October 14, 2006

Nobel Peace Prize' 2006


Chairman of the Norwegian Nobel Committee Ole Danbolt Mjoes announced the Nobel Peace Prize yesterday in Oslo. Bangladesh's Dr. Muhammad Yunus, dubbed the "Banker to the Poor", and founder of the Grameen Bank, which doled out small-scale loans to more than 6 (six) million borrowers won the Nobel Peace Prize'2006., AFP

Full list of Nobel Peace Prize laureates from 1901:

2006: Muhammad Yunus (Bangladesh) and the Grameen Bank
2005: International Atomic Energy Agency and Mohamed ElBaradei (Egypt)
2004: Wangari Maathai (Kenya)
2003: Shirin Ebadi (Iran)
2002: Jimmy Carter (US)
2001: Kofi Annan (Ghana) and the United Nations
2000: Kim Dae Jung (South Korea)
1999: Medecins Sans Frontieres (Doctors Without Borders)
1998: John Hume and David Trimble (Northern Ireland)
1997: Jody Williams (US) and the International Campaign to Ban Landmines
1996: Carlos Filipe Ximenes Belo and Jose Ramos-Horta (East Timor)
1995: Joseph Rotblat (Britain) and the Pugwash movement
1994: Yitzhak Rabin, Shimon Peres (Israel) and Yasser Arafat (PLO)
1993: Nelson Mandela and Frederik de Klerk (South Africa)
1992: Rigoberta Menchu (Guatemala)
1991: Aung San Suu Kyi (Burma)
1990: Mikhail Gorbachev (Soviet Union)
1989: Dalai Lama (Tibet)
1988: United Nations Peacekeeping Forces
1987: Oscar Arias Sanchez (Costa Rica)
1986: Elie Wiesel (US)
1985: International Physicians for the Prevention of Nuclear War
1984: Desmond Tutu (South Africa)
1983: Lech Walesa (Poland)
1982: Alva Myrdal (Sweden) and Alfonso Garcia Robles (Mexico)
1981: Office of the United Nations High Commissioner for Refugees
1980: Adolfo Perez Esquivel (Argentina)
1979: Mother Teresa (Albania)
1978: Anwar Sadat (Egypt) and Menachem Begin (Israel)
1977: Amnesty International
1976: Betty Williams (Britain) and Mairead Corrigan (Northern Ireland)
1975: Andrei Sakharov (Soviet Union)
1974: Sean Mac Bride (Ireland) and Eisaku Sato (Japan)
1973: Henry Kissinger (US) and Le Duc Tho (Vietnam, declined)
1972: Reserved
1971: Willy Brandt (Germany)
1970: Norman Borlaug (US)
1969: International Labour Organisation
1968: Rene Cassin (France)
1967: Reserved
1966: Reserved
1965: United Nations Children's Fund (UNICEF)
1964: Martin Luther King Jr (US)
1963: International Committee of the Red Cross and the League of Red Cross Societies
1962: Linus Carl Pauling (US)
1961: Dag Hammarskjoeld (Sweden)
1960: Albert Lutuli (South Africa)
1959: Philip Noel-Baker (Britain)
1958: Georges Pire (Belgium)
1957: Lester Pearson (Canada)
1956: Reserved
1955: Reserved
1954: Office of the United Nations High Commissioner for Refugees

1953: George Marshall (US)
1952: Albert Schweitzer (France)
1951: Leon Jouhaux (France)
1950: Ralph Bunche (US)
1949: Lord (John) Boyd Orr of Brechin (Britain)
1948: Reserved
1947: Friends Service Council (The Quakers), American Friends Service Committee (The
Quakers)
1946: Emily Greene Balch (US), John Raleigh Mott (US)
1945: Cordell Hull (US)
1944: International Committee of the Red Cross
1943: Reserved
1942: Reserved
1941: Reserved
1940: Reserved
1939: Reserved
1938: Nansen International Office for Refugees
1937: Viscount Cecil of Chelwood (Britain)
1936: Carlos Saavedra Lamas (Argentina)
1935: Carl von Ossietzky (Germany)
1934: Arthur Henderson (Britain)
1933: Sir Norman Angell (Ralph Lane) (Britain)
1932: Reserved
1931: Jane Addams (US) and Nicholas Murray Butler (US)
1930: Nathan Soederblom (Sweden)
1929: Frank Billings Kellogg (US)
1928: Reserved
1927: Ferdinand Buisson (France) and Ludwig Quidde (Germany)
1926: Aristide Briand (France) and Gustav Stresemann (Germany)
1925: Sir Austen Chamberlain (Britain) and Charles Gates Dawes (US)
1924: Reserved
1923: Reserved
1922: Fridtjof Nansen (Norway)
1921: Karl Hjalmar Branting (Sweden) and Christian Lous Lange (Norway)
1920: Leon Victor Auguste Bourgeois (France)
1919: Thomas Woodrow Wilson (US)
1918: Reserved
1917: International Committee of the Red Cross
1916: Reserved
1915: Reserved
1914: Reserved
1913: Henri La Fontaine (Belgium)
1912: Elihu Root (US)
1911: Tobias Michael Carel Asser (The Netherlands) and Alfred Hermann Fried (Austria)
1910: Permanent International Peace Bureau
1909: Auguste Marie François Beernaert (Belgium) and Paul Henri Benjamin Balluet, Baron
d'Estournelles de Constant de Rebecque (France)
1908: Klas Pontus Arnoldson (Sweden) and Fredrik Bajer (Denmark)
1907: Ernesto Teodoro Moneta (Italy) and Louis Renault (France)
1906: Theodore Roosevelt (US)
1905: Baroness Bertha Sophie Felicita von Suttner (Austria)
1904: Institute of International Law
1903: William Randal Cremer (Britain)
1902: Elie Ducommun (Switzerland) and Charles Albert Gobat (Switzerland)
1901: Jean Henri Dunant (Switzerland) and Frederic Passy (France)

>> Source: The Daily Star, 13.10.2006

July 20, 2006

Bangladesh: Development Issue 4

Bangladesh: Public Expenditure Management

Md. Matiur Rahman and Dr. Haripada Bhattacharjee*

BANGLADESH raised between 1972 and 2003 its dollar per capita income fourfold, reduced poverty by more than a third, increased life expectancy by more than 40%, and enhanced gross primary enrollment by over 80 per cent during the same period (World Bank, 2005). This remarkable progress is a testimony to the resilience and determination of a dynamic young nation and gives hope that with continued determined effort Bangladeshis can look forward to further gains in respect to development.

Notwithstanding past progress, Bangladesh is still amongst the poorest countries in the world with only $400 per capita income. It will take over 40 years of growth at this pace to reach the current per capita income level of Malaysia even though the recent per capita growth of Bangladesh rose from 3.7 per cent to 6.0 per cent. The World Bank estimated that Bangladesh could aspire to become a middle-income nation over the next 15-20 years if per capita growth rate rose by around 5.5 per cent. To achieve this, Bangladesh needs, among others, a sound public expenditure management.

Generally, economic management in Bangladesh has been sound over the last decade. Bangladesh achieved decent rates of growth, a steady reduction in poverty incidence, relatively low inflation, and a fairly stable domestic debt, interest, and exchange rates. Allocation of public expenditures of Bangladesh in broad categories -- such as interest payments, education, health, agriculture, transport, public order and safety, and others -- is much better than in India, Pakistan and Sri Lanka.

Each of these countries spends over 6.0 per cent of the GDP on interest payments. Defence spending in Bangladesh is also much low at 1.3 per cent of the GDP. India, Pakistan and Sri Lanka spend 2.4, 4.5 and 4.9 per cent respectively of their GDPs on defence (World Bank, 2005). The role of Bangladesh's defence forces in international peace keeping is a source of significant foreign exchange earning.

One notable feature in public expenditure of the government has been the shift of spending from agriculture and industries to the social sectors. Total expenditures on education, health, the social safety net and disaster management are currently about one third of total budgetary expenditures (see table 1). Outcomes in the social sectors have been good and much better than in the physical infrastructure areas.

Bangladesh's budgetary expenditures have not been characterised by high share of interest payment. Bangladesh has avoided excessive reliance on domestic and foreign borrowing, unlike its neighbours. Debt servicing has increased significantly, reflecting the increasing cost of domestic borrowing through nationalised commercial banks and foreign suppliers' credit. The GOB spends the equivalent of less than one per cent of the GDP on the safety net programmes.

However, the ratio of expenditures on safety net programmes as percentage of the GDP and public expenditures has been declining. While expenditure on social sectors has remained fairly constant since the mid-1990s -- in the range of 3.5 to 4.0 per cent annually, safety net expenditures now make up less than 20 per cent of all social sector expenditures, down from 30 per cent in the late 1990s -- indicating a crowding out of social assistance.

Safety net programmes roughly cover below 10 per cent of poor individuals and are administered by a large of number of agencies. Benefit incidence analysis of the safety net programmes reveals that these programmes are essentially the pro-poor. For example, Food for Work Programme created about 75,000,000 hours of works in rural areas, vulnerable group development programme assisted about 480,000 households by providing food to the poor, national nutrition programme helped significant reductions in poverty, improved in school enrolment, particularly of girls and in raising the marriage age (World Bank 2006).

Another study by the World Bank (2005) shows that the overall system of public expenditures on education and health are strongly pro-poor. For example, primary education (40 per cent of all current educational spending) is strongly pro-poor. The share of the poor people in all public health expenditures has been increasing and currently it is estimated to 45 per cent. The essential service package (ESP) allocations to "Child Health" are the most equitable and strongly pro-poor.

There are some weaknesses in Bangladesh's public expenditures programme. Low effectiveness of capital spending, inadequate attention to operations and maintenance, inappropriate employment and pay policies, and the existence of fairly large subsidiaries, etc., are the most important factors that affect sound economic management.

The weak expenditure management combined with other institutional weaknesses, has compromised the quality of public services. The most glaring examples of poor public service delivery are the deteriorating law and order situation; the high perception of corruption and citizen's dissatisfaction with services; and an inefficient bureaucracy that still maintains highly tight controls over critical business processes.

Moreover, the Annual Development Programme (ADP) includes many projects that are questionable. Questionable projects regularly find their way into the ADP mainly because of the weaknesses in the system of project management. For example, the ADP expenditures under Roads and Highways Department include about 800 sub-projects with annual ADP allocations of about 2.0 to 3.0 per cent of their project costs, implying that it would take 30 to 50 years to complete these projects (World Bank 2005).

Another area of weak public expenditure management is the large hidden subsidies and growing contingent liabilities, which are not reflected in the budget. Direct subsidy currently amount to less than 0.5 per cent of the GDP and is given on school textbooks, fertiliser distribution and several non-traditional export items. Indirect subsidy is estimated at 2.6 per cent of the GDP and is given on gas and electricity prices. Large contingent liabilities have accumulated on account of state-owned enterprises.

Despite all these weaknesses, public expenditure management in Bangladesh is broadly consistent with the government's economic and social development policy objectives. The successes in the social sector can be attributed to three factors: (i) the priority given by successive governments, (ii) strong support of various stakeholders in pursuing human development objectives, and (iii) an improved policy framework that enabled considerable innovation.

Recently government has taken efforts to prepare a medium-term expenditure framework. Experiences of other countries suggest that this can be a powerful tool to improve the effectiveness of public spendings provided projected activities well implemented.

>> Source: The Daily Financial Express, Bangladesh, July 20, 2006

* Md. Matiur Rahman is Director of Customs Intelligence and Investigation and Dr. Haripada Bhattacharjee is Professor of Department of Marketing, Dhaka University

July 04, 2006

International Banking

Bank size information

Top ten banking groups in the world ranked by tier 1 capital
Figures in U.S. dollars, and as at end-2004

1.
Citigroup — 73 billion
2.
JP Morgan Chase — 69 billion
3.
HSBC — 67 billion
4.
Bank of America — 64 billion
5.
Credit Agricole Group — 63 billion
6.
Royal Bank of Scotland — 43 billion
7.
Mitsubishi Tokyo Financial Group — 40 billion
8.
Mizuho Financial Group — 39 billion
9.
HBOS — 36 billion
10.
BNP Paribas — 35 billion

Top ten banking groups in the world ranked by assets
Figures in U.S. dollars, and as at end-2004

1.
UBS — 1,533 billion
2.
Citigroup — 1,484 billion
3.
Mizuho Financial Group — 1,296 billion
4.
HSBC Holdings — 1,277 billion
5.
Crédit Agricole — 1,243 billion
6.
BNP Paribas — 1,234 billion
7.
JPMorgan Chase & Co. — 1,157 billion
8.
Deutsche Bank — 1,144 billion
9.
Royal Bank of Scotland — 1,119 billion
10.
Bank of America — 1,110 billion

Top ten bank holding companies in the world ranked by profit
Figures in U.S. dollars, and as 2003

1.
Citigroup — 21 billion
2.
Bank of America — 15 billion
3.
HSBC — 10 billion
4.
Royal Bank of Scotland — 8 billion
5.
Wells Fargo — 7 billion
6.
JP Morgan Chase — 7 billion
7.
UBS AG — 6 billion
8.
Wachovia — 5 billion
9.
Morgan Stanley — 5 billion
10.
Merrill Lynch — 4 billion

Top ten bank holding companies in the U.S. ranked by assets
Figures as of March 31, 2006, in U.S. dollars

1.
Citigroup Inc. — 1.586 trillion
2.
Bank of America Corp. — 1.375 trillion
3.
J.P. Morgan Chase & Co. — 1.273 trillion
4.
Wachovia Corp. — 541 billion
5.
Wells Fargo & Co. — 492 billion
6.
HSBC North America Holdings Inc. — 441 billion
7.
Taunus Corp. — 391 billion
8.
U.S. Bancorp — 209 billion
9.
SunTrust Banks, Inc. — 178 billion
10.
Countrywide Financial Corp. — 177 billion

Top ten bank holding companies in the U.S. ranked by deposits
As of June 30, 2004 in U.S. dollars. These are U.S. deposits only. This is not a ranking of the largest U.S.-based global banks.

1.
Bank of America Corp. — 526 billion
2.
Wells Fargo & Co. — 256 billion
3.
Wachovia Corp. — 238 billion
4.
J.P. Morgan Chase & Co. — 227 billion (1)
5.
Citigroup Inc. — 193 billion
6.
Bank One Corp. — 150 billion (1)
7.
U.S. Bancorp — 112 billion
8.
SunTrust Banks, Inc. — 78 billion
9.
BB&T Corporation — 67 billion
10.
National City Corp. — 64 billion

(1) Since this report, J.P. Morgan Chase & Co. has acquired Bank One Corp., making the combined 6/30/04 deposit total for the merged company $377 billion, vaulting it to second place on the list.

>> wikipedia.org

Bangladesh : Banking 3

BANKING SERVICES:

Current Deposit (CD) Account:

Generally this sort of account opens for business purpose. Customers can withdraw money once or more against their deposit. No interest can be paid to the customers in this account. If the amount of deposit is below Taka 1,000 on an average the bank has authority to cut Taka 50 from each account as incidental charge after every six months. Against this account loan facility can be ensured. Usually one can open this account with Taka 500. One can open this sort of account through cash or check/bill. All the banks follow almost the same rules for opening current account.

Savings Bank Deposit (SB) Account:

Usually customers open this sort of account at a low interest for only security. This is also an initiative to create people's savings tendency. Generally, this account is to be opened at Taka 100. Interest is to be paid in June and December after every six months. If money is withdrawn twice a week or more than Taka 10,000 is withdrawn (if 25% more compared to total deposit) then interest is not paid. This account guarantees loan. Almost all the banks follow the same rules in the field of savings account, except foreign banks for varying deposit. On an average, all the banks give around 6 (six) percent interest.

SPECIAL SERVICES:

Some Banks render special services to the customers attracting other banks.

Internet Banking:

Customers need an Internet access service. As an Internet Banking customer, he will be given a specific user ID and a confident password. The customer can then view his account balances online. It is the industry-standard method used to protect communications over the Internet. To ensure that customers' personal data cannot be accessed by anyone but them, all reporting information has been secured using Version and Secure Sockets Layer (SSL).

Home Banking:

Home banking frees customers of visiting branches and most transactions will be automated to enable them to check their account activities transfer fund and to open L/C sitting in their own desk with the help of a PC and a telephone.

Electronic Banking Services for Windows (EBSW):

Electronic Banking Service for Windows (EBSW) provides a full range of reporting capabilities, and a comprehensive range of transaction initiation options. The customers will be able to process all payments as well as initiate L/Cs and amendments, through EBSW. They will be able to view the balances of all accounts, whether with Standard Chartered or with any other banks using SWIFT. Additionally, transactions may be approved by remote authorization even if the approver is out of station.

Automated Teller Machine (ATM):

Automated Teller Machine (ATM), a new concept in modern banking, has already been introduced to facilitate subscriber’s 24-hour cash access through a plastic card. The network of ATM installations will be adequately extended to enable customers to non-branch banking beyond banking.

Tele Banking:

Tele Banking allows customers to get access into their respective banking information 24 hours a day. Subscribers can update themselves by making a phone call. They can transfer any amount of deposit to other accounts irrespective of location either from home or office.

SWIFT:

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a bank owned non-profit co-operative based in Belgium servicing the financial community worldwide. It ensures secure messaging having a global reach of 6,495 Banks and Financial Institutions in 178 countries, 24 hours a day. SWIFT global network carries an average 4 million Message daily and estimated average value of payment messages is USD 2 trillion.

SWIFT is a highly secured messaging network enables Banks to send and receive Fund Transfer, L/C related and other free format messages to and from any banks active in the network. Having SWIFT facility, Bank will be able to serve its customers more profitable by providing L/C, Payment and other messages efficiently and with utmost security. Especially it will be of great help for our clients dealing with Imports, Exports and Remittances etc.

Banking Sector: CAMEL Rating 2005

Introduction

The Jews in Jerusalem introduced a kind of banking in the form of money lending before the birth of Christ. The word 'bank' was probably derived from the word 'bench' as during ancient time Jews used to do money -lending business sitting on long benches.

First modern banking was introduced in 1668 in Stockholm as 'Svingss Pis Bank' which opened up a new era of banking activities throughout the European Mainland.

In the South Asian region, early banking system was introduced by the Afgan traders popularly known as Kabuliwallas. Muslim businessmen from Kabul, Afganistan came to India and started money lending business in exchange of interest sometime in 1312 A.D. They were known as 'Kabuliawallas'.

Bangladesh Bank

Bangladesh Bank (BB) has been working as the central bank since the country's independence. Its prime jobs include issuing of currency, maintaining foreign exchange reserve and providing transaction facilities of all public monetary matters. BB is also responsible for planning the government's monetary policy and implementing it thereby.

The BB has a governing body comprising of nine members with the Governor as its chief. Apart from the head office in Dhaka, it has nine more branches, of which two in Dhaka and one each in Chittagong, Rajshahi, Khulna, Bogra, Sylhet, Rangpur and Barisal.

Banking Sector and CAMEL Rating:

14 A-class, 11 B-class, 12 C-class, 8 D-class & 3 E-class banks

A total of 48 scheduled commercial banks including 8 (eight) foreign banks have been operating business in Bangladesh through 6,383 Branches. Out of total business 56.5% handled by private commercial banks (PCBs) and rest 43.5% dealt by nationalized commercial banks (NCBs).

Deposit in banking system in 2005 stood at Tk 1,426 billion, registering 15% growth. Total assets increased by 14%, of which 8.2% in NCBs and 21.2% in PCBs. Total loans and advances during the year was Tk. 1,047 billion against total assets of Tk 1,725.5 billion. The cash balance in hand was Tk. 15.5 billion including the deposit with Bangladesh Bank (BB) of Tk. 86.3 billion. The total liability deposit of banking sector in 2005 was Tk. 1,725.5 billion including Tk 92.7 billion capital and reserve.

The total operations of every bank were assessed according to five fixed criteria. These criteria are capital adequacy, asset quality, Management Efficiency, Earning capacity and Liquidity (CAMEL).

Capital Adequacy: For the safety and protection of depositor’s benefit, capital adequacy must be maintained at 9%. It is also the coverage of financial debacles like loan loss, share market loss, foreign currency dealing loss, interest rate fluctuation loss and the protection for off balance sheet affairs hit. During the year 2005 the banking sector of Bangladesh has been able to keep an average 8.7% capital adequacy against the minimum requirement of 9%.

Asset Quality: A total of 60.7% assets of banking sector were used as loans and advances. But the high rate of classification has enhanced vulnerability of assets. In 2005, the classified loan of NCBs was 14.6% against the asset, which was 5.6% for PCBs, 0.9% for foreign banks and 26.6% for specialized banks. A good number of banks have not been able to keep required provision against the classified loan risk from the profit during the year.

Management Efficiency: Management is the key to the development and expansion of a bank. Management efficiency judged on the basis of the ratio of total expenditure to income, operational expenses and total expenses, per head employee income & expenditure and interest rate spread. The average expenditure-income ratio during the year 2005 was 102%, which is a painful scenario for our banking management.

Earning Capacity: Strong earning and high profitability is the good sign of a bank’s present and future strength. Any loss can be compensated from the profit of a bank. Earnings calculated on the basis of return on asset (ROA), return on equity (ROE) and Net interest margin (NIM) ratios.

Liquidity: The banks have to keep 16% SLR against their deposit with central bank, of which 4% average in the form of CRR. The central bank - Bangladesh Bank (BB) keeps CRR in current account and rest of SLR in cash and government securities. Islamic banks have to keep 10% SLR and specialized banks are given exemption of keeping the SLR but they have to keep 4% CRR.

CAMEL Rating: Analyzing the overall operational activities of all commercial and specialized banks; central bank, the regulatory authority of country’s banking sector has ranked 14 ‘A-class’, 11 ‘B-class’, 11 ‘C-class’, 9 ‘D-class’ and 3 ‘E-class’ banks by the end of 2005, which was completed recently.

A-Class banks: The 14 ‘A-class’ banks are Prime Bank, Mutual Trust Bank, Dutch-Bangla Bank, Bank Asia, Exim Bank, Mercantile Bank, Jamuna Bank, Dhaka Bank, BASIC Bank, Standard Bank, Commercial Bank of Ceylon, Citibank N.A, State Bank of India and HSBC.

B-Class banks: The ‘B-class’ banks are Eastern Bank, Premier Bank, The Trust Bank, BRAC Bank, Southeast Bank, NCC Bank, One Bank, Standard Chartered Bank, Woori Bank, Bank Alfalah and National Bank of Pakistan.

C-Class banks: Islami Bank Bangladesh Limited, Pubali Bank, Uttara Bank, National Bank, The City Bank, UCBL, Shahjalal Islami Bank, Al-Arafah Islami Bank, IFIC Bank, AB Bank, First Security Bank and Habib Bank.

D-Class banks: The ‘D-class’ banks are Social Investment Bank, Bangladesh Commerce Bank, Agrani Bank, Janata Bank, Rupali Bank, Sonali Bank, BSRS and RAKUB.

E-Class banks: Bangladesh Krishi Bank, Bangladesh Shilpa Bank and The Oriental Bank. It is revealed by the analysis that the top ranking banks were able to bring best results managing credit and asset efficiently.

>> Source: Weekly Industry, Issue: July 2, 2006, Bangladesh

July 02, 2006

NewsWeek Report


Bullish on Bangladesh

The headlines are grim. But they mask what is shaping up to be one of the world's most amazing turnarounds.

These days, it's not easy to be bullish on Bangladesh. Last month militant labor unions declared war on the country's vital textile industry, attacking dozens of mills and torching several in a struggle for wage hikes and new benefits. And just last week opposition parties bent on toppling Prime Minister Khaleda Zia staged a two-day national strike to demand electoral reforms ahead of parliamentary contests slated for early 2007. Their street actions temporarily closed the country's main port, halted public transport and triggered bloody clashes with riot police armed with tear gas, truncheons and rubber bullets. Observers warn that tensions could escalate as election season approaches; Britain's top diplomat in Dhaka, Anwar Choudhury, has voiced "grave concerns about the level of politically motivated violence."

Civil unrest is always worrisome in a densely populated nation that still ranks among the world's 50 poorest, to be sure. Yet what's remarkable about the grim headlines emanating from Dhaka of late is how little they threaten the country's stubbornly robust national economy. In spite of sporadic unrest, rampant corruption and a polarized political system that's all but dysfunctional, Bangladesh finds itself in the midst of a sustained boom. On June 8, Finance Minister Saifur Rahman forecast that the national economy would grow by 6.7 percent in 2006. The main drivers: surging export growth and a robust service sector.

In textiles, the country's mainstay manufacturing industry, export earnings rose by 17 percent last year to $7.5 billion, confounding forecasts that Bangladesh would lose market share to China once World Trade Organization textile quotas expired at the end of 2004. This year Bangladesh's garment makers expect to garner $10 billion abroad. Foreign investment is rising, too. The attraction is an economy that has expanded by 4 percent or more yearly since 1991, cutting the national poverty rate by 15 percent in the process. "Bangladesh is no more a country of despair," declared Rahman during his annual budget address earlier this year. "It is a country of hope and potential."

The Bangladesh boom defies some of development theory's central tenets. For decades, experts have identified political stability and effective governance as critical prerequisites for economic takeoff. But this lowland nation of 145 million is making tangible progress largely without them. Bangladesh now leads South Asia in most social-welfare indicators—including female literacy and poverty reduction. Its fertility rate is near replacement level. And Bangladesh is the only South Asian country on track to meet its United Nations-mandated Millennium Development Goals of reducing poverty by half by 2015. "When I go to India or Pakistan from Bangladesh, people ask, 'What is it you do, cook up all your statistics?' " says Muhammad Yunus, founder of microlender Grameen Bank. "They ask, 'Why are we falling behind when we're doing the right things, while you are doing the wrong things but getting the right answer?' "

There's no pat explanation for Bangladesh's unlikely success. Certainly, experts agree that the country urgently needs better governance to achieve its full potential of double-digit annual growth. Yet the country has disproved one assumption: that Asia's dynamic twin giants—China and India—would grow at the expense of their less efficient, less open neighbors. Instead, Bangladesh looks attractive as a cost-beating sweatshop economy precisely because China and India are thriving. Both have grown more expensive as manufacturing bases relative to Bangladesh, and rising domestic demand within each makes them attractive destinations for Bangladeshi exports.

In textiles, for example, Bangladeshi workers earn less than $1 a day to start, the lowest in the world, according to the International Labor Organization. Exploitation is rife, to be sure, but the mills nonetheless have given more than 2 million people—the vast majority women—nonagricultural wage jobs. In response to last month's factory raids, the government, industry bosses and labor unions cut a deal to raise wages in a pact announced last week, reducing the risk of further unrest. "As wages rise in China, Bangladesh will increasingly fill in the void," says Debapriya Bhattacharya, executive director of the Center for Policy Dialogue (CPD), a private think tank. "Bangladesh will not only successfully compete with Indian products abroad, but has a high potential to expand its market within India itself."

Funds critical to the nation's development often come from an unconventional source—broad-based microcredit schemes targeting the poor. Pioneered by Grameen Bank after Bangladesh's killer famine of the early 1970s, the strategy is to promote grass-roots development with collateral-free loans to poor households for investment in seeds, livestock, irrigation or village-level businesses. Today, an estimated 80 percent of households participate in some form of microcredit from Grameen or nongovernmental organizations.

That makes Bangladesh the test case in a new development-financing model. Experts laud microlending for a string of positive side effects. By targeting women (who have proved more reliable borrowers than men), lending schemes have pushed female participation in the labor force to among the highest in the developing world. As a result, Bangladesh's birthrate has plummeted, poor families have opted to put their girls as well as boys in school and women have taken a large role in local government—all in a predominantly Muslim country. "At the grass roots things have worked quite well," says Ifzal Ali, chief economist for the Asian Development Bank in Manila. "Rural literacy, basic health, provision of water [are] beginning to pay dividends. Compared to 3 to 4 percent growth earlier, there is now 6 to 7 percent. They're doing something right, no doubt about it."

But a concerted clean-hands campaign is needed to kick the economy into high gear. Corruption largely explains the endless red tape, crumbling ports and barriers to foreign investment that keep the country from achieving its full potential. "It's a barrier to every step we need to take," says Yunus, who adds without irony: "If we can bring down our corruption to the prevailing level in South Asia, our growth rate would be 9 to 10 percent."

Should Bangladesh experience destabilizing political turmoil in the coming weeks or months, its economy would certainly suffer. Tension in the garment industry remains high. Abdus Salam Murshedy, vice president of the Garments Manufacturers and Exporters Assocation, warns that the government "must protect our factories [from protesters], or else our achievements will be reduced to zero."

Yet even now, foreign investors have multibillion-dollar projects on the drawing board in Dhaka. The Indian conglomerate Tata has proposed building a steel mill and a power plant worth $2.5 billion in the area. And the government remains upbeat. "We could accelerate the growth momentum remarkably without destabilizing macroeconomic fundamentals," says Rahman, the Finance minister. Then, perhaps, Bangladesh would make headlines for something other than killer cyclones or riots in Dhaka's streets.

>> Source: George Wehrfritz and Hassan Shahriar, Newsweek Int’l, Issue: June 26, 2006

June 30, 2006

India vs Bangladesh: Issues 1

India seeks Bangladesh's support for UN Secretary General post

India has sought Bangladesh's support in favor of her candidate to the post of the next Secretary General of the United Nations.

Indian High Commissioner to Bangladesh Venna Sikri sought the support while she met Foreign Minister of Bangladesh, Morshed Khan in Dhaka Wednesday, Bangladesh Observer reports from Dhaka quoting a foreign ministry Press release.

Veena Sikri informed the Foreign Minister that India has nominated UN Under Secretary General Shashi Tharoor as her candidate for the top post of the UN. On an inquiry, she explained to the minister about Indian's recent ban on the export of rice, lentil and sugar.

She said it is not only applicable to Bangladesh but also to all. The measure has been taken in order to maintain good supply line in the country as they have some shortage of these items domestically.

Regarding imposition of countervailing duty on Bangladesh's four tems -hilsha fish, saree, medicine and porcelain, she said it has also been done universally on all imports for revenue purpose.

>> Source: New Delhi, June 29, IRNA

April 20, 2006

Bangladesh & WTO Issue

Bangladesh lists products for duty-free market access under WTO

Bangladesh has finalized a list of 1,017 products to try to get duty-free market access to the WTO member countries. It was agreed at the last WTO ministerial meeting in Hong Kong that 97% of products from the least-developed countries (LDCs) would be allowed duty-free access to the markets of WTO member nations.

Dhaka also identified 276 other products intended to be put under the sensitive list of the developed countries, which makes up the remaining 3% of products. But Bangladesh would demand a timeframe of phasing out these products from the restrictive list as per a WTO decision.

"We should have second and third lists of products as alternative options," Commerce Minister Altaf Hossain Chowdhury said Monday, after a meeting of the high-powered committee the government formed in this regard.

The committee convened the meeting for the first time after it was formed by the Cabinet Division on March 16 to finalize the list of products and the country-strategy in any future negotiation of the World Trade Organization (WTO).

The sub-committee on market access, headed by EPB Vice-Chairman Mir Shahabuddin Mohammed, prepared the lists of products. The next WTO negotiations would focus on how the member nations would settle which products would fall into the duty-free list of 97% and which into the sensitive or restrictive lists.

The decision would come from two meetings -- one scheduled to be held in Geneva and another in Washington. Meanwhile, the developed countries have decided to settle the lists by September and developing countries by December this year.

Altaf, who is heading the committee of 30 members comprised of public and private sector representatives, said an expert group to be formed out of the committee members would work to make the strategy concrete.

Besides, Bangladesh's Embassy in Washington would be assigned to further push US authorities to consider the Bangladesh cause while efforts by lobbyists already working there would be intensified.

The Committee meeting also considered the possibility of appointing lobbyists in Geneva, the headquarter of WTO, besides strengthening Bangladesh's mission there.

The country would also discuss LDCs causes with Asian LDCs as well as countries enjoying trade preferences under the African Growth and Opportunity Act (AGOA) and CBI, said the minister.

"The lists were prepared taking into consideration the existing exports, GSP facilities, lists of imports by importing countries and products having export potentials in the near future," Director General of WTO cell in the Ministry of Commerce said.

He said the committee would try to keep all the country's exportable items in the duty-free list of 97% as the country has the scope to negotiate.

He further said that Bangladesh would try to negotiate determining the duty-free items on the basis of USA's imports from LDCs, which would constitute only 50 items to put in their sensitive list.

If it has to accept the basis of calculating the items on USA's global import, some 308 items of Bangladesh would be included in their sensitive lists, he said.

Regarding Japan, he said the country has informally assured Bangladesh of a relaxed approach beyond their already offered 98.6% duty-free items. Bangladesh would try to bring leather and fish items out of their sensitive list.

In his introductory remarks, the Commerce Minister apprised the meeting that the sub-committee on services sector already submitted its report to the Ministry of Commerce but expressed dissatisfaction that the other sub-committee on export diversification is yet to submit its report.

He asked the sub-committee to submit their report urgently so that the national committee could set the country strategy. "We're looking eagerly to see results out of these reports," said the minister.

Commerce Ministry Adviser Barkat Ullah Bulu, Commerce Secretary Mohammed Abdul Karim and committee members both from public and private sectors were present at the meeting.

Source: OneWorld.Net, 20 April 2006

April 06, 2006

Bangladesh: Development Issues2


Rebuilding Bangladesh

A nation long plagued by natural disasters, poverty, corruption and violence may finally be on the verge of a happier future
By Alex Perry

Source: TIME Asia, April 3, 2006

As Lutfozzaman Babar, Bangladesh's Home Minister, tells it, the call he'd been awaiting for months came at 3 a.m. on March 6 while he was grabbing some sleep in a Singapore hotel during a whistle-stop tour of Asia. "It's him, it's Bangla Bhai," came the voice of a commander in the Rapid Action Battalion (R.A.B.), Bangladesh's élite antiterror squad. "He's surrounded." Babar, the leader of a government drive to rein in Islamic militancy, was instantly awake. "Don't shoot! Don't shoot!" he urged. "We need him alive. We need to know what he knows."

Bhai, whose real name is Siddiqul Islam, was the prime target in the government's crackdown on terrorism. A veteran of the mujahedin war against the Soviets in Afghanistan who later drifted through the Middle East as a nightclub bouncer, Bhai had returned to Bangladesh to help found two extremist groups. Over the past three years, he was believed to be a central figure behind a host of bombings, assassinations and suicide attacks that culminated last Aug. 17 in 500 near-simultaneous explosions across the country. It wasn't a surprise, then, to find that Bhai had no intention of meekly surrendering. When an R.A.B. officer opened the door of the house where Bhai was hiding in the northeastern village of Rampur, Bhai opened fire with a pistol, grazing the man's temple. Then, with the house surrounded, Bhai detonated a bomb inside, apparently hoping to kill himself and his assailants; he succeeded only in setting fire to the house. Looking charred and raw-skinned, he was led out of the burning building and pushed into a waiting truck.

Babar put in a triumphant call to the secure red phone in Prime Minister Khaleda Zia's office. "She was very excited," he recalls. She still is. In an interview with TIME, Zia purrs over how the war against radical Islamists is going. "We've broken their back," she says. "We will catch all of them. They'll get life sentences, or death."

Zia can be forgiven for a little crowing. At the best of times, governing Bangladesh is one of the toughest political challenges on earth. Its 144 million people are crammed into a country the size of New York State, with 70 million of them living on less than $1 a day. As the world's biggest delta, Bangladesh is also plagued by floods and cyclones, and by the steady poisoning of tens of millions of people who drink water contaminated by naturally occurring arsenic.

Man hasn't done Bangladesh many favors either. The country was born from the ruins of East Pakistan 35 years ago after a war of independence in which India-backed nationalists—unhappy at being ruled from what was then West Pakistan—fought Islamists loyal to Islamabad. Three million people were slaughtered in eight months before the Pakistanis conceded. Those were the days before truth and reconciliation commissions and international criminal tribunals, and the world left Bangladesh largely alone to heal and rebuild. Success has been limited. Democracy is strangled by a poisonous political war between Zia's right-of-center Bangladesh National Party (B.N.P.) and the left-leaning Awami League. Rejecting any notion of bipartisanship, both parties seem to keep the nation perpetually on the verge of chaos, alternating between state repression or crippling national strikes aimed at toppling the government, depending on who is in power. With politics often reduced to little more than a big brawl, violence infects much of daily life. Gangs armed with barbers' razors roam city streets, extortion is widespread, beatings are routine.
A TIME reporter who traveled to Rajshahi to interview a lawyer found on arrival that the man had been murdered. Bangladesh's courts, police and bureaucracy, moreover, are so weak that the country has come last in Transparency International's world corruption index five years in a row. Zia's most popular initiative has been forming the R.A.B., a police force that draws support in part for its willingness to kill. "It's been a crazy few years since I've been here," says Larry Maramis, the U.N. Development Program's deputy resident representative. "The country could easily have fallen into being labeled a failed state."

The scale of the Aug. 17 blasts—when hundreds of bombs were detonated in an hour—demonstrated how close Bangladesh could have come to falling apart. The ingredients for disaster were all there. While the country was founded on secular principles, a Western diplomat in Dhaka says it "has become noticeably more pious in the last few years" due to an explosive growth in radical madrasahs funded by Middle Eastern charities. It doesn't help that Bangladesh lies on a gun-smuggling route from East Asia; in April 2004, police discovered a boat in the southern port of Chittagong unloading enough AK-47s, grenades and ammunition to fill 12 trucks that were presumably destined to deliver the ordnance to insurgent groups in Bangladesh and possibly beyond. Responding to scattered reports of Islamic fighters from overseas using Bangladesh as a safe haven, the then U.S. State Department coordinator for counterterrorism, Cofer Black, warned in the fall of 2004 that the country could become a "platform to project terror."

Until the August bombings, however, Zia's government had denied the presence of Islamic extremists in Bangladesh. The opposition accused her of avoiding the issue because two hard-line Islamic parties, the Jamaat-i-Islami and Islami Oikya Jote, were partners in her ruling coalition. Zia insists the government's inaction was merely due to a lack of information. "We did not know they were there," she says of the militants. "After the Aug. 17 bomb blasts, we knew."

And they acted. Zia made combating the insurgency the defining mission for Home Minister Babar and the R.A.B., formed in 2004 from 9,000 top officers in the military and police. The Bangladeshi authorities solicited forensic help from the FBI and Scotland Yard, which was particularly interested in a May 2004 bomb attack that injured British High Commissioner Anwar Chowdhury; the R.A.B. also exchanged information with Interpol and Western intelligence agencies. Meanwhile, Zia demanded, and received, public support for an antiterror drive from Bangladesh's religious leaders and from her Islamist coalition members. The government also targeted bank accounts operated by suspect Islamic foundations in order to cut off funding to terrorists.

In addition to Bhai's capture, this antiterrorism campaign has led to nearly 1,000 arrests over the past eight months. Five of the seven top leaders of one terror group, the Jama'atul Mujahideen Bangladesh, have been caught, including Bhai's alleged co-conspirator Sheikh Abdur Rahman. Only two months ago, says the Western diplomat, "I was telling people back home it was just a matter of time before we had the first car bomb or first attack on a foreigner." The "nightmare scenario that could have unhinged the entire country," he adds, was for terrorist attacks to escalate during what is already expected to be a tense general election in early 2007—but that now seems "pretty remote. What we're seeing looks like the implosion of the entire [militant] organization."

Bangladesh, dubbed in the 1970s by Henry Kissinger as a "bottomless basket," is making surprising progress on other fronts, too. According to the U.N.D.P., the country now scores higher than neighbor India on several key barometers of social development, such as infant mortality, child vaccination, and employment of women—a striking turnaround over the past decade or so. The country's much-praised microcredit scheme, operated by the Grameen Bank, has lent an average of $120 each to 5.8 million people. And the government says 100% of young children are now enrolled in primary school, and that girls at last have equal access to education—goals that Zia, as a woman leading a conservative Muslim nation, had made a priority. "If we want to progress as a country, to remove poverty and spread awareness of family planning, we have to give [girls] equal rights," she explains.

The economy is looking up, too. GDP has grown by at least 5% for three years running, and the Asian Development Bank predicts that growth will hit 6.5% in 2006. Foreign direct investment rose from $138 million to $454 million in the first six months of last year compared to the same period the previous year. The number of cell-phone users rose by 144% in a year. And Goldman Sachs has rated Bangladesh as one of 11 developing nations that, in the long term, could emulate the success of China, India, Brazil and Russia. Mahmudur Rahman, Zia's executive chairman of the Government Board of Investment, can scarcely hide his delight, describing Bangladesh's recent economic success as "nothing short of a miracle."

That might be overstating it. But Christine Wallich, World Bank country head, says that in the past 12-18 months international opinion has indeed gone through a sea change. Bangladesh, she says, is now seen as "the little engine that could." Dramatic proof of that comes in plans by India's biggest business group, Tata, for a $2.5 billion investment in Bangladesh in steel, gas, coal and power. If it proceeds as planned, that would exceed the total foreign direct investment the country has attracted since independence. Wallich says the effect on Bangladesh of such a vote of confidence would be "transformative." Group chairman Ratan Tata says that while the deal makes good business sense, he hopes it could also kick-start the country. "If somebody doesn't make a move," he told TIME, "Bangladesh will always remain where it is today. Somebody has to make a leap of faith."

Salim Chaklader, 45, is part of the rising tide of Bangladeshis who have escaped from subsistence living and joined the happier ranks of the urban middle class. Born in a village outside Dhaka, he and his family moved to the capital in 1973 and set up a shop importing cloth from Thailand and China. The family now has six shops and 40 employees, and Chaklader hopes to send his two sons, 18 and 16, to university. "We're pretty confident of the future," he says. His conviction is echoed by Alan Rosling, executive director of Tata Sons and a prime mover behind Tata's investment in Bangladesh. "There is poverty," he says, "but there's also a fast-developing middle class, which makes it an attractive market. People tell us we're taking a big risk. But we've had a long, hard look at Bangladesh and while, yes, there are issues, there's nothing we see there that we don't see in most countries."

Rosling, deep in negotiations with the government over Tata's investment, is coy about specifying the "issues." Chaklader is less diplomatic. None of his confidence in the country's future, he says, derives from its political leadership: "It's small businessmen like me that boost growth. I've given a living to 40 families. The politicians just get rich." To the average citizen, claims Chaklader, the primary function of the state can seem to be extracting bribes. "I pay a $30 bribe for a telephone line. I pay another $50 bribe for my trading license. When I put my children in school, I had to give a $100 'donation.' These are not people that are thinking about the progress of the country." Chaklader fingers corruption, and the sharply uneven development that accompanies it, as the main cause of militancy. The swanky new apartment blocks, gelato houses and Thai restaurants in Gulshan, Dhaka's smartest neighborhood, he says, are a cause of frustration and alienation for many less fortunate Bangladeshis. Indeed, Jamaat-i-Islami explicitly appeals to that dissatisfaction in its party literature, casting its leaders as "honest men" working for a more equitable distribution of wealth. "A lot of people are deprived," says party spokesman Mohammad Kamruzzaman, "and so our support is increasing."

The bilious feud between Bangladesh's two leading women also hobbles the country. Asked about the hostility between her and Awami League leader Sheikh Hasina, Zia replies: "Ask her." For her part, Hasina accuses Zia of everything from staging "a drama" with the militant arrests to secretly being behind an attempt to have her assassinated in 2004 when a bomb killed 22 people at an Awami League rally. Politics in Bangladesh has always been a highly personal and perilous blood sport. Zia's husband, former President Ziaur Rahman, was assassinated in May 1981; Hasina's father Sheikh Mujibur Rahman, leader of the independence movement and the nation's first free government, was killed along with much of her immediate family in a military coup in 1975.

This history of personal tragedy has intensified the distrust and recriminations that characterize Bangladeshi politics. In March, Zia took a TIME correspondent by helicopter to a public rally at Pabna, a town west of Dhaka, to witness the popular support she attracts. The crowds were indeed impressive, even adoring, throwing themselves over fences, spilling into rivers and falling out of trees as they raced to catch a glimpse of the Prime Minister. But the day was also notable for the extravagant venom of Zia's speeches. She accused Hasina's party of bringing terrorism to Bangladesh, running a national network of criminal "godfathers," and being linked to the arrested militant leaders. In an interview the previous night at her home in Dhaka, Hasina spoke of Zia as the mastermind behind the Islamist conspiracy—"it's her baby," she said—and accused her Bangladesh National Party of torture, murder and rape. Needless to say, each of the women dismisses the other's allegations.

The price of this political hatred is incalculable because the instability spills over into the economy. "It's the single biggest issue holding back development," says the World Bank's Wallich. Even the Board of Investment's Rahman agrees: "The intensity of the political rivalry is definitely hurting the nation." It erodes faith in state institutions, which are co-opted into the fight at the expense of governance. The gloves-off bitterness also makes almost anything acceptable in Bangladeshi politics. Both the B.N.P. and the Awami League employ violent student wings, and both parties have wooed fundamentalists over the years to help defeat the opposition. Many B.N.P. members even allied themselves publicly with Bangla Bhai in his earlier days when he became an underworld hero by allegedly killing extortionists operating in the country's lawless western badlands. Asked about these embarrassing links, Home Minister Babar is visibly uncomfortable: "You have to understand that this was only local criminal activities. Bangla Bhai was fighting criminals. It wasn't jihad then."

Perhaps the biggest cost of the political feuding is that 35 years after its bloody birth, the country's tortured soul remains unhealed. Neighbors, colleagues, even members of the same family who support different parties commonly refuse to speak to one another. Truth is often lost in the chasm between these divisions. Depending on who you talk to, the arrest of a journalist is an attack on press freedom or the welcome detention of a professional blackmailer; a new flood-defense project is evidence of good governance or of pork-barrel corruption; even tax evasion can be hailed as a good thing if it keeps the money out of a particular government's hands.

Bangladesh may never truly leave behind this legacy of bloodshed, corruption and distrust. But in what was once one of the sorriest places on earth, there is new hope. From the slow but marked gains in foreign investment to Zia's decision to fight Islamic militancy head-on, Bangladesh has achieved progress that few outsiders, or even Bangladeshis, believed possible a few years ago. "All we need," says University of Dhaka Professor of Economics Abul Barkat, "is five years of good governance, and we'd be away." Surely no nation ever deserved it more.

—With reporting by Sayem Mehmood/Rajshahi

March 28, 2006

Bangladesh: Investment

20 textile units shift production units to Bangladesh for cutting production cost

ISLAMABAD, March 28 (Online): As many as 20 textile units have finally decided to shift their production units to Bangladesh in an aggressive move to cut their production cost, which they say is almost half of that of Pakistan as Bangladesh has offered a tax-free investment opportunity to the Pakistani textile industry, sources said on Monday.

They said the offer of a tax free-investment has attracted some of the prominent textile industrialists, who now plan to shift their production units.

Representatives of different textile associations claimed about 20 units of bed linen, readymade garments and knitwear had finalized plans to shift to Bangladesh and it could take a month or two to set up or acquire any of the already running units in Bangladesh.

However, the situation has pushed the authorities of government of Pakistan to offer incentives to the over $8 billion-export industry, otherwise it could trigger capital flight from the country.

Sources said major interest of the textile units, planning to operate from Bangladesh, was to get broader market access, as that country did not face tariff barriers like Pakistan.

"So the issue is not the production cost, it is the market share, which one can get better while exporting textile goods from Bangladesh compared with Pakistan," they added.

The Bangladesh government offered a tax-free investment environment to the Pakistani textile industry as the developing Asian country is eyeing $1 billion foreign investment within a year.

The Bangladesh offer did not go unheard as a 10-member delegation of leading bedwear manufacturers and exporters visited Bangladesh in early November 2005 and held a series of meetings at the Bangladesh Board of Investment, the ministry of commerce and the ministry of industries.

The beadwear exporters witnessed a sharp decline in orders from European countries after the EU in March 2004 imposed a 13.1 percent anti-dumping duty on imports from Pakistan, claiming the cheap Pakistani products were harming the local textile industries.

Pakistan, which entered the WTO regime in January 2005, is among top five textile goods exporters of the world. On an average, the country exports textile products worth more than $8 billion every year-end.

Source: paktribune.com
Monday March 27, 2006

February 07, 2006

Bangladesh: Madrassah Education


IDB to fund 10 million dollars for Bangladesh Madrassah modernization scheme

The Islamic Development Bank is providing Bangladesh a 10 million dollar grant to modernize the country’s traditional madrassah education system, according to newspaper reports.

The IDB support will be utilized in a project undertaken by the present Bangladesh Nationalist Party-led right-wing alliance government of Prime Minister Khaleda Zia, to produce science-minded madrassah students, the New Age newspaper reported on Saturday.

The Islamic Development Bank is going to donate 10 million dollars for the implementation of the modernization of madrassah education at secondary level. The government would contribute a nominal amount for the project, said an official.

The first-ever syllabus-based madrassah education in the then undivided Bengal was introduced in 1780 during the rule of the East India Company. Some minor changes were brought to the syllabus later on through individual initiatives at certain types of madrassah.

However, there is no curriculum as such for secondary and higher secondary madrassah education till date. And most of the Madrassah educated students are unable to get jobs in the competitive market nowadays.

The main objective of the project is to reduce the differences between madrassah and general education and produce skilled and productive citizens, according to the project proposal, which was submitted to the IDB recently.

The output of the project includes updating madrassah curriculum, improving textbooks, training madrassah teachers and science-minded madrassah students and helping them achieve skills to face challenges in the real world.

The inputs are reformation of the curriculum, construction of science laboratory buildings and supply equipment for facilitating science education, according to the proposal.

Laboratory buildings will be constructed in 64 madrassahs in 64 districts in the first phase and will supply scientific equipment to 515 madrassah by 2008 and 2009 under the project.

The Directorate of Secondary and Higher Education will implement the project under the supervision of the education ministry.

The National Curriculum and Textbook Board chairman, Professor Gazi Mohammad Ahsanul Kabir, who has prepared the project proposal, said the implementation would start in July.

The present condition of the madrassah curriculum is bad, he said. There are about 1400,000 students in secondary madrassahs across the country. 130,000 teachers are there in about 7,000 madrassahs.

The Bangladesh government provides 90 per cent of the salaries of teachers and employees of non-government secondary and higher secondary madrassahs which cost about Tk 600 crore per year.

Source: WebIndia123.Com (04.02.2006)

February 01, 2006

Bangladesh: Telecommunication




Mobile phone subscriber base expected to reach 18m by 2007

Bangladesh’s mobile phone subscriber base expected to reach 18 million by 2007 following massive surge of foreign investments in booming cellular marketLeading industry analyst and forecaster, BIS Shrapnel, has launched its Bangladesh Mobile Telecommunication, 2005 report. The extensive market analysis carried out for this study incorporated comprehensive interviews with most network operators and importers, as well as network dealers, and retailers.

Report author Mr. Priyam Shah explains that Bangladesh’s mobile phone market has achieved exceptional growth since the beginning of 2004, registering a massive 100 % growth in its subscriber base during 2004, and 137% during 2005. This trend is forecast to continue over the coming years, bringing the subscriber base to 18 million by 2007.

According to Mr. Shah, recent growth in the Bangladesh mobile market can be attributed to factors such as the deregulation of the telecommunication sector, low levels of tele-density, inadequate fixed phone infrastructure, high competition following the entry of two new operators (Banglalink and Teletalk) and, particularly, massive foreign direct investment (FDI) by telecom giants like Telenor, Telekom Malaysia (TM), Orascom, SingTel, and most recently by UAE-based Warid Telecom. Mr. Shah explains that foreign operators, in collaboration with local partners, have been working with the infrastructure to remove entry barriers and make mobile telephony more affordable and widen the base of mobile subscribers.

Mobile Price War

According to Mr. Shah, the entry of Banglalink in February last year has sparked a price war. Banglalink’s attractive launch offer included a new connection and handset at a low start-up cost of Tk 3,400. Following Banglalink, 3 (three) other private operators ­ GrameenPhone, Aktel and CityCell ­ have also come up with various value-added offers resulting in an intense price battle.

The development of a competitive mobile phone market is expected to prompt an easing in cell phone tariffs going forward, after years of escalation in what was a captive market. Consumers will also benefit from cheaper connection and call rates.

State-owned operator Teletalk, however, is expected to struggle in this new environment as it is still grappling with poor network coverage and inefficient management.

New SIM Tax

Controversially, the country’s 2004/05 annual budget (delivered in June 2005) imposed a tax of Tk 1,200 on each new SIM card connection, raising a huge furore among cell phone operators. Operators think that the new tax will pose a serious entry hurdle for low-income earners and will significantly stifle growth expectations.

According to the latest figures from BIS Shrapnel research, the sale of mobile phone connections has picked up after an initial slowdown in June and July. The tax on SIM cards was revised to Tk 900 in August in response to fierce demands from operators.

Mobile Handset Market

In tandem with the growing subscriber base, sales of mobile handsets has increased at a phenomenal pace. However, nearly 70 per cent of mobile handsets available in the local market have been entering through informal channels, depriving the Government and importers of a huge amount of revenue each year.

In a serious bid to turn around this drastic situation, the Bangladesh Government reduced the tax on mobile handset imports from Tk 1,500 to only Tk 300 in mid 2005. Mr. Shah explains that although this initiative has revived the situation to a certain extent, the effect on the grey market has not been as significant as was expected by distributors and importers. Interviews conducted by BIS Shrapnel with leading distributors reveal that the grey market is currently holding around 40% market share, but they are hopeful this will diminish over the coming months.

According to BIS Shrapnel research, Bangladesh’s mobile handset market is dominated by first-time users (nearly 85%), as the country is still in its infancy in terms of mobile phone usage. Further, 80% of the handset market is dominated by ultra-low to low-end handsets, available for less than Tk 4,500, due to the country’s low per capita income levels.

As with many other Asia-Pacific countries, the Bangladesh mobile handset market is predominantly captured by global handset giant Nokia (approximately 52% market share) followed by Siemens. Mr. Shah explains that the success of these 2 (two) vendors can be attributed to excellent handset quality, ease of use, an efficient sales and distribution network, dedicated after-sales service, and regular launches of low-priced handsets to meet market demand.

Source: BIS Shrapnel Pty Ltd (01.02.2006)

January 31, 2006

Bangladesh: Export Earnings




EPZs contribute $1.55b to Country’s Export Earnings

Country's Export Processing Zones (EPZs) have contributed 1.55 billion US dollar to the country's total export earnings of 8.65 billion US dollar in fiscal 2004-05, reports BSS.

Among the 6 (six) running EPZs, Chittagong EPZ registered the highest earnings with 772 million US dollar and Dhaka EPZ exported goods worth about 758 million US dollar, a high official source said.

Presently there are 6 (six) running EPZs, which are situated in Dhaka, Chittagong, Comilla, Mongla, Ishwardi and Nilphamari. A total of 221 industries are now in operation in these EPZs.

Investors from South Korea, Japan, Hong Kong, China, USA, UK, Germany, Pakistan, Malaysia, Taiwan, India, Panama, Denmark, Thailand, Sweden, Italy, Belgium, Switzerland, the Netherlands, France, Singapore, Nepal, Australia, Canada, Sri Lanka, Mauritius, New Zealand have so far invested in the EPZs with a total amount of over 860 million US dollar in addition to local investment.

A wide variety of products including readymade garments, garment accessories, other textile products, electronics and electrical goods, agro products, footwear and leather goods, metal and plastic products, paper products and sports items are being exported to some 186 destinations across the world.

World famous brand products like Nike, Reebok, Walmart, Kmart, Mother Care, Addidas, Hi-tech and others have been sourcing from these EPZs. Besides, many industries have been acting as out- source to Konika, Minolta, Sony, Nissan, Mitsubishi, Hino and other reputed multinational companies.

January 30, 2006

Bangladesh: FDI 2005




$800m FDI Received in 2005, BOI Executive Chairman tells FICCI meet

Declaring a bright prospect of foreign direct investment and higher economic growth in the country, Board of Investment Executive Chairman Mahmudur Rahman yesterday said an increased amount of US$ 800 million was received in FDI.

"In 2005, the provisional FDI inflow was 800 million US dollars while the amounts were US$ 460 million and US$ 268 million in 2004 and 2003," he told the monthly luncheon meeting of Foreign Investors' Chamber of Commerce and Industry (FICCI) in Dhaka.

The BOI chief executive also mentioned that every year the country is getting a significant amount of FDI for energy sector. Investment promotion is a long-term process, he observed.

Describing a positive result of the growing amount of foreign capital investment in productive sectors, Rahman said as per Bangladesh Bank statistics, in the first three months of this fiscal year, the manufacturing and industrial growth was more than 10 percent and nearly 10 percent.

He stressed the need for first-class government infrastructure as essential one for attracting more FDI.

"Impartial administration, dynamic and credible public institutions and transparent policy are the main elements for first-class investment-friendly government infrastructure. Investment decision is not a simple decision for the investors, it is related to many things," he said.

Describing present condition of the country as the best for FDI, he said there are three excellent elements now the country has got--energy resources, excellent bunch of people as workforce and market access.

"But we have to work together irrespective of party affiliation. FDI is not a matter of BNP, AL, JP or any other party--it is a matter of the country," he told his business audience, adding that the country now needs physical infrastructure, government infrastructure and aggressive promotion around the world for attracting investment.

Replying to the criticisms by some economists about the FDI, he said, "They did not come up with statistics, and statement without statistics is political."

The FICCI president said although the investment climate in the country is favorable compared with most South Asian countries, particularly in terms of its competitive labor costs and flexible labor laws, the cost of doing business in Bangladesh is perceived to be high.

"High costs are reflections of corruption, weak law-and-order, inadequate infrastructure and services and distressed financial markets", he said.

He pointed out the imposition of 10 percent tax at source on royalty, technical know-how fees and technical assistance fees in excess of 2.5 percent of profits by Income Tax authorities created "discontent of foreign investors".

January 26, 2006

Bangladesh: CSR Award 2005


Unilever Bangladesh Ltd and Dhaka Bank Ltd., the winner of StanChart-Financial Express CSR Award 2005

President Iajuddin Ahmed yesterday called upon corporate houses to make contribution to economic development by improving the quality of life of their workforce.

"Corporate social responsibility (CSR) is a crucial need for promoting sustainable development and long-term advancement of business," the president said at the Standard Chartered-Financial Express Corporate Social Responsibility Award 2005 ceremony in Dhaka.

Unilever Bangladesh Ltd and Dhaka Bank Ltd have been adjudged this year's winners in manufacturing and services sector categories.

Economist Wahiduddin Mahmud, chairman of the Standard Chartered-Financial Express Corporate Social Responsibility Award Trust, chaired the programme. Osman Morad, chief executive officer of Standard Chartered Bank Bangladesh, and Moazzem Hossain, editor of The Financial Express, also spoke.

The president also said as CSR is a growing demand, businesses competing in the global economy can no longer afford to ignore the issue.

Iajuddin said Bangladesh has been making relentless efforts to adopt operational principles of corporate governance in line with the international best practices.

"The regulatory agencies have incorporate many of the relevant issues into their respective operational framework and the process is still on," he added.

Wahiduddin Mahmud said companies worldwide are increasingly paying attention to CSR in their business approaches by attempting to address social issues and engaging themselves in not-for-profit community welfare activities.

Sanjiv Mehta, chairman and managing director of Unilever Bangladesh Ltd, and Shahed Noman, managing director of Dhaka Bank, received the awards.

January 24, 2006

Bangladesh: Banking 2





11 PCBs reduce Tk 500cr classified loans

Some 11 private commercial banks (PCBs) have been able to reduce their non-performing assets by cutting Tk 500 crore classified loans in a single year.

Classified amount of these PCBs was around Tk 2,900 crore in December 2004 but these banks were able to cut Tk 500 crore of the amount by December 2005, senior executives of these PCBs told Bangladesh Bank (BB) at a meeting yesterday.
Managing directors and senior executives of following banks were present at the meeting.

1. Pubali Bank Ltd,
2. Uttara Bank Ltd,
3. National Bank Ltd,
4. AB Bank Ltd,
5. IFIC Bank Ltd,
6. City Bank Ltd,
7. Social Investment Bank Ltd,
8. Al-Arafah Bank Ltd,
9. Oriental Bank Ltd,
10.First Security Bank Ltd and
11.Bangladesh Commerce Bank Ltd

Banks eye to lower their average classified amount to 10 percent by December this year, which is now 13 percent. Managing directors and senior executives of the PCBs attended the monitoring meeting with Mohammad A (Rumi) Ali, BB deputy governor, in the chair.

At the meeting the central bank also asked these PCBs to submit their loan status of the 2001-02 financial year within a month. Classified loan of Oriental Bank has come down to 23 percent from 28 percent earlier, Social Investment Bank's 7.4 percent from 11 percent and First Security Bank's 15 percent from 19 percent earlier, meeting sources said.

Oriental Bank was given the problem bank status much earlier but the Social Investment Bank and First Security Bank were given the status in the recent years. According to official statistics, performances of these banks are improving after bringing them under the problem bank unit of the BB.

January 23, 2006

Bangladesh: GDP growth



BBS Projects 6.86pc GDP rise in FY06

The country may strike the highest-ever GDP growth of 6.86 percent this fiscal year thanks mainly to a strong performance of the agriculture sector, according to a preliminary estimate of the Bangladesh Bureau of Statistics (BBS).

The BBS made the estimation based on the data of the first half of FY06. Although the BBS previously used to make the yearly forecast on the basis of data of the first three quarters, this time it made it earlier as part of its drive to develop a system of making quarterly economic growth projections.

The estimate will be tabled at the current session of parliament as well as sent to the Bangladesh Bank to assist it in its policy review, said a planning ministry source.

The average level of annual GDP growth was around 3 percent in the 1970s, 4 percent in 1980s and 5 percent in 1990s. The highest annual GDP growth so far has been posted in FY04 at 6.27 percent.

The BBS also has made an upward revision of its GDP growth calculation for FY05 from 5.38 percent to 5.61 percent.

Agriculture contributes 17 percent to the GDP (gross domestic product). The BBS projects a 5.01 percent growth in agriculture in FY06, which was as low as 0.78 percent in FY05, due to the devastation by severe flooding.

This year's aaush production has been 17.45 lakh metric ton (MT), up by 16.03 percent from that in the previous year.

The aman production has been projected at 1.10 crore MT, 12 percent more than FY05's. Because of the flooding, aman production in FY05 was only 98 lakh MT, down by 15 percent from FY04's.

The projected boro production in FY06 is 1.40 crore MT, 1.18 percent more than FY05's.

Industries that contribute about 27 percent to the GDP may achieve an 8.98 percent growth this year.

Among the industries, the manufacturing sector accounts for almost 17 percent of the GDP. This year, large and medium industries are estimated to score a 9.2 percent growth, which was 8.2 percent in FY05. Small industries are reckoned to grow by 8.8 percent in FY06. The rate was 7.9 percent in FY05.

According to the BBS projection, food, knitwear, cotton, textiles, leather, pharmaceuticals, cement and plastic industries will see substantial growth this year. It estimates the construction sector to witness an 8.96 percent growth in FY06, which was 8.76 percent in FY05.

The gas production will grow this fiscal year by 9.14 percent, which was 8.87 percent in FY05.

However, the bureau reckons the power sector's growth will go down from 8.58 percent in FY05 to 8.07 percent.

Bangladesh Institute of Development Studies Research Director Zaid Bakht said the estimated growth of the BBS is probable, as it largely based on the agricultural growth, mainly in the aman production.

Over the last two years the import of capital machinery as well as the industrial credit has seen a substantial rise, so the industrial production this year will also rise, he observed.

Zaid however pointed out three risk factors. Firstly, the World Bank and the International Monetary Fund (IMF) have been pressurising the government to adjust the domestic oil prices with the international ones. Though the government so far has managed to avoid their insistence, it may not succeed to do so for long. And if the government goes for any further upward adjustment of oil prices it may have a negative impact on the economy, particularly on the boro production.

Secondly, Zaid said, there is an uncertainty in the export sector. If export does not pick up in the coming months the GDP growth may fall short of the estimate.
Thirdly, the political situation in the last half of this fiscal year may become volatile and slow down the economic growth, he told The Daily Star.

On a query on the probable impacts of the ongoing controversies over the Election Commission, he said the government should not do anything that would heat up the political situation and ultimately affect the economy.

January 03, 2006

Bangladesh: Banking 1



Banks record 29% operating profits in 2005

The country's private commercial banks (PCBs) witnessed a hefty growth -- by about 29.10% -- of their aggregate operating profits in calendar year 2005 over those of the previous one.

The operating profit of the 29 PCBs out of a total of 30 increased by over Tk 6.0 billion to Tk 28.24 billion in calendar 2005, from Taka 21.88 billion in calendar 2004. The profit figure of the Oriental Bank Ltd was not available. Most of the third generation banks, which started operation in the late 1990s, performed well in terms of operating profit, the provisional data indicated.

Sources, however, said the operating profit does not indicate the real financial position of a bank. Because, the banks have to leave aside provisioning against bad debts and taxes that are paid to the government from the operating profit.
According to the central bank statistics, at least 8 PCBs faced provisioning shortfall amounting to Tk 4.02 billion as on September 30, 2005.

The Islami Bank Bangladesh Limited held the top position among the PCBs, earning Tk 2.89 billion in operating profit in 2005 against Tk 2.39 billion in the previous 2004. The Prime Bank Ltd., however, was in 2nd position with an earning of Tk 1.66 billion in operating profit in the last year against Tk 1.37 billion in the previous one. The Uttara Bank Ltd. secured the 3rd position with Tk 1.61 billion in operating profit last year compared to Tk 1.24 billion in the previous year.
Meanwhile, at least 2 PCBs - the Social Investment Bank Ltd. (SIBL) and First Security Bank Ltd. - out of 29 under report, recorded lower operating profits last year due mainly to higher bad debts and thin business, the sources noted.

The operating profit of the SIBL dropped to Tk 210 million in 2005 from Tk 420 million in 2004, while that of the First Security Bank Ltd, from Tk 390 million in 2004 to Tk 13.51 million in 2005. The operating profits of the Southeast Bank Ltd. and Pubali Bank Ltd. were Tk 1.54 billion and Tk 1.52 billion respectively in 2005 against Tk 880 million and Tk 750 million in the previous year.

The City Bank Ltd. earned Tk 1.35 billion in operating profit in 2005 followed by the United Commercial Bank Ltd. (UCBL) with Tk 1.20 billion. The amounts were Tk 950 million for the City Bank Ltd. and Tk 900 million for the UCBL in 2004. The operating profits of the National Bank Ltd. (NBL) and the EXIM Bank Ltd. were Tk 1.20 billion and Tk 1.15 billion respectively in 2005 against Tk 1.12 billion and Tk 830 million in 2004.

Arab Bangladesh (AB) Bank Ltd. earned Tk 1.05 billion in operating profit in 2005 followed by the Mercantile Bank Ltd. with Tk 1.03 billion. The amounts were Tk 720 million for the AB Bank Ltd. and Tk 870 million for the Mercantile Bank Ltd. in 2004.

The operating profits of the Dhaka Bank Ltd. and the National Commerce and Credit Bank Ltd. (NCCBL) were at the same level -- at Tk 1.02 billion in 2005 -- against Tk 850 million and Tk 720 million in the previous year.

On the other hand, the operating profits of the Dutch-Bangla Bank Ltd. and the Eastern Bank Ltd (EBL). were also at the same level -- at Tk 1.01 billion in the last year -- compared to Tk 680 million and Tk 910 million in the previous one.

The Premier Bank Ltd. earned Tk 900 million in operating profit in 2005 followed by the Bank Asia Ltd., with Tk 810 million. The amount was Tk 930 million for the Premier Bank and Tk 660 million for the Bank Asia in 2004. The operating profits of the BASIC Bank Ltd. and the IFIC Bank Ltd. were Tk 800 million and Tk 780 million respectively in 2005 against Tk 720 million and Tk 780 million in 2004.

The Mutual Trust Bank Ltd. made operating profit worth Tk 670 million in 2005 against Tk 520 million in 2004, while the figure for the Standard Bank Ltd. stood at Tk 630 million against Tk 490 million in 2004. The operating profits of the One Bank Ltd. and the BRAC Bank Ltd. were Tk 610 million and Tk 600 million respectively in 2005 against Tk 490 million and Tk 210 million in the previous year.

The Al-Arafah Islami Bank Ltd. earned Tk 600 million in operating profit in 2005 followed by the Shahjalal Islami Bank Ltd. with Tk 501 million. The amounts were Tk 370 million for Al-Arafah Islami Bank and Tk 120 million for the Shahjalal Bank in 2004.

The Jamuna Bank Ltd. made operating profit worth Tk 450 million in 2005 against Tk 320 million in 2004, while the figure for the Trust Bank Ltd. stood at Tk 310 million in 2005 compared to Tk 28 million in 2004.