Bangladesh Economy: News & Updates

[integra]

Major progress in e-bidding

Rejaul Karim Byron

An electronic payment system will be introduced in February as a major breakthrough in the government bidding system, freeing the process of corruption and hassles.

The Central Procurement Technical Unit (CPTU) of the planning ministry yesterday held final discussions with Bangladesh Bank and 12 commercial banks on the new system.

A high official of CPTU said the government is going to sign a memorandum of understanding (MoU) with the scheduled banks by the end of this month.

In the first phase of the electronic government procurement (e-GP) system, the contractors have to go to a CPTU-approved bank to pay cash, demand drafts of pay orders to sign up for the system, CPTU said.

The contractors must download tender documents and process tender security or bank guarantees.

In the second phase, there are possibilities of opening various channels such as ATM, debit card, credit card or internet banking.

In the second phase, CPTU will sit with respective e-payment providers for further discussion, the official said.

A Bangladesh Bank official told the meeting that the central bank is going to introduce the e-payment gateway which will enable the contractors to make payments staying home.

The meeting also discussed charges for e-payment and decided that the banks will fix their service charges but Bangladesh Bank may interfere to ensure that does not vary too much from bank to bank.

The headquarters of banks need to instruct their respective branches to receive e-payment, CPTU said. Banks agreed that after signing the MoU they would request their branches to receive e-payment through the e-GP dashboard.

CPTU informed banks that every bank should engage one appropriate focal person for this project, who will act on behalf of the bank and coordinate with CPTU as required.

Secretary of the IME Division Md Habib Ullah Majumder presided over the meeting organised by the CPTU. Director General of CPTU Amulya Kumar Debnath, Executive Director of Bangladesh Bank Nazneen Sultana, and CPTU Director Aziz Taher Khan were present on the occasion.

Representatives from different banks including Janata, Sonali, Agrani, Uttara, Pubali, National, Dutch-Bangla, UCBL, Krishi Bank and Islami Bank also attended the meeting.

The CPTU made a presentation on e-payment options in the e-GP system in the meeting. The bank representatives discussed the existing payment system, its capacity and how they can be involved in the process of electronic payment.

The CPTU is implementing the Public Procurement Reform Project-II (PPRP-II) supported by the World Bank. The e-GP, one of the four components of the PPRP-II, is going to be introduced initially at four target agencies — LGED, REB, WDB and RHD.

 

[integra]

Rahimafrooz to assemble solar panels soon

Rahimafrooz Renewable Energy Ltd (RRE) is set to start production of the country’s first solar panel assembling plant in Dhaka to serve the domestic need with solar home systems as their demand increases gradually amid severe power crunch.

“The solar panel assembling plant of a yearly capacity of 18 megawatt with an investment of Tk 400 million (40 crore) at Ashulia will start production by next May-June as per our plan,” RRE General Manager Sohel Ahmed told the FE recently.

He said the country will be able to save foreign currency, consumers will get solar panels at a lower price and the power supply will be smoother once these are manufactured in Bangladesh.

Bangladesh intends to add five per cent of the total electricity from renewable energy sources by 2015 and 10 per cent by 2020 to its power grid.

American company Spire Corporation will provide technological assistance in assembling solar photovoltaic manufacturing equipment, said Mr Ahmed, also head of business of RRE, a concern of Tk 15 billion Rahimafrooz Group.

Spire is the leading supplier in the design and manufacture of specialised equipment for producing photovoltaic solar modules, high quality photovoltaic systems and components.

“Spire will support us with their latest technology in manufacturing the best quality solar panels that we used to import at a higher cost than any other panels in the market. Now we will manufacture those panels in our plant with their technical knowledge, technology and support,” said Mr Ahmed.

At present most of the solar panels are imported from China the quality of which is not up to the mark all the time, said Mr Ahmed.

“That’s why we are importing state-of-the-art technology for manufacturing solar panels for the first time in Bangladesh,” he added.

The use of solar home systems has been increasing fast both in urban and the off-grid areas of rural Bangladesh backed by 22 to 24 NGOs that enjoy re-finance facility from state-run Infrastructure Development Company Ltd (IDCOL), which promotes renewable energy development.

RRE has been engaged in distributing solar systems for the last few years through its non-profit organisation Rural Services Foundation.

---------- Post added at 04:17 PM ---------- Previous post was at 04:16 PM ----------

Bangladesh, UAE sign agreement on avoidance of double taxation


Bangladesh, UAE sign agreement on avoidance of double taxation
Unb, Abu Dhabi

Bangladesh and the United Arab Emirates signed the avoidance of double taxation deal yesterday to boost the bilateral trade between the two countries.

Foreign Minister Dipu Moni and UAE Foreign Minister Sheikh Abdullah bin Zayed Al-Nahyan inked the deal.

Dipu Moni and Prime Minister Sheikh Hasina went to the gulf country to attend the Fourth World Future Energy Summit.

 

[akash57]

Abu Dhabi seeks joint economic partnerships with Bangladesh and Portugal

2011-01-23 17:12:28
WAM Abu Dhabi, 23 Jan. 2011 (WAM) -- Abu Dhabi Chamber of Commerce and Industry (ADCCI) held separate economic talks with Sheikh Hasina Wajed, Prime Minister of Bangladesh and Jose Socrates, Prime Minister of Portugal, to explore prospects of joint economic, trade and investment cooperation.

Fatima Al Jaber, member of the ADCCI's board, expressed the ADCCI's readiness to establish joint ventures with Bangladeshi firms, set up new joint partnerships and deliver premium services to Bangladeshi firms operating in Abu Dhabi to help them boost joint economic cooperation.

The Prime Minister of Bangladesh invited the business community in Abu Dhabi to invest in her country and avail the business offerings there. She affirmed that her government would assist would-be investors from Abu Dhabi.

At the meeting with the Portuguese premier, ADCCI Director General Mohammed Al Hamili called for forging joint strategic partnerships in consistence with Abu Dhabi Vision 2030.

''Abu Dhabi has huge business opportunities in vital areas like infrastructure, contracting, electricity, renewable, environment, financial services, and food industries,'' he said.

WAM/TF

WAM | Emirates News Agency

 

[fallstuff]

All fingers pointed at one man


A leading businessman yesterday came under heavy fire at a high-profile meeting on the recent stockmarket debacle.

Allegations against the businessman was made at a four-hour-long meeting at the state guesthouse Padma between Finance Minister AMA Muhith and market stakeholders, comprising businessmen, capital market leaders, bankers and regulators.

Several high-profile individuals who were there said the businessman, also present at the meeting, is very close to the ruling party.

The same businessman was also linked with the 1996 sharemarket scam but he remains scot-free, due to, what the government said, lack of evidence.

Bangladesh's stockmarket remained closed yesterday and stays closed today (Monday) for a crash that caused fund losses of millions of small investors. The benchmark Dhaka Stock Exchange general index (DGEN) fell nearly 1,800 points between December and January.

There is a lot of talk in the market that a few masterminds were behind market manipulation and the subsequent collapse. Many say that Ora Egarojon (they were 11) manipulated the market by doubling the index and prices of most shares in less than one year. These people allured lakhs of small investors across the country and pocketed crores of taka.

But one name surpassed others at the meeting, according to individuals who attended the meeting yesterday.

The businessman's firms were in financial crisis only two years ago but since the middle of 2009 those started acquiring other businesses one after another.

“He was accused of manipulation at the meeting by many,” said one of the meeting participants, asking not to be named.

The participant quoted the businessman telling the meeting: “I feel insulted and am a successful businessman.”

Calm at the meeting was lost and the finance minister had to intervene to pacify people.

link:

Daily Star: All fingers pointed at one man

 

[integra]

well who else can it be other than Salman F Rahman of BEXIMCO.

 

[fallstuff]

well who else can it be other than Salman F Rahman of BEXIMCO.

Yeah, pump and dump. Here is a Daily Star article from 2009, read on


Magic art of turning Tk 43 into Tk 1,200


Stocks in hot money spin aga


The company had been incurring losses for four consecutive years till 2007, producing aluminium panels.

Last year its share price dropped as low as Tk 43 while the face value of the share is Tk 100.

Then came in a foreign investment fund, offering to pump in a huge amount into the company with a hopeless record.

A deal was cut between the aluminium panel producer and the foreign investment fund under which the foreign firm snapped up a huge chunk of shares at a huge premium.

The market went crazy with the news. The company's shares worth Tk 43 soon started trading at a breakneck speed at astronomical prices, reaching as high as Tk 1,199 a share.

Within a month and a half, the foreign firm dumped all its shares on the bourses, and made even more astronomical profits. It repatriated $2 million from Bangladesh against its investment of $500,000. A super deal by any standard, for a month and a half.

The local company is BD Thai and the foreign firm, GEM Global Yield Fund.

That is what happened with Dhaka Stock Exchange between April and May this year, and market operators are now questioning how wise it was for the Securities and Exchange Commission (SEC) to allow foreign funds to engage on such terms in the market without any lock-in, a measure by which such investment companies are barred from selling before a certain time the shares they possess.

Questions are surfacing over SEC's withdrawal of the lock-in system for the foreign fund. In the past, the lock-in system had been in place for all companies -- both foreign and local -- to avert short-term speculative trading, and flight of capital from the market.

Usually, there should be a lock-in for a minimum of one year on share sales, and SEC applied the safety measure for GEM Global as well, at the commission's first meeting.

But the lock-in was withdrawn by SEC later after lobbying from an influential group, according to sources. The group argued if the lock-in remained, the foreign company would not invest.

Contacted by The Daily Star, SEC Chairman Ziaul Haque Khondker declined to comment on the issue of GEM Global.

Now an increasing number of companies such as Beximco Pharmaceuticals, and Aftab Automobiles are interested to strike such deals with the same foreign investment firm.

Not only that, those two local companies are now seeking to hand over their shares to GEM as 'loan', just like BD Thai sought.

If the 'share loans' are approved that could lead to even more interesting dealings, market players say.

GEM could first sell the shares that it buys for high prices, and then also sell the shares it gets as 'loans'. Then it could repatriate the whole amount. Later, as the market cools down, GEM could again buy the same shares at a lower price and repay its 'share loans'.

And why give shares as loans to a foreign fund? Because, as market players say, if a foreign company deals in its shares, general investors will find it much more 'valuable' than if a local company sells. In another word, such an arrangement would help boost share prices much more easily.

The Bangladesh Bank however acted wisely when it disallowed such deals, as that would lead to market manipulation and capital flight. The central bank rightly put a condition that in such cases of curious 'loans', GEM must arrange a guarantee in foreign currency by a foreign bank, so even if GEM sells the 'loaned' shares, the money remains in the country. If such conditions are not put in place, then a floodgate will open for such deals, draining the country of its foreign currency.

Market players also point out another curious thing that nobody knows who have contributed towards building the GEM fund. In many countries, disclosures about investors in a fund is a must, to avoid terrorist financing. But not in Bangladesh.

BD THAI DEAL AND CRAZY INDEX
DSE launched an investigation following an unusual price hike of BD Thai shares. The investigation found that GEM Global sold 2.72 lakh BD Thai Aluminium shares at Tk 909.51 each, totalling in more than Tk 24.73 crore.

DSE Chief Executive Officer AFM Shariful Islam, who led the investigation of BD Thai, also refused to comment yesterday.

The market witnessed a record-breaking trend in single-day turnovers over the last couple of months. Records were broken in single-day turnovers for at least four times within a month with the highest ever turnover of Tk 1,149 crore in DSE last Thursday.

The key index also went up by over 400 points since June 1 this year, according to DSE statistics.

CAYMAN CONNECTION
According to websites, GEM Global is an investment firm of GEM Global Emerging Markets, having offices in New York, London, Paris, Hong Kong, and Beijing.

GEM Global is incorporated in the Cayman Islands, a British overseas territory in the Caribbean. It is billed as a centre for tax evasion. It has a tax rate of zero for corporation tax, income tax, and capital gains, drawing some of the world's biggest banks and hedge funds to its shores.

The tiny Cayman Islands are the world's fifth biggest financial centre, where hundreds of billions of dollars flow through the economy.

The global economic downturn has brought the Cayman Islands and other offshore financial hubs into the spotlight.

Leaders from 20 of the world's most powerful countries, who gathered in London for a summit in April, put regulating offshore tax havens on the agenda. The Cayman Islands has been criticised for lax financial regulations.

LOCK-IN SAFETY
Market analysts suggest imposition of an immediate lock-in on all shares acquired by non-resident companies.

"I'm in favour of a lock-in system against issued warrants," Rakibur Rahman, president of DSE, told The Daily Star yesterday.

"There should be a lock-in system for three years, for the greater interest of the market, so no one may sell shares just after receiving or converting the warrants into ordinary shares," he added.

BEXIMCO'S BID
In January this year, Beximco Pharmaceuticals, a company of Beximco Group, announced that it had entered into a subscription agreement with GEM Global to raise Tk 460 crore by issuing its shares or warrants.

SEC had put a lock-in system in the initial stage, but withdrew the system following Beximco's lobbying with the commission.

"This is not correct. SEC gave a consent order based on shareholders' approval, without any lock-in as in similar cases," Bexmico said in a statement yesterday.

"Mr Salman F Rahman did not lobby with SEC regarding this matter," the statement added.

There were also allegations against Rahman of lobbying with the Bangladesh Bank for permission to transfer shares as 'loans' to GEM Global, and for making the shares saleable at any time.

In yesterday's statement, Beximco denied that allegation too saying, "This is not correct. Loan shares may be given against bank guarantee or Escrow Fund. Mr Salman F Rahman did not lobby with Bangladesh Bank regarding this matter."

1996 SCAM RECALLED
The episode is reminiscent of the 1996 scam when Awami League was in power.

"The incident calls to mind the 1996 incident. Unless the culprits are punished, there will be a repeat of the 1996 episode," Salahuddin Ahmed Khan, former CEO of DSE, told The Daily Star.

Khan said SEC should not approve such subscription to foreign funds without strict verification.

BD THAI VERSION
When contacted, BD Thai Chairman and Managing Director Zahid Maleque MP told The Daily Star that the deal was struck according to the rules and regulations, and all regulators such as SEC, the central bank, and DSE approved it.

Asked about the share sales by GEM Global, he said, "Selling of shares is a matter of GEM. We did everything within the framework of law."

"The lock-in system is not necessary for foreign investors," he said.

"I was able to turn my company around, thanks to the deal," he added.


link:

Magic art of turning Tk 43 into Tk 1,200

 

[akash57]

Textile performance - Bangladesh outclasses Pakistan
S A AZIZ SHAH

KARACHI (January 25, 2011) : If Pakistan has its name in the history, perhaps as the oldest or certainly one of the oldest home of cotton then Bangladesh has its name in the history as the producer of finest quality of cloth /fabric specially world fame product named Dhaka muslin (Dhaka Malmal)- prepared from perhaps the finest cotton yarn of over 250 Ne, samples of such fabric have been preserved for exhibition in the museums including Dhaka Museum and Albert Hall Museum, London.

Such finest yarn was probably made from the roughest and shortest fibre length cotton locally called Dessi Toola and botanically known as Gossypium Arboreum but now hardly 120 Ne yarn is spun from extra long staple cotton on sophisticated machines. The highly sophisticated cloth / fabric was reportedly prepared by highly talented craftswomen some 250 years ago. Although, the days of Dhaka muslin have gone yet Jamdani Saree prepared from very fine yarn and fine embroidery work by specialize workers is a real gift of Bangladesh.

When in 1947 Pakistan got independence, it consisted of two parts viz; one called East Pakistan (now Bangladesh) and the other West Pakistan (now called Pakistan). In 1971, the East Pakistan got independence and is now Bangladesh. In 1947-48 season, Pakistan being an agriculture country produced cotton crop of 1.16 million 170-Kg bales, all in West Pakistan which had only a couple of composite textile mills in Punjab including one Okara Textile Mills, Okara and Lyallpur cotton mills, Faisalabad while in East Pakistan where, almost no cotton was grown, had 16 composite textile mills; one of these was Dhakeshwari Cotton Mills, Narayanganj which was installed in 1908.

The reason for installing more spinning mills in East Pakistan may be its humid climate, which suits spinning process with lower percentage of yarn breakages in the absence of artificial humidification.

However, Dessi cotton (Gossypium Arboreim specie) which was grown and produced in limited volume of about ten thousand bales, on the Chittagong hill-tracks was called Comilla cotton and it was all exported mostly to Japan till independence. Later, Bangladesh Government established Cotton Development Board for the growing and development of staple cotton (Gossypium Hirsutum) but it could not get the desired results. In 40 years period (1971-2010), Bangladesh's total cotton production is equivalent of 2,045,440 bales, producing maximum of 115,200 bales of 170-Kg each in one season and the yearly average production works out to 51,136 bales (USDA figures). Main reason for poor cotton production may be more rains and unsuitable lands. At the time of its birth, Bangladesh had about 75 textile mills with spinning capacity of 858,000 spindles, 7,400 power-looms and 37,500 handlooms which were consuming about 225,000 bales of 170-Kg. Table 1 below gives present position of textile capacity and production.

Raw Cotton: Bangladesh' s own cotton crop is very limited to 50 - 70 thousand 170-Kg bales per season while its cotton consumption is high between 4.0-4.5 million 170-Kg bales.

Thus, Bangladesh has to import almost all its cotton requirements to feed its spinning industry. In 2008-09 season, Bangladesh reportedly imported 640,000 Metric Tons =3.765 million 170-Kg bales from different countries of which prominent import sources are Uzbekistan-52 %, India-12 %, US-6 %, Pakistan-7 % and Africa-6 %. Against this, Pakistan's total domestic consumption is estimated between 13.5 and 14.0 million 170-Kg bales in 2010-11 season of which about 80 % will be met from local production and balance 20 % from imported cotton.

Cotton Yarn: Bangladesh is estimated to have domestically produced 541,000 tons (2/3rd of total requirements) of cotton yarn in MY 2009-10 while total cotton yarn requirements are estimated around 800,000 Metric tons. The yarn shortfall of 259,000 Metric tons (1/3rd of total requirements) is met through imports from different sources of which prominent are India 72 %, China 6 %, Pakistan 5 % and Thailand 3 %.

In 2008-09, Pakistan domestically produced 2,862,411 Metric Tons of yarn (About 78 % of cotton and 22 % of Blended yarn) of which 2,336,165 Metric tons i.e. 81.61 % has been consumed locally (77.90 % by weaving and knitting sectors and towel and other textile products manufacturing sectors), 3.72 % by organized mill-sector and balance 106,416 Metric tons (18.38 %) has been exported.

Cotton Cloth / Fabrics: In 2009-10, Bangladesh's total domestic requirements of fabric is reported to be around 4.30 billion square meters of which 2.0 billion square meters (46.51 %) of fabric was produced domestically while balance 2.3 billion square meters was imported from different sources of which prominent are China 75 %, India 12 % and Pakistan 5 %.

Against this, in 2008-09, Pakistan produced 9.015 billion square meters (11.31 % mill sector and 88.59 % non-mill sector) of fabric of which 7.117 billion square meters (78.94 %) were used for local manufacturing of garment - apparel - other textile products and balance 1.898 billion square meters ( 21.06 %) were exported.

Exports of Ready made Garments; The Export Promotion Bureau of Bangladesh data showed that shipments in term of values of Ready Made Garments (RMG), in the January-December period in 2010 totaled US $14.846 billions against 11.892 billions last year. The EPB- Bangladesh said that the garment exports grew by 42 percent to $8 billions in the July-December period of the current Fiscal Year 2010-11. Shafiul Islam Mohiuddin - acting President of the Bangladesh Garment Manufacturers and Exporters Association reportedly said that the local factories are seeing huge demands from global importers and the simplified the EU-GSP regime, effective from 1st.

January, 2011 is set to bring more buyers to Bangladesh. Some recent positive developments such as China's policy of shifting from low-value garments to high-value garments providing ample opportunity for Bangladesh to fill-up the gap and the European Union's decision to abolish two-certificate system and go for only one certification of fabric to garments, would certainly increase the exports of Bangladesh in general and that of RMG in particular considerably. Therefore, there appear bright chances for Bangladesh to avail these opportunities and achieve the export target of US $20 billions through exports of garments and some textile products in FY 2010-11. It is to be mentioned that garment exports claim share of about 80 % of Bangladesh's total exports. It is worth-mentioning that US and European Union countries are main destinations for Bangladesh garment exports claiming some 80 % share. Against this, Pakistan's total exports in July-2009 to June 2010 period was US $19.29 billions while imports at US $34.710 billions.

In six month period July-December 2010, Pakistan earned US $10.976 billions through exports and share of total textiles goods is estimated around 48 % including 16 % of Knit and woven garments. For meeting its total requirements, Bangladesh imports about 100 raw cotton, about 33 % yarn and about 54 % cloth / fabric and exports Ready Made Garments almost five times that of Pakistan. Pakistan is short in raw cotton requirements by 20 % but is surplus in yarn and cloth by 20 % each. Of course, there is no export quota for Bangladesh in USA whereas exports of Pakistan's textile goods to USA are subject to quota.

There is no duty on the exports of Bangladesh textiles to the European Union countries but exports of Pakistan's textile goods to EU countries are charged by 10 % as duty. Bangladesh enjoys such export facilities because of its status as Least Developed Country (LDC). It is a fact that in making so wonder performance in RMG sector, factors such as the positive Government policies, Government's facilitation in making finance, power and utilities available at reasonable cost, availability of cheap labour, better entrepreneurship, management skill and professionalism, good reputation in performance of export contracts in letter and spirit and positive ideas and innovation from foreign merchants are playing their roles very efficiently.

Labour, power and financial charges are comparatively cheap in Bangladesh so their production cost works out lower than other countries. In textile sector including RMG, more than 80 % work force comprise of women workers who are paid low wages, averagely about BD Taka 3,000 per month which works out to US $0.22 per hour against 0.50 in India, 0.45 in Pakistan and 1.0 in China. Power rates are also lower in Bangladesh. Bangladesh has two system of power generation viz: one by private sector mostly using gas which costs US Cents 4.5 per KWH and the other public sector mostly using oil costing US Cents 7.56 per KWH. Cost of power in Pakistan is US Cents 6.72, India 9.33 and China 7.84 per KWH. Banks in Bangladesh lend money to industries at special interest rate between 9 and 11 % which is also lower than other competing countries.

Enough Foreign investment also helps Bangladesh in increasing its production in textile -RMG sector. Pakistan and Bangladesh are at almost equal population level between 160 and 180 million people. Per Capital Income (2010) is US $941 and that of Bangladesh is US $660. Pakistan's nominal GDP is US $164,792 millions and that of Bangladesh US $105,402 millions. Soon after its independence, Bangladesh currency BD Takka was valued at 50 % discount from Pak Rupee (Two Takka = One Pak Rupee) but by the end of 2010 BD Takka was valued at a premium of 25 % over Pak Rupee. One US Dollar = BD Takka 69 = Pak Rupee 86.

Local law and order situation and business conditions in Bangladesh are better than in Pakistan.

Actually, Bangladeshi people generally prefer to live a simple and natural life inclined to less expending and more saving. There is only one central Government in Bangladesh with one cabinet of reasonable size and no provinces whereas in Pakistan we have almost five provinces, a large number of ministers, Parliament members costing many times more than Bangladesh expenses.

Some more than a decade ago, this writer had written an article captioned "Textiles - a symbol of prosperity for Bangladesh" published in Pakistan's daily newspaper.

There is no doubt that textile has brought much prosperity to Bangladesh and in the next five years up to 2015, Bangladesh is expected to increase its exports to the level of 50 billions of which 40 billions would of textiles including garments.

At the start of 21st Century, there were ample hopes and enough opportunities of becoming the third largest country in world textiles but now Pakistan appears losing this position to Bangladesh.

Source; BTMA Directors' report 2009.

(There are tables at the end of the article, please follow the link below to find them.

Cotton and Textiles - Pakistan - Textile performance - Bangladesh outclasses Pakistan

 

[eastwatch]

Country?s economy posts 5.8pc growth last year: BB

Thursday, 27 January 2011 Author / Source : UNB

Dhaka, Jan 26: The economy of the country posted 5.8 per cent real GDP growth during the last fiscal (2009-10), which was largely internal-demand driven. In view of the internal and external sector developments, the 6.7 per cent real GDP growth targeted in the national budget of current fiscal is well within reach, according to the highlights of Bangladesh Bank annual report 2009-10.

In its near and medium term outlook for the current fiscal, the report said that the main near term risk is the persistent shortages of power and gas supplies, disrupting production in installed capacities and slowing down investments for new capacities.

It said that near and medium term growth prospects for the economy now hinge crucially on implementation of the government’s plan to eliminate energy shortages by adding as fast as possible new generation capacities with private and public sector outlays.

“Significant external sector risk factors to medium term growth outlook include the recent declining trends in FDI and manpower exports.”

“Foreign direct investment inflows are likely to pick up in step with global growth recovery, but can be hastened by forging closer trade and investment ties with the fast growing economies in the East and South Asia, bilaterally as well as regionally.”

On the supply side for fiscal 2009-10, the report mentioned that the growth was underpinned by overall robust growth in the agriculture and service sectors accompanied by a modest growth in the industry sector.

It showed that the agriculture sector grew by 4.7 per cent during the last fiscal compared to 4.1 per cent in the previous fiscal (2008-09). The growth rates for the industry and services sector were 6.0 and 6.4 per cent respectively in fiscal 2009-10 while 6.5 and 6.3 per cent respectively in fiscal 2008-09.

The Bangladesh economy maintained growth momentum despite deceleration in the export growth and investment initiatives, continuing with its resilient response to the global economic slowdown.

According to the report, the 12-month average Consumer Price Index (CPI) inflation rate increased to 7.3 per cent at the end of 2009-10 fiscal compared to 6.7 per cent at the end of fiscal 2008-09.
On the other hand, point-to-point CPI inflation rate stood at 8.7 per cent at the end of 2009-10 fiscal, which was 2.3 per cent at the end of fiscal 2008-09.

The 12-month average CPI food inflation rate rose to 8.5 per cent at the end of fiscal 2009-10 compared to 7.2 per cent at the end of fiscal 2008-09. Non-food inflation rate fell to 5.5 per cent at the end of fiscal 2009-10 as against 5.9 per cent at the end of 2008-09.

Money and credit developments:
The Bangladesh Bank pursued accommodative monetary policy stance during the fiscal 2009-10 with a view to promoting investment and productive economic activities and sustaining domestic demand against the backdrop of the global recession.
The broad money (M2) growth during the 2009-10 fiscal was 22.4 per cent, which was 19.2 per cent in the preceding fiscal.

The credit to the public sector declined sharply by 5.2 per cent during the 2009-10 fiscal compared to 20.3 per cent growth in the fiscal 2008-09. Reduced Annual Development Programme (ADP), higher revenue receipts and foreign grants and loans were mainly responsible for the fall in the credit to the public sector.

 

[integra]

Turkish co to invest $21.65m in Adamjee EPZ

Turkish co to invest $21.65m in Adamjee EPZ
United News of Bangladesh . Dhaka

Asia Holdings Bangladesh Limited, a Turkish company, will set up a garment manufacturing industry in the Adamjee Export Processing Zone.

The 100-per cent foreign owned company will invest $21.65 million in setting up their unit and will produce garment items.

The company will also create employment opportunity for 7,280 persons, including 30 foreign nationals.

An agreement to this effect was signed between Bangladesh Export Processing Zones Authority and the Turkish company in the BEPZA Complex in the city on Monday.

Mohammad Moyjuddin Ahmed, member (investment promotion) of the BEPZA, and Yusuf Kursad, managing director of Asia Holdings, signed the agreement on behalf of their respective organisations.

 

[CaPtAiN_pLaNeT]

Bangladesh hopes for $400 mn Indian investment
2011-01-28 11:00:00

Bangladesh hopes for $400 mn Indian investment

Dhaka, Jan 28 (IANS) Bangladesh hopes to attract Indian investments worth Taka 30 billion ($422 million) at the second Indo-Bangla trade fair to be held here in May, reducing its bilateral trade deficit.

India-Bangladesh Chamber of Commerce and Industry president Matlub Ahmed said he based his optimism on the success of the first Indo-Bangla trade fair held in March last year. This year the fair will be held May 5-7.

The maiden effort resulted in Taka 10 billion Indian investment in the IT sector with an equal amount of Indian investment in the pipeline, he said.

Ahmed said they expected the second fair to bring in Taka 30 billion Indian investment. He added that the fair would also strengthen the bilateral relations.

'Like the preceding one, this fair will provide the manufacturers and exporters of both the countries with a unique opportunity to showcase their goods and services under one roof which will open up a new window of opportunities for the business communities,' New Age quoted him as saying Friday.

 

[akash57]

Sri Lanka, Bangladesh to ink six agreements during President's visit to Dhaka

Jan 28, Colombo: Sri Lanka and Bangladesh have decided to ink six agreements boosting bilateral relations between the two countries during an upcoming visit by Sri Lankan President to Dhaka.

During the first-ever foreign secretary level bilateral discussions took place in Dhaka on Wednesday (26) between Sri Lanka's Foreign Secretary Romesh Jayasinghe and his Bangladeshi counterpart Mohamed Mijarul Quayes, the two countries decided to sign agreements on investments, exports, exchange programmes, agriculture, fisheries, and education.

The six agreements are to be signed during President's visit reportedly to take place after March this year.

The two countries have agreed to sign a deal between the Export Development Board of Sri Lanka and Export Promotion Bureau of Bangladesh to strengthen the bilateral trade between the two countries. Both sides have agreed that the current level of trade of about US$ 36 million is not satisfactory and needs to be strengthened further.

Although apex trade bodies of the two countries have a Memorandum of Understanding (MoU) the relationship needs to be strengthened, Quayes has said.

According to a report on The Daily Star other agreements to be signed and implemented soon include cultural, educational, and scientific exchange programmes, a deal between Ministry of Fisheries and Aquatic Resources of Sri Lanka and the Ministry of Fisheries and Livestock of Bangladesh, deal between Bangladesh Agricultural Research Council and Sri Lanka Council for Agricultural Research Policy, and agreement between Tertiary and Vocational Education Commission of Sri Lanka and the Ministry of Education of Bangladesh.

The foreign secretaries have also discussed the cooperation in various regional and multilateral forums including SAARC, BIMSTEC, IOR-ARC, UN, NAM and Commonwealth. Bangladesh has appreciated Sri Lanka's support to establish permanent secretariat of BIMSTEC in Dhaka.

During the discussions, Bangladesh Foreign Secretary has sought support from Sri Lanka for its candidature for the non-permanent membership in the United Nations Security Council for 2016-17 and Sri Lanka has assured to consider the request.

The next round of foreign secretarial level discussions is to take place in Colombo next year.

Sri Lanka : Sri Lanka, Bangladesh to ink six agreements during President\'s visit to Dhaka

 

[eastwatch]

Indian private investment pouring in Bangladesh
Saturday, 29 January 2011
Author / Source : Mashiur Rahaman

DHAKA, JAN 28: Renowned Indian business conglomerates, particularly from private sectors, are in a rush to invest in Bangladesh, taking advantage of its huge local market demands and export advantage as LDC country. Names of Indian business giants like Bharti Airtel Limited, Tata Motors, Arvind Denim, Aditya Birla Group, SRF Group, Zen Mobiles and many others have been on the list. They either have invested or are in the final stage to invest in Bangladesh.
Sectors like telecom, apparel, IT, plastic, cement and vehicle have become the prime attention for Indian investors in the country. “India already invested over Tk10 billion in Bangladesh in 2010, while investment of another Tk10 billion in IT and other sectors is in the pipeline,” President of India-Bangladesh Chamber of Commerce and Industry Matlub Ahmed told The Independent on Friday.
This is the outcome of growing foreign investor’s confidence in Bangladeshi economy, thanks to favourable government’s policy, he said.
Among the Tk 10 billion estimated investment recorded last year, Tk 5 billion investment came through plastics conglomerate SRF Group and Tk 5 billion through Arvind Denim, as per report. In January 2010, Bharti Airtel Limited, Asia's leading integrated telecom services provider, acquired 70 per cent stake in Warid Telecom, Bangladesh, a subsidiary of the UAE-based Abu Dhabi Group. Bharti made a fresh investment of US$ 300 million, and eventually rebranded itself as ‘Airtel Bangladesh’.
Aiming to take advantage of Bangladesh’s GSP advantage in export to US and EU, Indian textiles maker Arvind has finalized its investment of US$ 66 million over three years and plans to set up a denim manufacturing plant in Bangladesh.
The Indian textile giant has signed an agreement with the local Nitol Group in Dhaka in September 2010 to invest in Comilla Export Processing Zone for producing exportable denim fabrics and denim trousers, company official said.
The investment would be made in three phases in three years as per plan and is expected to produce 13 million metres of fabric a month with a growth of 12 per cent. Cheap labour, lower production cost and a burgeoning fabrics market are among the factors why Indian companies want to invest in Bangladesh, local partner of Arvind told The Independent.
Zen Mobiles, Indian mobile handset brand says it is all set to venture into Bangladesh by April 2011. It will set up a joint-venture plant with the Bangladesh government, company official said.
“The venture will pump in about Rs10 crore (Tk160 million) with a plan to set up an assembling plant capable of manufacturing 0.1 million phones per month in Bangladesh, the company official said.
Auto giant Tata Motors has also indicated interest in sourcing auto components from Bangladesh, in negotiation stage to set up plant to assemble and manufacture vehicles, a company official said. Nitol has been assembling and selling Tata trucks and buses in Bangladesh for nearly three decades.
In cement industry, top Indian conglomerate Aditya Birla Group which has acquired the Dubai-based ETA Star Cement Company in May 2010 owns the Emirates Cement in Bangladesh. The group, through its wholly-owned subsidiary UltraTech Cement Middle East Investments, has acquired Dubai-based ETA Star Cement which has operations in the UAE and Bahrain.
All these investments from renowned companies, particularly from our closest neighbour India, indicates prevailing healthy environment for investment in the country,” Ahmed said.
Indo-Bangla trade fair, organized by the India-Bangladesh Chamber of Commerce and Industry and High Commission of India in Bangladesh is playing a significant role, he claimed.
“Annual IBTF is contributing as facilitator to bring both the Bangladeshi and Indian business communities under one roof, enhancing understanding and confidence for further investment,” he said.
Organizers of IBTF-2011, scheduled to began in coming May, is hoping to attract Indian investments worth Tk30 billion ($422 million), reducing its bilateral trade deficit.
The maiden effort of IBTF-2010 resulted in Tk10 billion Indian investments, organizers said.

 

[integra]

Solar energy use sees major growth

Mushir Ahmed

The country is making a big stride in the use of renewable energy with companies and charities doubling the number of solar-powered houses to nearly 800,000 last year.

Soft-credit by a government-owned financiers, stepped-up marketing and a longing for a better life by millions of rural poor are powering the growth of solar energy use, officials said Saturday.

Grameen Shakti (GS), a sister company of Grameen Bank, is leading the surge, aided by more than two dozen firms and non-government organisations, in what experts describe as a major private sector push in power sector.

With 50 per cent of the country’s households still remaining outside the power grid such firms have now unveiled an ambitious plan to bring 35 million people under the coverage of renewable energy by 2015.

“When the GS started 14 years back, I never imagined that a day would come when we can add 1,000 solar home system (SHS) a day,” said Ruhul Quddus who now heads Rural Services Foundation (RSF), a for-profit charity owned by Rahimafrooz.

Quddus was at the helm of GS when the firm sold only 228 SHSs in fiscal 1996-97. Last year 29 firms and charities sold 400,000 SHSs to take countrywide solar-powered homes to nearly 800,000.

“It took us 10 years to cross the 10,000 threshold. And now we are in a position to power a million households every year,” he said.

Emboldened by its recent success, the GS aims to cover five million households under solar power, making the renewable energy available to some 25 million people in the next five years and other firms and charities hope to power the rest 10 million.

Last year alone the GS powered some 200,600 households with solar system, taking its tally to half a million. The RSF sold more than 50,000 and Brac, Srizony, Ubomus, Hilful Fuzul and other charities, the rest 130,000.

Officials said a 5.0-8.0 per cent soft credit lent to the solar firms by state-owned renewable energy financier, IDCOL, sparked the growth four years back, making the SHS affordable to villages not connected to the national grid.

Development of a monthly payment package and 20-year product maturity and service period made the system financially attractive to poor and middle income clients.

It means a rural poor can now buy a basic 20-50 watt SHS just at the cost of his monthly kerosene or candle bill.

“A 50 watt SHS is most popular because it powers four lights and a black and white television set. And the cost is around Tk 25,000, which can be paid back in small installments in three years,” said Abser Kamal, chief executive officer of the GS.

Kamal said his company has set a target to double SHS clients to one million in 2011 — a feat it had earlier hoped to achieve by 2015.

“We also revised our long term plan following success in 2010. By 2015, we want to sell solar system to five million households. And we think it is achievable,” he said.

He said people in the coastal areas, migration-prone districts and wealthy villages in Chittagong and Sylhet were first to convert to solar power.

But now, the company has offices in every sub-district town in the country, employing 8,500 trained staff and it is planning to recruit thousands more.

RSF chief Quddus said his charity would add 100,000 new SHS this year and seek to expand aggressively in urban areas where an acute power crisis has forced the authorities to freeze connections to new apartment projects.

The firms have also unleashed new solar-powered thermal system, irrigation, mobile phone base stations and geysers in an effort to help boost growth.

Late last year, a group of entrepreneurs launched SolarEn Foundation to sell SHS mostly to the urban clients.

“We think SHS will have high growth in cities this year because power-starved realtors are keen to use solar power in almost all their new projects,” said SolarEn’s chief Monir Hossain.

“It is costly. But a lot of realtors don’t have any choice,” he added.

As part of its urban drive, Rahimafrooz Renewable Energy had set up solar system at the PM office and Bangladesh Bank last year and the GS brought 18 big clients including those in district and sub-district headquarters under its large-scale SHS programme.

A company does not get soft credit benefit from IDCOL if it sells solar system to grid areas especially in cities, but officials said declining cost of solar panel has made this form of alternative energy attractive to urban consumers.

RRE’s $5.0 million solar panel plant kicks off production this March, aimed at substituting import and cutting cost. Another group, Electro, has already launched a similar factory on a test-case basis.

“As far as we know, six more companies are on the pipeline to build solar panel manufacturing plant in Bangladesh this year,” said RRE programme manager Istiaq Ahmed.

The RRE also took its solar success to seven African countries, lighting up the streets of the dark continent, in the first such case of export in the Bangladesh’s history, he said.

“From batteries to panel to cable, the success of solar energy has opened up array of new opportunities in the country’s industrial sector,” Dipal C Barua, who headed GS for many years, had said earlier.

“It is poised to become a big driver of our growth,” he added.

 

[monitor]

Half-yearly monetary policy unveiled
Reining in inflation main goal

FE Report

The central bank unveiled Sunday its half-yearly monetary policy that aims at keeping inflation rate at around 7.0 per cent by the end of this fiscal through discouraging credit flow to unproductive sectors.
Other major thrust of the policy will on achieving an inclusive economic growth by facilitating productive sectors while keeping inflationary pressure under control."Monetary policy stance in the second half (H2) of this fiscal will, as before, remain accommodative for productive economic activities; while also firmly discouraging diversion and undue expansion of bank credit for wasteful productive uses, to stem build-up of inflationary pressures," Bangladesh Bank (BB) Governor Atiur Rahman told reporters at the central bank while releasing the monetary policy for January-June period of the fiscal 2010-11 (FY11).
He also said climatic adversities disrupting output in many regions around the world are pushing up global prices of food commodities; strong growth performance in emerging and developing economies is propping up global prices of energy and non-food industrial commodities as well. "Against this backdrop, decline in the 12-month average CPI inflation in Bangladesh in H2 FY11 may be slower than expected earlier, remaining above the 6.5 per cent level targeted in government's FY11 budget. A level around 7.00 per cent appears to be likelier for June 2011," the central bank chief added. He also said the government could re-fix energy price in H2 of this fiscal that will impart some upward spurt on non-food CPI inflation."Food price inflation remained volatile in H1 FY11 both domestically and globally, at 9.80 per cent in November in Bangladesh against 10.88 percent of June 2010," Dr. Rahman added. The country's inflation as measured by consumers' price index (CPI) moved slightly in the month of November last mainly because of increase in prices of food items.
The inflation rate moved up to 8.14 per cent in November from 8.12 per cent of the previous month on the annual average basis, according to the Bangladesh Bureau of Statistics (BBS) data.
On the other hand, the point-to-point inflation rate rose to 7.54 per cent in November from 6.86 per cent in October 2010 despite declining prices of non-food items.
Stubbornly high food price inflation in neighboring fast growing India, and prevailing high international prices of food commodities mean that no calming influence on food prices are to be expected from private sector imports, the reason why local rice prices are high and rising even after a good aman harvest, the BB said."Monetary policy actions will have little leverage on rising food prices in this situation, fiscal measures by way of subsidized food grain sales from public stock may need to be expanded to ease hardships faced by low income population segments," the monetary policy said. It also said higher food grain prices for growers have important medium term upsides however; enabling the government to scale down input subsidies as growers get market prices adequately covering their costs and remunerating their efforts, and the price incentive eliciting higher output responses is eventually stabilising prices."Barring unforeseen new difficulties, the economy looks well poised to attain the 6.7 per cent real gross domestic product (GDP) growth targeted for FY11, as also to leap forward to growth performance well beyond seven percent in FY12," the BB governor noted.
he central bank has taken measures to reduce credit flow to the private sector through asking some banks to bring down their credit deposit ratio (CDR) at a rational level and imposing restriction on consumer financing."We've already imposed restriction on consumer financing so that banks are discouraged to lend to unproductive sectors," BB Senior Deputy Governor Nazrul Huda said while replying to a query. Credit flow to the private sector recorded a growth of 27.77 per cent to Tk 658.938 billion in November 2010 on a year-on-year basis compared to 16.73 per cent or Tk 340.175 billion in the same period of the previous calendar year, according to the central bank statistics.However, the BB had set the private sector credit growth target at 16 per cent by the end of June 2011. The BB deputy governor also said the central bank has sat with the banks, which have higher credit growth than that of deposit, separately to discuss the issue.
"Actually, the private sector credit growth was high last year," Mr. Huda said, adding that the credit flow to the private sector will come down at reasonable level if the banks maintain the existing CDR norm.
At least six commercial banks have CDR ranging between 84 and 94 per cent, instead of the standard 81 per cent, the central bank officials confirmed.
In conformity with the monetary policy stance and the financial inclusion initiative, the BB's credit policies in H2 FY11 will seek to redirect credit flows for unproductive wasteful uses into productive, employment and income generating uses.

"Supervisory vigil on lending and loan administration discipline in banks will remain stricter, lapses and laxities in lending banks will be dealt with sternly, eschewing forbearance," the BB said.

The central bank has kept broad money supply target unchanged at 15.2 per cent for FY11, which is higher considering the country's inflation and GDP growth, Deputy Governor of the BB Ziaul Hassan Siddiqui said.

"It's an accommodative monetary policy," Mr. Siddiqui said while mentioning the definitions between concretionary and neutral monetary polices.

Regarding energy prices revision, the BB deputy governor said the government will take decision on rising prices of fuel oils considering the country's macroeconomic stability. "It's not our basic task," he noted.

The first-ever monetary policy statement was formally published in January 2006 and the central bank of Bangladesh declared that it would publish it on a half-yearly basis along with a half-yearly policy review.

 

[monitor]

Decentralisation key to planned development

Shafiqul Alam

Population growth and absence of land use policy are the core reasons for unplanned development in Bangladesh. Rural-urban migration has led to a great influx of people into Dhaka. Dhaka city has a population of more than 15 million people, and this puts a lot of strain on the available resources and physical infrastructure of the city. Moreover, high urban growth rates and high urban density have already made Dhaka more susceptible to human-induced environmental disasters.

The large increase in population, combined with haphazard growth and expansion has resulted in negative impact on various sectors of the city. These unplanned developments have not only put stress on urban services, but they have also led to the reduction and disappearances of public land and water bodies. Filling up of water-bodies has led to water-logging problem as catchments areas of surface and storm drains are filled up. Illegal land grabbing takes place, especially alongside lakes and parks. These lakes become dumping grounds of indiscriminate throwing of household, commercial, and industrial wastes. Unauthorised occupation, mainly slums, crop up on the banks of these lakes and rivers; people from these slums use the water for all purposes, and incidences of water-borne and skin diseases occur. The health conditions in these urban slum settlements are very poor and due to the close proximity, this also affects health of the surrounding neighborhoods.

Non-existent garbage bins and dumping sites alongside streets and neighborhoods are always overflowing. Lack of awareness about hygiene and environment as well as lack of civic sense lead to indiscriminate dumping of waste everywhere. Noxious smells and unaesthetic sights pollute the neighborhood which affects public health. There are no proper sanitary landfills for urban wastes; their disposal in the final dumping sites involves throwing the waste into low-lying areas around Dhaka city.

Industrial discharge and sewage disposal into lakes and rivers are the most polluting sources of water pollution in urban areas. There are a number of industries that are situated around rivers in the outskirts of Dhaka city. Buriganga, Turag, Balu and Sitalakhya are the four most polluted rivers in Bangladesh as a result of these industries.

Emissions from diesel exhausts and badly maintained old vehicles still contribute to most of the emissions in the air followed by the brick kilns.

Urbanisation and industrialisation has led to an increase in the noise level in the city. Some of the main sources include motor vehicles; increase of industries- especially in the residential areas, frequent use of loudspeakers on the streets and construction work on roadsides. Improper maintenance of vehicles, old engine noises, use of high-pitched hydraulic horns and the frequent use of horns create an unbearable noisy atmosphere in the streets. Inefficient traffic control, haphazard pedestrian crossing and poor road surface conditions make matters even worse. Construction work alongside roads and neighborhoods also add to the noise level in a significant way. Nowadays a lot of factories that have night shifts are set up in residential areas and they do not comply with the set noise standards.

Mindless construction of high-rises by filling up low-lying areas has put the lives of the people of Kamrangir Char in danger, with the forebodings of floods, earthquakes and landslides looming larger than ever. Indiscriminate growth of human habitation has long been a curse of this area. Experts say that the high-rises constructed within the last couple of years, mostly without proper building guidelines, pose a serious threat to the inhabitants of the area. Several of these unplanned buildings have already tilted, on the fast-growing western fringe of Dhaka, in the past couple of years.

The demand for land or housing in Dhaka can be reduced by decentralising all economic, administrative, commercial and educational activities to different regions of Bangladesh. Environmentalists, planners, bureaucrats, policymakers and even media are highly concerned about the planning issues of Dhaka city. The real estate developers or land grabbers are nothing but the mediators for fulfilling the demand for land and property.

It is a known fact that urbanisation and increase in population are taking place very rapidly; the government needs to formulate policies and programmes to handle such developments. Concerned citizens can form committees to object to commercial development, such as factories and office buildings in residential areas. The importance of public parks and playgrounds for children needs to be emphasised and awareness of policies and laws that exist regarding development, whether planned or unplanned, has to be raised to improve the urban environment. Technical solutions are possible, but these solutions must also take into consideration unresolved development problems, such as the city's growing slum population, which has doubled in the last decade, and which shows no signs of abating.

E-mail : shafiq@iidfc.com