Bangladesh

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US$1.7 billion of Chinese backing set to deliver Karnaphuli Tunnel Project, a key Belt and Road component.

Photo: Chittagong Port: Heavily congested and in desperate need of a deep-water upgrade.
Chittagong Port: Heavily congested and in desperate need of a deep-water upgrade.
Photo: Chittagong Port: Heavily congested and in desperate need of a deep-water upgrade.
Chittagong Port: Heavily congested and in desperate need of a deep-water upgrade.

Construction work on the China-backed Karnaphuli Multi-Channel Tunnel Project in southern Bangladesh is now well under way. The tunnel is seen as a key component in several projects related to the Belt and Road Initiative (BRI), China's ambitious international infrastructure development and trade facilitation programme. Once completed, the tunnel will connect the port city of Chittagong to the far side of the Karnaphuli river, the site of a new Chinese economic zone.

Due to be completed in 2020, the tunnel will slash the travel time between Chittagong and Cox's Bazar, one of the country's leading tourist destinations, and ease the heavy congestion on the existing two bridges across the river, while also connecting-up with the Korean Export Processing Zone and Shah Amanat International Airport. It will also feed into two other projects that are currently under way – the Asian Highway and the Dhaka-Chittagong-Cox's Bazar Highway.

At present, it looks as if all of the required funding for the tunnel is now in place. According to government sources, US$1.02 billion of initial backing was secured from the China Exim Bank, with a further $663 million facility – repayable over 20 years at an interest rate of 2% – subsequently confirmed. The outstanding balance was then provided by the Bangladesh government.

The project has been jointly managed by the Bangladesh Bridge Authority (BBA) and the China Communication Construction Company, with the Hong Kong branch of Ove Arup & Partners providing additional design and technical support. With a total length of 9km – of which 3.4km will run below the river – it will be the first tunnel in Bangladesh to facilitate simultaneous road and rail transit.

The tunnel is just one of a range of China-backed projects currently underway in the region. Foremost among these is the Special Chinese Economic Zone – formally known as the Anwara 2 Economic Zone – which was officially established in June last year following the signing of a Memorandum of Understanding (MoU) between the Bangladesh Economic Zones Authority (BEZA) and the China Harbour Engineering Company (CHEC).

According to Paban Chowdhury, BEZA's Executive Chairman, the zone will have the capacity to house 150-200 industrial units and will focus on a range of different industrial sectors, including shipbuilding, pharmaceuticals, electronics, agro-business, IT, chemicals, power and textiles. With up to 75,000 jobs set to be created, the zone will not exclusively rely on Chinese businesses, with Chowdhury saying: "As per our initial agreement, while Chinese investors will get preferential treatment, other local and overseas businesses will also be welcome."

In the case of both the tunnel and the economic zone, their success is heavily reliant on the Chittagong port's facilities being substantially upgraded. The port currently handles a staggering 92% of Bangladesh's ocean freight, with the country's surging economy seeing the required throughput growing by about 14% a year.

The port, however, is heavily silted and extremely congested, while also lacking the depth required for the current generation of tankers. As a result, it is widely accepted that a deep-water port upgrade is a priority for the country.

Over recent years, though, attempts to implement such an upgrade have fallen foul of a series of international disagreements. Back in 2010, China agreed to put up the money for the port's expansion, as well as for the development of a deep-water port on the nearby Sonadia island. Then, in February 2016, in something of an abrupt about-turn, the project was scrapped in favour of a Japanese-funded port development at nearby Matarbari, the proposed site of a massive coal-fired power station.

Such wrangling, however, has not lessened Bangladesh's strategic significance to the overall BRI project. The country is a key component of the proposed Bangladesh-China-India-Myanmar corridor (BCIM), one of the programme's six priority routes.

Overall, Bangladesh is also seen as a vital conduit between the semi-industrialised ASEAN countries and the highly populated Indian sub-continent. Its strategic location between South Asia and Southeast Asia also makes it an essential link in the BRI's mission of trans-regional integration.

Geoff de Freitas, Special Correspondent, Dhaka

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Mainland Headwear Holdings Ltd was established in 1986 and listed in Hong Kong in 2000, engaging in the design, manufacturing, trade and retail of casual headwear. In recent years, Mainland Headwear has expanded its businesses through mergers and acquisitions as well as the establishment of strategic alliances, including signing a manufacturing agreement with New Era Cap Co., Inc., acquiring H3 Sportgear LLC and San Diego Hat Company, and forming a joint venture with Promotional Partners Worldwide Group Ltd to design, manufacture, and sell Sanrio products in the Chinese mainland. Headquartered in Hong Kong, Mainland Headwear has factories in Shenzhen and Bangladesh, manufacturing licensed casual headwear which are primarily sold in the US and European markets.

Capitalising on the Belt and Road Initiative, Mainland Headwear set up a 25,000-square-metre factory in rural Bangladesh in 2013 to boost production as the rise in labour costs on the Chinese mainland was weighing on profits. In its initial three years of operation, the company’s factory expanded significantly, with the number of staff increasing from 200 in 2013 to 4,500 in 2017, and monthly production together with production efficiency are continuously being enhanced.

Mrs Pauline Ngan, Deputy Chairman and Managing Director of Mainland Headwear Holdings Ltd, said many infrastructure projects including expressways, railways, deep water ports and power plants had been built in Bangladesh since the launch of China’s Belt and Road Initiative. The travelling time between the capital city Dhaka and Chittagong port will be shortened from seven to eight hours, to four to five hours upon completion of a new expressway, which will greatly improve the efficiency of raw material transportation. With the railway from Dhaka to Kunming expected to be completed in 2020, along with the deep water port construction deal between Bangladesh authorities and China’s COSCO, the local garment manufacturing industry is tipped to grow.

With more than 30 years of industry experience, the company overcame operational challenges in Bangladesh with its localised manufacturing planning and customised human resources management scheme. The company developed a digitalised inventory monitoring system, the ERP System, for management to obtain real-time information about inventory and raw materials’ status, and for customers to track their orders. Specialised equipment such as embroidery machines, sublimation printers and laser engraving machines were also widely adopted to better manage output. The company also maintained effective two-way communication with its staff to tackle issues arising from cultural misunderstanding. In order to instill a team atmosphere and strong sense of belonging among the workers, the company organises praying assemblies for Muslim workers, and provides comprehensive remuneration packages including housing allowances and gift packs with daily necessities. The setup of the factory has also boosted the population of the village from 400 to 10,000, improving its GDP and living standards.

Mrs Ngan said the Hong Kong-based company has been playing a role in connecting Chinese investors and the Bangladesh authorities. As a member of the Chinese Investors’ Alliance, Mrs Ngan provides consultation and training services to newcomers through regular classes on setting up companies in the country and overcoming cultural barriers.

Mrs Ngan said, as the company further expands its operation in the country, the Bangladesh factory will become the focus of the company’s business development. The second phase of the factory will be in operation by the year 2018. The company also plans to recruit 2,000 additional workers and local university graduates to hopefully enhance the synergy between the Bangladesh factory and the design and high-end production facilities in Shenzhen.

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Andrew has been Lead Arranging and advising on infrastructure finance for 30+ years.

In 2003, he set up in business as Logie Group to provide specialist advice on infrastructure finance in Asia across the whole investment cycle namely:

  • governments and public sector on policy including in Indonesia the MOF on its $15 billion of support for PLN in the power sector and Bappenas on a $235 million water supply project; and how to finance a $7 billion new state capital city in India.
  • institutional investors on strategy across the region.
  • transaction preparation and M & A advisory, e.g. hydro in Sri Lanka.
  • acting as an expert witness in arbitrations such as for Fraport re the $600 million Manila airport terminal 3; for a US developer in a $125 million power plant in Cambodia where he was cross examined in person and sat in a “hot tub” exchange of views with the other side’s expert (both rare experiences); and for a Canadian investor in a gold mine in a ’Stan country.
  • Capacity building / training.
  • Acting as a Non – Executive Director of e.g. an aircraft lessor.

Andrew is a member of the UNECE roster of PPP experts; acts as a peer reviewer for them; and is on IFC’s Nominee Directors database. He is a Fellow of the HKICPA, ICAEW and HKIoD; and a member of the HKSI, HKIB and APIEx.

Andrew worked originally with KPMG then PWC in London, Hong Kong and Sydney; then in tax driven financing at Westpac’s investment bank in Australia; Lead Arranging project finance at Mizuho then UBS in London; before he returned to Asia in 1998 as Head of Global Structured Finance, Asia Pacific for WestLB when it was a top five Lead Arranger of project finance globally.

 

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Established in 1982, Robert Bird Group is a global consulting engineering firm with over 700 staff across ten offices. A member of the Surbana Jurong Group, we are committed to delivering each client’s vision through the relentless pursuit of engineering excellence across all projects. We offer consulting engineering services across five disciplines, drawing upon our international expertise:

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3E Accounting Limited. is a Hong Kong-based accounting firm that specialises in providing affordable and quality professional incorporation, accounting, tax, and compliance services, based on Three Es: efficiency, effectiveness and economy – as part of our One-Stop Solution services for our clients. Our office is conveniently located in Central with a local team familiar with Hong Kong legislation. Founded by Chartered Accountant Lawrence Chai, we are recognized by ACCA as an Approved Employer. The ACCA Approved Employer Program only accepts companies that ACCA recognizes for having high standards of staff training and development. With this recognition, you are assured that 3E Accounting meets or exceeds global standards for teaching and developmental support. 3E Accounting Limited. is an independent member of 3E Accounting International Network, with presence in more than 80 countries to support clients in their overseas expansion to Asia, North and South America, Europe, Oceania, and Africa.

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Fujitsu is the leading Japanese information and communication technology (ICT) company, offering a full range of technology products, solutions and services. Approximately 140,000 Fujitsu people support customers in more than 100 countries. We use our experience and the power of ICT to shape the future of society with our customers.

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Mictronics Co. Ltd founders, Mr. Jackson Chack and Dr. Albert So, started with a vision to research and develop products and technology to contribute towards a sustainable world. Through years of dedication and research, they created an award winning invention, the “Fan-coil unit that demonstrates the advantages of saving energy and facilitates maintenance.”

The Mictronics’ Fan Coil Unit’s primary feature, consistent with the founder’s vision, is its green and energy saving properties. Through a unique application of a Permanent Magnet Synchronous Motor (PMSM), electricity consumption is reduced by up to 80% compared to traditional AC or DC motors. This is a significant reduction, considering fan coil units typically contribute up to 23% of a building’s total electricity consumption. 

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We would like to start business with countries participate in the Belt and Road Scheme.

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Manufacturing Experience Sharing Series: “Investment & Opportunities in Bangladesh Export Processing Zones” was held on 2 May 2019 to brief the overview of Bangladesh’s recent economy & development and introduce the investment & opportunities in Bangladesh Export Processing Zones (BEPZA).  

Clicking the below links for full version videos of guest speakers:
MES2019: Investment & Opportunities in Bangladesh Export Processing Zones
https://youtu.be/CGM05r6ocE8
Mr. Ricky Chan, Vice Chairman, FHKI International Affairs Committee
https://youtu.be/73XrzmRknYk
Major General S M Salahuddin Islam, Bp,SPP,ndc,psc, Executive Chairman, BEPZA
https://youtu.be/Z5v34D01E3E
Mr. Mehdi Hasan, Consul General, Consulate General of the People's Republic of Bangladesh Hong Kong 
https://youtu.be/eSEuxdyTnFA
Mr. Ahsan Kabir, General manager (Investment Promotion), BEPZA
Mr. Felix Chang, Chairman & CEO, Evergreen Products Factory Group Limited 
https://youtu.be/oYkqOIxSQmM
Mr. Calvin Ngan, Managing Director, South China Bleaching & Dyeing Factory Limited 
https://youtu.be/8bglGWKXn1w
Mr. KC Sze, Managing Director, Tung Hing Plastic Manufactory Limited
https://youtu.be/SPevCvpBrOI

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