Weekly News Clippings (30 May 2013)

A life=Tk 1 lakh (The Daily Star, May 30, 2013)

Currently compensation provisions in Bangladesh are among the worst in the world with the country’s labour law price tagging a worker’s life at Tk 1 lakh ($1,250). According to right activists and labour leaders, Bangladesh labour laws should have stringent provisions to oblige owners to support workers and their families in case of workplace accidents. Even in China, the compensation is about Tk 78 lakh. Activists demand that a dead worker’s family should be given compensation equal to at least his lifetime’s earnings, taking into consideration the bonuses and increments the worker would have got over the years. Garment owners refuse to pay such an amount, maintaining that they cannot afford to do so.

 

ADP zooms up 26pc (The Daily Star, May 29, 2013)

The National Economic Council has sanctioned a Tk 65,870 crore budget for fiscal 2013-14′s annual development programme, which is 26 percent higher than the current fiscal year’s ADP allocation:

·        The transport sector got Tk 15,363 crore, which is 89 percent higher than the current fiscal year’s allocation. The Padma Bridge project got 6,852 crore alone. Please see Padma to eat up ADP for more information.

·        The power sector got the second highest allocation of Tk 9,053 crore.

·        The education sector got Tk 8,766 crore, which is 18 percent higher.

·        Health sector saw a 2 percent increase only, i.e. Tk 4,239 crore.

·        The agricultural sector’s allocation stood at Tk 3,721 crore, which is 26 percent higher than the current fiscal year’s.

·        The total number of projects is 1,046, around 60 percent of which will be funded by the government.

 

Rajuk role in question (The Daily Star, May 29, 2013)

Architects and civil engineers now question the role of Rajuk in the unbridled growth of illegal buildings as well as the government’s reluctance in approving the required amount of manpower for identifying rickety structures like Rana Plaza. The president of Institute of Architects Bangladesh contends that the building law, safety precautions and mandatory Bangladesh National Building Code (BNBC) have not been followed in constructing thousands of buildings in Savar and other fringe areas of the capital. Rajuk is legally responsible to control development within its 1,528-square kilometres area of Dhaka Metropolitan Development Plan (master plan) as per the Town Improvement Act.

 

Reforms to help cut subsidy by 24pc (The Daily Star, May 28, 2013)

The government’s spending on subsidy may go down by 24 percent next fiscal year due to various reforms and price adjustments. However, this projected decrease is partially a result of a likely 7% upward revision of the current fiscal year’s budget. The total allocation for subsidy will be Tk 28,695 crore next year compared with the original 2012-2013 budget of Tk 35,045 crore (or an 18% decline). A special audit will be carried out in the state enterprises that deal with fuel, electricity and fertilizers to contain misuse and increase efficiency resulting in reduced subsidy spending.

 

Rehab urges government to allow black money (Dhaka Tribune, May 27, 2013)

The Real Estate and Housing Association of Bangladesh (Rehab) has asked the government to incorporate a provision in the upcoming budget allowing people with “legally” earned undisclosed money or black money, to purchase flats and apartments. According to the Rehab, the slump in the real estate sector dictates that buyers should be allowed to make their first purchases without revealing their sources of income. It has also urged the finance minister to lower levies on land and apartments from the existing 12.5% to 4.5%. Meanwhile, Transparency International Bangladesh (TIB), a global corruption watchdog has raised concerns about the probable move to allow whitening of black money terming it “illogical” and “completely contradictory to the constitution.”

 

Tannery relocation remains a far cry (Dhaka Tribune, May 28, 2013)

Continued disagreements between the government authorities and tannery owners over who should bear the cost of relocating tanneries to Savar have brought the long delayed relocation to a standstill. Tannery owners are refusing to pay for relocation and central effluent treatment plant (CETP) as the estimated cost for the project has increased over five times in the last decade. According to them, the government originally accepted responsible for the costs when it initiated the tannery relocation move in 2003. Later, the government deviated from its original plan and attempted to push the relocation expense on the owners via a 15 year loan agreement. According to the High Court’s order, the government was supposed to shift the tannery units from Dhaka to a proposed leather estate at Harindhara in Savar by February 28, 2010.

 

DCCI hunts for 2,000 young entrepreneurs (The Daily Star, May 26, 2013)

On June 15, the Dhaka Chamber of Commerce and Industry (DCCI) will set out to find 2,000 entrepreneurs from across the country. The DCCI will organize events at each of the 64 districts and select entrepreneurs with new and innovative ideas, who will receive financial support from the chamber. The DCCI will also give priority to ideas related to education, health, infrastructure and communications, renewable energy, fashion designing, handicraft, environment and waste management, IT, outsourcing, e-commerce, electronics and light engineering and agro-based industry. The names of the 2000 winners will be announced in November 1 and 2.

Weekly News Clipping (23 May 2013)

Target 48 entities (The Daily star, May 23, 2013)

The government’s Grameen Bank Commission has demanded documents from independent organisations bearing Grameen names even though they are not part of the microcredit organisation. The requested documents include copies of the minutes of the board meetings and the annual audit reports since their inception. The commission has also sent letters to almost all the 48 associated organisations of Grameen Bank, including Grameenphone, Grameen Telecom, Grameen Telecom Trust, Grameen Shakti, Grameen Kalyan, Grameen Fund, Grameen Udyog, Grameen Shamogree, Grameen Knitwear and Grameen Danone Foods. The government claims that any profit from the organisations should go to the bank’s 84 lakh beneficiaries.

 

Trade deficit drops to $4.9bn (Dhaka Tribune, May 22, 2013)

The trade deficit, which measures the difference between imports and exports, fell by 28% in the first nine months of the current financial year as compared to the previous fiscal year.  This was largely due to a decline in import payments, which is believed to be a result of the recent political instability. According to the Bangladesh Bank, the trade deficit during July-March period of FY2011-12 was Tk. 540 billion ($6.75 billion) . According to the central bank, the following changes have taken place during the period:

·        Imports registered a negative growth of 0.88%.

·        Exports rose by 9.48%.

·        Imports of capital machinery fell by 22% and industrial raw materials imports declined by 12.73%.

·        Remittances have increased, resulting in a current account surplus of Tk 224 billion ($2.8 billion).

·        Net foreign direct investment increased by 11%.

·        Medium- and long-term loans rose by 45%.

·        The foreign currency reserves crossed the $15 billion mark for the first time this month.

·        The Taka has appreciated 5% against the dollar since July last year.

 

‘200 RMG factories need to be pulled down’ (Dhaka Tribune, May 22, 2013)

Authorities should close down at least 200 factories housed in risky buildings to protect the country’s readymade garments industry. According to the all-party legislative standing committee overseeing the commerce ministry, the RMG factories should relocate outside the capital Dhaka and the chief port city Chittagong. They suggested that the government provide gas and electricity connections to incentivize relocation. Around 20% of the country’s 5,000 RMG units are located in residential buildings, while 50% factories are in buildings shared by other business establishments, like Savar’s Rana Plaza.

 

Worker database for Ashulia factories by Aug 30: BGMEA (The Daily Star, May 21, 2013)

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has set August 30 this year as a deadline for creating a biometric database for the 300 registered factories in Ashulia.  The database will be prepared in association with Tiger IT and Systech Digital Ltd and will cost each factory owner between Tk 4 to 5 lakh. The record-keeping system will be developed by taking finger prints of workers, and once the worker registers, he/she will be given an ID, which will be valid in all BGMEA factories. Currently there is no exact data on the number of skilled, semi-skilled and unskilled workers employed in the industry.

 

Concerns still exist (The Daily Star, May 21, 2013)                         

A final draft on amendments to the 2006 labour law may not make the lives of garment workers any easier after all. According to the American Centre for International Labour Solidarity (ACILS), some questionable provisions have been included alongside some positive ones.  The postives include the following:

·        End the requirement that the Department of Labour notify factory owners when workers file for a trade union.

·        Require factories to call for fire drills every six months, instead of every year as the present law stipulates.

·        Prohibits owners from blocking the exit doors at factories at all times to facilitate quick escape in cases of emergencies.

·        Require factories with over 5,000 employees to set up a healthcare facility for them.

·        Require factories with over 100 workers to provide insurance to their employees. In case of death of workers, owners will have to realize the insurance claims and hand over the money to the relatives of the worker or the labour court.

·        Require factories to pay employees’ salaries through bank accounts.

The aspects questioned by ACILS include:

·        Addition of new language stipulating that owners can terminate workers on allegations of arson, vandalism and obstruction to work.

·        Require at least 30 percent representation of workers of a factory for the formation of a trade union. 

·        A worker will lose his/her membership of trade union if he/she loses job.  Only workers within the factory are eligible for the position of union leaders.

·        Empowers the owners to terminate a worker without pay for being away from work for more than 10 days, without notice.

·        Stipulates that factory owners share 5 percent of their profits with the workers, which will be transferred into a welfare fund.

 

Allow trade union for own good: analysts (The Daily Star, May 19, 2013)

Analysts agreed that apparel makers should introduce trade unions to resolve workers’ unrest at a roundtable organised by Sushashoner Jonno Nagorik (Sujan), which works for good governance.  One former cabinet member argued that factory owners should remove all the hurdles to forming unions.  He contended that unions would benefit everyone, as factory owners will not have to call upon the law enforcement agency to resolve unrest if there is a responsible labour leader in the factory.

 

Private investment hits record low (The Daily Star, May 19, 2013)

Private sector investment fell to a six-year low this fiscal year due to political uncertainty and a slow recovery in the US and Eurozone economies. According to provisional estimates of Bangladesh Bureau of Statistics, the amount declined by 1.05 % over the last fiscal year and stood at 18.99 % of gross domestic product in the current fiscal year. Nonetheless, public investment went up by 1.35 % this year compared to last fiscal year.

Fix law, get benefits (The Daily Star, May 19, 2013)

The International Labour Organisation (ILO) and the World Bank have refused to let Bangladesh join their global textile industry monitoring programme unless the government implements the proposed labour law reforms.  The Better Work programme yields three major benefits:

·        It reduces the hassles for factory owners of multiple inspections by international retailers, as it puts in place a uniform system of factory inspections by “enterprise advisers’ hired by the ILO.

·        It builds capacity in the sector through training factory managers.

·        It improves the image of the sector as a whole as compliance rises.

The ILO’s stance underlines pressure on Bangladesh to reform its labour law. Trade unions are currently not allowed at garment factories, and labour leaders have claimed the amendments went against workers in the apparel industry.

 

Economists and policy advocates say 'no' to whitening black money (Dhaka Tribune, May 18, 2013)

Economists and policy advocates have opposed the government’s policy permitting “whitening” black money (undisclosed income) calling it “constitutionally illegal and ethically unacceptable.” According to the experts, the move is like “rewarding the illegal earners instead of punishing them and discouraging those who are earning legally and paying taxes honestly.” They also called upon the government to take stricter measures against tax evaders. Earlier, the finance minister had supported his arguments for his policies by quoting some studies which claim that black money represents 40-80% of the country’s economy, much of which is engaged in the real estate sector.

The Cost of Political Instability

The Center for Enterprise and Society’s latest analysis “The Cost of Political Instability” assesses the impact of recent political instability on the economy and on Bangladesh’s business community.  The study draws on data from our recent survey of 525 managing directors and chief executive officers conducted in cooperation with Sirius Marketing and Social Research Ltd.  You can access the study at http://www.ulab.edu.bd/CES/documents/Political_Instability(lg).pdf