Sherpa Hossainy's Blog

British company eyes major investments in energy sector

Posted in Bangladesh, Business, Dhaka, Energy and power, Renewable energy by Sherpa Hossainy on November 15, 2011

Published in The Independent on November 15

Read the article on Independent website

Digital print version

A UK-based company is set to make its mark in Bangladesh’s energy and power sector by setting up diesel generator and solar panel manufacturing plants in a bid to expand its business in developing economies.

“We want to become a premier manufacturer and supplier of diesel generators, which will be manufactured in Bangladesh and sold to both local and global markets,” said Steve Bandey, managing director of T&R Generators.

The company has already laid bare its business plan for the next five years in Bangladesh. “We want to quickly gain market penetration within the first three years,” Bandey told The Independent in an exclusive interview.

“We have several sites suggested for a factory. In January 2012, upon my return to Dhaka, we will choose the most appropriate and continue bearing in mind the possibility of an office in Dhaka,” he said.

Bandey said T&R is also eyeing investments in renewable energy sector by setting up a solar panel manufacturing factory in Bangladesh and produce quality solar panels at cheaper rates using the country’s cheap workforce.

“We will introduce the design, manufacture and supply of renewable energy based products including solar-based photovoltaic and water heating systems and wind energy products,” he said.

T&R plans to commence its manufacture of diesel generators in Bangladesh early next year and is currently in the process of design, supply and manufacture its first generator, which  will be exhibited to businessmen in January 2012, Bandey said.

Steve Bandey, managing director of T&R Generators.

“As we already have the technology and know-how, we’ll start the diesel generator plant first. Solar panel construction and manufacturing will follow on, once appropriate engineers are chosen and trained accordingly, also taking into consideration that factories are ready for use,” he added.

Bandey said strong light from sun can be used to produce high efficiency electricity in Bangladesh and T&R recognises the environmental and economic benefits of that.

“We aim to install five solar PV arrays with capacity of 50 megawatts each and it would be possible within three years. However, this project is still at the development stages,” he said.

T&R Generators Ltd, established in 1975, has enjoyed success in design, manufacture and supply of high-performance diesel engine generator sets ranging from 4.3kva to 3300kva. The British power company has extensive experience with power and power generation systems from large-scale to smaller specialist projects and has huge presence in Middle East, Africa and Asia.

T&R is currently working in cooperation with local company Home Street Builders and Bandey believes that it is important to have local liaisons. “We are also in talks with other local energy companies to assist shape our business and move swiftly ahead,” he said.

Bandey also wants to include local talents and engineers and create employment opportunities in Bangladesh through T&R projects. “It is our objective to use highly trained and skilled engineers and managers, already present in Bangladesh with the necessary guidance and support from our own team in the UK,” he said.

Explaining T&R’s reason to expand its business in Bangladesh, Bandey said: “We believe electricity is a key ingredient for the social and economic development of a country, and with the government’s policy statement and initiative for power generation companies, Bangladesh was our choice.” T&R has actually been present in Bangladesh for over 11 years with a large variety of clientele, he added.

T&R also has plans for other renewable sources in Bangladesh such as wind power, especially in the coastal and higher areas of Bangladesh where it is windier, he said.

Bandey lauded the eagerness of key government officials from Power Division, Ministry of Establishment, Dhaka City Corporation, Planning Division, Bangladesh Energy Regulatory Commission, Power Development Board and members of parliament in T&R’s business here and said that the overwhelming support had assisted with the company’s decision to move its development plans forward.

T&R logo

Bandey stressed the need to switch over to renewable energy amid depleting gas and fossil fuel resources of Bangladesh and said that poverty and lack of access to energy are closely linked.

“Bangladesh desires to make electricity available to all by 2021. This will be achieved more easily by focusing on natural resources (solar/wind) rather than extending a failing grid network; however fossil fuels will still be very important in other areas.

“Renewable energy (solar/wind) will benefit people in more rural and isolated areas, as no infrastructure is available; whereas city areas will benefit from immediate improvements to the national grid and using solar power to support the grid on new structures,” Bandey said.

The T&R managing director said solar energy might seem expensive but in the long run it is cheaper than any other energy source. Present customers must understand that the initial outlay for a solar system is expensive, however after that maintenance is very minimal and other costs are zero, he said.

“When you produce surplus electricity from the power plant, you could sell it to others and make a return on your investment. It is assumed that within 5-7 years the system will payoff,” he added.

Steve Bandey said that solar electric energy demand has grown by an average 30 per cent annually over the past 20 years against a backdrop of rapidly declining costs and prices, and this decline has been driven by manufacturing scale, technology improvements and the increasing efficiency of solar cells.

“In developing countries like Bangladesh, markets have benefited from the steady decline in solar PV prices, but they have also been stimulated by continued multilateral and bilateral development aid. This has meant that solar has been an enabling technology for developmental programmes for education, clean water and healthcare etc,” Bandey said.

He said T&R is also planning to develop a customer-centric organisation based on cutting edge technology with the development of fuel cell technology in association with a UK university’s technical team.

However, the T&R chief did not want to disclose the total amount of investments the company is contemplating but said that it will be significant.

“It is difficult to estimate costing at this moment, however I can say the more success at each stage, the more investment will continue to be added,” Bandey said.


Thailand flood likely to impact investments in Bangladesh

Posted in Bangladesh, Business, Dhaka, Export and Import by Sherpa Hossainy on November 5, 2011

Published in The Independent on 05 November 2011

Read the article on Independent website

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Thailand’s worst floods in decades could possibly slowdown potential Thai investments in Bangladesh and dent the burgeoning bilateral trade between the two countries, businesspersons feared.

Almost nine million people were hit by the recent flood, which inundated one third of Thailand’s provinces, and forced almost 1,000 factories to shut down. The Bank of Thailand (BOT) on 28 October slashed the growth forecast to 2.6 per cent from an initial projection of 4.1 per cent.

BOT estimated the damage to industry at $3.3 billion, and analysts warned that any substantial damage to the capital Bangkok, which contributes almost 41 per cent to Thai GDP, could see the losses go double.

Mohammed Ali, vice president of Bangladesh-Thai Chamber of Commerce and Industry (BTCCI), said, “A BTCCI delegation was supposed to visit Thailand on 12 November and hold talks with the Thai government and businesspersons about possible Thai investments and bilateral trade but it was postponed due to the flood.”

Although, a Thai business delegation from Thailand Bangladesh Business Council (TBCC) is expected to arrive in Dhaka on 15 November, he said.

“We are preparing ourselves to hear not-so-positive things about the possible investments here because they have to deal with their own problem now. We’ll see how the discussions go,” Ali told The Independent.

During Thai Deputy Minister of Commerce Alongkorn Ponlaboot’s visit to Bangladesh last year the Thai minister said Bangladesh has become an attractive destination for Thai investors in readymade garment, leather, tourism, pharmaceutical and infrastructure sectors, and they are eager to invest.

“Some Thai businessperson wanted to set up jute processing industries and light engineering factories. We were eager to share the technology from Thailand. But those projects are most likely to be pushed back,” Ali said.

Total sector-wise Thai investments in Bangladesh, as registered by the Board of Investments (BOI), up to April 2011 were $4,228.40 million.

Thailand has also shown interest in Dhaka’s subway system project as well as the Dhaka-Chittagong Expressway project, and The Italian-Thai, a Thai owned construction company, has won the bid to undertake the $1.2 billion Dhaka Elevated Expressway Project.

The BTCCI vice president said the chamber has been vigorously trying to improve the bilateral trade with Thailand and encouraging Thai entrepreneurs to invest here in Bangladesh.

“We could’ve gone made further progress if the natural disaster had not have happened,” he said. A Thai trade fair, which was supposed to be take place in November in Dhaka, was also cancelled because of the flood, Ali said.

In July this year, Thailand sought land from Bangladesh government to set up new power plant and paper mills, preferably in Khulna to use the Mongla Port facilities. Commerce Minister Faruk Khan assured Thai delegation about acquiring land and hinted that a special economic zone could be in the offing.

“There are some industries in Thailand that want to relocate to Bangladesh because of cheap labour here and rising manufacturing costs in Thailand. But now we have to wait and see for Thailand to recover from their imminent economic debacle,” Ali said.

Although the trade volume between Bangladesh and Thailand has increased steadily over the years, the trade balance continues to remain in favour of Thailand. The bilateral trade between Bangladesh and Thailand was more than $909 million in 2010, over 39 per cent more than 2009, and the trade volume is expected to cross $1-billion mark this year.

In July-September of 2011-12 Bangladesh exported only $5.01 million worth of goods and in 2010-11 fiscal the total export was $33.01 million. Thailand enjoys a yawning trade surplus with Bangladesh as its export stood at $729.14 million against its import of only $22.88 million during 2010 (January-October).

Ali said, “Our exports will not feel the pressure because the volume is low. But the imports will surely be hit by the flood because the transportation system has collapsed in Thailand. But hopefully it will not stay like this for long.”

“Exporters, in the meantime, are also taking a go-slow approach because of the recent flood,” he added.

Major export items from Bangladesh to Thailand include frozen foods, chemical products, leather, raw jute, jute goods, agri-products, knitwear, woven garment, pharmaceutical products, furniture and testing appliances and instruments; while major import items from Thailand include cement, plastic products, textiles, yarn, machinery, rice, synthetic yarns and chemicals.

ABM Musa, managing director of Astex Fashions Ltd and a member of BTCCI, said, “Right now the impact is not being felt on imports but it could probably be felt after two or three months.”

Mahmudul Islam Chowdhury, president of International Business Forum of Bangladesh, said, “There could be a probable impact on our imports because shipments will be delayed.”

The widespread flooding in Thailand, world’s biggest rice exporter, has also damaged some 3.5 million tonnes of paddy rice in the country. Thailand exported rice worth $42.8 million to Bangladesh during 2010 (January-October). Bangladesh’s import of Thai rice was zero in 2008 and 2007 with import valued at only $5.4 million and $1.3 million in 2006 and 2005.

“As for the essentials (rice and daal) there would be no problem. The food items that we import are mostly consumed by upper-middle class, so the impact will be negligible,” Chowdhury said.

“Those businesspersons who have opened back to back LCs would be in trouble even though the overall impact on economy will be negligible,” he added.

Santi Pongchaisopon, president of CP Bangladesh Co Ltd, a Thailand-based multinational company, and director of BTCCI, said, “Our supply chain is not hurt because the factory is based in Bangladesh.”

Usa Wijarurn, minister counsellor (commercial) of Royal Thai Embassy in Bangladesh, said, “There hasn’t been any estimation on the damage on bilateral trade from our part and we also haven’t received any report from the Thai commerce ministry. We’ll have to wait for the actual figures.”

Move on diverse use of potato

Posted in Agriculture, Bangladesh, Export and Import by Sherpa Hossainy on November 5, 2011

Published in The Independent on 3 November 2011

Read the article on Independent website

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An agro processing company is set to resume its starch-making factory to use the huge stockpile of potatoes in cold storages in northern Bangladesh, a move to avert an alarming overstock situation to save farmers.

Flamingo Agro-tech Ltd will restart its operation from mid-November in Joypurhat district, the largest potato growing area in the country. The factory will require 220 tonnes of potato everyday, officials of the company said.

The $5.5 million (Tk 420 million) factory, which started in 2005, was forced to shut down a few months ago after operating for only two and a half months following a long break.

Flamingo Agro-Tech Ltd factory

“We always had to stop our operation from time to time because banks were unwilling to give us working capital and there was also lack of government subsidies on potato cultivation and exports,” said Abdul Kader Siddique, Flamingo’s managing director.

“The situation is so dire now that we have to come forward and save the farmers, even though the banks and government don’t understand the gravity of it; otherwise farmers will lose interest in potato cultivation,” he said.

A few months earlier, farmers started to store Diamond and Rosetta type potatoes in cold storages hoping to make more profit. But amid potato price-drop and diminishing  demand, farmers are left with a huge stockpile with few or no potential buyers.

There is an approximate stock of 70,000 tonnes of potatoes in all the 13 cold storages in Joypurhat, which have capacity to store 103,045 tonnes, cold storage owners said.
Production cost of every sack (84 kg) of Diamond and Lady Rosetta including storage charge is about Tk 1,000 but those  are sold at a maximum of Tk 600 per sack now because of the demand-drop, they said.

“Upon observing the market and considering the farmers’ condition, Flamingo decided to buy Rosetta and Diamond type potatoes from the farmers and resume production at the factory,” Siddique said.

The company has one starch-making and three potato flake factories in the country that demand over 2-3 lakh tonnes of potatoes every year, the official said.

Siddique said the government should have encouraged diversified use of potato long time ago and should have provided proper incentives.

“In China farmers get 10 per cent incentives only on cultivation, plus there is export incentive. Rather than giving us incentive, the government took down the existing 30 per cent incentive to 20 per cent,” he said.

Siddique said potato, other than consuming it as vegetable, has versatile uses in fast foods, noodles and pharmaceuticals and Bangladesh should bank on the rising demands of diverse use of potatoes.

“We export starch to Japan, South Korea, Vietnam and the Middle East. If the factory runs all year round we can earn around $6-7 million a year by exporting 12-14,000 tonnes of starch,” Siddique said.

A labourer working inside Flamingo Agro-Tech Ltd factory

“I’ve been going from door to door of various officials for the last 4-5 years, holding meetings with banks, government offices, but nothing happened,” lamented Siddique.

“We directly employ 300 persons and indirectly a couple of thousands, who will lose jobs if we are forced to shut down once and for all,” he said.

Siddique said despite all hindrances, Flamingo keeps running. “We know what it can bring to Bangladesh and the farmers. But our machines are sophisticated, they can’t be used intermittently like that for long,” he said.

Siddique also stressed production of high-quality potatoes like Diamond and Rosetta. “The market is now flooded with low quality Granola type. Companies must understand which one is industrial grade and which one will bring them profit and can be put to good use.”

Flamingo can only use Lady Rosetta type in their factories as only this variety complies with the industrial starch standard. Chips making factories also need Rosetta types because of the quality and the crispness they offer.

Siddique said to encourage farmers to cultivate potato, Flamingo is supplying quality seeds at fair prices and taking initiatives to cultivate high-quality variety of potato. Besides, the company is organising seminars for farmers jointly with Southpole Seed Ltd, another agro processing company, so that they do not get cheated while buying high quality seeds.

Md Nafisur Rahman, managing director of South Pole Seeds, said, “There are so many unused potatoes in the cold storage. They would’ve been consumed by now if there was diverse use of potatoes.”

Rahman said that he had visited China to import machines that can extract protein and fibre from the float water and pulp respectively – the items that are left as residue after starch production — and both have high export potential.

“We will go to China in December to get the machines so that we can extract protein and fibre from the residue that Flamingo will produce,” Rahman said.

“No one in Bangladesh knows how to use those residues. We are also trying to introduce it as fish and cattle food in Chalan Beel area,” he said. Rahman said private entrepreneurs are trying hard to promote diverse use of potato but government should step in urgently to encourage the farmers and provide cash incentives for exports.

“Chips making factories have just started operating in Bangladesh and there should be more processing industries. But every initiative is taken by the private entrepreneurs, why not government?” he said.

Machines inside Flamingo Agro-Tech Ltd factory

Liton Hossain, a farmer from Joypurhat who took part in Flamingo seminars, said, “Farmers were not really interested in farming potato because they incurred huge losses this year. But Flamingo has assured us that we don’t have to worry if we produce high quality potatoes.”

Hossain hopes to cultivate Lady Rosetta variety potato on 20 bighas of land next season.

Abdul Alim, another marginal farmer, said, “In previous seasons I sold every maund of Rosetta at Tk 400. I had put 45 sacks of potato in the cold storage to make more profit this year. Now I can’t even sell a kilo at Tk 6.” Alim said that he is happy that Flamingo is going to buy these potatoes; otherwise, he thinks, all those potatoes would have gotten wasted.

Mojibor Rahman, a wealthy farmer from Karimpur village, said, “I incurred a loss of Tk 700,000 this year. Last year was the same.” He said that as Flamingo Agro-tech restarts its factory, farmers will at least get “something” from now on.

FAS to disburse $660m car, housing loans

Posted in Bangladesh, Business, Corporate, Dhaka, Finance by Sherpa Hossainy on November 3, 2011

Published in The Independent on 30 October 2011

Read the article on Independent website

Digital print version

FAS Finance and Investment, a leading financier in Bangladesh, is going to provide financing worth $660 million (Tk 5,000 crore) in housing and car loans by 2013, a top official of the company said.

“We are expecting to disburse Tk 700 crore by March 2012, Tk 2,500 crore by December 2012 and Tk 5,000 crore by December 2013,” said Abdul Matlub Ahmad, chairman of Fidelity Assets and Securities (FAS) Finance and Investment Ltd.

In a bid to introduce the financing concept, FAS, a sister concern of Nitol-Niloy Group, has arranged a year-long fair termed “Gari-Bari Mela” at Hotel Abakash in Dhaka. The fare will be held every Saturday.

Ahmad said that presently customers suffer from non-delivery of housing units and abnormal time to complete housing projects by various builders. “This fair will help buyers to get immediate possession of flats and cars without hassle by supporting them with instant sanction of loan advice,” he said.

“Customers would be able to purchase low cost homes, office spaces or shops, which have already been built or would be built in a year or more, by availing loans from FAS,” Ahmad said.

Moniruzzaman Akan, assistant vice president of FAS, said this [the fair] is a one stop service to cover two prime needs of middle-class customers.

“If buyers pay 30 per cent of the price of a flat or a car on the spot, they will get the rest 70 per cent as loan from FAS. Upon payment of the loan, the customer will get the ownership of the flat or the car,” Akan said.

Ahmad expressed satisfaction over the proceeding of the fair, and said that more than four units of houses and six units of vehicles were sanctioned on Saturday, the opening day of the fair.

“Numerous offers from proposed buyers had been received which will soon mature into positive sales. We are very happy with the tremendous response from public,” he said.

Twelve companies — nine realtors, one insurance company and two vehicle dealers — are participating in the fair. The companies include Concord Group, Rupayan Group, Mega Builders and Tropical Homes. FAS will also provide financial support to the builders in installing generators, LP gas and solar panels in their apartments to ensure timely hand-over of the flats, Ahmad said.

“Some banks namely State Bank of India, Pubali Bank Ltd and Mutual Trust Bank, already gave their go-ahead to finance this project and I hope more banks will be interested,” the FAS chairman said.

German trade show eyes advancing relations

Posted in Bangladesh, Business, Dhaka, Export and Import by Sherpa Hossainy on November 3, 2011

Published in The Independent on 28 October 2011

Read the article on Independent website

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The bilateral trade between Bangladesh and Germany is growing at a significant pace as the mutual ties were fortified in the areas of trade and politics recently, commerce minister Faruk Khan said on Thursday.

“The relation between the two countries has flourished based on mutual confidence and it’ll continue to grow,” the commerce minister said while inaugurating the three-day “German Trade Show 2011” at Bangabandu International Conference Centre in the city.

Bangladesh German Chamber of Commerce and Industry (BGCCI) organised the show where German ambassador to Bangladesh Holger Michael, BGCCI president Saiful Islam and executive director Daniel Seidl were also present.

Faruk Khan said the upcoming visit of the German President to Dhaka will be very significant in strengthening the bilateral relations. Germany’s Federal President Christian Wulff is likely to arrive in Dhaka on November 28, which will be the first visit by a German head of state in last 25 years.

Khan emphasised the need to increase exports to Germany and hoped that the trade show would focus more potentials in trade and investment relation between the two countries.

German ambassador Holger Michael said, “Bangladesh and Germany not only have political and business cooperation, we have cooperation in development, environmental, educational and cultural sectors.”

He said there were successful talks during the visit of Prime Minister Sheikh Hasina, foreign minister Dipu Moni and commerce minister Faruk Khan to Germany in the last few months.

BGCCI president Saiful Islam said Bangladesh now holds the third position instead of the previous seventh in terms of exports to Germany. He hoped of more German investments in Bangladesh.

Islam said the two ways trade was at $4 billion in fiscal year 2010-11, with 80 per cent trade was in favour of Bangladesh. The trade show aims to build on the outstanding Bangladesh-German trade relationship, he said.

Bangladesh exported goods worth $3.43 billion to Germany and imported goods worth $691.30 million in fiscal 2010-11, according to the commerce ministry of Bangladesh.

German chamber executive director Daniel Seidl said interests of German companies on Bangladesh market had increased vigorously in recent times.

Organisers say it is the biggest ever trade show in the country and almost 70 top companies from Germany and Bangladesh are showcasing their offerings from diverse industries including RMG, shipbuilding, energy, IT, logistics and pharmaceuticals.

The BGCCI president said they expect over 25,000 visitors in the three-day trade show, which will end on October 29. Having 200 plus memberships, BGCCI is the largest bilateral chamber in Bangladesh.

The first ever German Trade Show in Bangladesh was from 6-8 November 2009 where 60 companies and organisations exhibited their products and services.

Two Nobel laureates — Prof Muhammad Yunus of Bangladesh and German climate change expert Prof Wolfgang Cramer — are scheduled to deliver lectures at the seminars in the fair.

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