Lead Story:

25 Years of Economic Reform: Tracking Bangladesh’s progress in figures

Bangladesh embarked upon some major economic reforms in 1990s. Almost 25 years later, On October 2016, The

Economist reported that since 1990s, Bangladesh has made some of the most impressive improvements in the

basic living conditions of people seen anywhere else in the world.The poverty rate has been cut down from 44.2

percent (1991) to 13.8 percent (2016).Number of women in the workforce has doubled during this period, while

the birth rate has tumbled from 6.2 births per woman (1990), to just 2.2 (2016). Infant and maternal mortality

rateshave halved since 1990, and life expectancy has risen by 11 years, to 70.Bangladesh now enjoys life

expectancy 4 years longer than Indians, despite the Indians being, on average, twice as rich. More remarkably, the

improvement in life expectancy has been consistent along income levels.Per capita income has risen from USD 190

(1972) to USD 1,314 (2016), which is ranked 58thhighest in the world.

The major reforms in the early ninetiesincluded introduction of Value Added Tax (VAT) for the first time, major

banking reforms, liberalization of trade, and privatization of State-Owned Enterprises (SOEs). Adding VAT and

trade liberalization drew the most criticism at that time. These reforms were aimed at moving Bangladesh towards

an open economy system, and removing all controls on the movements of foreign private capital. The introduction

of VATin place of cascadingexcise duty and overall trade liberalization helped increase the country’s revenue GDP

ratio and promoted overall economic growth. Other major reforms, included relaxation of restrictions on private

investment, financial liberalization with deregulation of interest rates, and introduction of floating exchange rate

also played vital role in country’s economic growth.

Growth Performance: Bangladesh economy has experienced acceleration during the 1990s in comparison to the

1980s. The annual GDP growth rate rose from less than 4 percent 1970-90 to 4.8 percent in 1990-2000, 5.8 percent

in 2001-2010, and then surged to 6.5 percent in 2011-15. GDP growth has now risen to 7.1 percent for FY2016

(ADB), which makes Bangladesh the 2ndfastest growing major economy of 2016 (IMF). GDP growth rate of

Bangladesh exceededthe world average in 1990s and has remained above the level since (Figure 1). Although the

growth of South Asian countries has remained higher for most of this period, Bangladesh by comparison has

experienced far less fluctuations in growth. The GDP growth of Bangladesh has also been more stable than the

average growth rate of the least developed countries. Furthermore, even as the growth in South Asia is has started

to decline, Bangladesh has managed to retain an upward growth trend.

Figure 1: Trends of GDP Growth Rate (in %)

Source: World Bank dataset

Bangladesh has also performedbetter than Pakistan since independence in 1971 (Figure 2). Right after

Bangladesh’s independence, Pakistan achieved higher growth rate than that of Bangladesh. This changed in the

1990s, when the growth rate of Bangladesh exceeded the growth of Pakistan. This trend has been maintained

since, except for a brief period from 2004 to 2006. More importantly, the growth rate of Bangladesh economy has

shown less volatility than that of Pakistan.

Figure 2: Trends of GDP growth in percentage(Bangladesh vs Pakistan)

Source: World Bank dataset

Human-Development Indicators (HDIs): India is richer than Bangladesh, in terms of per-capita economic output.

But in certainhuman development indicators such as life expectancy, child survival rate, and proportion of girls to

boys in secondary education, Bangladesh comes out ahead. The two countries spend the same proportion (1

percent) of their GDP on healthcare, but India devotes more of its GDP to education (3 percent)than Bangladesh (2

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percent). Regardless, 88 percent of women are literate in Bangladesh, compared to only 68 percent in India.

Around 36 percent of women were in paid jobs in Bangladesh in 2010, up from just 14 percent in 1990 (ILO). By

comparison, India’s female employment has gone backward from 37 percent (2004) to 29 percent (2009). Child

mortality rates too have come down for Bangladesh, from 144 deaths per 1,000 (1990) to 41 per 1,000 (2013). In

that period, India moved from 126 deaths per 1,000 to 53 per 1,000, globally ranked 13 places below Bangladesh

in child mortality.

Sector-wise Contribution to GDP: Analysis of the sector-wisecontribution figuresin Bangladesh shows that within

the real economy, service sector contributed most. Since the 1990s, agricultural sector has seen a deceleration. In

2015,the sector contributedonly 15 percent to GDP growth, down from 45 percent in 1971. On the other hand,

service sector has contributed around 50 percent of GDP every year since 1980. Industrial sector’s contribution to

GDP has doubledsince 1990. In 1990, it had only15 percent shareof the GDP, but by 2000,the rate had doubled and

has remained steady since.

Figure 3: Agriculture, Industry, and Service Sector Contribution to GDP (in %)

Source: Bangladesh Bureau of Statistics (BBS)

Ready-Made Garments (RMG): Since 1990s, RMG has made huge contribution to the country’s economy RMG

sector. Favorable government policy, global trading agreements, and dynamic private entrepreneurship helped

RMG’s expansion. Now, it is the largest foreign exchange earning industry in the economy. In the year 2015-16,

Bangladesh earned USD 28.09 billion from exporting garments product, 82 percent of the country’s export, 20

percent of the country’s GDP. Moreover, the RMG industry is one of the major employers in the economy, with

4,328 garment factories hiring about 4 million employees, 80 percent of which is female.

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Figure 4: Export Composition of Bangladesh, RMG versus the Rest (in %)

Source: BGMEA

Inward FDI flow of Bangladesh: Bangladesh got its first FDI inflow in 1973.However, during the 1970s, FDI inflow

was very low. Starting from the early 1980s, Bangladesh adopted several policy measures to attract more foreign

investment. But foreign investment inflow did not pick up until late 1990s. From 1997, the FDI inflow started to

surge (Figure 5). Since then, it maintained a significant growth. In 2015, total amount of FDI inflow was USD 1.83

billion, 1.73 percent of GDP. Textile and Apparels, Gas and Petroleum, Banking, Telecommunication, Food, Trading,

Power, and Leather are the major sectors that attracted foreign investment in Bangladesh.

Figure 5: FDI inflows in USD million

Source: Bangladesh Bank

Higher Secondary Education: Over the past 25 years, the number of higher secondary school enrollment has

increased by 253 percent. Pass rate has also increased dramatically,from 31.73(1990) to 86.72 (2015).

Furthermore, gender parity has been achieved and female student maintain a pass ratio same as overall pass rate

in the higher secondary level.

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Figure 6: Number of College Student by Gender (1990-2015)

Source: BANBEIS Educational database

Foreign Reserve: From 1990 to 2015, the foreign exchange reserve has averaged USD 4437.58 million, reaching an

all-time high of USD 27.02 billion in 2015. The figure makes Bangladesh’s foreign currency reserve second only to

India’s in South Asia. The reserve is equivalent to 7 months of import payments.

Figure 7: Total Foreign Exchange Reserve in Bangladesh (in USD million)

Source: Bangladesh Bank

Capital Accumulation: Investment rate has growth from 17 percent of GDP (1990s) to 25 percent(2013). The

accumulation of capital has allowed the expansion of production capacities, which has, in turn, fueled the

expansion of economic activities. In the early years (1974-1990), the expansion of investment was facilitated by

foreign saving mostly in the form of official development assistance (ODA). But since the early 1990s, much of the

investment is financed by national savings. This is a remarkable result and somewhat different from the experience

of many developing countries that have faced a saving constraint for a fairly long period.

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Figure 8: Saving and Investment Rates as Percentage of GDP

Source: Bangladesh Bureau of Statistics (BBS)

Poverty Gap Ratio: Reduction in the poverty gap ratio in Bangladesh has been gradual and quite significant,

declining from 17.20 (1991-92) to 12.90 (2000), 9.00 (2005), and 6.50 (2010). This suggests that even among the

poor, greater proportion of the people are closer to the poverty line now than at the beginning of the 1990s.

Figure 10: Poverty Gap Ratio (using upper poverty line)

Source: Bangladesh Bureau of Statistics (BBS)

Demographic Dividend: Demographic dividend is accelerated economic growth resulting from a country's

declining mortality and fertility rate and subsequent changes in the age structure of the population. It occurs when

the majority of the population is of working age and can contribute to the country's economy, so the economy

grows. At the moment, 33 percent of the population belongs to age group 0-14 years, while 18.8 percent to age

group 15-24 years, and 37.6 percent to age group 25-54 years. This young population ensures a sizeable working-

age population in the foreseeable future, a low dependency ratio.

Figure 11: Bangladesh Fertility Rate (1991-2014)

Source: World Bank

Access to Electricity: Energy and human development are clearly linked. Access to modern energy empowers

human development, reduces the daily burdens of the poor, creates new economic opportunities, and allows for

the delivery of critical services ranging from health care to education. Bangladesh’s has had remarkable success in

increasing access to electricity within its population. In 1990 only 21.62 percent population had access to electricity

(figure 12). This has increased gradually to 59.6 percent by 2012.

Figure 12: Access to Electricity as Percentage of Population

Source: World Bank

Way Forward

Bangladesh has achieved considerable success in securing higher rates of growth but these growth rates also fall

short of growth achieved in the dynamic East Asian economies such as South Korea, Malaysia, and China.

Bangladesh can similarly aspire to do better and achieve higher growth. The analysis of past growth experience in

Bangladesh suggest that there are a number of policy areas where greater emphasis may be placed, to achieve a

higher growth in the future.

Need for a Fresh Bout of Reforms: The gains from reforms have stagnated. Fresh regulatory reforms need to be

undertaken to revive the economy. The experience of South Korea, Malaysia, and China shows that Bangladesh

still has a long way to go for deepening the capital intensity of production. For example, investment rates in China

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are above 40 percent of GDP, compared toonly 26 percent in Bangladesh. According to IFC’s Doing Business

Reports(2016), the time required for enforcing a contract in Bangladesh is more than 1,442 days, the highest

among its comparators, ranked 189 out of 189. Clearly, the investment climate agenda is substantial. Renewed

efforts are needed to reduce the cost of doing business through further deregulation and to strengthen the quality

and availability of infrastructure.

Acquiring Better Technology: The technology gap in Bangladesh is large and there is a severe issue of brain-drain.

Unlike East Asia, Bangladesh makes no effort to attract back skilled migrants. As a result, a major source of

technology transfer is under-utilized. The government should make effort to bring them back to help the country’s

technological improvement.

Improving Urban Agricultural Sector: Future growth will have to come increasingly more from the urban organized

sectors of the economy, which will need a better-functioning regulatory framework and improved infrastructure.

Strengthening agricultural growth will also need modernization. The growth in crop agriculture over the past

decades has come almost entirely from increased rice and wheat production but there is potential to accelerate

agricultural growth through crop diversification. High-value crops (such as fruits and vegetables) could be

profitably produced both for domestic consumption.

Strengthen Export: Strong export growth is the key to achieving any impressive growth performance of

Bangladesh economy. With extreme land scarcity and a very high population density, Bangladesh’s economic

growth dependent on the export of labor-intensive manufactures. Lack of high performance sectors such as RMG

is worrying. Export diversification is urgently needed to not only improve the country’s terms of trade, but also as a

hedging mechanism against external shocks.

Policy for Expanding the Supply of Female Labor: Although Bangladesh has achieved remarkable success in terms

of female participation in workplace yet, the level of female participation (only 36 percent in 2010) remains low by

international standards. With policy efforts to promote female education; provide female labor training: and

eliminate social, economic, and workplace discriminatory policies against the women, this rate could be increased.

Unemployment: Nearly one-third of Bangladeshi youths are either unemployed or underemployed, leaving a large

chunk of potential labor of the developing country unutilized or underutilized. Aged between 15 and 29, who

constitute over one-fourth of the total population, can be made into assets for the country if they are educated

and trained well. According to the 2011 census of population and housing, 32 percent of youths in the potential

labor force are either unemployed or underemployed. While Bangladesh's total unemployment rate is 4.53

percent, youth unemployment rate for males is 6.8 percent and the female 8.5 percent. School dropouts make up

for a large-chunk of this group. Provision for various skills training can be useful to utilize these young people.

Strengthening Human Capital: While Bangladesh has placed strong emphasis on education, its public spending on

education is considerably low. Currently, it spends only 2.2 percent of GDP on education. For example, although

the percent of work force with no formal education has fallen from 47 percent (1996) to 40

percent(2010).However, the facts that 40 percent of the workforce had no education and 23 percent had only

primary level education in 2010 are indicative of a very low skilled work force. Clearly the skills gap presents a

fundamental policy challenge for future growth strategy of Bangladesh.

Figure 14: Education Alignment of Labor Force

Source: Bangladesh labor surveys various years.

Demographic Dividend Challenges: After 15 years, most of the country’s population will be in the workforce. This

massive amount of young working people, if provided jobs, will definitely generate massive amounts of economic

activity. However, the main challenge here is creating productive jobs for this extra workforce, ensuring

agricultural sector growth to feed them and arranging adequate investments in education and health to ensure a

healthy, skilled and productive future workforce. Failure to capitalize on the demographic dividend may lead to

rise in crime rates, etc.

Developing the Infrastructure: GoB has taken several initiatives to improve its infrastructure through several mega

projects.But most of theseprojects are facing severe cost and time overruns. Therefore, attention should be given

to strengthening the public entities that deliver infrastructure services. In addition, while good progress has been

made in increasing the supply of electricity, there are still substantial gaps in primary energy and in transport,

especially roads, bridges, and railway across the country which also needs to address.

Ensuring Good Governance: At present, there are several issues that are constraining the process of good

governance in Bangladesh such ascorruption, bureaucratic inefficiency, political interference in administration,

misuse of power and resources, improper and non-observance of the rule of law, etc. Measures such as strong

leadership, building institutional capacity, and strengthening parliamentary oversight may help in this regard. On

the other extreme, the opposition, civil society and social groups and organizations also have the moral obligations

to help and cooperate with the governments in this juncture.

Single Product Dependency: The country is too dependent on a single product, RMG. A single product-dependent

economy can be risky. Looking for new markets with new products will help increase the export basket. Therefore,

a greater product diversification is needed to reduce the export volatility on a single product line. This will also

increase FDI, create job opportunities, and at the same time create the demand for locally-produced goods.

Ultimately, it will strengthen the economy of the country and make it less dependent on a single product.

Conclusion

Bangladesh has been successful in converting the gains of economic stabilization and reforms into sustained and

accelerated growth. To consolidate this process and to meet the future risks, it has to address the emerging

challenges on multiple fronts. Compared to the first generation reforms, there is a need for deeper and more

complex policy innovations. In addition, the inefficient of seaport, inadequate electricity and infrastructure, urban

congestion and mismanagement, acute skill shortages, and limited successes in attracting foreign investments are

some of the major factors that also need to address immediately. In 1974, countries such as China, Malaysia, and

South Korea were low income countries. Today, Malaysia and China are at the higher-end of middle income

group,and South Korea has crossed over into the high-income category. There is no reason why Bangladesh cannot

achieve a higher growth than presently if it follows the transition path towards development.

Silver lining :PayPal Coming to Bangladesh

In mid-June 2016, The Daily Star, ProthomAlo, and Bdnews24 reported that PayPal, a leading global online

payment platform, would be coming to Bangladesh. PayPal allows customers to securelysend, receive, and hold

money online, and its presence in Bangladesh is expected to benefit the growing e-commerce sector. This

development comes almost a year after Bangladesh’s StateMinister of ICT Division visited PayPal’s headquarters in

San Jose, California, USA to discuss the introduction of PayPal’s services in Bangladesh with the company’s Vice

President. PayPal will be collaborating with Sonali Bank for this venture.

PayPal accounts can be set up free of charge. The service allows freelancers to set up professional invoices for their

products and provides a secure channel for funds transfers from foreign buyers in exchange for a transaction fee.

Figure 1: PayPal’s Cross-Border Payment Solution for Freelancers

Transaction fees vary according to the freelancer’s monthly sales, as shown in table 1.

Freelancer supplies

goods and services

Foreign Buyer Receives

goods and services

Foreign Buyer authorizes

payment by entering

credit/debit card info.

PayPal deducts

transaction fee from

payment

Freelancer receives

payment. Funds ready

for withdrawal.

Freelancer opens a PayPal

account for free and sets up

professional invoices

Freelancer PayPal Foreign Buyer

Table 1: PayPal Web Payment and Professional Invoice Fee Structure

Monthly Sales Transaction Fees (per sale)

Up to USD 3,000 4.4% + fixed fee

USD 3,000.01 to USD 10,000 3.9% + fixed fee

USD 10,000.01 to USD 100,000 3.7% + fixed fee

USD 100,000.01 and over 3.4% + fixed fee

Source: www.paypal.com/in/webapps/mpp/paypal-seller-fees

E-commerce merchants and freelancers greeted the news with enthusiasm. They believe PayPal’s presence in

Bangladesh will make cross-border payments, and remittances coming in and going out of Bangladesh, easier and

cheaper. Merchandisers and buyers have long expressed frustration with the existing methods of cross-border

payments, wire-transfers and PayoneerMastercards, both of which charge exorbitant processing fees and present

inconvenienttime-lagsbetween requests for money transfers and actualmoney transfers from payer to payee.

PayPal’s operation in Bangladesh is expected to benefit local freelancing entrepreneurs who cater to the

international market, specializing in goods and services ranging from software, data entry, transcription services,

call centers, technologicalsolutions,and arts. PayPal will alsosimplify applying to international educational

institutions or registering for international standardized tests, and facilitate purchases from international

commerce platforms such as Amazon.

PayPal has sought to broaden its presence in Asia since 2011, when it announced that it would be opening a global

operations center in Malaysia to promote awareness of its cross-border payment solutions.While PayPalhas

announced they will be operational in Bangladesh and Sri Lanka in the near future, the only South Asian country

where it is operational so far is India, where consumers are far from satisfied with it.

Fund transfers in India via PayPal are restricted to incoming funds for exported commodities. Customers cannot

use their PayPal accounts to make purchases or payments to international institutions and organizations.

Furthermore, incoming funds are required to be transferred out of PayPal accounts into the customer’s local

Indian bank account within 7 days of receipt because, under the Indian Currency Rotation Act, any company

holding money longer than 7 days must be treated as a bank and pay interest on holdings. This is especially

problematic for freelancers receiving payments in small increments as they must incur transfer costs for each

payment they receive.

In China, PayPal is in the process of facilitating outbound cross-border payments for the growing number of

Chinese customers interested in making purchases from European merchandisers, for example. This is being done

through collaboration with China’s leading bank card service provider, Union Pay co. If PayPal takes a similar route

in Bangladesh, Bangladeshi customers will have easy access to European and other international markets.

With the nuts and bolts of PayPal’s activities in Bangladesh still being sorted out, it is yet to be seen if its

functionalities will be as restricted as it is in India or whether it will allow outbound remittances,such as in China.

For now, the news of PayPal’sarrival leaves Bangladeshi freelancers and shoppers hopeful.

Beyond Cross-Border Payments

In addition to cross-border payments, PayPal may enable domestic electronic payments for goods and services.

The company is yet to allowdomestic payments in Asian countries. Though it has shown interest in setting up intra-

country payment systems in countries with growing e-commerce sectors such as China and India, which in 2015

recorded online sales of USD 359 billion and 26 billion respectively, its progress has been continually throttled by

delays in obtaining appropriate licenses and other regulatory barriers.

In 2012, PayPal obtained a domestic license to setup operations in Japan, home of the second largest e-commerce

sector in Asia, accounting for USD 136 billion in sales in 2015. Similar to Bangladesh, Japan is a cash-based

economy where consumers are reticent to disclose credit or debit card information to vendors. PayPal’s encrypted

system provides customers with a safer payment alternative without leaving a digital footprint behind every credit

or debit card transaction, making it harder to commit fraud or theft. To assure Japanese customers of its security

system’s integrity, PayPal assembled a product team and customer service providers to appeal to the local mindset

and preferences of the Japanese customers. The same confidence will have to be inspired in Bangladeshi

consumers.

In addition to advertising in Japan, PayPal has joined forces withestablished local businesses (such as cafés) to

spread word about PayPal and encourage customers to use it as a mode of payment. It has also integrated itself

into local mobile purchasing apps. PayPal can take a similar route in Bangladesh by taking advantage of its thriving

restaurant and café sector and integrating itself with food delivery apps such HungryNaki and FoodPanda.

Though the venture isstill in its early stages, Bangladesh can preempt many possible challenges and their solutions

by studying PayPal’s experiences in Japan (and also China, Malaysia, and India). However, possessing few

similarities with the Japanese case, Bangladesh presents PayPal with its own set of unique challenges.Bangladesh’s

e-commerce sector is still in its infancy and has a long way to go before it can be on par with its Japanese

equivalent. In order to increase demand for its services, a payment system such as PayPal needs to be

complemented with the local presence of reliable electronic commerce platforms such as Amazon, SnapDeal, and

FlipKart.

Does PayPal have potential in Bangladesh e-commerce sector?

Paypal can integrate itself with established domestic online platforms that facilitate sales of second-hand goods or

Customer to Customer (C2C) sales, the most popular ones being Bikroy, Ekhanei, and ClickBD.With regards to sales

made by Businesses or Manufacturers to Customers (B2Cs), the most prominent commerce platforms, HungryNaki

and FoodPanda, belong to the restaurant sector.Easily accessible through their mobile apps and highly publicized

by their partner restaurants, these platforms have earned themselves a loyal customer base. By partnering with

them, PayPal can gain access to a substantive customer base.

Businesses dealing in electronics, books, apparels, and jewelriesare yet to band together under one unified banner.

Their exposure remains limited, scattered over approximately 2,200 disparate Facebook pages. PayPal will not gain

a significant customer base by collaborating with businesses in these sectors if the businesses themselves do not

have a large enough customer base.The solution to this problem lies in building a prominently visible commerce

platform.

Even if large-scalecommercial platforms succeed in validating the use of electronic payment systems, PayPalfaces

stiff competition from Bangladesh’s leading mobile financing system, bKash.Bkash payments are made through

agents and customers are charged a transaction fee of 1.85%.Unlike PayPal, which requires a credit or debit card

from a traditional banking institution to work,bKash carries out transactions directly from one mobile account to

another without the hassle of going through a bank. In a nation where, in 2014, only a recorded 14 percent of the

population over the age of 15 held bank accounts with a traditional financial institutions, it is unlikely that PayPal’s

domestic services will be able to cater to a large number of consumers.

Therefore, current e-commerce and financial infrastructure in Bangladesh may not be ready for PayPal’s domestic

services just yet. However, this should not deter PayPal’s efforts to introduce its cross-border payments services to

Bangladesh for the benefit of customers looking to shop internationally, and merchandisers and freelancers

looking to export their goods and services.

References:

https://www.facebook.com/paypalbd/posts/984830851575057:0

http://archive.prothom-alo.com/detail/date/2011-08-22/news/180032

http://en.prothom-alo.com/science-technology/news/113595/PayPal-to-be-launched-soon-in-

Bangladesh

http://bdnews24.com/business/2015/07/22/paypal-to-start-services-in-bangladesh-this-year

http://www.reuters.com/article/us-paypal-idUSBRE82F0MR20120316

http://www.wsj.com/articles/SB10001424052970204528204577010892743606310

http://www.japantoday.com/category/executive-impact/view/paypal-faces-many-challenges-in-japan

http://www.go-globe.com/blog/ecommerce-in-asia/

http://www.shoutmeloud.com/paypal-team-shocked-indian-freelancer-with-new-rules.html

Polities : Xi jinping’s (draft)

Xi Jinping, President of People’s Republic of China, made a state-visit to Bangladesh on 14-15 October, 2016. China

is already Bangladesh’s largest trade partner, accounting for over 26 percent of Bangladesh’s total foreign trade. Xi

hailed what he called a "historical turning point" in relations with Bangladesh after talks with Prime Minister

Sheikh Hasina. According to ShahidulHaque, Bangladesh’s Foreign Secretary, President Xi’s visit has helped the two

countriesupgrade their ties to a strategic partnership.A total of 40 agreements were signed during the visit,

including 27 agreements and Memoranda of Understandings (MoUs) between the two governments worth USD

24.5 billion and 13 joint-venture agreements between Chinese private entities and local firms worth USD 13.6

billion. The loan and investment pledgescover infrastructure, communications, power and energy.All political

parties have hailed the huge investments pledged by China, as did the business community.

Notable agreements include a cooperation agreement on increasing investment and production capacity building;

an economic and technical cooperation agreement; agreement for Karnaphuli tunnel construction; and credit

agreement for Dashekandi Sewerage Treatment Plant project. MoUs have been signed for maritime cooperation,

joint feasibility study on a free-trade area, new ICT framework, counter-terrorism collaboration, capacity building

and sharing of information, tackling climate change risks, regional and international cooperation, and cooperation

on power and energy sectors.

Significantly during the visit, Bangladesh, on its part, also reiterated its support for China’s Maritime Silk Route, and

One Belt, One Road (OBOR) (see figure 1) initiative, which aims to connect 4 billion people and 70 countries by

creating a vast network of railway, energy pipelines, highways, and modernizing border points to encourage

pragmatic cooperation and promote common developmentbetween the countries.

It has been suggested by some quarters this is China’s subtle way of carving out for itself a prominent role in South

Asian affairs and put a counterweight to India's increasing influence in South Asia. To counter this perception,

analysts said Bangladesh under Hasina will have to maintain a careful balance in its relationship with both China

and India. Bangladesh Prime Minister is, it appears, acutely aware of this. Recently, when asked whether closer ties

with China could jeopardize her country's ties with India, she said Bangladesh aims to maintain “good relations

with everyone”, mentioning Bangladesh’s participation in the BBIN and BCIM initiatives to highlight the country’s

commitmentto regional connectivity and cooperation.China also has been cautious in this regard. In one of its

recent write-ups, Global Times from China thus wrote, “India need not be jealous of an increasingly close

relationship between Beijing and Dhaka, because the improvement of local infrastructure and the overall economic

ecology in Bangladesh will create favorable external conditions for connecting with markets in India, China and

Southeast Asia…”Ali Riaz, political science professor at Illinois State University told AFP, "Understandably, India is

watching Bangladesh's growing ties with Beijing. But Bangladesh is improving ties with China carefully so that it

does not jeopardize its relations with India."

In Bangladesh, there has been some contrary views about the full benefit of Chinese economic assistance package.

Some analysts have thus emphasized that for the time being, it might be more important to focus on the nature of

the line of credit that China is offering Bangladesh. As a first step, negotiations must ensure MoUs are converted

into. Bangladesh has precedence of signing MoUs but failing to convert them into quantifiably beneficial contracts.

Furthermore, contracts have to offer Bangladesh concessional rates of financing, without which, repayment

becomes expensive in the long-run. Furthermore, Ahsan Mansur of Policy Research Institute has pointed out, “We

need to negotiate effectively for the fund, but at the same time, we have to keep in mind whether we have the

capacity spend the huge fund or not. Yes, we have the need for infrastructure. But the issue is whether we are ready

or not. Do we have ready information on the cost of the fund?”

It has been noted that tied nature of the loans inhibits Bangladesh any degree of flexibility when it comes to

utilizing the fund. An OECD study indicated that tying aids and loans can reduce up to 30 percent of its value.

Furthermore, there are worries in certain quarters that the nature of loans being offered might end up further

exacerbating the high negative balance of trade of Bangladesh against China, which is currently 85 percent of total

bilateral trade. President Xi’s visit has already offered a boost to the relationship between the two nations. The

next major boost to the relationship between the two countries can come in through ratifications and/or removal

of trade barriers between the countries. According to Bangladesh Institute of International Strategic Studies

(BIISS), “Bangladesh…needs zero-tariff access of 99 percent items, including RMG products…it would significantly

help reduce gigantic trade deficit, and bilateral trade would be much larger in the foreseeable future.”

Bangladesh has seen significant investments in the country this year. Japan recently pledged USD6.7 billion to build

a new seaport that includes a liquefied-natural-gas terminal and four coal-fired power plants. In July, Russia

promised USD11.4 billion in loans towards a pair of nuclear reactors. Earlier this year India, which is already

supplying Bangladesh with power from its grid, agreed to finance disputed Rampal coal-fired power plant

forUSD1.5 billion, andextended a USD2 billion line of credit. Multi-lateral institutions such as ADB and WB too have

pledged large loans to Bangladesh. Reservation about some aspects of Chinese assistance notwithstanding,

Chinese assistance commitments will no doubt have a positive impact on FDI inflow to Bangladesh.

Both symbolically and content-wise, the outcome of the Chinese President’s visit was a positive one for

Bangladesh. The government of Sheikh Hasina is happy that the visit lays the groundwork for deepening and

expanding the economic cooperation between China and Bangladesh with rich dividend and gain for the

Bangladesh economy. If the commitment of Chinese economic assistance materializes, that would definitely help

her carry forward her ambitious economic goals. She wants to do it without unnecessarily unnerving her closest

South Asian ally, India. So far, it seems that she has been successful in that. For China, the green signal received

from Bangladesh for greater Sino-Bangladesh, economic cooperation has been reassuring on two counts: first,

such cooperation would enable it to maintain with Bangladesh a critical link which, carefully nurtured, can avoid

Bangladesh being drawn into a constellation of forces against China. Secondly, and more importantly, with a

changing economic scenario in the global and regional context, increasing two-way trade between China and

Bangladesh will open up new opportunities for both countries to benefit from comparative economic advantages

in specific spheres. Chinese investment in Bangladesh will mean increasing economic opportunities and

engagement in Bangladesh.

Reference:

https://www.yahoo.com/news/china-woos-key-india-ally-bangladesh-investment-065241490--finance.html

http://www.thedailystar.net/frontpage/bangladesh-china-joint-statement-1299403

http://bdnews24.com/bangladesh/2016/10/14/bangladesh-china-sign-27-deals-as-president-xi-visits-dhaka

http://www.globaltimes.cn/content/1010843.shtml

http://www.thedailystar.net/op-ed/politics/expanding-the-bangladesh-china-trade-frontier-1296583

http://www.business-standard.com/article/pti-stories/china-b-desh-ink-40-deals-worth-usd-20-bln-during-xi-visit-

116101401236_1.html

http://www.firstpost.com/india/ahead-of-brics-summit-china-bangladesh-bonhomie-has-indias-attention-heres-

why-3049570.html

http://www.thedailystar.net/perspective/xi-jinpings-milestone-visit-transforming-dynamics-1300573

http://www.economist.com/news/asia/21708737-bangladeshs-economy-roll-even-its-democracy-weakens-tiger-

night

http://moderndiplomacy.eu/index.php?option=com_k2&view=item&id=1513:increasing-geopolitical-rivalry-china-

india-and-japan-focus-on-bangladesh&Itemid=867

Economic trends :Brexit Impact on Bangladesh

The UK referendum on 23rd June 2016, where majority of people voted in favor of leaving the European Union

(Brexit), have pushed the world economy, including Bangladesh’s economy, into the realm of uncertainty.The

consequences of Brexit are still being debated since the act of a country leaving the EU is without precedence.

Among many fallouts of Brexit is the likely harm to the trade relationship between the UK and other non-EU

countries. UK being one of Bangladesh’s major trade partners, any changes in the terms of policies in the post-

Brexit period may have significant ramifications for Bangladesh.

Brexit: Future of ATruncated EU

After 43 years, UK is set to leave EU and the impact of Brexit on the rest of EU will depend on the stipulations of

the new relationship between UK and EU, which are yet to be negotiated. UK is the second largest economy inthe

EU after Germany, and the fifth largest economy in the world. UK’s contribution to the EU budget is the third

largest, which was about 12.57 percent of the total EU budget in 2015 (see figure 1). UK also has the highest

military budget in Europe and the fifth largest military budget in the world (see figure 1). EU stands to lose both

these, following Brexit.

Figure 1: UK’s contribution to the EU budget (left) and UK’s military expenditure (right); Source: SPIRI Fact Sheet

and Statista

If UK loses its access to the European single market, Brexit will increase the cost of trade between UK and the rest

of the Europe, resulting in a reduced amount of trade. Most of the largest European banks have major operations

in London, which would be very costly to relocate if London loses its competitive position due to Brexit. Succinctly,

the EU would be a less attractive partner for trade agreements without UK since UK has put top-level political

weight behind trade negotiations more than any other state.

The leading risk of Brexit for the rest of the EU is the possibility of UK’s increased restriction towards immigrations

in other states. This has been termed as “hard” versus “soft”Brexit. Under a hard Brexit arrangement, UK would

give up full access to the single market and customs union and prioritize on gaining full control over its borders,

making new deals and applying laws within its own territory. However, if Britain opts for a soft Brexit, UK’s

relationship with the EU will remain similar to the existing arrangements and will keep its access to the European

single market unfettered, although UK would no longer be a member of the EU and would not have a seat on the

0.00% 10.00% 20.00% 30.00%

Belgium

Netherlands

Spain

Italy

UK

France

Germany

Country-wise contribution (top 7) to the EU budget (as a % of total-2015)

0 100 200 300 400 500 600

Germany

Japan

France

India

UK

Russia

Saudi Arabia

China

USA

World's top 9 countries with the highest military expenditure-2015 (USD Billions)

European Council. Both EU officials and Tory government, so far, for different reasons, seems more eager on a

hard Brexit.

UK and Bangladesh: Present Interrelationship

EU is the largest export destination for Bangladeshi export items. More than half of the exports of Bangladesh

enter to the single market of the EU (55.7 and 56.5 percent in 2014 and 2015, respectively). This export enters the

EU market through different access points and UK plays a vital role in Bangladesh accessing the European single

market. Table 1 shows the percentage of total exports of Bangladesh that goes to the EU and the percentage of

EU’s imports from Bangladesh that enters through the UK.

Table 1: Bangladesh’s Export to the EU and UK

Items % of EU in Total

Export

% of EU’s import from

Bangladesh that enters

through UK

Ready-made Garments 79.16% 20.31%

Fisheries and Live Animals 65.79% 28.98%

Vehicle 64.25% 51.05%

Ceramic Products 51.61% 31.03%

Footwear 49.95% 6.14%

Agro 49.62% 70%

Plastic and Plastic Products 22.47% 7.79%

Raw Hides and Skins 18.75% 3.77%

Source: Bangladesh Bank

EU is the major buyer of the ready-made garments (RMG) of Bangladesh since almost 80 percent of the total RMG

exports of Bangladesh goes to the EU and 20 percent of this RMG export to the EU goes though UK. About 28

percent of the fisheries and live animals export to the EU (65.79 percent of total fisheries and live animal export)

enters the market through the UK. Vehicle and ceramic products also have significant percentages in terms of

export to the EU market through UK (see table 1).

Apart from this strong trade affiliation, there are other aspects connecting Bangladesh and UK. For example,

alargenumber of Bangladeshi students go to the UK to pursue higher education every year. Bangladesh received its

second largest FDI inflow in 2015, USD 154.68 million, from UK. In addition, many Bangladeshi people live and

work in the UK, and remit a significant sum back to Bangladesh.

Possible Effects of Brexit on Bangladesh

Britain is yet to negotiate its new trade deals,which will possibly include some interim arrangement, to kick in after

Britain formally leaves the EU in early 2019. It is a complex and extended process and once UK has negotiated with

the EU, it will eventually launch formal trade talks with countries outside the EU. At this stage, therefore, it is very

difficult to determine the level of economic fallout that will be faced by Bangladesh if UK loses access to the

European single market.

Once that happens, Bangladesh will probably have to pay extra duty while exporting to the UK market. The article

“Trade Implications of Brexit for Commonwealth Developing Countries” calculated the effects of Brexit in terms of

additional taxes among the 53 commonwealth countries and found Bangladesh on top of the list, in the tune of

USD 278.77 million annually, once UK leaves the EU resulting in a loss of the trade facilities currently enjoyed by

Bangladesh in the UK market (table2).

Table 2: Post-Brexit effect of tax on commonwealth countries

Commonwealth

country

Calculable potential

tax (in USD millions)

Top 10 countries affected in absolute terms

Bangladesh 278.77

India 137.46

Pakistan 121.78

South Africa 71.75

Mauritius 46.35

Seychelles 28.88

Ghana 25.26

Sri Lanka 21.20

Kenya 20.61

Papua New Guinea 11.34

Source: Stevens, C and Kennan, J, “Trade Implications of Brexit for Commonwealth Developing Countries”, The

Commonwealth, Issue 133, 2016.

Other possible impacts of Brexit on Bangladesh:

Uncertainty regarding trade negotiations with UK after Brexit: Under EBA (Everything But Arms),

Bangladesh's export to the EU not only enjoys duty-free access, but also very relaxed rules of origin that

allows Bangladesh to bring more imported inputs for its exportable items to be eligible for duty-free entry in

the EU market. UK’s departure from the EU will introduce uncertainty regarding the new trade policies and

best possible market access, until the bilateral negotiations between the UK and Bangladesh are settled

down. In addition, it is uncertain whether the terms the UK will offer to Bangladesh will be as generous as

the EU’s.

Access to the European Single Market: Bangladesh will lose a crucial point to access the European single

market if the UK loses the access to the European single market (applicable only for hard Brexit).

Plummeted pound sterling and price pressure on the exporters: Following the referendum, pound sterling

has depreciated against BDT and recorded the lowest on October 7 2016 (BDT 97.5486/£). This falling value

of the pound and the possible economic downturn of Britain due to Brexit will make the UK’s apparel buyers

put price pressure on the RMG manufacturers of Bangladesh. As nearly 91 percent of Bangladesh’s export to

the UK is ready-made garment products, Brexit is likely to wobble the economy of Bangladesh.

Disruption of trade supply chain: Famous clothing brands of the world, headquartered in Europe (Primark,

M&S, Newlook, TESCO, ZARA, ASDA, C&A) import large amounts of RMG products from Bangladesh and

then push those back to other European destinations. If UK losses its access to the European single market,

these companies will face tariff charges, resulting in higher prices and lower demand, eventually leading to

lower import from Bangladesh.

Students, remittances and FDI inflow: Tightening of visa rules of the UK is likely to affect the students

aspiring to go to the UK in the coming years. In addition, plummetingpound sterling will adversely affect

remittances from UK. The uncertain overUK economy will affect Bangladesh’s FDI inflow from Britain.

New Standard and Certification System of the UK: At present, common EU standards are followed by the all

28 members of the EU. Upon Brexit, the UK will have new standard and certification system and the

flexibility of that system will determine the future of Bangladesh’s export to the UK. If there is a hard Brexit,

leaving the customs union will mean a significant increase in bureaucratic checks on goods passing through

ports and airports.

Ways Forward

It will take some time for UK and EU to complete the negotiations for Brexit, and an even longer time for UK to

negotiate bilateral terms with non-EU countries. Although the exact impact of Brexitis difficult to assess right now,

the government of Bangladesh needs to be prepared for any unfavorable situation arising aftermath of Brexit.

Government must prepare for bilateral negotiations to maintain the trade benefits that are currently

enjoyed by Bangladeshi exporters in the UK market.

Bangladesh must ensure that new deal with the UK is not less favorable than the existing ones with the EU.

The high commission of Bangladesh in Britain should now play a pro-active and vigorous role to uphold our

trade interest and maintain relations with trade bodies there.

The government may form a committee with the relevant stakeholders like trade bodies, economists,

researchers, and concerned ministries to monitor the situation closely and take appropriate decisions rather

than mere speculation.

Economic indicators:

1. Real Sector

GDP Growth Rate and Per Capita GDP

GDP per capita has touched USD 1,466 mark in the last fiscal year. However, the rapid increase in GDP per capita

observed in recent years is primarily due to the change in base year from 1995-96 to 2005-06. The World Bank and

ADB forecast growth for FY2017 to be 6.5 percent and 6.3 percent, whereas Bangladesh Bank predicts growth of

7.3 percent.

Inflation

Month Inflation % (P-2-P) Base Year (2005-06) Food Inflation % (P-2-P) Base Year (2005-06)

2015 2016 Change 2015 2016 Change

July 6.63 5.40 -18.55% 6.1 4.35 -28.69%

June 6.25 5.53 -11.52% 6.3 4.23 -32.86%

May 6.19 5.45 -11.95% 6.23 3.81 -38.84%

The twelve-month average inflation decreased to 5.40 percent in July 2016 from 5.53 percent in June 2016 despite

an increase in food inflation from 4.23 percent in June to 4.35 percent in July.

Inflation has been lower this year, on a p2p basis, from the previous year.In July 2016, for example, inflation has

been 18.55 percent lower than the level in July 2015. Similarly, food inflation has been drastically lower than the

previous year, on p2p basis. Highest difference between two corresponding years of 2015 and 2016 for the period

was on May, when food inflation was there was a 38.84 percent difference.

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GDP Growth Rate and Current Per Capita GDP

GDP Growth Rate Per Capita GDP at Current Market Price (USD)

Credit to Public and Private Sector

Import Coverage Ratio

11.49% 10.00% 11.65% 12.07% 12.57%9.64% 8.39% 6.63%

35.45%39.00%

42.77%44.59% 43.56%

37.58% 37.96% 37.28%

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-2015 2015-2016

Credit to Public and Private Sector (% of GDP)

Public Sector Private Sector

6.596.97 7.00

8.749.14

0.91

May June July

FY 2014-15 FY 2015-16

Current Account Balance

Trade Balance

Month

Trade Balance (USD million- latest 12 months)

2015 2016 %

Change

July -277.27 -477.8

-10.63%

June -309.3 79.5 -8.12%

May -499.9 -635 5.83%

Annual Trends of Selected Macroeconomic Indicators

Fiscal Year GDP Growth Export Growth

Import Growth

Foreign Aid Remittances FDI Inflows

FY 2007 6.4 15.69 16.35 4.01 24.49 6.46

FY 2008 6.2 15.87 26.17 26.43 32.39 -3.03

FY 2009 5.7 10.31 4.16 -10.39 22.42 24.96

FY 2010 6.1 4.11 5.41 20.60 13.40 -4.95

FY 2011 6.7 41.49 51.48 -20.25 6.03 -14.67

FY 2012 6.3 5.93 -1.49 19.68 10.24 -14.01

FY 2013 6.03 11.22 -7.06 37.02 12.59 9.15

FY 2014 6.12 11.65 17.91 31.04 -1.66 -10.2

FY 2015 6.51 -0.4 6.65 -18 8 23.88

FY 2016 7.05 10.22 -18.99 14.93 11.78 24.17

2. Financial Sector

Interest Rate Spread (IRS)

Month Interest Rate Spread %

FY 2015-16 FY 2014-15 % Change

July 4.84 4.79 1.04

June 4.85 4.87 -0.41

May 4.9 4.83 1.45

The spread between the weighted average interest rate on advances and deposits of all banks fell to a period low

of 4.84 percent in July 2016, still a 1.04 percent rise from on p2p basis from previous year (0.05 percent point rise).

Interest rate spread was exhibiting varying tendencies on a month-to-month basis for this period previous year,

Month Current Account Balance (USD-million-latest 12 months)

[converted from BDT to USD using monthly average exchange rate]

2016 2015 % Change

June 868.6352 344.827143 151.90%

May -361.148 -305.025707 18.40%

April 183.3291 -541.979434 -133.83%

but is decreasing this year. Overall, on p2p basis and time-series basis, interest rate spread has been stable, not

fluctuating erratically.

Bangladesh Bank Interest Rate

Call money rate has been stable this year, fluctuating between 3.6 and 3.9 percent. Repo rate has not changed

since November 2015 at 6.75 percent.Reverse repo ratedropped to 4.75 percent in December 2015 and has not

changed since. Weighted average yield on 91-Day T-bill fell steeply from 5.17 percent in October 2015 to 2.95

percent in November 2015. Since then, the rate has climbed steadily and stood at 3.77 percent at the end of July

2016.

Loan to Deposit Ratio

Loan deposit ratio has fluctuated between a high of 100.7 and lowest of 98.7 in the previous 12 months.

Call Money Rate

Repo Rate

Reverse Repo Rate

91 day T-Bill Rate

96

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98

99

100

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102

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104

Loan to Deposit Ratio

Contribution to Broad Money Growth

Broad money (M2) grew by 13.5 percent (y-o-y) in July 2016 and16.3 percent growth from the previous month.

Net foreign assets registered 19.8 percent and 23.2 percent growth. Private sector credit recorded a 15.9 percent

growth which was slightly lower that than the 16.8 percent growth in June 2016 and but much higher than 13.0

percent growth in the same month of previous year.

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DSEX Index

DSEX Index (October 2015-October 2016)

The DSE Broad Index (DSEX) at the end of September 2016 stood at 4695.18. The total market capitalization of all

shares and debentures of the listed securities at the end of September 2016 stood higher at BDT 6816.017 million,

up from BDT 4093.939 million at the end of August 2016.

SectorwisePrice Earnings Ratio

Sector May June July

Bank 6.47 6.7 7

Financial Institutions 12.68 13.95 13.66

Mutual Funds 6.73 7.21 7.52

Engineering 21.64 22.2 22.72

Food & Allied 30.91 31.91 31.34

Fuel & Power 12.69 12.6 12.54

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DSEX Index

Jute 71.36 67.79 95.71

Textile 10.19 10.17 9.9

Pharmaceuticals 26.57 27.17 26.89

Paper & Printing 14.08 13.55 15.18

Service & Real estate 31.46 29.92 28.06

Cement 27.06 26.42 24.83

IT 30.37 29.74 27.73

Tannery 25.53 26.34 26.57

Ceramic 20.77 20.45 19.34

Insurance 9.38 10.03 9.9

Telecommunication 18.24 18.25 19.72

Travel and Leisure 15.34 15.43 14.15

Miscellaneous 30.91 31.68 30.69

Market P/E 14.33 14.61 14.7

CSE Update

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CSCX Index

CSCX Index

Chittagong Stock Exchange (CSE) started the July-September quarter trending upwards in a string performance in

the CSCX Index, peaking at 8785.86 on 29th September, 2016. CSCX ended the period at 8766.84 up 370.2 points

from the beginning of the quarter.

3. External Sector

Month Woven Garments Export (USD million) Knitwear Export (USD million)

FY15-16 FY 16-17 % Change FY15-16 FY16-17 % Change

July 1087.79 1040.35 -4.36% 1127.37 1077.23 -4.45%

August 1138.68 1330.68 16.86% 1131.19 1395.61 23.38%

Sept 962.65 894.08 -7.12% 991.95 927.95 -6.45%

Exports of woven garments in July, FY 2016-17 are 7.12 percent lower than FY 15-16 on a p2p basis. Woven

garment exports experienced a 16.86 percent increase from August last year. Meanwhile, knitwear exports saw an

23.38 percent increase in August but a 6.45 percent decrease in September.

Monthly Export Growth

Export earnings recorded a decline of 13.9 percent between June and July, 2016. The export items that registered

a positive growth during July – September, FY16-17 include raw jute, engine& electric goods, woven garments,

knitwear, and chemical products.

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Monthly Export Growth Rate

MonthlyImport Growth

Import payments fell 13.9 percent between June and July, 2016. Import payments stood at BDT 236.15 billion in

July FY16-17, experiencing a decrease of 13.89 percent from import payments in June, FY15-16.

Regional Export and Import

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EU51%NAFTA

19%

Other Asian Countries

8%

OIC6%

Other European Countries

4%

Developing Eight3%

ACU3%

SAARC3% OPEC

2%

ASEAN1%

Regional Exports, January-March FY2015-16

Monthly Remittances Growth

Other Asian Countries

31%

OIC13%

Asian Clearing Union (ACU)

13%SAARC

13%

ASEAN10%

D-86%

EU5%

OPEC4%

Other European Countries

3%NAFTA

2%

Regional Imports, January-March FY2015-16

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Month Remittance (USD million) Foreign Currency (USD

million)

Exchange Rate

BDT/USD BDT/INR

2016 2015 Change 2016 2015 Change 2016 2015 Change 2016 2015 Change

August 1183.61 1195.02 -0.95% 31165.1 26175.3 19.06% 78.4 77.8 0.77% 1.17 1.2 -2.50%

July 1005.49 1389.56 27.64% 30039.3 25469.1 17.94% 78.4 77.8 0.77% 1.17 1.22 -4.10%

June 1465.86 1439.34 1.84% 30137.6 25025.2 20.43% 78.4 77.8 0.77% 1.16 1.22 -4.92%

Remittance receipts decreased by 31.4 percent in July FY16-17 and increased by 17.71 percent in August, FY16-17,

putting total remittance amount at USD 1183.61 million in August, FY16-17. Remittances for this year are only 0.95

percent lower than the amount received in the month of August last year.

4. Fiscal Sector

Revenue through NBR (Million USD)

Target total revenue collection through NBR of BDT 1.35 trillion was surpassed for FY2015-16. Target of BDT 2.08

trillion has been set for FY2015-16.

0

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4000

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8000

10000

12000

14000

16000

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20000

Fiscal Indicators

In the budget of FY2015-16, revenue as a percentageof GDP was estimated to be about 12.1 percent. The target of

BDT 2.08 trillion is expected to be achieved,with contributions fromadditional 1.1 million taxpayers who were

previously outside the tax bracket.

Trade with India (USD in millions)

Trade deficit with India in 2016 fell by 3.2 percent from the previous year. Imports from India have decreased 3.0

percent while exports have slightly decreased to 0.7 percent. It is too early to tell whether this trend will continue.

Nevertheless, trade performance in 2016 has been positive overall.

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Revenue (% of GDP) Expenditure (% of GDP) Budget Deficit (% of GDP)

0

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3000

4000

5000

6000

7000

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Trade with India (In Million USD)

Import Deficit Export

Source:

Bangladesh

Bank

Monthly fuel import is down on a p2p basis. Petroleum Products import in June 2015/16, for example, has fallen

by 41 percent from previous year. Crude Oil import rose on a p2p basis for July (100 percent), but experienced

declines in the other 2 months (30 percent and 82 percent).

Gas and Coal Production

Month Gas (MMCM) Coal (M. Ton)

July 2232.94 21995.95

June 2298.79 15048.08

May 2325.22 93535.63

Source: Petrobangla

Gas production has been stable for the three months, with minor changes on a monthly basis. Coal production has

fallenfrom 93535 metric tons on May, to 21,995 metric tons by July.

Source: Bangladesh Power Development Board (BPDB)

Gas62%

HFO21%

Power Import

5%

Hydro2%

Diesel8%

Coal2%

Fuel mix of installed capacity as of August 16

Monthly Fuel Import (Million USD and % Change)

Month Crude

Oil

Petroleum

Products

July 2015/16 2014/15 2014/15 2015/16 2014/15 % Change

June 3.89 0.00 0.00 16.99 20.53 -17.23%

May 6.25 8.92 8.92 17.17 28.92 -40.64%

2.86 16.26 16.26 16.30 20.76 -21.47%

Source: Bangladesh Power Development Board (BPDB)

Gas, as a percentage of fuel mix installed capacity, did not change between June 2016 and August 2016, as well as

HFO. BPDB’s share in the total production has increased by 1 percentage.

BPDB36%

APSCL11%EGCB

5%

IPPs24%

SIPP2%

RPP & QRPP (3/5 years)

15%

RPP & QRPP (15 years)

1% Other6%

Owner wise generation capacity as of August 2016

Energy indicators:

Monthly Fuel Import (Million USD and % Change)

Month Crude Oil Petroleum Products

2015/16 2014/15 % Change 2015/16 2014/15 % Change

July 3.89 0.00 100% 16.99 20.53 -17.23%

June 6.25 8.92 -29.94% 17.17 28.92 -40.64%

May 2.86 16.26 -82.43% 16.30 20.76 -21.47%

Source: Bangladesh Bank

Monthly fuel import is down on Products import in June 2015/16, for example, has fallen by 41 percent from

previous year. Crude Oil import rose on a p2p basis for July (100 percent), but experienced declines in the other 2

months (30 percent and 82 percent).a p2p basis. Petroleum

Month Gas and Coal Production

Gas (MMCM) Coal (M. Ton)

July 2232.94 21995.95

June 2298.79 15048.08

May 2325.22 93535.63

Source: Petrobangla

Gas production has been stable for the three months, with minor changes on a monthly basis. Coal production has

fallenfrom 93535 metric tons on May, to 21,995 metric tons by July.

Source: Bangladesh Power Development Board (BPDB)

Source: Bangladesh Power Development Board (BPDB)

Gas, as a percentage of fuel mix installed capacity, did not change between June 2016 and August 2016, as well as

HFO. BPDB’s share in the total production has increased by 1 percentage.

Gas62%

HFO21%

Power Import

5%

Hydro2%

Diesel8%

Coal2%

Fuel mix of installed capacity as of August 16

BPDB36%

APSCL11%EGCB

5%

IPPs24%

SIPP2%

RPP & QRPP (3/5

years)15%

RPP & QRPP (15 years)

1% Other6%

Owner wise generation capacity as of August 2016

Electricity Generation, Demand and Load-shed and No. of Plants in Operation

Month

Plants in Operation (Avg.)

Peak Demand (MW)

Peak Generation (MW)

Maximum Load-shed (MW)

Total Generation (MkWh)

2014/2015

2015/2016

Change 2014/2015

2015/2016

Change 2014/2015

2015/2016

Change 2014/2

015 2015/2

016 Chan

ge 2014/201

5 2015/2016

Change (%)

Aug ‘16 74 73 -1 8177 9000 823 8177 8719 542 0 627 627 4792.434 5461 13.96%

July ‘16 71 69 -2 7802 8650 848 7802 8795 993 0 265 265 4561 5067 11.11%

June ‘16 68 66 -2 7802 9036 1234 7802 9036 1234 0 292 292 4484.049 5348 19.27%

Source: Power Grid Company of Bangladesh (PGCB)

Number of plants in operation has experienced a slight decrease from the previous year but the peak generation

has increased to keep up with the rise in peak demand. Total generation has also increased significantly. However,

there have been load-shedding during the concerned period.

Renewable energy

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

July August September

Monthly installation of Solar Home System

2015 2016

Installations for both SHSs and bio-gas plants are markedly lower than the corresponding figure from a year ago in

2015

0

50

100

150

200

250

July August September

Monthly installation of Bio Gas Plant

2015 2016

News update:

Beximco Pharmaceuticals is set to make its debut in the US, one of the highly regulated drug markets in the world.

Bangladesh ranks 6thamong riskiest countries for business (Civil Unrest Index).

Bangladesh has once again been left out of the American list of beneficiary countries for trade privileges from the US

on grounds of poor labour rights.

Inflation stood at 5.92 percent on average in fiscal 2015-16 - the lowest in 12 years and even lower than the

government's budgetary target of 6.2 percent.

Exports raked in USD34.24 billion in fiscal 2015-16 - the highest ever.

Foreign aid disbursement increased 13.34 percent year-on-year to USD3.5 billion in fiscal 2015-16, a new record.

Foreign investment dropped 32 percent year-on-year in the first quarter of the year due to uncertain business

climate.

Remittance plummeted about 29 percent year-on-year to USD1 billion in July.

The Asian Development Bank estimated Bangladesh's economic growth at 7.1 percent for fiscal 2015-16, which is

higher than the government's estimate.

The education ministry is given with the highest allocation in the budget for fiscal year 2016-17.

A ground-breaking project based in Bangladesh, which allows villagers to earn by selling excess solar energy to

neighbours, was announced as one of 13 winners of the United Nations Climate Change Awards.

Around 67 percent corals of the Saint Martin's Island have been bleached to death and the rest are likely to be

damaged if pollution and non-regulated navigation continues, reveals a survey finding.

Beximco Power Co Ltd along with a Chinese company is set to build a 200-megawatt solar power plant in Gaibandha.

The 4-lane Dhaka-Chittagong highway formally opens today amid high hopes that it would boost trade and make

smoother road communications between the capital and the port city.

The Asian Development Bank is set to approve USD1 billion at the end of this week for a project to lay a 102km rail

track from Dohazari in Chittagong to Cox's Bazar - the lender's highest allocation for a single project in Bangladesh.

Summit Group has teamed up with international lenders and companies to raise USD2.5 billion in equity and loans

for setting up a LNG terminal and a number of power plants with electricity generation capacity of 2,000 megawatts.

As part of efforts to boost trade and improve rail communication, five rail routes will be launched between

Bangladesh and India in phases by 2018.

Government signed a deal with Microsoft Corporation to get free real time information about cyber threat, which

will allow it to protect its entities and combat dangers.

The World Bank is set to provide an additional USD10 million to its public procurement project in Bangladesh to set

up a modern data centre with 200 terra-byte storage capacity.

BTRC entered an agreement with HSBC to borrow 157.5 million euro for the country's first space satellite,

Bangabandhu-1.

The central bank has installed a new SWIFT system for international transactions from its foreign currency reserves

as it is determined to ensure foolproof security.

Bangladesh has the lowest internet penetration in South Asia, with just 14.40 percent of the population having

connectivity to the internet (International Telecommunication Union).

Exports of software and IT-related services crossed the USD1 billion mark.

Traffic congestion in the capital eats up around over USD 2.5 billion a year.

Dhaka is the 4thleast livable city in the world (Global Livability Index).