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.