Falling prices, higher costs hit RMG sector

The continuing downward pressure by international buyers on clothing prices is hitting profitability in the Ready Made Garment sector and undermining efforts to improve working conditions, industry leaders have warned.

Despite increases in costs of around 15 per cent in the last year intense competition in the sector has meant producers have been unable to pass the higher costs on to buyers.

In fact unit garment prices have fallen by between 1-2 percent in the past 12 months according Mustafizur Rahman, an economist at the Centre for Policy Dialogue.

In order to try and stem falling prices leading Bangladeshi garment manufacturers have launched a campaign and will press the major international buyers at a meeting later this month.

However economists said in such a fragmented industry it will be difficult for suppliers to force increases.

Fazlul Hoque president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said the issue would be addressed at a two-day meeting involving international buyers to be held in Dhaka June 28 and 29.

The meeting of the MFA Forum brings together public institutions, labour and civil society organizations and businesses. It was set up following the end of quotas under the Multi-Fibre Arrangement in 2005.

Executives from the major buyers including Wal-Mart, JC Penny, GAP, H&M, and Tesco are expected to attend.

“In the past year the fall has been 1-2 percent but over the past five years we have seen a fall in prices of more than 10 percent in the knitwear sector and the price fall in woven products has been even higher,” Hoque said

Nazma Akthar, a founder of the Bangladesh Independent Garment Worker’ Union Federation said international buyers are reducing prices all the time.

“Then they say how important compliance is for them. It’s a mockery, you can’t take what they say seriously.”

She questioned how conditions could improve when a pair of jeans was now being sold at a major UK chain store for $6, when a few years ago they had been retailing for more than double the amount.

Hoque said manufacturers have been following social compliances as per the recommendations of the buyers, yet the buyers were now not increasing prices. “They should also follow ethical buying practices,” he said.

He said the price index of exportable apparel items declined by more than 1 percent over the last fiscal while the cost of doing business in Bangladesh particularly in ready-made garment sector increased by 15 percent.

According to the industry, the erratic gas and power supply, higher freight charges both in local and international markets, the yarn price hike, implementation of the minimum wage for workers, higher transport costs and higher prices of capital machinery were the main reasons for the higher cost of doing business over the last year.

Hoque said recently exporters have been considering fixing a baseline price for some basic items to avoid unhealthy price competition.

CPD’s Mustafizur Rahman said that in Bangladesh it is often a ‘race to the bottom’ and buyers are able to force prices down.

“The manufactures are trying to produce a united front but it is so difficult and there are so many exporters and producers, “ he said.

“If some of the big players can unite they may have a chance,” he added.

Other economists said the only way out for the industry was to focus on improving productivity.

RMG exports account for around 75 per cnet of the country exports. Knitwear, the largest export earned $3.913 billion during July-March period of the current fiscal, marking a 17.34 percent growth over the same period of the previous fiscal.

During this time, woven garments earned $3.770 billion, a 7.54 percent growth over the same period of the previous fiscal.

Manufactures have been able to increase export earnings despite falling prices by raising the volumes of exports.

Source: The Daily Star

FBCCI business team off to China

A 32-member business delegation of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) left Dhaka on June 4 for Kunming, China to attend the 3rd China-South Asia Business Forum held during 4-6 June, in China.

The Forum will be inaugurated by Wan Jifei, Chairman of China Council for the Promotion of International Trade (CCPIT). The Forum has the support of business leaders of regional and apex chambers of the South Asian countries. It will tackle a number of regional and international economic issues from the perspective of the private sector’s role in economic and social development.

During the visit the FBCCI delegation will meet the Vice Prime Minister of Yunan Province, Chairman of CCPIT and the Governor of Yunan province of China. The FBCCI leaders will also have meetings with their counterparts and dignitaries of the province.

Source: The New Naion

BGMEA seeks state protection: External forces behind garment unrest

Leaders of Bangladesh Garments Manufacturers and Exporters Association (BGMEA) yesterday blamed the local agents of the foreign conspirators for the recurrence of labour unrest at the apparel factories for destroying the garment industry.

The leaders feared that the nation might have to see a sick economy and return of extreme poverty if the apparel industry was not duly protected from the foreign plotters.

They sought state protection against the foreign conspirators apart from arrest and trial of the local troublemakers in the interest of the budding industry and the national economy as well.

Addressing a press conference at the BGMEA’s regional office in the city, the First Vice-President of the apex body MA Salam demanded immediate formation of a ‘Crisis Management Cell (CMC)’ comprising representatives from the bodies concerned.

“Probably you’ve noticed by now that labour unrest only surged at the factories of the well-off companies and most of the troubles have taken place at the peak season, whereas the smaller and relatively insolvent factories have been running peacefully without problems of similar nature,” he said while analysing the influence of the foreign plotters.

The BGMEA leader said that the labour unrest at the sweater factories of the Azim Group and the subsequent violence warrants due attention of the government because those were not isolated incidents but the results of pre-planned espionage and destruction.

“Every thing of the agitation and violence was directed by cellular phone and from Hotel Shajahan in the city,” he added.

More than six thousand workers of the troubled sweater factories reportedly turned jobless from Monday following indefinite closure of the factories by the management inflicting a cumulative damage of Taka 2000 million to the company.

Denying wage exploitation by the owners of the Orchid Sweaters Limited, Savar Sweaters Limited and Global Knitwear Limited, the BGMEA leaders said that most of the previously raised demands of the workers had been duly addressed but a section of the workers deliberately instigated others on fictitious issue like basic wage what had long been accumulated in the takeaway package.

Directors of the BGMEA Ershad Ullah, Abdul Mannan Rana, Mohammad Ferdous, Mohammad M Mohiuddin Chowdhury, Syed Ahsanul Haque, former first vice-presidents Mahbub Ali, Moinuddin Ahmed, Khalilur Rahman and former directors Nasiruddin Chowdhury, Alhajj Nazimuddin Chowdhury, Emdadul Haq Chowdhury among others, were present on the occasion.

Source: The New Nation

Malaysia says foreign cars will pay more for fuel

Owners of foreign-registered vehicles will have to pay more for petrol in Malaysia under a plan to curb spiralling fuel subsidies, reports said Thursday.

Second Finance Minister Nor Mohamed Yakcop said the measure was part of a fuel subsidy reform plan to be announced before the 2009 national budget, which is expected to be presented to parliament in September.

The government earlier this week announced an interim measure banning petrol stations near the borders with Thailand and Singapore from selling fuel to foreign-registered vehicles.

The new initiative to permit sales to foreigners, but at a non-subsidised price, is likely to be approved at a cabinet meeting on Friday, the official news agency Bernama reported.

Despite dismay over the plans from tourism operators who rely on business from Singaporeans and Thais who make trips to shop and refuel in Malaysia, Nor Yakcop insisted the industry would not suffer.

“No it wouldn’t. Tourists who come in, they can certainly buy (petrol) in non-border towns … there is no problem but in the border towns … there has been absolute misuse by people along the border who come and buy and go off to sell back (the petrol) to their country,” he told Bernama.

“Why should we give subsidies to foreign smugglers,” he added.

The move is an attempt to minimise fuel subsidies which is expected to cost Malaysia 45 billion ringgit (146.3 billion dollars) this year based on an oil price of 120 dollars per barrel.

“Foreigners will definitely have to pay the full price when we make the announcement and (when we) enforce it immediately,” Prime Minister Abdullah Ahmad Badawi said in The Star daily Thursday.

Source: AFP

Upcoming budget to have little impact on market: Most food items imported under zero tariff

The upcoming budget is unlikely to have any positive impact on commodity price as most of the essential commodities now selling at high prices are imported with zero duty, according to economists and business leaders.

Shahjahan Sipon, a businessmen in the city’s Banani area, said despite the Government measures to contain the price hike of essential commodities people are yet to see any positive change in the price index of essentials, rather they continue to soar.

At present most of the essential commodities including rice, pulse and onion are being imported without duty. The government withdrew import duty of the essentials at different times to maintain stability of prices but to no positive effect, he noted.

Bangladesh Bank statistics show that the rate of inflation in January and February rose to around 13 per cent. The two phases of flood and cyclone Sidr have affected food grain production, which further contributed to the rise of inflation. Moreover, price hike of food grains in the international market has also deepened the crisis.

In this situation the government is planning for expansion of social safety programmes and creating employment for ultra poor. The government is making budget calculating average inflation at 9 per cent. However, experts said the rate of inflation in food grain in the next year is expected to increase at more than 9 per cent.

The government is increasing loan flow to the private sector through expansionary monetary policy.

Economist Dr Atiur Rahman said the world as a whole is facing the trouble of inflation. Bangladesh is in the same row. There is no chance for Bangladesh to get out from the cycle of inflation in the near future, he added.

Atiur suggested that the Government should withdraw VAT from all the food grains.

He said increasing of loan flow to the private sector through expansionary monetary policy may increase inflation further while contractionery monetary policy may halt employment opportunity.

Source: The New Nation

Bangladesh to request IDB to double its fuel oil financing

Bangladesh has decided to request the Islamic Development Bank (IDB) to double its financing for fuel oil imports to US$2 billion as the country is struggling to meet the increased requirement from local sources.

A meeting on fuel oil financing at the Planning Ministry also decided to request the IDB to double the limit of an instalment of the financing to US$100 million.

At present the IDB provides around US$1 billion annually at an average instalment of US$49 million to finance fuel oil imports by Bangladesh.

Finance and Planning Adviser Dr Mirza Azizul Islam will place the request to the IDB and its trade-financing window, Islamic Trade Finance Corporation (ITFC), during the IDB’s annual conference.

Dr Aziz will leave Dhaka Wednesday to attend the 33rd annual conference of IDB to be held on June 3-4 in Jeddah.

“If IDB accepts our request, it will reduce the pressure on foreign exchange and local financial institutions,” the Adviser told newsmen after the meeting.

Chief Adviser’s Special Assistant for Power and Energy Dr M Tamim and senior officials concerned were present.

Dr Aziz said the ITFC has already agreed with Bangladesh’s request to finance the fuel oil imports at a rate of LIBOR plus 1.75 per cent (over 4 per cent). They earlier demanded a fixed rate of 5.5 per cent.

ITFC will deal with the trade financing issues starting from this year.

Source: The New Nation

NBR sets Tk 54,274cr revenue target

The National Board of Revenue (NBR) has set a new target of collecting Tk 54,274 crore revenue for the fiscal 2008-09.

The new target for the NBR came after evaluating its excellent performance of collecting taxes and revenue during the current fiscal year.

The said revenue would be collected through widening the tax and VAT nets rather than increasing the rates. The procedure for collecting and submitting tax and VAT is to be simplified from the next fiscal year.

The new target of revenue would mitigate the growing expenditure of the Government. The NBR provides 75 per cent income of the government from internal resources.

From the next fiscal year some new sectors would be under the jurisdiction of VAT and tax.

FBCCI and other trade bodies demanded the continuation of tax holiday. Accordingly the NBR has decided to continue sector wise tax holidays, which were supposed to be expired on June 30 of the current fiscal. The tax holidays would be conditional. The Small and Medium Entrepreneurs (SME) sectors would get first priority for the next budget. And the rate of VAT in the SME sector would also be reduced.

The Better Business Forum (BBF) has called upon the Government to give a chance for whitening the undisclosed money with penalty.

Initiatives are underway to use the whitened money in the main stream of the national economy.

The present tariff structure is 10 per cent for industrial raw materials, 15 per cent for intermediary goods and 25 for finished goods. However, it was not known if the structure would remain the same in the upcoming budget.

NBR Chairman Abdul Majid recently said a combined revenue budget would be presented for the next fiscal year preserving all concerned party interests.

He said the next revenue budget has also a target to reduce the import dependency of the country.

The Caretaker Government has taken stiff measures to nab the tax dodgers, which increased the number of tax payees and brought back dynamism in collection of taxes and revenue by NBR.

For the first ten months (July-April) of the current fiscal the NBR has collected Tk 35,313 crore. The growth rate was 23.21 per cent. The NBR had re-fixed its revenue collection from Tk 43,850 crore to Tk 45,970 crore for the current FY 07-08.

The previous governments have failed to reach the revenue collection targets due to poor performance and lack of coordination. But this is for the first time the revenue collection target had been revised by the Government due to fulfilment of desired level of collecting revenue by the NBR.

Source: The New Nation

‘Made in Bangladesh’ trade show begins in US in August

The first-ever trade exposition, dubbed ‘Made in Bangladesh’ is going to be held in New York of the United States in the second week of August next.

The three-day exposition, which will jointly be organised by First Multipurpose Services, LLC (FMS), a company based in USA and Mattra, a Bangladeshi communication agency, will be held at Penn Pavilion Exhibition Hall, Manhattan, New York from August 15 to 17.

Hossain Jabbar, Founder-President of FMS, LLC announced this at a press conference at Dhaka Sheraton Hotel yesterday.

Anisur Rahman Mahmud, Chief Executive Officer (CEO), Mattra conducted the programme while Raghib Ahsan, Event Manager, FMS, gave vote of thanks.

Anwar Farooq, Joint Secretary, Ministry of Agriculture, Afzal Hossain and Sanaul Arefeen, Managing Partners, Mattra, Shahidul Alam Sachchu, Channel I and eminent writer Imdadul Huq Milon, among others, were present on the occasion.

Hossain Jabbar said Bangladesh is emerging as an economic giant of South Asia. The USA is the single largest importer of Bangladeshi products. Exports from Bangladesh to the USA and other countries have significantly increased for the last one-decade. The volume of export to the USA market could be doubled if the entrepreneurs and government made concerted efforts.

He also observed that Bangladesh could easily enhance its export volume through diversification of exportable items to the US markets.

“The USA is the main importing county of Bangladeshi products. The expected growth in terms of export could easily be enhanced to that country,” he said.

Mentioning the existing trade between Bangladesh and the USA, he said the exposition would help sustain and foster present growth of the trade between the two countries.

He also said that explore of newer avenues for promoting Bangladeshi products in the USA markets would boost further trade relations between the two countries and help attract possible US investment to Bangladesh.

Afzal Hossain said since its inception ‘Mattra’ has been trying to project the Bangladeshi products to other countries. He said necessary publicity is required for creating more popularity of the products.

“Bangladesh is gradually strengthening its position in the present competitive global economic market,” he mentioned.

The products and services which are going to be displayed at the fair include readymade garments (knit and woven), home textile items, information technology, ceramic (tiles and tableware), melamine and plastic products, handicrafts including bamboo and wooden products, furniture, leather and leather products, agriculture products and processed foods, jute goods (yarn and carpets), spices and pickles, tea and allied products, recycled glass items, tourism and hospitality, housing and real estate, institutions/ agencies related to testing/ certification/ quality control/ survey of exportable and business-related organisations like banks, shipping agents, insurance companies etc.

Apart from providing the standard facilities, the organisers will arrange meetings between the participants and buyers/ prospects within the fair premises.

Adequate publicity will be made through Bangladeshi satellite channels that have high viewership among Bangladeshi living in the USA. Buyers and prospects will be contacted through direct mailers and electronic media.

During the fair there will be seminars on different issues such as real estate and IT sector. Free transport services will be provided to the participants. Besides, Bangladeshi living in the USA would also perform cultural show at evening.

Application in prescribed form (available in the website and Mattra office) for participating in this trade show, to be submitted to the organisation by 15 June 2008 along with application fee of US$ 3500 for a 10′x8′ stall and US $ 9000 only for a 15′x15′ pavilion.

There will be five pavilions and 109 stalls in the fair. The media partner of the event is Channel I.

In the year 2006-07 Bangladesh earned US$ 12.17 billion through export, which was 15.39 per cent higher over the preceding year. The country is maintaining a satisfactory export growth of approximately 13 per cent during the last one decade. The major importing countries are USA, Germany, UK, France, Italy, Belgium and some other Asian countries.

The USA alone accounts for approximately 34 per cent of Bangladeshi export and hence the biggest trading partner of Bangladesh at present.

Source: The New Nation

Fuel-less electric bike, rickshaw launched

The first ever fuel-less and environment friendly electric bike and electric rickshaw was formally launched yesterday at Joydevpur in Gazipur District.

Bangladesh Diesel Plant Ltd (BDPL), an enterprise of Bangladesh Army, Sigs International and Lotus Bird of China manufactured the two types of electric transport at BDPL industry at Joydevpur.

Lt Gen Md Jahangir Alam, Quarter Master General and Chairman of BDPL launched the programme while Geng Yong Ding, President of Lotus Bird, Mohammed Abdul Gani, Chairman of Sigs International and Alhaj Morshed Alam, Chairman of Bengal Group of Industries were present at the ceremony as special guests.

“The price of an electric rickshaw will range from Tk 40 thousand to Tk 50 thousands while the price of electric bike is between Tk 60 thousand and Tk 68 thousand depending on its capacity, said Enayet Ullah Siddique, Managing Partner of the Sigs International. The rechargeable battery of the bike and the rickshaw will last one year. The price of each battery is Tk 4,000.

Enayet informed that electric bike will hit the market within a week and electric rickshaw two months later.

Lt Gen Md Jahangir Alam said that electric bike and electric rickshaw would save huge foreign currency by reducing diesel use and also reduce air pollution.

“It will reduce transport cost and people of middle and lower income bracket will be able use it for their affordable prices,” Geng Yong Ding said.

Col Shahid Sarwar, Project Director of BDP, Col Mohammad Ali, Deputy Managing Director of Bangladesh Machine Tools Factory of Bangladesh Army and other senior officials of Bangladesh Army were present at the ceremony.

Source: The New Nation

Best Air spreads wing beyond border

Best Air, the third Bangladeshi airlines, on Sunday launched flight on the international route.
The 118-seater Boeing-737-200 aircraft of Best Air carrying 71 passengers spread wing on the sky from Zia International Airport and landed at the Bangkok Subarnavum International Airport of Thiland, in the afternoon.
The Best Air will operate flights on the Dhaka-Bangkok route on Sundays, Mondays, Wednesdays and Thursdays.
Syed Mohammad Zobaer, civil aviation and tourism secretary, inaugurated the international flight of private airlines at the Zia International Airport.
Wichai Chingchama, charge de affaires of Royal Thai embassy, V Krishnamoorthy, high commissioner of Sri
Lanka, Dta Tshering Dorji, ambassador of Bhutan, Nguyen Van That, ambassador of Vietnam, Zenaida Tacorda Rabago, ambassador of the Philippines, and Hassan Farazandeh, ambassador of the Islamic Republic of Iran, attended the inaugural function and flew to Bangkok in the maiden flight of Best Air.
Addressing the inaugural function, Best Air’s chairman M Haider Uzzaman said their operation of flights between Dhaka and Bangkok would make traveling easier for the passengers.
‘Best Air targets to carry 60-70 per cent passengers on this route initially and the percentage of travelers will gradually increase.’ he added.
The Best Air chairman stressed the need for growth of tourism industry in the country and said the airliner would operate flights aiming to attract the foreign tourists to the country by offering ‘Destination Bangladesh’ package.