daily news flash, 26th february, 2018 - eblsecurities.com · the daily star books and the cpd...

Daily News Flash, 26th February, 2018

1

DSEX 74.85 Gold (Ounce) $1330.50 Dollar 82.94 (Buy) 82.94 (Sell) CSCX 151.44 Oil (Barrel) $63.57 Euro 101.96 (Buy) 101.97 (Sell)

GIVE THE POOR A STAKE IN INFRASTRUCTURE PROJECTS: REHMAN SOBHAN ................................................. 2

COMMISSION NEEDED TO PROTECT BANKS: IBRAHIM KHALED ....................................................................... 3

SET TK 16,000 AS MINIMUM WAGE ................................................................................................................. 4

BANGLALINK'S REVENUE SHRANK IN 2017 ...................................................................................................... 5

TASKFORCE FORMED TO DEAL WITH TELECOM COMPLAINTS.......................................................................... 6

SUSTAINABLE POWER SUPPLY CRUCIAL FOR BANGLADESH: ICCB .................................................................... 7

UNFOLD GREEN GROWTH AGENDA ................................................................................................................. 7

LOAN SCAMS IN STATE-OWNED BANKS: DIRECTORS GO SCOT FREE, BANK OFFICIALS CHASED ....................... 8

BANGLALINK PRE-TAX EARNINGS FALL BY 10PC IN 2017 ................................................................................ 10

ICCB LAMENTS POWER OUTAGES .................................................................................................................. 11

BANKS ASKED TO ISSUE LOAN SANCTION LETTER IN BANGLA ....................................................................... 11

LEATHER INDUSTRY NEEDS LONG-TERM POLICY SUPPORT .......................................................................... 12

DEMAND FOR 4G SMARTPHONES ON THE RISE ............................................................................................. 13

FORM 'BANKING ENQUIRY COMMISSION' FORTHWITH ................................................................................. 15

MERGER, ACQUISITION PANACEA FOR BADLY-PERFORMING BANKS............................................................. 16

PROSPECT OF RENEWABLE ENERGY ............................................................................................................... 17

RMG WAGE AND BUYERS' CHARITY ............................................................................................................... 18

MAKING BANKS AND NBFIS CODE OF CONDUCT COMPLIANT ....................................................................... 19

PREPARING FOR LDC GRADUATION ............................................................................................................... 21

WHEN MONETARY POLICY BECOMES SUBORDINATE TO FISCAL POLICY ........................................................ 22

IDRA MOVES TO RECAST DRAFT GUIDELINES ................................................................................................. 24

DSE CORE INDEX DIPS BELOW 5,900-MARK ................................................................................................... 25

LEGACY FOOTWEAR TO EXPAND BUSINESS, SEEK CONSORTIUM INVESTMENT ............................................. 26

FOREIGN BANKING SOFTWARE ELBOWING OUT LOCAL ONES ....................................................................... 27

THRUST ON LATEST TECH FOR RMG INDUSTRY .............................................................................................. 28

FOCUS ON POLICY SUPPORT FOR GROWTH OF AGENT BANKING .................................................................. 29

GP LAUNCHES 4G SERVICE IN RAJSHAHI ........................................................................................................ 30

! ................................................................................................... 30

......................................................................................................... 31

- ............................................................................................. 32

.................................................................................................... 32

% .................................................................................. 32

............................................. 33


2

........................................................................................... 33

% ............................................................................................. 34

............................................................................................ 35

............................................................................................... 35

........................................................................... 36

........................................................................................................................ 37

' ' .............................................................................................................. 37

.............................................................................................................. 39

: ...................................................................................................................... 40

................................................................................................................ 40

................................................................................... 40

.% ............................................................................................................... 41

................................................................................................... 41

................................................................................................. 43

...................................................................................... 44

GIVE THE POOR A STAKE IN INFRASTRUCTURE PROJECTS: REHMAN SOBHAN Noted economist Rehman Sobhan yesterday called for giving an ownership stake to the poor and low-income families in income-generating public infrastructure projects and equity stakes for workers in garment sector. Sobhan, also the chairman for the Centre for Policy Dialogue, recommended formation of collectives of small farm producers and auto rickshaw drivers to facilitate inclusive development of Bangladesh. The ideas were shared at a dialogue on a Sobhan-authored book 'Challenging Injustice in South Asia: A Work Programme for Promoting Inclusive Development' at the Brac Centre Inn in Dhaka. The Daily Star Books and the CPD jointly published the book in November last year, which is derived from a four-year study that the author had conducted on the theme 'Challenging the Injustice of Poverty: Agendas for Inclusive Development in South Asia'. The premise of our work argues that poverty originates in an unjust social order, which creates and reproduces it. Traditional agendas for poverty alleviation recognise the structural sources of poverty creation, but address those issues inadequately, said Sobhan in a brief on the book. The original research sought to identify the structural sources of poverty, while the latest one covers a more limited canvas of the work in question and focuses on unequal access to assets, inequitable participation in the market, inequitable access to human development and unjust governance. Sobhan came up with recommendations in six broad areas to promote inclusive development in Bangladesh, which includes agrarian reform and distribution of khas land to landless farmers. This is a low hanging fruit, he said. To enhance the market power of the small and the excluded, he suggested formation of projects across Bangladesh based on the model of the Anand Milk Union Ltd (Amul) in India. You need to address the sources of market injustice, he said. Citing inequitable access to human development, he said huge disparity remains in health and education.


3

Society is being divided by the quality education. Quality education is available only to elites. The CPD chairman recommended setting up a national commission to enquire about the governance of state and private schools, allegations of rent-seeking for employment, leaking of question papers and keeping reserved seats for underprivileged children in elite public and private schools, including the cadet colleges. He called for establishing a dedicated mutual fund for low-income investors, providing an equity stake for workers in the garment sector and forming a service exporting corporate enterprise under the ownership of migrant workers. AB Mirza Azizul Islam, a former adviser to a caretaker government, said traditional cooperatives did not function properly. Cooperatives of small industries could be important for empowerment of the poor, he added. Prime Minister's Economic Affairs Adviser Mashiur Rahman said India's Amul has been a success but the cooperative of sugarcane farmers in Gujrat was not successful. It is important to see the major reasons behind the success of Amul, he said. The minimum wage for apparel workers had been fixed at a certain level for several years, which contributed to the sector's success, said Selim Raihan, a professor of economics at the Dhaka University. The minimum wage is below the lower poverty line income, he added. MM Akash, also a professor of economics at the DU, said income inequality is less acute than wealth inequality. Subsequently, he suggested increased investment in education and health to boost labour income. Land reform is necessary to make rural power structure pro-poor, said Mujahidul Islam Selim, president of the Communist Party of Bangladesh. Democracy and good governance are important to promote inclusive development, said Zafrullah Chowhudry, founder of the Gonoshasthaya Kendra. Public service management system is archaic and nobody gets a chance to acquire expertise and work because of transfer, said Manzoor Ahmed, emeritus professor of BRAC University. The education policy was framed in 2010 and yet no serious effort has been made to implement it, he added. Salehuddin Ahmed, a former governor of the Bangladesh Bank, stressed policy continuity. Atiqur Rahman, ex-lead strategist at the International Fund for Agricultural Development, and Nazneen Ahmed, senior research fellow of the Bangladesh Institute of Development Studies, also spoke. Prof Mustafizur Rahman, a distinguished fellow of the CPD, also spoke. Source: http://www.thedailystar.net/business/give-the-poor-stake-infrastructure-projects-rehman-sobhan-1540204

COMMISSION NEEDED TO PROTECT BANKS: IBRAHIM KHALED The government should form a commission to look into the reasons for the current vulnerable situation of the banking sector, said Khondkar Ibrahim Khaled, a former deputy governor of the Bangladesh Bank yesterday. The sector is not doing well, so the government should give attention to the sector to overcome the crisis, he said at a technical session of the BIBM Research Almanac 2018. The Bangladesh Institute of Bank Management organised the event for the second time at its auditorium, where Mohammad Muslim Chowdhury, secretary of the finance division, attended as chief guest. The government was supposed to form a banking commission but the finance minister recently said it will not be formed anytime soon, Khaled added. The mismatch between asset and liability has emerged as a great crisis for the banking sector, said Chowdhury.

http://www.thedailystar.net/business/give-the-poor-stake-infrastructure-projects-rehman-sobhan-1540204http://www.thedailystar.net/business/give-the-poor-stake-infrastructure-projects-rehman-sobhan-1540204


4

He said the country is now hungry for long-term financing but the banks are taking deposits for the short-term. Subsequently, he suggested banks diversify their products to invest for the long-term. The financial sector is always volatile, not only in Bangladesh but also in other parts of the world, said SM Moniruzzaman, deputy governor of the BB. We have to make our financial sector less volatile by following the macro-prudential regulations strictly. He suggested banks bring the unbanked and under-banked population under the banking umbrella, extend loans to all segments of the economy, disburse credit through proper analysis of loan application, and check the quality of management and authenticity of securities for sustainable economic growth. Moniruzzaman also called for reducing transactions costs. The BB should strengthen its surveillance system to identify the irregularities in the banks, said Helal Ahmed Chowdhury, a supernumerary professor of the BIBM. He also defended the new banks, saying they need more time to be compliant with the rules and regulations. The newcomers should develop self-regulations, he added. The annual event was conducted in three technical sessions throughout the day. A total 19 research papers were presented at the event, of which eight were from research projects, three from roundtable discussions and eight from research workshop of the BIBM. Toufic Ahmad Choudhury, director general of the BIBM, chaired the concluding session, while Prashanta Kumar Banerjee, director of the institute, gave the welcome address at the inaugural session. The Daily Star, the Bonik Barta and DBC News were the media partners of the event. Source: http://www.thedailystar.net/business/commission-needed-protect-banks-ibrahim-khaled-1540198

SET TK 16,000 AS MINIMUM WAGE Workers and union leaders on Saturday demanded trebling of minimum wage to Tk 16,000 for the country's 3.6 million apparel workers given the abnormal spiral in the costs of basic commodities, accommodation and healthcare. At present, the minimum wage for garment workers is Tk 5,300. Although we do not fully agree with the concept of living wage, we want a big hike of the salary this time, said Nazma Akter, president of the Sommilito Garments Sramik Federation, a garment workers' rights group. The group has already sent a letter to the minimum wage board, which was formed last month by the government, demanding Tk 16,000 as the wage. Sima Akter and Rasheda Begum, two operators of a garment factory at Gazipur, echoed the views of Akter. If the salary is hiked the factory owners will also raise the production targets proportionately, Sima said. Please also keep our physical conditions in mind when you fix the minimum wage. The trebling of wages is warranted as the prices of basic commodities have increased along with the house rent, said Sultana Begum, president of the Green Bangla Garments Workers Federation. The garment workers have to buy rice at Tk 58 to Tk 60 a kilogram as the prices of the staple have shot up. But our incomes did not increase.

http://www.thedailystar.net/business/commission-needed-protect-banks-ibrahim-khaled-1540198http://www.thedailystar.net/business/commission-needed-protect-banks-ibrahim-khaled-1540198


5

She went on to state that the prices of basic commodities and house rent are higher than in Dhaka at Gazipur, the hub for garment factories. We cannot save any money even after sharing a room and having less nutrient food, she added. Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, suggested specifying the legal aspects of the wage and workers' rights while fixing the minimum wage as sometimes the workers cannot enjoy all benefits due to ambiguities in the labour law. For instance, there is an apprentice grade for which the minimum wage is Tk 4,200, but the factory owners often pay the entry level workers this wage instead of the correct amount of Tk 5,300. Every time the issue of wage hike is discussed the factory management brings up the argument that they would go out of business if the workers' salaries are raised. Actually, this is not right -- we should find out how many factories have shuttered for salary hike. Factories may close down for other reasons. Ideally, the minimum wage should be close to the living wage, Moazzem said. As per the Asia Floor Wage, the living wage for garment workers is Tk 37,661 given the conditions of 2017. The current minimum wage of Tk 5,300 is just 19 percent of the living wage, he added. The existing minimum wage is not enough to maintain the minimum standard of living for a worker, said Selim Raihan, a professor of the Dhaka University's Economics department, while sharing the findings of a study at an event held at the capital's Lakeshore Hotel yesterday. The study -- Moving towards Living Wage: What will it take? -- was conducted by the South Asian Network of Economic Modelling on garment workers in Dhaka and Gazipur. It was funded by CARE Bangladesh under its OIKKO project. A minimum standard living comprises food, clothing, house rent, education, health, entertainment, savings and so on. Fixing Tk 5,300 as the minimum wage for workers in 2013 was not adequate for maintaining a decent life, Raihan said. So, this time the minimum wage for garment workers should be fixed following the living wage concept. Prices are going up daily but not our wages. We are now buying lower quality food and grains from local shops. This is going to affect our health in the long-run but we have no choice. Between 0.5 and 3 percent of the cost of manufacturing a clothing item goes to the worker who made it. This means, on an 8 t-shirt, the most a worker will get paid is 24 cents, he added. Qazi Kholiquzzaman Ahmad, chairman of the Palli Karma- Sahayak Foundation, urged the government and factory owners to introduce a rationing system for garment workers so that they can purchase the basic commodities at subsidised rates. Four important factors -- food, accommodation, education and health of workers -- should be considered while fixing the wage, Ahmad said. Source: http://www.thedailystar.net/business/set-tk-16000-minimum-wage-1540195

BANGLALINK'S REVENUE SHRANK IN 2017 Banglalink, the country's third largest operator, saw its revenues slip 4.6 percent to Tk 4,650 crore in 2017, in what can be viewed as a worrying development as the country steps into the 4G era. Veon, the parent company of Banglalink, did not disclose in the annual report for 2017 whether the operator counted profit or loss for the year. Contacted, Banglalink declined to comment on

http://www.thedailystar.net/business/set-tk-16000-minimum-wage-1540195


6

the matter. The operator blamed the results on an exigent fourth quarter, which saw it restore network availability following flooding caused by severe monsoon earlier in the year. Its competitors Grameenphone and Robi though faced the same challenges in 2017 but navigated the year comparatively better. Grameenphone's net profit rose 21.4 percent year-on-year to Tk 2,740 crore in 2017 -- the highest in its 21 years of operations in Bangladesh -- while its revenue grew 11.8 percent year-on-year to Tk 12,840 crore. Robi logged in Tk 6,830 crore as revenue, up 29.7 percent from a year earlier. It counted net losses of Tk 280 crore last year, which is lower than in previous year, Banglalink also attributed the decline in revenue to the gap in 3G network coverage compared to the market leader and intense price competition in relation to data. Among all the operators in the country, Banglalink had the least amount of spectrum last year, Erik Aas, chief executive of Banglalink, told The Daily Star yesterday. We tried our best to ensure quality throughout the year, but some other factors made our task more difficult. Though Banglalink's gross revenue declined, its earnings from data increased 28.5 percent year-on-year to Tk 630 crore driven by increased smartphone penetration and a rise in average data consumption of per-internet users. Active customer base grew 3.2 percent year-on-year to 3.13 crore. The increase was fuelled by competitive customer acquisition campaigns. At the end of 2017, Banglalink accounted for 22.32 percent of the market share, down from 24.51 percent at the end of 2016. The operator's investment in 2017 slumped 23.6 percent year-on-year to Tk 820 crore. But, it started 2018 with substantial investment: it purchased 10.6 Megahertz of spectrum in two different bands and obtained technological neutrality for its entire spectrum for $308.6 million, excluding VAT. It has paid 60 percent for the spectrum charge upfront. This will allow Banglalink to double its 3G network capacity and expand service quality. In parallel, it acquired a 4G/LTE licence. Banglalink addressed the spectrum issue on time, he said, adding that the newly acquired spectrum has made the operator more capable of providing quality digital services. We look forward to making a big turnaround this year, Aas added. Source: http://www.thedailystar.net/business/banglalinks-revenue-shrank-2017-1540183

TASKFORCE FORMED TO DEAL WITH TELECOM COMPLAINTS The telecom regulator has formed a complaint management taskforce to mitigate users' grievances that have piled up in recent times amid the operators' continuous failure to provide quality services. The taskforce will provide solutions to the complaints against the telecom services furnished by around 2,500 licence-holders of Bangladesh Telecommunication Regulatory Commission (BTRC), the regulator said in a statement yesterday. The commission will launch a new shortcode100today, replacing the existing2872one to make the process easier, it said. The telecom watchdog introduced the four-digit shortcode last year and has received 3,522 complaints so far, all of them against mobile phone operators. The taskforce will handle only those complaints for which the operators fail to give any solution, BTRC said. The regulator will try to find solutions to those complaints after having discussions with the operators and will also inform the customers about the outcomes, according to the statement. Mobile phone was first launched in Bangladesh 20 years ago, but still the operators sometimes fail to meet the customers' expectation, a top official of the BTRC said.

http://www.thedailystar.net/business/banglalinks-revenue-shrank-2017-1540183


7

To address the situation, the telecom regulator organised a public hearing in November 2016 to learn about users' concerns on mobile operators' service quality. The BTRC earlier launched a dedicated mobile phone number and an email address to hear about complaints from users and solve them, but the efforts did not yield expected results. Source: http://www.thedailystar.net/business/taskforce-formed-deal-telecom-complaints-1540177

SUSTAINABLE POWER SUPPLY CRUCIAL FOR BANGLADESH: ICCB Sustainable and uninterrupted supply of power is of utmost importance for the economic growth as per capita power consumption in Bangladesh is one of the lowest in the world, a leading chamber said yesterday. The installed power capacity of Bangladesh was only 200 megawatt in 1972, according to the news bulletin of the International Chamber of Commerce-Bangladesh for the October-December period. Since 1972, the current power generation has increased to 16,046 MW thanks to favourable government policies, which have attracted private investment and independent power producers, it said. The per capita power consumption in Bangladesh stood at 433-kilowatt hour as of October 2017, one of the lowest in the world. Though the government has achieved significant success in electricity generation, actual capacity utilisation is only 9,507 MW because of the existing vulnerable and double-digit system loss in the distribution mechanism, ICCB said. A severe disruption is taking place in industrial production and other economic activities because of the country's failure in adequately managing the load-shedding, it said. Citing a recent survey, the chamber said power outages result in a loss of industrial output worth $1 billion a year which reduces the GDP growth by about half a percentage point in Bangladesh. It is estimated that the total transmission and distribution losses amount to one-third of the total generation, the value of which is equal to the $247 million a year, it said. Therefore, there is a need for the development of appropriate infrastructure and effective monitoring system to overcome the major hurdle in efficiently delivering power. Due to fast-depleting gas reserve and lack of major initiatives to develop local coal, it is becoming difficult to achieve a sustainable local primary energy source. According to an estimate, Bangladesh would meet 92 percent of its demand with imported fuel by 2030 if local coal is not explored and exploited, the ICCB said. The generation of electricity in coal-fired power plants would be viable and much cheaper if locally explored quality coal is used as fuel instead of the imported ones, the chamber said. Bangladesh should, therefore, go for all-out commercial exploration of coal in the next five years to make the power sector sustainable and vibrant. Source: http://www.thedailystar.net/business/sustainable-power-supply-crucial-bangladesh-iccb-1540165

UNFOLD GREEN GROWTH AGENDA Experts and media representatives yesterday emphasised unfolding a green agenda in Bangladesh by pursuing a green growth pathway to ensure sustainable development. They asked for using green lens in development planning and project implementation by arresting environmental pollution, recovering from ecological degradation, halting encroachment on water bodies, forests and uplands and ensuring sustainable development. Mindless implementation of mega projects having no consideration of environmental and ecological costs will bring down the country's economic growth, they observed.

http://www.thedailystar.net/business/taskforce-formed-deal-telecom-complaints-1540177http://www.thedailystar.net/business/sustainable-power-supply-crucial-bangladesh-iccb-1540165http://www.thedailystar.net/business/sustainable-power-supply-crucial-bangladesh-iccb-1540165


8

They spoke at a programme titled Media dialogues: economic dialogue on green growth organised by UK Aid, the Economic Dialogue on Green Growth, Adam Smith International and the Forum of Environmental Journalists of Bangladesh (FEJB) at the National Press Club in Dhaka. Veteran environmentalist Dr Rezaul Karim who was a top UN official for several decades stressed the need for pursuing a green growth agenda in Bangladesh to put an end to the depletion of natural resources. We need industrialisation in an environment-friendly manner and not while degrading our fragile eco system, he said. We need to go for solar, wind and other renewable sources of energy discarding the current heavy dependence on coal and other fossil fuels to achieve sustainable development, said Dr Saleemul Haq, director of International Centre for Climate Change & Development. Anisul Hoque, associate editor of Bangla daily Prothom Alo, asked for proper planning and designing infrastructural development since the nation had already paid a heavy price in terms of cost and time escalation because of faulty designs or wrong planning in some mega projects. We are running behind the golden deers of development by polluting almost all of our rivers and wetlands, he regretted, calling for improving inter-ministerial coordination. Suvojit Chattopadhyay of Adam Smith International underlined the need for proper training and learning of officials and stakeholders to help unfold a green growth agenda in Bangladesh similar to that in other developing countries. Environment Secretary Abdullah Al Mohsin Chowdhury listed different government initiatives and programmes undertaken to promote environmental conservation across the country. He said the nation required support from all including the media to achieve sustainable development goals. FEJB Chairman Quamrul Islam Chowdhury, chairing the event, said there were a number of success stories in Bangladesh, especially regarding climate change and environmental management, but everyone needs to move fast and scale up the best practices. He also suggested for undertaking more research and training to help institutionalise the green growth concept in development planning, financing and implementation. He also called for incorporating a green growth agenda in the election manifestoes of major political parties so that the media could monitor whether those pledges were kept once a party came to power. The dialogue was also joined by leading journalists Syed Ishtiaque Reza of Ekattor TV, Sakila Jesmin of Channel i and Shamima Chowdhury and Kazi Shahnaz of FEJB. Source: http://www.thedailystar.net/business/unfold-green-growth-agenda-1540159

LOAN SCAMS IN STATE-OWNED BANKS: DIRECTORS GO SCOT FREE, BANK OFFICIALS CHASED Lower and mid-level bankers are facing prosecution for loan scams while boards of directors get off scot-free and even some of them have been promoted although they have failed to prevent misappropriation of billions of taka from the state-owned banks in the past nine years. The Anti-Corruption Commission has so far brought charges or arrested 41 bankers for their alleged involvement in the loan scams, including embezzlement of Tk 3,700 crore by Hallmark Group from Sonali Bank and Tk 6,000 crore from BASIC Bank, said commission officials. The commission, however, brought no charge against directors including former BASIC Bank chairman Sheikh Abdul Hye Bacchu, they said. On June 30, 2015, finance minister AMA Muhith told parliament that action could not be taken against Sheikh Abdul Hye Bacchu because of ruling Awami League leaders. Besides, embezzlement of Tk 1,200 crore from five banks, including state-owned Janata Bank, and loan scam of Tk 5,500 crore by AnonTex Group in Janata Bank during the tenure of Abul Barakat-led

http://www.thedailystar.net/business/unfold-green-growth-agenda-1540159


9

board of directors raised questions about the role of directors appointed on political considerations, said experts. They noted that such appointments increased significantly since the beginning of the back-to-back five-year tenure of the ruling Awami League in 2009. Former interim government adviser Mirza Azizul Islam said that politically appointed directors could not avoid the responsibility of the loan scams that caused disaster in the state-run banks. The countrys banking sector is now in total disarray, said Mirza Aziz, who was reportedly forced to resign in December 2006 as Sonali Bank chairman following his refusal to approve a Tk 15 crore loan for the then president Iajuddin Ahmeds son Imtiaj Ahmed. Six BASIC Bank officerals deputy managing director Fazlus Sobhan, former Gulshan branch manager Shiper Ahmed, its commercial credit information department former manager M Selim, former Saidpur branch manager Ekramul Bari and general manager Joynal Abiden Chowdhury are now in jail as cases filed against 27 officials, including the six, by the Anti-Corruption Commission for loan scams are under investigation. Twenty-five Sonali Bank officials, including former managing director Humayun Kabir (now in hiding), deputy managing directors Mainul Haque and Atiqur Rahman, general managers Nani Gopal Nath and Mir Mohidur Rahman, deputy general managers Sheikh Altaf Hossain and M Safiz Uddin Ahmed, and assistant general managers Kamrul Hossain Khan and Ezaz Ahmed, and Ruposhi Bangla Hotel branch former assistant general manager AKM Azizur Rahman are now facing trial for the Hallmark loan scams. The commission in 2013 and 2014 dropped inquiries against former Sonali Bank directors Kazi Baharul Islam, Subhash Singha Roy, M Anwar Sahid, Abu Sayed Mohammed Nayeem, KM Zaman Romel, Satendra Chandra Bhaktha, M Shahidullah Miah, Kasem Humayun, Saimum Sarwar Kamal, Jannat Ara Henry who were the board members during the embezzlement of Tk 3,700 crore by Hallmark Group from Sonalis Ruposhi Bangla hotel branch. Saimum Sarwar Kamal, former Chhatra League leader of Chittagong University, became a member of parliament being elected uncontested in 2014 elections, boycotted by all opposition parties, with an Awami League ticket. Subhash Singha Roy, former Chatra League leader, is now running a news portal abcnews24.com and Jannat Ara Henry, a schoolteacher in Sirajganj before being appointed as director to the Sonali Bank board of directors, became a joint secretary general of the central Awami League. KM Zaman Romel, son of AL lawmaker Khandaker Asaduzzaman, in 2016 became chairman of the Peoples Group comprising companies of shipping, garments, power plants, gas station and international trading. Kasem Humayun, Bangla daily Sangbad executive editor, is now serving as Agrani Bank director. Finance ministry officials said that two of the six public servants serving as directors to BASIC Bank during the period of loan scams in 2009-2014 had been promoted to secretary. Shuvashish Bose, appointed BASIC Bank director while serving as Export Promotion Bureau vice-chairman, was made secretary to textiles and jute ministry in January and commerce secretary in March in 2017. Syam Sunder Sikder was made a director at the bank while serving as the Bangladesh Small and Cottage Industries Corporation chairman in 2013. He was made secretary to the information and communication technology division in September 2014 and the telecom secretary in March 2017. Fakhrul Islam, made a director while serving as Bangladesh Economic Zone Authority executive chairman, was promoted to secretary without any post in August 2014. Later, he went into retirement. Quamrun Naher Ahmed, made a director while he was a joint secretary, was promoted to additional secretary. Another former director Neelufar Ahmed is serving at the Prime Ministers Office.


10

AKM Rezaur Rahman, made a director while he was an additional secretary, was later appointed to the Sonali Bank board of directors. Five of the former BASIC Bank directors, including Awami Juba League leader Anwarul Islam, also ARS Lube Bangladesh Ltd managing director, and ruling Awami League mouthpiece Uttaran assistant editor Anis Ahmed, were appointed from the private sector. Anwarul Islam is serving as a director to the state-owned Dhaka Electric Supply Company Limited while Anis Ahmed is working as news editor of the magazine. Another director from private sector was AKM Kamrul Islam. He is a partner of Islam Aftab Kamrul and Co. Former BASIC Bank managing director Kazi Fakhrul Islam has been in hiding since his dismissal along with nine senior bank officials in May 2014. The commission, following a High Court order, interrogated Sheikh Abdul Hye Bacchu in December. On November 8, 2017, the High Court scolded the commission for keeping only small fry in jail demonstrating pick and choose policy about corruption suspects. Commission chairman Iqbal Mahmood said that they were scrutinising all the loans approved by the BASIC Bank board during Abdul Hyes period. Transparency International Bangladesh executive director Ifthekharuzzaman said that the commission should take immediate legal action against Abdul hye and other board of directors as their involvement in the loan scams was already detected in the investigation by the Bangladesh Bank. He criticised the commission saying that Abdul Hye and other BASIC Bank directors had been interrogated following a High Court order. The parliamentary standing committee on finance ministry on many occasions since the detection of the loan scams recommended that the commission should bring the controversial directors to justice. Parliamentary body chairman Muhammad Abdur Razzaque said that the commission mysteriously failed to prosecute the masterminds of the loan scams. Source: http://www.newagebd.net/article/35495/directors-go-scot-free-bank-officials-chased

BANGLALINK PRE-TAX EARNINGS FALL BY 10PC IN 2017 Mobile phone operator Banglalinks earnings before taxes declined by 10.11 per cent in 2017 compared with the previous year mainly due to intense market competition, said VEON, the parent company of the operator. The companys pre-tax earnings dropped by Tk 212 crore to Tk 1,884 crore in 2017 against Tk 2,096 crore a year ago, showed VEONs annual report, which was released on Thursday. The report, however, has not mentioned anything about the net profits or losses of Bangladesh. Banglalink, which has become the third largest mobile phone operator in Bangladesh from the second position after the merger of Robi and Airtel in 2016, also witnessed a 4.53-per cent fall in its annual revenue in 2017. Revenue of the operator was Tk 4,868 crore in 2016 that declined by Tk 221 crore to Tk 4,647 crore in 2017 despite a 28.57-per cent increase in data revenue. The operators data revenue increased to Tk 630 crore in 2017 against Tk 490 crore a year back. On the other hand, customer-base of the operator increased to 3.13 crore from 3.04 crore a year ago. Although the report mentioned restoration of network availability after monsoons flood in mid 2017 as another reason behind Banglalinks revenue fall, the companys capital expenditure dropped by 23.64 per cent in 2017. Capital expenditure of the operator was Tk 1,074 crore in 2016 that declined to Tk 820 crore in 2017, while the figure was Tk 1,050 crore in 2015.

http://www.newagebd.net/article/35495/directors-go-scot-free-bank-officials-chased


11

Banglalinks competitors Grameenphone and Rob, meanwhile, have continued to attain higher amount of revenue despite the market competition factor. Net profit of GP rose 21.4 per cent year-on-year to Tk 2,740 crore in 2017, while its revenue grew 11.8 per cent year-on-year to Tk 12,840 crore during the year. ven though Robi incurred a Tk 280-crore net loss last year, its revenue stood at Tk 6,830 crore in the year, up 29.7 percent from a year earlier. Source: http://www.newagebd.net/article/35480/banglalink-pre-tax-earnings-fall-by-10pc-in-2017

ICCB LAMENTS POWER OUTAGES Frequent power outages cause severe disruption in industrial production and other economic activities, observed the International Chamber of Commerce Bangladesh in its October-December 2017 news bulletin released on Sunday. ICCB said a recent survey had revealed that power outages result in a loss of industrial output worth $1 billion a year which reduces the GDP growth by about half a percentage point in Bangladesh. It is estimated that the total transmission and distribution losses amount to one-third of the total generation, the value of which is equal to $247 million per year. Besides, ICCB also urged the government to go for all-out commercial exploration of coal, and emphasised on hydropower potentials to make the power sector sustainable and vibrant for economic growth. Therefore, there was a need for the development of appropriate infrastructure and effective monitoring system to overcome the major hurdle in efficiently delivering power, it said. Though the government had achieved significant success in electricity generation, actual capacity utilisation was 9,507 MW only due to vulnerable and double-digit system loss prevailing in the distribution mechanism. As per the power sector master plan, the Government would import coal for the generation of 22,000 MW power within 2041 despite the fact that the country has an estimated reserve of some 3 billion tonnes of high-quality coal in five coalfields in northern districts, it said. Although experts and the members of the parliamentary standing committee on energy affairs had lent their support for open-pit mining as it is risk-free and cost-effective, the authorities are reluctant to go ahead with the option fearing a backlash from the opponents of the system, ICCB said. Due to fast depleting gas reserve and lack of major initiatives to develop local coal, it was becoming difficult to achieve a sustainable local primary energy source for Bangladesh and that might result in the countrys 92 per cent dependency on imported fuel by 2030 if local coal was not explored and exploited, international chamber said. Stressing the hydropower potential in South Asias Nepal, Bhutan and India, ICCB said that the Nepal alone has theoretical hydropower potential of 83,000 MW, but so far, less than 2 per cent had been realized. On the other hand, Bhutan had an estimated hydropower capacity of around 30,000 MW and thats they Bangladesh might explore the possibility of joining Nepal and Bhutan in tapping the vast hydropower resources. Bangladeshs power generation had increased to 16,046 MW including imported 600 MW from India. Source: http://www.newagebd.net/article/35481/iccb-laments-power-outages

BANKS ASKED TO ISSUE LOAN SANCTION LETTER IN BANGLA Bangladesh Bank on Sunday directed all banks to write loan sanction letter in Bangla so that borrowers can understand the terms and conditions of the loan agreements clearly.

http://www.newagebd.net/article/35480/banglalink-pre-tax-earnings-fall-by-10pc-in-2017http://www.newagebd.net/article/35481/iccb-laments-power-outages


12

The BB issued a circular in this regard saying that the directive would be effective from July 1. According to the circular, the BB found that most of the banks in the country composed forms and issued letters including loan approval letter in English to their clients. Borrowers require understanding clearly the terms and conditions written in the agreement papers as they are bound to follow the conditions by law, it said. If the loan approval letter is written in Bangla, it would be convenient for the customers in general and would keep banking activities transparent, the circular said. The BB directed the banks to write loan sanction letters in Bangla to protect the interests of the customers and to implement the Bengali Language Introduction Act, 1987 under the Article 3 of the constitution of the Peoples Republic of Bangladesh, it said. As per the act, except in the case of foreign relations, in all other cases records and correspondences, laws, proceedings in court and other legal actions must be written in Bangla. The banks can also use English alongside Bangla in writing loan sanction letters, the circular said. Source: http://www.newagebd.net/article/35484/banks-asked-to-issue-loan-sanction-letter-in-bangla

LEATHER INDUSTRY NEEDS LONG-TERM POLICY SUPPORT The leather and leather goods industry in Bangladesh needs equalized, innovative and implementable long-term policy support to attain its $5 billion export target by 2021, stakeholders said at a workshop on Sunday. They also called for the government to reduce the cost of doing business by removing trade barriers and invest in product and market diversification. The stakeholder consultation workshop titled Leather and Leather Goods Exports from Bangladesh: Performance, Prospects, and Policy Priorities was organized by Bangladesh Enterprise Institute (BEI) at Lakeshore Hotel, Dhaka. We have an ambitious target of exporting up to $60 billion annually by 2021. We are hoping that leather and leather goods sector will contribute $5 billion to this, Farooq Sobhan, president and CEO of BEI, said in his address. Bangladesh earned $1.23 billion in the last fiscal from exports in this industry, he said. We cannot ignore the fact that the global export market is undergoing transformations. We have to keep in mind the US trade policy, and take into account what is happening around the world because these things affect our exports directly and indirectly, he said. On the other hand, as Bangladesh graduates to a middle-income country from an LDC, it will lose certain trade facilities that have been benefiting the export sector, he added. Policy and strategy are required to reach the target, he said. We are left with four fiscal years to achieve our export targets. The formulation of a new Export Policy (2018-2021) should take the opportunity for providing concrete inputs, he added. He emphasized that before Bangladesh phases out of LDC, the time that Bangladesh has until 2027 has to be effectively utilized. Policy support needs to be innovative, strengthened, re-energized and, where possible, its scope and coverage has to be deepened, Farooq added. Nasim Manzur, the managing director of Apex Footwear Limited, said a long-term policy is needed to draw in foreign and local investment. Investors cannot be encouraged to come to an economy where businesses do not know what policy changes will be in effect when the budget is announced next year, he said. We need policy changes because our competitors are offering more incentives and policy support to capture the market, he said. Incentives for all exporters why two rules?

http://www.newagebd.net/article/35484/banks-asked-to-issue-loan-sanction-letter-in-banglahttp://www.newagebd.net/article/35484/banks-asked-to-issue-loan-sanction-letter-in-bangla


13

Equalize incentives and policy support for all export-oriented sectors to tap the vast opportunities, the business leader, who is a former president of MCCI and LFMEAB, said. A study presented at the workshop pointed out infrastructural bottlenecks as one of the major problems affecting the overall export industry including the leather sector. In the World Bank Doing Business surveys, Bangladesh typically is outperformed by most others in inland transportation, port infrastructure, trade logistics affecting export competitiveness, it said. Bangladeshs leather export is still highly concentrated in crust and finished leather, Dr Mohammad Abdur Razzaque, project leader for BEI, said while presenting the study. In 2015, the share of crust and finished leather was 28% in all leather and leather goods export. The industry should shift towards exporting more finished leather products than concentrating on exporting crust and finished leathers, he added. The study recommended reducing the cost and lead time to exports by establishing more off-dock facilities like private container freight stations (CFS) or inland container depots (ICDs), expanding export markets and export products by strengthening all export support measures. Acute skilled-manpower crisis is a severe constraint for the sector, specifically at the technical and upper-end managerial positions. The study recommended relaxing the hiring rule of the foreign experts. Jute and jute products were the main export of Bangladesh, and then that got replaced by ready-made garments. So the question is what will RMG be replaced by? Bangladesh has comparative advantage in leather, but still we have not gotten its benefits. Tannery relocation has also been a big issue for the sector. Sustainability and compliance issues are the main reason behind the slow progress of the industry. Abu Yusuf, chairman, Department of Development Studies, Dhaka University Bangladesh is suffering because of its inflated lead time. Vietnam is doing better because most of their tanneries are a result of FDI, and not local entrepreneurship. Bangladesh earns money through selling labour, but we have very little design and innovation capability. The problem is that all our policies are knee-jerk reactions to a particular problem. Policies should be tailored for long-term sustainability. Only Bangladesh charges tax on technical-know-how, which should stop. Nasim Manzur, MD, Apex Footwear Limited Efficiency of the Chittagong Port is dropping day by day. Shipping should not take more than 4 weeks, but it takes double that. The government should allow ports to be managed by international port operators. Ports are businesses, they should not be under a ministry. Turning the Matarbari port into a deep sea port is a good decision that will help reduce lead time. Md Saiful Islam, president, Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh We need a policy for technical training to create experts. We brought experts from China and the Philippines and them for transforming knowledge. That is why Foreign Direct Investment (FDI) works quite well as it bring lots of technical experts and knowledgeable mangers, which helps sharing knowledge with Bangladeshi people. Designs and innovation should be the focus of training, as that will define the quality of products. Fayaz Taher, MD, Fortuna Footwear and Leather Source: http://www.dhakatribune.com/business/2018/02/26/leather-industry-needs-long-term-policy-support/

DEMAND FOR 4G SMARTPHONES ON THE RISE The demand for 4G supported smartphones have increased after the introduction of 4G in the country by mobile phone operators. Mobile phone users have started looking for 4G supported phones in local markets and online.

http://www.dhakatribune.com/business/2018/02/26/leather-industry-needs-long-term-policy-support/http://www.dhakatribune.com/business/2018/02/26/leather-industry-needs-long-term-policy-support/


14

Smartphone suppliers have remarked that a craze for 4G supported smartphones is already in course, and now people are in the process of selecting the right one that matches their requirements. Most of the smartphones in the market that fall in the price range of Tk10,000 support 4G. As suppliers had prepared for the arrival of 4G beforehand, there has been no shortage of 4G supported smartphones in the market. However, as most of them are not using 4G supported phones at present, few people are availing of 4G services. Only 10% of the total 3 crore mobile phone users can currently use 4G. President of Bangladesh Mobile Phone Importers Association (BMPIA), Ruhul Alam Al Mahbub, said: 4G has just been activated. We have to wait for a while to understand its full impact. But we have already been able to create a demand for 4G smartphones in the market. We will understand the whole scenario regarding 4G in the second quarter [April-June] of this year.

Ruhul Alam is one of the most prolific suppliers of Samsung phones. He further said, People using Samsung phones will get a better experience using 4G. Once mobile network problems get solved, most of the Samsung users will be able to use 4G. The CEO of Tecno mobile phones, Rezwanul Haque informed: Mobile phone users have already started looking for different 4G phone sets in the market. Sales are not that bad either. But he admitted that the market is still not completely prepared for 4G. Adding that he is hopeful about sales going up once the 4G network expands, Rezwanul said, Not only do our expensive phone sets support 4G, the sets priced at Tk10,990 also support 4G. Dewan Kanon, the CEO of Xiaomi phones, said: All of our phones support 4G, so we did not have to take any separate preparations. Our sales are starting to go up. Mentioning that customers are buying both budget and expensive Xiaomi smartphones, Dewan added: The main factor of using 4G phones is the experience. Xiaomi uses Qualcom Snapdragon processors. That is why using 4G in a Xiaomi set is going to be a good experience. I also think that smartphone imports are going to increase because of 4G. Huawei, another mobile phone brand, has brought 12 models of 4G smartphones and one 4G model tablet. They fall between the price range of TK11,990-Tk83,900. Affiliated sources have informed that their sales have recently increased after 4G hit the market. Among the co-branded phones, WI phones, in a joint venture with Grameenphone, has released a 4G smartphone worth Tk4,444. On the other hand, Mircomax, in a similar venture with Grameenphone has released a 4G supported smartphone priced at Tk7,599. Banglalink, in co-operation with Symphony, will also release 4G supported phones in the market soon.


15

Local brands such as Symphony and Walton have also released 4G supported smartphones in the market. The communications department of Symphony has informed that, all the phones that have recently been released in the market, falling in the price range of Tk8,340- Tk19,000, support 4G. From a statistical study of imported smartphones in Bangladesh during the 4th quarter of 2017, the positions of mobile phone brands regarding sales was known. According to the study, among the companies selling smartphones at prices less than Tk10,000, Symphony tops the chart. The second and third positions are occupied by Itel and Huawei, respectively. And the fourth and fifth positions are held by Samsung and Walton, respectively. On the other hand, Samsung tops the list among brands selling phones that go above the price of Tk10,000. Second on the list is Xiaomi, and third, fourth and fifth are Oppo, Huawei and Nokia phones, respectively. Source: http://www.dhakatribune.com/business/2018/02/26/demand-4g-smartphones-rise/

FORM 'BANKING ENQUIRY COMMISSION' FORTHWITH The government should move to form a 'Banking Enquiry Commission' immediately to address the problems and irregularities that are 'eating away' at Bangladesh's financial sector, says an expert. "The core problem in our banking sector today is a lack of good governance," former Deputy Governor of Bangladesh Bank Khondkar Ibrahim Khaled told a function arranged Sunday in Dhaka on a BIBM Research Almanac focused on the state of banking in the country. "This is obvious that the banking sector is not running well. The problems have already been pinpointed and it is high time to act," said Mr Khaled, who had led one of recent probe bodies on financial-sector scam, namely stock-market manipulation and debacle. In this context, he mentioned that the Finance Minister had already said that he would not form a Banking Commission right now. "But even if that is not possible, a Banking Enquiry Commission, at the very least, should be formed," the former Deputy Governor of the central bank said. "Having such a commission would help us to get out of the problems that are eating away at our banking sector," he told the technical session of the daylong programme organized by Bangladesh Institute of Bank Management or BIBM. Earlier, during the inaugural session of the event, Finance Secretary Mohammad Muslim Chowdhury asked the banking sector to get ready for increased technological changes that would happen within the financial sector in the years ahead. "Human interface is already getting minimized, and within five to ten years time, most of banking operations will shift from human interface to technological interface," the Finance Secretary told the meet. He said the time has come to ponder whether the term banker will exist in the near future or not. "In this context, there are needs for increased research in our banking arena on the fintech issue and its possible impact." Afterwards, a series of keynote papers on various research topics conducted by BIBM were presented at the event, in the institution's bid to focus on variegated issues facing banks and on possible remedies. In a keynote paper called "Sustainability Reporting Practices in Banks of Bangladesh", the researcher pointed out that out of total of 30 listed banks in Bangladesh, only 15 had made separate sustainability disclosure in their corporate annual reports in between 2011 and 2015. In this context, researchers said that the central bank should give pragmatic policy and motivational support apart from confirming publication of report by all banks. Another research paper on the status of Fund Transfer Pricing in the commercial banks of Bangladesh showed that around 58 per cent of the country's banks have no FTP policy.

http://www.dhakatribune.com/business/2018/02/26/demand-4g-smartphones-rise/


16

A faulty FTP methodology or a biased framework will send wrong signals by creating an unintended balance-sheet structure in the form of disproportionate mix of asset portfolios on the asset side and liquidity holes on the liability side, researchers said. Therefore, banks in Bangladesh should implement matched maturity well-responsive FTP Framework by eliminating overreliance on offline systems requiring manual intervention and by revising the simplistic assumptions in the implementation of the FTP framework, they added. In another keynote paper entitled 'Addressing Disaster Risk by Banks: Bangladesh Perspective', researchers showed that although Bangladesh is among the top five vulnerable countries on earth, the proportion of insured risks appeared to be even much lower than the Asian average. In this context, they observed that a developed insurance market and attractive targeted insurance products might be the solution. In addition, researchers at the event also identified a lack of board-level awareness about the magnitude of the impact of implementing Basel III as a challenge facing banks in Bangladesh. "Basel-III requires the involvement of the senior management in the process of identification, evaluation and mitigation of risks," said a keynote paper titled 'Impact of Basel Accords in the Banking Sector of Bangladesh'. "The senior management and the board members may use some sort of supervisory and monitoring techniques to ensure the technical and other executives are engaged in risk-mitigation activities and the board is satisfied with the action taken by them," it added. Source: http://today.thefinancialexpress.com.bd/first-page/form-banking-enquiry-commission-forthwith-1519580544

MERGER, ACQUISITION PANACEA FOR BADLY-PERFORMING BANKS An expert opinion suggests forced merger or acquisition is the desperate remedy for the poorly-performing banks, especially where the underlying problem persists permanently. Such suggestion came up in a study that also recommended punishment of the wrongdoers by the regulatory authority as there remains tendency among directors of weak banks not to go for merger willingly. In another research paper also presented at a function Sunday it was found that the nine new banks that got approval in 2012 indulged in various irregularities and anomalies from the very beginning. In case of hiring, these banks failed to establish goodwill on the market, their commitment to serve the unbanked rural people was not fulfilled as they focused more on urban areas, had high non-performing-loan rate after 2014, declining tendency in CRAR, astounding expenditure in CSR despite losses in the previous year. In the research paper, titled 'Exploring Merger and Acquisition in the Context of the Banking Sector of Bangladesh', which was presented by associate professor of Bangladesh Institute of Bank Management (BIBM) Atul Chandra, it was stated that efficiency of the merged banks got reduced compared with the pre-merger institutions. Yet 88 per cent of the respondents have opined in favour of merger or acquisition to reduce the number of weak banks. Most of the respondents have opined against branch mergers while 83 per cent opined that merger between a strong and a weak bank would be appropriate in Bangladesh. And 72 per cent of the respondents believe that weak banks should not be allowed to fail in Bangladesh as the failure would be costly for the economy. Another 83 per cent respondents think Bangladesh Bank should not be the sole authority but main authority in case of merger in banking sector. The paper was presented at the third technical session of the Research Almanac 2018 at BIBM auditorium in the city. BIBM organised the daylong session where 19 papers were presented. Former deputy governor of BB Khondkar Ibrahim Khaled chaired the concluding session.

http://today.thefinancialexpress.com.bd/first-page/form-banking-enquiry-commission-forthwith-1519580544http://today.thefinancialexpress.com.bd/first-page/form-banking-enquiry-commission-forthwith-1519580544


17

One of the discussants and former managing director of Prime Bank, Ahmed Kamal Khan, in his remarks said merger and acquisition in Bangladesh is quite difficult due to capital shortfall of every bank. "Besides," he added, "the rate of non-performing loans is very, very high. The structure of the board is also not in favour of merger." He suggested that merger of the branches be easier than merger of banks as it requires long time and huge money. The paper, titled 'An Evaluation of the Performance of New Commercial Banks', was presented by Shohail Mustafa, a BIBM associate professor. He evaluated performance of three NRB banks and six private commercial banks except for Shimanto Bank which got approval in 2012. He mentioned that in the face of pressure from government high-ups, BB approved new private banks against its will. "The central bank had faced tremendous pressure from the government high-ups to quickly approve those banks even before it could properly scrutinise the applications," he told the meet. In his remarks of the chair, Ibrahim Khaled said in the banking sector of Bangladesh, failure of excellence is not the main problem but it is lack of honesty while banking. "All the parties, including the directors, politicians and executives try to interfere." The prevailing situation of some new and few old banks created much reason to be concerned, he said. It is the result of absence of social values, he added. Source: http://today.thefinancialexpress.com.bd/first-page/merger-acquisition-panacea-for-badly-performing-banks-1519580769

PROSPECT OF RENEWABLE ENERGY Controversy over renewable energy is less common. In fact, it is the fossil fuel that most often comes under scathing criticism, particularly in the context of global warming. On Monday there was a spat over the merit of renewable energy between Nasrul Hamid, State Minister for Power and Energy, and experts in the subject. The minister's contention is that Bangladesh is not well suited to solar power -the cleanest energy known. Why? Because, the country unlike Saudi Arabia and Abu Dhabi, has not enough land to install large-scale solar power plants, the minister argues. The example of Saudi Arabia can be understood but by referring to Abu Dhabi he possibly meant the United Arab Emirates (UAE). Yes, the UAE land area is larger than Bangladesh and the population size there is smaller compared to Bangladesh. Yet Bangladesh's population density and smaller land area cannot and should not stand in the way of harnessing renewable energy. Experts from home and abroad present at a discussion on 'Prospect of renewable Energy in Bangladesh' in the city did not agree with the minister. They made it amply clear that solar power in the country has ample prospect. In the paper former director general of the power cell presented there, it is claimed that the greater portion of the required electricity could be sourced from renewable energy even when the country would become a developed one requiring not more than 40,000 megawatt of electricity. Other experts present at the discussion could not agree more. The minister, on the other hand, stated that the 55 power projects undertaken by the government were not delivering the goods at the expected level. It is because of this fact, the government keeps faith in traditional power plants using fossil fuels. The minister may well-nigh be right in his contention that the solar power projects are not performing up to expectation. But the reasons behind this less-than-expected performance should lie elsewhere, not in the technology as such. Solar technology is getting more sophisticated and improved day by day and the day will not be far when it will be very efficient in storing and distributing power. There are some advantages of this technology in transmitting electricity to power grids over the type generated by fossil fuel. A populous country like Bangladesh threatened more than most by climate change, has the added compulsion to go for green technology.

http://today.thefinancialexpress.com.bd/first-page/merger-acquisition-panacea-for-badly-performing-banks-1519580769http://today.thefinancialexpress.com.bd/first-page/merger-acquisition-panacea-for-badly-performing-banks-1519580769


18

Then there are wind power and hydro-power which can as well be harnessed in order to supplement the need. In coastal areas, the wind power can be a viable option. But there is need for transfer of technology in this regard. Bangladesh, as one of the worst victims of carbon emission from developed countries, has the right to claim such a facility as also a substantial share of the international carbon fund. If wind and solar technologies become more efficient in generating electricity, the country should welcome those with open arms instead of opting for fossil-fuel plants. Source: http://today.thefinancialexpress.com.bd/editorial/prospect-of-renewable-energy-1519565992

RMG WAGE AND BUYERS' CHARITY The wage board formed last month for recommending wages for the workers engaged in the country's apparel industry is now doing the necessary exercise. The task before it is quite a difficult one, for the gap between the money needed to fix a just and fair minimum wage and the so-called affordability of the industry owners is very wide. The existing wages in the readymade garment (RMG) industry are not sufficient to meet even the basic requirements of the workers. The wage structure has become irrelevant if seen in the context of the current level of cost of living. The increase in rice prices is a pointer to that fact. The prices of the main staple have more than doubled since the announcement of the present wage structure. The situation with other food and non-food items remains almost identical. By any standard, the wages given to the RMG workers are too low to make a minimum level of decent living. The parties, including the government, which make decisions on the wages, are, apparently, oblivious of this fact. For instance, the government announced the salary scales for the public servants in 2015. While recommending the pay structure the relevant pay commission had surely taken into consideration the cost of living prevailing at that time. Under the present pay scale, a sweeper on the government payroll gets a gross salary of Tk 15, 250 while the minimum wage of a RMG worker is Tk 5, 300 per month. Thus, the RMG workers' future wage structure is eagerly awaited by all the relevant parties. The trade union bodies have already demanded a minimum wage of Tk 16,000 for a RMG worker. The demand, however, has been dismissed instantly by the industry owners, claiming that most RMG units would go out of business if they are made to comply with such a radical hike in wages. There is no denying that some apparel units have been paying wages more than what has been recommended officially. They are also ensuring all other facilities for their workers. But such factories are few in numbers. Overall, wages and other facilities in the sector are highly insufficient. RMG owners claim that their export earning is not enough to pay, what is called, living wage to their workers. If the RMG units are forced to pay such a wage, they would lose competitiveness in the global market and, eventually, leave the sector. But the popular perception is that RMG owners are deliberately depriving workers of their due despite having the financial strength to pay a decent wage. Such perception may either be right or wrong. There is no way of knowing the fact about the financial ability of the RMG owners. There is no denying that export performance of the RMG units varies; some are doing fine and some others are somehow surviving. But all the factory owners blame the buyers for their inability to pay higher wages. They allege that buyers, taking advantage of the cutthroat competition in the global textile market, have been offering the least possible prices for the product they procure from Bangladesh. Buyers, however, have never contested such an allegation. Why would they? They are buying from Bangladesh because low-segment apparel products are cheaper here. The products are cheaper mainly because of the availability of low-cost labour in abundance. The reasons are quite simple.

http://today.thefinancialexpress.com.bd/editorial/prospect-of-renewable-energy-1519565992http://today.thefinancialexpress.com.bd/editorial/prospect-of-renewable-energy-1519565992


19

Countries in Europe and North America are main destinations of Bangladesh garments. Buyers, who include large retail houses of international repute, often ask questions about physical safety and security of RMG workers. They became very vocal about those issues following some major industrial accidents, including Rana Plaza collapse and Tazreen fire, in Bangladesh. But these buyers hardly talk about the financial security of workers. Had they offered a bit higher prices against their purchases, the disbursement of higher wages among the RMG workers would have been possible. A vernacular national daily Sunday last ran a front page story that showed the huge gap between procurement and selling prices of apparels. It was claimed in the report that a shirt procured from a Bangladesh factory at a cost of US$10 is being sold at US$100 in Western markets. The reporter concerned quoted the owner of the RMG factory in question. In a way these profit-hungry retail houses are cheating both exporters and consumers in their respective home countries. The former could pay a little bit more for the merchandise they buy from a country like Bangladesh with a condition that the excess amount must be used for hiking wages of workers or for their welfare. They might react saying, 'we are doing business not philanthropy'. In fact, they are unlikely to utter anything like that, for they know the implications. Source: http://today.thefinancialexpress.com.bd/editorial/rmg-wage-and-buyers-charity-1519566071

MAKING BANKS AND NBFIS CODE OF CONDUCT COMPLIANT There are opinions that ethical failures and lapses in banking supervisions are becoming common because the people involved rarely face criminal charges. Perceptions on regulatory implications for restricting financial crimes and improving ethical practices are changing over time. A recent study on ethical behaviour of individuals indicates that voluntary regulation produced more unethical behaviour compared to conditions of no regulation or full regulation. In addition to reducing their size and finding new ways to enforce anti-fraud rules, banks should consider encouraging their employees to report incidents of misconducts anonymously. By doing so, banks can detect frauds at an earlier stage, thereby minimising the risks of banking crimes and retaining the trust of public. The tone set by the board and senior management is a key to driving an organisation's crusade against financial crime. Senior bank officials need to set accountability standards, establish policies and controls, and to promote transparency by working closely with regulators. They should provide incentives for promoting compliance, and show zero tolerance toward potential internal and external risks. It is crucial to conduct behaviour change internally and externally (for clients and public) to help shape the right attitude and moral responsibilities towards financial crimes. To address the financial crime and to promote ethical practices, financial regulators and industry bodies have launched several initiatives to reduce the risk of further misconduct, by launching several reform initiatives and improving accountability and controls. In May 2015, the Future Solution for Business (FSB) launched a misconduct action plan to address these issues through a range of preventative measures, focusing on three aspects. These are; improvements to financial institutions' governance and compensation structures to reduce misconduct risk; improvement to global standards of conduct in the fixed income, commodities and currency markets, including through codes of conduct and through related regulatory and enforcement tools in wholesale markets; reforms to major financial benchmark arrangements to reduce the risks of their manipulation. Indeed, the rationale behind this action plan is based on the conviction that "the use of fines and sanctions acts as a deterrent to misconduct, but preventative approaches are also needed that can mitigate the risk of misconduct through improved market organisation, structure and behaviour of market actors."

http://today.thefinancialexpress.com.bd/editorial/rmg-wage-and-buyers-charity-1519566071http://today.thefinancialexpress.com.bd/editorial/rmg-wage-and-buyers-charity-1519566071


20

Regulatory provisions and institutional setup are crucial to addressing financial crime in the banking and financial sector of any country. Regulatory provisions associated with financial crimes can be associated with different banking activities and services, operations and institutional setup. Especially regulations and set of rules related to the issues of due diligence, internal control and compliance, defaulted credits of different types, risk management process, and money laundering are particularly relevant. As a regulatory and supervisory authority, Bangladesh Bank (BB) has several departments and units that are directly and indirectly associated with handling financial crimes and frauds in the banking sector of the country. Probably anti-money laundering (AML) is the area where most of the financial crime-related regulatory provisions were introduced in recent times. As the institutional setup, every bank of the country has an internal control and compliance department (ICCD) responsible for overseeing internal audit, monitoring and compliance issues, as required by the rules issued by the BB. Ensuring the operational independence of ICCD and internal audit function is crucial to prevent financial crime in the banks. Absence of effective internal controls can be very costly for banks as it creates the opportunity of fraudulent activities. Bangladesh Bank has specific guidelines for internal control and compliance of banks. Moreover, risk management guidelines and provision for Customer Due Diligence (CDD) are also related to the prevention of several crime issues. CDD combines the Know Your Customer (KYC) procedure, transaction monitoring based on the information and data or documents collected from reliable and independent sources. In the context of addressing money laundering, the Bangladesh Financial Intelligence Unit (BFIU) guidelines require even stringent KYC requirements. Government of Bangladesh formulated its National Integrity Strategy (NIS) as a comprehensive good governance strategy to prevent corruption and improve national integrity in all sphere of life in October 2012. The National Integrity Strategy has identified 10 government institutions and six (6) non-government institutions for implementation of its action plans for prevention of corruption and ensuring integrity. The government institutions include parliament, executive and public service, judiciary, election commission, office of the attorney general, office of the comptroller and auditor general, public service commission, ombudsman, anti-corruption commission and local government. Non-government institutions are: political parties, private sector, NGO and civil society, family, educational institutions and media. Subsequently, an NIS unit has been formed at each ministry and a National Integrity Advisory Committee has been formed with the Prime Minister as its chair. The overall purpose of a National Integrity Strategy is to provide a system of governance that creates trust among citizens. The Government has also formed ethics committee in every ministry. Code of conduct for banks and non-banking financial institutions (NBFIs) has been introduced in November 2017 to implement National Integrity Strategy (NIS) in the financial sector. Instilling integrity, high ethical standards, efficiency and responsibility in the financial sector of the country is the prime objective of introducing this code. According to the circular issued in this respect, all scheduled banks were required to prepare their own code of conduct in line with this code by December 31, 2017. After formulation and completion of all preparation, banks were required to start practising or implementation of their own code of conduct in their day-to-day activities by January 01, 2018 properly and effectively. This code is applicable for all the persons working in the banks and financial services industry of Bangladesh in the capacity of owner, director, employee, advisor, consultant, supplier and other stakeholders. After implementation of this code, it is mandatory for all the concerned persons to act in an honest, fair and legitimate manner. Source: http://today.thefinancialexpress.com.bd/views-opinion/making-banks-and-nbfis-code-of-conduct-compliant-1519565956

http://today.thefinancialexpress.com.bd/views-opinion/making-banks-and-nbfis-code-of-conduct-compliant-1519565956http://today.thefinancialexpress.com.bd/views-opinion/making-banks-and-nbfis-code-of-conduct-compliant-1519565956


21

PREPARING FOR LDC GRADUATION Bangladesh has crossed the per capita income level of $1,045 and become a lower middle-income county. The country is now in the process of graduating from the status of least developed country (LDC) to that of developing country as categorised by the United Nations (UN). The World Bank (WB) has classified the countries into three categories on the basis of level of development. These are: low-income countries (LIC), medium-income countries (MIC) and high-income countries (HIC). On the other hand, the UN has divided nations into three categories on the basis of economic and social indicators. These are: developed, developing and least developed (LDC) countries. The level of development of a country shows how advanced it is economically, socially, and culturally. Low-income countries (LICs) are defined by the classification established empirically by the World Bank each year in the World Development Report. For the current 2018 fiscal year, low-income economies are defined as those with a gross national income (GNI) per capita, calculated using the World Bank Atlas method, of $1,005 or less in 2016. In calculating gross national income (GNI) in US dollars for certain operational and analytical purposes, the World Bank uses the Atlas conversion factor instead of simple exchange rates. The method uses a three-year average of exchange rates. The borderline for a developing country being a LIC today is very close to the often quoted '2 US dollars a day per capita income' level. Apart from per capita income level, there are some other parameters to assess the status of a country: (1) Human development level: very high, high, medium and low human development, defined by the UNDP since 1990; (2) Country indebtedness: Heavily Indebted Poor Countries (HIPCs) as defined by the World Bank in the 1990s; (3) Responsibility to address climate change issues: Some countries, defined by the UN Framework Convention on Climate Change in 1992; (4) State of governance: Fragile States (FS), which replaced the category Low-Income under Stress (LICUS); (5) Specific geographical features: Small Island Developing States (SIDS); (6) Landlocked Developing Countries (LLDCs) put forward by the United Nations, and (7) Access to and weight in international trade: Small and Vulnerable Economies (SVEs) defined by the WTO in 2002. A country should have a per capita gross national income (GNI) below the ceiling ($1,005 or less in 2016) used by the World Bank to be eligible for International Development Association (IDA) assistance. The 2017 List of Low, Lower-Middle, and Upper-Middle income economies includes: Low-Income Economies ($1,025 or less) are Afghanistan, North Korea, Ethiopia, Nepal etc, Lower; Middle-Income economies ($1,026 to $4,035) are Bangladesh, India, Sri Lanka, Bhutan, Cambodia, Philippines, Indonesia etc. and Upper-Middle-Income Economies ($4,036 to $12,475) are Algeria, Argentina, Belarus, Iran, Romania, South Africa, China, Thailand, Cuba, Maldives etc. LDCs are low-income countries confronting severe structural impediments to sustainable development. They are highly vulnerable to economic and environmental shocks and have low levels of human assets. The LDC status is given to countries by the UN Social and Economic Council (ECOSOC) based on three interrelated criteria which evaluate the income of a country as well as its structural handicaps for sustainable development. In order to graduate from LDC to developing country, the gross national income should be GNI per capita US$1,230 or above, human asset index (HAI) 66 per cent or above and economic vulnerability index (EVI) 32 or below. The standard GNI of a country should be US$ 1230 for graduating from the LDC group which, in case of Bangladesh, is now US$ 1272 according to Centre for Policy Dialogue (CPD) and US$ 1271


22

according to the Bangladesh Bureau of Statistics (BBS). The standard of human assets index of a country needs to be 66 or above for elevation from LDC status which is 72.8 according to CPD and 72.9 according to the BBS for Bangladesh. In case of EVI, the standard index is 32 or less which is 25 in Bangladesh according to the CPD and 24.8 according to the BBS, meaning Bangladesh is much ahead of the standard index in all aspects. After a country is recommended for graduation from LDC status, it enters a transition period to prepare for graduation, which normally takes three years. During this transition period, the country holds the LDC status and as such, is fully entitled to all benefits associated with the category. Specific tools exist to support graduating LDCs. These criteria are reviewed every three years by the Committee for Development Policy (CDP) from the United Nations Development Policy and Analysis Division (UNDESA). Their distinctiveness lies not only in the acute poverty of their people, but also in the weakness of their economic, institutional, and human resources combined with geophysical handicaps. The GNI per capita provides information on the income status of a country. GNI is equal to the gross domestic product (GDP) less primary incomes payable to non-resident units plus primary incomes receivable from non-resident units. The GNI measure used by the CDP is expressed in current United States Dollars. Values are expressed in current United States dollars, calculated according to the World Bank Atlas method and reflect an un-weighted average of three years. The Human Asset Index assesses the human capital of a country. It is an aggregated index of four equally weighted criteria of (a) under 5 mortality rate, (b) percentage of population undernurished, (c) gross secondary enrollment ration, and (d) adult literacy rate. The EVI is a composite index made of several indicators which are all measured and aggregated using the same min-max procedure as for the HAI but with different weights by indicator. EVI indicators assess the economic and agricultural vulnerability of a country and therefore higher the EVI, greater the vulnerability and worst the situation of the country. The idea of the EVI is to establish indicators expressing the occurrence of shocks, both economic shock and natural shocks. As countries differ with regard to how exposed they are to shocks there are also indicators expressing the exposure to shocks. The EVI comprise currently the following indicators: instability of exports of goods and services, instability of agricultural production, population size, share of agriculture, forestry and fisheries, merchandise export concentration, homelessness due to natural disasters, etc. In 1970, the International Development Strategy for the second United Nations Development Decade acknowledged the existence of a group of countries that required special attention and help. There are currently 47 countries in the LDC category - 33 in Africa, 13 in Asia and the Pacific and 1 in Latin America. A string of benefits are granted for an LDC country by the development partners. The benefits fall into four main areas: (a) preferential market access; (b) special treatment regarding World Trade Organisation (WTO)-related obligations; (c) official development assistance (ODA) and other forms of development financing; and (d) technical cooperation and other forms of assistance. The status of developing country raises prestige of a country but at the same time it deprives the country of LDC benefits in phases. Bangladesh needs internal reform and capacity building to finance its own development programmes and to become self-dependent. Source: http://today.thefinancialexpress.com.bd/views-reviews/preparing-for-ldc-graduation-1519566412

WHEN MONETARY POLICY BECOMES SUBORDINATE TO FISCAL POLICY The Dow Jones Industrial Average's recent "flash crash," in which it plunged by nearly 1,600 points, revealed just how addicted to expansionary monetary policy financial markets and economic actors have become. Prolonged low interest rates and quantitative easing have created incentives for

http://today.thefinancialexpress.com.bd/views-reviews/preparing-for-ldc-graduation-1519566412http://today.thefinancialexpress.com.bd/views-reviews/preparing-for-ldc-graduation-1519566412


23

investors to take inadequately priced risks. The longer those policies are maintained, the bigger the threat to global financial stability. The fact is that ultra-loose monetary policy stopped being appropriate long ago. The global economy - especially the developed world - has been experiencing an increasingly strong recovery. According to the International Monetary Fund's latest update of its World Economic Outlook, economic growth will continue in the next few quarters, especially in the United States and the eurozone. Yet international institutions, including the International Monetary Fund (IMF), fear the sudden market corrections that naturally arise from changes in inflation or interest-rate expectations, and continue to argue that monetary policy must be tightened very slowly. So central banks continue to postpone monetary-policy normalisation, with the result that asset prices rise, producing dramatic market distortions that make those very corrections inevitable. To be sure, the US Federal Reserve (Fed) has moved away from monetary expansion since late 2013, when it began progressively reducing and ultimately halting bond purchases and shrinking its balance sheet. Since the end of 2015, the benchmark federal funds rate has been raised to 1.5 per cent. But the Fed's policy is still far from normal. Considering the advanced stage of the economic cycle, forecasts for nominal growth of more than 4.0 per cent and low unemployment - not to mention the risk of overheating - the Fed is behind the curve. Other advanced-economy central banks, still stuck in extreme crisis mode, are doing even worse. Neither the Bank of Japan (BOJ) nor the European Central Bank (ECB) has provided any indication that it is set to tighten monetary policy, even though economic conditions today are totally different from those that prevailed during the crisis and subsequent double-dip recession in the eurozone. The ECB, in particular, defends its low-interest-rate policy by citing perceived deflationary risks or below-target inflation. But the truth is that the risk of a "bad" deflation - that is, a self-reinforcing downward spiral in prices, wages, and economic performance - has never existed for the eurozone as a whole. It has been obvious since 2014 tha

daily news flash, 26th february, 2018 - eblsecurities.com · the daily star books and the cpd...

Documents