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Chinese investors ready to relocate industrial units, says FBCCI chief

Abdul Matlub Ahmad, President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and Li Gange, President of China Council for Promotion of International Trade (CCPIT), Sichuan, China, signed a Memorandum of Understanding (MOU) recently at a local hotel in Chengdu during the 6th South Asia -Sichuan Business Promotion Roundtable.

Foreign Direct Investment (FDI) will get a big boost over the next few years as many Chinese investors consider relocation of their industries to Bangladesh.

A 35-member delegation from the capital of Sichuan, Chengdu, is visiting Bangladesh on June 25 to see the opportunities and the benefits of the relocation of their enterprises, said President of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Abdul Matlub Ahmad, according to BSS.

Talking to the news agency Wednesday on his way back from Kunming to Dhaka after attending two major trade and investment events in China, the FBCCI president said southwestern China’s province is now encouraging their investors to relocate their industries.

Ahmed led a 32-memebr FBCCI delegation to the 3rd China-South Asia (CSA) Expo in Kunming and a conference on infrastructure and renovation in Chengdu. FBCCI president chaired the Chengdu conference.

“Chinese investors at the conference told us that the recent economic stability and progress in Bangladesh attracted them to relocate their business there”, said the FBCCI chief.

Besides, he said, they found the labour cost in Bangladesh to be still cheaper than that of Chengdu. “Average wage in Chengdu is three times higher than Bangladesh,” he said.

The FBCCI signed another memorandum of understanding (MoU) with a private investment promoter in Chengdu to promote Chinese investment in Bangladesh, Ahmed said.

“The organisation, which works like our BoI (Board of Investment), is expected to bring one company to Bangladesh in two months and four companies in five months and will arrange visit of a big business delegation to Dhaka in three months.

The prime target of the investment promotion would be to encourage Chinese entrepreneurs to relocate their enterprises to the FBCCI’s planned investment zones in 64 districts, where 1,600 industrial units would be developed over the next few years.

Ahmed said Chinese investors would have the major portion of the industrial units where they would produce various goods for exporting those to the global market.

“There had also been a preliminary talks with some power companies in Chengdu when they expressed their keen interest in renovating power plants in Bangladesh”, the FBCCI president said.

He said the companies developed technology and knowhow to renovate old power plants to produce more electricity by using less water and gas.

“They would invest in replacing machinery in our power plants so we could produce more power with less water or gas. This will help bring in huge amount of FDI to the country,” he said.

Already, a Chinese bus company has signed an MoU with a Bangladeshi company to make modern bus-body and related stuff for Bangladesh and China, Ahmed said, pointing out that besides getting the Chinese investment, the country would get standard bus bodies once production begins.

Senior Secretary of the Ministry of Commerce Hedayetullah Al Mamoon, who also attended the 3rd CSA, said the expo would help increase investment from China besides strengthening regional connectivity for better trade and business.

BGMEA polls on Sept 8

Bangladesh Garment Manufacturers and Exporters Association has finally announced schedules for its biennial elections for 2015-2016 term after deferring two times.

The election board chairman Jahangir Alamin on June 10 announced September 8 as the election date for electing directors of the trade body for two years.

Earlier, the BGMEA board of directors took the decision on the polls in a meeting on June 9.

As per the schedule, the last date for paying the annual subscription is July 9 while the last date for submission of nomination for voter is July 12.

The last date for submission of the nominations for the post of director is August 3 while the polls will be held on September 8.

More than 3,000 voters of the trade body will elect 35 directors and the elected directors will choose president and seven vice presidents for the trade body.

The duration of the incumbent board ended in March as the last elections were held in March 2013. The commerce ministry extended the time for the incumbent board for six months.

The BGMEA was supposed to declare elections schedule by December 2014 for holding the polls in March 2015 but the elections were deferred to June as commerce ministry in a letter asked the BGMEA to submit the updated voters’ list to the ministry before holding the elections.

The BGMEA also missed the second deadline and sent a letter to the ministry seeking three more months for updating its members’ list.

The commerce ministry extended the tenure for the incumbents up to September for the second time.

The last biennial elections of BGMEA for 2013-14 were held in March 2013.

Netherlands for joint efforts to ensure fair price of RMGs

The Netherlands has extended its support for ensuring a ‘fair and true’ price for Bangladeshi readymade garments as Bangladesh has made a significant progress in transforming the sector that involves huge costs, reports UNB. “This is of course a very sensitive discussion… but I do think we have to sit together to try and come up with a decision,” visiting Dutch Foreign Trade and Development Cooperation Minister Lilianne Ploumen told a press conference while responding to a question from the news agency. She mentioned that if there is fare wage there has to be a fair price too and hoped that in the next year, working together with everyone, they can come up with some guidance identifying the composition of product price and the price at consumers’ end. The Dutch minister said it is not only the responsibility of the government to improve working conditions but the responsibility of the buyers, retailers consumers too. Commerce Minister Tofail Ahmed who also attended the joint press conference said the Accord and Alliance have no right to interfere in Bangladesh internal matters other than carrying out inspections. “In the name of social audit, they’ve no right to create unnecessary obstacles and interfere in our internal issues. We discussed it and their representatives were present,” Tofail said. He also said the government has already prepared rules for the amended labour law and those will be implemented by July. Earlier in her opening remark, the Dutch minister said since 2013 many challenges in the RMG sector have been tackled and some are need to be addressed in the coming days. She emphasised the need for speedy completion of the process towards adoption of the implementing rules of the Bangladesh Labour Act. Both the ministers underscored that fair pricing should also reflect among other cost of fire, structural and electrical safety and reasonable working hours in order to avoid workers having to pay the ultimate price through poor working conditions. Earlier, the stakeholders, including BGMEA, BKMEA, trade unions and ministers and development partners, held a discussion on the sector. The meeting reaffirmed the collective determination to continue to work together in improving the condition of Bangladeshi workers in the RMG industry

Bangladesh conveys worries over US Trade Bill

Bangladesh has expressed its concern over the US trade bill on Trans- Pacific Partnership (TPP) with a fear that it might lose its competitive edge in the American market due to the preferential treatment to the trans-pacific partners. Bangladesh Ambassador to the United States Mohammad Ziauddin conveyed Dhaka’s concern to the US authorities in separate meetings held with the US Congressmen Brad Sherman and Tom Marino at the Capitol Hill in Washington DC on June 15 and 16 respectively. During the meetings, Ziauddin briefed the congressmen about Bangladesh’s trade relations with the US. Being a least developed country (LDC), Bangladesh does not receive any special or deferential treatment from the US in terms of trade and commerce, Ziauddin told the US Congressmen. The US is a major destination for Bangladeshi products mainly RMG, receiving nearly one fourth of total exports but Bangladeshi apparels are subjected to a high tariff in the USA as opposed to zero tariffs to almost all other least developed countries in the world, said Ziauddin. The Bangladeshi envoy said: “Around 90% RMG workers are women, who accelerated the process of women empowerment and socio-economic development in Bangladesh.” He urged the US government to provide preferential market access for Bangladeshi products (duty free and quota free) to the US market as accorded to other developing countries of the Sub-Saharan Africa and the Caribbean and to reinstate the GSP facilities for BangladeshBangladeshi RMG. “The international community should persuade Myanmar to take back the Rohingyas from the southern part of Bangladesh,” said Bangladesh envoy while responding to Brad Sherman. Bangladesh cannot afford to host such a large number of refugees inside her territory, he said Regarding the Burmese Rohingyas, he said: “They are extremely susceptive to the religious extremist groups as there are evidences of using Rohingyas for terrorist activities.” The envoy also briefed the Congressmen on the colossal adverse effect of climate change on Bangladesh saying that climate change, a fact of life of the people of the country, is hardly of their own making, and being one of the least emitters of CO2 (with only 0.3 metric ton per capita emissions). Bangladesh is the most vulnerable to the severe effects of climate change and the present government under the Prime Minister Sheikh Hasina created ‘Trust Fund’ of US$ 375 million and launched nearly 238 projects for adaptation and mitigating the adverse effects of climate change in Bangladesh, he told the US congressmen.

Bangladesh denim: Big opportunities

The global brands and retailers are forecasting that Bangladesh would soon become a major player in the global denim market. Bangladesh is now turning into a major source of denim products as international retailers attracted by cheaper prices place higher volumes of denim-based work orders. At present Bangladesh is the third largest denim exporter to the US after Mexico and China with an 11.3 per cent market share, according to the US department of commerce. On the other hand, the global denim market will cross $65 billion in the next four to five years. Denim entrepreneurs of Bangladesh are facing serious problems at the moment but huge opportunities are there for increasing export of denim products. To take advantage of the expanding global market of denim, we need to take some steps. DEVELOPING R&D: In this rapid changing fashion world, denim products undergo diversification very frequently. Continuous research is required for this purpose. The managements of the denim industries very often show interest in research work. Without adequate budget, it is impossible to achieve effective R&D (research and development. INADEQUATE LOCAL YARN SUPPLY: Denim fabric is mainly produced from the open-end (Rotor) yarn. Local rotor yarn manufacturing industries can supply less than 50 per cent of the domestic demand. On the other hand, the slub yarn (Ring or Rotor) used in both warp and weft in fancy denim products and the core spun yarn used as weft in stretch denim fabric are mainly imported from countries like India, Pakistan, China, Taiwan, and Thailand. DEPENDENT ON IMPORTED CHEMICAL: Colourants and auxiliaries required for warp dyeing and garment washing are fully imported from abroad. When other Asian low-cost denim exporting countries like China, India and Pakistan are using their own chemicals which save their product cost. Moreover, insufficient gas, lack of infrastructural capacity and power crisis are common phenomena here. In spite of many limitations, our denim backward linkage is developing day by day. Presently Bangladesh has 25 denim fabric manufacturing plants. Most of them equipped with modern machineries have been set up in two years. More than five new companies are also setting up factories. They are now giving quality production with their maximum capacity. In addition, denim will contribute around $2.0 billion to the country’s garment export target of $50 billion by 2021. There is a huge demand of denim in the domestic market. Bangladesh is a growing market for denim fabrics and global retailers, especially European Union, are sourcing from here. Industries insiders say the local entrepreneurs are interested in denim production due to mainly higher demand and duty-free access opportunities to the European market. More than 60 international brands including G-Star, Jack and Jones, Oliver, River Island, H&M, C&A, PVH and GAP have turned to Bangladesh in the last couple of years for denim product imports. Versatile finishing range has to develop for the value added surface effect. To increase the percentage of contribution in the world denim market share, our manufacturers have to be as responsive and flexible as they can possibly be, by rapid response time with quality product and competitive price. Economists at home and abroad forecast that our next major business opportunity is denim, as orders are shifting from China to Bangladesh because of rising denim costs in China. Skilled workforce at all levels like operation, quality control, management, marketing, etc. related to denim manufacturing process are there in the country. It has reduced the dependence on foreign experts. Most of the recently running denim projects are running by our own experts. This encourages investors to set up new denim plants and expand the existing ones.

BGMEA accuses European buyers’ alliance accord of interference

Bangladesh Garment Manufactures & Exporters Association (BGMEA) has accused European buyers of interference in the apparel factories.BGMEA President Atiqul Islam made the allegation at a meeting with Finance Minister AMA Muhith on Monday.The industry lobby met Muhith to press for reconsidering several budget proposals for the 2015-16 financial year regarding taxation for the sector.Islam labelled Accord a ‘big problem’ for Bangladesh’s readymade apparel industry. He said it was supposed to look into factory building’s security, fire safety and working condition but it was now interfering in internal management matters.”Factory owners have the legal right to appoint and suspend workers,” he said.”A factory suspended six workers on rational grounds but Rob Ways was forcing the factory to keep them.”Ways heads Accord in Bangladesh.Islam also alleged that Ways was an ‘agent’ of the US trade union AFLCIO.”Accord and Alliance are insisting on changing the electrical wiring of all factories with wires that can withstand fire for two hours.” “They argue that since traffic jams happen a lot in our country, it takes fire service two hours to reach the accident site,” Islam added. He said those costly wires would have to be imported before adding such interference was a new challenge before the garment sector.The finance minister said Accord’s activities were ‘undesirable’ and that he would look into the matter. “We invited Accord and Alliance to help us but now it seems they themselves have become a problem,” he said.”Unusual pressure is undesirable.”On May 9, the BGMEA president sent a letter to Commerce Minister Tofail Ahmed, criticising Accord’s activities.

Businesses ask for 0.3 pc tax at source on apparel exports

Businesses have demanded retaining 0.3 percent tax at source on export of readymade clothing, report bdnews24.com. They have called for withdrawal of the one percent tax proposed in the budget for the 2015-16 FY. Leaders of the associations representing apparel exporters made the demand at a meeting with Finance Minister Abul Maal Abdul Muhith at his Secretariat office on Monday. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Atiqul Islam placed the demands of the exporters in a written statement. The demands also include withdrawal of one percent duty on capital machinery import, extension of the tax rebate for apparel sector by five more years, waiver of outstanding VAT on service sector and suspension of bonded warehouse audit. Islam thanked the government for continuation of different facilities and incentives for the garment sector in 2015-16 FY. He claimed murders of people and arson of vehicles during the BNP-led alliance’s agitations had caused apprehension among overseas buyers of Bangladeshi garments. “Now buyers don’t want to come to Bangladesh. That’s why export target for the current FY cannot be attained,” he said. The BGMEA chief said Bangladesh exported clothes worth $22.9 billion this FY until Monday against the target of $27 billion for the entire year. “Export figure will reach $25 billion. Even goods worth $2.1 billion will be exported during rest of this month,” he added. Islam said Bangladeshi apparels were losing competitive edge as taka had been strong against the US dollars. “In such a situation 1 percent tax at source on total export value will lower competitiveness of the garment industry. That’s why we’re requesting maintaining tax at source at 0.3 percent like the current fiscal year,” he added. The finance minister did not assure the businessmen of meeting their demands but said he would discuss the matter with the government high-up. “I don’t prepare the budget alone though I present it. We’ll discuss the matter,” he said. Hinting at the prime minister, Muhith said: “We two have to discuss the matter. I have to go there. Your market situation will definitely be taken into consideration.” He urged the entrepreneurs in the apparel sector to relocate their industries from the capital to the ‘garment village’ at Baushia in Munshiganj.

Dutch minister opens seminar, visits DBL Group factory

Visiting Dutch foreign trade and development cooperation minister Lilianne Ploumen opened a cleaner production measures in textiles industries in the city Tuesday. The seminar on ‘Sustainable Wet Processing’ was jointly organised by the International Finance Corporation (IFC) and Solidaridad. The initiative titled ‘Bangladesh Water Pact: Partnership for Cleaner Textile’ is being implemented in association with leading international apparel brands, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Embassy of the Kingdom of Netherlands in Bangladesh Working with over 100 textile factories, the project will facilitate ‘cleaner production measures’ across the textile industry resulting in a sustainable and competitive industry, according to the organisers of the seminar Earlier, Dutch Ministers Mrs. Lilianne Ploumen, Minister for Foreign Trade and Development Cooperation and Ms. Melanie Schultz Van Haegen, Minister of Infrastructure and Environment, paid a visit to DBL Group Factories at Kashimpur, Gazipur on Monday.  A multi-stakeholder delegation comprising representatives of Ministry for Foreign Trade and Development Cooperation of the Netherlands, Ministry for Infrastructure and the Environment of the Netherlands, Mr. Gerben de Jong, Ambassador of the Netherlands, Mr. Sheikh Mohammad Belal – Ambassador at the Bangladesh Embassy in the Netherlands, high officials from Dutch water companies, textile companies, trade unions and NGOs accompanied the Ministers. Mr. M.A. Jabbar, Managing Director, DBL Group and Mr. M.A. Rahim, Vice Chairman, DBL Group were also present during their visit, according to a media release. The visit was to intended to see the implementation of PaCT Project in DBL. PaCT seeks to bring about systemic, positive environmental change for the Bangladesh textile wet processing sector, its workers, surrounding communities and to contribute to the sector’s long-term competitiveness. PaCT is being implemented in about one hundred wet processing textile factories in Bangladesh. Besides, PaCT, DBL is also working on projects like Rice Fortification Programme, Nirapod: Saving Women from Unwanted Pregnancy & Unsafe MR etc. These projects are funded by the Netherlands government. During the visit, activity and progress of these projects have also been shared with the Ministers.

Gap to close 175 stores, cut jobs at headquarters

Apparel retailer Gap Inc said it would close a quarter of Gap specialty stores in North America over the next few years, including 140 this year, potentially affecting thousands of jobs as the company struggles with a slump in sales at its namesake brand. San Francisco-based Gap also said it would cut 250 jobs at its headquarters. The company did not say how many employees would be laid off as a result of the store closures. As of Jan. 31, Gap had about 141,000 full- and part-time employees in about 3,700 company-owned and franchise stores worldwide. A series of fashion misses has resulted in shoppers turning away from Gap to fast fashion rivals such as H&M, Inditex’s Zara, and Forever 21. “Management is trying to control the exposure to the Gap brand until they can have some compelling product to really (rejuvenate) the top line and profitability,” Mizuho Securities USA analyst Betty Chen said, noting the company’s “prudence” in trying to eliminate the store footprint. The announcement of store closures follows a management shakeup at the retailer. Gap Chief Executive Art Peck, who took over the reins in February, said last month that the label’s women’s clothing business had been a challenge for several seasons due to quality and fit issues and because it was not trendy enough. Gap fired creative director Rebekka Bay in January, eliminating the position in the process. In February, the company hired Wendi Goldman, former co-president at L Brands Inc’s Victoria Secret, as executive vice president of Gap’s product design and development team. Jeff Kirwan was named the Gap division’s global president in December. Gap said it expected to close 175 of the 675 specialty stores under the Gap label over the next few years, resulting in annual sales losses of about $300 million. The company also said it expects to incur one-time costs of $140 million to $160 million, primarily in the current quarter. Gap reported sales of $16.44 billion for the year ended Jan. 31. After the closures, Gap will have 500 specialty Gap stores in North America, as well as 300 outlet stores. The company also said it plans to close some stores in Europe, but did not specify how many.

MSME minister launches khadi denim, PMEGP North-East Expo

Kalraj Mishra speaking at the launch of exhibition

Union MSME minister Kalraj Mishra has described khadi as a statement about lifestyle and values and stressed on the manufacture of not only market oriented but also product oriented khadi. His comments came while inaugurating the khadi denim exhibition in New Delhi. Mishra also said that there is growing demand for khadi in foreign countries also, according to an official statement. Denim jeans, jackets, skirts and bags etc, designed by NIFT graduates and other professional designers will be available for sale in the exhibition. Speaking on this occasion, he recalled the appeal made by the Prime Minister in his radio address” Mann Ki Baat” to buy at-least one khadi garment. As a result of the appeal, the sale of khadi increased over 60 per cent. Mishra also inaugurated North East PMEGP Exhibition. He praised the products displayed by the entrepreneurs of North Eastern region. The products displayed in the PMEGP Exhibition are produced by the artisans of North East region and Khadi Gramodyog Bhavan has given an opportunity to market their products in the national capital. This is an example of unity in diversity, he said. In the first phase, micro entrepreneurs from the North East Region along with khadi institutions will be displaying their products in the PMEGP windows. The North East products like cane, bamboo, Munga silk, and Endi silk etc and other handicraft items will be available in the exhibition. Khadi Gramodyog Bhavan, KVIC, New Delhi has also been awarded an ISO 9001:2008 certificate, the statement said.

RMG BANGLADESH NEWS