trade
What’s the effect of Russian oil price cap, ban?
Western governments are aiming to cap the price of Russia’s oil exports in an attempt to limit the fossil fuel earnings that support Moscow’s budget, its military and the invasion of Ukraine.
The cap is set to take effect on Dec. 5, the same day the European Union will impose a boycott on most Russian oil — its crude that is shipped by sea. The EU was still negotiating what the price ceiling should be.
The twin measures could have an uncertain effect on the price of oil as worries over lost supply through the boycott compete with fears about lower demand from a slowing global economy.
Here are basic facts about the price cap, the EU embargo and what they could mean for consumers and the global economy:
WHAT IS THE PRICE CAP AND HOW WOULD IT WORK?
U.S. Treasury Secretary Janet Yellen has proposed the cap with other Group of 7 allies as a way to limit Russia’s earnings while keeping Russian oil flowing to the global economy. The aim is to hurt Moscow’s finances while avoiding a sharp oil price spike if Russia’s oil is suddenly taken off the global market.
Insurance companies and other firms needed to ship oil would only be able to deal with Russian crude if the oil is priced at or below the cap. Most of the insurers are located in the EU or the United Kingdom and could be required to participate in the cap. Without insurance, tanker owners may be reluctant to take on Russian oil and face obstacles in delivering it.
Read: After Russian retreat, Ukrainian military plans next move
HOW WOULD OIL KEEP FLOWING TO THE GLOBAL ECONOMY?
Universal enforcement of the insurance ban, imposed by the EU and U.K. in earlier rounds of sanctions, could take so much Russian crude off the market that oil prices would spike, Western economies would suffer, and Russia would see increased earnings from whatever oil it can ship in defiance of the embargo.
Russia, the world’s No. 2 oil producer, has already rerouted much of its supply to India, China and other Asian countries at discounted prices after Western customers shunned it even before the EU ban.
One purpose of the cap is to provide a legal framework “to allow the flow of Russian oil to continue and to reduce the windfall revenue for Russia at the same time,” said Claudio Galimberti, a senior vice president of analysis at Rystad Energy.
“It is essential for the global crude markets that Russian oil still finds markets to be sold, after the EU ban is operative,” he added. “In the absence of that, global oil prices would skyrocket.”
WHAT EFFECT WOULD DIFFERENT CAP LEVELS HAVE?
A cap of between $65 and $70 per barrel could let Russia keep selling oil and while keeping its earnings to current levels. Russian oil is trading at around $63 per barrel, a considerable discount to international benchmark Brent.
A lower cap — at around $50 per barrel — would make it difficult for Russia to balance its state budget, with Moscow believed to require around $60 to $70 per barrel to do that, its so-called “fiscal break-even.”
However, that $50 cap would be still be above Russia’s cost of production of between $30 and $40 per barrel, giving Moscow an incentive to keep selling oil simply to avoid having to cap wells that can be hard to restart.
Read: Most Ukrainians left without power after Russian strikes
WHAT IF RUSSIA AND OTHER COUNTRIES WON’T GO ALONG?
Russian has said it will not observe a cap and will halt deliveries to countries that do. A lower cap of around $50 could be more likely to provoke that response, or Russia could halt the last of its remaining natural gas supplies to Europe.
China and India might not go along with the cap, while China could form its own insurance companies to replace those barred by U.S., U.K. and Europe.
Galimberti says China and India are already enjoying discounted oil and may not want to alienate Russia.
“China and India get Russia’s crude at a huge discount to Brent, therefore, they don’t necessarily need a price cap to continue to enjoy a discount,” he said. “By complying with the cap set by the G-7, they risk alienating Russia. As a result, we do believe that the compliance with the price cap would not be high.”
Russia could also turn to schemes such as transferring oil from ship to ship to disguise its origins and mixing its oil with other types to skirt the ban.
So it remains to be seen what effect the cap would have.
WHAT ABOUT THE EU EMBARGO?
The biggest impact from the EU embargo may come not on Dec. 5, as Europe finds new suppliers and Russian barrels are rerouted, but on Feb. 5, when Europe’s additional ban on refinery products made from oil — such as diesel fuel — come into effect.
Europe will have to turn to alternative supplies from the U.S., Middle East and India. “There is going to be a shortfall, and this will result in very high prices,” Galimberti said.
Read: Russia-Ukraine grain deal extended in win for food prices
Europe still has many cars that run on diesel. The fuel also is used for truck transport to get a huge range of goods to consumers and to run agricultural machinery — so those higher costs will be spread throughout the economy.
Bangladesh seeks Portugal's investment, expertise in blue economy, wind power generation
State Minister for Foreign Affairs Md Shahriar Alam on Friday said Bangladesh would welcome visible Portuguese investments and expertise in the blue economy, including for exploring the potentials for offshore wind power generation.
Portugal’s large-scale and judicious investment in renewable energy over the past years has largely cushioned it from the present energy crisis around the world, he said while speaking at a seminar as the chief guest.
“We have many untapped potentials for economic cooperation between our two countries. We believe that there are opportunities for further expanding two-way investments in each other’s countries,” said State Minister Alam.
Bangladesh Institute of International and Strategic Studies (BIISS) organised the seminar titled “Bangladesh-Portugal Relations: Quest for Deeper Bilateral Cooperation”as part of its Eminent Person Lecture Series (EPLS).
Dr Francisco André, Secretary of State for Foreign Affairs and Cooperation, Republic of Portugal, attended the seminar as a guest speaker and Shabbir Ahmad Chowdhury, Secretary (West), Ministry of Foreign Affairs, was present as a discussant.
BIISS Chairman Ambassador Kazi Imtiaz Hossain chaired the programme and its Director General Major General Sheikh Pasha Habib Uddin delivered the welcome remarks.
Bangladeshis face certain constraints with regard to visas - especially for their family members - in the absence of any Portuguese diplomatic or consular mission in Bangladesh.
Read: EU’s EBA Scheme for LDCs: Portugal terms Bangladesh best success story
“We are assured by Dr. André that his administration will work towards finding a pragmatic solution to the issue in the near future. This will indeed have a huge qualitative difference in the substance of our bilateral ties, he said.
Bangladesh counts on Portugal to speak for Bangladesh within the European Union.
As a 27-member body, the EU has many competing priorities, and it certainly helps to have a reliable partner within this critically important institution for Bangladesh.
“It is reassuring for us that Portugal is favourably disposed to Bangladesh’s obtaining the GSP+ facility in the EU market beyond 2029. I am certain that Portugal will also play a catalytic role over time in realizing our efforts to take our engagements with the EU towards a more strategic direction,” said the State Minister.
He urged Portugal to maintain its voice and support for humanitarian assistance, justice and accountability, and safe and dignified repatriation of the Rohingya.
Bangladesh thanked Portugal for its forward-leaning approach to climate action, including for its support for the ‘loss and damage’ agenda.
“We look forward to working with Portugal on conserving and protecting our oceans from climate change impacts. We have taken due note of Portugal’s desire to serve the cause of international peace and security as an elected member of the UN Security Council in 2027-28,” he said.
The State Minister laid emphasis on continued investment in people-to-people connectivity between the two countries.
Read: Friendly conditions to be created for Bangladeshi immigrants in Portugal: Francisco Andre
The two countries will be celebrating the 50th anniversary of diplomatic relations in 2024.
“We have agreed to draw up plans from now on to commemorate the occasion through befitting events,” Alam said.
He said the renewed journey and engagements that they have started with Portugal this year will mark the beginning of a “mature, vibrant and multi-dimensional interface” in the years to come.
The speakers shed light on the historic tie between Bangladesh and Portugal which can be traced back to the 16th century.
They highlighted the growing trade relations between these two countries and emphasised on advancing the current economic relationship by exploring new avenues.
The speakers also stressed on expanding the overall bilateral relations in the diverse areas that include renewable energy, green transition, sustainable development, manpower export
Bangladesh has potential to increase trade with EU: Charles Whiteley
Bangladesh has the potential to increase trade with the European Union (EU) countries, Charles Whiteley, ambassador and head of the Delegation of the EU to the country, said Thursday.
He paid a courtesy call on Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) President Md Jashim Uddin in Dhaka Thursday.
They discussed trade and investment between Bangladesh and EU countries.
Read: FBCCI signs MoU with Greater New York Chamber of Commerce and Industry
Jasim hoped for enhanced cooperation between FBCCI and different trade bodies of the EU region.
Bernd Spanier, deputy head of mission, FBCCI Vice-President Salahuddin Alamgir; directors Syed Sadat Almas Kabir, Nadia Binte Amin, and Secretary General Mohammad Mahfuzul Hoque were present at the meeting.
Trading suspended in Ctg's Khatunganj wholesale market over worker's death
Trading at the popular Khatunganj wholesale market in Chattogram port city has been suspended since Wednesday morning, with workers embarking on a strike in the wake of the death of a worker in an attack by a driver.
Zahidul Kabir, officer-in-charge of Kotwali Police Station, said Masud, 29, the worker of the wholesale market, had a heated argument with the pick-up van driver while loading goods in the Chanmia Lane of the market over a small matter on October 17.
The argument turned violent when the van driver suddenly pulled out a knife and stabbed Masud, leaving him injured. He was rushed to Chattogram Medical College and Hospital (CMCH).
Soon after the attack, hundreds of workers at the wholesale market halted loading and unloading of goods on that day. They also blocked roads by placing carts.
Read: Traders reeling as rotten imported onions dumped in Khatunganj
The aggrieved workers went on an indefinite strike after Masud succumbed to his injuries on Wednesday morning at CMCH, two days after the attack.
Additional police personnel have been deployed at the wholesale market to avert further trouble.“Earlier, a complaint was lodged with the Kotwali Police, and now a process is on to convert the same into a murder case,” said the OC.
Trade via Sonamasjid land port resumes
After eight days of suspension owing to Durga puja, trade resumed via the Sonamasjid land port of Chapainawabganj on Saturday.
Abdur Rashid, general secretary of Sonamasjid Land Port C&F Agents’ Association, said that trade via the port was suspended from September 30 to October 7 following Durga Puja vacation and weekly government holidays.
“Export and import of goods via the port has restarted. Vehicles coming from India with goods have started entering the port since this morning,” said Rashid.
Read: Trade via Sonamasjid land port to remain suspended for 8 days
More development projects planned to support trade, investment
With a view to building better transport and road infrastructure that would support industry and trade in the country, the government is working for construction of more elevated expressways and large bridges integrating existing bridges, flyovers, highways and tunnels. While economists say the construction of the 6.51-kilometer Padma Bridge at an estimated cost of $3.6 billion would benefit the country’s $500 billion economy, the government’s policymakers are now keen to move ahead with more infrastructure projects that would consolidate the country’s ability to embrace both domestic and foreign investment more.
Read: South Korean firm to collect toll from Dhaka-Mawa Expressway for 5 years
The policymakers say they are inspired by Prime Minister Sheikh Hasina’s courage and leadership that helped the nation overcome all the challenges to build the Padma Bridge with own funds. The opening of the bridge in June has connected the country’s second largest Mongla Seaport to make it a vibrant hub for exports and imports while at least 21 districts in the southern and southwestern regions have been networked with Dhaka. According to an official document seen by UNB, authorities are pushing hard to complete the ongoing projects while taking up new schemes is also being considered. The document says the construction of 3.32-kilometer Bangabandhu Shiekh Mujibur Rahman Tunnel under the Karnaphuli River is about to be completed and the tunnel is expected to be opened by December 2022. In addition, the construction of 46.73-kilometer Elevated Expressway from Hazrat Shahjalal International Airport to Kutubkhali on the Dhaka-Chittagong Highway is in progress. About 78.94 percent construction work of the first part (Airport-Banani) has already been completed. The physical progress of the entire project is 43.60 percent, the document says. On the other hand, 69 percent of construction of 20-kilometer Bus Rapid Transit (BRT) lane from Gazipur to Hazrat Shahjalal International Airport has been completed while the work on the Airport to Mohakhali is progressing. Land acquisition for 24-kilometer Dhaka-Ashulia Elevated Expressway project from Hazrat Shahjalal International Airport to Savar EPZ via Ashulia is underway, it says. Besides, feasibility study for construction of a bridge over Meghna river on Bhulta-Araihazar- Bancharampur road, construction of Kalabadar and Tetulia bridges on Barisal-Bhola road, a two-storey road from Mithamoin Cantonment to Marichkhali in Karimganj upazila of Kishoreganj district are underway. Besides, feasibility study for construction of a tunnel under the Jamuna river is going on. The document says that the government has adopted a time-bound Action Plan to build an integrated metro-rail system of 129.901-kilometer (68.729-kilometer long elevated and 61.172-kilometer long underground) with 105 stations (52 surface and 53 underground) under the Dhaka Mass Transit Company Limited (DMTCL), comprising six metro rail lines to reduce traffic congestion and improve the environment of the Dhaka Metropolitan City and surrounding areas by 2030. Following this action plan, the construction of the first ever metro rail system from Uttara 3rd phase to Motijheel, which will be 20.10-kilometer long with 16 stations, is at the final stage.
Read:Chinese firm CCCC tipped for toll collection, maintenance of Bangabandhu Tunnel
In the meantime, Metrorail has completed its trial run from Uttara 3rd phase station to Agargaon successfully. This part is set be launched for commercial use by December 2022. The remaining part from Agargaon to Motijheel is expected to go on commercial operation by December 2023. Later on, it will be extended by 1.16 kilometers from Motijheel to Kamlapur. Besides, detailed design works of Southern Route of MRT Line-5 and Northern Route of MRT Line-1 are about to be completed. According to the document, the government has also taken up a plan to introduce MRT system in Chattogram city. In the last 13 years, the government has implemented 357 road development projects and taken up 448 new projects. At the same time, 173.20 kilometers of National Highways have been upgraded to 4-lane or above. Work is also underway to upgrade 914.84 kilometers of highway to 4 lanes or above, it added, Recently, construction of the Dhaka-Bhanga Expressway and the Gazipur- Tangail 6-lane road have been completed and opened to traffic. Besides, work for upgradation of the Elenga-Hatikumrul-Rangpur highway and Chattagram-Cox’s Bazar highway to 4 lanes are almost completed. Construction work has also begun to upgrade the Dhaka-Sylhet highway to 4 lanes. At present, 26 projects under the Road Transport and Highways Division are being implemented.
Bangladesh Bank yet to allow Indian rupee in foreign trade
Bangladeshi businesses cannot use Indian rupee for foreign trade as Bangladesh Bank is yet to enlist the currency to settle letters of credit (LCs).
BB spokesperson and executive director Md Serajul Islam told UNB that the central bank is yet enlisted Rupee for foreign trade.
He said that Bangladesh Bank is reviewing currency diversification in foreign trade to reduce sole dependence on the US dollar.
Read:“Use rupee, taka”: India asks exporters to refrain from trading in dollars with Bangladesh
Before allowing any foreign currency for trading, the central bank has maintained an exchange stander, and stability in line with the IMF standard, he said.
Businesses said if trade between Bangladesh and India happen in local currencies, pressure from falling US dollar reserves and associated ongoing forex market instability can be reduced.
They said India is the second largest source of imports of raw materials and other goods for Bangladesh. Industrial raw materials, capital machinery, cotton, yarn, fabrics, and chemicals worth USD 16.19 billion were imported from India in the fiscal year 2021-22.
Read:Bangladesh’s forex reserves now $36.90 billion
At the same time, Bangladesh exported goods worth USD2 billion to the neighbouring country.
On September 15, Bangladesh Bank allowed banks to open accounts in the Chinese currency yuan.
IMF has recognized five countries’ currencies as “high-value”. The Chinese yuan was admitted to IMF’s high-value currency basket in 2016. Since then, the yuan has become stronger than ever as per a currency review by the IMF.
Read Sri Lanka hopes to reach initial agreement with IMF for help
Vishwakarma puja in India: Trade at Benapole port halted
Trade between Bangladesh and India via the Benapole land port remained suspended on Saturday, with the neighbouring country celebrating Vishwakarma puja.
However, movement of people via the land port remained as usual, officials said.
Kartik Chakrabarty, general secretary of the Petrapole C&F Agent Staff Welfare Association, said that trade between Bangladesh and India through Benapole-Petrapole land ports will resume on Sunday morning.
Read: Trade through Benapole land port suspended for Janmasthami
Abdul Jalil, deputy director (traffic) at the Benapole port, said that though transportation of goods between the two countries was suspended, loading and unloading of goods inside the port remained normal.
“We’ve kept our cargo department and checkposts open so that Indian trucks carrying Bangladeshi goods can return," said Abdur Rashid Mia, joint commissioner of Benapole Customs House.
Doraiswami: PM Hasina’s India visit "extremely successful" with "strong deliverables"
Outgoing Indian High Commissioner to Bangladesh Vikram Kumar Doraiswami has described Prime Minister Sheikh Hasina's recent India visit as "extremely successful" with "very strong deliverables" on all areas of important cooperation from trade, connectivity to water sharing.
"So our goal essentially was to ensure that the relationship goes forward with more trade, more cooperation," he told reporters during an interaction at Old India House on Wednesday evening.
Doraiswami particularly highlighted few of the deliverables, one being the MoU on water sharing of the Kushiyara River, the first water sharing agreement that the two countries had since the Ganges water sharing treaty in 1996.
Read: Under Sheikh Hasina’s leadership, India-Bangladesh ties will reach new heights: Doraiswami
The second thing is the announcement by the two leaders of a decision to start negotiations for a Comprehensive Economic Partnership Agreement (CEPA).
"Third, I think the sense of focus on transport and connectivity was very strong. A very good package was negotiated and finalized in terms of railway connectivity in particular," Doraiswami said.
During the visit, the Indian side requested the Bangladesh side for cooperation for initiating new sub-regional connectivity projects including a highway from Hili in West Bengal to Mahendraganj in Meghalaya through Bangladesh and in this regard, proposed preparation of a detailed project report.
Read: Masud Bin Momen bids farewell to Doraiswami
Responding to a question, the High Commissioner said the idea is sub regional connectivity and the numbers of road options are very limited. “Alternatives options have to be explored and we are now suggesting and looking at options…”
In the same spirit, Bangladesh reiterated its eagerness to partner in the ongoing initiative of the India-Myanmar-Thailand trilateral highway project.
The envoy said they intended to invite Bangladesh to be one of the guests at the G20 Summit, which India will host next September.
Read Hasina, Modi jointly unveil Rampal Power Plant’s unit 1
"And of course that has now been announced. So as you will understand, it is not just an invitation for the Summit level process. It is an invitation for the totality of the G20 meetings during India's chairmanship," Doraiswami said, terming it a very big deal.
Essentially all the guest countries including Bangladesh will have an opportunity to be part of the larger process of negotiating outcomes for the totality of G20.
India, as G20 Presidency, will be inviting Bangladesh, Egypt, Mauritius, Netherlands, Nigeria, Oman, Singapore, Spain and the United Arab Emirates (UAE) as guest countries to its meetings and Summit.
Read Dhaka, Delhi sign 7 MoUs; unveil projects
India will assume the Presidency of the G20 for one year from December 1, 2022 to November 30, 2023.
Under its Presidency, India is expected to host over 200 G20 meetings across the country, beginning December 2022.
PM Sheikh Hasina paid a state visit to India from September 5-8 at the invitation of Prime Minister of India Narendra Modi.
Read Getting Kushiyara water is a big success of PM’s India visit: Quader
During the visit, Prime Minister Hasina called on President of India Droupadi Murmu and Vice President of India Jagdeep Dhankhar.
External Affairs Minister Dr. S. Jaishankar and Minister of Development of North Eastern Region G. Kishan Reddy called on her.
Prime Minister Hasina’s programme also included launching of "Bangabandhu Sheikh Mujibur Rahman Student Scholarship” for 200 descendants of Indian Armed Forces personnel martyred and critically injured during the Liberation War of Bangladesh in 1971.
Read PM’s India Visit: Bilateral instruments on water management, defence, railway likely to be signed
She also addressed a business event, jointly organized by Indian and Bangladesh business communities on September 7.
Both Prime Ministers held a restricted meeting and tête-à-tête followed by delegation level talks on September 6.
The two leaders expressed satisfaction at the excellent state of bilateral relations, based on deep historical and fraternal ties and shared values of democracy and pluralism, which is reflected in an all-encompassing bilateral partnership, based on sovereignty, equality, trust and understanding that transcends even a strategic partnership.
Read Let’s see what she achieves this time, Fakhrul about PM’s India tour
They recalled Prime Minister Narendra Modi’s state visit in March 2021 to join the celebrations of the Golden Jubilee of the Independence of Bangladesh, the birth centenary of the Father of the Nation Bangabandhu Sheikh Mujibur Rahman and 50 years of establishment of diplomatic relations between Bangladesh and India, which was followed by the state visit of the President of India in December 2021, to attend the celebrations of the Golden Jubilee of the Victory Day of Bangladesh, as the guest of honour.
Like Singapore, Bangladeshi traders can now buy goods and export directly to third countries
Bangladesh Bank has announced a ‘Merchandise Trade’ policy to diversify exports.
From now on, like Hong Kong and Singapore, traders can buy goods or services from another country and export them to third countries.
Foreign Exchange Policy Department of Bangladesh Bank issued a circular in this regard and sent it to the authorized dealers for immediate execution on Wednesday.
Read MCCI-PRI for raising EDF to $10 billion to achieve $80 billion export target
The central bank circular stated, “In accordance with export policy in force, a trade for which goods or services procured from a country, are shipped or delivered directly to a third country is defined as ‘merchandising trade’. To facilitate transactional services by ADs to their ‘merchandising, trade’ customers, it has been decided to formulate a set of operational guidelines.”
This type of business is gaining popularity worldwide. Specific policies in this regard were necessary for Bangladesh. Due to the new policy, export trade will expand. Now traders from countries like Hong Kong, and Singapore can do business. It will earn a lot of foreign currency.
According to the policy, ‘merchandising, trade’ is defined as ‘procurement of goods and services, from another country and shipment of goods and services from that country directly to buyers in a third country’.
Read Bangladesh’s apparel export to cross $100 bn by 2030: experts
According to the circular, the EXP form will not be required for export activities under merchandising trade. Similarly, the IMP form applicable to imports will not be required in the case of procurement of goods from different countries.
Import expenses can be met with income from foreign sources. At the same time, the possibility of meeting import expenses under buyers' credit received from abroad has been kept in the circular. However, in this case, the bank cannot guarantee payment.
The circular directed that there should be a sufficient margin for local expenditure and profit after meeting liabilities from export earnings.
Read All export-oriented industries should get equal facilities: Salman F Rahman