Can Bangladesh Emerge as a Semiconductor Hub?
The global semiconductor industry is experiencing a period of dynamic growth, with market expectations driven by advancements in AI-based computing, automotive technologies, miniature electronics, and the Internet of Things (IoT). The market, currently valued at $600 billion annually, is projected by McKinsey to surpass $1 trillion by 2030. This surge is leading to increased demand for chip manufacturing, design, packaging, and testing capabilities, influenced by innovations and geopolitical tensions, notably the US-China chip war. Established regions will see continued growth, while new entrants like India and Vietnam are attracting investment through government incentives.
Bangladesh, aiming to boost semiconductor exports to $10 billion by 2031, is positioning itself in this competitive landscape. Notably, Ulkasemi, a Bangladeshi company, has been successful in designing chips for major global firms, including Apple. Ulkasemi's operations span from Bangladesh to Silicon Valley in the USA, Toronto in Canada, and Bengaluru in India, working with leading foundries such as TSMC, Intel, Micron, Global Foundries, and Texas Instruments. With significant potential, Bangladeshi entrepreneurs and policymakers are exploring how to enter the growing semiconductor market, recognizing that countries successful in this industry will drive future global economies, with semiconductors being the new "oil."
Industry Spotlight: Clean Energy
Illuminating Bangladesh's Clean Energy Policies
Renewable energy is set to become a key component of Bangladesh's power generation, aiming to produce 15% of electricity from renewables by 2030. The government has allocated Tk. 1 billion in the latest budget for this initiative, signalling a prioritization of clean energy. However, experts stress the need for a detailed roadmap to achieve these goals, which is currently lacking. Development projects in Bangladesh often suffer from delays and a lack of progress transparency. To successfully transition to renewable energy, the government must provide clear plans, regular updates, and public education on the benefits of clean energy, given the country's vulnerability to climate change.
Bangladesh Government Sanctions 5-Year Scheme to Import 40MW Hydropower from Nepal
The Cabinet Committee on Government Purchase has approved importing 40MW of hydropower from Nepal at a rate of Tk. 8.17 per unit, including transmission charges. The decision, made during a meeting chaired by Finance Minister Abul Hasan Mahmud Ali on June 11, involves transmitting electricity through India's grid, incurring a trading margin of 0.059 rupees per unit to India, with additional transmission costs yet to be determined. The agreement, to be finalized between the Bangladesh Power Development Board (BPDB) and the Nepal Electricity Authority (NEA), will be part of a tripartite contract also involving India. The initial five-year contract, worth approximately Tk. 6.5 billion, will integrate the power into Bangladesh's national grid at Bheramara. The plan follows an earlier in-principle approval from the Cabinet Committee on Economic Affairs and includes proposals submitted by NEA and India's NTPC Vidyut Vyapar Nigam Limited (NVVN). The BPDB aims to finalize the contract within the month, with power integration expected within two months of signing.
Chinese Joint Venture to Establish 100 MW 'Semi-Agrivoltaic' Facility in Bangladesh
A joint venture between China's CREC International Renewable Energy Co. and Bangladesh's B-R Powergen Ltd. (BRPL) will construct a 100 MW solar power plant in Madarganj, Jamalpur district, Bangladesh. The $170 million project, spanning 350 acres, is scheduled for completion by December 2025. BRPL will provide the land, while the Chinese company, holding a 70% stake, will manage the rest, including financing, with support expected from the Asian Development Bank. Situated near the Jamuna River, the 'semi-agrivoltaic' plant will use a mix of shorter and taller poles to accommodate seasonal water flow and integrate agriculture, growing spices like chillies, turmeric, and ginger under the solar panels to maximize land use.
Industry Spotlight: Technology
Spintech Associates: The Innovators Behind Bangladesh’s Textile Tech Evolution
Spintech Associates Ltd. is revolutionizing the Bangladeshi textile market by introducing advanced European technologies. They are driving the industry's growth, enhancing its competitiveness, and promoting sustainability. Since its establishment in 2004, Spintech has partnered with four leading textile machinery brands: Bräcker, Suessen, Novibra, and Groz-Beckert.
2004: Launched with Bräcker, securing a 30% market share in spinning rings and related equipment.
2005: Began representing Novibra, achieving an 80% market share in high-speed spindles.
2005: Became the agent for Groz-Beckert, capturing a 25% market share in card clothing.
2009: Partnered with Suessen, now holding a 30% market share in compacting systems with over 2 million spindles in use.
Spintech's success is fueled by a skilled team led by Managing Director Anisur Rahman, a 1994 graduate of the Bangladesh University of Textiles (BUTEX). With 30 years of experience, Mr. Rahman has been a pivotal figure in the industry, bringing deep insights and commitment to the sector's development and growth. Spintech Associates champions sustainability in Bangladesh's textile industry through eco-friendly technologies, addressing challenges like rising energy costs and supply disruptions. They provide expertise beyond machinery, guiding clients to optimize efficiency and quality. Collaborating closely with European partners, Spintech stays ahead of trends, empowering Bangladeshi mills to compete globally while minimizing environmental impact.
Significant Tax Exemption Sparks Growth for Bangladesh's Tech Industry
The government has announced a significant tax exemption initiative aimed at boosting technology-centric businesses, with the goal of achieving a 'Smart Bangladesh' by 2040. This initiative covers 20 tech-focused sectors in the budget proposal for the fiscal year 2024-25, with Finance Minister Abul Hassan Mahmood Ali set to unveil the largest budget proposal in the country's history. The proposed budget size is Tk. 7.969 trillion, with a focus on meeting a government revenue target of Tk. 5.41 trillion. The initiative offers a 100 percent tax exemption for businesses engaged in cutting-edge sectors like artificial intelligence, blockchain technology, and robotics process outsourcing. Additionally, sectors such as software, cyber security, digital data analysis, and mobile application development will also benefit from these tax exemptions. However, the exemption is conditional upon all transactions being cashless and conducted through digital platforms.
Bangladesh on the World Stage
Envoy: Bangladesh-China FTA to reduce inflationary pressures in Dhaka
Chinese Ambassador Yeo Wen highlighted that a prospective free trade agreement (FTA) between Bangladesh and China could lower inflation in Bangladesh by reducing tariffs on Chinese imports, which would decrease import prices. Speaking at a seminar on the China-Bangladesh FTA, he emphasized that the agreement would lead to a significant reduction in overall tariffs and import costs, directly impacting inflation. The ambassador also stated that China aims to complete the feasibility study and initiate formal negotiations for the FTA by 2026. The FTA is expected to enhance bilateral economic relations, facilitate Chinese investment, create jobs, and support Bangladesh’s economic goals, including its Vision-2041 and graduation from Least Developed Country (LDC) status. The seminar was organized by the Chinese embassy, BCCCI, and CEAB, with other notable speakers, including State Minister for Commerce Ahasanul Islam Titu.
Bangladesh's PPP Authority and IFC collaborate on the Laldia Terminal project
Bangladesh’s Public-Private Partnership (PPP) Authority has partnered with the International Finance Corporation (IFC) to provide Transaction Advisory Services for the Laldia Container Terminal project at Chittagong Port. This collaboration will involve detailed technical, legal, and financial assessments, as well as studies on the environmental and social impacts, aiming to create a viable transaction structure and select private partners for the terminal's development. The Laldia Container Terminal is intended to increase Chittagong Port's container handling capacity and improve port logistics. A global private operator will be chosen to design, build, finance, operate, and eventually transfer the terminal. The project is expected to create jobs, stimulate economic growth, streamline supply chains, attract foreign investment, and enhance logistics capacity.
Investing in Women Can Boost Bangladesh's Economy and Climate Resilience
Bangladesh has achieved notable economic growth and poverty reduction, with significant contributions from increased female labor force participation, especially in the garment sector. However, gender disparities remain, with women less likely to participate in the workforce, pursue higher education, or access financial services. Addressing these gaps could increase GDP by nearly 40% and lead to sustained development and climate resilience for the foreseeable future for a few key reasons
First, women make up roughly half of any country's workforce, so enhancing the productivity of this half of the population can be expected to boost the productivity of any economy. Second, when women stay in education, training, and employment longer, they are able to provide greater economic security to their financial dependents. This directly translates to generational dividends, as children raised in households with economic security have better access to education and training, which allows them to be more productive and financially secure in their own adult lives, allowing them to raise their own children in economically secure households, and so on.
Just as poverty is transmitted through generations, so too is wealth, and a wealthier society is better positioned to afford and implement the technologies and infrastructure necessary to combat the effects of climate change, which will wreak havoc in climate-vulnerable countries like Bangladesh throughout the 21st century. Thus, empowering women in the green transition is essential to sustainable development, and rightly supported by initiatives like the IMF’s Resilience and Sustainability Trust. As such, Bangladesh has integrated gender perspectives into its climate strategies, updating its Climate Change and Gender Action Plan in 2024.
Powering Progress: An Analysis of SASEC’s Transformative Energy Cooperation with Bangladesh
Initiated in 2001, the South Asia Subregional Economic Cooperation (SASEC) program brings together Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal, and Sri Lanka in a partnership dedicated to promoting regional prosperity, enhancing economic opportunities, and improving quality of life in South Asia. SASEC’s member countries aim to boost regional trade and cooperation within South Asia while also increasing connectivity and trade with Southeast Asia via Myanmar, the People’s Republic of China, and the global market.
The SASEC Operational Plan defines the strategic goals of this partnership, concentrating on four key sectors: transport, trade facilitation, energy, and economic corridor development. This plan is backed by a continually updated list of potential projects for implementation from 2016 to 2025. By February 2023, SASEC countries had signed and implemented 79 investment projects financed by the Asian Development Bank (ADB), totalling about $18.41 billion. These projects cover various sectors, including 46 transport projects worth over $13.17 billion, 16 energy projects valued at over $2.92 billion, 8 economic corridor development projects worth over $1.94 billion, 5 trade facilitation projects totalling around $328.15 million, and 2 ICT projects worth $20.80 million. In 2022, the health sector was included in SASEC’s operational priorities, contributing $25.92 million through two regional cooperation projects aimed at strengthening COVID-19 recovery efforts.
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