News Clippings from the Week (20 December, 2012)

Bangladesh-India ties below potential:  WB (The Daily Star, December 20, 2012)

A new World Bank working paper entitled “Unlocking Bangladesh-India Trade” argues that economic ties between Bangladesh and India are far below potential.  While the study documents impressive gains in trade in recent years (exportation of Bangladeshi products to India has grown 7 fold in the last 11 years and importation of India goods into Bangladesh has increased 4 fold), Bangladesh still accounts for less than 1% of India’s imports.  The study estimates that a free trade agreement would lead to a 182% of Bangladeshi exports.   The full report can be found here.

Migrant workers drive economy  (The Daily Star, December 19, 2012)

On a discussion in International Migrants Day, Finance Minister said that Bangladesh's economic development largely depends on remittance sent by migrant workers, which is one of the sources of earning foreign currencies. He said that the remittance inflow would cross $14 billion mark this year. Speakers said that around 25 percent of the total employment comes from overseas employment, which could be increased to 50 percent in five years. They stressed the need for technical training and skills in foreign languages for the labor.

Trade deficit drops by 21 percent in Jul-Oct (The New Age, December 19, 2012)

According to Bangladesh Bank, the trade deficit of the country decreased by 20.84 percent in the first four months of the current financial year as the import of capital machineries, industrial raw materials and food grains declined in this period. According to the BB data the gap between export and import earnings stood at $ 2,517 million for Jul-Oct.

Malpractice threatens shrimp export (Financial Express, December 16, 2012)

Unscrupulous traders have allegedly injected shrimp exports with a type of gel to increase shrimp weight. Last week, six tones of adulterated galda shrimp were destroyed and businessmen were fined Tk3.9 million. The revelations have provoked fears of a repeat of 2009, when Tk1 billion in shrimp consignments were rejected after the discovery of salmonella, filth, and antibiotics in shrimp exports. In the aftermath of 2009, Bangladesh shrimp exporters faced onerous 20% mandatory testing throughout 2010.  Shrimp sales have declined 22% compared with the July-November period of 2011.

Stan Chart gives scholarships to intellectually-impaired students  (The Daily Star, December 16, 2012)

As part of its corporate social responsibility, Standard Chartered Bank awarded scholarships to 100 low income, intellectually-disabled students of five schools in Dhaka. Standard Chartered is giving education scholarships and medical facilities to the poor as part of its efforts to develop the country.

Weekly News Clippings (December 6)

WB sits with ERD Sunday to review fund spending in 46 projects (The Financial Express, December 6, 2012)

The WB has appointed Manusher Jonno Foundation to evaluate utilization of WB assistance money in Bangladesh.   Under the current Bangladesh Country Assistance Strategy there are 46 WB funded projects worth close to US$5 billion.  Four of these projects are considered “risky and problematic” due to  implementation problems, including a $257 million investment promotion and financing facility project, a $130.7 million secondary education quality & access enhancement project, a $67.20 million budget and financial capability project, and a $35 million disability-and-children-at-risk project.  Another fifteen projects are lagging in loan disbursements. 

FICCI for exclusive economic zone in Bangladesh  (The Financial Express, December 5, 2012)

A roundtable on investment opportunities for Indian entrepreneurs in Bangladesh was organised by FBCCI and the Federation of Indian Chamber of Commerce & Industry as part of the three day India Show.  Bangladesh could benefit enormously by attracting FDI from India and increasing exports to the country.  The speakers discussed several ideas including offering visa facilities, improving transportation infrastructure, reducing non-tariff barriers, and setting up an export processing zone exclusively for Indian companies.   

BRAC Bank SME lending crosses Tk 5,000cr mark (The New Age, December 5, 2012)

The CEO of BRAC Bank said that the bank’s SME credit portfolio is now over Tk 5,000 crore.  SME financing makes up over 50% of the banks portfolio and most of these loans are collateral free.  In related news, Bangladesh Bank (with assistance from the Japan International Cooperation Agency) has started a Tk 415 crore-refinancing-scheme to provide easy loans to SME entrepreneurs via banks like BRAC. 

SME Foundation, Trust Bank's fund for women entrepreneurs (The Daily Star, December 2, 2012)

The SME Foundation will provide Tk 3 crore to Trust Bank at 9 percent interest to provide loans to women entrepreneurs at the nakshikantha cluster in Jessore and the three hill districts of Rangamati, Bandarban and Khagrachhari.

Labor rights group presses for binding safety agreement (The Daily Star, November 30, 2012)

To prevent fire accident prevalent in many of the garment factory in Bangladesh, “International labor rights group Clean Clothes Campaign (CCC) called for international pressure on Bangladeshi garment makers and buyers to get them to sign the Bangladesh Fire and Building Safety (BFBS) agreement.”  The agreement would open garment factories to independent fire safety inspections and bind brands to only work with suppliers who permit such inspections. 

BGMEA wakes up, but slowly  (The Daily Star, November 30, 2012)

After some delay BGMEA formed a taskforce that “will give factory owners a deadline to upgrade their fire safety measures.” The president of the association said that all factories, whether they are BGMEA members or not, will come under the purview. At the meeting several garment owners suggested that they would be willing to bear the expenses of the families of the fire victims for the next 10 years.

Weekly News Clippings - November 29th

Much of this week’s business news has focused on the fire at Tazreen Fashions in Ashuluia that claimed the lives of at least 111 people.  The incident has drawn attention to poor worker safety in the garment sector. 

Important lessons to learn from Tazreen fire: Mozena (The Daily Star, November 28, 2012)

US ambassador to Bangladesh Dan Mozena said there are lot to learn from the Ashulia tragedy. In a meeting, arranged by Bangladesh Enterprise Forum, he said Bangladesh has once again drawn international attention to safety lapses at industrial units. The BEF president, stressed the need "to organise a discussion with the representatives from buyers, garment manufacturers, apparel workers, ILO [International Labour Organisation] and government soon for reviving buyers' confidence by ensuring workplace safety.”

Walmart blames its supplier (The Daily Star, November 28, 2012)

US global retailer Walmart  said Tazreen Fashions had been making clothes for the retailer without its knowledge. Walmart in a statement said that Tazreen was no longer authorised to produce merchandise for Walmart. But without authorisation a supplier subcontracted work with it which is an act of violation of policy. "Walmart categorises a factory's compliance as “Green”, “Yellow”, “Orange” and “Red”. A compliance audit of Walmart shows some of the units of Tuba Group, like Tazreen Fashions, had been rated as “yellow” for four consecutive years".

A lot left to be desired (The Daily Star, November 28, 2012)

After the Ashulia incident, garment workers complained of lack of safety measures in factories where they work. They said even factories considered to be compliant with safety regulations do not have emergency exits.  The president of the Institute of Architects wondered how the regulator RAJUK could have permitted the construction of the Tazreen facility without fire exits. Though some factories are equipped with modern fire extinguishers, but most cases these do not work or the factories do not have trained staff to operate the extinguishers. Some also complained that they are forced to work for 24 hours but they could not tell this to buyers or their representatives.

SME Foundation identifies 177 clusters to make the sector vibrant (The Financial Express, November 28, 2012)

In a view to assess the problems and prospects of small and medium enterprises (SMEs) in Bangladesh, SME Foundation undertook a cluster mapping project.  The project identifies clusters of SMES with geographic and product similarities.  The study revealed 177, 38% of which were in Dhaka.  The lowest concentration of SME clusters were found in Sylhet (4%) and Barisal (6%).  

Ashulia fire to affect RMG sector, export (The New Age, November 27, 2012)

The economists and exporters warned that the recent fire in Ashulia garment will have a negative effect in country's garment export. Distinguished fellow Dr. Bhattacharya of the Centre for Policy Dialogue said that the image of country's garment factory have changed with this incident in the global market. Garment owner need to avoid projecting an image of negligence. Bangladesh has been under pressure from the buyers concerned over worker safety. 

Akram new FBCCI President (The New Age, November 27, 2012)

In FBCCI election, Kazi Akramuddin Ahmed, Standard Bank Ltd’s chairman, Awami League advisory council member, and the candidate promoted by the government, was elected as president FBCCI directors. Akramuddin’s panel won 11 of 15 posts while Annisul Huq, who led an alternative group Ganatantrik Parishad, won the remaining 4.  According to the FBCCI rules, 30 directors are elected through direct voting – 15 from the chamber group and as many from the association group — while 18 directors are nominated by the nine leading chambers and an equal number of associations.

Business news clippings from the week (Nov. 22)

Banks’ profits erodes (The Daily Star, Nov. 22, 2012)

“Of 30 listed banks, 16 registered negative net profit growth year-on-year in July-September, six incurred losses  and seven made positive growth.”  Revenues reportedly feel because of two interrelated factors: interest rates are high and demand for loans is low.  Non-performing loans further hurt the industry, particularly from the ship-breaking industry, which was impacted by dropping steel prices.

Unemployment problem worsening: said MCCI (The Financial Express, November, 21, 2012)

The Metropolitan Chamber of Commerce & Industry (MCCI) said that unemployment problems are worsening due to the mismatch between demand and supply of labor market. Country's overseas employment fall drastically because of some imposed restriction by labor-imported country like the UAE. MCCI said to solve the problem Bangladesh needs to create jobs at a rapid rate through productive and efficient effort of the public and private sector.

Allegations of influence sour FBCCI polls (The Daily Star, November, 20, 2012)

Contestants in the upcoming FBCCI polls allege that an influential quarter is putting pressure on the election board to remove the designated secret ballot system and replace it with a hand-raising voting system.  Contestants said that under the hand-raising method, the nominated directors will come under pressure to vote for the government-backed presidential candidate. “This year, the posts of 30 directors are being contested by a total of 63 candidates: 30 under the banner of Ganatantrik Parishad, 30 under the Kazi Akramuddin Ahmed Panel and three as independent contestants.”

No need to 'reinvent the wheel' for SMEs (The Daily Star, November, 19, 2012)

Economists said that Govt should go for implementing the recommendations and policies laid out in the SME Policy 2005, the Industrial Policy 2010, and the 2011-2015 Five-Year Plan rather than undertaking further studies and trying to “reinvent the wheel.”  In a seminar, "Competitiveness of Bangladesh: Prospects and Challenges for SMEs", organised by the SME Foundation speakers “also  urged the policymakers and industrialists to take into consideration the total value chain of any sector to be able to enhance their competitiveness.”

Analysts see loopholes in consumer rights law (The Daily Star, November, 16, 2012)

The Consumers Association of Bangladesh (CAB) with the support of Manusher Jonno Foundation organised a programme on using the information law to ensure effective enforcement of the consumer protection law.  Participants noted several loopholes in the existing legislation that need closed.  For example, “The law gives rights to an aggrieved consumer to file civil cases. But it is not clear how to file civil petitions and what the court fee will be.”  Speakers advocated for permitting consumers to file petitions at an assistant judge’s court at no fee.   Speakers also called for strengthening the Department of National Consumer Rights Protection.

News Clippings from the Week (15 November)

Industrial output rises very marginally in FY 2012 (The Financial Express, November, 15, 2012)

The general index of industrial production of medium and large scale manufacturing operations increased by only .02 percentage points in the last fiscal year (2011-2012). Production of furniture, food and beverages, tobacco, chemical, petrol, rubber goods recorded a decrease during this period.  Cotton, woven apparel, leather, fabricated metal products, paper products, and non-metallic products all increased.  Some increases in power availability were noted.  Small-scale manufacturing recorded a larger increase of 3.54 percentage points.

Bangladesh could be next China (The Daily Star, November, 14, 2012)

According to a World Bank report, Bangladesh can become an alternative to China despite several obstacles, including poor governance, lack of foreign direct investment, poor infrastructure and unplanned urban growth.   In order to be the next China Bangladesh will need to improve its business environment. But the payoffs are potentially huge.  Capturing just 1 percent of China's manufacturing export markets would almost double Bangladesh's manufactured exports. Experts said that said skilled labour shortage outside Dhaka and Chittagong is the main impediment to dispersion of economic activities.

Big time for garment (The Daily Star, November, 12, 2012)

According to Richard Vuylsteke, leader of a delegation of international buyers, Bangladesh is their first choice in apparel production after China. The comment was made during a meeting with Bangladesh Garment Manufacturers and Exporters Association (BGMEA). As China is shifting away from apparel manufacturing to heavy industry now is the best time for Bangladesh to fill the vacuum.  BGMEA officials commented that energy and infrastructure are the two biggest challenges.

Women entrepreneur not getting desired loans (The New Age, November, 11, 2012)

According to Bangladesh Bank the entrepreneurs of small and medium enterprises are not getting desirable loan from the banks and NBFIs. Earlier the BB had asked the banks and NBFIs to disburse minimum 10 percent loans to the women entrepreneurs.  Loan disbursements to women have increased; however, they only amounted to 3.65%, far short of the goal. 

A lack of business ethics leads to scams: Latifur Rahman (The Daily Star, November, 11, 2012)

Latifur Rahman, who received Business for Peace Award 2012 said that the recent financial scandals in Bangladesh have occurred due to the absence of ethical business practices and exemplary sentencing of the culprits. He stressed on ethics and morality for sustainable business.

News Clippings from the Week (November 8)

FBCCI Polls 2012 (The Financial Express, November 08, 2012)

A new group of individuals has announced their candidacy for leadership positions within the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) under the banner of Gonotantrik Porishod.  The group is led by Abu Alam Chowdhury and is supported by former FBCCI chief Annisul Huq.  The main issue for the group is regaining the right to internally elect its own chief, a power that was stripped from the organization in 2002.   Member organizations currently elect some of the FBCCI’s leader positions but not all.  Elections for are to be held on Nov. 24. 

Towel makers go for expansion, target higher exports  (The Daily Star, November 07, 2012)

Industry owners see good prospects for Bangladesh in towel exports. "Presently, around 100 factories, mostly by Bangladeshis, are manufacturing and exporting towels, with towel exports fetching $140 million in fiscal 2011-12." To these entrepreneurs the towel industry offers the same potential as readymade garments.  The industry also benefits from cheap labor but it is less dependent on accessories than the readymade garments industry.

Bangladesh gaining strong position in global IT outsourcing market (The New Age, November 04, 2012)

Bangladesh is gaining a strong position in global IT outsourcing market due to low labor cost, skilled and efficient human resources, and quality output. The head of the industry association BASIS reports that renowned companies are moving towards here with more orders. Industry insiders said the average wage of an outsourced IT sector employee is around $8 per hour in Bangladesh compared to $20 in India and $10 to 15 in the Philippines.  The country is home to some 500 registered IT outsourcing companies that collectively employ 20,000. In addition, there are an estimated 15,000 freelancers in Bangladesh doing outsourced work for technology companies from across the globe.

BRAC puts women in the driving seat (The Daily Star, November 01, 2012)

In collaboration with the government, BRAC is funding and training about 600 poor women to become professional drivers.  The project is not uncontroversial but it represents a new income generating activity for women.  According to one participant, "Village elders declared my family an outcast. They said that a young woman like me should not live alone away from her family and that driving is not for women."  But she responded, “I told my parents everything will be fine if I become financially solvent. Village elders don't give us food when we go hungry." At the BRAC School of Driving, classes include parking, lane discipline, basic vehicle maintenance and practising on a simulator.

Low price: a boon for leather exporters (The Daily Star, November 01, 2012)

This Eid the price of rawhide dropped by 20% due to the fall of demand in the international market. "The low price of rawhide does have a silver lining as it might give exporters a competitive edge in the international market. The leather industry, which is reliant on local hides and skins, has now emerged as the third largest export sector, after garments and jute and jute goods."

News Clippings from the Week (October 18)

Furniture exports rise 27% (The Daily Star, October 18) 

The 11th National Furniture Fair going on now has brought attention to the growth of the furniture sector.  According to data from the Export Promotion Bureau, furniture exports grew by 26% between fiscal year 2011-2012 and the previous fiscal year to Tk 220 crore.  The local furniture market is estimated at Tk 11,000 crore.  In total the industry is believed to employ 30 lakh people.  

Solve infrastructure and power shortage to create jobs: MCCI Seminar (New Age, October 17)

In a seminar organized by the Metropolitan Chamber of Commerce & Industry, speakers pointed to several barriers to business development, including inadequate infrastructure, shortage of power, lack of skilled workforce, and unavailability of soft loan. They also emphasized the need to develop more skilled manpower. The seminar was entitled "Job creation in Bangladesh- an effective means to poverty reduction."

Apparel sector faces stagnation for bank's reluctance  (New Age, October 16)

Four apparel sector trade bodies reported  stagnating financial flows in the wake of the Sonali Bank – Hall Mark loans scandal that is hurting business.  Commercial banks are reportedly hesitant to accept Bills of Acceptance after Sonali Bank’s failure to ensure the quality of the Letters of Credit (on which Bills of Acceptance are based) that it issued to Hall Mark.   The speakers said that this situation can be eased if Sonali Bank pays against the bills of acceptance of Hall Mark group.

Bangladesh gets 3G, finally (Bdnews24.com, Oct. 14)

Bangladesh has finally launched third generation mobile communications technology (known as 3G), which offers faster data connectivity.  Currently the service is limited to customers of the state run TeleTalk, which controls only 1.5% of market share.

Chittagong port haven for dishonest importers (The Independent, October 14)

The importers of Chittagong port regularly submit incorrect and illegal customs declaration when importing of goods. The customs department has evidence of some 3,200 wrong declarations, which has resulted in hundreds of crores of taka tax evasion.

Corruption main hurdle to get MCC fund (The Independent, October 12, 2012)

Representatives from the Millennium Challenge Corporation (MCC), an independent United States foreign aid donor, said that Bangladesh should reduce corruption to obtain access to MCC funds. At a press conference organized by the US Embassy it was noted that corruption is also associated with other problems undermining the rule of law, port capacity, rail, road, power, energy and credit facilities.

News Clippings from the Week (11 October)

Dhaka Declaration commits to pursue industrial co-op among members (The Financial Express, October 11, 2012).

The third ministerial meeting of the Muslim Developing-8 (D-8) countries, including Bangladesh, Pakistan, Egypt, Iran, Indonesia, Malaysia, Nigeria, and Turkey, concluded yesterday.  The “Dhaka Declaration” outlines measures for mutual investment on industrial and technological development, technology transfers among member nations, and technical and industrial cooperation

IMF won’t loosen strings on loans (The Daily Star, October 11, 2012).

The IMF is threatening to not release the second installment of a US$987 million credit to Bangladesh worth US$141million if the parliament fails to move forward on proposed reforms to the VAT and the Banking Companies Act by November.  The IMF expressed its concerns that a proposed 15% VAT in initial draft legislation has been undermined by exemptions.  In addition, the IMF wants greater authority for banking oversight transferred from the Banking Division of the finance ministry to the more independent Bangladesh Bank. The finance ministry is also seeking an exception to allow high bank exposure limits in the stock market.    

Bangladesh: next pharma hub  (The Daily Star, October 10, 2012)

In the ministerial meeting of the Development-8 (D-8) pharmaceutical leaders of Bangladesh said that country will soon become a major global source of low-cost generic medicines and vaccines. As Bangladesh is capable of producing high-quality products with state-of-the-art manufacturing facilities and it can provide sophisticated quality control equipment and highly-skilled human resources. A number of pharmaceutical companies have obtained certifications from the UK, the European Union, Australia, the Gulf countries and other regulatory authorities.

Economists want more clout for BB to govern state banks  (The Daily Star, October 8, 2012)

The speakers on a discussion on Hall-Mark scam said that the government should give more authority to the central bank by disbanding the Bank and Financial Institutions Division of the finance ministry. In case of the state banks, the BB can only advise the government to take actions and it does not have any direct control over them.  In case of the private banks, the BB it has full regulatory control.

Speakers stressed need for easy bank loan (The Financial Express, October 7, 2012)

Association of Grassroots Women Entrepreneur, Bangladesh (AGWEB), in a conference stressed the need for easy bank loan. The speakers suggested that the government should arrange training program on entrepreneurship development and awareness, skill development, business counseling, networking support for the overall development of the grassroots women entrepreneur.

IT outsourcing earnings rise by 56% (The Independent, October 6, 2012)

BASIS said that earning from outsourcing IT jobs has increased by 56 percent in last one year. In the 2011-12 fiscal year the earning were US$70.6 million. At present there are more than 500 software companies according to BASIS.

BB opens probe as banks' dues against accepted bills soar (The Daily Star, October 5, 2012)

In response to the Hall-Mark/Sonali Bank loan scandal, "The central bank has opened an investigation into the rise in banks' dues against their accepted bills. Banks accept foreign and local bills against letters of credit. But due to complaints of false documentation and faulty accepted bills against local and foreign LCs, the banks later refuse to pay the bills. Influential businesses in collusion with some bank officials provide these false documents to banks to siphon money."

Hong Kong investors keen on investment in leather sector  (The Daily Star, October 5, 2012)

The president of Hong Kong New Territories Manufacturers Association proposed for a special industrial zone for composite leather to the government of Bangladesh. He suggested the government for issuance of bonded warehouse licence with easy terms for foreign investors, uninterrupted power supply, and registration processes for companies of foreign investors. He also urged the government to speed up the process of setting up the leather processing zone in Savar.

News clippings for October 4

Slow exports to pull down GDP growth to 6pc: ADB (4^th October 2012, The Daily Star)

The Asian Development Bank said that due to sluggish exports and a decline in domestic demand Bangladesh's economic growth may come down to 6 percent in the current fiscal year. The decline is primarily due to the financial crisis in the European Union, which is affecting Bangladesh's exports.  The central bank's continued credit tightening efforts have also had an impact.

Citi launches twin projects to help underprivileged children (1^st October 2012, The Daily Star)

With an aim to improve the lives of about 800 underprivileged children, Citibank NA yesterday launched two community projects in the capital. "Citi Bangladesh has partnered with Underprivileged Children's Education Program (UCEP) to launch the Citi-UCEP Pre-technical Education Project. The children will gain financial literacy, practical mathematics and communicative English skills."Citi teamed with SEID Trust to provide education to some 450 underprivileged children with autism, intellectual disability and multiple disabilities for the other project.

Skilled woman entrepreneur can drive economy (1^st October 2012, The Independent)

To achieve a higher sustainable economic growth, employment generation and enhance the standard of living, Bangladesh Bank is taking a more proactive role in enhancing the number of skilled women entrepreneurs in the country. Through a workshop organized by Bangladesh Bank and International Finance Corporation, it is providing practical solutions to management issues of small and medium sized enterprises.