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Daily News Recap
Monday
November 3, 2014
Analyst:
Salma Yeasmin Xinat
[email protected]
Industry
Tanners get BB incentive for factory
relocation
The central bank yesterday declared an incentive package for tanners to help them move hazardous factories to a designated industrial park in Savar. Tanneries which have already moved
there from the toxic tannery hub of Hazaribagh or under process to do so will get an opportunity
to shift their irregular loans into block accounts and will have eight years for repayment, with a
one-year grace period, Bangladesh Bank said in a notice. Tanners will be charged 10 percent
interest on the loans in the block accounts or banks' cost of fund or whichever is lower. "I hope
banks will respond accordingly for the sake of the nation," BB Governor Atiur Rahman told The
Daily Star.
The BB also allowed banks to consider relaxation of the existing downpayment while rescheduling old loans or awarding new loans for tanneries involved in exports. However, fresh collateral
has to be shown in getting new loans if there is any deficit in security money. Tanners will be
able to free their collateralised property if they can show equal collateral. To take the incentives,
tanners will have to begin the process of relocation within the next six months, the BB notice
said. The central bank is encouraging the relocation of tanneries as part of its efforts to promote
green banking, the governor said. "The banks will ultimately reap the benefit." The government
has taken a number of initiatives and made investment to relocate the polluting tanneries from
Hazaribagh. Bankers and tannery owners have welcomed the BB move.
"I think banks would come forward in extending their support so the tanneries are relocated. We
also want this from environmental concern," said Anis A Khan, vice chairman of the Association
of Bankers, Bangladesh, a platform of chief executives of private banks. The central bank directive is also in line with the demands of the tannery owners. Shaheen Ahmed, chairman of
Bangladesh Tanners Association, said: “It is a good initiative. The directive will accelerate the
relocation process." He also urged the central bank to take necessary steps so that banks comply with the directive properly.
The amount of irregular loans with the tannery sector now stands at around Tk 450 crore, of
which Tk 250 crore is accrued interest, he said. Tannery owners also urged the government to
provide long-term loans at single digit interest to expedite relocation. The tanners will have to
invest around Tk 6,000 crore to relocate the factories, set up new plants and begin commercial
production, Ahmed said. The industries ministry has already allocated plots on the 200-acre
leather estate in Savar to 155 tannery owners through Bangladesh Small and Cottage Industries Corporation, a wing of the industries ministry that is implementing the project. Industries
Minister Amir Hossain Amu had earlier threatened to cancel the allocation if tanners fail to relocate the factories by March next year.
About 80 tanneries have started the process of relocation, according to the tanners' association.
The leather industry brought home $1.29 billion last fiscal year, crossing the one-billion-dollar
mark for the first time, according to Export Promotion Bureau. Exports of leather goods rose
48.55 percent year-on-year to $240.09 million during the period, leather 26.47 percent to
$505.54 million, and footwear 31.19 percent to $550.11 million.
News source: http://www.thedailystar.net/business/tanners-get-bb-incentive-for-factoryrelocation-48601
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Daily News Recap
European retailers
pin high hopes on
Bangladesh garment
Bangladesh's apparel sector will continue to thrive due to retailers' growing confidence and the
country's ability to supply garments at competitive prices, said officials of Foreign Trade Association, a Brussels-based platform mainly of European retailers. The platform with 1,400 active
members has different wings such as Business Social Compliance Initiative (BSCI) and Business Environmental Performance Initiative (BEPI). “My guess is that Bangladesh's garment
sector will continue to grow. But it depends on how its competitors are doing. The buyers have
good links with Bangladesh and a good relationship with the factory owners,” said Lorenz Berzau, managing director of BSCI. Berzau along with Christian Ewert, director general of the association, was in Dhaka recently to see progress of a training programme on compliance in the
garment sector.
The BSCI gives guidelines to the members on different issues, Berzau told The Daily Star at
The Westin Hotel on October 23. The association has continuously been running the training
programmes as the retailers also have a responsibility towards sustainable business practices,
he said. Both the officials spoke about the prospects and problems of the country's $25 billion
garment sector that has been going through major reforms since the Rana Plaza building collapse in April last year.
“Bangladesh needs responsible entrepreneurship as garment is already a mature industry. If
garment owners become more responsible, they will one day not require any foreign firm to
coach them on compliance issues for sustainability,” Berzau said. The BSCI, on behalf of Foreign Trade Association and the retailers, has been working with garment factory owners, managers and workers to improve their compliance with labour laws, workers' rights, fire safety and
environmental issues, he said. In Bangladesh, the BSCI held seven training programmes on fire
safety, which were attended by more than 100 people from 110 factories this year. Around 230
people from 150 factories participated in eight programmes last year.
On price hike by retailers, Berzau said the retailers are probably ready to pay more, but they
need to know that the extra amount will go to workers. The government, employers and trade
unions should regularly review workers' wages, he added. Berzau said, to help the sector grow
further, Bangladesh needs a reasonable approach to compliance, including important issues
like management styles, health and safety, wages and working hours. On changing the management styles, the BSCI gives training to owners, management teams and workers on how to
improve industrial relations to ensure a safe workplace, he said. “Industrial relations have improved a lot in Bangladesh. The incidents of unrest in the sector declined a lot over the years.
We are continuing motivational training programmes in Bangladesh.”
“The key message is that we are working for greater capacity building and responsible business
among retailers, factory owners, management and workers,” said Ewert of the Foreign Trade
Association. Currently, Bangladesh is the second largest apparel supplier worldwide after China. Bangladesh exported garment items worth $24.5 billion in fiscal 2013-14 and the export
target for the current fiscal year has been set at $26.90 billion.
News source: http://www.thedailystar.net/business/european-retailers-pin-high-hopes-onbangladesh-garment-48610
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Daily News Recap
Coats banks on
growing garment
exports
When Coats, an industrial thread and zip making British company, started its operation in Bangladesh in October 1989, the South Asian country's total exports from the garment sector of
320,000 workers were merely $624 million. The then tiny Coats Bangladesh, a unit of the Coats
Plc of Britain, realised the country's potential in garment business. Bangladesh, now the world's
second largest apparel supplier after China, exported garments worth $24.5 billion last fiscal
year. Coats Bangladesh has been strengthening its foothold in the country with the growth of
the garment sector. Coats now has two thread manufacturing companies in Bangladesh—one
in Gazipur and the other in Chittagong— where 1,600 workers and experts are employed.
The 250-year-old company has a big warehouse in Dhaka for distributing its products to the
factories that supply garment items to global retailers and brands, including Walmart, H&M,
M&S, Next and JC Penney. The company now plans to establish another zip factory in Chittagong. “We will start production in our new zip plant in the next six months. We can employ another 200 workers at the plant,” Paul Forman, group chief executive of Coats, said in an interview with The Daily Star at Radisson Hotel in Dhaka on Saturday. Forman came to Dhaka to
celebrate his company's 25th anniversary.
Coats Bangladesh's sales turnover increased threefold to $50 million in the last 10 years, he
said. It now supplies thread and zips to 2,500 garment factories in the country, Forman said.
The list of Coats' customers includes not only the garment factories, but also the shoe makers,
he said. “We also produce surgical thread for our medical clients.” One in every five garment
factories in the world uses Coats' thread, he said, adding that the thread is used in 100 million
car airbags a year. Coats produces enough yarn to knit 70 million scarves a year. The amount
of thread the company makes in three and a half hours is double the distance of the moon from
the earth, Forman said. Around 400 million pairs of shoes are made every year using Coats'
thread and one million teabags using Coats' thread are brewed every 10 minutes, he said.
Forman said Coats has operations in more than 70 countries, employing over 20,000 people in
six continents. The firm globally generated revenues worth $1.7 billion in 2013. His company is
the largest supplier of industrial thread in Bangladesh and currently the capacity of the company
is two times higher than any of the competitor in the country. Globally, Coats is the second largest supplier of industrial thread and zip, he said. Bangladesh's garment sector is going in the
right direction, he said. A lot of international retailers are now coming to Bangladesh for competitive prices, as China became an expensive sourcing country due to high costs of production
fuelled by shortage of workforce and emergence of the business of technological gadgets.
Two important factors—recovery of the western economy and the rising economy of the Asian
nations—will play a vital role in the growth of garment business in Bangladesh. Demand for
Bangladeshi garment products from the western countries, including the US and the EU, are
growing by the day, as they are coming out of the recession that jolted them between 2007 and
2011, Forman said. The rise of the Asian economies, including India, Indonesia, China and
some East Asian countries, will also boost demand for Bangladeshi garments, he said.
“Hundreds and millions of consumers in those rising Asian nations will be the consumers of
Bangladeshi garment items as their income is also increasing.”
Bangladesh has improved its workplace safety standards, Forman said, mirroring the observations made by two foreign inspection agencies—the Accord and the Alliance. More than 98 percent factories are safe in the country, the Accord, a European sponsored inspection agency,
said in its report. The US-sponsored Alliance could only shut one factory after inspecting 587
factories.
News source: http://www.thedailystar.net/exclusive/coats-banks-on-growing-garment-exports46651
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Daily News Recap
Germany to provide
142m euro for power sector
German government will provide 142 million euro for the development of power sector, especially in transmission areas. “We will get 136 million euro for the development of transmission
line in west zone areas and 6 million euro for energy efficiency and sustainable energy development programme,” Siddique Zobayer, joint secretary of the Power Division, told The Independent yesterday following a loan negotiation meeting at ERD. ERD Secretary MezbhaUddin,
Power Division secretary Monwar Islam, Power Division joint secretary Zobayer Siddique and
KFW and GIZ officials took part in the negotiation meeting. The 6 million euro would be used for
the technical assistance to develop the module of energy efficiency and sustainable energy
programme, power division sources said.
News source: http://www.theindependentbd.com/index.php?
option=com_content&view=article&id=235764:germany-to-provide-142m-euro-for-powersector&catid=108:business-finance&Itemid=152
Four banks to raise
Tk10b by issuing
bonds
Four banks will raise Tk 10 billion (Tk 1,000 crore) from the capital market by issuing bonds.
The banks are--Prime Bank, Jamuna Bank, Bank Asia and Eastern Bank, reports BSS. The
Bangladesh Securities and Exchange Commission (BSEC) at its board meeting last week gave
the permission to the banks to issue non-convertible bonds to raise the money to strengthen
their capital base. Unlike convertible bonds, non-convertible is not convertible into common
stock in the issuing company after a certain period of time. Non-convertible bonds also show up
as debt on a company’s credit rating for their entire duration.
Prime Bank will issue the non-convertible bonds of Tk 250 crore. The issue price of a unit of the
bond will be Tk 10 lakh. Jamuna Bank will issue the bonds of Tk 200 crore. The issue price of a
unit of the bond will be Tk 1 crore.
Bank Asia will raise Tk 300 crore by issuing the bonds at Tk 1 lakh for a unit, and Eastern Bank
will issue the bond of Tk 250 crore at Tk 10 lakh for a unit. All the four bonds will have a maturity period of seven years with an annual return between 11.50 and 14.50 per cent. Local financial institutions, insurance companies, mutual funds, corporate bodies and individuals can buy
these bonds through private placement.
News sourced: http://www.theindependentbd.com/index.php?
option=com_content&view=article&id=235750:four-banks-to-raise-tk10b-by-issuingbonds&catid=107:business-banking&Itemid=154
Cut rate to be effective from order date
The telecom ministry on Sunday made it clear that the slashed revenue sharing and international call termination rate would be effective from September 18 despite desperate attempt by a
cartel of IGW operators to get a retrospective effect from July 1. Bangladesh Telecommunication Regulatory Commission officials said the ministry clarification came after a group of international gateway operators in October requested the BTRC for giving a retrospective effect of the
call rate which was lowered to 1.5 cents from 3 cents. ‘The ministry in a letter today informed
the BTRC that the new call rate and revenue sharing structure for the IGW operators will be
effective from the issuance date of the order. We issued the order on September 18, so now
there is no confusion on the matter,’ a senior BTRC official told New Age on Sunday.
The BTRC on September 18, following approval of prime minister Sheikh Hasina and an order
from the telecom ministry, issued a directive to lower the international call termination rate and
government revenue sharing to 40 per cent from 51.75 per cent. The revenue sharing of the
IGW operators, however, was raised to 20 per cent from 13.25 per cent. ‘As the BTRC order did
not mention any date of effect, a vested group of IGW operators took the advantage and started
pressing government high-ups to get a retrospective effect on new rates from July 1. The then
telecom minister Latif Siddique also supported the IGW operators in the issue,’ he said. Asked
about the issue telecom secretary Faizur Rahman Chowdhury told New Age, ‘We have kept our
previous directive (issued on September 18) in force on the matter.’
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Daily News Recap
The first ministry order said that the new rates would come into effect from the date of issuance of the order, said the BTRC officials. The BTRC, however, in the first week of October
allowed the IGW cartel, International Gateway Operators Forum or IOF, to control the international call termination business. The telecom regulator allowed four politically influential IGWs
and three large IGWs to build the internetwork operating system switch which will be the central routing point for all international calls. The seven IGW operators are Unique Infoway, Digicon Telecommunication, Mirtel Ltd, Bangla Trac Communications, NovoTel, Roots Communication and Global Voice telecom. The BTRC officials said that the call charges and revenue
sharing rates were lowered mainly to give benefits to the 25 IGWs which got licences in 2012
because of their strong connections with the ruling Awami League.
News source:
http://newagebd.net/63203/cut-rate-to-be-effective-from-order-date/
#sthash.NiPa4lSP.dpbs
Capital Market
Re-listing of OTC
cos draws mixed
opinions from experts
Experts and stakeholders have expressed mixed opinion regarding re-listing of the companies
which were de-listed from main bourses because of their non-performance. Their opinion
came following the tendency of the companies of OTC (over-the-counter) to be re-listed with
main bourses. Three companies recently have applied to Dhaka Stock Exchange (DSE) to be
re-listed with main bourses. The companies are: Niloy Cement Industry, Sonali Paper & Board
Mills and Apex Weaving and Finishing Mills. Both the exchanges are in favour of modernising
the OTC platform instead of re-listing them with main bourse. "We think OTC board should be
modernised not only for de-listed companies but also other non-listed ones in sync with the
best practice of other countries," said Syed Sajid Husain, the managing director of Chittagong
Stock Exchange (CSE).
The premier bourse is also in favor of modernising the OTC market as it is easy for market
manipulators to play with shares of companies having small paid-up capital. They said a company having paid-up capital below Tk 300 million should not be re-listed with main bourse. In
August, 2013 the securities regulator gave its consent to re-listing of Wata Chemicals and the
company started trading on May 14, 2014 with a paid-up capital of only Tk 63.0 million. Later,
market manipulators played with shares of Wata Chemicals due to small paid-up capital. On
October 14 last, the securities regulator has formed a three-member body to formulate a
guideline on as to how the aspirant companies of OTC market can be re-listed with main
bourse.
"The non-performing companies of OTC market recently showed the tendency to be re-listed
with the main bourse. Following this tendency, the BSEC took the decision of formulating a
guideline for the sake of investors' interest," the BSEC said. The BSEC body will submit its
draft by November 15 next. Meanwhile, the BSEC Wednesday last imposed a condition regarding rights issue of the companies, which will be re-listed from the OTC market, although
the BSEC body is yet to formulate the draft on re-listing. "The rights issuer of a company,
which was de-listed from any stock exchange and traded through OTC market and again gets
listed with any stock exchange, will not be allowed before completion of three financial years
after re-listing," the fresh condition said.
Investment Corporation of Bangladesh (ICB) recently made a proposal of re-listing of the companies of OTC market under 'O' category as the ICB has investments in 40 companies. The
ICB recently invited the representatives of 40 companies of OTC market to know their opinion
regarding the re-listing. Representatives of eight companies attended the meeting and said
they are unable to come to main bourse due to high fee for re-listing and share demate. "At
the meeting, ICB Managing Director Md. Fayekuzzaman stressed on holding AGM and disbursement of dividends by the companies of OTC market," a meeting source said.
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Daily News Recap
Former chairman of the securities regulator Faruq Ahmad Siddiqi said the securities regulator
will look into whether a company has achieved the eligibility to be re-listed with main bourse.
"It's also true that manipulators play with the shares of companies having small paid-up capital. That's why the guideline, which will be formulated by BSEC body on companies' re-listing,
should include measures to reduce the scope of price manipulation," Siddiqi said. Siddiqi expressed his surprise as the securities regulator has already imposed a condition reading the
rights issue of the companies which will be re-listed from OTC market although the BSEC
body is yet to submit its report on re-listing. In this regard, BSEC executive director Mohammad Saifur Rahman said the condition will be applicable for the companies that have already
been re-listed from the OTC market. "And the BSEC body will submit report to formulate the
overall guideline on re-listing."
Presently, there are 66 companies in the OTC market including three which have applied to
go main market. According to a DSE official, a company willing to be re-listed with main
bourse must have production continuity along with maintaining books and accounts properly,
holding AGM (annual general meeting) and giving dividends regularly. He said the companies
willing to be re-listed with main bourse needs the NOC (no objection certificate) from the securities regulator as those ones were de-listed as per regulatory directive. "However, the relisting of the companies of OTC market will depend on the decision of exchange authority and
the securities regulator," the DSE official said on the condition of anonymity.
News source: http://www.thefinancialexpress-bd.com/2014/11/03/64168
Company
Western Marine
exports ship to Tanzania today
Western Marine Shipyard ships a newly-constructed aluminium body catamaran type passenger ship to Tanzania tomorrow (November 3). The ship, named MV Dar Es Salam, was
mounted on another heavy carrier mother vessel at the Chittagong port for shipment to Tanzania. The ship has the capacity of carrying 300 passengers. It will be used by the Tanzania
Ministry of Transportation to carry passengers through the inland waterways. Western Marine
received the work order for the new ship through the Danish company JGH Marine.
The ship is 38 metres long and will be able to travel at a speed of 20 knots an hour. Catamaran ships are very safe for voyages and even more stable than other types of ships as they
are especially designed with twin hulls. The shipyard management said Africa is a big market
for Bangladeshi ship builders and there are a lot of opportunities in Africa yet to be explored.
Western Marine is also building one offshore patrol vessel for Kenya and they expect to deliver it by 2016.
News source; http://www.thefinancialexpress-bd.com/2014/11/03/64239
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Daily News Recap
Commodity
Edible oils much
dearer than production costs
Millers are selling edible oils at much higher rates than production costs, according to a government study on the price rises and possible remedies. The study report recommends that
the ministry of commerce (MoC) take steps to bring the jacked-up edible oil prices down,
sources said. Bangladesh Tariff Commission (BTC) carried out the study recently, taking into
account the import statistics of last September, import prices of crude oil, expenses related to
refining, bottling and distribution, and profits of millers, distributors and retailers. The study
found that after calculating all the expenses the maximum retail price of per- litre soybean oil
comes to Tk 98.20. But, according to the Trading Corporation of Bangladesh (TCB), soybean
oil was selling Wednesday at prices ranging between Tk 112 and Tk 116 a litre in different
markets at home.
On the other hand, the maximum retail costs of per-litre unpacked palm oil stands at Tk
62.20. But the shopkeepers charge consumers between Tk 65 and Tk 73. According to the
report some 28,900 tonnes of soybean oil was imported in September. Fresh letters of credit
(LCs) were opened for importing 16,000 tonnes more. And some 18,135 tonnes of refined oils
were preserved at millers' level. In the same month, 104,662 tonnes of refined palm oil was
imported while fresh LCs were opened for importing 20,407 tonnes of crude. The government
agency report said the stock of soybean and palm oils as well as their imports in pipeline was
satisfactory during the month.
However, despite the sound supply chain, the market showed wayward trends. "Refined soybean and palm oils are being sold on the local market at a much higher than logical level."
BTC officials hold the view that millers raise prices of edible oils unilaterally in breach of 'The
Essential Commodities Distribution and Distributor Recruitment Order-2011'. According to the
order, a national committee headed by the BTC chairman, in consultation with importers, millers and trade bodies concerned, will re-fix the prices of essential commodities. However, the
edible oil refiners are not going by the rules, the report observed. Even the millers are not cooperating with the price-monitoring cell of the BTC by way of providing necessary information.
A senior MoF official told the FE Wednesday that the ministry will soon sit with the importers,
millers, distributors and retailers to discuss the price hike of essential commodities and find
the ways to keep the prices under control. "Yes, we noticed the excessive profit making by
the edible oil sellers and will give a strong message to them in next week's meeting," the official added.
News source: http://www.thefinancialexpress-bd.com/2014/11/03/64194
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Daily News Recap
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