BD primary beneficiary of US-China trade war
$50 billion to be invested by 2030: BEPZA
Gazi Anowar :
The foreign direct investment (FDI) soars in Bangladesh as foreign companies, especially Chinese firms, are relocating here to avoid higher tariff in China imposed by US government.
Among the foreign firms, the highest investment proposal worth US$2.83 billion came for the power sector from two Chinese companies. South Korean entity Super Petrochemical showed interest to invest $2.38 billion in petrochemicals, the second biggest amount.
A Singaporean company stood third in the list with a fund of $400 million for the food- processing sector.
Around $5.78 billion will come as FDI from companies in China, South Korea, Japan, India, Singapore, the UK, Australia, Malaysia and the US, according to a data from Bangladesh Economic Zones Authority (BEZA).
"We hope the total investment in these zones will reach $50 billion by 2030. Mirsarai economic zone will get $25 billion and the other zones the rest $25 billion," said Paban chowdhury,
Executive Chairman of BEZA.
He said more proposals are coming thanks to the growing interest of foreign investors.
The amount of investment would increase in the days to come when the ease of doing business would improve along with the development of the infrastructure, he said.
Chowdhury said investments of India, Japan and China have not been included in this figure as those would come to special zones meant for their investors.
"I personally believe quality investment will come to the special economic zones of Japan, China and India," he said.
Bangladesh's leather exports to the US market already have gained from the trade war, registering a 34 per cent growth in the just concluded fiscal year.
According to an Export Promotion Bureau (EPB) data, exporting leather and leather goods, including footwear Bangladesh earned $207.13 million, up by 34.10 per cent, which was $154.47 million in the previous fiscal year.
A data of the Office of Textiles and Apparel (OTEXA) of the US shows that apparel import by the US from Bangladesh stood at $2.55 billion during January-May of this year as compared to $2.21 billion during the corresponding period of last year, posting a 15.48 per cent year-on-year growth.
Like the leather industry, the trade war has opened scopes for other sectors, especially the apparel goods, to grow further in the US market taking the advantage of the tension.
Meanwhile, Bangladesh's exports to US market rose by 14.92 per cent or $893 million to $6.88 billion, which was $5.98 billion in the previous fiscal year. US alone imported 16.96 per cent of total Bangladesh's export to the global markets.
In addition, a good number of new retailers are thinking to relocate their businesses in Bangladesh considering prices of goods, who have already started contacting manufacturers and my colleagues are receiving queries from them," Narayangonj based MB Knit Fashion owner informs.
As per sources in the apparel sector, Walmart will import knitwear products (T-shirt) worth $190 million out of its total purchase worth $220 million from here.
The garment sector is expected to reap the most benefits, as it accounts for 80 per cent of Bangladesh's total exports. As the trade war escalated, the country's garment industry observed significant growth as American retailers are placing more work orders with Bangladesh in order to offset increasing tariffs.
"Currently, there are 5,733 tariff lines on imports worth $200 billion which include apparel goods worth $3.7 billion dollar. This is currently under 25 per cent duty, imposed by the US, on China," BGMEA President Rubana Huq has told The New Nation on Tuesday.
"In general, US import has grown 11 per cent on a month on month basis. As per year on year growth figures, volumes are up by 5.5 per cent and value is up by 6.6 per cent," said Rubana, also Managing Director of Mohammadi Group.
Bangladesh and Cambodia have gained 10.2 per cent in year-on-year growth, Pakistan 10.16 per cent, India 8.5 per cent, China 6.8 per cent and Vietnam 4.7 per cent. So Bangladesh continues to grow but the growth in value terms must be looked into, she added.
"The changes in the geopolitical relationship between the United States and China through this trade war have alarmed many countries that have trade stakes with these two nations though this raises hope for Bangladesh. Trade war to generate additional US$ 400 million exports for Bangladesh." Yasuyuki Sawada, Chief Economist of Asia Development Bank said.