Business
ADB capital management reforms unlock $100 billion in new funding over next decade to support Asia, Pacific
The Asian Development Bank (ADB) on Wednesday approved capital management reforms that unlock $100 billion in new funding capacity over the next decade to address the region’s overlapping, simultaneous crises.
The expansion of available funds will be further leveraged through mobilizing private and domestic capital to move from the billions to trillions required to tackle the climate crisis.
The reforms were introduced through an update of ADB’s Capital Adequacy Framework (CAF), according to a message received from Manila.
ADB provides $120 million loan for community resilience, livelihoods in rural Bangladesh
They expand the bank’s annual new commitments capacity to more than $36 billion—an increase of approximately $10 billion, or about 40%.
The expansion is achieved by optimizing ADB’s prudential level of capitalization while maintaining its overall risk appetite.
The reforms also create a Countercyclical Lending Buffer to support ADB developing member countries (DMCs) facing unexpected crises.
The measures, which will enable ADB to provide up to $360 billion of its own financing to its DMCs and private sector clients over the next decade, are designed to ensure ADB maintains its AAA credit rating and its ability to provide DMCs with funding at low cost and with long maturities.
ADB approves $100 million loan to three universities in Bangladesh
The reforms further safeguard ADB’s AAA credit rating through the introduction of a recovery plan that would prevent capital erosion during periods of financial stress. ADB’s capital adequacy framework is reviewed every 3 years.
“These important reforms will significantly expand ADB’s ability to support a broad range of critical development efforts across Asia and the Pacific, including greater concessional resources for our vulnerable members,” said ADB President Masatsugu Asakawa.
Latest ADB report predicts a better year for Bangladesh in FY2024
“Our decision today is part of ADB’s response to the call for multilateral development banks (MDBs) to do more with our resources and faster. These resources will help the region manage a complex set of overlapping crises, address gender inequality, and provide for basic needs in the context of the existential challenge of climate change. This extra lending power will be extended and leveraged further by renewed efforts to mobilize private and domestic capital and maximize the impact of our work.”
Bangladesh to work together with EU to boost trade and investment overcoming problems: Tipu Munshi
Commerce Minister Tipu Munshi on Wednesday urged the European investors who already invested here and have been successfully operating their businesses to advocate for Bangladesh’s competitiveness in the global arena.
“You come and see. Let’s take the message to investors,” he said while speaking at a seminar as the chief guest.
Also read: Tipu Munshi under fire in Parliament for runaway prices of essentials
The commerce minister said Bangladesh wants to work hand in hand with the European Union (EU) and is committed to removing the existing problems that hinder inbound investment.
“Yes, we have problems. But listen to the investors. We want to work with the EU. We will work together. We will resolve the problems,” Munshi said, adding that if the foreign investors come here and invest, they will benefit a lot.
Also read: Tipu Munshi calls on H&M Group to continue support to garment sector for sustainable development
The seminar titled “Unlocking Trade and Investment for European Companies in Bangladesh” was jointly organised by Dhaka Chamber of Commerce and Industry (DCCI) and the European Union Delegation to Bangladesh at a hotel in Dhaka.
Executive Chairman of the Bangladesh Investment Development Authority (BIDA) Lokman Hossain Miah was present as special guest.
Lokman said they are working for reforms to attract more FDI from the EU member countries. “BIDA is committed to provide faster and investment friendly services.”
He also informed that all services of BIDA will be available in OSS by the end of this year and invited more direct or joint venture EU investment in Bangladesh enjoying various fiscal and non-fiscal incentives given to the foreign investors.
Readiness of Bangladeshi industries coupled with sustainable regulatory framework, favourable tax regime, positive image branding, technologically skilled workforce, export competitiveness, conducive environment and diversification of products are key to attract more investment from the European Union countries in Bangladesh, said the speakers.
Also read: Tipu Munshi to NBR: Touching income tax unpopular, widen VAT net to boost revenue collection
DCCI President Md Sameer Sattar said the five-decade-long Bangladesh and EU partnership had truly become an unprecedented and remarkable journey that turned the EU into one of the most reliable trading partners of Bangladesh.
“Our total export to the EU has surged to USD25.23 billion in FY2023 having 93% RMG share which has positioned Bangladesh as one of the popular sourcing destinations,” he said.
Upon the LDC graduation of Bangladesh in 2026, Bangladesh needs to sustain the export market in its traditional and major destinations including the EU.
He also emphasized sustainable export product diversification to increase the share of Bangladesh’s export to the EU market.
He invited EU investors to harness the country’s proven and diversified investment sectors including agro-processing, textile, automobile, service sector, ICT in hi-tech parks, skills development, infrastructure, economic zones and logistics sectors for rewarding return and sustaining the win-win bilateral economic ties.
Ambassador and Head of EU Delegation to Bangladesh Charles Whiteley said for decades, the EU has been the main destination for “made in Bangladesh” goods.
The graduation of Bangladesh to a developing country will reinvigorate EU-Bangladesh ties, he said, adding that it is time to explore new areas of cooperation from ICT to infrastructure, aviation, renewable energy, agriculture and pharmaceuticals. The EU is keen to boost bilateral trade and investment ties in the days to come.
Counsellor, EU Delegation to Bangladesh Jurate Merville said that to attract European FDI, a friendly regulatory framework is crucial.
She said that the EU is one of the top investors here in Bangladesh. She also called for an increasing skilled workforce to tap the future potentials of international business.
Country Representative, Airbus Morad Bourouffala stressed on human capital development, skill development is more important for Bangladesh.
Syed Nasim Manzur, Managing Director, Apex Footwear Ltd. said RMG has positioned us in a prestigious stage in the global arena.
“But we have a few other sectors that have huge potential to have their access in the EU market like the leather industry,” he said.
“At present we have many (Leather Working Group) LWG certified factories in Bangladesh. We need more EU companies to invest in manufacturing industries in Bangladesh. We need EU investment in skills transfer technology to create a technologically skilled workforce,” he added.
Iqbal Chowdhury, CEO, Lafarge Holcim said cost effective and sustainable energy security is crucial for smooth production. “Existing FDI is our brand ambassador to attract more FDI.”
Massih Niazi, CEO, Petromax LPG said they are successfully operating in Bangladesh. “At present we are facing a few short-term challenges like shortages of dollar, lack of LC opening and inflation, devaluation of taka.”
He also hoped that these challenges will be overcome soon. He said the power supply, roads and transportation system should be improved, he added.
Ziaur Rahman, Regional Country Manager, H&M said to compete in the international market “we have to prioritize our product diversification.”
Mushtaque Ahmed, Vice President, Bangladesh Bicycle and Parts Manufacturers and Exporters Association said Bangladesh is now producing a huge number of e-bikes and the EU market will be a potential destination for this product.
ADB provides $120 million loan for community resilience, livelihoods in rural Bangladesh
The Asian Development Bank (ADB) and the government of Bangladesh on Wednesday signed a loan agreement for $120 million to improve access to basic services and climate resilience of remote and rural communities in the Chittagong Hill Tracts (CHT) of Bangladesh.
Sharifa Khan, Secretary, Economic Relations Division, and Edimon Ginting, ADB Country Director for Bangladesh signed the agreement on behalf of Bangladesh and ADB, respectively.
Read: ADB approves $100 million loan to three universities in Bangladesh
“The Climate-Resilient Livelihood Improvement and Watershed Management in Chittagong Hill Tracts Sector Project will adopt an inclusive, holistic, and participatory approach to support sustainable and resilient community development in CHT region,” said Country Director Edimon Ginting.
“By 2031, the project is expected to increase cropping intensity by at least 50% on at least 7,500 ha of agricultural land; reduce by 50% the average time taken for women from 57,000 households to fetch potable water; and reduce the average travel time along the project-supported roads by 50% for buses, cars, and trucks compared with the baseline year of 2023”.
Read: ADB provides $490 million to Bangladesh for 2 projects
The project will cover the three hill districts of Bandarban, Khagrachari and Rangamati. It will help improve village access roads, develop water supply sources and sanitation services, install rooftop solar systems, and establish agricultural facilities, according to ADB.
The project will also improve about 140 kilometers of rural roads with all-weather standards incorporating nature-based, climate-resilient, and safety features, it said.
ADB’s intervention will strengthen watershed management in nine sub-watersheds, to improve resilience to climate change and mitigate risks from natural hazards.
This will entail improving vegetation in watershed areas through agroforestry, building small-scale water harvesting infrastructure, promoting income-generating activities from watershed protection, and training village forest committees in watershed management skills.
Read: ADB mobilizes $261 million for Rampura Amulia Demra Expressway
In addition, the project will support sustainable land use and climate-smart agricultural practices for food security.
Farmers will be provided training and support to shift climate-resilient crop varieties and to diversify into high-value vegetables, fruits, spices, and medicinal plants.
They will be given training, equipment, and linkages with experts and the private sector to help them process, market, and sell their products.
The expected increase in the demand for skilled labor will be met by offering vocational and professional training courses such as carpentry, food processing, entrepreneurship, and community-based tourism and hospitality management.
Bangladeshi furniture industry needs reforms to reach its full potential: HATIL Chairman Selim H. Rahman
With an annual growth rate of 19-20 percent, the furniture industry in Bangladesh has seen remarkable growth in recent years.
According to the Export Promotion Bureau, the current size of the furniture industry in Bangladesh is worth Tk 25,000 crore.
The success of Bangladeshi furniture extends beyond its borders, with thriving exports to foreign markets. Notably, there has been a remarkable 267 percent surge over the past decade, data from the Export Promotion Bureau showed.
In the fiscal year 2011-2012, the country’s furniture exports totalled USD 27.14 million, which significantly surged to USD 76.41 million in the fiscal 2019-2020.
Leading the drive towards this growth is HATIL Complex Ltd, currently the country’s leading furniture brand and also recognized to be a game-changer in the country’s furniture industry.
HATIL traces its roots back to H.A. Timber Industries Ltd – a small timber shop on the bank of the Buriganga River – founded by the late Al-Hajj Habibur Rahman in 1963, at 2/1 Ultinganj Lane in Old Dhaka’s Farashganj area.
Over the next 25 years, the only focus of this business was selling wood.
“Customers would come to our shops with a list of required items they were suggested by carpenters for their homes. Based on their requirements, we would cut the wood and sell them which the carpenters then would use to manufacture doors and everything else,” recalled Selim H. Rahman, the eldest son of Habibur Rahman.
For Selim H. Rahman, currently the chairman and also the managing director at HATIL Complex Ltd, the whole business was “somewhat traditional” and “lacked innovation”.
“It seemed to me that this whole business could actually be thought of and structured differently,” he said.
His vision received a significant boost when, in 1988, his father made the decision to import a seasoning plant — a machine designed to extract excess moisture from freshly cut wood – from Italy.
This seasoning plant was the first in Bangladesh owned by a private entity.
“My father had two things in mind: first, if he could bring in this seasoning plant, it would greatly benefit the customers as it gives the opportunity to season wood in less time (maximum 30 days) because natural seasoning of wood takes one and half years and second, it would also help his business grow,” said Selim Rahman.
His father’s decision to bring in the machine at a time when there was only one small seasoning plant in the whole country under the Bangladesh Forest Industries Development Corporation (BFIDC) “I had an idea since my father brought the seasoning plant: Could we actually think about manufacturing?” he recalled.
Read: Malaysia's semi-government body keen to promote Malaysian timber, furniture in Bangladesh
By the 1980s, the country’s furniture industry had already started flourishing. Most of the household items were already available in the local market.
“But things like doors and window frames needed for building a house were not readily available at stores,” Rahman said. “So, it occurred to me that we could think about this.”
This visionary approach marks the inception of HATIL Complex Ltd, led by Selim H. Rahman, which initially focused on door manufacturing.
Subsequently, as the demand for household furniture items increased, HATIL's product range expanded as well.
After nearly 35 years since its inception, HATIL has indeed become a household name.
According to its company profile, HATIL now has 75 outlets all across the country and 18 outlets overseas.
In an exclusive interview with UNB, the furniture industry tycoon discussed various aspects of the thriving sector.
When compared to the past, what is the current scenario of the local furniture industry?
Selim H. Rahman: The furniture industry in Bangladesh has seen significant development over the years. By development, I mean there was a time when a substantial amount of imported foreign furniture was needed to meet customer demands. The quantity of these imports has now decreased as local manufacturers are able to fulfil those demands.
The government played a significant role in this context. The government has encouraged the growth of the local furniture industry. Some policy support and opportunities have been provided by the government as well.
What do you think are the major challenges this industry faces?
Selim H. Rahman: The culture in our country is such that when an individual initiates a business based on a particular product or demand, it often encourages other entrepreneurs to enter the same sector. This dynamic is a key driver behind the growth of industries here in Bangladesh. This growth encompasses various sectors within the industry. However, it's important to note that due to the lack of proper policy and regulations in place, some actors in the furniture market do not adhere to proper manufacturing methods and lack compliance with industry standards. On the other hand, compliant brands incur higher production costs due to adherence to regulations, including taxes and VAT imposed by the government, ultimately resulting in higher prices for consumers.
Read: The most decisive platform for the Indian woodworking, furniture and mattress manufacturing Industry is set to create new benchmarks
The need of the hour is to establish a structured system that benefits consumers and manufacturers. Developing guidelines for the industry is crucial. There is a lack of specific criteria or policies governing the furniture industry, leading to revenue loss for the government. Reforms could unlock the full potential of this industry.
Furthermore, there is substantial employment potential for youths if provided with adequate training. Every household needs some amount of furniture, even if it is small, for living. As such, furniture is an essential item for human civilization.
Bangladesh’s LDC graduation is scheduled for 2026. Experts are now talking about export diversification. How is the furniture industry preparing in this context? And what is HATIL doing in this regard?
Selim H. Rahman: I’m not fully aware of all the opportunities, benefits and challenges we’ll face once we graduate from the group of LDCs as we are yet to be communicated regarding these matters from the authorities. However, what I understand is that we will need to compete with other actors in the global market to stay competitive in the future because the trade benefits and advantages we are getting at this moment will not be given to us post-LDC graduation. To stay competitive in the future, we will have to attain the required capability. To acquire that capability, we will need to work on the prerequisites. We haven't seen that preparation yet.
One thing that plays a significant role behind the growth of industries is public-private partnerships. What kind of communication with the government is happening in the furniture industry regarding policy issues?
Selim H. Rahman: There is some sort of communication happening in this regard. In many cases, there is a lack of qualified human resources needed for the growth of this industry. It is essential to pay attention to this aspect of our education curriculum. Many polytechnic institutes in our country do not prioritise the wood industry in their curriculum.
Another challenge is the perception among young individuals when choosing careers. Carpentry is often considered more complex compared to working in the garment industry.
Read more: Furniture Brands and Companies in Bangladesh: An Overview
Due to these societal perspectives and various reasons, many institutes have stopped offering courses on these subjects. We have discussed these issues with the government. The academic curriculum related to the wood industry hasn't been upgraded compared to the past. We have worked together to upgrade these curricula. In conclusion, both the government and private initiatives are necessary in this context. Communication from both sides is crucial.
Furthermore, for any industry to thrive, the government must offer essential policy support. If we look at the massive growth of the Ready-made Garment industry (RMG) today, it became possible due to the government's policy support in the 1980s. A comparable growth can also be realized by the furniture industry if the industry stakeholders receive crucial policy support, such as duty-free import of raw materials, among other measures.
HATIL currently sources its raw materials from external suppliers. Given the ongoing global supply chain disruptions, initially triggered by the COVID-19 pandemic and further exacerbated by the Russia-Ukraine war, what strategies does HATIL have in place to navigate these challenges?
Selim H. Rahman: HATIL does not use local wood for its furniture. We source it sustainably from overseas. Now, if that source is disrupted, it poses a challenge for us. It may force us to either halt our business or use locally available wood which is in direct contradiction of our commitment towards the environment. Another issue is that we import certain raw materials that are not available in the country or not produced here. If a supply chain crisis occurs, and we cannot import these raw materials, our business may face significant threats.
Additionally, there are some materials that we used to source from outside but are now exploring local alternatives to reduce dependency on imports. While some things may not be feasible due to the lack of an industry for all products here, we always strive to find local alternatives wherever possible. We are focusing on research and development to discover local alternatives for such materials. Additionally, we are also exploring alternative international sources to diversify our import options in case of a major supply-chain disruptions.
BGMEA president stresses timely policy to ensure growth of RMG industry
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), has emphasised the imperative for timely policy support considering the changing business landscape, global challenges, and needs of the readymade garment industry to keep the sector competitive in the long run and achieve its untapped potential.
"It is of utmost importance to provide necessary support to the RMG industry, the prime export industry of Bangladesh, so that it continues to flourish and contribute to the socioeconomic development of the country," he said, according to a press release on Tuesday.
Also read: BGMEA calls for government policy support to weather challenges of RMG sector
His observations came during a meeting with Cabinet Secretary Md Mahbub Hossain on Tuesday.
During the meeting, a wide range of topics related to Bangladesh's RMG industry were discussed, including its current status, existing challenges, and future priorities to adapt to evolving global market trends, said the release.
The implications of Bangladesh's graduation from the status of Least Developed Country (LDC) and its potential impact on export-oriented trade, as well as its preparedness to face new challenges, were given significant attention during their discussion.
Also read: BGMEA president tells Canadian official reforms in Bangladesh’s garment industry are huge
The ongoing Russia-Ukraine war and its impacts on the RMG sector were also a key focus of the discussion.
President Faruque Hassan emphasised the stiff competition in the global market, where lead time plays a vital role in maintaining competitiveness.
Faruque underscored the necessity of updating and simplifying business procedures, including customs and bond services, and urged government support in this regard.
He informed the cabinet secretary about the Sustainability Strategic Vision, which aims to guide the RMG industry towards more sustainable practices and achieve $100 billion from garment exports by 2030, the release also said.
Also read: US visa restrictions won’t impact garment exports: BGMEA
The BGMEA president also emphasised that government support would play a pivotal role in facilitating the industry's journey towards achieving this export target, ultimately contributing significantly to Bangladesh's economic development.
He expressed optimism that the government would continue its support, keeping the needs of the RMG industry into consideration for its sustainable development.
Runner Automobiles wins ‘Bangabandhu Sheikh Mujib Award for Industries 2022’
Runner Automobiles has received the "Bangabandhu Sheikh Mujib Industry Award 2022" in recognition of its outstanding contribution to the national economy as well as the industrial sector.
Chairman of Runner Automobiles PLC Hafizur Rahman Khan received the award from President Mohammed Shahabuddin on Tuesday at the Osmani Auditorium, according to a press release.
Read: Runner Automobiles approves 10% cash dividend
After receiving the award, the chairman of Runner Group said, "This award from the president is our motivation. I dedicate this award to all my employees who have worked tirelessly to bring this award to Runner Automobile Plc."
Runner Group is a leading business organisation in Bangladesh that has been continuously contributing to the country's economy since 2000 by doing business with reputation and integrity, said the release.
Read: ABM Group's Ataul Karim wins Bangabandhu Sheikh Mujib Industrial Award 2022
A total of 12 industrial units, including Walton, in six categories received the award.
Read more: Walton gets ‘Bangabandhu SheikhMujib Industrial Award-2022’
Rabbithole's World Cup package just Tk60 for Nagad customers
Nagad customers can now savour the excitement of live Cricket World Cup matches on Rabbithole, a renowned video streaming platform, by subscribing to an exclusive pack for just BDT 60 using the MFS payment gateway.
Cricket lovers will be able to watch all world cup matches of their favourite teams under this pack, which will expire on 20 November this year, at a very minimal cost. Usually, Rabbithole’s monthly pack costs BDT 99. If it is taken into calculation, a subscriber will have to spend BDT 198 if he or she wants to watch all matches on the video streaming platform. But exclusively for Nagad customers, the cost is only BDT 60, says a press release on Tuesday afternoon.
To avail of the exciting subscription package, a customer needs to visit Rabbithole website ( https://www.rabbitholebd.com/ ) or App, choose “Nagad World Cup pack” and make the payment through Nagad gateway.
Read: Nagad offers World Cup tickets on Mastercard add-money, bill pay
To this end, Nagad and Rabbithole have entered a partnership. Maruful Islam Jhalak, executive director of Nagad Ltd., and A.S.M. Rafiq Ullah, chief executive officer of Content Matters, a mother company of Rabbithole, signed the agreement on behalf of their respective sides at Nagad’s head office on Monday.
Sadat Adnan Ahmad, chief marketing officer of Nagad, and Mohammad Mahbub Sobhan, head of Business Sales of Nagad also attended the event.
Commencing on 3 October 2023, the special campaign will remain valid till 19 October, meaning that Nagad users will not be eligible to purchase the special pack once this tenure ends.
Besides, a customer will be allowed to enjoy this package once during the whole campaign period, subject to fulfilling all relevant terms and conditions.
Talking about this campaign, Sadat Adnan Ahmad, chief marketing officer of Nagad Ltd., “Nagad has made this partnership with Rabbithole to allow its cricket-loving customers to enjoy live world cup matches on this popular video streaming site at a minimal cost.”
Read: Nagad wins Visa Excellence award-2023
“This is also part of our ongoing initiatives taken to bring comfort to people’s daily lifestyles,” he added.
Mentionable, Nagad’s another exciting offer is going on, marking the upcoming ICC Men’s Cricket World Cup 2023. Under the campaign that will continue till 16 October 2023, customers have an opportunity to win World Cup match tickets by making an add-money of BDT 3,450 to their Nagad wallets from Mastercard or by settling their credit card bill of the same amount using this MFS platform.
Read more: Nagad offers ‘Jawan’ movie tickets on ‘Add-Money’ transactions
Walton gets ‘Bangabandhu SheikhMujib Industrial Award-2022’
Country’s global electronics giant Walton has received the first prize of “Bangabandhu Sheikh Mujib Industrial Award-2022” in recognition of its outstanding contribution in the national economy as well as the industrial sector.
In the hi-tech industries category of the award, Walton gained the first place in terms of its annual turnover, manufacturing import substitute products, usage of locally made raw materials, employment creation, CSR activities, proper usage of lands, environment protection, according to a press release.
Also read: Walton Plaza inaugurated in two new districts
A total of 12 industrial units, including Walton, in six categories received the award at a programme held at the Osmani Memorial Auditorium in the capital on Tuesday.
President Mohammed Shahabuddin handed over a golden crest and certificate to Walton Hi-Tech Industries PLC's Vice-Chairman SM Shamsul Alam at the ceremony.
Also read: Walton's business thrives in Q3 of FY 22-23
Agriculture Minister Muhammad Abdur Razzaque, State Minister for Industries Kamal Ahmed Majumder and President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Mahbubul Alam were present as special guests.
Industries Minister Nurul Majid Mahmud Humayun presided over the event while Senior Secretary of the Industries Ministry Zakia Sultana delivered the welcome speech.
In memory of Father of the Nation Bangabandhu Sheikh Mujibur Rahman, industries ministry arranged the Bangabandhu Industrial Award for the second time aimed to recognise the contributions of institutions in industrial sector, create incentives and encourage creativity.
Also read: Walton brings new models of single door all-rounder fridge
“We could not be industrialists if Bangabandhu was not born here. Introducing this award was a great work in a bid to encourage the creativities in the industrial sector and it should be continued so that the entrepreneurs could be encouraged,” said Walton Hi-Tech Industries' Director SM Mahbubul Alam.
“Walton family is feeling proud to receive this prestigious award. Walton from its very beginning is trying to make the country self-sufficient economically. Now, Walton is exporting 'Made in Bangladesh' labeled products to more than 40 countries, including Europe and America. We are earning foreign currencies by exporting products those were imported once. This remarkable achievement has been made possible by the help of government’s industry-friendly policy. We hope that the government's industrial policy supports would be continued,” he added.
End/UNB/M/MB
BGMEA calls for government policy support to weather challenges of RMG sector
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) called for government policy support to weather challenges of RMG sector.
A delegation from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), led by President Faruque Hassan, held a meeting with Dr. Md. Khairuzzaman Mozumder, Secretary of the Finance Division at the Ministry of Finance, on October 3 at the secretariat.
The delegation was comprised of BGMEA Senior Vice President SM Mannan (Kochi) and Vice President Rakibul Alam Chowdhury.
Read: 8th edition of BGMEA Cup 2023 to kick off on November 9
The meeting revolved around pressing issues concerning the country's readymade garment industry, its potential, and the vision to sustain growth and development.
During the meeting, President Faruque Hassan pointed to the profound impact of the Russia-Ukraine conflict on the global economy, which has presented a significant challenge for the readymade garment industry of Bangladesh.
The repercussions of the Russia-Ukraine war have led to severe inflation in the USA and EU countries and demand for apparel in key export markets like Europe and America has declined as consumers prioritize essential items such as food and fuel over clothing.
This has resulted in decline in garment exports to the Europe and the USA.
Read: BGMEA president tells Canadian official reforms in Bangladesh’s garment industry are huge
This decrease in garment exports, which constitutes over 84 percent of Bangladesh's total export earnings, has impacted the country's foreign reserves.
Recognizing the magnitude of these challenges, President Faruque Hassan emphasized the necessity for government policy support to navigate these troubled times and maintain competitiveness in the global market.
He underscored the industry's increasing focus on diversifying into non-cotton products including man-made fiber (MMF) based garments, given their high demand globally, and urged the government to encourage and facilitate this shift through policy support.
Faruque Hassan highlighted the industry's commitment to environmental sustainability, including efforts in developing the capacity of recycling and promoting a circular economy.
Read more: BGMEA installs CBC machine at its Chattogram Hospital for dengue patients
He stressed the need for government support to advance recycling and circularity within the Bangladesh’s garment industry.
In addition to these concerns, the delegation called for easier and faster services from the banking sector for the RMG industry.
Inflation, economic uncertainty: World Bank lowers Bangladesh’s growth projection for FY24
The World Bank in its latest update has projected Bangladesh’s economic growth to be 5.6 percent in the 2023-24 fiscal year ending next June.
The global lender in its previous projection in April, forecasted a 6.2 percent GDP growth for the current fiscal year.
The report’s companion piece, the latest “South Asia Development Update — Toward Faster, Cleaner Growth,” also released today, says South Asia is expected to grow by 5.8 percent this year, higher than any other emerging and developing region in the world, but slower than its pre-pandemic pace and not fast enough to meet its development goals.
The World Bank in its update stated that Bangladesh made a strong recovery from the COVID-19 pandemic, but the post-pandemic recovery was disrupted in FY23 with rising inflation, vulnerabilities in the financial sector, external pressure, and global economic uncertainty.
“New Frontiers in Poverty Reduction says that reforms to address inflation, through monetary and fiscal policies, as well as financial sector vulnerabilities will be critical for the country to sustain growth and poverty reduction,” the report said.
Read: Finance minister assures parliament of steps to control inflation
A single market-based exchange rate would help attract foreign currency inflows through formal channels and support the balance of payment and reserve accumulation, it added.
Supported by economic growth, Bangladesh improved living conditions and reduced extreme poverty to 5 percent in 2022 from 9 percent in 2016, which is comparable to Latin America and the Caribbean countries and fares better than the South Asian average.
The World Bank said, the new poverty numbers are based on the international poverty line of $2.15 a day (using 2017 Purchasing Power Parity) and the Bangladesh Bureau of Statistics’ (BBS) Household Income Expenditure Survey 2022 and re-estimation for 2016.
“Bangladesh’s progress in reducing poverty is multidimensional — it has improved poor people’s wellbeing, including in reduced infant mortality and stunting, and improved access to electricity, sanitary toilets, and education. The rural areas witnessed faster poverty reduction than the cities and towns,” said Abdoulaye Seck, World Bank Country Director for Bangladesh and Bhutan.
“Despite these gains, inequality has slightly narrowed in rural areas and widened in urban areas. The World Bank stands ready to support Bangladesh to take on urgent reforms to accelerate inclusive economic growth,” he said.
Read: Planning Minister compares controlling inflation to playing snakes and ladders
The regional report forecasts growth to slow to 5.6 percent in 2024 and 2025 in South Asia, as post-pandemic rebounds fade and a combination of monetary tightening, fiscal consolidation, and reduced global demand weigh on economic activity.
Growth prospects are subject to downside risks, including due to fragile fiscal positions. Government debt in South Asian countries averaged 86 percent of GDP in 2022, increasing the risks of defaults, raising borrowing costs, and diverting credit away from the private sector. The region could also be affected by a further slowdown in China’s economic growth and natural disasters made more frequent and intense by climate change.
“While South Asia is making steady progress, most countries in the region are not growing fast enough to reach high-income thresholds within a generation,” said Martin Raiser, World Bank Vice President for South Asia.
Read more: Despite move to rein in price hike, food inflation rose to 12.54 percent in August: BBS
“Countries need to urgently manage fiscal risks and focus on measures to accelerate growth, including by boosting private sector investment and seizing opportunities created by the global energy transition,” the World Bank Vice President for South Asia pointed out.