Economy of Bangladesh [Archive] - Page 4

sas

October 12th, 2008, 07:31 PM

Key themes in this issue are:

Global markets:

· Another week, another mega-bank bailout – but the speed at which things are deteriorating is truly breathtaking. It was the worse week in absolute terms on record.

· The failure of global markets to take any comfort in response to the passage of the $ 700bn US bank bailout followed by a GBP 75 bn UK Bailout and a prospective $ 400 bn bailout from Germany, along with coordinated global rate cuts is extremely troubling.

· But the market meltdown does not fully reflect the depth of the problems. The biggest challenge has been the seizing up of the interbank credit markets. Simply put, banks have lost confidence and trust in lending to each other. This needs to be restored for rate cuts to be effective in stimulating economic growth.

· We discuss a range of potential policy measures but further massive fiscal action in the form of bank gurantees and nationalizations seem inevitable. Additional aggressive rate cuts also seem likely.

· The recent and prospective massive action by fiscal and monetary authorities makes us confident that while the world faces recession, a 1930-style depression will be averted. The battle may not be fully won yet. But the message from today's move for us is that policymakers are willing to do whatever it takes to avoid very bad outcomes.

Bangladesh Overview and Special Focus:

· We discuss why the Bangladesh capital markets have been so resilient to the global meltdown. The DSE was barley down 1% in the week of the largest global market meltdown in recent memory.

· The lack of foreign investors in Bangladesh equities is the primary insulating factor. But we also highlight the vulnerability of Bangladesh exports to a major global slowdown.

· The USD appreciation versus the EUR will make Bangladesh exports less competitive given BDT peg. This is important as Europe is a much more important garment export market than the US for BD.

· In a Special Focus Article this week, we discuss the implications of the recently released insurance ordinances for the prospects for the insurance industry.

You may download a version of the document by clicking the URL below:
http://at-capital.com/images/at/at_capital_weekly_12_october_2008.pdf

You may send any queries to research@at-capital.com

niroohawaii

October 14th, 2008, 03:15 AM

That is over confidence. The middle east building boom and general "feel good" in the recent times has been brought about by the world wide thirst for oil. If the US cuts back its consumption, and the global credit crunch continues, the pain will be felt in the gold souks. Make no mistake of it. Don't forget that the oil rich middle east economies were not doing so well in the 90s. The sudden boom came about only when the price of crude shot up past $100 and remained high.

If there's a drastic collapse of the price of crude, discretionary spending will cease.

World wide thirst for oil is nothing new, the 'building boom' is! Alaska isnt seeing a 'building boom' either nor is the Arctic circle (lol), they are flush with oil!

Make no mistake about it, if USA goes down let them go down. Persian Gulf countries have diversified much better than some people like to think, who only glean all financial news from a select few american sources.

niroohawaii

October 14th, 2008, 03:17 AM

Dubai is just an exception, rather than an example. Countries like Saudi Arabia, Iran and the rest of the emirates of UAE still depend largely on oil revenues. With oil prices falling, as Amar pointed out, many of these countries will be in trouble.

When oil revenues dry up, many of these large government projects that employ thousands of Bangladeshis may not see the light of day, which may mean some bad news for them and for our remittance inflow.

Iran depends largely on oil revenues? Iran has the largest auto manufacturing industry in entire Muslim world including Bangladesh. Learn more before proving your ignorance. UAE has diversified much better than Bangladesh too, no offence, arent you living abroad? Go back to see how well Bangladesh has diversified. Even its expatriates choose to live in its former colonial master UK and USA, over all other countries of the world. That's an example of lack of diversification. Not Iran, which has its own satellites, its own weapons industry, its own auto industry, pharmaceuticals, has made a supercomputer itself, sent satellites to space (and planning to do more), has a fabulous metro line in Tehran, as well as u/c in four other cities (Tabriz, Shiraz, Isfahan etc).

Not only that Iran has one of the best university programs in the world if not for funding shortage and illegal illegitimiate illogical sanctions imposed by a few countries whose line a few other useless countries also tow.

I believe you should take back your words about Iran, also UAE. Saudi is diversifying slowly, I believe, no offence, it employs millions of Bangladeshis and has a better economy than Bangladesh.

Oil prices can not remain low anyway for long, since the world needs oil/gas more than Persian Gulf countries need to sell oil/gas.

niroohawaii

October 14th, 2008, 03:26 AM

Lets get back to topic. How well is Bangladeshi economy diversified? Has it been insulated from western financial crisis?

amar11372

October 14th, 2008, 04:11 AM

Lets get back to topic. How well is Bangladeshi economy diversified? Has it been insulated from western financial crisis?

For far so good. The Dhaka Stock Exchange is the best performer in Asia and the July exports marked a 78% growth in the mist of the World Financial Crisis. The remittance is also holding up nicely marking a 34% rise in September from the past year. In addition, new export products are opening up in footwear, shipbuilding and in IT for further diversification.

TIslam

October 14th, 2008, 04:48 AM

sas

October 14th, 2008, 04:51 AM

For far so good. The Dhaka Stock Exchange is the best performer in Asia and the July exports marked a 78% growth in the mist of the World Financial Crisis. The remittance is also holding up nicely marking a 34% rise in September from the past year. In addition, new export products are opening up in footwear, shipbuilding and in IT for further diversification.

I agree - so far so good. The fact that the capital market here has such negligible foreign investment has actually been a blessing for us, as the DSE isn't at all integrated with global markets. You should all refer to the 50% drop in equities in India, China, Vietnam etc. The largest drivers of the economy - RMG exports and remittances have all experienced significant in the first quarter (Jul-Sep) of this fiscal, but we must take into consideration the fact that there is usually a certain lag period before there is an effect on the Bangladesh economy. However, taking into consideration that a bulk of our remittances come from the Middle East (as opposed to the US and the EU) and that we specialize in the export of primarily low-end apparel, we can hope that both these sectors should remain largely unaffected.

manbil777

October 14th, 2008, 09:12 AM

Iran depends largely on oil revenues? Iran has the largest auto manufacturing industry in entire Muslim world including Bangladesh. Learn more before proving your ignorance. UAE has diversified much better than Bangladesh too, no offence, arent you living abroad? Go back to see how well Bangladesh has diversified. Even its expatriates choose to live in its former colonial master UK and USA, over all other countries of the world. That's an example of lack of diversification. Not Iran, which has its own satellites, its own weapons industry, its own auto industry, pharmaceuticals, has made a supercomputer itself, sent satellites to space (and planning to do more), has a fabulous metro line in Tehran, as well as u/c in four other cities (Tabriz, Shiraz, Isfahan etc).

Not only that Iran has one of the best university programs in the world if not for funding shortage and illegal illegitimiate illogical sanctions imposed by a few countries whose line a few other useless countries also tow.

I believe you should take back your words about Iran, also UAE. Saudi is diversifying slowly, I believe, no offence, it employs millions of Bangladeshis and has a better economy than Bangladesh.

Oil prices can not remain low anyway for long, since the world needs oil/gas more than Persian Gulf countries need to sell oil/gas.

I find your attitude rather sad as well and would rather stay away from arguing because your points above don't really break new ground. But oh well -- I'll bite.

First of all -- I find your comments about Bangladesh's diversification offensive. Making off-the-cuff comments about a country without relevant information should be avoided. If you've never met a Bangladeshi businessperson or tried to research our markets -- it is best to keep unsupported opinions private.

Some of us have been abroad for more than thirty years now and do know a few things about Iran. It's a country of great (and IMHO unfulfilled)promises especially in the industrial arena. Most of us living abroad probably count a few expat Iranians as friends. One thing we invariably talk about when we get together and talk about Iran is how oil money is being spent (squandered?) on showcase projects like satellites and aircraft assembly projects (witness the Iranian assembled IL-114 crashes).

Yes I know about the Iranian 'Paykan' (rebadged Hillman/Iran Khodro model finally retired a few years ago after 40 years of production) and I know about the Samand (re-badged Peugeot 405) as well as a few dozen other assembled automobiles. I find it heartening that they can sell these outdated (which won't pass pollution standards in many markets) cars in oil-rich Iran only because of an American embargo. In Teheran gas runs ten cents a liter (~40 cents a gallon). This is not how it is in the rest of the middle east or even in Asia. According to my information most Iranian cars get atrocious mileage. Fuel economy is something the Iranian car industry needs to concentrate on.

To the best of my knowledge -- Iran is yet to do something simple -- either come up with its own engine or design a car from the ground up. Which incidentally is quite common even in a country like India (witness the Tata or Mahindra lines). IMHO -- Iran can't match the 'frugal engineering' capability of the Indians. It has a long way to go on design capability, TQM, Usage of electronic marketplaces etc. (which is common even in places like India). Most of the poor people in the world who graduate to middle class in the next fifteen -twenty years are eventually going to buy cars. I'm sorry but I don't see them buying Iranian cars (at present Iranian conditions).

If you want to sing the praises of the Iranian Islamic republic and how great it is in industrial sectors like car manufacturing or other fields-- I suggest you share relevant news with us in a more 'reasonable tone'. Otherwise you'll find that your boastful statements won't find very many audiences.

P.S. the type of supercomputer Iran came up with -- the Indians came up with some twenty years ago. It is based on open-source Beowulf clusters of a few hundred off-the-shelf X86 LINUX boxes. This is news?

tanzirian

October 14th, 2008, 05:22 PM

Moderator Note

It is OK to talk about how economy of BD is affected by economies of other countries. It is not OK to say one economy is better than another or that one country is better than another. That goes for visitors to the subforum as well as regulars. We hope for prosperity of all nations. Please bring the discussion about Iran to an end now. Thank you for your understanding.

tislam84

October 14th, 2008, 10:36 PM

Inflation may ease in crisis
World commodity prices decline as demand slows
Sohel Parvez

The country's inflation is likely to come down in the coming days as global commodity prices have taken a beating from the ongoing financial turmoil across the world, analysts said yesterday.

Over the past couple of months, commodity prices marked a steady decline due to the fear of economic meltdown and credit crisis that prompted investors, mainly hedge funds, to liquidate their investment in commodity markets.

“It's a very bright side of the coin. Although the current financial turmoil has increased risks in some areas, the recent fall in commodity prices may have an easing effect on inflation,” said Zahid Hussain, senior economist for the World Bank Dhaka office.

However, a possible decline in exports and remittance inflows may take a toll on the country's economy.

Until the middle of this year, global commodity prices surged to unusually high level due to kite-flying speculation amid global investors' rush for a relatively safe heaven following the US subprime crisis first detected in mid-2007.

In Bangladesh, spiralling food prices in late 2007 and early 2008 played havoc with the poor and middle-income groups, and made the fight against inflation tough for the policymakers as domestic market followed the global trend.

But the current financial turmoil, creating a credit and liquidity crunch, has resulted in sell-offs in major commodities and pushed the prices down gradually. Oil price, which hit a record at $147.27 a barrel in July this year, now hovers around $80.

Prices of rice and edible oil also went down much in the last couple of months.

“With the aggravation of the financial turmoil, we have seen a sharp decline in global commodity prices. This makes the battle against inflation a little easier,” said Hussain. “Inflation rose earlier mainly due to food price hike. High oil price also affected non-food inflation.”

The declining trend of food prices has already contributed to a drop in inflation, which slipped to 10.11 percent in August from 10.82 percent in July.

The average inflation however rose to 10.01 percent in August 2008 from 7.78 percent a year ago, according to official data.

“We feared the inflation would rise further in the next couple of months. But the financial turmoil appears to ease inflation,” the WB economist said, expecting that food price would remain at a lower level in the days to come.

He said the possibility of speculation-led price hike of commodities appears to be thin due to liquidity and credit crunch in the global financial market.

“They (investors) are empty. What are the means the investors will use to speculate?” Hussain said.

An analyst of the Bangladesh Bank also said there would be a positive impact on inflation due to decline in commodity prices such as oil, rice and edible oil for which Bangladesh depends on imports.

Sajjad Zohir, executive director of Economic Research Group, said the prices came down because those went to an unsustainable level earlier.

“It's actually an adjustment of past wrongdoings. In the past, the futures market was driven madly by index investors or speculators. Speculation-driven price in the futures market also influenced the price level on the spot market,” he said.

“Rise in commodity prices has affected general consumers earlier. Now we are likely to see an easing inflation,” he added.

Source: The Daily Star: http://www.thedailystar.net/story.php?nid=58749

sas

October 15th, 2008, 07:29 AM

sas

October 15th, 2008, 07:33 AM

Great write-up as usual from Nasim Manzur, MD of Apex Adelchi on the global crisis and implications on Bangladesh. Even though I am optimistic that we won't be hit as badly as many are fearing. Moreover, I also feel that the US Treasury, the Fed, BOE and the ECB have finally come to a solution and the worst is over.

Another BRIC in the wall
Syed Nasim Manzur

What a difference a week can make! Only the other day it seems one could not throw a brick in a room full of economists without hitting someone who was touting the 'decoupling theory' where the remarkable economic growth in the unfortunately named BRIC countries -Brazil, Russia, India and China- along with emerging powerhouses such as Vietnam and Indonesia would more than compensate slowing economic growth in Europe, USA and Japan.

It would no longer be the case that if the American economy sneezed, the world economy would catch a cold.

Fast forward to the events of the last week: the US markets lost more than $1 trillion in one day of trading, the FTSE followed suit dropping to below 4000 in more than 5 years, Iceland almost went down as the first sovereign bankruptcy and almost every single major stock market in the world lost heavily.

But guess what else happened? Brazil has seen nearly a third of the value of its currency wiped out in the last three months; Russia has seen billions of dollars of market capitalisation vaporise in the last weeks prompting repeated market suspension; the Indian rupee is at an almost all time high against the dollar and the central bank had to release billions of rupees to restore liquidity; China has already revised downwards its growth targets as it sees demand for its products adversely affected by recession in the US and Europe. If this is the new improved decoupled economy, give me the old one any day.

This fallout is not just a reminder of the continued dominance of traditional economic powers of the G7 but also of the record degree of connectivity amongst all our economies and hence our fortunes today. We have not de-linked but become more interdependent and thus vulnerable as is evident from this crisis of epic proportions. Bollywood is having a harder time finding new finances for its films because of reduced credit and capital availability. Mexican remittance earnings from Mexicans working in USA could fall as much as 20 percent ($5 billion) this year due to the recession in USA.

Even Venezuela and Iran, neither of whom are known for their high levels of integration with the global economic order or affinity for the capitalistic system, already face lower export revenues as oil prices have crashed and seem headed further south. One reason is that with lower growth forecast for almost the entire globe and especially 'insatiable' China, prices of all commodities are correcting.

Oil is no exception and the OPEC president has said current oil prices are a true reflection of supply and demand now that speculators are out of the market. In a breathtaking display of self-serving behaviour OPEC has also announced that they are considering production cuts to boost prices.

So what does all this mean for Bangladesh? Is ignorance really bliss in our case as is one argument being made by some who say that we are so NOT wired into the global economy that it will be business as usual in Bangladesh? Will our exports flourish as the west demands lower priced goods?

My answer to all of the above: you must be joking!

We are already being hit by the crisis - the penny has just not dropped yet. From July 7 to October 7 this year, the Taka has gained 12.6 percent against the Euro thereby rendering our euro exports less competitive. As the Taka remains pegged to the Dollar, our exchange rate is causing us to lose competitive edge against India and Pakistan, both of whom have seen their currencies slide against the US dollar. This will mean lower export earnings growth and also margin pressure on exporters by buyers fighting weak consumer confidence.

As western consumers worry about their jobs, bank deposits and pensions, retail spending has slowed down. Retailers are already asking for longer credit terms or easier payment terms reflecting tighter credit. We must remember the time lag between orders placed now and our export performance. So policy makers and exporters must be prudent when projecting growth in 2008-2009, because the recent past is no longer relevant.

The seemingly endless solvency concerns about some of the largest US and European financial institutions have 'pushed the global financial system to the brink of a systemic meltdown' according to the IMF president and we are already seeing unparalleled bailouts in USA, UK, and Germany. All three countries are major development partners and donors to Bangladesh and we can probably expect reduced aid flows as well as slowdown in FDI.

The third probable fall out from this crisis could be on remittances, particularly from white collar Bangladeshis facing layoffs, lower wages or working hours. Further falls in oil prices could adversely impact the Middle East as well, which of course is our largest source of remittances. The potential double whammy of declining export earnings and remittances and the impact on our balance of payments position is the stuff of nightmares.

So what can we do? China has already tried to replace foreign demand for its products with local demand. Six central banks have jointly reduced lending rates to boost credit. India is boosting liquidity and allowing the Rupee to slide against the dollar. What we cannot do is believe that we can escape unscathed by this turmoil. We are just another brick in the wall, and the whole wall is shaking.

Write-up available at http://www.thedailystar.net/story.php?nid=58711
The writer is the managing director of Apex Adelchi Footwear and welcomes feedbackat nasim@apexadelchi.com.

Dhaka Megacity

October 18th, 2008, 04:11 AM

Dhaka Megacity

October 18th, 2008, 04:12 AM

Let me add to that with our Pharmaceuticals sector. We have now started exporting to Latin America. Our Pharma sector is the largest amongst LDCs. IT and IT-enabled services have excellent prospects, as wages in India are on the rise. So with respect to diversification, I think Bangladesh has very good opportunities in the coming days.

Well bro we are the biggest LDC out there and no offence but being the best LDC is of little consolation. We should try to graduate to Middle income category soon

meghnarmajhi

October 18th, 2008, 07:18 AM

................We should try to graduate to Middle income category soon

I'll respond to that with your signature line:

Inshallah Bangladesh shall rise higher

alladin212

October 19th, 2008, 12:41 AM

Global crisis won’t hurt Bangladesh: Economists

Country’s leading economists today at a seminar ruled out the widespread speculation over the possible adverse impact on the Bangladesh’s economy in the face of global financial crisis.
They suggested the government to be prudent while dealing with foreign direct investment (FDI) and intensifying the existing monitoring system on the country’s capital market for keeping steady economic growth.
Citibank, NA organised the seminar on Global Financial Crisis and Bangladesh at its conference room here.
Managing director of Citibank, Mamun Rashid presided over the seminar, while senior economist of the World Bank Dr Jahid Hossain, Dhaka University economics department Professor MA Taslim, former ambassador Masud Aziz, president of Bangladesh Bankers Association Mahmud Sattar, president of Bangladesh Enterprise Institute (BEI) Farooq Sobhan spoke on the occasion.
Country treasurer of the Citibank Sajed-ul-Islam presented a keynote paper in the seminar, in which issues relating to collapse of global financial meltdown, origin of the current financial crisis, great real estate debacle and possible adverse impact on Bangladesh.
Dr Jahid Hossain described the global economic recession as an impact of free market economy and said the turmoil probably took place in the western countries as the financial institutions in those countries had played a frantic casino to deposit their money.
He said the government should keep an eye on what could be the impact on Bangladesh’s economy in short and long-term due to the recession.
Prof Taslim said the recent outburst in the real estate sectors in the developed countries will continue to crush down and Bangladesh may face some problem on FDI and remittance inflow in future.
He asked the importers to be more cautious as Bangladesh produces cheaper products instead of sophisticated goods.
Masud Aziz said as Bangladesh receives a bulk amount of remittance from various countries mostly from the Middle East and thus, he suggested setting up monitoring cells to free the country from any negative impact of financial crisis.
“Recession has already started in Bangladesh and we are going to incur loss due to the global recession” said Mahmud Sattar.
Terming the decline in the inflation rate as a positive sign in Bangladesh, he said, food security can get top priority to address the probable impact of the global financial crisis.
Farooq Sobhan expressed his apprehension that foreign investment and export may came down dramatically due to the country’s political situation and global financial crisis.
Appreciating the government’s recent steps to create congenial business environment, the BEI president said, the government should take strategic planning considering the present state of economy.

http://www.newstoday-bd.com/business.asp?newsdate=10/19/2008#7868

Dhaka Megacity

October 20th, 2008, 05:53 AM

^^My opinion is that this financial crisis is mostly western.

sas

October 20th, 2008, 06:34 AM

^^My opinion is that this financial crisis is mostly western.

While it is directly affecting most developed economies such as the US, the EU and Japan, it is definitely having a detrimental effect on emerging and frontier markets in Asia. As the de-coupling theory (the fact that the rest of the world is largely immune from a US slowdown) is now being referred to as a myth, global economic growth will definitely slow down in coming months.

sas

October 20th, 2008, 06:38 AM

Key themes in this issue are:

Global markets:
· After the meltdown earlier in the month, last week's performance in global markets at least saw some light relief for US and European equities.
· The mixed performance for EM was at least in part driven by the continued weakness in commodity prices with oil down 7.5% on the week and Brent moving below $ 70, the lowest levels for the past 15 months. Some EM economies that are net exporters of commodities are clearly continuing to feel the after effects of the unwinding of the great commodity bubble.
· On a number of measures, there is little doubt world equities are now the cheapest they have been since 1986. They are at half the levels seen at the peak of the stock market bubble in 2000, and are well below the levels seen at the bottom of the bear market in 2002-2003.
· The weakness in commodity prices has diminished the pressure on inflation and also boosted growth. So as far as growth is concerned, there is a twin boost from lower costs for households and hence greater disposable income as well as greater latitude for central banks to cut interest rates.
· The risk of deflation -- generally falling prices across the economy, beyond volatile energy and food costs -- remains slim. But the financial shock and a faltering economy can set the stage for a deflationary environment.
· Some signs that the hyper-aggressive bailouts seen in Europe and the US in the past few weeks is having an impact on thawing out the interbank and capital markets, suggesting that financial institutions are rediscovering some confidence in each other's credit worthiness. However, the housing market remains in a slump with defaults and wider spreads likely to spread to other sectors of the economy and capital markets.
· The September retail sales data released last week also makes depressing reading - estimated monthly sales for retail and food services on a seasonally adjusted basis slumped 1.2% last month, Considering the U.S. economy's high dependence on consumer spending, such retail numbers speak loud and clear that the recession is here. The prospects for further bad news on the global and US economic outlook suggests further turbulence in the markets for at least a further 6 months.
· The IMF, in their latest World Economic Outlook published last week noted that Emerging Asia faces weaker economic growth prospects in the coming year amid slowing demand and financial turmoil in Western economies.

Bangladesh Overview and Special Focus:
· In this week's special focus we provide an extract of the new AT Capital report - Climate Change & Alternative Energy: Challenges & Opportunities – we discuss the global scenario and implications for Bangladesh
· Tackling climate change will undoubtedly be the major challenge of both our lifetimes and that of future generations. The transition to a low-carbon economy is necessary to mitigate the challenges of climate change - a transition that may also offer significant new opportunities across a wide range of industries and services. Markets for low-carbon energy products such as renewable energy are likely to be worth at least $500bn per year by 2050.

You may download a version of the document by clicking the URL below:
http://at-capital.com/images/at/at_capital_weekly_19_october_2008.pdf

You may send any queries to research@at-capital.com

Dhaka Megacity

October 21st, 2008, 09:23 AM

While it is directly affecting most developed economies such as the US, the EU and Japan, it is definitely having a detrimental effect on emerging and frontier markets in Asia. As the de-coupling theory (the fact that the rest of the world is largely immune from a US slowdown) is now being referred to as a myth, global economic growth will definitely slow down in coming months.

Yes the Western economies are affected by their own downturn, but it should not affect economies that aren't intertwined with Western economies much imo. Asian Tigers (Korea Taiwan all other chopstick people:lol:) are totally dependent on US, but many parts of the world are less affected by USA's internal financial turmoil.

I have never heard of this decoupling theory the way you have defined it. Obviously in this world today most countries trade with each other, invest in one another's economies, and so forth, which means SOME effects will spill over from one country to another depending on how interlinked they are.

sas

October 22nd, 2008, 04:46 AM

Yes the Western economies are affected by their own downturn, but it should not affect economies that aren't intertwined with Western economies much imo. Asian Tigers (Korea Taiwan all other chopstick people:lol:) are totally dependent on US, but many parts of the world are less affected by USA's internal financial turmoil.

I have never heard of this decoupling theory the way you have defined it. Obviously in this world today most countries trade with each other, invest in one another's economies, and so forth, which means SOME effects will spill over from one country to another depending on how interlinked they are.

Exactly. And because the US and a considerable number of European economies are going into recession, a majority of Asian economies will be affected. Let me give you China's case for instance - exports account for 40% of the Chinese GDP and with a combination of falling investor confidence and declining consumer sentiment in the US, what how do you expect this to hamper the Chinese economy? Growth has been projected to be considerable less than 10% - this is the first time the Chinese economy will grow at less than 10% in six years.

tislam84

October 22nd, 2008, 06:20 AM

sas

October 22nd, 2008, 10:21 AM

slashcruise

October 22nd, 2008, 11:51 AM

mirzazeehan

October 22nd, 2008, 12:07 PM

^^My opinion is that this financial crisis is mostly western.

Thats what I think too..lets hope we are right

tanzirian

October 22nd, 2008, 10:39 PM

amar11372

October 23rd, 2008, 09:00 PM

2nd PRSP okayed with high investment target
Evaluation of the first one not done yet
Staff Correspondent

The government has set an ambitious target for domestic investment in the second Poverty Reduction Strategy Paper (PRSP) approved yesterday while the investment slid in the past three fiscal years.

The PRSP II, titled “Moving Ahead: National Strategy for Accelerated Poverty Reduction II (NSAPR),” has set ambitious targets of 26.3 percent and 27 percent gross domestic investment out of the GDP for fiscal 2009-10 and 2010-11.

Gross domestic investment slipped to 24.2 percent in 2007-08 from 24.3 percent and 24.7 percent in 2006-07 and 2005-06.

The caretaker government approved the strategy at a meeting of the National Economic Council (NEC) chaired by Chief Adviser Fakhruddin Ahmed yesterday.

GDP growth has also been projected in the PRSP II at 7 percent and 7.2 percent for 2009-10 and 2010-11, higher than the projected 6.2 percent and 6.5 percent for 2007-08 and 2008-09.

The government however said the macroeconomic forecast has been made taking into account the uncertain global economic outlook and continued uncertainties in domestic developments.

“The forecast represents a cautiously optimistic scenario that is consistent with recent trends but also takes account of the impact of fiscal policy reforms,” it said.

According to the projection, total cost of implementing the second PRSP for the period 2009-2011 is estimated at Tk 3,190.44 billion, including a Tk 1,052 billion deficit financing.

Of the deficit, Tk 631 billion or over 60 percent would come from foreign assistance and the remaining Tk 421 billion from domestic borrowing, according to the projection.

Advisers to the caretaker government attended the NEC meeting.

The first PRSP was introduced for the period 2005--2007 and the time limit was extended up to the last fiscal year.

It was prepared mainly with advice from the International Monetary Fund (IMF) and World Bank.

But the government has not yet assessed the failures and successes of the first PRSP.

Talking to reporters after the NEC meeting yesterday, Finance Adviser AB Mirza Azizul Islam said, “We are an unelected government, but not a normal three-month caretaker one.”

Asked whether the elected government would own their decision or not, he said, “It is a matter of theirs."

Of the Tk 3,190.44 billion total expenditure projected for implementing the second PRSP, Tk 2,567.99 billion would be spent directly for implementing the goals of the PRSP II and the remaining Tk 622.45 billion for interest payment and defence expenditure.

The projected revenue earning has been set at Tk 2,138.45 billion while domestic borrowing would stand at Tk 421.05 billion.

Of the total estimated cost of implementing the PRSP, the highest 22.56 percent or Tk 579.34 billion would be for education, training and research followed by 20.64 percent or Tk 529.94 billion for infrastructure for pro-poor growth and 11.72 percent or 300.95 billion for promoting good governance and public services.

Some 3.32 percent or Tk 85.33 billion of the spending projected in the PRSP would be for food security.

The PRSP II says the government will extend the tax net and value added tax (VAT) to increase revenue earnings. It will introduce unified tax identification numbers (TIN) for income tax and VAT.

The government will also introduce public-private partnership for decentralising tax collection efforts.

The new PRSP also plans reduction of average protective tariff to 15 percent and enhancement of revenue mobilisation efforts for reducing dependence on import taxes.

To enhance private investment, the government will take measures to make unused land available for creating industrial or economic zones, provide incentives for private industrial estates, and will acquire land for handover to potential investors through the Board of Investment for setting up new industrial or special economic zones, or for industrial parks.

In the second PRSP, the government has also disclosed a plan for instituting new policies and regulatory frameworks to facilitate private investments in economic zones, and to improve land zoning for industrial purposes.

To attract foreign direct investment (FDI), the government will also introduce equity protection laws, and simplify procedures for opening up branches or liaison offices of foreign companies in Bangladesh.

Moreover, measures will be taken to reduce the use of chemical fertilisers and pesticides along with phasing out persistent organic pollutants.

The second PRSP has also planned to construct an elevated expressway in the capital and a Dhaka-Chittagong expressway by 2011 in a bid to ease traffic congestion in the capital and to speed up communication with the port city.

It also plans to upgrade Dhaka-Chittagong, Dhaka-Khulna, Dhaka-Sylhet and Dhaka-Tangail highways to four lanes, and to construct the already planned Padma Bridge by 2011.

The government strategy document for 2009-2011 also includes a plan to construct a ring road around the capital and a flyover across Pragati Sarani in Gulshan area.

http://www.thedailystar.net/story.php?nid=60092

sas

October 26th, 2008, 06:36 PM

Key themes in this issue are:

Global markets:
• The acute pain felt by global markets investors continued last week with all global stocks down sharply with EM stocks and bonds leading the way down.
• Massive capitulation or forced selling by hedge funds forced to liquidate all assets in the face of accelerating redemption as their traumatized investors demand their money back. A good portion of market moves can be explained by the reversal of their favourite trades of recent years which were long EM, long commodities, carry trades, short US Dollars and Yen.
• The EM decoupling myth has well and truly disintegrated as a number of EM countries are at serious risk of default and scrambling for IMF loans. EM counterparty default fears have sharply intensified with
Pakistan, Belarus, Argentina and even markets such as Hungary all at risk of default as the easy capital flows seen in recent years melt away.
• Although there are some signs that bank counterparty risk concerns have diminished, the heightened focus on the prospects for a global recession, and consequent defaults and reduced corporate earnings prospects, have replaced bank defaults as the primary concern for global investors.
• OPEC's decision to cut oil production had little impact in reversing the collapse in prices which, to the extent it is driven by the global downturn, underlines the severity of the current economic crisis.

Bangladesh Overview:
• The surge in the USD in the last month against global currencies such as Sterling and the Euro (with the only exception being the strengthening Yen), is going to hit exporters hard in the next few months
as even those with currency forward contracts see their hedges diminish. We believe it makes sense for the central bank to allow a 10-15 % depreciation of the Taka versus the USD.
• Bangladesh's inflation prospects are likely to improve with sharply lower commodity prices and a combination of lower interest rates and a weaker currency is a prudent strategy for the Bangladesh
central bank to take.
• In the backdrop of Pakistan receiving China's backing to install two nuclear power plants, we consider Bangladesh's plans to install a nuclear power plant by 2015.

Special Focus:
• In this week's special focus, Emerging Market Risks we review some of the recent literature on EM crises for a roadmap for how the current shocks might evolve going forward.
• While a country with relatively limited FDI and portfolio flows such as Bangladesh has been more insulated than many other EM countries to the current crisis, it also seems likely that increasing FDI into Bangladesh and increasing foreign investment into capital markets will take longer and require a more focused strategy.

You may download a version of the document by clicking the URL below:
http://at-capital.com/images/at/at_capital_weekly_26_october_2008.pdf

You may send any queries to research@at-capital.com

Dhaka Megacity

October 26th, 2008, 10:14 PM

Exactly. And because the US and a considerable number of European economies are going into recession, a majority of Asian economies will be affected. Let me give you China's case for instance - exports account for 40% of the Chinese GDP and with a combination of falling investor confidence and declining consumer sentiment in the US, what how do you expect this to hamper the Chinese economy? Growth has been projected to be considerable less than 10% - this is the first time the Chinese economy will grow at less than 10% in six years.

Asian economies will be affected, yes, most likely. Will they face a turmoil themselves? Most likely, no.

Singapore has exports as high as 150% of their GDP and they will fall into recession. Chinese exports are 40% of their GDP but most of it does not enter the US, which means it will be far less affected than the perturbances in the stock market caused by US financial turmoil.

Growth of 10% for Bangladesh - a rapidly developing poor Asian economy - is still a dream, let alone the Western economies. And China is still able to notch up that growth, whether I, you or anybody else likes it or not, is testament to its business acumen of prudence, hard work, good education, infrastructure, snubbing IMF/WB, and setting up massive industries supplying the world with "Made in China" products/services.

Dhaka Megacity

October 26th, 2008, 10:18 PM

One good thing about Bangladesh is that she does not receive much foreign investment in the stock exchange and in other sectors of the economy, relative to the size of GDP. So, Bangladesh does not have to suffer the dire consequences of foreign investors pulling their money out (a thing that is affecting Mumbai Stock Exchange, for instance).

But even after being protected from this capital flight, there can be some other problems that Bangladesh may face - fall in the inflow of exports, aid and remittance. That can affect the macroeconomic stability of Bangladesh, which, I hope, Bangladesh Bank is ready to tackle.

Oddly enough yes it is a boon that BD stock market is not linked to western markets in a big way. But one must realize most financial activities and major products are traded in New York and London. If you close them, the whole western world will come to a stand still, and even no western country has been able to replace them showing the anglo 'dominance' in this regard.

Another underlying weakness of investors leading rallies in stock trading is its based on irrational fear, hearsay, "beliefs" or other baseless ideas gathered from a medley of reliable and unreliable sources, and a slew of calculations which are not always in sync with normally accepted financial norms. "Herd mentality" leads them to seek US$ as a safe haven while there is no reason to do, herd mentality causes flight of capital from otherwise sound stable and prospering economies' markets when there is no reason to do. This "herd mentality" is hitting others hard.

Dhaka Megacity

October 26th, 2008, 10:21 PM

I believe Bangladesh will be affected by the global turmoil as it's exports growth will slow down due to consumer spending slowing down in the US and Europe which ultimately will slowdown its growth .....

If your belief turns out to be right, then I am afraid before some of us point out in certain threads that Iran Venezuela Russia or Nigeria has not diversified, we must point to ourselves first:bash:

AFAIK 90% of our RMG exports go to Europe/America, very poor example of diversification.

Dhaka Megacity

October 26th, 2008, 10:21 PM

Thats what I think too..lets hope we are right

Let's hope so.

Dhaka Megacity

October 26th, 2008, 10:23 PM

Let's not forget that the US is the largest destination for Bangladeshi products. But hopefully since we manufacture mostly inexpensive items, hopefully these are not affected as much as some other sectors.

I think EU as a whole is a bigger destination. It doesn't matter which one is the largest destination, what matters is what chunk of your business goes down.

If 2% of our exports go to US, it can still be our largest export market but a decline of 50% of that won't hurt us much assuming no other changes.

Dhaka Megacity

October 26th, 2008, 10:26 PM

Of the deficit, Tk 631 billion or over 60 percent would come from foreign assistance and the remaining Tk 421 billion from domestic borrowing, according to the projection.

Advisers to the caretaker government attended the NEC meeting.

The first PRSP was introduced for the period 2005--2007 and the time limit was extended up to the last fiscal year.

It was prepared mainly with advice from the International Monetary Fund (IMF) and World Bank.

I didn't bother making bold, italics or underlined portions in the quote. It's a gem.

Our gov't is going by the IMF and WB's recommendations. Thus we are deficit financing the PRSP. A gem.

amar11372

October 28th, 2008, 11:41 PM

http://edailystar.com/contents/2008/2008_10_29/content_zoom/2008_10_29_21_4_b.jpg

amar11372

October 28th, 2008, 11:43 PM

http://edailystar.com/contents/2008/2008_10_29/content_zoom/2008_10_29_21_7_b.jpg

alladin212

October 31st, 2008, 01:35 AM

GP ready to enter bond market

Star Business Report

Grameenphone has finalised its plan to raise Tk425crore ($60million) through private placement in the local bond market by next month, aiming to secure a healthy balance sheet before its debut in the capital market.

“We are going ahead with the launching of the bonds, sometime in November," said Md Arif Al Islam, chief financial officer of the company, yesterday.

He said, “We are thinking of raising around $40 to $60million from the bond market, depending on market appetite. However, the issue will not be a retail bond. The bonds will be privately placed, such as with banks, financial institutions and insurance companies.”

A bond is a debt instrument, in which the issuer owes the holder a debt and is obliged to repay the principal and interest at maturity.

According to the official, the value of the two-year tenure bond will be a minimum of Tk10 crore each and the coupon rate will not be less than 14.50 percent.

Does capital crisis encourage Grameenphone to go to the bond market? Islam said the vision is different for Grameenphone.

"It is part of our strategy to have a health balance sheet before entering the capital market. So far we have heavy equity and minor debt. So, we intend to have a balance between equity and debt," he said. “According to me, a healthy balance sheet means a good mix of equity and debt”.

Arif claimed that Grameenphone is getting good response from the market as it is a triple A rated company, although presently all investors are a little bit hesitant in the market.

Earlier, in August, the capital market regulator approved GP's proposal to raise funds from the bond market.

http://www.thedailystar.net/story.php?nid=61026

sas

November 3rd, 2008, 06:01 AM

Key themes in this issue are:

Global markets:
• Global stock markets posted some of the largest weekly gains seen for some time with the strongest gains posted in Emerging Markets.
• The rally was driven by global easing expectations. The US Federal Reserve cut the Fed Funds target rate by 50 basis points to 1% with hints of further easing to come.
• Further rate cuts from other central banks around the rest of the globe are likely to dominate financial headlines in the coming week.
• On November 6, the European Central Bank is expected to cut its refi rate by another 50bp to 3.25%. On the same day, the Bank of England's MPC will most likely vote for a 50bp reduction of the base rate to 4.0%.
• The Chinese Purchasing Managers' Index fell to 44.6 last month from 51.2 in September. Manufacturing contracted in July for the first time since the survey began in 2005. It also shrank in August. The October index was a record low. China decoupling is a myth.
• JPMorgan now forecasts global gross domestic product will contract at a near 1% annual rate in the fourth quarter of 2008 and the first quarter of 2009 with the three major developed regions of the US, Europe and Japan all contracting significantly.
• The Bank of England's Financial Stability report shows that this decade the assets of large complex financial institutions have apparently swelled from $10,000bn about $23,000bn. Most growth has occurred since 2003. The scale of the projected losses/writedowns on non-performing securities and loans of GBP 2.5 trillion is breathtaking.
• In this week's report, we also review trends in global markets for October, a month that proved extraordinary by almost any measure looking back through financial history.

Special Focus:
• In the Special Report article this week, we provide a summary of a forthcoming detailed analysis of Bangladesh's Macro Opportunities for Asian Regional Integrations.
• We focus on 1)Increasing Regional FDI;2) Greater Intra-SAARC trade; 3) Bangladesh as a Low Cost Manufacturing Hub; 4) Regional Infrastructure Opportunities; 5) Importing best practice from the regional economies and corporates; 6) Better Bangladesh-India Relations
• Some estimates suggest better regional infrastructure could see a trebling of Intra-SAARC trade on its own. Bangladesh needs a focused strategy to benefit from the Asian Century.

You may download a version of the document by clicking the URL below:
http://at-capital.com/images/at/at_capital_weekly_2_november_2008.pdf

You may send any queries to research@at-capital.com

amar11372

November 4th, 2008, 01:30 AM

Knitwear posts 52pc growth

The overall export in the July-August period fetched $2.903 billion in FY2008-9, registering 42.85 percent growth over the year-earlier period.

BKMEA president fears hurts to future exports
Star Business Report

The exports of knitwear items posted 52.84 percent growth in July-August of fiscal 2008-09 from the same period a year ago, according to data released by the Export Promotion Bureau (EPB) yesterday.

Ready-made garments (RMG) export data reveals slow growth for the July-August period of the current fiscal year. Manufacturers claim it was because of the global financial recession that has shadowed Bangladeshi products.

The knitwear sector recorded sharp growth in exports in July, fetching $640.50 million, which means an 84.72 percent rise in July over the same period of the previous year.

In fiscal 2007-08, knitwear exports were estimated at $5.532 billion with a 21.24 percent rise, exceeding the $5.465 billion target, according to EPB data.

The knitwear export target was set at $1.12 billion for the July-August period, while the 2008-09 annual target was fixed at $6.58 billion.

The data also shows that woven garment exports posted 35.55 percent growth in the July-August period of 2008-09 from the same period of last fiscal year. In July 2008, growth in the woven garments exports was 58.55 percent from the same period of the previous year.

The strategic export target of the woven sector was set at $974.24 million for the July-August period, while the annual target was fixed at $5.167 billion. Woven garment exports reached $5.168 billion in fiscal 2007-08.

The overall export in the July-August period fetched $2.903 billion in FY2008-9, registering 42.85 percent growth over the year-earlier period.

The overall strategic export target for the July-August period was fixed at $2.79 billion. The overall annual export target from Bangladesh was set at $16.29 billion, according to EPB data.

Talking to The Daily Star, Fazlul Hoque, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said local RMG exports may be hurt in the near future by the global financial recession.

“But the export data for the July period was very high,” Hoque said. He said the exporters have been increasing their export volumes and finding new export destinations for their RMG products to maintain higher export growth in times of the global financial crisis, he added.

According to the EPB, the export price index increased by 7.34 percent in July-August while export volumes rose by 35.51 percent in the same period.

The export price index for primary products increased by 25.37 percent while the export volume index declined by 13.40 percent. In the manufacturing sector, the price index increased by 6.23 percent and export volume index rose by 39.31 percent.

Export of frozen foods was $104.25 million in July-August, registering 4.84 percent growth, compared to the same period of 2007.

Besides export growth in the knitwear and woven sectors--two major sub-sectors of the RMG sector -- exports of home textiles, footwear, ceramic products, jute products, petroleum by-products, terry towel and textile fabrics also showed good growth in the July-August period.Export of home textiles was $55.18 million with 30.08 percent growth.

http://www.thedailystar.net/story.php?nid=61738

sas

November 10th, 2008, 08:29 AM

Key themes in this issue are:

Global markets:
• The euphoria in global markets on Nov 4 with the historic election of Barack Obama was followed by the worst two-day decline (Nov 4/5) in the S&P 500 since the 1987 crash. Fears about the economy dominated and drove further sharp declines in commodity prices. Oil fell to the lowest levels since early 2007.
• Beyond the Obama victory, the standout event for markets was the unprecedented and forceful 1.5% cut in UK base rates by the Bank of England that took UK rates to 3%. The ECB also cut rates by 50 basis points.
• According to the Labor Department the US economy lost 240,000 jobs last month. The unemployment rate jumped to 6.5%, the worst since 1994. The US economy is definitely in recession and some forecasts are for unemployment to rise to 8% in 2009.
• General Motors Corporation, seeking US government aid to avoid collapse, said it may not have enough cash to keep operating beyond the end of this year. A bankruptcy would risk 2.5mn additional job losses.
• CLSA, one of the leading Asian economic research houses, published a report last week suggesting that China must be radically reassessed by investors and could be lurching towards a more dramatic economic slowdown than Beijing authorities will admit. Even with aggressive government measures, growth in 2009 could plunge to 5.5%.
• Another interesting impact of the global credit crisis is the substantial impact on global trade via reduced credit availability to the shipping sector. At least 20% of the vessels most commonly hired to haul coal and ore are sitting empty as steelmakers cut output and dwindling trade credit halts deliveries.

Special Focus:
• Obama's economic plan: Recently, the President-elect increased the proposed cost of his "middle-class rescue plan" from USD 115bn to USD 175bn.
• Rising Democratic power in Washington is likely to usher in a drive for tighter financial regulation, increased social spending and more labor-friendly policies.
• Barack Obama is committed to a foreign policy of intense diplomatic engagement with allies and adversaries alike and an international approach to curb nuclear proliferation and terrorism.

You may download a version of the document by clicking the URL below:
http://at-capital.com/images/at/at_capital_weekly_9_november_2008.pdf

You may send any queries to research@at-capital.com

amar11372

November 12th, 2008, 07:57 PM

Sweden's Brummer Ventures to Bangladesh, Plans Asia Hedge Fund
By Netty Ismail

Nov. 12 (Bloomberg) -- Brummer & Partners, Sweden's largest hedge-fund manager, is venturing into Bangladesh and plans to start its first Asia-focused portfolio as it expects the region to ride out the global financial crisis.

``I never believed in decoupling; Asia will be affected by the global turmoil,'' Patrik Brummer, 59, the firm's founder, said in a telephone interview from Stockholm. ``But when the dust settles at some stage, Asia will outperform the rest of the world in growing faster.''

Brummer & Partners, which manages about $6 billion, set up the Frontier Fund in July to invest in Bangladesh stocks and private-equity investments. It plans to grow the fund to about $500 million in the next five years, from $53 million, said Khalid Quadir, chief executive officer of the firm's unit in the Bangladeshi capital Dhaka.

Bangladesh may join the ranks of the fastest-growing economies in the region as it benefits from its geographical proximity to India and China. The nation of 150 million people, equivalent to about half of the population of the U.S., offers a ``huge untapped cheap labor force,'' Quadir, 43, said. The labor cost in the South Asian nation is almost half of India's and less than a third of China's.

The firm also plans to start an Asia-focused long-short equity fund in the first half of next year once it finds the right team to manage it in Singapore, Brummer said. Long-short managers buy stocks they expect to rise and hedge those bets with short sales, or the selling of shares expected to drop. Such funds fell 22.8 percent this year through October, according to Singapore-based data provider Eurekahedge.

Profitable Downturns

``A lot of the hedge funds have a long-only bias, so they have difficulties in down markets,'' Brummer said. ``Historically, we were able to make money for clients even in downturns and we will try to do that in the future.''

Brummer & Partners Helios Fund, a portfolio of the firm's hedge funds, gained 5.7 percent this year through October. The Futuris Fund, a European long-short equity portfolio, rose 26.2 percent.

Hedge funds fell by an average 5.4 percent last month, pushing the year-to-date drop to 15.5 percent, according to the HFRI Fund Weighted Composite Index compiled by Chicago-based Hedge Fund Research Inc.

Brummer & Partners also made money for investors when the dot-com bubble burst at the start of this decade, Brummer said.

The Stockholm-based manager, which set up Sweden's first hedge fund in 1996, is hoping to replicate that ``first-mover advantage'' in Bangladesh as competition for investment deals remains low, Brummer said.

Like India, Vietnam

``It's a bit like entering India in the early 1990s or Vietnam in 2000,'' said Ifty Islam, managing director of Dhaka- based Asian Tiger Capital Partners. ``You're going to get relatively cheap and attractively priced assets which will give you some sizeable returns.''

Islam, previously the head of macro strategy and hedge fund research at Citigroup Inc. in London, plans to raise a $50 million Bangladesh-focused private-equity fund early next year.

Goldman Sachs Group Inc. in December 2005 included Bangladesh in a list of 11 developing countries that, according to its analysts, have the greatest potential to emulate the long-term economic success expected from China, India, Brazil and Russia. JPMorgan Chase & Co. named Bangladesh one of the ``Frontier Five'' markets worth investigating in an April 2007 note, along with Kazakhstan, Kenya, Nigeria and Vietnam.

`Basket Case'

The South Asian economy expanded more than 6 percent in the fiscal year ended June 30, bolstered by garment exports and inflows from Bangladeshis working overseas.

While a global recession may hurt the nation's exports, the stock market remains ``insulated'' as foreign investors account for about 3 percent of trading, Quadir said.

The Dhaka Stock Exchange index lost 12 percent this year, which still makes it the fifth-best-performing stock market in the world.

Bangladesh, once dubbed the ``basket case'' of the world by U.S. Secretary of State Henry Kissinger, has been plagued by coups, strikes and corruption since its independence from Pakistan in 1971. In Transparency International's 2008 survey of perceptions about corruption, the Berlin-based watchdog group put Bangladesh among the world's worst, ranking it 147th among 180 countries.

A military-backed government, in place since January last year, started an anti-corruption drive that resulted in the arrests of leading politicians, including former prime ministers Sheikh Hasina Wajed and Khaleda Zia. The nation plans to hold general elections on Dec. 18.

`Biggest Risk'

``The biggest risk is probably political,'' Brummer said. Still, ``people who are running the country will take measures that make it possible to boost the economy and take it out of poverty.''

About 36 percent of the population live on less than $1 a day, according to the Manila-based Asian Development Bank.

Brummer is an investor in bracNet, a wireless broadband company in Bangladesh that Quadir started in 2005. He said he ``has committed'' himself to visit the country at least three times a year.

``There are some very interesting opportunities in the next five to 10 years to explore in Bangladesh,'' Brummer said.

He said he plans to ``explore opportunities'' in neighboring countries such as Sri Lanka and Myanmar once the fund has built its track record in Bangladesh.

To contact the reporter on this story: Netty Ismail in Singapore nismail3@bloomberg.net.

http://www.bloomberg.com/apps/news?pid=20601080&sid=aYTSkaFZlmRU&refer=asia#

tanzirian

November 13th, 2008, 02:25 AM

For Towhid Bhai: oil barrell was $57 today. Getting close to that $50 (referring to earlier post of yours :))....

amar11372

November 13th, 2008, 02:32 AM

^^ Its at $55 now. Some of the oil exporters now have to rethink their grand investment plans.

http://clip2net.com/clip/m7984/1226536334-clip-23kb.jpg

mirzazeehan

November 13th, 2008, 02:50 AM

^^ Its at $55 now. Some of the oil exporters now have to rethink their grand investment plans.

http://clip2net.com/clip/m7984/1226536334-clip-23kb.jpg

Now this is getting a lil too dangerous....we got workers in ME and should hope for oil prices to be jumping back

tanzirian

November 13th, 2008, 06:49 AM

Now this is getting a lil too dangerous....we got workers in ME and should hope for oil prices to be jumping back

Well you didn't have to pay $4 dollar a gallon gasoline :)...it was costing me around $60 or more every time I filled up, now costing me half as much...makes a big difference for a guy living on a budget.

^^ Its at $55 now. Some of the oil exporters now have to rethink their grand investment plans.

Oh they needn't worry...there is only a finite amount of oil on the planet and it is always getting smaller...while the number of people wanting it always getting bigger (China and India will increase their consumption several-fold in the next few decades, think of what that will do)...so the price can only trend upward overall, unless there is some remarkable revolution in alternate energy.

Dhakaiya

November 13th, 2008, 11:28 AM

..it was costing me around $60 or more every time I filled up.

Thats insane! $60 is like Tk.4800!

TIslam

November 14th, 2008, 01:46 AM

For Towhid Bhai: oil barrell was $57 today. Getting close to that $50 (referring to earlier post of yours :))....

Yes I know, unbelievable! Countries like Russia and Venezuela must be beginning to hurt. Goes to show bad this global recession is.

TIslam

November 14th, 2008, 01:49 AM

Thats insane! $60 is like Tk.4800!

Insane as in too much? How much does an fill up cost in Dhaka? It was $60 for a small/medium sized vehicle. Imagine how much it takes to fill up an SUV or the Hummer!

TIslam

November 14th, 2008, 01:56 AM

Well you didn't have to pay $4 dollar a gallon gasoline :)...it was costing me around $60 or more every time I filled up, now costing me half as much...makes a big difference for a guy living on a budget.

Oh they needn't worry...there is only a finite amount of oil on the planet and it is always getting smaller...while the number of people wanting it always getting bigger (China and India will increase their consumption several-fold in the next few decades, think of what that will do)...so the price can only trend upward overall, unless there is some remarkable revolution in alternate energy.

"there is only a finite amount of oil on the planet and it is always getting smaller."

Lest we forget. Yet most seem not to bear this in mind nor talk about it much. While nobody can accurately predict when the bulk of ME oil shall dry up, those ME countries that do not prepare themselves for the eventuality, do so at their own peril. Even more foolhardy and dangerous are those countries that bank on those ME remittances from their expats, to bankroll their economies, like Bangladesh.

Dhakaiya

November 14th, 2008, 06:13 AM

Insane as in too much? How much does an fill up cost in Dhaka? It was $60 for a small/medium sized vehicle. Imagine how much it takes to fill up an SUV or the Hummer!

Well, once our driver takes Tk.300 worth gas in our Noah, it runs for 3 days. Why is the cost so high in the states?

ajprobashi

November 14th, 2008, 09:49 AM

Well, once our driver takes Tk.300 worth gas in our Noah, it runs for 3 days. Why is the cost so high in the states?

we drive unnecessarily and the distances we travel is longer than BD car owners

amar11372

November 14th, 2008, 10:27 AM

we drive unnecessarily and the distances we travel is longer than BD car owners

Yeah people who live in the suburbs (majority of Americans) commute anywhere from 20 miles - 50 miles or more.

tanzirian

November 14th, 2008, 04:25 PM

Well, once our driver takes Tk.300 worth gas in our Noah, it runs for 3 days. Why is the cost so high in the states?

I think gas to BD is sold at a lower price by Middle Eastern countries...or am I wrong on that?

Keep in mind that I have very efficient Accord. Now if I drove a Hummer :)...

mirzazeehan

November 14th, 2008, 08:32 PM

I think gas to BD is sold at a lower price by Middle Eastern countries...or am I wrong on that?

Keep in mind that I have very efficient Accord. Now if I drove a Hummer :)...

Dhakaiya is prolly talking about Compressed Natural Gas Tan....while you are talking about Petrol/Octane.Dhakaiya is right,once we take 250 taka gas,we can easily go on for 2 to 3 days,hehe,thats the advantage of having our own Bangladeshi Gas,lol.

manbil777

November 14th, 2008, 08:43 PM

I think gas to BD is sold at a lower price by Middle Eastern countries...or am I wrong on that?

Keep in mind that I have very efficient Accord. Now if I drove a Hummer :)...

In Bangladesh -- the mileage is good because speed rarely gets up above 60 KPH plus most Bangladesh vehicles have smaller Japanese market engines. You can't find Corollas in the US with 1.3 or 1.6 litre engines...it is a combination of many things like driving distance and lower compression etc.

tanzirian

November 14th, 2008, 10:11 PM

Dhakaiya is prolly talking about Compressed Natural Gas Tan....while you are talking about Petrol/Octane.Dhakaiya is right,once we take 250 taka gas,we can easily go on for 2 to 3 days,hehe,thats the advantage of having our own Bangladeshi Gas,lol.

Ah yes...some linguistic differences I guess....when Americans talk about "gas" they mean "gasoline."

amar11372

November 15th, 2008, 02:39 AM

http://clip2net.com/clip/m7984/1226709563-clip-51kb.jpg

amar11372

November 15th, 2008, 02:41 AM

http://clip2net.com/clip/m7984/1226709644-clip-51kb.jpg

amar11372

November 15th, 2008, 03:04 AM

http://clip2net.com/clip/m7984/1226711053-clip-36kb.jpg

mirzazeehan

November 15th, 2008, 03:12 AM

^^Wow!I cant believe this!Bangladesh experienced the highest % growth of Manufacturing production and Remittance in the world in 2007 and 2008??Amazingg:cheers::cheers:

TIslam

November 15th, 2008, 06:31 AM

^^Wow!I cant believe this!Bangladesh experienced the highest % growth of Manufacturing production and Remittance in the world in 2007 and 2008??Amazingg:cheers::cheers:

Yes indeed, me too. But I hope for higher growth in manufacturing/production and less of remittance. We should aim to be China. :cheers2:

Dhakaiya

November 15th, 2008, 07:57 AM

:cheers:

iftikhar63

November 15th, 2008, 09:40 AM

Until now, Bangladesh is really doing well..... Keep the sprite up!

sas

November 16th, 2008, 05:36 AM

mirzazeehan

November 16th, 2008, 06:22 PM

We must also not forget that of the total remittances that flow into Bangladesh, about half of those come in through official channels. So our total remittance inflow could possibly be up to USD 15bn.

If we can only tap the amount being sent unofficially,our Forex reserve would boom like crazy.

sas

November 17th, 2008, 05:55 AM

Key themes in this issue are:

Bangladesh:
• One of the ironies of the current crisis is that Bangladesh's ineffectiveness in integrating with global capital markets has left it insulated from the turbulence that emanated from the developed markets.
• The key to the continued resilience of the Bangladesh economy lies in the sensitivity of two critical sectors, garments and remittances, both of which contribute $ 12bn and $ 10bn respectively to the Bangladesh economy.
• It is becoming increasingly evident that remittance inflow from Middle Eastern countries is as likely to be adversely affected. Bangladesh sent a record 832,000 people abroad in 2007 but oil prices have fallen by almost 2/3.
• Remittance flows from the US and UK are also likely to fall sharply as discretionary spending to leisure, especially restaurants, falls given the severe recession.
• But the Bangladesh is likely to continue to expand market share in RMG as the Walmart effect persists whereby production/demand shifts to low cost producers.
• We believe that current IMF, Bangladesh Bank and private sector BD growth forecasts are too optimistic and sub 5% growth is still the risk for 2009.
• But this will also require BDT depreciation versus the USD otherwise exports will lose increasing competitiveness versus other countries in the region.

Global markets:
• The G20 summit in Washington on Saturday was long on rhetoric but short on concrete agreement on globally co-ordinated regulatory overhaul needed to prevent a repeat of the 2008 financial crisis.
• Pakistan reached an agreement in principle with the International Monetary Fund on a $7.6 billion loan package aimed at preventing the nation from defaulting on foreign debt and restoring investor confidence.

Special Focus:
• In this week's special focus we consider the backdrop to the recent oil exploration dispute between Bangladesh and Myanmar.
• We also outline a strategy Bangladesh should adopt to protect its valuable offshore natural resources.

You may download a version of the document by clicking the URL below:
http://at-capital.com/images/at/at_capital_weekly_16_november_2008.pdf

You may send any queries to research@at-capital.com

mirzazeehan

November 17th, 2008, 12:13 PM

Interesting...Thanks for sharing this with us Sas

sas

November 18th, 2008, 05:21 AM

Interesting...Thanks for sharing this with us Sas

Anytime bro.

sas

November 18th, 2008, 05:28 AM

Q1 export earnings cross $4.0b

The country's exports boomed in September, an uninterrupted growth in third consecutive month of the current fiscal year, to power the first quarter's earning to exceed record $4.0 billion belying apprehensions of possible impact of the financial meltdown in developed economies, officials said Monday.

With addition of the September figures, they said, the country's export earning in the first quarter, spanning from July to September, stood at nearly $4353 million with an impressive 42 per cent growth over that in the corresponding period of the last fiscal year.

Officials and analysts said the country's export is still out of danger and unlikely to feel the extreme pinch of world financial tsunami which has already started taking its toll on the economies of many developed countries.

They said the country mostly exports low-end products to the global market, demand for which has already risen as recession-hit consumers are showing more interest in buying low-cost goods.

Export Promotion Bureau (EPB) Vice Chairman Shahab Ullah told the FE on the day "The meaning of recession is not that it will affect all the countries. Our exports in September performed very well."

When asked, he said: "I have earlier told you (this correspondent) that export would continue to grow in September and subsequent months like that in the first two months."

In July and August of the current (2008-09) fiscal year, the country fetched over $2.903 billion from exports of primary and manufactured goods.

The country shipped goods worth around US$1.54 billion in July, $1.358 billion in August and around $1.450 billion in September with garments belying apprehensions that financial meltdown in the United States and the European Union-- Bangladesh's major markets-- would drag down exports.

The EPB, which is yet to formally announce the export data for September, said the performance of the major export items including knitwear, woven garments, frozen foods and leather and leather goods was more than expectation in the final month of the first quarter.

http://www.thefinancialexpress-bd.info/search_index.php?page=detail_news&news_id=51125

amar11372

November 20th, 2008, 03:34 AM

Amid the crisis, BD's Export to the USA in the month of September has been its highest.

http://clip2net.com/clip/m7984/1227144543-clip-82kb.jpg

mirzazeehan

November 20th, 2008, 03:53 AM

Great stuff Amar....I am really happy to know about the 4.3 Billion dollar export figure in the first 3 months of this fiscal.At this rate,our exports should reach 17 billion US dollars this year.I am still not sure if the increased exports figure in Sep is an actual indication of US demand for Bd goods during recession,as orders for those were probably placed months ago.However,its good to see that our exports are still setting records!:cheers:

sas

November 25th, 2008, 05:02 AM

Key themes in this issue are:

Bangladesh:
• The long-awaited parliamentary election will now be held on December 29 and upazila on January 22, the Election Commission (EC) announced yesterday, meaning most likely an end to the impasse over the polls. This reduces the prospects of street protests in the immediate term and is a welcome development for Bangladesh markets and the economy.
However, further volatility and uncertainty in the political process in the aftermath of elections remains the risk.
• Although the global economy and markets continue to deteriorate, Bangladesh remains largely decoupled.The DSE is still only down around 10% YTD versus 50-75% declines in a number of the larger EM countries.
• We discuss some policy recommendations made by the IMF to best tackle the spread of the crisis to emerging Asian economies and assess the relevance for Bangladesh.
• The Bangladesh economy also remains little affected but a key question is whether this resilience is likely to be sustained. Last week Bangladesh Bank's Policy Analysis Unit (PAU) published a comprehensive and thought provoking piece of analysis on this issue along with policy implications.
• In this issue we analyze the report in some detail. Our overall response to the PAU paper is that Bangladesh Bank is adopting a reasonable and pragmatic policy stance in the face of the current picture of resilient growth and elevated inflation.
• However, we would be more pessimistic on the growth prospects in 2009 given the downwards risks to remittances and the likely pressures on non-RMG sectors such as frozen food and jute. Even with RMG there is a risk of significant margins squeeze from global clothing retailers as the global economic outlook turns more grim. Our central expectations are for GDP growth to be sub-5% versus 6.2% forecast from BB
• We believe inflationary pressures will be significantly more moderate than BB is currently forecasting. Global deflationary worries will likely continue and should impact Bangladesh.
• In the PAU report, it is clear that BB feels that the recent appreciation in the BDT versus the currencies of some of its major trading partners, most notably EUR and GBP, is merely a correction of an undervalued position. They emphasize the need to keep inflation in check.
• But exchange rate depreciation among other regional competitors in RMG and other products versus the USD argues, in our view, for a controlled and modest 5% depreciation
of the BDT versus the USD. It is an insurance policy for future economic weakness/declining trade competitiveness.
• The suggestion from BB that fiscal policy should incorporate tackle the impact of the global crisis through targeted support for certain sectors has significant merits.

You may download a version of the document by clicking the URL below:
http://at-capital.com/images/at/at_capital_weekly_23_november_2008.pdf

You may send any queries to research@at-capital.com

iftikhar63

November 27th, 2008, 07:09 AM

Understanding the demand by BGMEA as logical one, if BD Government wants to bring the exchange rate down (taka to be devaluated against EURO) , can Bangladesh Bank do it! If yes, please tell me how?

amar11372

November 27th, 2008, 07:44 AM

Understanding the demand by BGMEA as logical one, if BD Government wants to bring the exchange rate down (taka to be devaluated against EURO) , can Bangladesh Bank do it! If yes, please tell me how?

-The Bangladesh central Bank can sell taka (from its reserve holding) and buy US Dollars, thereby creating more supply for taka and more demand for Dollar in the market. This will devaluate the taka against USD.

-The Ministry of Finance can devaluate the currency by printing massive supply of money (taka) to cover budget deficit, this will create more inflation and devaluate the currency.

- We can go back to fixed exchange rate system from the current managed float rate and fix the USD/TAKA exchange rate; even though this is generally not a good idea and may lead to unexpected capital inflow/outflow.

Hope this helps.

iftikhar63

November 27th, 2008, 07:30 PM

Thanks

iftikhar63

December 1st, 2008, 01:05 AM

http://www.freeimagehosting.net/uploads/3acc04b81b.jpg (http://www.freeimagehosting.net/)

tislam84

December 1st, 2008, 04:26 AM

^^ A better measure of economic well-being is GDP per capita (PPP), it can tell how much an individual contributes to the economy,

sas

December 1st, 2008, 04:45 AM

Key themes in this issue are:

Bangladesh:
• The tragic attacks on Mumbai where almost 200 people lost their lives has dramatically reversed the growing sense of entente between India and Pakistan and threatens escalating regional instability.
• Since it seems unlikely that Pakistanis can be categorical and convincing enough to thwart Indian demands, there are major risks that we will be deep into a crisis within the next few months, very shortly after the situation on the ground clarifies itself.
• But Bangladesh can stand out amid the increasingly fragile regional geopolitical picture as a moderate muslim state and a country of relative stability.
• There is every incentive for both leading political parties to fight free, fair and trouble-free elections to show the world that Bangladesh can make a successful return to democracy.
• The prospects for the country to also benefit from greater FDI and portfolio flows as global investors look to reduce India and Pakistan exposure is an added economic incentive.
• There has been a tremendous amount of debate and a heated response from the Bangladesh government and central bank to the World Bank (WB)'s forecast that Bangladesh's economic growth rate might come down to 4.8 per cent this fiscal from 6 per cent last year. We discuss the reliability of the Walmart effect and the meltdown in Dubai Property.
• To put the Bangladesh growth slowdown debate in perspective, it is worth looking at the turmoil occurring in Asia's most successful and fastest growing economy of the past two decades. China cut interest rates by 1 percent last week. The WB cut their growth forecast to 7.5%.
• We discuss some recent trends in Cleantech funds as well as new Hydro technology.
• Last month, we published an 80 page report on Climate Change and Alternative Energy in Bangladesh. There has been a growing number of requests to see the whole report online. Given our commitment to increasing awareness/debate on Bangladesh's biggest Macro challenge in coming decades, we have made the whole report available online

You may download a version of the document by clicking the URL below:
http://at-capital.com/images/at/at_capital_weekly_30_november_2008.pdf

You may send any queries to research@at-capital.com

mirzazeehan

December 1st, 2008, 05:57 AM

^^ A better measure of economic well-being is GDP per capita (PPP), it can tell how much an individual contributes to the economy,

thats true..but this is more like a measure of how big of a World power each country is,and how much influence in can exert on others

tanzirian

December 1st, 2008, 08:58 AM

^^ Purchasing power parity is good way to compare standards of living, but isn't a very good way to compare actual wealth of different nations. So I don't think this list is very useful...in terms of actual GDP, BD would rank lower. On the issue of total vs per capita GDP...I do think that the total wealth of a nation is very significant...for example per capita of India and China are still quite low but they are major players due to their total GDP.

iftikhar63

December 6th, 2008, 08:32 AM

Toys lift women from poverty

Refayet Ullah Mirdha

Workers make toys at a centre of Hathay Bunano. Samantha Morshed, a British-born Bangladeshi housewife, has set up an out-of-the-ordinary industrial unit that operates with 3,200 women across the country and mainly exports children's toys to North and South Americas, Europe, and Australia.

Hathay Bunano, a local handicraft exporting company, has an intricately woven assembly process and is based on trust and relationships, rather than the manufacturing lines that are most common in factories. The beautiful hand-knitted, hand crochet, and hand-embroidered products for children have made their mark with the 'Made in Bangladesh' tag at many destinations.

Samantha, chief executive officer of Hathay Bunano, seeks to create rural employment that is good quality, fairly paid, local and flexible. Employment that enhances the employees' life prevents economic migration and family separation.

They specialise in the production of children's toys, produced mostly by women, who traditionally find it difficult to find jobs. Most are physically challenged. The management of Hathay Bunano supplies the raw materials needed to manufacture the toys, to rural female workers to manufacture the export quality toys.

With their eye on the finish line and constant focus on innovation, Hathay Bunano has witnessed year-on-year export growth of more than 100 percent since its start in 2005. The company currently boasts production volumes of 10,000 pieces of toys per month.

International Finance Corporation's South Asia Enterprise Development Facility (IFC-SEDF), a member of the World Bank, technically assisted the implementation of the organisation's management information system (MIS).

A key challenge for the organisation remains in the effective cost monitoring system, order placement and resource allocation of the dispersed rural centres. It is the relentless work practices of the rural women that has supported this non-profit organisation's exports, says company management. Samantha says Hathay Bunano works closely with the Centre for Rehabilitation of the Paralysed (CRP), founded by Valerie Taylor, in providing employment opportunities for those who have completed rehabilitation at the CRP.

"These women become trainers in our organisation and together we are all working towards changing people's attitude towards the physically challenged in Bangladesh," she says."We have physically challenged women working at our head office in Dhaka and at the Dhaka Notun Bazar production and training centre. Our centre in Mymensingh is operated by the physically challenged," Samantha says.

"We have roaming trainers currently on assignment in Khulna, introducing new products and working with CRP on a new production and training centre. This is done exclusively to accommodate the challenged at the Sylhet centre." Samantha says the centre is often a rented structure, built of tin sheds, from someone within the community. “Mains electricity is not essential -- we can use solar or battery power for lighting and fans,” she adds.

She says Hathay Bunano is a member of the Ecota Fair Trade Forum, the body for Fair Trade in Bangladesh. "We are currently working towards SA8000 certification to ensure social accountability, in a joint project with the IFC-SEDF and hope to achieve it early next year."

The principles of Fair Trade, which Hathay Bunano has been following, include, transparency and accountability, gender equality, opportunity for economically disadvantaged groups, consideration of the environment, capacity building for workers, promotion of fair trade, payment of fair wages, restrain from child labour and safe working conditions.

Speaking to The Daily Star, Samantha says her export of toys has been going well, even in the face of the ongoing global financial recession."We are still receiving orders as before from the foreign buyers even in times of the financial recession," she says.

“Activities that promote gender and women's empowerment is at the core of what needs to be done to remain competitiveness," says Deepak Adhikary, deputy general manager and head of IFC-SEDF, Bangladesh, Nepal and Bhutan.

Source: http://www.thedailystar.net/story.php?nid=66174

sas

December 8th, 2008, 05:23 AM

Key themes in this issue are:

Bangladesh:
• On December 6, The Federation of Bangladesh Chambers and Commerce and Industry, the apex trade body in the country, with inputs from AT Capital, a number of leading CEOs, senior economists, as well as FBCCI Directors themselves, published a report " Maximizing Growth: A Private Sector Vision". In launching the report, the intention of FBCCI and all the contributors was to lay out an Economic Roadmap for the next government that offered 37 policy recommendations across a broad range of issues.
• The report addresses the following key challenges: Factors that need to be addressed by the government in order to achieve an inclusive growth of at least 8% include: Solving the Power Crisis; Increased private sector investment and focus on greater FDI inflow; An effective Brand Bangladesh Strategy; Skills development and improving vocational training
institutions; Improving access to finance; An effective Diaspora strategy; Creating a dynamic SME sector; Increasing exports of high value agricultural products; Improving the legal system; Focusing on environmentally sustainable growth; and Improving regional infrastructure.
• The ADB has just published their latest Quarterly Economic Update. While their FY 2009 GDP projection of 5.5-6% suggested they were not as concerned about the downside risks to growth as the World Bank at 4.8%
• We would be more pessimistic on Bangladesh's growth prospects in 2009 given the downwards risks to remittances and the likely pressures on non-RMG sectors such as frozen food and jute. Even with RMG there is a risk significant margins squeeze from global clothing retailers as the global economic outlook turns more grim.
• The Bangladesh Bank (BB) Policy Action Unit has just published a Report on improving the effectiveness of capital markets in providing better access to finance and stimulating investment ("Financing Long Term Investments in Bangladesh: Capital Market Development Issues", December 2008, Policy Paper 905).
• The supply of and demand for credit and liquidity is at the heart of financial intermediation. In order to develop an alternative to intermediation driven primarily by banks, it is necessary to simultaneously make progress on a number of fronts. We provide an analysis of the key components for the development of the capital markets.
• We also discuss the key ingredients for the development of both a properly functioning Government Bond Market and a Corporate Bond Market

You may download a version of the document by clicking the URL below:
http://at-capital.com/images/at/at_capital_weekly_7_december_2008.pdf

You may send any queries to research@at-capital.com

amar11372

December 26th, 2008, 07:23 AM

http://clip2net.com/clip/m7984/1230268968-clip-163kb.jpg

Dhakaiya

December 27th, 2008, 12:48 PM

We had a current account surplus in FY2007-08?

amar11372

January 1st, 2009, 08:24 PM

$9b remittance in 2008
Unb, Dhaka

The number of Bangladeshis cleared for overseas employment in 2008 exceeded 8,75,000 creating a new record.

A record amount of nearly US 9 billion has also been received as remittances in 2008.

Previous year (2007) witnessed the employment abroad of over 8,32,000 which was then a record too.

Foreign Adviser Dr Iftekhar Ahmed Chowdhury, who is also in charge of the Ministry of Expatriates' Welfare and Overseas Employment expressed his deep satisfaction at this.

"It is my hope that the next government would continue with this effort, because the opportunities of new markets are vast", he said.

Iftekhar said, "At all times, however, we must remember that the welfare of our workers must remain a priority. A migrant worker is not just a revenue-generating machine. He is also a human being. Indeed, he is our pride."

http://www.thedailystar.net/story.php?nid=69632

Zaki

January 4th, 2009, 07:53 AM

Could the large rises be also related to the fact that it is now more difficult to send money through unofficial channels than before. I am sure most of the growth is real but I also think that some parts of it are due to the fact that now there are more stringent rules for moving money to and from Bangladesh. I know that my family now usually uses official channels more often rather than the old practice of sending money with people you know going to bangladesh.

amar11372

January 6th, 2009, 10:46 PM

Sweden's Brummer Ventures to Bangladesh, Plans Asia Hedge Fund

By Netty Ismail

Nov. 12 (Bloomberg) -- Brummer & Partners, Sweden's largest hedge-fund manager, is venturing into Bangladesh and plans to start its first Asia-focused portfolio as it expects the region to ride out the global financial crisis.

``I never believed in decoupling; Asia will be affected by the global turmoil,'' Patrik Brummer, 59, the firm's founder, said in a telephone interview from Stockholm. ``But when the dust settles at some stage, Asia will outperform the rest of the world in growing faster.''

Brummer & Partners, which manages about $6 billion, set up the Frontier Fund in July to invest in Bangladesh stocks and private-equity investments. It plans to grow the fund to about $500 million in the next five years, from $53 million, said Khalid Quadir, chief executive officer of the firm's unit in the Bangladeshi capital Dhaka.

Bangladesh may join the ranks of the fastest-growing economies in the region as it benefits from its geographical proximity to India and China. The nation of 150 million people, equivalent to about half of the population of the U.S., offers a ``huge untapped cheap labor force,'' Quadir, 43, said. The labor cost in the South Asian nation is almost half of India's and less than a third of China's.

The firm also plans to start an Asia-focused long-short equity fund in the first half of next year once it finds the right team to manage it in Singapore, Brummer said. Long-short managers buy stocks they expect to rise and hedge those bets with short sales, or the selling of shares expected to drop. Such funds fell 22.8 percent this year through October, according to Singapore-based data provider Eurekahedge.

Profitable Downturns

``A lot of the hedge funds have a long-only bias, so they have difficulties in down markets,'' Brummer said. ``Historically, we were able to make money for clients even in downturns and we will try to do that in the future.''

Brummer & Partners Helios Fund, a portfolio of the firm's hedge funds, gained 5.7 percent this year through October. The Futuris Fund, a European long-short equity portfolio, rose 26.2 percent.

Hedge funds fell by an average 5.4 percent last month, pushing the year-to-date drop to 15.5 percent, according to the HFRI Fund Weighted Composite Index compiled by Chicago-based Hedge Fund Research Inc.

Brummer & Partners also made money for investors when the dot-com bubble burst at the start of this decade, Brummer said.

The Stockholm-based manager, which set up Sweden's first hedge fund in 1996, is hoping to replicate that ``first-mover advantage'' in Bangladesh as competition for investment deals remains low, Brummer said.

Like India, Vietnam

``It's a bit like entering India in the early 1990s or Vietnam in 2000,'' said Ifty Islam, managing director of Dhaka- based Asian Tiger Capital Partners. ``You're going to get relatively cheap and attractively priced assets which will give you some sizeable returns.''

Islam, previously the head of macro strategy and hedge fund research at Citigroup Inc. in London, plans to raise a $50 million Bangladesh-focused private-equity fund early next year.

Goldman Sachs Group Inc. in December 2005 included Bangladesh in a list of 11 developing countries that, according to its analysts, have the greatest potential to emulate the long-term economic success expected from China, India, Brazil and Russia. JPMorgan Chase & Co. named Bangladesh one of the ``Frontier Five'' markets worth investigating in an April 2007 note, along with Kazakhstan, Kenya, Nigeria and Vietnam.

`Basket Case'

The South Asian economy expanded more than 6 percent in the fiscal year ended June 30, bolstered by garment exports and inflows from Bangladeshis working overseas.

While a global recession may hurt the nation's exports, the stock market remains ``insulated'' as foreign investors account for about 3 percent of trading, Quadir said.

The Dhaka Stock Exchange index lost 12 percent this year, which still makes it the fifth-best-performing stock market in the world.

Bangladesh, once dubbed the ``basket case'' of the world by U.S. Secretary of State Henry Kissinger, has been plagued by coups, strikes and corruption since its independence from Pakistan in 1971. In Transparency International's 2008 survey of perceptions about corruption, the Berlin-based watchdog group put Bangladesh among the world's worst, ranking it 147th among 180 countries.

A military-backed government, in place since January last year, started an anti-corruption drive that resulted in the arrests of leading politicians, including former prime ministers Sheikh Hasina Wajed and Khaleda Zia. The nation plans to hold general elections on Dec. 18.

`Biggest Risk'

``The biggest risk is probably political,'' Brummer said. Still, ``people who are running the country will take measures that make it possible to boost the economy and take it out of poverty.''

About 36 percent of the population live on less than $1 a day, according to the Manila-based Asian Development Bank.

Brummer is an investor in bracNet, a wireless broadband company in Bangladesh that Quadir started in 2005. He said he ``has committed'' himself to visit the country at least three times a year.

``There are some very interesting opportunities in the next five to 10 years to explore in Bangladesh,'' Brummer said.

He said he plans to ``explore opportunities'' in neighboring countries such as Sri Lanka and Myanmar once the fund has built its track record in Bangladesh.

To contact the reporter on this story: Netty Ismail in Singapore nismail3@bloomberg.net.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aYTSkaFZlmRU#

amar11372

January 6th, 2009, 10:47 PM

Frontier Fund's equity investment in Rahimafrooz's battery project

Frontier Fund, the local partner of Brummer and Partners, yesterday made its first-ever equity investment in Rahimafrooz's global expansion project to develop its automotive battery export business.

Khalid Quadir, CEO of Frontier Fund, and Feroz Rahim, group managing director of Rahimafrooz, signed an agreement on behalf of their respective organizations.

“The investment deal marks a significant first step for Brummer and Partners in Bangladesh to provide private equity for successful, well-reputed and highly professional business groups, such as Rahimafrooz,” said Khalid Quadir.

He said such investments will help accelerate the growth of private enterprises, as well as boost up the country's economic growth.

Feroz Rahim said the agreement will help promote the growth and accelerate the process of internationalisation of the company.

However, the size of this investment was not unveiled. Earlier, Khalid told The Daily Star that the initial investment in any company would range from $5 million to $10 million.

Such an equity fund is generally invested in firms by purchasing certain equity shares of those companies and sharing their profit with the investors. Investors can recover the fund only when the companies sell their shareholdings to other investors.

Frontier Fund started its operation in Bangladesh in July with a fund of $53 million and expressed its interest in investing in private equity as well as the capital market.

The potential sectors to get such investment include banks, automobile, pharmaceuticals, healthcare, education and IT.

In November Brummer and Partners, Sweden's largest hedge fund manager, plans to grow its fund to about $500 million from $53 million in Bangladesh in the next five years.

The Swedish firm looks to take advantage of Bangladesh's being one of the fastest-growing economies in the South Asian region as it benefits from its geographical proximity to India and China and for its cheap labour force, according to a Bloomberg report.

http://www.thedailystar.net/newDesign/news-details.php?nid=70356

mirzazeehan

January 14th, 2009, 12:45 AM

Bangladesh Dec remittances up 20.5 pct on year
Sun Jan 11, 2009 5:02pm IST

Email | Print |
Share
| Single Page
[-] Text [+]

DHAKA, Jan 11 (Reuters) - Money sent home in December by Bangladeshis working abroad rose to $765.79 million, up 20.5 percent from a year earlier, the central bank said on Sunday.

In July-December, the first half of the 2008/09 financial year, remittances from more than 5 million expatriate Bangladeshis totalled $4.5 billion, 31 percent higher than the same period of 2007/08.

In 2008, the number of Bangladeshis cleared for overseas employment exceeded 875,000 against 832,000 in 2007, according to the Ministry of Expatriates' Welfare and Overseas Employment.

The central bank expects remittances to reach $10 billion in the current financial year.

However, some analysts say the inflow of remittances may slow down as the global credit crisis and recession in the developed world put jobs at risk.

The central bank said remittances would be affected only if instability in financial markets persists for long.

Expat income, a key source of foreign exchange for the impoverished south Asian country, hit a record $7.91 billion in the 2007/08 financial year, nearly a third higher than the previous year.

Strong remittances also helped offset the impact of the trade shortfall and kept the overall balance of payments in surplus.

The bulk of remittances came from Saudi Arabia followed by the United States, the United Arab Emirates, Kuwait, Britain, Qatar and Oman.

Source:http://in.reuters.com/article/asiaCompanyAndMarkets/idINDHA38238920090111

iftikhar63

January 15th, 2009, 05:15 AM

great!

laurus

January 24th, 2009, 12:54 AM

Some economic figures for 2008, according to the CIA World Factbook:

Bangladesh

GDP (purchasing power parity):
$228.4 billion (2008 est.)
GDP (official exchange rate):
$83.04 billion (2008 est.)
GDP - real growth rate:
5.9% (2008 est.)
GDP - per capita (PPP):
$1,500 (2008 est.)

https://www.cia.gov/library/publications/the-world-factbook/geos/bg.html#Econ

alladin212

January 25th, 2009, 08:43 AM

Jan 25, 2009
Cheap labour helps Bangladesh

DHAKA - AN ARMY of cheap labour has made Bangladesh a hotspot for growth as the rest of Asia struggles through the global financial crisis and observers say the country must now exploit its advantages.
With China finding it increasingly difficult to mass-produce low-cost items at discount rates, buyers have turned their attention to Bangladesh where textiles and footwear can be made cheaply.
'The country is fast replacing China as the desired low-cost manufacturing hub in Asia for items such as textiles and footwear,' Mr Ifty Islam, managing partner of Asian Tiger Capital, an investment bank, said.
'Thanks to this abundance of cheap labour and an insulated financial system, Bangladesh was one of the best performing economies in Asia in 2008,' Mr Islam, a former managing director at Citigroup and Deutsche Bank, said.
'It will remain so this year and in 2012 we may hit eight per cent growth'.
'If the new government can sort out power and infrastructure problems, Bangladesh will be unstoppable.'
Battered by the global financial slowdown, stock markets across the continent fell more than 50 per cent on average in 2008, while exports have slumped to the negative in many of the so-called Asian tiger economies.
'Dhaka shares were down by merely seven per cent. In the five months to November Bangladesh exports grew 27 per cent year-on-year, possibly the best rate in the world,' Mr Islam said.
Thanks to soaring exports and also remittances sent by the country's overseas workers, Bangladesh's central bank has projected a 6.5 per cent growth this year if shipments continue to fare well.
'Unlike economies facing heavy capital outflows and credit crunches in the current turmoil, credit and liquidity conditions remain easy here with no need for any blanket economy-wide monetary or fiscal stimulus,' the bank said.
Analysts and foreign investors said tens of millions of labourers who work in poor conditions for less than $50 a month are boosting Dhaka's growth at a time when buyers such as Wal-Mart are looking for cheaper sources.
'All eyes are on Bangladesh because it is the only country which can produce quality textile items at least 20-30 per cent cheaper than China,' said Mr Steffen Mohler, director of Germany's Multiline Limited, a top trading firm.
Multiline has this month started building one of the world's largest textile factories 50 kilometres north of Dhaka with an investment of $200 million (S$300 million).
It will be largest foreign investment in the country's fast growing textile sector, which accounts 75 per cent of its total exports, and will create jobs for 15,000 people when it goes into production early next year.
'We are here because Bangladesh will dominate (the) textile business for years to come. I know of no one - department stores, top retailers and trading firms - who are now not in Bangladesh. They are diverting their orders from China,' Mr Mohler said.
'We see Bangladesh textile exports doubling to 22 billion dollars by 2011.'
Taiwanese entrepreneurs who played a key role in transforming China into the world's top performing economy are rushing to Bangladesh to look for land to build footwear and textile factories, Taipei's representative Frank Chen said.
'Every week we have teams from Taiwan. Many of them have shut down factories in China's southern Dongguan city because they cannot make any money there. Bangladesh is the place which is still profitable,' he said.
Taiwanese investors have set up more than two dozen footwear, textile and furniture factories in Bangladesh with the firm Pao Chen looking to build the world's largest footwear factory which would employ 40,000 people, he said.
Such has been the rush of investors that Bangladesh's export processing zone (EPZ) authority says it is running short of plots to allocate to the incoming foreign investors.
'We have rented out almost all the plots,' said the authority's spokesman. 'Only a handful in the country's 10 EPZs remain, but we are searching for more.' -- AFP

http://www.straitstimes.com/Breaking%2BNews/Asia/Story/STIStory_330558.html

manbil777

January 25th, 2009, 10:23 AM

'We have rented out almost all the plots,' said the authority's spokesman. 'Only a handful in the country's 10 EPZs remain, but we are searching for more.

I think its time to build a couple more EPZ's lickety-split in CTG in the Patenga and Halishahar areas. I'm sure they can grade the land and build infrastructure (power/gas connections and roads) in a matter of a year next to the Korean EPZ and KAFCO -- I mean if the govt. really took this seriously. I think they have some land available over there. Building factories is not that tough either -- I've seen huge pre-fab structures go up in CTG. EPZ within a couple of months.

Otherwise all this business is going to go over to Africa or whoever has the next cheapest labor rate.

tislam84

January 25th, 2009, 07:24 PM

I would like to see some EPZs built near the banks of rivers. This way, goods can be shipped through river ports to Chittagong and Mongla. It would help to spur growth in the riverine sector (for lack of a better word). I have seen huge amounts of land lying vacant on either side of Jamuna Bridge. Can't we use all that land to make a big EPZ? North Bengal would get a growth spur then.

TIslam

January 25th, 2009, 07:25 PM

.....

Otherwise all this business is going to go over to Africa or whoever has the next cheapest labor rate.

I think it will be quite sometime before that happens. The current level of cheap labor exploitation is just the tip of the iceberg. A lot of people (businesses) are yet to discover Bangladesh.

Of course, a lot depends on the local entrepreneurs, and the government, as to how to promote (or not) Bangladesh.

MohammedC

January 26th, 2009, 02:08 AM

Is there a EPZ in or near to Sylhet?

amar11372

January 26th, 2009, 02:44 AM

Is there a EPZ in or near to Sylhet?

unfortunately no.

There are 8 of them. And 2 additional ones are in the pipeline.

* EPZ-Chittagong
* EPZ-Dhaka
* EPZ-Mongla
* EPZ-Ishwardi
* EPZ-Comilla
* EPZ-Adamjee
* EPZ-Uttara
* EPZ-Karnaphuli

mirzazeehan

January 27th, 2009, 01:35 AM

"One in every Seven Trousers sold in USA is "Made in Bangladesh"

Bangladesh becomes No 1
trousers exporter to US
Kazi Azizul Islam

Bangladesh is becoming the ‘Trousers Island’, if not the Treasure Island, for global apparel importers as local manufacturers are sourcing jeans and other cotton trousers at the cheapest prices and maintaining admirable quality, industry people said.
The industry’s strength has weighed up with Bangladeshi exporters occupying the number-one position in the US market of jeans and other cotton trousers in December, industry insiders told New Age.
Quoting the latest report of world’s leading market survey organisation Research & Markets, Bangladesh Garment Manufacturers and Exporters’ Association officials said by December Bangladesh controlled 13.82 per cent market share in USA.
The market surveyor, quoting US official data, showed that in 2008 US importers’ procurement of cotton trousers from Bangladesh totalled 299.9 million pieces, up 26.3 per cent from that in the pervious year.
Chinese suppliers lost their position to Bangladeshis as their shipments grew by less than 9 per cent to 288.7 million pieces in the year.
Mexico, which was the top exporter of trousers to USA just two years back, stood third, with a more-than-10-per-cent decline in shipments totalling 224.4 million pieces.
Vietnam stood at fourth position in US cotton trousers market, with 184.2 million pairs of trousers and an export growth rate of 14 per cent,
A Bangladeshi official at VF Corporation’s procurement office in Dhaka points out that with developed backward linkage, local jeans-makers are finding fabrics cheaper locally and delivering shipments within a short period.
‘It is really fantastic to feel that one in every seven trousers sold in the USA is made in Bangladesh,’ he said. ‘Importers are diverting their procurements from other countries to Bangladesh and it is becoming a ‘Trousers Island’.
The Bangladesh Garment Manufacturers and Exporters’ Association president Anwar-Ul-Alam Chowdhury Parvez said, ‘More and more global buyers are recognising the unparalleled capacity of Bangladeshi manufacturers in handling of large-volume orders at convenient prices.’
Bangladeshi suppliers recently received significant orders diverted from Mexico as depreciation of the value of her currency and some other factors made Mexican trousers costly, Anwar noted.
Abdus Salam Murshedy, managing director of the Envoy Group, a leading jeans supplier to American brands, points out that China’s growing reluctance to low-end products are also diverting many buyers to Bangladesh.
Partex Denim managing director Showkot Aziz Russell said finer quality denim fabrics are being produced in Bangladesh, attracting more procurement by global brands.
Partex supplies fabrics to many jean makers who source all top global brands including H&M, C&A, Marks & Spencer, American Eagle, and Uniclo.
With a 2-million-yard annul production capacity, Partex is said to be the largest among some 20 local units that are now able to meet more than half of the industry’s demand that earlier had to be fed by imports.
The robust growth in trousers shipments to the USA is also significant for Bangladesh as she earns more than one-third of her entire apparel export proceeds from that country by selling denim and other cotton trousers.
According to the latest official data, in the January-November 2008, Bangladesh apparel exports earned $3.17 billion from the USA, with cotton-based trousers accounting for $1.19 billion and non-cotton trousers $147 million.
‘Trousers’ success story again proves that if the backward-linkage is strong, Bangladeshi manufacturers are strong enough to extract maximum benefits using comparative advantages,’ said Prof Mustafizur Rahman, executive director of the Centre for Policy Dialogue, a private think-tank.
The apparel industry analyst thinks the woven garment sub-sector’s emphasis on trousers indicates a poor backward linkage for the shirt-makers.
Mustafiz however suggested that the industry should not be much complacent over the increasing volume of exports but put efforts for maximising value-addition.

Source:http://www.newagebd.com/2009/jan/27/busi.html#1

TIslam

January 27th, 2009, 02:07 AM

"One in every Seven Trousers sold in USA is "Made in Bangladesh"
...........

‘It is really fantastic to feel that one in every seven trousers sold in the USA is made in Bangladesh,’ he said. ‘Importers are diverting their procurements from other countries to Bangladesh and it is becoming a ‘Trousers Island’.

My sentiments exactly! I hope in a few years Bangladesh becomes the dominant exporter of fabrics and garments, both low and high ends.

tanzirian

January 27th, 2009, 05:23 AM

TIslam

January 27th, 2009, 05:38 AM

^^ Wonderful, but let's not forget that if this success is sustained over the next decade or two, we will have progressed to the point where we are no longer a most cost-effective alternative for western clothesmakers. So we must be prepared to make the shift from garments to other products when that time comes.

Unless the politicians create havoc and chaos, I'm sure the progression shall be the same as that of China, Korea, Taiwan. Hopefully, today's garment industry owners are putting some thoughts into it and not just sitting on their laurels.

Zaki

January 28th, 2009, 07:57 PM

Unless the politicians create havoc and chaos, I'm sure the progression shall be the same as that of China, Korea, Taiwan. Hopefully, today's garment industry owners are putting some thoughts into it and not just sitting on their laurels.

I would think that they have atleast considered. I mean the progression from agriculture exports to garments was pretty natural and led by the industrial sector so I am guessing that any eventual transition will also occur due to market realities and happen quite swiftly.

mirzazeehan

January 28th, 2009, 08:48 PM

Record car sales raise fear of traffic chaos in Dhaka
AFP, Dhaka

Car sales in impoverished Bangla-desh's capital hit a record high in 2008, bucking a gloomy global trend for the auto industry but threatening to push the city's crumbling traffic system towards collapse.
The Bangladesh Road Transport Authority (BRTA) said a record 14,944 new and reconditioned cars were sold in Dhaka last year, up 46 percent from 2007.
"Car sales in the capital hit an all-time high in 2008. It's more than twice the number of cars sold in 2006," said Sitangsu Shekhar Biswas, a deputy director of the BRTA, citing figures released earlier this week. The number also represents 90 percent of nationwide car sales, he said. Government figures do not differentiate between new and used car sales.
Authorities said car sales averaged 5,000 annually for more than a decade until 2006 when they started to spike thanks to two straight years of six percent economic growth.
Car traders said the availability of easy financing had helped fuel the record-breaking sales run since 2006. "Some 90 percent of the cars we sell are being financed by private banks' consumer financing facilities. Thanks to easy credit, even middle income people can now afford cars," said Abdul Haq, owner of leading car shop Haq's Bay.
"In addition, banks, big corporate houses give interest-free loans to employees to buy cars. It's also now the most-frequently used carrot to lure away mid-managers," he said.
As the global economic slump claims vehicle sales among its many victims, Bangladesh is one of the few countries, along with China, where car sales continue to grow -- though official Chinese figures show a slowdown. While that might be good news for Bangladesh's short-term bottom line, transport and urban development experts shudder at the explosion of car sales in the city of more than 12 million people, already notorious for its traffic congestion.
"It represents the worst nightmare for Dhaka and its millions of commuters," Mohammad Raha-mat-ullah, a former UN transport expert, told AFP.
Dhaka's population was less than half a million when it became the capital of independent Bangladesh in 1971. As it has grown, transport infrastructure has not kept pace.
"Such a huge growth in car sales has already started to take a toll on the capital. Traffic jams are getting bigger and lasting longer. Already we spend three hours a day in jams," Rahamatullah said, adding: "Dhaka's traffic system is heading for total breakdown."
According to government statistics, 170,000 motor vehicles including buses, mini-buses and cars ply the roads daily in Dhaka.
They jostle for space on narrow roads with another half-million cycle-rickshaws, so traffic here is among the slowest in the world.
Urban planner Nazrul Islam of Dhaka University called the rise in car sales "frightening".
"Dhaka does not have a mass transport system like a metro rail, commuter train or even a fleet of taxis," Islam said. "Dhaka does not have even adequate footpaths for pedestrians, forcing people to hire rickshaws for the smallest rides," he said. "The government needs to take urgent steps to save the city from total chaos." The newly-elected government that took power this month has put Dhaka's chronic congestion atop a list of priorities, pledging a major programme of infrastructure development "to solve the public transportation problem and traffic jam in the capital".

Source:http://news.yahoo.com/s/afp/20090128/wl_sthasia_afp/financeeconomybangladeshauto

TIslam

January 29th, 2009, 01:31 AM

Record car sales raise fear of traffic chaos in Dhaka

Source:http://news.yahoo.com/s/afp/20090128/wl_sthasia_afp/financeeconomybangladeshauto

Great for some people's pocketbooks (and hopefully the government's coffers)! Not so for our lungs and commute times.

nayeem007

February 3rd, 2009, 08:10 PM

Tk 650cr glassware plant to come on stream
http://www.thedailystar.net/photo/2009/02/04/2009-02-04__b02.jpg

Group is going to set up the country's first glassware and energy saving tube plant within this year at a cost of Tk 650 crore.

Officials said the new company -- Nasir Glassware and Tube Industries Ltd -- is expected to start operations by the end of this year.

“We have already invested around Tk 200 crore for the ongoing civil construction, including land acquisition,” said Habibur Rahman, project engineer of Nasir Glassware and Tube Industries.

The plant is being set up on a 125-bigha land at Sohagpur under Mirzapur upazila of Tangail district. Nearly 5,000 tonnes of 75-grade rod will be used for the factory.
Some 800 people will be employed permanently in addition to several hundreds casual workers, officials said.

“We have initially estimated the project cost at Tk 600 crore, but this will exceed considering the pace of the expenditure,” said Rahman who was also the project engineer of successfully built Nasir Glass Industries, the country's largest float glass manufacturer.

Nasir Glassware and Tube Industries will be the first of its kind in the country and will compete against a flood of imported goods now dominating the glass tableware, fluorescent and energy saving bulb market here.

Glassware products that will be manufactured at the plant include tableware, flower vase, perfume bottle, bowl and candle stand.

Officials, quoting a survey report, said the country has an annual market of glassware worth around Tk 500 crore. All of the items are imported from different countries including China, Thailand, Malaysia and Indonesia.

The market size of fluorescent and energy saving bulbs is almost same as that of glassware, they said. The energy saving bulb market will boom once the government makes its use mandatory.

“Initially our plan is to meet the domestic glassware demand, but we will export also,” said Aby Sayed, general manager (commercial and banking) of Nasir Group.

On the issue of bank financing, Sayed said: “It's under process.”

He however said several banks are offering the company their credit and the company is also going to some banks.

A senior private bank official admitted they are now appraising the project, and prefer to arrange a syndicated loan for one of its 'valued clients'. “We are studying the proposal thoroughly,” he added.

Earlier, as the lead arranger, Prime Bank managed a syndicated loan of Tk 100 crore for the group's Nasir Glass Industry Ltd in 2003.

Nasir Glass Industry manufactures float glass, reflective glass, tempered glass, coated glass, mirrors, clear and colour glasses.

Nasir Group, originally a regional bidi manufacturer based in western Kushtia district, became a household name after setting up the country's first float glass factory.

The group, also the country's biggest melamine manufacturer, has a sports shoes plant and sells low-priced cigarette.

Named after its owner Nasir Uddin Biswas, the group has an annual turnover of around Tk 1,000 crore.

http://www.thedailystar.net/newDesign/news-details.php?nid=74260

manbil777

February 6th, 2009, 07:52 PM

This is excellent news! Glass tubes are the basis for all glassware (drinking glass as well as CFL and long FL light components). Good now we have a huge local option. These Nasir guys have come a long way from the Bidi business...

manbil777

February 6th, 2009, 08:01 PM

Found a great article (http://seekingalpha.com/article/106915-the-arj-21-and-china-s-long-slow-climb-to-the-skies) on Chinese development philosophy. Text below. Interesting in how they take a decades-long philosophy in developing a sector. How can we apply this to our Bangladesh context?

"Covering this year's Zhuhai Air Show, The Economist takes a look at China's first domestically-produced jetliner, the AVIC1 Commercial Aircraft Corporation's ARJ-21, and on the eve of the regional jet's maiden test flight takes a moment to consider its commercial prospects. Their verdict: don't count China out.

Many foreign analysts doubt that Western airlines will ever be prepared to buy Chinese aircraft. But, as in other fields, China is playing a long game.

Much of the debate about the ARJ-21 thus far has centered around two issues: first, whether the ARJ-21 will attract buyers beyond the Chinese airlines who are compelled to purchase it (and GE (GE), who is making a pile selling engines for the jet); and second, whether China will ever develop a globally competitive civil aviation industry.

Both questions miss the point. What is most important about the ARJ-21 is the lessons it teaches us about the process China goes through to catch up with the rest of the world in technical, complex, high-value industries.

Watch Process, not Product

If you look at all of the technical sectors in which China has built commercially viable businesses, you can discern a clear process by which the nation's industrial policy kick-starts these efforts. In the case of cars, computers, mobile phones, and now commercial jetliners, the pattern is dependably consistent. Let's call it the Four C Model.

First, comes what I call the "capability" phase. the government typically announces a national project to build its own version of an technical product. It turns to a government research institute or a similar organization, which in turn pulls together the team from across the nation's universities and enterprises. Eventually they manage to produce a one or more prototypes, but there is no real possibility of commercializing the product.

Upon review of the initial prototypes and the development process, typically a range of issues is identified that prevented the commercialization of the product. As a result, during the next "collaborate" phase, China sets up an enterprise to build the product using foreign designs, components, and know-how. The result is not quite commercially viable, and may only sell to local customers because of tariffs, tax-breaks, or other subsidies that make the local product appealing to local customers.

Next comes the "component" phase, when a local company creates its own design or modifies another, and many of the parts, but key, mission-critical components come from overseas. In this phase the product is adequate and by most measures comparable to foreign products, but with no track record only the most adventurous foreign customers are ready to trust the product.

Finally, all of the technical kinks are worked out, there are several Chinese companies involved in the effort, and with a demonstrable track record behind it, China is ready to go head-to-head with global companies. This is the "competitor" phase, and it usually marked by brisk sales and the beginnings of a true competitive advantage.

Not Quite a Competitor

In the case of the ARJ, China's effort to build its own jetliner has reached the "component" phase, and it has taken 35 years to get this far.

In the early 1970s, China began a project to prove to the world it was capable of making its own jetliner. the result was the now almost-forgotten Shanghai Y-10, which was as close to a clone of the Boeing 707 that the nation could produce in the late 1970s. Two prototypes were produced. They flew in the early 1980s. China made its point. And the jets never saw commercial service: they were essentially flying monuments to China's aspirations. This was the "capability" phase.

Not long after, China got involved in negotiations with McDonnell-Douglas Aircraft for a joint-venture to assemble their MD-80 class jets in Shanghai. The JV went through brutal political turbulence and costly delays, and in the end the venture sold only a fraction of the jets it had hoped. McDonnell-Douglas was sent packing, but China was left with an entire generation of aircraft engineers, a lot of very helpful tooling, and the groundwork to take the next step. Thus ended the "collaborate" phase.

After nearly a decade of thinking, planning, proposals, and counter-proposals, and even another shot at collaborating with other Asian aspirants, China launched the ARJ-21 (Asian Regional Jet - 21st Century) project. This is the "component" phase, and at this point China is serving as re-designer (the jet is basically a shortened MD-80, or DC-9, with a new wing design from Russia), project manager, and system integrator.

Tough Room

China's aviation policy-makers and industrialists knew the ARJ-21 would be playing in the most competitive end of the civil aviation pool. The regional jet field is dominated by Canada's Bombardier (BDRBF.PK), with its CRJ series, and Brazil's EMBRAER (ERJ), with its ERJ series, both of whom have complete lines of aircraft, global technical support, and who built their business on solid reputations for making dependable aircraft.

Three very old names in the aviation industry, British Aerospace, Dornier, and Fairchild, have already been driven out of the aircraft manufacturing business after losing out to Bombardier and EMBRAER, and Boeing's 717 was squeezed out of its market niche with a plane strikingly similar to the ARJ-21. Four other very old names in the aviation industry, Antonov, Tupolev, Sukhoi, and Mitsubishi are all getting ready to pounce on the ARJ-21's markets with brand new regional jets of their own.

So there is not much hope for the ARJ-21 beyond China. And prospects inside of China are not that great, either.

Fat Planes Wanted

The idea behind a regional jet is that you have flights under two hours duration connecting cities under 1,800 kilometers or 1,100 miles apart where you cannot economically fill, say, a Boeing 737, or where the field might be a little short for a small jetliner.

In China, however, the problem is that we have a limited number of airports, a limited amount of airspace, and a whole lot of people who want to fly. There will be some market for regional jets, but in the medium to long term China needs larger jets that make the best possible use of the limited resources in Chinese aviation (i.e., concrete and airspace) to move the maximum number of passengers at the lowest possible cost.

Finally, let's not forget that perhaps the most serious competitor to regional jets in China doesn't even fly. China is in the early phases of a madness for high-speed intercity rail transport. The threat posed by trains as fast as Japan's Shinkansen and France's TGV is most serious to the shorter air routes served by the ARJ. As the price of jet fuel goes up (and, despite current trends, it surely will), that threat grows all the more critical.

Back to our Model

There are other issues, such as a total cost of ownership for the ARJ-21s that are going to be higher than carriers are being let to expect. With all factors in consideration, the ARJ-21 faces some roaring headwinds.

But again, what is important is not the plane itself, but where China's jetliner manufacturing industry will be after the ARJ-21. And here is where it starts to get really interesting.

Just as the ARJ-21 goes into full production, Airbus will be completing its A320 assembly plant in Tianjin. Between the two, China will for the first time have two factories cranking out airliners. The benefits to the industry will be enormous. China will have created overnight a workforce of engineers, machinists, and all of the other specialties involved in aircraft assembly.

In short, by 2014, the groundwork will be in place for China to make the next jump, and the ARJ-21 team will have had five years learning what it takes to support an airliner in the field, sometimes even in the most challenging locations.

What is more, right about that time, Boeing (BA) and Airbus will be under pressure from their customers around the world to develop successors to their single-aisle jetliners in the 110-170 passenger range. Both have made it so far by updating and extending their 737 and A320 lines. Five years from now, that may not be enough.

At that point, the door will open for China to enter the fray with its own design, and they will have the benefit of being able to work with the world of suppliers and subcontractors - both in China and overseas - that Boeing and Airbus have helped create. And with Boeing and Airbus forced to contend with powerful unions determined to secure for their members a comfortable American or European middle-class lifestyle, China may well offer a nice cost advantage as well.

All things being equal, then, China may well be able to compete in the small airliner market by 2020.

A Lesson, not a Product

Again, though, this makes the ARJ-21 a stepping-stone, not the destination itself. As such, the success or failure of the ARJ-21 project cannot be measured solely on the basis of aircraft sold. Rather, it must be judged on its by-products, on the extent to which it prepares the nation's aerospace industry to take the next, all-important step and become a global competitor."

manbil777

February 6th, 2009, 09:35 PM

Apparently the details are here (http://www.ecplaza.net/tradeleads/buyer/3902015/glassware_and_glass_tube.html) for the Nasir Glass tube factory. Or is it another plant? Posted on July 2006. 75 tons per day is pretty small but could be just the initial phase to test the waters...anyhow text is below.

"This will be a Soda Lime Glassware and Glasstube Project to be set up in Bangladesh. So, we are looking for brand new / rebuilt / refurbished following glassware and glass tube making machinery :

A. Glassware machines ( for 75 tpd furnace capacity ) :

1. 12-24 work-position press machine: to produce 125gm (175ml) - 320gm (370ml) tumblers : 3 line.
2. 8-12 work-position press machine : to produce 110gm (120ml) - 540gm (1250ml) dish / bowl : 2 line.
3. IS / press and blow machine : single gob 2 section : to produce 1125g water jug with handle : 1 line.
* Unifold / splitfold, single / double gob. All lines should be equipped with Batch Feeder, Fire Polisher, Stacker and Conveying System.

B. Forehearths :

1. Electric heated coloring Forehearths : 1 Line.
2. Electric heated Forehearths : 5 Line.

C. Automatic control annealing lehrs : 5 lines.

D. Toughening Plant : 1 line.

E. Tube drawing machine ( Preferably Danner Mandrel Machine ) : ( for a 20 tpd furnace capacity ) : Two Line.

Average output : 10 t/d (gross weight) / Line. Diameter : Ф26±0.35mm, Ф37.5±0.5mm. Wall thickness : δ0.71±0.07mm, δ0.8±0.1mm. Length : 500m-1270mm, Pulling speed : 20-120m/min.

* From electric heated tube batch Forehearths upto stacking and packing complete line with online automatic inspection.

F. Molds for Glasswares.

If you have scopes to supply all the above or partial machinery then please contact us immediately. Please note we will give preferences to rebuilt / refurbished type machines / lines with your own scopes of installation and commissioning. If you have scopes to supply used machines then we don’t want anything like “as it is”, we want complete rebuilt / refurbished.

We will be pleased if you kindly send us your product catalogs / brochures / vcd by courier."

For those who don't know -- glassware plants in most countries are local because of high costs to transport the stuff.

amar11372

February 14th, 2009, 11:15 PM

AK Khan group to invest big fund in infrastructure, tourism, textiles

Mushir Ahmed

One of the country's oldest industrial groups said it would invest some 350 million dollars (Tk24.15 billion) in infrastructure, tourism and textile in the country to boost growth and create jobs.

Salahuddin Kashem Khan said the "entire amount of the money" that his group earned by selling its stake in mobile phone company, AKTEL, would be reinvested in Bangladesh.

"This year we have planned to invest the money into infrastructure, tourism and textile sectors in the Chittagong region," said Khan, the head of the AK Khan group, whose names the Malaysia-owned mobile phone company AKTEL still bears.

AK Khan Group, a pioneer in Bangladeshi entrepreneurship, had 30 per cent stake in the then second largest mobile phone operator, majority owned by south-east Asian mobile phone giant Telekom Malaysia.

The company sold the stake to Japan's NTT DoCoMo for a whopping 350 million dollars in June last year in what is now called as the biggest selloff for a Bangladeshi company.

Analysts have described the sell-off as the deftest by a Bangladeshi entrepreneur, as the AK Khan sold the stake just before the growth in the country's mobile phone sector levelled off.

Chittagongian-owned Pacific Group also sold off its 45 per cent stake in its mobile phone company, CityCell, to SingTel in June 2005 for US$118 million.

But it is not known whether the Group, whose owners left for Singapore during the caretaker regime, has reinvested the money or brought it back home.

AK Khan Group chief said the company they have done some home-work and singled out power, logistics, hotel and textile for investment.

The company is looking for joint-venture to set up a large coal-based merchant power plant to tap into growing energy need in Chittagong industrial area.

"There is an acute crisis of gas and electricity in Chittagong. We are already holding talks with foriegn companies to set up power plants here," he said.

The caretaker government late last year allowed private companies to set up power plant under a new policy, provided the company has to find out its own clients.

Khan said his group has also selected a place to set up an inland container depot (ICD) as it sees Chittagong Port emerging as a big regional hub for trade and commerce in the near future.

"The ICD will be big and we will gradually increase its capacity, depending on containers' growth at the Chittagong Port," he said, without elaborating.

AK Khan has also planned to build a five-star hotel in the Chittagong, he said.

"We already have procured land to build the five star hotel. It will be the biggest in Chittagong and managed by a world-known hotel management group," he said.

"The market for a five-star hotel is still not big enough in Chittagong. But it will be within a very short time," he said.

Unlike Dhaka, which is home to at least four five-star hotels, Chittagong does not have any world-standard hotel catering to the need to the growing number of businesses in the country's second largesr city.

The company would inject a fraction of the amount to its 50-year-old textile factory, which was nationalised by the government immediately after the independence but handed back to the owners in the 1990s.

"We will modernise the factory with world-class machinery. Entire factory would be refurbished and relaunched," he said.

http://www.thefinancialexpress-bd.info/2009/02/15/58956.html

mirzazeehan

February 15th, 2009, 12:12 AM

This is great news,really looking forward to the 5 star hotel in Chittagong

mirzazeehan

February 18th, 2009, 12:50 AM

Bangladesh is a success story in poverty reduction: WB
BSS, DHAKA

World Bank said Bangladesh would attain the millennium development goals(MDG) if GDP continue to grow at the average rate of 5.3 per cent per year.
In a report on poverty assessment for Bangladesh published last month, the Manila-based World Bank said the country would meet the MDG target of halving poverty and extreme poverty rates within 2015.
"Bangladesh represents a success among developing countries in reduction of poverty. The poverty incidences, which was as high as 57 per cent at beginning of 1990's, had declined to 49 per cent in 2000", the bank said in its report.
"The primary contributing factor was robust and stable economic growth along with worsening of inequality", it added.
The bank pointed out that the average annual rate of poverty reduction in Bangladesh was second highest among South Asian countries for a comparable period. "Impressive gains and other indicators of well beings also accompanied the reduction in consumption poverty", it said.
"Bangladesh is on course to meet the year 2015 MDGs for infant and child mortality and has already met the MDG of gender parity in primary and secondary schooling".
The report said impressive improvements in access to sanitation and quality of housing sine 2000, particularly in rural areas, reflect broad based gains in standard of living of the poor.

Source:http://www.theindependent-bd.com/details.php?nid=115588

TIslam

February 18th, 2009, 02:55 AM

dopekhor

February 18th, 2009, 07:05 PM

While I wholeheartedly cheer the news I would really like to shoot the messenger. Dear Lord, World Bank is NOT based in Manila! That is ADB. WB is based in Washington DC. :bash:
how do they categorize a person being in poverty?

by his income, is so how much?

tislam84

February 18th, 2009, 11:38 PM

As far as I know, its based on how much money is needed to buy a 2122 calorie diet. I think if someone earns only 90% of that, he is considered to be in poverty, and if someone earns less than 80% of that amount, he is extremely poor.

dopekhor

February 19th, 2009, 02:04 AM

well that would vary from country to country right because what i believe is that we bengalis are lucky now, we may not eat biriani every day but we definitely have food that keeps us from starving

TIslam

February 19th, 2009, 02:15 AM

well that would vary from country to country right because what i believe is that we bengalis are lucky now, we may not eat biriani every day but we definitely have food that keeps us from starving

Yeah, but how many get the said 2122 calories/day?

dopekhor

February 19th, 2009, 02:28 AM

Yeah, but how many get the said 2122 calories/day?
isnt that a lot? i mean i have max 1800 cals a day and i am over weight :(

TIslam

February 19th, 2009, 02:42 AM

isnt that a lot? i mean i have max 1800 cals a day and i am over weight :(

Perhaps it is Kcal (metric)?

HereWeGo

February 19th, 2009, 04:36 AM

isnt that a lot? i mean i have max 1800 cals a day and i am over weight :(

Perhaps the stat was sponsored by Mcdonalds....

amar11372

February 19th, 2009, 07:23 AM

Yeah, but how many get the said 2122 calories/day?

Its not just food.

Here is what I found.

"A person is considered poor if his or her consumption or income level falls below some minimum level necessary to meet basic needs. This minimum level is usually called the "poverty line". What is necessary to satisfy basic needs varies across time and societies. Therefore, poverty lines vary in time and place, and each country uses lines which are appropriate to its level of development, societal norms and values."

"When estimating poverty worldwide, the same reference poverty line has to be used, and expressed in a common unit across countries. Therefore, for the purpose of global aggregation and comparison, the World Bank uses reference lines set at $1.25 and $2 per day (2005 Purchasing Power Parity terms). Using improved price data from the latest (2005) round of the International Comparison Program, new poverty estimates released in August 2008 show that about 1.4 billion people in the developing world (one in four) were living on less than $1.25 a day in 2005, down from 1.9 billion (one in two) in 1981. The new international poverty line of $1.25 a day at 2005 prices is the mean of the national poverty lines for the 10-20 poorest countries of the world. While the revised estimate is significantly higher than earlier estimates of less than a billion people living under $1 a day in 1993 prices, the developing world as a whole remains on track to meet the first Millennium Development Goal to halve extreme poverty from its 1990 levels by 2015."

http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,,contentMDK:20153855~menuPK:435040~pagePK:148956~piPK:216618~theSitePK:430367,00.html

tislam84

February 19th, 2009, 07:07 PM

Perhaps it is Kcal (metric)?

Oh yeah, sorry for the confusion. It is Kcal (I should have known this, because this is my area of research...). I found this presentation giving a lot of information on how income poverty is measured in Bangladesh.

http://www.lcgbangladesh.org/PovertyIssues/reports/Measuring%20income%20poverty%20in%20Bangladesh.ppt

Slide 6 explains how income poverty is measured in Bangladesh.

numb.soul

February 20th, 2009, 08:03 PM

Dhakaiya

February 20th, 2009, 08:20 PM

Thanks bro :D

Skyprince

February 20th, 2009, 10:09 PM

According to different stats that i found , unemployment rate in BD ( a country of 158 mil !!) is within the range of 2.5- 4.5% in 2007 , thats extremely low.

tislam84

February 21st, 2009, 02:25 AM

^^That rate is only among people who are looking for work. Actually, in Bangladesh there is a lot of people who are in the working age population, but do not look for employment (eg housewives). They are not counted when unemployment rate is measured (according to the definition on how unemployment rate is measured. Unemployment is the percentage of people who are looking for work, but are currently unemployed).

amar11372

February 21st, 2009, 07:51 AM

According to different stats that i found , unemployment rate in BD ( a country of 158 mil !!) is within the range of 2.5- 4.5% in 2007 , thats extremely low.

unemployment maybe low but underemployment is upwards of 25%.

TIslam

February 21st, 2009, 06:50 PM

unemployment maybe low but underemployment is upwards of 25%.

If it's any consolation, we'll soon catch up to Bangladesh (in underemployment)!

TIslam

February 21st, 2009, 06:53 PM

great job bangladesh .. :okay: :applause:

Thank you, numb.soul. I like that baby picture!

mirzazeehan

March 1st, 2009, 09:19 PM

Local clothing brands blooming

Local clothing brands are flourishing on the back of increasing demand from domestic buyers, said major brand operators.

Sensing a bright prospect in the branded clothes segment, almost all brand operators are opening new branches in local markets. They are also planning to open outlets in other countries.

On the other hand, readymade garment (RMG) manufacturers and exporters fear a decline in export orders and prices due to the ongoing global recession, according to exporters.

Businessmen said the customer base is becoming strong in Bangladesh for the emerging clothing brands as people's income and status are also changing gradually.

"Customers are now more fashion-conscious and they prefer branded clothes to regular ones," said Emdad Hossain, director (product development) of Banglar Mela, a local clothing brand having seven branches in Dhaka.

He said he would develop the brand both locally and globally in response to the growing demand for the items. “I plan to open a branch in a European country soon."

He said local clothing brands have not so far faced any bad impacts from the global recession, because the local customer base was strong enough to absorb the shock.

Local clothing brand operators are expecting good sales in celebrating the upcoming Pahela Baishakh, the first day of Bangla New Year.

Yasmin Hasan, manager (operations) of Westecs Women, said they are going to open a branch in Chittagong this month. The company started the venture with men's fashion and later diversified. At present, Westecs has around 20 branches in total.

She said Westecs has five branches for women customers -- four in Dhaka and one in Sylhet. More branches for women will be opened soon in Dhaka and other cities, the company sources said.

Talking to The Daily Star, Soumik Das, managing partner of Rang, another local brand, said the sector is witnessing increasing demand. Rang specialises in T-shirts printed in traditional motifs.

"I am currently preoccupied with developing new designs for both men and women, because I am expecting a big sale during Pahela Baishakh celebration," he said.

But incidents like the mutiny at BDR Darbal Hall hampers normal business, as the presence of customers in the showrooms thins, he added.

Shahroom Ali Shikder, branch manager of Fit Elegance, which mainly makes trousers and suits, said they made hefty profit this winter, as the customers responded very well.

"Our sales are growing as usual. We did not notice any bad impacts of recession on the sales of our products. Winter is the peak season for us," he said.

Fit Elegance is expecting more than 20 percent growth in sales in this fiscal year, Shikder added.

He said Fit Elegance has two branches in Dhaka, one in Chittagong and another branch would open on Baily Road in the capital very soon.

Source:http://www.thedailystar.net/newDesign/news-details.php?nid=78067

manbil777

March 2nd, 2009, 11:16 AM

^^ Nice for you to find this story Mirza.

Do you feel that Bangladeshi clothes can compete with foreign brands (Like Gap, H&M or Zara for example), in responsiveness to market, cut, finish and pricing? I found most of the designers have little formal training except one or two outfits (Aarong being one).

They might need to gather experience with a smaller western fashion house first before jumping in with both feet in the west. I think 'reasonable quality at good prices' is better to start out with as a marketing philosophy rather than simply 'cheap clothes'.

Now if the clothes are completely unique (and marketed at the expat Bangladeshi population) then we've got another story altogether.

tislam84

March 2nd, 2009, 11:46 PM

Otobi goes global with its brand

Sohel ParvezOtobi Ltd, one of the leading local furniture makers, has made foray into global business with its own brand by opening its first franchise outlet in India as part of the company's plan to promote the brand globally and expand businewss.

The move, some marketing analysts said, might be a more effective way than exports to win business as franchise helps a company ensure continuous presence among consumers and create a brand image.

Besides India, the company now puts focus on the markets in the Middle East and Sub-Saharan Africa to open more franchise stores, its Chief Executive Sabbir Hasan Nasir said yesterday.

“We think we ill enjoy a competitive edge in these markets compared with Chinese products,” he said.

Otobi chalked out the plan to explore new markets after it had opened its first franchise store at Mani Square in Kolkata in November last year mainly to reach middle income segment of West Bengal.

“We have received much better response from customers after launching the retail outlet,” said Sabbir.

Otobi, which makes diversified furniture ranging from home to hospital ones, moves to open retail outlets abroad under franchise deal as it observes that branded stores are more effective in wining consumer confidence than exporting products.

“Power of retail brand is stronger than that of manufacturing brand as it is closer to the customers,” said the chief executive of Otobi, which took the decision to go global in 2006.

“As we will be able to maintain and grow the brand through our own model, customer pull will be more. Automatically export will increase and sustain,” he added.

Under the franchise arrangement, Otobi will help its franchisees develop human resources, prepare advertising materials, set business strategies and maintain control over the day-to-day operations.

"The franchisees will not sell any other products than Otobi and all the branding activities will be done as per Otobi guidelines," said Sabbir.

At present, Otobi has stores in Tripura, Assam, Chhatisgarh, Sikim and Siliguri in India. All these stores are run by dealers, not franchisees, according to Sabbir.

The Otobi chief executive said stores run by dealers are not always helpful to create a brand image among consumers.

'We have plans to penetrate into few other Indian states with our brand,” he said.

Sabbir said the company wants to open 12 franchise stores abroad in the next three years.

Starting its journey in 1975 under the entrepreneurship of Nitun Kundu, Otobi has so far 12 showrooms and 530 dealers in domestic market to cater to the need of local customers, including corporate clients, with its wood and laminated board furniture.

The Otobi official said the company has been registering a faster sales growth for the last three years.

“We have been growing much faster for the last three years compared to the previous years. Obviously it is a double digit growth,” said Sabbir of Otobi that posted more than a 35 percent growth in sales to over Tk 200 crore last year.

Syed Ferhat Anwar, professor of marketing at the Institute of Business Administration at Dhaka University, observed that opening franchise outlets abroad might be more effective means compared to exports to grab business.

“It ensures continuous presence of a brand and reduces risks of a company that it faces in case of export,” he said.

Source: http://www.thedailystar.net/newDesign/news-details.php?nid=78182

manbil777

March 3rd, 2009, 10:35 AM

I met Nitun Kundu -- the founder of Otobi a few times before he passed away in 2006. Got a kick out of his inventive nature and 'pluck' -- improvising solutions and turning roadblocks into successes. Which in Bangladesh is no mean feat as you all know. He pioneered state of the art CNC-controlled sheet-metal work in Bangladesh which was as sophisticated in quality as Godrej in India if not in scale.

I was always puzzled why he didn't make the foray into refrigerators from Almirah's like Godrej did.

A true visionary -- he brought art and aestheticism from the hallowed galleries (he was an artist) to the offices and boardrooms in Bangladesh (not to mention homes nowadays) in the form of modern office furniture appropriate in price -- yet high in quality. He was easily the equivalent of the Herman Miller (http://www.hermanmiller.com)s of the world in concept -- if not limited by finances and markets of the third world environment he operated in.

The SAARC fountain (http://en.wikipedia.org/wiki/SAARC_Fountain) in front of the Sonargaon was his work.

mirzazeehan

March 16th, 2009, 01:54 AM

Auto fair set for an upbeat start
Star Business Report

The local auto market, apparently untouched by the ongoing global meltdown, is confident about soaring sales at the four-day motor show, scheduled to begin on Wednesday in Dhaka.

Conference and Exhibition Management Services Ltd (CEMS), an exhibition organiser, is expecting more than 70 companies, including new car importers and automotive component sellers, to take part in the "Lucas Dhaka Motor Show-2009".

Even when auto giants from the US and EU went down one after another due to the global economic recession, Bangladesh's auto market still shines. Last year, the import of used and new cars went up significantly to a total of 20,000, from the usual yearly imports of 15,000.

"The US, EU and even India have faced the ongoing global economic crisis. But Bangladesh is still far from the bad impacts," said Kazi Javed Islam, general manager of Rahimafrooz, a local automotive components manufacturer.

Echoing him, Yamin Sharif, another official from Rahimafrooz, said the number of cars registered with Bangladesh Road Transport Authority (BRTA) increased by 44 percent in 2008, proving the positive impact of the global recession in Bangladesh.

Rahimafrooz is the title sponsor of the exhibition.

Industry insiders said Bangladeshi importers can import cars at a low price because it mainly imports cars from Japan, one of the recession-hit economies.

However, Islam said the global meltdown may hit the local car market if the garments industry is badly affected and remittance inflow decreases. These two sectors are the main buyers of imported cars.

The fourth CEMS motor show will mainly showcase brand new cars and automotive components.

Meherun N Islam, managing director of CEMS, said CEMS is organising the show year after year to provide know-how on the latest innovation in the auto sector.

Source:http://www.thedailystar.net/story.php?nid=79919

TIslam

March 16th, 2009, 04:44 AM

amar11372

March 18th, 2009, 12:43 PM

http://clip2net.com/clip/m7984/1237372982-clip-54kb.jpg

mirzazeehan

March 18th, 2009, 08:03 PM

wow..seems like the economy is poised to grow much faster after 2010:cheers:

Pince1AndOnly

March 19th, 2009, 03:18 AM

I think bangladesh can catch up with India GDP per capita..

But bangladesh should look at its population...growing really fast

amar11372

March 19th, 2009, 03:53 AM

I think bangladesh can catch up with India GDP per capita..

But Bangladesh should look at its population...growing really fast

Its hard to have draconian population measure in Bangladesh like in they have in China due to democracy. But good news is after 2035 the population will level off and start to decline after that.

"by 2035-2040, the UN foresees the country's total fertility rate (the average number of children a woman can be expected to have in her lifetime) falling below the replacement level (2.1). The present fertility rate has already fallen to 2.83, well below 5.25 in 1980-85." Source: BMI :cheers:

http://clip2net.com/clip/m7984/1237427416-clip-35kb.jpg

amar11372

March 19th, 2009, 04:02 AM

http://ezproxy.library.nyu.edu:7236/BM4/graphics/mast_abovefla.gif

http://clip2net.com/clip/m7984/1237427930-clip-178kb.jpg
http://clip2net.com/clip/m7984/1237428013-clip-133kb.jpg
http://clip2net.com/clip/m7984/1237428077-clip-193kb.jpg
http://clip2net.com/clip/m7984/1237428124-clip-93kb.jpg

Zaki

April 1st, 2009, 10:04 PM

WB sees major dip in GDP growth
Projects 4.5pc for Bangladesh in current fiscal year amid global meltdown
Staff Correspondent

The World Bank has said the GDP growth in Bangladesh in the current fiscal year will be 4.5 percent, which is much lower than what the government and other donors projected.

The growth will further drop to 4 percent next fiscal year, according to the World Bank's Global Economic Prospect (GEP) 2009 released Tuesday.

In November last year, the WB forecast Bangladesh's GDP growth at 5.7 percent this fiscal year and 6.2 percent next.

However, both Bangladesh Bank and Bangladesh Bureau of Statistics project the GDP growth in the current fiscal at 6 percent.

The Asian Development Bank in its outlook published Tuesday has projected the growth at 5.6 percent for this year and said it will come down to 5.2 percent next year.

Talking to The Daily Star Senior Economist Zahid Hossain of World Bank Dhaka Office yesterday said, "The central message here is that economic uncertainties have deepened with a perceived increase in downside risks. This increase in uncertainties makes it very difficult to project a point estimate of growth for FY09.

"We think growth in Bangladesh in FY09 could range between 4.5 and 5.5 percent, depending on the extent of the impact of global economic crisis on exports and remittance in the last quarter of the current fiscal year. Our GEP colleagues choose to present 4.5 percent growth for Bangladesh in order to highlight the downside risk," he said.

"I should emphasise that even this, what you may consider conservative growth forecast, is the second highest in the developing world--only China has a higher growth forecast--and the highest in South Asia. The forecast for India is 4 percent and Pakistan just 1 percent," he added.

Zahid Hossain also said the new GEP update projects a gloomier external outlook than what the WB assessed last November. "Global growth forecasts in this update have been revised downwards very significantly. Global GDP is projected to contract by 1.7 percent in 2009 instead of 0.9 percent global growth projected for 2009 in November. Growth in OEC economies--Bangladesh's main export markets--is projected to contract 3 percent instead of 0.3 percent contraction projected for 2009 earlier in November."

Zahid Hossain said, "World trade volume growth has also been revised downwards substantially. It is now projected to decline by 6.1 percent in 2009, a significantly sharper contraction in trade volumes of manufactured products (Bangladesh's main exports). In November, drop in world trade volume in 2009 was projected at 2.1 percent."

The GEP said South Asia has been marked down to 3.7 percent growth for 2009 from 5.4 percent anticipated earlier--and down from 5.6 percent registered in 2008.

GEP said, "Though terms of trade has moved in favour of the region, with the fall in oil price weakening demand in export markets is being felt sharply as is a tempering of services exports from India's high tech centres, as capital spending wanes globally. Remittance is anticipated to ease as conditions in host countries falter, albeit with some lag. Capital inflows have diminished contributing to falloff in investment growth, notably in India. Fiscal support for slowing economies may face constraints in already quite high budget deficits.

"World Bank analysis shows that poor people are feeling the impact of the crisis across the world, many of whom were already hit hard by the food and fuel crises. The pace of poverty reduction has slowed with about 65 million people estimated to remain under the $2 a day poverty line in 2009 as a result of the crisis."

Justin Yifu Lin, WB chief economist and senior vice-president of Development Economics, said, "Conditions of recession are affecting the world's poorest people, making them more vulnerable than ever to sudden shocks--but also reducing the opportunities available to them, and frustrating their hopes. This could reverse years of progress and is nothing less than an emergency for development."

http://www.thedailystar.net/newDesign/news-details.php?nid=82373

tanzirian

April 2nd, 2009, 07:16 PM

I should emphasise that even this, what you may consider conservative growth forecast, is the second highest in the developing world--only China has a higher growth forecast--and the highest in South Asia. The forecast for India is 4 percent and Pakistan just 1 percent," he added.[/url]

For now...I guess we'll accept that and be happy...but hopefully things will pick up within a year or so. We need sustained 8% growth over several decades to become developed...realistically though with our politics and graft I would be quite happy with 6% sustained over a similar period.

amar11372

April 3rd, 2009, 12:28 AM

The WB and IMF revises their GDP figures almost every other month and they had no clue of the credit crises before it began. I can't take their "forecasts" (opinions) as a credible source any longer.

TIslam

April 3rd, 2009, 03:17 AM

For now...I guess we'll accept that and be happy...but hopefully things will pick up within a year or so. We need sustained 8% growth over several decades to become developed...realistically though with our politics and graft I would be quite happy with 6% sustained over a similar period.

I'd agree that would probably be a realistic goal.

TIslam

April 3rd, 2009, 03:19 AM

The WB and IMF revises their GDP figures almost every other month and they had no clue of the credit crises before it began. I can't take their "forecasts" (opinions) as a credible source any longer.

Analysis and thereby forecasts by the likes of ADB, WB, IMF, hardly matters, if a country manages to do most things "right", day after day, year after year.

manbil777

April 3rd, 2009, 06:33 AM

Analysis and thereby forecasts by the likes of ADB, WB, IMF, hardly matters, if a country manages to do most things "right", day after day, year after year.

That can be said of most of the forecasters but Dr. Zahid Hussain who made these forecasts is a very well-known economist locally (he has taught at North-South for the last fifteen or so years -- from its inception). I've also known him through other acquaintances. His practical insights about local financial institutions (such as his dealings with Bangladesh Bank and various NGO's about the state of the Bangladesh economy) -- and from what I've heard him talk about, seem more credible than these other 'experts' from abroad.

amar11372

April 3rd, 2009, 07:10 AM

That can be said of most of the forecasters but Dr. Zahid Hussain who made these forecasts is a very well-known economist locally (he has taught at North-South for the last fifteen or so years -- from its inception). I've also known him through other acquaintances. His practical insights about local financial institutions (such as his dealings with Bangladesh Bank and various NGO's about the state of the Bangladesh economy) -- and from what I've heard him talk about, seem more credible than these other 'experts' from abroad.

After the gross failure of economists from the world to even hint of such a big collapse (Credit crises), don't they feel embarrassment (ashamed) to make further predictions (I would). After all, why should we even give weight to those who seem to have the same sort hindsight as a layman, even though they are professionals with PhD's. My 2 cents.

TIslam

April 4th, 2009, 12:18 AM

After the gross failure of economists from the world to even hint of such a big collapse (Credit crises), don't they feel embarrassment (ashamed) to make further predictions (I would). After all, why should we even give weight to those who seem to have the same sort hindsight as a layman, even though they are professionals with PhD's. My 2 cents.

Couldn't agree more. If all the economists and finance experts with advanced degrees and handsomely compensated, cannot discern the simple fact that you ought not to lend money to someone who will have hard time repaying, or creating exotic products such as CDS, is a recipe for disaster, then who needs them? No, don't answer that because it seems all governments are beholden to them, but what are they really worth? Zero!

dopekhor

April 6th, 2009, 07:24 PM

ajprobashi

April 7th, 2009, 05:15 AM

Abdur Rahim Harmachi
bdnews24.com senior correspondent

Dhaka, Apr 5 (bdnews24.com)—Despite the global recession, Bangladesh received $881.3 million in remittances in March this year, the highest ever for a single month, the central bank governor said Sunday.

The March figure broke the record of $859 million earned in January, according to Bangladesh Bank numbers. February saw $784.5 million.

"Our foreign reserves have crossed $6.03 billion dollar due to the rise in remittance," central bank chief Salehuddin Ahmed told bdnews24.com Sunday.

"The global economic downturn is yet to cast its spell on remittance inflow. This is very positive for our economy," he said.

The World Bank, IMF, ADB and local economists have all predicted a dip in remittances, one of the economy's main indices, in the face of the global crisis.

The governor, however, is optimistic that remittances will maintain an upward curve in the remaining three months (Apr.-Jun.) of the current fiscal year

According to central bank figures, the first nine months (July 2008-March 2009) has seen remittance earnings of $7 billion, a 34 percent jump over the same period of the previous fiscal year (2007-08).

Total remittance in 2007-08 was $7.9 billion, and $6 billion in 2006-07.

bdnews24.com (http://biz.bdnews24.com/details.php?id=80789&cid=4&us=2is1rui1tj3vojgpsc8ru1dq06)

mirzazeehan

April 9th, 2009, 01:23 AM

Forex reserve crosses $6 billion
Staff Correspondent

The country's foreign exchange reserve has crossed US$6. billion again, mainly to a robust growth in workers' remittance and central bank purchase of dollar from local market, Bangladesh Bank (BB) officials said.
Besides, disbursement of soft loan by the World Bank (WB) for development of the country's health sector has helped the foreign exchange reserve reach the level, they said.
"The foreign exchange reserve has crossed the $6.00 billion mark again," a BB official said adding that "The country's foreign exchange reserve first crossed the mark on July 6, 2008, when it stood at $6.20 billion. On Wednesday the country's foreign exchange reserve was $6.04 billion."
The central bank continues its intervention in the inter-bank foreign exchange market through buying US dollar from commercial banks to keep the market stable.
"We have purchased the greenback from the banks to help them comply with the net open position (NOP) rules for holding foreign exchange properly," the BB official said, adding that "The demand for greenback has declined slightly due to falling prices of commodities, including fuel oils in the global market."
The central bank started the latest spell of intervention in the market by buying the US currency directly from commercial banks on January 15 last. The BB has since bought $347.20 million from commercial banks as part of its intervention in the market.
However, a total of $567.70 million was purchased by the central bank from July 2008 to April 2 last, the BB officials confirmed.
The World Bank has recently released funds worth around $80 million as soft loan through the International Development Association (IDA) to develop the country's health sector, the BB official said.
On the other hand, Bangladeshi expatriates sent home a record $7.029 billion in the first nine months of the current fiscal, marking a growth of 24.43 per cent over that of the corresponding period of the last fiscal. The remittance was $5.649 billion during the corresponding period of the previous fiscal, according to the central bank statistics.
The BB earlier took a series of measures to encourage expatriate Bangladeshis to send home their money using the formal banking channel instead of 'hundi' and boost the country's foreign exchange reserve.
Besides, the government offers special citizen facilities to the Non Residents Bangladeshis (NRB), who are able to send $ 5,000 and above annually, the BB officials said. "The government has already offered such facilities to over 11,000 NRBs who are contributing to the increase in inward flow of remittances," he added.

Source:http://www.thebangladeshtoday.com/leading%20news.htm

amar11372

April 9th, 2009, 08:00 AM

Couldn't agree more. If all the economists and finance experts with advanced degrees and handsomely compensated, cannot discern the simple fact that you ought not to lend money to someone who will have hard time repaying, or creating exotic products such as CDS, is a recipe for disaster, then who needs them? No, don't answer that because it seems all governments are beholden to them, but what are they really worth? Zero!

Here is an article from FT, touches few things we previously discussed.

Ten principles for a Black Swan-proof world

By Nassim Nicholas Taleb

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.

http://www.ft.com/cms/s/0/5d5aa24e-23a4-11...?nclick_check=1

TIslam

April 10th, 2009, 07:42 PM

Here is an article from FT, touches few things we previously discussed.
...............

http://www.ft.com/cms/s/0/5d5aa24e-23a4-11...?nclick_check=1

I think the link is not correct. Couldn't get there.

amar11372

April 10th, 2009, 11:17 PM

I think the link is not correct. Couldn't get there.

Sorry, try this one.

http://www.ft.com/cms/s/0/5d5aa24e-23a4-11de-996a-00144feabdc0.html

TIslam

April 11th, 2009, 12:26 AM

Sorry, try this one.

http://www.ft.com/cms/s/0/5d5aa24e-23a4-11de-996a-00144feabdc0.html

Couldn't agree more. (Thanks for the article)

manbil777

April 20th, 2009, 10:34 AM

Roundup: Bangladesh's Stimulus Package Draws Different Reactions

"The financial stimulus package the Bangladeshi government announced on Sunday to help face the global economic recession challenges has drawn different reactions in the country.

Some business leaders have expressed their disappointment at the "neglect of the readymade garments sector, the country's biggest foreign exchange earner, in the package, but experts said the package would bring positive result in the long-run, according to local reports on Monday.

Bangladesh's Finance Minister AMA Muhith Sunday unveiled a 34. 24 billion taka (about 489.14 million U.S. dollars) stimulus package for the last quarter of current fiscal (July 2008-June 2009) to help deal with the impact of global financial meltdown on the country's economy.

Under the package, 13 percent of the fund goes for raising the cash incentives for jute, leather and frozen goods export sectors, which experienced negative growth in the last several months amid the global recession.

But the apparel exporters who cried for government' help to face "unprecedented" challenges got no allocation of any additional incentives under the newly-unveiled package.

"The government declared a cautious stimulus package and it would not fulfill the demands of any sector," President of the country's apex trade body Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Annisul Huq was quoted by leading daily The Financial Express as saying.

Huq said the readymade garments sector, which accounts for more than 76 percent of the country's total exports, should have been given more importance.

The FBCCI last month demanded 35 billion taka (about 500 million U.S. dollars) from the government to help the garment exporters alone face the recession under its proposal of a total 60 billion taka (about 857.1 million U.S. dollars) rescue package.

Apparel exporters said though the statistics showed growth in the garment export in the last months, the prices and demand of their products are decreasing in overseas markets and the rate of growth has been declining.

Bangladesh Garment Manufacturers and Exporters Association ( BGMEA) has also expressed dismay over the package, saying the announcement created disappointment in the entire clothing sector, The Financial Express report said.

BGMEA president Abdus Salam Murshedy urged the government to reconsider the packages as their export orders fell fast over the past three months.

Regarding no subsidy to the apparel sector, Bangladesh's finance minister on Sunday said, "We've already declared different facilities including policy supports and bank loan rescheduling facilities for the sector which has not been so far affected by recession largely."

Of the total amount of the package, some 58 percent will go to agriculture sector as subsidies and agriculture loan recapitalization facility, while power sector and social security sector shared 18 percent and 11 percent respectively.

In terms of these allocations, Director General of state- sponsored think tank Bangladesh Institute of Development Studies ( BIDS) Mustafa Kamal Mujeri said the stimulus package would bring positive result in the long-run.

"An important aspect of the package is that it has focused in the domestic front while prioritizing power and agriculture sector, " Mujeri told The Financial Express.

"The government is trying to offset the negative impact of the global recession on the export sector by increasing competitiveness and reducing cost of production," Mujeri said.

If power production goes up, it would decrease the cost of production and eventually exporters could be able to increase their competitiveness, he said.

-- 2009-04-20 14:28:44 Xinhua"

CRI China (http://english.cri.cn/6966/2009/04/20/2001s476445.htm)

amar11372

April 24th, 2009, 12:01 AM

http://clip2net.com/clip/m7984/1240524066-clip-102kb.jpg

amar11372

April 24th, 2009, 12:02 AM

From 2007-2014

http://clip2net.com/clip/m7984/1240524110-clip-244kb.jpg
http://clip2net.com/clip/m7984/1240524153-clip-181kb.jpg

tislam84

April 24th, 2009, 01:51 AM

^^ Is this a table for nominal GDP Amar?

amar11372

April 24th, 2009, 02:05 AM

^^ Is this a table for nominal GDP Amar?

yes, that the only one that actually matters (I think).

TIslam

April 24th, 2009, 04:54 AM

Its hard to have draconian population measure in Bangladesh like in they have in China due to democracy. But good news is after 2035 the population will level off and start to decline after that.

"by 2035-2040, the UN foresees the country's total fertility rate (the average number of children a woman can be expected to have in her lifetime) falling below the replacement level (2.1). The present fertility rate has already fallen to 2.83, well below 5.25 in 1980-85." Source: BMI :cheers:

Do you know the reasons attributed for the said decline? Higher literacy among women? Higher employment rate among women? Wider acceptance and practice of birth control?

amar11372

April 24th, 2009, 06:38 PM

Do you know the reasons attributed for the said decline? Higher literacy among women? Higher employment rate among women? Wider acceptance and practice of birth control?

According to Mohammed Yunus, its combination of parity in Education(literacy,...) and ongoing women empowerment movement (entrepreneurship, working outside home, microfinance...) .

tislam84

April 24th, 2009, 08:59 PM

^^ In the book "Development as Freedom," Amartya Sen talks about how education and empowerment of women helped to reduce birth rate in Kerala (seems to be his favorite Indian state). He compared Kerala's result with that of China, and showed that even without drastic policies, Kerala had a birth date similar to many developed countries.

Something similar to that is working in Bangladesh too. Also, the family planning policies of Bangladesh has been lauded the world over for being very effective in bringing down average family size from 6 to 3 children in 30 years.

manbil777

April 24th, 2009, 11:06 PM

According to Mohammed Yunus, its combination of parity in Education(literacy,...) and ongoing women empowerment movement (entrepreneurship, working outside home, microfinance...) .

What is interesting is that the correlation between fertility rate (birth rate) and women's education (free in Bangladesh's case) is so direct. This prescription is so simple but few countries have implemented it successfully.

In Pakistan and Afghanistan's case the Mollah's are holding back women's empowerment but other than this societal constraint -- there are hardly any barriers to implementing reduction of women's fertility and population explosion.

It is sad because our prophet (SM) himself was a vocal proponent of women's rights -- according to available records.

TIslam

April 25th, 2009, 04:26 AM

What is interesting is that the correlation between fertility rate (birth rate) and women's education (free in Bangladesh's case) is so direct. This prescription is so simple but few countries have implemented it successfully.

In Pakistan and Afghanistan's case the Mollah's are holding back women's empowerment but other than this societal constraint -- there are hardly any barriers to implementing reduction of women's fertility and population explosion.

It is sad because our prophet (SM) himself was a vocal proponent of women's rights -- according to available records.

Only Afghanistan and Pakistan? How about most of the middle east?

amar11372

April 25th, 2009, 09:33 PM

SoE divestment to gain speed
Says new boss of Privatisation Commission

The Privatisation Commission will expedite divestment of the state-owned enterprises (SoEs), as government's job is not to do business, but to regulate.http://www.thedailystar.net/newDesign/news-details.php?nid=85601

No more privatisation of SoEs
Consultation meeting for industrial policy told

The government will no more privatise state owned enterprises (SoE), as successful bidders have not been using the divested SoEs for purposes they had promised, said Industries Minister Dilip Barua yesterday.http://www.thedailystar.net/newDesign/news-details.php?nid=85625

Is there no sense of coordination among the bureaucrats? And these statements were released on the same day. :lol:

TIslam

April 25th, 2009, 10:27 PM

SoE divestment to gain speed
Says new boss of Privatisation Commission

http://www.thedailystar.net/newDesign/news-details.php?nid=85601

No more privatisation of SoEs
Consultation meeting for industrial policy told

http://www.thedailystar.net/newDesign/news-details.php?nid=85625

Is there no sense of coordination among the bureaucrats? And these statements were released on the same day. :lol:

Classic! Goes to expose the fact that there is no policy at all.

ajprobashi

April 26th, 2009, 06:59 PM

Classic! Goes to expose the fact that there is no policy at all.

How much money do these 60+ year old bureaucrats need? Bangladesh biman is not a pride enterprise of Bangladesh instead, it's a humiliation. That airline is so pathetic. Bangladesh biman like many other state owned businesses need privatization.

Dhakaiya

April 27th, 2009, 09:49 AM

No more privatisation is outrageous. The private sector is the only reason the flames of Bangladesh are alight and roaring.

tislam84

April 28th, 2009, 09:33 PM

Bashundhara Group to set up Tk 25b integrated steel plant

Jasim Uddin Haroon

A local company Tuesday disclosed that it will set up the country's first ever integrated steel plant at a cost of around Tk 25 billion to cater to the domestic demand for steel products.

The Bashundhara Group said it will produce steel products from the proposed integrated plant by using the basic raw material- iron ore.

Currently, over 200 re-rolling and steel mills in the country are producing steel products by using imported and locally available ship scraps. Only a few steel factories use imported billet to produce high quality mild steel rod.

"We have taken up the project of an integrated steel plant as the steel products produced in it would be cheaper and of international standard," Serazul Islam, chief coordinator of Bashundhara Basic Integrated Steels said.

He also said the proposed plant will produce initially 1.0 million tonnes of steel products a year with an option of future expansion.

Bashudhara officials said they will start the civil works for the plant shortly at Anowara in Chittagong. The plant will be set on 300 acres of lands.

The project coordinator said Bashundhara will seek international financing for the project besides local commercial banks.

Bashundhara officials said they will produce different kinds of steel products to be used in structural engineering applications, maritime purposes, automobiles and general industrial purposes.

Md Jahangir Alam, a tremor expert, told the FE: "The quality of steel depends on its raw materials. Steels produced by iron ores are much more qualitative than the other steel products."

"The demand for steel product produced from ores is rising in rich nations. Even, neighbouring India is also using this kind of steel," Jahangir added.

Bangladesh's steel market is estimated to be about 2.0 million tonnes a year.

Source: The Financial Express http://thefinancialexpress-bd.com/2009/04/29/65099.html

amar11372

April 29th, 2009, 12:41 AM

^^ Looks like Bashundhara is back. Thanks for the news.

amar11372

April 29th, 2009, 12:42 AM

Data shows exports up amid global slowdown

Shakhawat Hossain

The country exported merchandise products worth US$ 11633.57 million in the first three quarters of the current fiscal year, registering 14.50 per cent growth over the same period of the last fiscal year.

During July-March period of the 2007-08 fiscal local exporters shipped out export products worth $10159.78 million.

Powered by readymade garment exports, which accounted for more than 76 per cent annual export, local exporters fetched $1280.49 million in last March, national board of revenue and export promotion bureau officials said Tuesday.

The earning is higher by $67.84 million over the same month of previous fiscal as the local exporters shipped out $1224.65 million worth goods in March 2008.

EPB officials who are preparing the detail of the exports are expected to release the data next week.

They said exports earning between June and March of the current fiscal is at least $590 million less than the strategic target fixed by the export promotion bureau.

They attributed lees demand in the country’s main export destinations in wake of worst ever global financial crisis to slower than expected growth in export by local manufacturers of readymade garments, frozen foods, leather and jute goods.

Exports earning for the period could have been much higher had not the country’s export destinations like US and European markets rocked by the financial meltdown, they said.

They, however, said the country’s exports situation is batter compared to prevailing situation in the rival countries like China, India, Pakistan and Vietnam.

China’s exports in March were down by double digits from a year earlier although the decline was smaller than in February. Exports in March fell 17.1 per cent from a year earlier to $90.29 billion, the fifth straight monthly drop.

India’s exports fell 31 per cent lower from previous year as provisional exports figure in March is just under $12 billion. This is for a sixth straight month India witnessed negative growth.

Recession in developed economies crimped demand for Indian goods and export growth slowed to 7.3 per cent in April-February to $156.6 billion from a year earlier, sharply lower from close to 20 per cent seen in 2007-08.

Pakistan’s export witnessed only 4.3 per cent growth until February. It exported goods worth $ 13,015 million during July-February period of the current fiscal which was $12,842 million during same period of 2006-08.

Exports in Vietnam rose only 2.4 per cent in the first quarter 2009, compared to the 22.7 per cent growth in the same quarter of 2008.

Compared to negative growth in the India and China and paltry growth in Pakistan and Vietnam Bangladesh’s exports witnessed slowing down in growth, said the EBP and NBR officials.

Until June-February period of the current fiscal the country’s exports growth recorded at 15.90 per cent higher over the same period of the pervious year.

Finance minister AMA Muhith while announcing the stimulus package against the backdrop of recession in the last week said the country’s export growth will slow down further until next July.

http://www.newagebd.com/2009/apr/29/busi-b.jpg

manbil777

April 29th, 2009, 07:42 AM

^^ Looks like Bashundhara is back. Thanks for the news.

The best source for iron ore is a few hundred miles south of Chittagong in Orissa State (Port of Paradip) where Posco from Korea has already set up a steel unit. Plus there is some steel deposits in West Bengal as well. Given these low-cost iron ore sources -- producing high grade billet initially and hot rolled coil and slab in the long term in Chittagong won't be a problem. Only thing that will need to be ensured is a power plant for about a 100 MW.

More here (http://www.mjunction.in/market_news/metals/bhushan_steel_setting_up_rs_55.php).

iftikhar63

May 3rd, 2009, 07:10 PM

Rupayan plans river container terminal

Sarwar A ChowdhuryRupayan Group, a leading real estate firm, plans to set up a state-of-the-art inland river container terminal near Dhaka to expedite container transportation from Chittagong Port to the capital and its adjacent areas.

"We have submitted a proposal to the shipping ministry recently for its approval," Sadat Hossain Salim, managing director of Rupayan Housing Estate, the parent company of Rupayan Group, told The Daily Star.

If approved, the terminal to be set up at an estimated cost of Tk 270 crore, will be the second of its kind after Dhaka ICT (inland container terminal), but the first in the private sector, he said.

The Dhaka ICT at Pangaon in Munshiganj on the bank of the Buriganga river is likely to open for operations by the end of 2010. The terminal, jointly owned by Chittagong Port Authority (CPA) and Bangladesh Inland Water Transport Authority (BIWTA), will have the capacity to handle 1,16,000 TEUs (twenty-foot equivalent unit) per year.

The Rupayan's proposed terminal at Dhamgarh on the bank of the Sitalakhya river and opposite to Adamjee EPZ in Narayanganj will have an annual capacity to handle 2,20,000 TEUs.

With a growth rate of 10 percent in container transportation per year, it is predicted that the volume of container handling will double in the next 7-8 years, Salim said.

"There is a need to develop the container transportation system and handling facilities to cope with the increasing demand," he said, adding: "We as private sector can play a vital role here in setting up more inland river container terminals or ports."

In 2008 the CPA handled more than one million TEUs.

"As our proposed terminal will be beside the intersection of Dhaka eastern bypass and near Dhaka-Chittagong highway, we will have the advantage of providing container transportation services to all major industrial areas of Narayanganj, Adamjee EPZ, Kanchpur-Rupganj-Sonargaon belt, Tongi, Savar, Dhaka EPZ, Joydebpur, Kaliakoir, Gazipur and Bhaluka without entering the capital," Salim said.

The terminal will primarily work as a supply chain inland feeder for Chittagong and Mongla ports with Dhaka-based importers and exporters in line with the government's inland multi-modal transport policy for national trade facilitation.

The terminal will have two berths -- one 90 metres and the other 110 metres in length. The later will facilitate berthing of 90-metre oceangoing low-draft small container vessels sailing directly from the hub ports of Singapore, Port Kelang and Colombo to Dhaka and going back with export cargoes to feed the mother vessels directly, bypassing Chittagong Port.

"This will immensely save time and money for the exporters," Salim said.

The terminal on 27 acres of land will have modern container scanning facilities, agro inspection and quarantine facilities, and fumigation area for customs and other regulatory agencies to carry out their tasks properly and with ease.

It will also have modern and computerised system with web-based interface to help port users track down their containers any time before loading or after unloading.

The terminal may be used as a transhipment river port by Indian shippers of containerised goods by container-carrying barges through the coastal rivers of the southwest Bangladesh and across the border by road trailers from the port to the eastern Indian states, bypassing Dhaka city.

sarwar@thedailystar.net

tislam84

May 4th, 2009, 08:38 PM

Per capita income rises to $690
Growth rate decreases due to global recession, says BBS

Rejaul Karim Byron

Per capita income in Bangladesh shot up to $690 this fiscal year (FY) from the previous year's $608 demonstrating the country's overall income significantly increased though GDP growth fell.

Bangladesh Bureau of Statistics (BBS) calculated per capita income in the current FY, based on its estimate of population at 14.42 crore. The estimated population last year was 14.24 crore.

In terms of local currency, per capita income this year is Tk 47,373 compared to Tk 41,728 last year, the BBS said.

GDP growth decreased by 0.31 percentage point due to the global recession and would stand at 5.88 percent.

Meanwhile, a World Bank (WB) report says poverty may increase by 0.3 percentage point due to the fall in GDP growth.

According to the BBS estimate, agricultural growth this FY is 4.81 per cent, which was 2.93 percent last year.

A high official of Bangladesh Bank(BB) said farm sector growth greatly contributed to the increase of income. Increased growth in many sections of the service sector also added to this. Besides, remittance inflow is still on the rise, and it is a major cause of the income hike.

Last month, the WB released a report titled "Bangladesh: semi-annual economic update" which said economic slowdown is likely to increase poverty rate next year and the year that follows due to the global financial meltdown. As growth was slow in the current FY, poverty rate would increase by 0.3 percentage point in FY 2010. In FY 2011, it is likely to increase by 0.5 - 0.7 percentage point depending on how growth would be affected.

Director General of Bangladesh Institute of Development Studies (BIDS) Mustafa K Mujeri mentioned that according to the 2005 household expenditure survey (the latest such survey by the BBS) income inequality increased further. The fall in poverty rate did not match income increase.

Mustafa said although per capita income increased this FY, the BBS estimate does not show whether per head income of the poor rose. But generally it could be said that since per capita income rose, every one got a share of it to some extent.

He however said if there is more growth in agriculture sector and SMEs (small and medium enterprises), income of the poor would go up.

The BIDS director general pointed out that remittance played an important role in the increase of per capita income, and stressed sending skilled labour abroad so that remittance inflow does not fall despite the global recession.

If readymade garments sector is affected by the meltdown, employment generation would suffer lowering income of the poor, he added.

Source: The Daily Star: http://www.thedailystar.net/newDesign/news-details.php?nid=86827

amar11372

May 4th, 2009, 10:27 PM

^^ So in about 3 years, I hope we reach $1000 per capita.

Dhakaiya

May 5th, 2009, 04:21 AM

The way its increasing, InshaAllah I am hopeful :cheers:

amar11372

May 12th, 2009, 01:15 AM

STEEL INDUSTRY
Steady demands nourish robust growth
Shakhawat Hossain

The country’s steel industry has been getting continuous investment boom due to steady demands.

Steel manufacturers see no major negative impact on their industry as they believe the country’s economy will keep its impressive growth despite the global financial recession.

They said the country with nearly six per cent growth in the last three years provides enough clues to consume higher production of mild steel rod to be generated by the big players with their proposed new investments.

‘The rod industry will not face major problem due to growing investment in the sector,’ said Bangladesh Steel Re-rolling Mills chairman Ali Hossain Akbar Ali.

‘Chance is slim even for the small players to become sick as the growing consumption rate of steel will remain in the coming years despite global financial recession,’ he told New Age.

BSRM, producer of high-grade steel, makes up more than 25 per cent of the total demand.

It is now on trial production in its newly installed 3,00,000-tonne plant, set up at a cost of over Tk 3.5 billion. It has also unveiled plans to invest another Tk 500 crore to raise its capacity to around one million tonnes within the next five years.

Following the footstep of the company, Kabir Steel and Re-rolling Mills is setting up a 3,00,000-tonne mild steel rod plant in Chittagong.

KSRM announcement came just a month after the country’s largest conglomerate, Abul Khayer Group, formally entered the sector, unveiling a Tk 700 crore investment for an 8,00,000-tonne plant.

Bashundhara Group, the realtor-turned-tissue to paper giant, also expressed its intention to set up an integrated steel plant.

Another Chittagong based mill — Ratanpur Steels and Re-rolling Mills — has said it has started marketing 75-grade mild steel rod since late last year from its Tk 200 crore state-of-the-art steel factory.

Trade experts and bankers, however, expressed concern that the latest investment boom in rod, a key construction component, will outpace the country’s annual demand for rod and might result in investment glut.

Dismissing such apprehension Akbar Ali said the country’s economic growth was good enough to consume the new and higher steel production that even raised no fear even for the existence of small players of the market.

He, however, foresees an intense competition in future due to possible price war which will eventually benefit the consumers.

Sheikh Masudul Alam, former general secretary of the Bangladesh Re-Rolling Mills Association, said he did not see any problem in new investment for the small players who were dominating the market with more than 70 per cent share.

‘The consumption of rod will be double in near future which will allow new investors sufficient breathing space,’ he said.

Sensing a fierce competition in the future rod market the small players are re-fixing their strategies. Many of them are adopting technology to produce high-grade rod, he added.

The country’s fast growing construction industry uses nearly 25 lakh tonnes of rods every year, the market price of which is Tk 1,000 crore.

More than 200 re-rolling and steel mills are producing steel products by using imported and locally available ship scraps. Only a few steel factories use imported billet to produce high quality mild steel rod.

http://www.newagebd.com/2009/may/12/busi.html#a1

tanzirian

May 12th, 2009, 05:44 AM

Per capita income rises to $690
Growth rate decreases due to global recession, says BBS

How reliable is BBS? That seems a pretty big jump for one year. But glad to see things are headed in the right direction still...

amar11372

May 12th, 2009, 11:55 PM

How reliable is BBS? That seems a pretty big jump for one year. But glad to see things are headed in the right direction still...

BBS seems to be in line with BD central Bank, $690 is still nothing and puts us in the bottom of the barrel. Still a long way to go.

amar11372

May 13th, 2009, 12:26 AM

Public-private Partnership Budget
30 projects picked for maiden venture

Rejaul Karim Byron

The government is going to implement around 30 projects for the first time under a 'public-private partnership budget' in the next fiscal year.

Finance and planning ministry sources say a list of projects in power, roads and communications and agriculture sectors has primarily been prepared and the ministries concerned have been asked to send more project proposals.

The government will formulate the new concept of public-private partnership budget along with the existing Annual Development Programme or development budget.

A final decision in this regard may come at the National Economic Council meeting to be held at the end of this month.

Finance Minister AMA Muhith yesterday urged the leaders of Bangladesh Association of Banks to take part in the budget when a delegation of the association met him at his Secretariat office.

Talking to reporters after another meeting of the purchase committee at the Cabinet Division, the finance minister said there will be three separate budgets -- revenue, development and public-private partnership -- in next fiscal year.

In the public-private partnership budget, the government will keep a block allocation and the private sector will contribute to it.

"We want the private sector play a leading role in the partnership budget. The private sector can submit a project proposal to the government after conducting feasibility studies," Muhith said.

The minister added the size of the ADP will be Tk 30,500 crore in the next fiscal year.

"I admit that it will be a highly ambitious budget," the finance minister said, adding the government has taken such budget for two reasons.

The government will firstly have to fulfil its election pledges. Secondly, the development budget of the country is very low and it will have to be increased, he continued.

"So, we deliberately keep the size of ADP ambitious and will take initiatives for implementing the programme," the minister said.

Finance ministry sources say different projects will be implemented on power, health, education, agriculture, roads and communications and infrastructure under the public-private partnership budget.

The infrastructure sector includes power, roads, railway and land port. The finance minister yesterday also said the Dhaka-Chittagong express highway can be built under this partnership budget.

Sources say the government high officials, including the finance minister, planning minister and the finance and planning adviser to the prime minister, held a number of meetings about the new concept.

The government will give allocation from its funds for the projects, while the private sector will also take part under the partnership budget. Funds from multinational donors like the World Bank's sister organisation IFC can also be utilised.

The sources say according to the primary plan there will be a committee to select project proposals and conducting feasibility studies.

The committee may also hire experts from the private sector, the sources add.

http://www.thedailystar.net/newDesign/news-details.php?nid=87978

amar11372

May 13th, 2009, 12:28 AM

Public-private Partnership Budget
30 projects picked for maiden venture

Looks like an innovative mechanism for BD budget. What do you guys think?

amar11372

May 20th, 2009, 12:44 AM

Rahimafrooz to start carbon trading

Rahimafrooz will start commercial carbon trading from May 2010 for the first time in the country by achieving carbon emission reduction (CER) standard with an aim to earn $100 million a year.

“Carbon trading will provide monetary reward and facilitate the focus to reduce emission in every activity in our economy and bring the country to the global carbon commerce market worth $100 billion,” said Munawar Misbah Moin, managing director of Rahimafrooz Renewable Energy Ltd.

“We are optimistic about earning $100 million a year from the global carbon commerce market. This will also help the country's role in addressing global warming and climate change issues,” he added.

Bangladesh Carbon, a clean development mechanism (CDM)-based carbon trading service of Rahimafrooz Renewable Energy, and Carbon Planet, an Australian company, yesterday signed an agreement in this regard.

Munawar Misbah Moin, managing director of Rahimafrooz Renewable Energy, and Haris Chaudry, director (Carbon Commerce Division for Asia and Africa) of Carbon Planet, signed the deal.

Moin said initially the project design document of CER is to be submitted to the government for approval and then Designated Operational Entity, a UN-approved agency, will validate it.

The CDM Executive Board in Geneva, Switzerland, then registers the project.

Currently, there are two companies -- Bangladesh Centre for Advanced Studies and Waste Concern BD -- working with CDM projects in the country. Another 2 projects are under validation from CDM Executive Board.

Md Mostafizur Rahman, state minister for environment, said the government would consider a public-private partnership to promote carbon trading in near future.

Dr Justin Lee, Australian high commissioner, and Feroz Rahim, group managing director of Rahimafrooz, were also present at the agreement signing ceremony.

sayeda@thedailystar.net

http://www.thedailystar.net/newDesign/news-details.php?nid=89022

amar11372

May 20th, 2009, 12:45 AM

^^ I am quite impressed by Rahimafrooz.

amar11372

May 20th, 2009, 01:02 AM

http://clip2net.com/clip/m7984/1242773936-clip-82kb.jpg

TIslam

May 20th, 2009, 01:14 AM

^^ I am quite impressed by Rahimafrooz.

Rather smart and creative thinking on the part of Rahimafrooz. Not that they are driven by any altruistic philosophy, rather all dollars and cents. Commendable, nevertheless.

amar11372

May 21st, 2009, 08:56 PM

BB hands over export certification authority to banks to ease business

FHM Humayan Kabir

The central bank has handed over its authority to issue export "proceed realisation certificate" to commercial banks, making it easier for the exporters to avail bond, cash incentives and duty exemption facilities quickly.

The export PRC is a document where detailed information on shipment of goods including its quantity, freight and prices are reflected. On behalf of the exporters, banks ask the Bangladesh Bank to issue the certificate against any shipment of local goods.

The central bank issued an order Thursday saying the authorised dealers --- mainly the country's 50 odd commercial banks --- would now be able to issue the PRCs to the exporters from July 01 next.

The BB will no longer issue the PRCs against direct exports and deemed exports, the order issued by the BB's foreign exchange policy department said.

"Handing over the authority to issue the PRCs to the authorised banks will greatly save time for the exporters. Due to lack of adequate manpower it takes more than a month for the BB to issue these certificates," a senior BB official said.

"The commercial banks will need a fraction of the time to issue these certificates," he said, adding that it would simplify business regime in the country.

The PRC is usually used when an exporter needs to renew his bond licence and to avail the government-offered duty exemption, duty drawback and cash incentives facilities.

Exporters have long complained that they need to spend a good amount of their valuable time to receive the certificate from the central bank, as the BB's process of issuing the PRCs are 'complex'.

Anwar-ul-Alam Chowdhury (Parvez), a top garment exporter and former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the BB's order would reduce cost of doing business for the exporters significantly.

"Sometimes the BB even takes two months to issue an export PRC. Commercial banks won't take that long. It will reduce both time and costs for the exporters," he told the FE.

"Since the bank knows everything about exporters' shipment of products, values and payment, so I think it will be very easy for the banks to issue the certificate in less than a week's time," Pervez said.

http://www.thefinancialexpress-bd.com/2009/05/22/67286.html

amar11372

May 21st, 2009, 08:59 PM

Muhith eyes Tk 800b revenue target in next fiscal's budget

FE Report

Finance Minister AMA Muhith has hinted at fixing the government's overall revenue income target at nearly Tk 800 billion for the next fiscal without putting any extra tax burden on the public.

Of the total, the target of generating revenue under the National Board of Revenue (NBR) would be fixed at around Tk 600 billion and the target of revenue from sources outside NBR Tk 180 billion to Tk 200 billion in the budget for the fiscal year (FY) 2009-10, he said Thursday.

In the original budget for the FY 2008-09 the government's total revenue earnings target was set at Tk 693.80 billion - Tk 545 billion under NBR, Tk 22.88 billion non-NBR revenue and Tk 125.92 billion from non-tax sources, according to official figures.

"In the next budget we will enhance our tax mobilisation target in such a manner that it does not create any additional tax burden on the public," the finance minister said while talking to newsmen at his ministry after a meeting with a delegation of the Newspapers Owners Association of Bangladesh (NOAB), led by its president Mahbubul Alam.

Responding to a question, the finance minister said: "Our general tax policy will be to support the local sectors that are able to produce quality products at competitive prices."

About his meeting with the NOAB leaders, Mr Muhith said the local newspaper owners have made two key proposals--maintaining the existing 'zero' tariff rate on import of newsprints and enhancing the allocation in the next budget to facilitate quick payments on the government's advertisement bills.

Not only the quality of local newsprint is lower than the imported, but also the supply of

local newsprints is irregular, Mr Muhith informed the media quoting the NOAB representatives as saying.

"They have informed me that in spite of having poor quality, the price of local newsprint is around 25 per cent higher than the imported," said the minister.

Considering the situation, the local newspaper owners have made a proposal to allow them to import newsprints from abroad as per their requirements, he mentioned.

The minister further said the newspaper owners also claimed that the use of 50 per cent local newsprint also created a problem for them.

Also demanding a hike in the government's advertisement bills in line with the pay hikes of newspaper employees under the latest 7th Wage Board, the NOAB leaders proposed to streamline the bill payment system, Mr Muhith mentioned.

The NOAB president informed newsmen that during the meeting they had proposed to keep the existing 'zero' tariff rate on import of newsprint unchanged in the next budget for helping implement the seventh Wage Board.

"We want to use quality newsprint … So, we have urged the finance minister to allow us to freely import from aboard, as is the practice in some other countries including India," Mr Mahbubul Alam said.

Responding to a question, he said the finance minister assured the NOAB members of considering their proposals.

The News Today Editor Reazuddin Ahmed, Prothom Alo Editor Motiur Rahman, Sangbad Editor Altamas Kabir and Manab Zamin Editor Motiur Rahman Chowdhury were present at the meeting with the finance minister.

manbil777

May 22nd, 2009, 09:59 AM

Muhith eyes Tk 800b revenue target in next fiscal's budget

I have a lot of respect for Mr. Muhith (very outspoken and some would say too honest) -- but his tax revenue target is quite unrealistic.

There's no 'teeth' to collect taxes. We don't have the equivalent of the US IRS. Heck we don't even tax enforcement equal to India's. Until that changes -- we need all the luck we can get.

TIslam

May 22nd, 2009, 04:37 PM

I have a lot of respect for Mr. Muhith (very outspoken and some would say too honest) -- but his tax revenue target is quite unrealistic.

There's no 'teeth' to collect taxes. We don't have the equivalent of the US IRS. Heck we don't even tax enforcement equal to India's. Until that changes -- we need all the luck we can get.

Bangladesh is yet tow "wake up" in that area, or could it be it is by design?

manbil777

May 22nd, 2009, 07:22 PM

Bangladesh is yet tow "wake up" in that area, or could it be it is by design?

By design meaning the top 10 or 20 corporate taxpayers don't want this to happen. They've lobbied the govt. (meaning Hasina) well so this will not happen. Just corporate taxation if properly enforced and collected can float the budget immensely but enforcement needs to be a public (vocal) issue).

On top of this you have to realize that the Tax collectors (at least the ones I have known among friends and far-removed relatives -- ashamed to admit) have invariably lined their nests with 'funny money'. They live far more lavishly than possible for govt. servants. But they also have the protection coming down from cabinet secretary level. The whole darned tax structure is corrupted and is the poster-child of corruption in the country.

I have to add however -- that this is exactly how it is in the rest of the subcontinent. You cannot stop this. This is just like being an electric meter-inspector. Comes with the territory. A few high profile RAB arrests won't do much about corruption here.

What we need is for these people to 'work off' their corruption. Let them collect more and legally turn in to the Govt. more than they take in. Then at least it's an even game.

TIslam

May 23rd, 2009, 01:22 AM

......

On top of this you have to realize that the Tax collectors (at least the ones I have known among friends and far-removed relatives -- ashamed to admit) have invariably lined their nests with 'funny money'. They live far more lavishly than possible for govt. servants. But they also have the protection coming down from cabinet secretary level. The whole darned tax structure is corrupted and is the poster-child of corruption in the country.

I know exactly what you mean. This goes back when I was a little kid. My parents had an income tax officer as their tenant. Since my father owned a furniture making business, he apparently requested my dad to make him a bed with hidden panels in it. I remember my dad repeating this story often.

I have to add however -- that this is exactly how it is in the rest of the subcontinent. You cannot stop this. This is just like being an electric meter-inspector. Comes with the territory. A few high profile RAB arrests won't do much about corruption here.

No doubt however, I believe a significant portion of this "systems loss" could be minimized through automation/computerization of the tax/revenue collection infrastructure.

What we need is for these people to 'work off' their corruption. Let them collect more and legally turn in to the Govt. more than they take in. Then at least it's an even game.

This works to the extent that most of this folks do not dispatch (hide) their wealth offshore.

amar11372

May 23rd, 2009, 03:13 AM

Bangladesh remittance flow to double in 10 years

Mehdi Musharraf Bhuiyan

Remittance flow to Bangladesh would double in 10 years and at a similar rate would grow the demand for quality money transfer services, a senior official of global money transfer giant MoneyGram International said Thursday.

Mr. Nick Cunnew, Senior Director of Asia Pacific and South Asia, told FE that the growth would depend on finding new destinations as the money transferring business in Bangladesh is predominantly dependent on workers' remittance.

"The estimated market size of remittance in Bangladesh, which was about US$9.0 billion in 2008, is poised to be US$10 billion this year," Mr. Cunnew said.

"If it can grow at the same pace; we can expect this market to be doubled over the next decade," he added.

"However, continuing such growth rate would depend on certain factors including finding new destinations for expatriate laborers at a time when the global job market is shrinking amid the world economic meltodwn"

MoneyGram is the world's second largest money transfer services. Last year it helped remit US$ 1.5 billion to Bangladesh from around the world.

The company has been operating in the country for the last 10 years, working here through a network of 12 local agent banks and one big non government organization.

Mr. Cunnew said while global recession has dried up demand for expatriate laborers in some countries, new opportunities are being created in some parts of the world.

"CIS (Commonwealth of Independent States) or the former Soviet states are for example is an emerging market for overseas labours which Bangladesh can explore," he said.

"This has been a specific focus during my visit in Bangladesh, as I told our agent banks here to advise those willing to find jobs overseas to explore the CIS countries," he added.

The MoneyGram official stressed the need for curbing money transfer through illegal routes such as hundi, saying his company would adopt aggressive marketing strategies to create awareness about the advantages using legal and fast channels.

"Allegations are there that we are offering our services at a higher service charge. But our services have certain advantages. Like, we have got a wider distribution base, which provides cash to cash services in 10 minutes time," he said.

"We would embark on a campaign through our agent banks to promote our Moneygram Services as fast, convenient and reliable which at the same time we are offering at quite a competitive price," he added.

Drawing an example of his company's competitive pricing strategy, Mr. Cunnew said for transferring US$ 500 in Bangladesh through MoneyGram, the service charge is US$ 10.

"One of the distinguishing features of the local market is the overwhelming direct presence of banks in money transferring business; while in the developed economies, the specialised money transferring companies mostly do the job," he said.

He said the company, which faces stiff challenges from some banks and global leader Western Union, would spread its network, reaching quality money transfer at the doorsteps of the migrant families.

"In the coming years, our goal is to expand our footprint in the local market by choosing our network locations carefully and convincing our agent banks that our high standard of service is maintained," he added.

http://www.thefinancialexpress-bd.com/2009/05/23/67396.html

tislam84

May 23rd, 2009, 03:54 AM

I have a lot of respect for Mr. Muhith (very outspoken and some would say too honest) -- but his tax revenue target is quite unrealistic.

There's no 'teeth' to collect taxes. We don't have the equivalent of the US IRS. Heck we don't even tax enforcement equal to India's. Until that changes -- we need all the luck we can get.

The only way to raise revenue for a country like Bangladesh is through sales tax and VAT. They are regressive, but what else can be done to obtain revenue when the collectors are corrupt?

dopekhor

May 23rd, 2009, 06:24 AM

The only way to raise revenue for a country like Bangladesh is through sales tax and VAT. They are regressive, but what else can be done to obtain revenue when the collectors are corrupt?
aggressive sales tax? 90% of the stores dont even have electronic cash registers, bd should focus on tourism, ict, export oriented sectors to earn not just taxes

amar11372

May 23rd, 2009, 07:08 AM

The only way to raise revenue for a country like Bangladesh is through sales tax and VAT. They are regressive, but what else can be done to obtain revenue when the collectors are corrupt?

-Since you are studying economics I will pass this question to you. Has there been any study about the effectiveness of progressive tax and is progressive tax actually beneficial to the overall economy compared to regressive tax? Yes, progressive tax provides more economic equality to society and such.... but is it any different than regressive tax in aggregate (economic) terms?

-Also I would like your (or anyone else's) opinion about this scenario, Get rid of all taxmen and Govt stop collecting taxes. Meanwhile, the Govt just prints out the money in equal value it would have collected from tax. This will indeed devalue the currency (through inflation) and therefore peoples' income will decrease. But wouldn't that "decrease" in income be the same as if the Govt would have collected taxes from the people. This would save the Govt/NRB time and resources trying to collect taxes from everyone. :)

TIslam

May 23rd, 2009, 04:01 PM

TIslam

May 23rd, 2009, 04:24 PM

aggressive sales tax? 90% of the stores dont even have electronic cash registers, bd should focus on tourism, ict, export oriented sectors to earn not just taxes

You may focus as much as you like but taxation is the only direct means for any capitalistic system of government to collect revenue, be it income, sales, VAT, or any other type (of tax).

dopekhor

May 23rd, 2009, 06:20 PM

You may focus as much as you like but taxation is the only direct means for any capitalistic system of government to collect revenue, be it income, sales, VAT, or any other type (of tax).
with taxes comes benifits, and most people in bd dont pay their taxes and there is nothing the govt can do about it

amar11372

May 23rd, 2009, 08:41 PM

Printing money has limited usefulness. Case in point: Zimbabwe.

I wasn't talking about printing money blindly which Zimbabwe did. They were printing more money than their entire GDP at its peak. Instead, I was trying to describe a situation where the GOVT prints money; say 11-13% of GDP instead of taxing people 11-13% of the GDP.

TIslam

May 23rd, 2009, 08:53 PM

with taxes comes benifits, and most people in bd dont pay their taxes and there is nothing the govt can do about it

Like it or not, NO government (local, state or federal) can function without revenue and thereby taxation. What benefits are you talking about? It is not true that the government cannot do anything. On the contrary, it is imminently feasible for any government, even GoB to collect taxes. In Bangladesh, there is no political will to do so and it suits them to keep it that way. While collection of personal income tax may not be substantial, GoB collect plenty of revenue through other means of taxation, such as corporate tax, VAT, excise duty, import duty and so on.

TIslam

May 23rd, 2009, 08:54 PM

Like it or not, NO government (local, state or federal) can function without revenue and thereby taxation. What benefits are you talking about? It is not true that the government cannot do anything. On the contrary, it is imminently feasible for any government, even GoB to collect taxes. In Bangladesh, there is no political will to do so and it suits them to keep it that way. While collection of personal income tax may not be substantial, GoB collect plenty of revenue through other means of taxation, such as corporate tax, VAT, excise duty, import duty and so on.

Good question. We need to hear about the pros and cons of this concept from Economist or the like.

tislam84

May 23rd, 2009, 10:16 PM

-Since you are studying economics I will pass this question to you. Has there been any study about the effectiveness of progressive tax and is progressive tax actually beneficial to the overall economy compared to regressive tax? Yes, progressive tax provides more economic equality to society and such.... but is it any different than regressive tax in aggregate (economic) terms?

-Also I would like your (or anyone else's) opinion about this scenario, Get rid of all taxmen and Govt stop collecting taxes. Meanwhile, the Govt just prints out the money in equal value it would have collected from tax. This will indeed devalue the currency (through inflation) and therefore peoples' income will decrease. But wouldn't that "decrease" in income be the same as if the Govt would have collected taxes from the people. This would save the Govt/NRB time and resources trying to collect taxes from everyone. :)

Well, progressive tax is better because of its wealth-distributing effect as you have mentioned. Regressive taxes can put more burden on the poor since they tend to pay a higher proportion of their income to get those goods and service. In theory, progressive taxation of income should raise more income as you are taxing the income of the rich more; also, taxes on goods can affect the demand of those goods, and so, can affect the total amount collected as taxes. There has been studies done on the redistributive effects of taxes, I don't remember them right now, but I will try to find some.

However, you can impose taxes on goods that are 'evil' and also that are deemed as 'essential' for the rich and not so essential for the poor. For example, taxes should be high on cigarettes and on goods the rich think are necessary, such as octane fuel, restaurant meals, cable TV, foreign travel and others. This way, you may not be able to tax their income, but you can tax their consumption, which should be able to raise a lot of revenue.

Printing money to be spent as revenue (called seigniorage) without any kind of economic backing is actually not good. Lets say that the government's annual budget is 10% of GDP and the economy is growing at 6%. So, the total amount of goods produced by the economy increased by 6%, but there is this about 4% extra money to be spent. This will lead to a rise in the nominal price of goods, causing inflation and eroding the value of money. This can affect foreign trade as the local currency will depreciate in value. If this keeps on happening, the value of money will keep on falling, and people will start losing confidence in the local currency. Once that happens, money loses all value, and people use it instead of firewood for heat (as it happened in post WWI Germany).

I hope this answers all the questions.

amar11372

May 24th, 2009, 04:35 AM

Well, progressive tax is better because of its wealth-distributing effect as you have mentioned. Regressive taxes can put more burden on the poor since they tend to pay a higher proportion of their income to get those goods and service. In theory, progressive taxation of income should raise more income as you are taxing the income of the rich more; also, taxes on goods can affect the demand of those goods, and so, can affect the total amount collected as taxes. There has been studies done on the redistributive effects of taxes, I don't remember them right now, but I will try to find some.

However, you can impose taxes on goods that are 'evil' and also that are deemed as 'essential' for the rich and not so essential for the poor. For example, taxes should be high on cigarettes and on goods the rich think are necessary, such as octane fuel, restaurant meals, cable TV, foreign travel and others. This way, you may not be able to tax their income, but you can tax their consumption, which should be able to raise a lot of revenue.

Printing money to be spent as revenue (called seigniorage) without any kind of economic backing is actually not good. Lets say that the government's annual budget is 10% of GDP and the economy is growing at 6%. So, the total amount of goods produced by the economy increased by 6%, but there is this about 4% extra money to be spent. This will lead to a rise in the nominal price of goods, causing inflation and eroding the value of money. This can affect foreign trade as the local currency will depreciate in value. If this keeps on happening, the value of money will keep on falling, and people will start losing confidence in the local currency. Once that happens, money loses all value, and people use it instead of firewood for heat (as it happened in post WWI Germany).

I hope this answers all the questions.

Thanks for the term, learned something new. "Seigniorage as a form of tax" is what I was trying to say. That not to print money blindly but only to cover revenue expense and never actually taxing people in the 1st place. The devaluation of the currency itself would be like an "indirect" tax.

nayeem007

May 27th, 2009, 09:59 PM

Bangladesh needs to go for massive privatization. The state owned industries are all inefficient and contributing to the economic stagnation we are facing.

Starting from steel industries to Railway and Bank, everything needs to be opened to free market economy. Even though initially it will cause job loss since excess employees will not be laid off, but on the long run the industries will be more competitive.

This will also attract more foreign investment, increasing our economic growth and wellbeing on the long run.As history has shown over and over again, market economy is much more efficient than government control.

Once this basic economic reform is made , higher taxes and revenues will follow on it's own. We need a radical change that can lift millions out of poverty, a 6-7% growth rate is simply not enought for a country that has 70-80 million people under poverty level.

But I am not sure if the government will go for decentralization since on the short run it will increase unemployment rate and will cause anger against the policy.

Manazir

May 27th, 2009, 10:15 PM

TIslam

May 28th, 2009, 02:13 AM

......
But I am not sure if the government will go for decentralization since on the short run it will increase unemployment rate and will cause anger against the policy.

Not going to happen in Bangladesh, because decentralization translates to dilution of power. Unless and until there is a paradigm shift in the ideology and thought processes in the entrenched political structure, "decentralization" will remain a catch phrase. Just look at Upazilla Council, after the much heralded elections, it has been rendered ineffective.

nayeem007

May 28th, 2009, 04:14 AM

Not going to happen in Bangladesh, because decentralization translates to dilution of power. Unless and until there is a paradigm shift in the ideology and thought processes in the entrenched political structure, "decentralization" will remain a catch phrase. Just look at Upazilla Council, after the much heralded elections, it has been rendered ineffective.

Just like mother nature market has it's own way of correcting itself to restore equilibrium. As seen in Soviet Union, South America or Chinese... all those hopeless communist socities eventually gave in. Even an overly protective Indian government, which relied on Ambassadors as main form of transformation for 4 decades eventually opened up in 90s.. So I strongly believe that sooner or later, Bangladesh will also follow the same direction.

If our present generation is vocal and strong, it will happen now and we can see the fruits of open market economy within 5-10 years, otherwise it will take longer. Good example is Vietnam, which has grown exponentially starting from the same base economic position as us.

Closing down of Adamzee jute mills and converting the zone into privately owned EPZ may just be the sign. Already higher education, telecommunication and media has been opened to private competition. NSU, Grameen phone and NTV/Chaneel-i are the direct results of that compared to inefficient and poorly managed Khulna University, T&T or BTV... Next target should be the state owned banks, Biman and the heavy industries.

But even the decentralization will not bring relief to everyone. Infact millions of poor workers will suffer initially as losing public factories will close down in the face of competition leaving them jobless. But in the long run, the higher investments will create more jobs and opportunities.

On a different note, capitalist society does have some drawbacks, like extreme difference in wealth. A class of have and have nots. But as the economy improves, the government should have more revenue to support such groups, as done in the Scandinavian countries, Japan or Canada.. .

tislam84

May 29th, 2009, 12:41 AM

Although I agree market forces should be implemented wherever possible, in some cases, the intervention of the government is needed for the benefit of all in Bangladesh. Lets take the example of the banking sector. The government should really not own commercial banks, but if we look at the distribution of banks throughout Bangladesh, we will find that private banks are only concentrated in big cities, while the government banks (Sonali, Janata, etc) have a branch in almost all decent-sized cities and towns in Bangladesh. Left to market forces, the rural areas of Bangladesh would not be served by any banks. However, these rural areas do need banks to attract savings. This is just one instance, and the same goes to the production of fertilizer, jute, paper, etc.

There should be a privatization scheme taken by all governements, but it should not be aggressive. Once private enterprises start getting attracted to a certain sector, the government-owned enterprises should slowly move away from that sector.

nayeem007

May 29th, 2009, 03:39 AM

I respect your opinion, but have a slightly different view. I believe that free market economy will push into rural areas aswell as cities if given the chance to grow... even private banks will spring up all over the country side when the demand rises. Good example would be spread of Western Union money transfer, they have decided to open hundrends of service centers all across the country, even in remote villages by utilizing the post offices. The reason being, lot of rural people migrate to Middle East for work and there is demand for money transfer.

Privatization is even more pressing in sectors such as jute, paper and fertilizer. Since majority of our jute industries are public, they have not progressed anywhere in the last 30 years. No innovation or new technology, the factories are using age old technique to produce jute goods whereas neighboring west bengal has made siginificant progress in creating high end jute products. Same goes for paper, inefficient Karanaphuli paper mill or the newspaper mill in Khulna has been in loss for decades. They need to be privatized without further delay.

Your thought goes along the lines of English economist John Keynes. He advocated a government to play an active role in the lives of people regarding business, economy, etc. In this role, the government would use fiscal measures to reduce the impact of recessions, economic depressions and booms... But since 1970s this way of thinking has changed drastically, many governments around the world failed by nationalizing the main industries of the country. India is a golden example of this, they were a failed country as late as early 90s, with a reserve of only 3-4 billion dollar and practically no competitive industry, making age old ambassador cars. Since the government protected the industries through subsidies and trade barrior. There was no competition leading to inefficiency and poor production quality.

Nowadays ideas of Austrian economist Friedrich Hayek is more widepsread and openly accepted. He was a strong proponent of a completely open economy with no government interferance in any of the business activities starting from the heavy industries like Steel, Coal and power. Many countries including Chile, Vietnam and Malaysia have seen the road to development by opening their country to globalization and competition.

In the short run, local industrires will suffer as they won't be able to compete. But gradually they will get better and competitive as seen in India and China.

Bangladesh has already been extremely slow in privatization, we still have government owend jute mills (thus the sector is dying), a failing airlines, one of the worst train service in the world to banks like Agrani, Rupali which practically has no automation and working in 60s..

Only with completely open economy can we grow at 9-10% a year, the government should just focus on taxation, maintaining law and order. Let the economy run on it's own... it would be more efficient. Not my thoughts only, but that of the best economists all over!

dopekhor

May 29th, 2009, 05:44 AM

companies owned by the noya boro loks are always out to exploit, so they wouldnt go outside of the big metros, had the govt banks not harassed people, the pvt banks wouldnt have survived.

funny how the west is not getting all governmentized, the govt should make these entities autonomous while being the majority share holder. Privatization in bd wouldnt be a blessing, what i believe the govt should do now is fix minimum wage and open more sectors and allow tax breaks in certain sectors and make the judicary system strong, trust me that is the only thing that is holding bd behind, fix that and you will have a booming economy.

nayeem007

May 29th, 2009, 06:24 AM

Human nature is not too different amongst the population in South America, China, India, Europe or Bangladesh. If free market economy has flourished all over the world, why wouldn't it be the same for Bangladesh?

Only a decade back China was a agrarian community and so was India. Opening up the market to competition has brought in much sort after capital leading to massive infrastructure development and industrialization.

The beauty of market economy lies in the united strength of the people, for us it would be 150 million strong. Ofcourse the basis of setting up a company will be profitability, that's fundamental to capitalist society and inherent human nature. A benevolent society or utopia does not really exist as seen in failising socialist government in USSR, Eastern europe and many other latin american countries. Without competition there is no incentive to be innovative, people get lazy and nothing new comes up.

Tell me one country, where government industries have flourished and shown the way. Even China's boom is mostly due to private investment, Shanghai and Beijing are shining examples..

Let's come to Bangladesh's context and see how certain fields have grown after opening them up to private entrepreneurs:

Cable Television- pathetic BTV 10 years back, over dozen new channels with quality channels like NTV, Ekushey or Channel-i now.

Telecommunication- inefficient service of BTTB compared to the booming cell phone business of Grameen, Banglalink etc

Shipbuilding- From low end shipbreaking yards Bangladesh has now emerged as a major ship producing hub, with many new multi million dollar companies in the market.

Also the profitability of private companies in Garments, Textile, Leather and Pharmaceutical compared to losing state owned industries like steel, jute and coal is a clear sign.

As for fixing wage and tax breaks. Germany after WW II is a very good example to reflect the impact. The country was in the verge of bankruptcy but yet due to the pressure of the Allied/Occupied force, their govt pegged their currency and implemented artificial wage ceiling. But this did not work and people started using American cigarettes as a means of currency and millions were jobless as factories could not afford to pay a certain wage without an open market and source of capital. I don't recall the name of their chanceller, but at around 1950, this government control was removed with one announcement. This lead to a competitive market, investment started pouring in to various heavy industrial field lifting the economy and naturally increasing the wage level.

As for tax break, again this is a short term shot in the arm to bring some cash but doesn't help the country in the long run. Infact this is something my professor at the Business school was mentioning just last week. He gave example of Detroit and Silicon Valley. Detroit has one of the lowest tax rate in US and California the highest but yet one is a "gutter city" while the other one is the hub of technological advancement. The main attractions to investors are good infrastructure, access to top class talents, political stability and a good environment in general. Tax break only make sense among comparable cities.

If Bangladesh's infrastructure improves, with world class highways, ports and telecommunication system, investment will pour in on it's own. If we give tax break, India or Srilanka can also do the same and eventually it will be a loose loose situation for both as we will be competing on price..

Finally, capitalist companies don't care for the poor, that is the truth. But more industries will lead to rapid industrialization, leading to job growth and ultimately more revenue to government in the form of tax. Then the government can use that tax for social programs. That is why, very open economies like in Japan or the scandinavian countries also provide extremely affordable and planned helathcare and other social services. Whereas closed or government controlled economies like that in North Korea or many Latin American countries are worse off on the long run.. in the aim to help everyone they end up helping no one.

The only way the governement can help is by developing an effective capital market, rules and regulations around financial and accounting rules i.e create a regulatory, security and banking system based on global learning experience. Also rule of law and implementing the rights of property is crucial. Since a free market economy can only function properly if these conditions are met. Lessons needs to be learned from the financial collapse of the Asian tigers in late 90s..

Manazir

May 29th, 2009, 12:25 PM

nayeem007

May 29th, 2009, 06:27 PM

AGREED! :D

But I didnt know Bangladesh Railway was one of the worst train services in the world!! that shocked me! Also, I think its time to start private railway businesses.

About Bangladesh Airlines, I believe privatizing it will make the firm far better than what it is atm, but are you quite sure that the airlines will turn into efficient, profit-making, world-class airlines if it is privatized because we have seen GMG and Best Air, they were operating quite well until last year and now, I have no idea about their operations.....so u think it might be same for Bangladesh Airlines??

WE MUST grow at 9-10% pa cuz of our 160 million population otherwise with current 5 - 6.5 % growth is NOT enough at all for Bangladesh to become developed and we are already abt 20 years behind so we NEED to grow fast and for that, we MUST have a patriotic, efficient government!

nayeem bro is our economic advisor :D

I do get a bit passionate about economics policies sometime..:) since that's our key to development and growth. The change needs to happen from the young, educated mass and as seen in Malaysia, China.. ones the growth starts extraordinary development can be made within a decade.

Bangladesh railway is indeed in a really bad shape, has been running in loss for ages. Moreover, it is astounding to find that new track has only increased by 5% from British era. No new exploration or expansion of network.

As far as the private airlines industry goes. A real open or competitive market needs to be created for that sector to flourish. From an outsider it may look that even private arilines like GMG or Best Air is not being very successful. But the truth is, that's because of the government policies, it has severe restrictions on which destinations those airlines can fly and the frequency. (shorter routes are not very profitable).Also, the airports needs to be privatized to support growth in service aswell.Moreover, Biman gets unfair subsidy and artificially lower ticket price creating unequal market competition.

An open market economy will only work when you have proper rules and regulations laid out. Property law being one of the most vital component.

nayeem007

May 29th, 2009, 10:13 PM

It's interesting that just a day back I was saying that Tax break does not have the desire result and today there is an article on Newage on the same topic!

Most industries abuse tax
holiday facility
Tk 500 crore revenue loss in 4 years
Shakhawat Hossain
AS MANY as 352 newly set-up industrial units availed tax holiday facility in the last four fiscal years, causing revenue losses worth about Tk 500 crores to the national exchequer.
Under government’s tax holiday facility, industrial units enjoy tax and duty exemption for a certain period of time. Such fiscal incentive is designed to promote industrial development.
A recent survey conducted by National Board of Revenue revealed that 90 per cent of the industries that were granted tax holidays reported ‘no profit’ after expiry of the tax incentive.
These industries reported profit during the tax holiday period, because they did not have to pay taxes. But on expiry of their tax exemption period they report ‘no profit, an official of the NBR pointed out.
He alleged the incentive was abused in the name of industrialisation while the entrepreneurs benefited at the cost of revenue loss to the national exchequer.
Former finance adviser of the caretaker administration AB Mirza Azizul Islam said most of the companies produce fake audit reports after enjoying the tax holiday facility.
And whenever the NBR challenged those audit reports, they secure stay orders from the court, keeping their cases pending for years, he alleged.
Islam said there is no justification of continuing such facility as tax holiday is misused to evade tax. He observed that the tax holiday scheme proved to be an ineffective measure for accelerating the pace of industrialisation nowadays.
Finance minister AMA Muhith termed the tax holiday facility as a big obstacle to widen the country’s income tax base, and hinted about withdrawing such fiscal incentives.
MM Akash, a Dhaka University teacher, blamed administrative weakness for such abuse of tax holiday by unscrupulous business houses.
He said he would not recommend a total withdrawal of tax holiday facility, suggesting that entrepreneurs in industrially backward regions like Rajshahi, Rangpur, Dinajpur and Barisal might be extended such incentives.
Akash also suggested that a detailed study on the tax holiday facility should be conducted to find out its economic advantages and disadvantages.

http://www.newagebd.com/2009/may/30/busi.html

dopekhor

May 30th, 2009, 03:00 AM

nayeem007

May 30th, 2009, 06:59 AM

india is so open that it has fdi restrictions in almost every sector, even the us is a protectionist economy, my question was the bttb allowed to perform at its full potential? ntv and co are products of extortion! how has the quality gone up? most of my aunties and co who watch bangla natoks and all tell me that what btv produced in the mid 90 till the late 2000's are off the hook compared to the shit shown today, what about the amount of money gp and co are taking out of bd? these arent charity, they are here to make profit and go home. they even operate on syndicated loans from bd banks

Nobody said that those countries are complete free market economy, but they are in much better shape than relatively closed economies like in Latin America, Africa or Bangladesh. Also you have to point which aspect of the industry you are looking at and look into the results in that sector in relation to other. A good example would be how the American auto industry suffered due to the unions and protections, thus becoming inefficient and uncompetitive.

BTV is still there, so why don't they produce those quality dramas now? Nobody is stopping them. It's like saying Bolloywood movie standard have gone done compared to the Amitabh classics of 80s, actually technologically there has been advancement, but due to change in society the type of shows have changed drastically. Nostalgia on the foregone days will always be there..

dopekhor

May 31st, 2009, 02:44 AM

Nobody said that those countries are complete free market economy, but they are in much better shape than relatively closed economies like in Latin America, Africa or Bangladesh. Also you have to point which aspect of the industry you are looking at and look into the results in that sector in relation to other. A good example would be how the American auto industry suffered due to the unions and protections, thus becoming inefficient and uncompetitive.

BTV is still there, so why don't they produce those quality dramas now? Nobody is stopping them. It's like saying Bolloywood movie standard have gone done compared to the Amitabh classics of 80s, actually technologically there has been advancement, but due to change in society the type of shows have changed drastically. Nostalgia on the foregone days will always be there..
first of all the development of a country depends on its judiciary, if it is strong a country will prosper.

I wasnt referring to the nostalgia of the 90's, i was referring to the level of quality which they couldnt hold on to. For bd to prosper we need a change of mentality at the policy making level. Bd isnt exactly a closed market, its just that too many hurdles to start any business.

TIslam

May 31st, 2009, 04:23 AM

A good example would be how the American auto industry suffered due to the unions and protections, thus becoming inefficient and uncompetitive.

That is an inaccurate and unfortunate characterization of the unions, especially UAW. Had it not been for them, the US auto companies would probably still be taming the workers just the way Henry Ford used to, using his paid goons. The union has always been the bogeyman for the management and a convenient scapegoat for a company's failure in the marketplace, especially by libertarians, republicans and ultra conservative capitalism theorists. It is because of the unions that an engineer in Southeast Michigan earns more than his compatriots in other states. Ditto for IT workers. Even though most are non-union white collar workers (engineers/IT).

The inefficiency and uncompetitiveness of the US automobile manufacturers is primarily attributable to the unimaginative and bureaucratic mindset and style of management that is solely focused on quarterly results i.e. profits, just like any other big business in America.

nayeem007

May 31st, 2009, 08:46 AM

That is an inaccurate and unfortunate characterization of the unions, especially UAW. Had it not been for them, the US auto companies would probably still be taming the workers just the way Henry Ford used to, using his paid goons. The union has always been the bogeyman for the management and a convenient scapegoat for a company's failure in the marketplace, especially by libertarians, republicans and ultra conservative capitalism theorists. It is because of the unions that an engineer in Southeast Michigan earns more than his compatriots in other states. Ditto for IT workers. Even though most are non-union white collar workers (engineers/IT).

The inefficiency and uncompetitiveness of the US automobile manufacturers is primarily attributable to the unimaginative and bureaucratic mindset and style of management that is solely focused on quarterly results i.e. profits, just like any other big business in America.

Unions may have increased the pay of the employees in the short term, but at what cost? The whole industry is falling apart and factories are closing down, pretty soon there will be no job left in Detroit or Michigan area as GM, Ford and others bid farewell...infact I just read in the news, the workers union of GM is already conceding on their healthcare plan and other compensations as the company goes into bankruptcy...

But you are right, the unions are not alone to cause this mess. The management of the auto industries as well as previous governments are to blame since they tried to put artificial barrier on free trade in order to "protect" the industry. This has backfired and american auto companies became inefficient and reliant on government bailout while Japanese and Europeans made technological progress. Infact now that the market is much more open, I see more hope for US auto giants on the long run. America is afterall the most innovative country due to its strong university system and power to attract entrepreneurial minds from along the world. If things go as planned, in next few decades US might be the leader again in Electric or other fuel efficient vehicles.

Another industry, where artificial barrier is causing harm to the general population is the Healthcare. Americal medical Association, have put a limit on number of doctors that can enter the market, infact foreign doctors cannot even practise here. Thus the salaries of doctors are sky high and many rural areas do not have the best physicians. If like Information Technology and other fields this sector was opened up, well qualified doctors from around the world would move in to fill in the vaccuum benefiting the people immensely. In a perfectly open market, demand will lead to supply...

nayeem007

May 31st, 2009, 08:48 AM

first of all the development of a country depends on its judiciary, if it is strong a country will prosper.

I completely agree with you on this point, infact proper judiciary and implementation of property rights are prerequisite for a competitive open market economy. Many developing countries failed to take advantage of true globalization and investment due to weak legal system.

I mentioned this in my last post aswell "The only way the governement can help is by developing an effective capital market, rules and regulations around financial and accounting systems i.e create a regulatory, security and banking system based on global learning experience. Also rule of law and implementing the rights of property is crucial. Since a free market economy can only function properly if these conditions are met. Lessons needs to be learned from the financial collapse of the Asian tigers in late 90s.."

nayeem007

May 31st, 2009, 09:04 AM

I think the state owned banks which control 3/4th of all loans and deposits in Bangladesh is one of the major reasons behind the lack of indiustrialization and overall growth.

In order for the development of industries, capital cost needs to be low. Infact in most developed countries, the interest rate for capital expenditure is much less than that of developing countries like Bangladesh. This encourages entrapeneurs to borrow and invest heavily in new factories,services etc creating jobs in the process.

On the other side, the rate of return on bank deposits (Savings, certificate of deposit) are lower in developed nations but higher in developing countries. Infact in Bangladesh, you can get as high as 10% return on CDs, whereas in US it is around 4-5% at most. As a result more people are encouraged to save money on the bank, instead of investing it in stocks or other development project. Why risk your money on those when you can get a high return of 10% from secured bank account?

As a result of this opposite banking polcies, the much needed capital for development is not readily available in the economy, creating stagnation. Infact many economists point to this scenario as the sole reason why developing countries continue to remain poor..

If the banks are privatized and the economy opened up more, foreign capital will flow in, decreasing the cost of capital and thus encouraging investors to take up large scale industrial and infrastructure development projects. This will lead to higher employment and GDP growth and eventually help the poorest people in the soicety as well, since government will earn more tax revenue which they can then spend..

amar11372

May 31st, 2009, 11:38 AM

I think the state owned banks which control 3/4th of all loans and deposits in Bangladesh is one of the major reasons behind the lack of industrialization and overall growth.

State owned commercial banks actually own only about 35% of the Banking assets not 75%. The majority 65% is owned by the Private sector. Bangladesh has quite a capitalistic banking sector compared to other developing counties with the private sector leading this industry and 100% FDI.

On the other side, the rate of return on bank deposits (Savings, certificate of deposit) are lower in developed nations but higher in developing countries. Infact in Bangladesh, you can get as high as 10% return on CDs, whereas in US it is around 4-5% at most. As a result more people are encouraged to save money on the bank, instead of investing it in stocks or other development project. Why risk your money on those when you can get a high return of 10% from secured bank account?

Even though I somewhat agree that Bangladesh indeed has high interest rate, the current interest rate is more or less fair. USA's inflation rate is way lower than BD's so in the states we have lower interest rate than in BD. Also there is a huge lack to quality credit information of the borrowers in BD. The US has FDIC, whereas BD banks have to keep quite a large amount in reserve with the central Bank, increasing capital costs. And to top it off Banks are discriminated against, as they have to pay 45% as tax compared to regular Corporation who pays 30%. All these factors add up, to make the cost of capital what it is today.

TIslam

May 31st, 2009, 05:13 PM

Unions may have increased the pay of the employees in the short term, but at what cost? The whole industry is falling apart and factories are closing down, pretty soon there will be no job left in Detroit or Michigan area as GM, Ford and others bid farewell...infact I just read in the news, the workers union of GM is already conceding on their healthcare plan and other compensations as the company goes into bankruptcy...

That "short term" has been for the last 40 years or so. And once again, the unions are really not the cause of the ills of these companies, primarily the US auto. The blames lies squarely on the management. Until the Japanese came along and poked them the the eye, the US manufacturers used to build in obsolescence in their product(s), so that your transmission fell apart at 60k, the body/frame would rust out, and the engine wouldn't live to see 100K miles. Anything beside the steering wheel was an option, so that a base price car say at $10K, would become $15K when you drove it out the door. The Americans did not take the issue of "quality" seriously enough until the late 80s, for which the results are bearing out only now.

Even after when the Arabs turned the oil spigot off around the 1973 Arab-Israeli war, do you think these companies got any clue? It is not until when the Japanese and the Germans began to sell their small body fuel efficient cars, that they began to wake up. Even then there were no serious attempt to produce good quality fuel efficient cars in substantial quantities. Nor were there any serious marketing campaign to try to change the American bias towards gas guzzling large vehicles. So much so, that even today, we may be back to square one: now that the price of gas has gone below $3, the hybrid sales fell of the cliff. So, one wonders who is going to buy that $40K+ Volt, if the price at the pump is still "cheap". The unions hardly had any hand in all these problems. And finally, I have this to say, to you the economy theorists: your economic theories and policies do not mean a hell of beans for me if, you (not you personally) can live high in hog heaven in your climate controlled offices, with all the perks and stock options, while I toil away to produce those shiny cars, that doesn't give me enough to pay for my son's college! So, why should I put up with that?

Another industry, where artificial barrier is causing harm to the general population is the Healthcare. Americal medical Association, have put a limit on number of doctors that can enter the market, infact foreign doctors cannot even practise here. Thus the salaries of doctors are sky high and many rural areas do not have the best physicians. If like Information Technology and other fields this sector was opened up, well qualified doctors from around the world would move in to fill in the vaccuum benefiting the people immensely. In a perfectly open market, demand will lead to supply...

Well hello! Such has been the case since time immemorial and hardly likely to change. AMA, like NRA and AIPAC, control so many things that are vital to this nation that are hidden to the public eye and have successfully turned themselves sacrosanct. It is not true that a foreign medical graduate (FMG) cannot practice here, s/he can as long as s/he passes all the requisite certification (that proves equivalency) and licensing exams. Same holds true for dentistry, pharmacy and physical therapy. If you thought the Americans are difficult, try the Canadians! Even an American medical graduate faces enormous barriers to become certified and then practice medicine in Canada. As for the availability of good health care in rural/remote areas, that is a difficult problem to solve in most countries. To put it in perceptive, how many top notch physicians do you find living and practicing outside Dhaka? The US has attempted to alleviate the problem with a special program which has not proved itself to be effective. There is a special program and a visa category, through which they will allow any (FMG) to come and work, as long as s/he passed the qualifying exams, if s/he agrees to be placed in a rural community for at least five years. There has not been much demand for that visa and those who do avail it, relocate to a metro area, as soon as the five years are up.

nayeem007

May 31st, 2009, 07:10 PM

State owned commercial banks actually own only about 35% of the Banking assets not 75%. The majority 65% is owned by the Private sector. Bangladesh has quite a capitalistic banking sector compared to other developing counties with the private sector leading this industry and 100% FDI.

"The government also has proven unable to resist demands for wage hikes in government-owned industries. Access to capital is impeded.State-owned banks, which control about three-fourths of deposits and loans, carry classified loan burdens of about 50%.[1]"
http://en.wikipedia.org/wiki/Economy_of_Bangladesh

If you refer to the quotation in wiki, it goes to "Bureau of South and Central Asian affairs".

So my post was based on the above estimate...

Even though I somewhat agree that Bangladesh indeed has high interest rate, the current interest rate is more or less fair. USA's inflation rate is way lower than BD's so in the states we have lower interest rate than in BD. Also there is a huge lack to quality credit information of the borrowers in BD. The US has FDIC, whereas BD banks have to keep quite a large amount in reserve with the central Bank, increasing capital costs. And to top it off Banks are discriminated against, as they have to pay 45% as tax compared to regular Corporation who pays 30%. All these factors add up, to make the cost of capital what it is today.

Ofcourse the developed countries must have done somthing right as you explained to keep the interest rate for capital low. The developing countries lilke Bangladesh needs to emulate the system. Also, US is just an example, the general trend around the world is, poorer countries have higher lending rate while Japan, UK or any other developed countries will have less. The countries economists and financial analysts needs to work towards keeping the capital cost low.

Otherwise if interest rate for loan is as high as 15-16% this gives little initiative to entrapeneurs to borrow and invest on industries, since getting such high return to pay off debt is extremely difficult.

nayeem007

May 31st, 2009, 07:46 PM

That "short term" has been for the last 40 years or so. And once again, the unions are really not the cause of the ills of these companies, primarily the US auto. The blames lies squarely on the management. Until the Japanese came along and poked them the the eye, the US manufacturers used to build in obsolescence in their product(s), so that your transmission fell apart at 60k, the body/frame would rust out, and the engine wouldn't live to see 100K miles. Anything beside the steering wheel was an option, so that a base price car say at $10K, would become $15K when you drove it out the door. The Americans did not take the issue of "quality" seriously enough until the late 80s, for which the results are bearing out only now.

Even after when the Arabs turned the oil spigot off around the 1973 Arab-Israeli war, do you think these companies got any clue? It is not until when the Japanese and the Germans began to sell their small body fuel efficient cars, that they began to wake up. Even then there were no serious attempt to produce good quality fuel efficient cars in substantial quantities. Nor were there any serious marketing campaign to try to change the American bias towards gas guzzling large vehicles. So much so, that even today, we may be back to square one: now that the price of gas has gone below $3, the hybrid sales fell of the cliff. So, one wonders who is going to buy that $40K+ Volt, if the price at the pump is still "cheap". The unions hardly had any hand in all these problems. And finally, I have this to say, to you the economy theorists: your economic theories and policies do not mean a hell of beans for me if, you (not you personally) can live high in hog heaven in your climate controlled offices, with all the perks and stock options, while I toil away to produce those shiny cars, that doesn't give me enough to pay for my son's college! So, why should I put up with that?

Labor unions have 2 distinct roles to play in an economy. One of the aspect that you have highlighted(increase in wages, benefits) has some positives for the employess but the other aspect (forcing government to raise trade barriers) to "protect" the industry has a direct impact in efficiency, productivity and ultimately the power to fight of competition.

A union is initially setup to protect the employees rights from the "evil and greed seeking management" which is all well and good But gradually as the unions grow, they want more protection, less working hours, forces all the employees to reduce their efficiency to match peers and ultimately even forces the government to erect trade barriers as seen in the Steel industry in US and auto to large extent.

Once that is done, the industry loose it's willingness to be competitive and within a few decade might be in a position without much innovation and new ideas. At that point, due to public demand of cheaper goods, if the government relaxed the import duties or other trade barriers. The industry gets swamped by foreign goods which are better and cheaper. What happened to US auto industry after it was opened to Japanese car companies.

France is another country which is heavily unionized. As a result there are frequent strikes and weekly working hour is only 35hrs with over 40 days of paid holidays. This has made them less competitive to US or fellow European counterparts. Infact I work in a French company and have experienced this inefficiency first hand. Projects we are able to close down in 6 months in US takes minimum of 9months there, as employees start leaving at 4pm. But as a result there are less jobs and most of the business is being shifted outside the country. So in the long run, the population of the country is suffering, since unemployment rate is high but people who have jobs are working less hours.

Finally, economists have nothing against labor unions per se. They want a free flow of capital and labor around the world to create a "truly free economy" which will generate more wealth and even out the playing fields between nations. They are as critical of developing countries for government being involved in all the major industries as they are on the developed countries for putting restrictions on free flow of Labor and putting trade barriers on major industries like steel, auto etc.

Well hello! Such has been the case since time immemorial and hardly likely to change. AMA, like NRA and AIPAC, control so many things that are vital to this nation that are hidden to the public eye and have successfully turned themselves sacrosanct. It is not true that a foreign medical graduate (FMG) cannot practice here, s/he can as long as s/he passes all the requisite certification (that proves equivalency) and licensing exams. Same holds true for dentistry, pharmacy and physical therapy. If you thought the Americans are difficult, try the Canadians! Even an American medical graduate faces enormous barriers to become certified and then practice medicine in Canada. As for the availability of good health care in rural/remote areas, that is a difficult problem to solve in most countries. To put it in perceptive, how many top notch physicians do you find living and practicing outside Dhaka? The US has attempted to alleviate the problem with a special program which has not proved itself to be effective. There is a special program and a visa category, through which they will allow any (FMG) to come and work, as long as s/he passed the qualifying exams, if s/he agrees to be placed in a rural community for at least five years. There has not been much demand for that visa and those who do avail it, relocate to a metro area, as soon as the five years are up.

Again, this comes to the basic Economic concept of "free flow of labor". They do not go into the details on what other organizations or countries are doing. The American medical association was one example, ofcourse the dental organization and the Legal assosciation are also taking similar "protective" steps to keep their salaries artifically high.

Imagine, how the Information technology field in US will be, if the US government said anyone with a computer science degree from abroad will have to go through special exams and practise that takes years to complete before they can start working for a US company. There will not be mass movement of Indian IT professionals here, as the barriers will be too high. The few that will make in to the field after the hard earned process will be earning average salary of 200k compared to 60-70K now.

Also, Bangladesh and US are not comparable in terms of healthcare. In Bangladesh, basic amenities(electricity, running water etc) are not found outside of cities like Dhaka which discourage people to move outside. But in US all those facilities are available across the country and road networks are world class. So professionals in most fields are spread across the nation as they can maintain the same standard of living. A better example will be with European countries like Norway, Switzerland or Germany. A comparison with the salary of those countries will easily show what US is lacking.

Here is an article that talks to some of the points I mentioned:

----------------------------------------------------------------------------------------------------------------------------------

Foreign doctors rebuffed by new U.S. barriers
Knot of restrictions tangles up efforts to fill medical gaps in poor areas

National shortage of doctors is hitting poor places the hardest, and efforts to bring in foreign physicians to fill the gap are running into a knot of restrictions from the war on terror and the immigration debate.

Doctors recruited from places such as India, the Philippines and sub-Saharan Africa to work in underserved areas like the Mississippi Delta and the lonesome West already face an arduous and expensive gauntlet of agencies, professional tests and background checks to secure work papers and permanent residency.

the federal government has made it more difficult to qualify for the special visas and to obtain permanent residency. The tests are harder, the legal fees are higher, and the rules have been changed by the Department of Health and Human Services in such a way that fewer counties and clinics are designated “underserved” and thus eligible to obtain J-1 doctors.

As a result, some foreigners are choosing to leave after their commitment is up, or are not applying to come to the U.S. at all.

The number of physicians in training with J-1 visa waivers has fallen by almost half over the past decade, from 11,600 in academic year 1996-97 to fewer than 6,200 in 2004-05, according to the Government Accountability Office. And federal and state requests for J-1s for doctors dropped from 1,374in 1995 to 1,012 in 2005.
http://www.msnbc.msn.com/id/198747/

nayeem007

May 31st, 2009, 07:53 PM

This article is a bit dated, but nevertheless shows the inefficiency of the state owned banks that I was mentioning earlier.
-----------------------------------------------------------------------------------------------------------------------

Bangladesh to close 500 bank branches
The central bank is taking tough action

By Moazzem Hossain
BBC correspondent in Dhaka

The central bank in Bangladesh has disclosed a plan to close down 500 branches of state owned commercial banks which were incurring losses over the last five years.

The decision came in the backdrop of growing pressure from the World Bank and other multilateral agencies to speed up reform in the banking sector.

World Bank officials say the country's bad debt and inefficient surplus workforce were the two main problems that crippled its nationalised commercial banks.

Bangladesh's state owned commercial banks have been facing a tough time since private sector and foreign banks entered the market with an efficient work-force to offer better service.

Six state owned commercial banks have a network of 5,000 branches throughout the country, but unplanned expansion of the network has led to inefficiency and huge losses.

No profit

The governor of Bangladesh's central bank, Dr Farkhruddin Ahmed, has identified 800 branches of six state owned commercial banks which have failed to make any profit over the last five years.

He announced that 500 of these branches would be closed down in phases by the end of this year.

Dr Fakhruddin Ahmad said they were not closing down those rural branches where no other bank were offering service within five kilometre.

Top executives of these state owned banks said that despite the downsizing of the network there would be no job losses in their banks.

They said the redundant workforce would be deployed in other branches where there had been no recruitment over the last three years.

External pressure

The World Bank has been insisting that the Bangladesh government should downsize the state owned banking sector since it stepped in with a financial sector reform plan during the middle of the 1990s.

World Bank officials say the sector lacks the efficiency to revive Bangladesh's sluggish economy.

The latest available figures show that six state owned commercial banks have a cumulative bad debt of $2.78bn.

Analysts said the government's attempt to recover default loans through lawsuits failed due to political interference.

http://news.bbc.co.uk/2/hi/business/1916036.stm

nayeem007

May 31st, 2009, 08:04 PM

Anyhow, I think I am spending too much time on this thread... need to go back to all the photo threads. Otherwise I will be stuck in this discussion forever!

TIslam

June 1st, 2009, 04:33 AM

Labor unions have 2 distinct roles to play in an economy. One of the aspect that you have highlighted(increase in wages, benefits) has some positives for the employess but the other aspect (forcing government to raise trade barriers) to "protect" the industry has a direct impact in efficiency, productivity and ultimately the power to fight of competition.

Again, unions cannot be blamed alone for the so-called trade barriers/protection which hardly exists today. The US auto companies expended enough resources through lobbying for such protectionism. They have however, done so cleverly through roundabout arrangements so that fingers cannot be pointed directly at them. The biggest folly of the US auto industry bosses committed was to base their business model of cheap oil, which they are yet to undo.

A union is initially setup to protect the employees rights from the "evil and greed seeking management" which is all well and good But gradually as the unions grow, they want more protection, less working hours, forces all the employees to reduce their efficiency to match peers and ultimately even forces the government to erect trade barriers as seen in the Steel industry in US and auto to large extent.

Once that is done, the industry loose it's willingness to be competitive and within a few decade might be in a position without much innovation and new ideas. At that point, due to public demand of cheaper goods, if the government relaxed the import duties or other trade barriers. The industry gets swamped by foreign goods which are better and cheaper. What happened to US auto industry after it was opened to Japanese car companies.

I agree. Personally, I have never been a union worker in my professional career and in my early working life, I was anti-union but over time I have come to accept and even appreciate their existence. Like anything less, any organization that consists primarily of people that become large over time, become bureaucratic, inefficient, and wasteful. After taking "political" beatings, with the rise of the conservative republicans from the south, unionism has been on the decline in this country for a while. The ones that still remain and remain effective have had to reform themselves periodically. Nobody could imagine all the concessions UAW has made in the decade (which continues today), in order to survive and be relevant.

[/QUOTE]
France is another country which is heavily unionized. As a result there are frequent strikes and weekly working hour is only 35hrs with over 40 days of paid holidays. This has made them less competitive to US or fellow European counterparts. Infact I work in a French company and have experienced this inefficiency first hand. Projects we are able to close down in 6 months in US takes minimum of 9months there, as employees start leaving at 4pm. But as a result there are less jobs and most of the business is being shifted outside the country. So in the long run, the population of the country is suffering, since unemployment rate is high but people who have jobs are working less hours.

Finally, economists have nothing against labor unions per se. They want a free flow of capital and labor around the world to create a "truly free economy" which will generate more wealth and even out the playing fields between nations. They are as critical of developing countries for government being involved in all the major industries as they are on the developed countries for putting restrictions on free flow of Labor and putting trade barriers on major industries like steel, auto etc. [/QUOTE]

I don't have much to say about France and its unions for I know only too well how the entire country operates in terms of business, commerce, and industry. Can't expect high productivity from a nation where a large portion of the population disappears from their cities and towns and camp out on the beaches for the entire month of August. All I can say that unionism is far stronger and effective in Europe as opposed to North America.

Again, this comes to the basic Economic concept of "free flow of labor". They do not go into the details on what other organizations or countries are doing. The American medical association was one example, ofcourse the dental organization and the Legal assosciation are also taking similar "protective" steps to keep their salaries artifically high.

The Utopian economic concept of "free flow of labor" is just that, an idyllic notion that is far from reality. Show me a country that does not have labor policies and practices that isn't contrary to such ideals and philosophy. This idea of "free flow of goods, services, and labor" is just that, an idea, that no country really practices in its orthodox sense (meaning)

Imagine, how the Information technology field in US will be, if the US government said anyone with a computer science degree from abroad will have to go through special exams and practise that takes years to complete before they can start working for a US company. There will not be mass movement of Indian IT professionals here, as the barriers will be too high. The few that will make in to the field after the hard earned process will be earning average salary of 200k compared to 60-70K now.

It would be a welcome break for all the Engineering and IT workers, if I can so say with tongue in cheek!

Also, Bangladesh and US are not comparable in terms of healthcare. In Bangladesh, basic amenities(electricity, running water etc) are not found outside of cities like Dhaka which discourage people to move outside.

No doubt but it was a relative comparison. What I meant is that just like a Dhaka based physician does not wish to relocate to a lesser city or town, the US physicians have the same mindset.

But in US all those facilities are available across the country and road networks are world class. So professionals in most fields are spread across the nation as they can maintain the same standard of living.

Not exactly. Have you ever been to the real "boonies" in this country? Sure, the inter-state road networks are world class but there are localities that has only a single lane road with no traffic lights or a stop sign and the nearest McDonald's is 20 miles away. Yes, there is running water because everybody has their own well, and electricity but not much else. They have rural telephone service not served by any major carriers but through a cooperative, internet is either dialup or via satellite for those who can afford it. I have been to such places. How is it any different for a doctor from here who has spent his youth and college life in urban areas, than the doctor in Bangladesh? Both the physicians would find the rural setting too quaint and boring. Furthermore, a physician in urban and metro areas earn ten times more, if not higher, than the guy in the single road village.

I think in order to provide adequate and better health area in the rural areas, the US needs to follow the Australian model, things like telemedicine, Royal Flying Doctor's Service, and so on.

A better example will be with European countries like Norway, Switzerland or Germany. A comparison with the salary of those countries will easily show what US is lacking.

Lacking? Not sure what you mean.

Here is an article that talks to some of the points I mentioned:

----------------------------------------------------------------------------------------------------------------------------------

Foreign doctors rebuffed by new U.S. barriers
Knot of restrictions tangles up efforts to fill medical gaps in poor areas

National shortage of doctors is hitting poor places the hardest, and efforts to bring in foreign physicians to fill the gap are running into a knot of restrictions from the war on terror and the immigration debate.

Doctors recruited from places such as India, the Philippines and sub-Saharan Africa to work in underserved areas like the Mississippi Delta and the lonesome West already face an arduous and expensive gauntlet of agencies, professional tests and background checks to secure work papers and permanent residency.

the federal government has made it more difficult to qualify for the special visas and to obtain permanent residency. The tests are harder, the legal fees are higher, and the rules have been changed by the Department of Health and Human Services in such a way that fewer counties and clinics are designated “underserved” and thus eligible to obtain J-1 doctors.

As a result, some foreigners are choosing to leave after their commitment is up, or are not applying to come to the U.S. at all.

The number of physicians in training with J-1 visa waivers has fallen by almost half over the past decade, from 11,600 in academic year 1996-97 to fewer than 6,200 in 2004-05, according to the Government Accountability Office. And federal and state requests for J-1s for doctors dropped from 1,374in 1995 to 1,012 in 2005.
http://www.msnbc.msn.com/id/198747/

I have no problem maintaining barriers for FMGs, particularly for medical graduates from third world countries because there is a big qualitative difference in their academic and clinical training. I wouldn't want an MBBS off the boat to treat me for even a minor cold! And those who are bright and sharp enough will pass all the exams and shine through the residency training that will make them better doctors.

nayeem007

June 7th, 2009, 11:57 PM

Again, unions cannot be blamed alone for the so-called trade barriers/protection which hardly exists today. The US auto companies expended enough resources through lobbying for such protectionism. They have however, done so cleverly through roundabout arrangements so that fingers cannot be pointed directly at them. The biggest folly of the US auto industry bosses committed was to base their business model of cheap oil, which they are yet to undo.

Again, I didn't say unions are the only ones to blame. Ofcourse over reliance on gas consuming vehicles is one of the factor,but it is not the only one. Infact the US companies many comparable autos to the Japanese ones it terms of mileage.

I was just reading that due to union, a mechanic who normally gets paid around 60k for a toyota, nissan plant in US, earns over 110K + benefits in GM or Chrysler. And this is excluding millions that are spent by these corporations on former employee healthcare.

Infact one of the first restructuring moves in GM has been to decrease the power of the unions specially in relation to healthcare benefits. Salaries are also dropping to industry standard and equilibrium is being reached gradually. I am not anti-union, I am just speaking from an economics perpspective. Anything that imposes barrier to movement of capital and labor, be it unions, international laws, tariff and subsidy eventually makes the industry less competitive. In the short run it may very well work...

I don't have much to say about France and its unions for I know only too well how the entire country operates in terms of business, commerce, and industry. Can't expect high productivity from a nation where a large portion of the population disappears from their cities and towns and camp out on the beaches for the entire month of August. All I can say that unionism is far stronger and effective in Europe as opposed to North America.

You are pointing at the result, not the cause. The reason the French people go on vacation is because the unions have been able to get those unreasonable demands implemented. I work in a French company and I know the management(who are French), would love to have the French employees to be working at the same level as the German or Americans. Unfortunately, the unions rules would not allow, as a result their productivity is less.

The Utopian economic concept of "free flow of labor" is just that, an idyllic notion that is far from reality. Show me a country that does not have labor policies and practices that isn't contrary to such ideals and philosophy. This idea of "free flow of goods, services, and labor" is just that, an idea, that no country really practices in its orthodox sense (meaning).

Well, what exactly do you think European Union or NAFTA are? They are stepping stones towards exactly that... In the union countries, capital(one currency) and labor can flow freely since in the long run it creates greater efficiency. Infact if you look into the European charter, labor and integration of banking system(for free flow of capital) are the two central tenants.

NAFTA did something similar for the northern american countries, us corporations can now produce in mexico or canada. Mexicand and Canada are also out of the quota limit for H1b and can find works in US with relative ease using TN visa.

Ofcourse, you cannot have a free flow of the whole world economy today, since economic parity and integration needs to be achieved first before that. That is, you cannot bring in African countries with western Europe for a union or Bangladesh with Japan. There has to be enough industrial, financial and political development before that can be done. So that is why European union is gradually including less developed Eastern countries, instead of just including them with an announcement.

How is it any different for a doctor from here who has spent his youth and college life in urban areas, than the doctor in Bangladesh? Both the physicians would find the rural setting too quaint and boring. Furthermore, a physician in urban and metro areas earn ten times more, if not higher, than the guy in the single road village.

I think in order to provide adequate and better health area in the rural areas, the US needs to follow the Australian model, things like telemedicine, Royal Flying Doctor's Service, and so on.

Urban doctors are paid more since the cost of living is higher in the cities.Even between states there is a huge difference in salaries. For example. if one moves to LA from Houston, there is a automatic increase in salary of 10-20K to match the increased house rent.

Again, Bangladesh and American cannot be compared in terms of infrastructure. Over here, you will find many well to do professionals staying in relatively smaller cities like Urbana, Austin, Madison compared to LA or NY. But in Bangladesh, outside of Dhaka and Chittagong there is basically no professional class in the regional centers like Narsingdi or Barisal. Since the towns lack basic amenities.

Also, even with a salary of 80-90k in rural areas, US can get lot of overseas doctors to practise there. They don't necessarily need to be of lower quality, countries like India, China, Cuba have highly qualified general physicians who can take over those jobs. They can ofcourse put some restrictions like degrees from accredited educational institutes and one standardized test to pass. But the level of scrutiny currently in place is not essential. Specially in fields of general medicine.

It's better to have foreign doctors in those rural centers than not having any.

I have no problem maintaining barriers for FMGs, particularly for medical graduates from third world countries because there is a big qualitative difference in their academic and clinical training. I wouldn't want an MBBS off the boat to treat me for even a minor cold! And those who are bright and sharp enough will pass all the exams and shine through the residency training that will make them better doctors.

I agree with you on the point that since medicine is a very critical field, it needs to be have stricter laws to maintain quality. But you have to balance everything out. Today, thousands of US patients are travelling to Thailand and even India for operations due to the expense. If they had such huge concerns about quality, they would not have done that.

Secondly, as I mentioned you can get quality foreign doctors(with degrees from top medical schools in Asia and 6-7years experience), willing to relocate to US with one third the salary of US doctors. Also, for general physicians, the rule can be more relaxed compared to specialized field like brain or heart surgery.

Finally it's not just about passing residency. It takes years to go through this, and it's absurd for someone who has 10-12 years of experience in surgery to go through training done by starting medical college students to show their competency. It's like bringing nuclear physicist from India and tell him to go through GRE and 2 years of masters to prove that he is really qualified to practise in the field in US.

There has to be a good balance in terms of ensuring quality and not putting unnecessary barriers to entry of qualified professionals.