Bangladesh and India have embarked on a collaborative effort to enhance trade routes by utilizing each other’s ports for third-country trade. A delegation from Dhaka set out on Saturday to inspect Indian ports and engage with relevant authorities as part of this initiative.
Currently, Bangladesh exports goods via ports in Singapore, Sri Lanka, and Malaysia but eyes utilizing Indian ports in Tamil Nadu’s Chennai, Andhra Pradesh’s Visakhapatnam and Krishnapatnam, and West Bengal’s Haldia. India, in turn, plans to utilize Chattogram Port in Bangladesh for its own trade with third countries.
The 16-member delegation, led by SM Mostafizur Rahman from Bangladesh’s shipping ministry, includes representatives from shipping, commerce, foreign affairs ministries, and various trade bodies. They are scheduled to stay in India from July 6-12, visiting multiple ports and engaging in discussions with stakeholders.
India and Bangladesh have existing transhipment agreements allowing Bangladesh to use Indian infrastructure for exports to Nepal and Bhutan. Now, India seeks to export goods or facilitate imports through Chattogram Port’s Bay Terminal, currently under construction.
This bilateral effort follows high-level approvals and agreements reached during talks between Dhaka and New Delhi in December 2023. It involves reciprocal visits, with India planning to send its own delegation to Bangladesh after the current visit.
The Bay Terminal project at Chattogram Port, initiated a decade ago, aims to significantly expand port capabilities. Recently approved funding from the World Bank underscores its importance in regional trade dynamics. Scheduled for completion by 2027, it is expected to bolster logistics capacity for both countries, ensuring mutual economic benefits without favoring one nation over the other.
Prime Minister Sheikh Hasina’s 2022 visit to India catalyzed discussions on leveraging Indian ports for Bangladeshi exports to third countries. The ongoing collaboration is set to enhance regional connectivity and economic opportunities through strategic port development and mutual cooperation agreements.
Source: TBS News
The Roads and Highways Department (RHD) is formulating a master plan to integrate the country’s road network through 12 expressway routes, aiming for enhanced internal and cross-border connectivity by 2041. This project, requiring an investment of Tk1.91 lakh crore ($17.28 billion), will expand 1,508km of roads.
Syed Moinul Hasan, RHD’s chief engineer, explained that the master plan aims to unify the nation’s highways into a cohesive network. The Asian Development Bank has drafted the “Highway Master Plan 2041,” and an implementation strategy will be developed once the draft is approved next year.
Funding and Implementation
The 12-expressway plan, spanning 10-12 years, requires annual funding of $1.5 billion. The government will prioritize public-private partnerships (PPP) for construction. Financing decisions will be managed by the Finance Division and the Economic Relations Division.
Previous efforts to construct expressways on the Dhaka-Chattogram route were abandoned due to high costs and the feasibility of a high-speed train line. Instead, the route was upgraded to a four-lane highway. Currently, the Dhaka-Bhanga expressway is the country’s sole access-controlled expressway, connecting the capital with southwestern regions via the Padma Bridge.
Expert Opinions and Future Prospects
Experts highlight the importance of such infrastructure for sustainable development. Neighboring countries implemented similar plans in the 80s/90s. Despite potential challenges, expressways are essential for Bangladesh’s growth.
The proposed expressways include:
- Dhaka-Chattogram (and elevated)
- Dhaka-Mymensingh
- Dhaka-Sylhet
- Dhaka Outer Ring Road
- Dhaka-Bogura
- Mirsharai-Cox’s Bazar (via Bangabandhu Tunnel)
- Mymensingh-Bogura
- Gabtoli to Paturia (upgrading existing)
- Feni-Barishal
- Paturia-Daulatadia
- Jhenaidah-Khushtia-Dasuria
Dr. Mohammad Yunus of BIDS emphasizes the need for infrastructural changes to achieve developed country status. He suggests that while the current economic situation precludes big projects, the master plan should be prepared for future implementation.
Mohammad Emdad Ullah Mian of the Planning Commission calls for integrated master plans covering road, rail, rural roads, and waterways. Communication expert Md Shamsul Hoque of BUET supports the strategic shift from traditional highway construction to elevated ways, maximizing land use without requiring additional space.
Cross-Border Connectivity
The master plan predicts a nearly 350% growth in cross-border goods flow, supported by developing value chains. It will consider multiple highways linking sea and land ports with major border points, aligned with the South Asia Subregional Economic Cooperation (SASEC) initiative.
Previous and New Plans
Past plans, including a Dhaka-Chattogram expressway and elevated expressway, were scrapped due to high costs and the viability of high-speed trains. The new master plan is more inclusive, addressing both internal and cross-border connectivity.
Source: TBS News
Understanding Bangladesh’s economy requires a comprehensive view of remittance flows. While the formal sectors like manufacturing struggle, the rural economy thrives significantly due to remittances.
Estimating Remittance Inflows
Accurate data is challenging, but remittances play a critical role. Estimates suggest Bangladesh receives between $30 billion and $60 billion annually, with official channels accounting for about $25 billion. The informal ‘hundi’ system potentially handles between $5 billion and $35 billion. Estimations of the number of people sending remittances range from 10 to 15 million, with a high-end estimate of 15 million workers abroad.
According to the 2022 Household Income and Expenditure Survey (HIES) by BBS, 8.3% of households receive remittances. With 38.3 million households, this means about 3.2 million individuals are sending money home. The average remittance was Tk 257,000 ($3,000) annually, and recent bank estimates suggest this has increased to $4,000.
For 2022, with 15 million workers, remittances totaled $45 billion: $22 billion via banks and $23 billion through hundi. By 2024, with 15.5 million workers and an average remittance of $4,000, total remittances could reach $62 billion, with $24 billion through banks and $38 billion via hundi.
The Role of the Hundi System
The hundi system’s substantial role indicates more than half of remittances come through informal channels. The projected $62 billion in 2024 aligns closely with expected exports. The remittances help alleviate poverty and mitigate inflation’s effects, especially in rural areas where $50 billion is directed, versus $12 billion in urban areas.
Economic Implications
Adjusting the 2022 balance of payments reveals a different economic landscape. Under-invoicing of imports, estimated at 20%, adds $20 billion, and capital flight through hundi accounts for approximately $1 billion. This suggests a more robust economy than perceived, driven by significant remittance flows that benefit rural development and reduce unemployment.
Challenges of Under-Invoicing
Under-invoicing imports result in revenue loss, higher foreign exchange costs, and customs corruption. Despite ending the Pre-Shipment Inspection (PSI) program, under-invoicing remains prevalent, particularly with imports from China and India. The government loses revenue, and importers may choose costlier sources, depleting foreign exchange reserves.
Conclusion
Bangladesh’s economy is more resilient than often recognized, thanks to the massive influx of remittances. These funds support rural construction and goods purchases, creating a multiplier effect that boosts local economies. Despite challenges like high food inflation, remittances significantly enhance rural living standards and economic stability.
Source: Dhaka Tribune
Source: TBS NEWS
Bangladeshi Prime Minister Sheikh Hasina is set to visit China from July 8 to 11, 2024. The visit aims to strengthen bilateral ties and explore cooperation in various sectors. Key agenda items include:
- Economic Collaboration and Infrastructure Development: The visit will focus on expanding economic ties, particularly in solar power generation, heavy industries, and the apparel sector. Bangladesh and China will likely discuss ongoing and new infrastructure projects, such as transportation and energy initiatives, with China already significantly involved in Bangladesh’s infrastructure through projects like the Padma Bridge and Bangabandhu Tunnel (PRC Foreign Affairs) (The Business Standard).
- Technological and Educational Cooperation: Discussions are expected to include enhancing collaboration between educational institutions, especially in fields like Artificial Intelligence (AI). China, a global leader in AI, could provide opportunities for skill development and knowledge exchange in Bangladesh (BLiTZ).
- Cultural and Tourism Exchanges: The visit might explore ways to boost tourism and cultural exchanges, leveraging Bangladesh’s scenic beauty to attract Chinese tourists and developing tourism infrastructure with Chinese collaboration (BLiTZ).
- Strategic and Diplomatic Relations: Strengthening the strategic cooperative partnership between the two nations is a priority. Topics like cooperation on global platforms, regional stability, and mutual development goals will be discussed. Both nations share a commitment to national sovereignty and independence (The Daily Star) (BLiTZ).
This visit is significant for advancing Bangladesh’s development and fostering deeper cooperation with China across multiple sectors (The Business Standard) (The Daily Star) (BLiTZ).
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Source: TBS 27 July, 2022, 09:35 pm
The profit margin of Marico Bangladesh Limited – an India-based multinational company – shrank in the March-June quarter – despite a 9% growth in revenue – due to a sharp rise in income tax expenses.
Following financial disclosures, its shares closed 0.58% or Tk14.1 lower at Tk2,418 each on the Dhaka Stock Exchange (DSE) on Wednesday.
Marico starts its financial year in March. According to its unaudited financials, the company’s profits before tax increased 4.52% compared to the same period in the previous year.
But its net profit declined 5% to Tk102.90 crore as income tax expenses rose 56%.
Based on three-month financials, Marico, which listed on Bangladesh’s stock exchanges in 2009, has recommended a 300% interim cash dividend for its shareholders.
After the board of directors’ meeting, the multinational company revealed its financials for the first quarter on the country’s premier bourse.
During the period, its revenue increased to Tk364.65 crore from Tk334.40 crore a year ago.
Marico started out in Bangladesh in 1999 with its flagship brand, Parachute Coconut Oil.
Since then, the company has expanded its business to 29 brands in personal care and food items, such as Saffola edible oil.
To meet the growing demand for coconut oil and food products, it invested Tk29.3 crore to increase the capacity of its factory in Gazipur and set up a new manufacturing line at the beginning of 2020.
Marico Bangladesh Limited / Marico Bangladesh
Visualizing The World’s Biggest Rice Producers
It’s hard to overstate the importance of rice to the world.
As a staple food, over half of the global population depends on the crop as a major part of their diet. In fact, rice is considered a vital part of nutrition in much of Asia, Latin America, Africa, and the Caribbean, and is estimated to provide more than one-fifth of the calories consumed worldwide by humans.
This graphic highlights the world’s 10 biggest rice-producing countries, using 2019 production data from the UN’s FAOSTAT and the USDA.
Which Countries Produce the Most Rice?
With 756 million tonnes produced globally in 2019, rice is the world’s third-most produced agricultural crop behind sugarcane and corn (maize), which both have a wide variety of non-consumption uses.
Just 10 countries are responsible for a bulk of global rice production:
| Country | Tonnes Rice Produced (2019) | % of Total |
|---|---|---|
| China | 211.4M | 28.0% |
| India | 177.6M | 23.5% |
| Indonesia | 54.6M | 7.2% |
| Bangladesh | 54.6M | 7.2% |
| Vietnam | 43.4M | 5.7% |
| Thailand | 28.3M | 3.7% |
| Myanmar | 26.3M | 3.5% |
| Philippines | 18.8M | 2.5% |
| Pakistan | 11.1M | 1.5% |
| Brazil | 10.4M | 1.4% |
| Others | 119.0M | 15.8% |
| Total | 755.5M | 100.0% |
At the top of the charts are China (#1) and India (#2), which produced 389 million tonnes combined, accounting for more than half of global production.
They’re significantly ahead of #3 and #4 countries Indonesia and Bangladesh, which produced around 54.6 million tonnes each. Almost all of the top producers are located in Asia, with the exception of Brazil (#10).
Feeding A Growing World
With 84% of rice being harvested in just 10 countries, it’s clear that many countries globally must rely on imports to meet domestic demand.
In 2019, India, Thailand, Pakistan, and Vietnam were large net exporters of rice, shipping out nearly $16 billion of rice combined. Other countries including Iran, China, Saudi Arabia, and the Philippines consume above production numbers and rely on imports to meet their needs.
And not everything makes it from plant to table. In developing countries especially, estimates of 8–26% of rice are lost due to postharvest problems and poor infrastructure.
As the global population continues to grow, rice will continue to be a key source of calories around the world—and as our diets change, it’ll be interesting to see how that role shifts in the future.
Visualizing the Shift in Global Economic Power
As the post-pandemic recovery chugs along, the global economy is set to see major changes in the coming decades. Most significantly, China is forecast to pass the United States to become the largest economy globally.
The world’s economic center has long been drifting from Europe and North America over to Asia. This global shift was kickstarted by lowered trade barriers and greater economic freedom, which attracted foreign direct investment (FDI). Another major driving factor was the improvements in infrastructure and communications, and a general increase in economic complexity in the region.
Our visualization uses data from the 13th edition of World Economic League Table 2022, a forecast published by the Center for Economics and Business Research (CEBR).
When Will China Become the Largest Economic Power?
China is expected to surpass the U.S. by the year 2030. A faster than expected recovery in the U.S. in 2021, and China’s struggles under the “Zero-COVID” policies have delayed the country taking the top spot by about two years.
China has maintained its positive GDP growth due to the stability provided by domestic demand. This has proven crucial in sustaining the country’s economic growth. China’s fiscal and economic policy had focused on this prior to the pandemic over fears of growing Western trade restrictions.
India is Primed for the #3 Spot
India is expected to become the third largest country in terms of GDP with $10.8 trillion projected in 2031.
Looking back, India had a GDP of just $949 billion in 2006. Fast forward to today and India’s GDP has more than tripled, reaching $3.1 trillion in 2022. Over the next 15 years, it’s expected to triple yet again. What is behind this impressive growth?
For starters, the country’s economy had a lot more room to improve than other nations. Demographics are also working in the country’s favor. While the median age in many mature economies is shooting up, India has a youthful workforce. In fact, India’s median age is a full 20 years lower than Japan, which is currently the third largest economy.
Over the last 60 years, the service industry has boomed to around 55% of India’s GDP. Telecommunications, software, and IT generate most of the revenue in this sector. IT alone produces 10% of the country’s GDP. India’s large tech-savvy, English-speaking workforce has proved attractive for international companies like Intel, Google, Meta, Microsoft, IBM, and many others, while the domestic startup scene continues to boom.
The Indian government is also pursuing “production-linked incentives” (i.e. subsidies) for multinational companies looking to diversify their production away from China. If these incentives prove successful, more of the world’s solar panels and smartphones will be produced within India’s borders.
How Will the Global Economy Look in 2031?
By the year 2031, there will be major changes in the global economic power rankings.
As we said before: China will have become the world’s largest economy in terms of GDP and India will be the world’s third largest economy. Let’s also take a look at the top 10 economies by 2031.
| Rank | Country | Region | Projected GDP in 2031 (in Trillions of USD) |
|---|---|---|---|
| 1 |  China | Asia | $37.6 |
| 2 |  United States | North America | $35.4 |
| 3 |  India | Asia | $6.8 |
| 4 |  Japan | Asia | $6.4 |
| 5 |  Germany | Europe | $6.3 |
| 6 |  United Kingdom | Europe | $4.6 |
| 7 |  France | Europe | $4.2 |
| 8 |  Brazil | South America | $3.1 |
| 9 |  Canada | North America | $3.0 |
| 10 |  Italy | Europe | $3.0 |
Out of the top five economies, three are located in Asia: China, India, and Japan—a clear demonstration of how economic power is shifting towards large population centers in Asia.
Europe will have four countries in the top 10: Germany, the United Kingdom, France, and Italy. From South America, only Brazil appears in the top 10.
Under these projections, Russia sits outside the top 10 in 2031. Of course, it remains to be seen how crushing sanctions and global isolation will affect the economic trajectory of the country.
Now, the big question. Is it inevitable that China takes the top spot in the global economy as predicted by this forecast? The truth is that nothing is guaranteed. Other projections have modeled reasonable alternative scenarios for China’s economy. A debt crisis, international isolation, or a shrinking population could keep China’s economy in second place for longer than expected.
Factor Investing: How You May Experience it
Why do investments perform the way they do? This is a question many investment experts have been attempting to answer for years. Luckily, factor investing can provide investors with a data-driven understanding.
In this infographic from MSCI, we use scenarios from everyday life to explain how factor investing works.
What is Factor Investing?
Simply put, investors choose stocks based on the “factors”, or characteristics, that help explain investment performance. They are typically aiming for:
- Higher returns
- Lower risk
- More diversification
While you may not have actively incorporated factor investing in your current portfolio, almost everyone will be familiar with the underlying concepts in real life. Here are five common factors and scenarios where you likely experience their principles.
1. Low Volatility Factor
The low volatility factor attempts to capture excess returns to stocks with lower than average risk. This factor has generally performed best during economic slowdowns or contractions.
How you may experience it: If you want a writing career with relatively reliable income, you’ll likely choose to be a marketer at a large company rather than a self-employed author.
2. Quality Factor
The quality factor attempts to capture excess returns in shares of companies that are characterized by low debt, stable earnings growth, and other “quality” metrics. This factor has generally performed best during economic contractions.
How you may experience it: When you’re purchasing new tires for your car, you might consider characteristics like tread longevity, traction, and fuel economy.
3. Value Factor
The value factor attempts to capture excess returns to stocks that have low prices relative to their fundamental value. This factor has generally performed best during economic recoveries.
How you may experience it: If you want a good deal, you may look for items that are on sale.
4. Momentum Factor
The momentum factor attempts to capture excess returns to stocks with stronger past performance. It has generally performed best during economic expansions.
How you may experience it: When you’re deciding what to watch, you may choose a TV show that has high audience ratings. You’ll likely also recommend it to your friends, which further boosts viewer numbers.
5. Low Size Factor
The low size factor attempts to capture excess returns of smaller firms (by market capitalization) relative to their larger counterparts. It has generally performed best during economic recoveries.
How you may experience it: When you’re learning a new sport, you’ll see larger increases in your skill level than a professional athlete will.
Understanding Your Investments With Factor Investing
These simple concepts are at work in your everyday life and in your investments. Targeting these factors can help you meet your investing goals, including maximizing return potential and managing risk.
From 2000 to 2020, here’s how the risk and return of the above factors compared to the benchmark MSCI World Index.
| Return | Risk | |
|---|---|---|
| Momentum | 9.4% | 14.8% |
| Quality | 8.7% | 13.9% |
| Low Size | 8.0% | 17.0% |
| Value | 7.9% | 17.9% |
| Low Volatility | 7.6% | 11.1% |
| MSCI World Index | 6.6% | 15.6% |
Annualized risk and gross returns in USD from December 29 2000 to December 31 2020 for MSCI World Factor Indexes.
All five of the factors have had greater historical returns than the benchmark index, and some have also had lower risk.
With factor investing, you can better understand what drives your portfolio’s performance.