Sherpa Hossainy's Blog

Bangladesh sees billion-dollar trade potential in Myanmar

Posted in Bangladesh, Dhaka, Economy, Export and Import, Myanmar, Yangon by Sherpa Hossainy on July 10, 2013

Renews pledge to boost cooperation

Published in Myanmar Business Today (Vol 1, Issue 21) on June 27, 2013

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Bangladesh and Myanmar can increase their bilateral trade up to a billion dollar if service-based trade can be bolstered, a top Bangladesh government official said.

“Our current bilateral trade is mainly goods-related, but the service-related trade hasn’t expanded that much. Bangladesh has an established service sector in banking and insurance, and these sectors haven’t developed much here. There’s also good potential for pharmaceuticals and IT services,” Md Shahidul Haque, foreign secretary of Bangladesh, told Myanmar Business Today.

“There are opportunities for expanding the exchange of services. The potential is huge. It can definitely cross the billion-dollar mark if we can add the services sector in our trade,” he said.

The bilateral trade between the two neighbours amounted to only about $79 million in 2011-12 fiscal year, while it stood at $190 million in 2010-11 fiscal. Bangladesh exported goods to Myanmar worth $13.45 million during the fiscal year 2011-12.

Bangladesh Foreign Secretary

Md Shahidul Haque (L), foreign secretary of Bangladesh, with Anup Kumar Chakma, ambassador of Bangladesh to Myanmar. Sherpa Hossainy

“At first we want to take the current trade volume up to $500 million,” Shahidul said. Myanmar was in a difficult situation and under various sanctions, so increasing the trade volume was hard as “we had to work within certain limits,” he added.

Shahidul said Bangladeshi private sector can facilitate in providing technical assistance to Myanmar, especially in garment industry, being the second largest garment exporter in the world behind China. “Exchange of technical expertise will be discussed during the next Joint Trade Commission meeting,” he said.

The Bangladesh Foreign Secretary was in Myanmar from June 12-17 to attend the 7th round of Foreign Office Consultations (FOC), where foreign secretaries of the two countries meet and review a range of bilateral political, economic and security issues. “We looked at ways to strengthen our relations and how both countries can grow,” Shahidul said, adding that trade and border issues were the main focal points.

During the talks Myanmar welcomed the four-country “Kunming initiative”, a sub-regional organisation that includes Bangladesh, China, India and Myanmar (BCIM), born in 1999 out of the attempts to link the development plans of the southwestern Chinese province of Yunnan to India’s ‘Look East policy.’ BCIM is a sub-regional organisation of Asian nations aimed at greater integration of trade and investment between the four countries.

“For a long time it was a Track II initiative but India and China has brought it up to Track I. Bangladesh and Myanmar has now decided to actively take part in the initiative and we will join the Track I force,” Shahidul said.

‘Track II diplomacy’ is a specific kind of informal diplomacy, in which non-officials engage in dialogue with the aim of confidence-building, while the term ‘Track I diplomacy’ refers to official governmental diplomacy, or a technique of state action, which is essentially a process whereby communications from one government go directly to the decision-making apparatus of another.

Shahidul led a 14-member Bangladesh delegation to the talks, while his counterpart Deputy Foreign Minister U Thant Kyaw, led a 20-member Myanmar delegation. Ambassador of Bangladesh to Myanmar Anup Kumar Chakma, along with senior officials from seven ministries and agencies of the Bangladesh government also took part.

During his visit in Nay Pyi Taw, the Foreign Secretary called on Deputy Ministers for Commerce, Home and Electric Power, and concerned members of the delegation met the Ministry of Transport officials. Both countries acknowledged the importance of increasing connectivity and expressed intention to sign the revised air service agreement soon.

“We will quickly start the air link programme. However, it’s not easy for the government to start the air link; private sector also has to take the initiative. We hope the agreement will be finalised next month” Shahidul said.

In a bid to have the best of neighbourly relations, Bangladesh and Myanmar pledged to begin an era of partnership based on trust and confidence for stronger economic ties and stability along the borders. To enhance security and stability at their common borders at land and sea, the two sides expressed willingness to address a range of trans-boundary crimes along the borders, including human, drugs and arms trafficking, and money laundering. The two sides also agreed to bolster regular interactions between the two border forces as well as civil administrations of the bordering districts of Bangladesh and Myanmar.

The two countries talked about the establishment of direct coastal shipping link and agreed to complete all necessary formalities for the purpose. They also agreed to renew the expired Agreement on Cultural Cooperation and conclude a memorandum of understanding on cultural exchange programme.

Bangladesh offered to arrange short diplomatic training courses for the mid-and junior-level diplomats of Myanmar, and invited Myanmar to send a delegation to an international conference on peace, tolerance and non-violence to be held in Bangladesh later this year. Bangladesh also proposed greater exchanges between Buddhist scholars to deepen intercultural understanding between the two countries.

The bilateral talks also focused on cooperation under regional frameworks like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and BCIM. BIMSTEC is a regional cooperation organisation involving Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal. Myanmar is the current Chair of BIMSTEC and will hold the next BIMSTEC Summit in early September this year.

The Myanmar delegation said the discussions will “strengthen goodwill, confidence, mutual trust and understanding between the two countries,” while Shahidul hoped “the existing trade barriers will be removed soon in a bid to strengthen the political, cultural and economic cooperation between the two neighbours.”

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ASEAN leaders quash common currency idea

Posted in ASEAN, Currency, Economy by Sherpa Hossainy on July 10, 2013

Published in Myanmar Business Today (Vol 1, Issue 20) on June 20, 2013

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ASEAN leaders recently brushed aside the idea of having a single currency for the Southeast Asian block, saying it’s “impossible” and would jeopardise the economic stability of the region.

“ASEAN countries have suffered together from the Asian economic crisis in 1997. Imagine what would’ve happened if we didn’t have the chance to peg our baht and turn deficits into surplus. We’ve seen the benefits of exchange rates, which are an important substance of the capitalist system,” Thai Deputy Prime Minister Kittiratt Na-Ranong told a discussion at the World Economic Forum in Nay Pyi Taw recently.

He dismissed the idea of an ASEAN common currency by saying, “It’s impossible.”

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The recently concluded WEF saw a lot of intra-regional commitments for regional integration and cooperation being made but the leaders were not keen on a common currency. They said regional trade and growth can be achieved without having a single currency and an ASEAN currency is not the primary agenda ahead of the creation of the ASEAN Economic Community.

“By being one doesn’t mean you have to lose your individuality,” said Cesar V Purisima, secretary of finance of the Philippines.

Harish Manwani, chief operating officer of Unilever, told the panel: “There are many currencies in the world, not one; and it is possible to manage an integrated system within the current context.”

The idea of a single currency has been on the table for at least a decade as part of regional integration plans. But the fiscal situations of the member states are so diverse that a single currency regime could prove fatal. Putting together strong globally traded currencies such as the Singapore dollar with weak Indonesian rupiah, Vietnamese dong or Myanmar kyat would very much dilute the strength of a common currency. It would also give the economically weaker states an unfunded creditworthiness which could trigger an economic debacle as seen in the eurozone when Greece’s economy collapsed under its debt load.

The leaders agreed that the recent euro crisis was a valuable lesson, and countries should not rush the process of financial and monetary integration before developing an adequate institutional framework.

“It would be impossible to get a 10 percent GDP growth with a single currency. Economic growth will not be driven by a single currency but by supply chain strength, an important aspect in which ASEAN countries must improve,” Tarek Sultan Al Essa, chairman and managing director of Agility, told the forum.

 

Economic progress will stall sans energy policy reform: Report

Posted in Economy, Energy and power, Myanmar, Yangon by Sherpa Hossainy on July 10, 2013

Published in Myanmar Business Today (Vol 1, Issue 19) on June 13, 2013

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An energy report recently urged Myanmar to renew its energy policy in a bid to continue its economic development.

“Without electricity and a reliable energy system, Myanmar’s economic progress will stall. Addressing this will require new sources of domestic energy, an expanded and modernised electricity grid, and innovative solutions for rural energy access,” the report titled “New Energy Architecture: Myanmar Report” said, adding that Myanmar could emerge as the next Southeast Asian frontier by renewing its energy policy.

The report, which analyses the challenges currently facing Myanmar’s energy sector and provides insights to support the country’s important energy reforms, was launched at the World Economic Forum on East Asia in Nay Pyi Taw on June 6.

“Myanmar has a historic opportunity to carve out its own niche in the global economy. Recasting its energy architecture will be pivotal to this transformation and to its economy’s sustainable development,” said Roberto Bocca, Senior Director, Head of Energy Industries, World Economic Forum.

Myanmar’s abundant gas resources and strategic position between some of the most dynamic Asian economies means it is crucial to regional energy security. As Myanmar reintegrates into the global economy, it will need more energy to power its own development.

“Myanmar is embarking on a new phase of development and the energy sector will be very important. This comprehensive and informative study will support the economic and social development of Myanmar,” said Union Minister for Energy U Than Htay.

The report identifies energy as one of the most pressing economic challenges facing Myanmar today. According to the report, 74 percent of Myanmar’s population lack access to electricity, while electrification rates average only 16 percent in rural areas, where 70 percent of Myanmar’s population live. Myanmar’s per capita electricity consumption is among the lowest in Asia.

Providing 17 specific recommendations, the report highlights the need for transparent governance and effective institutions in Myanmar as a sound basis for developing the country’s energy system. Creating a clear environmental regulatory framework will not only underpin sustainability and social acceptance of large-scale energy projects, but will also increase transparency for investors, the report added.

“To meet the country’s rapidly growing electricity demand, expand rural energy access, and ensure environmental sustainability, Myanmar urgently needs to attract investments by improving regulatory frameworks, promoting public-private partnerships, and undertaking crucial sector reform,” said Stephen Groff, vice president of Asian Development Bank (ADB).

To improve efficiency and the competitiveness of the domestic energy market, the report called for the gradual removal of energy subsidies in favour of targeted support for the poorest. To achieve an effective transformation, Myanmar needs an integrated energy plan to guide investments and sequence reforms, the report said.

“The development of an integrated new energy plan and system offers Myanmar a significant opportunity to design a path to sustainable and secure economic growth, bolstered by its energy industry,” said Arthur Hanna, Senior Managing Director, Accenture’s Energy industry group.

Myanmar unveils $500-m tourism master plan

Posted in Business, Economy, Investment, Myanmar, Tourism, Yangon by Sherpa Hossainy on July 9, 2013

Published in Myanmar Business Today (Vol 1, Issue 19) on June 13, 2013

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Myanmar launched an almost half a billion dollar master plan in a bid to boost its tourism industry and promote sustainable tourism.

The Myanmar government, alongside the Asian Development Bank (ADB) and the Government of Norway, unveiled the “Tourism Master Plan” on June 6 on the sidelines of the World Economic Forum on East Asia.

The master plan outlines 38 development projects valued at about $500 million aimed at increasing Myanmar’s tourism competitiveness, protecting environmentally important areas and safeguarding ethnic communities.

“This master plan outlines a path to welcoming more visitors to Myanmar without threatening our unique cultural heritage or endangering pristine environments,” said U Htay Aung, union minister for hotels and tourism.

International visitor arrivals in Myanmar are forecast to rise to 7.5 million in 2020 – a seven-fold increase from current numbers – with corresponding tourism receipts worth $10.1 billion, according to ADB. Under a high growth scenario, the tourism industry could provide up to 1.4 million jobs by 2020, the lender said.

“Tourism will be a pillar of Myanmar’s economy, and it has the potential to create meaningful job opportunities for the country’s people, including those living in poor communities,” said ADB Vice President Stephen Groff. “This plan is a long-term vision, and a solid start to ensuring tourism contributes to equitable social and economic development in Myanmar.”

The master plan, funded by Norway, recommends building tourism-related human resources by strengthening the tourism education and training system, and identifies $44.5 million in new opportunities and partnerships aimed at training tourism workers.

“The master plan provides a leading tool for Myanmar to develop the sector in an environmentally and socially sustainable manner. The implementation will demand strong government leadership and coordination among a wide range of government agencies and state and regional governments,” said Katja Nordgaard, Norwegian ambassador to Myanmar.

The projects focus on expanding international air arrivals in Mandalay and Nay Pyi Taw, undertaking improvements to the Bagan river pier to support more cruises, and building feeder roads in destinations like Ngapali beach and Inle Lake.

According to the plan, Myanmar’s 1993 Tourism Law will be reviewed and updated to streamline licensing formalities for hotels, restaurants, tour operators, and tour guides, as well as to amend sections governing regulations around the gaming subsector, labour and the establishment of outbound tour operations for Myanmar citizens. The plan suggests establishing a Tourism Executive Coordination Board, chaired at the vice-president level, to draw the various tourism-related ministries, agencies, and federations together under a single umbrella.

The plan also outlines the need for new tourist police divisions to be set up not only to safeguard tourists, but to prevent child trafficking and sex tourism. It suggests new tourism initiatives be introduced to ethnic communities using pilot community-based tourism projects that ensure local people are prepared to handle an influx of visitors, and maintain control over tourism in their communities.

Nearly half a million visitors arrived by air in Myanmar last year, with Thailand, China, Japan, the US, and South Korea making up the bulk of visitors. France, Germany, Malaysia, Singapore, and the UK each accounted for about 4-5 percent of overall arrivals. Another 465,614 visitors – mostly on day trips from Thailand – arrived via land borders.

Myanmar-Bangladesh bilateral trade: Mired in lack of connectivity

Posted in Bangladesh, Banking, Business, Dhaka, Economy, Export and Import, Finance, Interviews, Investment, Myanmar, Yangon by Sherpa Hossainy on July 9, 2013

Bangladesh is keen to resolve all the barriers to trade and tap the huge potential of Myanmar, which it sees as a key regional partner and gateway to Southeast Asia, says Bangladesh Commerce Minister

Published in Myanmar Business Today (Vol 1, Issue 11) on April 4, 2013

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A dearth of basic land, air and sea connectivity is daunting the prospects of boosting the bilateral trade between Myanmar and Bangladesh, the Minister for Commerce of Bangladesh said.

“The transport and communication infrastructure is very poor between Myanmar and Bangladesh despite being neighbours. We still haven’t been able to resume the air linkage and we don’t even have land links with Myanmar’s major cities. This is gravely hurting the prospects of a better trade,” GM Quader told Myanmar Business Today.

GM Quader, Minister for Commerce of Bangladesh, speaks to Myanmar Business Today during his visit to Myanmar at the Bangladesh Embassy in Yangon. Sherpa Hossainy

GM Quader, Minister for Commerce of Bangladesh, speaks to Myanmar Business Today during his visit to Myanmar at the Bangladesh Embassy in Yangon. Sherpa Hossainy

Myanmar and Bangladesh have been working to re-establish direct air link to connect Yangon and Dhaka after Biman Bangladesh Airlines, the national flag carrier of Bangladesh, suspended its flight between Dhaka and Yangon in 2007 against the backdrop of economic losses.

Bangladeshi cabinet in June last year approved a proposal for inking a deal with its Southeastern neighbour to resume direct flight service, which will allow seven passenger and four cargo flights to fly between Dhaka and Yangon every week.

“The agreement has been finalised and signed. However, Biman is not in a position financially to start a route which will take some time to become profitable, and airlines from Myanmar are also hesitant about getting into a financially risky venture,” Quader said.

During Bangladeshi Prime Minsiter Sheikh Hasina’s visit to Myanmar in 2011, the two countries agreed to develop their land, sea and air connectivity.

“These three are the biggest barriers for us. India, China and Thailand have a good connectivity structure with Myanmar in place via air, sea and land. We have to improve our connectivity if we have to improve the trade,” the Bangladeshi Commerce Minister said while visiting Myanmar last month.

When asked why Bangladesh have reacted slower than other Myanmar neighbours such as India, China and Thailand to the recent economic reform process the minister said they were “well-ahead than anyone even before the reforms began.”

“China and Thailand have basic advantages. Their manufacturing and production base is much stronger and they are way ahead than us in terms of investing in other countries.”

China is Myanmar’s biggest trading partner, followed by Thailand. Bilateral trade between China and Myanmar was worth about $3.6 billion in the fiscal year 2011-12, according to Myanmar’s Ministry of Commerce, while bilateral trade between Myanmar and Thailand stood at $4.576 billion in 2012. Myanmar-India bilateral trade reached $1.19 billion in 2009-10, making it Myanmar’s fourth largest trading partner after Thailand, China and Singapore.

Besides air linkage, Bangladesh and Myanmar also haven’t been able to develop any reliable road network in the bordering areas. However, the minister hoped that the proposed Asian Highway will hugely boost the road connectivity.

The Asian Highway project, also known as the Great Asian Highway, is a cooperative project among countries in Asia and Europe and the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), to improve the highway systems in Asia.

A sub-regional organisation of Asian nations called the Bangladesh-China-India-Myanmar Forum for Regional Cooperation (BCIM), established in 1999 for greater integration of trade and investment between the four countries, organises a car rally, widely known as Kolkata to Kunming (K2K) car rally, to explore the potentials of expanding trade, investment and tourism, and enhance connectivity in the region along the Kolkata-Kunming route.

“We have to establish major road links with Myanmar to get access to Southeast Asia. Myanmar is our gateway to get into the markets of Thailand, Laos and Cambodia,” Quader said. Talks are also underway to allow Myanmar water vessels into Bangladesh’s inland waterways and vice versa to strengthen the sea connectivity, he added.

Asian Highway mapThe Bangladeshi minister also pointed out banking as “one of the biggest barriers” to Myanmar Bangladesh bilateral trade as there is a cap on transaction amount in place. Both countries are trying to increase border trade, which was hit hard by the recent sectarian violence in Myanmar’s Rakhine state.

“We are planning to set up wholesale markets and warehouses along the border. Bank draft margin has also been increased from $30,000 to $50,000 to facilitate trade. These issues were not stressed that much before as the trade volume was low and there were sanctions against Myanmar banks, but now we are developing mechanisms to remove the existing obstacles,” he said.

The border trade between the two countries is still low (125 commodities) compared to the existing potential and overseas trade. About 10,000 commodities are traded along the Myanmar-China border, while about 3,000 commodities are traded in Myanmar-Thailand border trade.

During the 6th Joint Trade Commission (JTC) meeting between Myanmar and Bangladesh held in Dhaka in November last year, both countries agreed to enhance the volume of bilateral trade to $500 million from around $100 million annually.

The bilateral trade between the two neighbours amounted to only about $79 million in 2011-12 fiscal year, while it stood at $170 million in fiscal 2010-11. Bangladesh exported goods to Myanmar worth $13.45 million during the fiscal year 2011-12.

However, the volume of unofficial trade between the two countries is about $300 million per year, Border Guards of Bangladesh (BGB) sources were quoted as saying in Bangladeshi media.

Bangladesh exports steel products, light engineering machinery, cement, dry foods, medicines and cosmetics to Myanmar and imports fish, timber, spices, synthetic foot-wears, among others. Besides the formal trade, a large quantity of petroleum products, fertilisers, agricultural inputs, and automobile parts are also smuggled into Myanmar.

The minister agreed that illegal border trade has been a problem as there were no formal banking channels in place. “Businesspeople don’t want to do illegal trade. But the payment system was complicated and they had to do transactions through hundis. But we are trying to clear the restrictions now so that all businesses can be done legally.”

During the Bangladesh Prime Minister’s visit Myanmar and Bangladesh signed memorandum of understandings to establish a Joint Commission for bilateral cooperation and a Joint Business Council (JBC) between the Republic of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

Bangladesh is also interested in importing power from Myanmar as a power-starved country, the Minister said. “Not only power, we have to develop all kinds of infrastructures to facilitate business. Now people do business via Singapore or Bangkok and it takes a lot of time and money for businesspeople.”

“However, we have identified the barriers and efforts are being made from both sides to overcome those,” he said.

The Bangladeshi Commerce Minister said the trade volume between Myanmar and Bangladesh hasn’t reached a satisfactory level because of former Western sanctions and economic isolation of Myanmar, but the doors for business seem to have opened again.

“The opportunities are huge in Myanmar as it’s a very resourceful country. They have abundant agricultural products such as rice, pulse and beans. They have timber, oil and gas and jade, and most of the resources are mostly untapped here,” he said.

“The biggest advantage for Bangladesh is its geographical location. Many of our products are globally well-known for their quality such as readymade garments, leather and pharmaceuticals. Even Bangladesh’s shipbuilding industry, a sector where Bangladesh is recently registering remarkable export growth, has a great potential here.”

Bangladesh is the world’s second largest readymade garment exporter behind China with annual exports of about $20 billion and its leather industry is set to cross $1-billion mark in export earnings this fiscal year. The pharmaceutical industry in Bangladesh is one of the most developed hi-tech sectors within the country’s economy, with an export amount of over $50 million.

“If we can further the ties between the businesspeople of the two countries, and from the government’s part if we can ease the existing barriers then we can definitely develop our bilateral trade at a very faster rate,” he said.

“We both have goods that we need and can provide. So, the possibilities are endless.”

However, the Minister said it would take some time for Bangladeshi investors to come and invest in Myanmar because of Bangladesh government’s “rather strict” policy towards its businesspeople investing in other countries. “Only three to four months ago we started allowing foreign investments from Bangladesh in a case-by-case basis. Investment policy from our side to outside is still too restricted.”

“However, we are interested to invest in the cement industry in Myanmar as they have available raw materials. If Bangladeshi entrepreneurs are interested and Myanmar agrees to supply the raw materials we can go ahead and set up cement factories here,” Quader said. We also welcome any Myanmar investors who are interested to invest in Bangladesh, he added.

“We are very hopeful that there will be positive development. The Bangladeshi businesspeople who came here said they received overwhelming response from the Myanmar side.

“There is a huge trade prospect for both countries. The whole world is trying to establish their presence in Myanmar now. As a next door neighbour we shouldn’t just sit idly and let the opportunities fly past,” the Minister said.

Gold prices hiked again

Posted in Bangladesh, Business, Dhaka, Economy by Sherpa Hossainy on February 4, 2012

Published in The Independent on 25 January 2012

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Gold prices in the local market went up in a bid to counterbalance the devaluating local currency and to keep up with the soaring international price of the item.

The new rates were effective from Tuesday. This was the second hike in gold prices within 10 days.

The price of 22-carat gold was increased by Tk 1,283 per “bhori” (local unit of gold measurement, 1 bhori = 11.664 grams), and the prices of 18-carat, 21-carat and traditional gold were increased by Tk 1,108, Tk 1,283 and Tk 1,050 per “bhori” respectively, Bangladesh Jewellers Samity (BJS) sources said.

Following the rise, the prices of gold stood at: 22-carat Tk 57,736 per “bhori”, 21-carat Tk 55,170, 18-carat Tk 47,297, and traditional gold Tk 36,158 per “bhori”, according to BJS.

Gold prices closed on $1,664 per ounce [1 ounce = 31.1034768 grams] on Tuesday in the global market, while it closed on $1,638 per ounce on 14 January, when the first price rise came to effect in the local market.

“The spiralling prices in the international market forced us to increase the gold prices in less than two weeks,” said Dewan Aminul Islam Shahin, general secretary of Bangladesh Jewellers Samity (BJS).

“Our local currency (taka) is also losing its value against dollar. We are an import-based industry and the devaluation hurts our business,” he added.

Shahin said further price hike could be on the cards if the losing trend of taka doesn’t stop and the rising trend of global gold price doesn’t show any sign of easing.

Japan project to support Bangladesh informal sector workers

Posted in Bangladesh, Dhaka, Economy by Sherpa Hossainy on February 4, 2012

Published in The Independent on 23 January 2012

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Bangladesh can establish a social safety net system for vulnerable groups and boost its economic growth by incorporating its informal sector workers into formal sectors, the labour minister has suggested.

“If we can provide grassroots support for informal sector workers who are suffering from poverty and widening disparities, we can boost economic growth as their contribution to the economy will be recognised,” said Khandker Mosharraf Hossain.

Around 80 per cent laboureres are working in the informal sectors in Bangladesh which includes agriculture, domestic work, tailoring, hawker, barbers, porters and rickshaw pullers, among others.

The minister was speaking at a symposium organised by the Japan International Labour Federation (JILAF) and International Trade Union Confederation, Bangladesh Chapter (ITUC-BC) on Sunday in  Ruposhi Bangla Hotel.

The symposium was organised to launch the Japanese government programme — “Supporting grassroots activities through the International Employers and Workers Network” (SGRA). This programme is run in Asian countries by Japan Government’s Ministry of Health, Labour and Welfare and implemented by JILAF.

The support is provided through the international labour management network by organising informal workers and their families who lack public support.

Shiro Sadoshima, ambassador of Japan to Bangladesh, Hisashige Danno, deputy executive director of JILAF, Andre Bogui, director of ILO country office Bangladesh, and Masaaki Iuchi, deputy assistant minister for International Policy Planning Minister’s Secretariat, Ministry of Health, Labour and Welfare of Japan, were also present. The programme targets vulnerable groups such as low-wage earners, women and people with disabilities. SGRA currently runs in Thailand and Nepal.

“SGRA will improve the socio-economic and livelihood condition of the workers and their families in informal economy and enhance the role of trade unions,” said Kenichi Kumagai, assistant general secretary of JILAF.

JILAF aims for the development of free and democratic labour movements in developing countries and promote their sound social and economic development, Kumagai added.

The minister said the programme will also provide information and vocational training necessary for a better life thus contributing to raising the minimum standard of living.

Bangladesh Labour Welfare Foundation Act 2006, the only legal instrument of the country which provide definition of informal sector, says in section 2(a): “Informal sector” means types of non government sector where workers’ work or condition of work etc are not recognised or controlled by existing labour law and related policies and where there is very limited scope for employed workers to be organised.

According to definition of International Labour Organisation (ILO), the informal sector consists of small-scale, self-employed activities (with or without hire workers) typically a low level of organisation and technology, with primary objective of generating employment and incomes.

Tumbling taka hurts gold business

Posted in Bangladesh, Business, Dhaka, Economy, Industries by Sherpa Hossainy on January 24, 2012

Published in The Independent on 19 January 2012

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The country’s gold industry is going through a lean patch as flagging taka against dollar forces gold traders to push the item prices up, consequently driving the buyers away.

Gold is already trading higher in the local market than the global level, but the perpetual decline of taka is pushing the gold traders into a quandary as customers are averse to buying the precious metal at a higher rate.

“Gold prices should not be this high. But as taka gets weaker we are paying more for gold purchases and this is forcing us to hike the prices,” said Dewan Aminul Islam Shahin, general secretary of Bangladesh Jewellers Samity (BJS).

According to Bangladesh Bank, in the last one year alone taka devalued 15.43 per cent against the greenback. The dollar was trading on Wednesday at Tk 84.05 whereas it was around Tk 69 a year ago.

“It wouldn’t matter if the international gold price remained constant. Now we are paying Tk 12-14 more for every dollar than what we paid a year ago,” said Shahin.

After the historic rise of gold in the international market in mid-August last year, amid the Eurozone debt crisis, situation eased at the year-end. Gold crossed $1,800 per ounce [1 ounce = 31.1034768 grams] in mid-August, while in December it came down to $1,540 per ounce. However, since January gold prices started to shoot up again and on Tuesday gold traded at $1,630 per ounce.

In the course of this rising trend, BJS, the country’s largest gold traders’ association, is set to take the gold prices up again. The 35-member executive committee of BJS will sit  next Tuesday to decide the hike. “If majority of our members opine for a price increase we will implement it immediately,” the BJS general secretary said.

The latest price hike happened only last Saturday (January 14) where the price of 22-carat gold was increased by Tk 1,513 per “bhori” (local unit of gold measurement, 1 bhori = 11.664 grams). The prices of 18-carat, 21-carat and traditional gold were increased by Tk 1,222, Tk 1,397 and Tk 1,280 per “bhori” respectively.

After the hike, the prices of gold stood at: 22-carat Tk 56,454 per “bhori”, 21-carat Tk 53,888, 18-carat Tk 46,189, and traditional gold Tk 35,109 per “bhori”, according to BJS.

In India, gold prices continued to move up to new highs well beyond September and into December 2011 mainly because the rupee depreciated sharply against the dollar. In early December, spot gold in Delhi market hit a record high of Rs 29,540 per 10 gram. The rupee had moved down to around Rs 54 per $1 in December.

According to the World Gold Council, sharp volatility in gold prices and inflation do impact discretionary spending.

“When the gold price crossed the Tk 25,000 mark we started losing business as the customer base shrank,” Shahin said.

Very few customers now buy gold, and this is also confined to wedding occasions. No one wants to buy gold now unless it is mandatory, he said.

However, the traditional gold buying for wedding ceremonies is also hit by the rising prices, especially the middle-class is suffering the most. “A few years back, you could buy a whole set of jewelleries at Tk 50,000. Now you have to spend six times more just to get a bare minimum of five ‘bhoris’,” Shahin said.

The reluctant customer base is also forcing small jewellers to shut down businesses even amid the “wedding season”, which otherwise usually buoys the market. Dilip Roy, president of BJS, said, “20 per cent of the small shops have closed down now and the overall business is halved.”

Roy believes formulation of a gold policy can make this wobbling situation change. “If there was a gold policy, we would be able to buy gold from Bangladesh Bank. Then the price fluctuation in the international market would have a much lower impact,” he said.

In April, the ministry of commerce formed an inter-ministerial committee after receiving a letter from the BJS seeking formulation of a gold policy in three months. The committee then decided to make a jewellery industry policy, under the supervision of the industries ministry, immediately after formulation of the import policy, which will allow Bangladesh’s jewellery manufacturers to purchase gold through proper channels.

However, the progress following the formation of the committee has been sluggish, making matters much worse, Roy lamented.

Nordic chamber liaises to bring more investments

Posted in Bangladesh, Business, Economy, Export and Import by Sherpa Hossainy on December 18, 2011

Published in The Independent on 17 December 2011

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The Nordic countries are growingly interested in setting up more joint venture operations in Bangladesh if provided with transparent business rules and adequate policy support, a Norwegian business leader said.

In an exclusive interview with The Independent, Arild Klokkerhaug, president of the Nordic Chamber of Commerce and Industry (NCCI) in Bangladesh, discussed how the chamber is working as a “positive actor” to bring in more Nordic investments. “The Nordic companies that are doing business here believe that Bangladesh has a tremendous potential. We project Bangladesh as a prospective business destination to the Nordic businesses at home,” Klokkerhaug said.

The NCCI president said Bangladesh comes way down on the list of potential countries when Nordic companies wants to invest in Asia and the chamber is working on to improving the image. “When we meet Nordic companies we try to display the positive sides and potentials of Bangladesh. Being here and operating profitably, the existing Nordic companies are the proof of good business,” he said.

Since its inception one year ago, NCCI is helping Nordic companies, which are interested in investment and establishing operation in Bangladesh, by acting as a knowledge-sharing platform. Klokkerhaug said human resources and skilled workforce is the key strength of Bangladesh. “Bangladesh has a huge market in a compact place. There’s very small distance from anywhere in Bangladesh to the ports,” he said.

Arild Klokkerhaug, president of Nordic Chamber of Commerce and Industry (NCCI)

The biggest investments of Nordic countries in Bangladesh are in the telecom sector from the global giants Telenor, Ericsson, Nokia and Nokia-Siemens Network, while big production names like Ikea, H&M, Lindex and Kappahl are also in operation in textile sector. The NCCI has arranged business visits from Denmark, Norway, Sweden and Iceland and the focus was on energy sector such as natural gas and power plants. In November, the Danish government also expressed its interest to invest in Bangladesh, particularly in solar power and biogas.

The Norwegian embassy launched in 2010 the Bangladesh Business Matchmaking Programme (BBMP), which establishes business ventures between Norwegian and Bangladeshi companies. “Many of these meetings results in joint partnership or trade,” Klokkerhaug said. He also said there has been increased interest after setting up NCCI. “We are here to stretch out a hand and help a company start. This is like a public-private partnership to build awareness about the high potential in Bangladesh.”

NCCI is a 45 member companies that have Nordic background and operating in Bangladesh. Denmark has more than 20 companies, while Sweden and Norway has 18 and 5 respectively, operating in Bangladesh.

The exports to the Nordic countries — Norway, Denmark, Sweden, Finland, Iceland — has seen major a growth in recent years. According to Export Promotion Bureau data, exports to Nordic region in the fiscal year 2010-11 rose 54.75 per cent to $818.6 million than the previous fiscal. Denmark and Sweden is the biggest export destinations for Bangladesh but exports to Norway and Finland also marked a rise of 79.05 and 78.20 per cent in the 2010-11 fiscal than the previous one. The exports in July-November period of 2011-12 fiscal stood at $360.78 million.

However, the NCCI president said more concerted efforts are needed to remove the existing bottlenecks in Bangladesh to bring in more investments. Besides the perennial energy and power crisis, Klokkerhaug pointed out the changing rules of business as a big obstacle. “If you look at the telecom industry, it does not have fully transparent rules of business. If the rules of the game change while you are playing it is somewhat difficult; and that is scaring out new potential big investments,” he said.

Klokkerhaug said many foreign companies struggle to get money out of Bangladesh while it’s not a problem to get money in. “When finally they have a profit and want to take back some of their return many face big hassles. That is also one of the reasons why many companies hesitate to invest in Bangladesh.” He said there is a lack of understanding in certain government organisations such as National Board of Revenue as to how important it is for the companies to take the profit out so that it can be re-invested. “If one company takes profit out five new companies will come in. That’s how you do business,” he said.

The NCCI is also trying to build up a dialogue with the government to make the investment process more easy and smooth, especially with Board of Investment. “The government is doing a lot of good things and has good intentions. To set up a business is quite easy now. But some policy failures are making the good intentions backtrack,” he said, mentioning that Bangladesh has slipped four places in the global index of ease of doing business since last year on the World Bank’s report. “This is related partly to the policy failures and partly to lack of transparency in business dealings,” he said.

Arild Klokkerhaug

Klokkerhaug believes Bangladesh is yet to utilise the potential of its female population and it is hard for women entrepreneurs to set up a business in Bangladesh due to lack of transparency and hassles while setting up a venture. He thinks Bangladesh would do better in the business world by empowering local women entrepreneurs which would lead to much stronger value addition.

Recently, the Nordic chamber has started networking with local women chambers and women bodies to motivate them to build confidence, and encourage and make them more visible. The NCCI is also trying to implement strong business ethics that Nordic countries follow in carrying out business deals and operations and trying to implement better employment environment and work policies. He said companies like IKEA and H&M contributed a lot for improving work situation in the factory because they have strict rules to live up to in terms of child labour, health safety and environment guidelines.

“We encourage people to train and educate themselves more, have a life so that they don’t get exploited and burned out. We also invest in talents and the employees that will hopefully inspire local businesses to focus more on their human resources,” Klokkerhaug said.

Income tax — not so knotty now

Posted in Bangladesh, Business, Dhaka, Economy by Sherpa Hossainy on September 21, 2011

Published in The Independent on 21 September 2011

Read the article in Independent website
Digital print version

Some might wonder, as they go past the main entrance, if they have coincidentally bumped into a carnival full of colourful banners and balloons – only with a whiff of serious ambiance.

While income tax remains an un-amusing and inextricable subject, the Income Tax Fair 2011, organised by the National Board of Revenue (NBR), has surely turned the table around.

“It is so remarkable to see people paying tax in a festive mood,” said Shaon Chowdhury, deputy commissioner of taxes of NBR, who was supervising the media centre in the fair.

He said that people from all walks of life responded so spontaneously — which was evident from  eagerness of everyone, as they filled up forms, photocopied or checked documents; but without any ruckus.

People filling up Tax Identification Number (TIN) forms in Income Tax Fair 2011 in Dhaka

The NBR has launched on Saturday, for the second time, the six-day Income Tax Fair in seven divisional headquarters in Bangladesh aiming to create awareness about tax payment and boost revenue collection.

The fair in Dhaka is being held at the Officers’ Club and open for visitors from 10am to 6pm everyday till Thursday.

Last year, the tax authorities organised the fair only in Dhaka and Chittagong. Following the huge response, this year the fair is being held in all the divisional cities.

The gusto continued as thousands of prospective taxpayers kept receiving Tax Identification Number (TIN) instantly and submitted their income tax returns without any pestering.

According to NBR statistics, in the first four days, Tk 29.15 crore was collected as income tax from the fair in Dhaka, while 13,387 tax returns were submitted. A total of 2,442 TINs were also issued in the venue.

The taxpayers, in seven divisional headquarters, have deposited Tk 53.81 crore until Monday. They submitted 26,052 income tax returns while 4,608 TINs were given.

Last year, some 52,440 tax returns were submitted during the fair, as the NBR collected Tk 113 crore in income tax.

The tax administrator expects to have 100,000 visitors and log Tk 300 crore this time, while only 9 lakh, out of 26 lakh TIN holders, pay tax.

NBR officials said they were expecting the number of visitors and collection of income tax to rise in the last few days of the fair. “Day by day the number of people attending the fair is increasing, and I hope the number will continue to go up till the last day,” Chowdhury said.

At the fair, the tax administrator offers a range of services including issuance of TINs on the spot and helping taxpayers fill in tax return forms and pay taxes. The deadline for submission of income tax return for fiscal year 2010-2011 is September 30.

Shahriar Kabir, a medical officer from Manikganj, was paying tax for the first time as he started his job earlier this year.“The service is very good, but there are so many people here. I think some more booths would’ve been helpful,” Kabir added.

As Kabir happily received the required information on getting a TIN from the help desk, he said, “As far as I can understand, I earn money, so I have to pay tax. This is a moral obligation of every citizen.”

Owing to the complication of fiscal and tax laws people often didn’t have proper explanation regarding tax rules and regulations, and unscrupulous taxmen took advantage creating a smokescreen for extortion.

“The income tax is complicated. Sometimes university graduates don’t understand this matter,” said Md Sulaiman, a lawyer who attended the fair to pay his income tax.

A tax official giving instructions to a tax payee

A NBR official in the fair said: “The first class officers couldn’t interact with people directly and that led people to get harassed by the lower-level officers. It’s not likely that tax payers would be harassed by a BCS officer.”

Due to lack of knowledge people didn’t show that much interest to learn all the rules and pay tax but now the awareness has gone up, he claimed.

“This is a one-stop service,” Chowdhury said.

“People now understand that if they pay tax, it is them who will become the beneficiaries. When you pay tax you contribute for your country,” he added.

Businesspeople, such as Raihan Uddin, who opened a new company and came here to get a TIN certificate, are also gathering up in the fair.

“The service is very good. If it is organised every year, it will be very helpful for the businesspersons,” he said.

Although, the flurry of people had made some to wait longer — as Md Abdul Matin, a hardware businessperson, complained, “There are too many people, I’ve been sitting here for 20 minutes. I think they need more booths and manpower.”

But they are doing a great job in providing quick and efficient service to people, he admitted.

Last week, the finance minister said the government is determined to make income tax the biggest source of revenue in the next five years.

He claimed that the government is set to collect double revenue this fiscal.

The positive proceedings in the Income Tax Fair could easily make this a reality.

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