Survey: Philippines, Thailand have most corrupt Asian economies
 Bangladesh, Myanmar not in the survey

The Philippines, Thailand, Indonesia and China are among the most corrupt Asian economies, according to results of a regional poll of expatriate businessmen released March 10.

Singapore and Hong Kong retained their rankings as the cleanest economies, the Political and Economic Risk Consultancy (PERC) said.

The annual survey covers only 13 economies in Asia and excludes other countries notorious for corruption, such as Myanmar and Bangladesh.

Some 1,400 expatriates were polled in January and February this year, PERC said.

Corruption remains a problem in the region despite huge economic progress made over the years, with governments generally lacking the political will to tackle the problem, the Hong Kong-based PERC said.
 
The Philippine situation is "probably no worse than in places like Indonesia and Thailand" but corruption has become politicized and is openly discussed in the media, unlike in authoritarian countries like China and Vietnam, it said.

The Philippines scored 9.0 out of a possible 10 points under a grading system used by PERC under which zero is the best score and 10 the worst.

As in the 2007 survey, Thailand remained the second most corrupt economy after the Philippines with a score of 8.0 after the military, which seized power in a coup in 2006, was seen to have failed to tackle the problem.

"The kingdom's economy has been marking time for two years while it sorts out political problems in which allegations of corruption figure prominently," said PERC.

Indonesia, which ranked behind Thailand with a score of 7.98, has made improvements under President Susilo Bambang Yudhoyono but the perception of the civil service as one prone to graft remains strong, said PERC.
 
Corruption is also perceived to have worsened in Malaysia, which scored 6.37 in the survey, worse than last year's grade of 6.25, but the country retained its number six ranking in the poll.

Malaysian Prime Minister Abdullah Ahmad Badawi's failure to carry out his promise to fight graft was one of the key reasons his ruling coalition suffered its worst ever results during last Saturday's elections, PERC said.

GB/March 11

Country’s  jobseekers have scopes in Europe

Bangladesh workers have opportunities in the European job market in the next few years if it does not go by WTO rules, a recent government study finds.

According to the European Commission-funded study on Temporary Movement of Natural Persons (Mode-4), there will be an opportunity of huge employments in the United Kingdom and Poland, as the first one will be the host of the next Olympic games in 2012 and the latter the next World Cup football.

Photo: European cities

It said both the UK and Poland are facing a dearth of labor and Poland has already signed an agreement with India to hire 10,000 workers.

The Mode-4 study, which was conducted in December, suggested the Bangladesh government initiate bilateral talks with Poland as it might consider recruiting more workers to meet its growing demand for manpower.

Conducted under the Bangladesh Trade Support Project, the study also pointed out the demand for RMG (ready made garments) and other workers by Rumania and Bulgaria.

It said although the Romanian demand for workers is now met by the Chinese workers, that country is searching for other options as the Chinese labor is nowadays getting expensive and many Romanians are migrating to other countries under the European Economic Areas (EEA) for better payment.

These developments can be availed by Bangladesh as the experts said.

GB/March 9,2008

Low Investment in some industrial zones

The Mongla Export Processing Zone that started seven years before has only 11 factories are up and running and of the hoped for 22,000 new jobs, only 250 have materialized. According to Hafizur Rahman, general manager of Mongla Export Processing Zone, they  are in trouble because of the absence of a gas connection and a proper road infrastructure and investors initially prefer the EPZ, but leave the place due to these shortcomings.

The Mongla EPZ is one of the eight export-oriented industrial enclaves set up in the country. It started operation in 2001 with the aim of generating employment in the southwestern part of the country.

It is a product of a policy introduced in the 1980s, when the EPZs were introduced to promote local and foreign investment, diversify exports, generate employment and transfer technology, offering various facilities to investors such as investment guarantee, 10 years tax holiday, duty free import and export of products and relief from double taxation.

But while there have been notable successes in Dhaka, Chittagong and Comilla, other EPZ's remain largely unused. In Uttara EPZ in Nilphamari, Rangpur and Iswardi EPZ in Pabna, Rajshahi hoped for investments have not arrived. In the case of Uttara, set up five years ago to provide employment in the monga-prone area, only 8 of the 154 plots have been allocated.

These failures have put into question the usefulness of establishing EPZs outside the main metropolitan areas, where some suggest their location has been chosen to solve regional employment problems rather than to satisfy the needs of potential investors. The site  proper site selections are needed  to attract the investors and the creation of storage facilities, adequate electricity supplies and special fiscal incentives to make the EPZs vibrant.

Theorectically the Mongla EPZ is well situated, located less than a kilometer away from the Mongla Sea Port. Yet so far it has received just US$ 3.56 million in investment with only 27 out of 124 plots allocated on the 460 acre site.  Out of total export earnings from EPZs of $2063 million in the fiscal year 2006-07, earnings from Mongla stood at $1.31 million.

BEPZA executive chairman Brig Gen Ashraf Abdullah Yussuf said investment in the smaller EPZs is coming at a higher rate compared with the previous days. “You cannot expect these to attract investment like Dhaka EPZ.”

The BEPZA chairman said the tariffs for using land, electricity, water and other utility services at Mongla and Ishwardi have already been reduced to encourage investment.

He said Mongla and Uttara EPZ suffered from the lack of gas connection. Moreover in Mongla the water had high levels of salinity, while in Uttara the water had too much iron.

However, the authority concern is encouraging those industries that are immune to such problems.

Overseas Employment increasing

The country saw a phenomenal increase in over­seas employment during the kst year, as some 8.32 lakh workers were sent abroad in 2007 against 3.81 lakh of the previous year. A spokesman of the Ministry of Expatriates' Welfare and Overseas Employment came up with the statistics in a release yesterday following media reports that Bangladeshi manpower market abroad is shrinking.

A total of 1,59,000 people went abroad in the first two months of the current year compared to 78,000 at the same time in 2007. "Obviously, these are record numbers," he said adding that workers have continued to be employed in Saudi Arabia and Malaysia.

Some 20,200 workers already went to Saudi Arabia in February alone and the flow continues. "And the figure to Malaysia in February was 10,9,56 and the flow is also continuing," the release said. About the reports on the problems facing by Bangladeshis in Saudi Arabia, the spokesman said Saudi authorities have denied that any particular community has been targeted for legal action, or alleged harassment.

The Ambassador in Riyadh has been making contacts with the Saudi government and high-level visits to that country and discussions with their, authorities are being planned. "We must work together in a way that the host government is not unduly embarrassed," the spokesman said.
"In fact, at this very moment, a Saudi Company from Dallah Group is recruiting a large number of technical and professional workers in Dhaka," he mentioned.

As to Malaysia, the release added, several mea­sures have already been taken to minimize difficul­ties facing by Bangladeshi workers. These have been released to the media. Adviser Dr Iftekhar Ahmed Chowdhury, in-charge of the ministry, during his recent brief visit to that country held discussions with senior Malaysian officials. Immediate formal bilateral consultations are on the cards between Bangladesh and Malaysia. The ministry spokesman said new job markets in other countries, including in Europe, are being explored.

All Bangladeshi missions abroad have been instructed to attach the highest priority to the wel­fare of Bangladeshis. Efforts are also underway to improve the skills and quality of Bangladeshi man­power for better jobs. A multi-pronged program in this regard has been undertaken by the Ministry and its agencies, he said.

The government, he said, acknowledges the huge contribution of the expatriate community to the nation's development, and will make every effort to advance the welfare of expatriate Bangladeshis.

GB/March 2, 2008

Bangladesh needs $5.4b to recover Sidr losses

The country needs US$5.4 billion to recover losses it suffered due to the devastating cyclone, Sidr, and develop a long-term disaster risk management program, as said by a final joint government-donor assessment report.

Out of the estimated amount, US$1.4 billion will be required for early and medium-to-long term recovery and for carrying out reconstruction work in the cyclone affected coastal areas. The rest $4.0 billion will be needed for the long-term disaster risk management program.

Coordinated by the World Bank, the government and some other donors prepared the damage, loss and need assessment report and sent it to the government and other donor agencies on February 18 seeking comments.

The assessment report said the devastating cyclone that battered some coastal districts in mid-November had caused a total damage and losses worth $1.7 billion dollars, which is equivalent to 2.8 per cent of the country's gross domestic product (GDP).

The damage and loss estimation in the final report is $100 million higher than the preliminary estimate of $1.6 billion. The World Bank in late January presented the preliminary loss estimate at a meeting in Dhaka after three-week long joint assessment.

The joint assessment was made after the government in December last year appealed for an assistance of about $2.2 billion for long term fight against natural disasters.

The cyclone Sidr packed with a wind speed of 220-kilometre per hour hit the country's southern coastal districts on November 15, leaving at least 3,406 people dead and another 1,001 missing. It also affected the livelihood of 8.7 million people.

Housing sector was the worst hit, with an estimated damage worth Tk 57.9 billion or 50 per cent of the total loss and damage, productive sectors including agriculture and fisheries Tk 33.8 billion or 30 per cent and public sector infrastructure Tk 17.5 billion or 16 per cent, the joint report said.

Some 55,000 individuals also sustained physical injuries and psychological traumas, it said.

The report said: "A total of $300 million is required for the immediate recovery and the remaining $1.075 billion for medium-to-long term recovery. Besides, a long-term plan of action would be required to achieve disaster risk reduction and management where an investment of $4.0 billion is needed."

The report proposed to implement the disaster risk management strategy over a period of 15 years up to 2022.

The preliminary study prepared by the government and leading donors including the World Bank indicates that overall economic growth in the country will be affected by less than 0.5 per cent.

GB/19th February, 2008

Australia wants  more migrants to ease skills shortage

Australia said On February 17 that it was relaxing its migration program to allow more skilled workers into the country where the jobless rate is at a three-decade low and most companies face a labor shortage.

The new centre-left Labor government said it was expanding the skilled migration program by 6,000 in 2007-08, bringing the total number of visas to 108,500.

"Employer-sponsored visas are the highest priority because they put a migrant worker directly into a skilled job," Chris Evans, immigration and citizenship minister, said in a statement.

The government will also expand the working holiday visa program for young people, a move which is expected to benefit the tourism and construction industries.

Australia is a nation of migrants, with nearly one-in-four of the country's 21 million people born overseas. The booming economy, which has been growing at more than 4 per cent annually, is facing a huge shortage of skilled labor, pushing up wages and stoking inflationary pressures.

The unemployment rate has been under 5 per cent since 2006 and figures recently showed it falling to a fresh 33-year low of 4.1 per cent in January.

Core inflation in Australia was running at a 16-year high of 3.6 per cent last quarter, forcing the central bank to hike interest rates to an 11-year high of 7 per cent earlier this month. Markets are expecting one more rate hike in March as it steps up its fight to curb inflation.

Evans said the latest package had the potential to provide thousands of additional workers in the short term and would help address inflationary pressures.

GB/18th February

Govt. agreed for two more EPZs

The government on February 11 approved two news export processing zones(EPZs) at Munshiganj and Feni to accommodate around 250 foreign investors.

The decision was taken at a board of governors meeting of Bangladesh Export Processing Zones Authority (EPZA) chaired by Chief Advisers Dr. Fakhruddin Ahmed. They approved the new EPZs as a response to the strong interest shown by some investors from Asia and North America to relocate industries in Bangladesh.

According to sources, during the past few months more than 50 foreign investors from Japan, Malaysia, Canada, China, Taiwan, Korea, Singapore and other countries asked the government of Bangladesh for industrial plots to relocated some of their industries and to establish new enterprises.

The general manager (investment promotion), AZM Azizur Rahman,  said the EPZs will be established on 500 acres of land, each to develop about 600 industrial plots. According to him, the foreign investors are interested in the establishments of textile accessories, home appliances, electronic goods, and shoe and leather products.

The existing eight EPZs in the country such as Dhaka, Chittagong, Mongla, Ishwardi, Commilla, Uttara, Adamjee and Karnaphuli employed around 1 lakh 78 workers and contributed nearly 18 percent to the total  export earning in FY 2006-07.

GB/14th February, 2008

Improve 'doing business' indicator ranking, suggested by IFC

The International Finance Corporation (IFC), a World Bank (WB) group, has suggested that the government reduce time, cost and procedures of launching any new business to improve the 'doing business indicator' of Bangladesh.

The formal starting cost of a business in Dhaka could be reduced to US$ 46 from $223 as per the short-term reform suggestion of the IFC, said a recent doing business reform memo of the corporation.

For starting a business, the number of procedures should be reduced from eight to four, days from 74 to 66 and cost from 46.2 per cent to 9.6 per cent GNI (gross national income) per capita, it said.

The IFC recently placed a set of reform proposals, both short and long terms, to the Regulatory Reform Commission (RRC) of the government to improve the doing business indicator of Bangladesh in its next report for 2009.

The WB Group's report on doing business in 2008, Bangladesh has been ranked 107 among 178 economies covered by the report, down from the 102nd place of the previous year.

In its reform memo, the WB wing identified some short-term measures as 'quick win reform' to be implemented within six to eight months. The IFC keeps simplification of the business company registration procedures at top of the priority list of the short-term reform memo.

The IFC also pointed out the miscellaneous costs like bribing, high official costs of starting up a company in Bangladesh.

"The government should simplify measures to reduce time and cost of business company registration with a view to encouraging small companies to register with the Registrar of Joint Stock Companies and Firms (RJSC)," Senior Programme Manager of IFC's Bangladesh Investment Climate Fund Syed Akhtar Mahmood said.

Small companies will come under the net of the RJSC if the government reduces registration fees, he said adding that it could be reduced to one-fourth of the existing ones.

It has also suggested keeping a provision for combined registration for taxes and value added tax to upgrade Bangladesh's ranking in the 'doing business indicator'.

Akhter Mahmood laid emphasis on simplification of customs procedures and income tax payment, reduction of land registration time, strengthening the Credit Information Bureau.

The IFC has prepared the 'doing business reform memo' to help the government carry out necessary reforms as part of its ongoing advisory support to the RRC.

The IFC team, that prepared the report, arrived here Sunday for a three-day visit to discuss the memo and help the government draw an action plan.

The WB mission, led by Stefka Slavova, senior economist of the Foreign Investment Advisory Services (FIAS) of the WB Group, are scheduled to meet with RRC chairman Akbar Ali Khan on February 11.

The next WB report will follow the performance of the government up to June this year. So the country has to reap benefit of its reform activities by this time to improve its ranking in the indicator, IFC Program Manager Mahmood said. Following the suggestions, the government could improve its performance, which will place the country among the best 10 reform implementing countries, he said.

He expressed his optimism over improving the country's ranking from the three-digit mark to two digits doing the reform activities.

In the WB Group's report 2008, Bangladesh ranks fourth among the economies in the South Asian region, behind the Maldives, Pakistan and Sri Lanka.

Recently Chief Adviser Fakhruddin Ahmed also expressed his desire to carry out such reforms to improve the country's performance.

GB/11th February, 2008

Soaring inflation! Faulty market management is responsible

An expert committee has held flawed market management, lack of businesses confidence and insufficient buffer stock responsible for the soaring inflation that has put the country's macro-economy under challenge, official sources said.

The Consultative Committee on Economic Policies, Management and Reform in its first meeting last month said a poor market monitoring system and a lack of business confidence have resulted in serious interruptions in the supply chain.

Moreover, inaction by the authorities concerned in maintaining a sufficient buffer stock and the high price of the staple food in the global market have cast an uncertainty over the country's food security leading to buildup of the inflationary pressure, according to the sources.

The point-to-point inflation soared to 11.52 per cent in December 2007, the all-time high in the country in more than a decade.

The inflationary pressure has become a major worry for the present caretaker government (CG) since its takeover in January 2007.

During the first half of the current fiscal, the point-to-point inflation hovered over the double-digit mark excepting in October when the inflation was 9.6 per cent.

This has forced the central bank to make an upward revision of the general inflation to 9.0 per cent from initial projection of 7.0 per cent.

To keep the inflation at a tolerable level, the meeting recommended maintaining a sufficient supply of food grains, especially rice, to keep the local market stable.

It also laid emphasis on smooth supply of fertilizer, electricity and diesel to achieve the higher target of boro rice production in the current season.

The experts pinned high hopes on increasing the local Boro production to recoup the loss of about 1.4 million tonnes of rice caused by the two successive floods and the devastating cyclone Sidr, which hit the country last year.

They also suggested that the government extend the duration and the quantity of rice per head being sold in the open market and expansion of different activities under the social safety net.

The committee also focused on the subsidy situation and suggested that the government raise the prices of fertilizer and gas to ensure smooth fiscal management.

The committee expects that the government should consider the matter of marginal farmers and make an alternative arrangement for them re-adjusting the prices of the fertilizer and gas.

GB/11th February, 2008

Govt. wants to turn Ctg an investment-friendly zone

Considering the  geographical location, Chittagong is potential in the field of investment which occupies an unparalleled position in the similar sector across the south-east Asian region.

The government is determined to turn greater Chittagong into an investment-friendly zone, attracting entrepreneurs from both home and abroad, sources said.

Executive Director of the Board of Investment (BoI) Kamal Uddin Ahmed said these as the chief guest at a seminar on 'potentialities of greater Chittagong on the regional focal point of south and south-east Asia' in the port city On February 8

Chittagong Chamber of Commerce and Industry (CCCI) President Saifuzzaman Chowdhury presided over the seminar, while Divisional Commissioner Hossain Jamil was present as the special guest.

The BoI executive chairman said he would make all-out efforts to remove complications in consultation with the policy-making body of the government if those were pointed out in the seminar.

The speakers in the seminar, however, spoke on infra-structural problems and complications in the investment process as the great barrier to economic potentials of the country.

The divisional commissioner called upon entrepreneurs to invest in the port city.

The CCCI president said there lay immense potentials of tourism, power and ship-building industries in the port city and called for providing tax holiday facilities for developing the ship-building industry.

The seminar was also addressed, among others, by CCCI Director Mahfuzul Hoque Shah, BGMEA First Vice President MA Salam, Rangamati Chamber of Commerce and Industry SVP Belayet Hossain.

Pessimistic mood by G7 leaders on world economy

The G-7 Finance leaders of   the world's top industrialized nations at a meeting in Tokyo on February 9 put on a show of solidarity face of an economic slowdown and conceded that things could get even worse because of the crumbling US housing market. The Group of Seven (G7) leaders said prospects for economic growth had worsened since they last met in October, although fundamentals remained solid and the US economy was likely to escape a recession.

"In all our economies, to varying degrees, growth is expected to slow somewhat in the short term, reflecting wider global economic and financial developments," finance ministers and central bankers from Japan, the United States, Canada, Britain, Germany, Italy and France said in the statement.

They pointed to serious risks from the US property market slump and subsequent tightening of credit conditions, which has slowed the flow of money to the consumers and companies that drive the world's economy.

Debt-laden banks have curbed lending as their losses, tied primarily to souring US home loans, rise above $100 billion. That has raised the specter of a vicious cycle as consumer spending slows, prompting businesses to retrench and cut jobs.

US Treasury Secretary Henry Paulson said global markets may face a prolonged period of unrest.

"The current financial turmoil is serious and persisting," Paulson said in prepared remarks issued after the meeting. "As the financial markets recover from this period of stress, as of course they will, we should expect continued volatility as risk is repriced."
 
The monetary easing, along with a $152 billion US fiscal stimulus package, threatened to open a rift between the United States and its allies over how to prevent the credit crisis from pushing the world into a downturn.

The G7 leaders urged banks to fully disclose their losses and shore up their balance sheets to help restore the normal functioning of markets.

Meanwhile, the world's leading economies pledged to take appropriate action to secure stability in global markets but stopped short of prescribing specific measures, according to a draft statement on February 9 from the G7 wealthy nations.

GB/10th February, 2008

Tk 6,000cr subsidy on fuel, fertilizer, food

The government will provide around Tk 6,000 crore more subsidies than the budgetary allocation for the current fiscal year due to price hike of fuel, fertilizer and food in the international market. The total amount of subsidies already allocated in the budget is Tk 6,000 crore, which includes Tk 4,200 crore for agriculture (fertilizer and others), petroleum, electricity and food, finance ministry sources said.

With the additional subsidies, the total volume now will be Tk 12,000 crore in the FY 08.

The government needs another Tk 3,000 crore as the it has yet to adjust the prices of fertilizer, electricity, gas, and petroleum products according to their production cost as  said a government official.

Of the Tk 6,000 crore more subsidies, Tk 3,000 crore will be spent in fuel, and the rest for fertilizer and food.

The donors' funds as budgetary supports will also be utilized as subsidies and the government is expecting more revenue income in the second half of the fiscal year.

The government has already decided in principle to cut Tk 4,000 crore to Tk 5,000c crore from the ADP(Annual Development Program) due to slow implementation rates.

According to the estimate of the Bangladesh Petroleum Corporation (BPC), it will face a total loss of Tk 7,568 crore in the current fiscal for selling petroleum products at a subsidized price. The budget has already allocated Tk 1,200 crore as bonds to pay the previous dues of the BPC.

Sources said the government may go for price increase of petroleum products at the end of current Boro season to reduce losses of the BPC. Besides, the BPC will try to borrow money from its sources," one source said, adding, the BPC will get about Tk 3,000 crore from the government.

The budgetary allocation for diesel and fertiliser under the agriculture sector was Tk 2,250 crore. But the revised import target of urea and non-urea fertiliser in the current fiscal by the agriculture ministry will need another Tk 1,765 crore subsidy.

The government allocated Tk 300 crore subsidy in food items for the current fiscal year. But finance ministry estimated that Tk 346 crore more subsidy is required for food as a result of price spiral food and loss of food production due to devastating floods in 2007.

The food subsidy will increase more as the country witnessed losses of food production in cyclone Sidr and there was a crisis of food in the local market.

The power sector got allocation of Tk 600 crore subsidy in the budget, but it needs an additional Tk 586 crore subsidy as the government did not adjust the power prices.

In the budget there was no subsidy for natural gas, but it is now required Tk 700 crore as subsidy due to under pricing of gas.

GB/8th Feb, 2008

US recession economy will impact badly in Bangladesh exports

Bangladesh economy is set to face a fresh blow amid signs of recession in the United States which consumes two(garments and frozen foods such as shrimps) out of five items the country exports every year, officials, industry and experts said on February 2.

Their fear came amid the latest report that the United States have lost 17,000 jobs in January, while top investment banks such as Goldman Sachs and Merrill Lynch said the world's largest economy was already in recession.

Bangladesh Garments Manufacturer Association president Anwar-Ul Alam Chowhdhury Parvez said "Signs are already there that our export will get a fresh blow and the sales of the world's largest retailer Wal-Mart, has dropped significantly because of plummeting consumer spending in the US. It has already reduced its import from Bangladesh.”

Wal-Mart is one of the top importers of garment products from Bangladesh. It does not reveal its annual buying figure, but sources said the world's largest company imports garments worth about half a billion dollars from the country.

Nearly 40 per cent of the country's 12.18 billion dollars export headed to the United States last fiscal ending June 2007. Bangladesh mainly exports garments and frozen foods such as shrimps to the US.

The looming recession in the United States also made the new commerce adviser Hossain Zillur Rahman worried. He said,"We are concerned about the possible US recession and its shocks to the country's main export earning sectors." There is no alternative but to take stock of the overall situation through extensive analysis by the experts before fixing short and long term remedial action plans, he added. The commerce adviser said that the country's plea for duty free access of garments to the US market should be dealt with maximum importance so that the local manufacturers could gain some price advantages.

 The garment manufacturers have yet to recover fully from last year's labor unrest, which was blamed for the negative growth of exports in the first quarter of the current fiscal.

In the first quarter to September, exports fell by 5.37 per cent compared to the same period last fiscal. The government said it was the first negative growth since early 2002.

The adviser's concern came amid increasing signs that the United States was heading towards its first recession since 2001 amid a huge credit crunch due to the sub-prime housing crisis. Thr experts including the former chief economist of the International Monetary Fund Kenneth Rogoff said the recession, unlike 2001, would prolong and consumer spending would decline sharply.

The economists said the Bangladesh government should move fast to increase competitive advantages of the country's main export items to stave off any possible crash in export orders. "A decline in the US consumer spending means that the American buyers would import their items from the cheapest and most reliable sources," said trade export Mustafizur Rahman, the head of the Center for Policy Dialogue (CPD).  "In such case, the buyers' obvious choices would be China and Vietnam. It will be a very challenging time for our exporters," he added.

China and Vietnam have better competitive edges as they have  strong backward linkage and better port facilities.

Former caretaker government adviser Akbar Ali Khan said the government should step up its lobbying for an early duty free access to the US.  The former adviser said the government could also depreciate Taka against the US dollar to make export items cheaper in international market. "But it will be a tricky issue right at this stage because a slight depreciation of the currency can aggravate inflation," he said.

The price inflation hit 11. 21 per cent in November,2007 the highest in 11 years, amid soaring food prices due to successive natural disasters and an all-time high commodity prices in the international market.

GB/3rd February, 2008

Three key issues from British invest in  Bangladesh

Smooth function of business institutions, continued stability in investment environment, and democracy are the three prerequisites for attracting foreign investment, British High Commissioner in Bangladesh Anwar Choudhury observed on January 29 in a function styled 'Expression of Interest from NRBs' for investment in 'Probashi Palli', a real estate project of Inspired Development Ltd, held in Dhaka.

The British Ambassador also said an elected government will bring maximum investment to the country

Foreign Affairs Adviser Dr Iftekhar Ahmed Chowdhury was the chief guest at the function, where non-resident Bangladeshis (NRBs) investors signed deals for investing in a housing scheme.

The housing project, Probashi Palli, which is exclusively for the wage-earning NRBs, is located next to Rajuk's Purbachal Housing Project. The project's objectives are developing an exclusive residential zone for the wage earners and locals, building a sophisticated business enterprise and creating a secured investment platform for the wage earners.

GB/30 January ,2008

Stock Markets all over the world fell again

Asian and European stock markets fell sharply once more on January 28 as investors worried about possible recession and a forthcoming interest rate call in the United States, analysts said.

The Paris market fell amid anxiety and tension after an alleged seven-billion-dollar fraud was unearthed last week at French bank Societe Generale.

Nervous investor sentiment would drive the direction of world stock markets this week, according to CMC Markets trader Matt Buckland.

"It's going to be the sentiments of traders, rather than the fundamentals, that determine just how far markets come off in the near term," he said.

In France, the CAC 40 index of leading shares dived 2.31 percent to 4,765.35 points, Germany's DAX 30 tumbled 1.65 percent to 6,704.17 points and Britain's FTSE 100 shed 1.57 percent to stand at 5,776.80.

In Asia, fresh jitters about the outlook for the world economy also seriously rattled markets, dealers said.

They added that investors fled to safe havens such as bonds and gold as markets around Asia slumped deep into the red in the wake of pre-weekend losses on Wall Street, with Shanghai plunging by about 7.2 percent.

Hong Kong closed down 4.25 percent and Singapore tumbled 3.75 percent. Tokyo ended down nearly 4.0 percent as Seoul lost 3.85 percent.

"Recent volatility continues with worries over US recession weighting," said one London based trader.

"The focus on January 28 is clearly on the reaction of European markets to weakness in Asia overnight, and all eyes will turn towards Wednesday evening's Fed rate decision."

Most traders predict that the US Federal Reserve will cut American borrowing costs on Wednesday. In an emergency move last week, the Fed slashed rates by 0.75 percentage points to 3.50 percent in a bid to allay US economic concerns.

The lower borrowing costs can increase company profits because they trim loan repayments while also boosting consumer income.

Market views are also mixed about whether the central bank's efforts will be enough to prevent the US economy from slipping into recession.

"If the Fed makes another rate cut, the market will be likely to take the decision positively," said Mizuho Research Institute senior analyst Koji Takeuchi.

"But the market may turn cautious, as there are expectations that the forthcoming data may revive concerns about the US economy," said Takeuchi.

World equities were also battered last week by fears about the health of the global financial sector after it emerged that Societe Generale had a deep hole in its accounts attributed to fraudulent dealing by a lone trader.

On Monday, shares in crisis-hit Societe Generale again fell heavily as French authorities seemed poised to put alleged rogue trader Jerome Kerviel under formal investigation, one step away from laying charges, over a seven-billion-dollar loss.

With the bank still under pressure over how Kerviel allegedly single-handedly covered up the losses, shares plunged 6.86 percent to 68.8 euros on the Paris stock exchange on Monday.

Societe Generale stock has lost nearly half of its value since last May and many traders expect it to fall further, dealers said.

Sentiment remains fragile in the wake of last week's rollercoaster performance that saw global shares slump on fears of a US recession before rebounding sharply following the emergency US rate cut and an economic stimulus plan.

However, the global rally began losing steam in Asia late on January 25.

GB/29January, 2008

Investment seminar of Bangladesh  in New York

“Bangladesh is a good story to sell before the global investors and the ongoing economic reforms need to be intensified” as said by David Fernandez of JP Morgan, an Investment Firm in Wall Street, at an Investment Seminar titled "Untapped Investment Opportunities in Bangladesh: Investment climate, capital market and growth in Bangladesh" at the Asia Society in New York on January 24. The prestigious seminar was sponsored by the Asia Society and network of Bangladesh American professionals in the US.

With a view to attracting attention of the global investors, Dr Ahsan Mansur of the International Monetary Fund(IMF) highlighted microeconomic stability in Bangladesh, which could be a major attraction for foreign investment.

Peter Berezin of Goldman Sachs expressed confidence that with correct policies and investment knowledge and physical infrastructure, Bangladesh can attract investment significantly in the near future.

Mamun Rashid of Citybank in Dhaka called Bangladesh a new frontier for investment and urged more policy flexibility and the need for Bangladesh to get connected to the global network.

Arif Dowla of ACI company  in Bangladesh, Munawar M Moin, Rahim Afroz Group of Bangladesh and Iftekharul Islam of Asian Tiger Capital Partners, Dhaka noted the disconnect between the global capital market and the opportunities available in Bangladesh and suggested for quick learning which could help Bangladesh to benefit from the huge capital available in the global market. They also highlighted the new found confidence in the business community in Bangladesh and invited the global investors to capitalize the investment opportunities currently unfolding in Bangladesh.

 However, the Panelists stressed the need for policy dynamism and transparency and development of infrastructure, knowledge network and education to persuade the global investors about the economic strength of Bangladesh and its readiness to accept best practices. They also suggested that Bangladesh should work with the global rating agencies so that they could evaluate the investment competitiveness in Bangladesh compare to other emerging markets.

Bangladesh Ambassador to the United States, M Humayun Kabir in his keynote address underscored the fundamental strength of Bangladesh economy and described how it has been moving in the positive direction over the years.

The seminar was indeed a befitting arrangement as a follow up to the Chief Advisor's entreaty during his visit to New York in September 2007 attended by about 150 investors, economic experts, financial analysts and economists.

GB/27 January, 2008

ADB Present ensured continues supports for Bangladesh

Asia Development Bank(ADB) President H Kuroda on January 24 assured of the Bank’s continued support to Bangladesh for its infrastructure and power and energy sector development. The Chief Adviser(CA) Fakhruddin Ahmen made a courtesy call with ADB President  at congress center on the side lines of the world economic forum meeting. The chief Adviser sought during meet sought  ADB’s support  for the construction of the proposed Padma Bridge as well as cooperation in the power and energy sector.

The ADB chief said they would look into it and expressed the hope that big countries will also come forward to finance these sectors. 

GB/26 January, 2008

Global Economic Shocks: Perfect Storm Ahead” World Economic Forum Meeting discussed

The profit, not the corporate responsibility, took the center stage on January 25 in the world economic forum meeting at Devos, Switzerland as the business chiefs around the world turned its attention to issues of health, aid and development sectors.

The UN chief Ban Ki-Moon, rock star activist Bono and billionaire philanthropist Bill Gates steered the conversation away from the global economy and geopolitics towards the burning issues such as eradication of malaria, alleviation of poverty and climate change.

The event showed as usual tradition for caring in favor of capitalism, although participants have often been criticized for trumpeting big ideas on big issues in public, while actually expending most of their energy on corridor schmoozing and backroom deals.

Bill Gates announced 306 milion dollars of grants to develop farming in poor countries, making a major push into agriculture by his charitable foundation which has previously focused on public wealth.

Bill Gates, Bono ,British Prime Minister Gordon Brown and Ban Ki-Moon focused on lacking in reaching the UN Millennium Development Goals.

Around 30 heads of state or government including Bangladesh Chief Adviser Fakhruddin Ahmed, more than 110 cabinet ministers and several hundred corporate titans are taking part in world economic forum meeting.

The first day event on January 24 was taken up with talk of a looming US recession  and on January 25 with a round table discussion on the theme of “Global Economic Shocks: Perfect Storm Ahead.”

At the world meeting at Devos, the Chief Adviser Dr. Fakhruddin Ahmed has urged the foreign representatives to become “Investment Ambassadors” through investing I in Bangladesh.

GB/January 26, 2008

Pran plans to invest in India

Pran, one of Bangladesh's leading processed-food and beverage companies, is going to set up its first foreign factory in India, taking advantage of the country's recent decision to lift its ban on Bangladeshi investment.

The plant will be built in the north-eastern Indian state of Tripura. It will initially produce jelly and drinks and is expected to come into operation by 2009 with an annual turnover of around Tk100 crore.
It will supply the markets of northeast India -- Assam, Nagaland, Tripura, Meghalaya, Manipur, Mizoram and Arunachal Pradesh -- known as 'Seven Sisters', said a senior official of Pran Exports Ltd.

India will allocate a 10-acre industrial plot for Pran and  the negotiations have been going on between the parties concerned about acquiring land for the project. The Indian government has also assured Pran of banking, electricity and other infrastructure facilities. Initially Pran will employ nearly 200 people, including Bangladeshi and Indian nationals.

India lifted its ban on direct investment from Bangladesh in 2007 and said it would  welcome investment from its neighbor country. The move was seen as a precondition for Dhaka to consider the large-scale investment plans of Indian companies such as Tata in Bangladesh.

Pran exports its agro-processed foods and drinks to nearly 70 countries, including USA, UK, Sweden, Cyprus, Australia, Malaysia, Italy, Germany, South Korea, and some Middle East, East and West African countries.

The news of the new plant was announced at an 'Export Sales Conference 2008' of Pran Exports Ltd held on January 23 in Dhaka. Deputy Managing Director of Pran-RFL Group Ahsan Khan Choudhury and other senior officials were present at the conference.

GB/24 January

Banglalink has becomes the  2nd top operator just after GrameenPhone, Telephone companies are contributing in Country’s economy

Mobile phone subscribers in the country grew a massive 58 per cent in 2007 despite the emergency, with Banglalink overtaking  AKTel and has become the second largest operator, as said by  the Bangladesh Telecommunication Regulatory Commission (BTRC) on January 22.. According to BTRC the Egyptian construction-telecom giant Orascom-owned Banglalink had 7.08 million mobile subscribers, up nearly half a million than AKTel.

The telecom regulator said the country had 34.37 billion at the end of 2007, up from 21.77 million at 2006 end with the GrameenPhone still ruling the first position.  

The operators added over one million subscribers a month despite a slowdown in the economy and a dip in business confidence due to the crackdown on tax evasion and graft by the emergency government. Telecom penetration in the country rose to over 20 per cent of the population, which was only one per cent in 1997 when three GSM mobile phone including the GrameenPhone companies started operation.

The Telenor-controlled GrameenPhone finished the year at 16.48 million subscribers, its share falling less than fifty per cent for the first time since the operator emerged as the market leader a year after it started operation. The company, which said it would offload shares in the market soon, started the year with 10.76 million subscribers and added around half a million in the next twelve months.

Mobile operators said the prices of low-end mobile handset fell down to as low as Tk 1400-Tk 2100 (20-30 dollars) in 2007, allowing millions of lower middle class people to afford the services.

The average tariff also maintained a healthy decline of 40-50 per cent amid a stiff price war among the six operators.

Banglalink, with an array of competitive tariffs and aggressive advertisement-spending, began to make gain after opening the year with over 3.47 million subscribers.

AKTel, which started the year with six million subscribers, added another 700,000 subscribers by September before starting to fall steadily, it said, adding the figures are declared by the operators themselves.

Warid, the sixth and the newest mobile phone operator which began operation last year, ended the year as the fourth largest player with 2.15.

CityCell, controlled by South East Asia's largest mobile operator Singtel, had an indifferent year, adding only 140,000 subscribers in 2007.

The state-owned Teletalk remained at the bottom of the league with 0.85 million, albeit up significantly from November.

The good sign for the country’s economy is that telecom has emerged as the country's leading service industry, contributing more than 1.5 per cent to the GDP and creating over 250,000 jobs.

GB/23 January, 2008

ADB and Japan comes forward to ease regional transport

Asian Development Bank( ADB) and Japan are preparing to  invest a  project that will ease transportation across Bangladesh, Bhutan, India and Nepal to promote economic cooperation and integration among the four members of the South Asia Subregional Economic Cooperation (SASEC).

The Japan Special Fund is giving a grant of $1 million to draw up the design for the SASEC Transport Logistics and Trade Facilitation Project to promote the flow of goods, services and people in the sub-region. Asian Development Bank (ADB) will manage the grant.

The project consists of three components - building of a corridor from Kakarvitta(Nepal)  via Panitanki-Fulbari(India) to Banglabandha(Bangladesh), a railway linking Akhaura (Bangladesh) to Agartala( India), and a modernized cross-border regime at key cross-border points.

According to  Dong-Soo Pyo, Principal Financial Analysis Specialist of ADB's Southeast Asia Department, "The project will improve cross-border transportation infrastructure and introduce modern cross-border management to facilitate trade and the movement of people across SASEC countries." The project was the result of the fifth SASEC transport working group meeting in 2006 and the fourth SASEC country advisors' meeting in 2007, where SASEC members agreed to develop a regional transport and trade facilitation project to improve intra-regional transport.

The SASEC initiative was launched in 2001 with ADB assistance to support and facilitate regional cooperation initiatives in six priority areas: energy and power; environment; information and communication technology; tourism, trade, investment and private sector cooperation; and transport. It provides a venue for policy dialogue, information sharing and confidence building among participating countries to enable better economic cooperation.

The existing intra-regional transportation infrastructure of South Asian countries need upgrading in many areas. Falling into disarray with mistrust and other diplomatic problems, this transportation infrastructure is causing inconvenience for travelers, trades and total economic situations for the people living this region.

GB/22 January, 2008

 Government decides to set up 4 economic zones 

The government has planned  to establish  four economic zones (EZs) in the country aiming to attract more investment from home and abroad, and promote economic growth.

Govt. has taken the decision after World Bank recently suggested the government to set up  the EZs to encourage domestic and foreign investment in Bangladesh.

Under this plan the Comilla export processing zone (EPZ) and the Hi-Tech park for information technology at  Kaliakoir under Gazipur district will be transformed  into economic zones for promoting more investment, official sources said.

Besides, one EZ will be set up for readymade garment (RMG) factories and the other for producers of active pharmaceutical ingredients (API) most probably at Gazaria area under Manikganj district.

Sources in different government agencies said they had already started work on establishment of the EZs for encouraging domestic and foreign investments.

Following the success story of the EPZs in Bangladesh, the World Bank had asked the government to develop the Comilla EPZ into EZ so that it could be replicated in other parts of the country, the chief of the BEPZA said.

In the month of December, a World Bank mission after discussion with the government agencies suggested development of the Comilla EPZ as an EZ after expansion of its present area and development of adequate facilities for the investors. The Bank will extend financial support to the government under the "Private Sector Development Support Project (PSDSP)" for building the EZs.

Official sources said the Board of Investment (BoI) is working as a coordinating agency while the BEPZA, Bangladesh Small and Cottage Industries Corporation (BSCIC) and Ministry of Science & Information and Communication Technology are involved in setting up the EZs.

GB/19 January, 2008

Indian Textile Company proposed for US$66 million investment

Indian textile titan Arvind Mills Limited has renewed its US$ 66 million investment proposal for setting up a high-end denim fabric manufacturing factory in Bangladesh.

The Ahmedabad-based company  whose investment proposal has got stuck up for over a year due to political chaos in late 2006, has proposed fresh interest to set up production facility in Camilla Export Processing Zone(EPZ). They have already sought 26 industrial plots at Camilla EPZ.

The company will primarily produce 30 million meters denim fabric each year with providing employment for an estimated 1000 people. The cheap labor, lower production costs, a burgeoning fabric market are among the factors that may have encouraged the Indian textile group to invest in Bangladesh.

- GB/ 14 Janurary, 2008

Bangladesh-Qatar signed agreement for recruiting skilled workers

Bangladesh and Qatar on January 6 signed an additional protocol to recruit more workers especially skilled workers from the country for the gulf state.

The visiting  Labor and Social Affairs minister from Qatar Dr. Sultan bin Hasan Al-Dhabit Al-Dosari and Foreign Affairs Adviser Dr. Iftekhar Ahmed Chowdhury signed the supplementary protocol as the two countries signed a labor agreement in 1988.

Qarar is interested in recruiting skilled professionals like professors, engineers and IT experts. More than 15,000 workers went to Qatar in 2007 and some 70,000 Bangladesh workers are working over there.

Oman opens manpower export for Bangladesh withdrawing embargo

Oman has lifted a ban on recruitment of Bangladeshi workers after 12 years and expressed its desire to recruit skilled manpower form the country. Oman is probably the first Middle Eastern Country, which is keen to institutionalize manpower export from Bangladesh and it has prepared a draft memorandum of understanding(MoU) to be signed between two countries soon. Oman has similar agreements with all Gulf States, India, Pakistan and Vietnam.

An informal restriction was in place due to some unpleasant incidents made by some Bangladeshi workers in Oman. Now the situation has become normal. The man power minister of Oman, Dr. Juma Bin Ali Bin Juma, who was on a visit to Dhaka handed over the draft MoU to the foreign adviser. He told that his country requires skilled manpower like doctors, engineers, technicians and other professionals.

The Oman minister’s visit has opened a new door with Oman and Bangladesh can set target to export manpower in other countries with good prospect. Recently the Indian Institute of Management conducted a research on “Making Bangladesh a leading manpower exporter: Chasing a dream of US$30 billion annual migrant remittance by 2015.” The study indicated that Bangladesh can target Spain, France, Japan, South Korea, the Netherlands, Australian, Belgium and Austria for manpower export on a priority basis as such countries have high remittance potential but low presence of Bangladeshis.

Dec 13,2007

Bangladesh emerges as world’s fifth largest remittance recipient Country

Bangladesh has emerged as one of the top ten remittance receiving countries in the world in terms of volume after migrants and expatriates sent US$ 5.48 billion during 2006, as reported by Global Remittance Guide. Of the ten nations, the country secured the fifth position just ahead of Pakistan which received near $5.40 billion in 2006.

India($25.7 billion) topped the list followed by Mexico($24.7 billion) and China($22.4 billion) in 2006.

However, the International Organization (IOM), a Geneva-based inter-governmental body, says the actual amount of annual remittances flowing into Bangladesh is much higher as more than 50 percent of the money comes through unofficial channel.

December 30, 2007

India opens its gate for investment from Bangladesh

India has lifted its ban on Bangladesh investment recently. The Indian authority has amended its Foreign Exchange Management ACT (FEMA) to allow Bangladeshi Companies to invest over there, as reported by Indian media. However, individual investments form the country would continue to face restrictions.

Among the South Asian Association for Regional Cooperation (SAARC) member countries, Indian has now only restrictions on Pakistan investment. The investment from Sri Lanka was lifted by India in 2004.

Many Indian Companies have invested in Bangladesh and making hefty profit as there is no restriction here. Sources said, the removal of the restrictions would clear the way for India-Bangladesh bilateral investment agreement.

December 30, 2007