The draft 7th five-year plan focuses on signing bilateral free-trade area (FTA) and preferential trade area (PTA) agreements with India and China respectively to raise exports as Bangladeshi products could make negligible access to the two vast economies. Also priority has been attached to market diversification through exploring some emerging potential markets to lessen dependence on two-the European Union (EU) and the United States (US).          “An FTA with India and a selective cooperation in the form of a PTA/general trade cooperation agreement with China would be the preferred solutions to facilitate export to these countries,” the draft of the national development plan reads. It says India and China are both important trading partners for Bangladesh, particularly for imports. “…Bangladesh remains a minor trading partner to these two economic giants, taking up very minimal shares in their exports and imports. But exporting to India and China still remains difficult due to restrictive RoO and manifold NTBs.” In fiscal year 2013-14, Bangladesh’s exports to India fetched US$456 million while imports from that country cost $6.035 billion. On the other hand, in the same fiscal year Bangladesh’s exports to China amounted to $746.20 million and imports were worth some $7.544 billion. India has granted duty-free access of 25 but all products of least developed countries (LDCs) to its market. Bangladesh being an LDC also enjoys the benefit. As an LDC Bangladesh’s 4,788 products have entered the Chinese market without paying duty since July 2010. The draft notes that despite being located between the world’s fastest-growing and potentially largest economies, Bangladesh’s shares of export to China, India and ASEAN (Association of Southeast Asian Nations) are only 0.8 per cent, 1.9 per cent, and 1.5 per cent respectively. It suggests market diversification as the key option for Bangladesh to cut dependence on the traditional two regions-the EU and the US which together account for about two-thirds of Bangladesh’s total exports. “Achieving access to the non-traditional markets such as the BRICS countries, Japan, S Korea, and Turkey would be the big alternative destinations of Bangladeshi RMG products in the future as the domestic consumption of those countries is quite large and expanding,” the draft noted. When contacted, former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Mir Nasir Hossain told the FE the World Trade Organisation (WTO) has taken a path of tariff reduction and someday global trade will go under non-tariff regime. Supporting the focus on signing FTA and PTA deals with India and China he said Bangladesh has to give importance on product and market diversification to raise export. Mr Hossain said the government has to be alert so that no non-tariff barriers exist after the signing of free-trade deals. “Besides, connectivity and infrastructural development have to be given importance so that goods can be channelled easily.” Replying to a query the former FBCCI chief said local industry always stays under threat from aggression of foreign products. “In that case the government will have to provide incentives to keep local products competitive.” Executive director of the Policy Research Institute of Bangladesh Ahsan H Mansur said for India and China, in the context of FTA or PTA, Bangladesh can be benefited if the FTA entails reduction of non-tariff barriers and encouragement of foreign direct investment (FDI) from these two major regional economic powers. “It is generally observed that when a country signs an FTA with other bigger powers (as Vietnam and Mexico did with the USA), it tends to increase FDI from the bigger economic partners,” he told the FE. Indian investment in Sri Lanka increased significantly after the signing of FTA, he pointed out. The policy analyst said an FTA generally provides mutual protections and safeguards in many forms for promoting trade and investment. “For Bangladesh it would be more beneficial if we can attract investment from these countries through the FTA,” he added.  Mr Mansur said investment will also lead to higher exports from Bangladesh to the partner countries, which would help reduce trade imbalance with countries like India and China. “Investors will be more tempted to come to invest in Bangladesh if the goods originating from Bangladesh can come to China and India under the FTA regime.” Mr Mansur noted that any FTA with bigger powers like China and India must have proper safeguard and revenue protection mechanisms. This is quite normal practice for large and smaller economies when they sign FTAs. “Under such interim arrangements, Bangladesh should be able to maintain reasonable levels of protection for many years. Revenue can be protected by applying supplementary duty (SD) uniformly on both domestic and foreign products and not relying on applying SD on imported products for protection purpose,” he said.   In any event, he further observed, as Bangladesh will become a developing country many of the current protective practices adopted by the country would need to be dismantled in line with WTO rules and regulations. “Currently we can get away with WTO rules because of our least developed status, which we should be graduating from by 2021,” he said.

Bangladesh earned US Dollar 124.73 billion by exporting readymade garments over the last six and a half years, Commerce Minister Tofail Ahmed told the parliament on Tuesday. “Bangladesh earned US$124.73 billion by exporting readymade garments to 140 countries of the world from January, 2008-2009 to May, 2014-2015,” he said in reply to a question raised by treasury bench member Didarul Alam (Chittagong- 4). Responding to another question raised by ruling party lawmaker Enamul Haque (Rajshahi-4), the commerce minister said the government has taken various plans to reduce Bangladesh’s trade gap with India, China and Pakistan. Tofail said India allowed duty-free access of all Bangladeshi products except tobacco and narcotics products from November 9, 2011 following the steps of the Bangladesh government to boost trade with India. He said the efforts for removing duty and non-duty barriers through discussion at different time and levels are underway. “Steps have been undertaken to get duty- free access of a huge number of goods from other SAARC countries under the South Asian Free Trade Area (SAFTA),” Tofail said. The commerce minister said Bangladesh is participating regularly in the international trade fairs in Guwahati, Kolkata, New Delhi, Shilchar, Mumbai, Ranchi and Bhubaneswar in India to familiarise the Bangladeshi products. “This trend would continue in future,” he said. Tofail Ahmed said Bangladesh is also participating regularly in the international trade fairs in China and other SAARC countries to raise exports, familiarise products and expand market. “We are also continuing bilateral and multilateral discussion with different countries to develop our trade ties,” he said. Besides, Tofail said, measures have been taken to increase Bangladesh’s trade contact with the businessmen of China, India and Pakistan, a BSS report added.

Bangladesh earned USD 124.73 billion by exporting readymade garments over the last six and a half years, Commerce Minister Tofail Ahmed said yesterday, reports BSS. ”Bangladesh earned $124.73 billion by exporting readymade garments to 140 countries of the world from January, 2008-2009 to May, 2014-2015,” he said in reply to a question raised by treasury bench member Didarul Alam (Chittagong-4). Responding to another question raised by ruling party lawmaker Enamul Haque (Rajshahi-4), the commerce minister said the government has taken various plans to reduce Bangladesh’s trade gap with India, China and Pakistan. Tofail said India allowed duty-free access to all Bangladeshi products except tobacco and narcotic products from November 9, 2011 after following the steps of the Bangladesh government to boost trade with India. He said the efforts for removing duty and non-duty barriers through discussion at different time and levels are underway. “Steps have been undertaken to get duty-free access of a huge number of goods from other SAARC countries under the South Asian Free Trade Area (SAFTA),” Tofail said.

Garment exports grew 4.08 percent to $25.5 billion in fiscal 2014-15, according to data from the Export Promotion Bureau. Knitwear exports increased 3.13 percent year-on-year to $12.42 billion while woven shipments grew 5 percent to $13.06 billion in the immediate-past fiscal year. Export earnings from the apparel sector were 5.24 percent below the annual target of $26.9 billion. Over 80 percent of the country’s export earnings come from the garment sector, which was able to reach its target of annual export earnings once—in 2013-14—in the last four years. Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association, blamed the fall in earnings on the shipping problems caused by the political crisis in January-March. Moreover, the devaluation of major currencies—dollar, Russian ruble and euro—is also responsible for the shortfall in target exports, he said. Small and medium factories that are housed in shared buildings saw a fall in work orders after the Rana Plaza building collapse, Islam said. Overall exports rose 3.35 percent year-on-year to $31.2 billion in 2014-15, though the amount was well below the year’s target of $33.2 billion. Exports surged in June, the last month of the fiscal year, fetching $3.04 billion, which is an increase of 7 percent from the previous month and an 8.68 percent growth from a year earlier, according to the government data. Jute and jute goods exports grew 5.34 percent year-on-year to $868.53 million, home textiles 1.49 percent to $804.34 million, and leather and leather goods 0.56 percent to $1.13 billion. Frozen foods declined 10.99 percent year-on-year to $568.03 million and furniture fell 8.55 percent to $38.94 million in fiscal 2014-15.

A Chinese investor, interested to make huge investment here, has sought approval of the government of Bangladesh to set up an economic zone.On receiving a proposal in this regards, the Bangladesh Economic Zones Authority (BEZA) has requested the Chinese investor for coming through the Chinese government.If approved, this will be the second initiative of Chinese investors to set up economic zones as the government of China has already signed a Memorandum of Understanding (MoU) with BEZA to establish an EZ at Anwara in Chittagong. BEZA sources said that China National Machinery Import and Export Corporation (CMC), a global leader in engineering contractor, project management contractor, and automotive supply chain service provider has submitted proposal with BEZA to allocate them an economic zone to invest here. “We have asked the company to come through the government of China and now they are working for Chinese government’s approval”, a BEZA official said. According to BEZA sources, the Chinese government through its China Harbour Engineering Company Limited is working to establish an economic zone at Anwara in Chittagong. The economic zone styled ‘Chinese Economic and Industrial Zone (CEIZ)’ will be established on 774 acres of land, said a BEZA official expecting that the CEIZ will generate employment for around 4 lakh people.

According to information, BEZA has been conducting primary feasibility study on establishing the CEIZ while the China Harbour is also working on assessing the prospects of establishing the zone there, it was learnt. BEZA officials said, after the feasibility study, they will sit with the Chinese Harbour to settle the ownership pattern and other related things, said BEZA sources. The government plans to attract more foreign direct investment (FDI) here by establishing the economic zones, said Moloy Chowdhury, General Manager of BEZA. “Not only Chinese companies, many Japanese and Indian investors are also interested to establish economic zones in Bangladesh,” he added. Mentionable, the Bangladesh government is planning to set up a total of 100 economic zones at different parts of the country by the year 2030 with a view to catch more foreign investment and generating employment at a large scale. The economic zones will be set up on 75,000 acres of land the under the supervision of the BEZA. BEZA has already get approval for 37 economic zones including five in Cox’s Bazaar and three in Chittagong district. For this, BEZA has already acquired around 6,000 acres of land for different economic zones.

The export earnings growth hit its 13-year low at 3.35 per cent year-on-year in the just concluded financial year 2014-15 as political turmoil in the country and decline in the readymade garment prices on the global market hurt the export business. The growth was the lowest since the FY 2001-02 when it was 7.43 per cent. The country’s export earnings in the FY 2014-15 stood at $31.19 billion with a shortfall of $2 billion from the government-set target of $33.20 billion, according to the Export Promotion Bureau data which will be released today. The government had set for the FY 2014-15 the export earnings target at $33.20 billion with a year-on-year growth of 10.02 per cent which was the lowest target rate since the FY09 when the growth target was 15.50 per cent. The earnings target from the major export items, RMG products, was set at $26.89 billion for the FY15 which is 9.82 per cent higher than $24.49 billion earned in the FY14. Experts and exporters said the political turmoil, decreased value of products on the world market, deprecation of the euro and the impact of Rana Plaza building collapse were the reasons for the shortfall in the export target in the FY15. They said the export earnings witnessed a minimal growth in terms of value but the volume of export perhaps increased. According to EPB officials, the export earnings from the RMG products in the FY15 witnessed a shortfall of $1.4 billion from the government-set target of $26.89 billion. The RMG exports amounted to $25.49 billion in the FY15 with around 4 per cent growth. According to EPB officials, the single-month export earnings in June 2015 stood at $3.05 billion against $2.8 billion in the same month of the FY14. The year-on-year export earnings in the FY15 grew by 3.35 per cent to $31.19 billion against $30.17 billion in the FY14. EPB officials said the growth would be 3.5 per cent if the earnings from IT exports were included. Even if it were 3.5 per cent, the growth will still be the lowest in 13 years. In the last 13 years, the export earnings registered a poor growth of 4.11 per cent in the FY 2009-10 while the earnings registered highest 41.47 per cent growth in the FY2010-11, the EPB data showed. Policy Research Institute executive director Ahsan H Mansur told New Age that the political turmoil and currency devaluation in the eurozone were the key reasons for the shortfall in the export target. He said that the export earnings growth hit its 13-year low as the value of products decreased on the global market. But the volume of exports might increase, he said. The impact of the Rana Plaza building collapse and the slow growth in the US market were the other reasons for the sluggish export earnings growth, Mansur said.Abdus Salam Murshedy, president of the Exporters Association of Bangladesh, said the export earnings registered a minimal growth in the FY15 as the RMG sector had been going through a transformation since the Rana Plaza building collapse. The Rana Plaza building collapse at Savar, on the outskirts of Dhaka, on April 24, 2013 killed more than 1,100 people, mostly garment workers. ‘At the same time, exporters faced political turmoil in the last two years that hit hard the export business,’ Salam said. Salam, also a former president of Bangladesh Garment Manufacturers and Exporters Association, hoped that despite challenges exporters would overcome the shortfall in the next fiscal year as the political stability was restored in the country. EPB vice-chairman Shubhashish Bose told reporters that the export earnings in the FY15 registered a minimal growth due to price fall of apparel products as the prices of raw materials including cotton and yearn decreased on the international market. According to the EPB vice-chairman, the earnings from knitwear grew by 3.13 per cent while that from woven increased by around 5 per cent. He said that the footwear export grew by 24 per cent, leather products by 3.78 per cent, jute shacks and bags by 26.72 per cent, plastic product 17.35 per cent bicycle by 11.76 per cent. The shrimps export, however, registered a 7.35-per cent negative growth, he added.

The country’s merchandise export in the just-concluded fiscal year (FY) 2014-15 fetched US$31.198 billion (3119.8 crore), up by 3.35 per cent against the previous fiscal year’s $30.176 billion, officials said. However, the earnings fell short by 6.0 per cent of the target of $33.2 billion set for the last fiscal. Vice Chairman of the Export Promotion Bureau (EPB) Shubhashish Bose attributed this to depreciation of the Euro and the Russian ruble against the US dollar and the fall in production at some local apparel factories in the face of ongoing safety inspections by the Alliance and Accord, two platforms of apparel buyers. “Nearly 54 per cent of our export earnings come from the Euro zone which is now experiencing economic recession. That is why our exporters could bring home much less than the target,” said Mr Bose. He said the export target for the FY 2014-15 was set adding 9.0 per cent to the actual export earnings of the previous fiscal. Mr Bose said the target was set a little bit higher. Thus its achievement was not easy. For the new fiscal year the target has to be set taking into consideration the ongoing recession in the Euro zone. Statistics shows that in the just-concluded fiscal, earnings from the apparel sector stood at $25.490 billion, up by 4.0 per cent against the fiscal’s earnings of $24.491 billion. However, the country’s prime foreign currency-earning sector-readymade garment-missed its yearly target of $26.9 billion by around $1.41 billion. The earnings in the FY 2014-15 from knitwear export stood at $ 12.426 billion, up by 3.13 per cent from the previous fiscal’s $12.049 billion. On the other hand, earnings from woven garment exports in the just-concluded fiscal stood at $13.064 billion, higher by 5.0 per cent compared to the previous export earnings of $12.442 billion. Leather product exports in the FY 2014-15 saw 3.78 per cent growth and earned $249 million against $240 million of the previous fiscal. Footwear export saw 10.43 per cent growth over the period. When contacted, Exporters Association of Bangladesh (EAB) president Abdus Salam Murshedy told the FE on Monday the earnings were satisfactory in view of the serious fall of the Euro and ruble against the US dollar. He said the political unrest in the last January-March period, the impact of the Rana Plaza collapse and the Tazreen Fashions fire and safety activities of the Alliance and Accord resulted in the lower earnings from merchandise exports. “We have many challenges, but the currency depreciation is the prime challenge for now. Since there is no political unrest now, we are hopeful of achieving the target to be set for the new fiscal year,” MrMurshedy added.

That works out to $90 (Tk 7,020) a month.
In Bangladesh, the minimum monthly wage for a garment worker has been fixed at Tk 5,300.
The apparel industry’s resistance to paying the proposed daily minimum wage drew a sharp rebuke from local labour groups, as well as the International Trade Union Confederation (ITUC).
“The new minimum wage will still leave workers and their dependents just above the global severe poverty line of US$1.25 per person, and many will still struggle to make ends meet,” said ITUC General Secretary Sharan Burrow .
The Myanmar Garment Manufacturers Association (MGMA), which represents 280 factories employing approximately 200,000 workers met on July 2 after a June 29 announcement by Myanmar’s National Minimum Wage Committee proposing that the minimum wage be set at 3,600 kyats (US$3.24) – or 450 kyat per hour – for an eight-hour day.
The committee consists of government officials as well as business people and worker representatives.

LOW wages in Myanmar, now among the lowest in Asean, have been mentioned as the primary advantage for companies planning to locate their manufacturing plants in the country. Many companies have taken advantage of the situation. The number of foreign-owned factories has been on the rise, despite the existence of major challenges, such as poor infrastructure throughout Myanmar. According to data provided by the Directorate of Investment and Company Administration (DICA), 407 companies have invested a total of US$4.42 billion in the manufacturing sector, or 9.56 per cent of combined foreign investment in the country, as of May this year. This amount reflects a 17.55 per cent increase from the $3.76 billion in investment in the manufacturing sector at the end of 2014. In terms of the number of investors, the figure rose by 13 per cent from 360. More companies have committed to pour more investment into the sector, as the total number of foreign companies with permission at the end of May stayed at 497. Together, they promised a combined investment of $5.65 billion, which would account for 10 per cent of the total foreign investment permitted. In terms of value, the manufacturing sector is ranked third, following only the oil and gas sector and the power sector. This rise in investment followedefforts by the Thein Sein government, which has amended several laws on foreign investment since 2011. Foreign direct investment inflows to the country are expected to reach $6 billion in the 2015-16 fiscal year, though actual inflows hit $8.01 billion in the previous fiscal year, well above the $5-billion target. “I have no doubt that manufacturing is one of the key drivers of Myanmar’s economy, as it can create a lot of job opportunities and earn a fortune in foreign currencies,” said Yanai Takashi, president and chief executive officer of Myanmar-Japan Thilawa Development Ltd (MJTD), in an interview in April. The first phase of the Thilawa Special Economic Zone alone has the potential to create 40,000-50,000 job opportunities and has attracted exportoriented firms, he added. UK Trade and Investment, a government agency tasked to promote UK companies, estimated that among all Myanmar’s economic sectors, manufacturing would create the largest number of new jobs, as demand should rise
from 1.8 million jobs to 7.6 million by 2030. Given that about 70 per cent of Myanmar’s population of 52 million is involved with agriculture, this job creation would greatly lift the quality of life of many locals.
Minimum wage
The recently published 2013-14 Asean Investment Report reveals that China is increasing its investments in the garment industry throughout the Asean region – especially in Myanmar, Cambodia and Vietnam – in order to capitalise on low labour costs. The latest survey conducted by Standard Chartered shows that manufacturers in China – spanning nine cities in China’s Guangdong Province and accounting for 27 per cent of Chinese exports – continue to face persistent labour shortages and rising wages. Manufacturers in China and other countries in Asean are facing the challenge challenge of rising wages. The minimum daily wage in Thailand was raised to Bt300 in 2013. Negotiations are underway to further increase this figure next year. Thai workers expect the minimum wage to reach Bt491 a day in three years and Bt561 a day in five years. From April, the minimum wage in Laos was raised by 44 per cent from 626,000 kip (about $77) a month to 900,000 kip (about $110). In Myanmar, the average factoryworker wage is between Ks45,000 ($40) and Ks80,000 ($71) per month in Yangon. Manufacturers are now closely monitoring the latest developments in Myanmar as workers attempt to secure a minimum wage for the first time in history. Negotiations have grown fierce as workers want pay raises while employers seek to keep wages low. The final rate, however, will be applied to all manufacturers nationwide. Labour Minister Aye Myint said last month that the minimum wage will be set in a range of Ks3,200-Ks4,000 per day, or approximately US$2.86-$3.58.
Threat to workers
Several Chinese and South Korean garment manufacturers have threatened to shut down their factories and leave the country if the Myanmar government institutes a minimum daily wage of Ks3,600 (just over US$3). The manufacturers announced these conditions during a meeting of the Myanmar Garment Manufacturers Association (MGMA) in Yangon on Thursday. Sandar, the managing director of the Myanmar Apparel Co Ltd and Pearl Garment and local representative for a Chinese investment group, was the first to threaten to close her factory in response to the new minimum wage. Won Ho Seo, chairperson of the Korean Garment Manufacturers Association, said Korean manufacturers would also close their factories following the Chinese, citing the likelihood of labour protests as the reason. After the meeting, the Chinese Investors Association issued a statement in opposition to the proposed minimum wage. According to the statement, the association, which is comprised of investors from mainland China, Hong Kong and Taiwan, is investing in Myanmar because of its large population and tax exemptions on goods exported to other developing countries. The investment was meant to yield bilateral interest for both employers and Myanmar employees. Therefore, the statement said, the government’s announcement on June 29 of a new minimum daily wage of Ks3,600 was “shocking.” The statement also said if the government insists on setting such a rate at a time when workers lack sufficient skills, orders for garments will diminish, sparking lay-offs in the garment factories. Consequently, the operation of factories would stop and ultimately be shut down; the statement predicted.Sandar said Myanmar has about 30 Chinese garment factories and over 60 South Korean garment factories. About 200,000 Myanmar citizens who work in these factories could lose their jobs, she said. The Chinese employers also said if they closed their factories, they do not plan to pay laid-off workers a compensatory payment equal to three months of wages because the lay-offs, in their view, are the result of government action. Myint Soe from MGMA said its 145 members will lodge a complaint within two weeks. He said the minimum daily wage of Ks 3,600 is, indeed, lower than that of Cambodia. However, the opposition of these manufacturers is rooted in their inability to afford the new minimum wage for all of their workers, not a lack of desire to pay them. Aung Lin, president of the Myanmar Trade Union Federation, said the garment manufacturers’ offer to pay Ks2,500 per day or else shut down their factories if the proposed rate is set is just a threat. He also said some labour unions are not even satisfied with the rate of Ks3,600. He said his federation would soon hold a press conference on the matter. “Our country has hundreds of other businesses that employ 20 to 30 million people. About 200,000 people work in CMP (cutting, making and processing) garment factories. The opposition of these garment manufacturers can impact workers from other businesses. There are many who cannot accept wages as low as Ks3,600. I want them to devise ways to pay this rate. Don’t threaten us with shutting down factories and causing workers to lose their jobs,” said Aung Lin. Foreign businesses operating in Myanmar, including garment factories, enjoy many benefits, including a generalized system of preferences. Therefore, a rising number of foreign employers are coming to Myanmar to invest in the garment industry.
Workers’ demand
The Ks3,600 rate is indeed lower than the Ks5,600 that workers from industrial zones in Yangon Region asked for. About 150 of them shouted for the new rate as they staged a march on the 125th International Labour Day on May 1. The government’s willingness to institute a minimum wage follows years of economic growth, which spurred domestic consumption and, as a result, inflation. The preparation has been lengthy. A survey on living costs, expenditures, commodity prices and salary rates was conducted last year, as the government originally planned to announce the minimum wage at the end of last year. The survey covered more than 20,000 households in 128 townships throughout the country. The situation worsened as the enactment of the minimum wage was delayed and the government raised salaries for civil servants, which further buoyed spending and goods prices in the country. Aung Lin said earlier that if the new wage cannot cover workers’ living costs, the views of labour unions across the country would be collected. He did not comment on whether a nationwide protest is in the works.

Bangladesh’s export earnings in the just concluded fiscal increased by 3.38 percent over the previous year, but still missed the target by 6.41 percent. According to Export Promotion Bureau (EPB), $31.2 billion was earned from overseas sale of products and services in 2014-15 FY that ended on June 30. The target was $ 33.2 billion. The earnings were $30.18 billion in the 2013-14 FY – 11.69 percent up from a year before. EPB Vice-chairman Shubhashish Bose told bdnews24.com export earnings in 2014-15 had surpassed the previous year’s figure despite political violence and other deterrents.

“Earning was less despite a rise in the export volume. Two reasons caused the low income. “One is that buyers from all countries including the USA have cut the prices. Another is the fall in euro and (Russian) Rouble,” he said, explaining the reasons behind missing the export target. According to the EPB, the country earned $3.04 billion from exports in June, registering a 8.57 percent growth over the same the previous month. Bangladesh Bank says the rise in export earnings in June has pushed the foreign exchange reserves up. Its Foreign Exchange and Treasury Management Department General Manager Kazi Sayedur Rahman said an increased inflow of remittances also contributed to the rise in the reserves. The reserves at the central bank were $25.13 billion on Monday.