Saturday, April 27, 2013

Jumana Rezwan's Canvass



Traditional rice takes a back seat as farmers turn to hybrids to meet increased demand

During the green revolution, a booming population and increased demand for essential commodities such as rice led farmers to turn towards hybrid varieties of rice in order to realize higher yields, sales and profits.  This process continues today. Using hybrid varieties allow farmers to increase their harvests in shorter time periods, which allow for more cultivation opportunities throughout the year. While the hybrid varieties are assisting in meeting market demand and keeping market prices stables, they have several disadvantages.

First , rice is the most important staple in the local diet and a main source of nutrition for this impoverished nation. Hybrid varieties often fail to provide the same nutritional values that are found in the traditional rice breeds and dependency on them may actually add to chronic malnutrition problems that already exist.

 Moreover, as these hybrid seeds are not a result of the natural selection process, they require additional investment in harmful fertilizers and pesticides to sustain their growth. Altering soil composition to accommodate hybrid seeds means that the natural environment/ ecosystem is impacted in the long run.

Finally, since cultivating hybrid rice offers quicker yields, the traditional varieties are losing out. Each region of the country was renowned for a special breed of rice that was cultivated in that area. With farmers turning towards hybrids, the traditional rice varieties are slowly facing extinction. With the extinction of these breeds, a part of local culture is also being eroded.

Perhaps, authorities, farmers and agro-businesses should focus on promoting and adopting advanced agricultural methods that allow for the revival of the older breeds.  In fact, there has been a recent resurgence in demand for more traditional and nutritional rice varieties. The expertise on how to cultivate them is already available and soil conditions are naturally suited for these breeds.  There is likely a role for greater experimental research on these issues and subsequently a working plan to reintroduce breeds that are in the long run beneficial to both cultivators and customers.  




Wal-Mart to help set up supplier training academy in Bangladesh
In a bid to improve factory conditions, US retailer Walmart, in collaboration with the Institute for Sustainable Communities and Bureau Veritas, has planned to fund a new Environmental, Health, and Safety Academy in Bangladesh. This academy will train suppliers on ensuring workplace safety measures and improving overall working conditions.  It is unclear if Walmart’s $1.6million donation is an act of corporate social responsibility, an effort to ensure tighter quality control measures in its supply chain, or an attempt to improve its tarnished image in the wake of the Tazreen Fashions fire.  Regardless, this move by Walmart is likely to be received by a mixture of relief and appreciation by the local RMG industry for a variety of reason.

To begin with, as Walmart and other international bodies are investing in this project, it may be an indirect indication that buyers still intend to use Bangladesh as a major supplier - despite the recent shutdowns and delays in meeting orders. 

Moreover, foreign expertise at the training academy will allow for the adoption of best practices that have already been successfully tried and tested in other countries.  This could lead to meaningful gains in worker safety across the industry.   

Finally, sincere efforts to improve worker welfare may help rebuild foreign buyer confidence in an industry whose image has become tarnished by shutdowns and factory fires. International buyers will likely feel more confident in contracting from local companies that have taken advantage of the training center.


Wednesday, April 24, 2013

Weekly News Clippings 25 April 2013



RMG sector faces severe blow in int’l market for Savar tragedy (New Age, April 25, 2013)

The Savar tragedy is yet another blow for the country’s readymade garment (RMG) industry which is still recovering from the aftermath of the Tazreen disaster, said economists and garment exporters. With the numbers expected to rise, over 100 people, most of them garment workers, were killed and 500 were injured when a nine-storied building housing five garment factories and other shops collapsed on April 24. Locals alleged that the owner did not cordon off the building even after engineers had ordered the building to be evacuated on Tuesday after cracks developed in the building earlier that day. The apparel factory owners also ignored the advice and kept their units running. Apparel workers alleged that the structure of the building was so frail that it used to shake even when a generator ran. The RMG sector, which has been under severe criticism and scrutiny from international community and buyers for the last few years for lacking workplace safety, came under more pressure after 112 workers were killed in a devastating fire at Tazreen factory in November, 2012.

 

(This is an evolving story and updates are available through any of the major news outlets.)  

 

Dhaka replies to USTR with promise of tight factory monitoring (New Age, April 25, 2013)

The government has assured the United States Trade Representative (USTR) of strengthening its monitoring of working conditions in factories. With a promise to comply with labour rights and safety at factories, the government also said that it would increase the number of factory inspector post to 848 from the existing 183 and improve vigilance against rights violations at factories, especially in the garment sector. At present, the Department of Inspection for Factories and Establishments has only 90 factory inspectors despite 183 approved posts to monitor the working conditions. To retain the Generalized System of Preferences in the US market the government assured that the draft of Occupational Health and Safety Policy, which was scheduled to be placed before the cabinet by June 30 this year for approval, is in its final stage.

 

Govt revenue target for FY’14 unrealistic: NBR (New Age, April 25, 2013)

The National Board of Revenue has termed the government’s revenue collection target for the upcoming 2013-2014 financial year unrealistic and unachievable and recommended to bring it down. According to the NBR chairman, it will be impossible for the revenue board to achieve the target set by the government in the current political unrest and downtrend in macroeconomic situation.  At the Sixth Five-Year Plan, the government had set a revenue target for the NBR at Tk 1,36,000 crore with 21 per cent growth over the previous year but the NBR said they could hardly achieve a target of Tk 1,25,000 crore, or 13 per cent growth.

 

Ensuring compliant industries can boost export: seminar (New Age, April 23, 2013)

Producing quality goods and complying with the laws can strengthen the export prospects for Bangladesh industries in the international markets, according to speakers at a seminar on “Promotion and strengthening of export prospects for Bangladesh-made products in the US and EU markets”. Sourcing at MAGIC organised the seminar.

 

Bangladesh retains 7th position (New Age, April 22, 2013)

Bangladesh retains its position as the seventh most remittance-earning country in 2012. According to a World Bank’s Migration and Development Brief 2013 released on Friday, the total inward migrant remittance to the country was Tk 1,12,000 crore (i.e. $14 billion) last year. In 2011, the amount was Tk 96,000 crore (i.e. $12 billion). India remains the largest recipient of migrant remittances with $69 billion closely followed by China.

 

N-plant the need, but safety first (The Daily Star, April 21, 2013)

Energy experts at a roundtable on “Nuclear power in Bangladesh: prospects and concerns” have endorsed the government plan for nuclear power plants to meet the growing energy demand but warned of the safety issues, as well. They emphasized the importance of trained and competent technical manpower to operate nuclear reactors and ensure their safety.
The government has recently signed an agreement with Russia to build a 2,000-MW nuclear power plant. Bangladesh plans to produce 2,000 megawatt of electricity using nuclear energy by 2023 to meet the demand for 21,993MW and another 4,000MW by 2030 to meet the demand for 33,708MW.

 

Bridge with own fund to create resource constraints: CPD (The Financial Express, April 21, 2013)

The government’s move to construct the Padma Bridge with its own fund may eat up a giant share of the next budget creating resource constraints for many important projects in the health, education sector and social security sectors. The local think tank, Centre for Policy Dialogue (CPD) said that the government “should be aware of its ambitious targets and should present an austere, conservative, compromising and careful budget for the next fiscal year."  The government plans to allocate Tk 68.52 billion in the next fiscal year's annual development programme (ADP) for the Padma Bridge project.

 

WB bans Lavalin for 10 years (The Daily Star, April 19, 2013)

The World Bank has banned the Canadian engineering firm SNC-Lavalin Inc from taking part in any of its projects for the next 10 years. According to a statement by The World Bank (WB), the firm has been linked to corruption in a number of WB-funded projects including the Padma bridge construction and a rural electrification project in Cambodia.

 

BD economy to grow by 6.0pc: ESCAP (Dhaka Tribune, April 18, 2013)

Bangladesh economy would grow by 6.0 percent in the outgoing fiscal year, ending in June, which is lower than the government's target of 7.2 percent. According to the latest report of the Economic and Social Commission for Asia and the Pacific (ESCAP), political instability hampered production and transportation and eventually ate up economic prospects. The ESCAP in its report commented that although the growth would be lower than the initial target, it would be in line with the growth performance in the recent years. Bangladesh obtained 6.3 per cent growth in last fiscal year and 6.7 per cent in 2010-11.

Wednesday, April 17, 2013

Weekly News Clippings 18 April 2013



Don’t sanction loans to illegal housing projects  (New Age, April 18, 2013)

Bangladesh Bank (BB) has forbidden all scheduled banks to sanction loans to private land developers for constructing buildings and purchasing flats if they do not have the approval of the authorities concerned. According to a recent BB circular, a bank should check whether the project adheres to all the rules and regulations of the Land Development Act – 2004, before disbursing loans.

 

Brand war heats up in ice cream market (The Daily Star, April 17, 2013)

The growing market for ice cream is luring new players into the industry. Encouraged by the growing purchasing power of consumers, Kazi Farms launched its ice cream brand, Bellissimo early this year while two others, Golden Harvest and Cold Stone Creamery have queued up to enter the business. Igloo, Polar and Kwality (three local brands) account for nearly 70 percent of the market, but premium ice cream brands such as Mövenpick and Baskin-Robbins have carved out a niche.  Deputy Manager of Kazi Foods said that premium ice creams account for nearly 15 to 20 percent of the Tk 550 crore market for branded ice creams.

 

Gold slumps to two-year trough (The Daily Star, April 17, 2013)

The price of 22 karat gold dropped to Tk 51,322 per bhori (11.66 grams), the lowest in the last two and a half years. This was the fifth time this year the bullion prices had to be brought down by Bangladesh Jewelers’ Samity, a platform of gold jewelry shop owners. According to the president of Bangladesh Jewelry Manufacturers’ and Exporters’ Association, the prices dropped by $150-$200 in the international market over the last four days, which is impacting the local market. He is optimistic that the lower prices will attract new buyers. At present, the annual demand for gold jewelry in Bangladesh is around 16 tonnes.

 

Govt under pressure to inject bailout funds into SoBs (New Age, April 16, 2013)

The International Monetary Fund (IMF) has asked the government to inject fresh funds into the state-owned banks to address the crisis caused by the series of financial scandals last year. The state-owned banks, including Sonali Bank, the country’s largest commercial bank, have already sought fresh funds, after the Hallmark Group had embezzled around Tk 3,600 crore from one of the bank’s branches. Following a visit by its delegation to Dhaka, early this month, the IMF had asked the government to recapitalize the state-owned banks in FY14. The fund embezzlement by Hallmark Group from Sonali Bank Ruposhi Bangla Branch early last year was the single biggest financial fraud in the country’s history.

 

Wal-Mart, Sears Refuse Compensation for Factory Victims (Bloomberg, April 15, 2013)

Global retailer Walmart and Illinois–based multinational Sears Holdings Corp have refused to compensate the victims of Tazreen Fashions Ltd whereas other companies like Li & Fung Ltd have already started compensating voluntarily. In addition, Walmart and Sears did not attend the meeting in Geneva on the 15th of this month, where companies were expected to discuss compensation payments for the victims’ families and survivors of the fire. On November 24 last year, 112 workers of Tazreen Fashions were killed in fire as the factory did not have adequate fire safety measures.

 

First Bangla search engine Pipilika takes off (The Daily Star, April 14, 2013)

Pipilika.com, the first search engine in Bangla, was launched on April 13. The search engine, with a storage capacity of 4 terabytes will draw out contents from all Bangla newspapers, blogs, encyclopedias, government websites and others. The site has a dictionary of Bangla Academy spelling rules, which will suggest corrections for all mistakes in the language. A team of 11 researchers and developers of Computer Science and Engineering Department of Shahjalal University of Science and Technology (SUST) developed the search engine with technical and financial assistance from Grameenphone IT Ltd.

 

Taka continues to gain against dollar (The Daily Star, April 14, 2013)

A steady appreciation of the taka, increases the price of Bangladeshi goods on the international market and risks hurting the export sector. The central bank has been trying to restrain the local currency by purchasing dollars. Exporters blamed lower imports for the fall. According to a Bangladesh Bank official, imports have gone down even more in March due to the unstable political situation. The taka depreciated by more than 15 percent against the dollar in 2011 but began to appreciate against the dollar in the second quarter of 2012.

 

Economy in double jeopardy: CPD (The Daily Star, April 14, 2013)

According to Debapriya Bhattacharya, an economist and fellow of CPD, the ongoing violent political activities have put the economy in “double jeopardy”. The Centre for Policy Dialogue (CPD) has come up with a new estimate on how shutdowns put financial burden on the economy. According to CPD, if one shutdown causes at least 1 percent decline in the supply of capital, it will eventually eat up around 0.9 percent or $1 billion of the country’s GDP a year.

 

Bangladesh tea export may face setback after 3 years (New Age, April 13, 2013)

Bangladesh should produce more tea over the next three years to prevent a severe drop in its exports. According to the commerce ministry, the production of tea cannot keep up its pace with the rising demand of the crop. He said that, the country may not have any tea left to export after meeting the local demand.  President of Bangladesh Tea Association said that the government should give more soft loans at a lower interest rate to assist in increasing the production. The country exported Tk 22.23 crore worth of tea last year and 64 million kg of tea was produced. At present, Bangladesh exports tea to countries like Pakistan, Afghanistan, Russia, Saudi Arabia, Turkey, Ukraine and the UK.

Thursday, April 11, 2013

Weekly News Clippings (11 April 2012)



 

Shutdowns sour Baishakh sales (The Daily Star, April 11, 2013)

Frequent shutdowns at the threshold of Pahela Baishakh, the Bengali New Year, have led to poor sales, deeply disappointing the owners of boutiques (i.e. women’s clothing stores), who usually enjoy huge turnover this season. The small boutique owners in Dhaka have termed the situation as “a nightmare” as they have invested large sums ahead of the first day of the Bengali New Year 1420. The dull sales have led more than 100 boutique owners to take to the streets in Bailey Road on Wednesday, to voice their anguish over the current political unrest. Over the years, Baishakh has become the second biggest season after Eid-ul-Fitr for brisk business for thousands of boutiques across the country, when sales account for around 15 percent of annual turnover.

 

Land prices in decline (The Daily Star, April 11, 2013)

Land prices have begun to show a decline after over two decades of price hike. The situation potentially poses a problem for banks, as many of their borrowers have used loans to finance land purchases based on an assumption of rising prices. According to Real Estate & Housing Association of Bangladesh (REHAB), land prices had been skyrocketing for the past two decades till 2010. In Dhaka and its fringe areas, prices soared by over 300 percent between 2000 and 2007 and rose further by about 50 percent between 2007 and 2010. Bankers and realtors attribute the falling prices to political volatility, a slow pace of economic growth, a dearth of gas connections, and a bar on investment of untaxed money in the housing sector.

 

ACC may sue BTCL officials for fund misappropriation  (The Daily Star, April 10, 2013)

The Anti-Corruption Commission (ACC) will file a case against six officials of Bangladesh Telecommunications Company Ltd (BTCL) for misappropriating around Tk 575 crore. An investigative report conducted by the ACC has found that BTCL officials had manipulated incoming international call records between December 2011 and November 2012 at the two exchanges in Mohakhali and Moghbazar. The ACC report has recommended accusing three officials of a European telecommunication company along with the six officials of BTCL, including, two former acting managing directors, two general managers and two engineers. Last year, another probe team comprising of officials from telecom ministry and Bangladesh Telecommunication Regulatory Commission had inspected the two BTCL international exchanges and had reached the same conclusion as the ACC.

 

Exporters demand tax cut, in budget  (The Daily Star, April 9, 2013)

Exporters have urged the government to reduce the tax at source for fiscal 2013-14 as the garment sector has been badly affected due to political unrest and a drop in global demand. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association made the appeals during a meeting at the National Board of Revenue ahead of the budget for the next fiscal year. According to the BGMEA president, tax should be imposed on manufacturing instead of 0.8 percent tax at source on the value of export items. Exporters also demanded an extension to the time on bonded licenses from an existing two years to three years and an extension of the auditing interval from three months to six months.

 

Stock tax hits record low (The Daily Star, April 9, 2013)

The government’s earnings from stock trading fell to Tk 3.33 crore in March.  According to the Dhaka Stock Exchange (DSE), the figures came close to those last seen in May 2009 when the amount was as low as Tk 3.09 crore. On top of an already downward trend since early 2011, the ongoing political turmoil has further destabilized the market. The DSE, on behalf of the government, collects the tax as brokerage commission at 0.05 percent and deposits the amount to the state coffer. The government earned tax worth Tk 100.11 crore in 2012, as opposed to Tk 207.84 crore earned in 2011.

 

15 RMG units incur $3.31m loss for political turmoil (New Age, April 8, 2013)

The country’s ongoing political instability and incessant shutdowns have led to a loss of TK 26.48 crore ($3.31m) for 15 readymade garment (RMG) factories. According to an assessment survey conducted by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the political turmoil has taken quite a toll on the RMG sector as the industry has been facing huge loss from order cancellations, discounts, air freight fares and vandalism since last month. The BGMEA asked factory owners on March 28 to report on the financial impact of recent political violence and frequent strikes on their units.  As of April 6, 15 garment factories had provided data.

 

Telenor to invest in Bangladesh 3G mobile facility: Norwegian minister (New Age, April 8, 2013)

Telenor has shown interest in investing in the third generation (3G) mobile technology in Bangladesh through Grameenphone. According to the Norwegian trade minister, Statoil, another Norwegian company which specializes in deep sea operation may also invest in Bangladesh, in future. In a meeting with the foreign minister of Bangladesh, the Norwegian minister expressed his interest in investing in shipbuilding, ship-recycling, oil and gas, and the IT sector.

 

Investors dejected by banks’ poor dividends (New Age, April 5, 2013)

Listed banks have declared lower than expected dividends, disappointing investors who had hoped to offset losses incurred from the downtrend of the market. Of the 30 listed banks with the DSE, 13 banks have declared dividends lower than last year. Share prices of some banks dropped in the Dhaka Stock Exchange (DSE) in last few days after poor dividend declarations. The bankers said that the overall economic condition had not been business-friendly and naturally reflected on the dividends for shareholders.