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
Thursday.

“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.


Innovation jobs flocking to a handful of US cities

Updated 09 December 2019

Innovation jobs flocking to a handful of US cities

  • Economists fear job clustering could have a “destructive” influence on society

WASHINGTON: A new analysis of where “innovation” jobs are being created in the US paints a stark portrait of a divided economy where the industries seen as key to future growth cluster in a narrowing set of places.

Divergence in job growth, incomes and future prospects between strong-performing cities and the rest of the country is an emerging focus of political debate and economic research. It is seen as a source of social stress, particularly since President Donald Trump tapped the resentment of left-behind areas in his 2016 presidential campaign.

Research from the Brookings Institution released on Monday shows the problem cuts deeper than many thought. Even cities that have performed well in terms of overall employment growth, such as Dallas, are trailing in attracting workers in 13 industries with the most productive private sector jobs.

Between 2005 and 2017, industries such as chemical manufacturing, satellite telecommunications and scientific research flocked to about 20 cities, led by well-established standouts San Francisco, Seattle, San Jose, Boston and San Diego, the study found. Combined, these mostly coastal cities captured an additional 6 percent of “innovation” jobs — some 250,000 positions.

Companies in those industries tend to benefit from being close to each other, with the better-educated employees they target also attracted to urban amenities.

Brookings Institution economist Mark Muro said he fears the trend risks becoming “self-reinforcing and destructive” as the workforce separates into a group of highly productive and high-earning metro areas and everywhere else.

Even though expensive housing, high wages, and congestion have prompted some tech companies to open offices outside of Silicon Valley, those moves have not been at scale. Most US metro areas are either losing innovation industry jobs outright or gaining no share, Muro wrote.

Over this decade, “a clear hierarchy of economic performance based on innovation capacity had become deeply entrenched,” Muro and co-author Rob Atkinson, president of the Information Technology and Innovation Foundation, wrote in the report. Across the 13 industries they studied, workers in the upper echelon of cities were about 50 percent more productive than in others.

For much of the post-World War Two period labor was more mobile, and the types of industries driving the economy did not cluster so intensely, a trend that started reversing around 1980.

Concerns that the US is separating effectively into two economies has sparked support for localized efforts to spread the benefits of economic growth.

The Federal Reserve has flagged it as a possible risk to overall growth, and some of the presidential candidates running for office in 2020 have rolled out proposals to address it. One aim of Trump’s decision to impose tariffs on imports from China and elsewhere is to revive ailing areas of the country.