Weekly News Clipping (28 March 2013)

Banks Warned Against Higher Deposit Rates (The Daily Star; March 27, 2013)

The central bank has warned 17 commercial banks, including two foreign ones, against offering higher interest rates on deposits as the practice would fuel an unhealthy competition and distort the monetary system. Though Bangladesh Bank (BB) has not set any ceiling, the Association of Bankers Bangladesh Ltd, a platform of banks’ chief executives, has set the limit at 12.5 percent through an informal understanding between banks. However, a BB survey found that at least one or more branches of these 17 banks have offered interest rates higher than 12.5 percent for deposits.

Dhaka Among Worst Cities For Global Business  (The Daily Star; March 27, 2013)

Dhaka is among the 10 lowest ranking cities in the world for recruitment, employment and relocation according to a recent study. Of the 138 cities selected by Aon Hewitt, an American human resource consultancy firm, Dhaka came in at 130 of the People Risk Index. The index looks at demographics, access to education, talent development, employment practices and government regulations. The points in each category are tallied into a scale from 25 to 250, where 25 represents minimal or no risk and 250 extreme risk. Dhaka scored 180, the same as Tripoli but better than Karachi, Baghdad and Damascus.  More information can be found at https://aonpeoplerisk.com/2012-Update

Meena Bazar Accelerates Effort to Provide Safe Food (The Daily Star; March 26, 2013)

 Meena Bazar of Gemcon Food & Agricultural Products Ltd (GFAPL) has signed an agreement with Bangladesh Council of Scientific and Industrial Research (BCSIR) to facilitate testing and certifying its consumable raw and processed food products against food safety parameters for consumption. BCSIR will test and certify the food samples randomly collected or supplied by GFAPL against national standards for human consumption. Gemcon will now use the label ‘Tested by BCSIR’ along with the logo on the products to let consumer know about food quality and safety. (Disclosure: ULAB is a concern of the Gemcon group.) 

Ctg BGMEA Opens New Horizon for Students (The Daily Star; March 25, 2013)

Students in the port city looking to build a career in the garment sector can expand their horizons as the Chittagong BGMEA Institute of Fashion and Technology offers four-year undergraduate courses on fashion design, apparel manufacturing and technology.  The institute also plans to introduce four-year BSc honours courses on knitwear manufacturing and technology, textile engineering and textile management, MBA and diploma programmes with an aim to develop competent technical professionals for the garment sector.  The institute has been offering various diploma, certificate, and short courses since 2002.

 

FDI Rules Putting Off Investors (The Daily Star; March 25, 2013)

 Complicated entry procedures and weaknesses in regulatory framework, is preventing the desired levels of foreign direct investment (FDI) in Bangladesh, according to a report by the United Nations Conference on Trade and Development (UNCTAD). The report also identified issues, such as, congested roads, unreliable power supply, poor access to remote areas and lack of a deep sea port, among others, which should be addressed if FDI is to play a bigger role in the country’s development. Inward FDI volumes in relation to population and GDP have been 50 percent lower than the inflows to other populous low-income countries such as India and Indonesia.  The report is not yet available, however, UNCTAD’s 2012World Investment Report can be found at: http://unctad.org/en/PublicationsLibrary/wir2012_embargoed_en.pdf

GDP Growth May Hit 6.8pc: BBS (New Age; March 24, 2013)

According to the Bangladesh Bureau of Statistics, the Gross Domestic Product (GDP) of Bangladesh in the current fiscal year 2012-2013 may hit 6.8 percent, which is slightly higher than its previous estimate of 6.66 per cent.  While this is lower than the government’s targeted 7.2 per cent, multilateral lenders, including the International Monetary Fund (IMF), World Bank and Asian Development Bank (ADB), projected the GDP growth rate to be far lower--between 5.5 to 6 per cent. They projected lower rates based on weak domestic demand, sluggish local and foreign investment, and energy shortages.  

60pc decline in sales of flats, plots in 6 months (The Financial Express; March 24, 2013)

A Real Estate and Housing Association of Bangladesh (REHAB) spokesman reported that during the last six months there has been a decline in the sales of both flats and plots of at least 60% as a result of lack of gas and electricity connections, non-availability of bank credits, and an increase in land prices and the cost of construction materials.  In addition, REHAB is protesting moves by the Central Intelligence Cell of the National Board of Revenue to collect information on clients as a means to prevent money laundering in the real estate sector.  The business association contends that the drive has created panic among buyers and businessmen and requested the Ministry of Finance to de-list the real estate sector as a target for money laundering concerns. 

Drilling starts at new Titas gas well (The Daily Star; March 23, 2013)

The state-owned Bangladesh Gas Fields Company Ltd (BGFCL) has started drilling its 18th well in the Titas Gas Field in Brahmanbaria. The 3,200-metre deep well is expected to produce 25-30 million cubic feet of gas every day. The work is likely to end by June. BGFCL now operates six gas fields–Titas, Habiganj, Bakhrabad, Narsingdi, Meghna and Kamta–which have 32 functioning wells producing 765 million cubic feet of gas everyday. The gas produced by the six fields is 37 percent of the total gas being supplied to the national grid.

China offers $1.95b to build Padma Bridge (The Financial Express; March 22, 2013)

A Chinese consortium, backed by a government-owned bank, has officially proposed to channel $1.95 billion to construct the Padma Bridge without interest and a payback period of 20 years. The offer has estimated the cost of Bangladesh's largest ever infrastructure project at $2.79 billion. A previous agreement with the World Bank had put the cost at $2.9 billion. According to the latest proposal by the Chinese, Bangladesh will have to source the rest of the money – which is roughly 30 percent of the total cost - and appoint a firm to supervise the construction work. The fees for that firm will have to be paid by the government. Bangladesh would need to repay $8.15 million a month for 20 years if the agreement is signed for the 6.15-kilometer-long multipurpose road-rail bridge.

Bangladesh Riots Threaten Its Boom (The Wall Street Journal; March 21, 2013)

The Wall Street Journal provides a critical assessment of the current political instability’s impact on the economy.  Political violence in Bangladesh is pushing investors to look for new manufacturing bases. Foreign companies that had flooded into the country now speak of it in the past tense.  As one buyer stated, “How many eggs do you want in a basket that's basically a powder keg?" An upswing in the past few years that had transformed the impoverished country into one of the world's top clothing exporters is losing its momentum after a series of tumultuous events.