Germany prepares for hydrogen accord with Australia

Germany on Sunday said it has taken steps towards a bilateral alliance on hydrogen production and trade with Australia to try and facilitate a renewable energy-based hydrogen supply chain between the countries.

Economy minister Peter Altmaier and education and research minister Anja Karliczek signed a letter of intent to set up a “Germany Australia Hydrogen Accord” with their Australian counterpart, Angus Taylor, the economy ministry said in a press release.

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It said the cooperation was about enabling “the import of sustainably produced hydrogen in relevant volumes, which is an important factor to reach our tighter climate targets.”

Australia wants to develop a clean hydrogen and ammonia production chain to cut carbon, depart from fossil fuels and build up new export markets, Taylor said in an interview for Reuters events in May.

The two countries can take advantage of Australia’s limitless solar resources and employing German electrolysis technology, said Altmaier.

Karliczek said her ministry will fund a technology incubator called HyGate with 50 million euros ($60.53 million) over three years to test technologies from production through to storage and transport.

Big energy firms including German utility RWE and Uniper have started looking into possible new trade routes for hydrogen, a cleaner alternative to fossil fuels from Australia and other places.

Germany’s 9 billion euro hydrogen strategy launched last summer, which is embedded in wider European Union strategies, is based on the assumption that some 80% of its hydrogen requirements may have to be imported in the long term. Germany has put out feelers to Saudi Arabia, Canada, Chile and Morocco for possible supplies. 


Facebook gets VAT registration

Social media giant Facebook yesterday received the value-added tax registration from the National Board of Revenue after two years of stalemate.

Three entities of Facebook – Facebook Technologies Ireland Ltd, Facebook Ireland Ltd, and Facebook Payments International Ltd – got the Business Identification Number (BIN) from the Dhaka South VAT Commissionerate, said Pramila Sarker, additional commissioner of the field office.

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Facebook’s move comes nearly two weeks after Google and e-commerce company Amazon’s secured the BINs.

In July 2019, the NBR made it mandatory for tech giants to either set up offices in Bangladesh or appoint agents so that the government can collect VAT on the advertisements and other services provided by them to local firms.

However, internet companies were unwilling to set up representative offices. They were also not interested in paying VAT to the NBR through agents or sharing data on sales containing information about customers on the ground of privacy breaches and security risks.

Last year, the NBR decided to allow tech giants to get direct VAT registration without opening local offices to bring them under the tax network.

However, progress had been slow over the last one year owing to technical and legal complexity, according to officials.

Facebook’s local sales agent Httpool Bangladesh Ltd has been paying VAT against ad sales since July last year, said Sarker.

As of April this year, the NBR has received Tk 9.40 crore from Httpool Bangladesh, according to the field office of the VAT.

Besides, many companies also make payments to Facebook through banks and other payment systems, which also cut the VAT at the source.

“We are expecting to see streaming service provider Netflix and technology company Microsoft getting registration soon,” Sarker said.

With 4.1 crore users, Bangladesh has the 10th largest Facebook population in the world, according to German database company Statista.

More than 3 lakh stores run operations based on Facebook, with over 1,000 running their business through only the social media platform, which accounts for around 80 per cent of all social media users in Bangladesh, industry people said in December.

Although there is no specific figure of the F-commerce market size, it may range from Tk 300 crore to Tk 350 crore per year. 


Fed expected to stand its ground despite rising inflation

Even in the face of rising inflation, the lackluster progress on restoring jobs lost during the pandemic means the US Federal Reserve is unlikely to budge on monetary policy when it meets next week.

Central bank chief Jerome Powell has made it clear the Fed will hold the line on its massive bond buying program and rock-bottom lending rates until data reflect lasting improvement in employment across all economic strata.

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But the recent surge in inflation in the world’s largest economy is ramping up the pressure on policymakers to begin to pull back on stimulus programs.

Hints of whether central bankers will buckle may be seen next week when the Fed’s policy-setting Federal Open Markets Committee (FOMC) holds its two-day policy meeting.  “No good deed goes unpunished and that is the case with the rapid reopening of the economy,” economist Joel Naroff said in an analysis.

“The upside is that growth is soaring. The downside is that consumer inflation is surging, and labor problems are pressuring businesses. With widespread vaccinations in recent months and massive government aid, the US economy has come roaring back from the Covid-19 crisis as businesses rushed to reopen.  But the process has been bumpy and other countries have not kept pace, creating a shortage of supplies and workers.

That in turn has sent prices surging, with the consumer price index hitting a 13-year high of five per cent in May compared to the same month in 2020.

While Fed officials have repeatedly offered reassurances that the increase is mostly due to temporary issues — used car prices alone make up the bulk of the rise — some financial market players have begun to sound the alarm, as have Republicans opposed to President Joe Biden’s spending plans.

“We should all be very concerned,” Republican Senator Pat Toomey tweeted last week. “It’s long overdue for the Fed to begin the process of normalizing its monetary policy. “Omari Swinton, chair of the Howard University economics department, said with businesses finding it hard to fill open positions as they reopen, or competing with the $1,000 signing bonus offered by major US employer Amazon, wage and price inflation are legitimate concerns.

But the  “systemic” issue of the worker shortage is the more important target of the Fed’s policy deliberations, he said, especially if the labor pool shrinks permanently in the wake of the pandemic.

“No one knows if people are going to go back to work or not,” Swinton told AFP.   “So their focus on making sure the employment recovery is strong is more important than inflation.

“That has been Powell’s stance: downplaying inflation fears while stressing the importance of allowing the economy to grow fast enough that even low wage workers can find jobs.

While the official unemployment rate fell to 5.8 per cent in May, unemployment for Black Americans remains much higher at 9.1 per cent, and more than seven million of the jobs lost during the pandemic still have not been restored.

“The labor market recovery since the end of last year has been solid, but it remains far from a broad-based and inclusive one,” Kathy Bostjancic of Oxford Economics said.

Even if the Fed’s policy remains unchanged, Powell could reassure the world that the central bank will be vigilant about inflation, and he might signal they are  “talking about talking about” the right time to begin to slow purchases of assets, which have pumped cash into the economy throughout the crisis.

Many economists expect Powell to give clearer hints about the taper plans in August at an annual central bank conference in Jackson Hole, Wyoming.

The FOMC at this meeting also will release the latest quarterly forecasts of the 17 committee members, which are expected to reflect the improved economic outlook, and show a median projection for one interest rate hike in 2023.

In the last Summary of Economic Projections (SEP) in March, no increase in the benchmark borrowing rate was expected through 2023.


Development spending will barely impact youths

Only 14 per cent allocation of the annual development programme for the fiscal year of 2021-22 will directly contribute to the development of youths although they make up a majority of the population, according to a think-tank yesterday.

“Sixty per cent of projects will have no positive impact on youths,” said an analysis of the South Asian Network on Economic Modeling (Sanem).

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The research organisation shared the findings of its analysis at a webinar on “National Budget 2021-22 from Youth Perspective”, jointly organised by the Sanem and ActionAid Bangladesh yesterday.

While comparing the ADP allocation in the budget and the planned ADP allocation in the 8th Five-Year Plan, Sanem Senior Research Associate Eshrat Sharmin said several key ministries, including the Ministry of Primary and Mass Education, the Ministry of Youth and Sports, the Information and Communications Division and the Health Services Division, had received smaller budgetary allocations than planned.

In particular, the ADP allocation for the Department of Youth Development has seen a massive reduction in the latest budget, from Tk 42.6 crore in FY20-21 to Tk 1.9 crore in FY21-22.

In the analysis of the proposed ADP for 22 ministries for the next fiscal year, she said inadequate skill formation due to disruptions in learning activities, rising poverty and inequality, lack of nutrition, unwanted pregnancies and mental health issues will create a lasting impact on the socio-economic development of the country.

So, allocations needed to be increased for youth education, healthcare and job creation amid the ongoing Covid-19 pandemic, speakers said, while calling upon the government to take steps to ensure easier access to stimulus packages for youths involved in the SME sector.

Addressing the programme, Sanem Research Director Prof Sayema Haque Bidisha said that youths had been affected by the ongoing pandemic through two main channels, namely education and employment.

On the one hand, the pandemic has exacerbated the digital divide and inequality in access to education. But, on the other hand, the pandemic has created several challenges for fresh graduates and new entrants to the labour force who are looking for decent employment.

The government must focus on making the national budget more youth-centric to reap the benefits of Bangladesh’s demographic dividend, Bidisha said.

ActionAid Bangladesh Country Director Farah Kabir urged the government to focus on the youth and use their potential to drive economic prosperity within the country.

She also stressed the need to facilitate data collection and sharing between research organisations and policymakers to identify the worst-affected groups of the population and extend support to lift them out of their socioeconomic miseries.

Farzeen Ferdous Alam, chairman of Oggro Ventures, said some good initiatives were taken in the previous budget, but they had not been implemented appropriately.

Selim Raihan, executive director of the Sanem, said the budget allocation for the youth was severely inadequate.

“There remains a lack of special initiatives to solve the numerous crises faced by the young people during this time. Besides, there is a lack of supervision and evaluation in this regard,” Raihan said.

Nahim Razzaq, a lawmaker, reiterated the concerns of the research team and panellists regarding the gaps in policies to address the challenges facing the young population.

Md Hasanul Islam, additional secretary of the Secondary and Higher Education Division; Mohammad Ismail, additional secretary of the social welfare ministry; Nashid Rizwana Monir, deputy secretary of the expatriates’ welfare and overseas employment ministry; and Sabina Yeasmin, senior assistant secretary of the Technical and Madrasah Education Division, also spoke. 


Oil hits multi-year highs in third weekly gain on demand recovery

Oil prices reached fresh multi-year highs on Friday, closing out a third straight week of gains on an improved outlook for worldwide demand as rising Covid-19 vaccination rates help lift pandemic curbs.

Brent crude futures settled at $72.69 a barrel, rising 17 cents after reaching their highest since May 2019. For the week, Brent was up 1 per cent.

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US West Texas Intermediate (WTI) crude futures settled at $70.91 a barrel, up 62 cents, settling at their highest since October 2018. WTI was up 1.9 per cent on the week.

“Demand is coming back faster than supply and we’re going to need more supply to meet that demand,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

The International Energy Agency (IEA) said in its monthly report that the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, would need to boost output to meet demand set to recover to pre-pandemic levels by the end of 2022.

“OPEC+ needs to open the taps to keep the world oil markets adequately supplied,” the Paris-based energy watchdog said.

It said that rising demand and countries’ short-term policies were at odds with the IEA’s call to end new oil, gas and coal funding.

“In 2022 there is scope for the 24-member OPEC+ group, led by Saudi Arabia and Russia, to ramp up crude supply by 1.4 million barrels per day (bpd) above its July 2021-March 2022 target,” the IEA said.

US investment bank Goldman Sachs said it expects Brent crude prices to reach $80 per barrel this summer as vaccine rollouts boost global economic activity.

“The rollout of the vaccine in North America as well as Europe is helping to restore demand at the same time that OPEC+ has reigned in production,” helping propel oil prices, said Andy Lipow of Lipow Oil Associates in Houston.

Data showing road traffic returning to pre-Covid-19 levels in North America and most of Europe was encouraging, ANZ Research analysts said in a note.

“Even the jet fuel market is showing signs of improvement, with flights in Europe rising 17% over the past two weeks, according to Eurocontrol,” ANZ analysts said.

In an indication of future supply, US oil rigs rose by six to 365 this week to their highest since April 2020, energy services firm Baker Hughes Co said in its weekly report. [RIG/U] It was the biggest weekly increase of oil rigs in a month. 


Ring Shine to resume partial production

Shareholders of Ring Shine Textiles were all smiles after news broke that the company would partly resume production after about nine months’ closure.

As a result, the listed garment exporter’s stocks rose by around 1 per cent to Tk 11.

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In a disclosure on the Dhaka Stock Exchange (DSE) website, the company said it would resume production from June 13 at 25 per cent of its full capacity.

The factory lay-off was also accordingly withdrawn yesterday. Citing the economic turmoil brought about by the ongoing coronavirus pandemic, Ring Shine declared a lay-off last September.

The Bangladesh Securities and Exchange Commission had restructured the company’s board in January this year with an aim to change its non-performing status.

The stock market regulator also allowed Ring Shine to utilise its Tk 40 crore IPO funds, which was banned previously.

The company raised funds worth Tk 150 crore from investors in 2019 to set up denim manufacturing units and repay bank loans but the regulator froze its bank accounts in February last year due to various irregularities.

Now, its new board of directors is trying to resume full production after primarily deciding to start with 25 per cent of the production capacity.

After the board was restructured, investors have been hopeful of the company’s return to profitability, which has been reflected in its stock price.

Over the past one-and-a-half months, the company’s stocks soared to Tk 11 while it was Tk 4.80 earlier, DSE data showed.


China’s Geely to press on with methanol vehicles, chairman says

Chinese automaker Geely will keep working on vehicles powered by methanol even though the effort may fail, chairman Li Shufu said on Sunday. 

Zhejiang-based Geely, among a small number of automakers developing methanol-powered vehicles, is testing methanol taxis in some western Chinese cities as well as developing methanol-powered trucks at its commercial vehicles unit.

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Li said Geely, which owns Volvo Cars and 9.7 per cent stake in Daimler AG, invested in Carbon Recycling International, an Icelandic company, to work on technologies to produce methanol with carbon dioxide, in a way to lower overall carbon emissions.

“We will keep exploring methanol vehicle technologies. Of course it might fail in the end, but currently we are still working on it,” Li told an industry conference in the western city of Chongqing, without elaborating. Methanol fuel would boost China’s energy independence as the country has huge amounts of coal, which can be converted to methanol. Geely’s Li has also said he expects methanol vehicles to be cleaner than gasoline models.

Li did not offer details of the technology. He has told Reuters that Geely would expand production of methanol-powered vehicles.

Geely is also developing battery electric vehicles, petrol-electric hybrid cars and hydrogen commercial vehicles.

China, the world’s biggest auto market, is developing electric and hydrogen fuel-cell vehicles. 


BSCIC launches one-stop service

Bangladesh Small and Cottage Industries Corporation (BSCIC) inaugurated its “one-stop service” yesterday to attract domestic and foreign investment.

The service would help businesses get trade licences, land registration, naming, environmental clearance and many other certificates from BSCIC. 

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Businesses can now apply online and get these services from a single platform.

“BSCIC has entered into a new era with the inauguration of the One Stop Service Centre.

There is no alternative to one-stop service in building a Digital Bangladesh,” said Nurul Majid Mahmud Humayun, industries minister, after launching the service at a function at InterContinental Dhaka.

The initiative will help entrepreneurs get their desired services within the shortest possible time, said Md Mushtaq Hasan, chairman of BSCIC.

“This will attract new domestic and foreign investments in BSCIC industrial cities and will accelerate eco-friendly industrialisation in the country.”

Kamal Ahmed Majumder, state minister for industries, and Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, were also present at the event. 


Price hike of essentials weighs on 90pc people

Around 90 per cent of people of Bangladesh are forced to buy low-quality products when the prices increase as their incomes do not go up in keeping with the upward movement of basic items’ prices, speakers said yesterday.

“As the prices of goods increase, the income does not go up, which puts pressure on the family.

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As a result, mental and intellectual development is disrupted,” said Rajekuzzaman Ratan, the general secretary of the Samajtantrik Sramik Front.

He said 90 per cent of the population faced pressure when prices of essential items rose.

“They compromise with the quality of food and suffer from malnutrition. This impacts the next generation.”

He made the comments while presenting a keynote paper at a webinar on “Consumer rights in the face of rising prices of goods and services” jointly organised by the Consumers Association of Bangladesh (CAB) and VoktaKantho, an online news portal of the CAB, yesterday.

Addressing the webinar, Prof M Shamsul Alam, energy adviser to the CAB, said it was becoming impossible to control the market due to the inconsistency of price increase.

He pointed out the inconsistency in the income between government employees and marginalised producers.

“The market can be controlled when income inequality is removed,” he said. 

MM Akash, a professor of the economics department at the University of Dhaka, said the interest of both consumers and producers had to be protected.

He demanded a permanent wage commission to restore consistency between market price and wage.

The domestic market depends on the purchasing capacity of people, but their buying power was not increasing, he said.

Ratan said except for 23 per cent of the very rich, wealthy and upper-middle-class, the remaining 77 per cent of the people were affected by the increasing cost of living.

He called for a balanced price-fixing to save the market from the curse of inflation by breaking the monopoly and syndicates.

According to the labour leader, although there were many types of jobs and professions, the wage board had been fixed by the labour ministry for only 43 sectors.

There is a provision to revise the wage every five years, but it has not been done since 2013, he said.

Ratan recommended strengthening the Bangladesh Agriculture Development Corporation to make farm inputs quickly and cheaply, empowering the Trading Corporation of Bangladesh, and introducing a rationing system.

He also suggested monitoring the market, taking steps to rationalise transport fares, making education affordable for all, and controlling the market of healthcare and medicines.

Malay Bhoumik, a professor of the management department of Rajshahi University, backed rolling out a rationing system. 

Ghulam Rahman, president of the CAB, Jyotirmoy Barua, a lawyer at the Supreme Court, and Kazi Abdul Hannan, editor of VoktaKantho, also spoke.