[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Bangladesh doesn’t need IMF funds, but right policies: governor

Bangladesh does not need funds from the International Monetary Fund (IMF) if it can mobilise enough domestic resources, said Bangladesh Bank Governor Ahsan H Mansur, as he stressed that the country requires the right policies rather than “begging for foreign funds”.

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Bangladesh doesn’t need IMF funds, but right policies: governor

“Bangladesh’s financial position is strong. The only weak area is revenue collection, and the solution lies in improving revenue generation.” Ahsan H Mansur, Bangladesh Bank governor

Bangladesh does not need funds from the International Monetary Fund (IMF) if it can mobilise enough domestic resources, said Bangladesh Bank Governor Ahsan H Mansur, as he stressed that the country requires the right policies rather than "begging for foreign funds".

"Bangladesh's financial position is strong. The only weak area is revenue collection, and the solution lies in improving revenue generation," Mansur said at a roundtable yesterday.

"This fiscal year, the country has nearly $29 billion in remittances and $50 billion in exports. These two sources alone contribute about $80 billion. After deducting letters of credit (LCs), the country still has $10 billion in hand," the central bank governor said at a roundtable organised by The Business Standard at its office at Eskaton in Dhaka.

"Why should I have to go and beg for money?"

Speaking at the event titled "Path to Recovery for the Banking Sector", Mansur said, "I still publicly say that we don't need IMF money, but we do need the right policies. If our policies are correct, we won't need foreign funds; we can manage with our own resources."

He pointed out that despite rising interest rates, deposit growth remains sluggish. The banking sector's ultimate solution lies in increasing deposits.

"To resolve non-performing loans (NPLs), deposit growth must be high, and that will happen only with good governance. When there are enough deposits, it becomes easier to tackle other banking sector issues," said Mansur, an economist who served the IMF earlier in his career.

He said the Bangladesh Bank will soon conduct a fit and proper test for bank directors to assess their suitability. "If found unfit, they will be asked to resign."

"We don't want to see housewives, daughters and sons on boards who have no proper experience."

The governor said the central bank will also form a panel of independent directors so that banks can appoint them. The government has sought suggestions from the Association of Bankers, Bangladesh (ABB) on the qualifications required for directors.

"The central bank will not allow the country's exchange rate to be dictated by Dubai or any other external market," he said. "That is not acceptable."

"The central bank will determine the exchange rate pragmatically, considering the country's needs and economic conditions. If necessary, it will devalue the local currency in a structured manner," said the governor.

"Let that be absolutely clear to transactors and aggregators."

Agent banking is thriving and 50 percent of agents will have to be women, he said, adding that a circular on this will be issued soon as part of financial inclusion efforts.

He believes agent banking may overtake traditional banking due to its growing popularity. Meanwhile, the central bank is taking steps to promote QR code payments to further financial inclusion.

On recovery of laundered assets, Mansur said, "All we can hope for is to secure judgments at home and send them abroad with attachments to properties there."

Repatriating wealth takes time, but countries like Nigeria, Malaysia, and Angola have successfully done so, he further said.

"We hope the next political government will continue the effort to recover assets -- a process we have already initiated. Civil society can exert pressure on political parties to maintain the momentum," added the governor.

A five-year reform agenda cannot be completed in a year or 18 months. The current government will push as much as possible following the international standards, and the next government must carry it forward, Mansur commented.

As the tax-to-GDP ratio remains low, the government is borrowing from banks, while high NPLs are straining liquidity, said Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank.

On the NPL crisis, he cited weak governance, inadequate central bank supervision and the absence of a level playing field.

Rahman said law and order needs to be improved and a stable energy supply for industries must be ensured.

Selim RF Hussain, managing director and CEO of BRAC Bank, said banking regulations have become overly complex and should be liberalised.

He also urged aligning the NPL definition with international standards so that banks cannot conceal bad loans.

Ali Reza Iftekhar, managing director & CEO of Eastern Bank Limited, said the banking sector suffers from weak corporate governance at the board level.

He called for regulatory improvements to meet international benchmarks. Banks with capital and provisioning shortfalls should have a clear roadmap to address these issues, he added.

Other speakers at the event included Mashrur Arefin, managing director & CEO of City Bank; Sohail R. K. Hussain, president & managing director of Bank Asia PLC; Sharif Zahir, chairman of United Commercial Bank PLC (UCB); Mohammad Abdul Mannan, chairman of First Security Islami Bank PLC; Md Obayed Ullah Al Masud, chairman of Islami Bank; and Mati ul Hasan, managing director of Mercantile Bank.

Fahmida Khatun, executive director of the Centre for Policy Dialogue, also spoke at the event, which was chaired by The Business Standard Editor Inam Ahmed.​

 

[Saif]

Businesses demand easing rules to enjoy tax benefits

Two leading business chambers yesterday demanded the cancellation of a Tk 36 lakh cap on cash expenses to qualify for lower corporate tax rates, calling the requirement impractical.

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Businesses demand easing rules to enjoy tax benefits

Two leading business chambers yesterday demanded the cancellation of a Tk 36 lakh cap on cash expenses to qualify for lower corporate tax rates, calling the requirement impractical.

In an economy where a large portion of transactions take place outside the banking system -- particularly in the informal sector -- such restrictions create barriers for businesses seeking tax benefits, they said.

"Although corporate tax rates have been gradually reduced in recent fiscal years, the conditions on cash transactions mean no company is able to fully utilise these benefits," said Kamran T Rahman, president of the Metropolitan Chamber of Commerce and Industry (MCCI).

He made the comments while presenting the MCCI's tax-related proposals at a pre-budget discussion at the National Board of Revenue (NBR) headquarters in the capital's Agargaon.

The NBR organised the discussion as part of its exercise to consult business chambers, professional bodies, and economists, and seek proposals on tax measures for the fiscal year 2025-26.

To encourage compliance with a condition promoting cashless transactions, the tax authority is offering a 2.5 percentage point tax reduction to listed and non-listed companies, except for banks, financial institutions, mobile phone operators, and tobacco companies, for the current fiscal year.

However, it provided the condition that all income, receipts, and single transactions exceeding Tk 5 lakh, and all annual expenses and investments over Tk 36 lakh, must be conducted through bank transfers.

Rahman said Bangladesh's economy is 80 percent informal, where banking dependency is not absolute. "Therefore, complying with these conditions is extremely challenging for large and medium-sized companies," he added.

The Foreign Investors' Chamber of Commerce and Industry (FICCI) expressed a similar view.

"A 100 percent cashless revenue system and the Tk 36 lakh limit for cash expenses are impractical in the country," FICCI said at the same event.

"Cashless transactions should be introduced gradually."

The MCCI also urged the NBR to set a separate tax rate for small and medium enterprises (SMEs) and reduce the turnover tax to safeguard them.

The FICCI emphasised the importance of collaboration with the NBR to create a more integrated tax system that streamlines revenue collection processes and enhances the effectiveness of internal revenue mobilisation efforts.

It recommended recognising and establishing a clear distinction between policy formulation and revenue collection.

The chamber proposed setting up a dedicated data and analytics team within the NBR to facilitate this shift, enabling more effective tax collection and compliance.

Additionally, the FICCI recommended implementing a unified value-added tax (VAT) rate. This, it said, would simplify the VAT structure, reduce complexities for businesses, and ensure the tax system remains efficient and equitable.

At the event, NBR Chairman Abdur Rahman Khan said his office would consider the proposals, keeping in mind the revenue implications.

Among others, Zaved Akhtar, president of FICCI, Habibullah N Karim, senior vice-president of the MCCI, and Simeen Rahman, vice-president of the MCCI, were present.​

 

[Saif]

Exports edge up in further relief to economy

Bangladesh’s exports have shown resilience, displaying steady growth in key sectors such as garments, plastics and seafood in the first eight months of fiscal year (FY) 2024-25, somewhat defying global economic headwinds and domestic concerns like high inflation and political uncertainty.

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Exports edge up in further relief to economy

Bangladesh's exports have shown resilience, displaying steady growth in key sectors such as garments, plastics and seafood in the first eight months of fiscal year (FY) 2024-25, somewhat defying global economic headwinds and domestic concerns like high inflation and political uncertainty.

In February, export earnings stood at $3.97 billion, a 2.77 percent year-on-year increase from $3.86 billion, according to data published by the Export Promotion Bureau (EPB) yesterday.

This development comes days after the Bangladesh Bank reported a jump in remittance inflows, which surged 25 percent year-on-year to $2.52 billion last month, offering much-needed relief to a strained economy.

Total exports in the first eight months of FY25 reached $32.94 billion, up 10.5 percent year-on-year.

Exports of the readymade garment (RMG) sector, Bangladesh's largest export earner, grew 1.66 percent last month.

Overall, apparel exports rose 10.64 percent to $26.79 billion in the July-February period compared to the preceding year.

In the same period, knitwear exports climbed 11.01 percent to $14.34 billion, while exports of woven garments increased 10.22 percent to $12.45 billion.

The RMG sector accounted for over 81 percent of total export earnings, yet again underlining its dominance in the country's export basket.

"The outlook of our garment exports is promising as work orders are rebounding," said Faruque Hassan, a former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

However, he said law and order must be improved as international clothing retailers frequently raise concerns over security.

According to Hassan, the country is also benefiting from US President Donald Trump's tariff policies. Higher tariffs on Chinese and Mexican apparel exports to the US are redirecting orders to Bangladeshi manufacturers, he opined.

However, low pricing remains a key challenge, he mentioned.

Manufactured goods, which make up the bulk of exports, saw a 10.49 percent increase to $31.87 billion in the first eight months of the fiscal year. Key segments such as plastic products, rubber and headgear posted strong growth of 22.25 percent, 34.71 percent and 11.40 percent, respectively.

Leather and leather products showed mixed results. While total exports in this category rose 8.48 percent to $757.50 million, raw leather exports fell 8.68 percent.

In contrast, leather footwear exports surged 24.02 percent to $450.88 million, showing a shift towards higher-value products.

The engineering sector recorded a 7.48 percent rise, led by electric products and bicycle exports, which grew by 13.51 percent and 64.7 percent, respectively.

Specialised textiles, including knitted and woven fabrics, also saw strong growth, increasing 21.62 percent.

Terry towel exports grew by just 3.11 percent in the first seven months but plunged 41 percent in February to $1.5 million from $2.54 million a year earlier.

M Shahadat Hossain Sohel, chairman of the Bangladesh Terry Towel and Linen Manufacturers and Exporters Association, linked the sector's declining competitiveness to rising production costs driven by increased gas and power prices and higher wages.

He said that corruption at customs, including bribes during raw material imports and product shipments, has further complicated the situation.

"Without immediate reforms and a reduction in production costs, the sector may struggle to remain competitive in international markets," Sohel commented.

RN Paul, managing director of RFL Group, said strong performance in the plastics sector was driven by export orders from new destinations.

Previously reliant on European markets, the industry has recently expanded to North America, Australia and parts of Africa.

Paul said RFL registered export growth of 35 percent in the past eight months and anticipates further expansion, particularly with the addition of new products such as toys.

Commenting on the export figures, Selim Raihan, executive director of the South Asian Network on Economic Modeling, expressed mixed sentiments.

The economist said that the sustainability of export growth remains uncertain due to challenges such as stagnant private investment, high inflation and security concerns. The upcoming general election adds to the macroeconomic uncertainty, he noted.

Still, Raihan said the export growth figures are encouraging although the earnings largely came from previous orders.​

 

[Saif]

Bangladesh may take advantage of global trade tension

The trade tension across the world is shifting the wind, and Bangladesh may rather take advantage of it, says an industry leader...

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Bangladesh may take advantage of global trade tension
United News of Bangladesh . Dhaka 04 March, 2025, 22:44

The trade tension across the world is shifting the wind, and Bangladesh may rather take advantage of it, says an industry leader.

‘At the same time focus and attention should be given on investments in the backward linkages,’ said Faruque Hassan, said Director of International Apparel Federation (IAF) in an analysis shared with the media on Tuesday.

He shared a detailed analysis of the European Union’s apparel import for the period from January to December 2024.

This data provides insights into the performance of various countries in the global apparel market and Bangladesh’s position within it.

This data reflects the EU’s imports from Bangladesh between January and December 2024, indicating goods that entered through EU ports during this timeframe.

The global apparel market has experienced a modest growth, with the total import value increasing by 1.53% from US$91.17 billion in 2023 to US$92.57 billion in 2024.

Bangladesh has also managed to achieve a growth of 4.86%, with export values rising from US$18.86 billion to US$19.77 billion, Hassan said.

China, the largest supplier to the EU, has shown a growth of 2.61 per cent (year on year), with exports increasing from US$25.41 billion to US$26.07 billion.

Notably, Cambodia and Pakistan have exhibited impressive performances, with growth rates of 20.73 per cent and 12.41 per cent respectively, which is significantly higher than Bangladesh. Vietnam and India grew by 4.21 per cent and 1.97 per cent respectively. Turkey experienced a 6.64 per cent decline during the mentioned period of time.

In terms of quantity, EU’s global import increased by 8.98 per cent, with Bangladesh showing a commendable growth of 10.18 per cent in the same period, while China surged higher than Bangladesh by 12.05 per cent.

However, the analysis said, on a unit price basis, Bangladesh has seen a decrease of 4.84 per cent, which is a point of concern.

In fact the unit price of EU’s global apparel import has gone down by 6.83 per cent, significantly influenced by the -8.43 per cent price slash by China.

The price cuts by Vietnam and Cambodia are also noticeable.

This may be noted that the EU-Vietnam Free Trade Agreement (FTA) has been in effect since 2021, granting Vietnam the preferential benefit of a gradual removal of tariffs by the EU. However, taking a closer look at the European Union market, we can observe the comparative shares of various suppliers.

The share of Bangladesh in EU’s apparel was 21.37 per cent of the EU’s total apparel imports in dollar value, which was 20.69 per cent in 2023.

China, being the leading supplier, accounted for about 28.12 per cent in 2024, which was 27.87 per cent in 2023.

Other notable suppliers include Vietnam with 4.66 per cent, and India with 4.89 per cent.

The analysis underscores the need for Bangladesh to focus on strategic initiatives to enhance competitiveness, said Hassan who served as the President of Bangladesh Garments Manufacturers and Exporters Association (BGMEA).

While the growth in export volume is encouraging, the decline in unit prices is a challenge. ‘It is crucial that we explore opportunities to add value, improve operational efficiency, and tap into diversified markets to sustain growth,’ Hassan said.​

 

[Saif]

BB steps help boost remittance inflow

Against the fast depleting foreign exchange reserves of the country, some heart-warming reports are coming from the inward foreign remittance front. Notably, the precious inward hard currency that reportedly flowed into the economy last month amounted to US$2.528 billion. This is reportedly the fou

thefinancialexpress.com.bd

BB steps help boost remittance inflow
FE
Published :
Mar 04, 2025 23:06
Updated :
Mar 04, 2025 23:06

Against the fast depleting foreign exchange reserves of the country, some heart-warming reports are coming from the inward foreign remittance front. Notably, the precious inward hard currency that reportedly flowed into the economy last month amounted to US$2.528 billion. This is reportedly the fourth highest remittance receipt in a month recorded so far, while the highest receipt ever recorded was in December last year (2024) at US$2.638 billion, according the central bank. February's remittance receipt, too, marked a 23.8 per cent growth year-on-year. In the last eight months of the current fiscal year 2024-25, the total remittance inflow stood at US$18.49 billion, up from US$14.93 billion during the same period in the previous fiscal year.

Admittedly, the positive development in the country's second biggest forex earning source is welcome. It would hopefully cushion the economy against the multiple challenges arising from every conceivable sector. Now, the first thing this steady growth in remittance inflow can do is to provide some respite to the ever-declining forex reserve, which last month increased by 1.8 per cent to US$20.90 billion, calculated using IMF's so-called BPM6 method, says BB. No doubt, the enhanced remittance dollars have come in handy for the government to clear its overdue import bills, servicing foreign debt obligations, stabilising Taka against US dollar through intervening in the forex market and managing the economic shocks from the massive flight of capital, looting of banks and the overall destruction done to the economy by the previous dictatorial regime.

Increase in remittance, thanks to the BB's various regulatory measures, has arrested the decline in forex reserves as well as successfully kept the hundi operators at bay from diverting the flow of remittance dollars from the government-run formal banking channel to the so-called grey market. But the central bank has evidently witnessed a revolutionary transformation with the changing of the guard in the administration in the wake of the student-led upsurge. Hence is the rise in the remittance flow. It has also to be admitted at this point that migrant workers usually send higher amounts of remittance during the Ramadan and on other Muslim religious occasions so their families at home might meet extra expenses required during these special events. So far so good. But the central bank or the government for that matter should not be resting on its laurels, but must go the distance to arrest further raises in the exchange rate under the prevailing reference rate regime to avoid returning to a volatile forex market inviting speculators. That would again create the abhorred grey market to attract foreign remitters.

In addition to taking measures to assure optimal inflow of remittances from existing sources, the government needs also to work for expanding the foreign labour market as well as increasing skills training facilities for those workers who are already in the pipeline seeking overseas jobs. This should be complemented by preparing professionals, particularly in the IT sector, for grabbing jobs on offer in countries with fast aging population.​

 

[Saif]

We need a more self-reliant development model

Amid USAID funding cuts, government and NGOs should collaborate to keep key projects alive

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We need a more self-reliant development model
Amid USAID funding cuts, government and NGOs should collaborate to keep key projects alive

VISUAL: STAR

Like many countries, Bangladesh was caught off guard by the speed and extent of USAID funding cuts under the Trump administration. Although there is no official data on how many people have lost, or may lose, their jobs due to the freezing of funds, estimates from the development sector suggest that between 30,000 and 40,000 people may be affected. This is deeply concerning, particularly because it will put significant strain on the economy.

According to diplomatic sources, USAID provides Bangladesh with $300-400 million annually for health, nutrition, agriculture, livelihoods, labour rights, human trafficking prevention, and democratic development. These funds have been instrumental in Bangladesh's progress in areas such as maternal health, climate resilience, and rural development. However, following Donald Trump's inauguration as US president on January 20, his administration swiftly suspended most USAID funding and activities, except for emergency food aid, including assistance for Rohingya refugees in Bangladesh. This move has not only left thousands of development workers unemployed but also cast severe doubt over the future of various development projects.

Many development projects currently facing an existential crisis are similarly essential not only for their beneficiaries but also for society at large. As such, the government must not allow them to collapse. It should instead conduct a thorough evaluation to identify the most critical initiatives and explore ways to sustain them. This could include direct government funding for the high-priority projects, partnerships with international organisations, or securing alternative donor support. NGOs, too, must adapt by assessing their efficiency, optimising operational costs, and exploring sustainable funding sources.

Many of these now-unfunded projects serve the most vulnerable segments of our society. Whether providing crucial immunisations, essential medicines, affordable birth control, or income-generating opportunities for the poor, their loss will have a far-reaching impact. Some projects also focus on promoting workers' rights or supporting labour-related cases. With funding now frozen, many of these labour rights initiatives could be sidelined, leaving workers even more vulnerable to exploitation. In a country like Bangladesh, where a significant portion of the workforce is employed in the informal sector with weak labour protections, this could be devastating.

Many development projects currently facing an existential crisis are similarly essential not only for their beneficiaries but also for society at large. As such, the government must not allow them to collapse. It should instead conduct a thorough evaluation to identify the most critical initiatives and explore ways to sustain them. This could include direct government funding for the high-priority projects, partnerships with international organisations, or securing alternative donor support. NGOs, too, must adapt by assessing their efficiency, optimising operational costs, and exploring sustainable funding sources. Without compromising beneficiary support, they should implement cost-saving measures and seek collaborations with the private sector, philanthropic institutions, and public-private partnerships to reduce dependency on foreign aid.

The USAID funding cuts have posed a serious challenge, but they also underscored the need for a more self-reliant development model. A coordinated approach by the government, NGOs, and the private sector is therefore essential to ensure that crucial programmes continue to serve those who need them most.​

 

[Saif]

US, UAE overtake Saudi Arabia as top remittance sources

The United States, the United Kingdom, and Saudi Arabia were the top sources of remittance inflows to Bangladesh in the first seven months of the 2024-25 fiscal year.

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US, UAE overtake Saudi Arabia as top remittance sources

The United States, the United Kingdom, and Saudi Arabia were the top sources of remittance inflows to Bangladesh in the first seven months of the 2024-25 fiscal year.

According to Bangladesh Bank, total remittance inflows from the top 30 countries stood at $15.96 billion during the period.

Remittance inflows peaked in December before declining in January, likely due to post-festival slowdowns and economic adjustments.

The United States led with $2.9 billion in remittances from July 2024 to January 2025. Monthly inflows from the US peaked at $565.04 million in December before falling to $407.52 million in January.

The United Kingdom ranked second, with inflows totaling $1.47 billion. Migrant Bangladeshis in the UK sent home $248.48 million in December, which rose to $273.4 million in January.

Saudi Arabia followed closely, contributing $1.99 billion during this period. Inflows from the kingdom increased until December, reaching $290 million, but fell by 30 percent in January.

The United Arab Emirates ranked fourth, with total remittances at $2.27 billion. December inflows stood at $370.85 million before dropping to $249.56 million in January.

Among the top 10 contributors, Malaysia sent $876.14 million, while Kuwait followed with $867.14 million. Italy, Oman, Qatar, and Singapore also played significant roles.

Remittance from Italy surged in January to $131 million, the highest in seven months.

South Africa, Canada, and Australia contributed smaller amounts, with inflows totaling $175.16 million, $99.82 million, and $93.82 million, respectively.

Saudi Arabia has historically been the largest remittance-sending country for Bangladesh. However, in recent years, the UAE and the USA have emerged as the top sources, possibly due to the role of aggregators, said Professor Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue.

When commercial banks offered to buy foreign currencies at premium exchange rates due to a shortage of supply, these aggregators saw an opportunity to purchase foreign currency from remitters and sell the bulk currency to banks at a premium rate, he said.

Dubai, in particular, has emerged as a key hub for aggregator activities, Rahman added.

"Suddenly, remittance flows from Saudi Arabia dropped sharply, while those from the UAE surged. This shift in remittance sources needs to be closely examined by the relevant authorities."

Mohammad Ali, managing director and CEO of Pubali Bank, told The Daily Star that the US, the UK, and Saudi Arabia remain the top remittance sources as they host the highest number of Bangladeshi migrants.

Remittance inflows typically rise before festivals and winter as migrants send money home for Eid, Durga Puja, and winter weddings, he said.

Remittance Trends

Bangladesh's economy remains heavily reliant on remittances, with traditional markets playing a key role in inflows.

Remittance inflows have undergone dynamic shifts from FY2016-17 to FY2024-25, influenced by global economic trends, migration policies, and labor market conditions.

The UAE, Saudi Arabia, and the US have consistently remained top contributors, with inflows rising over the years.

In FY2016-17, remittances from the UAE stood at $2.09 billion, increasing to $3.01 billion by FY2022-23. Saudi Arabia's inflows rose from $2.26 billion in FY2016-17 to $3.75 billion in FY2022-23. The US saw a steady increase, reaching $2.96 billion in FY2022-23.

While some corridors have shown consistent growth, others have fluctuated.

Kuwait's remittances grew modestly from $1.03 billion in FY2016-17 to $1.55 billion in FY2022-23. Malaysia recorded little variation, maintaining inflows around $1.25 billion during the same period.

European countries such as the UK and Italy have remained strong sources. The UK's inflows increased from $808.2 million in FY2016-17 to $2.08 billion in FY2022-23.

Italy's contribution more than doubled, rising from $510.8 million to $1.18 billion during the same period.

Emerging and Declining Sources

South Korea, Japan, and Australia have emerged as growing remittance sources. South Korea, which recorded $80.7 million in FY2016-17, surged to $116.4 million in FY2023-24.

Japan also saw a rise in inflows, while Australia followed an upward trend.

Conversely, some Middle Eastern nations have experienced fluctuations. Qatar saw a decline after an initial rise. Oman, which recorded $897.2 million in FY2016-17, fluctuated, standing at $766.3 million in FY2024-25.

The number of aggregators has increased since the onset of the Covid-19 pandemic, as global foreign currency markets became more volatile, the Pubali Bank managing director said.

Money changers in Qatar or Oman may have used channels of US-based aggregators to send foreign currencies to Bangladesh, leading to a drop in remittance inflows from Qatar and Oman while increasing inflows from the USA, he said.​

 

[Saif]

Factories shut after July uprising struggle to reopen

Mills and factories that were vandalised, ransacked or set ablaze during and after the July uprising have been struggling to reopen due to financial crises, unavailability of bank loans and their politically exposed owners facing legal consequences.

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Factories shut after July uprising struggle to reopen

Mills and factories that were vandalised, ransacked or set ablaze during and after the July uprising have been struggling to reopen due to financial crises, unavailability of bank loans and their politically exposed owners facing legal consequences.

Nearly 1 lakh workers were employed in these production lines, many of which now remain closed, leaving employees to bear the brunt of the disruptions.

These attacks took place following the political changeover in August last year and during labour unrest from July to October last year.

As the industries have not been in operation for the past seven months, banks are not allowing these production units to open letters of credit (LCs) or seek loan rescheduling facilities, forcing them to endure a severe shortage of working capital.

Moreover, the owners of these industrial units are either in jail or have fled abroad due to their political ties to the previous Awami League government.

Major affected factories include 14 textile and garment factories of Beximco Group, five tyre factories of Gazi Group, three plastic factories of Bengal Group and several garment factories in Ashulia, Savar, Zirabo and Zirani.

The Daily Star spoke to members of the senior management of some affected factories, including Gazi Group.

Muhammad Fakhrul Islam, executive director (finance) of Gazi Group, said they have begun reconstructing the factories with plans to reopen within the next three to four months.

The group has been trying to reschedule a Tk 1,800 crore bank loan to resume operations. "Once we restart the business, repayment of the loan will be easy," Islam said.

Losses from the burning and looting of five Gazi Group factories in Rupganj of Narayanganj in August last year amounted to over Tk 2,000 crore.

The factories of Gazi Tyre, Gazi Tank, Gazi Pipe, Gazi Door and several warehouses were destroyed, allegedly owing to the political influence of Golam Dastagir Gazi, former minister of textiles and jute, who is now in jail.

In the case of Beximco Group, the government is set to make the final wage and service benefit payments totalling Tk 525.46 crore to 31,669 workers and 1,565 officials from March 9.

Following the ouster of the Awami League government in early August last year, Beximco Group found itself in hot water.

Its Vice-Chairman Salman F Rahman, who is now behind bars, was an influential adviser to deposed prime minister Sheikh Hasina. He faces charges of murder, graft, and using political influence for personal business gain.

After the fall of the Awami League, financial irregularities linked to Rahman and his business empire came to light, with Beximco Group's bad loans amounting to at least Tk 40,000 crore.

Top officials of the now cash-strapped group said they have repeatedly requested the government to allow them to open back-to-back LCs to resume business on a limited scale.

Khalid Shahrior, head of human resources (HR) and compliance for Beximco Group's textile and garment division, said, "It is important to run the factories, regardless of who owns them, to save the employees and their families.

"Despite multiple requests, the government has not permitted the business to resume," he said.

Meanwhile, Md Jashim Uddin, vice-chairman of Bengal Group, said three factories producing plastic goods, cement bags, packaging materials, and the group's central warehouse were burned down in August last year.

More than 2,000 workers were employed in these Zirani-based units, generating Tk 80 crore in monthly revenue.

Jashim Uddin, also a former president of the Federation of Bangladesh Chambers of Commerce and Industry, said he needs to reschedule Tk 400 crore in bank loans as he plans to rebuild factories and buy new machinery.

Syed Rezaul Hossain Kazi, managing director of Big Boss, an export-oriented garment factory, said his factory incurred a Tk 60 crore loss in post-August damages.

The factory managed to resume production within days as the losses were covered by insurance.

Currently, 12,000 workers are employed at Big Boss, and Kazi said he did not face major issues with loan repayment as his factory restarted operations.

However, many affected garment factories were unable to do the same.

For example, at least four garment factories that were severely damaged have not resumed production, said Mohiuddin Rubel, former director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

He declined to name these factories, saying they "were not allowed to reopen due to political reasons".

AHM Shafiquzzaman, secretary to the Ministry of Labour and Employment, said the government has provided Tk 127 crore in primary financial support to five companies, including Birds, Dird, Yellow of Beximco and TNZ.

However, he said the government is now pressuring these companies to repay the loans as the six-month tenure is coming to an end.

"If they fail to repay the loans on time, the government will attempt to sell the properties these companies used as collateral when borrowing," he said, adding that some units are operational and capable of repaying their debts.

Almost all affected garment factories have resumed operations, except for a few whose owners are either abroad or burdened with high outstanding loans, said Md Anwar Hossain, administrator at BGMEA.

Besides, some factories have remained shut since July last year, due mainly to financial losses from production halts caused by labour unrest and vandalism, he said.

Brigadier General (Rtd) M Sakhawat Hussain, adviser to the Ministry of Labour and Employment, said his ministry has worked on labour issues with many factories and provided financial aid to some to pay wages.

However, providing financial support to all affected factories is not possible due to their outstanding bank loans, he said. "Still, if any factory approaches the ministry, we will try to assist."

Regarding the government's financial support for workers' wages and benefits, he said it was done on humanitarian grounds, as selling shares of these companies is complex and time-consuming.

He also said that Beximco Group's default loans are too high for the government to risk major financial intervention to restart its operations.​