Daily News Recap

Daily News Recap
Thursday
January 8, 2015
Analyst:
Salma Yeasmin Xinat
[email protected]
Industry
Early completion of
Matarbari coal-fired
power plant sought
State Minister for Power, Energy and Mineral Resources Nasrul Hamid has urged the implementing authority to complete the Matarbari coal-fired power plant project within the tenure of
the incumbent government. "It is our expectation that the project will be completed at least two
years before the scheduled deadline," he said. The state minister was speaking at the deal
signing ceremony with the design and supervision contractor of the power plant project. Staterun Coal Power Generation Company Bangladesh Ltd (CPGCBL) inked the deal with the joint
venture of Tokyo Electric Power Services Co Ltd and Nippon Koei Co Ltd of Japan, Fichtner
GmbH & Co KG of Germany and SMEC International Pty Ltd of Australia. The contract value is
Tk 6.23 billion. Speaking on the occasion, Mr Hamid said the government has included it in the
list of high-priority fast track projects considering its urgent need to meet the mounting energy
needs. He said the government has targeted attaining the status of middle-income country within 2021 and developed one by 2041.
The country's gross domestic product (GDP) growth is hovering around 6.0 per cent over the
past one decade, he said. With the implementation of different energy projects of the government, the GDP growth could be raised to around 8.0 per cent to upgrade the country's economic status, said Mr Hamid. The Japan International Cooperation Agency (JICA) has been funding
the US$4.0 billion project, which includes construction work for the power plants, deep sea port,
navigation channel, coal handling facilities, access roads, transmission lines and consulting
services. The JICA's vibrant cooperation in power and energy sectors has been increasingly in
Bangladesh, said JICA Senior Representative Toyama. "Our total support to power generation
has amounted to 2,370 megawatts (MW), which is 23 per cent of the total effective capacity
including both existing and under- construction plants," he said.
Under the project, two coal-based power plants having electricity generation capacity of 600
MW each will be commissioned within 108 months. Bangladesh's first-ever deep sea port of 18metre depth with a navigation channel of 1.2 kilometres will be built under the project, which will
allow Panama-class ships of 80,000 tonnes to directly enter for unloading imported coal. A high
voltage 400 kilo volt (KV) power transmission line from Maheshkhali to Anwara, and construction of road and two bridges from Chakaria up to the project site will also be built. Some 1,414
acres of land have been acquired at Matarbari under Moheshkhali upazila of Cox's Bazar district for implementing the project. Ultra super critical technology will be used at the Matarbari
coal-fired power plant project, which will have work efficiency of 41.99 per cent. Power Secretary Monowar Islam said the government is eyeing early implementation of the project to ensure
electricity availability at reasonable rate.
"We want to see at least one of the two units of the power plant to be completed by 2018," he
added. Newly appointed Chairman of the Bangladesh Power Development Board (BPDB)
Shahinul Islam Khan said the government has a plan to add around 10,000 MW more electricity
by 2018.
News source: http://www.thefinancialexpress-bd.com/2015/01/08/74836
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Daily News Recap
Rice bran oil raises
hopes for cuts in
imports
Demand for the antioxidant-rich rice
bran oil is rising exponentially on the
back of increased health consciousness among urban people, said industry operators. he oil is extracted from
the hard outer brown layer of rice after
husking. After an intense awareness
campaign, particularly among housewives, demand for rice bran oil increased from 15-20 tonnes a day in
2012 to 70-100 tonnes now, according
to industry insiders. Consumers started
switching to rice bran oil from soybean
oil, according to Moinur Rahman, marketing manager of ACI Consumer
Brands, which markets the ACI Nutrilife
brand of rice bran oil. But it was not all
plain sailing. Introduced in Bangladesh in 2011, the cooking oil had to get past plenty of misconceptions.
“We had faced a lot of difficulties during the initial days -- people were completely oblivious to
the existence of rice bran oil and its health benefits. Many even perceived it to be engine oil,”
said Mazharul Islam, prime channel manager of Emerald Oil Industries Ltd (EOIL). One reason
for rice bran oil's rising popularity is a reduction in its prices. The price of each litre of rice bran
oil was Tk 40 higher than soybean oil during the initial days. But the gap has now come down to
Tk 20 each litre, said Rahman. Rice bran oil's growing demand has also created expectations of
bringing down the country's import dependency for cooking oil. At present, the country spends
over Tk 10,000 crore a year to import 14-15 lakh tonnes of edible oil against the domestic demand of 18 lakh tonnes, according to Bangladesh Bank and industry estimates. “The rice bran
oil holds very good market potential. We have the raw materials and there are many rice mills
that can supply it,” the ACI official said.
The country produces more than 5 crore tonnes of paddy a year, which yields 40 lakh tonnes of
rice bran, according to estimates by agricultural scientists. ACI entered this segment of cooking
oil market through toll manufacturing in 2012, when only EOIL and Rashid Oil Mills had started
extracting oil by using locally available rice bran. Now, there are around eight firms, including
Bangladesh Edible Oil Ltd. City Group of Industries, a leading cooking oil processor and marketer, is also set to make its entry to this segment of cooking oil. Biswajit Das, general manager
of City Group, said the company has already set up machinery for the plant. “The number of
health conscious buyers is rising by the day -- that's why we are going for rice bran oil.”
The existing players too have expanded their production capacity on the back of the rising popularity. EOIL, now listed on the bourses, increased its processing capacity last year and began
production of its expanded unit in November last year. Currently, its total production capacity
stands at 48 tonnes a day. Islam said the company now produces around 40 tonnes of rice bran
oil a day.
News source: h p://www.thedailystar.net/business/rice-bran-oil-raises-hopes-for-cuts-inimports-58889
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Daily News Recap
Cotton use to grow
4pc on higher demand
Bangladesh's cotton consumption will
rise 4.08 percent in fiscal 2015-16,
riding on higher demand from local
spinners and foreign investors in the
textile sub-sector, the London-based
Economist Intelligence Unit (EIU) forecasts. Consumption will increase to
1.02 million tonnes despite poor safety
standards, mainly due to a shift in investment in the textile sector from India and China, the EIU said. This is the
first time that cotton consumption will
cross the one million tonne mark. The
EIU is the research and analysis division of the Economist Group that owns
the Economist newspaper. “Cotton consumption in Bangladesh will increase if the investment
proposals in the textiles sector from aboard are really implemented here,” said Jahangir Alamin,
the immediate past president of Bangladesh Textile Mills Association. The local spinners have
been running their mills under capacity due to an inadequate supply of gas and power, he added.
“The EIU's prediction on cotton consumption may come true as the country's garment exports
are on the rise,” Alamin told The Daily Star by phone. “The country's competitive labour costs
have encouraged relocation by Indian and Chinese companies, and investment is expected to
continue over the next two seasons,” the EIU report said. Although the government has announced its intention to introduce genetically modified cotton to increase domestic production,
Bangladesh remains heavily reliant on imports, according to the EIU report published on January 1. The country currently imports more than 0.98 million tonnes of cotton a year from the US,
India, Pakistan, Australia, Uzbekistan and others countries; poor safety standards continue to
be a downside risk to the forecast, according to industry insiders. The total investment in the
primary textiles sector is around four billion euros. Local spinners can supply 90 percent of yarn
for the knitwear sub-sector and nearly 40 percent of fabric for the woven sub-sector. The death
of over 1,100 workers in the collapse of a factory in Dhaka in 2013 put the garment industry,
which accounts for about 80 percent of Bangladesh's exports, under scrutiny.
Safety challenges in the sector present the risk of Western buyers turning to other markets in
the region in search of better standards and greater regulatory stability, said EIU. On the international front, the EIU said global cotton consumption is to expand by 3.3 percent in 2014-15,
following a small decline of 0.5 percent in 2013-14. China has now dramatically slashed its nontariff import levels as the country grapples with its burdensome stockpiles. “We expect strong
consumption growth in India, as well as in smaller consumers, such as Bangladesh and Vietnam,” said EIU. Cotton's low price will make it attractive compared to synthetic alternatives in
the short term. “We expect consumption growth to slow slightly in 2015-16, to just below 3 percent, but note that there remain downside risks to these forecasts given the textile sector's exposure to global macroeconomic trends,” the EIU said. Bangladesh imports woven fabrics worth
more than $5 billion a year mainly from India and China as the local weavers can only supply 40
percent of the fabrics to the garment makers, Alamin said. “The local weavers cannot supply an
adequate quantity of fabric to the garment makers due to lower investment in the sub-sector as
the investors require higher capital.”
News source: http://www.thedailystar.net/business/cotton-use-to-grow-4pc-on-higher-demand58893
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Daily News Recap
Economy
Import rises
11.36pc in JulyNovember
The country's overall import increased by more than 11 per cent in the first five months of the
current fiscal year (FY), 2014-15, mainly due to higher import of fuel oils and capital machinery,
officials said. The actual import in terms of settlement of letters of credit (LCs) grew by 11.36
per cent to US$16.20 billion during the July-November period of FY 15 from $14.55 billion in the
corresponding period of the previous fiscal, according to the central bank statistics. On the other
hand, opening of LCs, generally known as import orders, rose by 14.77 per cent to $17.74 billion in the first five months of FY 15 from $15.45 billion in the same period of FY 14. "The rising
trend of overall import may continue in the coming months, if there is political stability," a senior
official of the Bangladesh Bank (BB) told the FE Wednesday. Fuel oils import increased by
28.30 per cent to $1.87 billion during the July-November period of FY 15 against $1.46 billion of
the corresponding period of the previous fiscal. The import of petroleum products may fall in the
coming months due to seasonal effect, the central banker explained.
The import of capital machinery or industrial equipment used for productions rose by 21.29 per
cent to $1.15 billion during the first five months of this fiscal against $948.73 million of the corresponding period of the previous fiscal. "Higher import for sectors like power and energy, leather
and tannery, electronic, food processing, ceramic and melamine have contributed to raise the
overall capital machinery import during the period under review," another BB official noted.
However, the food-grain import, particularly of rice and wheat, dropped by 6.54 per cent to
$565.74 million during the July-November period of FY 15 from $605.33 million in the same
period of the previous fiscal. The import of intermediate goods, like - coal, hard coke, clinker
and scrap vessels, increased by 7.50 per cent to $1.33 billion in the first five months of the current FY from $1.24 billion in the same period of FY 14. On the other hand, the import of industrial raw materials rose by 3.32 per cent to $6.16 billion during the period under review from $5.96
billion in the corresponding period of the previous fiscal. During the period, the import of machinery for miscellaneous industries witnessed a 15.88 per cent growth to $1.66 billion from
$1.43 billion in the corresponding period of FY 14.
News source: http://www.thefinancialexpress-bd.com/2015/01/08/74838
Forex reserves hit
new high
Foreign currency reserves reached a new high yesterday, hitting $22.46 billion on the back of
resurgence in exports in the past couple of months. Last month, exports raked in $2.84 billion,
up 4.41 percent year-on-year, according to an official from the commerce ministry, whose subdivision Export Promotion Bureau logs in export data. Exports raked in $2.42 billion in November last year. December's figure takes the total export earnings in the first half of fiscal 2014-15
to $14.91 billion, a slight improvement of 1.56 percent over the previous year, the official added.
Meanwhile, the surging reserves will take a hit today: some $900 million will be paid to Asian
Clearing Union as import liabilities, as per a Bangladesh Bank official. There was a rush of imports last month, particularly for Padma bridge construction, he said. “Even then, the reserves
were at satisfactory level. The forex market is very liquid now. There is no supply side problem,”
the official said, quashing fears of a greenback shortage. On December 30, reserves hit $22.30
billion, a record until now. If the trend continues, seeing the steady inflow of remittance, BB
might soon have to resume its purchase of greenbacks in the interbank market, he added. Inward remittance grew at double-digit rates in the first half of fiscal year to $7.47 billion. Some
$1.26 billion was sent in last month by migrant workers, according to BB's latest data.
News source: h p://www.thedailystar.net/business/forex-reserves-hit-new-high-58895
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Daily News Recap
Capital Market
Country's first
growth fund hits
market soon
Country's first growth fund 'Asian Tiger Sandhani Life Growth Fund' worth Tk 1.0 billion is set to
hit the market soon. According to stock market sources, the subscription of the fund will be
opened January 11. Asian Tiger Capital Partners Asset Management Company is launching
the fund, sponsored by Sandhani Life, one of the leading life insurance companies in Bangladesh, contributing Tk 200 million. General investors will subscribe Tk 600 million while the rest
Tk 200 million will be raised from private placement. Growth funds focus on companies that
managers believe will experience faster than average growth as measured by revenues, earnings, or cash flow. Bangladesh is an emerging economy and there are a number of companies
those have very high growth potentials in long run.
The objective of the growth fund managers will be to identify those companies and put substantial allocation on those stocks with a proper risk management tools to maximize the risk adjusted return and outperforming the market in the long run. Growth fund managers also look carefully at the way a company manages its business. For instance, many growth-oriented companies are more likely to reinvest profits in expansion projects or acquisitions, rather than use
them to pay out dividends to shareholders. They tend to perform better than the overall market
when stock prices in general are rising. However, it is worth noting that past performance does
not guarantee future results. "Therefore investing in growth funds usually requires a longer time
horizon," an analyst pointed out.
As per the source from Asian Tiger Capital Partners Asset Management Company, the Net Asset Value (NAV) at market as on June 30, 2014 audited account was BDT 14.12 (Based on
sponsors portion only) where the IPO participants can invest in the fund at face value of BDT 10
only. The subscription will continue till January 15, 2015 for Resident Bangladeshi investors,
institutions, mutual funds and affected small investors. For Non Resident Bangladeshi, the subscription period will be from January 11, 2015 to January 24, 2015.
News source: http://www.thefinancialexpress-bd.com/2015/01/08/74786
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Daily News Recap
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