Chamber News DCCI Review August-September 2020
1 Chamber News DCCI Review August-September 2020
2 Editorial Note DCCI Review August-September 2020 COVID-19: a boon for e-commerce
The COVID-19 pandemic which has shut almost the whole shows, about 2,000 online stores and 700 Facebook- world having, as of September, left more than a million based sales outlets. In 2018, the China-based global dead globally and more than 7,000 dead in Bangladesh e-commerce giant Alibaba acquired the Daraz Group, since the disease broke out in China in December 2019 a leader in e-commerce in Bangladesh, as part of the has constrained the supply chain, global, regional and Chinese company’s strategic move to open up South domestic. The disease which has so far left, globally, Asian markets. more than 33.7 million infected, with 69 per cent of them All this has furthered e-commerce and it grew having recovered, and, in Bangladesh, half a million exponentially during the COVID-19 outbreak as it infected, with 87 per cent of them having recovered has provides consumers the comfort of shopping sitting at also boosted, or furthered the scope for, e-commerce, the the home while avoiding the risk of infection that grows process of purchase and sales of products and services by when people go out and stay in public places with many means of the electronic medium between businesses and others around not wearing the mask or adhering to the consumers, businesses and businesses, consumers and social distancing protocol, which, of course, has come consumers and businesses and governments. as a big concern for the authorities, the government and Although people around the world have been shut the businesses, especially in market places and shopping indoors, the demand has not waned. Furthermore, malls. e-commerce has come to save people the hassle of A large number of consumers, as the E-Commerce venturing out to buy the products and services that they Association of Bangladesh, or e-CAB, says, use need sitting inside the home and, thereby, avoid the risk of COVID-19 infection. e-commerce for goods and services and the growth is said to have registered more than a 70 per cent increase amidst E-commerce, the purchase and sales of products the COVID-19 outbreak. A Bangladesh Bank document and services without requiring people to go out yet shows that that the amount of many in e-commerce maintaining social distancing, has in such a situation transaction was about Tk 4.9 billion in June 2020 which registered a significant increase across the world. Even grew to about Tk 6.4 billion in July 2020. in Bangladesh, as many believe, the increase has been to the tune of 70–80 per cent in comparison with online A situation like this suggests a further growth of trade in usual time. E-commerce stared coming at play e-commerce amidst the ongoing COVID-19 outbreak, in the late 1990s and the early 2000s, when the internet which shows no signs of letup, at least for now, and after connectivity was not adequate, on a very limited scale the outbreak ends, with effective vaccines coming to involving mechanisms to send flowers or even sweetmeat safeguard humans against the COVID-19 coronavirus. as gift. It is, therefore, time for the authorities and e-CAB, the It grew slowly and steadily till 2008, then covering trade organisation of e-commerce in Bangladesh, to cash products from books to home appliances. The major in on the situation and the scope to further the scope by issue that online shopping then faced was the absence working out strategies and the required schemes and by of what was required for electronic commerce. By 2009, attending to the problems that still plague e-commerce in the Bangladesh Bank allowed online transaction. With Bangladesh. the establishment of a payment aggregator in 2009 and The authorities must work to improve the delivery mobile-based financial services, e-commerce grew at a channel, which is likely to employ many of the people fast pace. In 2013, the central bank allowed the purchase who have lost their job during the outbreak, and to put and sales of goods and services online using international shield against fraudulence, which harms consumers, and credit cards. piracy, which harms the entrepreneurs. The government There are now about half a dozen online payment must also bring the e-commerce sector under a well- service providers and operators and, as a 2019 estimate planned legal framework for all this to happen r
3 BUSINESS KALEIDOSCOPE
Entrepreneur…Intrapreneur…and ‘Ultrapreneur’ Managing best use of stimulus package for CMSMEs Cottage, Micro, Small and Medium Enterprises (CMSMEs) disadvantaged position compared to medium and large are key enablers of the development process of most enterprises, the constraints and challenges are to be of the developing economies in the world and play addressed to elevate their position to the next level. significant roles in creating employment opportunities, On other hand, the COVID-19 pandemic has substantially reducing poverty and accelerating sustainable economic impacted CMSMEs of all sectors of the economy. development. Many CMSMEs have been passing distressed time. The In the development context of Bangladesh, contribution major impact of COVID-19 on CMSME include fall in of CMSMEs is well established. CMSMEs create jobs, production and employment, trade, shortage of working promote entrepreneurship, support large-scale industries capital and salary cut of the employees. and reduce rural and urban disparity. According to a To revitalise stressed CMSMES in post pandemic time, recent research conducted by Bangladesh Institute of government has offered a stimulus package worth Tk. Development Studies (BIDS), about 13 million CMSMEs in 200 billion. It is evident that there are some challenges Bangladesh constitute 90% of total industrial units, employ in implementation of the stimulus packages offered for 80% of industrial employment, and account for 45% of the CMSME sector. Only Tk.8218 crore was disbursed manufacturing value addition. Despite this contribution, to 56,800 CMSMEs from the Stimulus package which is CMSMEs are underperforming in Bangladesh and lagging insignificant against the demand. In order to contain the behind to fully utilise its potentials. The contribution of economic shocks on CMSMEs, implementation of the CMSMEs to GDP is 25% in Bangladesh whereas it is 60% stimulus package needs to be expedited. in China, 52% Sri Lanka, 40% in Vietnam, 35% in the Philippines and 30% in Pakistan. There are some issues which may cause the slump in implementation of the CMSME stimulus package. The It is evident that 93.6% of the total CMSMEs in Bangladesh guideline provided by the Bangladesh Bank for stimulus are small and only 6.4% are medium enterprises. Access packages mandated the risk for distributing loans on the to training, access to finance, technology, market, commercial bank. Besides, the interest rate cap at 4% with business development services are the most common higher managerial cost for CMSME loan, more allocation challenges for the development of SMEs particularly in the urban area than districts area and condition for for small enterprises. As small enterprises are at most Bank-Client relationship have discouraged propensity
4 BUSINESS KALEIDOSCOPE and eagerness to disburse the loan to CMSME sector. economic activities taking place online can help fill In addition, banks are reluctant to disburse loan under this credit scoring gap. For example, a lender may stimulus package to the enterprises having no minimum analyze SME borrowers’ online transaction report to rating and strong bank-client relationship. assess the borrowers’ credential without a credit score or reference of utility payment history. On the other hand, banks face challenges to reach-out the affected enterprises across the country in absence • In order to identify and expand outreach of banks to the of national database on CMSMEs, Moreover, there is no enterprises, a national database for CMS and Medium differentiation between Cottage, Micro and Small (CMS) enterprises is needed. In this connection, introduction and Medium Enterprise in terms of real life definition and of QR Code based transaction can help create MSME criteria. The capacity of CMS enterprises is much lower Database, business identification, membership than Medium scaled enterprises. verification and organizational EKYC. These efforts will also ease their reach out of Government benefits. We appreciate the initiative of credit guarantee scheme • Online trade license should be implemented across for risk sharing and engagement of NGOs in the Bangladesh for easing the business record process of disbursement process of stimulus package to reach more CMSMEs. CMSMEs and expedite implementation process of the stimulus package. • To expedite the recovery of distressed businesses, 2nd stage stimulus package needs to be declared as the In order to managing best use of CMSMEs stimulus coverage of existing package is low compared to the package, the following issues need to be considered: actual number of CMSMEs. • Need revisit the definition of CMSME since the • Informal CMSMEs in trading and industries need to threshold of Medium sized enterprises is determined be formalised through easy transformation process to higher than Cottage, Micro and Small enterprises and bring them under traceability. threshold of trading sector is not well specified. • Many of the cottage and micro enterprises in informal • For Micro, cottage and small entrepreneurs, the sector do not have bank account but doing business on repayment time is one year under stimulus package cash payment or on good faith. They need to be brought loan facility. As many CMSMEs are uncertain about under the formal financial network. It is needed to recovery of the business, the repayment period incorporate policy for unbanked and underprivileged needs to be reconsidered and extended to minimum Cottage and Micro enterprises to make them bankable three years. The Banking system of Bangladesh is through TK.10 token money account opening scheme. accustomed to collateral-based loan rather than cash flow-based loan and hence promotion of the cash • Comprehensive combined policy framework is flow-based loan will ease the access of finance for required for the development of CMSME sector. The CMSMEs. proposed comprehensive CMSME Policy needs two segments, addressing Cottage, Micro & Small and • Disbursement of loan to CMSMEs involve with high Medium sized businesses. operating cost for banks. In order to address this, Bangladesh Bank may leverage cost for the commercial If we cannot ensure rebounding of CMSME, the driving banks to cushion and support the higher operating force of the economy, it will be expense. difficult to recover the growth • Government needs to negotiate more with spree of the economy. Revival multinational development banks and partners like of the economy from pandemic IFC, World Bank and ADB for availing low-cost credit will significantly contribute support for CMSME recovery. towards achieving epoch- making and transformational • Credit Scoring Coverage is limited in Bangladesh. Without prior credit history, small business owners economic visions ahead – find it more difficult to qualify for loans and access graduation of Bangladesh into other financial products. Leveraging alternative a developing economy and data generated by the growing level of social and developed economy by 2041. President’s Pick of the Month 5 Chamber News DCCI Review August-September 2020
Coordinated efforts key attracting more FDI from UK The Dhaka Chamber of Commerce than 200 British companies operate export is in the right track,” he said. and Industry organized a webinar in Bangladesh. To attract more To bring more FDI from the United on “Exploring Trade and FDI investment from the United Kingdom, Kingdom, “we need to intensify Opportunities with the UK” on Bangladesh needs to design and broaden partnership dialogues August 19, 2020. Md. Shahriar innovative models of diversified under proposed Bangladesh-United Alam, MP, State Minister for Foreign product base. Kingdom joint Commission after Affairs, joined the webinar as chief the United Kingdom’s exit from the guest. British High Commissioner in He also said that government may European Union.” Dhaka Robert Chatterton Dickson introduce infrastructure bond to attract and Bangladesh High Commissioner investment from the United Kingdom He also urged close business-to- to the United Kingdom Saida Muna for developing large infrastructure business collaboration of both the Tasneem also joined as special guests. projects. “The continuation of countries. “We also need to work DCCI President Shams Mahmud Duty Free Quota Free access to the out a post-COVID market strategy moderated the webinar. Dr. Selim United Kingdom and investment are and establish a digital market place Raihan, Executive Director, SANEM, inevitable to revive our export-led to promote innovative Bangladeshi presented the keynote paper. economic growth and employment products on the UK market. Besides, generation especially in the COVID- connecting Bangladeshi diaspora, Shams Mahmud in his welcome hit economic scenario.” He also especially British-Bangladeshi youth, remarks said that the United Kingdom urged the agencies concerned of is very important,” he added. has for long been a large trade and Bangladesh and the United Kingdom investment partner of Bangladesh. to undertake necessary steps and Dr. Selim Raihan, Executive Director, Bangladesh’s export to the United dialogues to sign FTAs, focusing on SANEM and professor of economics, Kingdom was $3.45 billion in the comprehensive economic integration. University of Dhaka, in his keynote 2019-20 fiscal year whereas it was presentation said that the FDI from $4.83 billion in the 2018-19 fiscal Md. Shahriar Alam, MP, State Minister, the United Kingdom to Bangladesh year, having a negative growth of Ministry of Foreign Affairs, said, “The in 2018 was $370 million which is 28.57 percent. The United Kingdom United Kingdom will be giving us 10 percent of total FDI in Bangladesh becomes the second biggest foreign duty- and quota-free access till 2027. whereas FDI from the United Kingdom investor in Bangladesh, registering As for new tariff regime, Bangladesh to Asia in 2018 was £186.46 billion an accumulated FDI stock of $2.45 is in the process of discussion. In but the share of Bangladesh in that billion as of March 2020. More the post pandemic situation, our was only 0.37 percent.
Participants are seen at the webinar on Exploring Trade and FDI Opportunities with the UK held on August 19.
6 Chamber News DCCI Review August-September 2020
He termed some of the challenges for Ahsan Khan Chowdhury, Chairman Kingdom was the second largest Bangladesh to attract FDI from the and CEO of the PRAN RFL Group, destination. He said that sometimes United Kingdom and they are export said, “We can sign an FTA with the exporters face branding problems diversification, inadequate policies United Kingdom.” He also urged and image crisis. He invited British IT and strategies, weak collective Bangladeshi corporates to issue companies to invest in Bangladesh’s action of non-RMG sectors, more bonds in the Bangla Bond on high-tech park to produce industrial weak enforcement of intellectual the London Stock Exchange, he said. robots with a focus on knowledge property right, high cost of doing “Besides, we need to diversify our transfer. business, slow implementation of export portfolio.” infrastructural projects including Hossain Khaled, Managing Director, Sharifa Khan, Additional Secretary SEZs and LDC graduation. He also Anwar Group of Industries and (FTA Wing), Ministry of Commerce, suggested dialogues for signing FTAs former President, DCCI, said that said that till 2027, “we will get duty- with the United Kingdom in the post- Bangladesh’s non-RMG export to the LDC graduation era. and quota-free market access in the United Kingdom is only 7 percent. United Kingdom.” She underscored British High Commissioner to the importance of product “To increase our export, we need Bangladesh Robert Chatterton diversification and productivity of have further product diversification.” Dickson said that the diversification enterprises. She invited UK investors He urged reduction in the cost of of products is necessary to increase to invest in Bangladesh in nursing doing business and creating a value export competitiveness. He said education, power and energy chain. The United Kingdom’s service pharmaceuticals, IT, education, sector. She also urged non-resident industry can be attracted in the healthcare, service and financial Bangladeshis in the United Kingdom form of joint ventures, he added. sector have the potential to attract to invest in Bangladesh. “Our capital gain tax is higher in UK investments. He also said that the region,” so, he requested the reducing the cost of doing business Faraaz A Rahim, Executive Director, government to look into this issue. and policy reforms are important Rahimafrooz Storage Power to attract FDI. Bangla Bond in Business, stressed on exporting light Asif Ibrahim, Chairman, Chittagong London Stock Exchange creates engineering items to the United Stock Exchange and former an opportunity for the business Kingdom other than RMG items. President, DCCI, said that from community of both countries to work To attract FDI from the United 2014-15 to 2018-19, Bangladesh’s closely together. “We are also keen to Kingdom, joint ventures with local RMG export to the United Kingdom strengthen our existing trade relation entrepreneurs can play a vital role, increased from $2.8 billion $3.8 with Bangladesh,” he added. he added. billion and the growth is increasing. He also said that the stock markets Saida Muna Tasneem, Bangladesh Abdul Muktadir, Chairman and High Commissioner to the United in Bangladesh are being automated. CEO, Incepta Pharmaceuticals UK companies are welcome to invest Kingdom, said that chambers Ltd., sought the United Kingdom in the capital market. He also urged of commerce in Britain are not High Commission’s help to connect more Bangladeshi corporates to raise very much aware of Bangladesh. Bangladeshi drug regulators to finance, using the Bangla Bond on She said that exchanging regular the United Kingdom’s MHRA to the London Stock Exchange. communications between chambers get registration of Bangladeshi is key to increased trade and pharmaceutical products. The Abul Kasem Khan, Chairman, BUILD investment. She again underscored the United Kingdom’s generic market is and former President, DCCI, said, importance of product diversification. of about £4-5 billion. He suggested “We have location advantage also we Bangladeshi entrepreneurs have a that UK educational institutions of are close to ASEAN. Bangladesh gets good opportunity to tap the United engineering and basic science could duty-free market access to China”. Kingdom’s halal market and light establish their campus in Bangladesh. He requested UK manufacturers engineering sector. “We should “It will accelerate our growth in five to invest in Bangladesh to get this try to sustain the GSP beyond the years.” facility. He also said that 6 percent LDC graduation,” she said. “In the of GDP needs to be invested in services sector, if we want the British Syed Almas Kabir, President, BASIS, infrastructure development which is companies to come in, there should said that in 2019 Bangladesh’s export 2-3 percent now. He said to attract be a policy decision the government of software and IT-enabled services FDI, “we need to be competitive in has to take.” was of about $1 billion and the United terms of tax, duty and tariff structure” r 7 Chamber News DCCI Review August-September 2020 Regional cooperation urged to boost FDI
Participants are seen at the webinar on Implications of COVID-19 on FDI inflow to Bangladesh: Challenges and Way Forward held on August 22.
The Dhaka Chamber of Commerce According to World Investment Dr. M Masrur Reaz, Chairman, and Industry organized a webinar on Report 2020, Global FDI flow is Policy Exchange, in his keynote “Implications of COVID-19 on FDI projected to decrease by 40 percent presentation said that according inflow to Bangladesh: Challenges and in 2020 to $1 trillion from $1.54 to UNCTAD, global foreign direct Way Forward” on August 22, 2020. trillion in 2019 due to COVID-19. investment will plunge 40 percent Salman Fazlur Rahman, MP, Private in 2020 and another 5 percent to 10 Industry and Investment Adviser to the Due to COVID-19, developing percent will drop in 2021. Global Prime Minister, joined the webinar as economies like Bangladesh is foreign direct investment will fall chief guest while Executive Chairman expected to witness a sharp fall in FDI short to $1 trillion benchmark for of Bangladesh Export Zones Authority as well. In the post-pandemic state, the first time since 2005. Moreover Paban Chowdhury joined as special to attract FDI inflow, he suggested developing countries of Asia may guest. The Ambassador of Japan to strengthening local backward linkage, face lower investment flows up to 45 Bangladesh ITO Naoki joined as adoption of timely policy reforms percent, he said. Bangladesh needs to the guest of honor. Chairman of and inter-agency coordination. To improve in few competitiveness areas Policy Exchange Dr. M Masrur Reaz harness the investment, improvement like innovation, infrastructure, goods presented the keynote paper. DCCI in investment ecosystem, a faster market efficiency, technological President Shams Mahmud moderated completion of mega infrastructure readiness, business sophistication. the webinar. projects and public-private fraternity “We have $350 billion investment are needed as relocation and export gap in infrastructure, private DCCI President Shams Mahmud in opportunities opened up because of investment to GDP ratio should be his welcome remarks said that the COVID-19. 26.6 percent,” he added. 7th Five-Year Plan targeted $9.6 billion FDI inflow annually by the Shams Mahmud also said some of the However, Bangladesh has been 2020 fiscal year, “but we remained crucial measures would need to be maintaining impressive economic behind the target.” The FDI to GDP provided like equal fiscal and non- performances and high potentials to ratio in Bangladesh is 1.2 percent less fiscal facility, accelerate multilateral get better foreign direct investment than in India, Sri Lanka, Vietnam and regional economic ties aligning inflow. Bangladesh has the potential Cambodia. Out of total FDI stock, the with ASEAN, Big-B and One Belt for foreign investors to leverage high country received highest $3.8 billion One Road initiative and making the growth rate, sound macro-economic FDI in gas and petroleum sector EZs competitive. He also invited US management, demographic dividend, where the United States is the largest and Japanese investors to invest in liberal policies, strategic geographic investor with $3.60 billion followed conventional manufacturing, service location, affordable and flexible by the United Kingdom, South Korea, sectors and diverse infrastructure labor market and preferential market the Netherlands, China and Japan. works. access. But to woo more foreign 8 Chamber News DCCI Review August-September 2020 direct investment to be injected, products to boos export. He said that Economic Zone in Bangladesh he said, compliance, skilled labor the agro-processing sector is the most established by Japan will be the best force, easy cross-border movement potential sector for investment. “We in Asia, he said. of goods, coherence between trade want to make a level-playing field for and investment policies, facilitate the all investors. The deep sea port will Managing Director, Samsung-Fair establishment of investment, domestic open a new horizon and improve our Distribution Ltd. Ruhul Alam Al and foreign direct investment linkage competitiveness.” Mahbub said that a faster custom are some of the critical areas that clearance facility for investors should be in focused. To improve Paban Chowdhury, Executive is more important. He also said investment climate, he suggested Chairman, BEZA, said that foreign that infrastructure development, policy actions and reforms like investors as well as joint ventures building confidence among the access to finance, regulatory reforms, in the agro-processing food sector local investors, policy consistency, faster pace of mega infrastructure in EZs will get 20 percent cash removal of bureaucracy and political development, simplification of tax incentive. “We are discussing with stability are key to attract foreign regime, developing FDI policy and the NBR the bond license issue and direct investment. export diversification. its tenure may be extended by at least 3 years instead of one year, he said. Deputy Managing Director, Abdul Salman Fazlur Rahman, MP, Private Motorcycle registration fees will also Monem Limited ASM Mainuddin Industry and Investment Adviser to significantly be reduced to less than Monem said that land registration is the Prime Minister, said that reduction 10 percent, he said. an important issue to be addressed. in tax to investors will help them to He emphasized a better coordination come in but, on the other hand, “our He said, for better regulatory reforms, among BIDA, BEZA and the Land tax to GDP ratio is the lowest in this BEZA, BEPZA, BIDA and High- Ministry. He urged a conducive region. We need to widen our tax net Tech Park authorities should be policy regime and a level playing to ease burden on the existing tax more empowered. He also talked field for private EZ owners. He also payers.” The government is working about policy reforms and increasing said, “COVID is an advantage for us on policy reforms and this initiative port facilities. Land price in EZs in as it will open up opportunities of will attract more foreign direct Bangladesh is one-fourth than it is in foreign investment relocation.” Vietnam, he added. But signing FTA investment. Almost in all top level of President, AmCham, Syed Ershad is important to get greater market the government, the realization has Ahmed said, “We want hassle-free access. “Moreover, we need more come that “we need to change the support from NBR.” He also said, “We ports and we need to invest more in mindset to reform. Now this mindset need to modernize some acts like the ports and have a private port policy.” needs to slide down to field-officers Customs Act and the Bankruptcy Lastly, he said, the change in mindset who will actually play the role in Act. The port infrastructure should will change the investment scenario. implementation. be enhanced.” US foreign direct The Bangladesh Investment Ambassador of Japan to Bangladesh investment to Bangladesh is still high. He said because of COVID Development Authority has made Ito Naoki said that the Japanese are 19-led pandemic, most of foreign a tremendous progress in One Stop interested to invest in Bangladesh. direct investment flows to health, Service and it is true that automation In 2019, Japanese foreign direct pharmaceutical and ICT sector. will ensure transparency and end investment to Asia was $57 billion but Bangladesh’s share was just 0.09 corruption. He also said that the Chairperson, BUILD and former percent. In the regional connectivity government is working hard to President, DCCI Abul Kasem Khan and under Big-B initiative, Japan’s improve in the ease of doing business said that in the post-COVID era, collaboration will continue, he said. index and set a target of getting down Bangladesh needs to draw up to double digits by the next year. Simplification of taxation, customs a strategy to grab foreign direct “We will reform the bankruptcy law clearance and foreign exchange investment in the healthcare sector. and companies act soon. The tax reforms are the critical issues in “A duty-free access of Bangladeshi regime will also be re-designed soon attracting foreign direct investment, products to Chinese market is also an comparing with other countries. he said. Once the existing added advantage for us.” Our market capitalization to GDP companies feel convenient business ratio is also low,” he added. He environment, it will lead to further Foreign investors will come to emphasized the diversification of investments, he added. The Araihazar Bangladesh to get duty-free access 9 Chamber News DCCI Review August-September 2020
to the Chinese market, he added. said that innovative ideas like this will JoAnne Wagner, Deputy Chief of Citing that fast track of SEZs should help entrepreneurs to raise funds. Mission, US Embassy in Dhaka, said be the top priority, he said, “We that in Bangladesh, there are US Yuji Ando, JETRO Country need $300 billion investment alone investments in gas, power and energy Representative and President, in infrastructure development sector. sector but due to COVID-19, digital JBCCI, said that JETRO is facilitating We should have 3 to 4 percent foreign economy opens up a new opportunity investment from Japan. He said that direct investment to GDP ratio right to be explored. US companies are at present 310 Japanese companies now.” He requested the government still keen to invest in Bangladesh. are in Bangladesh and the number to declare logistics a thrust sector. She said that the agriculture and is increasing. Japanese foreign He also underscored the need for an bio-technology sectors have good direct investment has decreased to active participation of private sector opportunity where the United States 33 percent from January-June this and Bangladesh can work together. in the board of BIDA and PPP. year, he said. Tax issues, registration ICT and outsourcing, tourism, Asif Ibrahim, Chairman, Chittagong process, investment climate, lack agribusiness, food processing, cold Stock Exchange and former of adequate logistics and required chain logistics, light engineering, President, said, “We need to regulatory reforms are some of pharmaceuticals, vehicle assembly encourage investment in energy the challenges for foreign direct and healthcare are some of the investment attraction. and infrastructure sector. At present, potential sectors in Bangladesh, NRBs can invest in mutual funds in Once the business climate is she said. She also suggested using Bangladesh which is a good sign.” improved, the cost of doing business Bangladeshi diaspora in the United States. She emphasized women’s The government’s plan of to set up will come down. Motorcycle empowerment and women 100 SEZs will boost foreign direct manufacturing is a potential sector entrepreneurship. investment, he added. “Public- for Bangladesh and now the country private partnership and the resolution manufactures 5 lakh units a year, Waqar Ahmed Choudhury, Director of policy constraints will lead us to but he said that Bangladesh has and former Senior Vice-President, a new height,” he said. Foreign the capacity to produce 1 million DCCI, also spoke on the occasion investments in the capital market is motorcycles a year. The registration while Senior Vice-President, DCCI N. quite strong in Bangladesh. Terming fees of motocycles is too high, he K. A. Mobin, FCA, FCS gave the vote the Bangla Bond a great initiative, he added. of thanks r
BIDA, DCCI sign MoU to integrate services with OSS
The Bangladesh Investment on behalf of their respective meanwhile, got registration approval Development Authority and the organizations. Secretary to the using the OSS. Dhaka Chamber of Commerce and Prime Minister’s Office Md. Tofazzel Industry signed a memorandum of Hossain Miah was present on the Secretary, PMO, Md. Tofazzel understanding on August 23, 2020 occasion as chief guest. Hossain Miah also thanked the DCCI for the integration of services with for signing memorandum with BIDA BIDA’s One Stop Services. The OSS is Meanwhile, the DCCI, BIDA signed as one of the largest voices of the an online facilitation mechanism that the memorandum of understanding private sector in Bangladesh. He said aims to bring relevant agencies and with the Ministry of Land, Department for starting a business, license and stakeholders together, coordinated of Environment and RAJUK to provide certification are two important things and streamlined, to provide efficient 13 services online through the four and through the OSS, these services and transparent services to the organizations. DCCI, according to will be available in a hassle-free investors. the memorandum, will provide two manner. He said that this initiative services which are issuing certificates would create confidence and build Director General 5 (joint secretary) of origin and membership certificates. trust among the business community of BIDA Md. Wahidul Islam and In total, 154 services through 35 and investors. He also underscored Secretary General (acting), DCCI organizations will be provided the importance of maintaining Afsarul Arifeen signed the document under the OSS. Five companies, coordination between public and
10 Chamber News DCCI Review August-September 2020
Dhaka Chamber of Commerce & Industry and Bangladesh Investment Development Authority signed a memorandum of understanding for the integration of services with BIDA’s One Stop Services on August 23. DCCI Secretary General (Acting) Afsarul Arifeen (left) and Director General 5 (Joint Secretary) of BIDA Md. Wahidul Islam (right) signed the MoU on behalf of their respective organizations. private sector to expedite quality and it is a milestone and the DCCI is and attain the target of becoming a quantitative investments. honored to be the first private-sector developed nation by 2041. organization in Bangladesh to be BIDA Executive Chairman Md. associated with BIDA by signing this Land Secretary Md. Muksodur Sirazul Islam thanked the DCCI for memorandum. The OSS will open Rahman Patwary and Environment being on board with BIDA’s initiative up a new window of opportunity Secretary Ziaul Hassan, NDC also as the forefront of Bangladesh’s to both local and foreign investors spoke on the occasion. They both private sector. He also said that there and the initiative will help improve congratulated the DCCI as the first are three components like process, Bangladesh’s position in the Ease of private -sector representative to sign time and cost that are very important this memorandum with BIDA. in the ease of doing business index. Doing Business Index, he said. By implementing the OSS, process, An effective implementation of Land Secretary said that export- time and cost will automatically OSS will enhance employment oriented industries now get the come down, he said. Using the digital generation, boost economic opportunity of having their land platform will ease process and it will development, growth and help attain mutation within seven working days. help remove corruption as well. The the dream of becoming a developed The Environment Secretary said that OSS app is mobile-compatible and nation by 2041. Shams Mahmud also digital initiatives like OSS will usher there is an option for feedback to in trade and investment opportunity in monitor its activities. said that the DCCI will work hand in hand with the government and BIDA future which will boost employment During the signing ceremony, DCCI to contribute to fulfilling the dream generation r President Shams Mahmud said that of building a ‘Digital Bangladesh’ Long-term policy to adopt 4IR, technological shift urged The DCCI holds webinar on the 4th Industrial Revolution Long-term policies, the modernization for reap benefits of the 4th industrial Minister for Posts,Telecommunications of education and curriculum, revolution, said speakers at a DCCI and Information Technology Mustafa infrastructure development, industry- webinar on “4th Industrial Revolution Jabbar joined the webinar as academia collaboration and skilling, in the wake of COVID-19” held on chief guest. Ms. Parag, Additional re-skilling and up-skilling are priority September 3, 2020. Secretary, Ministry of Industries,
11 Chamber News DCCI Review August-September 2020
Participants are seen at the webinar on 4th Industrial Revolution in the wake of COVID-19 held on September 3.
joined as the guest of honor. DCCI intelligence, robotics and IoT to add technology adaptation, it should President Shams Mahmud moderated value to industrial and economic be inclusive. Regarding policy the webinar. competitiveness and connecting formation, the need of Bangladesh digitally-enabled global value chain. must get priority, he added. He also DCCI President Shams Mahmud He also urged sector-wise re-skilling, said that by 2023, 5G will be available in his welcome address said that up-skilling and development of in major cities of Bangladesh. The the Fourth Industrial Revolution is human resources in line with the education system and curriculum evolving fast and reshaping and 4IR demand. Creating an enabling need to be adjusted to cope with the global industrial, trade and economic regulatory ecosystem including advancement of 4IR, he said. landscape. Bangladesh still lags enforcement of Intellectual property behind in adopting 4IR technologies rights will facilitate the pathway of Ms. Parag, Additional Secretary, in industrial ecosystem and “this the 4IR. He also recommended the Ministry of Industries, said that the adoption will accelerate our growth 5G technology to underpin low-cost SMEs of Bangladesh use technology momentum.” big data and diverse IoT services. now and they produce various diversified products. The 4IR will Despite challenges of low-skilled job Mustafa Jabbar, Minister for open up new avenues especially loss in the short term, launching 4IR Posts, Telecommunications and in recycling industries. New technologies will unlock a new era Information Technology, said that technologies and automation will of growth and employment across all the telecommunication sector is the create new job opportunities and sectors of Bangladesh, he added. To ocean for the 4IR.” In our country, skills development. She said that seize the opportunities of the 4IR, the 65 percent people are under the age considering every aspect, the ministry government may form a high-level limit of 35 years which is an added is drafting National Industrial Policy. national committee with relevant advantage for us.” He said, “We “The COVID-19 pandemic taught agencies and experts from public and should not fear 4IR as our adaptability us how to be digitized. We have no private sectors. He recommended is too high.” In 2008, there were only options but to adopt the 4IR or we considering the 4IR perspective in 8 lakh internet users who used only may lose competitiveness in the the National Industrial Policy. 8GBPS bandwidth whereas now “we international market.” use about 2100GBPS bandwidth.” Upon assessment, a robust National Sajid Amit, Associate Professor, 4IR technology policy needs to be In that case, the capacity of University of Liberal Arts Bangladesh, framed to support the application Kuakata submarine cable needs to presented the keynote paper. He of big data, block chain, artificial be increased, he said. In terms of highlighted that manufacturing
12 Chamber News DCCI Review August-September 2020 industries are transforming almost the SME Foundation has worked to To face the challenges of job cut the entire system of production, increase the skills and capacity of because of the 4IR, “we have to management and governance. He SME entrepreneurs during the COVID re-train our existing workforce.” said that according to the World time. The Foundation conducts He also emphasized and inter- Economic Forum, about 800 million training to enhance the capacity of institutional collaboration to bring people worldwide may lose jobs by entrepreneurs to create a space in innovation in products. “We should 2030. But there may be a risk of job online marketplace. have regulations to safeguard local loss for low-skilled workforce for the 4IR, “but we need to take re-skilling Md. Rashedur Rahman, Associate industry.” Professor, Department of and up-skilling schemes to sustain Zaki Uz Zaman, Country jobs.” Electronic shift and automation Organization Strategy Leadership, Representative, UNIDO, said, “We will take place automatically. University of Dhakam said that the 4IR is not a matter of fear but an need to upgrade our young generation Although the shift has some opportunity. “We need to be resilient by up-skilling and re-skilling.” He also challenges, it creates opportunities about this.” Moreover, he urged said that the allocation for university for increased productivity, a long-term policy to streamline research needs to be enhanced. He innovation, increased connectivity the revolution. “We need to create said that coordination between the and sustainable production. The rise awareness and mentorship and run government, academia, including of digital marketplace will connect training along with new curriculum chambers, is important for policy the SMEs to the huge regional design in collaboration with formation. UNIDO can collaborate markets beyond the local customer industries.” with the public and private sector to base. He also recommended to focus skill-based education system and Dr. Anowarul Fattah, Professor adapt to the 4IR, he said. long-term policy measures. of EEE, BUET, urged motivating entrepreneurs about how to adapt to Kh. Atique-e-Rabbani, FCA, former Fahim Ahmed, President and CFO, the 4IR. He urged an inter-university Vice-President, DCCI, said that Pathao Ltd., said that more than linkage, inter-ministry and industry the technological advancement 6 million users in Bangladesh use collaboration for capacity building should be focused on the interest of internet to take services of Pathao. In as well. To create awareness among Bangladesh and its people. The blend the last five years, over $250 million the industries, he suggested the of policy and technology will help was invested in the technology establishment of a center and some entrepreneurs to adapt to the 4IR sector of Bangladesh. Access to pilot projects. in an easy manner, he said. In this connectivity and technology is more regard, he suggested taking a holistic important. “We must build soft skills Mohammad Abdul Momen, Director, approach. and innovation.” He said resilience BGMEA, said that the 4IR is not future but it is happening now. Automation and preparedness are very important Asif Ibrahim, Chairman, Chittagong things to adopt the challenges of the and technology transformation in Stock Exchange and DCCI Senior 4IR. the manufacturing industry reduces manpower. He said, “It is high time Vice President N. K. A. Mobin, FCA, Md. Sirajul Haider, NDC, General to sell our culture-based products on FCS also spoke on the occasion r Manager, SME Foundation, said that the international market.” E-learning guidelines should get priority: DCCI
Popularizing an effective e-learning on September 12, 2020. Education UNESCO, 1.37 billion students system in a new normal post-pandemic Minister Dr. Dipu Moni, MP, joined worldwide have been deprived of situation needs infrastructure the webinar as chief guest. DCCI education due to COVID 19. After a development, including high-speed President Shams Mahmud moderated great disruption, in the new normal internet bandwidth, quality- and the webinar. situation, the possibility of e-learning demand-driven online content and system has been felt to a great extent. policy revision, speakers said in a DCCI President Shams Mahmud But in terms of infrastructure and webinar organized by the Dhaka in his welcome remarks said internet affordability, “we stand far Chamber of Commerce and Industry that according to an estimate of behind in the South Asian region.
13 Chamber News DCCI Review August-September 2020
Participants are seen at the webinar on E- Learning held on September 12.
To implement e-learning system in Industrial Revolution, “we normally keynote paper. He said that e-learning the country effectively, we need to shall have to go for e-learning in is a sort of distance learning. For develop infrastructure and quality the next 4 to 5 years. Our resilience establishing e-learning system, “We online content. If we are able to and adaptability level are high need access to resource first.” He create online educational content which could play a catalytic role also urged electronic library, high- in Bengali as per the demand of in face the challenges,” she said. quality books, virtual lab resources industry, businesses and economy People of Bangladesh are very much and availability of journals. For it, will get its diverse benefits in the long technology-friendly and “we have a technologically enhanced social run,” he said. been able to spread online education learning environment needed. across the country.” Students’ participation in vocational He also suggested a national policy education among OECD countries Regarding the Education Policy development and resource allocation is about 45 percent whereas in 2010, she said that the government as part of industrial strategy and Bangladesh it is less than 15 percent. In will soon revise it, considering the industry partnership for workforce order to popularize e-learning system new normal situation. In the post- development. The University Grants COVID situation, online education in Bangladesh, he recommended the Commission should develop a will be transformed into blended inclusion of an e-learning policy in framework aligned with industrial education, she added. She also said the National Education Policy. He strategy, he added. also recommended the development that in the long run, people will get of necessary infrastructure including help of online education for their re- Professor Dr. Harun-or-Rashid, Vice- high-speed internet connection. VAT skilling and up-skilling. Chancellor, National University and surcharge on use of the internet Bangladesh, said, “The pandemic is For that, “we need to forecast and should be reduced, he said. a wake-up call for us to think about project the need of the next 20 to 30 e-learning system.” There are 260 The startups engaged in developing years. We have seen a paradigm shift colleges under National University e-learning system should get in total education system and online of Bangladesh, he said. Online special incentives and access to education and online degree are now education system can accommodate finance, Shams Mahmud also said. the need of time. Moreover, we need While creating online content, low to focus on research and innovation more students in a blended teaching bandwidth in Bangladesh should be in the university level.” She also said system. that 17 percent of the students are in consideration. Besides, the public In the meantime, the National enrolled for vocational education and the private sector should work University selected 1500 teachers which is growing day by day. hand in hand to make vocational out of 60,000 to provide 17,500 education more accessible to all. Professor Osama Khan, Pro-Vice- lectures online. He also emphasized Education Minister Dr. Dipu Moni, Chancellor, University of Surrey, reconstructing education system and MP, said that in the wake of the 4th the United Kingdom, presented the lessons. He added that the National 14 Chamber News DCCI Review August-September 2020
University has recently appointed a are well capable of conducting said, “Education system is changing director of e-learning. ICT will get e-learning. She stressed on more day by day and we need to cope priority as well as Bachelor in Tourism blended and hybrid learning system up with this change. We cannot and Hospitality Management will as well as long-term policy planning. deny digital platform any more.” He soon begin in nine colleges initially. said in the long run, there may not Prof. Dr. Khawza Iftekhar Uddin be any physical classroom. He also Dr. Md. Morad Hossain Mollah, Ahmed, Professor, United underscored the importance for Chairman, Bangladesh Technical International University, said that having a long-term plan for the next Education Board, said, “We need interaction in e-learning is the key 20 to 30 years. He emphasized need- to create industry demand-driven element. Through a blended learning based analysis and development of curriculum.” He also said that after system, teachers can play the role new curriculum. COVID disappears, “we need to of facilitators but teachers also work out how we can continue need proper training. He suggested M. Abu Horairah, Former Vice- e-learning.” revising the Education Policy 2010, President, DCCI, Riyadh Hossain, incorporating e-learning guidelines Former Vice President, DCCI also Prof. Dr. Carmen Z. Lamagna, Vice- and policies as needed. spoke on the occasion. DCCI Senior Chancellor, American International Vice-President N. K. A. Mobin, FCA, University of Bangladesh, said that Dr. Mohammad Istiaq Azim, FCS gave the vote of thanks r logistically, private universities Professor, North South University, Logistics policy, master plan under one authority urged The development of adequate, diverse to improve trade competitiveness and by the Dhaka Chamber of Commerce logistics infrastructure including secure low-cost trade potentials with and Industry on September 22, 2020. ports and multimodal sub-regional South and South East Asian markets, Dr. Rubana Huq, President BGMEA, transport connectivity are important speakers said in a webinar arranged joined the webinar as guest of
Participants are seen at the webinar on Logistics : Issues and Challenges in cross-border trade of Bangladesh held on September 22.
15 Chamber News DCCI Review August-September 2020
honor while DCCI President Shams better coordination in the logistic percent of those could not survive for Mahmud moderated the webinar. sector, she urged the private sector’s lack of incentives. participation as all efforts are for Shams Mahmud, President, DCCI, the well-being of the country. She Dr. M. Masrur Reaz, Chairman, said that logistics facilitation also suggested the adoption of the Policy Exchange, said that enhances trade competitiveness by ASEAN+1 policy to connect to Bangladesh is now doing better in making on-time trading of goods the trade of this region. Regarding several trade facilitation services. But and services with lower transaction pilferage in the bonded warehouse, logistic and infrastructure are two costs. Efficient logistics enhances she urged ensuring punishment for very important sides that need to be competitive edge substantially ill-doers. She underscored the need improved, he said. He also urged a reducing the cost of doing business. for a better coordination among the professional bonded warehousing The efficient logistics management related ministries. facility especially in the SEZ regions. has a stronger effect on trade There are third-party logistic services promotion than tariff cuts. Despite Dr. Selim Raihan, Executive Director, providers in different countries, a remarkable economic progress, SANEM, said that Bangladesh’s he added. “But what we need is a Bangladesh lags behind competing progress in Logistic Performance logistic-specific policy and master countries in terms of logistics Index between 2007 and 2018 is plan including land zoning.” infrastructure competitiveness. not up to the expected level whereas China, Vietnam, Thailand gained Mahbubul Alam, President, During the COVID-19 crisis, tremendous growth. “A lower Chittagong Chamber of Commerce Bangladesh experienced a 17 percent position in the LPI may hurt our and Industry, said that inter- export fall in 2020 while global competitiveness,” he added. Besides, ministerial coordination for trade decline is estimated at 28 to increase export, improvement in logistic improvement is necessary. percent. According to the Logistics the LPI is crucial. He also suggested Chittagong Port has improved a lot Performance Index 2018, Bangladesh addressing the challenges of tariff and but the logistic support of the port ranks 100the and 105th in the Global para-tariff issues including customs still lags behind. He stressed the need Competitiveness Index. Logistics modernization. for widening the Dhaka-Chittagong costs in Bangladesh are high in most four-lane into eight-lane highway. sectors while road transport costs in He urged a full automation of port There should be a railway cargo Bangladesh are higher than in many formalities, payment processes connectivity with the Chittagong developing and developed countries. and harmonization of HS code Port, he said. Moreover, the bay and customs formalities. He also terminal and cross-border link-up He also recommended an automated emphasized a faster implementation need to be developed. He demanded customs clearance process, integrated of large infrastructure projects, a truck terminal in Chittagong to ease port infrastructure with larger city traffic congestion. storage facility, handling facility upgrade of of railways, shipping and and terminal. He urged a quicker river connectivity on the priority basis. Md. Zafar Alam, Member, Chittagong implementation of WTO trade Port Authority, said that the facilitation agreements. He suggested Dr. Zaidi Sattar, Chairman, Policy Chittagong Port can now handle a long-term multimodal logistics Research Institute, urged customs three million containers whereas sector roadmap with logistics sector modernization. He said that custom it was 2 million in 2015. He said policy and a regulation to allow administration should play a role of that the government will build a common bonded warehousing. trade facilitator rather being a tax bay terminal outside the city where Dr. Rubana Huq, President, BGMEA collector. “If we can develop port 18-meter draft vessel will be able to said, “We need to have an internal infrastructure, custom infrastructure, come. With road connectivity, it will index of competitiveness which our position in the LPI will improve, be in full function by 2025. This bay needs to be monitored regularly. resulting in trade cost cut.” By the terminal will be cost-effective for We need to ensure the best use of improvement of LPI, non-RMG businesses having facility of road, rail full capacity of ports,” she said. In sectors will get the real benefits. and river connectivity. It will be on terms of improvement in logistics Moreover, incentives should be given a PPP basis. Moreover, there will be performance, inward foreign direct to export and domestic sales. He said a delivery yard outside the port, he investment and intra-regional trade that every year, 100 new products added. Next year, Bangladesh will are also important. Regarding are added to the export basket but 80 see a noticeable improvement in the
16 Chamber News DCCI Review August-September 2020 ease of doing business index, he said. will be implemented, he said. He BUILD, said that logistics is a vast The BIWTA can establish small inland underscored the importance of a issue and there is no single authority river barge ports across the country to coordinated border management. to look after it. So, he suggested the lessen load on roads, he said. He said that port-connecting road formulation of a comprehensive in Chittagong city needs to be logistics policy under a single Mohammad Akbar Hossain, First completed soon. authority or ministry. He also urged Secretary (Customs and VAT), NBR, the declaration of logistics a thrust said that the Bangladesh Customs Barrister Sameer Sattar, Advocate, sector. There can be a separate zone started its automation in 1994 but Supreme Court of Bangladesh, said for logistics service in the SEZs, he still there are bottlenecks and “we that congestion and delay in ports said. He cited an example of Vietnam have to eliminate these barriers.” need to be resolved. Moreover, in that there is a Global Distribution He also said that when the National goods transport system, roads and Center there as a common bonded Single Window will be implemented, railways are underused. He urged warehousing. He also suggested most of the problems will be a pragmatic governance, better the inclusion of common bonded resolved. He also requested trade coordination among the concerned warehousing system in the policy. bodies to mount pressure on the ministries to improve logistics NBR to implement all the measures performance. DCCI Senior Vice-President N. K. A. of Trade Facilitation Agreement. Soon Mobin, FCA, FCS gave the concluding e-payment facility for the importers Abul Kasem Khan, Chairperson, remarks r Supply chain management for better output of CMSMEs DCCI conducts online workshop on supply chain in SMEs
Participants are seen at the online workshop on strengthening the supply chain of CMSMEs after the COVID-19 disruption held on September 24.
A resilient supply chain system cost of doing business and open up Dhaka Chamber of Commerce and in the CMSME sector will build a new market opportunity, experts Industry in association with Freidrich competitive advantage, reduce the said in a webinar arranged by the Naumann Foundation for Freedom 17 Chamber News DCCI Review August-September 2020
(FNF Bangladesh) and an online to keep reliability, traceability and the economic growth. SMEs play an workshop for strengthening the transparency. “For CMSMEs, we increasingly important role as the supply chain of CMSMEs after the need to strengthen backward linkage engine for economic growth. Lack COVID-19 disruption. industry to enhance efficient value of skilled manpower, old machines, addition in export.” lack of information, limited access DCCI President Shams Mahmud said to finance, access of harmonized that cottage, micro, small and medium Dr. Najmul Hossain, Country tariff and non-tariff policies are enterprises (CMSMEs) contribute 32 Representative, Friedrich Naumann some of the major challenges of percent to the GDP and the sector Foundation for Freedom (FNF SMEs. Incorporating the supply creates employment opportunity Bangladesh), said that after the chain in business allows a higher for about 2.45 crore people which disruption of COVID-19 pandemic, efficiency rate, decreased cost, is 40 percent of total employment. short, medium and long-term increased output, increased profit Due to COVID-19 pandemic, the planning will boost the supply chain and enhanced communication. The overall CMSME has been hit hard in the CMSME sector to fuel its export implementation of a resilient supply as the sales came down drastically. competitiveness. chain will help accelerate 40-60 Ensuring supply chain in the new Shankar Kumar Roy, Corporate percent revenue growth, improve 20- normal situation is key for business Trainer and Consultant, presented 40 percent customer satisfaction and sustainability. Moreover, recently the keynote paper. He said that lower 10-20 percent transport costs r the use of technology in the process CMSMEs are an important arm of of supply chain has been increased Good financial reporting will attract FDI
In the context of increasing Bangladesh is underdeveloped and of public interest entity besides digitization, compliance with its market capitalization to GDP is financial courses. “We need more accounting standards and fair and one of the lowest in the world, he accounting professionals,” he said. transparent financial reporting is said. Transparent financial reporting The council needs to improve essential, experts said in a webinar by all listed companies as a well as the visibility and for that, it can on “Financial Reporting Act-2015: non-listed company is very critical collaborate with the Bangladesh its implications on the business in gaining investors’ confidence, Bank, the BSEC, the Ministry of houses” organized by the Dhaka thereby attracting investment in the Finance or other regulatory bodies. Chamber of Commerce and Industry capital market. In the next 4 to 5 years, the council on September 26, 2020. should play a role of persuasion To attract foreign investment, rather than imposition, he said. Mohammad Muslim Chowdhury, MSME reporting also needs to meet Comptroller and Auditor General international requirements and Regarding adopting the IFRS, it should of Bangladesh, joined the webinar standards such as those set by the be based on the country’s context as chief guest. Aftab-Ul Islam, FCA, International Accounting Standards considering the cost of compliance. Director, Bangladesh Bank, joined as Board. Simple, user-friendly Moreover, the IFRS is not applicable the guest of honor. DCCI President accounting and financial reporting to SMEs of Bangladesh right now, Shams Mahmud chaired the webinar. guidelines for MSMEs need to be he added. For an improvement in place to ensure better access to in corporate governance in small DCCI President Shams Mahmud said finance. The council needs to have business houses or SMEs, the council that the Financial Reporting Council more professional resources for can play its motivating role. needs to play a more effective role implantation of this act, he added. in improving the quality of audit He also talked about the 4th Industrial and corporate financial reporting Mohammad Muslim Chowdhury, Revolution and requested institutions systems which will help address Comptroller and Auditor General of like ICAB and ICMAB to collaborate willful default loan problems in the Bangladesh, said that the Financial with the council to enhance the banking sector. Capital market in Reporting Act covers the compulsion management information system and
18 Chamber News DCCI Review August-September 2020
Participants are seen at the webinar on Financial Reporting Act-2015: its implications on the business houses held on September 26. corporate governance in the next 10 businesses comparable globally and the council will conduct various years. create investors’ confidence and outreach programs and training for ensure high ethical values, he said. the simplification of standards. He Aftab Ul Islam, FCA, Director, Without international accounting also said that if businesses think that Bangladesh Bank and former standard or international financial IFRS is complicated for them, they President, DCCI, said that for audit reporting standard, the financial can hire or outsource consultant. firms, there could be a rating system report will not be accepted locally like Camel rating. He said that a better or internationally. The establishment Dr. Javed Siddiqui, Associate financial reporting will help attract of the Financial Reporting Council is Professor, University of Manchester, foreign direct investment and create a positive effort and the corporates the United Kingdom, said that the business confidence. “We have to need to change their mindset as Financial Reporting Council has enhance our credibility and in that well, he added. He also emphasized been given much authority and it case, we can examine successful the creation of more competent should act to maintain a transparent examples of other countries in terms professional accountants. “We also financial reporting by the auditors. of financial reporting regulations.” should conduct a GAP analysis for Auditor’s fee in Bangladesh is the preparation and presentation of low compared with that in other Mohammad Mohiuddin Ahmed, financial statements.” countries, he said. The council needs FCA, ACA (E&W), Executive Director, to increase it visibility through its Financial Report Monitoring M. Anwarul Karim, FCA, CPA regular activities. For a credible audit Division, Financial Reporting (USA), CFE, Executive Director, report, for local or international Council, Bangladesh, presented Standard Setting Division, Financial acceptance, corporate governance the keynote paper. He said that Reporting Council, Bangladesh, and the positive will of company there are three implications of the said that the Financial Reporting management are key factors, he said. Financial Reporting Act on business Council focuses on strengthening houses like financial statement, the financial reporting of business Barrister A. M, Masum, Appellate audit process and accountability. houses. The council is also working Division, Supreme Court, urged Good financial reports will make to enhance the standards. Moreover, the visibility enhancement of the 19 Chamber News DCCI Review August-September 2020
Financial Reporting Council. The that in the banking sector, “We do stakeholders to fix it. The council is council being a regulator has to make not see the implementation of the now on its take-off situation and it public interest entities abide by the IFRS. Moreover, auditors’ enlistment will slowly be able to enhance its regulations. Besides strengthening should be under one body.” visibility. auditors, he also emphasized strengthening management and Md. Jasim Uddin Akond, FCMA, Md. Abdul Kader Joaddar, CFO, board of a company that the council President, the Institute of Cost SCB Akter Hossain Sannamat, can look into it according to Section and Management Accountants of CEO, Omera Fuels Limited and Dr. 47, he added. To secure public Bangladesh, suggested the inclusion Sharif Ahkam, Faculty, North South interest, Section 71 of the Financial of cost audit in the FRA and requested University, took part in the open Reporting Act allows the council to the council to take initiatives in this discussion. They said that the mindset create necessary regulations to gain direction. of the company needs to change confidence. that audit is not an extra burden for C. Q. K. Mustaq Ahmed, Former a company. Moreover, auditors are Muhammad Farooq, FCA, President, Chairman, Financial Reporting poorly paid in Bangladesh. There is the Institute of Chartered Accountants Council, said that the council’s a lack of professional accountants of Bangladesh, said that the Financial supervisory role should be in Bangladesh, they added. A few Reporting Council should play the strengthened. Regarding fixing the rules of FRA are contradictory with role of regulators of the regulators. threshold (at present, the threshold the international rules. They also Financial reports are prepared by the for private company is more than Tk suggested that the council should company and upon that report, the 5 crore in revenue yearly, at least 50 introduce an index for best financial audit report is prepared by auditors. employee and property of Tk 3 crore reporting. If any anomalies are found, not only are considered as public interest auditors are to be blame, but the entity) for public interest entity for DCCI Senior Vice-President N. K. A. management of the company should the SME sector, he said that the FRC Mobin, FCA, FCS gave the concluding also be accountable for that. He said may have a consultation with SME remarks r
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20 Article DCCI Review August-September 2020
LDC Graduation and Uneven Trade War for Bangladesh
M S Siddiqui access to the standard GSP, whereby it would face higher, Legal Economist but still preferential tariffs. Approximately 83 percent of e-mail: [email protected] Bangladesh’s exports are garments, most of which would face tariffs of 9.6 percent in the EU under the GSP. Bangladesh´s Bangladesh met the criteria and assuming graduation exports would also have to comply with more stringent rules from LDC would be expected to take place in 2024. of origin to benefit from the GSP than it is required to, as Upon graduation, the direct impacts of the withdrawal of an LDC, to benefit from the EBA. Bangladeshi garments international support measures (ISMs) that are exclusive currently benefit from the single transformation rule for to LDCs. These measures relate to trade, development LDCs, whereby products qualify for preferential treatment cooperation, and support for participation in the United if only one form of product alteration is undertaken in the Nations system entities and processes. country as opposed to the double transformation rule for The most important impacts of Bangladesh’s graduation relate non-LDCs, whereby two stages of conversion are required. to trade and include the loss of LDC specific market access Woven garments would be most affected by the application provisions, LDC-specific special and differential treatment of the double transformation rule. and flexibilities under WTO rules and regional agreements, and certain training and capacity building mechanisms. Bangladesh looking for another preferential option after graduating LDCs of EU’s Special Arrangement for Sustainable The main impact of the graduation of Bangladesh on Development and Good Governance (GSP+), which grants market access would be in the European Union (EU). The duty-free access to 66 percent of EU tariff lines (in addition EU’s Generalized System of Preferences (GSP) contains to products that are subject to zero MFN duties). Based on three arrangements: a general arrangement, a special current rules, however, Bangladesh does not meet at least incentive arrangement for sustainable development and two conditions for eligibility. Its share in GSP covered good governance (GSP+), and a special arrangement for imports into the EU is above the maximum threshold and the least-developed countries (Everything But Arms - EBA). it has not ratified the Convention concerning Minimum Age Bangladesh currently exports under the latter, which grants for Admission to Employment (No. 138, 1973), one of the duty-free quota-free market access for everything but arms 27 conventions on human rights, labor rights, environmental and ammunition. The EU’s current GSP regulation will protection and good governance that are a condition for expire in 2023. eligibility. The EU has expressed concern and engaged with the government over labor rights and worker safety. Failure Bangladesh would lose access to duty-free quota-free to achieve significant improvements could affect market (DFQF) arrangements and simplified rules of origin preferences under the EBA, regardless of graduation. reserved for LDCs. In this case, the impact will be on the export of garments and employment in the industry. About In principle, graduating LDCs can apply to the GSP+, which 75 percent of its total exports were to preference granting grants duty-free access to 66 percent of EU tariff lines (in countries and that most exports to those countries enjoyed addition to products that are subject to zero MFN duties). DFQF treatment under LDC-specific preferential schemes However, under current regulations, eligibility for the GSP+ and shall feel the remarkable loss of preferences. About requires that the country meet certain criteria, some of which 60% of manufacturing employment and that the share of Bangladesh does not fully meet at this time. manufacturing in GDP stood at approximately 21% in 2015- 16. The main destinations of Bangladesh’s exports have been 1. The first – the import share criterion – is that the country’s the European and Union in the United States, followed by share of GSP-covered imports remains below 6.5 percent Canada, Japan, China, Australia, Turkey, etc. of GSP-covered imports of all GSP countries. A recent estimate by the EU for Bangladesh’s share was 17 percent. In its main market, the EU, Bangladesh would remain eligible for duty-free quota-free market access under the EBA scheme 2. Bangladesh does meet the second – diversification – for three years after graduation, given the scheme’s “smooth criterion, according to which 75 percent or more of its transition” provision. After that, the terms under which it total exports to the EU under the GSP over three years would have access to the EU market would depend on the must be in seven or fewer sections under the Combined new GSP regulation, as the current regulation will expire at Nomenclature of the EU. As a reference, over 90 percent the end of 2023 and before Bangladesh graduates from LDC. of Bangladesh’s exports to the EU in 2015 were in two Under current rules, Bangladesh would in principle have chapters in a single section.
21 Article DCCI Review August-September 2020
3. Thirdly, a “sustainable development criterion” requires to use dedicated rules of origin for LDCs, making it more the country to have ratified and effectively implemented difficult to use preferences for the tariff lines covered by the 27 international conventions on human rights, labor standard GSPs than it is to use GSP for LDCs. rights, environmental protection, and good governance. Among major developing country markets, Turkey, Bangladesh has not ratified the Convention concerning Bangladesh’s largest importer of jute and jute products, Minimum Age for Admission to Employment (No. 138, has aligned its GSP scheme to that of the European Union. 1973). It would also have to address problems identified In India and China, still relatively small destinations for by the International Labour Organization (ILO) concerning Bangladesh’s exports but important due to potential and the labor rights situation. Under Article 9 of Regulation proximity, Bangladesh would no longer benefit from DFQF (EU) No 978/2012, for a country to qualify for GSP+, in treatment reserved for LDCs and would instead export addition to meeting the vulnerability criteria and ratifying under the Asia-Pacific Trade Agreement (APTA) for export to the conventions, the most recent conclusions of monitoring China and India. It can also get MFN rates from India under bodies of those conventions must not have identified the South Asian Free Trade Agreement (SAFTA). Unless serious failure by that country to effectively implement negotiated otherwise such as FTA, Bangladesh would no the conventions. The ILO’s supervisory bodies have longer benefit from LDC-specific provisions under those and expressed concern over the implementation of some of other regional agreements. these conventions, including Conventions 87 (Freedom of association) and 98 (Collective bargaining). While advances Bangladesh would no longer benefit from LDC-specific have been noted, several issues remain to be addressed special treatment on obligations and flexibilities under (European Commission, 2018). Bangladesh repeatedly WTO rules. The main impacts are expected to be under the committing to work towards ratifying Convention No. 138 Trade-Related Aspects of Intellectual Property Rights (TRIPS) and would soon amend the labor law. agreement, the Agreement on Agriculture, and the Agreement on Subsidies and Countervailing Measures. Bangladesh Another important issue the value addition. The minimum would need to fully comply with the TRIPS agreement in local value-added for a product to be granted preferential pharmaceutical products when it graduates. It would not treatment would be 50 percent, as opposed to 30 percent as benefit from the full extent of the long transition period that an LDC. For garments, only products that go through double has been granted to LDCs, currently extended to 2033, nor transformation would qualify for preferential treatment, from any further extensions of that period. Around a fifth whereas as an LDC Bangladesh’s products are only required of pharmaceuticals produced in the country are patented to undergo a single transformation to export under the GSP in other countries, something which is made possible by (or, if found eligible, the GSP+). In practice, this could mean the waiver, which allows LDCs to produce patented drugs that certain garments produced with imported fabric would without first asking patent holders. not qualify.
If Bangladesh is not found eligible for GSP+, and unless As an LDC, Bangladesh is exempt from prohibitions on alternatives are negotiated, its products would enter the EU export subsidies under the Agreement on Agriculture and the under the standard GSP or most favored nation (MFN) terms. Agreement on Subsidies and Countervailing Measures. After The alternate open for Bangladesh is Free Trade Agreement graduation, Bangladesh would need to comply with the (FTA) with the EU. Bangladesh is on principle against FTA. Agreements, which could require a revision of government support in various sectors. There are no important impacts are expected in the United States market, since Bangladesh´s most important products A key determinant of future impacts is whether Bangladesh are not covered by the LDC-specific preference scheme. will seek bilateral free trade agreements, which it currently Bangladesh has been suspended from the GSP scheme does not have a single FTA. Bangladesh going to compete (including preferential tariffs for LDCs) since 2013 due to with the countries that are already signed FTA with all labor safety issues. Among other developed country markets, possible countries for the source of raw materials and export in Canada, Japan, and Australia, the standard GSP does not markets. Bangladesh is heading for an impossible task to face cover an important part of Bangladesh’s exports, which completion from well prepared and competitive countries. will face MFN tariffs. Moreover, in some countries such as The question is why Bangladesh will involve in an uneven Canada and Australia, Bangladesh would no longer be able trade war?
22 National Economy DCCI Review August-September 2020 Bangladesh still among top sourcing destinations Bangladesh remains one of the top sourcing destinations after China for international clothing retailers and brands even during the coronavirus pandemic because of its competitive prices, according to a new report by leading supply chain compliance solutions provider QIMA. After Vietnam, India and Bangladesh, alternative sourcing options of choice are still largely countries in Asia, including Taiwan, which enjoyed overwhelming preference as a sourcing market among US-based accounted for over half the buying country continue to grow steadily, respondents. volumes in the first half of the year. with the popularity of Latin and South America almost doubling compared The survey named “Evolution of Vietnam continues with its upward with 2019. Sourcing in 2020” was conducted trend, luring in Western buyers as in July 2020 by Hong Kong-based an alternative to China. Consistently Meanwhile, the EU brands are QIMA. It is said to be drawn on ranking among China’s regional increasingly turning to Turkey as a input from more than 200 businesses competitors, Vietnam continues near-shoring destination as the latter around the world across a variety to reap the most benefits of the was named among the top three of consumer product segments and continued mass exodus of Western sourcing regions by 30 per cent of EU buyers from China, with 40 per cent built on previous QIMA research. respondents. Diversification is on the of the EU respondents and almost as The report analyses the evolution top of the mind for global brands, but many US brands included Vietnam of global sourcing in response to there are some noticeable nuances among their top sourcing regions. the ongoing COVID-19 pandemic, between regions. This is in tune with Western brands US-China trade tensions and other not venturing too far from China. The US brands are by far most likely disruptions to global supply chains. The US and the EU brands are to diversify sourcing, with 95 per cent Nevertheless, 75 per cent of the exploring sourcing options closer of US-based respondents reporting respondents globally named China to home but are more likely to plans to the effect, likely due to the among their top three sourcing near-shore rather than re-shore. pandemic and worsening geopolitical geographies, with 55 per cent For US-based companies, sourcing tensions between Washington and reporting that Chinese suppliers destinations closer to their home Beijing r BB eases credit rules for exporters The Bangladesh Bank has relaxed disbursing the fund to its clients. banks felt discouraged to issue rules on securing funds from pre- disbursements from the preshipment Commercial banks have made shipment credit schemes and the disbursements from a preshipment credit scheme, making it difficult Export Development Fund so that for exporters to utilize the fund for exporters can avail soft loans to credit fund of Tk 5,000 crore, which was allotted by the government in business purposes. Now, exporters expedite shipments and make can avail sizable loans from the credit their international business more April this year to help businesses scheme against their letters of credit. competitive. survive the COVID-19 fallout. For instance, if the exporter avails an The central bank issued two Previously, lenders could only claim circulars in this regard. In the case the disbursed amount after exporters 80 per cent back-to-back loan, he of preshipment credit disbursements, delivered their shipments of goods as can avail a further 15 per cent loan lenders can now claim the amount per the participation agreement with from the preshipment credit scheme from the BB within a week of the BB. As a result, the commercial with only a 6 per cent interest rate. 23 National Economy DCCI Review August-September 2020
But if the exporter had received a 70 per cent back-to-back loan, then he or she will be able to avail a 15 per cent loan from the pre-shipment credit scheme while the remainder would come out of his own pocket. Due to the central bank’s move to relax these rules, exporters can now easily purchase raw materials and pay for other preliminary expenses, making the shipment process much faster. If an exporter receives money from million, down 66 per cent year-on- Also, the commodity price in the the pre-shipment scheme only after year, according to data from the global market has declined massively. shipments are made, his business Bangladesh Bank. During the period, The price of petroleum products also will not be competitive as he needs imports declined 13.85 per cent from fell. Import of capital machinery cash in hand to make goods and that a year earlier to $7.43 billion has almost come to a halt amid the the packing lists, said Mohammad and exports rose 2.39 per cent to ongoing slowdown in businesses. Hatem, vice-president of the $6.73 billion. Bangladesh Knitwear Manufacturers “Rising export earnings is a positive and Exporters Association. All indicators of the balance of sign for the economy. But, we have payments have posted a shining still a long way to go as the country “Export trade will be boosted by the mark, but these will not have a will need more time to attain the moves of the central bank. These remarkable positive impact on the benchmark of the export which initiatives are good. These are very GDP growth, experts said. Current it enjoyed before the pandemic,” positive decisions,” said Monsoor account balance, one of the major Rahman said. Ahmed, secretary to the Bangladesh indicators of the BoP, stood at $3.29 Textile Mills Association. The government will not get any billion in the first two months in respite from the improvement in the However, all exporters attempting contrast to $204 million during the indicators of the BoP immediately to avail funds from these schemes same period a year ago. as robust domestic demand and should be treated equally, he added. The current account, the record of a consumption are highly important The central bank also extended the country’s international transactions to make the economy vibrant. allotted time to receive payments with the rest of the world, was in “Depressed demand is not a good from international buyers so that surplus riding on the large volume sign for the GDP growth under they do not incur any overdue costs of remittance sent by expatriate any circumstance. The government for up to 720 days under the Export Bangladeshis and the dwindling should address the health issues to Development Fund. The existing import payments. push the economy,” Rahman said. timeframe is 300 days r The current account includes all Between July and August, the overall the transactions (other than those balance stood at $2.47 billion in Narrowing trade deficit in financial items) that involve contrast to $139 million a year not wholly good economic values and occur between earlier. The strong position of the Trade deficit narrowed heavily in the resident and non-resident entities. current account and foreign loans from multilateral lenders helped first two months of the fiscal year in “The ongoing economic meltdown boost the overall balance of the BoP. the wake of falling imports because brought on by the coronavirus of the ongoing economic slowdown, pandemic has adversely affected the “There is no scope to feel happy a sign of depressed demand and domestic demand, heavily bringing watching the indicators of the BoP. consumption. down import payments,” said The export sector has been in a Between July and August, trade Mustafizur Rahman, a distinguished weak situation considering the deficit, which occurs when imports fellow of the Center for Policy pre-COVID-19 level,” said Ahsan outweigh exports, stood at $698 Dialogue. H Mansur, executive director of 24 National Economy DCCI Review August-September 2020 the Policy Research Institute of for the past couple of months as the FY2018, the development lender said Bangladesh. central bank has injected funds into in its latest assessment on the public the market in different forms to revive procurement system in Bangladesh. The country is gradually recovering the economy, said Emranul Huq, from the meltdown but more time Average procurement time from managing director of Dhaka Bank. will be needed due to the weak the invitation of bidding to contract domestic demand, he said, adding In addition, credit demand from the signing declined from 93 days to that the economic recovery is also private sector is yet to reach a strong 59 days in case of open tendering dependent on the global situation r position as had been in the pre- method works from FY2011 to COVID-19 period, he said. Despite FY2019, according to the report titled Stimulus packages fuel that, banks are looking for avenues “Assessment of Bangladesh Public for investment to keep the wheel of Procurement System.” private credit growth their profitability moving, he said. After the introduction of e-GP in Private sector credit growth extended Activities in some areas of the private 2011, the bidding environment has its gains for the second straight sector have recently picked up, in improved significantly compared to month in August driven by loans a very positive development for the the paper-based tendering system. given under the stimulus packages financial sector. Companies from Market access has also increased. aimed at reviving the economy. The steel, cement, health and food sectors Only 10 per cent of tenders were year-on-year credit growth stood at now apply for fresh loans, which are awarded on time in 2007. It jumped 9.36 per cent in August, up 9.20 per gradually widening the loan books of to 90 per cent in 2019. Only 15 per cent from a month earlier, according banks, Huq said r cent tenders award publication took to data from the central bank. place in 2007 and it was 100 per cent Credit growth had decreased in the Huge potential lies in in 2019, the WB said. two years to April before increasing electronic procurement On average, only four bidders in May and declining once again in participated in bidding in 2007. It June. It started an upward trend in Despite some loopholes, the rose to 16 in 2019. July, a sign of the steady recovery implementation of an electronic process of the country’s economy. system for public procurement, The report is based on information of The outstanding loans in the private replacing paper-based lengthy 296,760 e-GP and 12,000 traditional sector stood at Tk 11,01,676 crore as process, has been a boon for paper-based purchases by the of August in contrast to Tk 10,95,202 Bangladesh as it is saving millions government between the 2012 fiscal crore in the previous month. of dollars and reducing time in the year and the 2019 fiscal year. bidding process, the World Bank “The implementation of various Besides, it incorporated interviews said. stimulus packages has given a boost and focus group discussions with key to the country’s private sector credit Because of the Electronic implementing agencies and surveys growth,” said MA Halim Chowdhury, Government Procurement, an of bidders conducted in five districts. managing director of Pubali Bank. estimated $600 million has been In the 2020 fiscal year, government Banks have so far disbursed 80 per saved between fiscal year 2012 and purchase was estimated at around cent of the Tk 33,000 crore that has been allocated for the large industries and service sector under the central bank’s stimulus package. But the implementation of the stimulus packages for small and medium enterprises and the farm sector has yet to reach a satisfactory level. Banks are now trying to expedite the loan disbursement in the two sectors as the central bank is emphasizing on the issue, Chowdhury said. Lenders have been sitting on excess liquidity
25 National Economy DCCI Review August-September 2020
$24.1 billion, which was 45.2 per cent of the annual budget and 8 per cent of the GDP. In the 2019 fiscal year, e-GP processed 62 per cent of $24 billion in public procurement expenditure. “Therefore, any improvement in the public procurement system is likely to have a significant financial effect,” said the World Bank. According to the assessment, 80 per cent of government procurement was made through the open competitive method. production, marketing and sales 27 per cent while medium enterprises amid the COVID-19 crisis. Rahman add the remaining 3 per cent. Before the introduction of e-GP, bidders from a geographical area made these remarks while presenting Almost 23,000 small enterprises and generally participated in the a keynote paper at an international around 3,000 medium enterprises procurement process only within that webinar styled “The Pandemic are involved in exports either directly area. However, e-GP has changed the and SMEs: Shock-absorbing policy or indirectly, Islam said. scenario with a significant increase measures and future debates, impacts Bangladesh Bank’s positive attitude of non-local winners, the WB said. in Bangladesh and lessons from towards promoting the SME sector responses around the World.” The share of rejected bids declined has been well reflected in the SME from 8 per cent in the 2012 fiscal The event was jointly organized by financing trend since the beginning year to 3 per cent in the 2019 fiscal the Small and Medium Enterprise of this decade, he added r year. Foundation and Friedrich-Ebert- Stiftung Bangladesh. Shibli Currently, there are 1,365 procuring Bangladesh should aim Rubayat Ul Islam, chairman of the agencies in the country. As of July, to join ASEAN+1 1,343 agencies registered with Bangladesh Securities and Exchange the e-GP system. The number of Commission, said SMEs account for Bangladesh needs to join the tenderers registered with e-GP stood 25 per cent of the country’s GDP but Association of Southeast Asian at 74,395, the Central Procurement only one-third of the total workforce Nations +1 in order to boost Technical Unit, which introduced engaged in the sector were females the country’s trade as this single market will become the world’s e-GP, said in July r due to its lack of policy incentives for women. fourth largest economy by 2030 following the United States, China SME sector in dire need Islam, who moderated the discussion, and EU, according to Rubana Huq, of support referred to the Bangladesh Bureau president of the Bangladesh Garment of Statistics when he went on to say Manufacturers and Exporters Increased policy support and smooth that the country was currently home Association. accesses to finance are needed on to about 7.8 million enterprises of an emergency basis to help small “Our trade will grow significantly if all sizes, of which a staggering 6.8 and medium enterprises cope with we join the ASEAN,” Huq said while million were cottage enterprises. the ongoing coronavirus pandemic, speaking at a virtual discussion on various experts suggest. “A lack of The second largest group were the “logistics issues and challenges access to formal financing has been SMEs with over 8.66 lakh small and in cross border trade of Bangladesh,” identified as a major obstacle to the medium sized firms, making up just organised by the Dhaka Chamber of survival and expansion of SMEs in a little over 11 per cent of the total Commerce and Industry. Bangladesh,” said Atiur Rahman, a number of companies. The SME Various government officials, former governor of Bangladesh Bank. sector generates 30 per cent of the exporters, researchers, trade body and Besides, many SMEs have suffered total employment in the country as business association representatives tremendous setbacks in terms of well. Small enterprises account for participated in the meeting r 26 SAARC News DCCI Review August-September 2020 Exports decline as Pakistan ignores industrial sector The Federation of Pakistan Chambers of Commerce and Industry has expressed grave concern over declining trend in exports, which have posted a downfall of around 20 percent to $1.58 billion in August 2020, startling especially for the economic managers who claimed that economy was recovering from the adverse effect of turbulent period of post-corona slowdown.
The apex trade body chief Mian Anjum Nisar said that the drop in exports during August period was especially in Karachi, has also machinery and raw materials etc. affected the overall industrial really surprising, calling for out- While the share of regional countries operations, indicating the exports of-the-box solutions for economic in world exports have considerably volume might not begin to recover growth in these crucial times, as increased over the last 40 years, in September as economic activity COVID-19 has adversely impacted Pakistan’s exports have remained was not expected to return to normal the world economy as well as the stagnant during this period, he said. immediately. Pakistan trade and industrial sectors. Unless attention was paid to all According to data, Pakistan’s exports He said that power trippings, factors that hamper the industrial and during the month of August recorded slowdown in business activities, delay exports growth, we may not be able a downfall of around 20 percent in in transportation and hampering of to achieve the desired results. port operations were some of the dollar terms, as compared to the same Some of the impediments to the period in 2019. It’s amazing that the issues faced by the exporters due to growth of industry include cost dip in August export figures comes the unprecedented rains across the of production, poor governance, after a surge in exports during July country. obsolete technology, low 2020, when COVID-19 restrictions The FPCCI President said that productivity, lack of competitiveness, were more stringently in place. besides liquidity problems and supply constraints and energy issues. In first two months of July-August the issues of increasing cost, the rains He said that the government has exports also went down by nearly and subsequent urban flooding already missed its annual export 4 percent, however, country’s trade also caused a significant damage target for the first two years. For its deficit contracted to $3.4 billion to the infrastructure, disrupting the second year, the economic managers due to shrinking imports. The trade supply chain and affecting industrial had set the export target at $26 billion, deficit, which stood at $3.7 billion in operations. which it later revised downward to the comparative period of the 2019 He urged the concerned provincial $22.4 billion. fiscal year, shrank to $3.4 billion governments to upgrade drain during July-August of 2020-21. For the current fiscal year, the system in business hubs of all cities, government has set the export target In absolute terms, there was a as sewerage system was outdated at $27.7 billion, requiring just 6 reduction of $307 million or around and dysfunctional, and these areas percent growth. Mian Anjum Nisar 8 percent in trade deficit in the become flooded with water whenever said that the government has to current fiscal year. Overall, imports there was a heavy downpour. formulate long-term and consistent dipped 6.3 percent to around $7 He said that rainwater enters the policies for the revival of industry and billion during the July-August. factories, godowns, shops and improvement in exports that have Mian Anjum Nisar said that the basements, damaging the whole been stuck in a downward spiral for flooding situation in the country, merchandise, goods, plants, a longtime r 27 SAARC News DCCI Review August-September 2020
Nepal, ADB sign deal for SASEC SASEC program on intraregional power transmission, trade power exchange with India, through planned upgrades of substations in Nepal Finance Secretary and Asian Khimti, Barhabise, and Lapsiphedi to Development Bank Alternate 400 kilovolts. Governor Sishir Kumar Dhungana and Country Director Mukhtor The project will help Nepal meet Khamudkhanov on 27 August, 2020, demand from communities, including in Kathmandu, Nepal, signed an women entrepreneurs. It will allow agreement for the modernization Nepal to meet future demand for Russia by 8.9 percent. Also, Australia of the power supply systems in commercial and industrial activities, has witnessed a decline of 7 percent Kathmandu, Province 2, and other and help create jobs for skilled and in the GDP data. Further in Asian locations in Nepal. unskilled labor as the country adopts economies, Japan saw a drop of measures to face the socioeconomic 7.8 percent, Indonesia declined by Under the South Asia Subregional impact of the COVID-19 pandemic r 6.9 percent and South Korea’s GDP Economic Cooperation Power diminishing by 3.2 percent. Transmission and Distribution System Strengthening Project, the India GDP contracts most Gopinath said, “In #GreatLockdown loan and grant agreement will among G20 Nations: IMF Q2 2020 GDP growth at historical strengthen transmission lines for lows. Graph puts G20 growth Gita Gopinath, Chief Economist of the evacuation of hydropower for numbers on a comparable scale, the International Monetary Fund has domestic consumption and facilitate quarter-on-quarter non-annualized.” validated that Indian economy saw power exchange with neighboring She added, “China recovers strongly most contraction compared to other countries. in Q2 after collapse in Q1.” Data G20 nations during April-June 2020 given by Gopinath shows that China The project will be financed through period. She posted a detailed graph is the only country to record growth a $200 million concessional loan about the performance of the gross in GDP by 12.3 percent in Q2. Going from ADB, a counterpart fund from domestic product of the G20 nation forward, Gopinath said, should the Government of Nepal worth on a quarter-on-quarter basis through expect rebounds in Q3 but 2020 $87 million, and a co-financing her twitter account. grant from the Government of overall will see major contractions r Norway amounting to $35 million. According to Gopinath, India’s GDP The Government of Norway is also slumped by 25.6 percent the worst hit Lanka’s Inflation decreases among other G20 nations. The Indian providing a $5 million technical in August assistance grant to develop capacity economy was followed by the United of the Nepal Electricity Authority to Kingdom whose GDP dwindled by Headline inflation as measured improve gender equality and social 20.4 percent. Apart from these two, by the year-on-year change in the inclusion. in the top 5 list for the most decline Colombo Consumer Price Index in GDP performance, was also Spain (CCPI, 2013=100) decreased to 4.1 The project will modernize the power whose economy dropped by 18.5 per cent in August 2020 from 4.2 per supply system in Kathmandu Valley percent, France declining by 17.1 cent in July 2020. This was mainly in Bagmati Province and Pokhara percent and Italy down 12.8 percent. driven by the statistical effect of the in Gandaki Province and improve Meanwhile, 27 European Union high base prevailed in August 2019. electricity supply in Province 2. countries saw their GDP contracting Food inflation increased to 12.3 per The project is aligned with the by 11.7 percent in Q2. Whereas, cent in August 2020 from 10.9 per Canada and Turkey witnessed a cent in July 2020, whereas Non-food decline of 11.5 percent and 11 inflation decreased to 0.8 per cent in percent in GDP. August 2020 from 1.5 per cent in July 2020. Furthermore, Brazil and Germany recorded a decrease of 9.7 percent The change in the CCPI measured on each during the second quarter this an annual average basis remained year. While the United States’s GDP unchanged at 4.8 per cent in August shrank by 9.1 percent and that of 2020. Monthly change of CCPI 28 SAARC News DCCI Review August-September 2020 recorded at 0.0 per cent in August growth, increasing from 3,248 2020. This was due to setting-off the million units from January to July price increase of 0.1 per cent in the 2019, to 3,724 million units for Food category, with the price decline the same period in 2020. Expected observed in the Non-food category revenues for the same period rose by by the same magnitude. Accordingly, 13 percent, from Nu 6,431 million within the Food category prices of (around $87.58 million) in 2019 to coconut, vegetables and turmeric Nu 7,315 million (around $99.62 increased in August 2020. However, million) in 2020. prices of fresh fish and limes recorded meal,” said Peter Natiello, Mission The COVID-19 pandemic has significant declines during the month. Director for USAID Afghanistan. affected domestic consumption of Within the Non-food category, prices “Through our partnership with WFP, electricity in the country, leading to an of items in Health (payments to USAID will help reach some of the 8 percent reduction in consumption. medical laboratories) sub-category most vulnerable families affected by However, Bhutan’s electricity export declined during the month. COVID-19 in Afghanistan with food to India has not been affected, said assistance.” The core inflation, which reflects the Mr. Dasho Chhewang Rinzin, DGPC underlying inflation in the economy, Managing Director. He added that Vulnerable families in Herat City remained unchanged at 3.2 per cent the overall performance for 2020 and the capital Kabul, the two urban in August 2020. However, annual would still depend on hydrology in centers of the country with the average core inflation declined the coming months r highest number of people who tested further to 3.8 per cent in August 2020 positive for COVID-19 and where from 4.0 per cent in July 2020 r USAID contributes $12m to the impact of the pandemic on the economy and individual livelihoods help 95,000 Afghan families Bhutan’s electricity export to is being felt the most, will receive the India continues to increase The United Nations World Food assistance. The assistance will help Program welcomes a contribution of keep these most vulnerable urban Hydropower generation in Bhutan, $12 million from USAID’s Bureau for families from being forced to resort to the country’s biggest export, has Humanitarian Assistance in support negative coping mechanisms such as increased by 14 percent, according of our response to the COVID-19 begging, child labor or eating fewer to a report by Kuensel. Bhutan’s pandemic in Afghanistan, where and smaller meals. economic development is linked with the public health emergency is the growth of its hydropower sector. compounded by increasing levels “We’re grateful for this generous The country exports about 70 percent of food insecurity and where many contribution from USAID and of energy generated to India. Strong communities’ livelihoods are being the continued support for WFP in growth in hydropower generation obliterated. Afghanistan,” said WFP Afghanistan can help offset the COVID-19- Deputy Country Director and This contribution from USAID induced dip in GDP, underscored the Officer-in-Charge Robert Kasca. will allow WFP to provide 95,000 Kuensel report. “This contribution comes at families affected by the socio- critical times when we are facing Overall generation of the Druk economic impact of COVID-19 with additional needs of $53 million due Green Power Corporation power direct cash-transfers. Each family to COVID-19. Without concerted plants — Tala, Chhukha, Basochhu will receive AFN6,000 ($79) through action, Afghanistan could face its and Kurichhu—recorded 14 percent cash-based transfers to partially cover most devastating food security crisis their food needs for two months. in decades.” “COVID-19 has disrupted the At the outset of 2020, more than 12 livelihoods of families across the country relying on day labor, small million people were already facing trade or remittances, most of all acute food insecurity due to decades in the cities where the lockdowns of conflict, natural disasters and have left them without opportunities growing poverty, according to the to earn money to buy their next latest Integrated Food Security Phase Classification Analysis r 29 Asia Pacific DCCI Review August-September 2020 Vietnam to halve 2020 GDP growth target The Vietnamese government is set to lower this year’s economic growth target to 2 percent to 2.5 percent, after the COVID-19 pandemic led to a global slowdown that hit the country’s exports, inbound tourism and foreign direct investments. Hanoi had vowed in May to deliver economic growth of over 5 percent, before a second wave of coronavirus started spreading in the country in July. Vietnam is trying to control the epidemic while maintaining economic growth, Planning and Investment Minister Nguyen Chi target, as the new wave of COVID-19 same period from a year ago, while Dung, said at a cabinet meeting spread from Danang, a tourism hub catering sales dropped 16.4 percent. earlier this month. in central Vietnam, in July. For the first time in 25 years, the National Wage Council proposed “Vietnam has so far been able to The new target comes as gross not to raise the minimum wage in sustain economic growth despite domestic product for the export- the coming 2021. The decision, many challenges brought by the led Vietnamese economy grew just announced on the labor ministry pandemic,” Dung said after he 0.36 percent in the second quarter, website, was made to show that unveiled the new targets for the down sharply from 3.8 percent in the government was committed to year. He compared the country’s the January to March period. Hanoi’s maintaining economic stability amid expected performance with those revised GDP target is expected to be the pandemic, said Nguyen Duc of other bigger economies that are approved by the national assembly Thanh, chief adviser at the Vietnam expecting contractions this year. But when it resumes in November. Until Institute for Economic and Policy turnover from exports, a key pillar of July, Vietnam had stayed relatively free Research. of the virus, thanks to Hanoi’s swift the economy, between January and declaration of a national epidemic on August is estimated to have grown The wage floor varies by region and April 1 that was followed by social just 1.6 percent to $174 billion from bottoms out at 3 million Vietnam distancing measures and the closing a year ago. dong a month. Although wages will stay flat into 2021, Thanh said most of its borders. Aviation is one of the hardest hit workers earn far more than the by the pandemic. Vietnam Airlines It took about three weeks to lift all the minimum. “The government wants to estimated a loss of 15 trillion dong restrictions at the cost of economic keep things stable, especially in this ($647 million) for the whole year, growth. Still, Hanoi had hoped to moment, when the pandemic and the while low-cost carrier VietJet Air reach its ambitious targets. “We must economy are very difficult,” he told posted a loss of $90.5 million for put our heads together to restart the Nikkei Asian Review. Vietnam’s economy with the lifting of the first half. Ho Chi Minh City, the social distancing, to reach the target economic hub, reported that 90 The lowest pay increase in 2019 was of over 5 percent gross domestic percent of tourist businesses have 5.3 percent. Vietnamese workers product growth in 2020,” Prime suspended operations, with 20,000 used to receive pay rises in the double Minister Nguyen Xuan Phuc said employees, or 70 percent of the digits — in 2013, workers received a in May after lifting the lockdown. workforce, now jobless. 17 percent rise, for example — but that figure has been on a steady His statement came in defiance of Over the first eight months, only 3.7 decline. This has had an impact on the International Monetary Fund’s million tourists arrived in Vietnam, a consumption. Total retail sales of projection in April for a 2.7 percent fall of 66.6 percent compared with consumer goods and services in the growth this year, down from 7 percent the same period in 2019. Travel and first eight months of 2020 declined in 2019. However, Hanoi had since hotel sales fell 54.4 percent over the been urged to slash this year’s growth by 4.5 percent to 3,225 trillion dong.
30 Asia Pacific DCCI Review August-September 2020
By comparison, it expanded by 9.5 the COVID-19 physical restrictions. government bonds and is taking percent in the similar period of 2019. Household consumption, which part in a debt monetization scheme typically accounts for more than half to help the government fund its Meanwhile, foreign direct and of Indonesia’s gross domestic product COVID-19 response. The fiscal indirect investment in the first eight (GDP), shrank 5.51 percent, deeper authority has earmarked Rp 695.2 months reached $19.54 billion, than overall economic contraction of trillion ($47.2 billion) in stimulus down 13.7 percent compared with 5.32 percent in the second quarter of measures to revive the economy and the same period of 2019. To support the year. stimulate domestic demand, even the economy, Hanoi sped up the as consumers reined in spending execution of public investment The CPI recorded a 0.05 percent while the government restarted including big-ticket infrastructure month-to-month deflation in August, economic activities in August to projects while encouraging private due primarily to the falling prices accelerate recovery. Finance Minister and foreign investment. Total realized of poultry, shallots and air travel. Sri Mulyani Indrawati said recently investment capital under the state In comparison, the CPI saw 0.12 that the economy was projected to budget reached 250.5 trillion dong, percent mtm inflation in August shrink another 2 percent in the worst- increasing by 30.4 percent from a 2019. The steepest deflation in August case third-quarter scenario for an was recorded in food, beverage and year ago r estimated annual contraction of 1.1 tobacco prices (0.86 percent) as percent r well as transportation prices (0.14 Indonesia inflation hits record percent). Meanwhile, the highest 20-year low in August inflation was recorded in personal Japan economy shrinks record Indonesia recorded the lowest care and other services (2.02 percent), 28pc in 2nd quarter inflation in two decades in August including gold, and in education The Japanese economy shrank a as consumer prices fell due to (0.57 percent). The personal care and record 28.1 percent in the April-to- weakening purchasing power, education segments resisted deflation June quarter — more than initially Statistics Indonesia announced. due to an increase in gold prices, feared — because of the coronavirus. BPS said Indonesia’s consumer price while the new academic year led to The Cabinet Office said that Japan’s index declined to 1.32 percent in seasonal inflation due to increased seasonally adjusted real gross August. The CPI fell further below tuition for primary, secondary and domestic product contracted at an Bank Indonesia’s 2020 inflation tertiary education, said Suhariyanto. annualized rate of 28.1 percent, target of 2 to 4 percent to reach the The increasing trend in gold prices worse than the initial 27.8 percent lowest level since May 2000, as the indicated a higher risk of a recession figure given last month. global health crisis continued to in the third quarter, said Bank batter the country’s economy and Mandiri chief economist Andry The COVID-19 pandemic, which consumer spending. “Inflation in Asmoro. He added that easing core has people staying home, restaurants many countries slowed even headed inflation indicated “significantly and stores empty or closing, and into deflation, as the COVID-19 weaker demand” that had “still not travel and tourism nose-diving, pandemic delivered a severe blow to recovered.” The major contributor has hurt all the world’s economies the demand and supply sides,” BPS to annual inflation this year would and many companies. It has head Suhariyanto told a virtual press be “the increasing gold prices due particularly slammed Japan’s export- briefing on September 1. to uncertainty in the global financial reliant economy, and forced the postponement of the 2020 Tokyo “The declining trend in core inflation markets,” Andry wrote in a research Olympics. showed that purchasing power has yet note made available to The Jakarta to recover.” Indonesia recorded core Post. inflation of 2.03 percent in August, He also expected inflation to reach while administered prices were up 1.95 percent by the yearend, lower 1.03 percent. At the same time, food than the 2.59 percent inflation prices recorded an annual deflation recorded in 2019 as well as the of 1.09 percent. The pandemic has central bank’s target range. hit Indonesian consumers hard, with millions losing their jobs due The central bank is also continuing to a cooling economy as a result of in its role as a standby buyer of
31 Asia Pacific DCCI Review August-September 2020
Restoring growth will be a priority Cambodia allocates $1.2b Cambodia has emerged relatively as the country prepares to choose for pandemic, EBA unscathed from the COVID-19 a new leader to replace outgoing pandemic, confirming 268 cases Prime Minister Shinzo Abe, who is Cambodia has allocated a budget of and no deaths with 220 recovered. $1.2 billion to bolster its economy, resigning for health reasons. A vote Almost all cases were discovered in which is struggling to cope with the among members of the governing people arriving on the few flights still impact of the COVID-19 pandemic party is expected next week. Other coming into the country. data released showed cash earnings and the withdrawal of some trade improving somewhat, and consumer preferences by the European Union. That prompted the government to Meas Sok Sensan, spokesperson of spending and other business activity suspend flights from Indonesia and the Ministry of Economy and Finance, is expected to rebound following Malaysia. The Philippines was added told online news portal Fresh News the sharp drops brought on by to the list on August 10. It has also that the partial suspension of the country’s efforts to wrestle the preferences under the Everything But imposed strict testing on arrival and coronavirus crisis under control. Arms (EBA) trade policy did not mean demands a medical certificate, health “However, high-frequency data Cambodia would lose export markets insurance and a $2,000 deposit to show that growth is struggling to in Europe. cover any potential costs. gain pace, suggesting a very gradual “Europe is still Cambodia’s exporting However, concerns remain. Medical and protracted recovery after the destination. The EBA partial sources said one group of six Chinese initial bounce. The near-term outlook withdrawal means some Cambodian nationals recently arrived and tested therefore remains challenging,” goods are no longer on the tax positive. They were retested the Oxford Economics said in a exemption list anymore,” he said. following day and all six tested commentary. Quarter-on-quarter, the negative, which one source said economy contracted 7.9 percent, The suspension came into force and was “unlikely.” Their whereabouts according to the revised figures, a the government says it will hit the slight change from the 7.8 percent in garment and footwear industries, were unknown amid speculation the preliminary data. traveling products and cane sugar, Chinese from the People’s Republic costing business about $100 million. — a major source of investment in The Cabinet Office said the It was imposed in response to Cambodia — were receiving special government began keeping Cambodia’s human rights record in treatment when entering the country. comparable records in 1980. The the aftermath of the 2018 election, previous worst contraction, a 17.8 which the main opposition party was The Health Ministry said 13 Chinese percent drop, was in the first quarter banned from contesting. nationals aged 20-35 are receiving of 2009 during the global financial medical treatment at the Chak Angre Further details were not available but Krom health center in the capital, crisis. Going by anecdotal evidence, Meas Sok Sensan said the allocation the latest drop is considered the would also be used to help Cambodia the Khmer Times reported. Thirteen worst since World War II. to cope with COVID-19, which passengers among 119 who arrived on August 9 from the Philippines Japan had already slipped into ground international tourism — a recession in the first quarter of this pillar of the economy — to a halt. tested positive r year, contracting by an annualized 2.3 percent. It shrank 7 percent in the final quarter of 2019. Recession is generally defined as two consecutive quarters of contraction. Growth was flat in July-September 2019. Domestic demand contracted even more in this year’s second quarter compared with 2019’s, as private investment fell. Public demand, driven by government spending, also fared worse than previously thought r
32 Middle East DCCI Review August-September 2020 Iran tops list of Mideast cucurbit exporters Iran is the top exporter of cucurbits in the Middle East and ranks fifth in the world, says Rouhollah Latifi, the spokesman of the Islamic Republic of Iran Customs Administration. According to the official, exports of cucurbits hovered around 1.09 million tons worth $241.16 million during the first five months of the current Iranian year (March 20-August 21). With imports worth $109.51 million, Iraq was Iran’s main customer of cucurbits during the period, followed Watermelon is the main crop in the under review in terms of tonnage. A by the UAE with $53.92 million and cucurbit family exported from Iran and total of 529,380 tons of watermelon Oman with $12.86 million, ILNA topped the list of Iran’s agricultural and worth $117.99 million were exported reported. food exports during the five months from Iran during the period r
Iran’s exports to Arab, Mideast countries hit $2.5b A total of $2.5 billion worth of non- according to a report by Citi Research result, multiple exchange rates have oil commodities were exported from which comes after French President emerged, with its official (pegged) Iran to the littoral states of Persian Gulf Emmanuel Macron pushed recently rate only available for limited and Middle Eastern countries during for a revamped cabinet that will institutions and purposes. the first five months of the current address urgently needed overhauls Citi said that based on the scenario in Iranian year (March 20-August 21). to get Lebanon’s economy back on which a solution is found, the debt- its feet, and address the deep public According to Director General of to-GDP ratio would drop to below anger over the August 4 port blast. Trade Promotion Organization of 100 percent by 2025. It said that in Iran’s Arab and African Countries The French road map set out the short term, the ratio would almost Bureau Farzad Piltan, Iraq, the UAE, milestones for a new government, certainly increase from current levels Oman, Kuwait, Syria, Qatar, Jordan, ranging from resuming stalled talks amid the collapse in growth, the Lebanon and Bahrain were the main with the International Monetary depreciation of the Lebanese pound destinations. Fund to fixing the broken electricity and the addition of IMF and other system. But the plan has stumbled at “The export value shows a $3.5 loans. the first hurdle as Lebanon’s political billion decline compared with the elite have bickered over how the Although Citi would expect positive similar period of 2019. The fall in cabinet is formed. growth thereafter, the cumulative value has to do with the closure of effect of growth until 2025 would still borders due to the outbreak of the Citi said that unlocking IMF and be to push up the ratio by 11 percent novel coronavirus pandemic,” the other external aid would be key to as the initial contraction outweighs official was quoted as saying by ILNA r initial stabilization and subsequent the modest recovery afterwards. implementation of a new financing model. Having defaulted earlier Citi’s assumption is for the primary Lebanon ‘running out of time’ this year on its Eurobonds, Lebanon deficit to widen initially as parts of to implement reforms is effectively cut off from foreign the external funding would have to be used for reconstruction, assistance to Lebanon is running out of time for a financing and relies on deficit the financial sector and infrastructure solution to its political and economic demonetization from the Banque du spending. crisis, as efforts appeared to have Liban, the central bank. failed to make a breakthrough in a The latter’s foreign exchange reserves According to the note, IMF and new government deadlock. That’s have been dwindling, and as a other external help would be needed 33 Middle East DCCI Review August-September 2020
initially to provide some replacement absence of globally aligned testing The decision is set to open up for the loss of private external regimes, has halted momentum prospects for promising and high- financing in order to guarantee toward re-opening borders to travel. return investment opportunities that imports of basic necessities and, benefit local and foreign investors, “Although domestic markets are following the explosion in Beirut while advancing Qatar’s real estate doing better, this is primarily owing to port, reconstruction. In the second market and contributing to the improvements in China and Russia. phase, the reforms would be needed realisation of its national vision for And domestic traffic represents just a not only for unlocking funding but 2030 and beyond. bit more than a third of total traffic, so also for setting the economy on a it is not enough to sustain a general According to the CEO of IPA Qatar, Sheikh Ali Alwaleed Al Thani, the sustainable track r recovery.” country is about to witness a paradigm His comments come after a previous shift in the development of its real Mideast airlines see 90pc percent IATA forecast that said the Middle estate sector. “Not only can investors, slump in Sept passenger demand East’s aviation industry is set to lose residents and non-residents, now Airlines operating in the Middle more than 140 million passengers take advantage of freehold properties East posted a 90 percent slump in this year due to the ongoing impact in malls and residential complexes across the country, they can also passenger demand in September as of the global pandemic r explore strategic investment and the coronavirus pandemic continued partnership opportunities, either to bite the global aviation industry. Good investment chance in directly or through local and foreign According to the International Air Qatar’s real estate market real estate investment funds, in an Transport Association, the September expanded number of areas that The Investment Promotion Agency figure was actually a slight follow global planning and urban Qatar has announced that now is the improvement on the previous month specifications which meet their time to invest in Qatar’s real estate when demand fell by 92.3 percent. aspirations,” he explained. market, following the Council of September also saw airline capacity Ministers’ Decision No. (28) of 2020 He also pointed out that the tumble by 78.5 percent in the Middle on the conditions, controls, benefits, enhanced residency benefits granted East while load factor sank by more and procedures for ownership and through the Council’s decision than 40 percent compared to the use of real estate in the country. further enrich Qatar’s overall value same month in 2019 to 34.4 percent. proposition for investors. “Now that Globally, IATA said that passenger The decision brings up the number of the permanent residency advantages demand in September remained areas where international investors, for owners of over $1,000,000+ highly depressed. companies, and funds can pursue properties encompass family ownership and use of real estate residency, education, healthcare, and Total demand was 72.8 percent to 25. Furthermore, it introduces commercial-activity investments, below September 2019 levels while the ownership of detached units in international investors can further capacity was down 63 percent residential compounds and shopping pursue their long-term ambitions compared to a year ago and load malls throughout the country, along while living in a place they truly can factor fell 21.8 percent to 60.1 with enhanced residency benefits. call home,” he added r percent. International passenger demand in September plunged 88.8 percent compared to September 2019, basically unchanged from the 88.5 percent decline recorded in August. Alexandre de Juniac, IATA’s director general and CEO, said: “We have hit a wall in the industry’s recovery. A resurgence in COVID-19 outbreaks — particularly in Europe and the United States — combined with governments’ reliance on the blunt instrument of quarantine in the 34 International DCCI Review August-September 2020 US trade deficit surges in July to highest in 12 years The Commerce Department reported that the July deficit, the gap between what America buys and what it sells to foreigners, was 18.9 percent higher than the June deficit of $53.5 billion. It was the largest monthly deficit since July 2008 during the 2007-2009 recession. The July deficit increase was driven by a record 10.9 percent increase in imports which rose to $231.7 billion. Exports were also up but by a smaller 8.1 percent to $168.1 billion.
When Donald Trump campaigned imbalance. The goods deficit with The increase in the overall deficit in for president in 2016 he pledged Mexico hit a record high of $10.6 July was bigger than economists had to sharply lower the country’s large in July. Trump has claimed the new been expecting. trade deficits, especially with China, free trade deal he has negotiated with which for years has been the country Mexico and Canada will be a boon Michael Pearce, senior U.S. with the largest trade surplus with the for American workers and businesses. economist at Capital Economics, said United States. But despite a number he expected the rising deficit, which The United States ran a deficit in of high-profile trade battles and a subtracts from U.S. growth, would goods trade of $80.1 billion in July, renegotiation of the North American cut the gross domestic product for the the highest on record. The U.S. Free Trade Agreement with Canada July-September quarter by about one surplus in services, such as banking and Mexico, America’s trade deficits and insurance, declined to $17.4 percentage-point. But he still forecast have remained stubbornly high. billion, the smallest services surplus GDP would rebound at an annual For July, the deficit with China in since August 2012 and a reflection rate of 30 percent in the third quarter goods totaled $31.6 billion, an in part of the decline in airline travel after having fallen at a rate of 31.7 11.5 percent increase from the June during the pandemic. percent in the second quarter r
Eurozone recovery falters in August as economies diverge The eurozone’s rebound from its earlier predicted a bounceback this “The recovery is already cooling deepest economic downturn on quarter with growth of 8.1 percent down a little bit, and it is very uneven record faltered in August, surveys but said a full recovery would take among countries. Some countries like showed, with some countries in two years or more. But as infection Germany have performed relatively the bloc suffering more than others numbers have risen some restrictions well and other countries like Spain from restrictions imposed to limit the have been reimposed, and IHS and to a lesser extent France are spread of the coronavirus. Overall Markit’s final Composite Purchasing sending more worrying signs,” growth in the dominant service Managers’ Index, seen as a good industry – which has been harder hit said Daniela Ordonez at Oxford gauge of economic health, suggested than manufacturing from lockdown Economics r the economy was still floundering. measures – almost ground to a halt, suggesting the long road to recovery It sank to 51.9 last month from will be bumpy. July’s 54.9 – close to the 50 mark Last quarter the bloc’s economy separating growth from contraction, contracted 12.1 percent as albeit slightly better than an initial lockdowns led to businesses being flash reading of 51.6. The services shuttered and citizens staying home, PMI fell to 50.5 from 54.7, better official data showed. A Reuters poll than its flash reading of 50.1. 35 International DCCI Review August-September 2020
France’s details $118b package Greek economy shrinks COVID-19 cases hinder activity. The global composite PMI fell from The French government detailed The Greek economy, also largely 52.4 in August to 52.1 in September. its 100 billion euro ($118 billion) reliant on tourism, contracted 14 Oil prices fell nearly 7 percent in stimulus plan to erase the economic percent last quarter, official data September, with the price of Brent impact of the coronavirus crisis over showed. Greece’s GDP shrink crude oil averaging $40/bbl. two years, lining up billions of euros marked the steepest quarterly in public investments, subsidies and contraction in at least 25 years and The daily number of COVID-19 cases tax cuts. “This recovery plan aims to threatens to undermine a decade in Russia continued to significantly keep our economy from collapsing of hard-won gains for the recently increase, reaching 15,982 per day and unemployment exploding,” bailed-out economy. The record on October 19. Concerns over the Prime Minister Jean Castex said on slump was not Europe’s worst, but it pandemic’s second wave, oil prices RTL radio. confirmed expectations for a sharp sliding slightly below the threshold Castex said the plan hopes to create contraction over the second and third price specified in the fiscal rule, and 160,000 jobs next year and restore quarters, induced by the lockdown further geopolitical risks resulted France’s economic growth levels of that authorities imposed in March to in the average ruble exchange rate 2019 by 2022 – the year of France’s contain the coronavirus. depreciating 2.6 percent with respect next presidential elections. The Greece lost about a quarter of its to the US dollar in September, m/m. stimulus equates to 4 percent of gross economic output during its 2010- In the third quarter of 2020, the domestic product (GDP), meaning 2018 debt crisis, which rocked the current account surplus fell to $2.5 France is plowing more public cash eurozone and forced it to sign up into its economy than any other big billion from $10.7 billion in the to three international bailouts in same period in 2019 largely due to European country as a percentage of exchange for unpopular austerity- GDP, an official told Reuters. a fall in energy exports. In August, focused reforms. In Britain, outside output in five basic sectors continued the currency union, the composite France’s recession, marked by a rebounding yet at a slower speed. PMI was at a six-year high but job 13.8 percent second-quarter GDP The Russian Composite PMI fell to losses accelerated in a bleak sign contraction that coincided with the 53.7 in September of 2020 from 57.3 ahead of the closure of the U.K. country’s COVID-19 lockdown and in the previous month, pointing to government’s coronavirus furlough is set to generate an 11 percent drop continuing recovery although with in 2020 as a whole, has also been scheme at the end of next month r easing growth rate. one of Europe’s deepest. The growth in real wages accelerated The stimulus package earmarks 35 Russia’s monthly economic to 2.9 percent, y/y, compared to 0.6 billion euros to make the economy developments percent, y/y, in June. In September, the more competitive, 30 billion for more annual headline inflation increased environmentally friendly energy The strength of the global rebound policies and 25 billion for supporting is quickly fading after the collapse further to 3.7 percent compared jobs, officials said. in output in the second quarter of to 3.6 percent in August. Banks’ 2020 as persistently high new daily key credit risk and performance France reported more than 7,000 virus cases, the highest daily rate in Europe and well above the several hundred cases a day in May and June when France was emerging from a strict lockdown and testing less. COVID-19 has killed more than 30,600 people in the country. President Emmanuel Macron’s government is banking on the plan to return the eurozone’s second-biggest economy to pre-crisis levels of activity by 2022 after what is expected to be its worst post-war recession r
36 International DCCI Review August-September 2020 indicators remained largely stable, undershoot the Bank of Canada’s supported by the CBR’s support “tepid” forecast for a seasonally measures, including regulatory adjusted annual rate of one per cent, forbearance. Credit growth for said CIBC Capital Markets senior households and companies slightly economist Royce Mendes. “It appears accelerated in annual terms following that the economy was slowing more the rebounding of the economy and than expected heading into the an accommodative monetary policy r fourth quarter, and the most likely outcome now suggests that GDP All nine members of the Monetary barely advanced during the period,” Policy Committee voted to leave Canadian economic growth Mendes said in a commentary r rates unchanged and keep its cools to 1.2pc in August quantitative easing (QE) program to The Canadian economy grew in Canada GDP grows by 3pc in boost the economy at £745 billion. The Bank said it stood ready to take August as real gross domestic product July as more sectors reopened further action as it cautioned over rose by 1.2 per cent in August, Canada’s economy shrank at fastest the twin threat of a second wave of Statistics Canada reported. That pace on record in Q2 despite sharp the coronavirus pandemic, together marked the fourth straight month of bounceback in May and June. BMO with the end of year Brexit deadline. growth following the steepest drops chief economist Doug Porter said The Bank said: “The outlook for on record back in March and April the way forward has been deeply the economy remains unusually amid pandemic lockdowns. August’s clouded by the second wave and uncertain. figure was down from the 3.1 per renewed restrictions, so growth cent expansion seen in July. “Recent domestic economic data will cool considerably in the fourth have been a little stronger than the The August number was still ahead of quarter. Bank of England warns over committee expected at the time what forecasters had been expecting. ‘unusually uncertain’ outlook as rates of the August Report, although, According to financial data firm held at 0.1 percent. given the risks, it is unclear how Refinitiv, economists had been informative they are about how the The Bank of England has kept predicting growth of 0.9 per cent for economy will perform further out. interest rates at 0.1 percent as the the month. Despite the recent string “The recent increases in COVID-19 economy climbs out of the record of growth, overall economic activity cases in some parts of the world, recession caused by the COVID-19 is still about five per cent below including the United Kingdom, have lockdown, but it warned over an February’s pre-pandemic level, the potential to weigh further on “unusually uncertain” outlook amid Statistics Canada said. economic activity, albeit probably on the pandemic. The Bank said recent a lesser scale than seen earlier in the Preliminary information from economic data had been stronger year.” Statistics Canada indicates real than it expected in August, but it The decision comes after official GDP was up 0.7 per cent in cautioned rising coronavirus cases in figures showed the economy grew September, with increases seen in the the United Kingdom and worldwide by 6.6 percent in July, which experts manufacturing and public sectors, as could hamper the economic bounce- said puts the economy on track for back. well as in mining, quarrying and oil a double-digit bounce-back from and gas extraction. “This advanced Minutes of the latest rates decision recession. The Bank said the rebound estimate points to an approximate also show the Bank continues to meant gross domestic product was 10 per cent increase in real GDP in consider the case for negative interest around 18.5 percent above the nadir the third quarter of 2020,” Statistics rates and revealed policymakers had of the recession in April, though still Canada said. Back in the second been briefed on its plans to look at around 11.5 percent below its pre- quarter, the country’s GDP shrank crisis level. how rates could be cut below zero if by 11.5 per cent in the three-month needed. It said that together with the period between April and June. It now sees the bounce-back in the Prudential Regulation Authority, it third quarter being better than it Assuming the economy contracts in would begin “structured engagement expected, with GDP to be around October and November as a result on the operational considerations” 7 percent below the pre-crisis level of a resurgence of coronavirus cases, of negative rates in the final three against the 8.6 percent forecast in fourth-quarter GDP looks likely to months of the year. August r 37 msev` wewPÎv DCCI Review August-September 2020 PjwZ A_©eQi evsjv‡`‡ki wRwWwc cÖe„w× n‡e 6.8% ; GwWwei c~e©vfvm
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gvbœvb e‡jb, †Kvwf‡Wi c‡Y¨ †fRvj †iv‡a weGmwUAvB‡qi Kvh©µg AwfNvZ mviv we‡k¦i g‡Zv Avgv‡`i †`‡kI c‡Y¨i ¸YMZ gv‡b wek¦gv‡bi m¶gZv Av‡iv kw³kvjx Kivi AvnŸvb Rvbvb| c‡o‡Q| G cÖfve KZUv c‡o‡Q Zv †ei AR©‡bi ZvwM`: weGmwUAvB‡qi Av‡jvPbv wZwb e‡jb, K‡ivbvi G µvwšÍj‡MœI wKQy Ki‡ZB cÖ_gev‡ii g‡Zv G aviYv Rwic mfvq wkígš¿x gybvdv‡jvfx e¨emvqx bvbvfv‡e bó I †fRvj cwiPvjbv K‡i‡Q weweGm| GLb evsjv‡`‡k cY¨ wewµ K‡i †µZv‡`i cÖZvwiZ Ki‡Q| GKwU MwZkxj kÖgevRvi we`¨gvb i‡q‡Q, hv ïay c‡Y¨i `„wób›`b †gvoK bq, ¸YMZ Giv hZ eo e¨emvqx †nvK bv †Kb G‡`i Qvo AZ¨šÍ BwZevPK| eZ©gv‡b gnvgvixi AwfNvZ gv‡bi †¶‡ÎI wek¦gv‡bi m¶gZv AR©‡bi †`qv n‡e bv| ax‡i ax‡i †K‡U hv‡”Q| Avi weweG‡mi G ZvwM` w`‡q‡Qb wkígš¿x b~iæj gwR` gvngy` M‡elYv cwiPvjbvi Rb¨ evowZ †Kv‡bv e¨q ûgvq~b| wZwb e‡jb, evsjv‡`k eZ©gv‡b RbM‡Yi Rb¨ gvbm¤§Z cY¨ wbwðZ Ki‡Z ev eivÏ †`qv nqwb| weweGm Zvi wbR¯^ Dbœq‡bi †h Ae¯’v‡b †cŠu‡Q‡Q, wkívq‡bi miKvi m‡e©v”P AvšÍwiKZvi m‡½ KvR Ki‡Q KvVv‡gvi g‡a¨ †_‡KB M‡elYvwU cwiPvjbv j‡¶¨ weGmwUAvB‡KI †m ch©v‡q DbœxZ D‡jL K‡i wkí cÖwZgš¿x e‡jb, PÆMÖvg K‡i‡Qb| M‡elYvi Z_¨ ej‡Q, w`bgRy‡ii n‡Z n‡e| MÖvgM‡Ä M‡o IVv wkí-KviLvbvq I Lyjbvq weGmwUAvB‡qi Kvh©vj‡q bZyb msL¨v †di Av‡Mi KvQvKvwQ †cŠu‡Q‡Q| Drcvw`Z c‡Y¨i ¸YMZ gvb wbwðZ Ki‡Z j¨ve‡iUwi ¯’vcb I AeKvVv‡gv Dbœqb Kiv weGmwUAvB‡qi Kvh©µg m¤cÖmviY Ki‡Z n‡q‡Q| GQvov iscyi I gqgbwmsn wefvM gv‡P© w`bgRyi wQj 8 `kwgK 21 kZvsk n‡e| MZKvj 51Zg wek¦ gvbw`em Dcj‡¶ gvbyl, RyjvB‡q Zv 4 kZvs‡k †b‡g G‡jI I dwi`cyi, Kywgjv I K·evRvi †Rjvq weGmwUAvB Av‡qvwRZ GK Av‡jvPbv mfvq †m‡Þ¤^‡i Avevi 7 `kwgK 5 kZvs‡k weGmwUAvB‡qi bZyb Kvh©vjq ¯’vcb Kiv cÖavb AwZw_i e³‡e¨ G K_v e‡jb wZwb| DbœxZ n‡q‡Q| Z‡e K…wl cwiev‡ii msL¨v n‡q‡Q| me ai‡bi c‡Y¨i gvb `ªæZ wba©viY cÖvq AcwiewZ©Z wQj| G nvi gv‡P© 10 Òwkí Lv‡Zi Dbœq‡b e½eÜyi ¯^cœ: wbivc` Kivi j‡¶¨ AvMvgx‡Z †`‡ki me †Rjvq `kwgK 23, GwcÖj-RyjvB‡q 9 `kwgK 22 I †UKmB c„w_ex Mo‡Z ÔgvbÕ-Gi f~wgKvÕÕ weGmwUAvB‡qi Kvh©vjq I j¨ve‡iUwi myweav I †m‡Þ¤^‡i wQj 10 `kwgK 13 kZvsk| kxl©K Av‡jvPbv mfv ivRavbxi †ZRMvuI‡q m¤cÖmviY Kiv n‡e e‡jI Rvbvb cÖwZgš¿x r 40 Trade Information DCCI Review August-September 2020
TRADE INFORMATION
August-September 2020 The following Trade Inquiries have been received in the Chamber from different sources abroad. Interested member- firms may like to contact them directly without any obligation on the part of DCCI. Due to COVID-19 Pandemic, date may be changed.
FAIRS & EXHIBITIONS
Arab Health Vietnam International Furniture & Home Accessories Fair Date: 01 February-04 February, 2021 Date: 10 March-13 March, 2021 Venue: Dubai World Trade Centre, Dubai, UAE Venue: Saigon Exhibition and Convention Center, Ho Chi Minh, Organizer: Informa Connect Vietnam Contact Person: Mr. Ali Alidina, Marketing Manager Organizer: HAWA CORPORATION E-mail: [email protected] Contact Person: Mr. Ngo Minh Nhat, Project Director Website: www.arabhealthonline.com Mob: +84 79 915 3873 E-mail: [email protected] Hostech by Tusid Expo Website: www.vifafair.com Date: 09 February-13 February, 2021 Venue: CNR Expo, Bakırköy, Turkey ITB Berlin Organizer: CNR HOLDING Date: 10 March-14 March, 2021 Tel: +90 549 746 55 42 (M) Venue: Messe Berlin, Berlin, Germany E-mail: [email protected] Organizer: Messe Berlin, Berlin, Germany Website: www.hostechbytusid.com E-mail: [email protected] Website: www.itb-berlin.com Gulfood Date: 21 February-25 February, 2021 Food Ingredients China Venue: Dubai World Trade Centre, Dubai, UAE Date: 16 March-18 February, 2021 Organizer: Dubai World Trade Centre Venue: National Convention & Exhibition Center, Shanghai, Contact Person: Mr. Gulsum Kayis Arslan, Marketing Manager China E-mail: [email protected] Organizer: CCPIT Sub-Council of Light Industry Website: www.gulfood.com Contact Person: Ms. Xu E-mail: [email protected] Taipei International Furniture Show Website: www.cfaa.cn Date: 26 February-01 March, 2021 Venue: Taipei World Trade Center Hall 3, Taipei, Taiwan Korea International Medical & Hospital Equipment Show Organizer: Tüyap Fairs and Exhibitions Organization Inc. Date: 18 March-21 March, 2021 Contact Person: Ms. Laura Chang Venue: COEX Mall, Seoul, South Korea E-mail: [email protected] Organizer: Korea E & Ex Inc. Website: www.tfma.org.tw E-mail: [email protected] Website: www.kimes.kr AAHAR - International Food & Hospitality Fair Date: 03 March-07 March, 2021 Cosmoprof Worldwide Bologna Venue: Pragati Maidan, New Delhi, India Date: 18 March-22 March, 2021 Organizer: India Trade Promotion Organization Venue: Bologna fiera, Bologna, Italy Contact Person: Ms. Renu Choudhary Organizer: Bologna fiera, Bologna, Italy E-mail: [email protected] Contact Person: Mr. Francesca Maturi Website: www.indiatradefair.com E-mail: [email protected] Website: www.cosmoprof.com China International Beauty Expo Date: 10 March-12 March, 2021 Toronto Gift + Home Market Venue: China Import and Export Fair(Canton Fair Complex), Date: 18 April-21 April, 2021 Guangzhou, China Venue: The Toronto Congress Centre, Toronto, Canada Organizer: GUANGZHOU JIAMEI EXHIBITION CO.,LTD. Organizer: Canadian Gift Association Contact Person: Mr. Huang Contact Person: Ms. Kate Easther Magsino E-mail: [email protected] E-mail: [email protected] Website: www.pc.chinainternationalbeauty.com Website: www.cangift.org
Note: Due to the corona pandemic (COVID-19), information about trade fairs and events may change. To get more information, please contact the organizers.
41 Share Market DCCI Review August-September 2020
Share Market (as on September 30, 2020)
Top 5 Turnover Leaders
Dhaka Stock Exchange Chittagong Stock Exchange
Company Close % Ǿ Turnover Company Close % Ǿ Turnover Price Price (BDT mn) Price Price (BDT mn)
batbc 915.40 -5.39 582.37 orionpharm 34.80 -9.61 69.28 squrpharma 173.30 -7.03 161.68 beximco 13.50 -7.53 69.00 gp 250.10 -5.87 138.59 kpcl 43.50 -9.75 68.22 lhbl 36.30 -9.48 127.58 beaconphar 57.60 -10.00 66.44 seapearl 72.90 -0.82 105.44 kppl 18.80 -9.62 61.69
Top 5 Market Capitals
Dhaka Stock Exchange Chittagong Stock Exchange
Company Close % Ǿ Turnover Company Close % Ǿ Turnover Price Price (BDT mn) Price Price (BDT mn)
gp 250.10 -5.87 337,710 gp 252.60 -3.99 341,086 batbc 915.40 -5.39 164,772 batbc 910.70 -6.04 163,926 squrpharma 173.30 -7.03 146,307 squrpharma 174.70 -5.47 147,489 upgdcl 226.30 -5.40 119,206 upgdcl 221.80 -7.20 116,888 renata 1021.30 -3.87 90,476 bergerpbl 1,311.70 -3.32 60,834
Currency Valuation (as on September 30, 2020)
Currency Buying Selling
US$ 86.20 87.00 EUR 94.20 97.00 GBP 110.20 113.60 AUD 59.00 61.00 YEN 0.75 0.77 Saudi Riyal 22.50 23.20 S’pore$ 62.65 64.00
Source : The Financial Express & The New Age
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