Jumana Rezwan's Canvass

“I am real”  To Set New Standards In The Food and Beverage Industry

BanglaDutch Developments Ltd Company has recently launched a premium juice line “I am real” 

which promises to offer similar nutritional and health benefits as are found in real fruits. Juice is of course not a new product, but by branding their juice “I am real,” the company is clearly responding to a demand for unadulterated food in Bangladesh.

Consumers are often unsure if the food they purchase in the country’s markets and grocery stores is hygienic and unadulterated, given the considerable evidence that  many perishable food items are treated with formalin(formaldehyde) to preserve freshness.

The adverse affects of high levels of formalin have been discussed on various forums. While measures have been taken, it has also given rise to a new sector which trades in “formalin free  fresh food”.

“I am real”  and “formalin free food” may be the beginning  of a megatrend in Bangladesh where people are more conscious about the quality and purity of food and its overall impact on general wellbeing and health. Low GI rice is already being sold in selective locations in Dhaka. The near future may see retailers  increasing their stocks of healthier alternatives such as organically grown foods.

http://www.thedailystar.net/newDesign/news-details.php?nid=269493

BGMEA and SEDF awards eco compliant companies.

 25 garments manufacturing companies were awarded for their initiatives in implementing rigorous measures to allow for sustainable development practices within their factories. The focus was on areas such as waste management, noise pollution, chemical and hazardous materials management and more.

These awards  will hopefully symbolize the revival of the RMG industry which has suffered severe blows to its international image due to factory fires and other malpractices.

The recent spate of fires could have been prevented had safety measures for employees been taken into considerations. Moreover, installing basic facilities such as fire extinguishers, water sprinklers and smoke detectors should perhaps be high on the list of priorities, since achieving sustainable growth in the long run will be a difficult task if key assets such as human resources are neglected.

While rewarding companies is likely to encourage more of them to take initiatives to implement  sustainable business operations, perhaps it should also include more extensive  focus on improving conditions for laborers. Moreover such awards appreciating companies for their effort to create safer work environments may well complement recent initiatives to help gradually rebuild the tarnished image of the RMG sector.

http://www.thedailystar.net/newDesign/news-details.php?nid=269801

Jumana Rezwan's Canvass

Banglalink Prepping up to offer 3G services soon

Banglalink has rolled out plans to offer 3G services to its users and is undergoing phase by phase structural upgrades to support the new system. 3G or 3^rd Generation technology enables high speed data rates of at least 200 Kbit/s   that allows mobile users to take advantages of applications such as Mobile TV, GPS, Video conferencing, to name a few. Should the proposed plans come through, Banglalink will have the technological capabilities of supporting 2G,3G and 4G technology. Given the high licensing prices, 3G services are likely to be very expensive when launched initially. 

As the telecom market goes through a gradual evolution, it will be interesting to see the market’s reaction at to the introduction of new technology. On one hand, this move may be a test of brand loyalty for telecom operators where  eager mobile subscribers may switch to different operators in a bid to avail 3G services as soon as possible.  On the other hand, a  shift in consumer behavior is highly anticipated where handsets will evolve from being mere communication tools to a mode of entertainment.  Given the lower disposable income  of the average population this may well indicate a lucrative opportunity for  low priced handset manufacturers such as  Symphony.

 http://www.thedailystar.net/newDesign/news-details.php?nid=268984

Outgoing WB Country Director expresses confidence in Bangladesh’s  economic future

Ellen Goldstein, the World Bank’s outgoing country director has predicted that with increased public-private partnerships as well as investments in skill development, Bangladesh may well be able to achieve  an annual economic growth of 8 to 10 percent , similar to that of China. The favorable demographic characteristics of the population mean that Bangladesh  has one of the youngest workforces in the world, making it the most competitive labor market worldwide.

However, in order to facilitate the growth and take advantage of favorable demographic characteristics , there is a need to invest in the training/ educational sectors in order to create a stronger base of skilled workforce.

 
Goldstein's emphasis on skill development is crucial.  Her comments shed light on the inadequacy of the  current structure of the educational systems, which is unable to churn out well rounded graduates and is more focused on catering to specializations such as Engineering, Medicine and Business Administration. Moreover, at primary and secondary school level, students are taught to memorize rather than understand the different concepts, which in turn decreases their ability to think critically.

Perhaps it is a good time to look at possible reforms within the educational system, so that the future generations are exposed to more multidisciplinary educational systems which will hopefully create more well rounded individuals with ability to think individually and critically.

http://www.thedailystar.net/newDesign/news-details.php?nid=268962

Weekly News Clippings: 14 February, 2013

BB boss blames negligence for state bank scam  (The Financial Express, February 14, 2013)

The Governor of BB said that there remains considerable laps and deficiencies in credit administration, risk management, internal control and compliance function in the state banks as these banks do not follow and administer recommended policies like Know Your Customer (KYC), Credit Risk Grading (CRG) and Anti Money Laundering Provisions. As part of this, he said central bank has developed an electronic supervision dash-board which can provide signs of fraudulent transactions. He also said that the government now has taken a step to select the board of directors with adequate eligibility so that the practice of insider abuse and fraudulence will be reduced.

GSP may go on: AmCham (The Daily Star, February 13, 2013)

American Chamber of Commerce in Bangladesh (AmCham) said that there is hope for Bangladesh to retain GSP facility for its exports to US market. The total US investment in the country now standing at $1.35. According to the American Chamber’s data, in 2012 Bangladesh exported goods worth $4.91 billion to the US and imported products worth $501.9 million.

Fair opens in city to promote SMEs (The Daily Star, February 13, 2013)

In the fair organized by the SME Foundation, speakers stressed the need for adequate credit and availability of collateral loan. They noted that SMEs are repaying loans at a 90% rate, but still banks and financial institutions are reluctant to give loans to the SME entrepreneurs. Speakers said that SMEs in the country account for over 90 percent of the industries and provides jobs for 3.1 crore people so all should come forward to help them on financing. In the fair SME's from agriculture, clothing, home textile, handicraft, leather, light engineering, foods, beverage, electrical and electronics and furniture are participating.

Most SME loans went to unproductive sector in 2012 (The New Age, February 12, 2013)

According to Bangladesh Bank (BB) data, SME loan disbursement by banks and non-banks financial institution increased by 29.84% in 2012 in comparison with 2011.  Nonetheless the majority of the loans (63%) were not destined to manufacturing companies but for trade.  BB urged the banks and non-bank financial institutions to disburse more loans to entrepreneurs of the manufacturing sector. The SME loan disbursement by banks and NBI's had increased by 45.16% to tk 44,222.65 crore in trading sector in 2012 from the annual target of tk 30,463.81 crore. Women entrepreneurs also did not get the desired amount of loans, accounting for only 3.19% of the disburseds loan.

Export  earning growth falls to 8.83 % in 7 months  (The New Age, February 12, 2013)

According to statistics of EPB (Export Promotion Bureau) the export earning growth in 7 months of FY 2012-13 was positive but slower due to sluggish growth in export of ready made garments, leather and jute in the first five months of the year. The export growth of woven garments fell to 13.57% from 22.84% and knitwear fell to 6.39% from  9.71%. In total the country's export earning growth fell to 8.83% from 14.28%. In a report of EPB it is said the drop was due to the ongoing crisis in Europe and sluggish market of US.

Experts blame loan disbursement on political consideration  (The New Age, February 12, 2013)

According to BB statistics, default loan increased by 88.67% to Tk 42,723 crore in 2012 from Tk 22,644 crore in 2011. In state-owned banks the amount increased by Tk 13,344 crore to Tk 21,514 crore.  The largest portion of this increase came from Sonali Bank in the aftermath of the recent scandal.  Experts said that the amount of default loans increased in banking due to lack of monitoring of central bank and loan disbursement on political consideration. Another cause is the high rate of interest which businessman cannot repay timely.

Thrust on practical roadmap for integrated, sustainable growth of leather industry  (The Financial Express, February 11, 2013)

The leather industry of Bangladersh has been criticised by Human Right Watch, Reuters and other world media due to the working condition of Hazaribag tannery. Among the buyers and other stakeholders it has created a negative image of the industry.   The speakers and leaders of leather industry spoke in an event of the need for co-operation between the public and private sector to formulate and implement policy. They suggested for relocation of the tanneries to the leather village and listing of all bottlenecks and recommended solutions.

Jumana Rezwan's Canvass

It is our pleasure to introduce a new addition to the CES blog: Jumana Rezwan’s Canvas.   ULAB faculty member Jumana Rezwan will be regularly contributing her analysis of important business and economic news.  Jumana holds degrees from American University Sharjah in the United Arab Emirates and the Skema Business School in France.   She has worked for Louis Vuitton and Cartier in France and is an expert on luxury brand management.   

Women as entrepreneurs

Recently four distinguished women were recognized for their outstanding contributions in the SME sector. These entrepreneurs were largely related to the fashion industry and one to the food and beverage sector. While is it an encouraging sign to see women actively involved in the economic development of the nation and being recognized for their contributions, it will be interesting to see if women entrepreneurs will venture out away from the traditionally female dominated industries such as fashion and compete in more male dominated sectors such as manufacturing, finance and real estate industries.  In these industries, women leaders are few and tend to be wives and daughters  in the country’s larger family businesses. Outside of these circles, women still must contend with familial acceptance and  possible religious restrictions on mingling with men constantly. While the government has been trying to implement measures to assist women entrepreneurs financially, perhaps we need to be thinking about simultaneously creating a broader social awareness of the beneficial roles women can play in leading our economic development.

For more info see: http://www.thedailystar.net/newDesign/news-details.php?nid=267913

Positive growth in Global labor market signifies an opportunity for Bangladeshi migrant workers

As labor force shortages continue to plague developed countries, opportunities for Bangladeshi migrant workers are on the rise. While this may seem advantageous for the economic development of Bangladesh, one cannot just look at these migrant workers as a means of remittances. Too often migrant workers have been subject to unfair labor laws and despicable living conditions as is often seen in the Middle East. Given that demand for their labor is high and remittances are at unprecedented levels, now is a good time to work towards addressing some of the abuses in the labor market. The 14 point demand made by the WARBE Development Foundation and other prominent NGO’s in Bangladesh in December 2012 may perhaps be a starting point to implementing different measures to protect the rights of migrant workers.

For more info see: http://www.thedailystar.net/newDesign/news-details.php?nid=268111

Weekly News Clippings (7 February, 2013)

Investment to drop further: study (The Daily Star, February 03, 2013)

Private investment in the economy declined 19.1 percent year-on-year in fiscal 2011-12. According to a study of Policy Research Institute (PRI), private investment is likely to drop at a higher rate this year. In a discussion some speakers said that high interest rate of bank loans are affecting investment; however, others noted that once inflation is taken into account the real interest rate is not excessively high.  Also noted was the continued problems in the global economy, which has constricted the growth of the export sector.   PRI Chairman Zaidi Sattar said trade policy needs to be reoriented to deliver high growth in the manufacturing sector.

Export may face challenge over FTA between EU, Vietnam (The New Age, February 04, 2013)

Bangladesh's apparel export sector will face a big challenge in the EU market if the European Union and Vietnam sign a proposed free trade agreement.  Presently Bangladesh’s apparel items enjoy duty-free and quota-free market access to the European countries under the generalized system of preference while Vietnam has to pay 9% duty.  Removing this duty will make Vietnam more competitive with Bangladesh and cut into Bangladesh’s market share.  

Dozens of high rises make HSAIA air traffic hazardous  (The Financial Express, February 04, 2013)

The Civil Aviation Authority of Bangladesh (CAAB) said dozen new high rise buildings near the Hazrat Shahjalal International Airport posing a serious threat to aircraft. CAAB took the initiative to form a committee with Rajuk and Dhaka City Corporation north to prepare a list of those high rises and to demolish all those structures that violating the civil aviation law of the country. If needed CAAB would also seek assistance of ICAO in identifying risky buildings. Rajuk in 2009 identified 300 structures including 46 high rises and took the initiative to demolish 17 of them, but due to legal barriers, eight of them could not be knocked down.  Rajuk also could not demolish several illegal structures as the owners had the stay orders from high court.

Garment subcontracts avoidable? Far from it (The Daily Star, February 04, 2013)

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) there are about 3500-odd active garment factories and of these 3000 odd factories produce on subcontract basis at the time when they have no orders of their own. Industry people claiming that poor infrastructure, political unrest and pressure to meet the deadline force many garment exporters to resort to subcontracts. Subcontracting garnered greater attention after Wal-Mart cancelled its entire order worth nearly $5 million (Tk 40 crore) with the local firm after the fire incident of Tazreen garments because of several layer of subcontracting.  

Four women entrepreneurs win SME awards (The Daily Star, February 05, 2013)

The SME Foundation awarded three women entrepreneurs for micro, small- and medium enterprises and a fourth for lifetime achievement among 90 applicants. The speakers urged government to provide loans with lower interest rate and for the exemptions of tax and VAT for new entrepreneurs as the SME sector accounts 40% for the national economy.  The awards went to a fashion designer, a restaurant owner, and handicraft goods vendor, and a boutique clothing store owner.