Notable RMG sector entrepreneurs and other businesspeople yesterday urged Dhaka to vote their family member Annisul Haq for the mayor of Dhaka North City corporation. FBCCI Prsident Kazi Akram Uddin and BGMEA President Atiqul Islam led the call for votes speaking at “Current situation of RMG Sector and the way forward” – a meeting to exchange views organised be the BGMEA, BKMEA and BTMA.“Annisul Huq is a family member of the clothing industry, we must stand by him and extend our hands of cooperation,” said BGMEA president Atiqul Islam. FBCCI President Akram remarked that Annisul’s victory would mean victory for the business community as a whole, and said: “The government has met the demands of the business community; we will peruse the government to realise the businesspeople’s demands in the upcoming budget as well.” “Annisul Huq has led the $30bn RMG industry to where it is now, and if we elect him as mayor, he will lead Dhaka and make it the most liveable city,” said BKMEA acting president Aslam Sunny. Annisul, on the other hand, took the opportunity to reiterate his election promises and garner support: “Trust us, we businesspeople will work together to make Dhaka city green and clean. The business community is a family, and on behalf of the community I have taken the challenge to contest the poll. It is also is a gift from the Prime Minister Sheikh Hasina.” “We oppose each other in BGMEA and FBCCI polls, but now we are a family and this solidarity is an example for the country’s politicians,” Huq added. At one point, the business leaders raised their hands showing their support for Annisul Huq. The meeting also discussed the challenges and the ways forward for the RMG sector. “On behalf of the RMG sector I have placed our demands to the Finance Minister AMA Muhith and he assured policy support to recover losses suffered due to the political unrest,” said Abduis Salam Murshedy, president Exporters Association of Bangladesh. He also urged BGMEA president to handle the Accord and Alliance issues as they are continually coming up with new issues in the name of safety and rights. The country’s RMG sector is now under pressure due to the inspection of Accord and Alliance who are devising new issues that are difficult for the industry to tolerate, said Shafiul Islam Mohiuddin, former president of BGMEA. “We have the capacity of exporting $50bn by 2021 as we have the potential and capacity, but we need scope to work,” said Anwarul Alam Chudhury Parvez. “Accord and Alliance are not responding the our call on funding for remediation and we need follow up of inspection for proper implementation,” he added.

Source: https://www.dhakatribune.com/politics/2015/apr/13/rmg-bosses-seek-vote-their-fellow#sthash.2n1z3gNU.dpuf

Myanmar is to expand its textile and garment industry under the country’s new national export strategy as a means to boost economic growth, with the sector’s export earning targeted at 2 billion U.S. dollars for the 2015-16 fiscal year, official media reported today. With foreign investment accounting for 90 percent, the sector created 100,000 job opportunities in 2014-15, according to the Myanmar Garment Manufacturers Association. The five-year national export strategy, which also covers six other sectors and is aimed at tackling trade deficit, focuses on rice, peas and pulses, fishery products, timber and forest products, rubber and tourism. According to the Ministry of Commerce, the export income from the textile and garment sector made up 40 percent of the country’s foreign exchange earning around the year 1990. Official statistics show that foreign investment in the manufacturing sector reached 5.458 billion U.S. dollars as of February this year since late 1988 when the country opened to foreign investors. The manufacturing sector, which ranked the third in the foreign investment line-up after power and oil and gas, accounted for about 10 percent of the total of 54.086 billion U.S. dollars as of February this year.

Source: https://www.newstoday.com.bd/index.php?option=details&news_id=2408302&date=2015-04-13

Left-oriented Ganasanghati Andolan candidate Zonayed Saki, Mahi B Chowdhury, AL-blessed mayoral contender Annisul Huq and BNP-backed mayoral candidate Tabith Awal pose for photographs at a views-exchange meeting with mayoral and councillor candidates of DNCC in the city on Sunday.
Four major trade bodies, including apex trade body FBCCI, on Sunday extended their support to Annisul Huq, the Awami League-backed mayoral aspirant for Dhaka North City Corporation election, reports UNB. Their overwhelming support for Huq came at a views-exchange programme organised by BGMEA, BKMEA and BTMA at Mohakhali in the city. Huq, also the former FBCCI and BGMEA president, was present at the programme. All the leaders and members of the four bodies expressed their supports by raising hands for the business leader at the event. President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Kazi Akram Uddin Ahmed, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President M Atiqul Islam, former BGMEA president Anwar-ul-Alam Chowdhury Parvez, Abdus Salam Murshedy, BGMEA vice president SM Mannan (Kochi), former FBCCI first vice president M Jasim Uddin, BKMEA first vice president AH Aslam Sunny, current and former leaders, members of BGMEA, BKMEA BTMA and FBCCI were present. View exchange on garment industry’s prospect, problems and future initiative turned into an election campaign as almost every speaker talked about election issues extending their support and vowed to work for Huq in upcoming city election, billed for April 28. BGMEA president M Atiqul Islam said they have division and rivals in the BGMEA but in the grater interest of the business community and business itself and in the grater interest of BGMEA all are united. Describing Huq as a successful businessman, Atiqul Islam said they all are familiar with the ability and leadership of Huq. “He had proved it before so many times. He loves to take challenges, and we’re all with him,” he added. Kazi Akram said, “If we can elect him, we’ll have an opportunity to bargain with the government and fulfill the business community’s demand whatever we need.” The mayoral candidate – Huq – said it is quite normal that there will be differences of opinion. “Yet it’s a happy day for me and for the business community as finally we managed to get united today.” He also thanked the business leaders for extending their support for him. “We businessmen are of the same family members,” he said pledging to build a safe, dynamic, clean, green and world-class city with the help of the business community. Meawhile, business leaders here on Sunday urged political parties to refrain from enforcing destructive political programmes which will ruin the garment industry’s potential. They came up with the call from a views-exchange meeting jointly organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA). Chaired by BGMEA president M Atiqul Islam, Dhaka North City Corporation mayoral candidate and former BGMEA and FBCCI president Annisul Huq , FBCCI president Kazi Akram Uddin Ahmed, and leaders of BKMEA and BTMA were present at the meeting. Observing that many factories have turned ‘sick’ and the readymade garment (RMG) and textiles manufacturers of the country are facing losses due to recent hartals and blockades, Atiqul Islam said, “We beg to our political parties not to engage in such political programmes which create more new sick industries every year.” Former BGMEA president Abdul Matlub Ahmad said the industry suffered a huge loss of 2.1 billion over the last three months. “We want a court order to prevent political parties from enforcing destructive programmes. If such violence continues we have to shut down our businesses,” he bemoaned.

Source: https://www.newstoday.com.bd/index.php?option=details&news_id=2408340&date=2015-04-13

The government should introduce international factoring system which will expedite export and import activities by reducing cost of letters of credit under the existing system, experts and business leaders said in Dhaka on Sunday. At a seminar on ‘international factoring for foreign trade ’ held at Westin Hotel in the capital, they said that factoring system, an instrument of payment and financing in international trade, would ensure full protection of export earnings against the importers’ inability to pay or deferred payment. The International Chamber of Commerce Bangladesh, Netherland-based Factor Chain International, Asian Development Bank and Bangladesh Institute of Bank Management jointly organised the seminar. The international factoring system is better for export and import of consumer goods than that of the existing LC system as the businesspeople have to open LCs frequently with the banks to import or export of such items, said the speakers. International factoring is a method of financing under which a third party, called factor company — mostly bank, financial institution or specialised factor company — offers services of purchase of invoices, bills or accounts receivable. An exporter/seller can sell his/her invoices or accounts receivable on supply of goods to a factor and can get prices of goods in advance that reduce the risk of non-getting export earning or deferred payment. Under the international factoring system, the banks do not require to provide any LC confirmation charge while the businesspeople do not give collateral securities with the banks. The country will save huge amount of foreign exchange by not giving LC confirmation charge to the foreign banks if the businesspeople settle their imports through the factoring system, the speakers said. The banks will have to receive membership from Factor Chain International or International Factor Group to enjoy the facility. If any dispute arises between importer and exporter, the factor organisation will dissolve the crisis. Commerce minister Tofail Ahmed, who attended the seminar as chief guest, said Bangladesh Bank and other government departments concerned would scrutinise the international factoring system before introducing it. It is a tough job to introduce the system as the country’s businesspeople are used to the existing LC process to settle their exports and imports for long, he said. He claimed that the ongoing political unrest due to non-stop blockade and frequent hartals enforced by BNP-led opposition alliance had failed to put any adverse impact on the economic activities as the export growth continued to register a satisfactory growth in the period. BB deputy governor Nazneen Sultana said that international factoring had already got momentum in the developed countries including some from Asia. ‘The BB is positive to introduce any new method to liberalise the country’s foreign exchange regime. As part of the move, it took a number of initiatives in the last five years’, she said. A supervisory framework should be constituted to introduce the international factoring, Nazneen said. Daniela Bonzanini, an official of Factor Chain International, said that a number of Asian countries including Japan, China and Taiwan had already introduced the factoring system which expedited their business volume hugely. Bangladesh will get opportunity from the factoring system as it business volume is increasing rapidly, she said. BIBM professor and director Prashanta Kumar Banerjee said, ‘Businessmen generally face several problems in opening LCs as they have to fulfil many conditions imposed by different parties including importers and banks and maintaining LCs is costly and time consuming while factoring is comparatively less costly and hassle free.’ Some importers have to open LCs frequently in a month to import consumer goods meaning that they count margin, LC confirmation charge and collateral securities, he said. They will be able to avoid such type of hassle if they can use the factoring system, Prashanta said. ‘So, it is the high time to introduce the factoring system in the interest of expanding the country’s economic volume,’ he said. ICCB chairman Mahbubur Rahman presided over the seminar while BIBM director general Toufic Ahmad Choudhury, former BB deputy governor Muhammad A (Rumee) Ali and FCI secretary general Peter Mulroy spoke, among others, spoke.
Source: https://newagebd.net/111181/introduce-intl-factoring-system-to-expedite-exports-imports-experts/#sthash.SG0hkh6o.dpuf

A discussion meeting on Sunday on current situation of the garment sector organised by three related associations turned into an election campaign programme of ruling Awami League-backed mayoral candidate Annisul Huq. The Bangladesh Garment Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association and Bangladesh Textile Mills Association organised the view exchange meeting on the ‘current situation of RMG sector and the way forward’ at Raowa Club in the city. But instead of discussing the situation of RMG sector, the organisers of the meeting started campaigning for Annisul, a former BGMEA president who is a candidate for Mayor of Dhaka North City Corporation, the election of which is scheduled to be held later this month. ‘On behalf of the business community of the country, I am announcing that the business people would remain by the side of Annisul Huq in the mayoral polls [for Dhaka North City Corporation] ,’ the Federation of Bangladesh Chambers of Commerce and Industry president Kazi Akram Uddin Ahmed said at the meeting. Kazi Akram is also a member of the advisory council of ruling Awami league. ‘The garment sector got all facilities they wanted from the government as the sector people are united. I believe the united efforts of the sector people will make Annisul Huq a winner,’ he said. BGMEA president Atiqul Islam urged all the garment factory owners who were presented in the meeting to express their support for Annisul through raising their hands. ‘The name of our party is BGMEA and Annisul Huq is the candidate of the BGMEA party,’ he declared. He urged the factory owners to campaign among their workers in support of Annisul and to ensure the presence of garment workers at the polling stations in due time on the election day. In response to the announcement of support, Annisul Huq expressed gratitude to the business leaders and said that he was going to take up a challenge on behalf of the business community. ‘The selection of mayoral candidate for the north Dhaka City Corporation is a big gift to the business community from prime minister Sheikh Hasina,’ said Annisul, also a former president of the FBCCI and BGMEA. The former BGMEA presidents Abdus Salam Murshedy and Anwar-ul-Alam Chowdhury Parvez, and acting BKMEA president Aslam Sunny also voiced their support for Annisul. Nitol-Niloy Group chairman Abdul Matlub Ahmad said, ‘Annis is the right person as mayoral candidate and we will remain by the side of him.’ The BTMA vice president Fazlul Haque also expressed his support for Annisul Huq on behalf of the trade body. Asif Ibrahim, a former president of Dhaka Chamber of Commerce and Industry urged the business people in all segments to extend their support for Annisul Huq. Industry insiders said that though the title of the programmee was ‘Current situation of RMG sector and the way forward,’ the event was basically organised for the election campaign in support of Annisul Huq. At the initial stage, the apparel sector leaders decided to organise the event as the orientation meeting for Annisul Huq as mayoral candidate but later they changed the title of the programme considering the electoral code of conduct, they said.
Source: https://newagebd.net/111177/view-exchange-meeting-on-rmg-sector-turns-into-election-campaign-for-annisul/#sthash.VFGD7z6A.dpuf

Exporters of readymade garments (RMG) in Bangladesh have come under extra pressure, with buyers’ compliance requirements increasing by the day. A 2013 accord on safety and the Alliance for Bangladesh Worker Safety, founded by a group of apparel companies and retailers, have been, in particular, responsible for such a situation. Besides, production cost has also increased because expenditure on fire-safety, electrical and structural items have become extremely high owing to additional value-added tax (VAT). If the buyers’ demands continue to grow, RMG traders would not be able to meet the export target of $50 billion by 2021. Business leaders from all sectors came up with the observations during a view exchange meeting on “Current situation of RMG sector and the way forward” in the capital yesterday. Bangladesh Garment Manufactures and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), and Bangladesh Textile Mills Association (BTMA) had jointly organised the event. The Accord on Fire and Building Safety in Bangladesh was signed on May 15, 2013. It is a five-year legally binding agreement between global brands and retailers and trade unions and the Alliance for Bangladesh Worker Safety to improve safety in RMG factories in the country. The accord was the handiwork of a group of North American apparel companies and retailers and brands who have joined together to develop and launch the Bangladesh Worker Safety Initiative. Anwar-Ul-Alam Chowdhury Parvez, former president of BGMEA, said “We might fail to reach our target to export $50 billion by 2021 as the buyers are not willing to listen to us on anything except the report of Accord and Alliance. Besides, welfare and participatory fund issues would be major obstacles to reach the goal.” Parvez added: “We have improved a lot with regard to working conditions, safety issues and enacting relevant laws as per the buyers’ requirements. But the demands of the buyers are increasing cumulatively and they are adding more in their requirement list.” Abdus Salam Murshedy, former president of BGMEA, said that no such accord and alliance existed in any other country though many incidents had taken place there at different times. “We agreed on the accord and are trying to fulfil all the requirements. But there is no end to their demands and it has been increasing and no coordination between accord and alliance” he alleged. Md Shafiul Islam Mohiuddin, former president of BGMEA, said, “We are under pressure from national and international bodies as we are facing political violence and buyer’s surplus demand which are the major obstacles in the RMG sector.” AH Aslam Sunny, acting president of BKMEA, said the economy and business was being severely affected because of political impasses. He said fire clocks and other equipment were expensive, making it tough for businessmen to fulfil the requirement of accord and alliance. He requested BGMEA president to talk with NBR to exempt these accessories from VAT. BGMEA president Md Atiqul Islam said, “Accord and Alliance, National Action Plan and double digit vat are the major challenges for exporters. Also, we need same plan for small, medium and large factories in case of bank loan.” Talking about the initiatives that have been taken by the garments owners of the country, he said, “All the database of 2,100 factories is available in the website. There is no other country with such a transparent database.” Mentioning the problem of the Accord and Alliance, the BGMEA chief said it was not a level playing field as the requirements were imposed only on Bangladesh. The buyers should implement the same law for other countries or else we will lag behind our competitors.
Source: https://www.theindependentbd.com/index.php?option=com_content&view=article&id=254691:rmg-exporters-rue-extra-pressure-from-buyers&catid=110:business-others&Itemid=156

Commerce Minister Tofail Ahmed yesterday said the international factoring system removes the danger of open account trade under two-factor system very easily, regardless whether an exporter is a small or large organisation, reports UNB. The Minister said this while addressing a seminar on ‘International Factoring for Foreign Trade’, jointly organised by the International Chamber of Commerce (ICC) Bangladesh, Factors Chain International (FCI), Netherlands; the Asian Development Bank (ADB), and Bangladesh Institute of Bank Management (BIBM). Factoring is a type of debtor-financing which is a better alternative to L/C for the ease of access it provides to short-term finance. Factoring allows a business house to sell its invoice to a third-party, called a factor, at a discount to meet its immediate cash requirements. Tofail Ahmed said under this international financing mechanism, the exporter gains finance immediately after submitting the relevant documents to the export factor and the import factor/bank collects money with 100 per cent protection at the end of the approved period from the importers of the same country in the locally accepted manner. ICC Bangladesh president Mahbubur Rahman said involvement of many banks increases the cost of international trade and creates barriers in different steps of operation. Moreover, Letter of Credit (L/C) confirmation fees takes away a substantial amount of foreign currency abroad and increases the cost of international trade. Importers are no more interested to import by opening L/C. To fulfill the demand of the importers for credit terms, our exporters need to export under international factoring which is also as secured as L/C, he added. The seminar informed that factoring in Bangladesh has been very limited, whereas factoring in most other regions of the world, even within South Asia, has exploded with the shift towards open account trade.
Source: https://www.theindependentbd.com/index.php?option=com_content&view=article&id=254693:factoring-can-open-new-avenues-in-trade-finance&catid=110:business-others&Itemid=156

International Chamber of Commerce (ICC) found in its global survey covering 122 banks in 59 countries titled ‘Rethinking Trade Finance 2009’ that market momentum shifts towards open account terms and importers of North America, Europe and Asia clearly move from Letter of Credit (L/C) to open account settlement. Most source documents available today indicate that the percentage of open account transaction is usually around 80 per cent of world trade. Bangladesh is not an exception. Review of trade service operation of banks conducted in 2014 by Habib et al. in BIBM (Bangladesh Institute of Bank Management) shows that 84 per cent of import payments from the country were made through L/C in 2013. This figure was about 98 per cent in 2011. On the other hand, the same survey shows that L/C payment method was used in case of 49 per cent of the total export receipts in 2013. This was 60 per cent in 2011. It indicates that use of L/C in both export and import is being decreased very sharply and this downward trend is overly high in case of export from Bangladesh. Particularly, it is important to note that non-L/C trade is being increasingly used for our major export items namely RMG (ready-made garment), jute goods and leather. However, open account trade means that payment is received many weeks or even months after delivery. Unsurprisingly, exporters find that open account terms may create cash flow and default risk problems. On the other hand, banks also face certain challenges in financing open account transactions as under this system no bank offers guarantee of payment in case of failure of importer to pay. International factoring provides a simple solution to problems faced in case of open account trade regardless of whether the exporter is a small organisation or a major corporation. Mechanism of international factoring involves a five/six-stage operation, if it is carried out by members of FCI. It is noted that if any bank wants to offer international factoring, it needs to get membership either from Factoring Chain International (FCI) or the International Factoring Group (IFG). These groups regulate the international factoring activity of their member banks/factors. Mechanism followed here is as follows:

* The exporter signs a factoring contract assigning all agreed receivables to an export factor/bank. The factor then becomes responsible for all aspects of the factoring operation.

* The export factor/bank chooses an FCI correspondent to serve as an import factor/bank in the country where goods are to be shipped. The receivables are then assigned to the import factor.

* At the same time, the import factor investigates the credit standing of the buyer of the exporter’s goods and establishes lines of credit. This allows the buyer to place an order on open account terms without opening letters of credit. Consent of import factor/bank for establishing line of credit means certainty of paying 100 per cent of invoice to export factor/bank in case of importer’s inability to pay.

* Once the goods have been shipped, the export factor/bank advances up to 80 per cent of the invoice value to the exporter against documents.

* The import factor collects the full invoice value at maturity and is responsible for the swift transmission of funds to the export factor/bank who then pays the exporter the outstanding balance.

* If after 90 days past due date an approved invoice remains unpaid, the import factor will pay 100 per cent of the invoice value under guarantee.

The mechanism placed above indicates the simplicity of international factoring in conducting international trade compared to L/C. Additionally for opening L/C, importers have to provide required margin and sufficient security to their banks in order to confirm L/Cs. Even for a successful importer, there comes a time when the growing requirements for L/C margin goes beyond the importer’s financing ability and L/C coverage exceeds the security available to give to the bank. Moreover, importers need to approach banks for issuing L/Cs on each occasion of importing goods from abroad, which is really time-consuming. In L/C operation procedures, several banks, namely issuing bank, collecting bank, negotiating bank, presenting bank and confirming bank are involved. Involvement of many banks increases the cost of international trade and creates barriers in different steps of operation. Moreover, L/C confirmation fees take away a substantial amount of foreign currency abroad and increase the cost of international trade. Importers at home and abroad are therefore no more interested to import by opening L/C. International factoring is now a global industry with a vast turnover and is universally accepted as vital to the financial needs of all types of business. International factoring has become well-established in developing countries as well as in those that are highly industrialised. The total amount of international factoring conducted by FCI members in nearly 70 countries stood at 213.22 billion euros in 2012 whereas the amount of total factoring accounted for 2.1 trillion euros at the same time. A clear picture is available in the following table.
It is revealed that Asian region shows highest growth among all the continents although it stands only behind European region with respect to total volume. Export and economic growth always maintain a robust positive relationship irrespective of the size of economy. As a result, Bangladesh Government always makes it a top priority to improve the conditions that directly affect the ability of exporters to export. In this process, reaching new importers as well as unexplored market is important. In entering new competitive market, offering attractive credit terms are being used increasingly in addition to ensuring quality and fixing rational price of the products. As international factoring ensures offering attractive credit terms to the importers, Bangladesh may go forward to launch this product. However, many issues are likely to be encountered while launching this service. These issues are primarily related to the legal, strategic and organisational aspects. Moreover, a policy guideline is also necessary for procedures of client management, dispute handling and prevention, invoice processing and documentation, assignment of the export invoice, costing and pricing, approval and monitoring and activities of factor banks/financial institutions. These issues should be looked into thoroughly before launching this service. Dr. Prashanta Kumar Banerjee is Professor & Director (Research, Development & Consultancy), Bangladesh Institute of Bank Management (BIBM).

Source: https://www.thefinancialexpress-bd.com/2015/04/13/88614