Weekly News Clippings (January 9, 2014)

Dull investment keeps inter-bank rates cheaper (Dhaka Tribune, January 9, 2014)
The inter-bank call money rate was low throughout last year’s sluggish investment climate as banks were sitting on idle cash. The rate hovered around 6-8% almost the whole year except January, compared to the double-digit rates during previous two consecutive years, according to Bangladesh Bank data. In January, the call money rate was 10.29% while the spread was 5.13%. After that, the rate began dropping as investment stagnated because of political turmoil. Banks’ excess liquidity increased 50% to Tk90,000 crore in November from Tk60,000 in January, said the central bank.

Denim exhibition in March (The Daily Star, January 8, 2014)
Bangladesh, the second largest exporter of denim products after China will hold an exhibition in March, to leverage the country's rising denim industry. A total of 28 companies from Bangladesh, India, Pakistan, Italy and Japan will showcase denim pants, fabrics and modern machinery while 66 international retailers such as Charles Voegele, G-Star, Jack and Jones, River Island, H&M, C&A, PVH and GAP will participate in the exhibition.


Garment exporters get cash benefits against fund transfer via TT (The Daily Star, January 7, 2014)
Apparel makers will get 5 percent cash benefits against their export proceeds if sent through an electronic system known as telegraphic transfer (TT). This step has been taken with an aim to help them recoup the losses caused by political unrest. The products that will enjoy the incentives are woven, knitwear and terrycloth. The government also has a plan to bring down export tax for the sector to 0.4 percent from 0.8 percent now and causing the government a loss of around Tk 1,000 crore a year. Some sectors, including fish, vegetables, potatoes and jute goods, now get such cash incentives.



Bangladesh inflation quickens as political turmoil mounts (Reuters, January 7, 2014)
Bangladesh's annual inflation rate quickened in December for the second month in a row as political turmoil over the election crippled supply chains, causing the food prices to rise. Officials at the Bangladesh Bureau of Statistics fear that inflation could go even higher this month as the unrest has shown no signs of abating since the poll. Food prices in December were 9 percent as opposed to November's 8.55 percent. Since November 1, the country has been going through series of blockades and hartals enforced by the opposition, breaking the supply chain of the country.

RMG incurs $20m loss in December(Dhaka Tribune, January 6, 2014)
The country’s readymade garment sector has incurred a loss of $20m due to cancellation of orders, burden of air freight, delays in shipments, discount and vandalism in the wake of non-stop political unrest since December 1, 2013. According to a survey conducted by Bangladesh Garment Manufacturers and Exporters Association (BGMEA) over 38 export-oriented factories has come up with the claim of huge business losses in the RMG sector. All the factories faced the order cancellations worth $5.35m and had to spend additional money of over $1.56m for air shipment with those factories having to pay $1.87m extra as they failed to ship the products on time. Vandalism during the blockades also cost the exporters $2.8m while the delays in shipment cost $9.21m during the period.


Low global price causes surge in rice import (The Financial Express, January 6, 2014)
The country's import of rice has soared this fiscal year for failing to import adequate amount of the grain in the last FY (2012-13). The cost has also soared to Tk 3.85 billion ($ 49.47 million) in the first five months of the current FY which was only Tk 900 million in the corresponding period of FY '13. The surge in rice import has been attributed to the lower price of the produce in India, depreciation of rupee against US dollar and appreciation of BDT against the greenback, all of which are encouraging the local importers. Experts predicted that rice import cost may surge further in coming days due to the global price factor and the trend of production in FY '13.


Foreign aid spending in slow lane (The Daily Star, January 6, 2014)
Foreign aid disbursement increased only 2 percent in the first five months of the fiscal year due to slow project implementation brought about the political turmoil surrounding the national election. Between July and November, foreign aid of some $987 million was disbursed, which is 29 percent of fiscal 2013-14's target, according to data from Economic Relations Division (ERD). Despite the increment, the disbursement target of $3.37 billion is unlikely to be met due to the political unrest, said an ERD official. The government aims to bring in $6 billion in foreign aid this fiscal year.

RMG workers to get food and transport allowanceseven in absence (Dhaka Tribune, January 5, 2014)
The country’s readymade garment workers are entitled to get food and transport allowances even if they do not show up at work, as per new wage structure.  However, the BGMEA are still seeking clarification from the ministry regarding the eligibility of the allowance by various ranks of RMG officials and workers. Also workers whose pay is based on the number of units produced will not enjoy the overtime facilities as the law lacks any such provision.


Move to revive Commerce Bank with public money (The Daily Star, January 3, 2014)
The finance ministry has injected Tk 67 crore of taxpayers' money into Bangladesh Commerce Bank to help the private bank meet its capital shortfall brought about by bad management. The government has a 32 percent stake in the bank, and the fund injection came as part of it. Three state banks Sonali, Janata and Agrani own another 12 percent of the shares, meaning the government, ultimately, has a 44 percent stake in the bank. The remaining 56 percent of the shares are under private ownership.


Remittance drops 2% in 2013 (Dhaka Tribune, January 2, 2014)
The remittance inflow to Bangladesh has been on the decline throughout the year due to a fall in migrating workers and political unrest. According to the central bank the remittance inflow registered $1.2bn in December, 2013 compared to $1bn in November. Dull business environment due to political instability throughout the year made the expatriates wary of investing in their home country.