Weekly News Clippings (24 January, 2013)

FDI sluggish due to land scarcity, poor infrastructure (The Financial Express, January 24, 2013)

Foreign Direct Investment in the country is slowing due to scarcity of land, poor economic and physical infrastructure and bureaucratic obstacles. The chief of the Board of Investment said that significant investment took place in the services sectors but that the country has failed to attract investment in high technological sectors and fallen short of potential in oil and gas exploration.

Walmart refuses to take clothes from Simco Dresses: Tazreen fire link (The New Age, January 23, 2013)

Walmart the biggest US retailer terminated its relation and canceled an order of clothes worth $1 million from Simco Dresses Limited in the aftermath of the Tazreen fire.  The cancellation occurred because Simco had subcontracted the work to Tazreen Fashions without informing Walmart.  Simco officials supported by the BGMEA have protested the cancellation, because Simco had already shipped the goods to Walmart and because Simco is no longer able to pay their workers without payment from Walmart.

Wal-Mart tightens supplier policy after Bangladesh fire (The Daily Star, January 23, 2013)

After the November fire of Tazreen garment in Bangladesh, Walmart has warned its supplier of a 'zero tolerance policy' to take effect in March.  The retailer will immediately cut ties with any supplier that subcontracts work without Walmart’s knowledge.  This replaces a “three strikes” policy, which gave companies some leeway in addressing problems.    

Int’l Plastic Fair begins in Dhaka (The New Age, January 22, 2013)

The Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) kicked off their 8^th annual plastics fair.  While Bangladesh primarily exports to the European Union, the industry is currently enjoying duty-free access to the USA under the generalized system of preferences facility and its exports of plastic goods to the country have been increasing for last few years.  As such, the industry is worried about a potential US suspension of the facility.   Industry spokespersons report that 5,000 small and heavy plastic companies are operating in Bangladesh employing around 12 lakh people are working in the units. The industry export goods of Tk 2000 crore annually in addition to Tk15,000 crore of domestic sales.

Remittance from major countries shoots up (The Daily Star, January 22, 2013)

Due to the earnings and incomes of Bangladeshi expatriates, remittances have risen from most source countries with the exception of the US.  Bangladesh received a record US$14.17 billion in remittances in 2012, a 16.4% increase over the previous year. According to central bank, the highest number of remittance comes from Saudi Arabia, which experienced a 16% increase. The second highest comes from the United Arab Emirates (UAE), which increased 26%.  Oman experienced the largest growth: 55%.  In the US remittance inflow dropped 2.5 percent to $1.67 billion in 2012 due to the sluggish economy and the US migrants’ preference for saving money instead of sending it to Bangladesh.  The average amount per migrant is $1,672, which is low compared with the average Indian ($4,843) or Chinese ($6,112) migrant.

Premier Bank sues nine officials for fund fraud (The Daily Star, January 21, 2013)

Premier Bank filed criminal cases against nine officials for misappropriating nearly Tk 60 crore between 2011 and 2012. By bypassing the standard procedure for loan approval, the Motijheel branch manager, sanctioned a loan of Tk 59.34 crore to Alppa Composite Towels Ltd, a concern of Bismillah Towels Group.

Leather industry aims to cross $1b exports (The Daily Star, January 18, 2013)

Due to demand for leather and leather goods in the global market specially in US and China, Bangladesh aims to cross the US$1 billion mark in export earnings from leather industry this year.  This would be an improvement over 2012’s exports of just under $800 million.  Industry spokespersons are optimistic because of new potential buyers from the US and Japan for higher standard of product at competitive prices. The leaders of the sector said that the country registered a higher export growth in leather goods as the companies are now focusing more on value-added products. Bangladesh exports leather products mainly to Italy, New Zealand, Poland, the UK, Belgium, France, Germany, the US, Canada and Spain.

Weekly News Clipping (17 January 2013)

RMG fire safety: Action plan by next month (The Daily Star, January 17, 2013)

In a meeting organized by the Ministry of Labor and Employment and the ILO office in Dhaka, the top officials of the labor ministry, Bangladesh Employers Federation, National Coordination Committee for Workers Education, Bangladesh Garment Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association and Bangladesh National Council signed the tripartite statement of action plan on fire safety by next month to prevent any further loss of life and property in Bangladesh due to fires at factories. The statement includes implementing the Promotional Framework for Occupational Safety and Health Convention, 2006, the Occupational Safety and Health Convention, 1981 and other instruments of the ILO relevant to the framework for occupational safety and health.

Motions in European Parliament: Retailers under pressure to compensate Tazreen victims (The Daily Star, January 15, 2013)

The European Parliament is going to discuss a resolution in the coming days aimed at promoting improvements to working environment and safety in the Bangladeshi garment sector, including increasing the minimum wage for the workers, establishing trade unions, and permitting collective bargaining. The resolution stresses the importance of human rights, labor rights and environmental protection.  The resolution does acknowledge Bangladesh's effort to reduce child labor in the garment sector, the establishment of an independent inspection system, and the creation of health and safety committees.

Meena Bazar buys two outlets of Nandan (The Financial Express, January 15, 2013)

As part of its expansion plan, Meena Bazar bought two outlets of Nandan. Due to financial crisis the super chain shop Nandan shut down three of its five stores and sold these two outlets to Meena Bazar. Total number of outlets of Meena bazar is now 18. It started in 2002 and operates in Dhaka, Chittagong and Khulna.

Signing TICFA turns necessary for keeping US GSP (The New Age, January 14, 2013)

In the inaugural ceremony of GAPEXPO, the Commerce minister said it has become necessary for Bangladesh to sign the Trade and Investment Cooperation Framework Agreement (TICFA) to continue to benefit from the General System of Preferences (GSP) offered by the US. If the USA withdraws GSP facilities it will likely have a negative impact on export and overall economy of the country.  BGMEA President, however, said that Bangladesh is not really getting any significant help from the current GSP as it still has to pay a high tariff to get access to US market. According to him withdrawal of GSP would only reduce exports by 0.54 percent. 

Another kitchen market goes formalin free (The Daily Star, January 13, 2013)

Shah Ali bazar, a kitchen market of Mirpur has announced formalin free after Malibagh, Shantinagar, Mohakhali, Gulshan DCC-North, Mohamm-adpur's Town Hall, Kaptan Bazar and the superstore Swapno. FBCCI has trained three persons to use the formalin detector donated by Islami Bank Bangladesh Ltd. In the next few months FBCCI wants to make the capital's 30 big kitchen markets free from formalin. Due to the initiatives taken by Commerce Ministry, the amount of imported formalin has come down to 205 tonnes last fiscal year from the 550 tonnes registered for fiscal 2009-10.

Businesses not in favor of FDI in basic RMG sector (The New Age, January 13, 2013)

In response to Chinese interest in investing in Bangladesh, manufacturers of RMG sector, worried about competition, contend that the country’s local manufactures already have the expertise and know how t.  Instead they argue that foreign investors should focus on high end products and spinning and woven textile, areas where local manufactures lack enough expertise and technology.

Exports rebound, exceed target (The Daily Star, January 11, 2013)

The country's export earnings made a dramatic rebound in December, rising by 40 percent to $2.47 billion, due to product and market diversification. According to Export Promotion Bureau, the December earnings were 2.89 percent higher than the target at $2.40 billion which was set for the month. The country is performing well in new markets of China, Russia, Japan, South Korea, Australia, Mexico, Brazil, Chile, Malaysia, South Africa, New Zealand, Turkey and India. Exports of jute items and other products other than the garment items have also increased.

Weekly News Clippings (January 10, 2013)

RMG export face another difficult situation in European market (The Financial Express, January 10, 2013)

Bangladesh's apparel sector is going to face another challenge as the EU Parliament is planning to adopt “a harsh resolution soon on the labour and safety standards in the garment sector in Bangladesh.”  This development in the EU, the Bangladeshi garments sector’s largest market, is particularly worrisome following the US Trade Representatives move to debar Bangladesh from its generalized system of preferences (GSP) over the failure to implement adequate labour standards.   Government and BGMEA spokespersons contend that they are doing everything possible to address the European and US concerns in the aftermath of the Tazreen fire.

TICFA to boost economic relations with US (The Daily Star, January 09, 2013)

This article by Manzur Ahmed, former director of the FBCCI and DCCI, argues in favor of finalizing the proposed Trade and Investment Cooperation Framework Agreement (TICFA) between Bangladesh and the US.  TICFA is crucial for Bangladesh to ensure duty-free and quota-free market access to US. The proposed agreement between Bangladesh and US will strengthen the economy and trade and will also yield support in technology, compulsory licensing, and technical assistance for capacity building. The article summarizes the role of the US in the Bangladeshi economy, mentioning that there are almost 500 American companies active in Bangladesh, that the US is Bangladesh’s single largest export market, and that the US is the second largest investor in the country (behind the UK).  The article makes the case that Bangladesh is moving in the right direction in terms of addressing US concerns regarding labor standards through, among other steps, increasing safety training for workers and management

Bangladesh for duty free first before TICFA signing (The Financial Express, January 08, 2013)

Obstacles remain to signing the TICFA with the US.  Bangladesh is pushing for its garments industry to have duty free access to the US.  While Bangladesh does receive the US’s facility of generalized system of preferences for some goods, garments exports, which amounted to nearly $4.5billion in 2011, are still taxed.   For its part, the US is pushing for Bangladeshi labor’s freedom of association – in other words, the development of unions in the garment sector.  The Bangladesh government is willing to commit to a “gradual” introduction of such labor rights.     

Fuel oil price hike to badly hit expected RMG export earning (The Financial Express, January 07, 2013)

The leaders and experts of the RMG sector said the recent fuel price hike will impose a negative effect in the country's RMG export sector. The sector has been facing multifarious problems of high interest rates and inadequate supply of gas and power.  The article notes that the RMG sector employs 3.5 million workers, 80% of whom are women. The apparel sector earned around US$19 billion during FY 2011-12, a 7% increase over the previous year.  60% of the sectors exports are destined for EU countries, 23% to the US, and 16.8% to other destinations.

MCCI sees political feud as serious setback to economy (The Daily Star, January 07, 2013)

In a statement MCCI stated that “The most important challenge for the economy is to solve the present political uncertainty generated by the continuing feud between the government and the opposition political parties.”  MCCI leaders raised other concerns as well, including the high interest rates, which had been exacerbated by reductions in credit flows following the Hall-Mark scam.  While the MCCI understands the need for power price hikes, it contends that such increases should not exceed 3% so as to not put undue pressure on businesses.  In order to make more export to overseas markets it advised the government to improve law and order situation and to promote higher quality export.

Fuel price hike draws flak (The Daily Star, January 5, 2013).  On Thursday, Jan. 3 the government “increased the prices of diesel and kerosene by Tk 7 a litre to Tk 68 a litre and octane and petro by Tk 5 a litre to Tk 99 and Tk 96 a litre to reduce the subsidy burden.  In response the BNP led 18 party alliance called a nationwide dawn to dusk hartal for January 6.  Leftist parties in the Awami League’s governing coalition also oppose the price hike.