Bangladesh Economy: News & Updates

[CaPtAiN_pLaNeT]

Sea freight: income dream sets sail
Posted on February 25, 2011

Sea freight: income dream sets sail

Sea freight: income dream sets sail

Sajjadur Rahman

Sea freight is expected to be a good source of direct foreign currency for Bangladesh in a few years as big business conglomerates are increasingly buying ocean-going ships cashing in on the troubled US and European economies.

The sector, which now boasts 70 ocean-going ships, can earn $200-300 million in freight charges a year, according to industry people. These ships’ capacity ranges between 30,000 and 100,000 tonnes.

“The economic crisis in the US and Europe has forced many owners to sell their ships at low prices. Asians, including Bangladeshi buyers, have been taking the opportunities,” said Azam J Chowdhury, chairman of East Coast Group, which has bought two such ships recently.

The company has purchased another tanker ship, which will be delivered next month, with over one lakh tonne capacity at $22.5 million, to carry oil.

According to businessmen, each ship can earn $2-5 million annually by transporting goods, depending on the capacity.

“It is a very good business. The increase in fleet will boost foreign currency earnings,” said AKM Shahidul Islam, managing director of United Sea Liner.

A 30,000-40,000 tonnes-capacity ship now costs $10-12 million, according to the industry people. Islam, who is in the business for over 30 years, said an investor can get his money back in just five years.

Top conglomerates and traders have now entered into the lucrative business, which was earlier dominated by the shipping businessmen only. Major groups including Meghna, Bashundhara, Akij, Abul Khair, East Coast, HRC and KSRM have bought the ships in the last few years.

Besides, freight earnings the sector will help Bangladesh create highly-paid jobs. According to the sector people, a ship employs 25-30 crews who are paid in foreign currency. Top crews can earn as much as $25,000 per month.

But ship-owners have some reasons to be worried such as high bank interest rates, lack of crews, rising piracy and the continued volatility and dampness in global freight markets.

“We have serious shortage of crews and often we have to hire people from China and Taiwan to run the ships,” said Mostofa Kamal, chairman and managing director of Meghna Group of Industries, who has bought such a ship recently.

Chowdhury of East Coast Group fears more on the growing attacks by Somali pirates. “Many of our crews do not want to go to the Middle East countries because of the piracy on the Arabian Sea,” said Chowdhury.

Somali pirates have already hijacked a Bangladeshi-flagged ship — MV Jahan Moni, owned by KSRM, in early December last year. The ship, with 25 Bangladeshi crew members, is still in the pirates’ hands.

Chowdhury suggested the government sign a protocol agreement with countries such as the UAE, Bahrain and India, to protect Bangladesh’s ships and crew.

Islam of United Sea Liner believes 15-16 percent bank interests rates are “very high” and make the business costly at initial stages.

 

[CaPtAiN_pLaNeT]

February 26, 2011 23:17 PM

Malaysia Offers To Help Bangladesh Set Up High Tech Park

BERNAMA - Malaysia Offers To Help Bangladesh Set Up High Tech Park

DHAKA, Feb 26 (Bernama) -- Malaysia has offered its expertise to develop and manage the Kaliakoir High Tech Park in Bangladesh.

Science, Technology and Innovation Minister Datuk Seri Dr Maximus Ongkili made the offer when he called on Bangladesh Minister of Science and Information and Communication Technology Yeafesh Osman on Thursday.

The offer was a follow-up of the proposal that a Malaysian consortium submitted to the Bangladesh Government in December last year to plan, design, develop, manage and operate the high tech park.

An official of the Malaysian delegation said that Yeafesh responded by welcoming Malaysia's involvement in the High Tech Park.

During the one-day visit, Dr Ongkili and his delegation also held a meeting with the Bangladesh Computer Council and Bangladesh High Tech Park Authority.

 

[CaPtAiN_pLaNeT]

Country fetches Tk 399b revenue in 7 months

Posted on February 27, 2011

daily sun | business | Country fetches Tk 399b revenue in 7 months

Country fetches Tk 399b revenue in 7 months

The country’s revenue collection in the first seven months of the current fiscal year (2010-11) totaled to Tk 399.14 billion, posting a 28.44 per cent growth over the earnings during the same period of last fiscal.

The collection of revenue during the said period surpassed the target of Tk 363.65 billion.

Chairman of the National Board of Revenue (NBR) Nasiruddin Ahmed said while briefing journalists at the NBR yesterday.

The collection of revenue during first seven months of last fiscal stood at Tk 317.51 billion.

The tax authority, however, targeted to collect Tk 725.9 billion revenue during the current fiscal year.

The NBR will be able to achieve the target of revenue collection during the fiscal year as pace of growth in revenue collection will be continued, NBR chairman hoped.

The highest revenue came from income tax, which totaled to Tk 94.3 billion surpassing the target of Tk 85.95 billion, he said adding collection of revenue from VAT secured the second highest growth of 30.69 percent.

An amount of Tk 150.12 billion was collected as VAT during the said period against the target of Tk 133.71. The revenue as duty and excise from import-export businesses posted a growth of 22.86 percent during the period, he said.

The revenue earnings from export-import businesses during the seven month period amounted to Tk 152.32 billion against its target of Tk 141.27 billion.

“Massive awareness and motivational programme, budgetary measure and field level monitoring contributed a lot to boost to the revenue collection during the period,” Nasiruddin Ahmed said.

 

[akash57]

BD can emerge as regional investment hub: EU envoy

He stresses better energy situation, graft cut

FE Report

Newly-appointed European Union (EU) envoy to Dhaka, William Hanna, said Bangladesh can emerge as a regional investment hub but it should improve energy situation and combat corruption in an effort to woo investors to the country.

"Bangladesh is the most potential country and blessed with many advantages, which other LDCs (Least Developed Countries) do not have," Hanna said in his first press briefing in the capital.

The envoy hoped Bangladesh would become a regional investment hub with businessmen of neighbouring nations investing in the country to get access to the EU market.

But he stressed Dhaka should make efforts to curb corruption. "The EU is against corruption. Corruption raises the cost of doing business and hampers development," he said.

The ambassador said the government must also improve the country's "critical" energy situation - a key pre-condition to lure industrialists to invest in any country.

He said many companies from the EU had shown interest in Bangladesh but he added a firm considered many factors including investment climate, energy, human resources and graft scenario, before investing in any country.

He was speaking to the newsmen a day after he formally presented his credentials to President Zillur Rahman.

The ambassador said the 27-nation EU, the world's largest economic bloc, is eager to import more quality products from Bangladesh at a low cost.

"It's our interest to get high quality products at low cost," he said adding, "There is a risk of protectionism, but we must keep our market open."

He hoped for further growth of Bangladesh's readymade garment products to the European nations following relaxation of the grouping's strict import rules from January 2011.

Last year trade volume between the EU and Bangladesh was eight billion euro (nearly 10 billion dollars) with apparel making up more than three-fourths of the shipment.

"The EU has already given Bangladesh the duty-free market access and it'll work together in the WTO to get more market access to the developed world," Hanna said.

Bangladesh and the EU will work together in Geneva to ensure greater market access of the LDC export items to the developed countries.

He said the EU has provided everything but arms (EBA) facility to poor countries but many countries have failed to reap the benefit. "But, Bangladesh has the capacity to get the benefit."

Citing a study by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the envoy said thanks to the relaxed import rules, Dhaka's export to the EU will double in the next three years and generate one million extra jobs.

When his attention was drawn to removal of Yunus from Grameen Bank, he said he was closely monitoring the situation.

"I worked in Africa and Latin America and found microfinance as an important tool for poverty alleviation."

He said he was aware of a discussion going on between the country's development partners and finance minister AMA Muhith on the issue.

He said the EU supports increased trade with Bangladesh as it can create jobs and more opportunities and bring prosperity to the country.

The EU promotes trade capacity building in Bangladesh under its trade-related technical assistance programme.

Now it is working on developing trade policies and negotiation capacity, improving business climate and quality infrastructure, implementing decent work agenda as well as supporting business to compete in the world market.

The ambassador said the EU will also continue to support in three major areas in Bangladesh - democracy, human rights and governance.

BD can emerge as regional investment hub: EU envoy

 

[ProsperBD]

May allah bless our sacred and beautiful country ameen.

IBM plans to go big in Bangladesh

IBM, the world's largest provider of enterprise business software, is set to run free training programmes over the next three months for engineering students in Bangladesh to nurture batches of software developers in universities and research institutes.

“We will train the engineering students in IBM software at absolutely no cost in collaboration with the country's engineering colleges and universities to enhance their knowledge,” said Pradeep Nair, director of IBM Software Group for South Asia region.

Nair spoke at the Software Universe, the first ever IBM software conclave in Bangladesh, called “Smarter Software for Smarter Planet” at Sonargaon Hotel in Dhaka.

The company has planned to start the training programme for the engineering students of Bangladesh over the next three months to build a community of software experts and thought leaders in Bangladesh, said Nair.

“The country has a huge prospect for software industry because Gartner has recently listed Bangladesh as one of the top 30 software outsourcing destinations in the world,” said Gaurav Agarwal, a regional general manager of IBM Software.

Agarwal said IBM wants to invest in the IT sector of Bangladesh due to its rising economy and booming exports.

Besides, the country has around 70 million phone subscribers, with the numbers growing every month, he added.

Today, businesses across the world are going digital, infusing intelligence into everything from cars and roadways to agriculture, power grids and even clothes. However, this digitisation brings with it a number of challenges that can only be handled with the help of smarter software which are quick and easy to implement, flexible, scalable, robust and cost-effective in the long run, said Nair.

IBM, which operates in more than 170 countries, has a plan to work with the governmental agencies of Bangladesh to implement cutting edge e-governance programmes. They also want to partner with the country's banking industry to help implement BASEL guidelines, said Agarwal.

Agarwal said, “IBM also plans to replicate the success stories like Bharti and Idea to propel the Bangladesh telecom industry to newer heights.

At Software Universe, the company discussed IBM's portfolio of ready-to-work solutions. Business Partners also joined the conclave to gain insight into how to increase profit margins.

IBM that boasts $21 billion in annual software sales showcased its different software solutions such as Lotus, Tivoli, Web Sphere, Information Management, Rational, Business Analytics, and Industry Solutions to the business partners at the daylong conclave.

They also launched its smarter software portfolio which is completely integrated with its hardware and services offerings, giving customers flexibility and efficiency in business processes, empowering better decision making and enabling to work smart.

IBM has been doing business in Bangladesh in partnership with Thakral Information Systems since 1998.

IBM plans to go big in Bangladesh

 

[ProsperBD]

Khulna Shipyard starts building gun-ships

Khulna Shipyard has started constructing five gun-ships at a cost of Tk 300 crore in cooperation with China and expected to complete the work by December 2013.

Earlier on March 5, Prime Minister Sheikh Hasina inaugurated the construction works during her visit to the shipyard that is run by Bangladesh Navy since 1999.

The shipyard's Managing Director Commodore Riazuddin Ahmed said they had so far paid Tk 24 crore to the National Board of Revenue in income taxes and value-added taxes.

The company built 75 new medium- and small-sized commercial ships and repaired 221 old ships since 1999. “We have opened a academy to build up skilled manpower where SSC passed students will get admission to be trained in technical works,” he said.

He also hoped the shipyard will be able to build export quality modern ships in future.

Khulna Shipyard starts building gun-ships

 

[ProsperBD]

PM opens 100 MW power plant at Shiddhirganj on March 20

DHAKA, March 14 (BSS) - Prime Minister Sheikh Hasina will inaugurate a 100 MW "quick rental" power plant at Shiddhirganj on March 20.

Desh Energy, a local company, implemented the diesel-fired power plant last month and producing power on a "test-run basis".

Power Development Board (PDB) signed the contract with Desh Energy about eight months back. Per unit cost of electricity from this plant will be Taka 16 plus.

"According to the agreement, the plant should come into operation within four months from the agreement signing date. However, we are behind the schedule," a PDB senior official told BSS.

At present, the PDB is producing around 3900 to 4100 MW electricity against the demand of around 5200 MW.


Bangladesh Sangbad Sangstha (BSS)

 

[ProsperBD]

Pvt firm plans to set up BD's first geothermal power plant

A private company has planned to set up the country's first geothermal power plant with a capacity to produce 200 megawatt by exploiting the country's warm groundwater, company officials said Saturday.

Anglo MGH Energy said it has sought government approval to estbalish the plant at Salandar village in the impoverished northern district of Thakurgain.

The Dhaka-based company plans to dig 28 deep tube wells to lift hot steam, whose temperature will be at least 12 degree celsius.

The lifted and pressured steam will be channeled into a turbine which is linked to a generator for turning it to produce electricity.

Officials of the company said they have found ideal sites in Thakurgaon to generate 200 mw of electricity, which they say will greatly reduce acute power shortages in northern districts.

"We are now waiting for the government's approval for exploration license," Md Abdur Rahim, a director of the company, told the FE.

He said the company has done primary feasibility studies on the plan and will conduct a final one shortly on a span of 3,555 hectares of land to select the spot for the plant.

"It will be the first geothermal plant in Bangladesh. Our studies have shown that some northern districts are ideal place for harnessing hot ground water to generate power," he added.

At present 24 countries have geothermal power plants including China, Ireland, Indonesia, Italy, Japan, Kenya, Mexico, New Zealand, the Philippines, Turkey and the United States.

According to the International Geothermal Association, the US is the largest geothermal power producer in the world with the capacity of 2,544 mw followed by the Philippines with 1,931 mw.

Experts said geothermal is a renewable energy source and costs less than most of the fuel-powered power plants. It also requires less amount of land and needs only a handful of manpower.

A 200 mw gas-fired power plant can cost $150-200 million dollars. By contrast, a geothermal power plant with similar capacity can be set up at one third of that cost, at the most.

Mr. Rahim said the company has recently applied to the power and energy ministry, seeking a licence to produce geothermal power.

Already it has secured favourable opinions from the Geological Survey of Bangladesh, the Ministry of Water Resources and the Ministry of Environment and Forest.

The district administration in Thakurgaon, home to one of the poorest communities in the country, has also cleared the project. "We have sent no objection certificates to the ministries," said Md Shahiduzzaman, district deputy commissioner.

The company moved to set up the plant following a ground-breaking study by a specialist at the Dhaka-based Institute of Water Modelling.

Mizanur Rahman, senior groundwater expert of IWM, first came up with the idea to build a geothermal power plant in Thakurgaon after he studied water temperature of the district for years.

In his study he found that the water coming out of a deep tubewell in Thakurgaon was warmer by at least 12 degrees Celsius than that of any other tubewells.

He also collected data from different countries and has since published a research paper on geothermal resource potential in Thakurgaon.

http://www.thefinancialexpress-bd.com/more.php?news_id=128347&date=2011-03-07

 

[ProsperBD]

Exports grow 40pc

Exports grew by 40.28 percent in the first eight months of the current fiscal year, compared to the same period a year ago, the government said yesterday.

According to the Export Promotion Bureau (EPB), the country exported goods worth $14.08 billion during July-February of fiscal 2010-11, up from $10.31 billion in the same period of 2009-10.

In February alone, exports grew by 43.33 percent to $1.89 billion, compared to the same month of the previous year, according to government data.

The EPB report shows exports of major products -- knitwear, woven, jute and jute goods, home textile, frozen foods, shrimp, leather goods -- have grown significantly during July-February period.

Among the major exported products, in the first eight months of the current fiscal year, the knitwear sector earned $5.80 billion, which is a 43.93 percent rise from the same period in the previous year.

Woven garment exports grew 37.95 percent to $5.13 billion, compared to the same-year-ago-period. At the same time, products such as tea, chemical products, bicycle, furniture, engineering products and petroleum by-products showed negative growth.

However, EPB set a target to earn $18.5 billion for the current fiscal year, which is 14.16 percent more than the actual earnings last year. During 2009-10, the total export earnings were $16.2 billion against a target of $17.6 billion, which was 4.11 percent higher than the 2008-2009 earnings.

On the growth of exports of the country, EPB vice-chairman Jalal Ahmed said 40 percent export growth has been maintained over the last few months, which is a positive sign in the overseas trade of the country.

The export of jute and jute goods has been increasing thanks to higher demand, part of the reason for higher growth in exports out of Bangladesh. The export of jute and jute goods grew by 51.04 percent to $734.39 million during July-February compared to the same period of the last year.

Moreover, the exports to the EU are growing significantly because of relaxed rules of origin under the generalised system of preferences (GSP), Ahmed said. The EU's relaxed rules for the least developed countries came into effect from January 1.

Exports are increasing mainly for higher exports to new destinations and because buyers are shifting to Bangladesh from China, the largest apparel supplying country worldwide, said Abdus Salam Murshedy, president of Bangladesh Garment Manufacturers and Exporters Association.

But the steady export growth is dependent on uninterrupted supply of gas and power to the industrial units and improved port management system, he added.

Salim Osman, president of Bangladesh Knitwear Manufacturers and Exporters Association, linked the export growth to product diversification. Buyers have now more choices in Bangladesh, which was not possible earlier, he said.

Exports grow 40pc

 

[ProsperBD]

Bangladesh to produce 500 MW power from solar system


DHAKA, Mar 14 (BSS) - Bangladesh has set a target to produce
500 MW of electricity installing solar home systems to reduce
greenhouse emissions and ensure sustainable development in energy
sector.

It also plans to install solar irrigation system to cut diesel cost.

To use Asian Development Bank (ADB)'s fund in solar power
project, Bangladesh set the target of electricity generation from
solar energy.

"To ensure energy security and to reduce carbon emission we
have taken up a massive programme to implement renewable energy,
energy conservation plan," Adviser to the Prime Minister Dr.
Tawfiq-e-Elahi Chowdhury said.

ADB is set to support 3000 MW capacity power project in Asia-
Pacific region. To get benefit from it, Bangladesh has prepared
its programme in collaboration with NGOs.

Bangladesh has achieved a landmark achievement in
implementing renewable energy expansion programme through
installing solar home systems across the country.

Every month, more than 36,000 solar home systems are being
installed adding one and half MW of electricity. Just one and
half years back about 12,000 systems were installed every month.

According to the power division, Bangladesh made a pledge at
Washington International Renewable Energy Conference, 2008 that
about five per cent of its total electricity generation will come
from renewable sources by 2015.

Bangladesh Sangbad Sangstha (BSS)

 

[ProsperBD]

Economy is well on track: Muhith

Sylhet, Mar 12 (bdnews24.com) —The finance minister has termed 'encouraging' the current state of the country's economy and said the government has managed to address most of the problems in the economic field.

"The country has been able to offset the global economic meltdown and there is no large issue remaining," Abul Maal Abdul Muhith told a press meet in his residence at Dhopadighirpar of Sylhet on Saturday morning.

The minister also expressed the hope to achieve a 6.7percent growth in Gross Domestic Product (GDP) and 28 percent growth in investment in the current fiscal year.

He pointed out that Bangladesh's economy is agro-based one and said, "No matter how much we make progress in terms of industrialisation or information and technology, agriculture is our driving force."

"We've made good progress in the agriculture, education and health sectors but lag behind in communications. The railway is in a bad shape while the roads are in shabby condition. These issues will be addressed soon," Muhith said adding, "Various steps have already been taken to resolve the country's power and energy crises."

The minister went on: "The country's previous bad image due to corruption caused poor response from foreign investors when we had floated international tenders. However, the recent downtrend in corruption has changed the situation."

SYLHET DEVELOPMENTS

Muhith, also a local parliamentarian, said there had been unprecedented development in Sylhet's power and energy sectors.

"There has been a marked fall in load-shedding as power supply is now much better compared to the last 30 years," the minister claimed.

He further said law and order in the area is also relatively better. "However, there were some controversial murders. A special cell has been formed to investigate those."

The minister added that more teachers will be appointed to address the crisis prevailing in schools of Sylhet.

"The sport sector in the region has also seen no progress over the last 15 years," Muhith pointed out adding a cricket stadium will be built in the airport area along with an indoor stadium and swimming pool at Machimpur Koyedir Math to address the problem.

In response to a query from journalists about the recent land-grabbing in the area, Muhith said, "Grabbers do not have any difference when it comes to political philosophy. Jamaat-e-Islami, BNP and Awami League are all the same. We'll ward them off strongly."

bdnews24.com/corr/rn/mr/1500h

Economy is well on track: Muhith | Business | bdnews24.com

 

[monitor]

Power supply from India is to be delayed

Special Correspondent

The commencement of power supply from Indian to Bangladesh, as earlier committed by New Delhi, is going to be delayed.
Only around 40 per cent of Bangladesh population currently have access to electricity and the country is now witnessing a deficit of 1,000 to 1,500 MW power with 41 public and private sector plants with a capacity of 5,198 MW.
In a desperate move, the energy-starved Bangladesh last year inked a landmark 35-year power transmission deal with India for the import of 250 megawatt electricity.
Meanwhile, a joint-venture agreement between state-owned Bangladesh Power Development Board (PDB) and Indian National Thermal Power Corporation (NTPC) will be signed in June next for setting up a 1,320 megawatt (mw) coal-fired power plant in Khulna. However, the tariff rate of the power to be imported from India is yet to be fixed.
"The rate will be fixed by Central Electricity Regulatory Commission of India," Indian Power Secretary P Uma Shankar clarified at the joint press conference after the meeting in Dhaka last Monday.
A 14-member Indian delegation led by the Power Secretary and NTPC's Chairman and Managing Director Arup Roy Choudhury visited Bangladesh last week to move forward the power sector cooperation between the two countries.
Bangladesh and India signed a memorandum of understanding (MoU) last January under which Bangladesh will initially import 250 megawatt (MW) of electricity. Pointing to the progress work in electricity import, Bangladesh Power Secretary Abul Kalam Azad said awarding of contracts for the construction of a 110 kilometre power transmission line and setting up a power sub-station are now at the final stage. Mobilisation of fund worth around $400 million has also been completed, he said.
"NTPC has completed the feasibility study for setting up the 1,320mw coal-fired power plant in Khulna. The report will be submitted within the next couple of weeks," said Mr Azad.
During the press briefing, the Indian Power Secretary avoided responding to queries over regional power cooperation and import of electricity from Bhutan to Bangladesh. "At this stage we are here to discuss the issues of bilateral power cooperation," Mr Shankar responded.
He also said although India is facing shortage of energy and coal at home front, exporting of 250 mw of electricity to Bangladesh will not be a problem for her.
"We may get the imported electricity by March 2013 instead of the previous schedule of December 2012," said Power Secretary Abul Kalam Azad following a marathon meeting with his Indian counterpart last Monday.

---------- Post added at 10:01 AM ---------- Previous post was at 10:00 AM ----------

Government-induced 5,000cr fund to boost share market

Business Report

The state-run investment organisation and seven other enterprises at a meeting earlier last week have decided to create Tk 5,000 crore "Bangladesh Fund", to give liquidity support to the country's shrivelling stock market in a bid to create confidence and generate hope among the prospective investors.
It will be an open-ended fund, half of which will be utilised in buying shares from the secondary market while the rest will be kept for the money market, said Md Fayekuzzaman, managing director of Investment Corporation of Bangladesh (ICB) and also the organiser and manager of the fund.
"Bangladesh Fund will be an open-ended mutual fund and it will also help boost the investors' confidence," he said after the meeting. "As it's an open-ended fund, the door for any financial institute would remain open for their participation in the fund," he added.
An open-ended mutual fund is a professionally managed collective investment scheme that has unlimited lifetime and size. The fund manager pools money from many sponsors or investors through its selling agents and invests it in stocks, bonds and short-term money market instruments, and pays out dividends to the unit holders annually. Apart from the ICB, the seven other tate-owned enterprises (SOEs) are: Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Development Bank, Sadharan Bima Corporation and Jibon Bima Corporation. The sponsors, however, will decide the sizes of their participatory portions in the fund later.
Fayekuzzaman said the ICB will apply for the regulatory approval required after the eight participating institutions come up with permissions from their respective boards of directors.
Earlier, the government through the Securities and Exchange Commission suggested the ICB form a special purpose fund to increase liquidity supply in the stock market.

 

[integra]

Ctg-based large mills move fast on long-steel

Mushir Ahmed

The country’s major steel mills, based in Chittagong, have moved very fast in billet manufacturing in a multi-billion taka investment drive that will largely determine who influences most the future of a fast-growing rod market in Bangladesh.

Industry leader Abul Khaer Group triggered the race after it opened its letter of credits (LCs) for machinery import for a US$130 million billet plant at its steel hub in Sitakundu, sources said.

The billet plant will be the largest steel plant in the country, having the capacity to meet all of AK’s 800,000 tonne capacity long-steel making unit.

Billet is an intermediate steel product, mainly produced by melting iron ore. It is melted to make rod or other long steel products. Bangladesh has several small billet plants, accounting for only 10 per cent of its need.

PHP, a leading player in steel sheet and an old rival of AK, joined the investment drive in long steel late last year, buying the country’s first private TMT steel plant at Ghorasal for Taka 800 million.

Kabir Steel started its 400,000 tonne top-grade rod plant last month and has unveiled plan to set up its own billet unit later this year — a move it says is a must to stay competitive in the fast-changing sector.

BSRM, another of the country’s leading rod manufacturer, said it was watching the gas and energy scenario too closely and has put a plan in place to raise capacity of its billet and rod plants.

Industry players said a growing uncertainty over the scrap industry stemming from a slew of law-suits by environmental campaigners against shipbreakers mainly prompted large steel mills to make rapid inroad in long-steel.

“Traditionally, re-rolled scrap irons used to dominate the country’s long-steel market. But it seems they are hit by one problem after another,” said Mohammad Shahjahan, owner of Kabir Steel.

Now the top four-five players alone can make up more than 80 per cent of the country’s three million tonne long-steel market, he said, adding quality of their steel is also far superior to the re-rolled rods.

Kabir Steel, known as KSRM, last month opened its Taka 4.0 billion top-grade 400,000 tonne steel plant at Sitakundu, raising its total capacity to about 600,000 tonnes a year. It is also planning to go big in billet manufacturing.

“Having a billet plant gives you price advantage, makes you competitive over your rivals and hedges you from volatile billet prices in international market,” he said.

Sources said the recent jumpy prices of steel raw materials was the main reason why AK has moved fast to build the country’s largest billet plant with nearly Taka 10 billion investment.

The plant would be the biggest private sector investment by a Bangladeshi group, according to bankers, and it will help the group take a firm grip in $2.0 billion long steel market.

“It’s a clever ploy by the group to move into billet manufacturing with such a massive investment. Their sudden move has left most of their rivals in the lurch,” said a source, who is familiar with AK’s steel ambition.

Experts said the move is a repetation of what AK and its Chittagong-based rival PHP did in corrugated iron (CI) sheet business back in the late 1990s.

PHP set up the country’s first Cold-rolled steel coil plant in 1998, which gave them a large advantage over rival CI sheet manufacturers. CI sheet is known as tin in Bangladesh.

Until then, Bangladeshi CI sheet manufacturers would import CR Coil and slice it into CI sheets. Fearing that the Coil plant will help PHP dictate local tin market, AK soon set up its own coil factory to remain competitive.

“Today’s race for billet manufacturing is similar to what happened in CR Coil in late 1990s and early 2000s. After PHP and AK, others such as KDS and S Alam set up their own coil plants,” said the source.

By going into coil making, big CI sheet manufacturers consolidated their backward linkwage, leading to the deaths of scores of CI sheet makers who failed to build their own CR plant.

AK officials could not be contacted for comments as the firm has always been secretive about investment plan. But a source said AK has set aside worries over gas and power to move ahead in billet manufacturing.

Zahirul Islam, a director of PHP, said the company has taken up a three-year plan to match the main players in long-steel following its acquisition of AMK Steel plant at Ghorasal.

“The market for long-steel has been growing at 10-15 per cent for the last few years. And in the near future we see the market growing even faster,” Mr. Islam told the FE.

The group has renamed the AMK’s 100,000 tonne plant into PHP Espat and is now planning to raise its capacity three-four fold within a couple of years.

“We want to do things in phases. We have just started production at the plant. But obviously, we have to go into billet and raise capacity to stay competitive in the market,” he said.

Amirhussein Akbarali of BSRM, the main top-grade rod player until AK, KSRM and PHP gate-crashed into the scene, said the company would rather wait and see how the situation evolves.

The company has a 25,000 tonne-a-month billet plant, which rougly meets half of the company’s annual need. The Chittagong-based firm plans to raise capacity significantly once the gas and power crisis eases.

“There is no doubt that our long-steel market is poised for a big growth as the construction industry booming fast,” Mr. Amirhussein, the BSRM chief executive officer, told the FE last week,

“But unless the energy situation improve, I don’t see how you can go big in new steel plant. A medium sized billet plant can alone consume 20-30 megawatt power. And that is quite a big amount of power,” he said.

Still, the CEO of BSRM has kept his fingers crossed for further investment in both billet and long-steel in the near future because of the growing apetite for quality steel products in the country.

 

[integra]

Maiden R&D set up to nurture local talents

Samsung Bangladesh Research Centre (SBRC), the first research and development (R&D) setup by Samsung Electronics in the country, will not only cater to local demands but also Middle Eastern and African countries, its managing director said.

Last month, Samsung Electronics, the world’s largest technology company by sales, launched the R&D centre at Uday Tower in Gulshan, first of its kind by any multinational company in Bangladesh.

“Whatever you see in Samsung mobiles in Bangladesh, we will develop,” said Nam Kyu Lee, managing director of SBRC Ltd. “But our target is not only the Bangladeshi market. We have also targeted other Asian and African countries including Australia.”

“We will customise our products in line with needs of the consumers,” he told The Daily Star during an exclusive interview recently.

So far, the SBRC, the Seoul-based company’s 18th R&D centre in the world and second in South Asia, organised five job fairs and four campus-recruiting events at the country’s top universities and hired 180 fresh graduates.

“We will hire 300 graduate engineers this year. Our ultimate target is to recruit 1,000 people by 2013. That will however depend on the performance of the current staff working here and R&D need of Korean market worldwide,” said Lee.

Lee, 46, said they would also hire qualified and talented Bangladeshis living abroad, particularly in the USA and Canada.

All engineers and staffs currently working at the centre are Bangladeshis apart from two South Koreans, including Lee.

Lee said they are facing problems in recruiting skilled and experienced people. “Our engineers are not experienced. They have no experience about the domain of Samsung and mobile software development.”

“We are training them on basic things for four weeks and then on project specific topic and mobile software for another four weeks. We will then start physical work.”

SBRC is working with Samsung’s R&D centre in India and headquarters to train its people. “We have sent some of our engineers to India to work with staffs there. We are also sending a number of engineers to our headquarters in South Korea,” said Lee, who joined Samsung in 1988.

Lee said the main focus of the centre is to develop software for mobile phones, which will be used by Samsung alone. There is also demand from R&D sector, so it will provide core software.

“Initially, our products will be used for Bangladesh, Nepal, Sri Lanka and other Asian, Middle Eastern and African countries. We will also develop software for South East Asian countries and Australia.”

He said they are working on developing software for feature phones or low-cost phones. “We will later move to smartphone segments.”

“We will not develop hardware here.”

The Samsung official said the SBRC is also working on developing digital camera applications and mobile testing system.

“We will develop mobile testing. Whenever we develop any mobile software, its needed to be tested before launching. Different models have been in place in different markets across the world. So, whenever we have a new model, we will have to test it internally.”

On pilot basis, the SBRC has already developed software like Bangladesh tour guide to help tourists travelling the country with information where and how they can go.

“We have also developed software for Bangladesh calendar and clocks for prayers. These are available online free,” he said.

“These are some of the examples we are working on. We will expand scopes as we move on. Our target is to provide all software solutions to Muslim people around the world,” he said, adding that this is the first R&D centre in a Muslim country.

He said Bangladesh is a Muslim country with over 16 crore population. There are Middle Eastern countries. In South East Asia, there are a number of countries that are Muslim majority.

“We want to provide all software solutions to those countries. We will develop both feature and smart phones for Muslim people,” he said. “They are our major target customers. Then we will extend our services around the world.”

Lee said Samsung chose Bangladesh to set up the R&D centre due to its abundant cheap labour and huge population.

“Bangladesh is one of the populous countries in the world. We believe that there are a lot of talents in the country, but there is no multinational company here to tap their potential. It will be easy to hire talented people.”

“We also do not have R&D centre in any Muslim country. We need such centre in one of the Muslim countries to extend our R&D scope.”

SBRC is now working on projects provided by its headquarters, where its brands products are manufactured. But Lee said the Dhaka centre has to develop a good number of ideas.

“Every other R&D centre has its own characteristics. We also have to have our own characteristics. By next year, we will have to propose our projects.”

“By 2012, we will start performing independently, as there is competition among R&D centres within Samsung. If we cannot generate ideas then we will have no speciality. We will only have to complete projects of headquarters.”

Lee, who was educated in computer science at Yonsei University in Korea, believes if his venture succeeds then other multinational companies would consider setting up such centres in Bangladesh.

He urged the government to offer tax reductions for long-time to companies who want to set up R&D centres in the country.

Last year Samsung spent US$4.5 million to set up offices and bear other expenditures. This year, the spending could reach $6 million.

fazlur.rahman@thedailystar.net

 

[monitor]

TATA to set up motor parts JV
in Bangladesh

Business Report

Tata Motors Ltd of India has in principle agreed to establish a spare parts industry of Tata cars in a joint-venture in Bangladesh. This was announced last Saturday at a press conference in Dhaka organised by Bangladesh Engineering Industry Owners' Association (BEIOA).
Addressing the press conference BEIOA president Abdur Razzaque said that the delegates from Tata Motors Ltd had principally agreed to establish a spare parts industry of car in Bangladesh during their visit to the second Bangladesh International Industrial and Engineering Technology Tradeshow (BIET-2011) in Dhaka that concluded on March 5.
"Besides, the light engineering industries association of Jharkhand in India invited us to visit their industries," said the Association leader. BEIOA leaders have also sought strong policy supports, supply of adequate funds, technical assistance and proper training can boost the country's light engineering sector.
"If we get proper policy supports from the government, we will be able to compete globally", Abdur Razzaque added. He pointed out: "With the introduction of modern technologies and availability of adequate funds, the sector can definitely derive more benefit for the nation."
The BEIOA organised the second 4-day fair from March 2 to March 5 at the Bangabandhu International Conference Center in the city. A total of 103 business organisations, of them 79 local and 34 foreign firms, including those from India, China and Germany, took part at the fair.
Claiming the fair as a success Abdur Razzaque said it created prospects for attracting foreign investment in the country.