[🇧🇩] Bangladesh Economic Affairs & News

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Chinese Ambassador Yao Wen suggests transactions with Bangladesh using 'own currencies' amid dollar crisis​

“The fluctuation of the dollar rate is now a worldwide problem which China is also facing. It is something that China wishes to work with Bangladesh on," he said​

File photo of Chinese Ambassador to Bangladesh Yao Wen. UNB

Chinese Ambassador to Bangladesh Yao Wen has proposed transactions using Chinese or Bangladeshi currencies instead of US dollars amid the ongoing dollar rate fluctuation.

"The fluctuation of the dollar rate is now a worldwide problem which China is also facing. It is something that China wishes to work with Bangladesh. Maybe one of the ways is to use our own currencies," said Yao Wen after a meeting with the Planning Minister Major General (retd) Abdus Salam in the capital's Agargaon today (30 January).

"We approached and are engaging with Bangladesh to see what we can do together to use our own currencies instead of the US dollar," he added.

The planning minister said, "China has shown interest in discussing Bangladesh's 14th Five-Year Plan. China has a strong relationship with Bangladesh and have assisted in the implementation of our five-year plans."

 

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Planning Minister Abdus Salam (L) and China Ambassador to Bangladesh Yao Wen during a courtesy meeting on 30 January in 2024Collected

China has expressed interest in doing business transactions with Bangladesh using the currencies of the two countries instead of the US dollar.

Chinese Ambassador to Bangladesh Yao Wen disclosed this to the media after a meeting with Planning Minister Abdus Salam at the latter’s office at Sher-e-Bangla Nagar in Dhaka Tuesday.

“Now it’s a worldwide problem. This fluctuation in the dollar rate is because of the financial and the monetary policy of the US. So, the global south, the developing countries as well as China also are facing the same problem. This is something where China wishes to work with Bangladesh,” he said.

Yao Wen also stated, “Maybe one of the ways is to use our own currencies. We approached and are engaging with Bangladesh to see what we can do together to use more of our own currencies instead of the US dollar.”

China, the second largest economy in the world, has been doing business transactions with its currency, yuan, with several countries. The country has been trying hard for the last few years so that its currency could be used more in doing global business.

China is one of the countries that have been trying actively to slash the dominance of the US dollar in global trade and commerce.
Bangladesh also started doing business transactions with India in taka-rupee from July last year, albeit on a small scale, due to the dollar crisis.

Speaking about today’s meeting with the minister, the China ambassador said that during the meeting, they discussed the possible areas of cooperation between the National Development and Reform Commission (NDRC) of China and the Bangladesh Planning Commission.

“China has already the 14th Five Year Plan while Bangladesh is having its 8th Five Year Plan. So, we can see we’ve great potential to cooperate and work on this area… we can share experiences and can cooperate on this Five Year Plan,” he added.

Noting that the NDRC of China and the Bangladesh Planning Commission are almost similar in nature, Yao Wen said, “I believe there is enormous potential to work on this area regarding macro economy and development cooperation. We discussed a lot, we’ll follow up on what we’ve discussed.”

Earlier, the planning minister told the media, “There was no specific agenda of discussion. This was a courtesy meeting. We talked about cooperation in Five Year Plan.”

Asked about the amount of China’s disbursement of funds for development projects have come down, the planning minister said this would not affect the bilateral relations between the two countries.

Such minor issues would be resolved through discussion, he stressed.

 

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Bangladesh govt seeks $8.9b NDB loans for 5 key connectivity projects​

Apart from the loans for five major bridges, various ministries and divisions have also submitted proposals for projects worth $23b for NDB loans​

The government has sought loans from the China and Russia-led New Development Bank (NDB), formerly BRICS Development Bank, to finance the construction of five bridges at an estimated cost of around $8.87 billion, according to the Bridges Division.

These projects include a bridge to connect Barishal and Bhola with a projected cost of Tk17,500 crore ($1.615 billion), as per the final report of a feasibility study, and the second Padma Bridge in Paturia-Goalanda with an estimated cost of around Tk31,200 crore ($2.8 billion).

The proposed bridge over the Kalabodor and Tetulia rivers aims to establish direct road connectivity between mainland Barishal and Bhola.

The other three Bridges Division projects for which loan proposals have been sent to the NDB are a bridge on the Bakerganj-Bauphal road over the Karkhana River, one on the Bhola-Lakshmipur road over the Meghna River, and either a tunnel or a bridge over the Maheshkhali channel in Cox's Bazar.

Moreover, various ministries and government divisions have submitted proposals to obtain loans from the NDB for numerous projects, as reported by the Economic Relations Division (ERD). Initial estimates by officials indicate that the potential cost of these projects could reach as high as $23 billion.

An NDB delegation, led by its Vice President and Chief Operating Officer Vladimir Kazbekov, visited Bangladesh on 21-23 January. During this period, discussions were held with the Bridges Division regarding the financing of various development projects.

"The government has plans to build several bridges. The master plan in this regard is also in the final stage. Some of these projects have received final feasibility study reports, and the review work is underway. The issue has been highlighted in the meeting with the NDB," Md Monjur Hossain, secretary of the Bridges Division, told The Business Standard.
He said the Bridges Division did not prioritise funding for any particular project during the meeting with the NDB. The NDB is expected to invest in the bridges it is interested in based on its review.

Five more major bridges

Officials of the Bridges Division and Bangladesh Bridge Authority say the feasibility study for the construction of the bridge on the Barishal-Bhola road project has been completed.

The Indian consulting firm, STUP Consultants, has submitted the final report. The bridge department is currently reviewing the report, and simultaneously, the preparation of the preliminary development project proposal is in progress.

Bridges Division officials said the Tetulia River separates the 3,400 square-kilometre Bhola district from the mainland, where more than 20 lakh people reside. Currently, the only access to this island is through a river route. The proposed bridge, with a length of 4.7km along with a 4.8km approach road, aims to enhance connectivity with the district.

Additionally, it will enable the construction of a pipeline to transport the gas produced in Bhola to the mainland. Bhola's Shahbazpur gas field is reported to have 721 billion cubic feet of gas reserves.

Meanwhile, officials of the Bangladesh Bridge Authority say the construction of the bridge on the Bakerganj-Bauphal road over the Karkhana River project will cost Tk3,048 crore ($363 million). The feasibility study for this project has already been completed.

The proposed bridge will establish direct road connectivity between Barishal and Patuakhali through the Bakerganj and Bauphal upazilas.

An NDB loan has also been sought for the construction of a 9.20km bridge over the Meghna on the Bhola-Lakshmipur route. A pre-feasibility study is currently underway for the construction of this bridge. The estimated cost of the project is around Tk37,000 crore ($3.36 billion), according to preliminary estimates by the Bridges Division.

Officials of the division said there is a plan to construct a 6km long bridge over the Padma on the Paturia-Goalanda road. According to preliminary estimates, the construction of the bridge will cost around Tk31,200 crore ($2.8 billion).

Besides, the government is seeking NDB financing for the construction of a tunnel or a bridge from Maheshkhali to Cox's Bazar. The Bridges Division estimates that the construction of the 2km tunnel or bridge may cost an estimated Tk8,100 crore or $736 million.

More loan proposals to the NDB

Officials at the Economic Relations Department (ERD) say apart from the Bridges Department, the NDB delegation held separate meetings with the Ministry of Civil Aviation and Tourism, Ministry of Railways, Local Government Division, Road Transport and Highways Division, Ministry of Local Government, Rural Development and Co-operatives, Local Government Division, and Energy and Mineral Resources Division.

During these meetings, the ministries and divisions submitted project lists for financing to the NDB. Preliminary estimates by officials suggest that the estimated cost of the projects is $23 billion. However, the final approval from the NDB will be obtained after sending the PDPP of the projects.

Before this, the government will determine in which projects NDB loans will be taken, and the PDPP will be sent to the NDB through the ERD.

Meanwhile, proposals have been sent to the NDB for financing 17 projects from the Power Division, ERD sources said.
Among these, there are five projects in electricity generation from renewable energy and five projects in the distribution system and transmission.

The total cost of implementing these projects has been estimated at Tk41,373 crore ($3.727 billion). Of this, Tk32,315 crore ($2.911 billion) has been proposed to be financed from foreign loans.

Md Habibur Rahman, senior secretary of the Power Division, said, "The list has been given to the NDB based on the type of projects that NDB is interested in financing. For example, they have funds in renewable energy. That is why we have included some projects in this sector."

Meanwhile, loans have been sought from the NDB for 10 projects of the Road Transport and Highways Division.

However, the cost of the projects was not mentioned.

Besides, the Ministry of Civil Aviation and Tourism has sought loans for two projects, the Ministry of Railways has sought loans for eight projects, Dhaka Wasa wants loans for five projects, and the Energy and Mineral Resources Division wants loans for three projects.

Bangladesh's relation with the NDB

Although Bangladesh obtained NDB membership in September 2021, the country is yet to receive a loan from this organisation due to the lengthy process of submitting loan proposals. However, loan processing for two projects is at the final stage.

After gaining membership, the NDB wrote to various organisations in Bangladesh through the ERD, seeking loan proposals. As the Secured Overnight Financing Rate (SOFR) rises amid the current geopolitical situation caused by the Russia-Ukraine war, Bangladesh is taking fewer market-based loans. Due to this, the government is moving slowly to take loans from the NDB, said ERD officials.

According to the ERD, the NDB wants to facilitate $4.5 billion for Bangladesh during the next five years for infrastructure development. However, there is an opportunity to further increase the loan amount depending on the readiness of Bangladesh.

ERD officials say a loan agreement worth $763 million for two projects could be reached with the NDB this year. This includes Dhaka Wasa's water supply project, for which the NDB will lend $320 million with a grace period of seven years. The project has already received the approval of the Executive Committee of the National Economic Council (Ecnec), and the loan agreement is expected to be finalised by next June.

Additionally, the NDB will provide $443 million to replace decades-old leaky gas pipelines. Titas Gas Transmission and Distribution Company Limited is anticipated to finalise a loan agreement with the NDB for this project within this year, according to ERD officials.

The NDB extends loans to member countries in six sectors – clean energy and energy efficiency, transport, infrastructure, water and sanitation, environmental protection, social infrastructure, and digital infrastructure.

 

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The 3 largest ticket bridges in my opinion won't have a large enough return on investments and are entirely hatched on the impetus of lining the pockets/purses of politicians.

The govt. should clearly show how taking these loans and completing these bridge projects will benefit the economy of the regions they will serve.

Just massive theft and corruption on an unimaginable scale .

 

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Private sector paves the way: Bangladesh's remarkable rise and what lies ahead​

The private sector in Bangladesh has a crucial role to play in steering a growth trajectory driven by innovation​

Sajjadur Rahman. Sketch: TBS

In the immediate aftermath of gaining independence, Bangladesh emerged as the world's ninth-poorest nation. With a nominal income per capita of only $95, an infant mortality rate of 210 per 1,000 births, and an average life expectancy of 46.6 years, the challenges were immense.

Fast forward 50 years to FY2022-23, and Bangladesh has undergone a remarkable transformation. Boasting a GDP of $460 billion, it now stands as the 35th largest economy globally, with per capita GDP of $2,765. Infant mortality has drastically declined to 23 deaths per 1,000 births, and life expectancy has soared to 72 years.

Internationally, Bangladesh is recognised as a model for poverty reduction. Originally designated as a Least Developed Country (LDC) by the United Nations in 1975, it achieved lower-middle-income status in 2015 and is on track to graduate from the LDC status in 2026.

Economic indicators vividly depict the nation's evolution from an agrarian subsistence society to a global hub for garment manufacturing. Industry now constitutes over 30% of the GDP, with manufacturing alone contributing 22%, up from 9% post-independence. Simultaneously, services have surged to represent 50% of GDP, while agriculture's share has decreased from over 60% to around 20%.

From having to import steel and cement in the 1990s, Bangladesh is now self-reliant in these sectors and more, including pharmaceuticals and electronics. The pharmaceutical industry, for instance, meets a staggering 98% of the local market demand.

Projections from PricewaterhouseCoopers (PWC) indicate a promising future for Bangladesh, foreseeing it as the 28th largest economy by 2030 and further climbing to the 23rd position by 2050.

This unprecedented progress can be attributed to a dynamic private sector that employs over 90% of the 70 million-strong workforce. Government policies and financial support have played a pivotal role, nurturing the growth of various sectors. For instance, incentives for ready-made garment exporters, which were initially at 25%, have now reduced to 0.5%. Similar policy support has propelled the growth of the pharmaceutical and electronics sectors.

The economic growth, coupled with rising purchasing power, has catapulted numerous small companies into multi-billion-dollar conglomerates, including Meghna Group of Industries, City Group, Abul Khair Group, Akij Group, Square Group, and more.

At this stage of its development, Bangladesh faces considerable challenges both from global and domestic fronts. The complex global economic landscape comprises a number of internal risk factors, including rising non-performing loans (NPLs) in banks, limited domestic resource mobilisation capacity, substantial external financing dependence and over-reliance on a single export sector.

What next?

Experts say if Bangladesh wants to level up further and sustain the development, the country needs to undertake massive reforms, especially in the financial sector that is struggling with high NPLs, now standing at nearly 10%. NPLs would be much higher if the figures of rescheduling loans and pending court cases are taken into account.

"It is not only banks, the whole economy is feeling the pressure of NPLs," said Kamran T Rahman, president of the Metropolitan Chamber of Commerce and Industry (MCCI) at a programme on Wednesday (31 January).

Dr Ashikur Rahman, senior economist at the Policy Research Institute of Bangladesh, said establishing good governance in banks should be a top priority. Also, he has advocated for independence of the central bank so that it can focus on long-term economic goals, such as price stability and low inflation.

FDI required for development

Bangladeshi companies should enhance their innovation endeavours and assume a more proactive role in nurturing the growth of a domestic innovation ecosystem. Leveraging the burgeoning startup landscape and strengthening ties with academic and research institutions could prove advantageous.

The private sector in Bangladesh has a crucial role to play in steering a growth trajectory driven by innovation. This involves enhancing traceability, elevating quality standards to meet international benchmarks, and boosting investments in research and development (R&D). To facilitate this transition, the government must revamp its policy approach and update incentives to encourage increased innovation and responsibility within the private sector.

According to an OECD report on Bangladesh published in September, foreign direct investment (FDI) could play a bigger role in fostering diversification, learning and innovation. Although attracting FDI is among the top government's priorities, FDI to Bangladesh remains limited and concentrated in traditional sectors. FDI accounts only for 0.7% of GDP in the country, versus 6% in Vietnam and 2% in Morocco (data refers to 2018-20). During 2018-22, Bangladesh's remittances were seven times higher than FDI.

"Bangladesh has an untapped innovation potential," says the OECD report. Only 1.2% of firms invest in R&D — less than half the rate invested by firms in India and only 2.6% of Bangladeshi companies employ technologies licensed from foreign counterparts.

Experts say Bangladesh should shift from a policy approach mostly focused on tariff management, to a more sophisticated one. This could involve implementing diverse schemes, such as establishing matching funds for innovation, wherein state support is contingent upon private sector investment.

Need to come out of cheap labour economic model

It is imperative to move away from an economic model reliant on cheap labour, with wages lower than even in South Asian nations and Myanmar. For Bangladesh to sustain its success, there is a need to overhaul its current economic approach rooted in price competitiveness. This involves addressing the dual nature of its industrial model, characterised by an export-oriented RMG sector and highly protected industries serving the domestic market.

To achieve this transformation, diversifying the export base, forging strategic international partnerships, and promoting innovation- and quality-driven industrial development are crucial steps, experts say.

LDC graduation challenge

The 27-nation European Union has been Bangladesh's largest export market for years, with half of its exported Ready-Made Garments (RMG) destined for this bloc. As Bangladesh approaches graduation from LDC status in 2026, which will lead to a shift in EU market access fully taking effect around the end of 2029 with a three-year transition period, and given the complex global economic landscape, the country stands at a critical crossroads.

To retain GSP facilities, it is crucial for Bangladesh to embark on reforms. Updating institutional arrangements, enhancing transparency and accountability, and advancing labour and digital regulations are indispensable measures. These actions will play a pivotal role in determining eligibility for post-LDC support, including access to the EU's Generalised Scheme of Preferences Plus (GSP+), an updated preferential trading scheme after 2029.

The author is a deputy editor at The Business Standard.

 

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EMERGING & FRONTIER MARKETS

Bangladesh: Riding The Growth Wave​

FEBRUARY 5, 2024
Author: Jonathan Rogers


There is one unignorable input to Bangladesh as an investment proposition: growth. The country’s growth data points are remarkable, with an average 7% GDP growth over the past decade and not a single year of contraction over the past 30 years.

Those figures have burnished the reputation of Prime Minister Sheikh Hasina, daughter of the nation’s founder and in power since 2009, who has championed the country’s textile industry as a powerful growth engine.

All has not been smooth sailing for the net oil-importing nation. Last year, rising fossil fuel prices increased inflation, shaving 1% off 7% forecast growth and creating a balance of payments crisis that led to intervention by the International Monetary Fund (IMF). But the country’s long-term growth trajectory remains intact.

When the country experienced an unprecedented reversal of its financial accounts last year, leading to a deterioration in the balance of payments and consequent pressure on Bangladesh Central Bank’s foreign exchange reserves and the taka, the bank, under program guidance from the IMF, tightened monetary policy, allowed greater exchange rate flexibility.

“Due to active intervention by the central bank, there has been some convergence of formal and informal exchange rates for the taka,” says Salim Afzal Shawon, head of research at BRAC EPL, a Dhaka stock brokerage. “Whereas we have seen different formal and informal rates with as high as a 14%-plus gap in between, it has narrowed a bit recently, with some sign of steadiness, which should help improve onshore dollar liquidity.”

Vital Statistics

Location: South Asia

Neighbors: India, Nepal, Bhutan, China, Myanmar, Pakistan, Afghanistan, Tajikistan, Kyrgystan

Capital City: Dhaka

Population (2021): 172.9 million

Official language: Bengali

GDP per capita (Est. 2023): $2,657

GDP size (Est. 2023): $446.3 billion

GDP growth (Est. 2023): 6%; forecast 6% 2024

Inflation (Est. 2023): 9.7%; forecast 7.2% 2024

Unemployment rate (Est. 2023): 9.5%

Currency: Taka

Investment Promotion Agency: Bangladesh Investment Development Authority (BIDA)

Investment incentives: All incentives are subject to various registrations and approvals. The industry must be registered with BIDA for corporate income tax (CIT) exemption (holiday and rebate), based on type of business and geographical location; CIT exemption subject to National Board of Revenue approval; import duty exemption on capital machinery and spare parts subject to BIDA registration and approval from the office of the Chief Controller of Export and Import. Accelerated depreciation allowance for plants and machinery.

Corruption Perceptions Index (2022): 147 (out of 180 countries)

Credit Rating: BB- Outlook negative (Fitch Ratings)

Political Risk: Civil protests are common but political stability is intact following the ruling party’s 2024 election victory, albeit amid criticisms of authoritarianism and a slide into one-party rule

Security Risk: Ongoing risks of opposition BNP-orchestrated violence and terrorist attacks.

PROS

Stable political backdrop

Young population (28% of which is ages 15-29)

Pro-business administration

Sustainability-friendly with strong underlying framework to support green transition, at-scale financial support from MDBs and other international development finance organizations

CONS

Highly vulnerable to climate change

Corruption endemic in a red tape-choked business backdrop

Ingrained negative perception among international investors

Confusing foreign exchange environment

Concentration risk to textile sector

Sources: IMF, Fitch Ratings

For more information on Bangladesh, click here.


“Due to active intervention by the central bank, there has been some convergence of formal and informal exchange rates for the taka,” says Salim Afzal Shawon, head of research at BRAC EPL, a Dhaka stock brokerage. “Whereas we have seen different formal and informal rates with as high as a 14%-plus gap in between, it has narrowed a bit recently, with some sign of steadiness, which should help improve onshore dollar liquidity.”

Meanwhile local commercial banks have grown their hard currency reserves, boosting system liquidity.

Textile Dependency​

Bangladesh’s most urgent economic need, close observers say, is to ameliorate the concentration risk from a too-great reliance on textiles, which account for 85% of the country’s exports and 10% of GDP. Given that the government appears to be well aware of the urgency of diversifying the economy, however, the backdrop for foreign direct investment (FDI) is ripe with opportunity.


“We must see how we can attain sustainable export growth. For that we have to find new markets across the globe. We have to diversify our products, and we have to induct new items in our export baskets,” Sheikh Hasina said last March as she addressed the 11th meeting of the National Committee on Export, eyeing the digital devices, pharmaceuticals, light and medium weight industries, motor vehicles and electronic motor vehicles, and food processing sectors.


“We have formulated a perspective plan which aims at making the country developed by 2041. For that we need to advance gradually and we have to work in this field,” she added.


That said, the country still suffers from long-standing preconceptions that hold back foreign investment, as highlighted in a United Nations Conference on Trade and Development (UNCTAD) report published in 2021: “Despite steady economic growth in the country over the past decade, FDI has been comparatively low in Bangladesh compared to regional peers. Bangladesh suffers from a negative image: The country is seen as being extremely poor, underdeveloped, subject to devastating natural disasters and sociopolitical instability.”


At the same time, UNCTAD noted the positives: the country’s macroeconomic stability, low levels of public debt (31% of GDP in December 2022), a low-cost workforce, a strategic geographic position as a gateway to Asia Pacific, a strong position in the global economy’s value chain, and a pro-business legislative environment.

Accordingly, the country attracted $900 million of FDI in calendar 2023, the Bangladesh Investment Development Authority (BIDA) said during a two-day Investment Expo held in conjunction with the Foreign Investors Chambers of Commerce (FICCI) in November.


That figure is impressive given the volatility that forced the country to seek a $4.7 billion IMF bailout early in 2022 to plug a balance of payments hole. The deal also required Bangladesh to enter a 42-month supervisory program aimed at strengthening its financial system and fostering sustainable economic growth.


The prior year, the textile sector recorded its highest-ever FDI—$1.23 billion, according to the central bank—while total FDI rose 20% to $3.48 billion, according to UNCTAD. Those new infusions bucked a declining overall FDI trend that saw global volume decline by 12% to $1.3 trillion due to the Ukraine war, rising food and energy prices, and debt service cost pressures.


“Bangladesh remains overreliant on garments, with around 85% of the country’s exports deriving from that sector,” says Florian Schmidt, founder and CEO of Singapore-based capital markets advisory Frontier Strategies. “The need therefore is to diversify into higher value-added industries—for example, pharmaceuticals or electronics.”

Encouraging FDI​

The government appears to be sharpening its approach. At the Investment Expo, Mohsina Yasmin, BIDA’s acting executive chairman, highlighted the launch of a one-stop service to encourage FDI and address business-related challenges; 90 different types of support are offered, with the aim of protecting foreign investors from harassment and excessive costs.


“We hold a broadly positive outlook for foreign direct investment inflows into Bangladesh,” says Tim Kerckhoff, senior analyst at London-based research firm BMI, a unit of Fitch Solutions, “which we think will be supported by policy continuity following the January 2024 general elections and increased demand for Bangladeshi garment exports.”


Kerckhoff points to the reelection of Sheikh Hasina, which augurs a continuation of the policies that have succeeded in attracting significant FDI flows. Weak macroeconomic conditions and weakened consumers purchasing power will shift consumer spending from mid-priced to low-priced clothing, he predicts, benefiting Bangladesh’s low-wage producers. “We expect that retailers’ efforts to diversify their supply chains beyond Mainland China will support FDI inflows into Bangladesh,” he adds.


Fitch Ratings downgraded Bangladesh’s BB- ratings outlook to negative in September, citing a deterioration in external buffers and a policy response insufficient to stem falling foreign exchange reserves. But that call might have been excessively gloomy, Shawon argues: “Our reserves cover around four months of imports, which should be sufficient to get through this cash flow strain, and our capital account is not open, which should guard against excessive downside taka volatility. Meanwhile, the upcoming loans from the IMF and other multilateral financial institutions would certainly help bridge the gaps.”


A wild card is Bangladesh’s high-risk exposure to climate change; the 2021 Global Climate Risk Index Report ranked it seventh among countries most affected by climate change between 2000 and 2019. That vulnerability may be a developmental capital blessing in disguise.

In December, the government established its Bangladesh Climate and Development Platform (BCDP), a collaborative initiative and the first of its kind in Asia, spearheaded by the Asian Development Bank and World Bank, aimed at mitigating and adapting to the effects of climate change and involving the participation of multilateral development banks and other bilateral partners—12 in total—including the Green Climate Fund.

The BCDP will “generate a robust pipeline of climate projects, integrated with a financing strategy” and the initiative aims to attract private capital via risk mitigation and direct funding, according to an IMF prepared statement. The initiative includes a Project Preparation Facility, which aims to coordinate development partners and support scalability in order to attract private investment.

 

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Chinese bank in Bangladesh to facilitate yuan trade​

Woman holds Chinese Yuan banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic/Illustration

State Minister of Commerce Ahsanul Islam has urged the Chinese government to initiate the operations of a Chinese bank in Bangladesh to facilitate the use of yuan for bilateral trade.

"The Chinese currency has been recognised by the government as the official currency since last month to facilitate trade with China for Bangladesh," he mentioned during the Economic Reporters Forum (ERF) and China Bangladesh Chamber of Commerce Industry (BCCCI) Journalism Award ceremony held at the Sonargaon Hotel in the capital on Sunday.

Conducted by ERF General Secretary Abul Kashem, the event featured speeches from Minister Counsellor and Deputy Chief of Mission at the Embassy of China in Bangladesh Hualong Yan, Federation of Bangladesh Chambers of Commerce and Industry President Md Mahbubul Alam, BCCCI President Gazi Golam Murtoza, its Secretary Al Mamun Mridha, and ERF President Refayet Ullah Mirdha."

Mentioning that Bangladesh has the potential to become a global trade hub, Ahsanul said, "The bilateral trade gap with China is substantial – around $22 billion. Increasing China's investment in the country is essential to narrowing this gap. We can potentially reduce this disparity by re-exporting products made through China's investment."

He added that achieving the goal of smart market management requires identifying and addressing the issues in market management.

"Increasing China's investment in the country is essential to narrowing this gap. We can potentially reduce this disparity by re-exporting products made through China's investment."
Ahsanul Islam, state minister of commerce

He said the commerce ministry oversees both imports and exports, implementing business-supportive policies aimed at safeguarding consumer interests. Specific initiatives, particularly concerning Ramadan products, have been introduced. The National Board of Revenue has been urged to consider reducing duties on essential items such as oil, chickpeas, chilies, pulses, and onions.

"The prime minister also supports this stance, and we anticipate that the supply of these products will remain uninterrupted," he mentioned.

The state minister assured, "There is a sufficient stock of food products for the upcoming Ramadan. Proposals have been submitted to the prime minister to reduce import duties on some other products, with the hope that they will positively impact consumers during Ramadan."

He mentioned that the country currently has 18 lakh tonnes of rice in stock, and an additional 13 lakh tonnes of food grains have been imported. The supply of various products is expected to remain normal during the month of fasting.

"We are engaged in coordinating efforts at the production, import, and export levels. Collaborative endeavours with all stakeholders are ongoing," he added.

FBCCI President Mahbubul Alam stated that Bangladesh has grown from a $90 billion economy to a $470 billion one. The country is now on the path toward becoming a trillion-dollar economy.

"The China Chamber has been encouraged to collaborate in order to boost Chinese investment in Bangladesh," he added.

BCCCI President Gazi Golam Murtoza said, "We regularly present awards in collaboration with ERF. This initiative is commendable for the people of the country, especially the journalists."

At the ceremony, the State Minister for Commerce presented crests, certificates, and checks to 15 journalists, including The Business Standard Chief Reporter Abbas Uddin Noyon and Senior Reporter Jahidul Islam.

A total of 68 news articles were submitted in five categories for the BCCCI-ERF Journalism Award this year. According to the scores given by the six-member jury board, 12 winners were awarded first, second, and third places in four categories.

In another category, the first and second-place winners were one each, but the third place was held jointly by three winners. Altogether, 17 journalists received awards in five categories.

The award was jointly launched by BCCCI and ERF in 2020 to highlight the growing trade and economic ties between Bangladesh and China.

 

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The secret behind the phenomenal success of Bangladeshi conglomerate Pran-RFL group that has turnover of over a thousand crore (Tk. 10 Billion or about USD 91 Million) per year.

Chairman Ahsan Khan Chowdhury explains in Bengali.

 

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Over 100,000 foreigners in Bangladesh, step to make visa difficult​

The government is losing significant revenue from income tax due to the illegal residence of many of these foreigners, while job opportunities for local workers are also diminishing as a result, said Tofazzal Hossain Miah, the Principal Secretary to the Prime Minister.

Special Correspondent
Dhaka
Updated: 07 Feb 2024, 00: 00

Many foreign nationals are residing in Bangladesh without obtaining a work permit, and they face minimal hindrance. This situation arises due to legal loopholes and the absence of a comprehensive database containing information about foreign nationals living in Bangladesh.

Consequently, many of these individuals earn income in the country but do not fulfil their tax obligations properly.

Authorities express concern over the significant number of foreign nationals remaining in Bangladesh even after their visas expire. The deterrent to overstaying is relatively weak, as the fine for visa violations is only Tk 30,000. This low penalty encourages individuals to prolong their stay, often by changing visa categories to circumvent enforcement measures.

The topics discussed in the meeting titled 'Determining what to do about foreign nationals staying in Bangladesh without work permits,' which took place at the conference room of the Bangladesh Investment Development Authority (BIDA) in Agargaon, in the capital.

During this meeting, it was decided to address the issue by creating a central database and implementing fines on a daily basis against foreign nationals residing illegally in Bangladesh.

Additionally, measures were decided upon to penalise those who offer employment, lodging, or housing to foreign nationals residing illegally in the country.

Chaired by Tofazzal Hossain Miah, the Principal Secretary to the Prime Minister, the meeting saw the participation of Executive Chairman Lokman Hossain Mia, as well as secretaries from relevant ministries and departments, and other high-ranking officials.

Also Read

‘No foreigners to be allowed to work without work permit’​

During the meeting, the Special Branch (SB) of the police provided information indicating that as of 31 December, a total of 107,167 foreign nationals were residing in Bangladesh, entering the country under four visa categories.

Among them, 10,485 foreign nationals arrived on business and investment class visas, some 14,399 on employment visas, 6,827 on education visas, and 75,456 on tourism and other visas. Among these, Indian citizens constituted the largest group, totaling 37,464 individuals, followed by Chinese citizens with 11,404 people.

Responding to a question at the conclusion of the meeting, Principal Secretary Tofazzal Hossain Miah informed Prothom Alo that due to incomplete information, estimates suggest that there could be between 400,000 to 500,000 foreigners in the country.

The government is losing significant revenue from income tax due to the illegal residence of many of these foreigners, while job opportunities for local workers are also diminishing as a result, he added.

Legal weaknesses within Bangladesh's policy​

According to the information presented in the meeting, individuals intending to work while staying in Bangladesh must obtain permission from the government and fulfil income tax obligations. However, the current visa policies exhibit weaknesses.

The 2006 visa policy remains in effect despite the formulation of a new policy in 2019, which is yet to be implemented by the government. Additionally, foreign nationals have the option to change their visa classifications while residing in Bangladesh.

It was highlighted in the meeting that many individuals enter and engage in employment, business, and investment activities, as well as tourism, under various visa categories, without facing stringent conditions or requirements outlined in the visa policy.

Consequently, visa holders often do not adhere to the necessary procedures. Many individuals continue to extend their stay in Bangladesh, exploiting loopholes in the visa system. Furthermore, discussions during the meeting addressed instances where foreign embassies facilitate the issuance of new passports for blacklisted individuals.

Decisions made in the meeting​

During the meeting, Principal Secretary to the Prime Minister, Tofazzal Hossain Miah, announced the decision to create a central database accessible to various government entities, including the Security Services Division of the Ministry of Home Affairs, Ministry of Foreign Affairs, Bangladesh Bank, National Board of Revenue (NBR), Bangladesh Investment Development Authority (BIDA), Bangladesh Export Processing Zones Authority (BEPZA), Bangladesh Economic Zones Authority (BEZA), Hi-Tech Park Authority, Bureau of NGO Affairs, National Security Intelligence (NSI), Department of Immigration and Passports, and Police Special Branch (SB).

This database aims to prevent foreigners from working without permission.

The Principal Secretary to the Prime Minister outlined plans to digitise and automate the visa issuance process in Bangladeshi missions. Additionally, it was decided that fines would be imposed on foreigners, who possess visas different from their intended class, hold expired visas without work permits, and stay in hotels unlawfully. Fines will be levied on illegal foreign nationals on a daily basis, proportional to their length of stay. Companies found employing illegal immigrants will also face penalties. Moreover, details of individuals blacklisted by the Security Services Department will be published on a designated website.

Tofazzal Hossain Miah expressed confidence that the decisions regarding foreigners will generate additional revenue of Tk 10 to 12 billion annually.

 

[Bilal9]

India's business approach as a "friendly country to Bangladesh" outlined...interesting that India now considers Bangladesh as potential competitor for exports.

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BD-Japan FTA talks: Zero duty Bangladesh exports to Japan may impact Indian exports to Japan: Indian think tank says in a report

ISMAIL HOSSAIN

Published : Apr 21, 2024 20:29
Updated : Apr 21, 2024 20:29


A report by Indian think-tank CUTS International (Consumer Unity & Trust Society) has warned India about the possible impact of the proposed Bangladesh-Japan Free Trade Agreement (FTA) on its trade with Bangladesh.

The report -- a quarterly analysis by CUTS Dossier on Preferential Trade Agreements and India released two days ago -- recommends that India "exercise caution and closely monitor the progress of the Bangladesh-Japan EPA negotiations."

"Several products in sectors such as automobiles, metals, electricals and textiles may be largely impacted by the Bangladesh-Japan FTA," according to the CUTS International analysis of possible scenarios.

As Bangladesh seeks to expand its trade relations with Japan, the CUTS report recommends that India assess the potential impact on its own trade interests and competitiveness in the region.

The report suggests that India may need to consider strengthening its existing trade ties with Bangladesh, diversifying its export markets, enhancing its competitiveness and exploring partnership opportunities to navigate the changing trade dynamics effectively.

The report said while India has a Preferential Trade Agreement (PTA) with Bangladesh and there is the Agreement on South Asian Free Trade Area (SAFTA), addressing these concerns is crucial to maintaining India's export performance in this market and neutralising the shocks posed by future FTAs that Bangladesh may engage in.

"This calls for a comprehensive economic cooperation agreement between India and Bangladesh," the report suggests.

Bangladesh is not a big competitor for India in terms of access to the Japanese market, as India already enjoys a tariff advantage in Japan due to its Comprehensive Economic Partnership Agreement (CEPA), according to CUTS International analysis.

However, the report warns that India should assess the possible impact of Bangladesh's fast-growing textile and apparel sector, including footwear, which is gaining a comparative advantage over time.

"As Bangladesh is entering into FTAs, India's textile and apparel industry should be concerned about their prospective market access challenges to third-country markets."

However, the CUTS International analysis using its SMART methodology suggests that India is unlikely to experience significant market share loss for textile and apparel products in Japan.

"Still it will be better to take some precautionary measures," the report cautions.

The analysis also suggests that any reduction in India's exports of certain textiles, apparel, and footwear to Japan would likely be negligible.

While Bangladesh's current export value to Japan remains lower than India's, the gap is narrowing due to Bangladesh's export growth. Bangladesh's exports to Japan reached $1.70 billion in 2022, compared to below $1 billion in 2013.

India's key exports to Japan include petroleum oils, fish products, non-industrial diamonds and ferro-silicon manganese, accounting for 42.76 per cent of its total exports to the country.

Bangladesh's exports to Japan are dominated by various types of readymade garments and footwear for both men and women, contributing 55 per cent of its total exports to Japan.

India's exports to Japan began a steady rise in 2016 after a three-year downturn in 2013-2015. This growth continued after the Covid-19 pandemic. However, the overall value of India's exports to Japan has declined, falling from nearly $8 billion in 2013 to $5.70 billion in 2022.

In March, Dhaka initiated talks to sign the Economic Partnership Agreement (EPA) with Tokyo in order to retain the duty benefit after Bangladesh's scheduled graduation to a developing nation in 2026.

The Bangladeshi authorities said the EPA with Japan will be signed before December.

If trade deals are not finalized before 2026, LDC-graduating Bangladesh will need to seek bilateral agreements with World Trade Organisation (WTO) member countries to continue enjoying duty-free market access until 2029.

The 13th WTO ministerial conference in Abu Dhabi last month extended duty-free benefits for graduating LDCs for an additional three years. However, Bangladesh will still need to negotiate bilateral trade deals to retain these benefits in the long term.

Therefore, Bangladesh is pursuing preferential trade agreements (PTAs) such as Economic Partnership Agreements (EPAs), Comprehensive Economic Partnership Agreements (CEPAs), and Free Trade Agreements (FTAs) with major trading partners.

In 2022, Japan imported approximately $1.72 billion worth of goods from Bangladesh, with over 90 per cent comprising apparel items like clothing and footwear.
Conversely, Japan exported $2.57 billion worth of goods to Bangladesh, with iron and steel accounting for around 30 per cent of these exports.

A study by the Japan External Trade Organization (JETRO) in May 2023 found that the number of Japanese companies operating in Bangladesh has doubled over the past decade, reaching 338.

These firms could face challenges if Bangladesh experiences higher tariffs exceeding 10 per cent for certain textile products after graduating from LDC status.
This situation marks a first for Japan, as it has never negotiated an EPA with a country on the verge of leaving its LDC status.

Initial research into a potential EPA with Bangladesh began in December 2022, and the findings recommended launching formal negotiations.

The research suggested that an EPA would not only boost trade and investment between Japan and Bangladesh but also strengthen their political and diplomatic ties.

Besides, Japan is also keen on setting standards for tariffs and trade regulations, particularly as Bangladesh considers a free trade agreement with China.

The negotiations will focus on simplifying import and export procedures, including reducing excessive paperwork.

 

[Bilal9]

[H3]Over 100,000 foreigners in Bangladesh, step to make visa difficult[/H3]
The government is losing significant revenue from income tax due to the illegal residence of many of these foreigners, while job opportunities for local workers are also diminishing as a result, said Tofazzal Hossain Miah, the Principal Secretary to the Prime Minister.

Special Correspondent
Dhaka
Updated: 07 Feb 2024, 00: 00

Many foreign nationals are residing in Bangladesh without obtaining a work permit, and they face minimal hindrance. This situation arises due to legal loopholes and the absence of a comprehensive database containing information about foreign nationals living in Bangladesh.

Consequently, many of these individuals earn income in the country but do not fulfil their tax obligations properly.

Authorities express concern over the significant number of foreign nationals remaining in Bangladesh even after their visas expire. The deterrent to overstaying is relatively weak, as the fine for visa violations is only Tk 30,000. This low penalty encourages individuals to prolong their stay, often by changing visa categories to circumvent enforcement measures.

The topics discussed in the meeting titled 'Determining what to do about foreign nationals staying in Bangladesh without work permits,' which took place at the conference room of the Bangladesh Investment Development Authority (BIDA) in Agargaon, in the capital.

During this meeting, it was decided to address the issue by creating a central database and implementing fines on a daily basis against foreign nationals residing illegally in Bangladesh.

Additionally, measures were decided upon to penalise those who offer employment, lodging, or housing to foreign nationals residing illegally in the country.

Chaired by Tofazzal Hossain Miah, the Principal Secretary to the Prime Minister, the meeting saw the participation of Executive Chairman Lokman Hossain Mia, as well as secretaries from relevant ministries and departments, and other high-ranking officials.

Also Read
[H3]‘No foreigners to be allowed to work without work permit’[/H3]

During the meeting, the Special Branch (SB) of the police provided information indicating that as of 31 December, a total of 107,167 foreign nationals were residing in Bangladesh, entering the country under four visa categories.

Among them, 10,485 foreign nationals arrived on business and investment class visas, some 14,399 on employment visas, 6,827 on education visas, and 75,456 on tourism and other visas. Among these, Indian citizens constituted the largest group, totaling 37,464 individuals, followed by Chinese citizens with 11,404 people.

Responding to a question at the conclusion of the meeting, Principal Secretary Tofazzal Hossain Miah informed Prothom Alo that due to incomplete information, estimates suggest that there could be between 400,000 to 500,000 foreigners in the country.

The government is losing significant revenue from income tax due to the illegal residence of many of these foreigners, while job opportunities for local workers are also diminishing as a result, he added.

[H3]Legal weaknesses within Bangladesh's policy[/H3]

According to the information presented in the meeting, individuals intending to work while staying in Bangladesh must obtain permission from the government and fulfil income tax obligations. However, the current visa policies exhibit weaknesses.

The 2006 visa policy remains in effect despite the formulation of a new policy in 2019, which is yet to be implemented by the government. Additionally, foreign nationals have the option to change their visa classifications while residing in Bangladesh.

It was highlighted in the meeting that many individuals enter and engage in employment, business, and investment activities, as well as tourism, under various visa categories, without facing stringent conditions or requirements outlined in the visa policy.

Consequently, visa holders often do not adhere to the necessary procedures. Many individuals continue to extend their stay in Bangladesh, exploiting loopholes in the visa system. Furthermore, discussions during the meeting addressed instances where foreign embassies facilitate the issuance of new passports for blacklisted individuals.

[H3]Decisions made in the meeting[/H3]

During the meeting, Principal Secretary to the Prime Minister, Tofazzal Hossain Miah, announced the decision to create a central database accessible to various government entities, including the Security Services Division of the Ministry of Home Affairs, Ministry of Foreign Affairs, Bangladesh Bank, National Board of Revenue (NBR), Bangladesh Investment Development Authority (BIDA), Bangladesh Export Processing Zones Authority (BEPZA), Bangladesh Economic Zones Authority (BEZA), Hi-Tech Park Authority, Bureau of NGO Affairs, National Security Intelligence (NSI), Department of Immigration and Passports, and Police Special Branch (SB).

This database aims to prevent foreigners from working without permission.

The Principal Secretary to the Prime Minister outlined plans to digitise and automate the visa issuance process in Bangladeshi missions. Additionally, it was decided that fines would be imposed on foreigners, who possess visas different from their intended class, hold expired visas without work permits, and stay in hotels unlawfully. Fines will be levied on illegal foreign nationals on a daily basis, proportional to their length of stay. Companies found employing illegal immigrants will also face penalties. Moreover, details of individuals blacklisted by the Security Services Department will be published on a designated website.

Tofazzal Hossain Miah expressed confidence that the decisions regarding foreigners will generate additional revenue of Tk 10 to 12 billion annually.

A lot of lip service.

Whether they enforce and follow-up remains to be seen. Way too many foreigners working in Bangladesh illegally, Indians are the lion's share of it.