NEWS BRIEF DATE: 07-12-2020

Economy

Germany to provinide €339.54m

Germany will provide Bangladesh €339.54 million financial assistance for development in different sectors. The
amount will be used in different sectors including renewable energy, sustainable urban development, good
governance, displacement and migration, and sustainable supply chains in the textile sector.

Enlarge stimulus, cash support to cope with second wave: Experts

Experts at a workshop in Dhaka called for enlarging the government's stimulus package as well as extending both
the loan disbursement and recovery periods in order to deal with the second wave of Covid-19. They have also
urged the government to rely not only on incentives but also increase demands for products to protect the
industrial sector, especially the cottage, micro, small and medium enterprises (CMSMEs). Experts have said about
60% of products produced in the CMSME sector remain unsold in warehouses due to a decline in the demand amid
the pandemic. Besides, many entrepreneurs have already run out of capital as cash flow has stopped.

Bank and NBFI

Banks to struggle under heavier NPL burden

Banks are going to face substantial pressure originating from an ever-bulging defaulted loans in the next years as
the regulatory support in this particular area is due to expire by the end of this calendar year, bankers and experts
say. They, however, advised the banks to assess upfront the risk appetite for both customers and sectors. Such an
assessment will help better adjust risks that might be created after the end of Bangladesh Bank's policy support.
Meanwhile, the central bank is now working on issuing a directive for the banks to keep provisions against their
loans for minimizing the possible shocks.

RMG

Garment sector to lose $4b in EU if duty-free benefit ends

Bangladesh's garment exporters will lose $4 billion if the duty-free trade benefit for the country comes to an end in
the European Union following its graduation to a developing nation. If the Standard Generalized System of
Preferences (GSP) can be availed, the loss will be $3.2 billion. The EU offers Standard GSP for low and lower-
middle-income countries. This means a partial or full removal of customs duties on two-third of tariff lines.

Deferred payments put RMG makers in a box

The adverse purchasing practices, delayed payments, lower price offers and less work orders by global buyers
might force a good number of suppliers out of business, industry people fear. A new survey also revealed that the
financial pressures threaten to make many apparel suppliers unviable and are likely to cause, or have already
caused, large-scale dismissals of workers. "Currently, most suppliers or 61% reported being paid 60, 90, or even
120 days after order shipments," says the report. On an average, suppliers surveyed will have to wait 77 days after
they complete and ship customers' new orders, to receive payment, which was 43 days before the pre-pandemic
period.

When waste Jhut turns into gold

Fabric scraps, locally known as jhut, have gradually been gaining a foothold in the world of apparel with their
usefulness in manufacturing high-end items. Most global fashion brands are now shifting towards recycled yarns in
producing apparel products. Such items produced from recycled yarn hold only 5% of the global market. But
retailers, such as fashion giants H&M and Inditex, have set goals to use 100% recycled or sustainable fibres by
2025-30 in readymade garment production.

Building and Construction

Local Galvanised iron fittings industry thrives amid pandemic

Galvanised iron (GI) fittings business saw a significant growth amid the Covid-19 pandemic due to low imports from
China during this period. GI fittings are a small but important part for the construction and housing sector. They are
classified as plain elbow, plain tee, plain socket, union, reducer elbow, reducer tee, reducer socket, plain cross,
way elbow, hex nipple, bend plug and so on. The bulk portion of the local demand for these products is met by
importing from China. But, the novel coronavirus pandemic that led to a halt in export-import activities for several
months has paved the way for the local manufacturers of these products to increase sales.

Local Market

Bangladesh pays the highest price for global scrap ships

Bangladesh has taken the lead in the prices of scrap ships among the 5 major recycling destinations in the world as
the local market has been witnessing a rise in demand for scraps since November. The shipbreakers said they are
buying ships at a higher price to meet the huge local demand for scraps or raw materials of steel factories which
puts Bangladesh at the top of the list of the scrap ship buyers. According to the latest bulletin of GMS, the world's
largest cash buyer of end-of-life ships, published on 30 November 2020, currently prevailing prices in Bangladesh
are around $400 for containers, $390 for tankers, and $380 for bulk carriers for per Light Displacement Tonnage
(LDT). In June 2020, prices in Bangladesh were $310 for containers, $300 for tankers and $290 for bulk carriers for
per LDT.