Weekly News Clippings (August 1, 2013)

Banks’ spread hits 5pc again (The Daily Star, August 1, 2013)

Spread again crossed 5 percent in June after two months to pave the way for banks to make more profit in the face of the rising trend of their excess liquidity. The spread, which is the difference between deposit and lending rates, rose mainly due to a fall in deposit rates and a hike in lending rates, meaning banks maintained profit depriving the savers. The banks’ spread rose to 4.99 percent in March for the first time in recent months. Though the spread came down to 4.98 percent in May, it again jumped to 5.13 percent in June.

 

Index soon to rank garment units: Yunus (The Daily Star, July 31, 2013)

A process is underway to prepare an index to rank Bangladesh’s garment factories on the basis of their fire and building safety measures and working environment. Noble laureate Prof Muhammad Yunus said that the Garment Industry Transparency Index (GITI) would be formulated in the model of the Transparency International’s Extractive Industries Transparency Initiative (EITI). The first meeting of the GITI is expected to take place in Berlin in late August or early September.  “The ranking will spur healthy competition among garment manufacturers,” he said.

Ticfa may be a vehicle for GSP retention: USTR (Dhaka Tribune, July 31, 2013)

The United States Trade Representative (USTR) has said the Trade and Investment Cooperation Forum Agreement (Ticfa) which is likely to be signed in September, either in Washington or in Dhaka might help in retaining the Generalised System of Preferences. USTR Ambassador Michael B Froman proposed the commencement of a Bangladesh-US working group on GSP which might hold meetings at various levels on a regular basis to work on its action plan. US President Barack Obama suspended GSP facilities on June 27 following the Rana Plaza collapse that killed 1,132 garment factory workers.

Regulator goes ahead with 3G auction plan (The Daily Star, July 30, 2013)

The Bangladesh Telecommunication Regulatory Commission (BTRC) has invited telecoms companies to apply for the South Asian country's first 3G or third generation mobile services licences. The telecom regulator has fixed August 1 as the deadline for submission of the applications, according to a notification posted on the BTRC's website on Monday afternoon. In the notice, the commission has not mentioned a date when the auction for 3G will be held. But officials said that the state-run company will have to pay for 3G spectrum the same amount of money that other private operators would spend although it does not need to take part in an auction.

 

Black money provision for real estate cancelled (Dhaka Tribune, July 30, 2013)

The government has finally withdrawn the proposal to provide special provisions facilitating the investment of undisclosed money in the country’s real estate sector, citing possible rise in the prices of land and apartments, as the reason. In the budget for the 2013-14 fiscal, the finance minister had proposed special tax rates for “unsourced” legal income, if it was used to build or buy buildings or apartments in Dhaka and Chittagong. In general, owners of undisclosed money are allowed to legalise it by investing in a productive sector through payment of a 10% penal tax, in addition to normal taxes.

 

Fund crunch cripples Shishu Hospital (Dhaka Tribune, July 29, 2013)

The country’s largest child healthcare facility had been running without a chairman of the board of management for more than four months. This means that there was no one who could approve a budget that would enable the government to allocate the funds necessary for the hospital to carry out its expenditures. The Tk 250m budget has not been approved half way into the year because of the chairman’s resignation. Around 700 patients come to the 560-bed hospital every day from different parts of the country.

 

132 RAJUK plots at Purbachal allotted against prescribed rules (The Financial Express, July 29, 2013)

The officials of the Rajdhani Unnayan Kartripakkha (RAJUK), has allotted more than 132 plots under the Purbachal New Town Project to some individuals, violating the allotment rules. According to an audit report conducted by the Directorate of Public Works Audit under the Comptroller and Auditor General (CAG) Bangladesh, Rajuk allotted 72 plots to undeserving candidates, 50 plots to RAJUK employees and seven 10-katha plots to seven members of a single family which does not coincide with the rules. The directorate also reviewed 175 cancelled applications for plots under the project and found 28 of those valid.

Dhaka’s doom in DAP failure (The Daily Star, July 28, 2013)

The government is yet to implement the vital recommendations in the Detailed Area Plan (DAP). According to experts, the DAP has earmarked one-third of the 1,528 sqkm master plan area as flood flow zones, water retention ponds and water bodies. But the government’s compromising stance on enforcing the DAP has allowed filling of reserved wetlands and flood flow zones by powerful real estate developers and illegal building constructions Prof Jamilur Reza Choudhury, who headed the DAP expert body said.

Booming sales mark Eid shopping in city (The Financial Express, July 27, 2013)

Sales at the city's shopping malls have sped up as Eid-ul-Fitr, the largest religious festival of the Muslims, is lurking right round the corner. Though prices in general have increased for all kinds of clothing items than the previous year, sales have not seen any decline.

“Instead, sale has gone up by more than 30 per cent than that of last year,” said Rajib, manager of Yellow.

Action plan on factory safety (The Daily Star, July 26, 2013)

The government yesterday signed an action plan on fire safety and structural integrity in the garment sector with the employers’ and workers’ organizations. Key activities identified in the plan include assessment of the structural integrity and fire safety of garment factory buildings and strengthening labour inspection. Worker and management training and occupational safety and health and worker rights and rehabilitation of disabled workers are part of the plan. The International Labour Organisation will assist in the implementation and coordination of the roadmap. The plan brings together the tripartite agreement on fire safety in the RMG sector signed on March 24 in response to the Tazreen factory fire and the joint tripartite statement adopted on May 4 after the Rana Plaza tragedy.

Bangladesh Detains Suspended Mayor of Collapsed Factory Town (Bloomberg Businessweek, July 26, 2013)

The suspended mayor of the Savar where a garment factory collapse killed more than 1,000 people earlier this year has been detained by a judicial magistrate in the capital Dhaka. The arrest is part of an investigation into the collapse of Rana Plaza on April 24, the country’s worst industrial accident to date. At least 21 people have been arrested in two cases tied to the collapse, said Bijoy Krishna Kar, an assistant superintendent of police, adding that, the investigation will probably take two more months.

Weekly News Clippings (July 25, 2013)

Firms allowed to publish stock research reports for investors(The Daily Star, July 25, 2013)
To reduce risks and develop a rumour-free market a regulatory initiative has been taken by Bangladesh Securities and Exchange Commission (BSEC). Research firms will now be able to publish and sell equity research reports to investors advising them on the prices at which they will buy or sell stocks. Merchant banks, stockbrokers, stock dealers, asset management companies, investment advisers and independent research firms will be eligible for publishing research reports on listed securities, according to the rule. However, the institutions must have a separate research team comprising at least three members, including a head of research, to do the job.

Taxmen swoop on dodgers buying over Tk 10m land (The Financial Express, July 24, 2013)

In a bid to collect tax from the wealthier segment of the population the National Board of Revenue (NBR) has focused on the high-end areas, where prices of land witnessed a sudden rise. Under the move, the tax officials are collecting details of buyers from the land registrar's offices across the country. "The information on land purchases will be cross-checked with the tax files of the persons concerned. There are many people who own several plots of land, but have never disclosed the wealth in their tax files," said a senior tax official.

Record $2.78b received in foreign aid last fiscal (The Financial Express, July 24, 2013)

The government has received record US$ 2.78 billion in foreign aid in the last financial year (FY) as some major donors, including the World Bank, the Asian Development Bank and Japan disbursed quite impressive amounts of funds in financial assistance. The huge inflow was attributed to higher fund disbursements by Bangladesh's largest development partner World Bank, according to a senior ERD official. Of the total amount, $ 2.13 billion came in the form of loans while $ 651.79 million in grants, the ERD statistics showed. New aid commitments by the multilateral and bilateral donors during the last fiscal year have also shown an upward trend.

                                    

Govt to step up factory watch (The Daily Star, July 23, 2013)

Appointment of 23 factory inspectors is underway as part of the roadmap for regaining the GSP status in the US market. The move followed the Obama administration’s suspension of the trade benefit on June 27 over poor labour rights and working conditions. The labour and employment ministry has already appointed four inspectors to fulfill the US government’s conditions for reinstatement of the privilege. At the moment, only 51 inspectors are assigned to more than 2 lakh factories across the country. Also the home ministry has withdrawn all criminal charges against labour leaders Babul Akter and Kalpana Akter, as part of the US conditions.

Commission is 30pc (The Daily Star, July 22, 2013)

Contractors have to pay up to 30 percent commission to lawmakers, politicians and government officials for implementing each component of a project of Local Government Engineering Department (LGED), says a study of Transparency International Bangladesh (TIB). They pay up to 20 percent of the component’s total budget for getting the job, and up to 10 percent for receiving payments against the bills, according to the study based on analysis of official documents, field-level data and interviews of stakeholders. The study also found corruption, misuse of public resources and logistics, and irregularities in manpower recruitment, promotion, transfer, project formulation, financial audit and other sectors of LGED.

Pre-Ramadan food imports much higher this year (Dhaka Tribune, July 22, 2013)

Food imports from India have shown a marked increase in June, a month before Ramadan, compared to the same period last year, Bangladesh Bank figures showed. Usually, the Ramadan consumption spree triggers a rise in food imports from the neighbouring country, but this year the figures are much higher. Economists say that the rise suggests the remarkable increase in consumption, which signals an even wider trade gap with India. The government thinks reduction of import duties on food items is encouraging the traders to import more from India thus contributing to widening of the trade gap.

Govt-WB Project to generate 30,000 jobs in IT sector  (Dhaka Tribune, July 21, 2013)

The government with support from the World Bank is implementing a project to create an estimated 30,000 direct jobs in the IT and ITES sectors. The project has the potential to create up to 120,000 indirect jobs. It is expected that the IT and ITES industry revenue will increase by over $200m by the end of the initiative, said a WB press release.  According to the studies, Bangladesh possesses significant comparative advantage in the IT and ITES industry due to the availability of a large English-educated talent pool and competitive labour costs. In addition, the industry possesses particular strengths in niche sub-segments like software programming, graphics and animation.  

Fresh move for building safety (The Daily Star, July 20, 2013)

As part of the government’s move to enforce building safety standards across the country, the Rajdhani Unnayan Kartripakkha (Rajuk) is going to triple the number of its building construction committees, from eight to 24, to oversee approval and construction of buildings. Of the committees, eight will work on the outskirts of its 1,528-square km of the master plan area. The government has recently approved a new organogram for Rajuk, which will see the town planner’s total manpower hiked to 2,000 from the existing 1,087.

U.S., Urging Worker Safety, Outlines Steps for Bangladesh to Regain Its Trade Privileges (The New York Times, July 19, 2013)

The US has recommended a series of steps that the Bangladesh government should take to have its trade privileges restored. The steps include increasing the number of labor, fire and building inspectors and to improve their training. The plan also urges Bangladesh to impose stricter penalties, such as cancelling export licenses on garment factories that violate labor, fire or building safety standards. In addition, the administration recommended creating a public database of all garment factories for reporting labor, fire and building inspections. The administration suspended Bangladesh’s trade privileges after a widespread outcry that the country was doing too little to safeguard worker’ rights and safety in light of the Rana Plaza factory building collapse in April that killed 1,129 workers.

Weekly News Clippings (July 18, 2013)

6 days of waste (The Daily Star, July 18, 2013)

This week has seen only one working day as the Jamaat-e-Islami has called four countrywide hartals four days in a row from Monday, protesting the war crimes trial and the recent verdicts. Today’s hartal is to protest the death sentence of Jamaat Secretary General Ali Ahsan Mohammad Mojaheed. The International Crimes Tribunal delivered the verdict yesterday, two days after it handed down 90 years’ imprisonment on former Jamaat chief Ghulam Azam.

Formalin added to fruits after import (The Financial Express, July 17, 2013)

Fruits and frozen foods, including fish, are being imported in a formalin-free condition, but the harmful chemical is being added to the food items at different stages of marketing locally. Officials at the Chittagong Port came up with the findings after three-month long formalin tests on imported food items and fruit (including apples and oranges) from different countries, including China, Brazil, South Africa and the USA.

Deposits pile up as demand for credit goes down (The Daily Star, July 17, 2013)

Banks’ deposit growth has surpassed credit growth by 9 percentage points, which may take a toll on their profits and affect the savers. Profit of most banks marked a fall in the first half this year due to a huge gap between deposit and credit. According to central bank statistics, the amount of deposit grew by 17.74 percent on June 13, while credit rose by 9.41 percent, compared to that of last year’s. Banks are giving interest to their depositors but cannot invest the deposited money, as a result of which their cost is going up. Bank officials said that most banks have already started cutting the interest rates on deposits to rein in the cost. 

Under Pressure, Bangladesh Adopts New Labor Law (The New York Times, July 16, 2013)

Bangladeshi lawmakers have adopted a new labour law three weeks after the United States suspended Bangladesh’s trade preferences. Moreover, the European Union has threatened to revoke Bangladesh’s trade privileges on the grounds that labour rights and safety violations were far too prevalent in the country’s factories. Under the new law, factories will be required to set aside 5 percent of its profits for a welfare fund for employees, although the law exempts export-oriented factories. However, the Human Rights Watch criticized the new law saying that it would make unionizing harder as it added more industrial sectors, including hospitals, where workers are not permitted to form unions. The group also noted that workers in Bangladesh’s important export processing zones would remain legally unable to unionize.

BB gains some control over state banks (The Daily Star, July 15, 2013)

The government has finally empowered Bangladesh Bank (BB) to remove the chief executive officer of any state bank to prevent activities harmful to depositors. However, the authority to remove the chairmen and directors of the banks remains at the hands of the government. The changes came in the Banking Companies (Amendment) Bill, which was made under the conditions of the Extended Credit Facility loans of the International Monetary Fund and passed in parliament. Earlier when various scams were unearthed in different state banks, the BB had urged the government to take action against the boards of the banks. In this context, the IMF had recommended empowering the central bank with the authority to take actions against the state banks.

Bangladesh Pollution, Told in Colors and Smells (The New York Times, July 14, 2013)

Bangladesh has laws to protect the environment, a national environment ministry and new special courts for environmental cases. Yet pollution is rising, not falling, experts say, largely because of the political and economic power of industry. Bangladesh’s garment and textile industries have contributed to severe water pollution especially in the large industrial areas of Dhaka, the capital. Many rice fields are now inundated with toxic wastewater. Fish stocks are dying and many smaller waterways are being filled and sold by developers as plots. Tanneries and pharmaceutical plants are part of the problem, but textile and garment factories, a mainstay of the economy and a crucial source of employment, have the most important role to play.

City dwellers face acute gas shortage in Ramadan (The New Age, July 13, 2013)

Residents in many areas of Dhaka and Narayanganj are facing acute shortage of gas supply to their kitchens forcing them to use kerosene stoves or makeshift ovens. Since the last few days, gas supply in many parts of Dhaka and Narayanganj stops at dawn and resumes at mid-night. Titas Gas Distribution Company is responsible for gas supply to the households, commercial spaces, power stations and factories in Dhaka and its adjacent districts. Managing Director of Titas said that the company was directed to prioritise power plants for gas supply which causes shortage of gas supply to the households.

Uniqlo looks to cash in on Bangladesh's middle class (BBC News, July 12, 2013)

Uniqlo outlet, the first of any major global retail clothing brand in Bangladesh, has recently opened styled as a social business under the Grameen Uniqlo brand. The idea is to reinvest profits and create employment through the manufacturing of clothes and its planned nationwide network of stores. Nearly $100bn is spent on private consumption in the country every year, according to the latest World Bank data, with non-essential items such as fashion retail accounting for a growing proportion of that number. As is the case among many of its Asian neighbours, this growth in consumption is being fuelled by the growing middle class. "Many Bangladeshis are now travelling abroad and taking holidays abroad," says Prof Imran Rahman, vice chancellor and director of the School of Business at the University of Liberal Arts Bangladesh.

Weekly News Clippings (July 11, 2013)

VAT rate to be cut by 2015: Muhith (New Age, July 11, 2013)

The value-added tax rate would be lowered by 2015 to facilitate business expansion in the country, said the finance minister.  VAT is imposed on creation of wealth while income tax is collected on accumulation of wealth, the minister said at a programme where the National Board of Revenue awarded 129 business organisations with crests and certificates in recognition of their paying highest VAT in the financial year 2011-2012.However, the businessmen present at the programme demanded that the government should lower the VAT rate to 10 per cent from the existing 15 per cent. A VAT Week organised by the tax administration has begun and will continue till July 16.

China offers $2.4b again to build Padma Bridge (The Financial Express, July 10, 2013)

China has again offered Bangladesh Tk. 19,200 crore (US$ 2.4 billion) to construct the Padma Bridge. However, the government has recently invited international companies to compete for the work of the bridge. According to the communications minister of Bangladesh, the Chinese financial proposal was now under the scrutiny of the Economic Relations Division (ERD). The minister said that the government had already spent the money on the construction of the approach roads of the Padma Bridge and needed to have foreign funds to construct the bridge to reduce the pressure on local resources.

Political parties, cops most corrupt (The Daily Star, July 10, 2013)

Political parties and the police have been identified as the two most corrupt areas in Bangladesh, according to a survey of the Berlin-based Transparency International. The country's judiciary was listed as the second most corruption-ridden area. According to the survey, around 93 per cent of the surveyed respondents consider political parties and police as the most corrupt while 89 per cent respondents think judiciary is the second most corrupt institution. The survey says about 58 per cent people think that paying bribe is the only way of getting government services, while 76 percent identified graft as a serious hindrance in receiving services from official agencies.

Factories under scanner (The Daily Star, July 9, 2013)

A forum of 70 international retailers and brands has agreed to inspect all garment factories in Bangladesh in nine months to ensure fire and building safety. The signatories which include names such as H&M, Carrefour, Marks & Spencer and PVH, the parent company of Calvin Klein and Tommy Hilfiger, have agreed to provide funds for renovation of any factory if the inspection teams find it risky. The teams with local and international experts will focus on fire exit and evacuation along flaws in the structure of a factory building. According to the plan, an emergency protocol will ensure quick action to protect workers at any factory which imposes immediate threat to life and limb. The signatory company will be notified immediately and the factory owner will be told to stop production until further investigation or repairs.

Biggest solar power plant on BBS rooftop (The Daily Star, July 7, 2013)

The government has installed the biggest solar power plant on the rooftop of the Bangladesh Bureau of Statistics (BBS) building in Dhaka. The 11-storey building requires around 500 kwp (kilowatt peak) electricity a day to run its functions out of which, around 200 kwp will come from the solar plant, according to the director general of the BBS. The plant has the generation capacity equivalent to lighting up 5,000 bulbs of 40 watts, will meet a significant portion of the building’s demand for electricity. The cost of installing the plant is more than Tk 2.93 crore but will save around Tk 2 lakh in monthly electricity bills.

Jute yarn exports see tough time in FY13 for Eurozone crisis (Dhaka Tribune, July 6, 2013)

Despite an increase in the prices of jute yarn and its manufacturing cost in the fiscal 2012-13, the country’s jute yarn exporters are facing losses as the international prices keep falling due to the Eurozone crisis and unrest in the Middle East. Export Promotion Bureau (EPB) data show the export earnings from jute yarn remained Tk 3,720 crore ($465m) as the previous fiscal year. The industry insiders, however, noted that the figure looks high due to an increased export tao India and China at low prices.

Existing labour law better than the proposed draft (The Daily Star, July 5, 2013)

The proposed amendment to the labour law still has some provisions that go against the garment workers’ interests, experts said. A senior legal counselor of the American Centre for International Labour Solidarity (ACILS) said that the existing law was in fact more labour friendly as it does not ask to terminate workers for “arson, vandalism and obstruction to work”.  The revision has also curtailed the service benefits, especially of the garment workers, as factory owners would be able to dismiss workers for any misconduct, he said. These points were discussed at a seminar titled “Creating better environment for garments workers and improving working conditions in the readymade garment sector: reforming the labour law” which was recently organised in the capital by the National Human Rights Commission.

 

GSP suspension may hit FDI flow further: Moody's (The Financial Express, July 5, 2013)

The United States’ move to suspend trade benefits may dampen broader investment flows to Bangladesh, eventually posing risks to its external position, said Moody’s. According to the rating agency, while the direct effect on Bangladesh’s exports to the US would likely be very limited, the move may have negative signaling effects, since it could further deter investors who are already faced with the frequent occurrence of strikes and uncertainty over the future labour environment. On June 27, the US suspended Bangladesh from eligibility for trade benefits under the generalised system of preferences (GSP) programme, due to the country’s insufficient progress towards reforms on worker rights and safety standards.