China, the largest apparel exporter worldwide, is becoming a major destination for Bangladeshi garment items due to duty benefits offered by the Asian economic giant and a rising middle-class there.Garment exports to China, the second largest Asian apparel market for Bangladesh after Japan, accelerated 73.48 percent year-on-year to $241.37 million in fiscal 2013-14, according to the Export Promotion Bureau.The earnings were $136.5 million in July-December this fiscal year, with 24 percent growth year-on-year.After garments, Bangladesh’s jute and jute goods and leather and leather products are also becoming popular in China, fetching $100 million and $60 million, respectively, in fiscal 2013-14.“Our garment exports to China will cross $1 billion in three to four years,” said Syed Sadek Ahmed, managing director to Space Sweater.Space Sweater that started exporting sweater to China in 2013 ships $1 million worth of products a year, Ahmed said, adding that he plans to sell other garment products as well. Due to rising production cost, Chinese businesses are moving away from producing low-end garments, which has created an opportunity for Bangladesh, he said.Overall exports to China have also been on the rise: $746.19 million came in 2013-14, with a whopping 63 percent rise year-on-year. In July-March, total exports to China were worth $579.13 million.Because of the duty benefits and low production cost in Bangladesh, Chinese consumers can save up to 15 percent if their garments are bought from Bangladesh.In July 2010, China offered a zero-duty benefit for exports of 4,721 types of Bangladeshi products, of which the majority are garments.Exporters said they enjoy an added advantage in the Chinese market as 90 percent of the garments they ship to China without paying any duty include T-shirts, jeans, sweaters and casual trousers, and Bangladesh has an edge over its competitors for these products.Bangladeshi garment items enter China in three ways — by international retailers such as H&M and Walmart, by Chinese manufacturers operating in Bangladesh, and by Chinese retailers and brands, exporters said.China is losing its share in the global apparel business due to its higher production cost, including labour wage, a lack of skilled workforce and a shift of its manufacturing base towards technological products.The average wage for Chinese garment workers is around $500 per month, while the amount is between $70 and $100 in Bangladesh.This is why Chinese businesses source garments from countries like Bangladesh and Vietnam.The apparel market size in China is $300 billion a year, of which more than $150 billion is export-oriented, according to China National Garment Association.China has a population of 1.3 billion, most of whom fall in the middle-income bracket and rely on low-end clothing.“We have a big opportunity in the Chinese market,” said Shahidullah Azim, vice-president of Bangladesh Garment Manufacturers and Exporters Association, the garment exporters’ platform.We are trying to remove the barriers to exports to China,” Azim said.The balance of bilateral trade between the two countries is heavily in favour of China due to higher imports by Bangladesh.In fiscal 2012-13, Bangladesh imported goods worth $6.32 billion from China, against $6.44 billion in the previous year, according to the commerce ministry.Before the duty benefits were offered, Bangladesh’s main export items to China were jute, jute goods, fish and frozen fish, leather and leather goods, Azim said.ndia is another major Asian market that is becoming lucrative for Bangladeshi apparel exporters.Garment exports to India have also been rising, though at a slower pace than those to China, since the neighbour allowed zero-duty benefits for Bangladeshi garment items in November 2012.In fiscal 2013-14, Bangladesh exported apparel items worth $96.26 million to India, with a 21.86 percent rise year-on-year.

Source: https://www.thedailystar.net/business/export/china-next-big-garment-export-destination-76877

Export-oriented business sectors, except RMG, have urged the National Board of Revenue (NBR) to fix tax at source for all export sectors at 0.30% like the RMG sector. They also demanded withdrawal of 5% tax on cash incentive provided by the government to boost exports. In the current fiscal year, the government lowered tax at source to 0.30% from 0.80% for the apparel sector, following demand by the RMG leaders in the wake of political unrest. The leaders of business association made the appeal at a pre-budget discussion with NBR Chairman Md Nojibur Rahman at his office yesterday.  “Frozen foods are 100% agro-based products having no relation with import, but the sector people have to pay 0.60% tax at source over export value, while the country’s ready-made garment sector pays 0.30% tax at source on export, said Bangladesh Frozen Foods Association President Amzad Hossain. “That is why we should unite and urge the government to treat all equally,” he said.  Due to hartal and blockade, production in the frozen food industries suffers due to lack of raw materials, Amzad said, stressing policy support to recover losses. He also urged the government to withdraw the ceiling on shrimp export and to set the incentive on realised prices.  Bangladesh Textile Mills Association (BTMA) President Tapan Choudhury urged the government to allow duty-free import of Busbar Trunking System like the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).  Tax at source contributes a little to the revenue and that is why it should be withdrawn, said Shahidul Islam, director of FBCCI, and also former president of Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA).  BPGMEA also urged the government to lower import tax to 2% from existing 5%.  The country’s Terry Towel sector’s export is facing trouble due to unhealthy competition, said Shadat Hossain, director of Bangladesh Terry Towel and Linen Manufacturers and Exporters Association. To help the sector come out of trouble, he urged the government to withdraw tax on incentives and local Letter of Credit and to lower tax to 10% instead of existing 15% on export earnings. “Small and medium business people are exporting jute goods, but last year the NBR through a Statutory Regulatory Order (SRO) increased licence fee to Tk15,000 from Tk11,000, and added 15% VAT to the licence fee, which discourages businessmen, said S Ahmed Majumdar, president of Bangladesh Jute Goods Association claimed.   He added that the number of entrepreneurs came down to 300 from 500. Ahmed demanded cash incentives and tax-free export facilities as it is a 100 locally-based industry.  Leader of Jute Mills Association urged the government to withdraw tax at source and cash incentives.    Responding to the call for incentives by the business community, NBR Member Farid Uddin Ahmed said incentive is a matter that Bangladesh Bank (BB) and the Commerce Ministry deal with.  “We can consider the source tax issue and would try to revise it to give cushion to the business community.”  Replying to a query about import-related disputes, NBR chairman urged the business community to resolve the disputes through Alternative Dispute resolution (ADR). “We are working on bridging relationship with the business people and to provide them with all-out cooperation to do business.”

The now multi-billion dollar readymade garment industry is currently passing through a critical juncture, as conspiracies both at home and abroad are being hatched in the sector. The overall performance of apparel exports in the last year compared to previous years has not been that different. The growth rate has been around 9% over the previous year, which is slightly lower than the past five years’ average of around 12%. This drop can be attributed to several factors likes the cancellation of the US generalised system of preferences (GSP), the Rana Plaza tragedy, political instability, the energy crisis, and discriminatory treatment by some major global buyers and various propaganda about factory diseases. Bangladesh’s apparel exports have been concentrated to two major destinations — the EU and North America. The share of our apparel export to markets other than EU and North America was 6.88% during the 2008-09 fiscal year, which had increased to 14.71% in 2013-14. From June 2013, the US suspended Bangladesh’s trade benefits under the GSP program that made Bangladeshi (barring RMG) products ineligible for duty-free treatment. Now is the time to diversify our export destinations, and the oil-established Middle Eastern countries can be a future destination for us. This diversification of export destinations, with growing exports, is a healthy sign. Over the last five years, there has been a significant rise in exports to Japan, China, India, South Korea, South Africa, Russia, Brazil, Mexico, and Chile. The simplification of GSP rules of origin by the EU, Japan, Norway, Switzerland, and duty-free and preferential market access by India, China, Korea, and Malaysia are all positive signs for us. In April 2012, the world’s leading strategy consulting firm McKinsey & Co released a study titled “Bangladesh’s ready-made garments landscape: The challenge of growth.” McKinse forecasted that the Bangladesh apparel sector could reach $30bn by 2015 and $50bn by 2021. Unfortunately, Bangladeshi entrepreneurs cannot export to Middle Eastern countries for the lack of necessary steps or lobbying and advocacy. The region has the possibility of netting us $20bn in the export of RMG commodities. Bangladesh has carried out exports worth $847m, according to Kuwait Bangladesh Chamber of Commerce and Industry (KBCCI). It is, however, important that necessary steps be taken by diplomats, missionaries, and the export promotion bureau (EPB) in those countries. That will make sure that RMG exports will increase dramatically in the year of 2021, as estimated by entrepreneurs of this sector. In addition to RMG exports having huge opportunities, other sectors like the export of labour force, pharmaceutical products, handicrafts, tannery commodities, and the export of various types of produce which can be pursued in Middle Eastern countries. Kuwait can become a central point in this region, according to the president of KBCCI. The secretary of KBCCI estimated that because of a lack of marketing, we have not been able to enhance export growth in the Middle East — but our government bodies should take the necessary measures in each of the individual countries. It was also noted that presently the lion’s share of RMG goods come by way of China, Turkey, the US, and EU. If direct negotiations with Middle Eastern business authorities can be ensured, only then can we expect to see any benefits. KBCCI is going to organise a trade fair on April 23 in Kuwait, hopefully Bangladeshi entrepreneurs and the government will be able to increase advocacy and lobbying to boost exports. All entrepreneurs should be involved in the discussion. One of the vice presidents of BGMEA has stated that it will only be possible to reach our 2021 financial goals if the necessary facilities are made available by the government. In fact, it would help ensure that we reach two goals at the same time: The RMG vision, and our aspired status of becoming a middle-income country by 2021. Apart from China, other countries and regions such as Japan, Russia, India, Australia, New Zealand, Canada, Korea, Turkey, Southeast Asia, Central and South America, as well as the Middle East have enormous potential to be future destinations for the RMG exports of Bangladesh. In the meantime, Bangladesh must continue to work on improving infrastructure, ensuring power and eco-compliance, and maintaining a world-class working environment by building eco-friendly RMG factories, according to United States Green Building Council (USGBC). However, there are some long-term challenges to the growth of the RMG sector. Infrastructure and governance, compliance issues, supplier performance, workforce supply, raw materials, and economic and political stability being some of the bigger hurdles. Bangladesh also needs to gradually diversify its export products to include other industries, where it can be competitive in the long-run. We are optimistic that the new wave of opportunities and the growth momentum will energise the apparel industry to add new success stories in the coming years — opportunities that clearly mark the RMG vision for 2021.

We do not underestimate the damage done to the economy by blockades and violent political disputes. The opportunity costs suffered by the RMG sector through buyers postponing visits and falls in orders are incalculable. It is still possible, however, to see considerable potential for the country’s leading export industry to continue to grow and provide valuable manufacturing jobs. Despite disruption and increased transport security costs, export earnings from the ready-made garment sector saw 8.4% growth to $2.08bn for the month of March compared to the same period last year. Figures from the Export Promotion Bureau indicate that RMG exports grew by over 3% for the July-March period. These figures are some way short of the growth needed for the sector to achieve its target of $50bn exports by 2021. What matters though is that, in spite of all the difficulty faced, the sector has still been able to increase export sales. Efforts to nurture new export markets are playing their part in helping the sector prove resilient. Likewise, the efforts being made by mutli-stakeholder safety initiatives and the government to improve safety conditions and productivity, are helping keep major brands committed to procuring garments from Bangladesh. Given our low labour costs and the trend of increasing outsourcing from China, there is no reason why the sector cannot get back on track and improve its competitiveness against other nations. An end to political unrest is imperative to boost confidence among buyers to keep orders flowing and secure the funds needed for future growth.

The new industrial zone will be set up on the unused land belonging to different ministries including the Industries Ministry The Industries Ministry is planning to set up a new industrial zone in the country’s northwest region, along with forming an authority that would work for ensuring better coordination and development of the existing industries. A source at the ministry said the proposed name of the new authority would be Bangladesh Industrial Development Authority (BIDA). Seeking anonymity, the official said the new authority would improve coordination among different government agencies and state-owned industries to prevent labour unrest, collapse of factories, fires, and unwanted incidents. Last week, an inter-ministerial meeting was held at the Prime Minister’s Office, presided by the premier’s Principal Secretary Abdul Kalam Azad, to discuss the arguments behind setting up another industrial zone in the country. Asked about the issue, Industries Secretary Mosharraf Hossain Bhuiyan told the Dhaka Tribune: “The proposal is now in an initial stage and it [zone] will be set up after a new law is enacted.” The proposal reportedly recommends that a variety of industries including agricultural services are set up in the new zone. The new zone would also have import and export industries, while the industries that are on the brink of being shut down would also be placed in the zone after they are modernised and new technology is introduced to ensure maximum production, according to the proposal. The new industrial zone will be set up on the unused land belonging to different ministries including the Industries Ministry, the proposal further recommends.

The government has offered 1,145 acres of land in attractive locations for establishing two separate economic zones for large-scale investors from China and Japan and sought financial assistance from those countries to develop the special economic zones. A key official of Bangladesh Economic Zones Authority (BEZA) informed that 635 acres of land was primarily selected at Gohira near Karnaphuli Fertilizer Company (KAFCO) under Anwara upazila in Chittagong for Chinese investors while land will be provided at Sreepur in Gazipur for establishing the proposed economic zone for Japanese investors. BEZA Capacity Building Project Director Md Harunur Rashid told daily sun that all the land of the proposed sites is not owned by the government, so the government has sought financial assistance from China and Japan to establish the economic zones. “Parts of the proposed sites will have to be purchased from private owners. As BEZA is a newborn dedicated agency of the government, it doesn’t have the financial capacity to purchase the land right now. So, we sought repayable financial assistance from them in form of soft loans or interest-free credit. Negotiations are continuing in this regard and hopefully we will get positive results,” the BEZA official said on Wednesday. He also said the China Harbour Engineering Company, which is carrying out dredging at Mongla port sites, has been maintaining correspondence with BEZA in regards to setting up the proposed economic zone for Chinese investors. “The company is representing the Chinese government to discuss the matters relating to financial assistance to set up the economic zone at Gohira,” he said, adding, “We have sought the same assistance from Japan to set up another economic zone at Sreepur. We are continuing discussions in this regard as well.” The BEZA official said during the visits of the Chinese and Japanese prime ministers to Dhaka, Prime Minister Sheikh Hasina has pledged to provide dedicated land to their investors for establishing industries here. According to reports, China and Japan in recent years have been carrying out diplomatic efforts to get land in some specific locations in Bangladesh for their investors to set up industrial units. Many investors of both the countries are looking for best sites abroad to expand their industries. Bangladesh is also looking for foreign direct investment (FDI) and decided in principal to provide incentives including long-term tax holiday and infrastructure facilities to foreign investors to attract more FDI. To materialize the target, the incumbent government also created a dedicated authority to provide necessary support to the foreign investors. The BEZA is one of such authorities to provide one-stop services to the foreign investors. BEZA has taken initiatives to set up 22 economic zones by the year 2020 and 100 economic zones by the year 3030. Meanwhile, BEZA has got response from a local private company to set up an economic zone for both local and foreign investors near the Mongla port. The private firm proposed to finance all the necessary infrastructural development of the economic zone. Bangladesh currently has eight Export Processing Zones (EPZs) in Ashulia (Dhaka), Chittagong, Narayanganj, Ishwardi, Uttara, Comilla, Mongla and in Karnaphuli. Over the last one decade, the country’s annual export has soared to $30 billion with the readymade garment industry being the highest export earning sector.

Square Textiles, a concern of Square Group, plans to increase its yarn production capacity with an estimated investment of Tk 113.87 crore.The export-oriented company now produces 21,600 tonnes of yarn a year at its three units. After the completion of the new project next year, another 4,235 tonnes will be produced.Square Textiles is expecting Tk 119 crore in turnover from the additional capacity, according to a posting on the Dhaka Stock Exchange website yesterday.The company also said the expected profit contribution will be around 11 percent on the turnover.The disclosure came after its board approved the investment plan at a meeting on Tuesday.At the meeting, Square Textiles, which was listed on the stockmarket in 2002, also recommended 20 percent cash and 10 percent stock dividends for 2014.The company’s net profit, however, declined 35 percent year-on-year to Tk 54.11 crore in 2014. Its earnings per share stood at Tk 3.66 at the end of last year.On the premier bourse yesterday, each Square Textiles share traded between Tk 82 and Tk 86.1 before closing at Tk 83.9

The government has allocated three economic zones to the investors of China, Japan and India in a bid to attract more foreign investment and generate employment, an official said yesterday.Bangladesh Economic Zones Authority has already acquired 510 acres of land at Sreepur upazila in Gazipur for Japanese investors and 774 acres at Anwara upazila in Chittagong for Chinese entrepreneurs, said BEZA Executive Chairman Paban Chowdhury.The government is in talks with Indian investors for selecting a site for their economic zone, he said, adding that lands will be handed over to the investors of the three countries soon. The investors will then develop the lands into economic zones, he said.Chowdhury shared the plans at a discussion at the office of Canada Bangladesh Chamber of Commerce and Industry (CanCham) in Dhaka.He said Bangladesh needs investment worth $35 billion a year to attain an 8 percent year-on-year economic growth and graduate to a middle-income country by 2021.“This is why the government has taken the initiative to build the economic zones to attract more foreign investment.”Since 2010, the government has decided to offer 22 economic zones to both local and foreign investors.The BEZA has so far issued operational licences to two private investors — AK Khan Group and Abdul Monem Ltd. Another local conglomerate, Meghna Group, is in the process to get two economic zones, Chowdhury said.Economic zones will be provided to sectors such as tourism and information technology as well, he said, adding that the government has acquired lands at Teknaf in Cox’s Bazar to develop an economic zone for tourism.An economic zone is being developed at Keraniganj in Dhaka for the IT sector, Chowdhury said.“We will provide various services to the foreign investors in the economic zones, who will be allowed to sell 10-20 percent of their products in the local market,” he said.Bangladesh has eight export processing zones (EPZs), which attracted investment worth only $3 billion in the last three decades, Chowdhury said. Annual exports from these EPZs are worth $5 billion, he added.The EPZs are run by the government, while the economic zones will operate under public-private partnership.We will not face a land crisis as we plan to construct some of the economic zones near the Bay of Bengal or on reclaimed land from the sea.At the discussion, CanCham President Masud Rahman suggested appointing public operators at the economic zones for effective management.“The BEZA should fast-track construction work as it is really difficult to get back a foreign investor if he leaves the country for not getting desired services to implement a project,” Rahman said.The government should also hold roadshows abroad to attract more foreign investors in the economic zones, he added.