Economy of Bangladesh [Archive] - Page 6

nayeem007

November 2nd, 2009, 08:29 PM

Financial sector logs hefty profit

Sajjadur Rahman
Bangladesh's financial sector has recorded impressive profit growth in the first three quarters of 2009, showing strong resilience against fallout from global recession.

The sector -- both banks and non-banks -- posted 30 percent growth in net profit in the January-September period, compared to the same period a year ago.

Sector people linked the growth to a booming capital market, growth in remittances and a revival of congenial investment climate in the third quarter.

“Institutions with operations in capital market have achieved substantial gains this year,” said Mafizuddin Sarker, managing director of LankaBangla Finance, a joint venture leasing and finance company.

LankaBangla Finance's net profit grew nearly 45 percent to more than Tk 52 crore for the first three quarters, compared to the same period of 2008.

Pubali Bank's net profit rose 25 percent to Tk 90 crore in the first three quarters from the same period a year earlier.

“Capital market operation has contributed substantially to growth,” said Helal Ahmed Chowdhury, managing director of the bank, a relatively a new entrant to the capital market operations.

Most banks out of the 48 banks and 29 non-bank financial institutions have achieved significant growth during the period, offsetting fears that the global economic slowdown would cost Bangladesh and its financial sector heavily.

These financial institutions are the prime source of funding for investment in industries and trade.

AB Bank, one of the largest private banks, has logged Tk 210 crore in net profit in the Jan-Sept period of 2009, up from Tk 181 crore in the same period a year ago.

Of the banks, Eastern, IFIC, First Security, Prime, Mutual Trust and Mercantile also grew by double-digit rates during the period. Islami Bank's profit grew only 4 percent, which is negative for Premier Bank.

Eastern Bank's net profit increased by 60 percent to Tk 115 crore in the first three quarters of the current year from the same period of last year, while it is Tk 62 crore for IFIC Bank, up from Tk 50 crore a year ago.

First Security Islami Bank earned Tk 21 crore in net profit, up from Tk 8 crore in the same period a year ago.

Net profit of the non-banks that include IDLC, Union Capital, Phoenix Finance and Investment, Uttara Finance and Prime Finance and Investment grew significantly in the period.

IDLC's net profit increased by 55 percent to Tk 45 crore in the period. Prime Finance's profit rose to Tk 41 crore from Tk 24 crore, Union Capital rose to Tk 11.24 crore from Tk 9 crore, Phoenix rose to Tk 14.36 crore from Tk 9.15 crore, Uttara Finance Tk 34.5 crore from Tk 23 crore.

“Banks and financial institutions have been optimising the still-untapped opportunities in the capital market,” said Anis A Khan, managing director of Mutual Trust Bank that has recorded 252 percent growth in net profit during the first three quarters of 2009.

Mutual Trust Bank's net profit reached nearly Tk 37 crore this year from Tk 10.5 crore a year ago.

“Our capital market is still underserved compared to the total economy. There is ample scope to grow up," Khan said.
http://www.thedailystar.net/newDesign/news-details.php?nid=112427

nayeem007

November 3rd, 2009, 06:14 PM

Bangladesh's Remittance Flow Records Over 21 Percent Growth
November 3, 2009 9:49 a.m. EST

Siddique Islam - AHN Correspondent
Dhaka, Bangladesh (AHN) - Bangladeshi working abroad sent home a record $3.61 billion as remittances in the first four months of the current fiscal, registering a 21.24 percent growth over the same period in the last fiscal period.

The remittances from Bangladeshi nationals working abroad were estimated at $911.20 million in October, up by $23.63 million from the previous month. In September 2009, the remittance was $887.57 million, according to the central bank statistics, released on Tuesday.

"The flow of inward remittances may increase this month ahead of the Eid-ul-Azha festival," a senior official of the Bangladesh Bank (BB), the country's central bank, told AHN Media in Dhaka, preferring anonymity.

Bangladesh received $3.619 billion during the July-October fiscal period of 2009-10 against $2.985 billion in the same period of the previous fiscal, the BB's data showed.

The central bank earlier took a series of measures to encourage the expatriate Bangladeshis to send their hard earned money through formal banking channel instead of the illegal "hundi" system and boost the country's foreign exchange reserves.

Four state-run commercial banks and dozens of private commercial banks have also stepped up efforts to increase remittance flow from the Middle East, the United Kingdom, Malaysia, Singapore, Italy and the United States.

"We are establishing new contacts with overseas exchange houses so that our overseas workers can find it easy to send money back home," a senior official of a private commercial bank told AHN in the capital, Dhaka.

The country's foreign exchange reserves stood at $9.56 billion on Tuesday due to the robust growth of remittances from Bangladeshis working abroad, the BB officials confirmed.

They also said the foreign exchange reserve would come down slightly as the central bank is set to pay around $487million to the Asian Clearing Union (ACU) in a day or two.

The ACU is an arrangement among the central banks of Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan and Sri Lanka to settle trade related payments on a multilateral basis.

http://www.allheadlinenews.com/articles/7016882770

samaruf

November 3rd, 2009, 07:22 PM

[SIZE="5"]
They also said the foreign exchange reserve would come down slightly as the central bank is set to pay around $487million to the Asian Clearing Union (ACU) in a day or two.

The ACU is an arrangement among the central banks of Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan and Sri Lanka to settle trade related payments on a multilateral basis.

I don't understand the ACU concept. Is it like an escrow account where you put in money for goods bought from the member countries?

nayeem007

November 3rd, 2009, 07:34 PM

I don't understand the ACU concept. Is it like an escrow account where you put in money for goods bought from the member countries?

Asian Clearing Union (ACU) is the simplest form of payment arrangements whereby the participants settle payments for intra-regional transactions among the participating central banks on a multilateral basis. The main objectives of a clearing union are to facilitate payments among member countries for eligible transactions, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade among the participating countries. The ACU is a clearing houses/payments arrangements operating in various regions of the world.

http://www.asianclearingunion.org/

mirzazeehan

November 3rd, 2009, 10:02 PM

Thanks for sharing with us this great news Nayeem..this Remittance is more than offsetting any effect on our economy from the global crisis.

Manazir

November 4th, 2009, 02:58 PM

^^
after sometime, u r also gonna be one of the persons sending remittances to BD :)

mirzazeehan

November 4th, 2009, 09:53 PM

^^
after sometime, u r also gonna be one of the persons sending remittances to BD :)

I am afraid I will prolly be creating the opposite impact:lol:

Manazir

November 4th, 2009, 10:20 PM

^^
HAHA :lol:

nayeem007

November 6th, 2009, 12:48 AM

Bangladesh Oct remittances up 40.5 pct yr/yr

Thu Nov 5, 2009 6:14pm IST

DHAKA, Nov 5 (Reuters) - Bangladesh received $911.20 million in remittances from workers overseas in October, up 40.5 percent from a year earlier, the central bank said on Thursday.

The expat incomes, a key source of foreign exchange for the economy, hit $9.7 billion in last fiscal year that ended in June, 22.3 percent higher than the previous year, in spite of the global economic slump.

In July-October, the first four months of the current fiscal year, remittances from more than 6 million expatriate Bangladeshis totalled $3.62 billion, 21 percent higher than the same period of previous year.

Millions of Bangladeshis are dependent on money sent by relatives working overseas, mainly in the Middle East, Europe and the United States, which is also a key plank of the economy.

Officials said strong remittances helped offset the impact of the trade shortfall and kept the overall balance of payments in surplus.

At the end of October the country's foreign exchange reserves surged to an all-time high of more than $9.5 billion, following a steady rise since February.

Analysts and global lending agencies including the World Bank warned the growth of remittances could slow down in the 2009/10 fiscal year as the number of workers leaving for overseas jobs is declining due to the impact of recession in major markets.

Expatriate incomes, which account for 10 percent of the GDP, are the country's second-biggest source of foreign income after ready-made garments, which earned more than $11 billion in the 2008/09 fiscal year.

($1=69.15 taka) (Reporting by Ruma Paul; Editing by Andy Bruce)

http://in.reuters.com/article/domesticNews/idINDHA54791620091105

mirzazeehan

November 7th, 2009, 11:23 PM

Some experts were predicting that remittance growth will slow down next year due to less people going abroad for jobs.Heres the good news that proves them wrong.Remittance is sure to reach 11 Billion Dollar this fiscal year.Now lets target 15 Billion Dollar remittance by 2012:cheers:

Manpower export hits
seven-month high
Shakhawat Hossain

The number of overseas employees in October recorded a seven-month high when 43,812 Bangladeshi workers went abroad with jobs last month thanks to the beginning of the global economy’s recovery from the recession. The last time that Bangladesh sent abroad such a high number of workers (43,856) was in February 2009, according to the Ministry of Expatriates’ Welfare and Overseas Employment.
The worst global financial crisis since 1930 forced the oil-rich Arab countries and others to shut their doors to overseas workers, and as a result the outflow of Bangladeshi workers slid drastically since February 2009 and hit the lowest ebb last September. Only 30,812 people could manage to get jobs abroad that month.
Experts hailed the latest turn-around in overseas manpower recruitment, saying that it was good news for our impoverished country that is heavily dependent on overseas jobs for the remittance of precious foreign currency which plays a significant role in its economy.
Bangladesh is twelfth among the twenty countries in the world where unemployment is rising at the greatest rate, according to last year’s report by the International Labour Organisation. It calculated that the growth rate of unemployment in Bangladesh rose to 3.7 per cent in recent years from 1.9 per cent in the 1990s.
The number of the unemployed in Bangladesh now is estimated to be 30 million. Every year some 2.7 million youths are becoming eligible for jobs, but only 0.7 million of them are getting employment.
In 2007 and 2008, nearly 1.7 million Bangladeshi workers were employed in countries like Saudi Arabia, United Arab Emirates, Bahrain, Kuwait, Malaysia, Singapore and South Korea.
The Bangladesh Association of Recruiting Agencies’ president, Ghulam Mustafa, told New Age that the rise in manpower export in October has signalled strong signs of recovery by the affected countries from the global financial crisis.
Manpower recruitment by the Middle Eastern countries is picking up, he said, adding that nearly 1,000 local manpower recruiting agencies are expecting them to recover fully from the economic downturn early next year.
Of the 43,812 expatriate workers who went abroad in October, the UEA alone recruited 25,185, said the ministry’s officials.
The rise in manpower export is expected to further boost up the inflow of remittance from workers, which is the second highest foreign currency generating source after export, said MK Mujeri, director-general of the Bangladesh Institute of Development Studies.
The revenue from remittance was $9.6 billion while that from the export of merchandise, especially garments, was $15.5 billion in 2008-9.
The country has already received $3.61 billion as remittance in the first four months (July-October) of the current fiscal year, which was $2.98 billion in the same period last year.
Due to the inflow of remittance, the foreign currency reserve is swelling and has registered a record sum of $9.56 billion this week. The reserve was $5.82 billion in June and crossed $9 billion in August.

Source:http://www.newagebd.com/2009/nov/08/busi.html#2

TIslam

November 8th, 2009, 01:23 AM

nayeem007

November 8th, 2009, 09:32 AM

Read read somewhere unemployment is 3% while the underemployment is 40%

As I guessed in an earlier post, unemployment of Bangladesh to be around 15-20%. The Newage article shows that:

The number of the unemployed in Bangladesh now is estimated to be 30 million. Every year some 2.7 million youths are becoming eligible for jobs, but only 0.7 million of them are getting employment.
http://www.newagebd.com/2009/nov/08/busi.html

nayeem007

November 10th, 2009, 10:41 PM

India lags Bangladesh, Nepal in fiscal management

11 Nov 2009, 0109 hrs IST, ET Bureau

MUMBAI: India’s neighbours have done far better than India in economic parameters such as managing their fiscal and current account balances. While Bangladesh is being lauded for controlling wasteful subsidies, Nepal has a revenue-to-GDP ratio far higher than India and has been running fiscal and current account surpluses. Pakistan, despite all its struggles, has been recently upgraded by the global ratings firm Standard & Poor’s for its efforts at fiscal consolidation.

Though, India has been the most adversely affected by the global financial crisis, its neighbours, too, have been indirectly hit. The United Nation’s Economic and Social Commission for Asia Pacific has noted in its latest report that Bangladesh has fared better than other countries in the region. It grew by 6.2% in 2008 compared to 6.4% in 2007, despite back-to-back floods and a devastating cyclone. Also, its current account balance showed a surplus despite higher imports, largely on account of strong growth in export earnings and workers’ remittances.

Bangladesh’s fiscal deficit as a percentage of GDP increased from 3.7% in 2007 to 4.8% in 2008 despite a healthy growth in government revenue, mainly due to higher spending on flood and cyclone relief and higher fuel food and fertiliser subsidies to make up for rising prices in the international market. Even though India had to resort to expansionary fiscal policies, the fiscal deficit number is sharply higher. Even in subsidies, Bangladesh’s number looks much better.

TN Srinivasan, Samuel C Park Jr Professor of Economics at Yale University, in a recent interview to ET, said that Bangladesh is faring comparatively better than its neighbours. For instance, India has this huge set of subsidies in farm, which Bangladesh has been able to do away with. Their respective budget data indicate that subsidies as a percentage of total expenditure for Bangladesh is only about 6.1% compared with India’s 10.9% for FY10. In FY09, it was 6.7% and 14.3%, respectively.
As for Nepal, its government has succeeded in raising its revenues over the last two years after seeing some kind of political stability. Revenue collection increased by 22.6% in 2008 on top of a 21.3% increase in 2007. As a result, the revenue-to-GDP ratio improved to 13.1% in 2008, much lower than India’s. However, Nepal, which enjoys a fiscal surplus, is having steady revenue-to-GDP ratio for the past six-seven years. According to Robert Prior Wandesforde, economist, HSBC, India has a revenue-to-GDP much lower than the rest because fewer people here pay taxes (compared to its population).

In Nepal, higher imports and slower growth of exports led to further widening of the merchandise trade deficit in 2008. But workers’ remittances increased by more than 50% to roughly $2.2 billion in 2008, helping to move the current account deficit into surplus in 2008.

Pakistan’s finances or external position may not be looking significantly better than India’s yet, but ratings firm S&P revised its outlook upward. Susan Smith, MD ratings, S&P, said: “The foreign currency rating on Pakistan was raised in August due to improved external liquidity and progress in fiscal deficit reduction.” Even Sri Lanka recently received a positive ratings review.

http://economictimes.indiatimes.com/news/economy/indicators/India-lags-Bangladesh-Nepal-in-fiscal-management/articleshow/5217353.cms

mirzazeehan

November 10th, 2009, 11:02 PM

Good to see our govt. become efficient in managing the economy

TIslam

November 10th, 2009, 11:09 PM

Good to see our govt. become efficient in managing the economy
I don't know how to interpret it. Is it really that?

nayeem007

November 11th, 2009, 04:14 PM

Bangladesh's Forex Reserve Crosses $10 Billion
November 11, 2009 7:50 a.m. EST

Siddique Islam - AHN Correspondent
Dhaka, Bangladesh (AHN) - The country's foreign exchange reserve has crossed $10 billion mark for the first time, after a substantial amount of funds were received from a multilateral donor agency, officials told AHN Media on Wednesday.

The Asian Development Bank (ADB) has released funds worth around $650 million aiming to help the government overcome the impact of the global economic meltdown and minimizing the fiscal deficit of Bangladesh.

The foreign exchange reserve rose to $10.03 billion on the day from $9.30 billion of the previous day following disbursement of the fund by the ADB, the central bank officials confirmed.

"The country's foreign exchange reserve crossed $10 billion on the day setting a new record in the history of Bangladesh," a senior official of the Bangladesh Bank (BB), the country's central bank, told AHN in the capital, Dhaka.

Besides, the central bank continues its intervention in the inter-bank foreign exchange market through purchase of the U.S. currency directly from commercial banks, which has also pushed the foreign exchange reserve up.

As part of the move, the central bank of Bangladesh purchased around $1.5 billion from commercial banks until Nov. 10 of this fiscal year.

In fiscal 2008-09, the BB bought a total of $1.48 billion directly from the commercial banks against only $202.50 million of the previous fiscal, according to the central bank statistics.

Read more: http://www.allheadlinenews.com/articles/7016962609#ixzz0WYoaUByR

mirzazeehan

November 11th, 2009, 04:33 PM

TIslam

November 11th, 2009, 05:35 PM

Finally!!:banana:
Well,650 million dollar fund by ADB only made it happen fast,the rate at which our forex reserve had been increasing for the last 6 months,we would have reached 13 Billion US Dollars by the end of this fiscal anyway.
By the way,can anyone tell me how much Forex our commercial banks are holding currently?I always read in Pakistani newspapers that their central bank has "this much" and commercial banks are holding "this much".But in our newspapers,I always only get to read about the Forex with the central bank.
Perhaps the commercial banks are not permitted to any substantial amount of foreign currencies? Perhaps most of it end up at the central bank, i.e. it is the only keeper? It would be nice if some Dhaka banker could answer this question.

nayeem007

November 11th, 2009, 08:09 PM

Forex reserve sets $10b benchmark

Star Business Report Bangladesh's foreign exchange reserve yesterday crossed the $10 billion mark for the first time in history, riding on buoyant remittance inflows, moderate exports and declining import payments.

The Asian Development Bank's budgetary support worth around $649 million released the same day also helped the reserve reach equivalent to five months' import bills.

Central bank Governor Atiur Rahman termed it a 'historic' and 'rare' achievement for the country, as the reserve almost doubled in two years.

“This reflects the strength of our economy,” Rahman told reporters at a briefing at the Bangladesh Bank (BB) headquarters yesterday.

The governor however denied that the ADB loan has helped push the reserve to $10 billion and said it is the remittances that played the key role.

Deputy governors Murshid Kuli Khan and Ziaul Hassan Siddiqui also spoke.

The central bank expects the reserve to help the country achieve a better sovereign rating currently being conducted by two global firms -- Moody's and Standard and Poor's.

“This reserve will also help the government bargain strongly with bilateral and multilateral development partners,” said the central bank chief.

“Foreign investors will also be encouraged,” Rahman added.

The foreign exchange reserve was $9 billion in September and $7.47 billion in June this year. But it was slightly over $5 billion in June 2007.

Bangladesh has an obligation imposed by the International Monetary Fund to maintain a reserve equivalent to three months' import bills. According to IMF compulsion, $6 billion reserve is enough.

The reserve reached $10 billion mainly due to a significant rise in inward remittances despite the global economic slowdown that dealt a blow to many countries with negative growth in their remittances.

“Remittances rose by over 22 percent. This has happened as remittances came through banks,” said the central bank governor.

Quoting a recent World Bank report, Ziaul Hassan Siddiqui said only 9 percent remittances are now channelled through hundi, an illegal way of sending money home.

Although exports plummeted by over 11 percent in the first quarter of the current fiscal year compared to the same period last year, the governor termed it a reasonable growth considering other countries' exports.

“Exports are reviving. A lot of orders are coming and we expect a substantial rise in investment demand in the current quarter,” said Rahman.

Replying to a query about the declining import of capital machinery, the governor said the country is already in excess capacity. “We don't need capital machinery now,” he said.

However Rahman said: “Import of industrial raw materials increased significantly last month, reflecting a growing activities in the manufacturing sector.”

But he admitted a significant decline in import payments, mainly with the food grain imports. He has also given credit to farmers for bumper yield.

Rahman admitted the fear of inflationary pressure due to constant rise in remittances. “It creates inflationary pressure, but we are cautious,” he

http://www.thedailystar.net/newDesign/news-details.php?nid=113698

TIslam

November 11th, 2009, 08:28 PM

Forex reserve sets $10b benchmark

Star Business Report Bangladesh's foreign exchange reserve yesterday crossed the $10 billion mark for the first time in history, riding on buoyant remittance inflows, moderate exports and declining import payments.
While all types of "Johnny come lately" will claim credit, let us not forget it is happening primarily because of two sectors: 1) expat remittance, and, 2) garment exports.

tislam84

November 11th, 2009, 08:33 PM

TIslam

November 11th, 2009, 08:39 PM

Governtment should encourage the private sector to import some good quality machinery/capital to spur economic activity in the country. Bangladesh does not need $10b as reserves, it is well over 4 months worth of imports.
What I would hope that they do not expend the reserves for imports of food grains that always appear to be needed owing to poor agricultural infrastructure and support system (proper/adequate storage facilitates, transportation and distribution network, etc.).

nayeem007

November 11th, 2009, 11:54 PM

While all types of "Johnny come lately" will claim credit, let us not forget it is happening primarily because of two sectors: 1) expat remittance, and, 2) garment exports.

Dhaka 8th largest remittance earner in developing world

A Z M Anas
Bangladesh became the eighth largest remittance earner in the developing world last year as it showed resilience in the face of stinging global recession, according to the latest World Bank data.
The Development Prospect Group of the bank, in a revised estimate, said that the country's remittance flow amounted to US$9.0 billion in 2008, catapulting it into the league of top 10 recipients as Bangladesh edged out Egypt and Vietnam.
Other nations included in the top 10 recipient nations' list are the Philippines, Poland, Nigeria and Romania.
In contrast, the top recipients in terms of the share of remittances in GDP (gross domestic product) include many smaller economies such as Tajikistan, Tonga, Moldova, Kyrgyz Republic, Lesotho, Samoa and Lebanon, where remittances exceeded a quarter of the GDP, providing a lifeline to the poor.
The estimate for remittance flows to developing countries in 2008 is higher than earlier estimates largely because of a one-time revision to China's data from $40.6 billion to $48.5 billion to include a larger share of flows recorded as other current transfers.
After the latest data revisions for 2008, India, China and Mexico retain their position as the top recipients of migrant remittances among developing countries.
The new estimates came as world leaders met last week in Greece to explore ways to increase the development benefits of migration.
Dilip Ratha, the Bank's top migration expert, said Bangladesh and its peers in the region with substantial migrant stock in the oil-rich Gulf countries have experienced smaller decline in remittance flows, due to the global downturn.
Dubai which has been the worst affected by the crisis is only one of the seven emirates of the UAE, and the only one that does not have oil.
Many migrant-sending countries are worried about large return migration prompted by weak job markets in destination countries, the Bank economist said.
Data released by the Bureau of Manpower said nearly 45,000 Bangladeshis returned home after the crisis as jobs dried up in major Asian economies, where 92 per cent Bangladeshi migrants lived in.
"Return migration in the current crisis appears to be negligible so far, but if it happens, the workers coming back home will return with skills, entrepreneurial energy and capital," Said Mr. Ratha.

http://www.thefinancialexpress-bd.com/more.php?news_id=84129

nayeem007

November 12th, 2009, 02:46 AM

New nat'l pay scale announced
52pc pay rise, separate scale for judiciary

http://www.thedailystar.net/photo/2009/11/12/2009-11-12__back02.jpg
Staff Correspondent The government announced a 52 percent increase, on average, in the basic salary of the public servants in the seventh national pay scale and fixed the highest salary at Tk 40,000 and the minimum at Tk 4,100.

After the cabinet approved the new pay scale yesterday Finance Minister Abul Maal Abdul Muhith announced it in the evening at a crowded press briefing at the Prime Minister's Office.

Separate pay scales for the judicial service has been announced for the first time this year as the judiciary was separated from the executive during the last caretaker government.

Replying to a query he said there would be no negative impact on the kitchen market with the announcement of new pay scale. "I think prices of essentials won't go up as the present market condition is stable."

Muhith said the district judges, the highest post in the judicial service, would get their salaries according to the third grade meaning they will receive Tk 29,000 as their monthly starting salary instead of Tk 16,800 under the previous scale.

Every member of the judicial service will be given special allowance, which is 30 percent of their basic salary. Members of the armed forces would get increased salary and wages according to their pay scale, Muhith said.

As per the new pay scale, benefits of police and other civil forces will be increased by 30 percent, he added.

The finance minister said the government would try its best to publish a gazette notification before the Eid-ul-Azha to be held at the end of this month.

He said the government would announce a separate pay scale for the education sector next time. Under the new scale teachers, both in public and private institutions will enjoy the same pay scale.

Nurses from diploma and degree backgrounds who work under the same scale will now get different scales as per the new pay scale.

Muhith said the medical allowance of the government employees has been increased to Tk 700 from Tk 500. The government will provide education allowance of Tk 200 to Tk 300.

The pension allowance has also been increased by 40 percent. But if the pensioner is 65 years old he will receive 50 percent increase. As per the new pay scale, either of the spouses will be entitled to pension in case one of them dies. At present only the wife gets the pension benefit if the husband dies.

The pay commission recommended Tk 45,000 as the highest salary, which was cut down to Tk 40,000. Tk 4,000 was proposed as the lowest salary, which was later increased to Tk 4,100.

The government will require an additional amount of Tk 6,222 crore a year to implement the new pay scale. Only the basic salary will come into effect from July this year while other allowances from next July.

In the current fiscal year's budget around Tk 3,500 crore was set aside for implementing the new pay scale for about 15 lakh beneficiaries.

Of that 7,61,214 government employees, 3,03,220 staffs of different autonomous institutions and 4,24,285 pensioners will come under the new pay scale.

In September last year the seventh pay commission was formed with former chairman of the Revenue Reform Commission Mustafizur Rahman as its chairman. The commission submitted its report in last April. The government formed a secretary level committee to review the report on which the cabinet took the decision yesterday with Prime Minister Sheikh Hasina in the chair.
http://www.thedailystar.net/newDesign/news-details.php?nid=113747

samaruf

November 13th, 2009, 10:09 PM

TIslam

November 13th, 2009, 11:01 PM

nayeem007

November 13th, 2009, 11:36 PM

^^The lowest salary is Tk 4100. Who is paid this amount, and how are they supposed to survive on it? It is less than what our bua in Dhaka gets if you include food, clothing and shelter.

I asked an Indian colleague and he mentioned that in Hyderabad, sweepers get Rs 7000/month. A very low salary scale is also the cause of a lot of the corruption and thievery...not that kotipotis are any less corrupt.

Tk 4100 is low, but better than Tk 2100 they used to get just last week. Also government employees get lot of other facilities like cheaper apartments(ex: new colony at Lalmatia and the Govt employee housing center at Banani Road 23).

I am sure the condition of government workers in India is also similar (just like the bua in Dhaka earning more than tk4100, the sweeper in India might make more than lowest grade of government employees there).

Also, cost of living at Bangalore and Hyderabad has gone up many folds in the last decade due to the boom in the IT industry. I saw that first hand last year, everything costs atleast three times more than that of Dhaka.. a decent hotel like Marriot costs around $350-400/night and a crappy 2 star is $150-175/night. In Dhaka you can stay in 5 star Westin, Radisson for $200.. Not just hotel, fast food price was also much higher there..

King Nothing

November 14th, 2009, 01:14 AM

^^The lowest salary is Tk 4100. Who is paid this amount

Entry level kormocharis.

TIslam

November 14th, 2009, 01:57 AM

Tk 4100 is low, but better than Tk 2100 they used to get just last week. Also government employees get lot of other facilities like cheaper apartments(ex: new colony at Lalmatia and the Govt employee housing center at Banani Road 23).

Does every single government employee receive all or most of the perks (benefits)? How about employees of sector corporation like TCB (just picked one out of the hat)?

I understand in India, government employees receive "ration" of foodstuff/essentials. Is there any such thing for government employees in Bangladesh?

nayeem007

November 14th, 2009, 02:03 AM

Does every single government employee receive all or most of the perks (benefits)? How about employees of sector corporation like TCB (just picked one out of the hat)?

I understand in India, government employees receive "ration" of foodstuff/essentials. Is there any such thing for government employees in Bangladesh?

I don't think Indian government rations foodstuff/essentials for every class of government employees. Just like Bangladesh the benefits are confined to certain section.The reason I am saying this is, when I was in Bangalore, I saw the government employees complaining about their salary the same way as Bangladeshis.

My dad was a civil servant aswell, working for the Planning Commission of Bangladesh. I heard from my mum that those days were really difficult and we couldn't even afford to keep domestic help since salary was abysmal.

King Nothing

November 14th, 2009, 02:43 AM

Does every single government employee receive all or most of the perks (benefits)?

I know every single government employee recieves Pension after retirement. Thats what makes government job so valuable to many kormocharis even with the low salary.

TIslam

November 14th, 2009, 03:05 AM

I don't think Indian government rations foodstuff/essentials for every class of government employees. Just like Bangladesh the benefits are confined to certain section.The reason I am saying this is, when I was in Bangalore, I saw the government employees complaining about their salary the same way as Bangladeshis.

My dad was a civil servant aswell, working for the Planning Commission of Bangladesh. I heard from my mum that those days were really difficult and we couldn't even afford to keep domestic help since salary was abysmal.

That being the basic fact, I don't see the reason for overwhelming preference for a government job over other sectors. A pension alone cannot be that much of an overriding reason [King Nothing].

Yes, I know, my father-in-law was in Planning Commission as well. My mother-in-law tells me the story that soon after they returned home from their stint in Singapore, they enrolled my wife at Green Herald. Within a few months, they had to yank her out as they couldn't afford the tuition on government's salary. In the end, they lucked out because my father-in-law landed a career position at ADB.

My personal observation has been that a family of four can have a comfortable life, provided it is a dual income family with government provided housing (or subsidy).

King Nothing

November 14th, 2009, 03:29 AM

That being the basic fact, I don't see the reason for overwhelming preference for a government job over other sectors. A pension alone cannot be that much of an overriding reason [King Nothing].

I forgot to mention the most important reason. Its the permanancy of a government job. A private org. can fire you whenever it wants to but in a govt. job you can commit the worst crime and you will only be suspended. Sacking rarely happens.

TIslam

November 14th, 2009, 04:26 AM

I forgot to mention the most important reason. Its the permanancy of a government job. A private org. can fire you whenever it wants to but in a govt. job you can commit the worst crime and you will only be suspended. Sacking rarely happens.
Now that I buy, and makes most sense. My wife's youngest uncle is a nuclear medicine specialist and I suppose, he is therefore, an employee of the Atomic Energy Commission. The man appears to be way too preoccupied and worried about office politics as opposed to the practice of medicine. When he was here for a training, I used to argue (debate) with him about it and ask him why did he care about all the nonsense being a doctor, because if he could always quit and establish a thriving private practice. I came to understand he didn't wish to work very hard to earn a decent living, especially in old age.

nayeem007

November 14th, 2009, 05:13 AM

samaruf

November 14th, 2009, 05:52 AM

Overall I think it's a good move to almost double the base salary of government employees. We may criticize saying that it's not enough, but we have to realize that Bangladesh is a developing country with 160 million people and huge amount of foreign debt, so we cannot afford to provide the same kind of facilities like other nations. But it's a step towards the right direction.

The government has so many things to balance out, starting from improving infrastructure(bridges,subways, power stations) to having better defense forces and educational system for the young generation. The balance among the sectors is delicate.

Actually Nayeem, even though it's a step in the right direction, my heart goes out to these poor folks, especially the entry level kormocharis that King mentioned. What kind of a survival are they eking out with mere 4000 taka and before that with paltry 2100 taka(30 bucks) ? My parents tell me about the prices of essentials going up all the time and I wonder if these folks can even afford dal bhat on a daily basis. And since they are govt. employees, they have a certain standard to maintain and can't lead the life of a slum dweller or a rickshawallah. The RMG sector employees are in a similar bind.

nayeem007

November 14th, 2009, 07:17 AM

^^ I completely agree with you. But if you thought the government employees are paid poorly, think about the public school teachers. I just read in the newspaper that the teachers in primary/secondary school actually earn less than government office drivers (based on above pay scale).

TIslam

November 14th, 2009, 10:16 PM

Overall I think it's a good move to almost double the base salary of government employees. ...
Was watching Tritio Matra (Channel-i) the other day. There were these two experts who opined that the pay scale increase will lead to price inflation.

nayeem007

November 15th, 2009, 01:07 AM

Was watching Tritio Matra (Channel-i) the other day. There were these two experts who opined that the pay scale increase will lead to price inflation.

I read an article about it in DS the other day aswell.If there is more liquidity in the market then the inflation should naturally rise, but hopefully not at the same rate as the salary increase. The government do need to monitor the commodity/kitchen market very carefully over the next 6 months.

samaruf

November 15th, 2009, 03:26 AM

I read an article about it in DS the other day aswell.If there is more liquidity in the market then the inflation should naturally rise, but hopefully not at the same rate as the salary increase. The government do need to monitor the commodity/kitchen market very carefully over the next 6 months.

Salary increase or not, price fluctuation is really egregious in Bangladesh. I mean 1 kg of kacha morich can be 20 taka during a month and in a few months it will be 90 taka. It is the same for other vegetables and essentials except may be rice. The sugar hoarding and price manipulation was widely publicized and it provided an insight into how unscrupulous wholesalers keep the country hostage and create artificial crises.

nayeem007

November 16th, 2009, 05:08 AM

Income tax returns revenue grows 36.28 pc

Star Online ReportThe amount of money collected by the National Board of Revenue, NBR, through income tax returns increased by 36.28 percent in the current fiscal year with Tk 859.93 crore.

The income tax collection in the 2008-09 year was Tk 623.67 crore.

Increasing trust of the taxpayers and the service-oriented mentality of the tax officials contributed to the rise in income tax collection, NBR member Aminur Rahman told a press conference on Sunday.

November 12 was the last day for submission of income tax return.

Rahman told the press conference that a number of 7,57,964 organisations and individuals have submitted returns in this fiscal year against the 6,56,193 in the previous year, marking 15.51 percent growth.

At present there are 22 lakh Tax Identification Number (TIN) holders across the country. But according to information though the number of tax payees submitting returns increased this year about 14 lakh TIN holders do not pay tax yet.

http://www.thedailystar.net/newDesign/latest_news.php?nid=20601

nayeem007

November 16th, 2009, 05:10 AM

^^Good to see Income tax revenue growing in Bangladesh. We are still lagging behind other nations in the region in terms of tax income as a percentage of country's budget, but the signs are positive.

tislam84

November 16th, 2009, 07:28 AM

Tk. 859 crore is approximately equal to $120 million. That is still pretty low. NBR needs to be more aggressive in collecting taxes.

I think corporations should deduct taxes before paying out salaries and give it to NBR

nayeem007

November 24th, 2009, 07:59 PM

Citi projects GDP growth at 6.1pc for next fiscal year

Star Business ReportBangladesh's economy is expected to grow at 6.1 percent in the next fiscal year (2010-11) after two years' growth of less than 6 percent, Citigroup forecasts on Bangladesh yesterday.

The economy grew at 5.9 percent in fiscal 2008-09 and set to grow 5.7 percent this year, according to the projection. Earlier, the economy had grown 6 percent plus rate since fiscal 2004-05.

“Trends so far indicate that estimates could be achieved, with industrial production growing at a healthy pace,” said the group in an outlook report.

Lauding the government's thrust on infrastructure development, the Citigroup sees it as encouraging. It said this thrust could result in more investments.

However, there are some downside risks, including low agriculture production, poor implementation of the government's various initiatives and a decline in manufacturing production, particularly due to sluggish demand for textile exports, it said.

The group has also identified inflation as a risk in future.

Growth in Bangladesh has historically remained firmly above 6 percent on year-on-year levels in spite of natural disasters, political volatility and governance issues.

In FY 2008-09, gross domestic product (GDP) was up 5.9 percent despite weak global growth. The group expects GDP to sustain at 5.7 percent growth this fiscal before recovering further to 6.1 percent in 2010-11.

Citigroup estimates are based on an upturn in industry and services. It said industry now comprises close to 30 percent of GDP from 20 percent levels earlier.

“We expect the government's thrust on infrastructure development to fuel further growth, particularly in construction, manufacturing, and in the power sector,” it projects.

Growth in exports has been a major driver in Bangladesh economy during the recent years. Exports comprise around 17 percent of GDP and have been growing at an average rate of around 11percent year-on-year over the last ten years. And the key driver has been textile exports, which account for around 75 percent of total exports.

“Trends are erratic, but it should gather pace in fiscal 2010-11,” the group said in the outlook. Monthly trends have been extremely erratic with growth during July-September (FY10) down 11.7 percent.

While trends in remittances are expected to remain buoyant, rising imports could result in the current account surplus narrowing to 1.7 percent of GDP in the next fiscal year from estimated 2.5 percent this year.

On the currency, the group expects Taka to continue its depreciating trend, to average Tk 71.6/$ in FY 2009-10.

It said the recent success of the Grameenphone IPO (the biggest since independence in 1971) could enhance the attractiveness of the domestic equity market to foreign investors.

The projection also said the fiscal deficit will remain within the GDP target of 5 percent.

http://www.thedailystar.net/newDesign/news-details.php?nid=115421

mirzazeehan

November 24th, 2009, 10:29 PM

^^Thats great news:banana:
Heres more:

Banks' idle money declining fast
Any rise in deposit rates unlikely
Sheikh Shahariar Zaman

Excess reserve with Bangladesh Bank fell by Tk 53 billion in two months with November alone witnessing a decline of Tk 30 billion, indicating a return of normalcy in the economy.

The reserve was as high as 98 billion on July 1, it came down to Tk 95 billion on October 1 and on November 1 it was Tk 72 billion, but it came down to Tk 42 billion on November 23, according to central bank data.

The excess reserve is the hard cash deposited by commercial banks in addition to cash reserve requirement and it lies idle with the central bank and bears no return.

"The banks are doing very well and now they need money as they have found investment and lending scopes," managing director of Mutual Trust Bank (MTB) Anis A Khan told the FE.

"Some of the money are spent on buying treasury bonds and some went to lending," he said adding, "My bank alone lent about Tk 3.0 billion in three months."

An economic turnaround will not put pressure on deposit rate, and lending rate will remain stable, he hoped.

"It is true, demand for money will increase when the economy will start functioning in full swing, but it is expected that the banks will not increase the deposit rates in a bid to rope in funds," he said.

MTB has reduced the agriculture lending rate to 12.75 per cent from 13 per cent as it is managing its liabilities very prudently, he added.

The banks have sufficient liquidity and call rate is only 4.0 to 5.0 per cent this year, Mr Anis said.

A senior central bank official said it is a very positive sign that the amount is decreasing as the banks keep the money with the central bank for lack of investment or lending scope.

"The idle money remains at Tk 15 billion to Tk 20 billion level when the economy performs normally," he said.

The country experienced sluggishness in economy due to global recession and fall in both value and volume of the exports. But there is now a sign of recovery, the official said.

The opening of letters of credit (LCs) is also on the rise as investors expecting a turnaround in the global economy, he added.

The LC opening in October was worth $2.0 billion, which was $1.37 billion in the same month of the last year, and in the first three weeks in November $1.5 billion worth of LCs were opened compared with $1.17 billion in the same period of the last November.

Source:http://www.thefinancialexpress-bd.com/more.php?news_id=85347

nayeem007

November 27th, 2009, 08:22 AM

I think Mirza and others were talking about Ambani of India in some earlier posts... well here is our own story of "rags to riches", Mr Azad of Azad products limited.

4aRMZPTQpFw&feature

^^ The above is the true lifestory of Azad and I have read it in newspapers/heard from parents before also.Today Abul Kalam Azad is heading large corporations like Azad Printing and Packaging, Grand Azad Hotel, A to Z computers and Education, Scan builders and more.

nayeem007

December 2nd, 2009, 04:18 AM

Swedish Hedge Fund Brummer to Set Up New Bangladesh Stocks Fund Share
By Netty Ismail

Dec. 2 (Bloomberg) -- Brummer & Partners, the largest Scandinavian hedge-fund manager, plans to set up a fund to buy Bangladeshi stocks, betting the south Asian nation will attract investors seeking the world’s next low-cost labor hub.

The fund “should not be larger than $100 million” as only about a third of Bangladeshi companies’ outstanding shares are publicly traded, said Patrik Brummer, founder of the Stockholm- based firm, whose assets are at their peak of about $7 billion. The fund will be formed within the next three months, he said.

The nation of 162 million people, equivalent to about half of the population of the U.S., may join the ranks of the fastest-growing economies in the region as it benefits from its geographical proximity to India and China and low labor costs. The economy, which expanded 5.9 percent in the year to June, was shielded from the financial crisis because of its “limited integration” in the global economy, according to the World Bank.

“If you believe in labor arbitrage as a true trend, that will benefit Bangladesh,” Brummer, 60, said in an interview at the three-year-old Westin Dhaka hotel. “The predictability for this country is much higher than most countries that I know of; it is largely uncorrelated to the world economy.”

Bangladesh’s ready-made garment exports have shown resilience because of the so-called Wal-Mart effect, where consumers substitute more expensive products for cheaper ones such as those from the South Asian nation, the World Bank said in a September report. Buyers are also shifting production to Bangladesh, which may have become the world’s lowest-cost producer, from China, the Washington-based bank said.

Stock-Market Rally

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.

“Bangladesh has a lot of raw potential and is full of opportunities for those ready to dig in,” said Douglas Clayton, Phnom Penh-based founder of Leopard Capital LP, which manages a Cambodia private-equity fund and is raising money to invest in Sri Lanka. “In time, we’ll probably launch a fund here.”

The Dhaka Stock Exchange General Index, which gained 21 percent this year, eclipsed its previous high reached in 1996 as shares of GrameenPhone Ltd., Bangladesh’s largest mobile-phone company, almost tripled on debut on Nov. 16. GrameenPhone, controlled by Norway’s Telenor ASA, raised 4.9 billion taka ($71 million) in Bangladesh’s biggest initial public offering.

The stock market’s daily turnover has grown to about $100 million over the last few months, from an average of $20 million a day in 2007, according to Brummer.

Bubble Danger

“One danger in this kind of an environment is that you get a bubble at one stage,” Brummer said. “If a lot of foreign investors take an interest in this market, being such a small market, then it can explode.”

The manager set up in July 2008 a Bangladesh hybrid fund to invest in stocks and private equity. About half of that fund’s $53 million will go into a private-equity fund, which the firm started this year. The International Finance Corp., part of the World Bank, has committed $10 million to the private-equity fund, which is set to attract more money from other investors, he said.

The private-equity fund, targeting returns of at least 20 percent, plans to hold minority stakes in “successful companies that have a bright future,” Brummer said. It has invested in the export business of Bangladesh’s largest automotive battery maker and a supermarket chain operator, both part of Dhaka-based Rahimafrooz Group.

Stockholm to Dhaka

“There has been a lot of change in the city of Dhaka, a lot of construction activity,” said Brummer, who first visited the capital city in 2005 and travels there four times a year.

The Stockholm-based manager is an investor in bracNet, a wireless broadband company in Bangladesh that Khalid Quadir, who runs Brummer & Partners’ unit in Dhaka, started in 2005. KDDI Corp., Japan’s second-largest mobile-phone operator, agreed to buy 50 percent of bracNet on Nov. 12.

Brummer started his hedge-fund business in 1996 after spending 22 years at Alfred Berg, the largest brokerage in the Nordic region. Alfred Berg was acquired by ABN Amro Holding NV in 1995.

Brummer & Partners attracted net inflows of $1.7 billion this year, he said.

The firm’s multistrategy fund, which invests in Brummer & Partners’ own strategies and accounts for more than a third of its total assets, “has become a very popular vehicle,” he said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=abOlqUUVJMtM&pos=7

nayeem007

December 2nd, 2009, 04:19 AM

The nation of 162 million people, equivalent to about half of the population of the U.S., may join the ranks of the fastest-growing economies in the region as it benefits from its geographical proximity to India and China and low labor costs.

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.

“Bangladesh has a lot of raw potential and is full of opportunities for those ready to dig in,” said Douglas Clayton, Phnom Penh-based founder of Leopard Capital LP, which manages a Cambodia private-equity fund and is raising
http://www.bloomberg.com/apps/news?pid=20601087&sid=abOlqUUVJMtM&pos=7

^^ Bangladesh is finally getting attention for the right reasons from reputed international business sites like Bloomberg.

mirzazeehan

December 4th, 2009, 06:36 AM

^^very encouraging news indeed

mirzazeehan

December 4th, 2009, 11:22 PM

Expats remit record $105.35(about seven thousand crore taka) crore home in November
Some 6.5 million Bangladeshis work in foreign countries, according to government figures

Thursday December 03 2009 23:29:46 PM BDT

Bangladeshis working abroad sent home $ 105.35 crore in November, (about seven thousand crore taka) all-time high amount in a single month and belying forecasts of a slump due to the global financial downturn.(TBT Report)

"The figure of remittance in November is a new record in the country's history," Bangladesh Bank (BB) governor Atiur Rahman said on Thursday adding that the new record cash inflow from expatriates bettered the previous mark of $ 93.79 crore of August.

The flow of inward remittances increased in the month of November over the previous month due to the Eid-ul-Azha festival, said BB governor. "The record remittance due to Eid-ul-Azha festival, pushed the forex reserves to top $ 1,000 crore," he added.

The flow of remittance has increased as programmes have been taken up to create awareness among the non-resident Bangladeshis (NRBs) across the globe about remitting their hard earned currencies through the banking channel, instead of 'hundi', he said.

Besides, the government offers special citizen facilities to the NRBs, who are able to send US$ 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.

The central bank earlier took a series of measures to encourage the expatriate Bangladeshis to send home their money using the formal banking channel instead of 'hundi' and boost the country's foreign exchange reserve.

At the outset of global economic recession, the International Monetary Fund and Asian Development Bank predicted an alarming slump in remittance.

As per statistics of Foreign Reserve and Treasury Management Division of Bangladesh Bank, July, the first month of current fiscal year, saw remittance worth $ 88.64 crore while it was $ 88.76 crore in September and $ 91.12 crore in October.

At present, some 6.5 million Bangladeshis work in foreign countries, according to government figures.

Source:http://www.bangladesh-web.com/view.php?hidRecord=295500

Manazir

December 5th, 2009, 06:09 PM

^^
i think 6.5 mn are just laborers, cuz I am quite sure there are atleast 10 mn Bangladeshis around the globe!

nayeem007

December 12th, 2009, 07:29 PM

Bangladesh fights back fallout good
States Goldman Sachs outlook on post-global meltdown

Staff CorrespondentBangladesh figures in a group of countries that are emerging from the shocks of global economic crisis better than the developed world, US investment bank Goldman Sachs finds in a research.

The research report released on December 4 says Bangladesh has performed "broadly in line with expectations".

Also, Bangladesh is one of the 11 countries that have a high potential of becoming a leading economy in the 21st century along with Brazil, Russia, India and China (BRICs), Goldman Sachs says in the report styled "Long-Term Outlook for the BRICs and N-11 Post Crisis".

The other 10 countries that constitute N-11 (Next Eleven) as dubbed by Goldman Sachs are Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam.

The bank has recently chosen these states, all with promising outlooks for investment and future growth.

Goldman Sachs used macroeconomic stability, political maturity, openness of trade and investment policies, and the quality of education as criteria.

The N-11 paper is a follow-up to the bank's 2003 paper on the four emerging BRIC economies.

"Bangladesh was the only country in the BRIC and N-11 where macro stability components improved. Like others, it also benefited from higher mobile penetration, while political conditions took a step back," says the Goldman Sachs report.

It is now possible that China will become as big as the US by 2027, and the BRICs as big as the G7 by 2032, while China, Brazil, India, Indonesia and the Philippines appear to be performing best.

"Bangladesh, Egypt, Korea, Nigeria, Turkey and Vietnam form a second group of countries that have performed broadly in line with expectations," says the report.

On an individual country basis, all of the BRICs and seven of the N-11 countries--Bangladesh, Egypt, Indonesia, Iran, Nigeria, Philippines and Vietnam--contributed more to world growth in 2007-2008 than from 2000 to 2006.

Between 2007 and 2009, Mexico, Russia and Turkey saw the deepest downturns in the two groups. These three countries saw their economies shrink in 2009.

"China, India, Indonesia and Bangladesh experienced only relatively mild slowdowns," the report says.

Stock markets in Mexico, Korea and Bangladesh declined notably less amid the global economic meltdown. Since the rebound in equity markets, some markets have recovered substantially. Brazil and Mexico are almost back to their previous peaks.

Bangladesh has recovered all its losses, says Goldman Sachs, adding that China and Russia have only regained around half of their respective all-time highs.

"Global credit crisis and recession have tested the resilience of our GES (Growth Environment Score)," which is designed to measure the strength of a country's sustainable growth, Goldman Sachs says.

Brazil, China, Indonesia and even Bangladesh have shown less vulnerability to the crisis.

All the BRIC and N-11 countries, with the exception of Bangladesh, have given back a large share of the gains made in the macro stability category, as a result of higher inflation, rising external debt and deteriorating government deficits. Political conditions have also suffered in some places.

All the countries that rank relatively highly in terms of their GES are expected to recover faster. These include Brazil, Korea, Mexico, Russia, Turkey and Vietnam.

"On the other hand, those places where our GES remains significantly below the developing-country average are likely to see a very modest acceleration. Bangladesh, Nigeria and Pakistan reflect this," says the Goldman Sachs report.

http://www.thedailystar.net/newDesign/news-details.php?nid=117533

mirzazeehan

December 12th, 2009, 09:27 PM

^^
Great to see Goldman Sach still backing Bangladesh's hopes of becoming one of the 12 largest economies in the world by 2050:cheers:

tanzirian

December 13th, 2009, 05:10 AM

^^ Heartening report to hear, Nayeem. Let's hope for a few decades of industry-building...hopefully our politicos will keep agitation low enough for a period of sustained growth.

jjsheed

December 13th, 2009, 07:58 AM

Govt plans to raise private investment to spur growth

The government plans to raise private sector investment to 30- 32.5 per cent of the country's Gross Domestic Product (GDP) to boost economic growth to eight per cent by 2013, a finance ministry policy paper said.

Presently, investment from the country's tens of thousands of private entrepreneurs is less than 20 per cent of the GDP, resulting in a gaping hole in the amount of fund needed to spur growth.

The paper has identified a number of policy steps and a host of ambitious infrastructure projects to increase private investment to the required level in an effort to achieve the targetted growth.

Ministry of Finance officials said the paper has already been finalised and would be sent to the Prime Minister Sheikh Hasina soon for approval.

Ensuring energy security, enhancing efficiencies of ports and implementing large infrastructure projects are three most urgent policy steps identified by the paper to catalyse private sector investment.

"We have identified the policy steps to implement the medium term targets included in the government's Vision-2021 by 2013," a senior official told the FE.

"A strong political will can implement the targets, which are achievable if policies are fine-tuned,'' he said.

As part of the plan, a fund worth $9.5 billion was now being created for the power sector alone.

The paper has stressed creating a pool of bureaucrats to implement Public-Private Partnership (PPP) related projects and strengthen Board of Investment (BoI), now assigned to oversee the PPP-related activities.

It said budgetary allocation of Tk 25 billion, earmarked for the projects under the private-public initiative, should be utilised to create a momentum in the government's plan to invigorate the PPP.

It added the government must implement large projects like Dhaka-Chittagong access control highway, sky-train encompassing the Dhaka metropolis, Dhaka city subway and Dhaka-Narayanganj-Gazipur-Dhaka elevated expressway through private sector to boost growth.

As the issue of investment -- be it public or private -- requires direct involvement of bureaucrats, the paper recommended forming a high-powered commission to enhance expertise of public servants.

It also suggested creating a market-oriented education system to prepare future managers and executives for the booming private companies and bringing about changes in traditional institutional framework of the government.

The policy paper also called for planning development projects only after considering impacts of climate change to ensure a sustainable development.

The target to achieve eight per cent GDP growth by 2013 is included in the Medium Term Targets of Vision 2021 of the ruling Awami League (AL) party.

Reducing the present rate of poverty to 25 per cent and extreme poverty to 15 per cent are two other major targets set by the AL.

http://www.thefinancialexpress-bd.com/more.php?news_id=86768

fallstuf

January 3rd, 2010, 12:25 AM

From:
http://www.thedailystar.net/newDesign/news-details.php?nid=119715 (http://www.thedailystar.net/newDesign/news-details.php?nid=119715)

Call Centres on the rebound

Call Centres have emerged as a new foreign currency earning sector, generating more than 30,000 jobs since its boom in mid-2009.

With around 1,500 seats in 47 such centres currently in operation, experts say, this sector has every potential to flourish, bagging high-end work contracts from global markets.

Successes are many. So are the industry insiders encouraged for expansion of business that now enjoys 60 percent growth.

"It is quite encouraging to see what call centres have accomplished in a short span of time," said Habibullah N Karim, president of Bangladesh Association of Software and Information Services (BASIS).

Bangladesh Telecommunication Regulatory Commission (BTRC) allowed setting up of call centres in April 2008. However, such business started springing up this year.

A call centre is an office where a company's inbound calls are received, or outbound calls are made.

The industry here mainly works for different companies based in the US, UK, Canada and Australia. Its job responsibilities include selling products, verifying international credit cards, campaign for new product sales, booking hotel rooms and even selling laptops.

In addition to outsourcing different services globally, the industry now eyes grabbing Tk 500 crore a year from the local market, although a dearth of skilled agents haunts call centre business.

"A learning phase we're now passing. We have success stories as well. More than 60 percent call centres are now in break-even,” says Reazuddin Mosharaf, secretary general of Bangladesh Association of Call Centre and Outsourcing (Bacco).

An amount of al least Tk 1 crore is required to set up a centre having 25 seats.

Initially, entrepreneurs deemed global recession a threat to their business, which eventually proved to be wrong as the financial firestorm had left some openings. The foreign companies using the call centres for promoting products and services have opted for working with Bangladesh's novice call centres.

Now the industry presents a base to brighten its future prospects, even though its turnover in terms of forex earning is not that impressive.

"Some expertise now we've earned. We've ideas as to how a call centre should work, " the Bacco executive pointed out.

Many a company have centralised their customer support functions at call centres, which contributed a lot to make this business popular.

However, efficient agents remain scarce, a main obstacle to the sectoral development. In the coming years, around 1,50,000 agents will be required to cope with the growing demand for call centres.

Mainly students from English medium schools and private universities work with such centres.

Rumana Hossain, an agent of ATN call centre, thinks the profession is not bad at all. "Our working environment is nice. So we do not feel bad during day or night time."

From a social perspective, the second year student of BRAC University said, it is a new idea in Bangladesh. She also pointed to the fact that she faced a volley of questions from fellow students.

"But when someone gets to know responsibilities of the job, they also become interested."

Mosharaf, who is also managing director of Windmill Advertising Ltd, said the local market is worth about Tk 500 crore.

Usually telecoms, medical institutions, insurance companies and banks provide different services through the domestic call centres.

Masrur Alam, director of Computer Source, demanded that the regulator allow providing domestic and international call centres services at the same premises with the same set up.

"We are busy with our international clients mainly at night because of the difference in time. But in the day time, our call centre becomes lazy as we have no work then,” he pointed out.

In this context he cited the example of India where both domestic and international operations are allowed from the same premises, which makes room for flourishing within a very short time.

The BASIS president brushes aside such a dearth. "I believe, one or two lakh agents are available in the market. Let them know that it is an opportunity."

Zia Ahmed, chairman of BTRC, believes that the call centre industry is a promising sector to earn foreign currency.

"The plan to set up a call centre village is under consideration by the telecom ministry,” he told The Daily Star.

fallstuf

January 8th, 2010, 12:38 AM

From:
http://www.thedailystar.net/newDesign/news-details.php?nid=120539

2009 remittance sets new benchmark
Tuesday, January 5, 2010
Rejaul Karim Byron

http://www.thedailystar.net/photo/2010/01/05/2010-01-05__b04.jpg

Remittance crossed $10 billion mark for the first time in Bangladesh history in the year 2009 because migrants, a main driver of the country's economic progress, sent more money home despite all odds during global recession.

With 20 percent growth, remittance inflow reached $10.72 billion last year, although the year marked a fall in manpower exports. In 2008, the remittance was $8.97 billion.

The overseas employment ministry data shows that the number of migrant workers declined 46 percent to 475,278 persons in January-December of 2009. In 2008, the number was 875,055.

The monthly average number of the workers going abroad with jobs almost halved last year from around 80,000 persons in 2008.

Still, the remittance inflow grew 20 percent, turning down World Bank forecast of 12-15 percent such growth for 2009. The international lender in a recent report expressed its fear about low growth on the basis of the declining trend of manpower exports.

Economists and bankers think the financial crisis worldwide has opened up the scope for Bangladesh expatriates to send more money home, as they lost confidence in depositing hard-earned money with foreign banks during their stay in middle eastern and other countries.

Baharul Islam, chairman of Sonali Bank, the second highest remittance earner among banks, gave all credit to the expatriates who sent money home after passing through many hurdles for the record remittance flow. “Expatriates are great contributors to our economy,” he said.

Mustafizur Rahman, executive director of the Centre for Policy Dialogue (CPD), said, “The main cause of more remittance inflow in 2009 is the worry among expatriates about depositing money with foreign banks against the backdrop of global meltdown.”

He also pointed to the fact that migrant workers now increasingly tend to sent their money to their relatives through official channels, instead of informal ones like 'hundi.' The institutional service providers are also contributing a lot to reach out the remitted amount to the recipients in rural areas, which Mustafiz thinks another reason behind the enhanced reliance on official channels.

Cost of sending money has also reduced significantly in recent times, which also helped raise remittance inflow, the CPD top official pointed out.

Meanwhile, uncertainty has loomed over future manpower export, as big manpower markets Saudi Arabia, Kuwait and Malaysia stopped hiring workers from Bangladesh. However, some new markets have emerged, which include Iraq and Libya.

The government is continuing dialogue with these countries but any positive signal is yet to come.

mirzazeehan

January 8th, 2010, 07:13 AM

^^:cheers:

mirzazeehan

January 10th, 2010, 11:19 PM

DSE turnover sets new record
Hasina's visit to India jives up power shares
Star Business Report

The single-day turnover on the premier bourse reached a new high of Tk 1,325 crore yesterday, backed by price rallies in the power sector shares that were riding on the prime minister's visit to India and a probable deal on electricity import.

Prime Minister Sheikh Hasina left Dhaka yesterday evening on a three-day visit to India. According to media reports, an agreement on power sharing between Bangladesh and India would be signed during her visit.

Market insiders said the investors were betting on state-owned power companies on anticipation that the companies would be assigned for transmission and distribution of the imported electricity from India, resulting in more business and profitability.

The craze was for two state-owned enterprises -- Power Grid Company of Bangladesh (Powergrid) and Dhaka Electric Supply Company (Desco).

On the Dhaka Stock Exchange (DSE) yesterday, each Powergrid share advanced by 4.3 percent to Tk 819, while each Desco share went up by 3.8 percent to Tk 1,634.75.

A huge transaction in the two companies' shares also put them on the second and fourth positions in the list of top turnover leaders. A total of 720,800 Powergrid shares worth Tk 58.08 crore were traded on the DSE, while a total of 251,850 Desco shares worth Tk 40.66 crore changed hands.

“The record level turnover is the reflection of investors' continued confidence in the market,” said Yawer Sayeed, managing director of AIMS of Bangladesh, an asset management company.

“However, the momentum is required to be sustained by attending to the supply side deficiency,” he said.

The rally in the power sector shares also pushed up the benchmark index, DSE General Index, to a new high of 4,730.74 points, which rose by 8.64 points, or 0.18 percent. The broader DSE All Share Price Index increased 13.03 points, or 0.33 percent, to 3,917.69.

However, the major market movers such as banking, non-bank financial institutions and telecom sectors declined yesterday.

Advancers beat losers 127 to 113. Four securities remained unchanged. A total of 3,95,87,648 shares and mutual fund units were traded on the prime bourse.

Beximco topped the turnover leaders with 30,32,500 shares worth Tk 99.06 crore being traded on the DSE.

S Alam Cold Roll Steel Mill, which advanced 13.73 percent, was the largest gainer, while 2nd ICB Mutual Fund, which declined 5.76 percent, was the biggest loser.

Chittagong stocks also marked a slight rise. The CSE Selective Categories Index gained 8.7 points, or 0.09 percent, to 8,928.73. The CSE All Share Price Index increased 33.52 points, or 0.24 percent, to 13,780.94.

A total of 42,56,186 shares worth Tk 80.56 crore changed hands on the Chittagong Stock Exchange. Of the traded securities, 74 advanced, 95 declined and eight remained unchanged.

S Alam Cold Roll Steel Mill was the biggest gainer, rising 14.85 percent, while Olympic Industries was the largest loser, declining 11.9 percent.

Beximco topped the turnover leaders with 180,100 shares worth Tk 5.87 crore being traded on the port city bourse.

Source:http://www.thedailystar.net/newDesign/news-details.php?nid=121295

nayeem007

January 21st, 2010, 05:25 PM

Bangladesh breathes in hope
By R M Cutler

MONTREAL - Bangladesh, long known in the West as an "international basket case", is doing its best to consign to history the dismal label so firmly attached to it by US diplomat Henry Kissinger. The economy is humming and the stock market surging. Now the government is being urged to pursue reforms while the opportunity lasts.

The Dhaka Stock Exchange General Index (DGEN) has doubled in the past nine months, including a phenomenal 25% one-day jump in mid-November. It has risen 10% in just the last three weeks and is now on the verge of closing above the 5,000 mark, which it crossed briefly earlier this week.

This is a remarkable change in fortunes for the country since Kissinger, then running the US State Department, expressed hisviews soon after Bangladesh won its independence from Pakistan in 1971. An important force for good since then has been the Grameen Bank's extension of microcredit, the idea for which Muhammad Yunus received the 2005 Nobel Peace Prize.

The country's per-capita inflation-adjusted gross domestic product (GDP) has more than doubled in the past 35 years, according to the World Bank, and its poverty rate fallen by 20% in the last two decades. Urbanization, especially around the capital Dhaka, has driven this growth.

The UN still classifies it as a "least developed country" (LDC), but the decline in the budget deficit, high rates of export and import growth, and increasing foreign currency reserves earned Bangladesh plaudits in a recent country review paper for the UN's Brussels Program of Action for the LDCs. The report encouraged the government to continue to pursue attempts to reform the budgetary system, financial institutions, and the revenue sector.

The drive to pursue any such reforms may be weakened by an economy faced with unpleasant headwinds as the global economic crisis continues to make its impact felt.

Three-quarters of the country's export earnings are pulled in by the garment industry, backed by foreign direct investment (FDI). This has been hard hit by a decline in demand as a result of the global financial crisis.

FDI, which has been encouraged through the establishment of a handful of Export Processing Zones, where foreign investors receive incentives for opening factories, also took a hit last year and is expected to continue to slow in 2010. Remittances from abroad, which contribute significantly to foreign exchange, also face a slowdown as Bangladeshi workers overseas struggle to keep jobs and maintain pay levels.

As is the case in some East Asian countries, the lack of integration of local financial and banking institutions with the worldwide industry shielded Bangladesh somewhat from being swept up in the economic maelstrom of the global crisis. The possibilities of increased prices for food and fuel are now the country's major macroeconomic challenges.

The Bangladesh Bank has followed a monetary policy intended to control inflation while increasing capital investment. While increasing credit to the private sector, however, it is restricting credit to government. The bank anticipates that both food and non-food inflation in Bangladesh will continue over coming months. Its target figure is 6.5%. Bank governor Atiur Rahman says there are dangers of speculative bubbles, as real productive opportunities may lag behind available investment capital. Those worries seem so far not have dragged on the stock market.

It was the landslide election of a political alliance led by the Bangladesh Awami League at the end of December 2008 (following a provisional military government that postponed the planned January 2007 elections) and the institutionalization of a relatively stable democracy that created the political preconditions for the present exceptional, near-parabolic rise in the stock market.

The banking sector remains the market bellwether, and the country's largest mobile telephone operator, Grameenphone, represents 17% of total market capitalization. Other significant sectors include pharmaceuticals and energy, notably gas.

There had been some hope, in the middle of the last decade, that a Bangladesh-India-Myanmar dispute over Bay of Bengal maritime boundaries might be resolved in conjunction with development of an east-to-west gas pipeline extending to Kolkata.

The Bangladeshi government, which would have garnered transit fees from the project, was however the only one not to sign off on the final proposal. Since then, Myanmar has decided to send its gas by pipeline to China.

There has been so much natural gas development in Bangladesh that the Asian Development Bank estimates that overdependence on gas for power generation and in industrial and residential sectors in fact represents a threat to the country's energy security. At some time in the future, the government will have to rethink its pricing structure, which makes gas available to users at a minimal price. Electricity demand regularly outstrips supply.

It the country is able to overcome transparency issues and continue cooperation with its South Asian neighbors (as a recent summit meeting with India indicates will happen), then the country's economic prognosis is far more positive than its earlier reputation.

Bangladesh is considered a "frontier market" under the FTSE classification, although not by MSCI. Yet Goldman Sachs includes it among the "Next Eleven" (N-11) that it judges have the potential to become one of the world's largest economies in the present century, a category separate from the BRICs - the fast-growing developing economies of Brazil, Russia, India and China.

Dr Robert M Cutler (http://www.robertcutler.org), educated at the Massachusetts Institute of Technology and The University of Michigan, has researched and taught at universities in the United States, Canada, France, Switzerland, and Russia. Now senior research fellow in the Institute of European, Russian and Eurasian Studies, Carleton University, Canada

http://www.atimes.com/atimes/South_Asia/LA22Df02.html

mirzazeehan

February 6th, 2010, 01:24 AM

BB expects remittance income to cross $11b mark this fiscal:banana:
Siddique Islam

Bangladesh Bank expects the inward remittance to record more than US$ 11 billion by the end of the current fiscal as a special move has already been made to increase its flow from different parts of the world.

"We expect that the inflow of remittances may cross $11 billion mark by the end of this fiscal'a senior official of the Bangladesh Bank (BB) told the FE, adding that the central bank had estimated the figure on the basis of the last six months flow of remittances.

Bangladesh received $5.535 billion during the July-December period of fiscal 2009-10, registering a 22.89 per cent growth over the same period of the previous fiscal, according to the central bank statistics.

The latest figure shows that despite the slowdown of overseas jobs, inflow of remittance has maintained a robust growth -- a continuation of the trend in last fiscal year when remittance grew 22.41 per cent, the BB officials said.

"We expect the upward trend of inward remittances to continue in the near future," another BB official said, adding that the stable exchange rate of the local currency against the US dollar was also contributing to higher flow of inward remittances.

The central bank earlier took a series of measures to encourage expatriate Bangladeshis to send their hard earned money through formal banking channel instead of the illegal "hundi" system to boost the country's foreign exchange reserves.

As part of the measures, the BB issued 26 more licences to 14 commercial banks recently for setting up exchange houses in different parts of the world aiming at expediting remittance inflow.

The central bank has, so far, given approval to establish 295 exchange houses and set up 840 drawing arrangements abroad to boost flow of remittance through formal channels.

Besides, the BB has given permissions to 13 both local and foreign commercial banks to disburse remittances using networks of 14 non-governmental organisations (NGOs.), including BRAC and ASA, across the country.

Four state-run commercial banks and dozens of private commercial banks have also stepped up efforts to increase remittance flow from the Middle East, the United Kingdom, Japan, Canada, Australia, Malaysia, Singapore, Italy and the United States.

"We've a plan to establish a good number of exchange houses at Canada, the United States, Europe, Australia and the countries in the Meddle East to speed up remittances from the counties using official channel," Managing Director and Chief Executive Officer of the Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed told the FE Saturday.

He also said the board of directors of the state-owned bank has already given permission for setting up the exchange houses aboard. "We're seeking permission from the central bank in this connection," he added.

"Our efforts will continue to establish new contacts with overseas exchange houses so that our overseas workers can find it easier to send money back home," a senior official of a private commercial bank said.

Some banks are trying to expand their network to expedite the delivery of remittances to the beneficiaries across the country, he added.

Source:http://www.thefinancialexpress-bd.com/more.php?news_id=91094

nayeem007

April 6th, 2010, 03:12 PM

Bangladesh 'stable' economy earns first credit rating
(AFP) – 4 hours ago

DHAKA — Bangladesh got its first sovereign credit rating Tuesday, with Standard & Poor's saying Dhaka's economic outlook was stable but constrained by high levels of debt and poor revenue collection.

The move means import and export costs will be significantly lower, while the country will be able to attract more foreign direct investment, central bank governor Atiur Rahman said.

"We consider Bangladesh free from major macroeconomic imbalances despite severe fiscal constraints, a low-income economy and heavy development needs," the ratings agency said in a statement after awarding Bangladesh a BB-.

S&P said the rating was boosted by the country's "strong and stable" economic growth -- last year it expanded 5.9 percent despite global downturn -- improved foreign exchange reserves and debt ratios.

Key problems were identified as "high public and external debt, limited fiscal flexibility due to low revenue-generation capacity and significant physical and human capital development needs," S&P said.

Finance minister A.M.A Muhith welcomed the decision, Bangladesh's first sovereign rating since independence in 1971.

The country is now on par with 11 other countries including Cambodia, Georgia, Serbia and Ghana, and well above other south Asian nations including Sri Lanka and Pakistan, he said.

"It's a very important statement on our economy. We agree with their ratings. We are now almost at par with Indonesia, Vietnam and the Philippines," he said.

He said the government was committed to improving the country's low tax to GDP ratio, which currently hovers at around eight percent, and scaling up investment in the energy sector to boost industrial growth.

http://www.google.com/hostednews/afp/article/ALeqM5ggbnSo7bDt-BRHrBVPV5vewx2ExA

nayeem007

April 6th, 2010, 03:31 PM

S&P gives good rating to Bangladesh

http://www.thedailystar.net/latest_photo/2010/04/06/2010-04-06__S&P_1.jpg

Star Online Report

Bangladesh got a –BBB sovereign credit rating by US rating agency Standard & Poor's (S&P), securing a higher position than Pakistan and Sri Lanka.

The first ever rating would help Bangladesh government to measure the existing risks in the economy and both public and private sectors would now be able to borrow at a lower interest rate from international lenders.

S&P rates 123 governments.

The organisation has a total of 17 rating categories ranging from AAA to CCC+ and Bangladesh was placed in number 13 category.

Announcing the achievement at the Finance Division of the ministry, Finance Minister AMA Muhith said out of 123 countries S&P rated this year, Bangladesh's position was more or less the same from that of some other emerging economies of the region like the Philippines, Indonesia and Vietnam.

Muhith also said his government is happy with the rating.

Admitting the past government’s contribution in achieving the rating, the minister said the rating agency has evaluated GDP growth of the last ten years. This is why the achievements of the previous BNP-led four-party alliance and the immediate past caretaker governments contributed to securing the good rating.

Earlier in 2006, Bangladesh Bank asked S&P and Moody's Investors Service to rate Bangladesh.

At the briefing, Bangladesh Bank Deputy Governor Ziaul Hasan Siddiqui said the rating would help reduce costs of international trades.

Expressing expectation of getting more Foreign Direct Investment in the country, BB Governor Atiur Rahman said GDP growth, high foreign exchange reserve and good current account balance were the reasons behind getting a good rating like this.

http://www.thedailystar.net/newDesign/latest_news.php?nid=23089

nayeem007

April 6th, 2010, 03:33 PM

^^ My respect for Finance minister AMA Muhith has gone up after reading his comment above. Very few Bangladeshi politicians openly acknowledge the good work done by previous governments.

samaruf

April 6th, 2010, 04:34 PM

^^ My respect for Finance minister AMA Muhith has gone up after reading his comment above. Very few Bangladeshi politicians openly acknowledge the good work done by previous governments.

My good friend, the PS of the late Finance minister, Saifur Rahman, mentioned to me that Mr Muhith and Mr. Saifur Rahman were buddies and both hail from Sylhet. I guess that also contributes to the mutual respect these two men had for each other. Now if we can get the Begums to be a little more social.

mirzazeehan

April 6th, 2010, 10:14 PM

Great to hear this fantastic news!This could greatly improve Bangladesh's image in the eyes of foreign investors.

jjsheed

April 6th, 2010, 11:07 PM

double post

jjsheed

April 6th, 2010, 11:10 PM

S&P gives good rating to Bangladesh Good news considering

Foreign investment in Bangladesh down nearly 66 pct
Monday, April 05, 2010 6:31 AM
DHAKA, Apr. 5, 2010 (Xinhua News Agency) -- Net foreign investment in Bangladesh plunged nearly 66 percent to 228 million U.S. dollars in the first seven months of the current fiscal year 2009-10 to end June 2010, the central bank data showed Monday.

"Net foreign direct investment (FDI) inflows came down to 228 million U.S. dollars in July-January period of the current fiscal year from 662 million U.S. dollars in the same period a year earlier owing to global recession," a senior Bangladesh Bank (BB) official said.

Apart from the global recession shocks, the BB official, who preferred to be unnamed, said acute shortage of gas and electricity in the country also contributed to abate FDI inflows to a large extent during the first seven months of the current fiscal year 2009-10 (July 2009-June 2010).

Bangladesh experiences up to 300 million cubic feet (8.49 million cubic meters) of gas and at least up to 1,500 megawatts of electricity shortages each day.

Due to the same reasons, the BB official said the FDI inflows also fell sharply in the first half of the current fiscal year.

Inflows of FDI to Bangladesh shrunk by 67.33 percent to 197 million U.S. dollars in July-December period of the current fiscal year 2009-10, the BB data showed.

Despite the power and energy crisis in the country, the BB official, however, expressed the hope that the flow of FDI might rise in the coming months due to recovery of major global economies.

http://www.istockanalyst.com/article/viewiStockNews/articleid/4001286

TIslam

April 7th, 2010, 12:13 AM

S&P gives good rating to Bangladesh

After the CDO/CDS debacle, do the rating agencies (Moody's, S&P) have any credibility left?

TIslam

April 7th, 2010, 12:43 AM

TIslam

April 7th, 2010, 12:50 AM

My good friend, the PS of the late Finance minister, Saifur Rahman, mentioned to me that Mr Muhith and Mr. Saifur Rahman were buddies and both hail from Sylhet. I guess that also contributes to the mutual respect these two men had for each other. Now if we can get the Begums to be a little more social.
It is difficult to demonize somebody if you know him/her well personally. My other observation is that most people will extend professional courtesy to his/her fellow professional, and readily so, if that person is highly competent and credible.
Politicians, on the other hand, have no such creed. Before Mr Muhith turned politician, he had an illustrious professional life. It is heartening to learn that he can reflect on his professionalism.

amar11372

April 7th, 2010, 05:51 AM

After the CDO/CDS debacle, do the rating agencies (Moody's, S&P) have any credibility left?

Unfortunately, still yes.

TIslam

April 7th, 2010, 01:13 PM

Unfortunately, still yes.
Then be prepared for another massive bailout when you (all) are in your 50s/60s. :)

nayeem007

April 17th, 2010, 10:06 PM

Bangladesh moves up economic liberty index
States Heritage Foundation-Wall Street Journal report

Staff Correspondent Bangladesh has made significant strides in the Index of Economic Freedom world rankings, making its economy the 137th freest in the world.

In the ranking, the country's overall score was 51.1, which is 3.6 points higher than that of the last year, according to the report jointly prepared by USA-based think tank Heritage Foundation and the Wall Street Journal.

In the Asia-Pacific region Bangladesh has been ranked 29th out of 41 countries.

“The gains reflect Bangladesh's improvements in trade freedom and investment freedom,” according to the report.

In the index, the country for the first time graduated itself from the 'Repressed' category to the category of 'Mostly Unfree' countries.

Praising the country's performance in last five years, the report said, “Bangladesh has enjoyed impressive economic growth of around 6 percent per year over the past five years driven mainly by its limited but growing services and industrial sectors.”

It, however, said, “Structural and institutional weaknesses remain serious impediments to sustaining such high economic growth rates.”

It said Bangladesh's economy remains overly dependent on agriculture, which accounts for almost 20 percent of GDP and employs more than half of the labour force.

It also said the heavily politicised weak regulatory regime of the country often tends to crowd out private investment while corruption, coupled with onerous bureaucracy, is still perceived as pervasive.

This year the ranking covered 183 countries measuring 10 components of economic freedom. Score in each category ranged from 0 to 100.

The components were business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labour freedom.

In the component business freedom Bangladesh scored 59.4 out of 100. The report said in Bangladesh it requires 44 days on average to start a business while the world average is 35 days. However, obtaining a business license requires less than the world average of 18 procedures.

Bangladesh's score was 58 in trade freedom component. Import and export restrictions, numerous border taxes and fees, burdensome import licencing rules, export subsidies, government monopolies, inefficient and corrupt customs administration, among others, add to the cost of trade in the country, said the report.

Twenty points were deducted from Bangladesh's trade freedom score to account for non-tariff barriers.

In the monetary freedom component where the country scored 66.6, a total of 15 points were deducted from this component to adjust for price-control measures that distort domestic prices for petroleum products, some pharmaceuticals, and goods produced in state-owned enterprises.

About the financial freedom the report said Bangladesh has made modest progress in recent years in its banking sector adding that the sector is underdeveloped and provides a limited range of banking services.

Bangladesh's state-owned commercial banks, which account for more than 30 percent of total banking system assets, undermine the sector's efficiency, it said. Bangladesh scored 20 in the financial freedom component.

In the global context Hong Kong, Singapore, and Australia are the top three scorers in the index while North Korea, Zimbabwe and Cuba were top from the bottom.

In South Asian context Bangladesh's position was only above Maldives whose rank is 148th. Bhutan's position was the 103rd, Pakistan's 117th, Sri Lanka's 120th, India's 124th, and Nepal's 130th.

Though Afghanistan was covered in the index, it was not given any score.

http://www.thedailystar.net/newDesign/news-details.php?nid=134742

TIslam

April 18th, 2010, 12:39 AM

nayeem007

May 27th, 2010, 09:29 PM

Per capita income reaches $750

http://www.thedailystar.net/photo/2010/05/28/2010-05-28__b1.jpg

Rejaul Karim ByronThe per capita income crossed the $700 mark in the current fiscal year, mainly because of a healthy GDP growth.

The people of lower strata have got a share of the rise in the income as small-scale industries have shown a rapid growth and employed the poor segment.

The per capita income has reached $750 this fiscal year from $676 last year.

For Bangladesh to graduate to a mid-income country, its per capita income should be $975 now.
World Bank senior economist Zahid Hussain said Bangladesh can quickly reach the mid-income group of countries only if its GDP grows at a faster rate of around 7.5 percent to 8 percent. The GDP (gross domestic product) growth rate is 5.5 percent now.

Hussain said the growth is healthy in the existing economic scenario.

Bangladesh Bureau of Statistics (BBS) early this week finalised the provisional account of GDP for the current fiscal year and the actual GDP calculations for the last year.

"If we can't make a rapid progress, we won't be able to reach the level of per capita income required for becoming a mid-income country," Hussain said.

"From the growth pattern it seems that the low-income people have benefited from the rise in the per capita income."

In the manufacturing sector, small-scale industries, which are more labour intensive, have shown the most rapid growth.

The WB economist also said the country fetched a huge amount of remittance this year, which gave a rise to non-farm activities such as in small teashops, biscuit factories and small toy shops in the rural areas.

This has helped the lower strata people get a share of the increased per capita income, said Hussain.

He said the growth has almost doubled this fiscal year in public administration and education sectors. The income of the government staff, workers and teachers increased as the pay scale was implemented.

The government repeatedly projected the GDP growth rate to be 6 percent but the BBS provisional account shows that the growth was 5.54 percent this fiscal year.

The BBS in the final calculation of last fiscal year's GDP growth showed a slide to 5.74 percent, which was 5.9 percent in earlier estimate.

The services sector showed a good growth this year, but the overall GDP growth was lower because of a fall in the agriculture and industries sectors.

The growth rate in the agriculture sector dropped almost by half due to the declining growth in crop. The growth rate in crop sector was 2.20 percent this fiscal year, down from 4.02 percent last year.

BBS officials said the main contributor to the crop sector is rice. In the last fiscal year crop sector saw a bumper production of rice at around three crore tonnes. Although Aus crop was hampered this year, the harvest is expected to be around three crore tonnes. As the production remained the same, the crop sector did not rise.

In the manufacturing sector, the growth rate fell by 1.40 percentage points compared to the last fiscal year, due to a poor performance by the export sector.

The inflow of a big amount of remittance and the implementation of pay scale in the public sector contributed to the growth in the services sector.

http://www.thedailystar.net/newDesign/news-details.php?nid=140346

Manazir

May 27th, 2010, 11:29 PM

^^
this is good news indeed :)

King Nothing

May 28th, 2010, 09:21 PM

How much is per capita income in PPP terms? That should give us a more clearer picture.

Manazir

May 29th, 2010, 08:04 AM

^^
around $1,500

mirzazeehan

May 29th, 2010, 10:23 AM

great news! Cant wait to reach 1000 and remove this tag of "poor country'!

hakz2007

June 6th, 2010, 07:04 AM

EXPATRIATES CONTRIBUTE 30 PERCENT TO GDP-BANGLADESHI MINISTER
DHAKA, June 5 (NNN-BSS) -- Minister for Labour and Employment, Expatriate Welfare and Overseas Employment Engineer Khondoker Mosharraf Hossain has said the people of Bangladesh working in different countries of the world are contributing 30 percent to the GDP every year by sending home remittances from their hard- earned foreign currencies.

"As many as 70 lakh Bangladeshis are now working in around 100 countries of the world and sending remittances home regularly, contributing enormously to the national economy every year," he said while addressing as the chief guest the concluding ceremony of the annual convention of Lions Clubs International Multiple District 315 here last night. (One Lakh:100,000)

Presided over by outgoing Council Chairperson Lion Engr M Shahjahan Khadem, the function was also addressed by Lions Sheikh Kabir Hossain, Qazi Akramuddin Ahmed, Moslem Ali Khan and P K Roy, among others, as special guests. Several Members of Parliament elected from the Lions' family were especially honoured at the function.

Engineer Khondoker Mosharraf Hossain said around 500,000 Bangladeshis went abroad with jobs last year and this year it would be more as the present government as part of its election pledges has been pursuing a pro-people policy to provide employment to the unemployed youths at home and abroad.

"The way the present government is running the governance by upholding the national interest, I foresee around 10 million Bangladeshis will be able to work abroad after a few years and they will be the main contributors in the national economy," he said.

Referring to the global recession that even brought the world's biggest economies on the brink of collapse last year, the Minister said Prime Minister Sheikh Hasina's excellent managerial efficiency and farsightedness saved the Bangladesh economy from the wrath of that adversity in the global economy.

"Inshallah, we will go ahead with our vision and mission towards fulfilling the Vision-2021 under the able and dynamic leadership of Bangabandhu's daughter and Prime Minister Sheikh Hasina," he said.

Later, Engineer Khondoker Mosharraf Hossain joined a Lions Club being imbued with their spirit of service to humanity and congratulated them on their instant contribution of Taka 25 lakh to Prime Minister Sheikh Hasina for helping the city's Nimtoli fire victims.http://www.namnewsnetwork.org/v2/read.php?id=122682

nayeem007

June 11th, 2010, 05:45 PM

Bangladesh proposes a 'humanised budget'
Bangladesh proposes an ambitious $19.42 billion budget for fiscal year 2010-2011

By Saifur Rahman, Business Editor Published: 17:15 June 11, 2010
Dubai: Bangladesh government on Thursday proposed an ambitious Tk1.32 trillion ($19.42 billion) budget for fiscal year 2010-2011 starting July 1, with a target of achieving 6.7 per cent growth in gross domestic products (GDP).

This is nearly 20 per cent higher than last year's budget, in which the government aims to fund about 70 per cent from domestic sources by expanding domestic capacity.

Finance Minister Abul Maal Abdul Muhith tabled the country's 39th budget since Bangladesh's independence in 1971, at the Jatiya Sangsad (the National Parliament) in style, for the first time through a power-point presentation, giving adequate attention to power generation.

Due to the lack of sufficent power supply in the face of rising demand that has been hampering social life, businesses and industrial development, as well as shifting government services online as part the country's quest towards developing soft infrastructure under the 'Digital Bangladesh' programme, the government has nearly doubled the allocation for power generation in the sector, amounting to Tk61.14 billion.

For the first time, the government has published a roadmap for the power and energy sectors with a five-year development roadmap that will see supply catching up with demand by 2012 with a planned Tk30 billion public-private partnership framework. The government has already set up a Tk16 billion Bangladesh Infrastructure Finance Fund (BIFF) to spearhead investment in these sectors to support the growth of the power-hungry economy.

While tabling the budget, Muhith said, the country's economy has largely remained unaffected by the global financial crisis as workers' remittance continue to grow in double-digits to $10 billion and the foreign exchange reserve has crossed for the first time the $10 billion mark.

"Export earnings are on the rise since March 2010 and in April this has increased by 19 per cent. I am optimistic that this trend will continue in the remaining months of current financial year as well as in the coming fiscal year," he told the parliament session boycotted by the Opposition.

Shaikh Abdul Karim, Senior Vice-President of Sharjah Islamic Bank, said, "Although the budget is very much a people-oriented and theoretically a very good document, the challenge lies in its implementation. I hope the government succeeds in implementing this."

The government has pledged more than 30 per cent of the Tk385 billion Annual Development Programme (ADP) in local government, rural development and agricultural sectors while 15.3 per cent has been allocated to power and energy sectors.

Social sector and rural economy has been given a clear priority to develop capacity that could reduce dependence on foreign aid, economists say.
Professor Abul Barakat, president of Bangladesh Economists' Association, termed it a "humanised budget".

"For the first time I have seen the government has clubbed the various economic sectors from a holistic point and tried to allocate resources accordingly," he said in his reaction. "For example, the agricultural sector has been integrated with rural development, increase in agriculture research, development of agro-based industries and capacity building in the rural areas - these are inter-linked. Education, human resources, training, research and technical education has been clubbed together that will help the government to extract better results."

Iftekhar Ahmad, chief financial officer of Qatar-based Ali Bin Ali Group, commented, "We need to develop a national focus and prioritise the sectors which we will develop on a longer term basis. We cannot, be self-sufficient on everything, so we will be dependent on many sectors. So, the sectors, in which we can be self sufficient, like rice and poultry sectors, we need to make the import of raw materials for these sectors with minimum tariff."

http://gulfnews.com/news/world/other-world/bangladesh-proposes-a-humanised-budget-1.639822

nayeem007

June 11th, 2010, 05:48 PM

http://www.newagebd.com/2010/jun/11/front-b.jpg

nayeem007

June 11th, 2010, 05:50 PM

Defense have more spending than "Energy & Power"!

TIslam

June 11th, 2010, 08:05 PM

Defense have more spending than "Energy & Power"!
Can I quip "what's wrong with this picture"? What exactly constitute "Miscellaneous Expenditure" (at over 8 %)?

Shafi_Khan

June 11th, 2010, 09:04 PM

Can I quip "what's wrong with this picture"? What exactly constitute "Miscellaneous Expenditure" (at over 8 %)?

I think the MPs take that as a salary boost... and also to buy expensive cars and homes :lol:

ajprobashi

June 11th, 2010, 10:20 PM

I think the MPs take that as a salary boost... and also to buy expensive cars and homes :lol:

I was thinking the same thing..and it's probably it

TIslam

June 12th, 2010, 12:13 AM

I think the MPs take that as a salary boost... and also to buy expensive cars and homes :lol:
:lol:
Welcome to the forum, Shafi Khan. Even though you've had 12 posts already, you must have joined recently. Hope you'll have a good time here.

King Nothing

June 12th, 2010, 08:47 PM

Defense have more spending than "Energy & Power"!

An absolute shame! Well thats what happens when u spend on Migs and tanks and military equipment.

nayeem007

June 13th, 2010, 12:25 AM

An absolute shame! Well thats what happens when u spend on Migs and tanks and military equipment.

I completely agree with you on this... Defense should get some spending but definitely not more than "energy & power" which is the key to our economic development.

Also, I believe a vast portion of funding is used for the salary and boarding of the military personal. We need to have a small but efficient armed forces, that is focused more on technology than numbers.

HereWeGo

June 13th, 2010, 12:39 AM

An absolute shame! Well thats what happens when u spend on Migs and tanks and military equipment.
I cannot agree with you....
Defence brings in more money than we spend on it. If you look at the bangladesh navy and airforce, than you would realise how backward the forces are in terms of modern equipments. Given the threat posed by myanmar regarding the sea boundary, atleast our navy needs to improve...

King Nothing

June 13th, 2010, 12:54 AM

I cannot agree with you....
Defence brings in more money than we spend on it. If you look at the bangladesh navy and airforce, than you would realise how backward the forces are in terms of modern equipments. Given the threat posed by myanmar regarding the sea boundary, atleast our navy needs to improve...

Let them be backward. We are a developing country facing 6 hours of load-shedding every day while the army officers live their luxury lives. U wont believe how much go into their pockets while buying these migs and tanks. Meanwhile I think the PM herself is the defense minister so do the math.

Also we are in no position to counter Myanmar and India anyway. And it makes no sense protecting sea-boundaries if you are going to give all the gas to foreign companies anyway.

And how does the dfence bring in money?

TIslam

June 13th, 2010, 01:07 AM

^^
I think, the annual "budget" process really doesn't mean much, owing to much "off the books" transactions galore. Bangladesh will never catch up to its neighbors in terms of military hardware so facing off the neighbors militarily, is a moot point. Common sense tells us that a huge capital expenditure would be required in the energy and power sector, if any meaningful improvement in capacity is to be attained.

nayeem007

June 13th, 2010, 06:29 AM

There should be a balance in spending and prioritization. We cannot completely ignore the defence forces of the country since it directly related to our sovereignty and territorial integrity. Myanmar is a real threat to our oil and gas resources in Bay of Bengal, we need a strong navy to counteract that. Also, we are no match for a regional power like India, but at the same time we are not Bhutan or Nepal either. Moreover, Bangladesh armed forces also have critical roles to play in terms of disaster relief (in fact for cyclone or earthquake, they are the only organization that have some sort of capacity for mass relief/ rescue operation) and through UN missions army has also brought in lot of revenue.

I believe in a relatively small but modern army with latest equipment.So I would prefer cutting down on numbers (which takes a lot in the form of salaries, lodging etc) and emphasize on efficiency and technological advancement.

But saying all this, I do agree with King and Towhid bhai, that the allocation should never be more than that of critical sector like "Energy & Power". This area is vital for industralization and economic growth. So it's beyond my comprehension why the Budget provides a larger allocation in defense!

nayeem007

June 13th, 2010, 08:24 AM

Losses pile up at state entities

http://www.thedailystar.net/photo/2010/06/13/2010-06-13__b01.jpg

Rejaul Karim Byron

Losses incurred by state-owned enterprises increased by 38 percent to Tk 4,130 crore in the outgoing fiscal year.

The Power Development Board (PDB) and Bangladesh Petroleum Corporation (BPC) accounted for about 86 percent of the total loss.

According to the Economic Review 2010, PDB incurred losses worth Tk 1,428 crore in fiscal 2009-10, which was Tk 828 crore last year.

PDB officials said the power plants in the public sector are run-down and their generation capacity has dropped. "This is not only contributing to the loss, but is also the reason for an increase in load-shedding," said one of the officials.

The government sells electricity at a price lower than production costs. It buys power from rental plants at much higher prices and sells for less, which inflates the loss figures.

PDB plans to buy 1,000-1,200 megawatts of electricity next fiscal year from the rental power plants. The loss will pile further up, the official said.

But the loss may go down, if the government adjusts the price of power, he said.

The Rural Electrification Board (REB) pared down losses: it suffered a loss of Tk 240 crore this fiscal year, down from Tk 1,488 crore a year ago.

BPC incurred the highest loss of Tk 1,936 crore in the current fiscal year, while it made a profit of Tk 322 crore last year.

Officials at the Energy Division said the prices of petroleum products fell on the international market because of global recession, which enabled BPC to profit last fiscal year.

But in the recent times, the prices of petroleum products are increasing and BPC is recording deeper losses.

Officials said BPC would have to supply furnace oil and diesel to the rental power plants at market price. This is a major concern, as it will increase losses, they said.

Of the 46 SOEs, 17 were in the red. The rest made a profit of Tk 4,001 crore in the current fiscal year. BTRC recorded the highest profit of Tk 2,074 crore.

Many state enterprises also failed to pay bank loans. Until February, default loans by the SOEs stood at 7 percent of total outstanding loans. The amount of outstanding loans was Tk 16,208 crore.

Bangladesh Jute Mills Corporation (BJMC) defaulted on Tk 687 crore, a third of its outstanding loans of Tk 2,466 crore. A high official of BJMC said the government has taken massive plans to reorganise the jute sector and if the plans are implemented, loan defaults will drop.

In his budget speech, Finance Minister AMA Muhith said: "To revive the jute sector, BJMC has been given Tk 1,092 crore in funds through cash and bank guarantees in the current fiscal year."

Bangladesh Textile Mills Corporation (BTMC) was second in terms of loan defaults: Tk 272 crore. About 99 percent of BTMC's outstanding loans are default loans.

http://www.thedailystar.net/newDesign/news-details.php?nid=142406

nayeem007

June 13th, 2010, 08:25 AM

^^ "Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless." Milton Friedman

King Nothing

June 13th, 2010, 11:13 AM

^^ "Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless." Milton Friedman

The guys an asshole. That statement doesnt make any sense.

dopekhor

June 13th, 2010, 11:31 AM

Defense have more spending than "Energy & Power"!
how else do u think the military will lead the lives of kings and how are they supposed to build dohs's

dopekhor

June 13th, 2010, 11:34 AM

I completely agree with you on this... Defense should get some spending but definitely not more than "energy & power" which is the key to our economic development.

Also, I believe a vast portion of funding is used for the salary and boarding of the military personal. We need to have a small but efficient armed forces, that is focused more on technology than numbers.
bangladesh needs to use the IDF as a roll model

King Nothing

June 13th, 2010, 11:38 AM

Whats IDF?

dopekhor

June 13th, 2010, 11:38 AM

dopekhor

June 13th, 2010, 11:45 AM

Whats IDF?
israel defense forces

TIslam

June 13th, 2010, 05:50 PM

bangladesh needs to use the IDF as a roll model
And what would that be? Citizen soldier? Will you join or try to escape the mandatory two years? IDF wouldn't amount to much without the active military (economic) assistance of the US. Even with all the sophistication, they had their collective behinds reamed in their last war with Hezbollah in Lebanon. IDF is good for only one thing, keeping the hapless Palestinians down.

nayeem007

June 13th, 2010, 07:38 PM

The guys an asshole. That statement doesnt make any sense.

:lol: I knew Milton Friedman will upset you.. Here is another one "Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government."

dopekhor

June 13th, 2010, 07:47 PM

And what would that be? Citizen soldier? Will you join or try to escape the mandatory two years? IDF wouldn't amount to much without the active military (economic) assistance of the US. Even with all the sophistication, they had their collective behinds reamed in their last war with Hezbollah in Lebanon. IDF is good for only one thing, keeping the hapless Palestinians down.
what i meant was one single force and their officers dont enjoy the privileges of the officers in bangladesh/pakistan

King Nothing

June 13th, 2010, 08:08 PM

:lol: I knew Milton Friedman will upset you.. Here is another one "Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government."

Ah well Tea Party supporters and Reaganites love these quotes of his as I've seen.

King Nothing

June 13th, 2010, 08:11 PM

how are they supposed to build dohs's

The DOHSs though I would say are some of the well planned and nicer areas in Dhaka (atleast the Dhaka ones) although DOHS Baridhara is just a concrete jungle.

nayeem007

June 13th, 2010, 08:34 PM

Ah well Tea Party supporters and Reaganites love these quotes of his as I've seen.

And so do economists and people who stands for democracy and individual rights in society.. I wish tea party supporters understood economics :lol: Infact most republicans are against some of the basic principles of Milton Friedman's work, about less government intervention in corporation/business aswell as involvement in other nations for natural resources (they only refer to selective work of his).

Personally I am not into politics along party line whether it's Bangladesh or US. I like/dislike many aspects of both democrats and republicans.

TIslam

June 13th, 2010, 08:55 PM

what i meant was one single force and their officers dont enjoy the privileges of the officers in bangladesh/pakistan
Even though in command structure IDF may be a unified forces but they do have distinct air, land, and naval entities. As far as the privileges are concerned, it would be very difficult to attract people to join up in an all voluntary armed forces without inducements and perks. With IDF and perhaps other countries that have mandatory military service (conscription), it hardly matters since everybody is compelled to join. It could perhaps be argued that the perks for armed forces personnel is excessive in the subcontinent, which I doubt, will ever change (be reduced).

King Nothing

June 14th, 2010, 01:09 AM

And so do economists and people who stands for democracy and individual rights in society.. I wish tea party supporters understood economics :lol: Infact most republicans are against some of the basic principles of Milton Friedman's work, about less government intervention in corporation/business aswell as involvement in other nations for natural resources (they only refer to selective work of his).

Well there are economists who heavily disagree with him as well. Heres one. I ask you to take a few mins and watch these bro.

bJXx4hODeOk&feature=related

Cfc-GQinwlQ&NR=1

Heres an interview of him with a couple of interesting excerpts

http://www.newyorkreviewofideas.com/2009/06/free-market-protectionism/

Citing Friederich Hayek and Karl Marx as influences, Chang argues that any emerging economy needs a mix of protectionist measures, free market opportunities and government guidance

The first thing that I say there is that there’s no such thing as a free market. It’s like those kung fu movies where these guys fly, but actually they are on wires. When you accept the legitimacy of [government] regulations, you don’t even see them as wires and you think that this market stands alone.

TIslam

June 14th, 2010, 05:30 AM

^^
"Citing Friederich Hayek and Karl Marx as influences, Chang argues that any emerging economy needs a mix of protectionist measures, free market opportunities and government guidance".

I couldn't agree more.

nayeem007

June 14th, 2010, 06:01 AM

Dr Chang was a guest lecturer at UT, so I have been exposed to some of his views. The natural tendency of academics is to use the basis of his/her upbringing and surroundings to explain the events happening around them. In economics there is no 100% right or wrong answer since this is not an exact science like physics and most times the development of a country is tied to many different things.

Milton Friedman was part an era that was right after the second world war and in the midst of Vietnam war. On top of this communist Soviets were running havocs in Eastern europe, so naturally the "Chicago school of thought" came up as a way to explain how government intervention eventually leads to inefficiency, underdevelopment and a"fixed pie" view of the world.

Whereas, Ha-Joon Chang is from the South Korean generation that came out of agrarian economy to become one of the developed countries in Asia through a policy of "benevolent dictatorship". A nation where the government was authoritarian but still prudent enough to focus on what was essential to industrialization. A middle ground between the socialist and liberal policies of west.. Thus his view and outlook is an outcome of that surrounding.

His policies will work best at other nations like Singapore or even Malaysia to certain extent where the government is semi-autocratic but still "pro- people" and economic development is emphasized.

Bangladesh needs to have it's own system, that works best based on our own situation. A neo liberal policy can be catastrophic if the domestic industries collapse under competition, similarly with the government being extremely corrupt, a South Korean style development is also highly unlikely. There is no visionary leader or a group of politicians who care for the country.. it's run by thugs, who are not interested in anything other than power.

I am personally leaned towards the liberal school of thought mainly because I had very bad experience with government and politicians in Bangladesh. The few developments that has happened whether in microcredit, garments/ textiles or shipbuilding has all been due to private initiatives. Government agencies like Biman, Adamjee Jute Mills to Railway and DESCO have all failed miserably. If I was brought up in Singapore or Seoul maybe my outlook would have been different..

nayeem007

June 14th, 2010, 06:24 AM

On a different note, we all hear about Collateralized debt obligations(CDO), Subprime Mortgages and the whole financial meltdown of 2008 in the news.. this short animation explains the whole chain of events in a very simple way:

VlvVumYdMGs&feature

dopekhor

June 14th, 2010, 10:51 AM

Even though in command structure IDF may be a unified forces but they do have distinct air, land, and naval entities. As far as the privileges are concerned, it would be very difficult to attract people to join up in an all voluntary armed forces without inducements and perks. With IDF and perhaps other countries that have mandatory military service (conscription), it hardly matters since everybody is compelled to join. It could perhaps be argued that the perks for armed forces personnel is excessive in the subcontinent, which I doubt, will ever change (be reduced).
no other sector in the country enjoys such perks, yet has to do quadruple the amount of work and needs a lot more talent to get in

tislam84

June 14th, 2010, 08:15 PM

Bangladeshi companies are spreading their wings!

AB Bank to invest in Sri Lankan bank
Sarwar A Chowdhury

AB Bank shares cheered up in DSE's morning trade yesterday after the bank announced a plan to make equity investment in a new Islamic bank in Sri Lanka.

The bank in a posting on the Dhaka Stock Exchange website said it had received approval from Bangladesh Bank to make an investment of 15 percent in the equity of Amana Bank Limited.

Amana Bank is the first Islamic bank in Sri Lanka that has received licence from the Lankan central bank recently.

"We'll invest around 66 crore Lankan rupees (around Tk 45 crore) on the bank aiming to make our presence in Sri Lanka as part of our expanding the network in Asia," M Fazlur Rahman, additional managing director of AB Bank,

"Besides, if we have liaison with others in the region, we can be updated about the trade and business of the region," he said.

Moreover, Rahman said, the venture will not only help the bank to bring profit in the country but it will also help get ideas and know-how from the other regional institutions making their investment on the Sri Lankan bank.

Apart from AB Bank, the Islamic Development Bank, Bank Islam of Malaysia and Bank of Ceylon will also invest in the equity of Amana Bank, Rahman said.

The AB Bank, a first generation bank that listed on the stockmarket in 1983, has also presence in Bombay and Hong Kong. "We're also trying to take the Bangladeshi flag in other countries in the region," Rahman added.

In yesterday's morning trade of the premier bourse, the AB Bank shares rose as high as by Tk 50, or 4 percent. The shares however finished the day only 0.13 percent up, as the overall market fell after midday trading.

However the volume indicates the interest of the investors on AB Bank shares. On the DSE, a total of 7,66,545 AB Bank shares were traded.

The bank was the second turnover leader on the DSE with shares worth Tk 93.35 crore being traded.

Source: The Daily Star http://www.thedailystar.net/newDesign/news-details.php?nid=142734

nayeem007

June 14th, 2010, 11:19 PM

Bangladesh factories asked to shut to save World Cup TV
(AFP) – 8 hours ago

DHAKA — Bangladeshi authorities on Monday asked factories across the capital Dhaka to shut during World Cup games so that power blackouts do not interrupt football fans watching the television.

The two state-owned companies which supply electricity to the city made the request after power cuts during a match on Saturday triggered violent protests.

When blackouts hit the Argentina-Nigeria game, angry fans went on the rampage, damaging scores of vehicles and vandalising more than a dozen electricity supply centres.

"We have sent letters to all the factories operating in and around Dhaka to stop work between 5:00 pm and 11:00 pm -- the peak hours -- when the matches are usually held," said Faridul Haq, head of Dhaka Power Distribution Company.

"It is our humble submission to them that they close factories so that we can divert the power to people watching the World Cup. We don't want to see repeat of Saturday's violence," he told AFP.

The authorities have also stepped up security in power plants and distribution centres to prevent a repeat of enraged fans storming the premises and throwing rocks at officials.

Haq said the plan should enable fans could watch key matches, especially those of Argentina and Brazil -- two teams which attract fanatical support in Bangladesh.

"The World Cup is the biggest sporting event for Bangladesh fans, which is why we are taking this desperate step. The work stoppages at the factories will also allow their workers to watch matches," he said.

Bangladesh generates around 4,000 megawatts of power a day, far short of its 6,000 megawatt demand. Authorities try to manage the shortfall by rationing power supply nationwide, with blackouts every other hour.

State-run Dhaka Electricity Supply Company (DESCO) sent similar letters to the factories, its chief Saleh Ahmed said.

DESCO is also setting up wide-screen televisions in its distribution centres so that fans can watch the matches on back-up supplies if there are power cuts.

Dhaka police chief A.K.M Shahidul Haq has urged wealthy residents to set up wide-screen televisions powered by generators in open spaces.

http://www.google.com/hostednews/afp/article/ALeqM5ihuX-L3oq0sab_f4G6xoY9RYmaLw

nayeem007

June 14th, 2010, 11:21 PM

^^ That's the height of stupidity! Government is asking factories to shut down/decrease production so that people can watch worldcup!!!

And people question why I am a strong proponent of privatization and minimum role of government in economic activities..

tislam84

June 14th, 2010, 11:25 PM

^^ Well, you have to keep the masses quiet somehow....

nayeem007

June 15th, 2010, 03:26 AM

^^ Well, you have to keep the masses quiet somehow....

That's why I am all for privatization.. you cannot run a profitable and efficient organization when it's run by political motives (keeping mass quiet, getting votes etc).

Also, the government can use mass media like TV, Radio etc to show the importance of running industries compared to watching football matches. We simply cannot decrease production for watching a sports that we are not even participating in.

tislam84

June 15th, 2010, 05:49 AM

^^ Hahaha, you sound like you want a government model like that of Chile! Personally, I am in favor of privatization of most state-owned enterprises, at least in the production phase. For the distribution phase, we may still need a government enterprise running it, because, for example, a private company may be unwilling to provide electricity and transportation to the remotest corners of Bangladesh (they would be unprofitable ventures).

But of course, this decision of the government is ludicrous to say the least!

King Nothing

June 15th, 2010, 12:39 PM

But of course, this decision of the government is ludicrous to say the least!

Its the only way you can stop people from doing bhangchur. Ppl dont want load shedding when they're beloved Argentina is playing.

dopekhor

June 15th, 2010, 01:14 PM

King Nothing

June 15th, 2010, 01:20 PM

That's why I am all for privatization.. you cannot run a profitable and efficient organization when it's run by political motives (keeping mass quiet, getting votes etc).

Theres nothing about votes here. People were breaking cars and ransacking offices in old Dhaka and other parts of BD when they lost electricity during the Argentina - Nigeria game. The main problem is the diffrence between demand and supply of electricity. Why is this? Because we have given gas extraction to blood-sucking companies like Chevron. Not only do we pay them a lot of money they export a certain portion of our gas. If we spent a portion of that money making BAPEX stronger we would'nt have this crisis.

Also why should state-run entities be privatized? Its not like private companies are banned from entering the market. Let them set up their own companies and provide electricity, if they can find the coal and gas that is.
Among the state-owned companies that are suffering from loses as mentioned in the article are Petro Bangla, PDB and REB. You cannot privatize them. Privatization would cut off basic things like gas, electricty and water to a high number of households by favouring the more affluent customers. This would lead to a growing gulf of energy between the rich and the poor.

Its like the healthcare industry in BD. There are private hospitals like Apollo and United (which arent all that great to begin with - my friend's dad and another classmate's aunt died there respectively while udergoing basic operations) and public ones. Who can afford Apollo and United? Only the wealthy. What would happen if you close the public ones? A huge mass of people withou healthcare.

nayeem007

June 15th, 2010, 04:52 PM

^^ It's difficult to compete with organizations that are subsidized by government and does not rely on profitibility. For example: if Biman starts selling ticket for Tk 1,000 for Dhaka to Kolkata flight(even though the operating cost is much higher than that) it will likely kill off any competition from private companies because no one will venture into a business that is not profitable.

As for electricity issue, the supply is low in the first place because they are all run by government organizations. Private companies(if given the right atmosphere) will fix the whole issue with better processes. Best example is the telecommunication sector, for decades T&T could not meet the demand of phone lines, people had to pay Tk 10,000 to 20,000 just to get a line. Now look at what Grameen, Warid and others have done.. millions of cell phone users at a much lower cost than Teletalk.According to anti-privatization way of thinking, only rich people should have been able to access cell phone now, since they are run by private companies.

Eventually it's the people of the country who pays for the inefficiency of the government industries be it paper mills, WASA, T&T or Biman through higher taxes or borrowing from foreign countries.

We just need to look into China and India for this, both the countries have benefitted immensely after opening up their economy, infact "blood sucking" Chevron is more prominent in those countries than Bangladesh. Opening up the market just needs to be done in the right way, with proper planning, rules and regulations and one step at a time.

King Nothing

June 15th, 2010, 05:44 PM

^^ It's difficult to compete with organizations that are subsidized by government and does not rely on profitibility. For example: if Biman starts selling ticket for Tk 1,000 for Dhaka to Kolkata flight(even though the operating cost is much higher than that) it will likely kill off any competition from private companies because no one will venture into a business that is not profitable.

As for electricity issue, the supply is low in the first place because they are all run by government organizations. Private companies(if given the right atmosphere) will fix the whole issue with better processes.

Absolutely not. You have no idea about the energy sector in BD. Where does electricity come from? What runs the power plant? Coal and Gas. I have spoken personally with ppl from the Tel-Gas Rokha Comittee including Professor Anu Muhammad. Where will private companies get their coal and gas from? We are giving all our oil and gas to foreign companies. Not only do these companies damage our gas fields we have to pay them and they export a huge percent of the coal and gas. If we spent a little of that money strengthning BAPEX and Petro Bangla that would solve the crisis.

Private companies wont be able to do shit in the present scenario. If they want to compete they should compete in the present scenario if not buzz off. Private schools and universities compete side by side by side with public schools and universities. Grameen, Warid and Robi all operate side by side with BTTB and Teletalk. Teletalk didnt have to shut down or be privatized for them to operate.

King Nothing

June 15th, 2010, 05:58 PM

We just need to look into China and India for this, both the countries have benefitted immensely after opening up their economy, infact "blood sucking" Chevron is more prominent in those countries than Bangladesh. Opening up the market just needs to be done in the right way, with proper planning, rules and regulations and one step at a time.

What are you talking about man? Chevron doesnt even exist in India. In China, China National Petroleum Corporation is the main energy exploration company. A very strong and efficient state owned enterprise. Chevron works with a production sharing contract with China National Petroleum Corporation in a couple of gas fields. It works accoridng to their laws. In Venezuela Hugo Chavez forced Chevron into a joint ventures with the state-owned Petroleos de Venezuela, with the government holding the majority share. Thats how it should be done.

nayeem007

June 15th, 2010, 07:10 PM

Chevron to Purchase 5 % Stake in RPL for USD 300 Million
Option to Increase Stake to 29 %
Mumbai April 12, 2006: Reliance Industries Limited (Reliance) and Chevron Corporation today announced the signing of an agreement for purchase of 5 per cent equity of Reliance Petroleum Limited by Chevron India Holdings Pte. Ltd,a wholly owned subsidiary of Chevron Corporation for USD 300million.This purchase is subject to approvals from the regulatory authorities

Hundred per cent foreign direct investment is permitted in private refineries in India under the automatic route. Automatic route means companies do not need government permission first to plan and invest in a project.

http://www.dnaindia.com/money/report_chevron-planning-to-raise-stake-in-rpl_1098115

Chevron China gas venture expects first output in 2010
QINGDAO

QINGDAO Sept 28 (Reuters) - China's Chuandongbei gas project, in which U.S. oil major Chevron Corp (CVX.N) has a 49 percent stake, expects first gas production in 2010, a Chinese industry official said on Monday.
CNPC and Total would submit to the National Development & Reform Commission by end of October the overall development plan for Sulige South gas block in Inner Mongolia region that covers nearly 2,400 square km, Yan said.

The project is expected to reach a plateu production of 3 bcm from 2012 for 15 years, the companies have said.

http://www.reuters.com/article/idUSPEK26077320090928

^^ I rest my case..

King Nothing

June 15th, 2010, 08:28 PM

You dont need to rest your case because you dont have one in the first place. Thats a 2006 article showing a 5% stake (which isnt much in the first place). Heres a 2007 article .

Chevron Could Dump Stake In Reliance Petroleum
Ruth David, 11.27.07, 1:17 AM ET

U.S. petroleum giant Chevron on Monday acknowledged it was evaluating whether to hold on to its stake in Reliance Petroleum following a sharp run-up in the stock and parent company Reliance Industries' sale of 4% of its holdings in its subsidiary.

Chevron (nyse: CVX - news - people ) bought a 5% stake in Reliance Petroleum — a vehicle set up by Reliance Industries to build a refinery in the western state of Gujarat — for $300 million in April 2006, with an option to increase its stake to 29% by July 2009. The shares have more than tripled to over 200 rupees ($5) since, which could be a deterrent, particularly following Reliance Industries' share sale last week.

That left Reliance Industries with a 71% stake in Reliance Petroleum; given that it would want to retain a controlling 51%, Chevron would likely need to buy about 4% on the open market if it wanted to exercise its option to raise its stake to 29%. Analysts say the higher costs involved could make the deal less attractive to Chevron.

“We believe this [stake sale] could also pave the way for a potential exit of Chevron from RPL,” Goldman Sachs (nyse: GS - news - people ) said in a note to clients Monday. The U.S. firm would have received an estimated 5% discount to market price if it bought the stake directly from Reliance Industries.

“Chevron continues to evaluate our options with our ownership in Reliance Petroleum. We will provide specific project updates when definitive decisions are made,” a Chevron spokesperson said in a statement when asked about the possibility of selling its stake back to Reliance.

Reliance Industries said Friday it had sold 180 million shares worth $1.01 billion through open-market transactions. Reliance Petroleum shares hit a high of 295 rupees ($7.45) on the Bombay Stock Exchange on Nov.1 amid speculation Chevron would increase its stake.

If Chevron were to do so, that would now mean an investment of over $5.5 billion, analysts said.

Reliance Petroleum could then use the money to effectively finance the entire construction of its refinery. The 580,000 barrels per day refinery is expected to come on line in December 2008.

“We are not sure how the Chevron board, its management and investors will perceive Chevron’s potential 29% stake in a refinery (albeit a world-class one) at practically the full cost of the refinery,” Kotak Securities said in a client note.

On Monday, Reliance Petroleum shares fell 2.6% to 204.05 rupees ($5.15), while Reliance Industries rose 2.5% to 2882.85 rupees ($72.83)

http://www.forbes.com/2007/11/27/chevron-reliance-petroleum-markets-equity-cx_rd_1126markets29.html

Maybe that explains why as of 2010 Chevron doesnt show India on the list of countries it operates in.

http://www.chevron.com/countries/

Read what I wrote abt China. It goes in line with what you posted.

Either all this debunks your statement "Chevron is more prominent in those countries than Bangladesh"

dopekhor

June 15th, 2010, 09:17 PM

i am against full priviatization, the gov should hold 55% and let the rest out on the open market who says govt owned instituions cant make profit if they want too, look at the mobile sector in bangladesh, grameenphone (telenor majority owned by gov of norway), robi (majority owned by khazana national the malaysian govts investment corporation) citycell n warid (held by singtel a subsidiary of temasek holdings an investment arm of the singapore govt)

look at neighboring india bnsl isnt lagging far behind look at their natural resources companies mostly government owned they making a hefty profit

whats that canadian company that kinda fled bangladesh, after the gas burst who paid compensation?

in the us the govt owns shares of citigroup, aig, gm and many more!

King Nothing

June 15th, 2010, 09:33 PM

whats that canadian company that kinda fled bangladesh, after the gas burst who paid compensation?

Niko right? I dont think they paid any compensation. Neither did Occidental. The damage was worth thousands of crores of taka.

The biggest copper company in the world is CODELCO in chile. Its a nationalized company that is efficient. Then there is Vale company in Brazil another expolration company. There is that huge steel industry in Korea. There are the shipbuilding industries of Vietnam and China.

If Im not wrong Singapore Airlines and Malaysian Air are also government run right?

Titas Gas is BD company that does ok.

in the us the govt owns shares of citigroup, aig, gm

That I dont know. They have bailed them out in the past and recently yes but havent ever been nationalized I think

nayeem007

June 15th, 2010, 10:04 PM

Maybe that explains why as of 2010 Chevron doesnt show India on the list of countries it operates in.

http://www.chevron.com/countries/

I believe that's because Chevron works through a wholly owned subsidiary (Chevron India Holdings Pte) in India. Moreover, in India private energy companies like Reliance are already big players outside of the government. In Bangladesh we don't have any major private energy companies thus it's easier for multinationals to compete with inefficient public sector corporations.

nayeem007

June 15th, 2010, 10:11 PM

Niko right? I dont think they paid any compensation. Neither did Occidental. The damage was worth thousands of crores of taka.

The judicial system in Bangladesh aswell as the poor implementation of environmental laws is to be blamed for that. In US, allmost all power & energy companies are private but they cannot get away with such environmental disasters as seen with the incidence in Gulf of Mexico by BP.

King Nothing

June 15th, 2010, 10:15 PM

In Bangladesh we don't have any major private energy companies thus it's easier for multinationals to compete with inefficient public sector corporations.

Which we dont need. We pay them so much money and they export our gas and dont pay us any compensation if a blowout occurs. If we spent a fraction of that amount in improving BAPEX's technology we can solve our crisis and have higher rates of growth.

King Nothing

June 15th, 2010, 10:20 PM

The judicial system in Bangladesh aswell as the poor implementation of environmental laws is to be blamed for that. .

I dont think so. Case was taken to court but they refused to pay if I rem correctly. Few days ago government of Bangladesh won a case against Chevron but when it was filed few years back the then US ambassador Patricia Butenis tried to the convince the govt. to withdraw the case.

nayeem007

June 15th, 2010, 10:45 PM

I dont think so. Case was taken to court but they refused to pay if I rem correctly. Few days ago government of Bangladesh won a case against Chevron but when it was filed few years back the then US ambassador Patricia Butenis tried to the convince the govt. to withdraw the case.

Can you please post solid evidence that the court declared a verdict against Niko with specific compensation laid out and they just refused to pay! It just doesn't seem right to me..

nayeem007

June 15th, 2010, 10:49 PM

Which we dont need. We pay them so much money and they export our gas and dont pay us any compensation if a blowout occurs. If we spent a fraction of that amount in improving BAPEX's technology we can solve our crisis and have higher rates of growth.

Bangladesh public sector companies can't even make a car let alone high tech oil refinery equipments or other complex machineries needed for oil extraction.Even the state owned oil companies in Venezuela or other oil rich socialist states don't manufacture them either.

I personally don't understand how a company can be efficient in the public sector where there is no pressure from competition. Private firms constantly have to review their manufacturing process to lower cost in order to compete, otherwise competitors will take market share and they will be wiped out. No investor wants to put their money in a firm's stock who are not constantly evolving. Most of the innovations in today's world are from private firms like Boeing, Airbus, Lockheed Martin, Google, Microsoft to Hitachi or Toyota.

A public company like Biman can go on for decades with poor service and inefficiency as they don't have to worry about investors or competition. They will continue to be subsidized by the government and employees/ management has no reason to strive for something better.

Saying all this, I am not talking about overnight privatization. It has to be a step by step process, as it has happened in South Korea, Malaysia, Chile and other fast developing nations through few decades. I am all for public-private partnership, this way atleast 20-30% of the organization that is by owned private investors will work towards efficiency and growth, as it relates to higher profit. But a 100% state owned firm is just a waste of resources.

King Nothing

June 15th, 2010, 10:51 PM

Heres a reuters link I found.

Niko Resources is not getting any payments due to an injunction from a Bangladesh court that barred the government from making payment because of compensation issues relating to two fire incidents in 2005 in another Niko operated gas field at Chhatak, in the eastern Sylhet district.

After the blowouts the government took Niko to a local court demanding $110 million as compensation for damages

Full article:

http://in.reuters.com/article/idINSGE6440FK20100505

King Nothing

June 15th, 2010, 10:56 PM

Bangladesh public sector companies can't even make a car let alone high tech oil refinery equipments or other complex machineries needed for oil extraction.

Even the state owned oil companies in Venezuela or other oil rich socialist states don't manufacture them.

1) Theres no oil rich socialist state. Heck there is no socialist state.

2)What? What does making a car have to do with this? You dont have to manufacture it use the money you give foreign companies to make BAPEX stronger as simple as that. Do what companies in China and Malaysia have done. Hugo Chavez forced Chevron, Exxon and others to play by Venezuela's rules or get the hell out.

nayeem007

June 15th, 2010, 11:12 PM

Heres a reuters link I found.
Full article:

http://in.reuters.com/article/idINSGE6440FK20100505

The article says nothing about a court verdict!

All it says is "After the blowouts the government took Niko to a local court demanding $110 million as compensation for damages. The case is still pending with the court.
"We had to stop production as we were not getting payments for long," a Niko official told Reuters.
Niko had a sales and purchase agreement with Petrobangla that expired in November 2009, but continued to supply gas until Tuesday to honour Petrobangla's request.

Nobody pays compensation before a court makes a verdict. I can take someone for a $100 million lawsuit, but doesn't mean the person needs to pay me..

King Nothing

June 15th, 2010, 11:13 PM

.
I personally don't understand how a company can be efficient in the public sector where there is no pressure from competition.

You will once you come out of your Milton Friedman Dogma :)

Private firms constantly have to review their manufacturing process to lower cost in order to compete

Which is not good at all. It leads to management squeezing the workers as much as they can. Which is why after the 1970 while profit went up for corporations working hours increased for regular Americans and wages became stagnant. There were also mass job losses from outsourcing. NAFTA in the end was harmful for both Mexico and the US but good for the elites.

This is also why certain sectors call for abolishment of the minimum wage.

King Nothing

June 15th, 2010, 11:18 PM

The article says nothing about a court verdict!

Nobody pays compensation before a court makes a verdict. I can take someone for a $100 million lawsuit, but doesn't mean the person needs to pay me..

This is all I could find for now. The Niko case took many twists and turns. Niko left once the court ordered them to be not paid. In the meanwhile the Caretaker Govt. charged Moudud Ahmed whose firm was handling the case for Niko. Sheikh Hasina and Khaleda Zia were also charged with graft related to Niko.

King Nothing

June 15th, 2010, 11:30 PM

Most of the innovations in today's world are from private firms like Boeing, Airbus, Lockheed Martin, Google, Microsoft to Hitachi or Toyota.

Ah now that is not true. They rely heavily on state power; the dynamism of the modern economy comes mostly out of the state sector, not the private sector. Almost every aspect of what's called the "New Economy" is developed and designed at public cost and public risk: computers, electronics generally, telecommunications, the internet, lasers, whatever.

MIT is technically a private institution, but it's publically funded through the government. What is it funded for? Well, it's funded to create the technology of the future, which private corporations can make profit on. So the main elements of the productive economy now, like computers and the Internet, were developed right there, and similar places, under Pentagon funding for decades, not short periods. The public was paying the cost for a long period. The public was taking the risks, and it finally ends up in Bill Gates's pockets.

The cutting edge of the economy in the fifties and the sixties was electronics-based so funds were provided for that. By now the cutting edge of the economy is becoming biology-based. Biotechnology, genetic engineering and so on, and pharmaceuticals, so infrastructure and insights for the biological-based private industries of the future are being developed.

They are happy to let the public pay the costs and take the risks, and then transfer the results to private corporations to make the profits. From the point of view of corporate elites it is a perfect system,

Btw did u know Boeing gets lots of government funds?

nayeem007

June 15th, 2010, 11:37 PM

1) Theres no oil rich socialist state. Heck there is no socialist state.

2)What? What does making a car have to do with this? You dont have to manufacture it use the money you give foreign companies to make BAPEX stronger as simple as that. Do what companies in China and Malaysia have done. Hugo Chavez forced Chevron, Exxon and others to play by Venezuela's rules or get the hell out.

I meant semi socialist state like Venezuela. Btw, what has Hugo Chavez gained from all this? It's still a developing country and doing much worse than more open economies like Malaysia, Chile, Brazil or South Korea.

Also, privatization needs to happen in a step by step process. In the last decades China and India has industrialized and grown fast due to liberal policies and opening up the market to foreign companies. The first step is to open the nation to small scale consumer good products (Tv, Refrigerator, Automobile etc), then gradually to midscale industries (telecommunication, satellite) and finally to core industries like Oil & gas, energy and defence.

China, Malaysia and other fast developing nations are in step and 2. Western Europe, Japan and US are in the final stage of development where standard of living is extremely high.

nayeem007

June 15th, 2010, 11:43 PM

Ah now that is not true. They rely heavily on state power; the dynamism of the modern economy comes mostly out of the state sector, not the private sector. Almost every aspect of what's called the "New Economy" is developed and designed at public cost and public risk: computers, electronics generally, telecommunications, the internet, lasers, whatever.

MIT is technically a private institution, but it's publically funded through the government. What is it funded for? Well, it's funded to create the technology of the future, which private corporations can make profit on. So the main elements of the productive economy now, like computers and the Internet, were developed right there, and similar places, under Pentagon funding for decades, not short periods. The public was paying the cost for a long period. The public was taking the risks, and it finally ends up in Bill Gates's pockets.

The cutting edge of the economy in the fifties and the sixties was electronics-based so funds were provided for that. By now the cutting edge of the economy is becoming biology-based. Biotechnology, genetic engineering and so on, and pharmaceuticals, so infrastructure and insights for the biological-based private industries of the future are being developed.

They are happy to let the public pay the costs and take the risks, and then transfer the results to private corporations to make the profits. From the point of view of corporate elites it is a perfect system,

Btw did u know Boeing gets lots of government funds?

US tax revenues come from all the private companies like Boeing, Microsoft, Lockheed Martin to Wallmart and Apple. This revenue allows the government to fund projects for agencies like CIA, FBI and to educational institutes like MIT. I see nothing wrong in that, they are just feeding back the money generated by private companies.

But if US had all entities run by public companies like in Soviet Union, then standard of living would have been 100 times less, a state in the brink of collapse..

Private corporations employs millions of people and thus the profit benefits everyone and not just corporate benefit. They increase the pie through efficiency. I don't mind working for a 70-80K job for a company who executives are making millions, it's much better than earnig 5k for a communist government where everyone earns the same!

King Nothing

June 15th, 2010, 11:53 PM

I meant semi socialist state like Venezuela. Btw, what has Hugo Chavez gained from all this? It's still a developing country and doing much worse than more open economies like Malaysia, Chile, Brazil or South Korea.

Venezuela is the only OPEC nation in South America. It has large amounts of oil which has helped the elite lead lavish lives at the same time. Before international oil companies were not giving anything to the government and exported most of the oil and the gas to the US. They would state reasons like failure to recover the production or exploration costs or something like that.Hugo Chavez is using Venezuelan oil welath to build schools and hospitals. Venezuela is giving Cuba oil while Cuba is providing teachers and doctors. Chávez is envisioning Petroamerica, an integrated energy system for Latin America.

And Chavez is also a big fan of Dr. Yunus. :)

King Nothing

June 16th, 2010, 12:00 AM

. I see nothing wrong in that, they are just feeding back the money generated by private companies.

I see a lot wrong with that heres a short article by Noam Chomsky about it. And oh it does prove one thing. The state sector is very important and there is no pure capitalism and no absolutely free markets.

Viewpoints: Where now for capitalism?
Noam Chomsky
BBC News, September 19, 2008

Markets have inherent and well-known inefficiencies. One factor is failure to calculate the costs to those who do not participate in transactions. These "externalities" can be huge. That is particularly true for financial institutions.

Their task is to take risks, calculating potential costs for themselves. But they do not take into account the consequences of their losses for the economy as a whole.

Hence the financial market "underprices risk" and is "systematically inefficient," as John Eatwell and Lance Taylor wrote a decade ago, warning of the extreme dangers of financial liberalization and reviewing the substantial costs already incurred - and also proposing solutions, which have been ignored.

The threat became more severe when the Clinton administration repealed the Glass-Steagall act of 1933, thus freeing financial institutions "to innovate in the new economy," in Clinton's words -- and also "to self-destruct, taking down with them the general economy and international confidence in the US banking system," financial analyst Nomi Prins adds.

The unprecedented intervention of the Fed may be justified or not in narrow terms, but it reveals, once again, the profoundly undemocratic character of state capitalist institutions, designed in large measure to socialise cost and risk and privatize profit, without a public voice.

That is, of course, not limited to financial markets. The advanced economy as a whole relies heavily on the dynamic state sector, with much the same consequences with regard to risk, cost, profit, and decisions, crucial features of the economy and political system.

http://www.chomsky.info/articles/20080919.htm

In the late 19th century, tThere was a brief experiment, a very brief experiment, with something more or less like capitalism, not really but partially, really free markets, and it was such a total catastrophe that business called it off because it couldn't survive, and there were moves in the late 19th century to overcome these radical market failures. This is when liberalism started to evolve and become the neo-liberalism we have today.

King Nothing

June 16th, 2010, 12:21 AM

But if US had all entities run by public companies like in Soviet Union, then standard of living would have been 100 times less, a state in the brink of collapse..

Private corporations employs millions of people and thus the profit benefits everyone and not just corporate benefit. They increase the pie through efficiency. I don't mind working for a 70-80K job for a company who executives are making millions, it's much better than earnig 5k for a communist government where everyone earns the same!

Firstly command economy has nothing to do with socialism or communism (which are very different things by the way). But some interesting things to note are the Soviet Union grew at really fast rates to become a second world nation from an agrarian society within one generation. Which frightened US and Western Europe. Ppl in Russia still love Stalin for that :nuts:. And then their economy became stagnant in the 60s. The US grew the fastest during the world wars (1 and 2)when it was pretty much a command economy. Soviet Union was also a type of state capitalism and a very tyrannical system.

I believe that workers should have control over production. There is a company in Wisconsin called Isthmus Engineering and Manufacturing where all the workers are the owners of the business. Theres a bread factory in California where assembly line workers make $65,000 a year. The CEO takes the same share in profits as the workers. In Germany unions can hire and fire the board of directors. Also I like Dr. Yunus's idea of Social Business. Hes got a new book on it

nayeem007

June 16th, 2010, 03:53 AM

Venezuela is the only OPEC nation in South America. It has large amounts of oil which has helped the elite lead lavish lives at the same time. Before international oil companies were not giving anything to the government and exported most of the oil and the gas to the US. They would state reasons like failure to recover the production or exploration costs or something like that.Hugo Chavez is using Venezuelan oil welath to build schools and hospitals. Venezuela is giving Cuba oil while Cuba is providing teachers and doctors. Chávez is envisioning Petroamerica, an integrated energy system for Latin America.

And Chavez is also a big fan of Dr. Yunus. :)

Venezuela is still an underdeveloped country inspite all of the oil resources.. Chavez along with Castro has only prevented their country from forging ahead like Brazil, Malaysia are other open economies. No wonder thousands still migrate to US every year to escape the prosecution..

Venezuela has some of the world's largest proven oil deposits as well as huge quantities of coal, iron ore, bauxite and gold.
Yet most Venezuelans live in poverty, many of them in shanty towns, some of which sprawl over the hillsides around the capital, Caracas.

Huge Chavez's actions have damaged economic performance and encouraged inflation, running at 25% by the end of 2009. In January 2010, the government devalued the bolivar in an attempt to boost oil revenues and simulate domestic production

http://news.bbc.co.uk/2/hi/americas/country_profiles/1229345.stm

nayeem007

June 16th, 2010, 05:31 AM

Firstly command economy has nothing to do with socialism or communism (which are very different things by the way). But some interesting things to note are the Soviet Union grew at really fast rates to become a second world nation from an agrarian society within one generation. Which frightened US and Western Europe. Ppl in Russia still love Stalin for that :nuts:. And then their economy became stagnant in the 60s. The US grew the fastest during the world wars (1 and 2)when it was pretty much a command economy. Soviet Union was also a type of state capitalism and a very tyrannical system.

I believe that workers should have control over production. There is a company in Wisconsin called Isthmus Engineering and Manufacturing where all the workers are the owners of the business. Theres a bread factory in California where assembly line workers make $65,000 a year. The CEO takes the same share in profits as the workers. In Germany unions can hire and fire the board of directors. Also I like Dr. Yunus's idea of Social Business. Hes got a new book on it

"A command economy, also called planned economy, is directly controlled by the government. The state owns all property and controls all resources including land, labor, and capital in a command economy. Allocations of resources, supply, and price are regulated through central planning by command economy experts. The command economy discourages individualistic profit motives and consumeristic needs."

Some great and prosperous nations that tried command economy:

Ethiopia
North Korea
Poland
Slovakia
U.S.S.R
Cuba

http://www.investorglossary.com/command-economy.htm

If you love Cuba, Venezuela and other countries with command economies (ofcourse not communist/ socialist lol )so much, why did you even go to a capitalist country like US for studies? (I believe you even posted somewhere earlier about coming back to America).

I have a cousin's husband who was a hardcore communist supporter in Bangladesh, talking about injustice done by ruling class and giving slogans like "sromojibi mahoniti manusher joy akdin hobei, biplob nischit" Now he is happily staying in US, working in an Oil company (Exxon Mobil- the evil blood sucker). I asked him why he didn't go to Cuba or Venezuela which he praised so much when in Bangladesh.. he had no answers.

As I said earlier, a free market economy needs to happen in stages, it cannot happen overnight. Today all the developed, first world nations in the world like Sweden, England, France, Germany, Japan, US, Australia are all free market economies with some minor controls by government for check and balance. In general vast majority of the industries are private and competitive. Bangladesh needs to go through a gradual development phase as it has happened in Japan, Malaysia and other nations (they all started with nationalized institutions but gradually opened up as they moved up the value chain). But closing the doors to competition and following Cuba and Venezuela is not the way to go..

Government has a vital role in every nation, which is to provide a safe and secure atmosphere to it's citizens, create and implement a sound legal system that encourages property rights and take care of defence. If this is done correctly, everything else in the economy will fall into place.

King Nothing

June 16th, 2010, 11:43 AM

If you love Cuba, Venezuela and other countries with command economies (ofcourse not communist/ socialist lol )so much, why did you even go to a capitalist country like US for studies? (I believe you even posted somewhere earlier about coming back to America).

Yo mister where did I say I love Cuba and Venezuela? You're just muddying the waters and fudging arguments here. In the process being a pain in the ass. When did I say I love command economies? Command economy has nothing to do with socialism. You need to know what socialism and communism is. And no as I've said they are not the same thing. The US is not capitalist. Its state capitalist. There is nothing remotely like capitalism in existence. To the extent there ever was, it had disappeared by the 1920s or '30s. Every industrial society is one form or another of state capitalism.

Venezuela has some of the world's largest proven oil deposits as well as huge quantities of coal, iron ore, bauxite and gold.
Yet most Venezuelans live in poverty, many of them in shanty towns, some of which sprawl over the hillsides around the capital, Caracas.

Yes yes even having such rescources most Venezuelans live in poverty. The wealth is controlled by a tiny elite. Hugo Chavez government is the only government that is doing something that is doing something about it. Using resources to build schools and hospitals. Hugo Chavez is among a new generation of Latin American leaders that are challenging neo-liberalism in Latin America. Others are Evo Morales of Bolivia, Rafael Correa of Equador, Lula da Silva of Brazil, Michelle Bachelet of Chile and Cristina Kirchner of Argentina. As a result South America is becoming more integrated and projects like Petroamerica are taking hold.

dopekhor

June 16th, 2010, 08:20 PM

"A command economy, also called planned economy, is directly controlled by the government. The state owns all property and controls all resources including land, labor, and capital in a command economy. Allocations of resources, supply, and price are regulated through central planning by command economy experts. The command economy discourages individualistic profit motives and consumeristic needs."

Some great and prosperous nations that tried command economy:

Ethiopia
North Korea
Poland
Slovakia
U.S.S.R
Cuba

http://www.investorglossary.com/command-economy.htm

If you love Cuba, Venezuela and other countries with command economies (ofcourse not communist/ socialist lol )so much, why did you even go to a capitalist country like US for studies? (I believe you even posted somewhere earlier about coming back to America).

I have a cousin's husband who was a hardcore communist supporter in Bangladesh, talking about injustice done by ruling class and giving slogans like "sromojibi mahoniti manusher joy akdin hobei, biplob nischit" Now he is happily staying in US, working in an Oil company (Exxon Mobil- the evil blood sucker). I asked him why he didn't go to Cuba or Venezuela which he praised so much when in Bangladesh.. he had no answers.

As I said earlier, a free market economy needs to happen in stages, it cannot happen overnight. Today all the developed, first world nations in the world like Sweden, England, France, Germany, Japan, US, Australia are all free market economies with some minor controls by government for check and balance. In general vast majority of the industries are private and competitive. Bangladesh needs to go through a gradual development phase as it has happened in Japan, Malaysia and other nations (they all started with nationalized institutions but gradually opened up as they moved up the value chain). But closing the doors to competition and following Cuba and Venezuela is not the way to go..

Government has a vital role in every nation, which is to provide a safe and secure atmosphere to it's citizens, create and implement a sound legal system that encourages property rights and take care of defence. If this is done correctly, everything else in the economy will fall into place.
hey china plays by the same rule too...

and how much tax does the private sector pay in bangladesh, sure you may credit the garments sector, but it too runs on subsidies..

the biggest contributor to the local economy is remittance, so far nothing has ever been done to help their lives improve one bit

nayeem007

June 16th, 2010, 08:27 PM

Yo mister where did I say I love Cuba and Venezuela? You're just muddying the waters and fudging arguments here. In the process being a pain in the ass. When did I say I love command economies? Command economy has nothing to do with socialism. You need to know what socialism and communism is. And no as I've said they are not the same thing. The US is not capitalist. Its state capitalist. There is nothing remotely like capitalism in existence. To the extent there ever was, it had disappeared by the 1920s or '30s. Every industrial society is one form or another of state capitalism.

One can define "democracy", "religion", "socialism" "capitalism" etc--- the way he/she wants. Some will say religion is not a spiritual field it's a way of life or capitalism is not about privatization/open economy it's about exploitation of masses etc etc. But at the end of the day in the academic circle the differences between capitalism, communism/command economies are well understood.

Ofcourse there won't be any system that is 100% capitalist or communist,even US have institutes like USPS (United States Postal Service), Finland and Norway have good welfare system for their elderly population etc.Similarly,Cuba can have some people who own departmental stores or sell fruits in the streets for profit. But the general political system defines the alignment of the nation.

Yes yes even having such rescources most Venezuelans live in poverty. The wealth is controlled by a tiny elite. Hugo Chavez government is the only government that is doing something that is doing something about it. Using resources to build schools and hospitals. Hugo Chavez is among a new generation of Latin American leaders that are challenging neo-liberalism in Latin America. Others are Evo Morales of Bolivia, Rafael Correa of Equador, Lula da Silva of Brazil, Michelle Bachelet of Chile and Cristina Kirchner of Argentina. As a result South America is becoming more integrated and projects like Petroamerica are taking hold.

We just need to compare the progress made by relatively open economies in Latin/Central American nations like Chile, Brazil with Venezuela, Cuba to see the difference.

King Nothing

June 16th, 2010, 08:27 PM

and how much tax does the private sector pay in bangladesh, sure you may credit the garments sector, but it too runs on subsidies..

Bangladeshis are too busy giving tax faki. Bangladesh has one of the lowest tax and other revenues as a % of GDP and expenditure as a % of GDP ratios in Asia.

Yea the garments and knitwear sectors get government assistance. Shipbuilding and Frozen foods have asked for goverment assistance too and will be getting them I guess

In developed countries agriculture gets major subsidies, in the US Boeing and the aircraft industries were founded and survive thanks to enormous subsidies.

King Nothing

June 16th, 2010, 08:49 PM

We just need to compare the progress made by relatively open economies in Latin/Central American nations like Chile, Brazil with Venezuela, Cuba to see the difference.

Who told you Venezuela is closed man? How much do you know about Venezuela? Hugo Chavez only came to power few years back. Cuba is the 2nd highest ranked Latin American country on the HDI list just slightly below Chile. Do you know what Chile's Gini-Coefficient is? like 60. One of the highest in the world. How do you explain that. Also Venezuela is very different to Cuba.

All countries in Latin America have kicked out the IMF. You know why?In return for its loans, the IMF imposes "liberalization": an economy open to foreign penetration and control, sharp cutbacks in services to the general population, etc. These measures place power even morefirmly in the hands of the wealthy classes and foreign investors ("stability") and reinforce the classictwo-tiered societies of the Third World -- the super-rich (and a relatively well-off professional class thatserves them) and an enormous mass of impoverished, suffering people.

Between 1982 and 1987, about 150 billion dollars were transferredfrom Latin America to the West. The New York Times cites estimates
that "hidden transactions" (including drug money, illegal profits, etc.) might be in the 700 billion range.

Chile's president now is as left leaning as Chavez.

King Nothing

June 16th, 2010, 09:01 PM

But at the end of the day in the academic circle the differences between capitalism, communism/command economies are well understood.

Im talking about the actual meaning. The actual actual meaning. Socialism in one line is "Worker control over production". Communism in one line is "A stateless classless society". Meaning a society without government and class divisions.

Similarly,Cuba can have some people who own departmental stores or sell fruits in the streets for profit. But the general political system defines the alignment of the nation.

According to wikipedia: By the year 2006, public sector employment was 78% and private sector 22%. Its prolly higher now in the private sector.

Educate urself before posting.

nayeem007

June 16th, 2010, 09:13 PM

Venezuelan economy contracts 5.8% in first quarter over a year ago
Venezuela’s economy fell deeper into recession in the first three months of the year as electricity rationing conditioned manufacturing and investment dried up because of government takeovers.

Hard times ahead for the Bolivarian revolution of Hugo Chavez

GDP shrank 5.8% in the first quarter from a year earlier, the central bank said in a statement. Private economists and consultants forecast a 7% decline in 2010. The IMF anticipates Venezuela will be the only South American country to see a decline in GDP this year.

Venezuela among the world’s five top oil producers is entering a second year of recession as President Hugo Chavez’s nationalization drive saps investment and his price and currency controls squeeze industrial output.

Industrial production plunged 9.9% in the first quarter after Chavez ordered 20% cuts in electricity usage because of a severe drought that threatened to collapse the power grid. Inflation has accelerated to a seven-year high, with prices rising 31.9% in April from a year ago.

In the first quarter, transport fell 15.9%, commerce shrank 11.6% and the financial industry sector contracted 9.7%, the central bank said. The decline stems from reduced imports, electricity rationing and the fall in investment. Venezuela’s oil industry contracted 5%, the non-oil sector fell 4.9% in the quarter and private consumption dropped 5.9%, the bank said in the report.

Chavez, who devalued the two-tier Bolivar Jan. 8 by 50% and 100%, said April 26 that the economy may shrink for a second straight year as it sheds “capitalist” consumption habits. GDP will probably shrink 2.4% in 2010, according to the median forecast of nine banks including Bank of America, Merrill Lynch and Citigroup Inc. The economy contracted 3.3% during 2009.

The government posted a current account surplus of 7.2 billion USD in the quarter while the capital account had an 11.5 billion USD deficit. Direct investment outflow reached 3 billion USD as companies pulled capital out of the country following nationalizations in the steel, cement, oil and food industries.

http://en.mercopress.com/2010/05/28/venezuelan-economy-contracts-5.8-in-first-quarter-over-a-year-ago

^^ If you don't call the nationalization of all major industries in Venezuela to be signs of a closed economy then I don't know what nations can be classfied as "closed"

As I said earlier, every nation has to go through multiple phases in order to open up the economy, get integrated to global capital flow and development. 30 years back when South Korea was just starting to take off, even they had many restrictions and many nationalized institutes. But look at them now, it's a vibrant country with major private firms like Daewoo, Hyundai etc. North Korea kept itself permanently closed to foreign companies and competition, the state owns everything there. Now, their standard of living is comparable to subsaharan Africa.

Finally, IMF, Worldbank and their policies are a different issue. It has to do with world geo-politics than economics. Every nation has the inherent tendency to further their own cause with any means necessary, it was done by communist countries aswell (how USSR invaded Afghanistan in late70s). China tried doing the same by using their national organizations to lend billions to other communist regimes.

Bangladesh should ofcourse look at her own interest and not blindly take loans from IMF or even China, that binds the country to an unfair position. There are many sources for capital, if we can have a functioning "Equity market" like Dhaka Stock Exchange, other foreign investors will also bring in investments. Similarly, if government can ensure law & order and propert rights, investments will flow in for other multinations in Tourism, manufacturing and other sectors. We should do what is best for the country by balancing our interests. But on the long run our focus should be to emulate Japan, South Korea and Malaysia, not Venezuela or Cuba. That is, go for a more open economy in a step by step process.

King Nothing

June 16th, 2010, 09:39 PM

^^ If you don't call the nationalization of all major industries in Venezuela to be signs of a closed economy then I don't know what nations can be classfied as "closed"

What does nationalization have to do with trade liberalization they are 2 diff things. Venezuela imports a lot of stuff and exports a lot specially oil which they now have control over.

South Korea was just starting to take off, even they had many restrictions and many nationalized institutes. But look at them now, it's a vibrant country with major private firms like Daewoo, Hyundai etc.

Haha Hyundai, Daewoo and Samsung are Chaebols. They recieved lot of govt. funding back in the day and still do. Infact all of them had paid bribes to the late president Roh Moo-Hyun. Shows how close their relation with the govt. is.

Bangladesh should ofcourse look at her own interest
But on the long run our focus should be to emulate Japan, South Korea and Malaysia

And for that we need to do what Dr. Chang says. And no Dr. Chang didnt base his research on S Korea alone. If you read his books you'll see he has tsken the whole world into account.

Citing Friederich Hayek and Karl Marx as influences, Chang argues that any emerging economy needs a mix of protectionist measures, free market opportunities and government guidance

Milton Friedman doesnt even come into consideration here because he is not a development economist and his policies will only lead to disaster. Korea, Japan, Taiwan all grew violating free market norms.

Ha-Joon Chang 1
Milton Friedman 0

And oh we need to stop handing our oil and gas to foreign companies and make BAPEX stronger. Or else we will never be able to grow

dopekhor

June 17th, 2010, 10:38 AM

Bangladeshis are too busy giving tax faki. Bangladesh has one of the lowest tax and other revenues as a % of GDP and expenditure as a % of GDP ratios in Asia.

Yea the garments and knitwear sectors get government assistance. Shipbuilding and Frozen foods have asked for goverment assistance too and will be getting them I guess

In developed countries agriculture gets major subsidies, in the US Boeing and the aircraft industries were founded and survive thanks to enormous subsidies.
tell me about it, but i think subsidies in the form of more help should be given to labors who go abroad to work, remove their contribution to the economy and it would be diaster.

the us govt has a lot of resources hence it can afford to subsidize a lot its the opposite in bangladesh

i am surprised nayeem doesnt say much about how to improve the tax system in bangladesh and how the black money holders should be penalized

King Nothing

June 17th, 2010, 04:00 PM

Well the low expenditure because of the low revenue generated from tax.

The government should impose income taxes based on the progressive principal, which means that the higher the level of taxpayers' earnings, the greater the proportion of income paid in that tax.

The money collected through progressive income taxes could be used for national economic development as well as to conduct social welfare activities. In addition, the government could introduce inheritance taxes, so that whenever wealth or property is transferred to heirs, that wealth or property must be subject to an inheritance tax at a progressive rate.

nayeem007

June 20th, 2010, 08:45 PM

i am surprised nayeem doesnt say much about how to improve the tax system in bangladesh and how the black money holders should be penalized

Infact that was one of the first thing I mentioned, government's role should be in implementing rule of law(property rights, safety), taxation and national security. Taxation is a concept of free market economy. Private companies and individuals share their profit for the general development of the country. In a socialist/ communist/ command economy the government owns all major industries, so issue of tax does not even come into picture.

Bangladesh actually have one of the highest corporate tax in the world, over 40%. But yet we are one of the lowest ranked one in terms of Tax as a percentage of GDP. The main reason for this is government corruption and lack of accountability and implementation of rule of law. The government tax officials take bribes and put blind eye on the profits made by companies. Infact there is widespread misrepresentation of personal income, as a result income tax is paid by a very small minority of our 160 million strong population.

If government privatize( or atleast do a public- private partnership by floating half the shares in stock market) most of the losing state run organizations like Biman, DESA, Teletalk etc, it will free up the resources to do the things that the country needs most from government.

Some of which are : implementation of property rights, plugging in tax frauds, checking quality/standard of manufactured products and services, actively implement environmental laws,ensure security and safety of citizens, create safety net for children, old and disabled people and national soverignity through strong tactical defense forces and policies.

Finally, there is a big difference between receiving government funding(which are provided by the private companies in the first place by paying tax on profits) and the government actually owning all major industries. Even in US, GM and Ford received government bailout money. But America in general is a capitalistic society, even railwalys and defense products are manufactured and serviced by private firms. The government provides a safety net in times of need, which is perfectly fine. But I am against outright ownership by government as it's happening in Cuba and Venezuela. It just leads to inefficiency and lower standard of living.

nayeem007

June 20th, 2010, 08:51 PM

Income tax in Bangladesh and global trend
Badrul Ahsan

To encourage investment and employment creation China has reduced corporate income tax rate at 25%-20% for smaller companies and 15% for high tech companies. India followed suit, proposing 25% tax rate on corporate income in its proposed new tax code, which is due to be effective from 211 subject to approval. Many countries are using income tax as an incentive to allure investment; both by reducing tax rate and simplifying the taxation laws.

In Bangladesh, tax rates on company profits are 45% to 42.5% for bank, insurance, mobile phone, financial companies. It is 37.7% for all other companies. The tax rate is 27.5% for publicly traded companies other than bank, insurance, mobile phone, financial companies.

Bangladesh company income is taxed twice, once tax is paid by the company on its profit, and then again it is slapped on the shareholders who receive dividends out of such profits at rates applicable on them. Companies are required to deduct income tax at 10% on dividends paid to its shareholders. Bangladesh tax rates rank among the highest in the world.

Some of the countries having low corporate income tax rates are as follows: Albania- 10%, Brazil- 15%, Cambodia- 20%, Chile- 17%, China- 25%, Egypt- 20%, Germany- 15%, India- proposed 25%, Indonesia- 28%, Iran- 25%, Ireland- 12.5%, Malaysia- 20% to 25% (20% small co.), Mexico- 28%, Pakistan- 20% for companies with turnover upto Rs. 250 million; above that 35%, the Philippines - 30%, Russian Federation- 20%, South Africa- 28%, Sri Lanka- 15% to 35%, Thailand- listed 20% - 25%, non-listed 20% - 30%, Turkey- 20%, the United Kingdom- 28%, small co. 21%, the United States- income upto $50,000 at 15%, maximum tax slab for income above $18,333,333 at 35%, Vietnam- 25%.

Most countries including India & Pakistan are no longer taxing the corporate income twice; instead they impose additional dividend distribution tax on the company and keep dividends exempted for the shareholders.

Tax Incentive

Bangladesh exempts agriculture and worker remittance from income tax. And export incomes are either exempted or taxed at a lower rate. The situation is same in other developing countries including India & Pakistan.

Simplification of tax laws

Most common tax law simplification is done through imposing a fixed percentage of income tax on sale (turnover) of goods or services and relieving the tax payers from the burden of filing of tax returns and from proving his declared profit or loss by producing books and records and involving in dispute and disagreement with tax department.

Traders, manufacturers and service providers deposit a fixed amount or a percentage of sales turnover, which is deemed final tax. It eliminates possibility of protracted legal battle between the tax department and tax payers. This is a great hardship on tax payers in terms of time & cost. It also increases government's cost of tax collection.

Presumptive fixed tax and no filing of tax return

Relevant tax laws require a predetermined percentage as tax at source from payment by the payer. This is effective for every conceivable area, such as salary to employees, rent to landlords, payment to contractors, import/ sale of goods & services, payment of interest and/or dividends, business of a particular type or payment for a particular goods or services so on. When such tax is already deducted and paid and the person has no other untaxed income, he is no longer required to file a tax return and go through tax assessment process. The return of deduction filed by tax deducting entity and deposit of tax is deemed sufficient; if the person from whom it is deducted has no other earning.

Bangladesh tax laws have wide provision for such tax withholding at source and in many cases to deem the same as final payment of tax.

Argentina, Egypt, Japan, Korea, Pakistan and many others do not require tax return filing for salary income where tax has been withheld at source and employee has no other income. Also people whose entire income has been subjected to tax deduction at source do not require tax return filing; which is voluntary and not mandatory.

Minimum Alternate Tax (MAT)

Another way to overcome tax dispute is to impose a minimum tax. When a loss or very low income is shown, the taxpayer is required to pay a certain percentage of sale or assets deployed. India in its new code proposed 0.25% on assets of banks and 2% on assets of other companies. Pakistan tax code has the rate of 1.25% on sale. For small business and profession having turnover of less than ten million Indian Rupees, the new Indian Tax Code proposes a final income tax of 8% of the turnover.

All the above rules as to final tax keep no relation to profit or loss in the business; but an amount is collected based on assumed income. No doubt such procedure compromises with the principles of equity; for the sake of convenience. Pakistan tax law has the same provision as Bangladesh, to pay income tax while registering car and as well every year while renewing it.

Tax year

Our tax law creates confusion in tagging assessment year (on which tax rate shall apply) for a particular income year. This is because businesses can choose their own accounting year. This confusion has been eliminated elsewhere by mandating only one income year. Both proposed Indian & Pakistan tax law provides financial year as the tax year removing confusions.

Tax treaty and Vietnam

Tax Treaties are signed between countries to provide a lower tax rate to businesses and person's income in the countries bound by treaty. Some countries are now lowering their own rates even lower than the treaties they signed, making treaties redundant. For instance, Vietnam has treaty with 49 countries. In its treaty with Bangladesh, tax rate on both interest and royalties is 15%. While the tax rate with most other treaty countries with Vietnam for both interest and royalties is 10% (5% in some cases). But Vietnam in its own tax law has reduced its tax rate on both interest and dividends to 5%, and tax on income from franchising/ royalties to 5% making all its tax treaties to scrap in this area. If treaty rates are higher than country rate, then the country rate prevail. Vietnam has made great strides towards attracting local and foreign investments.

New Indian Tax Code

India recently responded to the global trend. To simplify its tax laws and put tax rates with rest of the world India has proposed a new tax code. New Tax Code of India has the following features:

Corporate Tax Rate will be 25% for all companies.

Dividend distribution tax @10% is paid by the company on dividend paid and shareholders need not pay any further tax on dividends received by them. Companies will be able to write off entire capital investment in the first year. Losses can be carried forward for set off indefinitely.

Individual Tax: from Indian Rupees 1.6 lac to 10 lacs (US$20,752) 10%, above Rupees 10 lacs to 25 lacs 20%, above Rupees 25 lacs 30%. New Indian tax code provides for straight deduction up to Rupees three lacs per year for long term saving (retirement provision) from income (no tax when invested). The principle is similar to the United States tax code provision for 401K scheme. Savings/ Investment for future (like retirement) are not taxed. Accruals of earning on them are also not taxed. But when the savings is withdrawn, it is taxed (EET principle). Although taxed on withdrawal, there will be little or no tax when one has no other income and survives by drawing on past savings.

In addition, Indian new tax code allows further deduction of specified amount for following expense from income (incurred for self and de[dependents)

In Bangladesh the tax rate for first Tk 165,000/- nil, next Tk 275,000/- 10%, next Tk 325,000/- 15%, next Tk 375,000/- 20% and for rest amount 25%.
Simple, transparent tax law and low tax rates ensure compliance while ambiguity, discretion & high tax rate promotes evasion and corruption. India has proposed & Pakistan has introduced new tax laws adopting mostly global best practices; and it is high time that Bangladesh should overhaul its tax policy, procedure and rates in line with the countries that are competing to encourage local and foreign investment. This will help create jobs, provide social security and produce more goods and services as most developing countries are in the league.

http://www.thefinancialexpress-bd.com/more.php?news_id=93701

nayeem007

June 20th, 2010, 11:29 PM

Obama's Plan to Commercialize Space Flight Gets Boost From Falcon 9 Launch
Jason Mick (Blog) - June 7, 2010 6:24 AM

SpaceX's Falcon 9 rocket launched late Friday afternoon, bearing much of the hopes of the fledgling commercial space industry with it. (Source: SpaceX)

The launch was picture perfect, with a dummy payload delivered in orbit, as planned. (Source: SpaceX)

The Falcon 9 will propel both cargo loads and human crews aboard SpaceX's Dragon capsule to the International Space Station. (Source: SpaceX)

Beleagured by Republican critics who want to keep the space industry nationalized and a messy divorce, SpaceX CEO Elon Musk wearily commented, "There’s more weight on our shoulders... I wish there weren’t." (Source: Wired) Republicans are criticizing the effort, cry for socialized space industry)

At around 2:35 p.m. on Friday, nine engines fired, propelling the 154-ft. SpaceX Falcon 9 from the Cape Canaveral Air Force Station in Florida into a fiery sprint through the Earth's atmosphere. Minutes later, the first stage fell off, dropping into the Atlantic Ocean, while a second stage fired, delivering a dummy payload into orbit 155 miles above Earth. For SpaceX, the mission was picture perfect -- a happy ending to years of struggles.

SpaceX was founded in 2002 by tech-pioneer Elon Musk who serves as the company's CEO and CTO. Musk, also CEO of Tesla Motors, sunk $100M USD of his own PayPal fortune into the company.

The company first saw success in September 2008 with the launch of its Falcon 1 rocket powered by its Merlin (first stage) and Kestrel (second stage) engines. On July 14, 2009, a Falcon 1 rocket delivered its first commercial payload -- the Malaysian RazakSAT satellite. Those successes came after a fair share of failures -- the first three launches of the Falcon 1 proved unsuccessful.

Today, SpaceX is offering Falcon 1 launches for $8.9M USD, with slight discounts for mass contracts. The Falcon 9, launched Friday, is the next stage in its bid for commercial space dominance.

The Falcon 9 is designed to carry much higher payloads. Where as the Falcon 1 can deliver 670 kg to low earth orbit (LEO), the Falcon 9 "heavy" variant can deliver 29 tons of cargo to low Earth orbit.

The first stage of the Falcon 9 is powered by 9 first stage Merlin 1C rockets which burn liquid oxygen (LOX) and rocket-grade kerosene (RP-1) propellants. Those rockets are fired by dual redundant pyrophoric triethylaluminum-triethylborane (TEA-TEB) igniters. The first stage can produce 4.94 MN of thrust and 304 sec (3.0 kN/kg) of specific impulse in vacuum.

A carbon fiber aluminum core composite structure joins the first and second stages. The design is made more affordable as the engine used in the second stage engine is identical to those found in the first, albeit with a smaller fuel tank and only a single engine. The second stage engine has a burn time of 345 s.

At a press conference, CEO Musk commented, "I hope people don’t put too much emphasis on our success because it’s simply not correct to have the fate of commercial launch depend on what happens in the next few days. But it certainly does add to the pressure. There’s more weight on our shoulders because of that. I wish there weren’t."

The issue of the commercialization of the space industry has created an unusual role reversal for the Democrats and Republicans in Washington D.C. President Obama, amid criticism about "nationalizing" the automobile industry is charging ahead with plans to privatize the space industry, a move long championed by the U.S. Armed Forces. Under his leadership, NASA has pledged $3.5B USD in contracts to SpaceX and Orbital Transportation Services, a rival firm.

Designs from SpaceX's and Orbital, under Obama's plan will service the International Space Station and replace NASA's aging Shuttle fleet, which is in the process of being retired

http://www.dailytech.com/Obamas+Plan+to+Commercialize+Space+Flight+Gets+Boost+From+Falcon+9+Launch/article18636.htm

^^ Interesting development in US.

TIslam

June 22nd, 2010, 04:52 AM

Income tax in Bangladesh and global trend

http://www.thefinancialexpress-bd.com/more.php?news_id=93701
Regardless of the existence of specific tax laws (in the books), tax fraud (from paying no taxes at all to insignificant amount) is chronic and widespread in all countries in the Indian subcontinent. Perhaps, the Indians have learned to be a bit more efficient than others. That's all.

Following up on the earlier discussing, isn't it ironic Nayeem, that even though taxation is a free market concept, it is the most hated and disavowed principle by most capitalists?

King Nothing

June 22nd, 2010, 05:20 AM

Following up on the earlier discussing, isn't it ironic Nayeem, that even though taxation is a free market concept, it is the most hated and disavowed principle by most capitalists?

The minimum wage too I think.

I cant believe the ones in the US were against the healthcare reform bill. The US has the most dysfunctional healthcare system in the industrial world and it's also the only privatized system. Its inefficient. It's very costly and it has very poor outcomes. The U.S. has twice the per capita costs of other industrialized countries and it has some of the worst outcomes.

TIslam

June 22nd, 2010, 04:43 PM

The minimum wage too I think.

I cant believe the ones in the US were against the healthcare reform bill. The US has the most dysfunctional healthcare system in the industrial world and it's also the only privatized system. Its inefficient. It's very costly and it has very poor outcomes. The U.S. has twice the per capita costs of other industrialized countries and it has some of the worst outcomes.
When it comes to health care policies in the US, the average American and the politicians are equally guided by fiction, NOT truth. While statistical data attesting the high cost and inefficiencies are well documented, people in this country tend not to believe in them. The cartel of for profit health care institutions (large hospitals, providers, etc.), insurance companies (both for profit and non-profit), as well as big pharmaceuticals have done a tremendous job of selling the negatives of health care reform, to the public.

nayeem007

June 22nd, 2010, 05:52 PM

Following up on the earlier discussing, isn't it ironic Nayeem, that even though taxation is a free market concept, it is the most hated and disavowed principle by most capitalists?

The same way socialists/communists talk about equality for all human beings but their leaders like Lenin, Stalin to Castro are all almost god like figures living a live of ultra luxury.

Also, not all proponents of capitalist economy are ultra right wing people. Infact even the current Obama administration is very much for privatization as shown by the NASA post above.

TIslam

June 22nd, 2010, 06:20 PM

The same way socialists/communists talk about equality for all human beings but their leaders like Lenin, Stalin to Castro are all almost god like figures living a live of ultra luxury.

Also, not all proponents of capitalist economy are ultra right wing people. Infact even the current Obama administration is very much for privatization as show by the NASA post above.
I see nothing wrong with privatization per se. In fact, it makes most sense for those sectors (area) where privatization may produced the desired end results faster and more efficiently because it is a given that it is hard to achieve top speed or steer quickly in the correct direction, the super tanker that is the government bureaucracy. Moreover, it hardly matters which political party is in power in the US, since most policies, be it economic, foreign, or, national security (defense), remain largely the same.

For developing countries though, privatization isn't the one-size-fits-all panacea for everything.

King Nothing

June 22nd, 2010, 06:22 PM

When it comes to health care policies in the US, the average American and the politicians are equally guided by fiction, NOT truth. While statistical data attesting the high cost and inefficiencies the well documented, people in the country tend not to believe in them. The cartel of for profit health care institutions (large hospitals, providers, etc.), insurance companies (both for profit and non-profit), as well as big pharmaceuticals have done a tremendous job of selling the negatives of health care reform, to the public.

Propaganda sure is effective. :)

Even Margaret Thatcher who was pretty much a privatization Nazi had said she wouldnt do anything to the NHS.

For developing countries though, privatization isn't the one-size-fits-all panacea for everything.

Absolutely. Imagine if Deng Xiaoping (the guy who reformed China after Mr. Mao's death) had picked up a Milton Friedman book at that time and applied Russia like shock therapy to China. Would've been absolutely dreadful.

nayeem007

June 22nd, 2010, 07:37 PM

I see nothing wrong with privatization per se. In fact, it makes most sense for those sectors (area) where privatization may produced the desired end results faster and more efficiently because it is a given that it is hard to achieve top speed or steer quickly in the correct direction, the super tanker that is the government bureaucracy. Moreover, it hardly matters which political party is in power in the US, since most policies, be it economic, foreign, or, national security (defense), remain largely the same.

For developing countries though, privatization isn't the one-size-fits-all panacea for everything.

As I said earlier, it is a step by step process. Countries with agrarian economies like Bangladesh, Srilanka or India cannot just open up the market one fine day and expect booming economy. In order for free trade to function properly, you need multiple factors including free flow of information, implementation of property rights, a transparent government to ensure competitive atmosphere and many other things..

Even US and western european countries in the early 19th century were not as capitalist as now. They gradually moved the industries to private sector. For example: having a high tech industry space exploration(NASA) would not have made sense in 50s and 60s.

South Korea, Malaysia and even China is gradually opening up the market. But the fact is, every growing nation is moving towards it...the countries that have done the reverse like Venezuela, Cuba and North Korea has faced dire consequences.

In Bangladeshi context, I am not saying we should privatize heavy industries like military hardware manufacturing units, railways and petroleum and natural gas corporations overnight. But we can start with small steps towards the right direction. For example: floating 50% share of Biman in the stock exchange, have public private partnership to revive Teleltalk etc. As we have a stronger equity market, banking sector, streamlined rules and regulations...we can move towards broader open market and privatization.

Milton Friedman talks in the context of a country, where there is free flow of information, the market is big and free enough to balance the competition of firms-- i.e mostly in terms of a developed nation like US were capital is relatively free floating.

dopekhor

June 22nd, 2010, 08:12 PM

As I said earlier, it is a step by step process. Countries with agrarian economies like Bangladesh, Srilanka or India cannot just open up the market one fine day and expect booming economy. In order for free trade to function properly, you need multiple factors including free flow of information, implementation of property rights, a transparent government to ensure competitive atmosphere and many other things..

Even US and western european countries in the early 19th century were not as capitalist as now. They gradually moved the industries to private sector. For example: having a high tech industry space exploration(NASA) would not have made sense in 50s and 60s.

South Korea, Malaysia and even China is gradually opening up the market. But the fact is, every growing nation is moving towards it...the countries that have done the reverse like Venezuela, Cuba and North Korea has faced dire consequences.

In Bangladeshi context, I am not saying we should privatize heavy industries like military hardware manufacturing units, railways and petroleum and natural gas corporations overnight. But we can start with small steps towards the right direction. For example: floating 50% share of Biman in the stock exchange, have public private partnership to revive Teleltalk etc. As we have a stronger equity market, banking sector, streamlined rules and regulations...we can move towards broader open market and privatization.

Milton Friedman talks in the context of a country, where there is free flow of information, the market is big and free enough to balance the competition of firms-- i.e mostly in terms of a developed nation like US were capital is relatively free floating.
the government needs will power more then anything to revive this government institutions and proper management open market does have it disadvantages too and knowing how bengalis are it will be a disaster for bangladesh esp with all the beimans around

King Nothing

June 22nd, 2010, 08:22 PM

knowing how bengalis are it will be a disaster for bangladesh esp with all the beimans around

Theres a joke about Bangladeshis. The world ended and everyone died. God put all the Bangladeshis in a hell just next to heaven and put a wall in between. He said you just need to climb over the wall and you will be in heaven simple job. All other nationalities were stunned at this but god said just wait and see. It ended up being that no Bangladeshi could climb the wall and go to the other side because everytime one wanted to climb the wall the others pulled him/her down. :lol:

King Nothing

June 22nd, 2010, 11:52 PM

King Nothing

June 23rd, 2010, 07:56 AM

Well since Venezuela and Chavez were discussed here. Im posting this. This videos shows how ppl both approve and disapprove of him.

o2RQWpgEjBQ&feature=channel

dopekhor

June 23rd, 2010, 07:40 PM

Theres a joke about Bangladeshis. The world ended and everyone died. God put all the Bangladeshis in a hell just next to heaven and put a wall in between. He said you just need to climb over the wall and you will be in heaven simple job. All other nationalities were stunned at this but god said just wait and see. It ended up being that no Bangladeshi could climb the wall and go to the other side because everytime one wanted to climb the wall the others pulled him/her down. :lol:
and the worst part is that such things are growing at an alarming rate

musso7

June 24th, 2010, 04:54 PM

I am Malaysian..totally agree with nayeem, a big country like Bangladesh should to look into privatization to booth economic, but the process is not easy though, need to stabilize the politics first, the peoples attitude must be right, the oppositions party should consider the initiatives positively, and a lot of work should be done. I remember when Mahathir threw the idea of privatization of utility companies and other government owned corporations, peoples were not happy back then. But Mahathir is the man with vision and possessed a strong leadership. Obstacles is always everywhere but it doesn't mean that we should stop progressing.

musso7

June 24th, 2010, 04:58 PM

I am Malaysian..totally agree with nayeem, a big country like Bangladesh should to look into privatization to booth economic,

*boost

dopekhor

June 24th, 2010, 07:43 PM

King Nothing

June 24th, 2010, 08:41 PM

Petronas is not private thats for sure.

TIslam

June 24th, 2010, 09:26 PM

Petronas is not private thats for sure.
I doubt whether Malaysia will ever privatize Petronas. I believe they are talking about the public utilities such as power, telecommunication, water, sewage.

King Nothing

June 24th, 2010, 10:55 PM

I doubt whether Malaysia will ever privatize Petronas.

No one in their right mind would. We need to build up Petrobangla and BAPEX to be like Petronas.

King Nothing

June 25th, 2010, 08:58 AM

Since NASA has been talked about here. Heres a recent documentary that came out

http://upload.wikimedia.org/wikipedia/en/d/d7/Pax_americana.jpg

Synopsis: The prospect of Earth being ruled from space is no longer science-fiction. The dream of the original Dr. Strangelove, Wernher von Braun (from Nazi rocket-scientist to NASA director) has survived every US administration since WW2 and is coming to life. Today the technology exists to weaponize space, a massive American industry thrives, and nations are maneuvering for advantage.

http://en.wikipedia.org/wiki/Pax_Americana_and_the_Weaponization_of_Space

musso7

June 25th, 2010, 12:43 PM

musso7

June 25th, 2010, 12:48 PM

utility companies in malaysia are private?

private are different from privatization, privatization means let the corporate people handle the business, government only involve in policy making at national level with regards to the business.
Privatization does not mean that the utility company that hold nation interest fall to certain individual. Change from government to the business entity.

TIslam

June 26th, 2010, 03:02 AM

Since NASA has been talked about here. Heres a recent documentary that came out

Synopsis: The prospect of Earth being ruled from space is no longer science-fiction. The dream of the original Dr. Strangelove, Wernher von Braun (from Nazi rocket-scientist to NASA director) has survived every US administration since WW2 and is coming to life. Today the technology exists to weaponize space, a massive American industry thrives, and nations are maneuvering for advantage.

http://en.wikipedia.org/wiki/Pax_Americana_and_the_Weaponization_of_Space
Neither you or I and for that matter all humankind does not have to lose any sleep over it for centuries to come. Until we can conquer zero gravity, warp speed and aging, space will remain just that, space. :)

TIslam

June 26th, 2010, 03:34 AM

Yeah, Petronas, TNB (National Power), Telekom (Telco), MAS (Malaysian Airlines), KTMB (Train), POS Malaysia are all private but to secure government interest so we change name into GLC (government linked company), Government held the stake inside but all those company are public listed (floated to the public). All these company are under government investment institution (Khazanah), thats how its works - government secure certain income from the profit of businesses and let the corporate people bear the headache...I think Bangladesh can use this formula to enhance the economic, more employment, efficiency, productivity, more corporate people will be born, more richer peoples, higher purchasing power and the business will gradually grow..

Bangladesh isn't any different since the government does not "own" anything directly. Most assets are held and managed through the so-called "sector corporations". So, in theory Bangladesh has a striving "corporate world". In reality however, everything is government owned and managed because all boards (members) and management are comprised of government officials (mostly bureaucrats from the civil service).

If in Malaysia, those government owned corporations are indeed managed by people from the business world, I'm sure the outcome is different (positive).

private are different from privatization, privatization means let the corporate people handle the business, government only involve in policy making at national level with regards to the business.
Privatization does not mean that the utility company that hold nation interest fall to certain individual. Change from government to the business entity.
Perhaps that is a Malaysian definition for "privatization" but that term actually means a total devolution of ownership and management from public to private, as prescribed by western economists (the IMF and WB mantra).

nayeem007

June 26th, 2010, 06:06 AM

the government needs will power more then anything to revive this government institutions and proper management open market does have it disadvantages too and knowing how bengalis are it will be a disaster for bangladesh esp with all the beimans around

No ethnic/ national group is "bad/evil" by default. As late as early 90s, the total foreign currency reserve of India was only 1 billion dollar (10 times lower than that of Bangladesh). Their economy was mirred by bureaucratic government institutions.. gradually opening up the eonomy attracted lot of capital, competitiveness and development. Even China in the 60s and 70s under a closed economy and centralized ownership of industries was called the "sick child of asia".

I am sure Bangladeshi business can also thrive if a proper atmosphere is provided. Good example would be the telecommunication sector. Just see the impact private investments have had in the last decade. When state run T&T was in controll, phone penetration was around 1%, now it's almost 50% and growing every day. Private companies like Grameen, Banglalink are much more efficient as they have to worry about profit and competition. If they loose business, their employees loose job. In a government industry, a person can go on for decaded without doing anything.

We don't need an overnight conversion to "free economy", but atleast step by step process towards that. South korea, Malaysia, Japan are all good examples infront of us. Public-private partnership, creation of a vibrant stock market and implementation of property rights are the first steps toward it.

The government does have a huge impact in a country's development, since they are the ones who can create laws to maintain consumer rights, regulate banking and financial sector, protect environment and ensure sovereignty through strong defence. Also, the revenues generated through the private sector can be used to build infrastructures, social safety net for old and disabled and funds for rainy day situation.

In a very simplistic example, I see the government's role to that of a referee in a soccer match. As the private companies play a competitive game in the field, the government maintains sanity. But if the players themselves are government employees where "win or loss" (profit taking) has no meaning, then very soon the game will become dull and pointless.

dopekhor

June 26th, 2010, 06:15 AM

No ethnic/ national group is "bad/evil" by default. As late as early 90s, the total foreign currency reserve of India was only 1 billion dollar (10 times lower than that of Bangladesh). Their economy was mirred by bureaucratic government institutions.. gradually opening up the eonomy attracted lot of capital, competitiveness and development. Even China in the 60s and 70s under a closed economy and centralized ownership of industries was called the "sick child of asia".

I am sure Bangladeshi business can also thrive if a proper atmosphere is provided. Good example would be the telecommunication sector. Just see the impact private investments have had in the last decade. When state run T&T was in controll, phone penetration was around 1%, now it's almost 50% and growing every day. Private companies like Grameen, Banglalink are much more efficient as they have to worry about profit and competition. If they loose business, their employees loose job. In a government industry, a person can go on for decaded without doing anything.

We don't need an overnight conversion to "free economy", but atleast step by step process towards that. South korea, Malaysia, Japan are all good examples infront of us. Public-private partnership, creation of a vibrant stock market and implementation of property rights are the first steps toward it.

The government does have a huge impact in a country's development, since they are the ones who can create laws to maintain consumer rights, regulate banking and financial sector, protect environment and ensure sovereignty through strong defence. Also, the revenues generated through the private sector can be used to build infrastructures, social safety net for old and disabled and funds for rainy day situation.

In a very simplistic example, I see the government's role to that of a referee in a soccer match. As the private companies play a competitive game in the field, the government maintains sanity. But if the players themselves are government employees where "win or loss" (profit taking) has no meaning, then very soon the game will become dull and pointless.
tnt is a landphone company, the penetration in the land phone business is still pretty low and mind you the government of bangladesh is still the countries largest employer

the ethical standards of bengalis towards another bengali is very low in case of bangladesh the entire country needs a mentality change for example everyone talks about how garments sector needs a boost since they r bringing in the dollars yet labours who go abroad and send back remittances send back more dollars then the garments folks do yet receive no help what soever such is the state of bangladesh

and in bangladeshi context the only way to take the economy is to open the private field to european or american investors since bengalis love to kiss gora ass

nayeem007

June 26th, 2010, 07:27 AM

tnt is a landphone company, the penetration in the land phone business is still pretty low and mind you the government of bangladesh is still the countries largest employer.

Well.. how about teletalk? They are government owned and have the lowest user base. Ofcourse in Bangladesh government is the largest employer, no wonder we are still a developing country with per capita income of $750.

Private landline connections has not grown upto expectation due to BTRC regulations and bureaucracy. Following is a report on that: http://www.thedailystar.net/newDesign/latest_news.php?nid=24092

Government needs to ensure proper investment atmosphere for private firms to flourish, which means clear and business friendly regulations, easy access to capital (through vibrant equity market). If the laws are complex with lot of bureaucracy and capital hard to get, the private sector will be stifled.

the ethical standards of bengalis towards another bengali is very low in case of bangladesh the entire country needs a mentality change for example everyone talks about how garments sector needs a boost since they r bringing in the dollars yet labours who go abroad and send back remittances send back more dollars then the garments folks do yet receive no help what soever such is the state of bangladesh

and in bangladeshi context the only way to take the economy is to open the private field to european or american investors since bengalis love to kiss gora ass

^^ The above issues are there in pretty much all developing nations.. be it Srilanka or India. As a country develops, people get more confident of themselves. Good example would be Japan, South Korea or China. Decades back even eastern asian population looked up to "gora people", but the trend is changing. Hundred years of colonialism will take some time to rub off.

I agree that mentality of Bangladeshis needs to change, but I feel that environment has a lot to do with it. If industries develop back home, people find employments and have better living standard, the "under cutting others" attitude will also change gradually.

dopekhor

June 26th, 2010, 07:45 AM

Well.. how about teletalk? They are government owned and have the lowest user base. Ofcourse in Bangladesh government is the largest employer, no wonder we are still a developing country with per capita income of $750.

Private landline connections has not grown upto expectation due to BTRC regulations and bureaucracy. Following is a report on that: http://www.thedailystar.net/newDesign/latest_news.php?nid=24092

Government needs to ensure proper investment atmosphere for private firms to flourish, which means clear and business friendly regulations, easy access to capital (through vibrant equity market). If the laws are complex with lot of bureaucracy and capital hard to get, the private sector will be stifled.

^^ The above issues are there in pretty much all developing nations.. be it Srilanka or India. As a country develops, people get more confident of themselves. Good example would be Japan, South Korea or China. Decades back even eastern asian population looked up to "gora people", but the trend is changing. Hundred years of colonialism will take some time to rub off.

I agree that mentality of Bangladeshis needs to change, but I feel that environment has a lot to do with it. If industries develop back home, people find employments and have better living standard, the "under cutting others" attitude will also change gradually.
all late entrants in the business has been struggling.. look at warid even the early entrant citycell is struggling

i dont know if you are aware or not these companies primary source of income was voip calls hence they got pwned.

just look at the manpower export sector it is entirely private and look how they are operating

i doubt that bengalis tend to hire indians with similar qualifications esp in the garments sector, so its like bengalis pwning bengalis and then no matter how learned you are your opinion will hold less value vs a goras in the echelons of bangladesh

the term respect is missing when bengalis are at it with their fellow citizens every friggin person promotes the dhor ma kha strategy

from a cngpuller to the top exec to a company

musso7

June 26th, 2010, 08:00 AM

I have a Bangladesh friend who resides in Malaysia for 3 years now, he is telling the same thing, difficult to change the mentality of the people theres, if the attitude is right i can't imagine how prosperous Bangladesh would be with 150 mil population, a lot business opportunity there, lot Bangladeshis here in Kuala Lumpur doing business, mainly in IT, textiles...but my Bangladesh friend told me to be careful to deal with businessmen from Bangladesh, they are prone to get rich in short time, not many of them thinking of a long term business relations.
We have an opportunity in tannery business in Malaysia (cow and goat skins) but we don't have any expertise in this field-if there any experts n willing to invest in malaysia your are welcome, Malaysia has a good platform for Halal products..

King Nothing

June 26th, 2010, 04:56 PM

all late entrants in the business has been struggling.. look at warid even the early entrant citycell is struggling

Grameen has like 60% of the market share. At this rate I dont think anybody would be interested in buying Teletalk even if it was to be privatized.

Wheeee! My 1000th post

dopekhor

June 26th, 2010, 07:59 PM

Grameen has like 60% of the market share. At this rate I dont think anybody would be interested in buying Teletalk even if it was to be privatized.

Wheeee! My 1000th post
which is why dhabi group sold 70% of its stake in warid for 100,000 usd and a debt of at least $200 million

they'd have to find someone like airtel to vouch

King Nothing

June 26th, 2010, 08:17 PM

which is why dhabi group sold 70% of its stake in warid for 100,000 usd and a debt of at least $200 million

Nah man they only showed on paper that bought it for 100,000 usd. They had it prepared that way so that Airtel could escape from paying Rajosho Kor. They actually sold it for $300 million

Heck if they indeed sold it for 100,000 I would've bought it. A tower alone prolly costs 50,000.

TIslam

June 26th, 2010, 08:29 PM

all late entrants in the business has been struggling.. look at warid even the early entrant citycell is struggling

i dont know if you are aware or not these companies primary source of income was voip calls hence they got pwned.

just look at the manpower export sector it is entirely private and look how they are operating

i doubt that bengalis tend to hire indians with similar qualifications esp in the garments sector, so its like bengalis pwning bengalis and then no matter how learned you are your opinion will hold less value vs a goras in the echelons of bangladesh

the term respect is missing when bengalis are at it with their fellow citizens every friggin person promotes the dhor ma kha strategy

from a cngpuller to the top exec to a company

The grass is always greener on the other side. Do you think life is any better for the masses in China or India regardless of the tremendous economic development that has been occurring in those countries?

It will just take time to things straighten themselves out and for people to become mature enough to learn what's good for them, individually as well as collectively, and for the greater good of the nation. That of course, will happen with actual and proper education, from grade school onwards.

You may not be alive to see it but let's hope your children will.

dopekhor

June 26th, 2010, 09:20 PM

Nah man they only showed on paper that bought it for 100,000 usd. They had it prepared that way so that Airtel could escape from paying Rajosho Kor. They actually sold it for $300 million

Heck if they indeed sold it for 100,000 I would've bought it. A tower alone prolly costs 50,000.
when i pointed that out you guys were like no it cant be,..

and the minister cleared it as being all legal

dopekhor

June 26th, 2010, 09:24 PM

The grass is always greener on the other side. Do you think life is any better for the masses in China or India regardless of the tremendous economic development that has been occurring in those countries?

It will just take time to things straighten themselves out and for people to become mature enough to learn what's good for them, individually as well as collectively, and for the greater good of the nation. That of course, will happen with actual and proper education, from grade school onwards.

You may not be alive to see it but let's hope your children will.
proper education? lol like thats ever gonna happen... nothing wrong with the education provided its just the way it is provided little kids are being exposed to the commercial aspect of everything from an early age take the notion of coaching for example if you dont study at a specific bastards house you dont get grades

the govt employees can by far represent the biggest chunk of corrupt people in the land and all of them are among the brightest minds of the nation

King Nothing

June 26th, 2010, 09:40 PM

when i pointed that out you guys were like no it cant be,..

and the minister cleared it as being all legal

Nah you were saying it was illegal because singtel had share in airtel and had share in citycell. Theres no problem there. Problem is the tax faki.

TIslam

June 26th, 2010, 09:58 PM

Nah you were saying it was illegal because singtel had share in airtel and had share in citycell. Theres no problem there. Problem is the tax faki.
"Taxi faxi" is a national pastime. I think most Bangladeshi would feel right at home with our ultra conservatives to whom the word "tax" is an anathema.

TIslam

June 26th, 2010, 09:59 PM

when i pointed that out you guys were like no it cant be,..

and the minister cleared it as being all legal
Minister? I thought BTRC is the finally authority, and perhaps NBR?

dopekhor

June 26th, 2010, 11:10 PM

Minister? I thought BTRC is the finally authority, and perhaps NBR?
perhaps everyone got their cur hence very chup chap

dopekhor

June 26th, 2010, 11:11 PM

"Taxi faxi" is a national pastime. I think most Bangladeshi would feel right at home with our ultra conservatives to whom the word "tax" is an anathema.
can verizon hold up to 30% in atnt via a 3rd company?

nayeem007

June 27th, 2010, 08:01 PM

"Surely, God will not change the state of a people until they change that which is within themselves" [Surat al-Ra’d, 13:11]

or as Gandhi says " Be the change you want to see in the world"

So instead of focusing our time and energy on how Bengalis, politicians and business people are evil/selfish/corrupt back home, let's do what we can.

dopekhor

June 27th, 2010, 08:20 PM

nayeem007

June 27th, 2010, 09:26 PM

that needs to happen on a large scale a one man show will take you no where

If everyone thinks that way then ofcourse nothing is going to happen. Never underestimate the power of 1...Martin Luther King, Nelson Mandela and other leaders could have all waited for mass scale movement. Mohammad Yunus could have just complained about the profit oriented bankers and evil rich people, when he realized that no one was willing to give loans to poor people in rural areas. Instead he took the duty upon himself to change the situation.

If today by being honest, hardworking and entrepreneurial, every one of us in this forum helps a dozen people around us(family, friends, acquaintances); it's going to be much better than doing nothing or posting hundred times against politicians/businessmen/army in Bangladesh.

nayeem007

June 27th, 2010, 10:46 PM

Neo-liberal bias revealed

In the proposed budget for fiscal 2010-11, Bangladesh Railway did not get enough attention. Photo: Amran Hossain

Asjadul Kibria

It is widely articulated that Awami League believes in a state-focused economic philosophy, where people's welfare gets priority over profit maximisation of market functions. Considering the reality in Bangladesh as well as the global economy, the party tried to strike a balance between the state and the market when it assumed power during 1996-2001.

Decisions to revive the five-year plan with a long-term perspective and the thrust on agriculture are some initial signals in this regard. The previous regime had discontinued long-term planning and adopted the international institutions' guided poverty reduction strategy, a three-year policy. The incumbent government wants to press a pause button on such neo-liberal rally.

As the task is not easy, it is expected that the government will move slowly and steadily in this direction. But the situation has started changing in a different direction, and the proposed budget for fiscal 2010-11 is a good example.

By carefully reviewing the national budget, one can safely draw the conclusion that a bias towards a neo-liberal policy is there.

Neo-liberalism claims that people are best served by the maximisation of market freedom and minimisation of state intervention. So, the role of the government should be confined to creating and protecting markets and private properties.

Several budgetary steps need to be examined to substantiate the proposition of the neo-liberal bias. But one should keep in mind that Bangladesh entered this regime about two decades ago and over the years, neo-liberal agendas become dominant features to run economic policies.

The reduction of allocation for farm-subsidy in the proposed budget is confusing. The proposed allocation worth Tk 4,000 crore is 20 percent less than the current year's revised budget subsidy. No rationale for the reduction was spelled out in the finance minister's speech. Moreover, the announcement of crop insurance without any specific allocation reflects a lack of seriousness in this issue.

The withdrawal of the tax-exemption on interest income from savings instruments is a blow to small and medium income people. So far, the interest income worth Tk 150,000 has been exempted from tax and there was no tax on the interest on the pensioner savings scheme. The finance minister subjected interest earnings to 10 percent tax at source.

Moreover, the finance minister hinted at reducing the interest rates on savings instruments. Currently, there are three types of savings instruments with different maturity periods and interest rates ranging between 11.5 percent and 12.5 percent. In the current fiscal year, the government has been heavily dependent on the sales of savings instruments to run the budget deficit. It enhanced the government's interest payment burden. Now the rate cut appears essential to reduce the burden.

Such measures are discriminatory when individual investors in the capital market have been given a free ride. There is strong economic logic of imposing capital gain taxes on individual investors. As an initial step, the finance minister can easily impose a minimal tax rate of 3 percent. Without doing so, the government has virtually encouraged people to go with speculative investment, which creates trouble in the long run.

It is surprising to see that in the name of capital market development, different stakeholders are now crying for a reduction in the proposed 10 percent gain tax on institutional investors, source tax on turnover of members of the stock exchange that has been increased from 0.025 per cent to 0.1 percent and VAT on stockbrokers. The government should not pay heed to such demand.

While many have welcomed the increased allocation of social safety net, the designing and targeting of the programmes requires a critical review. The government allocates some Tk 19,497 crore for the social security and empowerment sector, which is 14.8 percent of total public expenditure. But over the year, non-development expenditure for the sector got higher allocation compared to development expenditure.

A calculation by Unnayan Onneshan, a local research organisation, shows that the average growth rate of the non-development expenditure of social security and welfare during fiscal 2002 to fiscal 2011 is 36 percent. But the average growth rate of development expenditure in this sector is only 17 percent.

Easy access to the programme is equally important, pointed out by the Bangladesh Economic Association in its budget reaction.

The association clearly said that beneficiaries of these programmes have to suffer a lot to get due benefits. For example, rural people in their old age have to go a long way and wait the whole day at the respective bank branches to collect their dues.

If a farmer can open a bank account by depositing only Tk 10, why can't accounts be opened for the people entitled to social security schemes? Such mechanisms should be in place, so that the monthly allowance can be transferred to the accounts.

In fact, most social sector schemes of the government continue to follow a welfare approach, but provide low-cost ad-hoc interventions. Such interventions cannot bring any long-term benefits, except creating some fiscal burdens and such burdens may lead to abandoning the programmes.

While safe and easy public transportation becomes a critical issue, the budget almost avoids the sector.

There are only three paragraphs on the railway without any well-designed thoughts. There is also no mention of revival of bus and truck services of the Bangladesh Road Transport Corporation.

The budget rightly prioritises the energy sector. But emphasis on rental power will lead to a price hike. There is also an indication that tariff adjustments are unavoidable.

All these reflect the vision of the economy in which it is taken for contracted that the market mechanism generally delivers the economically desired outcomes for people and the role of the government is therefore mainly to ensure such market functions smoothly.

http://www.thedailystar.net/newDesign/news-details.php?nid=144404

The writer is a journalist and can be reached at: asjadulk@gmail.com

nayeem007

June 27th, 2010, 10:53 PM

^^ I don' really get how Bangladesh is moving towards a market focused economy, when we have one of the smallest capital market in the developing world(compared to Pakistan, Vietnam or Thailand). The state is giving huge subsidies on loss making organizations like Biman, Desco, BRTC, BWTC, Teletalk etc.

In Bangladesh majority of the big businesses are family owned, with stock exchange playing a minor role. Most infastructure and industries are based on bank loans and foreign aids as outside investments are not flowing in.A vibrant equity market will minimise our reliance on World bank and IMF loans and decrease the cost of capital immensely.

When foreign companies like Toyota, Ford are opening multiple plants in Thailand and chip makers like Intel are investing in plants in Vietnam, our foreign investment is limited to some small scale shoe manufacturing or garments. We need inflow of capital in order to create mass employment needed to lift the standard of living for millions. Infact this will even help in government to increase social efforts like helping the poor and needy, since more corporations means higher tax revenue as well as more purchasing power for people.

I am not saying that we should open our country to harmful deals like the one with TATA(which had unfair clause on uninterrupted gas supply at extremely low cost). But we definitely need to attract foreign investment in the proper way by simplifying investment process, improving infrastructures (ports, roads and highways, electricity) and diplomatic effort.

King Nothing

June 27th, 2010, 11:06 PM

[SIZE="4"]
By carefully reviewing the national budget, one can safely draw the conclusion that a bias towards a neo-liberal policy is there.

This is disturbing. Not as disturbing as this

Cairn allowed to sell gas to 3rd party

The law ministry has endorsed the energy ministry's proposal to allow Cairn, the operator of Sangu Gas field, to sell its gas to any third party within the country.

“We are set to sign a contract with the Cairn, the British oil and gas company, today (Sunday) thus it could collect rig by December to go for drilling in South Sangu to tap 30 to 50 mmcf gas”, a Petrobangla official told BSS yesterday.

Earlier, the company informed Petrobangla to sign contract within June 30 otherwise it would not be able to go for drilling any appraisal well at South Sangu this winter.

Energy ministry approved the UK-based Cairn Energy for selling gas to a third party in August last year other than Petrobangla produced from Magnama and Hatiya. Cairn completed the 3D seismic survey there although it will take some time more for analysing the data.

“Through this tapping the Sangu gas field would get life for next one and half year”, energy ministry official said.

Petrobangla's PSC cell said as per condition Cairn has to submit a report to Petrobangla where it will give every details of the sale agreement between the third party and Cairn, including the gas price.

And if Petrobangla agrees to buy the gas as per proposed price than Cairn would have to sell gas to it. Petrobangla, however, will get 30 days to take its decision in this regard.

According to PSC, Cairn is selling gas to Petrobangla at a price of US dollar 2.9 for 1,000 cubic feet (Mcf), following the approval it could fix its rate as per negotiation.

“As per amendment, we (Petrobangla) will get same benefit as they will get higher price, it would be calculated by the accounts department”, a top official said. However, for the first time the government recommended any foreign company to sell gas to the private sector. At present all the international oil companies in operations are selling gas to Petrobangla only.

“Cairn will be allowed to sell only their portion of gas to a third party as per the production sharing contract (PSC) for block 16,” Petrobangla official added.

The Cairn official said if there is any availability, the gas production from Magnama and Hatiya structures would be possible by next three and a half years. “A US$ 40 to 50 million would be required to implement the plan to tap pocket gases of south Sangu”, the official said.

http://www.thedailystar.net/newDesign/news-details.php?nid=144356

King Nothing

June 27th, 2010, 11:15 PM

can verizon hold up to 30% in atnt via a 3rd company?

Its the law in Bangladesh that is of concern. So far from what I have discussed with a lawyer the deal is fine. Even if its not its the Rajosho Kor faki that is of bigger concern.

nayeem007

June 28th, 2010, 01:41 AM

Govt targets 5 lakh new tax payers

Staff CorrespondentThe government has decided to bring five lakh new taxpayers under the tax net in the next fiscal year and set up tax offices at upazila level, Finance Minister AMA Muhith told the House yesterday.
In a scripted response to lawmakers' queries, Muhith said the government has taken measures for use of machines in the activities of tax division to ensure transparency and bring dynamism.

On micro credit interest, he said the Microcredit Regulatory Authority will fix reasonable interest rate for micro credit and implement it in next two months.

Muhith said the government has a plan to bring amendments in the banking laws and it will take necessary step soon to this effect.

He said eight state owned banks waived Tk 1,662 crore interest against loans from January last year to June 20 this year while nine banks Tk 3,644 crore from 2001-08.

He said the government is withdrawing old and torn notes of Tk 2 from market and releasing new ones.

According to the list placed by the finance minister, Sonali Bank has exempted Tk 555 crore interest, Janata Bank Tk 586 crore, Agrani Bank Tk 299 crore, Rupali Bank Tk 96 crore, Bangladesh Krishi Bank Tk 42 crore, Bangladesh Development Bank Tk 69 crore, Rajshahi Agriculture Development Bank Tk 10 crore and Basic Bank Tk 1 crore against 65,925 loan accounts in last one and a half years.

Another list shows that Sonali Bank has exempted Tk 987 crore, Janata Bank Tk 655 crore, Agrani Bank Tk 946 crore, Rupali Bank Tk 183 crore, Bangladesh Krishi Bank Tk 259 crore, Bangladesh Shilpa Bank Tk 325 crore, Rajshahi Krishi Unnayan Bank Tk 18 crore, Bangladesh Shilpa Rin Sangstha Tk 256 crore and Basic Bank Tk 11 crore as interest against 692 loan accounts in 8 years from 2001 to 2008.

http://www.thedailystar.net/newDesign/news-details.php?nid=144429

nayeem007

June 28th, 2010, 01:42 AM

This is disturbing. [/url]

as some said few months earlier, Bangladesh's finance minister AMA Muhith is a very intelligent man :)

nayeem007

June 28th, 2010, 10:03 PM

The cat does catch the mice

Sazzadul HasanIn 1979, the first business licence was issued in China to a 19-year-old woman, Zhang Huamei. Zhang is now a multimillionaire businessperson heading the famous Huamei Garment Accessory Company, a global supplier of buttons.

Looking back on her early years as a pioneering entrepreneur, she told the Times of London, “My classmates were ashamed of me for starting my own business. They would turn their heads away when passing my house and pretend not to know me.”

On her first sale she said, “The first thing I sold was a toy watch. It was a sunny morning in May 1978. I bought it for 0.15 yuan and sold it for 0.20 yuan. I was very, very excited to make a profit. But I was also very nervous and afraid the local government staff would come to stop it.”

Like Zhang, China started a new journey in 1978-79. The journey has been amazing and much to the surprise of even analysts. Today, the economy of China is the third largest after the United States and Japan.

In terms of purchasing power parity (PPP), it is the second largest after the US. China has been the fasted growing economy in the world for the last thirty years, with a phenomenal annual GDP growth rate of 10 percent. According to International Monetary Fund, the country's per capita income rose to $3,677 in 2009, which was $190 in 1978. It sounds like a never-ending success story. China is the second largest trading nation in the world and the largest exporter and second largest importer of goods.

Question naturally arises as to what happened in 1978? None other than Deng Xiaoping planted the seed for China's miraculous success. After founding the People's Republic of China in 1949, [China, under the leadership of Mao Zedong, established a centrally planned economy and it continued like that till Mao's death in 1976. Deng gradually emerged as the de-facto leader of China thereafter. In 1978, Deng introduced a series of reforms known as “gaige kaifang", or “reform and opening up.” These programmes included, formation of rural enterprises and private businesses, liberalisation of foreign trade and investment, relaxation of state control over some prices, investment in industrial production and the education of its workforce.

Deng was a great believer of an old Chinese saying: “Seeking truth from the facts”. He strongly believed that, facts rather than ideological dogmas, whether from east or west, should serve as the ultimate criterion for identifying truth. The then Chinese policy makers under Deng's leadership realised that neither the Soviet socialist model nor the western capitalist concept was the solution to developing their country.

As Deng clearly said, “only development makes sense”. A good number of conservative communist leaders used to believe that it is “better to be poor under socialism than rich under capitalism”.

The blunt, practical Deng offered instead, “Poverty is not socialism.”

"To get rich is glorious", and later added, "Some should be allowed to get rich first." Many Chinese have taken this maxim to heart and have become very rich.

Deng's greatest achievements were to put China on a path of rapid economic development and to bring it in the mainstream of international life. He sees three secrets to success in China's drive to development that distinguishes it from the failures of the former Soviet Union.

First, China began by reforming agriculture rather than commerce or industry.

Reforms, like long term land leasing, right to hire labour, sell off of surplus crops in the open market, and price bonuses for above-quota grain production, brought significant changes in the country's agriculture output. Even though many farmers used hoes instead of tractors, crop yields jumped dramatically. Wheat production doubled between 1978 and 1985 from 41 million tonnes to 87 million tonnes. By 1987, the output of grains and tubers was three times that of India and almost equal to that of the US and former Soviet Union. Perhaps Deng's most glorious year was 1984, when he reached 80 years of age. China's food supply hit 400 million tonnes of grain, making the nation self-sufficient in food. This made food and raw materials for the light industry plentiful and thereby, created conditions conducive to change in the cities.

A Chinese think tank under Deng's leadership did realise that, no reform would sustain if poverty couldn't be eradicated. The age-old Chinese governance concept, “primacy of people's livelihood”, had great influence on the then leadership who rightfully realised that poverty eradication was the most fundamental human right. The best way to do so was to improve the livelihood of millions of farmers and their families. This idea has paved way for China's enormous success in lifting nearly 400 million individuals out of abject poverty within one generation, an unprecedented success in human history.

Second, China avoided hyperinflation and a rapid decline in living standards by removing price controls gradually, so that the consumer was not turned into an enemy of reform.

Third, economic reforms preceded political reform, which improves the chances that a more open political order will survive once it does come about.

Deng had great political skill and patience to get his reforms past hard liners in the Chinese Politburo. There was always the belief that the Deng reforms would be reversed at any moment. Deng himself insisted the reforms kept the communist party from being "toppled". No wonder a lot of people termed “reform and opening” policy the greatest poverty-reducing programme in history. It not only launched a period of economic prosperity in China, it lifted millions out of poverty.

All his life, Deng focused on the results and it was reflected repeatedly in his works and remarks. Probably, one such great comment made by this great leader was, "Whether a cat is black or white makes no difference. As long as it catches mice, it is a good cat."

The cat nurtured by this legendary leader has been very successful so far in catching mice.

http://www.thedailystar.net/newDesign/news-details.php?nid=144577

King Nothing

June 29th, 2010, 12:12 AM

"To get rich is glorious", and later added, "Some should be allowed to get rich first." Many Chinese have taken this maxim to heart and have become very rich.

Sorry but this notion of a few people accumulating capital and then trickling down to the poor doesnt work. Its already showing in China. Whats their gini-coefficient again. Egalitarian growth is very much possible.

Third, economic reforms preceded political reform, which improves the chances that a more open political order will survive once it does come about.

Cool. Now how abt they give Tibet its independence back.

King Nothing

June 29th, 2010, 12:25 AM

Deng's greatest achievements were to put China on a path of rapid economic development and to bring it in the mainstream of international life. He sees three secrets to success in China's drive to development that distinguishes it from the failures of the former Soviet Union.

Had Russia style shock therapy been applied at that time, China at that time would have been in tatters. Deng made cool calculated moves.

nayeem007

June 29th, 2010, 12:27 AM

Sorry but this notion of a few people accumulating capital and then trickling down to the poor doesnt work. Its already showing in China. Whats their gini-coefficient again. Egalitarian growth is very much possible.

Ofcourse it works.. US, Japan, Germany, Sweden, Switzerland, Australia, Canadia, Denmark are all golden examples of that. It won't happen overnight, will take few decades.

Gini-coefficient (based on Lorenz curve) is a decent way to understand income inequaliy in a nation, but it's not pefect.Economies with similar incomes and Gini coefficients can still have very different income distributions. This is because the Lorenz curves can have different shapes and yet still yield the same Gini coefficient. For example, a country where half of individuals had no income and the other half shared all the income equally (i.e. whose Lorenz curve is linear from (0,0) to (0.5,0) has Gini coefficient 0.5 -- the same as that of a society in which 75% of people equally shared 25% of income while the remaining 25% equally shared 75% (i.e. whose Lorenz curve is linear from (0,0) to (0.75,0.25).

Moreover, if everybody is equally poor in a nation/society, then Gini-coefficient will reflect minimum inequality. So a starving nation like North Korea can in principle have better equality than nations like US where the income of the top 5% is many times over that of the bottom 10%. But the fact is, the bottom 10% makes more than any North koreans...

nayeem007

June 29th, 2010, 12:32 AM

Had Russia style shock therapy been applied at that time, China at that time would have been in tatters. Deng made cool calculated moves.

I agree on this, the change needs to be gradual. But ultimately as China,India and South Korea have shown the goal is to reach a market based economy and not a government controlled one like North Korea, Venezuela, Cuba etc.

In order to market to function properly, there needs to be regulations (US has very comprehensive anti trust laws like Sherman Act protecting consumers against monopolies), check and balance, free flow of information, implementation of property rights and many other things. Just dissolving all state institutions one fine day without the underlying infrastructure will not work.

King Nothing

June 29th, 2010, 12:35 AM

I agree on this, the change needs to be gradual. But ultimately as China,India and South Korea have shown the goal is to reach a market based economy and not a government controlled one like North Korea, Venezuela, Cuba etc.

How abt you stop talking about Venezuela since you have absolutely no idea about it. Millions of marginalized ppl are getting access to helathcare, education which they never could despite all their oil wealth.

King Nothing

June 29th, 2010, 12:38 AM

Ofcourse it works.. US, Japan, Germany, Sweden, Switzerland, Australia, Canadia, Denmark are all golden examples of that. It won't happen overnight, will take few decades.

Absolutely not. They are all examples of egalitarian growth. US from the 1950 to the 1970s had 2 decades of real egalitarian growth. Japan had egalitarian growth, Taiwan had egaliatrian growth, Korea had egalitarian growth.

nayeem007

June 29th, 2010, 12:45 AM

Absolutely not. They are all examples of egalitarian growth. US from the 1950 to the 1970s had 2 decades of real egalitarian growth. Japan had egalitarian growth, Taiwan had egaliatrian growth, Korea had egalitarian growth.

As I said multiple times. It's a step by step process to go towards a complete market based economy, you cannot do it overnight. All developed and industrialized nations in the world Japan, South Korea, USA, Germany are capitalistic society with market playing a major role. Government is there for implementing laws and regulations. Neither Japan nor US is a command economy or rely on centralized government for their major industries like telecommunication, high tech industries to food production.

China in the 70s or India in the 80s were also command economies with government in every aspect of life. But within the next few decades it wouldn't be anymore as their country gradually opens up to reform and open market and global integration.

nayeem007

June 29th, 2010, 12:53 AM

How abt you stop talking about Venezuela since you have absolutely no idea about it. Millions of marginalized ppl are getting access to helathcare, education which they never could despite all their oil wealth.

Ofcourse that's what many said regarding Cuba,Poland Soviet Union etc. But in the end all these people try their best to go to US, Canada or other capitalistic societies for education or career. Such hypocricy..

Hugo Chavez Spearheads Raids as Food Prices Skyrocket

Published: Friday, 18 Jun 2010 | 5:18 PM ET Text Size By: ReutersDiggBuzz FacebookTwitter More Share

Mountains of rotting food found at a government warehouse, soaring prices and soldiers raiding wholesalers accused of hoarding: Food supply is the latest battle in President Hugo Chavez's socialist revolution.

Venezuelan army soldiers swept through the working class, pro-Chavez neighborhood of Catia in Caracas last week, seizing 120 tons of rice along with coffee and powdered milk that officials said was to be sold above regulated prices.

"The battle for food is a matter of national security," said a red-shirted official from the Food Ministry, resting his arm on a pallet laden with bags of coffee.

It is also the latest issue to divide the Latin American country where Chavez has nationalized a wide swathe of the economy, he says to reverse years of exploitation of the poor.

Chavez supporters are grateful for a network of cheap state-run supermarkets and they say the raids will slow massive inflation.

Critics accuse him of steering the country toward a communist dictatorship and say he is destroying the private sector.

They point to 80,000 tons of rotting food found in warehouses belonging to the government as evidence the state is a poor and corrupt administrator.

Jose Guzman, an assistant manager at a store raided in Catia, watched with resignation as government agents pored over the company's accounts and computers after the food ministry official and the television cameras left.

"The government is pushing this type of establishment toward bankruptcy," said Guzman, who linked the raid to the rotten food scandal. "Somehow they have to replace all the food that was lost, and this is the most expeditious way."

Wasted Food

Much of the wasted food, including powdered milk and meat, was found last month in the buildup to legislative elections in September. The scandal is humiliating for Chavez, who accuses wealthy elites of fueling inflation and causing shortages of products such as meat, sugar and milk by hoarding food.

"They are not going to stop us in the plan, which is to give the people what is their right," Chavez said Friday during the inauguration of a supermarket chain the government bought this year from French retailer Casino.

Food prices are up 41 percent in the last 12 months during a deep recession, government figures show, despite the government's growing network of state-run supermarkets that sell at discounts of up to 40 percent and are popular with his poor supporters.

South America's top oil exporter, Venezuela imports about 70 percent of its food and analysts say the economic hardships could give the opposition a boost at the ballot box—although most expect Chavez to retain a reduced parliamentary majority.

Fighting back, Chavez says he is in an economic war against the "parasitic bourgeoisie" that tries to convince Venezuelans that socialism does not work by twisting facts and taking advantage of honest mistakes.

"They know where we are headed, we are going to take from the Venezuela bourgeoisie the hegemony of dominance in this country," Chavez, who calls himself a Marxist, said to applause from supporters on his TV show on Sunday.

He has also revived threats to take over the country's largest private food processor, miller and brewer, Polar.

The president rushed to give public support to Oil Minister Rafael Ramirez, who as the boss of PDVSA is also responsible for food unit PDVAL, over the case of the rotting food.

Two former PDVAL managers have been jailed in the scandal, but that has not stifled opposition charges of government incompetence.

A string of expropriations and buyouts of companies during the last couple of years means the government now controls between 20 percent and 30 percent of the distribution of staple foods.

"We are bringing order to prices," Trade Minister Richard Canan told Reuters during the Catia raid. "There are traders who are taking these products to the black market ... That is a crime and our government will continue to target these stores."

http://www.cnbc.com/id/37786852/Hugo_Chavez_Spearheads_Raids_as_Food_Prices_Skyrocket

King Nothing

June 29th, 2010, 12:57 AM

As I said multiple times. It's a step by step process to go towards a complete market based economy, you cannot do it overnight. All developed and industrialized nations in the world Japan, South Korea, USA, Germany are capitalistic society with market playing a major role. Government is there for implementing laws and regulations. Neither Japan nor US is a command economy or rely on centralized government for their major industries like telecommunication, high tech industries to food production.

And as I have said multiple times all the developed and industrialized nations are not all capitalistic. Like Ha Joon Chang said its like those Kung Fu fighters who fly only thru attached strings.

And I'll say this one last time. We are a poor country who needs to grow. The mantra of "Privatization, Deregulation, Liberalisatuion" will get us nowhere. We need protectionism to develop our own industries. Govt. support for them as well. As well as the govt. paving the way to industrializtion. Worker unions so that workers can have their rights. Govt. needs to make helathcare and education free. And no to financial liberalization. How abt we become a middle income country first and then see what happens. Who knows when that is going to happen. Its difficult to talk abt development in bangladesh anyway. Anytime I've tried to a tea stall or with other ppl or with friends ppl have said "Bangladesh ar develop hoise. Purai bell less ekta desh"

King Nothing

June 29th, 2010, 01:05 AM

Ofcourse that's what many said regarding Cuba,Poland Soviet Union etc. But in the end all these people try their best to go to US, Canada or other capitalistic societies for education or career. Such hypocricy..

Blah Blah Blah Blah. Now lets play the "America Fuck Yeah" song from Team America.

What on earth are talking about man? Lost ur screws? Cuba? Poland? Soviet Union? Using oil wealth to improve lives of their poor? What hyporcrisy? Who said what abt Poland, Cuba and Soviet Union and who went to US and Canada. Ur just talking out of ur ass here. What relation does this have to my post?

How abt you get info from somwhere else then the America Fuck yeah brigade. How abt you watch these.

o2RQWpgEjBQ

w-ngXnKF-EA

Heres the description from the last one.

"The ruling elites and popular media in Venezuela and the United States oversimplify by casting Chávez as the heir to Fidel Castro, and more often than not, they have their facts wrong. The truth is more complex, and more interesting. The leader of one of the most powerful economies in Latin America is determined to try to use his country's wealth to help the poor majority. The Chávez that emerges from Jones' account is neither a plaster saint nor a revolutionary tyrant. He is a master politician — democratically elected to the presidency three times — an inspired improviser, a Bolivarian nationalist and an unashamed socialist. His policies have brought him into conflict with the IMF and the World Bank, the major oil companies and the Bush White House"

dopekhor

June 29th, 2010, 07:33 AM

If everyone thinks that way then ofcourse nothing is going to happen. Never underestimate the power of 1...Martin Luther King, Nelson Mandela and other leaders could have all waited for mass scale movement. Mohammad Yunus could have just complained about the profit oriented bankers and evil rich people, when he realized that no one was willing to give loans to poor people in rural areas. Instead he took the duty upon himself to change the situation.

If today by being honest, hardworking and entrepreneurial, every one of us in this forum helps a dozen people around us(family, friends, acquaintances); it's going to be much better than doing nothing or posting hundred times against politicians/businessmen/army in Bangladesh.
exceptions cannot be examples in your opinion what should we do?

and friends it will take me a long time before i help another one, family not in a position to help them and i dont come from a multi millionaire family that i can be a data hatem tai

nayeem007

June 29th, 2010, 04:59 PM

exceptions cannot be examples in your opinion what should we do?

and friends it will take me a long time before i help another one, family not in a position to help them and i dont come from a multi millionaire family that i can be a data hatem tai

I just think we have a different perspective in looking at things. We do need to focus on the high achievers and not the general mass. I don't see the point in blaming community as a whole scale since I don't have control over it. But I can change myself and my surroundings so I just focus on it.

Also,change can be small based on every individual. As a starter we can just focus on personal ethics and try to be honest and hardworking regardless of what people around us are doing. I remember Mirza saying earlier about his discussion with his dad regarding not throwing a coke bottle in the street.

For example, I cannot change the issues of drugs with the teenagers in Bangladesh overnight. But I can advise and help influence my younger cousins and friends, hopefully they in turn will share their perspective with others. I saw few days back in news, how a 7-8 year old kid was so taken aback by the shortage of water in an african village(by watching discover channel), that he started collecting fund through cookie sales, asking neighbors etc. In the end he was able to raise few thousand dollars to install a deep tube well and a rain water reservoir, changing lives of hundreds.

nayeem007

June 29th, 2010, 05:26 PM

King you need to calm down. I am just sharing the view on how market based economy leads to faster development and growth (as long as it's done in a step by step process). I gave examples of US, Germany, Japan, South Korea to China and India, countries that all moved towards this in an organized fashion. Unfortuntaly the story of the other side like East Germany, Poland, Cuba and USSR are that of failure.

If you think about it, the economic philosophy (market based or centralized one), tries to address the same human flaw. That is, a few control the wealth where the majority suffers. Proponents of market based economy are against centrally planned/government run business, because they feel that this gives immense power to few politicians/bureaucrats. The political leaders basically end up keeping the wealth to themselves through nationalized industries where the mass suffers.

Similarly, to marxist thinkers the "evil ones" are the Bourgeoisie who owns the capital in a society i.e the corporations and executives. That is just like the above example, they fear that few controls the lives of millions. An unfair system as there is no equity.

So at a very high level, both sides are trying to address the same issue. But the reason I am personally more inclined towards market based economy is, the economic power (even though lop sided) is still better distributed. In a centrally planned economy, a few dozen government bureaucrats hold absolute power. Countries like Cuba and Venezuela are extremely dependent on leaders like Castro and Chavez. But in a market driven economy, it's true that some executives hold millions of dollars, but still the ownership is shared to thousands using a well functioning equity/stock market. A French or Japanese company's majority share can be owned by an Indian or vice versa. Capital is more free to flow, encouraging innovation and development.

China, India all learned the lesson. When China was a closed country in 60s and 70s, the government could not expand the overall pie since they did not have acceess to external capital. Foreign investors willing to capitalize on the vast resources in China were forced out. But the "small pie" was shared more evenly (your GINI-coefficient), so everyone was equally poor. Opening up to foreign capital, brought in the much needed capital for development. As a result ofcourse some executives became multi billoinares and income equality exacerbated, but the fact is the poor are also better off since they found jobs in many of the manufacturing plants that has sprung up.

Moreover, putting the task of industrialization to private companies the governement can finally act neutrally to provide "check and balance" through rules and regulations. That is the institution (government) responsbile for making envrionmental, financial and other regulatory laws are seperate from the corporations actually doing the business. This seperation is vital to prevent conflict of interest. If government owns the industries and also tries to make regulations, this important area of seperation is neglected. Similarly, nations should be very careful to ensure seperation of private organizations/executives from law making process. In many developing nations, this doesn't happen and thus monopolies and bad business practice becomes a common place.

Ofcourse this is not a perfect system (just like any other human endeavor), even in places like Chicago and Atlanta there is vast inequality. But it's better than the alternative (command/centrally planned economies) like Venezuela, North korea or Cuba.

King Nothing

June 29th, 2010, 07:57 PM

I am just sharing the view on how market based economy leads to faster development and growth (as long as it's done in a step by step process).

As I have said a bazillion times all the industrialized countries of the world didnt develop through market based procedures. Theres tons of stuff out there on this. Read Ha-Joon's book. He talks about this clearly. Educate yourself man.

And for all the good in China and India theres as much bad. Farmer suicides have gone up in India. Inequality has increased. The government has given large amounts of land belonging to Indeginous communities to big corporations. Hence the Maoist problem. Companies with dubious records like Goldman Sachs, Enron, General Motors and GE are making there way there. Theres a ton of stuff out there on this. Arundhati Roy comes to my mind immediately. But theres other stuff as well. Again educate yourself. GDP growth doesnt necessarily mean increase in welfare.

China as we know is the world factory. Even a few weeks back there were stories of worker suicides. CEOs had to fly into the electronics factories and install cameras for the factories as well as raise the minimum wage.

And for God's sake stop painting USSR, North Korea, Cuba and Venezuela with the same brush. USSR is gone and North Korea is just reclusive. Cuba and Venezuela are not only different but different from each other. Cuba has the highest/2nd highest ranked Latin American country in the HDI rankings. Other than this it suffers from an Embargo by the US. Fidel Castro is retired and as of now Cuba has already moved towards a mixed economy. Venezuela is very different from Cuba. Chavez is different from Castro. He is democratically elected. Venezuela before was 2 parties changing hands every term getting rich on oil welath just like what BD would've been if we had oil. Venezuela is no command economy. Venezuela's oil industry has been nationalized for years just like in Iran and other energy rich countries. Nationalization is not necessarily a bad thing. The US health care industry needs to be nationalized. As Ha-Joon said since the govt. was paying for the bailout of the big banks they should've been nationalized. Thats the sentiment of lot of the ppl. Hence the "Bailout the workers not the banks" slogan.

So at a very high level, both sides are trying to address the same issue. But the reason I am personally more inclined towards market based economy is, the economic power (even though lop sided) is still better distributed. In a centrally planned economy, a few dozen government bureaucrats hold absolute power.

This is oversimplification since a) None of the market based economies are market based. b) I never supported command economy. The world isnt all black and white. There are many shades of gray.

Big companies in the US work against the intersts of the common ppl. Firstly they eliminate jobs by outsourcing. Secondly they are so powerful they lobby for both democrat and republican candidates. And get them to cut regulations and do other favours for them. Senators become CEOs and CEOs become senators. This is a vicious circle.

King Nothing

June 29th, 2010, 08:12 PM

Moreover, putting the task of industrialization to private companies the governement can finally act neutrally to provide "check and balance" through rules and regulations. That is the institution (government) responsbile for making envrionmental, financial and other regulatory laws are seperate from the corporations actually doing the business. This seperation is vital to prevent conflict of interest. If government owns the industries and also tries to make regulations, this important area of seperation is neglected.

In a developing country the private sector needs huge and I mean HUGE amount of government support. In a lot of areas the private sector wont respond as required. Thats when the government needs to setup industries. Lots of developed countries did it when they were developing. This idea of public entrprise bad private enterprise good is bullshit.

Want an example of the private sector resulting in undesired outcomes? Look at antivirus companies. They release viruses themselves and then make us buy their antivirus. Making the virus is just a samll part of their production cost. Another example, whenever Microsoft releases a new operating system like windows 7 they give out the codes for the previous ones to hackers so the buyers are compelled to buy the new OS.

Similarly, nations should be very careful to ensure seperation of private organizations/executives from law making process. In many developing nations, this doesn't happen and thus monopolies and bad business practice becomes a common place.

This doesnt happen in real life. Why do you think Salman F Rahman hangsout with Hasina so much? Heck this doesnt happen in developed nations and the governments are busy looking after business interests. Ahh just watch Michale Moore's "Capitalism- A love story"