newsletter prime ba-01. 03 issue 01.pdf · vol. 03, issue 01 january 2011 a monthly update of...

Vol. 03, Issue 01January 2011

A

Monthly Update of Economic,Banking and Financial News

Article

A Newsletter of Research & Development Division, Prime Bank Limited

��Gearing Up for the two-speed global recovery

By Caroline Firstbrook

The rising economic tide that follows a global recession typically swells highest in developed countries. Not this time.

In the aftermath of the worst recession in a generation, Western businesses continue to be dogged by stubbornly slow growth and depressed domestic demand. Persistent unemployment, higher taxes and continued volatility in asset values only aggravate their task. Meanwhile, having experienced only a mild crisis of consumer confidence and subsequent quick recovery, a number of emerging economies are now enjoying world-beating growth.

A new, two-speed global economy is emerging, and it seems likely to become an enduring reality. Going forward, long-term economic fundamentals suggest emerging markets such as India, China, Brazil and parts of Africa will generate most of the new demand in many industries. Projections for demand in the oil sector, just to take one example, currently indicate virtually all future growth will come from developing economies.

Beyond strong current growth driven by a rapidly expanding middle class, these up-and-coming economies hold huge untapped potential for the future.

For example, one emerging economy's planned transformation of its rural postal network will bring universal banking services and access to life insurance to its massive base of rural customers-and simultaneously stimulate further growth. That's because one dollar invested in life insurance translates into an estimated 1.65 dollars in overall local GDP growth.

Here's how: Studies by The World Bank suggest a direct correlation between insurance consumption and economic growth, because life insurance encourages long-term saving that can be invested in infrastructure development and other areas. In rural regions, increased insurance coverage encourages people to consume more because the greater financial security it offers reduces the instinct to hoard cash to guard against a disaster. It also enhances risk-taking ability, promoting entrepreneurship in rural areas and triggering a multiplier effect in terms of employment.

The resulting migration of this country's rural inhabitants into the mainstream economy will create an almost limitless supply of “entry-level” consumers, a phenomenon occurring with different local variations throughout much of the developing world.

Winners and losers�Businesses worldwide need to resolve a key question concerning this new multi-speed reality: Who's positioned to win in this environment and why? Three groups of candidates exist.

1. Multinationals with positions in emerging markets are already outperforming their peers.

Access to higher-growth emerging markets has been an important driver of multinational performance throughout the downturn. In 2009, while Honda Motor Co.'s global automotive and power product businesses saw unit sales declines of 10 percent and 14 percent, respectively, its motorcycle operation enjoyed increased unit sales (up 8.5 percent) because of the company's positions in emerging-market economies such as India and Vietnam.

Similarly, consumer products firm RB saw its revenue grow strongly, helped by a robust emerging-market presence that generates 19 percent of its global sales. The company makes acquisitions to expand its distribution networks in these markets a high priority because it sees substantial growth opportunities to serve new middle-class consumers.

RB also wants to expand its offerings in these regions beyond such staple products as Dettol disinfectant or Vanish stain remover to include products more commonly found in developed markets, such as Finish dishwasher tablets, which could appeal to consumers now contemplating their first dishwasher purchase.

Companies lacking a foothold in emerging economies must choose whether to participate in this growth as followers or remain at home and fight for share in a stagnant domestic market. Latecomers will need to take shortcuts to build market presence quickly, which probably means pursuing acquisitions and joint ventures rather than taking a more time-consuming organic, greenfield approach. US adult stem-cell player NeoStem took this route in 2009 when it acquired China Biopharmaceuticals Holdings and a resulting controlling interest in Suzhou Erye Pharmaceuticals Co.

However, the road to emerging-market success can be rocky, and not all entry attempts have been successful. Failing to anticipate the distinctive needs and expectations of local customers is a common problem. For example, one well-known Western luxury jewelry maker's China entry has been unable to replicate the success the company enjoys in most other countries. Why? Its stores are too small. Chinese consumers dislike little stores, which make them feel unwelcome.

Understanding the often unwritten rules of engagement is equally important. In China, for example, winners plan their strategies to coincide with the government's cycle of five-year plans (the country is currently operating under its 11th such plan),

An Endeavor to Transtate Market Insight into Business Need.

Inside this IssueArticleCountry Profile�Global Business & EconomyBangladesh EconomyFinance & BankingEnergy�AgricultureReadymade GarmentsIT & TelecommunicationMiscellaneous

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ATM Shirajul Haque, MT

Eiman Fergeion, MT

Researeh & Development Division�

Prime Bank Limited

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Tel: 9565564,�

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Editorial Body


Vol. 03, Issue01, January 2011 2

and understand that a longer time horizon may be required here than in other emerging markets. This means addressing the long-term concerns of China's markets as well as Chinese customers, with a reduced emphasis on quarterly reports geared to shareholders' concerns.

For example, Vestas, the Danish wind power company, is building a value chain in China capable of fully supporting the construction of wind turbines in its factories there. Vestas, which has been in China for about 25 years, works continuously to improve its Chinese sourcing capabilities and expects to produce 100 percent made-in-China wind turbines soon. The company's long-term strategy of establishing wind power technology leadership meshes well with China's focus on environmental protection and sustainable development�

2. At the same time, emerging-market players are expanding beyond their borders.

Many domestic companies in these markets have taken advantage of the recession-driven slowdown in global M&A to accelerate their own cross-border purchases.

With enviable capital availability and favorable exchange rates, Brazilian companies are looking to markets in North America and Europe for growth. A notable early example: In 2006, Brazil's Vale outbid US players Falconbridge and Phelps Dodge to take over Canadian mining giant Inco.

More recently, the acquisition of US food distributor Keystone Foods by Marfrig Alimentos for $1.26 billion could almost triple the size of the Brazilian meat processor and make it a lead supplier to McDonald's Corp., ConAgra Foods, Campbell Soup Co., Subway, Yum Brands and Chipotle in a dozen countries (the deal was pending approvals by antitrust agencies at the time of writing).

When it comes to shopping sprees, however, Chinese companies have had the greatest appetites and the deepest pockets. Together they made a record 298 outward investments in 2009, worth almost $43 billion, placing China third in cross-border M&A behind the United States and France. A variety of motives drive these acquisitions, with access to energy sources and natural resources at the top of the list, followed by market expansion and the ability to secure new technology and R&D capabilities.

With less competition (the recession having sidelined many players), these companies have found more good deals. In the beleaguered auto industry, Chinese conglomerate Zhejiang Geely Holding Group picked up Volvo Cars Corp. Auto industry insiders are alarmed at the progress Chinese automakers have been making, and some have revised dramatically downward the assumed 10 to 15 years that these companies will need to become globally competitive.

China appears ready to make global expansion a keystone of its next five-year plan, with the explicit goal of accessing skills, technology and management expertise through cross-border acquisitions. But similar objectives are evident among other emerging-market multinationals as well.

Crompton Greaves, part of India's Avantha Group, has made a number of international acquisitions with the aim of establishing itself as a first choice global supplier of high-quality electrical equipment. Targets have included Belgium's Pauwels in 2005; Ganz in Hungary in 2006; Ireland's Microsol Holdings in 2007; Sonomatra of France and MSE Power Systems in the United States in 2008; and the United Kingdom's Power Technology Solutions in 2010.

Acquisitions in developed markets have brought access to technology and management expertise. However, a notable

feature of this M&A wave is that much of the action focuses on other emerging markets, where the acquirer's domestic experience is immediately relevant.

In 2006, Brazilian bus manufacturer Marcopolo agreed to form a joint venture with Tata Motors of India to produce buses for the Indian domestic market. The plant, which began commercial production in 2009, will ultimately be able to produce 30,000 vehicles a year.

Bharti Airtel, a leading integrated telecommunications player in India, played to its emerging-market strengths by purchasing mobile operations in 15 African countries from Zain for $10.7 billion in 2010. The company's home-market experience in dealing profitably with customers who generate low average revenue per user gives it distinct advantages over Western players attempting to enter these markets.

While cross-border acquisitions present new opportunities, they also put new demands on emerging-market companies, which typically have little experience managing in an international environment. Firms are adopting a variety of approaches to bridge this gap, with some looking to import experienced managerial talent from around the world and others using foreign postings and exchanges to educate their management teams and build bench strength.

3. Within emerging markets, domestic players continue to develop new sources of competitive advantage.

Three trends deserve particular attention in this arena.

Playing technology leapfrog�Vast markets such as China and India have nurtured correspondingly outsized domestic enterprises capable of making large-scale investments in R&D, capital equipment and new technology. China's investments in new steel mills, for example, have enabled it to become the world's largest steel producer, and key players have begun to upgrade existing plants with new technology.

China's ability to coordinate and direct investment across its huge economy plays an important role in burnishing its world-beater credentials. The Chinese government has signaled its desire to have 60,000 alternative energy vehicles operating in 10 cities by 2012, providing the incentive for companies to invest in these green machines.

Take BYD Co., a Chinese manufacturer of automobiles and rechargeable batteries that has developed technology for producing safer lithium-ion batteries. In March 2010, the company's automotive subsidiary offered its first plug-in hybrid-electric vehicle to the general public in China; expected to be available in the United States and Europe in 2011, the plug-in hybrid sedan could potentially sell for half the price of PHEVs developed elsewhere.

The relatively recent establishment of many emerging-market companies is also an advantage, because firms aren't burdened by expensive legacy infrastructure or received wisdom about success that often constrain the thinking of perennial incumbents. Many of these companies are bypassing conventional technology and re-imagining entire industries.

In Africa, for example, telecom operators like Kenya's Safaricom have capitalized on consumer willingness to adopt mobile phones as the accepted communication standard over fixed-line copper networks. This, in turn, has triggered the rapid adoption of innovative, mobile-based services such as banking, agricultural trading and health care that can be delivered at a fraction of the cost of traditional, brick-and-mortar versions.


3Vol. 03, Issue01, January 2011

Developing deep specialization�The emergence of highly competitive clusters of focused specialists in large emerging markets could ultimately make it impossible for new entrants to achieve comparable performance.

For example, the Chinese town of Qiaotou manufactures 60 percent of the world's clothing buttons and 80 percent of its zippers. The combination of enormous scale and fierce competition among local players has resulted in performance levels other competitors can't hope to match. By combining forces at a pre-competitive level, these companies are using technology to collaborate in ways that generate growth for all.�

Qiaotou Button City recently set up China's largest business-to-business website to display and sell its products and collect and exchange market information. Other similarly focused manufacturing clusters abound in China, including “Underwear Town” in Foshan's Yanbu district, with its hundreds of factories, or Datang, known as “the sock capital of the world” because it makes approximately 13.5 billion pairs of socks annually-two pairs of socks for every person on the planet.

A similar game is played in other emerging markets, but with different cards. Brazil, for example, has become the world's No. 2 producer and No. 1 exporter of ethanol, capitalizing on its large sugarcane harvest to become a model of biofuel sustainability.

�Counting up cost advantages�Growing demand in emerging markets results from the new entry-level class of consumers who aspire to a middle-class lifestyle but have very limited cash to spend-for now. This creates a huge incentive for local players to find ways to deliver products at the lowest possible price points, stripping out all unnecessary costs and establishing highly efficient distribution networks capable of reaching these consumers wherever they are.

The pressure to reduce costs affects all parts of the value chain, from product design to go-to-market strategies. Companies thus eliminate many of the design features found in Western products. For instance, laundry detergents featuring state-of-the-art enzymes create no value for customers who lack access to hot water. Package size is also affected; with limited cash on hand, consumers prefer to buy small quantities for immediate use.

Likewise, distribution needs to be both low cost and capable of overcoming the constraints of limited infrastructure. Mobile banking services illustrate this well. Mobile phone users in Kenya, for example, transfer money via their handsets without the need for bank accounts, paying bills and buying goods and services with them. Mobile banking is convenient, offers proven security, keeps costs low both in terms of transaction fees and the need for physical bank branches, and reduces the cost of poor credit for merchants, since consumers typically pre-pay before purchasing via their phone.

As a result of such innovations, we are seeing the emergence of companies capable of operating profitably at prices well below Western competitor cost levels. For example, in 2009, the average revenue per user for Indian mobile operators was less than $7 per month, compared with more than $35 in Europe and more than $50 in the United States. But even at such low per capita revenue levels, India's mobile players have remained solidly in the black, delivering operating margins of around 40 percent-similar to those of successful Western operators.

The global implications�

The two-speed recovery clearly has implications for players worldwide.

To remain competitive in the long term, Western multinationals that are focused exclusively on developed markets need to establish positions in high-growth emerging markets, and time is not on their side. They must compete against rapidly evolving domestic incumbents as well as other established multinationals already benefiting from the higher growth that the emerging markets offer.

Operating across both developed and emerging markets creates new challenges for many of these companies. Different customer needs, at times unclear local rules, diverse competitive environments and often unfamiliar governance requirements mean that a one-size-fits-all approach to country management will probably fail. As a result, many firms are already struggling to adapt to the unique needs of multiple local markets while attempting to exploit the scale advantages of a global organization and at the same time keep complexity costs to a minimum.

Incumbent emerging-market players similarly need to prepare for a rapid evolution of the local competitive environment as new entrants create both risks and potential rewards. Forming partnerships that combine a strong local market presence with world-class product designs and brands is one way to take advantage of this wave of market attackers. However, local players that lack specific competitive advantages will likely come under increasing pressure as consumer choices multiply and price competition heats up.

Current and aspiring emerging-market multinationals need to clarify their strategies for geographic expansion. The M&A market remains relatively quiet, and good opportunities exist for cross-border acquisitions for companies with sufficient means. Reasons for expansion can be as varied as acquiring managerial talent, establishing beachheads in other high-growth markets, securing access to resources and technology, and obtaining new design capabilities.

But in pursuing these goals, caution is in order. Players in all categories can easily destroy value if they lack a coherent growth strategy, undertake poor due diligence, overpay or engage in clumsy post-merger integration. As a result, building strong in-house M&A capabilities can be an important source of competitive advantage.

Respondents in a recent survey of Chinese companies that have made cross-border acquisitions reported that their No. 1 challenge was the lack of management experience in handling overseas investments; local regulations and cultural differences came in second and third, respectively.

In this new two-speed global environment, companies that simply react on an ad hoc basis as they attempt to get on the right side of each new competitive issue will not survive. Instead, they should craft a comprehensive and innovative strategic response to the new global equilibrium-one that recognizes the likely enduring nature of this upside-down competitive reality-and gear up for what could be massive disruptive change. (Source: Outlook, October 2010, the Accenture)



��CANADA

Area and Population�

Canada is a federated country in North America, made up of ten provinces and three territories. It is a vast nation with a wide variety of geological formations, climates, and ecological systems. It is bounded on the north by the Arctic Ocean; on the northeast by Baffin Bay and Davis Strait; on the east by the Atlantic Ocean; on the south by the United States; and on the west by the Pacific Ocean and Alaska. Canada with a total area of 9.98 million square kilometre, it has a population of only about 32.51 million.

Economy: Canada has an advanced economy, and the majority of its citizens enjoy a high quality of life by world standards. Historically, much of this wealth has been generated through the extraction and processing of natural resources, especially fish, furs, timber, minerals, and farm produce. Increasingly, however, manufacturing and service activities have been added, and Canada now has one of the most complex economies in the world. Agriculture; Forestry and Fishing: Wheat is the most important single crop, and the provinces of Alberta, Manitoba, and Saskatchewan form one of the greatest wheat-growing areas of the world, producing more than one-fifth of the world's supply. After wheat, the largest cash receipts from field crops are obtained from canola, vegetables, barley, maize, potatoes, fruits, tobacco, and soybeans. Livestock and livestock products are growing in importance and account for about 50% of cash receipts. Beef cattle's ranching is a specialized industry in the west, especially in the dry grasslands of southern Alberta and Saskatchewan. Canadian wood products are among the finest in the world. Canada is the world's largest producer of newsprint, producing about 27% of the world's total. Commercial fishing in Canada dates back nearly 500 years. Fishing occurs in ocean waters, inland lakes, and rivers. Cod, herring, crab, lobster, and scallops have been the most important exports from the Atlantic coast, and halibut and salmon from the Pacific coast.

Mining: The mining industry employs 1.3% of the country's workforce and accounts for 4% of the GDP and 19% of goods exported. Canada is one of the world's leading producers, and the world's largest exporter, of nonfuel minerals. Canada is the world's largest exporter of uranium, zinc, and potash; second largest producer of nickel, elemental sulfur, asbestos, and cadmium; and among the top five producers of platinum, gypsum, copper, lead, cobalt, titanium, and molybdenum. Much exploration and development activity in Canada is now devoted to diamond mining, especially in the Northwest Territories, the Prairie Provinces, and the Canadian Shield. Fuel minerals - oil and natural gas - are also significant. Canada is the world's tenth largest exporter of oil, and the largest exporter of natural gas. Oil and gas production is centered mainly in Alberta. Manufacturing: Manufacturing is a key component of the Canadian economy, employing 15.3% of the country's workforce and accounting for 19% of the GDP and 57.5% of goods exported. The country's chief manufacturing industry is transportation equipment. Other significant manufacturing sectors are food processing, paper products, chemical products, primary metal processing, petroleum refining, electrical and electronic products, metal fabricating, and wood processing.�

Energy: The production of electrical energy employs 0.6% of the country's workforce, and accounts for 2.6% of the GDP and about 1 percent of goods exported. In 2001, Canada's annual output of electricity was 566 billion kilowatt hours, of which 58% was provided by hydroelectric plants, 13% by nuclear power plants, and about 28% by conventional thermal plants.

Foreign Trade: Canada has just 0.5% of the world's population, but accounts for 4% of total exports in world trade. Canada's leading export commodities now are motor vehicles and parts, mineral fuels, machinery, wood products, paper and paperboard, electrical equipment, wood pulp, aluminum products, and cereals. Leading imports are motor vehicles and parts, heavy machinery, communication equipment, office equipment (especially computers), and industrial machinery.�Bangladesh-Canada Trade

Two-way trade between the countries has shown a rising trend in recent years. Total trade amounted to US$1120.02 million in 2009-10 compared to US$949.75 million in 2008-09 and US$895.21 million in 2007-08, showing a rise of 18% in 2009-10 and 6% in 2008-09.�Position of bilateral trade (US$ million)��As can be seen in the table above, Bangladesh's exports to Canada have shown a rising trend in recent years. Exports amounted to US$666.83 million in 2009-10 compared to US$663.21 million in 2008-09 and US$532.90 million in 2007-08, showing a rise of 0.55% in 2009-10 and 24% in 2008-09.��Major items exported to Canada (US$ million)

COUNTRY PROFILE

Year Total tradeExports �

to CanadaImports �

from Canada

2009-10 1120.02 666.83 453.19

2008-09 949.75 663.21 286.54

2007-08 895.21 532.90 362.31

Major export items 2007-08 2008-09 2009-10�

Woven garments 235.38 295.00 311.69

Knitwear 232.40 292.05 283.86

Frozen food 3.66 6.19 6.40

Agricultural products 1.45 2.12 2.57

Jute goods 1.10 5.76 1.11

Leather -0.01 0.01 -

Chemical products 0.01 0.10 -

Raw jute 58.90 0.05 -

Others - 61.93 61.19

Total 532.90 663.21 666.83

Source: Export Promotion Bureau



Major items imported from Canada (US$ million)��Bangladesh's imports from Canada have shown a mixed trend in recent years. Imports amounted to US$453.19 million in 2009-10 compared to US$286.54 million in 2008-09 and US$362.31 million in 2007-08, showing a rise of 58% in 2009-10 but a fall of 21% in 2008-09. ��Global financial regulation overhaul seen in 2010�Global financial regulation has changed little since the 2008 banking crisis, but that won't be the case much longer. US and EU authorities are expected to hammer out the definite shape of a new regulatory order in 2010 that will fundamentally change how world banks and markets operate. In Europe, EU member states and the European Parliament must still rule on a range of proposed regulations for banks, markets, insurers, hedge funds and private equity groups. (Source: New Age, January 07, 2010)

World trade to grow 9.5%�World trade is expected to grow 9.5% in 2010, after suffering its biggest collapse since World War II in 2009. WTO's economists forecasted that world trade growth for 2010 of 9.5% with developing countries' trade growth by 11% and industrialized countries' trade growth by 7.5%. (Source: New Age, March 27, 2010)

Goldman Sachs hit by British probe�

Britain's financial regulator launched a formal investigation into Wall Street giant Goldman Sachs, in relation to US fraud charges that were filed against the bank last week. The US Securities and Exchange Commission filed charges against Goldman last week over the sale of a type of complex mortgage product blamed for the financial meltdown. Hours after the SEC announcement, the embattled US investment firm posted soaring first-quarter profits of US$ 3.46 billion. (Source: Businessday, April 20, 2010)

G20 ministers face more wrangling over bank tax�The world's top countries face more wrangling over a global bank tax next week and crunch time over beefing up capital and cutting

risks at big banks. Finance ministers from the Group of Twenty countries met in the South Korean port of Busan on June 4-5 to review pledges their leaders made last year to learn from the worst financial crisis since the 1930s. The European Union is set to approve this year reform of supervision, hedge funds and bank capital and implement new rules on credit rating agencies and securitization. (Source: bdnews24, May 29, 2010)

Economic centre of gravity shifts to developing countries: OECD Developing countries will account for nearly 60% of global economic output by 2030, marking a major shift in activity away from the traditional industrialized powers, according to the Organization for Economic Cooperation and Development (OECD). As of 2008, according to the OECD, developing countries were holding US$4.2 trillion (3.4 trillion euros) in foreign currency reserves, more than 1.5 times the level held by rich countries. (Source: www.oecd.org, June 16, 2010).

Europe posts record unemployment�Debt-laden Europe posted highest unemployment rate of 10.1% since the euro came into being and its core currency and shares plummeted amid a worrying industrial slowdown. Almost 16 million people were out of work across the 16 countries that share the euro. The numbers reached more than 23 million in the 27-nation EU as a whole, including non euro giants Britain and Poland, 2.4 million more than one year earlier. The euro sank to a new four-year low of 1.2115 dollars on concerns about the European financial sector's ability to weather the region's debt and deficit crisis. Throughout the EU, only Germany recorded a fall in unemployment over the full year, from 7.6% to 7.1%. (Source: AFP, June 02, 2010)

Eurozone bank deadline, growth fears put markets on edge�World stock markets were under strain over a deadline for European banks to repay 442 billion euros in crisis funding and an ominous drop in confidence in global recovery prospects. European equities clawed back limited ground, gaining around 0.75% in London, 0.58% in Frankfurt and 0.73% Paris, Stock markets were given a supporting hand midmorning when the European Central Bank said it would make available a record amount of 131.933 billion euros (US$162 billion) in three-month loans. The European single currency crept upwards to US$1.2213 in morning deals, compared with US$1.2186 could leave a liquidity shortfall with borrowing costs jumping. The looming deadline, alongside economic jitters, prompted many investors to sell assets that are regarded as risky, like equities and the euro. (Source: The Financial Express, July 01, 2010)

China overtakes Japan as number 2 economy�China has overtaken Japan to become the world's second-largest economy. Depending on how fast its exchange rate rises, China is on course to overtake the United States and vault into the No.l spot sometime around 2025, according to projections by the World Bank, Goldman Sachs and others. Cruising past Japan might give China bragging rights, but its per-capita income of about US$3,800 a year is a fraction of Japan's or America's. China's economy expanded 11.1% in the first half of 2010, from a year earlier, and is likely to log growth of more than 9% for the whole year, according to analysts. China has been encouraging the use of the yuan beyond its borders, allowing more trade to be settled in renminbi and taking a series of measures to establish Hong Kong as an onshore center where the currency can circulate freely. (Source: www.washingtontimes.com, August 16, 2010)

GLOBAL BUSINESS & ECONOMY

Major export items 2007-08 2008-09 2009-10�

Cereals 91.78 103.30 197.57

Edible vegetables and 122.68 73.20 138.83

certain roots and tubers �

Iron and steel 40.92 43.72 48.80

Oil seeds and others 51.52 24.96 22.10

Paper and paperboard 12.70 17.83 8.57

Machinery and 15.67 9.59 7.08 �

mechanical appliances

Others 27.04 13.94 30.24

Total 362.31 286.54 453.19

Source: Bangladesh Bank

�



��Royal Bank of Scotland sells 318 branches to Santander�Britain's state-controlled Royal Bank of Scotland (RBS) agreed to sell 318 branches to Santander in a deal that will further expand the Spanish group's presence on the high street. The branches will be sold at an estimated 1.65 billion pounds (2.0 billion euros, US$ 2.6 billion). RBS, 83% owned by the British government, is selling assets in line with a demand made by the European Commission, in exchange for the state aid it received during the global financial crisis. The process of transferring the RBS and NatWest branches, together with associated customers and accounts, will take place towards the end of 2011. (Source: www.bbc.co.uk, August 04, 2010)

UK mortgages worst valued in the world �Britain's banks are using homebuyers as cash cows, according to new research revealing the mark-up on mortgages is the highest in the Western world. The difference between what British banks pay for funds and what they charge homeowners is more than twice that in the U.S., France or Germany. British banks add 2.5% points to the cost of the money they borrow before lending it out, while U.S. banks add just 0.85 points. Last night, Lloyds TSB was charging 3.79% for a two-year fixed rate. Natwest and Santander were offering 3.19%. (Source: www.dailymail.co.uk, September 22, 2010)

Kuwait raises oil output capacity�Kuwait has boosted its oil production capacity to around 3.3 million Barrels Per Day (BPD) as it strives to achieve its target of four million bpd by 2020. Three million bpd are produced by the state-run Kuwait Oil Company (KOC) and the rest comes from the neutral zone with Saudi Arabia. KOC has successfully tested raising its output to three million BPD for the first time in line with its strategy of reaching four million BPD. KOC production capacity now tops three million bpd, besides our share of around 270,000 bpd from the divided zone with Saudi Arabia. (Source: AFP, October 17, 2010)

Federal Reserve slashes US growth forecasts�The US economy will grow at a much slower pace than expected this year and next, as unemployment remains stubbornly high. Members of the Fed's top policy-setting panel slashed already anemic growth predictions to 2.4-2.5% this year and 3.0-3.6% in the next. Unemployment is not expected to go below 9.5% this year and 8.9% in 2011, bad news for the nearly 15 million Americans who are unemployed. The Fed had noted that headline consumer price inflation was subdued in recent months, despite a rise in energy prices, as core consumer price inflation trended lower. The global picture also provided some cause for concern, as growth in emerging market economies 'appeared to have slowed markedly.' (Source: www.channelnewsasia.com,November 24, 2010)�Asian shares nudge up�

Asian stocks nudged a little higher but optimism about China was limited by uncertainty over Beijing's plans to rein in inflation and concerns over tax reform in the United States. Hong Kong edged up 0.49%, or 113.58 points, to 23,431.19 and Shanghai rose 0.15%, or 4.12 points, to 2,927.08. Seoul finished 0.62% higher, adding 12.46 points to reach 2,009.05. Japan's Nikkei was given some support after the centre-left ruling party said it would shave five percentage points off the 40.7% corporate tax. Singapore closed 0.17%, or 5.41 points, lower at 3,176.91. Bangkok edged up 0.40%, or 4.09 points, to close at 1,037.41. Mumbai rose

0.55%, or 107.41 points, to 19,799.19, tracking global markets as (Source: Afp, December 14, 2010)

Oil hits 26-month high to end 2010 up 15%�Oil prices hit a 26-month high over US$92 a barrel, closing the year up 15% on expectations that the economic recovery will drive demand growth next year and send prices into triple digits. Strong growth from Asia, especially China, and a rebound in demand from recovering economies elsewhere fueled a four-month rally that knocked crude over the US$70-$80 range it held for much of the year. The Organization of the Petroleum Exporting Countries (OPEC) would step in to cool off markets if they headed into territory that could endanger the global economic recovery. Recent gains in the dollar could also help cap oil's momentum by increasing the cost of dollar-denominated currencies for holders of other currencies. Cold weather in the United States and Europe and OPEC's decision to keep production levels steady earlier this month have added to bullish sentiment this month. Analysts are watching to see how much of the recent rally has been caused by seasonal weather demand and how much has been driven by more structural consumption growth. (Source: Reuters, January 01, 2011)

China FDI rises by 23%�

Foreign direct investment in China rose 23.4% in January from a year earlier, despite an official campaign to stem liquidity and control inflation. China attracted US$10.03 billion in foreign investment last month. The figure indicated continued revival in investment after growth slowed sharply in August and despite moves by the government to slow the economy including last week's third interest rate hike in four months. The January figure compares to growth of 15.6% in December '10, when US$14.03 billion in investment flowed into China. Investment by overseas companies last year rose 17.4% year-on-year, with more than a fifth of the money flowing into the booming property sector. Figures showed January's annualized inflation remained high at 4.9%, despite adjustments to the Consumer Price Index (CPI) that reduced the weighting of soaring food costs. China's foreign direct investment data include investment by overseas companies in industries such as manufacturing, real estate, services and agriculture but exclude money put into banks and other financial institutions. (Source: New Age, January 18, 2011)��Govt banks likely to open more branches after 8-year restrictions�State-owned commercial and specialised banks are planning to open more branches this year, after restrictions on such expansion for eight years now, to net more clients for low-cost deposits, finance ministry officials said. The government has a verbal restriction on the banks not to open any more branches as the banks are incurring losses by running loss-making branches. (Source: New Age, January 9, 2010)

Services sector heading for a slide: BB�The growth of the services sector that accounts for half of GDP is expected to dip this year, the central bank predicts in a report. In its quarterly report for October-December 2009, Bangladesh Bank estimated that services-sector growth is likely to drop by nearly 1% point to 5.5% in the current fiscal year, from 6.3% last fiscal year. The sector grew by 6.5% in fiscal 2007-08 and the highest growth 6.92% was recorded in fiscal 2006-07. The central bank identified lower growth in transport and telecommunications, the two important sub-sectors of the services industry. (Source: The Daily Star, March 02, 2010)

GLOBAL BUSINESS & ECONOMY...

BANGLADESH ECONOMY

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Per capita income crosses US$700�The per capita income crossed the US$ 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 smallscale industries have shown a rapid growth and employed the poor segment. The per capita income has reached US$ 750 in this fiscal year from US$ 676 in last year. For Bangladesh to graduate to a mid-income country, its per capita income should be US$ 975 now. According to WB, Bangladesh can quickly reach the mid-income group of countries only if its GDP grows at a faster rate of around 7.5% to 8%. The GDP (Gross Domestic Product) growth rate is 5.5% now. (Source: The Daily Star, May 28, 2010)

GDP size touches US$100 billion�The country's Gross Domestic Product (GDP) at current prices has touched 100 billion dollars after the economy clocked nearly 6% growth in the outgoing fiscal, according to the government's annual economic survey. The country's GDP size stood at Tk.6905.70 billion as of June 2010, or US$100.08 billion, when a US dollar traded at Tk.69 each. The country's per capita income has risen to US$ 684 with a year-on-year increase of US$64, - a 100% increase in less than seven years time. The per capita GNI (Gross National Income) has also soared to US$750, up US$74 from the previous FY2009. Finance Minister has said the economy would clock a 6% growth in the 2009-10 fiscal, although the state-owned Bangladesh Bureau of Statistics (BBS) has said the growth would come down to 5.54% - the lowest in seven years. (Source: The Financial Express, June 11, 2010)

Remittance crosses US$10 billion in 11 months�Remittance for the first time has crossed the US$ 10 billion mark in the first 11 months of the current fiscal year, according to Bangladesh Bank (BB). The inflow was US$876.5 million in the same period (July 2009-May 2010) last year which shows that remittance has increased by US$1.32 billion over the last 11 months. The volume of total remittance by the expatriates was US$9.7 billion during the previous fiscal 2008-09, while this year's first 11 months' inflow has clearly exceeded that of last year's total by a big margin. Bangladesh Bank said the inflow grew steadily beating all negative speculations despite the adverse impacts of global recession and the country's shrinking job market abroad. (Source: The Daily Star, June 04, 2010)

Forex reserve crosses US$11b mark �Country's foreign exchange reserve has crossed US$11 billion mark for the first time, thanks to a robust growth of inward remittances as well as decreasing import payments. The foreign exchange reserve reached US$11.02 billion, setting a new record in the history of Bangladesh from US$10.92 billion. The foreign exchange reserve may come down slightly as the central bank is set to pay around US$604 million to the Asian Clearing Union (ACU) in a day or two.(Source: The Financial Express, July 09, 2010)�

��Investment in EPZs rose by 50% �Actual investment in the country's eight export processing zones (EPZs) increased by 50% in 2009-2010 fiscal year thanks to robust growth in the sectors of shoes, garments and textiles. The eight EPZs attracted a total of US$222 million in 2009-10 fiscal year against US$148 million in 2008-09. The cumulative investment in the eight EPZs stood at US$18 billion since 1983-84. According to official statistics, the actual investment in the Dhaka EPZ stood at US$64.38 million, a 112% rise in the investment against previous fiscal year. The country's oldest EPZ at Chittagong attracted a total of US$47.52 million against US$47.22 million in 2008-09. (Source: The Daily Star, August 1, 2010)

IMF likely to provide US$1.0b loan for poverty reduction�

International Monetary Fund (IMF) has assured the government of providing US$1.0 billion soft loan to finance its robust Second National Strategy for Accelerated Poverty Reduction (NSAPR-II) program launched this year. The credit will be 'free money', meaning it will not be attached with any particular project rather it will be meant for different sectors and the government will decide where to spend the money. IMF has changed their operations after the global depression and it is helping many countries with big volume of loans. The NSAPR has revenue and expenditure gap of about US$6 billion and the IMF will provide US$1 billion. (Source: The Financial Express, September 07, 2010)

Interest rate fixed at 27% max Micro-financiers�The Microcredit Regulatory Authority (MRA) published a guideline for micro-financiers putting a cap on interest rates, banning deductions at the time of issuing loans, and making it mandatory to allow at least a 15-days gap between the dates of loan issuance and first repayment installment. All MFIs of the country must introduce all changes by June 30 next year. In a circular, MRA said MFIs will not be able to charge more than 27% interest on loans. The guideline puts a ban on deducting money from loans, at the time of issuance, in the name of savings, insurance, or any other category. The lenders must calculate rates of interest on loans in declining balance method, in place of the existing flat rate method. In 2009, Microfinance Transparency, found that the effective rates of interest in Bangladesh are between 18.75% and 51.68%. An MRA study however found the minimum rate of effective interest at 24% and the maximum at 41%, if payments on savings and insurance made during loan commissioning, are not taken into account. The minimum rate stands at 22% and the maximum at 85% if the deductions are considered, the study found. (Source: The Daily Star, November 11, 2010)

BANGLADESH ECONOMY...



��Inward Remittance during the month of January, 2011��

�

�

�Price correction drags down Dhaka stocks�Dhaka stocks declined amid massive price correction, and turnover came down to four months' low, following liquidity crunch in the money market. The present liquidity crisis in the money market is one of the key factors behind the continuous slide in share prices and turnover. All indices shed more than 2%, and total turnover came down to Tk.11.56 billion, which is the lowest in Dhaka Stock Exchange (DSE) since mid-September. The market analysts, for drop in share prices, blamed price-correction and price re-adjustment of the financial institution stocks, which were over exposed in the capital market. The DGEN lost 323.60 points in the last two trading sessions, and more than 937 points during the last one month, after it hit the all-time high of 8918.51 in December 05, 2010. The broader DSE All Shares Price Index (DSI) ended at 6635.21, shedding 2.33% or 158.60 points. The DSE-20 index lost 2.39% or 122.80 points to 5018.48. (Source: The Financial Express, January 05, 2011)

BD 15th best place for investment�

Bangladesh has placed 15th in the international ranking of potential countries for investors and businessmen in 2010 while the country was in the 28th place in 2009, according to a Japanese survey report. China has got the first position followed by India, Vietnam and Thailand which kept their positions intact. Bangladesh and Myanmar have obtained positions in the top 20 list for the first time. Bangladesh has turned into a lucrative place for foreign investment as there is possibility of an internal market of readymade garments, machinery assembling and consumer

goods as well as opportunities of cheap labor and lowest risk in the country. The government of Bangladesh is offering different kinds of facilities like tax holiday, 100% profit sending back to own countries, easier visa process, work permits and cash incentives. (Source: The Financial Express, January 07, 2011)��Inflation to rise as fuel price hike looms�The Bangladesh Bank (BB) has announced the monetary policy for the second half of the ongoing financial year projecting an increase in inflation as the price of fuel oil might go up. The central bank which adopted a contractionary monetary policy for the first half of the financial year to contain inflation, however, the monetary policy for the second half would be neither contractionary nor expansionary. The central bank in its contractionary monetary policy for the first half had tried to squeeze money supply on the market and stop banks from investing in unproductive sectors such as share market to halt inflation. The central bank in its policy statement also vowed to provide adequate lending for agriculture SMEs, renewable energy and other productive sectors. It iterated that there was strong possibility that GDP growth in the current financial year would be 6.7%. (Source: New Age, January 31, 2010)

BANGLADESH ECONOMY...

1 Islami Bank Bangladesh Ltd. 247.302

2 Sonali Bank Ltd. 100.62

3 Agrani Bank Ltd. 88.49

4 Janata Bank Ltd. 73.81

5 National Bank Ltd. 57.924

6 BRAC Bank Ltd. 48.037

7 South East Bank Ltd. 42.857

8 Pubali Bank Ltd 26.982

9 Prime Bank Ltd. 22.756

10 The City Bank Ltd 21.314

11 AB Bank Ltd. 20.744

12 Bank Asia Ltd. 17.811

13 Dhaka Bank Ltd. 14.798

14 Dutch-Bangla Bank Ltd. 12.638

15 Eastern Bank Ltd. 10.088

16 Uttara Bank Ltd 47.514

Source: Bangladesh Bank, P=Provisional

Sl. No. Banks Million US$ (P)

Selected Macroeconomic Indicators

Item

Foreign ExchangeReserve

(In million US$)

Amount/Rate

(Reference Date)

Amount/Rate

(Reference Date)

BDT-Dollar ExchangeRate (Average)

Export(In million US$)

Import(In million US$)

GDP Growth Rate(In %)

Broad Money (M2)(In crore Tk.)

Rate of Inflation(Point to Point Basis)

Wage Earner'sRemittance

(In million US$)

Current Account Balance

(In million US$)

P* -Provisional; R* - Revised (Source: Bangladesh Bank)

10,749.74(June 30, 2010)

10,381.72(Jan 31, 2011)

69.5013((June 30, 2010)

71.15(Jan 31, 2011)

6,485.59(July-Jan, 2009-10)

6,510.63(July-Jan, 2010-11 P*)

8,712.44 (July-Jan, 2009-10)

12,184.19(July-Jan, 2010-11P*)

11,157.60(July-Dec 2009-10)

15,212.90 (July-Dec, 2010-11 P*)

1,562.0(July-Jan, 2009-10)

578.0(July-Dec, 2010-11 P*)

53.74(2008-09 R*)

5.83 (2009-10 P*)

328,192.20(Dec, 2009)

399,279.00(Dec, 2010 P*)

8.51(Dec., 2009)

8.28(Dec., 2010)



��Economists for reducing bank interest rate spread�Economists have suggested banks in Bangladesh should reduce interest rate spread by increasing operational efficiency and competitiveness for sustainable economic development. Monzur Hossain, a BIDS research fellow who presented the key note paper at a seminar, said that high administrative costs and nonperforming loans in the banking sector were responsible for higher interest rate spread in the country. (Source: New Age, January 8, 2010)

BB moves on Basel II requirements�The central bank has directed all scheduled banks to implement Capital Cdequacy Ratio (CAR) and Minimum Capital Requirement (MCR) in three phases that started from the first of January this year. The directive came in line with Basel II requirements. Bangladesh entered the Basel II regime, the latest version of risk-based capital standards set for banks worldwide, on January 1 this year. According to the Bangladesh Bank circular, the scheduled banks will maintain CAR not less than 8% between January 01, 2010 and June 30. The CAR will have to increase at least to 9% between July 2010 and June 2011 and 10% in July 2011 to onwards. The MCR must be 8% of a bank's risk weighted asset by June 30, 2010, 9% by June 2011 and 10% from July 2011 to onwards. The circular also said the amount of MCR may be fixed by the Bangladesh Bank from time to time. (Source: The Daily Star, March 11, 2010)

Banks asked to close operation of EEA�Bangladesh Bank has asked the commercial banks to close the operation of Exchange Equalization Account (EEA), the balance of which might be shown as their capital. The balance of account will be shown as extra ordinary gain instead of operating profit, according to a BB circular, asking the chief executives of all scheduled banks to maintain the instruction properly. A total of TK 1.03 billion remained as balance in the EEA with 44 commercial banks out of 48 as of December last, according to the central bank statistics. (Source: The Financial Express, April 28, 2010)

Bangladesh halts plan to relax capital controls�Bangladesh's central bank has suspended a plan to ease restrictions on capital transfers, due to concerns about its impact on financial stability and the need to invest spare funds at home, the bank's governor said recently. Capital account convertibility means the abolition of limitations on the movement of capital from Bangladesh to other countries across the globe. The government should carefully scrutinise foreign exchange reserve size, capital repatriation prospects and benefit of the country before giving green signal to the convertibility. The central bank can give capital outflow decisions on a case-by-case basis after scrutinizing proposals very carefully. (Source: The Financial Express, May 28, 2010)

Govt to borrow Tk. 155 billion from banks next fiscal year �The national budget proposed for the upcoming financial year, which totals Tk. 132,170 crore, relies heavily on bank borrowing and revenue earnings to cover the costs. The government will borrow around Tk 155 billion in the fiscal year of 2010-2011 (FY11) from the banking system, up by around 343% from the ongoing fiscal year. Around 80% will be borrowed issuing long-term bonds while the remaining 20% through T-bills in the next fiscal putting emphasis more on long-term borrowing than short-term. The finance ministry has set the government's borrowing at only Tk 35 billion from the banking system by the end of the fiscal

2009-10 (FY10) from the revised target of Tk 86.61 billion. (Source: The Financial Express, June 16, 2010)

Govt selects Mawa for SME cluster village�The government has preliminary selected Mawa for establishing first ever cluster village in the country for Small and Medium Enterprises (SME). Feasibility study of the cluster village will be completed by the end of this month and land acquisition will begin by December next. The cluster village will have facilities for light engineering, plastic and electronic industries, which could be fully operational in two years subject to availability of support from all corners including trade bodies. (Source: The Independent, July 05, 2010)

Central bank profit plummets 62%�Bangladesh Bank (BB) profits fell by about 62% in the last fiscal year, mainly because the government did not borrow money from the banking system. The central bank made Tk 948 crore in profits in fiscal 2009-10, down from Tk 2,505 crore a year ago. Officials said BB gave the government Tk 1,732 crore from its profit in fiscal 2008-09 but it is likely to give Tk 612 crore to the government from its profits in fiscal 2009-10. The central bank's income from both domestic and foreign sources decreased. While the interest earned from investments of foreign currency reserves in commercial and central banks abroad is known as the earning from foreign sources. Rather, it repaid Tk 3,793 crore in arrears. BB's income from foreign sources was Tk 424 crore a decline by 40% from the last fiscal year's income of Tk 707 crore. Although foreign exchange reserves were over US$10 billion, the central bank did not invest it in the profitable but risky sectors because of global recession. It invested part of the reserves with the central banks in other countries. (Source: The Daily Star, August 27, 2010)��BB buys US$14m from 2 banks�

The central bank purchased US$14 million from two commercial banks aiming to keep the inter-bank foreign exchange market stable. BB bought the US currency at market rate from the commercial banks directly aiming to keep the rate of local currency stable against the greenbuck. The US dollar was quoted at Tk 69.58-Tk69.60 in the inter-bank foreign exchange market, unchanged from that of the previous working day, according to the central bank statistics. A total of US$200.50 million has been bought from the commercial banks, so far, in the current fiscal year as part of the central bank's intervention in the market. In fiscal 2009-10, the central bank bought a total of US$2.16 billion directly from the commercial banks against US$1.48 billion of the previous fiscal. (Source: The Financial Express, September 03, 2010)

Central bank buys 10 tonnes of IMF gold�

The Bangladesh Bank has purchased 10 tonnes of gold from the International Monetary Fund (IMF) to diversify its foreign currency reserve. The sale was conducted on the basis of market prices prevailing on September 7 last with proceeds equivalent to US$403 million. Central bank has increased its gold holding position to 13.50 tonnes from 3.50 tonnes earlier to minimize currency valuation losses because of volatility in the global forex market. Gold's share in BB's foreign exchange reserve increased to around 5.0% from 1.3%, adding that there would be no impact of the gold purchase on the local market. Gold has diversification properties in a currency portfolio. This stems from the fact that its value is determined by supply and demand in the world gold markets, whereas currencies and government securities depend on government promises and variations in central banks' monetary policies. (Source: New Age, September 14, 2010)

FINANCE & BANKIING



��BB asks banks to allow discount on import bills�Bangladesh Bank (BB) has asked all commercial banks to allow discount on accepted bills against Letters of Credit (LCs) for import aimed at facilitating foreign trade. According to the guidelines, purchases by the ADs of usance bills covering imports into Bangladesh result in the payment by them in foreign currency or a payment in the local currency to a nonresident account, whereas, they do not receive payment for the bills from the importer pending maturity and thus the transactions result in the extension of credit facilities to the importer in Bangladesh. Bankers, however, expressed mixed reaction on the matter, saying that it would depend on availability of the foreign currency fund to allow such relaxation. The BB has taken the latest move after allowing Offshore Banking Units (OBUs) to allow discount on such bills in line with bankers' and importers' demands. Under the provisions, the OBUs may allow discount on bills accepted by ADs in Bangladesh against import under LCs opened on deferred or usance basis applying due diligence. (Source: The Financial Express, October 03, 2010)

Call money rate rises�

A huge cash withdrawal pressure ahead of Eid fuelled the inter-bank call money rate to a three-year high. The rate reached as high as 22%, but most of the deals were traded between 16% and 20%. Eid-ul-Fitr and Eid-u-Azha are the two peak seasons for a rise in demand for money. Last year, the rate touched 12%. It was 35% in 2004 and 43% in 2005. Bangladesh Bank also pumped over Tk.1,000 crore into the market through repo to avoid any liquidity crunch. The BB sells money to the banks by a repurchase agreement (repo), to help the market remain stable. The present repo rate is 5.5%. Most of the local banks, particularly private ones, faced a shortage of liquidity. Only the foreign banks and state-owned Sonali and Agrani banks did not feel the shortage of money. The operators said borrowing by non-bank financial institutions has also fuelled the demand for money and the price of borrowing as well. (Source: The Daily Star, November 16, 2010)��Banks count costly money�

The call money market keeps overheating like what the stock market was a week ago. The interest rate at which banks lend money to one another shot up as high as 175%. Costlier money also contributed to a squeezed stock market. This volatility in the money market and the central bank's continued restriction on repo have put pressure on the commercial banks' lending rates, many of which are capped by the central bank. Pubali Bank, which was always a lender in the call money market, also borrowed Tk.100 crore at over 100% interest rate. But the central bank believes it is doing everything for the sake of the market, including curbing inflationary pressure and stopping the flow of banks' money to the capital market. According to BB, around 10 banks have invested as high as 75% of their deposit in the stock market against a cap of 10%. BB sold Tk.1,000 crore more by repo. The central bank increased the CRR to 6% in a bid to tighten the liquidity flow to the volatile capital market. (Source: The Daily Star, December 20, 2010)

Gen insurers creating hefty black money to pay illegal commission�

Most of the country's 44 general insurance companies hide a big part of their annual premium income deliberately, creating black money to the tune of billions of taka every year. The amount could be as big as six-seven billion Taka or 40% of the total annual insurance premium income of all general insurers. The so-called "slash funds" have been created to pay for the extraordinary amount of commissions that the companies dish out every year, violating the country's insurance laws. Insurance laws permit commission no more than 15-20% to licensed agents but in practice most of these companies are paying up to 60-65% commission in a desperate bid to win policies. Bank managers, unlicensed brokers and top private company officials have been the main beneficiaries of these illegal commission payouts. Presently as per the NBR rules, a big general insurer cannot show management expenses more than 18% of its premium income and smaller companies more than 25% of their premiums. (Source: The Financial Express, January 04, 2011)

Banks earn hefty profits in 2010�The country's private commercial banks (PCBs) witnessed remarkable growth in their aggregate operating profits in the just-concluded calendar year-2010 compared to the same of the previous year. Most of the PCBs saw their profits bulging in 2010 riding on higher import payments and an enhanced credit flow to the private sector including capital market. Operating profit, however, does not indicate the real financial picture 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 profits. Among those banks, the Islami Bank Bangladesh Ltd. (IBBL) was the top operating profit earner Tk.11.43 billion in 2010 against Tk.8.440 billion earned in the previous year. National Bank Ltd. (NBL) was placed at the second position with an estimated earning of Tk.10 billion in operating profit. The Prime Bank Ltd. secured the third position earning Tk.7.70 billion as operating profit in 2010 compared to that of Tk.5.80 billion earned in the previous year. Among the top-performers, Southeast Bank Ltd., made operating profits worth Tk.6.80 billion in 2010 against Tk.4.64 billion in 2009. The EXIM Bank Ltd posted operating profit worth Tk.6.07 billion against Tk.3.20 billion a year ago. The Bank Asia Ltd., made operating profit worth Tk.4.55 billion and Dutch Bangla Bank Ltd Tk.4.50 billion in 2010. (Source: The Financial Express, January 01, 2011)

More BB fund to ICB to stabilize share market �The central bank has provided more fund to the state-run Investment Corporation of Bangladesh (ICB) to bring back stability in the share market. Bangladesh Bank (BB) has disbursed a total of Tk.4.0 billion to the ICB through IFIC bank in the last two consecutive days to avert any massive slide. The BB sanctioned a fresh loan to the ICB amounting to Tk.2.0 billion, which was disbursed. The BB further injected fresh fund worth Tk.2.0 billion to the ICB Tuesday as trading in both bourses was halted by the Securities and Exchange Commission (SEC) for the second time in eight days. With 80 minutes remaining, the benchmark index of the Dhaka Stock Exchange, generally known as DGEN, was down by 3.29% or 243 points when trading was suspended. Earlier on Monday last week, the SEC suspended trading within the opening fifty minutes of trade when DGEN was down by 9.0% or 660 points. (Source: The Financial Express, January 19, 2011)

FINANCE & BANKIING...



��Power import from India to start thru' Kushtia border�Ramkrishnapur under Bheramara upazila in Kushtia has been primarily selected for setting up of 250KV power sub-station aiming electricity import from India. The government has 600 acres of free land under railway (west zone) in Ramkrishnapur while only 250 to 300 acres of land is necessary for the new sub-station. Moreover, the site is only 35 kilometers from Nadia, a border district of India, they added. Besides, setting up of power station over there would reduce cost as a power network is already there due to Ishwardi sub-station. Only eight kilometers of cable connectivity will be necessary to supply electricity to Ishwardi sub-station, said the sources. (Source: Daily Star, January 22, 2010)

ECNEC approves 10 new power plants�The government has undertaken a mega-project worth Tk 72.03 billion to build 10 new power plants by 2011 to solve the persisting electricity crisis in the country. The executive committee of the national economic council headed by the prime minister approved the project. The planned power plants will generate 830 megawatt electricity during the peak hours. Of the Tk 72.03 billion crore investment requirement for the plants, the government will provide Tk 70.85 bilion and the rest will come from the Bangladesh Power Development Board. (Source: The New Age, March 17, 2010)

Summit to produce about 1,200 mw electricity�Summit, a leading power producing firm in Bangladesh would invest US$ 1.2 billion to generate 1,200 megawatts (mw) of electricity over the next three years to ease a nagging power crisis. Summit with a market capitalization of more than US$ 1

billion and partnership with the US based General Electric Co is now generating 330 mw of electricity, about 10% of the total power in the national grid. General Electric Company (GE) holds a 20% stake of this firm. (Source: Bangladeshdir, May 12, 2010)

WB to provide US$1.0b for power, gas transmission�The World Bank (WB) will provide US$1.0 billion fresh loan to Bangladesh for expanding its power and gas transmission network within the next three years. The new loan for power sector will be provided in addition to US$ 800 million, which is now in the pipeline. The fresh power sector loan will be included in the next Country Assistance Strategy (CAS) of the WB spanning from 2011 to 2014. Presently, the WB has extended loans to two projects. They are the Rural Electrification and Renewable Energy Development Project involving a cost of US$ 130 million and the Siddirganj Peaking Power Project at a cost of US$ 350 million. Currently, the country generates between 3800 mw and 4000 mw, leaving a shortfall of about 1500 mw. (Source: The Financial Express, August 30, 2010)

Mobil Jamuna Lubricants opens new plants in Ctg �Mobil Jamuna Lubricants (MJL) Bangladesh opened three new plants in Chittagong to make a new portfolio of products. The plants will make grease, transformer oil and viscosity index improver, which had earlier been all imported. Since its establishment as a modern lube oil blending plant in 2003, the company has transformed into the market leader in the lube oil sector. Bangladesh needs 600 tonnes additives a year, which is much lower than MJL's capacity. The plants and its technology have been designed and implemented by former officials of ExxonMobil. (Source: The Daily Star, November 12, 2010)

Four global state-owned cos seek gas tie-ups with Bapex�Top state-owned global oil giants have lined up to tie up with Bapex to develop four Bangladeshi gas fields and explore hydrocarbon in the Chittagong Hill Tracts region. The firms Chinese Cnooc and Sinopac Shingli, Thai PTTEP and Russian Gazprom -are interested to strike joint venture deals with the lone Bangladeshi state-owned exploration company to make a foothold in the country. The four gas fields that Bapex put up for joint venture deals are Kotia, Joldi, Kafalong, Shitapara - all situated in gas block number 22 in greater Chittagong region. It spans over 13,900 square kilometers area. The planned tie-ups will strengthen the country's sole oil and gas exploration firm, which produces only 58 million cubic feet of gas daily (mmcfd) contributing less than 3% of the national gas output. (Source: The Financial Express, January 02, 2011)

Work of nuclear power plant to begin by 2012�The parliamentary standing committee on the Ministry of Science and Information Technology recommended that the proposed nuclear power plant, scheduled to be set up in Pabna, should be built to the international standard. The committee at a meeting also disclosed that the construction of the 2,000MW nuclear power plant would begin in 2012, and an agreement between Bangladesh and Russia to this effect would be signed in March this year during Prime Minister's visit to Russia. Meetings between Bangladesh and Russia were held three times and the Memorandum of Understanding (MoU) was finally signed on 13 May, 2009. A 1,000MW plant will be set up in the first phase of the project, and the other plant will be set up in the second phase. The committee also expressed satisfaction over the performance of the ministry in relation to the nuclear power plant. (Source: New Age, January 19, 2011)

FINANCE & BANKIING...

ENERGY

Selected Financial Indicators

P* -Provisional; R* - Revised (Source: Bangladesh Bank)

Name

Share Price Index (DSE)

Share Price Index (CSE)

Call Money Rate(Weighted Average

Rate)

Reserve Money(In crore Tk.)

Amount/Rate(Reference Date)

Amount/Rate(Reference Date)

Gross NPL (%)

Net NPL (%)

Foreign direct investment (net)(In million US$)

LC Settlement(In million US$)

4,422.807(26 November, 2009)

6,198.818(January 31, 2011)

12768.71(26 November, 2009)

15,593.4424(January 31, 2011)

3.40(June 30, 2010)

5.50(January 31, 2011)

80,510.30 (June 30, 2010)

85,903.30(December, 2010 P*)

8.67(June, 2010)

7.27(December, 10)

1.67(June, 2010)

1.28(December, 10)

13,194.81(July-Dec.,2009-10)

46.45 (July-Dec.,2010-11)

10,717.42(July-Dec.,2009-10)

39.97(July-Dec.,2010-11)



��New subsidy scheme to boost farming�The government will give farmers a 25% subsidy on the cost of buying agricultural implements to boost crops production and minimise wastage. An Executive Committee of the National Economic Council (Ecnec) meeting chaired by Prime Minister Sheikh Hasina on January 21, 2010 approved a Tk 149 crore project to that end. Titled “Enhancement of Crop Production through Farm Mechanisation”, the project will primarily be introduced to 237 upazilas under 25 districts, said a planning ministry official. Meanwhile, the agriculture ministry has proposed a Tk 1,400 crore increase in farm subsidies in the revised budget for the current fiscal year. (Source: The Daily Star, January 22, 2010)

Genome sequencing of jute made�A group of Bangladeshi scientists have invented genome sequencing of jute, opening up a vast array of opportunities for its production, conservation, characterization and genotyping. Among the developing nations, Bangladesh has become the second country to achieve the success after Malaysia. It would improve the quality of jute fibre and help saplings to survive in adverse weather caused by climate change. Genome sequencing will also make the jute growers happy. A group of researchers from Dhaka University, Bangladesh Jute Research Institute and Software company DataSoft in collaboration with Centre for Chemical Biology University of Science Malaysia and University of Hawaii, USA, led by an expatriate, Dr Maqsudul Alam, have made out the genome. (Source: The Independent, June 17, 2010)

Govt to disburse Tk 120 billion as agri credit�The government has set a target to disburse Tk 120 billion as agriculture credit through banks and nonbanking financial institutions for FY 2010-11. In the current fiscal year, up to April 2010, agricultural loan worth Tk 89.49 billion has been distributed against a target of Tk 115.12 billion through public and private sector banks and financial institutions, according to the budget documents. The loans have been given to eight agro-based sub-sectors like crops, irrigation equipment, livestock, agricultural products marketing, fisheries and poverty alleviation. (Source: The Financial Express, June 13, 2010)

Govt to cut prices of non-urea fertilizers�The government for the third time in its tenure has decided to cut down the prices of non-urea fertilizers -- Muriate of Potash (MoP) and Diammonium Phosphate (DAP) -- by 40% and 3% respectively, as an incentive to farmers to grow more winter crops. At the farmers' level, MoP will be sold at Tk 15 a kilogram, which now sells at Tk 25, while DAP will be sold at Tk 27 a kg, which now costs Tk 30. At dealers' level new price of MoP will be Tk 13 a kg and DAP Tk 25 a kg. The government will issue a circular soon in this regard to make the new prices effective. (Source: The Daily Star, October 23, 2010)

Food price up 28% in a year �The major food items became costlier by as food price has increased more than 28% on an average in a year and over 9% month-on-month. Among 30 food items in different categories, prices of at least 20 items had increased sharply in a year and more than 25 items month-on-month. The price of coarse rice increased by 43% over a year and 6.5% month-on-month and that of medium grade rice soared by 38% in a year and 3% month-onmonth while the price of fine rice rose by 20% and 5% respectively. The price of coarse flour increased by 53% in a year

and 11% month-on-month and that of soya bean oil by 19% and 10% respectively. (Source: New Age, October 04, 2010)

India lowers export price for onion at US$375�India has reduced the Minimum Export Price (MEP) for onions by US$50 to US$375 per tonne for November '10 to encourage shipments amid arrival of new crops. The onion MEP has been fixed at US$375 per tonne against US$425 per tonne in the previous month. The MEP has been lowered to boost exports in the current month as fresh arrival of onion is expected to increase from mid-November. In July and September period, normally the lean season, the Indian government kept the MEP higher to curb exports and tame domestic prices. India has shipped 10.10 lakh tonnes of onion so far (from April 2010 to March 2011), against 12.99 lakh tonnes in the same year-ago period. The crop's output is pegged at around 130 lakh tonnes in 2010-11. (Source: The Daily Star, November 02, 2010)

Importers rush for Pak, German wheat�Bangladeshi importers in recent weeks have booked large quantities of Pakistani and German wheat. Limited availability of Black Sea wheat and uncertainty of delivery from the flood-hit Australia and Canada have driven the country's importers to the above-mentioned sources. The procurement cost of Pakistani wheat ranges between US$360 and US$375 per tone. Bangladeshi wheat importers have faced an uneasy situation in recent months after the drought-hit Russia stopped wheat exports in August and then Ukraine reduced it deliveries to Bangladesh and other export destinations. Ukraine and Russia had been the major sources of cheap wheat for Bangladeshi importers for many years. The local flour price has posted a nearly 50% rise at retail level year on year due to wheat price spiral on the international market as well as price hike of rice, the country's staple food. Wheat consumption in Bangladesh stands at around 5 million tonnes a year, with imports ranging from 2.5 million tonnes to 3.5 million tonnes. (Source: New age, January 17, 2011)

Govt to import 2 lakh tonnes of rice from Thailand�

The government will import 2,00,000 tonnes of rice from Thailand this year to increase food reserve and ensure food security in the country. The 14-member delegation led by Thai commerce minister Prontiva Nakasai called on the food minister in the afternoon. The food minister admitted that currently food deficiency was prevailing in the country and the government had decided to import rice from abroad to keep price of food grains affordable for all. (Source: New age, January 20, 2011) ��Industrial park underway for RMG: Barua�The government has laid out a project to set up an industrial park outside Dhaka for garment factories, said Industries Minister Dilip Barua on January 28. Barua said the project is waiting for approval from the government. “The government will also provide loans to the factories to set up ETPs." (Source: The Daily Star, January 29, 2010)

China to allow duty-free RMG access from July�Bangladeshi readymade garments are set to get duty-free market access to China from early July. Analysts, however, caution that China's stringent rules of origin on apparel imports remains an obstacle and Bangladeshi authorities should negotiate the matter to make the most of a privileged market access to that country. The leader of the country's apex trade body said although China was a rival of Bangladesh on the global apparel market, their offer had created a great opportunity for Bangladeshi garment

AGRICULTURE

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��exporters to harness that vast market. China imported garments worth US$ 2 billion last year with shipments there from Bangladesh amounting to US$ 20 million, almost double the exports last year. (Source: New Age, March 28, 2010)��Govt assures RMG sector of 5% more cash incentive�Finance minister assured the garment exporters that the government would consider their demand favorably for additional 5% cash incentive by relaxing a previous condition. The finance ministry had attached the condition for providing additional cash incentive under a stimulus package worth around TK 45 billion that was announced last November to protect the local exportoriented industries from the delayed impact of the global recession. According to the condition a readymade garment industry would be qualified to receive additional cash incentive only when it exported products worth more than US$ 3.5 million per year. Following the assurance, the garment exporters are likely to get 10% cash incentive instead of 5% they are getting at present. (Source: New Age, April 8, 2010)

BD's apparel export to Japan rises three times�Local apparel export to Japan has increased more than three times this year, proving the destination a lucrative one for Bangladesh. Japan has recently reduced its dependence on import from China, and it prompted foreign RMG exporters to increase their sourcing from Bangladesh. The country shipped knitwear worth US$ 60.03 million during the first ten months of the current fiscal year that was US$ 18.15 million during the same period of the 2008-09 fiscal. Bangladesh exported woven garments worth US$ 89.87 million during the July-April period of 2009-10, up from US$ 40.58 million of 2008-09. Imported apparel market in Japan used to be dominated by China, which accounts for 90% of total Japanese import, but Japanese importers are now looking for one more dependable source to reduce their reliance on China. (Source: The Financial Express, June 18, 2010)

Bangladesh ranks fourth in global apparel exports�Bangladesh has ranked fourth in the global apparel exports and grabbed 3% market share, according to a recent World Trade Organization (WTO) report. Bangladesh secured the fourth position in terms of value followed by China, EU-27 countries and Turkey. According to the report, China exported apparel items worth US$115billion, EU-27 countries US$103.40 billion, Turkey US$14 billion and Bangladesh more than US$10 billion. The report was prepared on the basis of export data of 2007 of the respective countries. The latest data from state-owned Export Promotion Bureau (EPB) said Bangladesh fetched US$12.59 billion from garment exports last fiscal year, and contributed around 80% to national exports. Of the total amount, the country exported knitwear items worth US$6.48 billion, and woven worth US$6.01 billion, registering a 0.84% and 1.60% growth respectively, according to the EPB data. (Source: The Daily Star, July 25, 2010)

Tk 438cr RMG industrial park outside Dhaka�The Industries Ministry is planning to set up a garments industrial park outside Dhaka to provide one stop services to Readymade Garment (RMG) entrepreneurs. A project titled 'Garments Industrial Park' at an estimated cost of Taka 438cr is the first government initiative to establish the RMG hub aimed at developing and modernizing the potential industry on 300 acres of land at Bausia under Gojaria upazila of Munshiganj district. Bangladesh Small and Cottage Industries Corporation (BSCIC), run under the ministry, is scheduled to begin implementation of

the project next year. (Source: The Independent, August 08, 2010)

Cotton price spike to hit: RMG�Bangladesh ready-made garment (RMG) salesmen may have to re-price their imported fabrics if spiking prices for cotton continue in international markets. Cotton prices surged to a 15-year high on increased demand, fuelled by speculation of reduced supplies after crop damage in Pakistan. Many importing countries have stored cotton, speculating that rising demand and crop damage would force prices up. Buyers of the EU and US are not willing to increase their prices during a recession. The price of most yarn would also increase in Bangladesh if the price hike of cotton persists in the international market. Bangladesh imports nearly 50 lakh bales (440 pounds make a bale) of cotton in a year. Bangladesh Textile Mills Association (BTMA) said Bangladesh imports 10% of its total cotton from Pakistan. So it would be a bit affected by crop damage in Pakistan's recent flood. (Source: The Daily Star, September 05, 2010)

More buyers shift to Bangladesh�Opportunities are widening as globally renowned apparel brands look to source more garments from Bangladesh amid the widening recovery from financial crisis. Some buyers have already shifted to Bangladesh from competing countries, while others are increasing order quantities. Prices of garments in China, Turkey, Sri Lanka, Cambodia and Vietnam have gone up due to higher production costs. Bangladesh has also diversified its product range and marketing over the last few years. Apparel exports grew by more than 30% in the first quarter (July-September) of the current fiscal year, riding on high demand for competitively priced items. Export Promotion Bureau data shows knit products worth US$2.18 billion and woven worth US$1.79 billion were exported during the time 32% and 30% more than a year earlier. Apparel exports to Japan, a newer market, started picking up after 2008, when Tokyo announced the China+1 strategy to shift sourcing focused on China to other nations, such as Bangladesh. Fast Retailing Company Ltd, which owns Japan's casual-clothing chain Uniqlo, signed a US$100,000 deal with Grameen Bank Group on July 13 to produce garments at the group's factories. Uniqlo opened a liaison office in Dhaka in 2008. (Source: The Daily Star, November 22, 2010)

More buyers shift to Bangladesh �Opportunities are widening as globally renowned apparel brands look to source more garments from Bangladesh amid the widening recovery from financial crisis. Some buyers have already shifted to Bangladesh from competing countries, while others are increasing order quantities. Prices of garments in China, Turkey, Sri Lanka, Cambodia and Vietnam have gone up due to higher production costs. Bangladesh has also diversified its product range and marketing over the last few years. Apparel exports grew by more than 30% in the first quarter (July-September) of the current fiscal year, riding on high demand for competitively priced items. Export Promotion Bureau data shows knit products worth US$2.18 billion and woven worth US$1.79 billion were exported during the time 32% and 30% more than a year earlier. Apparel exports to Japan, a newer market, started picking up after 2008, when Tokyo announced the China+1 strategy to shift sourcing focused on China to other nations, such as Bangladesh. Fast Retailing Company Ltd, which owns Japan's casual-clothing chain Uniqlo, signed a US$100,000 deal with Grameen Bank Group on July 13 to produce garments at the group's factories. Uniqlo opened a liaison office in Dhaka in 2008. (Source: The Daily Star, November 22, 2010)

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��

Sunman sets up country's largest home textile plant�Sunman Group is setting up the country's largest home textile plant to grab new-found opportunities in the European Union's four billion dollars bed-sheet and curtain market. The clothing-to-beverage maker is investing more than eight billion taka in a state-of-the-art plant at Iswardi export processing zone, which will go into operation mid-2012. The plant will have a capacity to produce 100,000 yards of bed sheet and curtains a day, making it the country's largest home textile manufacturers. The investment has been fast-tracked after the EU last month relaxed its import rules, allowing products with 30% value addition to get duty-free access in the world's second largest clothing market. Sunman's project, named Sunman Industrial Corporation, is being funded by a consortium of local financial institutions led by One Bank. The banks are financing 60 per cent of project outlay while the company is investing the rest from its own coffer. (Source: The Financial Express, January 09, 2011)��RMG sector earning may reach US$30-35b in 4-5 yrs�The earning from garment sector may be taken up to US$ 30-35 billion in the next 4-5 years by ensuring power, infrastructure and port facilities, and maintaining law and order situation. The local RMG industry's growth was 40% last year, and it will start increasing significantly within a short time. For this the government has to ensure logistic supports for the sector. (Source: The Financial Express, January 13, 2011)��BTCL reduces call charges for 55 countries�Bangladesh Telecommunications Company Ltd (BTCL) has reduced call charge of its land phones facilities to land phones and mobile phones in 55 countries and the new tariff has already been made effective, reports BSS. Clients can speak at Tk 6.00 per minute on land phone and mobiles to 23 countries. On the other hand, they could speak to 32 countries at Tk 6.00 per minute on land phone and Tk 16 on mobiles. Second-placed Ranks Telecom almost doubled its user number last year to reach 274,895 from 152,505. Although BTCL failed to add a new single user to its subscribers' base in 2009, the former BTTB retained its pole position as the country's top PSTN operator. BTCL has also reduced call charge to India to Tk 12 per minute from Tk 18 previously. (Source: The Financial Express, January 18, 2010)

Mobile 'apps' a US$ 17.5-billion market by 2012�A study indicated that the market for mobile device software programs should rocket to US$ 17.5 billion within three years. Downloads of mobile applications to handsets will leap from slightly more than 7 billion in 2009 to nearly 50 billion in 2012. (Source: New Age, March 18, 2010)

Tk 312 cr. for ICT sector�The finance minister proposed an allocation of Tk 312 crore mainly for the infrastructural development of Information and Communications Technology (ICT) for the next financial year. A proposal for allocation of Tk 112 crore in non-development allocation and another proposal for allocation of Tk 200 crore in the existing Equity and Entrepreneurship Fund (EEF) to promote entrepreneurship in the ICT sector have been made for the 2010-11 financial year. The government also has plans to set up an IT Village at Mohakhali in Dhaka. (Source: New Age, June 11, 2010)

Govt setting up e-info bank at UP level�The government has taken move to establish a national einformation bank (e-tothyo kosh) aiming at making different information and data available at the Union Parishad (UP) information centers. The information bank will be enriched with different information including agriculture, human rights, disaster management, health, education, law, employment and tourism. The Union Parishad information and service centers scheduled to be launched across the country by December will be strengthened by the e-information bank. (Source: The Financial Express, July 27, 2010)

Mobile growth slows down in October �The growth in the number of mobile subscribers slowed down in October as the country's six operators added only 4.23 lakh subscribers, while Grameenphone, the leading operator, lost 1.67 lakh subscribers. The total number of active mobile subscribers increased to 65.56 million or around 6.56 crore at the end of October from 6.514 crore in September, according to data of the Bangladesh Telecommunication Regulatory Commission (BTRC). The number of subscribers increased by 16.70 lakh in September, 16.30 lakh in August and 18.60 lakh in July. The reasons behind the slowing down of the growth of the number of mobile subscribers in October. The total number of Grameenphone's subscribers increased to around 2.848 crore at the end of October from 2.865 crore in September. Grameenphone added 7.32 lakh subscribers in September and 6.46 lakh in August. The subscriber base of Banglalink, reached 1.84 crore at the end of the month as it had added 3.01 lakh subscribers last month. Warid Telecom added 85,000 subscribers in October and its subscriber base reached 36.67 lakh. Robi, added 1.38 lakh subscribers to take its subscriber base to 1.18 crore. (Source: New Age, November 24, 2010)

M-banking to take a full shape soon�Bangladesh will enter a full-fledged mobile banking network within the next three months, and the shift will be implemented within a bankled model. The model will ensure proper regulatory monitoring and transparency in the related transaction processes and help reach banking services to the grassroots. BB Governor called upon the telecom operators to give the banks access to their Unstructured Supplementary Service Data (USSD) networks soon so both the sectors can communicate with each other. President of the Association of Mobile Telecom Operators of Bangladesh proposed a 'hybrid model' for the upcoming mobile banking where 'both banks and mobile operators will have an equal role'. (Source: The Daily Star, December 23, 2010)

Major progress in e-bidding��An electronic payment system will be introduced in February as a major breakthrough in the government bidding system, freeing the process of corruption and hassles. The Central Procurement Technical Unit (CPTU) of the planning ministry yesterday held final discussions with Bangladesh Bank and 12 commercial banks on the new system. In the first phase of the electronic government procurement (e-GP) system, the contractors have to go to a CPTU-approved bank to pay cash, demand drafts of pay orders to sign up for the system. The contractors must download tender documents and process tender security or bank guarantees. In the second phase, there are possibilities of opening various channels such as ATM, debit card, credit card or internet banking. The headquarters of banks need to instruct their respective branches to receive e-payment, CPTU said. Banks agreed that after signing the MoU they would request their branches to receive e-payment through the e-GP dashboard. (Source: The Daily Star, January 19, 2011)

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IT & TELECOMMUNICATION



��LEATHER: Tanneries must move to Savar unconditionally: Dilip Barua�Industries Minister Dilip Barua January 26, 2009 urged the tannery owners to shift their units immediately and without any condition from the city's Hazaribag area to the new tannery park at Savar. He also em phasised quick installation of the Central Effluent Treatment Plant (CETP) at Savar, as the tanners have been demanding it to start shifting the immensely hazardous industry. The tannery sector leaders demanded the government's intervention in directing the banks to help them repay their loans. They also expressed concern for delay in installing the CETP at Savar. (Source: The Financial Express, January 27, 2010)

SHIPBUILDING: Government moves on ship-breaking zone�The government has tasked a technical committee to start work on creating a separate ship-breaking zone along Bangladesh's coast, following the prime minister's recent call for proper regulation of the hazardous industry. The move comes in the wake of renewed concerns for worker safety following a number of deaths at ship-breaking yards and continued environmental worries over the industry located mainly in the coastal districts of Sitakunda and Chittagong. The inter-ministry committee has been tasked with formulating separate rules and regulations for shipbreaking and reprocessing industries, said the state minister for environment and forests, Hasan Mahmud. (Source: The New Age, January 6, 2010)

Lafarge to pay Rs. 60cr to resume Chhatak ops�French multinational Lafarge has agreed to pay Rs 600 million, to re-establish forest cover denuded by its limestone mining in the north-eastern Indian state of Meghalaya, so it may resume supply of raw material to its cement plant at Chhatak in northern part of Bangladesh. It has also agreed to pay approximately Rs. 300 million annually for the 2 million tons of limestone it mines every year from Nongtrai in Meghalaya for development of the area and welfare of local people. (Source: Bdnews24.com, April 11, 2010)

Saudi prince backs Beximco for US$ 1b project�Beximco Group has teamed up with a company tied to the Saudi royal family to bid for the billion-dollar Balancing, Modernisation Rehabilitation and Expansion (BMRE) project of the lone oil refinery of Bangladesh. Marasel Company Ltd and Beximco Ltd will finance the BMRE project of Eastern Refinery Ltd to increase its capacity from 1.5 million tonnes per annum (TPA) to 4.5 million TPA on Build Own Operate Transfer (BOOT) or Public Private Partnership (PPP) basis.(Source: The Independent, August 29, 2010)

Hospitality industry records 34% growth in six months �The country's booming hospitality industry has maintained an impressive 34% growth in the first half of the current calendar year due to political stability and increased flow of foreign tourists and businessmen. Luxury hotels in Dhaka earned nearly Tk 1.20 billion in January-June period of 2010 against Tk 894.45 million in the corresponding period last year. The room revenue data showed that the four five-star hotels in Dhaka earned Tk 970.42 million in 2006 and Tk 717.98 million in 2005. In the first half (January-June) of 2010, the Westin hotel earned the highest Tk 412.40 million as room revenue, followed by the Radisson Tk 292.45 million, Sonargaon Tk 212.52 million, Dhaka Sheraton Tk 184.83 million and the Dhaka Regency Tk 96.58 million. (Source: The Financial Express, September 05, 2010)

Ramco Systems to enter Bangladesh�Software and service provider Ramco Systems of India seeks a slice of a burgeoning market in Bangladesh with a view to tapping business from the public, power and banking sectors. The Bombay Stock Exchange-listed Ramco Systems will partner with a local firm, Computer Source. Ramco Systems, a part of the US$875 million Ramco Group, has more than 1,400 employees operating out of 14 offices in nine countries. The company provides solutions for multiple areas including banking, insurance, manufacturing, supply chain, aviation. (Source: The Daily Star, December 14, 2010)

BD set to become a large ship-owning country�Bangladesh is now heading to become a big merchant ship-owning nation, which has already surpassed the number of these types of ships owned by Pakistan, Sri Lanka and Myanmar. The local people have bought a record 12 vessels in 2010 alone. Bangladesh traders also bought 10 vessels in 2009. Bangladeshi traders have so far purchased 65 vessels spending more than 1.0 billion US dollars.The government waived import and value added tax on purchase of ships in its budget placed for 2009-10. Local banks like AB Bank, One Bank and Prime Bank have come up with funding purchase of vessels, mostly bulk carriers. (Source: The Financial Express, January 08, 2011)

Drug makers double sales in three years�Top medicine makers recorded robust growth last year at an average 25%, riding on people's growing health awareness and purchasing power. Also, increased rural penetration of the manufacturers and a significant development in healthcare sector have contributed to the growth. Bangladesh medicine sales reached Tk.3,700 crore three years ago, which nearly doubled to Tk.7,000 crore in 2010. The industry players forecast the growth trend would take the sales volume to Tk.10,000 crore in 2011. Square, Beximco, Eskayef, Incepta and Acme are the top five manufacturers by sales and growth rate. Business Monitor International in its latest report (Q1 2011) said Bangladesh has moved up one place to occupy the 14th position in 17 regional markets surveyed in BMIs Pharmaceutical & Healthcare Business Environment Ratings for the Asia region. This adjustment now sees Bangladesh placed below Vietnam and above Sri Lanka. Bangladesh's pharmaceutical rating is 40.2 out of 100, a figure that has changed marginally from the previous quarter but remains lower than the regional average of 53.1. Globally, Bangladesh occupies 67th position in BMIs 83 market-strong pharmaceutical universe. (Source: The Daily, January 16, 2011)

MISCELLANEOUS

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