Jumana Rezwan's Canvass

Dwindling export of tea

Tea exports have decreased over the years as rising prices and low production rates have seen international buyers turning to Vietnam and Malaysia as preferable sourcing options.  Once a major foreign currency earner, the tea industry is suffering deeply as deficits in production has resulted in the country importing supplies to match demand.  To revive the industry, the Bangladesh Tea Board is investing in new tea gardens in several locations throughout the country.

While this is good news for the country’s trade, it is also a very critical time for the nation’s workers. With the recent Savar tragedy, there is greater scrutiny of worker rights and workplace safety. The tea industry currently suffers from problems such as shortage of labor and lack of training in tea related issues.  If the tea industry wants to create a sustainable industry, these new expansion plans, still in its early stages offer a good opportunity to ensure that regulations are strictly applied and hazardous practices avoided before the industry expands further. Workers’ welfare must be a key priority, as Bangladesh cannot afford to suffer from accusations of negligence in yet another sector of the export economy.

http://www.thedailystar.net/beta2/news/parched-out-of-tea/

Green Banking and the New Bangladesh

The banking industry in Bangladesh has taken a step towards sustainable development with the initial implementation of the Bangladesh Bank’s Green Banking guidelines. A fund has been created to help finance business ideas that specially focus on renewable sources of energy or efforts to develop environmental friendly practices. So far the response has been very positive with several banks dedicating significant funds for what is both a socially responsible and profitable cause.

If Bangladesh is to become a middle income country in the near future, this is the right way to go about it. By encouraging environmental friendly practices and offering special concessions to those who abide by them, BB is not only creating awareness but backing it up with financial incentives.  However, to ensure success in the long run, the cooperation of all banks is essential, as they are the main medium though which borrowers have access to funds.  While the initiative is positive, it is perhaps still too highly focused on large scale project loans, whereas the future of the country likely lies with SMEs. Moreover, there seems to be insufficient understanding on exactly what the banks are likely to gain from this initiative other than goodwill. This may hamper the sustainability of the initiative, as the initiative must not only be socially desirable but also profitable. 

http://www.thedailystar.net/beta2/news/green-banking-gets-warm-response-bb/

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.

 

 

 

 

 

 

 

Weekly News Clippings (9 May 2013)

8 new banks must lend govt just after start of operation (New Age, May 9, 2013)

Bangladesh Bank is requiring the eight new commercial banks to participate in a government securities auction at the start of their operations to facilitate government borrowing. According to BB officials, the banks will have to purchase the treasury bills and bonds from their paid-up capital. This might create a challenge for the new banks, which have not had the time to build up deposits from clients.  

 

Political unrest hits transport business (Dhaka Tribune, May 8, 2013)

The supply chain has been affected badly in Bangladesh, as the frequent shutdowns and political violence have disrupted the transportation of goods. According to the acting general secretary of Bangladesh Covered Van and Truck Owners’ Association, around 1,000 vehicles came under attack and more than 400 trucks and covered vans were vandalised in last three months of political violence. Businessmen complain that the vehicles have become the most common targets for arson attacks on the hartal days, which has adversely affected the transportation business. Transport owners claim that their businesses have declined by 70% due to violence and shutdowns while Bangladesh Bureau of Statistics figures show that food prices this year, have increased from 7.45% in February to 8.57% in April. Most truckers prefer to keep their vehicles off the roads during hartals, fearing attacks, which is why commodities fail to reach the markets and prices rise.

 

Exports slow as strife lingers (The Daily Star, May 8, 2013)

The persistent political strife has led to 9.73 percent decline in exports in April. According to Export Promotion Bureau, export earnings were worth $2.07 billion in April, which is lower than the monthly target of $2.34 billion. Nonetheless, the overall earnings during the first 10 months of the current fiscal year, have increased over the previous year by 10.14 percent to $19.78 billion.

Imports nosedive in July-March amid poor business climate (New Age, May 7, 2013)

The recent spates of political violence have created an unfavorable business environment affecting the import bill payment. According to the Bangladesh Bank data released on May 6, 2013, the overall import bill payment in July-March of the FY 2012-13 posted a negative growth of 10.40 per cent compared to the 14.60 per cent growth during the corresponding period in the FY 2011-12. The business people are hesitating to expand their investment as the times are uncertain ahead of the national election.

 

BB committee warns govt of risks (New Age, May 7, 2013)

Prevailing political tension ahead of the next national elections might affect the rate of interest and repayment arrangement for a potential sovereign bond issuance. According to a report by the Bangladesh Bank, the government should consider the risks before issuing the country’s first ever sovereign bond to raise funds for infrastructure projects from the international money market. The IMF has also advised against “rushing to the market with non-strategic view, as the market prefers low political risk”. Failing to obtain funds for the Padma bridge project because of alleged corruption, the government has decided to build it with its own finance. As part of the plan finance minister, had announced that a substantial amount of $1.8 billion would be raised from the international market through issuing bonds.

 

ILO rolls out roadmap (The Daily Star, May 5, 2013)

The International Labour Organisation (ILO) is set to formulate a “road map” to improve labor standards. Under the action plan, the government will recruit, within six months, 200 additional inspectors and ensure that the Department of the Chief Inspector of Factories and Establishments is upgraded to a directorate with an annual regular budget allocation. The deputy director general of the UN agency viewed the latest incident of building collapse in Bangladesh with great concern. His mission’s recent discussions with the stakeholders (i.e. the government, the employers and the workers’ rights groups) were focused on the issues of workers' rights, workplace safety, and minimizing the impact on the image of the country in order to ensure its economic growth.

BGMEA to set up a database of garment workers  (The Daily Star, May 5, 2013)

Bangladesh Garment Manufacturers and Exporters’ Association (BGMEA) has plans to prepare a central database of the 3.6 million workers garment workers for ease of verification during crises. “We will sign an agreement with the ILO [International Labour Organisation] soon to prepare a central database of workers,” said the President of BGMEA.

 

EU warns of trade action (The Daily Star, May 3, 2013)     

The European Union has warned that it would take trade action against Bangladesh through its Generalised System of Preferences (GSP) if the country failed to ensure workers’ safety in factories. The EU is Bangladesh’s top trading partner, accounting for 60 per cent of the country’s exports. If Bangladesh was placed outside the GSP, it would face import duties up to 12 per cent.

 

Land prices put Dhaka on par with NY or London (Dhaka Tribune, May 3, 2013)

According to a recent study by urban planners and economists in the country, for most Dhaka dwellers the prospect of buying a house seems dim. A World Bank study conducted in 2007 shows that land prices are comparable to those in suburban New York or London, although the median income in Dhaka is 50 to 100 times lower. The price income ratio in Dhaka is 5:1 (i.e. the price of the median home is five times more than the median annual income), compared with Kolkata, which has a ratio of 3:1. Between 2000 and 2007 in Dhaka and its outskirts, land prices have increased by more than 300%. Real estate developers’ estimates suggest that the it would be close to 350% now.

Concern over Savar

Bangladesh shrugs off international help in the Savar rescue operation 


It was an unusual move by the home minister of Bangladesh to decline help in the rescue drive at Savar’s Rana Plaza, now a mangled mass of rod and concrete. When disaster strikes, regardless of whether countries are rich or poor, they usually welcome a helping hand from the outside. After major earthquakes like those in Haiti (2010) or China (2013), hundreds of rescuers combined their efforts to save as many lives as possible. Even Japan, in spite of being a rich country, accepted substantial help from around the world following the earthquake and tsunami in 2011.

In a time of acute crisis, following what could be the biggest man made disaster the country has ever encountered, Bangladesh needed help badly, and the international community was willing to help.  For example, Britain's Department for International Development had sent a UN aid package for disaster management that included 16 thermal image cameras and 20 search cameras designed to find people trapped in collapsed buildings. However, Home Minister Mohiuddin Khan Alamgir rejected such offers of foreign aid saying that no help was needed because the “rescue operation was going on successfully and the local emergency services were well equipped.”

His statement, however, contradicts what millions of people witnessed. Poorly-equipped volunteers were seen scrambling through the ruins and young doctors were amputating limbs with kitchen knives and saws. The unskilled rescuers even started a fire, apparently by trying to cut through iron rods of the building to make room for saving lives. That fire ended up burning a woman alive who till then had managed to stay alive for over 100 hours.  There was also a severe shortage of oxygen cylinders and medicine supplies.  All this begs the question: why Bangladesh discarded state-of-the-art search equipment which could have saved so many lives?

Bangladesh discarded UK-funded search cameras in Dhaka rescue mission (The Telegraph, April 30, 2013)

Govt declines foreign offer of help (The Daily Star, April 30, 2013)

                                                                                                                              -Afsana Tazreen