Weekly News Clippings (May 16, 2013)

Infrastructure deficit deters higher economic growth (The Daily Star, May 16, 2013)

Bangladesh has the potential for a much higher growth due to its “advantageous location” and availability of a “large labour force”. According to the country director of Asian Development Bank, though the country is a leading exporter of garments to the US and the European Union, its intraregional trade is still small. At a meeting organised by the Foreign Investors’ Chamber of Commerce and Industry (FICCI), the bank official highlighted the need for more trade openness, higher exports and investment and stressed on the importance of trade growth in Bangladesh hopes to eradicate poverty completely “in less than a decade’s time.”

 

Realtors eye better days as ban on gas connections goes (The Daily Star, May 15, 2013)

The real estate industry may get some helping in bouncing back from an otherwise stagnant market.  After three years, the government has recently lifted a ban on new gas connections to households. The Real Estate and Housing Association of Bangladesh (REHAB), a platform of the realtors has hopes that the move would help increase the sales of apartments significantly. According to the acting general secretary of REHAB, around 20,000 ready-to-be-sold apartments worth more than Tk 10,000 crore are waiting in the market due to the gas crisis and restrictions on electricity connections. Realtors have slowed their construction work and stopped taking on new projects due to the crisis as well as frequent shutdowns.

 

Stock regulator seeks ideas to attract foreign investors (The Daily Star, May 14, 2013)

The Bangladesh Securities and Exchange Commission is looking for suggestions from stakeholders to help the regulator in preparing a guideline on attracting foreign investment.
On May 13, the stock market regulator sat with the bourses, four leading stockbrokers, merchant bankers’ association and listed companies’ association, and requested them to send suggestions on preparing the foreign investment guideline. Foreign investment, also known as portfolio investment, accounts for less than 1 percent of the total market capitalisation of Dhaka Stock Exchange.

 

Cabinet okays amendment to Labour Act (Dhaka Tribune, May 13, 2013)

A final draft on amendments to the 2006 labour law has been approved by the cabinet and will soon go to the parliament.  The draft bill includes the following directives:

·         Allow workers to form Collective Bargaining Agents and Participatory Committees and punish factories that create barriers to collective bargaining and trade union activity

·         Require firms with more than 100 workers to provide insurance to their employees.

·         Require a bonus of one month’s salary for workers with over 12 months employment.

·         Require factories with more than 5,000 employees to set up a health clinic for their employees.

·         Establish a welfare board and welfare fund to ensure oversight.

·         Apply stiff fines for factories’ failure to comply with the Inspectorate of Industries and Factories.

 

Global Retailers Join Safety Plan for Bangladesh (The New York Times, May 13, 2013)

Several of the world’s largest apparel companies agreed on Monday to a landmark plan to help pay for fire safety and building improvements in Bangladesh after last month’s collapse of the Rana Plaza factory complex, which killed more than 1,100 people. The Swedish retail giant H&M and Inditex, owner of the popular Zara chain, endorsed the safety plan. Within hours, the large Dutch retailer C&A also joined the agreement, as did the low-cost British retailers Primark and Tesco. The mounting pressure to improve working conditions in Bangladesh’s garment factories have led to these developments.

 

Ticfa to benefit Bangladesh more: GM Quader (Dhaka Tribune, May 13, 2013)

Bangladesh has agreed in principle to sign the Trade and Investment Cooperation Framework Agreement (Ticfa) with the US to boost the trade between the two countries. According to Commerce Minister GM Quader, “the agreement would also act as a platform for negotiations like retaining the Generalised System of Preferences (GSP), though signing it is not any pre-requisite for continuation of the GSP”. The GSP is a duty-waiver scheme of the US government for the least developed countries, introduced in 1976. Bangladesh has continued lobbying to retain the GSP, as the American Federation of Labour and Congress of Industrial Organisations (the largest trade union in the US) filed a petition with the United States Trade Representative to discontinue the GSP after the incident of fire at Tazreen Fashions incident last November.

 

Hit by rising costs, China RMG retailers look to Bangladesh (The Daily Star, May 12, 2013)

Twelve Chinese retailers have imported garments worth $100 million from Bangladesh over the last nine months even though China is the largest garment supplier in the world. While talking to reporters at the Bangladesh Garment Manufacturers and Exporters Association in Dhaka, the vice-president of China National Garment Association (CNGA) said that the rising cost of production in China has increased its dependency on Bangladesh to cater to its domestic consumers.

 

Political turmoil to affect growth: ICCB (The Daily Star, May 12, 2013)

Performance of the economy in 2012-13 will depend on how the political challenges are addressed. According to the analysts in the council meeting of the International Chamber of Commerce Bangladesh (ICCB), any prolonged uncertainty in this context will have serious implications for the performance of the economy. On the contrary, some analysts said that Bangladesh has maintained a reasonable macroeconomic stability and a good growth momentum despite significant odds.

 

BB restricts bank accounts of Rana Plaza factories (The Daily Star, May 10, 2013)

The central bank has asked all commercial banks not to disburse any money from the bank accounts of the directors of the four garment factories formerly located at Rana Plaza, the building which collapsed last month killing over 1,100 garment workers. Bangladesh Bank has also asked the banks to send statements of the accounts to the regulator by May 14.

 

Factory disasters may weigh on Bangladesh credit profile: Moody’s (Dhaka Tribune, May 10, 2013)

Garment factory disasters and frequent strikes and violence in Bangladesh pose risks to the country’s credit rating, according to Moody’s, the leading global ratings agency.  It also said that political tensions are damaging confidence of the investors in Bangladesh, which has a rating below investment grade.  Investor confidence has also dropped after a building in Savar that housed five garment factories collapsed on April 24, killing more than 1,100 people. “Continued political tensions are credit negative because they may further damage investor confidence against the background of recurrent industrial disasters in the garment sector,” it said in a report titled "Moody's Credit Outlook" released in Singapore on May 9. Bangladesh’s rating from Moody’s is Ba3.