At Capital Weekly 25 January 2009

25 January 2009 AT CAPITAL RESEARCH
AT Capital Weekly Update
Key themes in this issue are:

Bangladesh Overview:

• We review the Asian Development Bank (ADB) economic and political update for

Bangladesh. They are modestly more bearish than Bangladesh Bank in forecasting FY 09
GDP growth slowing to 5.7%. However, they are far less pessimistic than the World
Bank’s equivalent forecast of 4.8%.
•
Weekly News Update
Perhaps the biggest risk for Bangladesh is the speed at which the global economy in
general, and China in particular, is slowing.
• We discuss some current analysis that suggests that Chinese Q4 GDP growth estimates of
6.8% are grossly over‐optimistic. A number of private forecasters suggest that the

manufacturing sector is already in recession and the overall economy barely expanded.

• Japanese exports to China have collapsed while Chinese electricity demand is also
contracting.
• The recent comments from Treasury Secretary Geithner in his Congressional ratification
hearings warning China against manipulating the Yuan, underlines US fears that China will
try and depreciate their way out of crisis.
• The global banking crisis has also re‐surfaced with Barclays bank stock price falling almost
75% in 2 weeks, RBS announcing a USD 41bn loss for 2008, the largest in UK history, and

Bank of America leading the way lower among US financials, triggering the resignation of

ML CEO John Thain.
• Bangladeshi exports have been resilient but the authorities need to keep a close watch
on demand and margin pressure given the rapid speed of the slump in global demand.

Special Focus:
• This week we discuss the progress made by Bangladesh in terms of regulatory reforms.
• In addition we review the country’s performance with respect to The World Bank “Doing
Business” Survey which suggests Bangladesh still needs to push ahead with making the

EDITORS regulatory environment more business friendly.

• We also summarize some of the key findings from a recent IFC‐BICF survey of private
sector attitudes towards the reform process started by the recent Caretaker
Ifty Islam Government, and expectations from the New Government.
Asian Tiger Capital Partners
Managing Partner • Finally we review some of the recent literature on Regulatory Impact Assessment (RIA)
ifty.islam@at‐capital.com
and conclude that it should be incorporated into Bangladesh’s regulatory reforms

Syeed Khan initiative.

Partner
syeed.khan@at‐capital.com

Jisha Sarwar
Senior Research Associate Collapsing Chinese Electricity Demand Suggests Manufacturing Sector
jisha.sarwar@at‐capital.com

Asian Tiger

Capital Partners

UTC Building, Level 16
8 Panthapath, Dhaka‐1215
Bangladesh
Tel: 8155144, 8110345
Fax: 9118582

www.at‐capital.com


Contents Page

Bangladesh Overview 3
ADB sees modest risks for a growth slowdown 3
ADB highlights the need to encourage private investment in infrastructure 3
Biggest vulnerability to ADB forecast for Bangladesh GDP growth is a rapid move towards recession in rest of Asia 3
The Global Banking Crisis Part 67 4

Special Focus: The Need for Reforms 5

Stock Market Weekly 13
Weekly Stock Market Commentary 14
Stock Market News 15

Economics 17
Economics News 18

20
Sector News
Agriculture/ Aviation 20
Banking/ Infrastructure & Energy 21
Leather Goods 22
Pharmaceuticals / Shipbuilding/ Telecoms 23
Textiles 24

_______________________________________________________________________________________
AT Capital Weekly Update 2


Ifty Islam, Managing Partner

FY2009 is expected to show a modest surplus of 0.8% of GDP.
Bangladesh Overview Foreign exchange reserves during the year are expected to remain
at a relatively comfortable level equivalent to about 3 months of
The ADB published a Political and Economic Update last week that goods and services imports.”
briefly outlined their thoughts on the risks for the economy as
well as policy challenges. ADB highlights the need to encourage private investment in
infrastructure
ADB sees modest risks for a growth slowdown

The ADB noted that “(one of) The key challenges for the new
The ADB noted the following on the resilience of the Bangladesh
Government over the longer term will be to raise infrastructure
economy in the first half of FY09, which is over the past 6 months:
investment and government revenue mobilization, accelerate
“Economic performance in the first half of FY2009 held up well
Annual Development Program implementation, address
with a pick up in domestic economic activity and robust growth in
deficiencies in institutional capacities in key line agencies, and
exports and remittances. Continued growth in readymade
create more jobs. Addressing power and gas shortages will be
garment production, together with improvements in business
critical to encourage private investment to enhance longer‐term
confidence and recovery in housing and construction, stimulated
growth prospects. Confrontational politics, if it reappears with the
industrial activity in the first quarter of FY2009. Falling prices of
restoration of democracy, will also slow down economic activity. “
construction materials and a rise in demand for real estate

because of the growth in bank credit and higher remittances
Biggest vulnerability to ADB forecast for Bangladesh GDP growth
helped to revive the construction subsector. Services, especially
is a rapid move towards recession in rest of Asia
wholesale and retail trade and transport and telecommunications,

also performed well in the first quarter of FY2009. Rapid growth in
We believe that the official forecasts of the ADB and other
the mobile phone market and a growing number of healthcare
multilateral agencies are lagging the dramatic speed of the slump
service providers are contributing to robust service sector growth.
in demand conditions in the rest of Asia.
The continued expansion in agriculture and industry is also likely

to have a positive impact on services sector growth. Exports grew
The Chinese came out recently with their 6.8% estimate of Q4
by 27% through November 2008 and remittances by 31% through
2008 growth. China publishes its quarterly GDP figure on a year
December 2008, over the corresponding periods of the previous
over year basis, differently from the U.S. and most other countries
fiscal year. “
that publish their GDP growth figure on a quarter over quarter

annualized seasonally adjusted (SAAR) basis. When growth is
Looking ahead the ADB only saw growth slowing modestly, with a
slowing down sharply the Chinese way to measure GDP is highly
far less bearish forecast than the World Bank, given that the latter
misleading as quarter on quarter growth may be negative while
forecast growth for the whole of FY 09 at 4.8%. The ADB
the year over year figure is positive and high because of the
suggested that: “Before the onset of the global financial crisis, a
momentum of the previous quarters’ positive growth.
6.5% growth target for FY2009 appeared attainable. With the

financial crisis in the advanced economies unfolding and recession
Indeed if one were to convert the 6.8% y‐o‐y figure in the more
setting in, a growth rate of 5.8% seems more likely in FY2009.
standard quarter over quarter annualized figure Chinese growth in
Industrial growth is expected to moderate to 6.7% from 6.9% in
Q4 would be close to zero if not negative.
FY2009 as production for exports begins to slow in the second half

of the fiscal year with cooling global demand. Deceleration in

remittance growth will also dampen domestic demand. Services

growth will slow to 6.2%, down from 6.7% in FY2008, due to lower

activities in the export sector and declines in consumption

spending induced by lower income and moderation in remittance

growth. Agriculture is expected to perform well, aided by

favorable weather conditions, expansion of cultivable land, and

various government support programs. Overall, agriculture is

expected to grow at 4.0%, up from 3.6% in FY2008.”

On the trade and remittance outlook, the ADB remained quite
positive: “The external position should also remain stable with
annual export growth projected to be 16.5% in FY2009, still higher
than the 15.7% growth in FY2008. Further, the fall in international
commodity prices is expected to contain growth in the import bill, Other data confirm that China was in a borderline recession in Q4
which is projected to moderate to 18.0% in FY2009. Although and that it may be in an outright recession in Q1: production of
growth in remittance inflows will also slow, the current account in electricity plunged 7.9% on a y‐o‐y basis; the Chinese PMI has
been below 50 and close to 40 for five months now.

_______________________________________________________________________________________

With manufacturing being about 40% of GDP, manufacturing is
certainly in a sharp recession (negative growth) and the overall
economy may be close to a recession

So the 6.8% growth was actually a 0% growth – or possibly
negative growth – in Q4; and the Q1 figures look even worse. So
China is in a recession regardless of what the highly massaged
official numbers claim.

Albert Edwards, Chief Global Strategist at Societe General, and a
well known China bear, has suggested that the Chinese
manufacturing sector is already contracting. He stated that : “That
this outturn (Q4 Chinese GDP of 6.7%) was bang in line with the
median estimate of economists surveyed by Bloomberg makes it
all the more unbelievable in my mind. All other economic data
worldwide have been surprising massively on the downside and
China should be no exception. A few hours earlier, for example,
South Korea reported Q4 GDP had declined a hefty 5.6% QoQ,
massively worse than a Reuter’s consensus which looked for a
contraction of 2.7%! I naively thought that this QoQ decline was
already annualized, but it was not. On a US style of reporting, the
South Korean economy contracted at a 20% annualized rate in Q4.
Asia is in depression. Whatever the heavily manipulated Chinese
GDP is telling us, that economy must now be contracting. The
Yuan needs to be devalued...we cannot highlight strongly enough
how truly mindboggling Japan’s collapse in exports to China are.
Last July they were expanding at a 16% yoy pace. Now they are
contracting at a 35% yoy rate! This is a phenomenon throughout
the region. Hence despite the notoriously manipulated Chinese
GDP data showing a shocking slowdown in GDP growth to 6.8%
yoy, I would eat my hat if the Chinese economy was doing
anything other than contracting right now.” Global Markets Last Week – Oil Bounce Appears Unsustainable
given Weak Global Economy

The Global Banking Crisis Part 67

Bank stocks came under severe pressure last week with Bank of
America leading the charge lower in the US and Barclays playing
the rabbit in the headlights in the UK. The charts below from
Bespokeinvestment.com highlight just how extreme the
downwards re‐pricing of the financial sector of the S&P 500 has
been. The first chart below dates back to 1990, and as shown, the
sector closed at its lowest level since March 1995 yesterday. The
sector is now down 79% from its highs in 2007. A chart of the
sector all the way back to 1940 shows just how much the sector
has fallen in such a short period of time.

_______________________________________________________________________________________


Michael Klein, World Bank Group vice president and IFC chief
Special Focus economist stated that “The [Doing Business] report finds that
equity returns are highest in countries that are reforming the
Need for reforms most. Investors are looking for upside potential, and they find it in
economies that are reforming—regardless of their starting point.”
The need for business reforms has become vital with the
realization that the private sector is a key driver of inclusive In a recent Daily Star article on regulatory reforms, Anwarul Islam,
economic growth and poverty alleviation. In Bangladesh, reforms a member of the Regulatory Reform Core Group representing
that aim to simplify business regulations, strengthen property Bangladesh Bank, wrote:
rights, open access to credit, and enforce contracts are necessary,
since all these measures can help aid the creation of enterprises “There are two things we [Bangladesh] need to address
that provide employment and economic growth. immediately. One is to introduce RIA process for new
rule/regulation at the ministry/agency level. Another is to give
Although Bangladesh did enact a number of key regulatory RRC an institutional and permanent shape, preferably through
reforms, such as reducing the time needed to register property by enactment of law. All the country's primary and secondary laws,
almost half, its ranking in World Bank’s “Doing Business 2009” including the proposed one, should be required to be cleared by
th th
report nonetheless fell from 104 in 2007 to 110 in 2008. “Doing the RRC, whatever name we shall call the body. This will definitely
Business” ranks economies based on 10 indicators that track the improve governance standard in our country. With better
time and cost to meet government requirements in starting and international credibility and improved regulatory consistency and
operating a business, access to credit , trading across borders, predictability, we can become one of the most attractive
paying taxes, and closing a business. The rankings do not reflect investment hubs in Asia.”
such areas as macroeconomic policy, quality of infrastructure,
currency volatility, investor perceptions, or crime rates. Doing We agree with Mr. Islam that a permanent Regulatory Reform
Business 2009 ranks 181 economies on the overall ease of doing Commission (RRC) and an RIA process are two requirements for
business. The top five are, in order, Singapore, New Zealand, the creating an effective, transparent, and predictable regulatory
United States, Hong Kong (China), Denmark, the United Kingdom. system, which will in turn enhance the country’s investment/
business climate and ultimately drive economic growth.
According to the report, Bangladesh enacted reforms in starting
Businesses and in registering Property. Bangladesh cut the time In the following sections we discuss results from the “Doing
needed to register property by almost half, from 425 days to 245, Business 2009” report published by the World Bank, which shows
through reforms at the Municipal Deed Registry Office. Starting a that although there have been successful reforms on several
business has also become easier. Bangladesh made involving fronts in Bangladesh, major business reforms are still needed, and
lawyers in company registration optional. That eliminated one the RRC needs to play a strong role in implementing these
procedure and reduced the cost by USD 100. The country also did reforms. We also emphasize on the need to develop an RIA
well in terms of "strength of investor protection index" and process immediately for improving the quality of new and existing
"strength of legal right index", the report said. regulations.

However, compared to international best practices, Bangladesh World Bank “Doing Business 2009” report shows that
still has a long way to go ‐ the country needs 73 days in starting a major reforms still needed
business, 231 days in dealing with construction permits, 245 days
in registering property, 302 hours per year in paying taxes, 28 days Despite the steps taken by the RRC to modernize and simplify the
in export and 32 days in import. As a result, among the eight regulatory system in Bangladesh, the country still needs major
South Asian countries Bangladesh's doing business ranking is improvement on several fronts that will ultimately help in creating
fourth followed by the tiny Maldives, Pakistan and Sri Lanka but a dynamic business environment leading to inclusive economic
ahead of giant India, Nepal, Bhutan and Afghanistan. growth.

Source: World Bank

_______________________________________________________________________________________

Bangladesh is ranked 90 in the overall ranking for starting a has remained stagnant, while in South Asia as a whole, there has
business compared to good practices. It requires 7 procedures, been a significant improvement in the availability of credit
takes 73 days, and costs 25.67 % GNI per capita to start a business information since 2008.
in Bangladesh. Procedures such as verifying the uniqueness of the
proposed company name with the Registrar of Joint Stock
Companies and Firms, filing documents with the Registrar of Joint
Stock Companies and Firms for registration, registering with the
tax authority and for VAT, should all be simplified in order to ease
the process of starting up a business.

Dealing with construction permits is also an arduous process in
the country ‐ It requires 14 procedures, takes 231 days, and costs
739.81 % GNI per capita to build a warehouse in Bangladesh.
Obtaining project clearance and building permit from the City
Development Authority (RAJUK), obtaining zoning clearance,
receiving foundation inspection and electricity inspection, are
some of the procedures that need to be simplified in order to IFC‐BICF stakeholders’ opinion survey shows there is
enhance the overall ease of doing business in the country. overwhelming support for reforms

It is evident from the “Doing Business 2009” report findings that
Bangladesh is still lacking behind in a number of areas compared
to global practices, which can use major reforms and
improvements. Along with specific regulatory reforms pertaining
to businesses, such as simplifying procedures for obtaining
construction permits, accessing credit, trading across borders,
enforcing contracts, reforms in areas of education, corruption,
energy, infrastructure, are also mandatory in order to attain
higher economic growth.

IFC‐BICF conducted a stakeholders’ survey in 2008 (from
September to November) in order to analyze how economic and
business conditions affect different groups of stakeholders.
Stakeholders include citizens, opinion leaders/ elites, businesses,
Although Bangladesh ranks low at 175 (after Pakistan, India, and public officials. The objectives of the surveys were mainly to
Afghanistan) in registering property compared to global best understand:
practices, it has simplified the number of procedures needed to
register property, time required to register property, and official ‐what are the key perceptions and attitudes of the stakeholders
costs to register property. The time needed to register property toward economic and business environment in Bangladesh
has been cut by almost half, from 425 days to 245, through ‐What are the views of the stakeholders about economic and
reforms at the Municipal Deed Registry Office. Simple procedures business reforms in Bangladesh
to register property are associated with greater perceived security ‐How confident are the stakeholders about the economy and
of property rights and less corruption. business environment in Bangladesh, and how does their level of
confidence change over time
‐How does the knowledge and attitude of the stakeholders about
economic and business reform issues change over time.

The surveys were broken down into three categories –
Stakeholders’ Perception Survey (SPS), Business Confidence
Survey (BCS), and Public Perception Survey (PPS). With a fairly
large sample size, the survey was the first of its kind in
Bangladesh. Below are some key findings from the survey results.

Perceptions of current business environment

A majority of the stakeholders said that the country's economic
situation deteriorated in September 2008 but saw improvements
in October 2008. This was mainly because high prices of
commodities and essentials were a concern in September 2008
Bangladesh’s ranking for getting credit has fallen from 51 in the but some improvements were seen in October 2008 – in the SPS
2008 Doing Business report to 59 in the 2009 report. The credit survey conducted in September, when asked about some of the
information index in the graph below shows that over the past leading concerns in the economy, 83% of opinion leaders and 84%
three years the level of credit information available in Bangladesh of the general population surveyed had high prices on the top of
_______________________________________________________________________________________

their list of concerns, followed by jobs and employment, Overwhelming support for reforms across all groups of
corruption, electricity, lack of democracy, crime and terrorism, stakeholders
education, etc.
When asked how much the stakeholders have heard about
Majority of the Stakeholders view Bangladesh’s economic business reforms, 85% of ordinary citizens and 66% percent of
situation is worse than before (SPS, Sept 08) opinion leaders responded by saying that they heard “nothing at
Som ewhat worse all” about reforms; 8% of ordinary citizens and 20% percent of
140 Much worse opinion leaders said that they had “some” idea about business
120 Som ewhat better reforms. Although both the general population and the elite group
Much better do not know or hear much about reforms, their support for
100
reforms is overwhelming – 84% of opinion leaders and 76% of the
83
80 81 general population surveyed feel that reforms are necessary for
73
60 their own economic betterment.

Reforms are necessary for the stakeholders (SPS, Sept 08)
40

20 21
32
42
34 N e ce ssary
13 16
0 2 2 0 N ot ne ce ssary
84
General Population Opinion Leaders SME/Micro 90 76
80
70
60
Similar to the economic situation, the country’s business 50
environment is also viewed as unfavorable, and the situation is 43 00 24
not expected to improve anytime soon either. 20 16
10
Majority of the businesses view their overall situation is worse
0
today than 3 months Ge ne ral Population O pinion L e ade rs

In your opinion, what is the overall situation of your business
today compared to 3 months ago?

Worse 38% 11%
An interesting finding was that reforms in the agriculture sector is
given a lot of importance, especially by the general population –
56% of the general population and 31% of opinion leaders stated
Unchanged 35% that the agriculture business climate needs improvement.

Most important reforms (SPS, Sept 08)

Regardless of which type of reforms the government has been working on, in your
Better 16% 2% opinion, which two of the following areas is most important to reforms?

37
Education
31
0% 20% 40% 60% 35
Corruption 29
Moderately Better Substantially Better Moderately Better Substantially Better
32
Political
25
31
The business confidence survey revealed that there was a Agriculture
56
29
complete reversal in the investment situation in the first quarter Business 27
of FY 2008 compared to the corresponding period of 2007, due to Crime & Terrorism 13
22
a declining profit margin and a shortage of raw materials. Constitutional
4
13
Infrastructure 4
10
Sixty two % of respondents during the survey said they did not 0 10 20 30 40 50 60
invest during July‐September of 2008 while only 38 % replied in
Opinion Leaders General Population
the affirmative.

Declining profit margin and shortage or raw materials are the Support for particularly business reforms was expressed by both
leading constraints for lack of investment (BCS, Oct‐Nov 08) opinion leaders and ordinary citizens during the surveys

% of Firm s When asked why they support business reforms, a large number
70 61 of stakeholders responded that a better business environment will
60 52
50 38
create more job opportunities and will help in controlling
40
30 20
26 28 28 29 inflation. High prices are still a major concern, and so, many
20 believe that a good business climate will ultimately help in
10
0 lowering prices of essentials.

_______________________________________________________________________________________


Extent to which citizens agree with the statement that business Some key obstacles faced by the SME/ micro entrepreneurs (SPS,

reforms are much needed in Bangladesh Sept 08)

120 O w n fe ar o f failu r e 43
96
100 86
L e arn in g h o w t o d o b u sin e ss 34
80 L ack o f acce ss t o lo ans 21
Go ve r n m e n t re gist r at ion p ro ce ss 12
60 Pr e ssu r e fr o m fam ily, frie n ds 11
40 Go ve r n m e n t co r r up t io n 10
20 12 V alu e add e d t ax (V A T) 4
2 1 3
0 In co m e t ax 3
I n t e r act io n w it h tax o fficials 1
Agree or strongly agree Disagree or strongly Don't know/Refuse
disagree
0 10 20 30 40 50

Ordinary Citizens Elite Groups

RRC’s efforts for modernizing the country’s public
Survey results show that the general population and opinion administration
leaders want a greater focus on SMEs

The Regulatory Reform Commission was formed by the caretaker
The Business Confidence Survey results show that the business
government in October 2007, upon realizing that it is imperative
condition of SMEs was worsening in the last quarter of calendar
to modernize public administration and simplify legal and
year 2008 – 16% of small companies said their situation became
procedural complexities, in order to create the right enabling
“substantially worse” in October, compared to 8% of medium
environment for foreign as well as domestic investment. The
companies and 3% of large companies. That SMEs need a greater
commission consists of four sub‐committees, within which one is
attention was also emphasized by both the general population
working on utility service related reforms, and one for land
and opinion leaders during the survey – a significant 62 % of the
registration and related reforms. The RRC is responsible for
general population, and 61% of opinion leaders stated during the
reviewing and updating all government regulations totaling to
survey that the government should focus more on helping small
about 50,000, many of which are decades old but still being used
and medium enterprises.
today – the commission is removing all redundant and inefficient

regulations, and is identifying those regulations that should be
SMEs have long been considered as the principal driving force of
modified or left unchanged, simplifying certain government forms,
Bangladesh’s economy. Along with stimulating private ownership
and is reducing the time required to process applications and
and entrepreneurial skills, SMEs are flexible and can adapt quickly
licenses by government departments. (Please refer to Appendix 1
to changing market demand and supply situations, generate
to see some of the key recommendations made by the RRC)
employment, help diversify economic activity, and make a

significant contribution to exports and trade. At a time such as
One of the important recommendations the RRC made was for the
now, when the economy is vulnerable to the adverse affects of
Directorate of Land Registration to be transferred from the Law
the global financial crisis, boosting the SME sector, known as the
Ministry to the Ministry of Land to allow a "one‐stop service" for
economy’s thrust sector, is absolutely imperative. Thus
land registration. However, this recommendation is yet to be
improvements in areas such as access to loans, training on how to
implemented due to complexities related to the High Court.
start up businesses and procedures required, and registration

processes, are necessary in order to encourage SMEs to grow.
However, a number of recommendations have been implemented

successfully. Following RRC recommendations, the Government

Attention needed on SME versus large companies (SPS, Sept 08)
started to publish gazette notifications on its website and started

developing a new website incorporating all previous gazettes. The
The Government should be focus more attention on helping small and medium enterprises
RRC suggested that all proposed regulations must be published in

The Government should be focus more attention on helping large companies draft form for feedback from civil society members before

finalization.

70 62

61
The commission recommended online registration with the BoI,
60
uniform fees or charges for registration of investment projects
50
and reforms in the BoI. A consultant was appointed for starting
40 34 online registration and the BoI took the issue of uniform fees into

30 24 consideration.

20
The commission proposed that Bangladesh Bank should be able to
10
make decisions regarding private sector foreign loans without
0
informing the BoI. In August 2008, the Chief Adviser's Office
General Population Opinion Leaders during the Caretaker government directed the BoI and the BB to
implement this within two months.

_______________________________________________________________________________________

The RRC suggested legalization of "courier service" in the country, stakeholders. Even where consultation takes place, this is often
by amending the Post Office Act 1898. The Ministry of Post and inadequate and the feedback is not adequately incorporated in
Telecommunications have implemented this. the framing of the regulations. This creates major uncertainty
regarding the effectiveness of the regulations. RIA examines and
RRC’s recommendation for reducing the time of giving location measures the likely benefits, costs and effects of new or changed
clearance and environment clearance certificates was accepted regulations. It provides decision‐makers with valuable empirical
and implemented. data and a comprehensive framework which they can use to
assess options and the consequences their decisions may have.
The government has also implemented the recommendation RIA is used to define problems and to ensure that government
regarding bonded warehouse licensing processes. action is justified and appropriate.

Although the RRC has made over 30 recommendations and has RIA aims to improve the regulatory environment by:
sent them to the ministries for immediate implementation, the I. Building a regulatory management system–Regulate the
implementation process has not been successful in all cases. Red‐ regulators through transparency and accountability mechanisms
tapism, bureaucratic complexities and some pending cases in the (laws, policies, institutions, enforcement, etc.)
High Court have hindered the progress of the reforms, apart from II. Improving the quality of new regulations–Control of the flow
a few. It has also been reported that some ministries have not (RIA, consultation, alternatives, co‐ordination, etc.)
cooperated with the RRC. According to The New Nation, a local III. Upgrading the quality of existing regulations – Control of the
daily, the RRC selected 202 laws and regulations for review and stock (deregulation, up‐dating, codification and restatement,
amendment, and drafted their synopsis. In order to do this, the formalities, etc.)
RRC sent notifications to 47 ministries or departments back in
November 2007. However, only nine ministries or departments RIA has been widely used in OECD countries, and is increasingly
responded to RRC's request for assistance and cooperation. being used in developing countries also. Around 40 countries have
introduced RIA including 90 % OECD countries, while about 20
Need to adopt Regulatory Impact Assessment (RIA) developing countries are implementing or actively exploring the
as a tool to improve regulatory environment scope to establish RIA.

The Rise in RIA
In a recent Financial Express article regarding the need for

introducing RIA to the regulatory system in Bangladesh, Syed

Akhtar Mahmood wrote:

“We often talk about streamlining the existing stock of

regulations. This is indeed a top priority. But we also need to think

about the quality of new regulations. If the flow of new

regulations is of poor quality, the stock will remain bad. It is like

cleaning the water in a swimming pool. No use doing that if you

cannot ensure that the new water flowing in is also clean.

So how do you ensure this? The answer lies in introducing a

process whereby new rules and regulations, at least the important

ones, are subjected to an impact analysis. The idea of an impact

analysis is not novel in Bangladesh. When a government agency

does a project, say a road, a hospital or a power transmission line, Source: Jacobs & Associates

it is required to carry out a cost‐benefit analysis and justify the

planned investment. The Planning Commission then reviews the
RIA reduces regulatory burdens
analysis, and approves or rejects the project. Whether these

exercises are done properly is of course a matter of debate ‐
The chart below shows that the RIA process is extremely
Bangladesh is replete with examples of projects that were done
comprehensive. Internally, it is the key mechanism for assessing
on purely political considerations with little analysis of the costs
the impact of new or existing regulations, and thereby reducing
and benefits to society. But the rules of business of the
duplicative and contradictory policies. Also RIA helps to identify
government do require such analysis.”
possible difficulties and shortcomings during the implementation

and enforcement phase of regulation. Externally, RIA promotes
While it is definitely a priority to remove redundant regulations
regulatory transparency and accountability of administration
and update the existing ones, the quality and effectiveness of new
through consulting with stakeholders and incorporating their
regulations also need much attention. In short, Regulatory Impact
suggestions. As its use expands, RIA can help define which
Analysis (RIA) aims to improve the quality of regulations,
government actions are suited to a market economy.
regulatory institutions and regulatory systems. It is basically a

systematic process of evaluating the cost and benefits of

regulations.

In Bangladesh, new rules and regulations are often introduced

without any prior notice or consultation with relevant
_______________________________________________________________________________________

reviewed and the new regulation being developed and regulation
mapping, i.e., the mapping of relationship between the regulatory
proposal in question and the existing regulations relating to it,
cost‐benefit‐analysis of alternatives to the regulation in question.
The ministry concerned must gather public opinions during the
stipulated 20‐day notice and comment period and report the
results of its review to those who provided inputs on the relevant
regulatory proposals.”

Other countries in Asia which have started to experiment with RIA
are Vietnam, China and Sri Lanka. Vietnam recently launched a
prototype RIA for helping the government reform two key laws:
The Unified Enterprise Law and the Common Investment Law. In
Sri Lanka, the Institute of Policy Studies together with the
Manchester Center for Regulation and Competition, initiated a RIA
Working Group where public officials and academic participate on
the development of a RIA system for the country.

Launching RIA in Bangladesh
Source: presentation made at CRC by Prof. David Parket at the University of

Manchester
Efficient and business–friendly governance requires the modern
methods and tools of the RIA process. Although there does exist a
International experience of using RIA review process in the government of Bangladesh for new laws,
rules and regulations, it merely ensures that the proposed rules
More than half of the OECD governments and many Eastern and regulations are consistent with the existing ones. But the RIA
European countries in transition have been successfully using RIA undertakes more than just that, as it analyzes the impact of
tools in regulatory decisions. The OECD reference checklist for proposed rules and regulations. If Bangladesh wants to become
regulatory decision‐making is elaborated in Appendix 2. In Asia, one of the most attractive investment hubs in Asia, business
the use of RIA is still a growing concept, but is nonetheless being regulations need to be predictable and useful, and this can only be
used in several countries. A survey organized by the Centre on done by introducing an RIA process to the regulatory system.
Regulation and Competition (CRC) at the University of Manchester
in 2003 ‐2004, indicated that at least nine Asian countries have Suggestions for effectively developing an RIA system in BD:
developed elements of a modern RIA: India, Jordan, Korea,
Malaysia, Oman, Pakistan, the Philippines, Sri Lanka, Thailand. - It will be useful to have a program of regulatory impact
analysis (RIA) within various ministries, monitored by an
Among these countries, the Philippines, Malaysia, and Korea have independent body overlooking all the RIA programs. Hence,
made significant progress. Philippines established RIA as a legal all new laws and regulations that are passed through each
requirement, though the government had not published the ministry should be justified through basic cost benefit
implementing regulations and guidelines. In practice, the analysis. In order to enact this, all ministries could be asked/
Philippines government has concentrated its RIA effort on new required to answer the basic regulatory quality questions
economic regulations ‐‐ complementing its efforts through designed by the OECD (Please see Appendix 2). The goal for
enhanced public consultation and the use of public notices and the justification should be to show that the proposed law or
invitations to comment, followed by public meetings. regulation minimizes costs to concerned businesses.

In Malaysia, elements of a RIA process have been used within the - As mentioned above, a politically neutral and independent
government, though not on a consistent and systematic way. body needs to be in place to monitor, oversee, and
Unlike in the Philippines, the Malaysian RIA, when adopted, was strengthen the RIA process. This advisory body should
applied to social and environmental regulations as well as to receive the regulatory justification statements, and consult
economic ones. In Malaysia, public consultation before the with stakeholders and the business sector, and make the
introduction of new regulations seems well developed with all suggestions public. Hence, the public should be involved
respondents in agreement. extensively in the process ‐ interest groups should be
consulted widely and in a timely fashion. Korea is a good
Korea, which has attained remarkable economic growth partly example where public opinion is integrated into the rule
due to successful business and economic reforms, introduced RIA making process – “The RRC has conducted surveys every year
to its regulatory system in 1998. In a recent Daily Star article on to hear the public and experts' opinions on the regulatory
the Korean experience on reforms, Anwarul Islam wrote, “[In reform. The results of survey have been used as feedbacks in
Korea, RIA] enables the public officials in charge of designing setting future policy directions every year” (Anwarul Islam,
regulations to take informed decisions on how to make “Regulatory Reforms: Korean experience”, Daily Star).
regulations viable, sound and effective. Assessment areas and Consultation before the introduction of new regulations is
factors for RIA include: overview of regulation in question, imperative in creating a transparent and accountable
identifying regulated entities and stakeholders, lifetime of regulatory system.
regulation, short description of both the existing regulation being
_______________________________________________________________________________________

- Although all regulations need to be justified by a cost benefit
analysis, analytical methods can vary as long as RIA identifies
and weighs all significant positive and negative effects and
integrates qualitative and quantitative analyses. Mandatory
guidelines should be issued by the independent oversight
body to maximize consistency.

- Results of RIA must be communicated clearly with concrete
implications and options explicitly identified. A common
format should be used in order to communicate effectively.

- The independent body monitoring the RIA process should
also be in charge of guidance and training ‐ upgrading the
quality and consistency of RIA training government‐wide, and
ensuring that good practices around the world are
transmitted quickly and efficiently to civil servants.

- The private sector will play a vital role in making RIA
successful in Bangladesh. Second, business involvement in
RIA has several significant benefits in terms of improved
information. Businesspersons, especially those affected by
regulations, can constitute cost‐effective sources of the data
needed to complete high quality RIA. Consultation can also
provide important indications on the feasibility of proposals,
on the range of alternatives considered, and on the degree of
acceptance of the proposed regulation by affected parties.
Moreover, active participation by the business sector means
better compliance with the regulation and thus savings in
terms of implementation and enforcement.

- Some of the institutional methods that Bangladesh could
explore to maximize business participation in the RIA process
consist of establishing (Cordova, Cesar “Enabling
Environment and Economic Zones for Private Sector
Development in Bangladesh”)

• Expert groups, such as academic and industry groups;
• Business Test Panels organized for a particular regulation. They
can be fast, but data quality can be a problem;
• Focus groups, which can provide a wide range of data;
• Development together with the business associations of model
enterprises that “represent” the affected population;
• Opinion surveys, which can identify major issues, and in
particular repeatedly running the FIAS administrative barrier
surveys, and
• Direct interviews with businesspersons.

Ifty Islam
Managing Partner

Jisha Sarwar
Senior Research Associate
jisha.sarwar@at‐capital.com

_______________________________________________________________________________________

APPENDIX 1 APPENDIX 2

Some of the key recommendations made by the RRC and their The OECD Reference Checklist for Regulatory Decision‐Making
implementation status (as of mid 2008):
1. All gazette notifications must be published on the website, 1. Is the problem correctly defined?
which has already been implemented with technical assistance The problem to be solved should be precisely stated, giving
from Bangladesh Investment Climate Fund (BICF) ‐‐ a multi‐donor evidence of its nature and magnitude, and explaining why it has
initiative managed by the International Finance Corporation (IFC). arisen (identifying the incentives of affected entities).
2. Is government action justified?
2. All proposed regulations must be published in draft form for Government intervention should be based on explicit evidence
feedback from civil society members before finalization. The that government action is justified, given the nature of the
Ministry of Law, Justice, and Parliamentary Affairs has vetted the problem, the likely benefits and costs of action (based on a
amendment of the government's "Rules of Business, 1996" to realistic assessment of government effectiveness), and alternative
include "Rule 16," and this recommendation now awaits approval mechanisms for addressing the problem.
of the council of ministers. 3. Is regulation the best form of government action?
Regulators should carry out, early in the regulatory process, an
3. The investment registration process of the Board of Investment informed comparison of a variety of regulatory and non‐
(BOI) must be simplified. According to Section 10(1) of Investment regulatory policy instruments, considering relevant issues such as
Board Act, 1989, BOI will introduce speedy online investment costs, benefits, distributional effects and administrative
registration process through its website. Paper registrations must requirements.
be processed within 24 hours. According to section 11(5) of the 4. Is there a legal basis for regulation?
Investment Board Act, 1989, investment enquiries must be Regulatory processes should be structured so that all regulatory
answered within 15 days unless otherwise advised. BOI decisions rigorously respect the “rule of law”; that is,
registration service fee is being contemplated to be set at a flat responsibility should be explicit for ensuring that all regulations
rate, regardless of the proposed investment amount. are authorised by higher‐level regulations and consistent with
treaty obligations, and comply with relevant legal principles such
4. Sub‐committee on "processing and approval of foreign private as certainty, proportionality and applicable procedural
loans", under the leadership of Bangladesh Bank's governor, requirements.
proposed that the sole responsibility and authority for approval of 5. What is the appropriate level (or levels) of government for this
foreign private loans be vested with the Bangladesh Bank. The BOI action?
and BB have been directed by the Chief Adviser's Office to Regulators should choose the most appropriate level of
implement the RRC recommendation within two months. government to take action, or if multiple levels are involved,
should design effective systems of co‐ordination between levels of
5. The legalization of "courier service" in the country, by amending government.
the Post Office Act 1898. The Ministry of Post and 6. Do the benefits of regulation justify the costs?
Telecommunications is taking steps to implement this. Regulators should estimate the total expected costs and benefits
of each regulatory proposal and of feasible alternatives, and
6. The Directorate of Land Registration should be transferred from should make the estimates available in accessible format to
the Law Ministry to the Ministry of Land to allow a "one‐stop decision‐makers. The costs of government action should be
service" for land registration. The High Court has placed a writ and justified by its benefits before action is taken.
stay order against this executive decision for a period of three 7. Is the distribution of effects across society transparent?
months. To the extent that distributive and equity values are affected by
government intervention, regulators should make transparent the
7. Sub‐committee on location and environmental clearance distribution of regulatory costs and benefits across social groups.
recommended that the "Bangladesh Environment Conservation 8. Is the regulation clear, consistent, comprehensible and
Act, 1995" and "Environment Conservation Rules, 1997" be accessible to users?
amended by the Department of Environment, so that the time Regulators should assess whether rules will be understood by
taken to issue Location Clearance Certificates and Environmental likely users, and to that end should take steps to ensure that the
Clearance Certificates can be halved. text and structure of rules are as clear as possible.
9. Have all interested parties had the opportunity to present
8. Sub‐committee on duty drawback and exemption system, their views?
capital machinery import clearance system, and bonded Regulations should be developed in an open and transparent
warehouse licensing system recommended the National Board of fashion, with appropriate procedures for effective and timely
Revenue (NBR) to simplify the duty drawback application form by input from interested parties such as affected businesses and
June 30 and move to an industry‐based instead of enterprise‐ trade unions, other interest groups, or other levels of
based coefficient identification system to streamline the process. government.
NBR is advised to introduce "risk‐based inspection and clearance" 10. How will compliance be achieved?
system for capital machinery imports, where about 5%‐10% Regulators should assess the incentives and institutions through
consignments will be inspected by September 30. In addition, NBR which the regulation will take effect, and should design responsive
is advised to improve Bond Warehouse Licensing Process by implementation strategies that make the best use of them.
allowing non‐association members to apply for such licenses
without referrals from members.
_______________________________________________________________________________________


Stock Market Weekly

DSE performance: 52 weeks Market news
• Shinepukur Ceramics to raise BDT 800mn (USD
11.62mn) in bonds.

• ACI to raise BDT 1.3bn (USD 18.88mn) in bonds

• Bangladesh remains decoupled from both regional

and global markets
• RSI indicators have moved back to neutral territory
suggesting market overbought condition has

corrected

• Fuel and Power + Investment lead the way lower

DSE performance: 30 days Regional stock market performance (last week)

Market summary Valuation snapshot

DSE General Sector P/E
Index performance Index
DSE 20 Aug‐08 Sep‐08 Oct‐08 Nov‐08
Opening of this week 2695.58 2,199.3 Banks 19.08 18.24 15.62 15.62
Closing of this week 2671.06 2,189.2 Cement 10.96 10.34 10.32 8.91
Ceramic 49.92 43.93 41.76 32.17
Change within a week (%) -0.9% -0.5%
-24.5 -10.1 Engineering 39.11 41.36 40.8 31.94

Change within a week (Point) Food & Allied 17.85 19.44 17.09 14.77
Fuel & Power 17.81 20.2 19.14 16.29
Capitalization and turnover This Week Last Week % Change
Insurance 23.17 24.77 23.12 17.69
5 5 Investment 45.08 55.48 28.93 21.42
Number of Trading Days IT 41.44 45.64 47.89 33.96
Market Capitalization (USD bn) 14.80 15.15 -2.34%
Total Turnover (USD mn) 209 255 -18.0% Jute 16.16 16.16 14.18 14.18
Daily Avg. Turnover (USD mn) 41.75 50.91 -18.0% Miscellaneous 25.46 33.95 32.2 23.32
124 156 -20.7% Paper & Printing 8.36 8.08 9.97 7.32
Total Volume (mn) Pharmaceuticals 23.97 28.45 30.25 26.26
Daily Avg. Volume (mn) 25 31 -20.7%
Service & Real Estate 20.57 22.87 23.55 18.74
This Last Tannery 19.05 19.89 18.44 14.87
Weighted avg. P/E Ratio* Issues
Week Week Textiles 15.74 15.45 14.55 12.43
17.06 144 104
This Week Advanced
121 158
Source: Dhaka Stock Exchange
Last Week 17.34 Declined
% Change -1.6% Unchanged 3 2
*Weighted on Market Cap. Not Traded 31 29
_______________________________________________________________________________________

Weekly Stock Market Commentary

This week the market was down by 0.9% for the third consecutive Bangladesh remains decoupled from both regional and global
week, and the daily average turnover was down by 16.5%. The markets
turnover volume dropped significantly as investors, especially
retail investors, remained shaky amid the recent bearish trend in With the Sensex down almost 6% last week and the KSE down a
the market. Out of 297 stocks, 144 advanced, 121 declined, 3 massive 17%+, the moves in the DGEN remain extremely muted.
remained unchanged and 29 were not traded. Two newly listed With the S&P 500 down 3.5 % and the European stock markets
companies started trading this week. BSRM joined the stock also down sharply, Bangladesh remains one of the few truly de‐
market by floating 2mn ordinary shares at BDT 100 each, while coupled EM markets in the world.
Republic Insurance joined by offloading 90,000 ordinary shares at
BDT 100 each. Similar to the previous week, this week retail Sector Update – Fuel and Power + Investment lead the way
investors also focused intensively on Z‐listed stocks. Among the lower
top ten gainers, nine of them were from Z‐list categories. Z‐list
stocks are categorised by virtue of their lack of compliance with This week the “Fuel and Power” and “Investment” sectors
SEC regulations (Ex. filing of accounts) or are unprofitable – so are declined significantly by 4.9% and 4.1%, respectively. The major
largely constituted of companies lacking fundamental qualities. reason of the decline in the “Fuel and Power” sector is the 100%
bonus share and 50% cash dividend issued by Padma Oil Company
RSI indicators have moved back to neutral territory suggesting Ltd., a state owned petroleum products distribution company.
market overbought condition has corrected After the record date which was January 18, the price of this stock
dropped by 47% and thus affected the market capitalization of the
The Relative Strength Index (RSI) of the DSE General Index is now “Fuel and Power” sector, though the bonus share has not started
at 48 .8 with a consolidating trend in the last three days of this trading in the market.
week. Also the MACD line is below and parallel to its 9 days signal
line, showing that a significant trend has not developed yet. As In the “Investment” sector, among the 17 mutual funds, only
can be seen in the chart below, the key overbought/oversold three increased while prices of rest of the unit funds decreased.
indicators for the DGEN are 70 and 30 respectively. Typically when The “Engineering” sector grew by 5% this week, largely driven by
the RSI hits 70, the market tends to correct and sell off, as was the “Atlas Bangladesh Ltd.”, a state owned motorcycle and three
case earlier this month, whereas when the RSI hits 30, we typically wheeler assembling company. Atlas Bangladesh Ltd. is the second
get a bounce. The principal behind momentum indicators is that largest company in the engineering sector, as it contributes 20%
they capture when too much of the market is positioned in one towards the sector’s total market capitalization.
direction. If there are a majority of investors who are long the
market, there is diminishing numbers of prospective buyers which The “IT” sector grew by 1% last week following an increase of
leaves the market vulnerable to profit‐taking. The current RSI does 2.7% the previous week. The sector is showing a rising trend
not give any strong technical signal in either direction suggestion recently with the new government's thrust in the area. According
consolidation until the market receives some new fundamental to DSE statistics, the IT issues' weighted average price earnings
news. (P/E) ratio surged 46.5 in 2008 against 15.2 in 2007 and 11.1 in
2006. The rising P/E ratio of this sector implies the investors’
RSI and MACD movement of DSE General Index: positive perception about the growth of the sector.

_______________________________________________________________________________________


Stock Market News

Shinepukur Ceramics to raise BDT 800mn (USD 11.62mn) in
bonds
The Daily Star, Tuesday January 20, 2009

Shinepukur Ceramics, an export‐oriented bone china and
porcelain tableware manufacturing company, has decided to
borrow BDT 800mn (USD 11.62mn) from its parent company
Beximco by issuing convertible bonds , in order to set up a new
bone china unit. However, in order to issue bonds, the company’s
shareholders and the Securities and Exchange Commission must
approve.

The new bone china manufacturing unit, which is expected to be
completed in October 2009, aims to increase production capacity
and sales turnover. Production capacity will increase by 150% to
25,000 pieces a day from currently 10,000 manufactured pieces.
Additional exports worth BDT 1.1bn (USD 15.98mn) and a net
profit of BDT 200mn (USD 2.9mn) is expected to be generated.

Shinepukur signed an agreement with a German company on
th
January 18 for setting up the new unit at the Beximco Industrial
Park at Gazipur.

http://www.thedailystar.net/story.php?nid=72078

ACI to raise BDT 1.3bn (USD 18.88mn) in bonds
The Daily Star, Monday January 19, 2009

Advanced Chemical Industries (ACI) Limited has decided to raise
BDT 1.30bn (USD 18.88mn) by issuing convertible zero coupon
bonds, for loan repayment and fresh investments. A zero coupon
bond is a bond bought at a price lower than its face value, with
the face value repaid at the time of maturity. Convertible zero
coupon bond means that the bond is convertible into a company's
common stock or share.

The issuance of the 'ACI 20% Convertible Zero Coupon Bond', the
first of its kind, is however subject to the approval of the
Securities and Exchange Commission. The maturity period of the
bond is five years with yearly redemption, meaning that 20%
value of the bond will be repaid to the investors each year with a
10.5% discount rate.

Along with the discount or interest, the investors, excluding banks
and insurance companies, will get tax exemption on the income
generated from the zero coupon bonds. The bonds will be traded
on the Dhaka and Chittagong stock exchanges.

The bond will be issued through both private placement and an
initial public offering. Alliance Financial Services Ltd is the issue
manager of the bond, and Industrial and Infrastructure
Development Finance Co Ltd is the facility manager.

ACI, which has investments in pharmaceuticals, consumer brands
and commodity products, agribusinesses, crop care and public
health, livestock and fisheries, fertiliser and seeds business,
posted net profits of BDT 362.5mn (USD 5.27mn) in 2007.

_______________________________________________________________________________________


DGEN Performance YTD DGEN Performance LTM

Turnover leaders Best performers* Worst performers*
(All figures in mn) BDT USD
Beximco Pharma 1285 18.7

Meghna PET
% Change
49.0% Padma Oil Co.
% Change
-46.7%
BEXIMCO 1074 15.6
Shinepukur Ceramics
Shaympur Sugar 37.8% BEMCO -25.3%
Rangamati Food 35.9% Al-Haj Textile -16.7%
Limited 991 14.4
Titas Gas 939 13.6
Quasem Silk 35.7% Eagle Star Textile -10.7%
Quasem Textile 32.6% National Housing Finance -9.7%
Summit Power 754
BSRM Steels Limited 584
11.0
8.5
and Investment Ltd.
Lexco 30.3% 8th ICB M.F. -8.2%
Grameen One: Scheme2 375 5.5 B Monospool Paper 29.0% 3rd ICB M.F. -7.9%
Uttara Bank 345 5.0 Bd. Welding Electrodes 28.7% Pragati life Insurance -7.3%
ACI Formulation Limited 339 4.9 Al-Amin Chemicals 28.6% Global Insurance -7.1%
Summit Alliance Port
BEXTEX Limited -6.6%
Limited 326 4.7
Megha Condensed 26.5%

*By closing price
Banks
Market cap. by sector*
51.0%
Correlation with other indices*

S&P500 Sensex NIKKEI225 KSE100 SSECI FTSE100 Hangseng DSE

Fuel & Power 13.8%
S&P500 1
Pharmaceuticals 11.6%
Insurance 5.5% Sensex 0.609533 1
Cement 5.1% NIKKEI225 0.479296 0.57751 1
Miscellaneous 3.0%
KSE100 0.137983 0.245628 0.136849 1
Engineering 2.4%
SSECI 0.315464 0.411735 0.245613 0.09449 1
Foods 2.1%
Textile 1.9% FTSE100 0.843726 0.610483 0.494904 0.238387 0.431538 1
Service & Real Estate 1.2% Hangseng 0.704434 0.677905 0.526227 0.110829 0.509843 0.786434 1
Tannery 1.2% DSE 0.161589 0.193995 0.103366 ‐0.05588 0.035032 0.131261 0.143725 1
Ceramics 0.7% * Based on the last 86 months’ USD returns
IT 0.5% Source: AT Capital Research
Paper & Printing 0.1%
Jute 0.03%
Total 100%
*As of November 30, 2008
Research Team

Ifty Islam
Syeed Khan
Managing Partner
Partner
syeed.khan@at‐capital.com

Mohammad Emran Hasan
Senior Associate
emran.hasan@at‐capital.com
_______________________________________________________________________________________

Economics

Selected macroeconomic indicators Market news

20‐Jan‐08 13‐Jan‐09 20‐Jan‐09
Forex reserves (USD mn) 5677.81 5471.15 5430.92 • Country's trade balance narrows in first half of FY 09
USD‐BDT average rate 68.5800 68.9500 68.9499
• Inflow of foreign aid normal
Call money rate 13.79 9.32 9.48

• Uptrend in export earnings continues
Dec‐07 Dec‐08 2007‐08
Remittances (USD mn) 635.34 765.79 7,914.78 • Manpower export suffers blow as KL bans overseas
recruitment
Annual %age change 14.46 20.53 32.39

• BEPZA expects to attract more investments in EPZs
Nov‐07 Nov‐08
P
2007‐08
• Series of BB steps to expedite flow of inward
Imports (USD mn) 1,661.80 1,816.50 21,629.00
remittances
• Recession fears loom over shrimp exports
P
Nov ‐07 Nov ‐08 2007‐08
Exports (USD mn) 1144.47 1297.47 14,110.80
P
Latest treasury yields
Sep‐07 Sep‐08 2007‐08
Current A/C Balance (USD mn) 20.00 46.00 672.00
Weighted
Auction date Tenor & security type
P
average yield
Nov‐07 Nov‐08 2007‐08
Tax revenue (USD mn) 506.24 551.57 6,868.43 Dec-08 91-day T-bill 7.91%
Annual %age change 26.59 8.96 27.06 Dec-08 182-day T-bill 8.16%
Dec-08 364-day T-bill 8.58%
Source: Selected indicators by Bangladesh Bank, 21 January 2009 Dec-08 5-year T-bond 10.60%
Dec-08 10-year T-bond 11.72%
Source: Bangladesh Bank
Latest Bangladesh Inflation Rates
Oct‐08 Nov‐08 Dec‐08

General 209.31 207.14 204.90
Inflation 7.26 6.12 6.03
Food 226.88 223.98 220.64
Inflation 8.08 6.68 6.83
Non‐food 186.13 184.95 184.29
Inflation 5.95 5.25 4.76
Source: Bangladesh Bureau of Statistics
Jisha Sarwar
Senior Research Associate
Jisha.sarwar@at‐capital.com
_______________________________________________________________________________________

Economic News fears that its economic crisis will lead to more job losses for locals.

Country's trade balance narrows in first half of FY 09 Malaysian Home minister Syed Hamid Albar told the country's
th
The Financial Express, Sunday January 25 , 2009 leading English daily, New Straits Times, that there is no reason to
bring in foreigners after a government report showed 45,000
The country's balance of trade in the first half of fiscal year 2009 people will be laid off at the end of January.
narrowed to USD 3.2bn from USD 3.5bn during the same period a
year ago, owing to a rise in exports and decline in imports. The two sectors ‐ manufacturing and services ‐ employ one million
foreign workers currently. These employees will be allowed to
During the first two quarters of FY 09 (July – Dec) exports earnings work until their permits expire, unless they are laid off before
stood at USD 7.5bn while import payments were USD 10.7bn. then. Malaysia's Deputy premier Najib Razak said the foreign
During the same period in FY 08, the country received USD 6.49bn workers will be sent back in batches so as not to jeopardize the
for exports while import payments were USD 9.078bn. country's economy.

The country's export target for the current fiscal year has been "Almost all of the 131,000 Bangladeshis that found jobs in
fixed at USD 16.29bn, 15.5% higher than FY 08. During the last Malaysia in 2008 were in the manufacturing and services sector,"
fiscal year, the country exported goods worth USD 14.5bn and said a senior official of Bangladesh Bureau of Manpower and
made import payments of USD 20.37bn. Training (BMET). "A hiring freeze in Malaysian may result in drastic
drop in manpower exports and remittance. Already thousands of
Export growth was 18.33% during the first 6 months of FY 09, workers have returned home from Singapore," he added.
which is around 3 percentage points higher than the projected
target. The country's overall import payment during the first six‐ Malaysia was the third biggest employer of Bangladeshi workers
month of FY 09 grew by only 6.84% compared to 17.25% during last year, followed by Saudi Arabia and the United Arab Emirates
the same period in FY 08, mainly due to declining prices of fuel, (UAE).
edible oil and other commodities in the international market.
Manpower exports in December slumped by nearly 50 % to
If the present trend continues, it will ease pressure on the 44,000, the worst monthly figure last year.
country’s balance of payment and will help strengthen the
country's foreign exchange reserve, which stood at USD 5.6bn on A record 875,055 Bangladeshi found overseas jobs last year, with
January 22, 2009. the UAE employing 419,355 and Saudi Arabia 132,124 people.
During the period, eight million overseas workers sent home a
http://www.thefinancialexpress‐ record USD 8.9bn, which accounts for over 12 % of Bangladesh's
bd.info/search_index.php?page=detail_news&news_id=56958 gross domestic product (GDP).

Satisfactory inflow of foreign aid http://www.thefinancialexpress‐bd.info/2009/01/23/56716.html
The Financial Express, Saturday January 24th, 2009
BEPZA expects to attract more investments in EPZs
nd
Inflow of foreign aid into Bangladesh has not been affected by the The Financial Express, Thursday January 22 , 2009
global financial downturn, as the government has received USD
830.41mn in foreign aid during the first half of the current The Bangladesh Export Processing Zones Authority (BEPZA) is
financial year. The amount received was USD 8.0mn higher than expecting to attract more investments in the country' Export
that received during the corresponding period of last financial Processing Zones (EPZs) as the government has approved their
year (2007‐08). proposal for setting up two new EPZs. The country will have a
total of 10 EPZs after the two new zones in Feni and Meghna are
The government expects to receive USD 2.14bn in aid during the set up.
current fiscal year. Out of the total amount, USD 65mn is expected
to come as food aid, USD 10mn as commodity aid, USD 1.72bn as BEPZA officials stated that their decision for expansion was mainly
project aid and USD 350mn as budgetary support credit. based on the high demand and flow of both local and foreign
investment. In fiscal year 2008, total investment was USD
Out of the total USD 830.41mn disbursed foreign assistance 302.19mn, almost a 100% increase from USD 152.37mn in fiscal
during July‐December of this fiscal year, USD 748.62mn was given year 2007. Investments reached USD 74.7mn during the first six
as loan, and only USD 81.79mn was given as a grant. months of the current financial year.

http://www.thefinancialexpress‐bd.info/2009/01/24/56831.html According to Prasanta Bhusan Barua, a member (Investment
Promotion) of the BEPZA, the BEPZA signed agreements worth
Manpower export suffers blow as KL bans overseas recruitment USD 1.4bn with a number of investors last year.
rd
The Financial Express, Friday January 23 , 2009
Data showed that the BEPZA's contribution to total national
Bangladesh's manpower export is expected to decline significantly export is increasing steadily. In FY 08, the total export of EPZs was
as Malaysia’s government declared that it will not hire new worth USD 2.4bn, which was 17.2% of Bangladesh's total export of
foreign workers in the manufacturing and services sectors amid USD 14.11bn; In FY 07 the total export of EPZs was USD 2.06bn.
_______________________________________________________________________________________

Export earnings stood at USD 1.26bn during the first two quarters
of the current fiscal year (July 08 – Dec 08).

Currently, a total of 292 enterprises are operating in eight EPZs
and, 125 plants in the process of being implemented. Of the 292
industrial plants, 173 are foreign‐owned, 48 are joint ventures and
the rest 71 are owned by local investors. Currently 228,932 people
are working in the EPZs. Of them 82,416 (36%) are male and the
rest are female (64%).

BEPZA officials stated that each EPZ will have a central effluent
treatment plant. Chittagong Waste Treatment Plants Ltd. has
been approved for setting up such a plant in the CEPZ.

http://www.thefinancialexpress‐bd.info/2009/01/22/56645.html

Series of BB steps to expedite flow of inward remittances
The Financial Express, Tuesday January 20th, 2009

The Bangladesh Bank (BB) has taken a series of measures aiming
to expedite the flow of remittances into the country.

The BB has recently formed a seven member committee, the first
of its kind, in order to monitor and supervise the overall inflow of
remittances. Furthermore, the BB has given permissions to three
private commercial banks (PCBs) recently for setting up exchange
houses in Malaysia and United Kingdom. Both Malaysia and UK
are important sources of remittances. Earlier, the BB took an
initiative to boost remittance inflow from Malaysia. As part of the
move, the BB asked ten commercial banks to submit action plans
for increasing the flow of inward remittances from the country.

Bangladesh received a total of USD 92.44mn in remittances from
Malaysia in fiscal year 2008 compared to only USD 11.84mn in
fiscal year 2007. Remittance inflow from UK also grew from USD
886.9mn in FY 07 to USD 896.1mn in FY 08.

Remittance inflow reached USD 486mn during the first half of this
month. In December Bangladesh received USD 765.8mn in
remittances from abroad, an increase of USD 4.4mn from
November. The country's foreign exchange reserve stood at USD
5.5bn on Monday due to robust growth in remittance inflow,
according to the central bank.

http://www.thefinancialexpress‐
bd.info/search_index.php?page=detail_news&news_id=56499

_______________________________________________________________________________________

Sector News
In fiscal year 2008, the price of 16 to 30 grade shrimps, which
Agriculture accounts for around 65% of the total frozen shrimp export, ranged
between USD 5.20 and USD 5.50, but now it has come down to as
ACI will open 200 chain‐shops as it forays into organized retailing low as USD 4, marking a 30‐32% decline, According to the BFFEA
The Financial Express, Sunday, January 25, 2009 (Bangladesh Frozen Foods Exporters Association).

Leading conglomerate ACI plans to open around 20 value stores In Bangladesh frozen food is the second highest export earner
across the country in the next four months, making it the first after apparels. In FY 2008, the country exported frozen foods
company to do nationwide organized retailing. The company has worth USD 534mn. The government set a target of USD 574mn for
opened two stores in Dhaka and plans to replicate them across this fiscal year, but exporters revised it up to USD600mn. Shrimp
the country. At present the company is working with the price accounts for over 80 % of frozen food products.
propositions; they want to make the chain stores affordable for
the mass people. An official from the company stated, “We have The European Union, USA and Japan are the three main markets
already opened up two stores and will open at least 20 by May. for Bangladesh's frozen shrimp, with the EU and the US
We have a plan to launch 200 stores in prime locations." accounting for 48 % and 40 %, respectively, of total exports.

http://www.thefinancialexpress‐ About 10mn people are directly and indirectly involved with the
bd.com/search_index.php?page=detail_news&news_id=56962 shrimp business, which is concentrated in the Khulna district.

Agro‐based industries to be set up in CHT The BFFEA has already requested the government to create an
The Daily Star, Saturday, January 24, 2009 emergency fund for the shrimp exporters to protect them from a
liquidity crisis. According to the association, formation of a 40 %
The government will set up agro‐based industries in the interest‐free block account facility for a period of four to five years
Chittagong Hill Tracts (CHT) region. Fruits like lemon, pineapple, will help the industry cope with the situation.
orange, jackfruit and guava are largely grown in three hill districts
of the region. If agro‐based industries are established then various
food products can be produced by processing the fruits.


Give enough loans to Boro farmers
The Daily Star, Monday, January 19, 2009

Bangladesh Bank asked eight public sector banks, who distribute
80% of total agricultural loans, to provide adequate loans to
farmers during the Boro season. The BB mandate followed the
government’s recent decision to cut fertilizer and diesel prices.

Bangladesh Bank Deputy Governor directed the banks to give
quick and hassle‐free loans to farmers so that they do not face any http://www.thedailystar.net/newDesign/news‐details.php?nid=71944
financial problems in buying agricultural inputs including fertilizers
and seeds. He told managing directors of the banks to monitor Aviation
proper distribution of loans at the field level. He said Bangladesh
Bank would monitor their progress. Two new airlines will begin operations in Dhaka soon
The Daily Star, Wednesday January 21, 2009
Two new airlines ‐ Indian Kingfisher Airlines and the Malaysian
Recession fears loom over shrimp exports carrier AirAsia Berhad ‐ will begin operations in Dhaka within the
The Daily Star, Monday January 19th, 2009 next three months.

Shrimp exports are expected to fall significantly this year, as the Kingfisher Airlines, owned by Indian liquor baron Vijay Mallya, will
price and demand for shrimps have fallen in developed countries, operate on the Dhaka‐Kolkata route from mid‐February, and will
the main consumers of local shrimp exports. Buyers in the US and be the sixth airline on the route. Air Asia, one of the most low‐cost
Europe have been urging Bangladeshi exporters to reduce shrimp carriers in Asia, will start Dhaka‐Kuala Lumpur flights from early
prices. According to industry insiders, the price of shrimp has March. The airline plans to operate seven flights a week.
dropped by USD 1 per pound, or about BDT 155 per kilogram, in
late 2008 compared to the 2007 price. http://www.thedailystar.net/newDesign/news‐details.php?nid=72259

_______________________________________________________________________________________

Among the projects, loan agreements were signed by the previous
Banking governments for Siddhirganj, Sirajganj, Khulna and Bhola power
plants. As per the agreements, the World Bank is supposed to
Five foreign banks fail to disburse agriculture loans finance the Siddhirganj plant while Japanese JBIC will finance the
The Daily Star, Thursday January 22nd, 2009 Haripur project. The Asian Development Bank (ADB) will finance
the Sirajganj and Khulna power plants, while the Islamic
Development Bank (IDB) will finance the Bhola project.


WB to fund gas exploration
The Financial Express, Sunday January 25, 2009

The World Bank has agreed to fund exploration of natural gas in
Bangladesh for the first time in its history.

Finance and energy ministry officials said the fund would be
primarily provided to the state‐owned oil and gas exploration
company, BAPEX, to discover new reserves in two of its untapped
onshore blocks in greater Mymensingh.

Despite the central bank's order, five foreign commercial banks, BAPEX has not undertaken any exploration activities during the
including HSBC, have failed to disburse any agriculture loans last decade, which resulted in an over‐dependence on foreign oil
during the first two quarters of FY 09. Other banks that have not companies and a shortfall of 250 mn cubic feet of gas a day since
disbursed any farm credit include Bank Al‐Falah, Habib Bank, State November last year.
Bank of India and Woori Bank.
The blocks in Mymenshingh have been considered hydrocarbon
rich, however, BAPEX needs to conduct an intensive exploration
Nearly BDT 1340mn (USD 19.46mn) in agriculture loans was
drive to extract gas from them. BAPEX has planned to conduct a
disbursed by nine foreign banks during the first two quarters of
2400 kilometre two‐dimensional (2D) seismic survey, geophysical
the current fiscal year; these banks include Standard Chartered
and geological studies and a delineation of the drillable subsurface
(USD 14.49mn), Citi Bank NA (USD 2.47mn), Commercial Bank of
structure.
Ceylon (USD 2.03mn) and National Bank of Pakistan (USD

0.44mn).
http://mail.google.com/mail/?zx=u7n4lumq4oej&shva=1#inbox

The central bank last year asked all local private and foreign Revenue generation, investment in infrastructures key
commercial banks to allocate a reasonable amount of their total challenges
loan portfolio for farm credit. The BB is now considering setting a The Financial Express, Saturday January 24th, 2009
farm credit target for private and foreign commercial banks in
order to boost agriculture output. The Asian Development Bank (ADB) has said the key challenges for
the new government over the longer term will be to raise
http://www.thedailystar.net/newDesign/news‐details.php?nid=72370 infrastructure investment and government revenue mobilization
and accelerate the Annual Development Program (ADP)
Infrastructure & Energy implementation.

10 power plants on government's priority list Other challenges include improvement of institutional capacities
The Daily Star, Sunday January 25, 2009 in key line agencies, creation of more jobs and coping with power
and gas shortages for encouraging private investment to enhance
As part of its efforts to solve the country's chronic power crisis, longer‐term growth prospects, according to the ADB’s recently
the new government has decided to implement 10 power plant published report on Bangladesh's 'Political and Economic Update'.
projects, which were initiated by previous governments. Eight of
the projects will be implemented by the public sector while two http://www.thefinancialexpress‐
will be undertaken by the private sector. bd.com/search_index.php?page=detail_news&news_id=56836

The proposed projects to be implemented in the public sector are Gas shortage affects private initiative to generate power in EPZs
300MW Siddhirganj peaking plant, 360MW Haripur plant, 150MW The Financial Express, Saturday January 24th, 2009
Sirajganj plant, 150MW Khulna plant, 150MW Bhola plant,
150MW Sylhet plant and the 210MW Khulna power plant. The The plan for export processing zones in the country to run
private sector plants are 450MW Bibiyana and 450MW Sirajganj industrial units with the electricity produced by their own plants
power plants. has not yet materialized due to a shortage of gas supply.
Bangladesh Export Processing Zones Authority (BEPZA) officials
said six private power plants with a combined capacity of 240
_______________________________________________________________________________________

megawatt were scheduled to start power generation in 2008.
However, only the plant in the Dhaka EPZ started its operation on Power secretary, Nasiruddin Ahmed said, “The caretaker
a trial basis two weeks ago. government took steps to generate around 1100MW of additional
electricity. As per that plan, around 322MW electricity was added
Power plants in Chittagong and Karnaphuli EPZs were installed by by December 2008. We are expecting around 730MW of
December 2008. However, private power companies, who won additional electricity by June this year’. He further stated that an
the bid for producing power at Comilla, Adamjee and Ishwardi additional 157.5MW electricity is expected to be generated in
EPZs, are waiting for gas supply. January, 131MW in February, 287MW in March, 105MW in May
and 50MW electricity in June from a number of short and long‐
http://www.thefinancialexpress‐ term power plants, small IPPs and one public sector power plant.
bd.com/search_index.php?page=detail_news&news_id=56833
http://www.newagebd.com/2009/jan/20/nat.html#1
BB to finance captive power plants through' IPFF project
The Financial Express, Friday January 23rd, 2009 Leather Goods

The central bank will finance the installation costs of captive Leather exports slow in financial rout
power plants along with small power projects (SPP) under its The Daily Star, Sunday January 25, 2009
investment promotion and financing facility (IPFF) project.
Exports of finished leather and leather goods declined by around
Additional funds will be made available by the central bank shortly 18% during the July‐November period of the current fiscal year.
through two private commercial banks (PCBs) for setting up two
more SPPs in Feni and Chittagong to add at least 33 Megawatt According to the former chairman of the Bangladesh Finished
(MW) of electricity to the national grid. Leather, Leather Goods and Footwear Exporters Association, Mr.
Sultan, the consumption of leather and its prices in the
Dhaka Bank Limited will finance the Doreen Powerhouse and international market went down by 30% last year, following a
Technology Limited to set up an 11MW SPP at Feni while Eastern decline in international production by 6%. Industry insiders expect
Bank Limited has agreed to provide loans to Regent Power Limited leather exports to drop by 25% in FY 09, which will directly affect
for setting up a 22MW power plant in Chittagong. 195 tanneries in the country.

The WB earlier provided USD 50mn for the IPFF Project for long‐ There are four types of leather ‐‐ rawhide, wet blue, crushed and
term financing of infrastructure projects under the Public‐Private finished leather. Bangladesh mainly exports crushed and finished
Partnership (PPP) framework while the government offered USD leathers, demand for which dropped in the international market
10mn as co‐financer of the project. due to the global economic crisis.

http://www.thefinancialexpress‐ Leather is one of the most important export items of the country.
bd.com/search_index.php?page=detail_news&news_id=56712 Some of the most common leather items are shoes, bags and

purses. Currently, the leather industry is worth around USD
Tullow appoints BAPEX to explore gas at Bangura
508mn a year, with exports accounting for USD 284mn in FY 08.Of
The Financial Express, Thursday January 22, 2009
the total leather exports from Bangladesh, 80% is crushed leather
State‐owned petroleum exploration and production company and the remaining is finished. The main exporting countries are
BAPEX has entered into a deal with a foreign oil company to Italy, Japan, Korea and China, Sultan said.
produce gas in the Bangura field in the Comilla district. Irish
company Tullow has recently appointed BAPEX to start gas According to Mr. Sultan, the government should take necessary
production from its non‐operative well‐3 at the Bangura field. measures to develop and protect the leather industry. “Essential
chemicals, such as sodium chloride and sulfuric acid that are
Tullow plans to produce an additional 25 to 30mn cubic feet of gas needed for conversion of animal hides to leather, have to be
per day (mmcfd) from the Bangura field. The gas field, located in imported and are very expensive,” he said. Sultan suggested that
Block‐ 9, has been producing about 100mmcfd of gas from well‐1, the government should reduce import duties and VAT on these
2 and 5. Well‐3 was developed in October 2008. Tullow owns 30% chemicals.
of the total gas in Block‐9, while Canadian Niko Resources and
BAPEX own 60% and 10%, respectively. http://www.thedailystar.net/newDesign/news‐details.php?nid=72831

http://www.thefinancialexpress‐ Pharmaceutical
bd.com/search_index.php?page=detail_news&news_id=56700

Government to initiate power plant projects in pipeline Local co starts manufacturing raw materials for pharmaceuticals
New Age, Tuesday January 20, 2009 The Daily Star, Thursday, January 22, 2009

The Awami League‐led alliance government has taken an Active Fine Chemicals (AFC), a private company, started
initiative to develop the costly rental power plants and small manufacturing raw materials and chemical reagents for the
independent power plants, which were approved by the interim pharmaceutical industry, with an aim to reduce import
government. dependency.
_______________________________________________________________________________________

the SIM card tax has increased customers' expenses and impeded
Although Bangladesh’s pharma industry has successfully secured a growth in the sector.
place in the global market in a short span of time, all of its
necessary raw materials still need to be imported from abroad. A Officials present at the meeting represented grameenphone,
few local pharmaceutical companies that do produce raw AKTEL, CityCell, Teletalk, WARID and Banglalink, and also the
materials can produce only 5% of the total requirement, and most ministry.
of these products are used by themselves; the rest is imported
from abroad. http://bdnews24.com/details.php?id=74333&cid=4

AFC hopes to supply a major portion of the required raw ATC Comment: The 6 mobile operators paid around USD 121mn in
materials, which will save both time and costs. The company is sim taxes last year. This is impeding growth in the industry in
expected to supply raw materials worth BDT 2bn (USD 29.2mn) to terms of mobile operators’ profitability and acquisition of new
the local market this year. AFC's factory has already been set up in mobile subscribers. Of the 6 mobile operators, only
Munshiganj at the cost of about BDT 500mn (USD 7.3mn). Grameenphone is profitable, as the operators largely have to
According to the senior vice president of the company, AFC has subsidies sim prices in order to attract new customers. On the
already started producing a number of raw materials, including other hand, lowering mobile sim taxes to Pakistan’s level (around
reagents used in different laboratories. It will be possible soon to BDT 500) would allow mobile operators to sell sims at prices that
produce raw materials used in cancer and diabetes preventive are affordable for the rural population, as that is where mobile
medicines, he said. He also stated that a team of chemical subscriber growth is expected to be in the future.
engineers comprising of members from the US and India are now
working with the company. State‐owned BSCCL keen to run new cable link
The New Nation, Thursday January 22, 2009
State‐owned BSCCL (Bangladesh Submarine Cable Company Ltd) is
Shipbuilding interested in setting up an alternative submarine cable link in the
country.
Shipbuilders dispel recession fears
The Daily Star, Thursday January 22, 2009 Bangladesh is now linked to SEA‐ME‐WE‐4 submarine cable, the
link managed and maintained by BSCCL. Of the 24.12 gigabyte
Local shipyards have been receiving enquiries from foreign buyers capacity, 7.5 GB is being used, statistics show.
about small vessels, despite a downturn in the global shipbuilding
industry caused by the global recession. However, according to http://nation.ittefaq.com/issues/2009/01/22/news0295.htm
local shipbuilders, buyers are offering lower prices as steel prices
have declined. TeleTalk network to be expanded
The New Nation, Monday January 19, 2009
Bangladesh, which has recently entered the global shipbuilding
market, is yet to face any cancellation in orders or delays in Post and Telecommunications Minister Rajiuddin Ahmed Raju
payments. So far, local shipyards‐‐ mainly Ananada Shipyard and Sunday said state‐owned TeleTalk mobile’s network and
Western Marine Shipyard ‐ have received over USD 600 worth of broadband would be extended to upazila and village levels as
orders for making more than 40 vessels, with a capacity below soon as possible.
15,000 dead weight tonnes (DWT). Most of the orders for these
ships come from European countries like Germany and Denmark. A task force probe recently found serious irregularities in the
implementation of TeleTalk projects that caused losses of over
According to industry insiders, there are about 300 small and large BDT 2000mn (USD 29.4mn). The implementation period of the
dockyards, generating about 100,000 jobs, but only a few project was from 2002 to 2004, but it ended in July 2008.
companies have been able to attract foreign buyers. Although the original estimated cost of the project was BDT
5940mn (USD 86.22mn), total costs ended up being BDT 8010mn
http://www.thedailystar.net/newDesign/news‐details.php?nid=72371 (USD 117.8mn) due to alleged corruption.

Telecoms TeleTalk, which entered the market in 2005, has the lowest
number of subscribers among the 6 mobile operators, with only
Operators ask government to lift SIM card tax 0.98mn subscribers. The operator has established its network in
www.bdnews24.com, Wednesday January 21, 2009 64 districts, 355 Upazilas, and along most of the highways.

Mobile‐phone operators asked the government to remove the http://nation.ittefaq.com/issues/2009/01/19/news0029.htm

BDT 800 (USD 11.8) SIM card tax. During a meeting held on

Wednesday, the members of the Association of Mobile Telephone
Operators Bangladesh asked the telecoms minister Raziuddin
Ahmed Razu to look further into the Telecom Ordinance 2008.

According to AMTOB president and AKTEL director Fazlur Rahman,

_______________________________________________________________________________________

http://www.thedailystar.net/newDesign/news‐
Textiles details.php?nid=72258

NGWF for re‐fixing garment workers' minimum wages German co. invests USD 200m to set up mega textile factory in
The Financial Express, Sunday, January 25, 2009 Bangladesh
The Financial Express, Thursday, January 22, 2009
The National Garments Workers Federation (NGWF) has
demanded a re‐adjustment of the minimum wage for garments A top German company is setting up one of the world's largest
workers. According to the NGWF members, the minimum wage textile factories in Gazipur. Steffen Mohler, marketing and sales
for apparel workers was fixed at BDT 1,662 (USD 24.26) in 2006, director of Multiline Limited, said his company is investing USD
and has not been revised since then. The NGWF also stated that 200mn in a state‐of‐the‐art knit composite manufacturing facility.
the Bangladesh Labor Law 2006 should be amended to protect the The company already bought 80 bighas of land in Gazipur and is
interest of the workers. The NGWF urged the government to give purchasing another 220 bighas in the same area. It will have 14
workers of the country's export processing zones trade union factory halls employing more than 10,000 workers, once it goes
rights as per the convention of the International Labor into production in early 2010. The factory will have all the forward
Organization. and backward linkages ‐ spinning, weaving, dying and washing and
sewing in one compound ‐ along with a three‐star hotel to house
http://www.thefinancialexpress‐ German technicians. This will be the biggest German investment
bd.com/search_index.php?page=detail_news&news_id=56979 in Bangladesh and by far the largest the country's textile sector
has attracted from a foreign investor. Previous investments in the
Japanese firm seeks to buy USD 600mn RMG sector have not exceeded USD 25mn.
The Daily Star, Friday, January 23, 2009
One of the largest Japanese retail chains, Uniqlo, has decided to

purchase readymade garments (RMG) worth more than USD

600mn from Bangladesh in 2009. Currently, Uniqlo purchases
RMG products worth USD 3bn from different countries a year ‐
Bangladeshi products will make up 20% of the company’s total
purchases of USD 3bn in 2009. Uniqlo currently has stores in 30
countries, and has a network of over 750 stores in Japan.
Bangladesh exported woven items worth USD 20.801mn and
knitwear items worth USD 7.234mn to Japan in FY 08, according to

the Export Promotion Bureau.


Garment exports to new destinations on the rise
The Daily Star, Wednesday, January 21, 2009

The volume of garment exports to new destinations is increasing,
as manufacturers aim for market diversification. Exporters have
been exporting garment products to Brazil and Mexico, the two
new export destinations since mid‐2008. The chairman of Dekko
Group stated that they have already shipped trousers, shirts and
some other woven garments, worth USD 500,000, to Mexico.
More shipments to that country are in the pipeline. The group has
recently started exporting to Brazil. They are also looking at
exporting to some other new destinations such as Japan, Russia
and South Africa.

According to EPB statistics, Bangladesh exported woven garments
worth USD 5.350mn and knitwear items worth USD 7.374mn to
Russia in FY 08. During the same period, the country exported
woven products worth USD 32.873mn and knitwear products
worth USD 27.662mn to Mexico. In Brazil, another emerging
export destination for Bangladesh, woven items worth USD
3.090mn and knitwear items worth USD 13.281mn were exported
in FY 08. During the same fiscal year, the country exported woven
products worth USD 16.977mn and knitwear products worth USD
12.211mn to South Africa.

_______________________________________________________________________________________


AT Capital Team – Dhaka

Ifty Islam Managing Partner (880‐2)‐8155144, ext. 132 ifty.islam@at‐capital.com
Syeed Khan Partner (880‐2)‐8155144, ext. 109 syeed.khan@at‐capital.com
Akther Ahmed Senior Advisor (880‐2)‐8155144, ext. 108 akther.ahmed@at‐capital.com
Masud Khan Senior Advisor (880‐2)‐8155144, ext. 113 masud.khan@at‐capital.com

Jisha Sarwar Senior Research Associate (880‐2)‐8155144, ext. 119 jisha.sarwar@at‐capital.com
Mohammad Emran Hasan Senior Associate (880‐2)‐8155144, ext. 120 emran.hasan@at‐capital.com

S Adeeb Shams
Ahmad Sajid
Research Associate
Research Associate
(880‐2)‐8155144, ext. 128
(880‐2)‐8155144, ext. 135
adeeb.shams@at‐capital.com
ahmad.sajid@at‐capital.com
Abdullah‐Al‐Farooq Research Analyst (880‐2)‐8155144, ext. 133 abdullah.farooq@at‐capital.com
M. Emrul Hasan Research Analyst (880‐2)‐8155144, ext. 138 emrul.hasan@at‐capital.com
Md. Zahidur Rahman IT Analyst (880‐2)‐8155144, ext. 140 zahidur.rahman@at‐capital.com
Ohidul Alam Chowdhury Analyst (880-2)-8155144, ext. 130 ohidul.alam@at‐captial.com
Sohana Alam Seraj Office Manager (880‐2)‐8155144, ext. 132 sohana.alamseraj@at‐capital.com

AT Capital Team – North America/Asia

Zarif Munir Senior Advisor zarif.munir@at‐capital.com
Professor Jahangir Sultan, Ph.D. Senior Advisor jahangir.sultan@at‐capital.com
M. Nasim Ali Senior Advisor nasim.ali@at‐capital.com

Iqbal Hussain Senior Advisor iqbal.hussain@doctors.org.uk
Robert Kraybill Senior Advisor robert.kraybill@at‐capital.com

© Copyright 2008. Asian Tiger Capital Partners Limited, Level 16, UTC Tower, Panthapath, Dhaka – 1215, Dhaka, Bangladesh.
All rights reserved. When quoting please cite “AT Capital Research”. The above information does not constitute the provision
of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily
correspond to the opinions of Asian Tigers Capital Partners or its affiliates. Opinions expressed may change without notice.
Opinions expressed may differ from views set out in other documents, including research, published by Asian Tigers Capital
Partners Limited. The above information is provided for informational purposes only and without any obligation, whether
contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the
information given or the assessments made.

_______________________________________________________________________________________

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