The ministry of finance has allocated Tk 420 crore in favour of the proposed Chinese economic and industrial zone in Anwara upazila, Chittagong, as money to be spent on purchasing 794 acres of land by this month. Of the land, 290 acres belong to the government, while the rest 494 acres will be bought from the private land owners. The land purchase would be completed by this month through the Chittagong deputy commissioner office, Pabon Chowdhury, excutive chairman, Bangladesh economic zones authority said. ‘With the release of the fund, the formal development activities to establish the Chinese economic and industrial zone will gather momentum,’ Paban told New Age, and added that a memorandum of understanding between BEZA and China Harbour and Engineering company will be signed on June 16 in Dhaka. Under the MoU, the Chinese state-owned firm will develop the zone site – which is expected to see nearly $2 billion of Chinese investment – by the next three years, he added. The Chinese economic and industrial zone, or Anwara Economic Zone- 2, will be developed as part of a government-to-government deal with China, which will create more than 1.5 lakh jobs, officials in the BEZA said. Nearly 400 factories can be set up in the 794-acre zone. The government plans to sign the MoU with China Harbour and Engineering for 50 years, according to BEZA. The zone is 39 kilometers off the Chittagong port, 28km off the Chittagong city and 46km off Chittagong Shah Amanat International Airport. The Executive Committee of the National Economic Council (ECNEC) in September last year approved the proposed Chinese Economic & Industrial Zone. BEZA signed an agreement with the Commerce Ministry of China on establishing Chinese economic zone in Bangladesh during Prime Minister Sheikh Hasina’s visit to China in June, 2014. According to BEZA, special economic zones are there in 119 countries across the world with 2031 are in operation. Out of that number, 436 are in India, 460 in China and about 200 in the Philippines. Currently, the number of approved sites for economic zones, both for local and foreign investors, is 46. Paban said the separate special zones for Japanese and Indian investors would be ready soon. He said the government has plans to establish 100 EZs in the next 15 years, adding, ‘a huge response from both local and overseas potential investors have made us upbeat about the prospects of success of the zones, as investors need not worry about infrastructure and utility connections before parking their fund.’ ‘Once we complete the land acquisition, developers will be appointed to develop the lands,’ Paban said. The government approved the Economic Zones Act in 2010 to attract both foreign and domestic investors. Potential investors from China, Japan and South Korea have, meanwhile, expressed desire to invest in the proposed economic zones.

The Export Promotion Bureau (EPB) will propose setting the country’s export target at $ 37 billion for the upcoming fiscal year (FY) 2016-17, officials said. The EPB has projected the target, which sees an 8.81 per cent or $ 3.50 billion rise over the current fiscal year’s export target of $ 33.50 billion. The proposed target was placed at a meeting of the EPB Wednesday where leaders of major export-earning sectors, including ready-made garment and frozen fish, differed with the government’s projection, saying that it might not be achievable if the proposed 1.5 per cent source tax is implemented.  The EPB also expected that the country’s total export receipts would reach $ 34.0 billion by the end of this FY, reflecting an 8.95 per cent growth over the previous fiscal. “We have initially proposed the export earnings target for FY17, taking the last five years’ growth in the merchandise shipments into account,” Vice Chairman of EPB Mahruha Sultana told the FE after the meeting. The EPB chief said they will again sit with all stakeholders and send the proposal to the Ministry of Commerce (MoC) shortly for approval. The country depends on limited markets and limited products, EPB officials said, adding that the country’s overall infrastructure has not developed to meet the required demand. For the current fiscal year, all 21 major export items, except for frozen fish and plastic, have been projected to grow. These include knitwear at 6.33 per cent, woven garments 11.69 per cent, leather and leather products 0.93 per cent, medicines 13.54 per cent, jute and jute goods 5.01 per cent and footwear 14.78 per cent. The upbeat forecast has been made despite the country’s largest export group openly questioning the wisdom behind such a rosy projection. “We don’t think we can achieve this target if the proposed source tax is implemented,” said Bangladesh Garment Manufacturers and Exporters Association (BGMEA) director Shahidul Haque Mukul told the meeting. Source tax is applicable to sales, not to profit, he said, adding that the industry is passing a tough time after the Rana Plaza collapse and many factories especially small and medium-sized units were closed to various reasons. Moreover, there is acute energy crisis, he said urging the government to reduce the source tax to a reasonable rate mainly to help achieve the projected target. Echoing the BGMEA leader, representative from Bangladesh Frozen Fish Exporters Association also demanded cut in source tax to 0.30 per cent. Frozen foods industry insiders said $ 544 million earning is not possible unless the government provides the sector with bonded warehouse facility mainly to meet the scarcity of raw materials. “But before that, the target for the next fiscal might not be achieved,” BFFEA representative said. The EPB proposed $ 14.15 billion and $ 16.18 billion target from knit and woven products exports respectively. It also proposed $ 957 million export target with a growth projection of 4.93 per cent for jute and jute goods sector. It expects the sector to end the current fiscal year with $ 912 million earnings. Bangladesh earned $ 31.20 billion in FY 2014-15, $ 30.18 billion in FY 2013-14 and $ 27.02 billion in FY 2012-13 from exports respectively.

Cotton exports from India, the world’s biggest producer, have nearly halted as local prices have rallied due to tight supplies because of drought, forcing key importers like Bangladesh, Pakistan and Vietnam to turn to other suppliers. The freeze in Indian export will prompt Brazil, Australia and United States to raise shipments and has pushed global prices to near their highest since August. The price rise could subsequently push up fabric and clothing prices and put pressure on the margins of garment makers. “In last three-four weeks Indian exporters could not sign a deal. Our cotton is more expensive than Brazilian or Australian supplies,” said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt. Ltd, a leading exporter. The landed cost of Indian cotton for buyers in Pakistan and Bangladesh is at 75 cents to 76 cents per lb compared to around 73 cents for Brazilian cotton, he said.

The country’s export earnings from the United Kingdom in 11 months of the current financial year grew by 19.10 per cent to $3.44 billion from $2.89 billion in the same period of the financial year 2014-15 due to an encouraging performance of the readymade garment sector. Besides, Japan has already appeared as an emerging market for Bangladesh and the earnings from the market in the July-May period of FY16 stood at $981.92 million with a 17.12-per cent increase from $838.34 million in FY15, according to the Export Promotion Bureau data to be released today. Experts and exporters said both the markets have shifted their procurement orders to Bangladesh from China due to price competitiveness and they hoped that export growth in the destinations would increase further in the coming days. ‘Especially, Britain is a cosmopolitan nation and the huge number of tourists in the country is the buyers of garments and they want middle- and lower-end products. The UK is shifting their procurement orders to Bangladesh from China as the world’s second biggest economy is shifting its production to high-end and high-tech,’ Anwar-ul Alam Chowdhury Parvez, a former president of Bangladesh Garment Manufacturers and Exporters Association, told New Age on Tuesday. He said that Vietnam could be the China plus country (import source alternative to China) for the UK but Vietnam shifted its production to high value-added products and Bangladesh gained the market share previously held by China in the UK. ‘Not only in the UK the export growth in the EU would also increase more in the coming days as Vietnam is occupied with the US market,’ Parvez said. He said that Japan was another promising market for Bangladesh as the country also shifted its procurement orders to Bangladesh from China. According to Parvez, after the US and the EU, Japan is the biggest apparel importer with 32 billion imports a year. The confidence of Japanese retailers have increased and Japan would be very good market for Bangladesh in future, he hoped. Khandaker Golam Moazzem, additional research director of Centre for Policy Dialogue, said that the Japanese currency devaluated by about 12 per cent against the dollar in last six months but its import from Bangladesh increased due to price competitiveness. He said that Japanese importers also shifted apparel sourcing from China due to an increase in price in the country and Bangladesh is getting advantage of the situation. Moazzem also identified three reasons for the moderate growth in the UK market. Recently the British currency appreciated about 5 per cent against the dollar that made their import less expensive and the UK is shifting more orders to Bangladesh considering it as a China plus country and the UK economic growth is higher than other European countries, he said. According to the EPB data, the RMG exports to the UK in the 11 months of FY16 increased by 21.90 per cent to $3.18 billion from $2.61 billion in the same period of FY 15. The RMG exports to Japan in the July-May period of the current financial year increased by 18.49 per cent to $704.8o million from $594.81 million in the same period of FY15. Data showed that export earnings from the US in the 11 months in FY16 grew by 7.68 per cent to $5.59 billion from $5.19 billion in the same period of FY15. The RMG exports to the US in the July-May period of FY16 grew by 6.62 per cent to $5.05 billion from $4.74 billion in the same period of FY15. Export earnings from India in the 11 months of FY16 grew by 29.86 per cent to $613.12 million from $472.12 million in the same period of FY15, data showed.

The country’s trade deficit decreased to $5.27 billion in the first 10 months of the current financial year 2015-16 compared with that of $5.87 billion in the same period of FY15 amid a fall in import payments against higher export earnings. The country had registered a trade gap of $5.50 billion in the first 10 months of FY14, according to Bangladesh Bank data. A BB official said the country posted a record trade gap in last financial year but the deficit decreased in the July-April period of FY16 due to a drop in import payments. The trade deficit had hit its all-time high at $9.91 billion in FY15. The BB data showed that the export earnings registered 8.35 per cent growth in the first 10 months of FY16 compared with the 2.42-per cent growth in the same period of FY15. The export earnings stood at $26.98 billion in the July-April period of FY16 and it was $24.90 billion during the same period of FY15. The imports registered 4.81 per cent growth in the first 10 months of FY16 compared with the 3.21-per cent growth in the corresponding period of FY15. The import payments stood at $32.25 billion in the July-April period of FY16, which were $30.78 billion in the same period of FY15. A BB official told New Age on Wednesday that the country’s businesspeople were not interested much in opening letters of credit to expand their business due to the ongoing dull business situation and vulnerable law and order situation in the country. So, the trade gap decreased in recent months, but it would not put much positive impact on the country’s macroeconomic situation as the import of industrial raw materials did not increase much to match the size of the country’s industrial sector, he said. Dull business amid political uncertainty and vulnerable law and order situation put an adverse impact on the country’s imports, which contributed to squeezing of the trade gap, the official said. The investors and businesspeople are yet to regain their confidence to go for business expansion, and so the import financing by banks has remained dull in recent months, he said. The businessmen are still following a cautious policy in setting up new industrial units and expanding existing industrial infrastructure, as they think political unrest may return anytime due to an absence of proper law and order, the BB official said. The BB data showed that the current account balance increased to $3.13 billion in the first 10 months of FY16 against $2.20 billion during the same period one year ago. The contracted trade deficit mainly played a role in registering a surplus current account balance in the first 10 months of FY16. The net foreign direct investment increased by 20.93 per cent to $1.82 billion in the July-April period of FY16 from that of $1.50 billion in the same period of FY15. The financial account of the country’s balance of payments decreased to $1.06 billion in the first 10 months of FY16 from $1.36 billion during the same period of FY15. The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans. The country’s overall balance increased by 20.82 per cent to $3.97 billion in the July-April period of FY16 against $3.29 billion during the same period of FY15 due to a strong position in the current account balance.