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Hun Sen’s labor sop will cost Cambodian industry

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Hun Sen’s labor sop will cost Cambodian industry

Cambodian Prime Minister Hun Sen’s political move to hike the minimum wage for textile and footwear workers threatens to undermine the crucial industries, which combined account for two-thirds of the nation’s exports.

Under the executive order, announced last week, garment and footwear factory workers’ minimum wages will increase around US$2 to $192 per month beginning January 1, 2021.

Employer groups that have argued for wage reductions for next year say that this additional burden could make the sector even more uncompetitive and hinder recovery amid the pandemic-induced economic crisis.

Almost a quarter of Cambodia’s workers have been laid off since the pandemic began and after the European Union partially knocked Cambodia from a privileged tariff-free trade scheme, known as Everything But Arms (EBA), in reprisal for Hun Sen’s democratic backsliding.

The National Council for Minimum Wage, a tripartite body composed of representatives from the government, trade unions and employer groups, meets annually to discuss minimum wage increases. But it couldn’t reach an agreement for what the basic salary should be in 2021 after weeks of debate.

Most industries in Cambodia have no set minimum wage, but the salary of textile workers tends to be the highest.

Trade union representatives went into this year’s discussions demanding a wage hike of $11.59 for next year, which they say is a necessity given the ever-increasing cost of living in Cambodia. Employer groups, which had tried to have these discussions postponed by a year, demanded a $17 cut.

There are conflicting reports as to why Hun Sen intervened. One claim is that the National Council for Minimum Wage simply couldn’t agree on a figure so turned the decision over to his government to settle the impasse.

Another suggestion is that the council agreed to keep wages the same for next year, only for the prime minister to then intervene with his raise.

This isn’t out of character for the national leader. In 2014, 2015 and 2018, Hun Sen added a few dollars to higher minimum wages that his ministers had previously agreed.

While unions and business groups have tacitly accepted the decision of Cambodia’s strongman leader, who has been in power since 1985, neither side are pleased with an outcome that appears to most benefit the government.

Hun Sen is keen to maintain some calm in a country that has seen escalating youth-led protests in recent months, especially after the arrest of prominent trade unionist Rong Chhun in July. Placating garment workers with even a limited wage bump is the other side of the coin to his government’s violent crackdown on these latest protests.

It was also a populist measure by Hun Sen who has been keen in recent years to woo garment workers, who in the past typically voted for the now-banned Cambodia National Rescue Party (CNRP), the largest opposition party until its forced dissolution in late 2017.

A promise to boost the minimum wage was key to the CNRP’s campaign ahead of the 2013 general election, at which it won 44% of the popular vote. Afterward, this policy was immediately appropriated by Hun Sen’s ruling Cambodian People’s Party (CPP) as a way to curry favor with this part of the electorate.

The minimum wage for textile workers rose from just $80 in 2013 to $190 this year. Government propaganda circulated on social media shows images of Hun Sen being embraced by adoring garment workers, alongside the boast that Cambodia is the only country in Southeast Asia that has increased the minimum wage during the pandemic.

Core inflation reached 3.2% in June as Cambodia’s consumer price index hit a five-year high. The cost of living has increased significantly over the past five years. The price of fresh fish, for instance, rose by 11.4% in June compared to the same month last year.

Phnom Penh, home to many of the typically young, female migrants from the countryside who work in the textile factories, is now the sixth most expensive city in Southeast Asia, according to the Numbeo Current Cost of Living Index. It ranked fourth last year.

It is estimated that one in five Cambodians depend on salaries earned in the textile sector, as workers send home large chunks of their wages to families back in the countryside. The considerable decline of the sector during the pandemic has contributed to rising poverty in rural areas, analysts say.

Government data claims that textile exports fell by only 5.4% in the first half of this year, compared to the same period in 2019, an official figure that has raised a few suspicious eyebrows considering the loss of certain tariff-free trade privileges in the EU.

The government also asserts that only 50,000 jobs have been affected by the pandemic-induced economic crisis. But the Garment Manufacturers of Cambodia (GMAC), the main industry body, puts the number of job losses at 150,000, out of around 700,000 pre-pandemic.

In February, Hun Sen promised that furloughed textile workers would receive 60% of the minimum wage, or roughly $114 per month, with the majority being paid for by the state and the rest by employers.

Two months later, however, the leader reduced the amount to just $70 per month. It remains unclear whether Phnom Penh caved to demands from employers for the original sum to be reduced or, more likely, the government realized it didn’t have the funds to make the payments over a medium or long-term period.

Most years, employer groups have gone into minimum wage discussions with the goal of keeping salary hikes as low as possible. Seldom, however, have they demanded a cut in minimum wages, as they did this year.

Textile factory owners contend that the minimum wage is something of a red-herring, as most workers receive more than the basic salary.  Employers must also pay overtime bonuses, a $7 monthly accommodation allowance, good attendance add-ons, and seniority payments for long-serving staff.

It is thought that these bonuses, on average, cost employers an additional $15 per month per worker.

Phnom Penh has put a positive spin on the minimum wage hike. “The raise is also a message to attract more investment and new factories to Cambodia,” Labor Minister Ith Sam Heng told local media.

Yet it is difficult to see how the move to increase costs would necessarily attract new investors. Indeed, if the textile sector is to recover to near pre-pandemic levels it will need substantial investment in the coming years, mostly from overseas.

Some of the factories barely surviving at present are expected to collapse once state bailout funds are withdrawn. Others will need to raise working capital to pay for operations and wages, since earnings from exports are rarely paid up-front.

A recent GMAC survey found that only 35% of factories have enough orders until the end of the year, while quarter 25% reported having no orders until the end of 2020, the Southeast Asia Globe reported last month.

To raise the necessary investment, Cambodia’s textile sector will need to show it remains competitive against its more developed and higher-end rival producers in Thailand and Vietnam.

Not only has the pandemic significantly reduced demand from Western buyers for Cambodia-made textiles, the country also recently lost many of its trade privileges with the EU, traditionally its largest textile market. Last year, the EU purchased the majority of Cambodia’s textile exports.

In August, tariffs were slapped on one-fifth of Cambodia’s exports to the EU, including some goods from the textile sector, though it is difficult to estimate the costs of the new charges.

Kimlong Chheng, director of the Centre for Governance, Innovation and Democracy at the local Asian Vision Institute think tank, has claimed that total removal from the EBA scheme would cost Cambodia’s economy as much as $650 million each year.

Given that only a fifth of trade privileges under the EBA was cut, the cost may be around US$130 million each year.

Much depends on whether textile factory owners shoulder the additional costs of tariffs by cutting into their profits, or whether they shift the additional costs onto clients by increasing prices, making Cambodia’s textile exports less competitive.

Now, factory owners must also find additional money for higher wages. If the textile sector was to recover to near full employment next year, representing around 750,000 workers, the minimum wage hike will cost employers an additional $1.5 million each month, or $18 million annually.

For years, analysts and industry insiders have warned that Cambodia’s textile sector was losing its competitive edge vis-a-vis neighbors.

Vietnam, now a Southeast Asian powerhouse for manufacturing exports, boasts far higher standards of transport infrastructure, a more productive workforce and easier export capabilities for business owners.

Cambodia’s minimum wage was already higher than its more productive neighbors, which in comparison have avoided hefty wage hikes in recent years to maintain their competitiveness.

Wages for Thai textile workers are currently $191 per month, compared to Cambodia’s US$192 from next year. In Vietnam, where wages differ based upon location, the highest salary i$182 per month. In Laos, the minimum wage is just $88 per month.

Another reason for Cambodia’s faltering competitiveness is political unpredictability. For almost two years, textile owners and investors were left guessing whether Hun Sen’s government would loosen its political stranglehold to maintain economic benefits with the EU. He didn’t and now business owners and workers are bearing the costs.

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North Korea Fires Several Cruise Missiles Towards Yellow Sea: Seoul Military

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North Korea Fires Several Cruise Missiles Towards Yellow Sea: Seoul Military
South Korea and U.S. soldiers stand guard during a ceremony marking the 63rd anniversary of the signing of the Korean War armistice agreement at the truce village of Panmunjom, South Korea, July. REUTERS/Kim Hong-Ji

North Korea fired several cruise missiles towards the Yellow Sea on Wednesday (Jan 24), Seoul’s military said, the latest in a series of tension-raising moves by the nuclear-armed state.

Pyongyang has accelerated weapons testing in the new year, including tests of what it called an “underwater nuclear weapon system” and a solid-fuelled hypersonic ballistic missile.

“Our military detected several cruise missiles launched by North Korea towards the Yellow Sea at around 7am today,” the South Korean Joint Chiefs of Staff said in a statement.

“The detailed specifications are being closely analysed by South Korean and US intelligence authorities,” it added.

Unlike their ballistic counterparts, the testing of cruise missiles is not banned under current UN sanctions against Pyongyang.

Cruise missiles tend to be jet-propelled and fly at a lower altitude than more sophisticated ballistic missiles, making them harder to detect and intercept.

The latest launch comes as South Korea is conducting a 10-day special forces infiltration drill off its east coast, “in light of serious security situations” with the North, that runs until Thursday, according to the South’s navy.

“We will achieve our mission to infiltrate deep into the enemy’s territory and neutralise them completely under any circumstances,” the drill’s commander said in a statement.

“PRINCIPAL” ENEMY

Last week, North Korean leader Kim Jong Un declared the South his country’s “principal enemy”, jettisoned agencies dedicated to reunification and outreach and threatened war over “even 0.001 mm” of territorial infringement.

Hours after the missiles were fired by Pyongyang Wednesday, Seoul’s defence minister said North Korea would face the end of its regime if it ever waged war.

“If the Kim Jong Un regime makes the worst choice to start a war, you must become the invisible force that protects South Korea and … eliminate the enemy’s leadership in the shortest possible time and end their regime,” Shin Won-sik said.

Shin made the remarks during his visit to an air force base operating the South’s advanced stealth fighter jets.

Recent months have seen a sharp deterioration in ties between the two Koreas, with both sides jettisoning key tension-reducing agreements, ramping up frontier security, and conducting live-fire drills along the border.

The North Korean leader Kim also said Pyongyang would not recognise the two countries’ de facto maritime border, the Northern Limit Line, and called for constitutional changes allowing the North to “occupy” Seoul in war, the Korean Central News Agency (KCNA) said.

“OVERWHELMING RESPONSE”

In Seoul, President Yoon Suk Yeol told his cabinet that should the nuclear-armed North carry out a provocation, South Korea would hit back with a response “multiple times stronger”, pointing to his military’s “overwhelming response capabilities”.

At Pyongyang’s year-end policy meetings, Kim threatened a nuclear attack on the South and called for a build-up of his country’s military arsenal ahead of armed conflict he warned could “break out any time”.

Earlier this month, the North launched a solid-fuel hypersonic missile, just days after Pyongyang staged live-fire exercises near the country’s tense maritime border with South Korea, which prompted counter-exercises and evacuation orders for some border islands belonging to the South.

Kim also successfully put a spy satellite into orbit late last year, after receiving what Seoul said was Russian help, in exchange for arms transfers for Moscow’s war in Ukraine.

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AFP

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North Korea Fires Intermediate-range Ballistic Missile: Seoul Military

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North Korea Fires Intermediate-range Ballistic Missile: Seoul Military
North Korean leader Kim Jong Un labelled South Korea his country's "principal enemy" while on a tour of a major munitions factory earlier this week. (Photo: KCNA/KNS/AFP)

North Korea fired a suspected intermediate-range ballistic missile on Sunday (Jan 14), Seoul’s military said, days after Pyongyang staged live-fire exercises near the tense maritime border with the South.

“Our military detected one suspected intermediate-range ballistic missile launched from the Pyongyang area towards the East Sea” at about 2.55pm (5.55am GMT), Seoul’s Joint Chiefs of Staff (JCS) said in a statement, referring to the body of water also known as the Sea of Japan.

The statement gave no further details, adding that authorities in Seoul, Washington and Tokyo were analysing the specifications.

“Our military maintains full readiness by closely sharing information related to the launched ‘North Korean missile’ with the US and Japan,” the JCS said.

Japan’s coast guard also confirmed a suspected missile launch by North Korea, citing information from the country’s defence ministry, and warning vessels to take care.

North Korea’s last missile test was of a Hwasong-18 solid-fuel intercontinental ballistic missile (ICBM), which it fired into the East Sea on Dec 18.

The apparent test comes days after North Korea conducted a series of rare live-fire drills near the maritime border with the South, prompting counter-exercises and evacuation orders for some South Korean border islands.

Leader Kim Jong Un also earlier this week branded Seoul his “principal enemy” and warned he would not hesitate to annihilate the South, as he toured major weapons factories.

“The historic time has come at last when we should define as a state most hostile toward the Democratic People’s Republic of Korea the entity called the Republic of Korea,” Kim was reported as saying on Wednesday by the official Korean Central News Agency (KCNA), referring to the two countries by their official names.

Analysts said at the time that the shift was significant, signifying a shift in Pyongyang’s approach to Seoul into “ultra-hawkish mode”.

TIES WOEFUL

Relations between the two Koreas are at one of their lowest points in decades, after Kim enshrined the country’s permanent status as a nuclear power into the constitution and test-fired several advanced ICBMs.

Last year, Pyongyang also successfully put a reconnaissance satellite into orbit, after receiving what South Korea claimed was Russian assistance, in exchange for arms shipments for Moscow’s war in Ukraine.

Traditional allies, Russia and North Korea have recently boosted ties anew, with Kim making a rare overseas trip to see President Vladimir Putin in Russia’s far east in September.

Top Russian officials, including Moscow’s defence and foreign ministers, also visited North Korea last year, with the flurry of trips both ways fanning concern among Kyiv’s allies over the possibility of a potential arms deal.

KCNA said on Sunday that Pyongyang’s foreign minister would visit Russia this week.

In 2023, Kim test-fired a string of advanced ICBMs including a purported solid-fuel version.

At Pyongyang’s year-end policy meetings, Kim threatened a nuclear attack on the South and called for a build-up of his country’s military arsenal ahead of armed conflict that he warned could “break out any time”.

Pyongyang declared itself an “irreversible” nuclear power in 2022 and has repeatedly said it will never give up its nuclear weapons programme, which the regime views as essential for its survival.

The United Nations Security Council has adopted many resolutions calling on North Korea to halt its nuclear and ballistic missile programmes since Pyongyang first conducted a nuclear test in 2006.

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AFP

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Indonesia’s Marapi Volcano Erupts Again, a Month After Deadly Incident

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Indonesia’s Marapi Volcano Erupts Again, a Month After Deadly Incident
Mount Marapi volcano spews volcanic ash during an eruption as seen from Nagari Bukik Batabuah in Agam, West Sumatra province, Indonesia, January 14, 2024, in this photo taken by Antara Foto. Antara Foto/Iggoy el Fitra/ via REUTERS

Indonesia’s Marapi volcano erupted on Sunday (Jan 14), with ash rising 1,300m from the peak six weeks after a fatal eruption, according to the country’s geological agency.

The volcano in West Sumatra province erupted at least twice by 3.37am GMT on Sunday, the agency said, urging the evacuation of people within 4.5km of the centre of the eruption, with the possibility of lava flows in rivers and valleys.

“In case there’s a rain of ash, we urge residents to also use masks in order to prevent respiratory illness,” the agency said.

Mount Marapi volcano spews volcanic ash during an eruption as seen from Nagari Bukik Batabuah in Agam, West Sumatra province, Indonesia, January 14, 2024, in this photo taken by Antara Foto. Antara Foto/Iggoy el Fitra/ via REUTERS

In December more than 20 people were killed after Mount Marapi, one of Sumatra’s most active volcanoes, erupted and spewed grey clouds of ash as high as 3km.

Indonesia straddles the “Pacific Ring of Fire”, an area of high seismic activity atop multiple tectonic plates.

Volcanic ash from Sunday’s eruption covered nearby houses, vehicles and evacuation tents set up by the local disaster agency, Reuters footage showed.

A number of residents went to health facilities for respiratory check-ups, and the authorities distributed masks.

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REUTERS

 

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Indonesia Temporarily Grounds Boeing 737-9 Max Jetliners After Alaska Airlines Incident

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Indonesia Temporarily Grounds Boeing 737-9 Max Jetliners After Alaska Airlines Incident
An Alaska Airlines Boeing 737-9 Max flies above Paine Field near Boeing's manufacturing facility in Everett, Wash., Monday, March 23, 2020, north of Seattle. A window panel blew out on a similar Alaska Airlines Boeing 737-9 Max seven minutes after takeoff from Portland, Ore., on Friday, Jan. 5, 2023. (AP Photo/Ted S. Warren, File)

Indonesia has temporarily grounded three Boeing 737-9 Max jetliners, following an incident last week in which an Alaska Airlines plane suffered a blowout that left a gaping hole in the side of the fuselage.

The three aircraft, grounded since Saturday, belong to the Indonesian budget carrier Lion Air. The decision was made by the country’s Transportation Ministry in coordination with the U.S. Federal Aviation Administration to ensure the safety and security of flight operations.

An emergency landing on Friday by the Alaska Airlines jetliner prompted U.S. federal authorities to ground some Boeing 737 Max 9 aircraft. The FAA grounded all Max 9s operated by Alaska and United and some flown by foreign airlines for inspection. The inspections are focused on plugs used to seal an area set aside for extra emergency doors that are not required on United and Alaska Max 9s.

The grounded Lion Air planes use a mid-cabin emergency exit door that is different than the one on the Alaska Airlines’ plane involved in the incident, said Adita Irawati, a Transportation Ministry spokesperson.

Danang Mandala Prihantoro, a spokesperson for Lion Air, said the airline “has taken preventive steps” by grounding the planes and is “carrying out further inspections on the mid-cabin emergency exit door.”

In 2019, Indonesia temporarily grounded Boeing 737 Max 8 jets to inspect their airworthiness after a Lion Air plane of that model crashed in October 2018, killing all 189 people on board.

 

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North Korea’s Kim turns 40. But There Are no Public Celebrations of His Birthday

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North Korea’s Kim turns 40. But There Are no Public Celebrations of His Birthday
North Korean leader Kim Jong Un. REUTERS

North Korean leader Kim Jong Un turned 40 on Monday with no announced public celebrations at home, after he entered the new year with artillery barrages into the sea and vows to expand his nuclear arsenal.

Since taking power in late 2011, Kim, the third generation of his family to rule North Korea, is believed to have established an absolute leadership similar to his predecessors. But his birthday has yet to be officially celebrated, unlike his late father Kim Jong Il and grandfather Kim Il Sung. Their birthdays are two of the North’s biggest holidays and are marked with great fanfare, loyalty campaigns and sometimes massive military parades.

On Monday, North Korea’s state news agency published a lengthy article extolling Kim’s guidance of major construction projects in the past decade. It also reported Kim visited a chicken farm with his daughter the previous day. But it made no mention of his birthday.

Some observers speculate Kim may think he’s still relatively too young or needs bigger achievements to hold such lavish birthday festivities. Others say the lack of a public birthday bash may be related to his concerns about attention to his late Japan-born mother.

Kim’s headlong pursuit of a bigger nuclear arsenal has invited punishing U.S.-led sanctions, which together with border closures during the pandemic were believed to have badly hurt the North’s fragile economy. Kim has subsequently admitted policy failures as his vow that North Korea would “never have to tighten their belts again” remained unfulfilled.

“For Kim, it’s still probably politically burdensome to idolize himself as he’s still young and hasn’t accumulated much achievements,” said Hong Min, an analyst at Seoul’s Korea Institute for National Unification.

Kim Yeol Soo, an expert at South Korea’s Korea Institute for Military Affairs, said it will likely take some time for his birthday to become an official holiday because elderly members of the North’s ruling elite would still think he’s too young.

Birthdays are central to the mythology of Kim Il Sung and Kim Jong Il, who had ruled North Korea with a god-like status since the country’s founding in 1948.

Their birthdays — April 15 for Kim Il Sung, and Feb. 16 for Kim Jong Il — are typically celebrated with tributes to their giant statues, dance parties, fireworks and art performances. On some milestone birthdays, North Korea’s military holds huge parades with goose-stepping soldiers and powerful weapons capable of targeting the U.S. and South Korea.

Kim Il Sung’s birthday was designated as an official holiday in 1968 when he turned 56, according to a website run by South Korea’s Unification Ministry, which handles relations with North Korea. Kim Jong Il’s birthday reportedly became an official holiday in 1982, when he turned 40.

North Korea has never formally commented on Kim Jong Un’s birthday. The only time Kim has been honored in public on his birthday was in 2014, when former NBA star Dennis Rodman sang “Happy birthday” before an exhibition basketball game in Pyongyang. The Unification Ministry-run website states that Kim Jong Un was born on Jan. 8.

There are also views that Kim may be worried about bringing unwanted attentions to his mother, Ko Yong Hui, a Japan-born dancer who was known as his father’s third or fourth wife. Ko’s links to Japan, which had colonized the Korean Peninsula in the past, and the fact that she wasn’t Kim Jong Il’s first wife, are considered as disadvantageous for Kim’s dynastic rule.

“The fact his mother came from Japan is his biggest weak point that undermines his legitimacy of the Paektu bloodline,” Park Won Gon, a professor at Seoul’s Ewha Womans University, said, referring to the Kim family’s lineage named after the country’s most sacred mountain.

“When Kim Jong Un’s birthday becomes an official holiday, he won’t still publicize details about his birth,” he said.

Despite no known public birthday events, experts believe Kim Jong Un faces little political challenge and is expected to intensify his run of weapons tests ahead of the U.S. presidential election in November.

In a key ruling party meeting in late December, Kim vowed to enlarge his nuclear arsenal and launch additional spy satellites to cope with what he called unprecedented confrontation led by the U.S. In the past few days, he had his troops fire artillery shells near the disputed sea boundary with South Korea, raising tensions with his rival.

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AP

 

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At Least 4 Dead in Suspected Train Arson in Bangladesh Before Election

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At Least 4 Dead in Suspected Train Arson in Bangladesh Before Election
Firefighters try to extinguish a fire on passenger train, before the general election in Dhaka, Bangladesh [Mohammad Ponir Hossain/Reuters]

At least four people, including a child, died in a suspected arson attack on a passenger train, police said on Saturday (Jan 6), the eve of a general election that the main opposition party is boycotting.

In addition to the deaths, eight were injured when the fire spread to four compartments of the Dhaka-bound Benapole Express around 9pm on Friday.

The main opposition Bangladesh Nationalist Party (BNP), boycotting for the second time in three elections, calls the polls a ploy by Prime Minister Sheikh Hasina’s Awami League to legitimise a sham vote that will deliver her party a fourth straight term.

Hasina, refusing BNP demands to resign and cede power to a neutral authority to run the election, accuses the opposition party of instigating anti-government protests that have rocked Dhaka since late October and killed at least 10 people in the South Asian country.

Last month protesters set a train ablaze, killing four people during a countrywide strike called by the opposition.

Senior BNP official Ruhul Kabir Rizvi said Friday’s incident on the Benapole Express was “undoubtedly an act of sabotage and cruelty against humanity”, blaming the ruling party for it.

Awami League party leaders were not immediately available for comment.

The train fire in Dhaka’s Wari area was brought under control by seven firefighting units after about an hour, fire service official Shahjahan Sikder said.

“Investigation is underway, but it seems the train was deliberately set on fire,” said railway police official Ferdous Ahmed.

An official at the Wari police station said police suspected “sabotage” and would be able to confirm the cause of the fire only after the investigation.

The BNP has asked citizens to shun the poll and called a two-day strike in the country from Saturday.

About 800,000 police, paramilitary and police auxiliaries are to guard polling booths on Sunday. Officials of the army, navy and air force have also been deployed across the country to maintain peace.

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REUTERS

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