Govt to fast-track textile solutions
March 10, 2009
The government will move fast to address the problems of the textile and RMG manufacturers as it has got a specific proposal consisting of their demands, said Textiles and Jute Minister Abdul Latif Siddiqui yesterday.
He assured the textile and RMG makers of solving their problems within next week as the sector people submitted a package of proposal yesterday to the minister.
In the package proposal, the businesspeople demanded depreciation of the local currency against the dollar, a moratorium on loan payment for two years and taking effective measures to slap a ban on yarn import through illegal channels.
The assurance from the minister came at the inaugural ceremony of the four-day 6th Dhaka International Textile and Garment Machinery Exhibition-2009 at Bangladesh-China Friendship Conference Centre in Dhaka.
About illegal import of yarn through Benapole land port, Siddiqui said some unscrupulous businessmen are involved in such illegal trading.
“I will take the right decision about yarn import through Benapole land port,” the minister told the inaugural function as chief guest.
At the inaugural session of the show Abdul Hai Sarker, president of Bangladesh Textile Mills Association (BTMA), reiterated that the primary textile sector is under threat because of yarn import from India through illegal channels.
“I hope the government will take a right decision about the spinners for their survival amid competition,” Sarker said.
He said more than 600 companies from over 30 countries are displaying their machinery and other textile accessories in more than 800 booths at the show, which will remain open to visitors from 12pm to 8pm without any entry fee.
BTMA and ES Event Management SDN BHD Malaysia have jointly organised the machinery fair, said Tiger Lin, vice president of Asian Federation of Exhibition and Convention Association.
After the inaugural session Sarker submitted the proposal comprising different demands of other related associations to the minister.
Talking to The Daily Star, Sarker said they also urged the government to give more than five percent cash incentive and research and development fund to the textile and RMG sector.
BSS adds: At a seminar on jute yesterday the minister said the local ‘culprits’, responsible for ruining the country’s jute sector, should be identified to revive the past glory of the ‘golden fibre’.
“There are allegations that foreign quarters are destroying our jute sector, but it is not possible without the help of local collaborators,” he said.
BGMEA hopes to push garment export to $18b in next 3 yrs
March 10, 2009
Setting an export target of readymade garment (RMG) worth $15-18 billion dollars in next three years, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is going to hold its three-day apparel and textile exhibition here on November 15.
During the last fiscal (2006-07), the sector earned US$ 9.2 billion.
BGMEA President Anwar-Ul-Alam Chowdhury told members of the Overseas Correspondents Association (OCAB) that the exhibition called Batexpo-07, the largest textile fair in the Asia Pacific region, would facilitate foreign buyers to see Bangladeshi textiles, clothing and accessories.
He said significant number of buyers particularly from USA, Canada, UK, Middle East, Southeast Asia and many other countries of the world participated in previous Batexpo fairs.
Buyers from Pakistan, India, China, Japan, Hong Kong and host Bangladesh will display their products in the exposition for which 41 different companies have already registered.
The BGMEA president hailed US Congressman Jim McDermott for introducing a bill, “New Partnership for Development Act 2007”, in the US House of Representatives on October 18 to facilitate more market access of RMG products from the LDCs, including Bangladesh, to the US market.
He said BGMEA would send an 11-member delegation to USA to discuss with the US Congressmen, including Congressman McDermott, and officials of USTR and labour organisations so the bill is passed by both the House of Representatives and Senate.
Although China, India and Sri Lanka are major competitors of Bangladeshi garment products, the BGMEA president said Bangladesh would be the main source of RMG export in the ultimate analyses, mainly in low and medium price garments.
In reply to a question, Chowdhury said export of garment worth US$ 8 million to India is a starter, saying that in the near future India could be the third largest destination of Bangladeshi RMG after USA and Europe.
He dismissed campaigns in UK against Bangladeshi garments for alleged child labour and low wages, saying that the campaigners could not produce any evidence in support of their allegations.
However, Chowdhury said BGMEA is now giving attention to human resource development, image building and improved relations between entrepreneurs and workers.
Presently some 2.4 million people, 80 percent of them women, are directly employed in the garment industry in Bangladesh.
In reply to another question, the BGMEA president said buyers this time around would feel more confident in participating in the exposition because there is no political unrest.
The value of last year’s spot order was US$ 68.61 million, about 12 million higher than the previous year. The organisers expect more spot orders this year.
Chief Adviser Dr Fakhruddin Ahmed will inaugurate the exposition as chief guest at Sonragaon Hotel on November 15 and Army Chief General Moeen U Ahmed will be the chief guest at the concluding ceremony.
On the sidelines of the 3-day exposition, there will be seminars and fashion shows spotlighting the country’s vibrant and burgeoning RMG sector.
BGMEA with assistance from German Technical Cooperation (GTZ) is organising the exhibition.
This traditional annual exhibition provides an opportunity for Bangladeshi RMG enterpreneurs and their foreign buyers to meet and interact for further boosting the country’s apparel and textile sector which is a top foreign exchange earner.
The BGMEA president said Bangladesh’s RMG sector is competitive enough in terms of quality, prices and skilled workforce and it is possible to raise the level of exports to US$ 18 billion a year.
The world apparel market is worth US$ 500 billion, which in next few years is going to reach US$ 800 billion. Such burgeoning global market, Chowdhury said, would give Bangladesh newer opportunities to export more.
RMG holds out bright hope
March 10, 2009
A strong chance stays yet to materialise the dream of exporting readymade garment (RMG) worth $25 billion within 2013 from the existing $11.70 billion if the sector is given proper and timely policy support and financial aid from the government side.
It may sound ambitious to many in the time of tumultuous global economy that has already affected many of the export destinations of Bangladeshi products.
But Anwar-Ul-Alam Chowdhury Parvez, the outgoing president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), holds out the hope deep in heart.
He describes the ways and means how the dream can come true.
In an interview with The Daily Star, Parvez, who completed his two-year tenure (2007-08) as the BGMEA skipper, says Bangladesh has a lot of opportunities in global apparel trade although major competitors like China, India and Pakistan are facing the recession ordeals.
“Every crisis is an opportunity. The risk of global recession has brought the opportunities for Bangladesh. All the stakeholders including manufacturers and exporters, the government, workers and trade unions should come forward to exploit the opportunities,” Parvez says.
But, the sector needs government back-up for extracting the opportunities from the recession, otherwise there is a chance of losing the existing markets as the competing countries have already taken a lot of safeguard measures, he says.
Parvez, who is scheduled to hand over the BGMEA presidency to Abdus Salam Murshedy on March 12, says the positive leadership both by the manufacturers and the government is very important during such a crucial moment.
“I hope the new BGMEA leadership in collaboration with the government would utilise the opportunity that has been created for Bangladesh stemming from the global recession,” the outgoing leader says.
He says the government should move fast in giving the financial packages to the manufacturers and exporters, as any further delay may demoralise the businessmen.
Parvez also talked about infrastructure and skill development, labour issue, developing fashion and design, creating mid-level management, improving productivity, reducing bank interest rate and developing marketing strategies and negotiation skill in price fixation with the foreign buyers.
He particularly stresses infrastructure development to sustain the industrial and manufacturing growth of the country.
The government should ensure smooth supply of electricity and gas to the industrial plants and development of transportation especially the Dhaka-Chittagong highway, he suggests.
Increasing efficiency of the country’s prime Chittagong Port is a major task for maintaining a higher export growth, he says, calling for developing new alternative port soon.
Parvez says BGMEA has so far taken over the charge of 31 government-owned training centres across the country to train new workers for the garment sector, which has at least 25 percent shortage of skilled workers.
“I hope at least 17,000 trained workers would come out from such training centres every year to man the garment sector,” he says.
Parvez, owner of Evince Group, says more than 300,000 new workers entered the garment sector last year and the total number of workers is now 2.8 million.
He says the training centres also organise seminars and workshops for the mid-level managers of different factories to enhance their negotiation capacity with workers, buyers and other managements.
Bangladesh needs not only skilled workers but skilled designers also, as the next business of garment would be the business of fashion design and brands, he says.
“This is why the students’ enrolment in BGMEA Institute of Fashion Technology should be increased to produce more skilled hands for fashion design,” Parvez says.
He says since almost all the economies of the world are driving on a bumpy road, the new BGMEA management should tackle the issue of labour unrest very efficiently, otherwise the country may lose in competitiveness.
“The owners of the garment units should work closely with the workers and trade unions so any kind of problem could be resolved immediately through negotiation.”
He says buyers are now offering at least 17 percent reduced prices due to the recession.
“At this time improving productivity and looking for new export destinations is a must for the countries like Bangladesh,” he says.
About the backward linkage industries, Parvez says the woven manufacturers need to buy fabrics from countries like China, Indonesia, Vietnam, Italy and other EU countries as the local backward industries can contribute only 30 percent.
But for the knitwear sub-sector the backward integration can contribute more than 80 percent now, he adds.
He calls upon the government to address the issue of reducing bank interest rate so the investors can set up new industrial plants with ease.
“The interest rate at 18 percent is really very high for establishing industrial plants in this competitive age,” Parvez says.
He says the government must improve the activities of missions abroad as the international trade is largely dependent on effective economic diplomacy with the competing countries.
He urges the government to open permanent display centres of major Bangladeshi exportable products in the foreign missions so the buyers can easily choose the items and make business deals easily.
He says export of garment items would rise significantly from April as the buyers are placing orders for winter collection.
Govt assures RMG sector of all-out support
March 10, 2009
Commerce Minister Lt Col (retd) Muhammad Faruk Khan yesterday assured the entrepreneurs in Readymade Garment (RMG) sector of all necessary policy support so that Bangladesh could secure the top position among the RMG exporting countries.
Terming the government of Sheikh Hasina a trade and investment-friendly one, the commerce minister promised the business community that they would see the real result and impact of the government’s commitment towards the promotion of trade and investment by next four months.
While speaking as the chief guest at the inaugural function of 3-day fair of garments and textile products and accessories titled “Chittagong Apparel Fabric and Accessories Exposition-2009″ (CAFAXPO-2009), Faruq Khan called upon the entrepreneurs to put in their best efforts in accelerating the economic growth by their talents and hard work.
Chittagong chapter of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) organised the fair at IEB Chittagong centre auditorium. Entrepreneurs in RMG and textile sectors from home and abroad have been participating the event by setting up 33 stalls to showcase their products and services.
Chittagong City Mayor Alhaj ABM Mohiuddin Chowdhury and FBCCI President Annisul Huq spoke at the function as special guests.
With BGMEA President Anwarul Alam Chowdhury Pervez in the chair, BGMEA first vice president MA Salam, among others, spoke at the function.
Faruq Khan said the present government has been working hard from the very beginning to ensure sustainable economic progress of the country by changing the lot of the people.
He said there was a correlation among the profit from the business, further investment, employment, increased export and economic growth and the government was pledge-bound to do everything possible to continue the chain-work of economic activities.
Seeking wholehearted cooperation from the government to make the country’s economic vibrant, the commerce minister said, “the present government is your government and all necessary measures will be taken so that Bangladesh could emerge as top RMG exporting countries within next 5 years.”
“We want to reach the top position by launching competition of good and positive work,” he said referring to Bangladesh’s young cricketer Sakib Al Hasan, who secured top all rounder position in the global cricket ranking.
He conveyed the greetings of Prime Minister Sheikh Hasina to the people of Chittagong and said she reiterated her commitment to the development of the economically potential region according to her election pledge.
Faruk Khan called upon the members of the business community to supplements the government’s efforts for establishing a digital Bangladesh as per goal “Vision 2021″ through incorporating more technologies in their business enterprises.
The Chittagong mayor sought government permission for the implementation of a CCC project aiming at setting up garments village on 1,500 acres of land at Fateyabad.
He also emphasised the need for establishing a central bonded warehouse besides port area, earmarked a jetty exclusively for handling export-import of garments and fixation of a reasonable wage scale for workers in the sector.
Annisul Huq said Bangladesh lagging behind three and half days from international trade deadline due to public holiday on Friday and called upon the government to fix Sunday as weekly public holiday for the convenient of export-import trade.
He also demanded the government to take steps to lower the bank interest and service charges for expediting the trade and investment.
Anwarul Alam Chowdhury Pervez said achieving annual export earning from RMG products to 25 billion US dollar from current 10.72 billion US dollar would not a difficult task for Bangladeshi entrepreneurs if government provides necessary policy support to achieve the goal.
RMG in shadows of global turmoil
March 10, 2009
The global financial turmoil seems to have weighed on Bangladesh’s lifeline, garments, as orders are being deferred by buyers from the countries, where stores have reported declining sales.
Exporters have also said buyers are trying to cut down costs of imports to cope with a slump in consumer confidence.
“Generally, September is a golden month for knitwear exporters, but this year’s orders appear to be declining for the first time in four years,” said Fazlul Hoque, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
However, remittance inflows, also allied with the global economies, are still immune to probable fallout from the unfolding financial crisis that rattled depositors and investors worldwide.
“If 9/11 had affected Bangladesh’s export growth significantly, I don’t believe this huge crisis would bypass us,” said Hoque.
Hoque’s remarks came a day after Nobel Laureate Professor Muhammad Yunus and others warned that Bangladesh’s export and remittances would take a hit from the global crisis, which promoted governments and central banks around the world to initiate nationalisation and cut interest rates to restore confidence.
Bangladeshi exports, mostly to the US and Europe, are set to become vulnerable to the debacle, although knitwear and garments registered 84 percent and 58 percent growth in July from the same period a year ago.
“Buyers are now bargaining for price reduction,” said Habibur Rahman, owner of Pandemic Fashion Ltd that exports knitwear to Scandinavian countries.
The IMF has recently projected that income growth in Bangladesh’s export markets will decline to 0.5 percent in 2009 from 1.5 percent in 2008.
“The growth of orders received by the exporters in July has slowed down in the last two months,” said Centre for Policy Dialogue Executive Director Mustafizur Rahman, citing his talks with knitwear exporters.
Anwar-ul-Alam Chowdhury Parvez, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), has said buyers seem slow to place orders in an apparent sign of businessmen losing confidence in the world markets.
“They (buyers) are now waiting out the turmoil,” the BGMEA president said.
But Mustafizur Rahman of CPD said: “It’s not clear whether this is because of the global economic turmoil or a seasonal outcome. But RMG prices may go down further amid buyers’ move to cut costs.”
Mamun Rashid, chief of Citibank NA in Bangladesh, thinks the problems might run deeper because of the likely delay in export receipts and the possible cancellation of orders.
Of Bangladesh’s export, only less than 30 percent goes to retail giants such as Wal-Mart, Jc Penny’s, Levis, Gap, Zara, Van-Heusen and H&M, while others are mostly small and mid-sized companies, more vulnerable to any financial shock or surprise.
However the ultimate impact may be little less because of diversion of orders from other countries such as Vietnam and China due to rising labour costs in those countries, Rashid said.
BRIGHTER SIDE
Zaid Bakht, research director of Bangladesh Institute of Development Studies, believes RMG exporters would receive increased orders for its edge over China where the production costs would jump another step in the wake of the crisis.
Professor MA Taslim, chief executive of Bangladesh Foreign Trade Institute, also looks at the brighter side of the situation.
“It’s also an opportunity. Garment makers can take advantage of the decline in exports from other countries by increasing competitiveness,” said Taslim, citing the example of China, which raised exports after the 9/11 attacks on the US.
Analysts suggested that the regulator maintain a competitive exchange rate to encourage exporters and remitters. They also suggested a mechanism for timely delivery, cheap sourcing of raw materials and no hike in utility prices.
Although some argue that remittance inflows would slow due to the global turmoil, Zahid Hussain, a senior economist for the World Bank’s Dhaka office, said any direct immediate impact on remittance looked unlikely, as its inflows remained resilient against the previous financial crises in the world.
In Bangladesh, the bulk of remittance inflows, which recorded a significant rise in the first quarter of the current fiscal year, come from the Middle East, and less than a third comes from the US, UK and Germany.
“However, if a deep and protracted recession starts in the US and EU, the Middle Eastern economies are likely to be adversely affected,” Hussain said.
“Even if the current nearly $8 billion level of remittances is sustained, it would be challenging to maintain its growth momentum if the world economy remains depressed for an extended period,” he said.
Economy may slow in recession: ADB
March 10, 2009
Bangladesh may face slowing economic growth in fiscal 2008-09, hurt by a slowdown in the export-based industry and a decline in remittance as the financial crisis is panning out across the world, Asian Development Bank said yesterday.
“The global financial crisis is yet to significantly affect Bangladesh. However, pressures from the global showdown are building up with signs of moderation in growth,” said the Manila-based lending agency in its quarterly economic update on Bangladesh.
ADB predicts that growth may dip as much as 1.0 percentage point to fall between 5.5-6.0 percent, down from a government projection of 6.5 percent for fiscal 2008-09.
“Before the onset of the global financial crisis, a 6.5 percent growth target for fiscal 2009 had appeared attainable,” it said.
“With the financial crisis in the advanced economies unfolding and recession appearing to last longer than earlier anticipated, a growth rate in the range of 5.5-6.0 percent seems more likely.”
The prediction by ADB came about three months after the World Bank had forecast growth falling below 5 percent this fiscal year.
In its latest quarterly report, Bangladesh Bank however said economic growth is likely to hover around 6.0 percent.
ADB said agriculture might attain the targeted growth but industry and services sectors might see a fall in growth due to a drop in industrial activities and consumer spending.
There is a silver lining. A fall in commodity prices on the international market and increased domestic agricultural production may help ease inflation, it said.
Average inflation dropped to 8.9 percent in December from 9.37 in the same month a year ago.
ADB predicted a downturn in exports of the country’s prime exportable garments after consumer spending slumped in the advanced economies such as the USA and European countries, the main destinations of garment and knitwear items.
Exports of upmarket frozen foods and leather products are also likely to suffer amid slowing demand on the global market.
Exports however maintained growth. In the July-December period, it grew 19.38 percent, backed by growth in readymade garment exports.
But ADB, referring to a 1.4 percent fall in exports in the October-December period, expected industrial growth to come in the range of 6.6-7.2 percent in fiscal 2009, compared with 6.9 percent in fiscal 2008.
To promote industrial activities, the lender said the prevailing shortages in power and gas need to be urgently addressed.
ADB points to a slowdown in remittance growth in the wake of layoffs and contraction of new recruitment in the developed and emerging economies. Recruiting agencies had earlier feared that the outflow of migrant workers might slump nearly 50 percent in the January-December of 2009 from 8.75 lakh a year ago.
Inflows of remittance, the second biggest foreign exchange earning source, however, remain unaffected.
But ADB warns: “Deceleration in remittance growth will dampen domestic demand for household goods.”
The financial crisis is also expected to have an adverse impact on the services sector because of effects on industries, tied to exports and a decline in domestic demand amid lower income and moderation of remittance growth.
ADB warned that the global financial meltdown might slow private-sector activities and affect government revenue collections due to a fall in import-based revenue such as custom duty.
“A major challenge to the government is to raise utilisation rate of annual development programme,” it said.
Huge foreign investment in construction sector likely
March 10, 2009
The international leaders have expressed their commitment to promote use of environment friendly materials in construction across the globe to present greener world for the posterity.
“At the end of our three-day high level Convention of International Federation of Asian and Western Pacific Contractors’ Associations (IFAWPCA) in Bangladesh where we have shared our experience took a pledge to build a greener world for our posterity,” the incoming president of IFAWPCA Herman H M Chen told BSS on Sunday.
The three-day convention, hosted by Bangladesh Association of Construction Industry (BACI) that ended on Saturday were participated by 270 construction experts and entrepreneurs including 220 foreigners from its 16 member countries.
The leaders of BACI, the local member of IFAWPCA, hoped that Bangladesh would witness huge volume of foreign investment in the construction sector as a follow up of this high level convention.
“After the convention we expect significant foreign investment will come to the country as the participated foreign delegates shown their keen interest to invest here,” the out going IFAWPCA President Engr Aminul Islam told BSS.
The convention helped to change the mind set of the prospective foreign investors who had no ideas about various existing investment opportunities in Bangladesh, he added.
Aminul said, a lot of small scale construction projects are being undertaken here which have a lot of potential for foreign investor.
“We may expect foreign investment in urban road construction to reduce the traffic congestion in the city,” he said. The member countries of IFAWPCA are Australia, Bangladesh, Thailand, Hong Kong, India, Indonesia, Japan, South Korea, Maldives, Taiwan, Malaysia, Nepal, New Zealand, Philippines, Singapore, Sri Lanka.
At the end of the convention, the builders of the 16 countries gave commitment to use environment-friendly quality construction materials at any development works for a greener world.
The out going general secretary of IFAWPCA Engr Mir Zahir Hossain said, the convention would encourage all the builders residing in the IFAWPCA member countries to carry out construction works in a more eco-friendly manner.
In the sideline of the convention, BACI organised a three-day international construction exhibition at Sheraton Hotel to showcase the activities and achievements of the local construction firm in the infrastructure development of Bangladesh.
The convention also decided that the 38th IFAWPCA convention will be held in Taiwan on April next year.
Winter RMG orders buoyant
March 10, 2009
International buyers are placing a substantial number of bookings to collect winter clothing from Bangladeshi companies at cheaper prices as the major competitors are losing markets to the country amid global recession, apparel exporters said.
Bangladesh has already turned into a lucrative destination for the buyers for its cheaper clothes.
The exporters said the flow of orders indicates that exports of readymade garments (RMG) would pick up from the next few months although the prices offered are low.
Some recent Indian newspaper reports also supported such indication, saying the major competitors are losing markets to Bangladesh for its cheaper production costs.
The reports said Indian garment manufacturers have already been adversely affected by a steep fall in demand from the US and European countries, and Indian garment exporters may lose out to low-cost competitors.
Garment exports from India showed no sign of pickup this autumn-winter season following a gradual shift of international buyers to low-cost neighbouring countries, the reports said.
Bookings for Indian garments dropped sharply although exporters slashed prices by 11-12 percent.
“Major global buyers like Wal-Mart, JC Penney, Li & Fung, GAP and Target have indicated plans to cut offtake from India by 12-15 percent this year, while they are increasing their offtake in neighbouring countries,” Rahul Mehta, president of the clothing manufacturing association of India, was quoted as saying in a report.
Garment exports from India would be lower than Bangladesh, Vietnam, Indonesia and Cambodia, the reports said.
India is expected to end up exporting garments worth $9 billion this fiscal year, down by almost 10 percent compared to a year back, while Bangladesh is poised to export worth $12 billion garments, the reports said.
Currently bookings for Indian garments are 20-25 percent lower than the same season last year and sentiments are weak because of a gloomy outlook of its textile industry.
“Our export target for the current fiscal year was $9 billion. But due to the present market condition, we will be able to close the year with exports of only $8-$8.5 billion,” Confederation of Indian Apparel Exporters President Amit Goyal said.
Meanwhile, top local RMG makers are optimistic about meeting the export target in the current fiscal year although exports of some other products from Bangladesh declined in July-December period.
Executive Director of Ananta Garment Ltd Badius-Salam said the flow of orders is still high compared to those of other competing countries.
“I hope to meet our targeted 15 percent sales growth this year. Last year the company exported products worth $26 million and this year it will increase,” Salam said.
“But the offered prices are too low,” he added.
A senior official of Opex Group, one of the leading apparel makers, said they have no problem with the flow of orders until now.
“But the problem is low price. The buyers are not offering higher prices for the recession. Now we are trying to make profit by increasing the volume for delivery,” the official said requesting anonymity.
Monir Ahmed, managing director of Abedin Group of Industries, also said orders are satisfactory now although he experienced a relatively low volume of orders in the last three months.
He also vented frustration over the low prices offered by the buyers.
Woven garment surpassed the export target by 2.45 percent, knitwear 2.16 percent, terry towel 10.96 percent and textile fabrics by 8.16 percent during the July-December period of the current fiscal year, according to Export Promotion Bureau.
Bangladesh exported woven garment worth $2.805 billion against the target of $2.738 billion, knitwear $3.240 billion against $3.172 billion, terry towel $66.39 million against $59.83 million and textile fabrics $41.63 million against the target of $38.49 million in the period.
The export trend shows that the target of exporting woven and knitwear worth $12.267 billion for the current fiscal year is quite achievable, exporters said.
3 Top textile firms tie up with local co to tap into Japan market
March 10, 2009
A Bangladeshi top garment group has tied up with two leading Hong Kong-based textile firms and Japan’s biggest clothing retailer to set up one of the largest integrated knitwear plants in the country.
The four-way joint venture is believed to be the largest foreign direct investment in the country’s fast-booming knitwear sector, with Hong-Kong listed Pacific Textiles holding 42.33 stakes in the venture.
Analysts said the investment testifies Bangladesh’s growing stature in world of garment trade at a time when top player China’s reputation is at stake amid worsening global economic meltdown.
Hong Kong-based Crystal International, with annual turnover of around $800 million, and Fast Retailing, Japan’s largest apparel retailer and the owner of Uniqlo stores, are the other foreign partners of the deal.
Trendit Corporation, the sister corporation of $70 million garment manufacturer Ananta Group, is the local partner of the deal although its officials are tightlipped on their stake in the venture.
“The total capital investment in the facilities is US$80 million, to be contributed by each party in proportion to their respective ownership in the joint venture,” a statement by Pacific Textiles said.
“The first phase of the production facilities, including a fabric production factory, a power plant, water treatment facilities, a garment production factory and information technology systems, is expected to commence operation in 2010,” the statement said.
“It is already operating a vertical cut and sewn knits manufacturing business,” it added.
A senior official of Ananta refused to comment on the size of the stakes that each of the four partners was holding or how much the company intends to export.
The joint venture will also separately co-invest with Bros Eastern Company Limited, a top-dyed mélange yarn producer in China, in a yarn manufacturing facility in Bangladesh.
“The JV will hold 15 per cent of the yarn facility while Bros will hold the remaining 85 per cent,” Pacific said.
Sources said the four-way joint venture would make more investment in phases in a bid to make maximum use of Bangladesh’s duty-free access to European and Japanese markets.
Pacific Textiles chairman Wan Wai Loi has said the venture entails ‘minimal risk’ as it covers every aspect of garment value chain and it would provide a platform for Bangladeshi goods’ entry into the Japanese market.
Bangladesh last year exported knitted garments worth only seven million dollars to Japan, but analysts said Fast Retailing’s presence in the venture would guarentee a bigger entry into the world’s fourth largest apparel market.
“It’s a very good news for us and it shows that Bangladesh is fast emerging as a top alternative source to China in global apparel trade,” said Md. Fazlul Hoque, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
Hoque said the four-way joint venture is the largest foreign investment in the country’s knitwear sector and it would act as a stepping stone for Bangladeshi apparel’s large-scale invasion in Japan.
“We export a very meagre amount to Japan. But it is a $13 billion market and China is the only major exporter. I am sure this four-way venture will make us big in Japan,” he said.
ADB cuts growth forecast for Bangladesh economy
March 10, 2009
The Asian Development Bank (ADB) has revised downward its growth forecast for Bangladesh economy, ranging between 5.5 per cent and 6.0 per cent, for the fiscal (FY) 2008-09 against the backdrop of the ongoing global financial crisis.
‘Before the onset of the global financial crisis, a 6.5 per cent growth target for FY2009 appeared attainable. With the financial crisis in the advanced economies unfolding and recession appearing to last longer than earlier anticipated, a growth rate in the range of 5.5 per cent to 6.0 per cent seems more likely in FY2009, the ADB said in its latest Bangladesh Quarterly Economic Update (BQEU).
The global financial crisis is yet to significantly affect Bangladesh, the December BQEU also said, adding that the pressure from the global slowdown is building up with signs of moderation in growth.
Economic performance in the July-September of FY2009 had held up reasonably well with steady progress in domestic economic activity and satisfactory growth in exports and remittances, said the BQEU released Monday.
According to the Economic Update, growth in ready-made garment production, together with improved business confidence and recovery in housing and construction, stimulated the industrial activity.
During the October-December period, export growth decelerated affecting the export-based industrial production, and growth in remittances also moderated, it revealed.
Highlighting the sector-wise performances, the ADB said Bangladesh’s agriculture sector is expected to attain the target growth rate of 4.0 per cent, up from the actual growth of 3.6 per cent in the FY2008.
Production of rice and wheat for the FY2009 is targeted at 34.3 million tonnes — 33.3 million tonnes of rice and 1.0 million tonnes of wheat — 15.1 per cent rise from the actual production in FY2008, the BQEU said.
Bumper harvests of Aman rice, maize, wheat and potato in FY2009 have already been reported, it said. A favourable outlook is maintained also for the upcoming Boro crops because of good weather conditions together with strong support from the government to ensure availability of key agricultural inputs, it added.
The prospects for output in various non-crop sub-sectors of agriculture also appear bright, it said, adding that the fishery sub-sector has performed well because of the growing domestic demand.
The country’s industrial growth is expected to be in the range of 6.6 per cent to 7.2 per cent this fiscal compared to 6.9 per cent in FY2008 with production for exports continuing the slowing trends that became evident in the October-December period of FY2009, the ADB said.
It also said aided by the robust export growth of 42.4 per cent in the July-September of FY2009, the ready-made garment production, together with improvements in business confidence and recovery in housing and construction, stimulated the industrial activity.
However, exports declined by 1.4 per cent in October- December of FY2009 implying a slowdown in export-based industrial production, it said.
‘On the contrary, falling prices of construction materials and a rise in demand for real estate because of the growth in bank credit and higher remittances helped revive the construction sub-sector,’ the ADB said.
It also suggested that the prevailing shortages in power and gas supplies need to be urgently addressed to promote the industrial sector.
The lack of gas supplies will also constrain power generation and new investment in manufacturing activities, it said, adding that the country’s export-based industry sector is likely to experience a slowdown in the coming months.
According to the ADB, growth of the country’s services sector will slow to the range of 5.8 per cent to 6.2 per cent, down from 6.7 per cent in FY2008, due to lower activities in the export sector and declines in consumption spending induced by lower income and moderation in remittance growth.
Services, especially wholesale and retail trade and transport and telecommunications, performed well in July-September of FY2009.
The satisfactory performance of agriculture and industry has contributed to healthy service sector growth, it said, mentioning that in October-December, escalation in demand for services during the parliamentary elections, contributed to boost retail trade in both rural and urban areas.
On the other hand, profit margins of private sector banks remain quite healthy, and are likely to have a positive impact on growth of financial services.
However, the global financial crisis will have an adverse impact on the services sector as well, because of effects on industry, particularly related to exports, and compression of domestic demand in general.
In its Economic Update, the ADB projected the rate of inflation at about 7.0 per cent for the year as a whole, down from 9.9 per cent in FY2008.
Inflation moved steadily downward as the October-December of FY2009 unfolded, sliding from 10.2 per cent year-on-year in September to 6.0 per cent in December, it said.
It also identified a rapid decline in international commodity prices and improved domestic food supplies as the main factors for pushing inflation lower.
The decline in food inflation to 6.8 per cent in December from 12.1 per cent in September was steeper than that of nonfood inflation that came down to 4.8 per cent in December from 7.2 in September.
The cut in the locally-administered price of oil in October and December last, after a rise in July, also helped ease price pressures, the ADB said.
The likely good domestic crop harvests, the effects of raising policy rates by the central bank for restraining credit in October-December of FY2009, and the January 2009 reduction in the domestic fuel prices will also ease inflation, it added.
On the fiscal management, it said despite the recent rise in subsidy on fertiliser, the government’s budget deficit is expected to be around 4.7 per cent within the budgeted level of 4.9 per cent.
According to the ADB, the government revenues are showing signs of deceleration, with the revenue collections falling from 20.5 per cent during July-September of the FY2009 to 13.2 per cent during July-December period, over the corresponding periods of FY2008.
The ADB cautioned that the slower private sector activity, as the impact of the global economic slowdown takes hold, could further affect revenue collection.
Import-based revenues will be affected by the cuts in customs duties in the FY2009 budget and the erosion in import values resulting from the decline in international commodity prices, it added.
It also mentioned that a major challenge to the new government would be to raise the utilisation rate of Annual Development Programme (ADP).
‘Both quantity and quality of ADP need to be stepped up by addressing capacity constraints and better interagency and aid coordination, so that infrastructure provision can support increased private investment and help address the country’s development needs,’ it said.
About the monetary and financial sector, the multilateral donor agency said Bangladesh Bank maintained an accommodating monetary policy stance with little adjustment in policy rates to support high economic growth and to contain inflation within tolerable levels.
Broad money growth reached 17.9 per cent year-on-year in December last, up from 14.7 per cent in December 2007, it said, adding that the private sector credit grew rapidly at 21.8 per cent year-on-year in December 2008 from 16.8 per cent in December 2007.
In mid-January last, Bangladesh Bank announced the Monetary Policy Statement (MPS) for the January-June period of FY2009 with a commitment to continue its support to maintain the flow of credit to raise production of goods and services, and provide refinance against lending in employment-intensive sectors such as agriculture and SMEs, it mentioned.
The ratio of gross non-performing loans (NPLs) to total loans of all banks declined to 12.3 per cent at the end of September last from 14 per cent at the end of September 2007.
On the other hand, NPLs of the state-owned commercial banks (SCBs) rose from 26.9 per cent to 29.3 per cent during the period, it said.
Weighted average lending rates continued to fall and stood at 12.4 per cent at the end of September 2008 while the interest rate spread declined from 6.2 per cent in September 2007 to 5.2 per cent in September 2008.
On the balance of payments, it said the preventing of a sharp decline in export earnings in the face of the cooling global demand in the coming months will be a major challenge for the government.
During July-December of FY2009, imports rose by 23.2 per cent over the same period of FY2008 while the total remittance receipts during July-January of FY2009 rose by 29.4 per cent over the corresponding period of the preceding fiscal year.
The annual growth in the number of workers leaving Bangladesh for overseas jobs slowed in 2008 compared with a growth of 118.2 per cent in 2007.
The trade deficit edged up to $2.9 billion in the first half of FY2009, up from the $2.2 billion deficit in the corresponding period of the previous fiscal year.
Higher deficits in trade and service payments reduced the current account surplus to $232 million from $298 million of the same period the year before.
Because of the higher surplus in the financial and capital accounts, the overall balance showed a higher surplus of $489 million in July-December 2008 against a surplus of $44 million in July-December 2007.
Gross foreign exchange reserves of Bangladesh Bank were lower at $5.8 billion (equivalent to about 3.3 months of imports) at the end of December 2008, down from $6.2 billion at the end of June 2008.