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Friday, April 3, 2020

Norwegian Pension Fund boosts portfolio investment in Bangladesh

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portfolio investment

Norwegian Government Pension Fund Global, the world’s largest sovereign wealth fund, has substantially increased its portfolio investment in Bangladesh last year.

It started investing in Bangladeshi stocks for the first time in 2015 when it was only US$19 million, which was increased by six times to $112 million in 15 companies on Dhaka stock exchange by the end of 2016.

“The significant growth in investments in Bangladesh by the Norwegian Government Pension Fund Global is very positive,” Norwegian Ambassador Sidsel Bleken said today (Monday).

“I see this as a confirmation that the Bangladeshi economy is maturing and companies are regarded as promising investments,” she was quoted in a statement as saying.

She said the investment took place on a strictly commercial basis and it was not an expression of political preferences or decisions, according to an official Facebook post shared by the Norwegian Embassy in Dhaka.

The Fund has clear expectations of companies in areas such as corporate governance, shareholder rights, social issues and the environment.

The guidelines for investments are made by the Norwegian parliament but the day-to-day management is not influenced by politicians.

The Ambassador also pointed out that the global investors like the Pension Fund were looking for a stable and predictable business environment.

The government of Bangladesh needed to continue to create a level-playing field where companies are treated on an equal basis, she added.

The total market value of investments done by the Government Pension Fund Global, better known as the Norwegian Oil fund, is close to US$900 billion.

The Fund was established in 1990 and is built up by revenue from oil and gas activities on the Norwegian continental shelf. It owns stock in 9,000 companies in 77 countries, while 1.3% of all publicly listed stocks worldwide.

Apparel brands, buyers urged to support factories

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Apparel factory working condition

Prime Minister Sheikh Hasina assures her government’s support to make the apparel sector safe and sustainable

Prime Minister Sheikh Hasina has called upon the apparel brands and buyers operating in Bangladesh to support the factories for improving their working condition.

“Overhauling of the factories requires huge funds,” she said, inviting assistance for the factory owners.

The Prime Minister also assured the government’s support to develop a safe and sustainable readymade garments sector while inaugurating the Dhaka Apparel Summit 2017 at a hotel in Dhaka today (25 February 2017), according to reports by news services.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in collaboration with Bangladesh Apparel Exchange (BAE) organised the event, aimed at opening dialogue on framing strategies to achieve the target of earning US$50 billion from the RMG sector by 2021.

Sheikh Hasina said BGMEA, the government, domestic and international organisations and development partners were working together to develop the sector, which has by now become a role model in the world.

“We’ve been working to turn Bangladesh into a middle-income country by 2021. The RMG sector can play a vital role to achieve the goal.”

To improve the working atmosphere, she said, a number of measures have been taken at the international level to make the RMG sector safe, including inspection conducted on 3,869 factories.

“Faults have been found in only 39 factories and those were shut down, and the remaining factories are being renovated to improve their safety condition,” she said.

The Prime Minister also asked all concerned to expand Bangladesh’s export market with diversified products and thus boost export earnings.

She urged the exporters to take necessary initiatives as the government was ready to extend all-out support to boost the export. “We’ve to work on how to increase our share in the world market. We’ve to formulate short-, medium- and long-term plans in this regard.”

The inaugural session was addressed, among others, by Finance Minister AMA Muhith, Commerce Minister Tofail Ahmed, Foreign Minister AH Mahmood Ali, State Minister for Labour and Employment Ministry Mujibur Huq, the EU Ambassador to Bangladesh Pierre Mayaudon, BGMEA President Siddiqu Rahman and BGMEA First Vice President Mainuddin Ahmed.

The Dhaka Apparel Summit is a prime event on textile and apparel industry in Bangladesh that brings together some of the world’s leading experts in their respective fields to share their experiences and visionary thoughts on issues pertaining to the apparel industry and ways in which the business can realize sustainable growth well into the 21st Century.

It will feature three panel discussion sessions, offering an open and inter-active environment, and allowing full audience participation and the opportunity for a valid exchange of ideas.

The seminars will be attended by representatives of the government, international organisations, economists, brand representatives, development organisations, employers, workers’ representatives, civil society members, academics, and media from home and abroad.

WTO’s Trade Facilitation Agreement enters into force

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WTO TFA

The Trade Facilitation Agreement (TFA) of the World Trade Organisation (WTO) entered into force yesterday (February 22, 2017), setting a major milestone for the global trading system.

It was the first multilateral deal concluded in the 21-year history of the WTO.

In receiving four more ratifications for the agreement, the WTO has obtained the two-thirds acceptance of the agreement from its 164 members needed to bring the TFA into force, according to a press statement.

Rwanda, Oman, Chad and Jordan submitted their instruments of acceptance to WTO Director-General Roberto Azevêdo, bringing the total number of ratifications over the required threshold of 110.

The entry into force of the TFA, which seeks to expedite the movement, release and clearance of goods across borders, launched a new phase for trade facilitation reforms all over the world and creates a significant boost for commerce and the multilateral trading system as a whole.

Full implementation of the TFA is forecast to slash members’ trade costs by an average of 14.3%, with developing countries having the most to gain, according to a 2015 study carried out by WTO economists.

The TFA is also likely to reduce the time needed to import goods by over a day and a half and to export goods by almost two days, representing a reduction of 47% and 91% respectively over the current average.

Implementing the TFA is also expected to help new firms export for the first time.

Moreover, once the TFA is fully implemented, developing countries are predicted to increase the number of new products exported by as much as 20%, with least developed countries (LDCs) likely to see an increase of up to 35%, according to the WTO study.

DG Azevêdo welcomed the TFA’s entry into force, noting that the agreement represents a landmark for trade reform.

He said: “This is fantastic news for at least two reasons. First, it shows members’ commitment to the multilateral trading system and that they are following through on the promises made in Bali. Second, it means we can now start implementing the agreement, helping to cut trade costs around the world. It also means we can kick start technical assistance work to help poorer countries with implementation.

“This would boost global trade by up to US$ 1 trillion each year, with the biggest gains being felt in the poorest countries. The impact will be bigger than the elimination of all existing tariffs around the world.”

The agreement is unique in that it allows developing and least developed countries to set their own timetables for implementing the TFA depending on their capacities to do so.

A Trade Facilitation Agreement Facility (TFAF) was created at the request of developing and least-developed countries to help ensure they receive the assistance needed to reap the full benefits of the TFA and to support the ultimate goal of full implementation of the new agreement by all members.

The developed countries have committed to immediately implement the agreement, which sets out a broad series of trade facilitation reforms.

Spread out over 12 articles, the TFA prescribes many measures to improve transparency and predictability of trading across borders and to create a less discriminatory business environment.

The TFA’s provisions include improvements to the availability and publication of information about cross-border procedures and practices, improved appeal rights for traders, reduced fees and formalities connected with the import/export of goods, faster clearance procedures and enhanced conditions for freedom of transit for goods.

The agreement also contains measures for effective cooperation between customs and other authorities on trade facilitation and customs compliance issues.

Developing countries, in comparison, will immediately apply only the TFA provisions they have designated as “Category A” commitments.

For the other provisions of the agreement, they must indicate when these will be implemented and what capacity building support is needed to help them implement these provisions, known as Category B and C commitments.

These can be implemented at a later date with LDCs given more time to notify these commitments. So far, notifications of Category A commitments have already been provided by 90 WTO members.

Gas prices go up across the board

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Gas prices

The gas prices of all consumer types will go up with the first phase starting next month, followed by the second phase in June this year.

Household consumers will have to pay Tk750 per month for a single burner and Tk800 for double burner with effect from March 1. At present, the rate is Tk600 and Tk650 respectively.

In the second phase that takes effect on June 1, the consumers will have to pay Tk900 and Tk950 for single and double burners respectively.

Bangladesh Energy Regulatory Commission (BERC) Chairman Monwar Islam announced the new prices at a press briefing in Dhaka today (February 23, 2017). The prices of gas will then increase by 22.7% (weighted average).

New gas tariffs for metered household consumers would be Tk9.10 per cubic meter from March 01 and Tk11.20 per cubic meter from June 1, from the existing rate of Tk7 only.

The price of CNG, used for motor vehicles, will be Tk38 per cubic metre from March 1 and Tk40 from June 1. The existing rate is Tk30 only.

The feed gas price for CNG has been raised to Tk30 per cubic metre from March 1 and Tk32 per cubic metre from June 1 against current Tk27. However, the operators’ margin was kept unchanged at Tk8.0 per cubic metre.

The gas prices for other sectors, including power, fertiliser, industries, commercial ventures and captive power plants, were also raised.

The BERC announced the new tariff after six months of holding public hearing on proposals from state-run gas marketing, transmission and distribution companies.

It also raised the distribution margins of Sundarbon Gas Company Ltd and Pashchimanchol Gas Company Ltd, but rejected the plea for raising the similar margin for Titas Gas Marketing and Distribution Company Ltd.

The BERC chairman said the gas tariff has been increased to cope with the growing costs of natural gas production, transmission and distribution.

“We’ve decided the hike to be effective in two phases offering a comfort to consumers so that it doesn’t create any pressure on their pockets at once,” he said.

The BERC last raised the natural gas prices in September 2015 with an average hike of 26.29% (weighted average) while it was hiked by 11.22% (weighted average) in 2009.

The tariff for natural gas for power plants will be Tk2.99 per cubic metre from March 1 and Tk3.16 from June 1. The existing tariff for power plants is Tk2.82 per cubic metre.

Gas tariff for captive power plants has been increased to Tk8.98 per cubic meter from March 1 and Tk9.62 per cubic meter from June 1 from the current tariff of Tk8.36 per cubic meter.

For fertiliser factories, the new tariff of Tk2.64 per cubic metre will be effective from March 1 and Tk2.71 per cubic metre from June. The present natural gas tariff for fertiliser factories is Tk2.58 per cubic metre.

For industrial consumers, the new gas tariff will be Tk7.24 per cubic metre from March 1 while Tk7.76 per cubic metre from June 1 from existing Tk6.74.

The BERC raised the natural gas tariff for commercial consumers to Tk14.20 per cubic metre from March 1 while Tk17.04 per cubic metre from June 1 against the existing Tk11.36.

For tea estates, the new tariff of Tk6.93 per cubic metre will come into effect on March 1 and it will be Tk7.42 from June 1 from the existing Tk6.74 per cubic metre.

The transmission margin of state-run Gas Transmission Company Ltd (GTCL) was increased to Tk0.2654 per cubic metre from Tk0.1565.

Replying to a question, a BERC member said the most part of the increased natural gas tariff will go to the national exchequer as supplementary duty, value added tax (VAT) and corporate taxes. Currently, some 81% of gas prices go to the exchequer as SD, VAT and corporate taxes.

Textile cos using CombiPolish tech awarded

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Textile bio polishing

Danish company Novozymes has patented an enzyme technology, called CombiPolish, which reduces use of harsh chemicals in industrial processes.

The technology is claimed to be the fastest, gentlest and most sustainable way to perform textile bio polishing and bleach clean-up saving water during dyeing, energy and time. The fabric stays smooth longer and the colours remain fresh, said a press release.

It said a number of textile companies in Bangladesh have already embraced the technology in their manufacturing process.

Garment industry faces conflicting demands – it is required to process fabric with less consumption of water and energy but at the same time produce higher quality for competitive prices.

The groundwater level in the Dhaka drops by 2 to 3 metres every year while Bangladesh has an aspiration of becoming a 50 billion dollar garment industry by 2021. Sustainability is the solution for both the environment and the future of the garment industry in Bangladesh

Danish ambassador to Bangladesh Mikael Hemniti Winther hosted Novozymes CombiPolish Champions Award 2016 at his residence on November 27 and 28.

Textile companies using the technology in Bangladesh were awarded certificates by the Danish ambassador and Ethel Fanny Laursen, Head of Technical Industries Novozymes, Asia Pacific, Eastern Europe, Middle East and Africa.

“The target by the government for Bangladesh to become middle income country by 2021 is ambitious but achievable and RMG sector will play a very important role in that process,” Mikael Winther said.

“We are very proud of being a company that brings innovation in textile sector. Novozymes spends 14% of the revenue in research and development to bring products that not only will solve problems of today but tomorrow,” said Ms. Ethel Laursen.

Keynote speeches on sustainability and clean technology were given by David Hasanan, Chairman of Viyellatex Limited and Md. Abdul Jabbar, Managing Director of DBL Group.

Bangladesh continue to invest in gas supply network

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gas supply
The natural gas reserves are depleting fast and no major immediate discovery is in sight as of now, forcing the country to plan for imported energy to meet the growing demand.

Asian Development Bank (ADB) has approved a loan of $167 million to improve production efficiency at a key gas field north of the capital Dhaka and expand transmission infrastructure.

Asian Infrastructure Investment Bank (AIIB) is expected to lend an additional $60 million, subject to board approval, to be managed by ADB.

It is the second project to be cofinanced by ADB and AIIB to promote sustainable economic growth and reduce poverty in Bangladesh, according to a press release ADB issued in Manila today (Nov 21).

The project will install seven wellhead compressors to increase pumping pressure and ensure steady extraction at the Titas gas field, the country’s largest field.

It would also boost transmission by building 181 kilometers of transmission pipeline from Chittagong to Bakhrabad southeast of Dhaka.

“The project will help the government address the country’s energy crisis by making available additional clean energy, particularly imported natural gas, through the transmission network,” said Hongwei Zhang, Finance Specialist (Energy) in ADB’s South Asia Department.

“By addressing gas supply constraints and transmission bottlenecks, the project will increase the energy sector’s contribution to sustainable economic growth in Bangladesh.”

Bangladesh’s economy is growing fast. But domestic natural gas supplies cannot keep pace with soaring demand for energy, resulting in a rising dependence on oil and diesel-based power generation.

With reserves depleting, the country is trying to meet the supply shortage by importing liquefied natural gas (LNG).

The $453 million project is expected to be completed in late 2021. It is expected to substitute the use of other fossil fuels, thereby reducing over 700,000 tons of carbon dioxide emissions per year over the ensuing 10 years. The government will provide $226 million for the project.

Natural gas is Bangladesh’s main energy source and a major driver of economic growth, providing nearly 75% of total primary energy consumed. More than half of the production is used to generate electricity.

However, a widening gap between demand and supply has highlighted the urgent need to accelerate exploration and production, and to expand transmission infrastructure.

Bangladesh to highlight green initiatives at 3R Forum

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Bangladesh green

Bangladesh will present the initiatives it has taken so far for developing green industry in the country at the 7th  Regional 3R Forum in Asia and the Pacific.

Australia and Japan are jointly organising the Forum on “industrial waste management” to be held in Adelaide, Australia on November 2-4.

Industries Minister Amir Hossain Amu is scheduled to leave Dhaka tomorrow (Sunday) night to join the conference at the invitation of  United Nations Centre for Regional Development (UNCRD), said a handout issued in Dhaka today (Saturday).

The minister would highlight the initiatives Bangladesh has taken to recycle industrial wastes and, introducing green technology and renewable energy in the industries to manufacture green products.

The Forum is expected to provide an opportunity to learn about the technologies already developed and being followed globally to reduce, recycle and reuse (3R) of industrial wastes.

It is also expected the Forum would offer an opportunity to transfer green technologies.

The Forum would adopt a global strategy to follow 3R in the production facilities and ensure sustainable development of the natural resources in the production process.

Mr Amu is scheduled to return home on November 6.

Energy prices projected to jump 25% next year

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energy price

Crude oil price is expected to average $43 per barrel in 2016, but may reach to $55 per barrel in 2017 due to OPEC agreement to limit production.

The World Bank has raised its 2017 forecast for crude oil prices to US$55 per barrel from $53 as members of the Organisation of the Petroleum Exporting Countries (OPEC) prepare to limit production after a long period of unrestrained output.

Energy prices, which include oil, natural gas and coal, are projected to jump almost 25% overall next year, a larger increase than anticipated in July.

The revised forecast appeared in the World Bank’s latest Commodity Markets Outlook released Friday. Oil prices are expected to average $43 per barrel in 2016, unchanged from the July report.

”We expect a solid rise in energy prices, led by oil, next year,” said John Baffes, Senior Economist and lead author of the Commodity Markets Outlook.

“However, there is considerable uncertainty around the outlook as we await the details and the implementation of the OPEC agreement, which, if carried through, will undoubtedly impact oil markets.”

Major Commodities

A modest recovery is projected for most commodities in 2017 as demand strengthens and supplies tighten.

Metals and minerals prices are expected to rise 4.1% next year, a 0.5 percentage point upward revision due to increasing supply tightness.

Zinc prices are forecast to rise more than 20% following the closure of some large zinc mines and production cuts in earlier years.

Gold is projected to decline slightly next year to $1,219 per ounce as interest rates are likely to rise and safe haven buying ebbs.

Agriculture prices are expected to increase 1.4% in 2017, slightly less than expected in July, as food prices are projected to climb more gradually than anticipated (1.5%) and beverage prices are seen dropping by a greater extent (0.6%) on expectation of a large coffee output.

Among food prices, grains prices are forecast to rise a steeper-than-anticipated 2.9% next year, while oils and meals prices are anticipated to rise a slower-than-expected 2%.

“Low commodity prices hit commodity-exporting emerging and developing economies hard but now appear to have bottomed out,” said Ayhan Kose, Director of the World Bank’s Development Prospects Group.

“Growth in this group of economies is expected to be near zero for the year. Where feasible, policymakers should pursue growth-enhancing strategies, such as investments in infrastructure, health and education, in the context of a credible medium-term fiscal plan.”

This edition of the Commodity Markets Outlook contains a Special Focus analyzing OPEC’s recent announcement of plans to limit production.

Historically, agreements aimed at influencing the prices of commodities such as tin and coffee have succeeded in swaying markets for a time but eventually lost that ability and collapsed.

OPEC’s ability to affect oil prices is likely to be tested by the expansion of oil supply from unconventional sources, including shale producers.

BTRC shuts citycell operation

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citycell BTRC

Bangladesh Telecommunication Regulatory Commission (BTRC) today suspended the spectrum of Citycell for its failure to pay the dues, forcing shut down of the services by the country’s first mobile phone operator.

“Citycell failed to pay the dues as per the court’s directive,” State Minister for Posts and Telecommunications Tarana Halim told a press conference at BTRC headquarters in Dhaka in the evening.

Citycell was supposed to pay two-thirds of the dues within four weeks, but was failed. The authorities took the decision, as a result, said the junior minister.

BTRC officials said a team of BTRC went to the Citycell headquarters in Dhaka in the afternoon and “took necessary measures.”

Citycell owes about Tk 4.8 billion to the government for a long time as spectrum and license renewal fees and other charges.

In line with the apex court decision the operators was required to pay Taka 318 crore to the BTRC by October 19 but the time limit was later extended for one ore month or the remaining one third outstanding amount.

“But, as the operator didn’t fulfill the first part of the judgment of Appellate Division, there is no option for another part of the judgment,” said the state minister.

BTRC earlier started the process to shutdown Citycell in August when it asked operator’s subscribers to chose alternative services by August 16. Later, the regulator extended time to August 23.

But, the operator again failed to comply with the regulator’s directives. Citycell went to the court finally. After the completion of subscribers’ identity verification using biometric system, Citycell has now approximately 150,000 active customers.

According to BTRC, the Citycell didn’t pay the second and third installments, in combine Taka 229 crore, for 8.82 megahertz spectrum since spectrum renewal in 2012, which has breached the licensing terms.

Besides, it has owed of annual spectrum fees (from the year 2013 to 2016) Taka 27.14 crore, revenue sharing (2014 to 2016) Taka 27.84 crore, social obligatory fund (2011 to 2016) Taka 8.92 crore, VAT Taka 39.92 crore and late fee of Taka 135 crore.

Pacific Bangladesh Telecom Limited under the brand name “Citycell” obtained license in 1989 where SingTel Asia Pacific Investment Limited has 45 percent share while Far East Telecom Limited owns 23.57 percent share and remaining 31.43 percent share hold by Pacific Motor Limited.

World Bank to spend Padma bridge fund on climate projects

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world bank Kim Bangladesh

It would be a part of the World Bank’s effort to enhance its financing for Bangladesh as President Jim Yong Kim says in Dhaka today.

World Bank President Jim Yong Kim announced today an additional loan of US$1 billion for next two years to improve the child healthcare and nutrition facilities in Bangladesh.

He said Bangladesh being one of the largest recipients would also get increased assistance as the bank is going to enhance its global funding by 50% in next three-year cycle.

He also expressed the interest to spend the $1.2 billion fund – the World Bank had approved for the Padma Bridge project – in climate change related projects in Bangladesh.

“Bangladesh has done exemplary work in reducing child marriage and child mortality rate,” Kim said, announcing the assistance plan at a joint press conference with Bangladesh Finance Minister AMA Muhith in Dhaka.

Earlier the World Bank president, who arrived here Sunday on a two-day visit to Bangladesh, had a meeting with Muhith when he appreciated Bangladesh for its success in human resource development.

Replying to a question, Muhith said Bangladesh’s relation with the bank is now good as the situation that had created over Padma Bridge funding is resolved. “Now we expect more assistance from the bank,” he said.

Kim said the World Bank would instead spend the $1.2 billion fund (approved for the bridge project) for climate-related projects in Bangladesh.

In 2015-16 fiscal, the bank committed financing of $1.18 billion and disbursed $1.16 billion finally.

“We’ll continue to assist Bangladesh in areas including climate change and infrastructure development,” Kim said.

The International Development Association (IDA), the World Bank Group’s fund for the poorest countries, has provided more than $24 billion in support to Bangladesh since 1972 to advance the country’s development priorities, making the country the largest recipient of IDA.

Its private sector arm, IFC, has a committed portfolio of $1 billion and MIGA has $305 million in gross exposure in Bangladesh.

The World Bank president said he arrived here to encourage Bangladesh’s move for investing in human capital, which is critical.

“The development of Bangladesh is extremely important to the World Bank and we’re aggressively looking for supporting Bangladesh … funding for climate change should be coming for Bangladesh,” he said, adding that the bank will be discussing over the next few days how the climate change funding could be increased.