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DT 12 Business FRIDAY, DECEMBER 30, 2016 CAPITAL MARKET SNAPSHOT: THURSDAY DSE Broad Index 5,036.1 0.2% ▲ Index 1,191.9 0.2% ▲ 30 Index 1,810.9 0.1% ▲ Turnover in Mn Tk 10,705.9 14.1% ▲ Turnover in Mn Vol 433.4 12.7% ▲ CSE All Share Index 15,477.7 0.0% ▲ 30 Index 13,583.6 0.0% ▲ Selected Index 9,369.9 0.0% ▲ Turnover in Mn Tk 741.9 21.3% ▲ Turnover in Mn Vol 32.9 18.9% ▲ $167m ADB loan signed for befitting gas production • SM Najmus Sakib The government has signed with the Asian Development Bank (ADB) a US$167 million loan agreement for financing a project to improve infrastructure and operational efficiency of the country’s gas sector. Last month, the ADB approved the loan to help promote sustainable economic growth and reduce poverty in Bangladesh by improving production efficiency at a key gas field north of the capital Dhaka and by expanding transmission infrastructure. Mohammad Mejbahuddin, senior secretary to the Economic Relations Division (ERD) under the Ministry of Finance, and Kazuhiko Higuchi, country director of ADB, signed the agreement on their behalf at the ERD office in the city yesterday. Under the agreement, the 2016 YEAR IN REVIEW RMG EXPORT TREND IN JANUARY-NOVEMBER Year Export value in$ billion Export growth in% 2012 17.84 1.75 2013 21.22 18.98 2014 22.25 4.85 2015 23.93 7.55 2016 26.09 9.03 Source:EPB BB appoints observer to NRBC Bank • Jebun Nesa Alo Bangladesh Bank has appointed an observer to NRB Commercial Bank in the wake of conflict among the directors. Masud Biswas, general manager of Foreign Exchange Policy, Department of Bangladesh Bank, has been appointed as observer to the bank to closely monitor the director’s activities. The decision was taken following the investigation against the complaint directors filed with Bangladesh Bank, said a senior executive of the central bank. Following the complaint that directors made against each other about various corruption, the central bank conducted inquiry and found authenticity, he said. The BB official said directors of the bank were divided into two groups and both groups are involved into various irregularities. The directors’ conflict put the bank at risk. In this circumstances, the central bank appointed the observer, he added. NRBC Bank started its journey in 2013 with the aim to facilitate remittance inflow from Bangladeshi expatriates working abroad and idle and less remunerative fund held with wealthy NRBs. As a newcomer, the bank performed worse as its non-performing loans were on the rise. The total default loans of the bank stood at Tk127 crore as of September 2016 which was 4.19% of its total outstanding, according to the central bank data. • High-end products, cutting-edge technology to boost future RMG export volume • Ibrahim Hossain Ovi ADB will finance the “Natural Gas Infrastructure and Efficiency Improvement Project” at an interest rate of 2%. The six-year-long project from July 2016 to June 2022 has estimated that the total cost would be US $453 million, of which the Asian Infrastructure Investment Bank (AIIB) will provide $60 million and the government of Bangladesh US$ 226 million. ADB will provide the rest of the amount under the agreement. The Energy and Mineral Resources Division is the sponsoring division and Gas Transmission Company Ltd and Bangladesh Gas Fields Company Limited are the executing agencies of the project. The project aims to improve efficiency in natural gas production by installing seven wellhead gas compressors at the Titas gas field and expand natural gas transmission Bangladesh’s RMG exports to the global market rose by over 9% to over $26 billion in eleven months of the outgoing year, thanks to the safety improvement and increased production capacity. The growth is, however, less than required to attain the $50 billion export target by 2021 as the sector needs over 12% growth to realise the vision. The sector people attributed remediation process – which helped improve safety standards – to the increased production capacity. Upon completion of remediation, some RMG units have received more orders from buyers who were satisfied with the safety progress, they argued. According to the data of Export Promotion Bureau (EPB), during January-November period of the outgoing year, Bangladesh earned $26.09 billion, exporting clothing products, which is 9.03% higher compared to $23.93 billion a year ago. Knitwear products fetched $12.56 billion with an 8.22% rise compared to $11.60 billion in the previous year while woven products earned $13.53 billion, which pipeline capacity by constructing a 181-kilometre 36-inch parallel gas transmission pipeline from Chittagong through Feni to Bakhrabad. At the signing ceremony, ADB Country Director Kazuhiko Higuchi said: “Bangladesh economy has grown significantly over the last decade.” “By increasing natural gas production and addressing supply constraint and transmission bottlenecks, the project will help address growing energy needs with additional cleaner energy, and contribute to the sustained strong economic growth in Bangladesh.” The total loan to the socioeconomic development of ADB in Bangladesh is more than US$15.5 billion. In December, ADB will mark 50 years of its development partnership in the Asian and Pacific region. • is 9.78% higher compared to $12.32 billion a year ago. “In 2016, Bangladesh has seen a 9% growth in RMG export earning, but in 2017, we expect a double digit growth as the production capacity as well as the volume of work orders have increased because of safety improvement and remediation completion in most factories,” Exporters Association of Bangladesh president Abdus Salam Murshedy told the Dhaka Tribune. Last year production in many RMG units were hampered due to the ongoing remediation to improve safety standard in workplaces for ensuring workers’ safety, Salam said. After the full-fledged completion of Corrective Action Plans (CAPs), the work order flow would increase and it would be possible to attain a double-digit growth, added the business leader. “In attaining the $50 billion export target by 2021, the current growth is not satisfactory as the sector needs an over 12% growth,” according to BGMEA vice-president Mahmud Hasan Khan Babu. He said in the outgoing year, the sector has seen less investment as manufacturers had to spent a lot on remediation and safety improvement. But RMG sector requires investment for expansion of existing business to increase production capacity for grabbing more global market share, he said, adding that gas connection is a big challenge for Bangladesh’s RMG. The country has to put emphasis on technology upgradation and high-end products as the demands for global apparel products have witnessed downtrend last year. As per the latest statistics of World Trade Organisation (WTO), the global clothing export market has contracted by around 7.8% to $445 billion in 2015. In 2014, the global apparel export was $483 billion while the global RMG export market is expected to reach $650 billion by 2021. As a newcomer, NRBC performed worse as its non-performing loans rose “In garbing more global market share to attain $50 billion export target from RMG, Bangladesh has to concentrate on capacity building and set strategies to move to high-end and branded fashion segments, BGMEA senior vice-president Faruque Hassan told the Dhaka Tribune. Currently, about 79% of Bangladesh export items are concentrated in five basic products – trouser, t-shirt, sweater, shirts and jackets mostly made of cotton. Hassan said another priority area is market diversification as Bangladesh’s apparel exports are mostly concentrated on EU and North America. Non-traditional market is the key element to enlarge the export volume. The contribution of non-traditional markets to total export was 2% in FY2005-06, which has increased to 15% in FY’16, he added. To tap the opportunity, manufacturers have to upgrade technology and modernise their factories while the government has to ensure infrastructure development, i.e. building industrial zone, connectivity to ports and improving their efficiency, resolving gas and electricity crises, added Hassan. •
Business 13 DT FRIDAY, DECEMBER 30, 2016 RMG makers seek gas price hike exemption • Asif Showkat Kallol Apparel sector businessmen have urged the government to give them an exemption from the proposed gas price hike, according to official sources. They also requested the government to devaluate Taka against the US dollar for the sake of enhancing their export earning. Besides, they also wanted the export price garment items to be fixed in the Freight-on Board (FOB) instead of Ready-made garment item for valuation of export items to giving the cash incentive. President of Bangladesh Garment Manufacturers and Exporters’ Association (BGMEA) Siddiqur Rahman placed their demands at a meeting with Finance Minister AMA Muhith held at his secretariat office in the city. Commerce Minister Tofail Ahmed also attended the meeting. According to the meeting sources, the BGMEA leaders also demanded for the cancellation of audit by the Bangladesh Bank for getting cash incentive against their export volume. RMG leaders also demanded disbursement of Tk10 crore incentives for small RMG exporters. Finance Minister Muhith is learned to be disagreed with the BGMEA demands. Meanwhile, the government has allocated Tk4,500 crore for 22 export items including RMG items. During the meeting, RMG exporters also informed that they are already providing salary of Tk10,000 as minimum wage to their garment factory workers although the garment factory workers demanded Tk16,000. In 2013, the government declared a minimum wage of Tk5,300 per month for garment industry workers. Earlier, the figure was Tk3,000. Besides, the garment exporters also demanded the amendment of the provision of local cloth word replace with cloth of own enterprises . Last August, Bangladesh Energy Regulatory Commission (BERC) held an eight-day public hearing on gas transmission tariff and user-end price hike proposals submitted by seven state-owned gas transmission and distribution companies. The companies initially proposed a massive 85% price hike for household users: Tk1,200 per month for double-burner stoves and Tk1,100 for single-burner stoves. In addition, they proposed a 140% increase for consumers using meter-based burners, increasing the price from Tk7 to Tk16.8 per cubic metre of gas. Besides, the price of a US dollar in curb market is differed by Tk4 per compared to official bank rate. • The currency exchange values placard of a bureau de change in Rio de Janeiro, Brazil REUTERS Fund managers bullish on emerging markets • Reuters A number of global fund managers say they are buying emerging market assets for 2017 after the beating the sector has taken since the US election in November, even though credit rating agencies have a less positive outlook. Since the election of Donald Trump as US president, emerging market stocks are down nearly 7%, based on the Morgan Stanley Capital Index, and the yield spread of emerging market bonds over benchmark US Treasuries is wider by 10 basis points, reversing some of the gains seen earlier in the year. On Nov 8, the date of the US election, the EMBI Global year-to-date total return was 14.04%, and a week later, on Nov 14, it had halved to 7.6%. Currencies such as Mexican peso and the Turkish lira have tumbled 10% or more in the wake of the election. US President-elect Trump has pledged to impose protectionist trade policies and restrict immigration which would likely damage most emerging market economies. The Washington, DC bank lobbying group, the Institute for International Finance, reported this week that $23bn has flowed out of emerging market funds since Oct 4, with $18bn of that taking flight since Nov 9. “The magnitude of outflows has diminished significantly in recent weeks, but the direction has remained persistently negative,” said Scott Farnham, an IIF research analyst. Fund managers positive BlackRock, the world’s largest asset manager is expecting to reap solid gains from all emerging market asset classes, especially bonds, the firm’s chief fixed income strategist, Jeff Rosenberg said at the company’s recent global outlook summit. Other global fund managers also see a rebound on the horizon. Ricardo Adrogué, head of emerging markets debt at Baring Asset Management Ltd, said analysts, including ratings agencies, are confusing structural versus cyclical problems when evaluating the sector. “Our assessment of emerging markets is actually strengthening at the time that developed market institutional framework is weakening,” he said. Similarly, Michel Del Buono, head of portfolio strategy at Makena Capital Management LLC, who oversees $18bn across asset classes, also has a bullish outlook. •
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