and the rest of amount will be collected government fund, Planning Commission sources told the Daily Observer.

The project will be approved at a meeting of the Executive Committee of the National Economic Council (ECNEC) today. Prime Minister Sheikh Hasina will preside over the meeting.

- See more at:http://www.observerbd.com/details.ph....kzGaIuoV.dpuf

Ishwardi-Pabna broad gauge line to be opened in Dec 2017.

New imported Indonesian Meter Gauge rakes have been commissioned, more are due from Indonesia soon.

 

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Bangladesh gets dot bangla internet domain
on October 5, 2016


businessnews24bd.com

Bangladesh has finally got the rights on dot bangle (.bangla) domain as own, the Internationalized Domain Name (IDM), to express its own identity internationally.

The Internet Corporation for Assigned Names and Numbers (ICANN) on Wednesday sent a letter to the Ministry of Post & Telecommunications in this regard, according to the Internet Assigned Numbers Authority (IANA) website.

Enayet Hossain, Public Relations Officer at Post & Telecommunications Ministry confirmed the matter.

Earlier, ICANN-approved another domain label for Bangladesh as dot bd or .bd. From now on, .bangla is Bangladesh`s own Unicode domain label.

It is the second country code top-level domain (TLD) for Bangla websites. This domain is meant for web addresses in the Bengali language. It is administered by the Ministry of Posts, Telecommunications and Information Technology of Bangladesh

Walton releases laptops in tech market
on September 22, 2016


Economic Correspondent

Bangladesh’s electronics giant ‘Walton’ has officially kicked off the marketing of its new product ‘6th Generation Intel processor based laptops’ in the domestic tech market.

The launching ceremony of Walton brand laptops was held at Westin Hotel in Dhaka on Thursday. Finance Minister Abul Mal Abdul Muhith attended the event as the chief guest while State Minister for ICT Ministry Zunaid Ahmed Palak, President of Bangladesh Association of Software and Information Services (BASIS) Mustafa Jabbar, Director of Walton Group SM Rezaul Alam, Country Business Manager of Intel Corporation Zia Manzur and Representative of Microsoft Pubudu Basnayake, among others, were present as special guests.

The launching programme was presided over by Walton Group’s Managing Director SM Shamsul Alam.

In association with the United States based two giant brands Intel and Microsoft and Bangladeshi Bijoy Bangla, Walton started the marketing of laptops in the local market.

Like fridges, air conditioners, televisions and mobile phone, Walton would be able to secure the apex position in the local laptop market, the Walton officials hoped.

At the launching ceremony, Finance Minister AMA Muhith said, “Bangladeshi brand Walton is marketing computer like high-tech product in the domestic market. The local brand has also a plan of manufacturing and marketing all sorts of ICT products gradually. Such initiative taken by Walton has not only started a new era in the country’s high growth potential ICT sector but also moved Bangladesh one step ahead towards its ‘Digital Revolution.”

State Minister for ICT Ministry Junaid Ahmed Palak said, the laptops, marketed by Walton with the joint collaboration of Intel and Microsoft, will meet the desire of the local users.

Now, the domestic users can buy highest standard Bangladeshi brand’s laptops at affordable rates, he added and hoped that Walton would be able to bring Bangladesh in a strong position in the global ICT market through manufacturing all sorts of ICT products.

They said, Walton has a plan of manufacturing various sorts of ICT products like Laptop, Computer, Monitor, Mobile phone set, Tab and so on. Thus, today Walton is releasing Laptops as its first ICT products. The local laptops’ users can buy the most stylish, multifunctional and high speed laptops of Walton brand about 10 to 30 percent lower rates than the prices of foreign brands’ laptops.

Under the joint collaboration with Microsoft, Walton will also supply genuine windows and other Microsoft Office applications at an affordable price for the local customers. The officials also informed that Walton is initially launching 20 models of laptop under four series like WaxJambu, Karonda, Tamarind and Passion, which prices are ranging from Tk 29,500 to Tk 95,500.
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If they can get a few large govt. contracts from the Revenues dept., army, customs etc. they will be set......

 

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Bangladesh on track to get world’s first fully integrated turnkey floating LNG terminal

Excelerate Energy L.P. (“Excelerate”), Petrobangla, and the Government of Bangladesh executed the Terminal Use Agreement (“TUA”) and the Implementation Agreement (“IA”) for the construction and operation of Bangladesh’s first LNG import terminal – Moheshkhali Floating LNG. Located offshore near Moheshkhali Island in the Bay of Bengal, the terminal will provide the crucial infrastructure required for the country to access natural gas from global markets. The signing of the agreements signals the commencement of the project and the approval to move forward to implementation. The terminal is expected to be in operation in 2018.

Petrobangla Chairman Mr. Ishtiaque Ahmad, Excelerate Chief Development Officer Mr. Daniel Bustos and US Ambassador Ms. Marcia Bernicat are seen at the signing ceremony

The project is a result of the collaboration between Excelerate, Petrobangla, and IFC, a member of World Bank. Among the executives and government officials present for the event were Excelerate Chief Development Officer Mr. Daniel Bustos, Petrobangla Chairman Mr. Ishtiaque Ahmad, and the Honorable Advisor to the Honorable Prime Minister of Bangladesh Dr. Tawfiq-E-Elahi Chowdhury, Bir Bikrom. Also in attendance were representatives of IFC, who is delegated to provide and arrange the required financing for the terminal.

“This innovative project would not be possible without the critical support and collaboration of Petrobangla and the Government of Bangladesh,” stated Mr. Bustos. “The signing of these agreements not only authorizes Excelerate to begin developing this vital project, but it also demonstrates the trust bestowed upon us by Petrobangla and the nation. We are confident our experience and expertise in delivering floating regasification solutions in a cost-effective and timely manner ensure we will provide an efficient and reliable project for Bangladesh.”

The new terminal will enable Petrobangla to procure LNG from international gas markets which will further complement and enhance Bangladesh’s ability to reliably use the country’s domestic natural gas reserves. Expanding access to diverse and abundant sources of natural gas supply will promote power reliability, industrial development, and job creation in the region.

Moheshkhali Floating LNG will be the world’s first fully integrated turnkey floating LNG terminal whereby all services will be provided under a single contract by a single provider – Excelerate Energy. Excelerate will fully develop, design, construct, install, finance, and operate the terminal. This structure will allow for a single point of interface and responsibility to Petrobangla and provide seamless operations for the Bangladeshi market. Excelerate will operate the terminal for 15 years, after which the company will transfer ownership to Petrobangla.

The terminal will include the provision of one of Excelerate’s existing floating storage and regasification units (FSRU), the installation of a subsea buoy system anchored offshore, and the employment of port service vessels during operation.

The FSRU will have 138,000 cubic meters of LNG storage capacity and a base regasification capacity of 500 million standard cubic feet per day.

 

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CHINA AND BANGLADESH

On a Transformational Journey

China has been taken a strong place in the global economic landscape with its large GDP and rapid economic growth. Although in the last three decades, the growth of the Chinese economy has slowed down from a rate of 10 percent GDP growth to 6.9 percent in 2015, it was the largest economy in the world in terms of purchasing power parity last year. In 2015, China's contribution to global economic growth was 51.3 percent compared to 30.9 percent of the USA.

The impressive economic growth of China, one of Bangladesh's large Southern neighbours, has important implications for our development. Bangladesh can advance further through connecting with China through trade, investment, foreign aid, and exchange of people and intellectual pursuits. China is now Bangladesh's largest trading partner. In 2015, Chinese export to Bangladesh was USD 13.9 billion. Foreign direct investment from China and Hong Kong together stood at USD 859 million in the same year.

Economic ties between China and Bangladesh have been strengthened in the last four decades. However, there are many more opportunities for China to contribute towards the development of Bangladesh. China is a minor export destination for Bangladesh, making bilateral trade deficit between Bangladesh and China very high. In 2015, Bangladesh's export to China was USD 804 million, which was equivalent to only about 3 percent of Bangladesh's total exports to the global market. To address the growing trade imbalance, China offered duty-free access to 4,788 products from Bangladesh under the Asia-Pacific Trade Agreement. However, because of non-diversified export basket and supply side constraints, Bangladesh cannot take full advantage of this offer. Bangladesh also needs more favorable rules of origin (RoO) for increasing its exports to China.

The size of China's investment across the globe is increasing steadily towards making it a leading economic power. In Africa, Latin America and Asia, China is investing tens of billions of dollars. This is not only on infrastructure, but also on several other sectors, including natural resource extraction, financial service, power generation, textiles, home appliances and real estate. In Bangladesh, Chinese investment has not been particularly noteworthy yet. Until 2010, Bangladesh did not get much priority from China for investment in Bangladesh. Of course, significant increase of Chinese FDI in Bangladesh was observed from 2010 onward. China's contribution to Bangladesh's FDI profile has been growing faster than that of India over the last couple of years. Low investment indicates that Chinese investment in Bangladesh has not been linked to its trade with the country.

Traditionally, Chinese investment projects involved infrastructure and service sectors. In recent times, the focus of Chinese investment in Bangladesh has shifted towards the manufacturing sector, specifically to the ready- made garments sector. It has also expressed interest in making investment in priority sectors such as commerce, agriculture, industry, energy and infrastructure. Higher investment from China can in fact help reduce bi-lateral trade deficit.

Given the large and growing domestic market of China, Bangladesh has the potential to increase its exports to the country. With rising wages in the country, China may take advantage of competitive wage by shifting some of its sunset industries to Bangladesh. This will create employment here and the opportunity to increase exports. This requires massive improvement in infrastructure including power and energy, and also availability of land. The Bangladesh government is planning to have land bank to facilitate large investments. Large Chinese investments can be an opportunity for technology transfer which can contribute to productivity improvement through upgrading of skills.

Chinese contribution, as development assistance to Bangladesh, was negligible till the recent past. Chinese assistance has been mainly for infrastructure development. The Asian Infrastructure Investment Bank (AIIB), established with the initiative of China in 2015, has created opportunities for Bangladesh. Indeed, Bangladesh has already received loans from AIIB for its power sector development. At a time when there is huge finance gap to meet the need of countries, AIIB has the potential to bridge at least a part of this gap. Asian countries can request AIIB for funds to build infrastructure such as roads, railways, power and telecommunications. This initiative is also a complementary to the New Silk Road initiative of China, which seeks to improve infrastructure and connectivity in Asia.

China's transformational journey during the last three decades with high economic growth has made it an economic powerhouse, not only in the region but across the globe. Through several rounds of reforms since 1978 and following its membership in the World Trade Organisation in 2001, China has gone through major structural change as well. As a result, China has achieved the power to influence the course of development of other countries.

Even at a phase when Chinese growth has slowed down, it is trying to consolidate its progress through modernization and reforms. The inclusion of Chinese currency Renminbi in the Special Drawing Right (SDR) valuation basket of the International Monetary Fund indicates progress in reforms in China. It is also an attempt to deepen its integration with the global economy. The quality of growth has now caught the attention of Chinese policymakers. It is also investing heavily on green economy, as at the G20 meeting in Hangzhou in September 2016, China highlighted the issue of green financing.

The future growth prospect and reorientation of growth pattern within China will shape the development path of its partners to a large extent. Despite challenges, there will be newer opportunities for developing countries which are directly linked with Chinese prosperity. As a long term economic partner, Bangladesh will have to prepare itself to benefit from this opportunity.

The writer is Research Director at the Centre for Policy Dialogue.

Expanding the Bangladesh-China trade frontier

Bangladesh Prime Minister Sheikh Hasina with Chinese President Xi Jinping. PHOTO: AFP


Chinese President Xi Jinping will be visiting Dhaka for an official visit on October 15, 2016. This is happening three decades after Chinese President Li Xiannian visited Bangladesh in March 1986. This high-profile visit has already triggered considerable optimism in all quarters due to the fact that China is the biggest trade partner and one of the most trusted friends of Bangladesh since formal diplomatic relations were established in mid-1970s. Both the countries are ready with a number of agreements worth billions, covering trade, investment and developmental cooperation, to sign during President Xi Jinping's visit.

Bangladesh-China bilateral trade has been increasing significantly over the years, both in terms of absolute amount and percentage change among Bangladesh's top trade partners. As per the statistics of Export Promotion Bureau of Bangladesh, the country's total merchandised export to China was USD 808.14 million in the year 2015-16, which was only USD 319.66 million in 2010-11. Thus, Bangladesh's export to China grew at an annual average of 30 percent in the last five years. Nevertheless, the recent export growth has been quite slow, only 6 and 2.2 percent in 2014-15 and 2015-16, respectively. The share of exports to China was merely 2.4 percent of the total export in the immediate past fiscal year.

On the other hand, merchandised imports from China have been the highest for quite some time. The extrapolated data of Bangladesh Bank shows that import from China was worth about USD 9.8 billion in 2015-16, which was USD 5.9 billion in 2010-11. However, the growth of import was considerably lower than export during this period, on average 13 percent per annum. Conversely, the share of imports of China is growing quite well; from 20.7 percent in 2013-14, it has become about 24.1 percent of the total merchandised imports from the country in 2015-16 as per Bangladesh Bank data. Together, Bangladesh's trade with China is now about 26.5 percent of its total trade with the world, which is the highest with a rising trend. If this rate prevails, the total bilateral trade would be USD18 billion in 2021, when the country would celebrate its 50th anniversary.

Bangladesh mainly imports raw materials for its textiles and clothing from China, such as cotton, yarn, fabrics, staple fibers and accessories for its readymade garments (RMG) industry, which is nearly 35 percent of total imports. The latest data of Bangladesh Bank reveals that the country imported cotton, cotton yarn/thread and cotton fabrics (19.6 percent); man-made staple fibres and knitted or crocheted fabrics (10.1 percent); man-made filaments, strip and the like of manmade textile materials (3.8 percent); and other fabrics and apparel accessories (2.8 percent). The other notable import items are boilers, machinery, mechanical appliances and their parts (16.4 percent); electrical machinery and equipment and parts (12.2 percent); and fertiliser, plastic, chemicals, and iron and steel (13.1 percent). The country also imports some food items from China.

On the export side, the top five items constituted about 80 percent of total exports in 2015-16, of which 42.2 percent is woven and knit garments as per the double-digit harmonised code. The main items are woven garments (24.5 percent), leather products and travel items (17.9 percent), knitwear (17.8 percent), paper yarn and woven fabric (12.6 percent), and raw leather (6.5 percent). Fish and footwear are also getting prominence (8.5 percent) in the export basket. Thus, a complementarity is evident in the export and import items, which is believed to create synergy especially in Bangladesh's export-oriented RMG industry. Bangladesh is basically sourcing raw materials and machinery for its textiles and clothing sector.

Despite these positive developments in bilateral trade, there are certain gray areas and constraining factors disfavouring Bangladesh in optimising mutual gains from trade. The first and foremost is very high amount of negative trade balance of Bangladesh, which is currently 85 percent of total bilateral trade. It is mainly due to low export value and its very slow growth in recent years. A slightly encouraging fact is that relative trade deficit has been on the decline — it was 90 percent of total bilateral trade in 2010-11. The declining ratio of trade deficit is perhaps due to duty-free access of around 5,000 Bangladeshi items to the Chinese market under the Asia Pacific Trade Agreement (APTA). Bangladesh, however, needs zero-tariff access of 99 percent items, including RMG products. If China grants this concession, it would significantly help reduce gigantic trade deficit, and bilateral trade would be much larger in the foreseeable future.

Further strengthening of value chain is imperative to benefit the textiles and clothing sector of Bangladesh. China is a cheap source of raw materials, which is being utilised to maintain trade surplus with the European and North American countries. Cost of importing garment inputs from China could be reduced in two ways: reducing time of clearance in sea ports by improving capacity of Chittagong port and extending Chinese production base of non-cotton RMG inputs by constructing relevant factories in Bangladesh. Though the earlier option is immediately required, the latter would help China's costly and declining industries to locate a gainful place and strengthen the bilateral value chain.

Finally, Chinese involvement in Bangladesh's two special economic zones (SEZs) and establishing a dedicated export processing zone (EPZ) for China would help boost bilateral trade and increase Bangladesh's exports to the global market. Even though the SEZ Authority is on the fast track in offering China's desired SEZs in Chittagong and Mongla, the sites have been far from ready in the last two years. There will also likely be complications in constructing EPZ as can be inferred from the experience of the Korean EPZ. Therefore, both parties should come together to assess the ground reality and expedite the process to operationalise the SEZ. The joint communiqué of Prime Minister Sheikh Hasina and President Xi Jinping should cover these issues.

The writer is Acting Research Director at Bangladesh Institute of International and Strategic Studies (BIISS).

Govt eyes big investment from China

Staff Correspondent

The government looks to tap Chinese investment into Bangladesh by awarding them a special economic zone as well as availing loans at cheap rates from Beijing, said Commerce Minister Tofail Ahmed yesterday.

He made the comment at a discussion on “Bangladesh-China Relation: Achievement and Expectation” organised by the Economic Reporters' Forum (ERF) at the CIRDAP auditorium in Dhaka.

The discussion came days ahead of Chinese President Xi Jinping's upcoming visit to Dhaka.

“He also visited Bangladesh when he was the vice-president of his country. He is now coming to Bangladesh as the president. This only proves how deep relations are between the two nations,” the minister observed.

Tofail said many countries have problems with other countries. “But Bangladesh has good relations with China, India, Russia and the US. This proves the diplomatic farsightedness of our prime minister.”

He added that the government has decided to set up 100 special economic zones across the country. Work for around 20 such zones has already started. The government plans to award one of those SEZs to China to attract Chinese investment, he said.

He further said China is gradually moving away from garment manufacturing and many Chinese business-people believe Chinese manufacturers have the opportunity to relocate their businesses to Bangladesh.

“So, we will give them an SEZ to bring in Chinese investment,” he said, adding that both the countries have expressed their willingness to that end.

Currently, China is Bangladesh's largest trading partner, although the trade balance is heavily tilted in favour of the Asian giant.

Bangladesh imports products worth $10 billion from China and exports products worth $800 million, said the commerce minister quoting data from the Export Promotion Bureau.

Export to China grew by 25 percent in the first quarter of the current fiscal year, whereas total export went up by only 4 percent, he added.

He said export to China would soon surpass the $1 billion mark and Bangladesh' overseas sales would stand at $2 billion to the world's second-largest country within two to three years as China has offered Bangladesh duty-free benefits for more than 5,000 items.

Talking about trade deficit, the minister said Bangladesh's trade deficit with India is debated more compared to that with China.

Tofail said India has granted Bangladesh duty and quota-free access to all of its products except alcohol and tobacco. But the Bangladeshi exporters have not yet attained capability to utilize the export opportunity, he observed.

“We have to increase our competitiveness.”

He also talked about any free trade agreement with China, saying Bangladesh would be cautious about the issue.

“We already have duty-free benefit to the Chinese market for our products. Why should we go for the FTA with the country? Already China's export to Bangladesh is more compared to its import. If Bangladesh goes for the FTA, how much will we benefit?”

Most of the countries in the world except the US have given duty and quota-free market access to Bangladesh, he said.

During Chinese President Xi Jinping's upcoming Dhaka visit, a number of memoranda-of-understanding between the two countries would be signed.

The commerce minister said Bangladesh has developed its capacity to implement projects on its own funds. Still the country is borrowing from China at 2 percent with tenures up to 20 years, but these rates could not be compared to those of the World Bank and the Asian Development Bank.

But Chinese financing entails one problem as the bidding are unsolicited and do not go through a tender process. During usual tendering process Bangladesh can negotiate hard for the rates and terms and conditions for a loan.

“We have even proposed that there should be competition among Chinese companies. If there is a tendering process among the competing Chinese companies, Bangladesh will still benefit.”

Tofail said Bangladesh wants to maintain peaceful relations with all countries in the world for further development of the country.

 

[Nilgiri]

CHINA AND BANGLADESH

On a Transformational Journey

China has been taken a strong place in the global economic landscape with its large GDP and rapid economic growth. Although in the last three decades, the growth of the Chinese economy has slowed down from a rate of 10 percent GDP growth to 6.9 percent in 2015, it was the largest economy in the world in terms of purchasing power parity last year. In 2015, China's contribution to global economic growth was 51.3 percent compared to 30.9 percent of the USA.

The impressive economic growth of China, one of Bangladesh's large Southern neighbours, has important implications for our development. Bangladesh can advance further through connecting with China through trade, investment, foreign aid, and exchange of people and intellectual pursuits. China is now Bangladesh's largest trading partner. In 2015, Chinese export to Bangladesh was USD 13.9 billion. Foreign direct investment from China and Hong Kong together stood at USD 859 million in the same year.

Economic ties between China and Bangladesh have been strengthened in the last four decades. However, there are many more opportunities for China to contribute towards the development of Bangladesh. China is a minor export destination for Bangladesh, making bilateral trade deficit between Bangladesh and China very high. In 2015, Bangladesh's export to China was USD 804 million, which was equivalent to only about 3 percent of Bangladesh's total exports to the global market. To address the growing trade imbalance, China offered duty-free access to 4,788 products from Bangladesh under the Asia-Pacific Trade Agreement. However, because of non-diversified export basket and supply side constraints, Bangladesh cannot take full advantage of this offer. Bangladesh also needs more favorable rules of origin (RoO) for increasing its exports to China.

The size of China's investment across the globe is increasing steadily towards making it a leading economic power. In Africa, Latin America and Asia, China is investing tens of billions of dollars. This is not only on infrastructure, but also on several other sectors, including natural resource extraction, financial service, power generation, textiles, home appliances and real estate. In Bangladesh, Chinese investment has not been particularly noteworthy yet. Until 2010, Bangladesh did not get much priority from China for investment in Bangladesh. Of course, significant increase of Chinese FDI in Bangladesh was observed from 2010 onward. China's contribution to Bangladesh's FDI profile has been growing faster than that of India over the last couple of years. Low investment indicates that Chinese investment in Bangladesh has not been linked to its trade with the country.

Traditionally, Chinese investment projects involved infrastructure and service sectors. In recent times, the focus of Chinese investment in Bangladesh has shifted towards the manufacturing sector, specifically to the ready- made garments sector. It has also expressed interest in making investment in priority sectors such as commerce, agriculture, industry, energy and infrastructure. Higher investment from China can in fact help reduce bi-lateral trade deficit.

Given the large and growing domestic market of China, Bangladesh has the potential to increase its exports to the country. With rising wages in the country, China may take advantage of competitive wage by shifting some of its sunset industries to Bangladesh. This will create employment here and the opportunity to increase exports. This requires massive improvement in infrastructure including power and energy, and also availability of land. The Bangladesh government is planning to have land bank to facilitate large investments. Large Chinese investments can be an opportunity for technology transfer which can contribute to productivity improvement through upgrading of skills.

Chinese contribution, as development assistance to Bangladesh, was negligible till the recent past. Chinese assistance has been mainly for infrastructure development. The Asian Infrastructure Investment Bank (AIIB), established with the initiative of China in 2015, has created opportunities for Bangladesh. Indeed, Bangladesh has already received loans from AIIB for its power sector development. At a time when there is huge finance gap to meet the need of countries, AIIB has the potential to bridge at least a part of this gap. Asian countries can request AIIB for funds to build infrastructure such as roads, railways, power and telecommunications. This initiative is also a complementary to the New Silk Road initiative of China, which seeks to improve infrastructure and connectivity in Asia.

China's transformational journey during the last three decades with high economic growth has made it an economic powerhouse, not only in the region but across the globe. Through several rounds of reforms since 1978 and following its membership in the World Trade Organisation in 2001, China has gone through major structural change as well. As a result, China has achieved the power to influence the course of development of other countries.

Even at a phase when Chinese growth has slowed down, it is trying to consolidate its progress through modernization and reforms. The inclusion of Chinese currency Renminbi in the Special Drawing Right (SDR) valuation basket of the International Monetary Fund indicates progress in reforms in China. It is also an attempt to deepen its integration with the global economy. The quality of growth has now caught the attention of Chinese policymakers. It is also investing heavily on green economy, as at the G20 meeting in Hangzhou in September 2016, China highlighted the issue of green financing.

The future growth prospect and reorientation of growth pattern within China will shape the development path of its partners to a large extent. Despite challenges, there will be newer opportunities for developing countries which are directly linked with Chinese prosperity. As a long term economic partner, Bangladesh will have to prepare itself to benefit from this opportunity.

The writer is Research Director at the Centre for Policy Dialogue.

Expanding the Bangladesh-China trade frontier

Bangladesh Prime Minister Sheikh Hasina with Chinese President Xi Jinping. PHOTO: AFP


Chinese President Xi Jinping will be visiting Dhaka for an official visit on October 15, 2016. This is happening three decades after Chinese President Li Xiannian visited Bangladesh in March 1986. This high-profile visit has already triggered considerable optimism in all quarters due to the fact that China is the biggest trade partner and one of the most trusted friends of Bangladesh since formal diplomatic relations were established in mid-1970s. Both the countries are ready with a number of agreements worth billions, covering trade, investment and developmental cooperation, to sign during President Xi Jinping's visit.

Bangladesh-China bilateral trade has been increasing significantly over the years, both in terms of absolute amount and percentage change among Bangladesh's top trade partners. As per the statistics of Export Promotion Bureau of Bangladesh, the country's total merchandised export to China was USD 808.14 million in the year 2015-16, which was only USD 319.66 million in 2010-11. Thus, Bangladesh's export to China grew at an annual average of 30 percent in the last five years. Nevertheless, the recent export growth has been quite slow, only 6 and 2.2 percent in 2014-15 and 2015-16, respectively. The share of exports to China was merely 2.4 percent of the total export in the immediate past fiscal year.

On the other hand, merchandised imports from China have been the highest for quite some time. The extrapolated data of Bangladesh Bank shows that import from China was worth about USD 9.8 billion in 2015-16, which was USD 5.9 billion in 2010-11. However, the growth of import was considerably lower than export during this period, on average 13 percent per annum. Conversely, the share of imports of China is growing quite well; from 20.7 percent in 2013-14, it has become about 24.1 percent of the total merchandised imports from the country in 2015-16 as per Bangladesh Bank data. Together, Bangladesh's trade with China is now about 26.5 percent of its total trade with the world, which is the highest with a rising trend. If this rate prevails, the total bilateral trade would be USD18 billion in 2021, when the country would celebrate its 50th anniversary.

Bangladesh mainly imports raw materials for its textiles and clothing from China, such as cotton, yarn, fabrics, staple fibers and accessories for its readymade garments (RMG) industry, which is nearly 35 percent of total imports. The latest data of Bangladesh Bank reveals that the country imported cotton, cotton yarn/thread and cotton fabrics (19.6 percent); man-made staple fibres and knitted or crocheted fabrics (10.1 percent); man-made filaments, strip and the like of manmade textile materials (3.8 percent); and other fabrics and apparel accessories (2.8 percent). The other notable import items are boilers, machinery, mechanical appliances and their parts (16.4 percent); electrical machinery and equipment and parts (12.2 percent); and fertiliser, plastic, chemicals, and iron and steel (13.1 percent). The country also imports some food items from China.

On the export side, the top five items constituted about 80 percent of total exports in 2015-16, of which 42.2 percent is woven and knit garments as per the double-digit harmonised code. The main items are woven garments (24.5 percent), leather products and travel items (17.9 percent), knitwear (17.8 percent), paper yarn and woven fabric (12.6 percent), and raw leather (6.5 percent). Fish and footwear are also getting prominence (8.5 percent) in the export basket. Thus, a complementarity is evident in the export and import items, which is believed to create synergy especially in Bangladesh's export-oriented RMG industry. Bangladesh is basically sourcing raw materials and machinery for its textiles and clothing sector.

Despite these positive developments in bilateral trade, there are certain gray areas and constraining factors disfavouring Bangladesh in optimising mutual gains from trade. The first and foremost is very high amount of negative trade balance of Bangladesh, which is currently 85 percent of total bilateral trade. It is mainly due to low export value and its very slow growth in recent years. A slightly encouraging fact is that relative trade deficit has been on the decline — it was 90 percent of total bilateral trade in 2010-11. The declining ratio of trade deficit is perhaps due to duty-free access of around 5,000 Bangladeshi items to the Chinese market under the Asia Pacific Trade Agreement (APTA). Bangladesh, however, needs zero-tariff access of 99 percent items, including RMG products. If China grants this concession, it would significantly help reduce gigantic trade deficit, and bilateral trade would be much larger in the foreseeable future.

Further strengthening of value chain is imperative to benefit the textiles and clothing sector of Bangladesh. China is a cheap source of raw materials, which is being utilised to maintain trade surplus with the European and North American countries. Cost of importing garment inputs from China could be reduced in two ways: reducing time of clearance in sea ports by improving capacity of Chittagong port and extending Chinese production base of non-cotton RMG inputs by constructing relevant factories in Bangladesh. Though the earlier option is immediately required, the latter would help China's costly and declining industries to locate a gainful place and strengthen the bilateral value chain.

Finally, Chinese involvement in Bangladesh's two special economic zones (SEZs) and establishing a dedicated export processing zone (EPZ) for China would help boost bilateral trade and increase Bangladesh's exports to the global market. Even though the SEZ Authority is on the fast track in offering China's desired SEZs in Chittagong and Mongla, the sites have been far from ready in the last two years. There will also likely be complications in constructing EPZ as can be inferred from the experience of the Korean EPZ. Therefore, both parties should come together to assess the ground reality and expedite the process to operationalise the SEZ. The joint communiqué of Prime Minister Sheikh Hasina and President Xi Jinping should cover these issues.

The writer is Acting Research Director at Bangladesh Institute of International and Strategic Studies (BIISS).

Govt eyes big investment from China

Staff Correspondent

The government looks to tap Chinese investment into Bangladesh by awarding them a special economic zone as well as availing loans at cheap rates from Beijing, said Commerce Minister Tofail Ahmed yesterday.

He made the comment at a discussion on “Bangladesh-China Relation: Achievement and Expectation” organised by the Economic Reporters' Forum (ERF) at the CIRDAP auditorium in Dhaka.

The discussion came days ahead of Chinese President Xi Jinping's upcoming visit to Dhaka.

“He also visited Bangladesh when he was the vice-president of his country. He is now coming to Bangladesh as the president. This only proves how deep relations are between the two nations,” the minister observed.

Tofail said many countries have problems with other countries. “But Bangladesh has good relations with China, India, Russia and the US. This proves the diplomatic farsightedness of our prime minister.”

He added that the government has decided to set up 100 special economic zones across the country. Work for around 20 such zones has already started. The government plans to award one of those SEZs to China to attract Chinese investment, he said.

He further said China is gradually moving away from garment manufacturing and many Chinese business-people believe Chinese manufacturers have the opportunity to relocate their businesses to Bangladesh.

“So, we will give them an SEZ to bring in Chinese investment,” he said, adding that both the countries have expressed their willingness to that end.

Currently, China is Bangladesh's largest trading partner, although the trade balance is heavily tilted in favour of the Asian giant.

Bangladesh imports products worth $10 billion from China and exports products worth $800 million, said the commerce minister quoting data from the Export Promotion Bureau.

Export to China grew by 25 percent in the first quarter of the current fiscal year, whereas total export went up by only 4 percent, he added.

He said export to China would soon surpass the $1 billion mark and Bangladesh' overseas sales would stand at $2 billion to the world's second-largest country within two to three years as China has offered Bangladesh duty-free benefits for more than 5,000 items.

Talking about trade deficit, the minister said Bangladesh's trade deficit with India is debated more compared to that with China.

Tofail said India has granted Bangladesh duty and quota-free access to all of its products except alcohol and tobacco. But the Bangladeshi exporters have not yet attained capability to utilize the export opportunity, he observed.

“We have to increase our competitiveness.”

He also talked about any free trade agreement with China, saying Bangladesh would be cautious about the issue.

“We already have duty-free benefit to the Chinese market for our products. Why should we go for the FTA with the country? Already China's export to Bangladesh is more compared to its import. If Bangladesh goes for the FTA, how much will we benefit?”

Most of the countries in the world except the US have given duty and quota-free market access to Bangladesh, he said.

During Chinese President Xi Jinping's upcoming Dhaka visit, a number of memoranda-of-understanding between the two countries would be signed.

The commerce minister said Bangladesh has developed its capacity to implement projects on its own funds. Still the country is borrowing from China at 2 percent with tenures up to 20 years, but these rates could not be compared to those of the World Bank and the Asian Development Bank.

But Chinese financing entails one problem as the bidding are unsolicited and do not go through a tender process. During usual tendering process Bangladesh can negotiate hard for the rates and terms and conditions for a loan.

“We have even proposed that there should be competition among Chinese companies. If there is a tendering process among the competing Chinese companies, Bangladesh will still benefit.”

Tofail said Bangladesh wants to maintain peaceful relations with all countries in the world for further development of the country.

Very informative, thanks.

BD - China cooperation is actually much welcome thing for the region as it adds fiscal and economic stability to the region.

 

[Bilal9]

 

[Nilgiri]

Surely a better video can be made by professional BD govt

 

[katarabhumi]

10 railway coaches brought from Indonesia

Md Taiyeb Ali Sarker, Nilphamari - October 14, 2016

Asian Development Bank is funding the purchase from Indonesia which includes 100 meter gauge and 50 broad gauge coaches within February 2017

Ten new passenger coaches have been imported from Indonesia and sent to Saidpur Railway Workshop.

The modern coaches reached the workshop on Tuesday and the railway workers are now conducting inspection to prepare the coaches for trial run, sources said.

BR sources said that the coaches were made specifically for Bangladesh’s particular needs by PT Inka (Persero). PT Inka is a state-owned train manufacturer, the first fully integrated rolling stock and automotive manufacturer in Southeast Asia.

Shawkat Jamil, divisional traffic officer of Bangladesh Railway (BR) West Zone (Rajshahi), said: “BR imported the coaches under a bilateral agreement between Bangladesh and Indonesia. Among the coaches one is AC berth, three are AC chair and rest six are Shovon chair.”

Workers at the workshop told the Dhaka Tribune that these coaches are of better quality than the Indian coaches.

Divisional Caretaker of Saidpur Railway Workshop, Nur Ahmed Hossain, said: “After completing the inspection, we will hand over the coaches to Railway traffic department for test runs.”

http://www.dhakatribune.com/bangladesh/2016/10/14/10-railway-coaches-brought-indonesia/

 

[Bilal9]

Surely a better video can be made by professional BD govt

This is definitely not made by BD govt professionals.

This is from some Internet hack of limited talent....

 

[Nilgiri]

This is definitely not made by BD govt professionals.

This is from some Internet hack of limited talent....

What I am saying is that BD govt must make something better....or have they already? (If so post it here please).