[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Reserves may fall below $21b after ACU payment

Bangladesh's foreign exchange reserves are likely to fall below $21 billion next week after the Bangladesh Bank clears import bills of around $1.35 billion with the Asian Clearing Union (ACU), said a senior central bank official.

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Reserves may fall below $21b after ACU payment​

Bangladesh's foreign exchange reserves are likely to fall below $21 billion next week after the Bangladesh Bank clears import bills of around $1.35 billion with the Asian Clearing Union (ACU), said a senior central bank official.

The import payments are scheduled to be cleared on Thursday through ACU, an arrangement for settling payments for intra-regional transactions among eight countries, including India.

However, he said it would take an additional one or two days to adjust the forex reserves after the ACU payment.

The country's gross forex reserve stands at above $21 billion now as per calculations based on the International Monetary Fund's Balance of Payment Manual 6.

It is likely to fall to the $20 billion mark after the payment, as per the central bank official.

The gross reserve stood at $20.57 billion as of February 28.

The gross reserve has continued to rise in recent times due to a currency swap initiated by the central bank. The banking regulator mobilised more than $500 million from the banks in exchange for local currency till the end of February.

However, the currency swap is not helping raise net reserves because mobilising foreign currency through swap deals is a liability.

The forex reserves have continued to fall for the past two-and-a-half years as the nation has been contending with a US dollar crisis.

The central bank has also continued to sell US dollars from its reserves, but only to settle import bills of state-run enterprises.

In the post-pandemic period in 2021, the country's import payments started to rise faster than remittance earnings and exports, leading to a shortage of US dollars in banks.

The forex crisis intensified in the middle of 2022 due to the price increase of essential goods and other commodities in the global market, an impact of supply chain disruptions caused by lingering impacts of the pandemic and Russia-Ukraine war.

In order to help banks settle record import bills, the central bank pumped more than $28 billion into the banking sector from its reserves, a development that caused the reserves to halve in just two years.​

 

[Saif]

Hasan discusses manpower export with UAE minister

Bangladesh today requested the UAE to recruit skilled manpower such as qualified nurses and medical professionals from Bangladesh

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Hasan discusses manpower export with UAE minister​

Photo: Collected

Bangladesh today requested the UAE to recruit skilled manpower such as qualified nurses and medical professionals from Bangladesh.

Foreign Minister Hasan Mahmud conveyed the message at a bilateral meeting held with UAE Minister for Human Resources and Emiratization Dr Abdul Rahman Al Awar at the latter's office in Dubai.

The two ministers discussed bilateral issues of mutual interests including the recruitment of more Bangladeshi nationals in all sectors of the UAE job market as well as in all Emirates; specially recruitment of graduate nurses, healthcare technicians, caregivers, professionals, agro farmers.

The foreign minister requested to reopen visa in all trades in all Emirates and ease the visa procedure for Bangladeshi workers in all categories as well as transfer of work permit from one employer to another.

The UAE minister responded that there was no bar in place to the employment of Bangladeshi workers, adding that UAE government is focussing on recruiting skilled workforce based on the demand of the technology-driven job market.

He also apprised about the use of AI and related software to process the recruitment and management of the workforce in UAE and expressed concerns over the credentials of skills verification and certification of the job seekers.

In this context, the foreign minister apprised his counterpart on Bangladesh government's initiatives for enhancing the skills of UAE-bound workforce and expressed readiness to hire UAE language trainers to prepare our workforce to suit the demand of UAE job market.

During the meeting, Hasan, referring to the recruitment of nurses by the Kuwaiti government, requested the UAE side to recruit qualified nurses and medical professionals from Bangladesh.

The UAE minister welcomed the proposal and assured that they would examine the Kuwaiti recruitment model in the upcoming joint technical committee meeting in Dhaka. Both sides also discussed the welfare issues of the Bangladeshi community in the UAE.

Most importantly, the challenges facing the signing off seafarers to use UAE ports with CDC to return home was also discussed in the meeting. The UAE minister assured that his ministry would look into it with urgency.

During the meeting, Bangladesh Ambassador to UAE Md Abu Zafar, consul general to Dubai, and director general of West Asia wing of the Ministry of Foreign Affairs were present from the Bangladesh side.

Hasan Mahmud is scheduled to hold bilateral consultation with UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan in the evening at Royal Palace in Al Ain city.

During the two-day visit the minister will also attend a community meeting with Bangladeshi expatriates living in the UAE in observance with the historic 7th March day and meet other dignitaries.

Religious Affairs Secretary of Bangladesh Awami League Central Committee Advocate Sirajul Mustafa is accompanying the minister.​

 

[Saif]

https://thefinancialexpress.com.bd/trade/uae-wants-to-sign-cepa-with-bd

UAE wants to sign CEPA with BD​

FE REPORT

Published :​

Mar 10, 2024 00:54

Updated :​

Mar 10, 2024 00:54

Foreign Minister Dr Hasan Mahmud and UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan

The United Arab Emirates has expressed interest in signing the Comprehensive Economic Partnership Agreement (CEPA) with Bangladesh, a spokesperson for the foreign ministry said on Sunday.


During the bilateral meeting with Bangladesh, Foreign Minister Dr Hasan Mahmud at his palace in Abu Dhabi, UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan underscored the need for transforming the bilateral relationships with Bangladesh into partnership.

Mr Abdullah opined that signing the CEPA can be a major way forward to achieving this goal.

The UAE minister also stressed the need for activating the Joint Business Council (JBC) for economic partnership with Bangladesh.

At the outset of the meeting held on Friday evening, Dr Hasan handed over Prime Minister Sheikh Hasina's invitation letter to Mr Abdullah inviting the UAE President to visit Bangladesh on the occasion of 50 years of diplomatic relations between the two countries.

"Dr Hasan recalled the historical ties between the two brotherly countries established by the founding fathers of Bangladesh and the United Arab Emirates, praised the UAE leadership for their unprecedented progress through last five decades and highlighted the outstanding achievements of Bangladesh under the leadership of Prime Minister Sheikh Hasina," the spokesperson said.

While reviewing the whole gamut of existing bilateral cooperation, the two ministers stressed on exploring new emerging areas including energy security, food security, environment and climate change, renewable energy and people-to-people communication to increase bilateral trade.

Dr Hasan highlighted potentials of investment from the UAE government and businessmen to develop the Matarbari Exclusive Economic Zone, port and logistics management, development of the land gifted to the founder President of the modern UAE, Sheikh Zayed Ibn Sultan Al Nahyan in Rangunia.

The UAE foreign minister expressed his interest in advancing the ongoing investment. The two leaders exchanged views on various regional issues, including Rohingya repatriation and efforts to end the ongoing Gaza war.

Mr Abdullah gave a positive response when Dr Hasan made a request to simplify the visa process for Bangladeshis in all trades, including graduate nurses, caregivers, healthcare technicians, agriculturists, farmers and various professionals in the UAE, and ease the transfer of work permits from one employer to another.

Bangladesh Ambassador to the UAE Md Abu Zafar and Director General of the West Asia wing of the Ministry of Foreign Affairs Md Shafiqur Rahman were present at the meeting.​

 

[Saif]

Financial account deficit widens to new level

The deficit in the country's financial account widened to touch a new level in the past seven months up to January of the current fiscal year 2023-24, showing that challenges in the economy are far from over, according to an economist.

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Financial account deficit widens to new level​

The deficit in the country's financial account widened to touch a new level in the past seven months up to January of the current fiscal year 2023-24, showing that challenges in the economy are far from over, according to an economist.

The nation registered a deficit of $7.3 billion in its financial account, a key component of the external account termed as Balance of Payment (BoP), in the July-January period of this fiscal year, which was 9 times higher from year ago, showed data of Bangladesh Bank (BB).​

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As a result of the widening deficit in the financial account, the country's external account remained in the negative, though there was an improvement in trade deficit, rise in remittance flow and other inflow from services during the period.

The BB data showed that the country's trade deficit fell by more than half to $4.6 billion in the July-January period as exports rose while imports fell.

The trade deficit was $13.39 billion in the July-January period of the year prior.

"This gives a message of both hope and despair," said Zahid Hussain, a former lead economist at The World Bank, Dhaka.

"The increase in remittance inflow gives hope but an 18 percent import fall is not a good omen for the economy because most of the imports of Bangladesh are production driven," he added.

Hussain said that for an economy of around $450 billion, monthly $5 billion imports are not sustainable. Rather, this could fuel inflation because of supply shortage.

"So, managing the balance of payment through import control is not a feasible option," he added.

Data showed that because of reduction in trade deficit and rise in remittance and private transfers, Bangladesh's overall deficit in the BOP declined to $4.68 billion in the first seven months of this fiscal year from $7.38 billion a year ago.

Hussain said BOP has to be positive. But it has been in the negative because of a large deficit in the financial account, which included foreign direct investments, medium and long-term loans, trade credits, net aid flows and portfolio investments.

He said one of the reasons behind the negative financial account is slow realisation of export proceeds against shipment.

"This is because of under-pricing of dollar that exporters get against export. We saw similar problems in case of remittance earlier. But remittance flow improved after remitters were offered higher rates through relaxation of policy. But we have not seen any easing of rules for export earnings," he added.

"Flow of export proceeds would rise if exporters get market-based rates."

Overall, he said, improvements in the current account thanks to increased flow of remittances has reduced unease in the market.

"But BOP deficit persists because of the negative financial account. Overall net inflow is yet to become positive. And without the financial account turning positive, overall availability of dollar will not increase and this will create inflation, depress investment and production," Hussain added.​

 

[Saif]

Bangladesh’s trade potential with South Asia remains untapped: study

Bangladesh’s trade potential with South Asia has not fully tapped due to lack of promoting trade facilitation and reducing non-tariff barriers, according to a study....

www.newagebd.net

Bangladesh’s trade potential with South Asia remains untapped: study
Staff Correspondent | Published: 00:42, Mar 11,2024

Bangladesh’s trade potential with South Asia has not fully tapped due to lack of promoting trade facilitation and reducing non-tariff barriers, according to a study.

South Asia’s trade potential was left untapped with 93 per cent and 67 per cent remaining unexplored respectively, the study said conducted by the Centre for Policy Dialogue.


The findings of the study were revealed at a seminar titled ‘Multi-layered Connectivity in the Bay of Bengal: Positioning Bangladesh as a Regional Economic Hub’ jointly organised by the CPD and the embassy of Japan in Bangladesh on Sunday.

CPD research fellow Syed Yusuf Saadat presented the findings at the seminar that identified a two-pronged strategy for export diversification for the Bay of Bengal countries.

‘One would be to focus on the products that are already close to the current specialisation patterns and require similar knowledge and technology and the second would be to take some bold steps towards more complex and technology-intensive products, particularly if doing so could open up more opportunities for trade diversification,’ the report said.

Currently, it was of utmost importance for Bangladesh to simultaneously improve its investment and trade capacities, with the goal of integrating investment, commerce, and transportation to strengthen regional integration, it said.

The study also said that establishing trading partnerships through Regional Trade Agreements to take advantage of market opportunities and trade potential in neighbouring regions.

Iwama Kiminori, ambassador (extraordinary and plenipotentiary) embassy of Japan in Bangladesh, said secure peace, stability, and prosperity through a free and open Indo-Pacific is crucial for fostering co-operation and mutual understanding among nations in the region.

Ichiguchi Tomohide, chief representative of JICA, emphasised that the Matarbari port was poised to emerge as a critical gateway, serving as a central hub for energy, power, logistics, and industry.

Notably, unlike much of the shallow Bay of Bengal, the waters surrounding Matarbari offer significant depth, making it the sole viable location in Bangladesh for a deep-sea port, he said.

Fahmida Khatun, executive director of CPD, said that updating and diversifying industries was urgent, requiring action not only at the individual country level but also on a regional scale.

Sonoko Sunayama, principal public sector management specialist of Asian Development Bank, highlighted that within the South Asia sub region, ADB has been actively engaged in facilitating cooperation through various programmes.

Notably, the ADB has been involved in corridor development initiatives such as the East Coast Economic Corridor and the North East Economic Corridor, she said.


‘Collaboration between BIMSTEC and ADB is underway, further enhancing regional connectivity and integration efforts. ADB’s involvement also extends to economic corridor assessments, including those in Bangladesh and Sri Lanka,’ Sunayama said.

The chief country representative of Japan external trade organization (JETRO) Yuji Ando, said that the perspective of Japanese companies in Bangladesh was shaped by various factors, as highlighted in JETRO’s annual survey.

While there is significant interest in investing in Bangladesh, with 61 per cent of Japanese companies expressing intent over the next 1 to 2 years, this figure has decreased by 10 percentage points compared to the previous year, he said.

Ando said that the bilateral Comprehensive Economic Partnership Agreement (CECPA) and the development of the Matarbari deep-sea port are expected to enhance connectivity and facilitate trade.

Challenges persist, including poor road conditions from Shilong to Tamabil and complexities within Bangladesh’s legal and tax systems, including time-consuming tax procedures and customs clearance, he added.

Indian high commissioner to Bangladesh Pranay Verma emphasised the deepening relationship between India and Bangladesh, focusing on shared progress and prosperity.

He highlighted the importance of efficient connectivity, including the restoration of historical routes and agreements on port usage.

State minister for commerce Ahasanul Islam Titu said that the government has taken initiatives to enhance infrastructure, including plans for paperless documentation in ports with support from Singapore, aimed at reducing processing times.​

 

[Saif]

Pvt Sector External Debt: Repayments outstrip new loans in 2023

The private sector’s short-term foreign debt repayment last year was more than in 2023, in a complete reverse of the scenario seen in previous years.

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Pvt Sector External Debt: Repayments outstrip new loans in 2023​

The private sector's short-term foreign debt repayment last year was more than in 2023, in a complete reverse of the scenario seen in previous years.

Last year, the private sector took on $25.8 billion in short-term foreign loans and repaid $31.14 billion in both principal and interest, according to data from the Bangladesh Bank.​

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In 2022, total private sector short-term foreign loans stood at a record $37.25 billion and repayment $36.73 billion.

Last year's trend continued into the new year: in January, the private sector took on $1.76 billion in new loans and repaid $2.19 billion.

The rising interest rates in the global market in recent times and Bangladesh's macroeconomic instability account for the private sector's repayment outstripping new loans, said Zahid Hussain, a former lead economist of the World Bank's Dhaka office.

"Now, the interest rate in the international market is 8-9 percent -- it used to be just 1 percent."

As a result, the private sector needed to pay back more than they envisaged when they took on the loans, he said.

Another factor is the growing concern over Bangladesh's banking system and macroeconomic situation over the past two years.

Global credit rating agencies voiced their concerns about Bangladesh's banking system after many banks could not do letter of credit (LC) settlements in due time because of the foreign exchange crisis.

As a result, many foreign creditors were not confident enough to lend money to Bangladesh's private sector players, Hussain said.

"Such confidence problem could be the reason for the declining foreign short-term new loans by the private sector," he added.

The private sector's dwindling short-term external debt, which soared over the past decade, has posed another problem: the foreign currency stockpile continues to be under immense strain as the inflow of dollars is shrinking with the lower loans.

As of March 7, the country's foreign currency reserves stood at $21.15 billion, enough to meet about three months' import bill.

In 2022, the private sector's short-term foreign loan soared to $16.42 billion, thanks to low interest rates in the international market. The loan amount was $3.77 billion in 2014.

Last year, the private sector's short-term foreign debt stock fell 28 percent to $11.79 billion, which declined further in January this year and stood at $11.25 billion.​

 

[Saif]

Beximco to raise Tk 1,500 crore thru zero-coupon bonds

Beximco Ltd is set to raise Tk 1,500 crore through the issuance of a zero-coupon bond

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Beximco to raise Tk 1,500 crore thru zero-coupon bonds​

It forms joint venture with Sreepur Township Ltd

Beximco Ltd, one of Bangladesh's leading conglomerates, is set to raise Tk 1,500 crore through the issuance of a zero-coupon bond.

The company has also signed a joint venture development agreement with Sreepur Township Ltd, according to a filing on the Dhaka Stock Exchange.​

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Beximco's board, in a meeting on March 10, approved the issuance of the "Beximco 1st Zero Coupon Bond", to repay the company's existing loans and invest in a joint venture with Sreepur Township.

The bond, subject to the approval of the Bangladesh Securities and Exchange Commission (BSEC), is a secured, redeemable, non-convertible, non-tradable zero-coupon bond with a discount rate of 15 percent.

A zero-coupon bond is a debt security that does not pay interest but instead trades at a deep discount. It will render a profit at maturity when the bond is redeemed for its full-face value.

Beximco's joint venture with Sreepur Township is for the development of "Mayanagar," a mixed-use, multipurpose affordable real estate project, located on a 100-acre land on the Nabinagar-Chandra Highway.

The housing project will be a fully secured, gated, and self-contained township comprising 18,000 apartments and will offer a comprehensive range of facilities including healthcare, education, entertainment, sports, and recreation, along with all necessary civic and lifestyle amenities.

The commercial space, spanning 5 million square feet, will include serviced apartments, a hotel, offices, a convention centre, and a shopping mall. The entire project is set to be developed as a green and eco-friendly township.

Currently, Beximco owns 75 percent of the project land, with Sreepur Township owning the remaining 25 percent, and the profits will be shared accordingly.

Beximco said that a globally renowned architectural and engineering consultancy firm has been appointed for the design, development, and supervision of the project on a turnkey basis. An international engineering, procurement, and construction (EPC) contractor will be appointed for the project's implementation.

A turnkey business is an arrangement where the provider assumes responsibility for all required setup and ultimately provides the business to the new operator only upon completion of the aforementioned requirements.
Shares of Beximco were unchanged as of 1:10 pm today.​

 

[Saif]

‘Focus on restoring macroeconomic stability instead of preparing expansionary budget’

The country’s top economists have advised the government to refrain from preparing an expansionary budget for the next fiscal year as the economy is facing external and internal stresses. They suggested effective measures for the restoration of macroeconomic stability. They also suggested th

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‘Focus on restoring macroeconomic stability instead of preparing expansionary budget’​

Suggest top economists​

The country’s top economists have advised the government to refrain from preparing an expansionary budget for the next fiscal year as the economy is facing external and internal stresses.

They suggested effective measures for the restoration of macroeconomic stability. They also suggested the government not to take on such mega-projects, whose return takes a huge amount of time.

Also, they emphasised that raising direct tax instead of depending on value-added tax (VAT) puts pressure on poor people.

They came up with the suggestions during a pre-budget meeting for the FY25 with Finance Minister Abul Hassan Mahmood Ali at the State Guest House Padma on Sunday night.

Emphasising the expansion of the tax net, they also stressed the lessening of default loans in the banking system.

The economists also suggested the government take immediate steps to contain inflation, which has been putting tremendous pressure on the common people.

Eminent economist Professor Rehman Sobhan, former central bank governor Dr Salehuddin Ahmed, Distinguished fellow of the Centre for Policy Dialogue (CPD) Professor Mustafizur Rahman, Executive Director of CPD Dr Fahmida Khatun, and Director General at the Bangladesh Institute of Development Studies Binayak Sen attended the event, among others.

After the discussion, Finance Minister Abul Hassan Mahmood Ali said he has taken the note as economists suggested and will act accordingly.

“They suggested us to carry out reform in various sectors as required,” he said.

BSS adds: Finance Minister Abul Hassan Mahmood Ali has said the next national budget for the FY25 would put higher emphasis on employment generation, while efforts to carry out reforms in different fields are needed to be continued.

"We'll have to increase employment generation to a larger extent as efforts are underway to overcome the foreign currency reserve issue," he said.

Ali said the eminent economists present at the meeting had put forward a set of good suggestions while all of them had opined that the government was in the right direction to overcome the current economic situation.

"I've never said that there is no problem. But, we've got praise that we've been handling the situation well and so far everything is good," he said.

"Everyone knows what the underlying problems are...so they (economists) have remarked that everything is well so far, but we've to remain cautious about the problems," he added.

When asked about their specific suggestions, the finance minister said that the ongoing reform initiatives should have to be continued in various fields.

Replying to another question on publishing the list of loan defaulters following the suggestions of the economists, he said, "Let's see what we can do,"

Ali also said the Vice President of the Asian Infrastructure Investment Bank (AIIB) in a recent meeting with him, had assured him that they were ready to provide more financial support to Bangladesh.

"They (AIIB) informed us that the fund is ready; take it....," he said.

Emerging from the meeting, eminent economist and former central bank governor Dr Salehuddin Ahmed told reporters that the main focus of the budget should be macroeconomic stability.

He suggested raising allocations in the education and health sectors side by side, minimising the number of such projects that take much time to get results.

The noted economist also advised ensuring strict monitoring for implementation of the budget, increasing dependency on direct tax instead of the indirect tax like VAT, ensuring allocations in different sectors on a priority basis, and minimising wastage.

"There should be a fine synergy between the monetary policy and the fiscal policy ... Boosting the supply chain is needed as inflation is mostly supply-driven. The real sector should also be promoted," he added.

The former central bank governor opined that it is not possible to control the inflation trend with the interest rate, as small businesses are often affected by this.

In this regard, Dr Salehuddin suggested making the interest rate market-based.

Dr Mustafizur Rahman said the meeting discussed various aspects of the budget for the next fiscal year as well as how to ensure further macroeconomic stability.

"We've said that it will be more convenient to implement the budget if the exchange rate and inflation can be controlled, considering the current position of the economy," he added.

Executive Director of the CPD Dr Fahmida Khatun said the main focus of the next budget should be ensuring macroeconomic stability instead of putting much focus on growth.

"In this regard, there is a need for generating more employment, increasing investments in the private sector and also the FDI," she said.

She also said there is a need for similarity between the policies and operations of the government.

Dr Fahmida Khatun also demanded the publicising of the loan defaulters' lists.

Eminent economists Dr Ahsan H Mansur and Mustafa K Mujeri, and former ICAB president Parveen Mahmud also attended the event.

Besides, Bangladesh Bank Governor Abdur Rouf Talukder, Finance Division Secretary Dr Khairuzzaman Mozumder, Financial Institutions Division Secretary Sheikh Mohammad Salim Ullah and other high officials attended the meeting.
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