Sherpa Hossainy's Blog

Credit policy hindering Light Engineering Sector

Posted in Bangladesh, Business, Dhaka, Economy, Export and Import by Sherpa Hossainy on May 28, 2011

Published in The Daily Independent on 27 May, 2011

Read the article on the Independent website

Digital print edition

Light engineering sector is reeling from lack of access to credit and sluggish government initiatives, a study revealed.

Despite contributing 2.2 percent of the GDP, which is more than the foreign aid that the country receives in a year, land and energy crisis and poor credit accessibility is hurting the labour-intensive sector’s growth potential, the study said.

International Business Forum of Bangladesh (IBFB) conducted the study titled “Identifying Regulatory Impediments of the Light Engineering Sector and Improving Transparency” as part of its research activities funded by USAID-PROGOTI.

“There should be simplified VAT payment, based on total turnover instead of categorised VAT and tax structure,” IBFB research officer Md Deloar Hossain said Thursday at a view exchange meeting.

IBFB Chairman Mahmudul Islam presided over the event, while Editor of the Financial Express Moazzem Hossain was present as the chief guest.

Deloar Hossain said the entrepreneurs are currently paying 15 per cent VAT (Value Added Tax) on finished LE products and 17 per cent duty on the repairing services.

IBFB chairman said, “The government can build multi-storied buildings in its khas lands to house those industries where all kinds of facilities should be available.”

Moazzem Hossain said that the government should incorporate effective initiatives to promote this industry as it generates annual revenue of Tk 9,500 crore (US$ 1.36 billion).

The sector employs nearly 800,000 people by making import-substitute products worth Tk 2,000 crore a year, he said, citing the study report.

“Despite facing a number of obstacles, the sector has managed to keep a seven per cent growth,” Moazzem Hossain said, adding that it also earned Tk 12-15 billion through exports.

He said Bangladesh depends heavily on the readymade garment sector to earn foreign currency, but such dependency should be reduced for the sake of balanced economic growth and export diversification.

Journalists participating in the view-exchange meeting also emphasised the need for dialogues with the private and public banks so that the traders can avail access to industrial credit at a tolerable interest rate.

The sector’s contribution to production, maintenance and repair of automobile spare parts is worth about $75 million. Statistics show that the country spent $2.3 billion in importing cars and another $75 million in automobile spare parts in the 2007-08 fiscal year.

According to Export Promotion Bureau (EPB), export earnings from this sector were $310 million during 2007-08 compared to $285 million in 2006-07.


Software piracy reaches $137m in Bangladesh

Posted in Bangladesh, Business, Computer, Dhaka, Economy, Export and Import, Internet, IT, Software, Technology by Sherpa Hossainy on May 26, 2011

Published in The Daily Independent on 20 May, 2011

Read the article on The Independent website

Digital print edition

The value of unlicensed softwares installed on personal computers in Bangladesh reached a record $137 million in 2010, a study revealed.

The Global Software Piracy Study 2010 by Business Software Alliance (BSA), which evaluates the global state of software piracy, found that 90 percent of the softwares installed on PCs in Bangladesh are pirated.

The value of illegally obtained software was $127 million in 2009, while the piracy rate was 91 percent.

“Although we have seen a one-point reduction in the software piracy rate over the previous year, we continue to face huge challenges to keep the piracy rate down,” BSA said in the study.

“Even as the Bangladesh IT industry is developing, many companies are still oblivious to what constitutes illegal software use,” said Roland Chan, senior director (marketing), Asia-Pacific, BSA.

The survey found seven out of 10 respondents expressing support for paying inventors for their creations to promote more technology advances. However, support for intellectual property rights was strongest in markets with higher piracy rates.

The commercial value of stolen software in Asia Pacific totaled over $18.7 billion, while  the global value was $59 billion — nearly double than the value in 2003.

Half of the 116 geographies studied in 2010 had piracy rates of 62 percent or higher, with the global average piracy rate at 42 percent.

The study found the piracy rate in the developing world was 2.5 times higher than the developed world, and the commercial value of pirated softwares were $31.9 billion, which accounts for more than half of the world total.

Globally, 59 percent of the respondents said IP rights benefit local economies, while 61 percent said that IP rights create jobs.

Among the common ways of people engaging in piracy was to buy a single copy of software and installing it on multiple computers. The survey found that 51 percent of business-decision makers in developing markets erroneously believed that the softwares were legal.

This was the eighth study of global software piracy conducted by BSA in partnership with IDC, the IT industry’s leading market research and forecasting firm, using a methodology that incorporates 182 discrete data inputs for 116 regions around the world.

This year’s study also included a public opinion survey of PC users on key social attitudes and behaviors related to software piracy, conducted by Ipsos Public Affairs.

The study covers piracy of all software that runs on PCs, including desktops, laptops, and ultra-portables and netbooks. This includes operating systems, databases and security packages, and applications software.

The BSA works in 80 countries to expand software markets and create conditions for innovation and growth. BSA members include giant software makers like Adobe, Apple, Autodesk, Corel, Microsoft, Siemens and Symantec.

Bangladesh proposes zero-tariff market zone

Posted in Bangladesh, Business, Dhaka, Economy, Export and Import by Sherpa Hossainy on May 24, 2011

Published in The Daily Independent on May 24, 2011

Read the article on The Independent website

Digital print edition

Bangladesh has yesterday reiterated its proposal for setting up a free market zone for the SAARC member countries with zero tariffs under the South Asian Free Trade Area (SAFTA) agreement.

“This proposal is essential for creating duty free access to our industrial goods and services without any technical barriers to trade,” said Minister for Industries Dilip Barua.

Barua was speaking at the ending ceremony of “India INVESTRADE 2011” exposition at Ruposhi Bangla Hotel in Dhaka. The show was organised by the Indian Chamber of Commerce (ICC) with assistance from the Indian government.

Industry representatives of Bangladesh with interest in energy products have interacted with Indian producers for possible tie-ups throughout the show held from 21 May.

Rajeev Singh, director general of ICC, in his summary speech about the fair, said: “We have received proposals worth Tk 1,273 crore in the fair, including both imports and exports.”

Earlier the minister proposed the special non-tariff zone on May 5 at the 2nd India-Bangladesh trade fair.

He also stressed the need to resolve bilateral and multilateral trade disputes through negotiations. “For settlement of issues, a proper co-ordination between the governments and industrial players is required,” he said.

Matlub Ahmed, president of India Bangladesh Chamber of Commerce and Industry (IBCCI), urged the government to help set up a special economic zone (SEZ) for the Indian investors at Chattak, Sunamganj.

“ICC has promised to bring in Indian Industrial houses to invest in the SEZ,” he added.

Farooq Sobhan, president of Bangladesh Enterprise Institute and former ambassador to India, said: “Bangladesh is strategically located in one of the fastest growing region in the world, where India is growing at 8-9 per cent, ASEAN countries at 6-7 per cent and China at almost 10 per cent.”

Sobhan said, “Any country, as well positioned today as Bangladesh, should take full advantage of its geographic location.”

He also added that all businessperson authorised by their respective chambers should qualify for SAARC visa exemption certificate. “This will make business much easier,” he said.

Sanjay Bhattacharyya, deputy high commissioner of India to Bangladesh, and Francois Carpentier, head of power of Alstom India, also spoke in the occasion.

Muhith vows to stamp out North Bengal energy woes

Posted in Bangladesh, Business, Dhaka, Economy, Energy and power by Sherpa Hossainy on May 18, 2011

Published in The Independent on May 18, 2011

Read this on The Independent website

Digital print edition

The impoverished northern region of Bangladesh will be brought under gas-connection network urgently in a bid to eliminate its existing regional inequity, said Finance Minister AMA Muhith Tuesday.

“We have not been able to use the available energy sources in the North Bengal nor have we been able to deliver adequate energy there,” Muhith said. He was speaking at a seminar on “North Bengal’s development and budget” organised by the North Bengal Development Forum (NBDF) at Hotel Ruposhi Bangla in Dhaka.

He said the most important issue on focus about North Bengal is ensuring gas supply there. He blamed Petrobangla for its failure to provide enough gas supply for the region.

“It is unacceptable that Petrobangla has not been able to add significant gas supply to the North Bengal in two and a half years,” Muhith lamented.

Speakers at the seminar said there is a coal reserve of 3 billion tonnes in four coal mines of North Bengal that could be used for producing 10,000 mega watts of electricity over the next 50 years. But they said a group of environment activists is trying to daunt the region’s progress by misguiding people about the effects of coal mining.

The minister said, “The complaints and criticisms on coal mining are only theoretical.

The practical benefit is much greater if we can mitigate the environmental and social problems arising from mining.”

Coals are mined all around the world such as in Australia and the USA, but the effects are contained so far as possible, he said. “No one sits on such a huge energy source, while, most importantly, Bangladesh’s coal quality is very good.”

He said the decision to start coal mining, whether by open-pit or underground mining method, depends on the people of North Bengal.

Muhith assured there would be no obstruction from the government if people want coal mines. “The electricity generated by furnace oil fuelled power plants is very costly and unsustainable.

There is no way but to use the huge coal resource.” “But it will take time, and it could be seven to ten years, to be practical,” the finance minister said.

M Asaduzzaman, research director of Bangladesh Institute of Development Studies (BIDS), said: “There can be no provision of ‘no’ in the case of coal mining. The issues are only technical.”

Although Muhith rejected the idea of starting coal mining by Underground Coal Gasification (UCG) method saying the technology is still not viable.

The finance minister also snubbed the idea of a federal government in the northern region saying the integrated economy of the country does not allow such system. But he proposed a district-based government system, as there are 20 lakh people on an average in a district, which is bigger than the population of many countries like Sri Lanka and Bhutan.

He said the Prime Minister Sheikh Hasina also expressed her interest in forming such government. Muhith also said providing loans without interest is impossible but subsidies and lower interest rates for the loans for the development of the Northern region could be arranged.

The minister assured that the government will focus on the development of the silk farming (sericulture), warehousing and cold storage facilities.

Md Shahriar Alam, member of the parliament, presented the seminar’s proposals. Some of them were: building warehouses, surface water irrigation project, development of tourism in the Northern region, resuming operation in the airports in the North Bengal.

Textile minister calls for a united force

Posted in Bangladesh, Business, Dhaka, Economy, Export and Import, RMG and textile by Sherpa Hossainy on May 16, 2011

My second event coverage published in The Daily Independent on May 16, 2011.

Read the report on The Daily Independent website

Digital print edition

Minister for Textiles and Jute Abdul Latif Siddique  on Sunday urged the textile and garment entrepreneurs to unite under one umbrella to enjoy a better hand while bargaining with foreign buyers.

“The root of all problems is the lack of co-ordination among the entrepreneurs, who belong to different strata of society and have units with different production capacity,” Siddique said.

The minister was speaking as the chief guest at the launch of the ‘Better Work in Textiles and Garments (BWTG) component of the Better Work and Standards Programme’ (BEST) project of the United Nations Industrial Development Organisation (UNIDO) at Hotel Pan Pacific Sonargaon.

He urged Bangladesh Garments Manufacturers and Exporters Associations (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), and Bangladesh Textile Mills Association (BTMA) to stop creating rifts and form a collective bargaining cell.

“All the bodies representing textile and garment sector should outline a joint bargaining unit to fix uniform prices for their productions. Rather than becoming self-centred we have to sacrifice for our country. Then we would not need discussions like these in small rooms,” the minister said.

The minister also advised to eliminate the internal market rivalry before competing internationally.  “We should resolve our own issues. We have to get rid of this internal divide and conflict.”

Currently, Bangladesh is the fourth largest garment exporter in the world and exports from textile and garment contribute to 82 per cent of the total exports. Exports in the first nine months of the current fiscal year (July’10 – March’11) were $13.2 billion. The sector also employs 5 million people of which 70 per cent are women.

Siddique also snubbed any sign of looming danger on the textile and garment industry and expressed hope that Bangladesh would become a major player in this sector globally within the next 10 years.  “We have to concentrate on technology. If we can become proficient in using information technology, we would be able to bargain and the industry will flourish.”

BWTG is a joint project of Ministry of Textiles and Jute and the Ministry of Commerce, funded by the European Union (EU) and Norwegian Agency for Development Cooperation (NORAD). It is focused on improving the effectiveness of the textile and garment sector in Bangladesh.

John T Smith, international coordinator of BWTG-BEST, Jean-Jacques Lauture, first counsellor and head of Good Governance, Human Rights and Economic Cooperation of European Commission, Ashraful Moqbul, secretary for Ministry of Textiles and Jute, Md Shafiul Islam, president of BGMEA, MA Zaher, vice-president of BTMA, AH Aslam Sunny, vice- president of BKMEA, and David Yuen-Hoi Lee, project manager, BWTG-BEST, UNIDO-Vienna, also spoke in the occasion.

Exporters push for special economic zones (Urges single-digit lending rate)

Posted in Bangladesh, Business, Dhaka, Economy, Export and Import, RMG and textile by Sherpa Hossainy on May 14, 2011

My first business report for The Daily Independent (published May 13, 2011).

Read this on The Daily Independent website

Digital print edition

Exporters yesterday urged the government to set up special economic zones, especially in the underdeveloped northern region in a bid to develop the country’s economy.

“We are proposing to the government to set up at least three to four economic zones in the northern part of the country, which will result in an industrial balance,” said Abdus Salam Murshedy, president of the Exporters Association of Bangladesh (EAB).

He was speaking at a press conference on budget proposals at Pan Pacific Sonargaon Hotel, organised by EAB.

EPZs are given many facilities like tax exemption and continuous utility services but other industries are not getting those — this is creating an internal competition, said Murshedy, former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

In the budget proposal, EAB also urged the government to bring down the banks’ lending interest rate to a single-digit.

“After the withdrawal of the lending cap of 13 per cent, the interest rates now depend on bank-client relationships, some are gaining advantages while others are not,” the EAB president said.

He said the banks are taking various additional charges like service and monitoring charges, which is making the total interest rate climbing up to 18-19 per cent now.

“Small and medium industries will not be able to survive the competition with 18-19 per cent interest rates. I don’t think there is any industry, anywhere in the world, which was viable after giving 18 per cent interest rates.”

Other demands on the budget proposal of EAB were: bringing source tax down to 0.25 percent from 0.40 per cent, exemption from VAT against utility charges, interest-free cash incentives, duty-free diesel and furnace oil, exemption from PSI inspection of capital machineries and spare parts, allotment of funds for human resource development, unified dollar exchange rate for all exporters and tax exemptions for sub-contractors.

Murshedy also asked for prioritised new connections of gas and electricity as government plans to provide new utility connections from June.

“There should be at least 25 per cent of the total electricity generation allotted for the export-oriented industries,” Murshedy proposed.

He said jute and shipbuilding are promising sectors and those should be provided with proper policy support and cash incentives to help them thrive. The EAB president urged the government to fulfil all their demands so that the country can dig out of the impacts of the ongoing global recession.

Murshedy said: “Even after facing all the difficulties, our total exports are almost $35 billion now. If the government supports us, it’s not going to be difficult to increase the exports to $50 billion, even with our existing infrastructure.”

Safi Ullah Chowdhury, vice president of EAB, Md Saiful Islam, president of Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh, Faruque Hasan, vice president of BGMEA, AH Aslam Sunny, vice president of Bangladesh Knitwear Manufacturers and Exporters Association, and Jahangir Alamin, president of Bangladesh Textile Mills Association, were also present.

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