Mercedes, BMW in talks to open assembling plants in Bangladesh

Demand for luxury cars is increasing rapidly in Bangladesh, where around 30 percent of private cars are new vehicles imported from different countries. (Shutterstock)
Updated 15 September 2019

Mercedes, BMW in talks to open assembling plants in Bangladesh

  • Experts express optimism about the high-profile investments in the country, which is a fast-growing market

DHAKA: World-renowned executive car producers, BMW and Mercedes-Benz, could soon be putting the pedal to the metal by setting up an assembling plant in Bangladesh, officials told Arab News on Saturday. 

A high-profile delegation from Germany is on a five-day visit to the country, to explore investment options. 

The group held several rounds of talks with top Bangladeshi government officials, including Finance Minister AHM Mustafa Kamal, and representatives of the Bangladesh Investment Development Authority (BIDA) to speed up the investment process. They also met Prime Minister Sheikh Hasina on

“We have just started the discussions with the German investors. We hope that it is going to be a Foreign Direct Investment (FDI). Although we are yet to confirm the amount, I can say that it will definitely be a big one,” Nabash Chandra Mandal, executive member of BIDA told Arab News.

Mandal added that the visiting delegation has been briefed about the investment road map and the ease of doing business in Bangladesh.

“It will take a couple of months to finalize the negotiations and we hope things will move positively,” Mandal said. 

The companies hope to set up a plant in Bangladesh to manufacture some parts locally. The rest will be imported from Germany, with plans to build a brand new vehicle in Bangladesh in the future, Finance Minister Kamal said.

“It is a good proposal as we will not have to import very expensive cars from abroad if they set up the plant,” he added.

The proposal has got its seal of approval from experts and analysts, too.

Professor Mustafizur Rahman, a distinguished fellow at the Center for Policy Dialogue (CPD) — a non-governmental think-tank — said he was optimistic about the plans considering it could be a “new kind of FDI for the country.”

He added that once the companies set up shop, it will help to boost the economy and create a positive branding for Bangladesh in the global market. 

“Since it’s a capital intensive venture, this large-scale FDI from Germany will definitely encourage other big, global players to invest in Bangladesh. Besides, it will create another opportunity for the small and medium enterprises to grow, centering around this world-famous vehicle assembling plant, and generate employment, too,” Professor Rahman told Arab News. 

Bangladesh is one of the world’s fastest growing markets, with the demand for luxury cars increasing by the year.

According to the Bangladesh Reconditioned Vehicles Importers  and Dealers Association (BARVIDA), in the past year alone, nearly 13,000 reconditioned private cars were imported. 

“Around 70 percent of the cars that you see on the streets are reconditioned and mostly imported from Japan,” Shahidul Islam, the secretary of BARVIDA, told Arab News, adding that in recent years there has been “an increase in demand for new cars.”

“Currently, around 30 percent of our private vehicles are brand new cars imported from different countries. The new investment plans will help our upper-
class buyers to buy brand new vehicles at a cheaper price. As the country’s economy is moving at a very fast pace, the executive cars will enjoy more market share in the coming days,” Islam said.

The German Asia-Pacific Business Association — together with the Association of the German Chambers of Commerce and Industry — organized the visit for the delegation which is being headed by Peter Fahrenholtz, the German ambassador to Bangladesh.

$8bn blow to Erdogan as investors flee Turkey

Updated 09 July 2020

$8bn blow to Erdogan as investors flee Turkey

  • Overseas holdings in Istanbul stock exchange are at lowest in 16 years

ANKARA: Foreign capital is flooding out of Turkey in a massive vote of no confidence in President Recep Tayyip Erdogan’s economic competence.
Overseas investors have withdrawn nearly $8 billion from Turkish stocks since January, according to Central Bank statistics, reducing foreign investment in the Istanbul stock exchange from $32.3 billion to $24.4 billion.
As recently as 2013, the figure was $82 billion, and foreign investors now own less than 50 percent of stocks for the first time in 16 years.
“Foreign investment has left Turkey for several reasons, both internal and external,” Win Thin, global head of currency strategy at Brown Brothers Harriman, told Arab News.
“Externally, investors fled riskier assets like emerging markets during the height of the coronavirus pandemic. Some of those flows are returning, but investors are being much more discerning and Turkey does not seem so attractive.”
In terms of internal factors, Thin said that Turkish policymakers had made it hard for foreign investors to transact in Turkey. “This includes real money clients, not just speculative.
“By implementing ad hoc measures to try and limit speculative activity, Turkey has made it hard for real money as well. Besides these problems, Turkey’s fundamentals remain poor compared to much of the emerging markets.”
Erdogan allies claim international players are manipulating the Istanbul stock exchange through automated trading, and have demanded action to make it difficult for them to trade in Turkish assets.
Goldman Sachs, JPMorgan, Merrill Lynch, Barclays and Credit Suisse were banned this month from short-selling stocks for up to three months, and this year local lenders were briefly banned by the banking regulator from trading in Turkish lira with Citigroup, BNP Paribas and UBS
JPMorgan was investigated by Turkish authorities last year after the bank published a report that advised its clients to short sell the Turkish lira.
MSCI, the provider of research-based indexes and analytics, warned last month that it may relegate Turkey from emerging market status to frontier-market status because of bans on short selling and stock lending.
With the market becoming less transparent, overseas fund managers, especially with short-term portfolios, are unenthusiastic about the Turkish market and are becoming more concerned about any forthcoming introduction of other liquidity restrictions.
The exodus of foreign capital is likely to undermine Turkey’s drive for economic growth, especially during the coronavirus pandemic when employment and investment levels have gone down, with the Turkish lira facing serious volatility.