BANGLADESH

Monday, December 19, 2011 See this report at worldfolio.co.uk

Accomplishment beyond expectation
In forty years since independence this undersized country has achieved oversized feats, but how?
angladesh’s Prime Minister Sheikh Hasina has affirmed before parliament that her government is “for the people, by the people and of the people.” She further echoed this sentiment when she visited David Cameron at Number 10 on January 27, 2011, saying: “My agenda is very clear, I want to build up my country as a poverty-free, illiteracy-free country, and I want to make sure that our people get healthcare, health service and education.” In the past, Bangladesh has been unfairly satirised as “Bang-the-dish” and it has come a long way since Henry Kissinger dubbed it an international “basket case” 40 years ago. In fact, last year the Wall Street Journal suggested that Pakistan could learn about economic growth and confronting terrorism from its former eastern province in an article headed “Bangladesh, ‘Basket Case’ No More”. The UN has also lauded Bangladesh in its progress toward achieving its Millennium Development Goals, Bangladesh was one of six countries in Asia and Africa feted for its progress toward achieving those goals. It has a rapidly expanding economy and is one of the world’s major exporters of readymade garments. The world’s third most populous Muslimmajority country has also taken a strong stance against global terrorism and confronts any radical ideology that may fan its flames. During a recent three-day visit, German President Christian Wulff called Bangladesh a “stabilising force” in South Asia and commented: “Bangladesh is a key partner for Germany when it comes to tackling global challenges, including the question of how we can together contribute to improved understanding across cultural and religious boundaries.” Bangladesh was previously the breadbasket of the region, earning it the name

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Bangladesh has been lauded for its poverty-reduction efforts and hailed a “stabilising force” in South Asia

“Golden Bengal” in pre-industrial days. Its infrastructure was destroyed during the war of independence of 1971. In addition, natural disasters hit developing countries hardest and Bangladesh was recently identified by the Global Climate Risk Index as the country most affected by extreme weather events between 1991 and 2010. Unsurprisingly, the government is tackling global climate change, food security and poverty confidently. In 2005, the poverty rate in Bangladesh was around 40 per cent; by the end of last year it had fallen to 31.5 per cent, putting the government’s Poverty Reduction Strategy on a good footing to hit its goal of lifting 12 million people out of poverty by 2015. So what is behind the poverty rate falling by almost a quarter in just five years? In a recent interview with The Washington Post, the Prime Minister attributed it to a combination of factors, saying: “We have been trying to find the root causes of poverty and how we could reduce it. We wanted to ensure food security so we put all our force into producing more food and also the distribution system so that food should first reach the poorest of the poor. Then we tried to create job opportunities for them in the rural areas. Now our farmers can open bank accounts with 10 taka [8 pence], a very small amount, and the subsidy we give goes directly to the farmer. So they use this money for cultivation and also it creates job opportunity. “We also established one bank to create job opportunities for the younger generation. Without any collateral, they can take out a loan from the bank to start a business. I believe that educating our people will also help to reduce the poverty level. So our education is free up to primary level for everyone, and for girls it is free up to high school level.”

“Digital Bangladesh is becoming a reality”
As part of her election manifesto, Prime Minister Sheikh Hasina promised to make Bangladesh a middle-income country, particularly influential in the ICT sector, by 2021 Vision 2021: Digital Bangladesh is the result of Prime Minister Sheikh Hasina and her government’s pledge to make Bangladesh a middle-income country, particularly influential in the information, communication and technology (ICT) sector, by 2021. The roadmap for this technological advancement focuses on four elements: human resource development, people involvement, civil services and use of information technology in business. The initiative is already taking shape and gaining global attention. The inauguration of the first Bangladesh-assembled laptop, called Doel, in October by the Prime Minister heralded a major step forward in widening access to ICT across the country. At the launch, the Prime Minister highlighted the various steps the government has taken for the advancement of Bangladesh through launching web portals, setting up e-centres at district levels and withdrawing tax on computers. Publicly owned Telephone Shilpa Sangstha (TSS) has been assigned to manufacture the cut-price computers and has so far made 6,000 laptops and netbooks for sale. The product range comprises one laptop and three netbook models. The netbooks are cheaper and have lower specifications than their laptop counterpart and prices for the Doel computers range between Tk 10,000 and TK 26,000 (£85-£220), depending on their configuration. A month later, at the opening of the One-Stop Service Centre in Dhaka on November 14, 2011, UN Secretary-General Ban Ki-moon remarked: “Digital Bangladesh is becoming a reality [...] And that is what people across Bangladesh can see with their own eyes. “Vital services are being provided quickly and affordably. Modern electronic systems have replaced century-old, heavily bureaucratic manual administrative practices. “Women have new venues for empowerment. Cutting out middlemen reduces corruption. And instead of travelling long distances for such services, people in all 64 districts now have, as the slogan so aptly puts it, service at their doorsteps.”

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BANGLADESH

Presenting Bangladesh to the rest of the world
Highly educated, independent and q
t home, Bangladesh’s newfound stability under the Awami League government is allowing the country to flourish with the introduction of a more efficient bureaucratic system and regulatory reforms. Overseas, it is increasingly taking a more significant stance on the world stage on a range of issues, including climate change, women’s empowerment and poverty reduction. Furthermore, while many countries around the world search for ways to break out of serious financial difficulties, Bangladesh has never defaulted on its payments or gone bankrupt. “Bangladesh is probably one of the best-kept secrets,” says Dr Dipu Moni, Bangladesh’s Minister of Foreign Affairs. “The perception around the globe in many areas is due to the international media. Whenever they talk about Bangladesh they talk about the challenges, the floods, the cyclones and boats capsizing, as well as overpopulation and climate change. But they do not talk about the other realities.” Bangladesh is the seventh most populous country in the world. Its population exceeds 158 million people – roughly half that of the United States – in an area only twice the size of Ireland. Yet despite such population density, and a reduced availability of agricultural land, it now meets almost 100 per cent of its domestic food requirement. By comparison, in the 1970s its population was half it is today and only about 60 per cent of its food crop was produced. “This is a great achievement,” says Dr Dipu. The Minister attributes the resilience and adaptability of the people as the country’s greatest asset that should be acknowledged internationally. Climate change, overpopulation, poverty, the struggle for rights, and the sacrifice of lives for an independent, democratic country are all cases where Bangladeshis have had a chance to show their true colours. “In any part of the world you have natural or manmade disasters or riots, looting and all sorts of things. But here, even during the worst disaster, people come together and help each other. They are hard working and honest, and the best thing is that they have never accepted anything less than democracy,” says Dr Dipu. “This is a country where, despite all these challenges, we are achieving our Millennium Development Goals (MDGs).” People-to-people links are at the core of the close relationships that exist between the UK and Bangladesh. Today, almost half a million British nationals are of Bangladeshi origin – a community whose contributions to UK society have not just impacted on the nation’s palate, but are also visible in government, politics, business, law, education, innovation and technology. The UK has provided a great deal of support for Bangladesh since its liberation in 1971. The Department for International Development (DFID) in the UK has the largest bilateral grant aid programme in Bangladesh. It has pledged to spend an average of £250 million per year on development initiatives there until 2015. According to the British High Commission in Dhaka, the UK is also looking to support the Bangladeshi leadership in key international

CLIMATE CHANGE

Tackling the issues
Bangladesh has to meet the challenges presented by extreme weather Bangladesh is one of the most unfortunate countries in the world with regard to climate change. Despite the fact that it does not contribute to these negative changes, Bangladesh is paying the price for other countries’ industrialisation. Although various states have made promises to Bangladesh to help combat the issues it faces, few are following through with actions. “The UK is probably one of the very few countries which has kept its promise in terms of helping with mitigating climate change. They have come up with some funds, whereas many others, although they pledged to do so, did not come up with any funding,” says Dr Dipu Moni, Minister of Foreign Affairs. Both the northern and the southern parts of Bangladesh are affected, in differing but harmful ways. Previously, Bangladesh’s summer lasted for two to three months. Now, however, as the heat increases, so does the duration of summer, which now lasts from five to six months. Gradually, rivers will dry up and the northern half of Bangladesh could turn to desert. An extreme drought would destroy the fertile land that allows Bangladesh to grow its own food, maintain its self sufficiency, and contribute to the country’s main source of GDP: agriculture. Tropical cyclones have also taken an unexpected turn for the worse, with their numbers and strength increasing. These stronger and more frequent cyclones increase the size and speed of high tide waves, causing more flooding. Many places are gradually sinking in the amount of water that pours over the land. Thousands of people and animals die, and the water’s salt content destroys any standing crops. It is universally recognised that Bangladesh is vulnerable to these climate changes because it is low lying, located on the Bay of Bengal in a delta, and densely populated. As a result of these problematic changes, the government is putting special emphasis on the conservation of the environment and its development. The government has undertaken integrated policies and plans to protect the country from the impact of global warming by building pollution-free environments and protecting water resources: 134 programs have already been launched to aid in these changes, as promised by the government in its election manifesto. Bangladesh hosted the CVF (climate vulnerable forum) in November in Dhaka, which gave Bangladesh new visibility in its fight against climate change.

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Our people are our greatest asset.”

DR DIPU MONI, Minister of Foreign Affairs

institutions, for example in the latter’s role as a major provider of UN peacekeeping forces and in multilateral bodies responsible for climate change negotiations. Prime Minister David Cameron welcomed Bangladesh’s Prime Minister Sheikh Hasina on her visit to London in January, commenting: “We have a good and strong relationship between Britain and Bangladesh. We have a great shared interest in tackling issues like climate change.” In addition, both Britain and Bangladesh have been targets of indiscriminate terrorist violence. During the January visit, both leaders reaffirmed their commitment to continue working together to counter the threat by building up the capacity to pursue terrorists and protect against attack, and also through addressing the root causes of extremism. “We have now become an example to the world in terms of disaster management where we have involved the whole community in a disaster management programme. We have also become an example in terms of counter terrorism and counter extremism,” says Dr Dipu. “In our society there is no room for extremism or terrorism because people do not like it. Even though at some point in our

history some regimes did support these groups, the population rejected it completely.” This determination to draw the line at extremism has allowed Bangladesh to become a pluralist society where ethnic and religious harmony is present, not because of any imposed force, but rather from something that has come from within. Dr Dipu says, “The influence of Buddhism is where men are carriers of knowledge, but women are carriers of wisdom. The Hindu influence is also there. In Islam the first person to become a martyr was a woman, and in our Prophet’s life there was a great influence of women around him. There is violence against women in this society, like anywhere, but in our culture there is a special place for women.” Dr Dipu is a firm advocate of women’s participation in politics. She is one of two master trainers who have trained women political activists under a programme she helped design and implement in close relationship with the National Democratic Institute (NDI) of the US. “This is a great country for women and everyone, because if women move forward, then the whole country moves forward,” she says. Dr Dipu has also played an important role in many other sectors, including health and human rights, both locally and globally. The Foreign Minister stresses the importance of good international relations. “Our main motto with regard to our foreign policy is to be friends with everyone,” she says. The US is Bangladesh’s biggest trade partner and largest source of foreign direct investment, followed by the UK. It also has growing business, trade and investment relationships with China. Dr Dipu adds: “If you look at our infrastructure, a sizeable proportion of it has some kind of Chinese influence. We are definitely looking forward to cooperating in the energy, power and infrastructure sectors, as well as other areas including science and technology, agriculture, research and innovation.”

BANGLADESH PRO JECT TE AM: ANDREW MACHAJ, SOPHIA SHEPODD, MAX GAJDEL. REGIONAL DIRECTOR: VINCENT RIFICI. UPPER REACH, 68 King William Street, London EC4N 7DZ, Tel: +44 (0)207 959 2424, Fax: +44 (0)207 959 2201 See it also at facebook.com/worldfolio

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BANGLADESH

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DEMONSTRATING DEMOCRACY FACILITATING GROWTH
a prime strategic location between two economic giants – India and China. Easy access by sea, air and roads allows for a huge market. It is also cost effective to invest in Bangladesh compared with other countries because of export processThe battle for democracy has not been easy for ing zones and government incentives such as Bangladesh, and despite interruptions that have tax holidays. Currently the UK is the third largest export desstalled the democratic process, the people retination for Bangladeshi products. Total exports main optimistic. “The people of Bangladesh love democracy. to the UK from Bangladesh in the last fiscal year They are liberal and progressive – not extremists 2010-2011 were $2.23 billion – a 35 per cent rise or militants. They keep demonstrating to restore from the previous year. Some export items from democracy and democratic processes,” he says. Bangladesh to the UK include shrimps, home texWith this attitude, Bangladesh continues to move tiles and woven garments, but the country has many more products to offorward, hoping to sustain fer besides traditional items, itself as a self-reliant naranging from computer softtion. “This is the priority of ware to ceramics – and even the government – we want shipbuilding. to depend less and less on Bangladesh and the UK foreign donations,” Dr have historic, traditional and Khan adds. friendly ties that predate According to financial 1971 and the two nations analysts and watchdogs, have worked closely in varBangladesh is expected ious international forums on to be one of the 11 emerga range of issues, including ing economies in the climate change, human world in the next decade rights and UN peacekeepdue to the country’s ining. “Bangladesh considers vestment potential in the UK to be a very dependsuch sectors as garments able friend and development and textiles, tourism, powpartner,” Dr Khan says. “In er and energy, leather and fact, the relations between leather goods, food, inour two countries are deformation technology and fined by a shared aspiration business services. One for democracy, development non-traditional sector and human rights, and a viBangladesh is currently brant trade and economic exploring is pharmaceutipartnership, and the prescals, with pharmaceutical ence of a large Britishfirms currently supplying Bangladeshi diaspora.” products to 75 countries, Currently there are about including Britain. 500,000 British BanglaBangladesh’s business deshis living in the UK, and environment is investment 35,000 students from friendly when compared DR M. SAYEEDUR RAHMAN KHAN, Bangladesh studying in with other Asian countries, High Commissioner for the People’s the UK. and the country also boasts Republic of Bangladesh Dr M. Sayeedur Rahman Khan, High Commissioner for the People’s Republic of Bangladesh is determined to raise the image of Bangladesh in the UK and other countries

THE UK-BANGLADESH BOND HAS NEVER BEEN STRONGER
The relationship between the two countries is a long-standing friendship with a big future “We have a strong working relationship with Bangladesh and shared interests globally and domestically,” explains British High Commissioner to Bangladesh based in Dhaka, Mr Robert Gibson. Britain is a close partner, not least on the commercial front. “The UK is the largest investor in Bangladesh with a cumulative total of approximately £2 billion at the moment. There are over 50 British companies operating throughout the country,” says Mr Gibson. Encouraging private investments benefits economic and social development and increases employment. “The benefit for a company operating here is the large workforce. Bangladesh is a huge exporter of labour around the world. Inside Bangladesh there is a large workforce available for companies,” adds the High Commissioner. The UK has the largest bilateral grant aid programme in Bangladesh, aimed at helping over 15 million people living in poverty. The aim is to assist the poor with improved education, better family planning and the development of technical skills among employment seekers. “Through its education programme, the UK’s Department for International Development (DFID) hopes to ensure there is virtually 100 per cent primary education across the country and that the majority of children stay in education and that this is of good quality,” adds Mr Gibson. “We enjoy a shared vision in global affairs, and one of the areas where we cooperate is climate change.” Undoubtedly, the strongest bond that exists between Bangladesh and the UK is the people-to-people connection. Personal and family ties stretch across and beyond borders in such a way that a fusion of cultures could be said to have taken place. The UK is home to an estimated half million nationals of Bangladeshi descent, and is the firm choice of destination for studying abroad, while Bangladeshi culinary tastes now form part of the British palate. There is even the mutual passion for cricket! So, for a multitude of reasons, the strong bond between Bangladesh and the UK promises to be a long-term relationship.

We enjoy a shared vision in global affairs.”

ROBERT GIBSON, British High Commissioner to Bangladesh
“Forty years after independence, Bangladesh is rapidly emerging on the global stage. This is a country with enormous potential and opportunities. The biggest treasure is undoubtedly the people – they are dynamic, resourceful and full of aspiration,” concludes Mr Gibson.

BRAC pioneers innovative approach to poverty alleviation
Once one of the world’s poorest nation’s, Bangladesh has made some remarkable achievements in the fight against poverty and improving social and economic prospects for its people “Out of adversity comes opportunity,” Benjamin Franklin once famously declared, and a year after a devastating civil war brought independence to East Pakistan, as Bangladesh was formerly known, Sir Fazle Hasan Abed left his executive accountancy position at Shell Oil and devoted himself to helping fellow Bangladeshis help themselves. He believed that to change poverty, you had to change society, especially in rural communities. Founded in 1972 and dedicated to empowering the poor to bring about change in their own lives, his multiple award-winning BRAC project – which started as an acronym (Bangladesh Rehabilitation Assistance Committee) and became a motto, “building resources across communities” – has pioneered a business-like approach to tackling the realities of poverty and has arguably become the most successful non-governmental organisation (NGO) on the planet. The unleashing of human potential through self-reliance is at the core of BRAC’s operations. After initially being involved with relief work, BRAC has developed support services in the areas of human rights and social empowerment; education and health; economic empowerment and enterprise development; livelihood training; environmental sustainability; and disaster preparedness. According to Subinay Nandy, country director, China, at the United Nations Development Programme: “BRAC is the world’s largest development organisation and is doing tremendous work impacting the lives of millions. BRAC is making a significant contribution to Bangladesh, making huge leaps forward in meeting the Millennium Development Goals.” In his book Freedom from Want, Ian Smillie refers to BRAC as “undoubtedly the largest and most variegated social experiment in the developing world. The spread of its work dwarfs any other private, government or non-profit enterprise in its impact on development.” BRAC launched its microfinance programme in 1974 to provide the poor with the economic tools to fight their own way out of poverty, which now distributes around $1 billion (£640,000) a year in microloans. In partnership with the IFC and ShoreCap International, it is also behind one of the leading private banks in Bangladesh – BRAC Bank – that is renowned for its support of small and medium-sized enterprises (SMEs).
BRAC: “Undoubtedly the largest and most variegated social experiment in the developing world”

BRAC now reaches over eight million borrowers, with the number steadily rising due in part to this year’s launch of bKash Limited, a mobile financial service provider in Bangladesh and a subsidiary of BRAC Bank. Gender equality, respect for the environment and inclusivity cut through all of its activities. BRAC is also an internet service provider, has a university, and its primary schools educate 11 per cent of Bangladesh’s children. BRAC also runs feed mills, chicken farms, tea plantations and packaging factories. Although BRAC is now active in 10 countries and spans three continents, the majority of its work remains in Bangladesh. Its low-cost, effective and adaptable solutions to the day-today problems facing poor families can be scaled up quickly to a national level and now reach every village in the country, which covers an area roughly twice the size of Ireland and has a population of more than 158 million people. BRAC has built a massive global network of micro-franchised entrepreneurs providing services in agriculture, poultry, livestock and health. Sir Fazle calls it a “holistic, sustainable, market-oriented approach” to poverty alleviation that uses microloans, training and branding, while offering borrowers low-cost access to inventory, efficient distribution systems and continuous support. He recently presented his approach to more than 2,000 delegates at the Global Microcredit Summit 2011 in Valladolid, Spain.

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BANGLADESH

FINANCE
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mid the unprecedented global financial crisis Bangladesh has managed to keep its head above water. Bangladesh achieved a GDP growth of 5.74 per cent in the 2008-09 fiscal year and the Medium Term Macroeconomic Framework has envisaged it will only keep growing. An anticipated GDP growth of 6.7 per cent is expected for the 2010-11 fiscal year, with a gradual increase to 7.2 per cent and 7.6 per cent in 2011-12 and 2012-13 respectively. A combination of all of the sectors of Bangladesh are to thank, as reforms and projects are being done in every area to make Bangladesh’s potential more obvious to investors. Abul Maal Abdul Muhith, a renowned economist, diplomat, freedom fighter, language veteran, and now currently the Finance Minister of Bangladesh, feels confident that through the multiple projects in various sectors that he oversees, these investments will be achieved. “I think the potential here is easy to recognise, and investors will continue to come and invest in Bangladesh. Billions of dollars need to be invested in power, roads, highways, and obviously in railways. So, we are appealing for higher foreign investments and high foreign assistance. So far we are receiving strong responses from investors. They have increased their commitment to the country even though there are a number of problems we continue to work to correct,” he says. One sector getting a lot of attention is power and energy. Due to power outages and an overall lack of power in many parts of the country investors have been discouraged. The government has yet to provide gas connections to more than 250 new industrial units and some 5,000 new apartments,

Paving the way to a new prosperity
With ongoing economic reforms and incentives for businesses, the Ministry of Finance is an active department looking to openly engage foreign investors in the country
causing serious setbacks for the industries involved. However steps have already been taken to combat the problem with the signing of an agreement with Qatar. “Now we are going to try something different by using coal along with gas, which is our main source of power right now,” Mr Muhith says. “We are going to import LNG (liquefied natural gas). Half a billion tonnes of LNG will be imported from Qatar. So I hope we will be able to correct our electricity crisis very soon.” The government has given highest priority to the power sector development and is committed to ensure availability of electricity to all by 2021 by following the Power System Master Plan 2010. To fulfil the growing demand of electricity, various short, medium and long-term generation, distribution and transmission projects are at different stages of implementation. According to the existing generation expansion programme, a total of 11,456MW of new generation will be added to the national grid by the end of 2015. In addition to power generation, initiatives have also been taken to build new transmission and distribution infrastructure along with renovation and maintenance of the existing ones for reliable and quality power transmission and distribution networks to ensure regular and uninterrupted power supply to the consumers. Another sector that is growing rapidly is transportation. Being linked with South-East Asia has forced Bangladesh to keep up with the rapid growth of this particular industry. “We are looking to improve the transit traffic through government policies,” explains Mr Muhith. “Transit to any country will become available in Bangladesh. South-East Asia is growing very fast. So, if we can make transit facilities available with these countries I think the economy of Bangladesh will grow rapidly.” A total of 119 development (or investment) projects, including six JDCF (Japan Debt Cancellation Fund) projects, were included in the Annual Development Program of Roads and Highways Department for 2009-10. The Ministry of Local Government, Rural Development and Co-operatives (LGRD) has constructed a total of 135,313km (64,691km unpaved roads and 70,622km paved roads). Bangabandhu Bridge is playing a vital role in the road transport system and economy of the country by linking the northwest with the eastern part of Bangladesh. With the assistance of Asian Development Bank, the Bangladesh Railway Sector Improvement Project has been undertaken to modernise Bangladesh’s railways. Projects are also in motion to improve the main ports. Special emphasis however has been put on the financial management sector, since an efficient financial sector is a prerequisite for economic development. The government has taken a number of initiatives towards reform. The Bangladesh Bank is implementing the Central Bank Strengthening Project with the financial assistance of the International Development Agency. The project started in 2003 and should be completed by the end of this year. The main objective of the project is to transform Bangladesh Bank into a modern and dynamic institution capable of playing appropriate regulatory and supervisory role in the monetary and banking sector.

ABUL MAAL ABDUL MUHITH, Minister of Finance

South-East Asia is growing very fast. So, if we can make transit facilities available with these countries I think the economy of Bangladesh will grow rapidly.”

Aiming to enhance the banks’ appeal nationwide
The Association of Bankers works to heighten regulation and compliance among the country’s banks, and helps spread their influence he Association of Bankers, Bangladesh Limited (ABB), is an organisation that fosters friendship among bankers, and provides a forum for the discussion of common issues. Since its establishment in 1997, its role has been pivotal in the development of the country’s economy. ABB chairman, K Mahmood Sattar asserts that in recent years Bangladeshi banks have experienced noteworthy developments through the development of private sector interests. “Out of the 48 banks, 30 are from the private sector. 10 years ago the nationalised banks had 70 per cent market share. Today it is the reverse – the private sector makes up 68 per cent of the market.” The SME sector – said to account for over 95 per cent of the nation’s business enterprises – is currently the focus of bankers’ interest, as more consumer items and export-oriented goods are produced. “We are being encouraged to look at SMEs, and this is really taking off,” affirms Mr Sattar. The World Bank Outlook for 2012 forecasts that emerging and developing countries will lead the way in the global economic recovery. Bangladesh’s banking sector is adopting measures to create regulations that will safeguard the nation’s economy against any possible future financial and operational risks. “I think the two strongest pieces of regulation which have come in have been the Basel II adoptions. Every bank in Bangladesh is Basel II compliant,” explains Mr Sattar. “We have finished the first phase and we are now in the second phase

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which concerns the strategic pillars, where additional capital is required... We have been talking about Basel III as well.” ABB continues its efforts to spread its reach to the unbanked population. According to Mr Sattar, currently “9 per cent of our population are bankable,” though he is optimistic about future prospects. “Soon this figure will be up to 30 per cent.”

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BANGLADESH

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Dhakar’s modern skyline may come as a surprise to Western eyes

BANGLADESH BANK

CRISL

Balancing the books
Through active reforms, and the implementation of Basel II, Atiur Rahman has restored stability to the country’s finance and banking sectors

Rating and enforcing
The establishment of a credible credit rating agency has been essential to the country’s financial progress

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he borders of Bangladesh as they stand today were established back in 1947 with the Eastern region of Bengal becoming East Pakistan, the eastern part of a new country Pakistan, separated by over 1,600 kilometres of Indian territory from West Pakistan, the Western part. Political exclusion, ethnic and linguistic discrimination, and economic neglect by the politically dominant West Pakistan kept breeding resentment and unrest in East Pakistan, eventually leading to the War of Liberation that ended on December 16, 1971, with surrender of the Pakistani occupation forces to a joint command of Indian Army and Bangladesh liberation forces at Dhaka, the capital of the new Peoples Republic of Bangladesh. Branches of the State Bank of Pakistan in the erstwhile East Pakistan were reconstituted by the government of Bangladesh as Bangladesh Bank, the central bank of the new country. Sheikh Mujibur Rahman, founding father of the new nation, had a socialist agenda; and accordingly the government nationalised all banks in 1972 to ensure channelling of the country’s funding resources to high priority sectors for the reconstruction of the war-ravaged country with the restoration of industry and agriculture. However, the administration’s inexperience with state control of various sectors prevented banks from functioning as they should. In the initial years in regime of directed lending at prescribed interest rates the meagrely capitalised nationalised banks kept on handing out loans without commercial consideration driven due diligence. Legal processes for recovery of defaulted loans were hopelessly slow in the nascent judicial system, and non-performing loans kept piling up. While the government in the early years made a point of intervening in all possible areas, proper regulatory and supervisory processes for timely diagnosis and redressing of problems were not in place. As such, in the early years after independence, banking concepts like liquidity and profitability became alien to many financial managers, with capital adequacy and solvency taking backseats. Financial sector reform initiatives taken up in the 1980s brought back private sector bank ownership and lending on commercial considerations; from early 1990s directed lending was abolished, and interest rates were freed up. From then on Bangladesh Bank has been steadily pursuing updating of local financial sector regulatory and supervisory practices structures towards full convergence with international best practice standards, including the Basel Committee riskbased capital standards and liquidity buffers. Dr Atiur Rahman, the incumbent Bangladesh Bank Governor, is keen to point out that despite the teething period problems of the earlier years the Bangladesh

We are much, much cheaper than both China and India in terms of labour costs. We can outbid anybody for many years to come.”
DR ATIUR RAHMAN, Governor of Bangladesh Bank

economy has been growing steadily over the years, and is now on firm footing on a path of faster growth over the coming years. He insists that it is this future rather than the past that should be of most interest and relevance for investors. “Bangladesh is an untold story, an unearthed secret, waiting to come out to the world. A new, inclusively growing, socially and environmentally responsible Bangladesh is emerging outside the glare of centre stage and beyond the traditional Western vision. This Bangladesh is resilient, innovative, very forward looking and liberal in attitude.” Bangladesh Bank has now progressed vastly from the initial shaky

start to presiding over a dynamically growing, robust and stable banking sector, with proactive reforms in regulatory and supervisory standards and the introduction of practices like stress testing. This dynamic financial sector is capably supporting steady output growth in the economy. “Our 6.7 per cent FY11 real GDP growth target was attained, and the economy is on course for attaining the 7 per cent growth target for FY12,” said Governor Atiur. “Exports and imports both grew by more than 40 per cent y-o-y in FY11. The composition of imports was remarkable, with only about one seventh in consumption goods and all the rest in capital goods and production inputs. BB’s financial inclusion campaign embraced enthusiastically by banks is promoting credit flows to the productive, income and employment-generating micro, small and medium-scale enterprises throughout Bangladesh, hastening poverty reduction. This is evidenced in the recent substantial rise in rural real wages and in attendant decline in poverty.” Governor Atiur sees the growing population of young and willing workers throughout Bangladesh as an important advantage. “We are much, much cheaper in labour costs than both China and India; we can outbid other countries on this count for many years to come. I’ve heard of a Western automobile manufacturer getting their car interiors designed by teams in Bangladesh. Senior representatives from many leading global IT sector corporates visiting Bangladesh have expressed keen interest in utilising our upcoming crop of young tech-savvy manpower. Foreign investors in the apparels and other light export manufacturing sectors, including those from China, India, Korea and the Gulf region, have bought up or set up manufacturing units in Bangladesh. The electricity and gas shortages impeding these processes are now being addressed which by themselves are investment opportunities for foreign investors.” Governor Atiur recognises the important role that foreign investors, particularly the larger multinationals, can play towards faster economic growth in Bangladesh, bringing in global marketing clout besides output technology and investment capital. Recalling the role of capital market development side by side with financial sector development, Governor Atiur points out that except for volatile short-term capital flows in the money and credit market, non-resident owned direct and portfolio investments can enter Bangladesh freely; and post tax profits/dividends and disinvestment proceeds thereon can be freely repatriated abroad in convertible currencies. Further information on these foreign investment facilities in Bangladesh can be accessed from such sources as Bangladesh Bank, Board of Investment and the Bangladesh missions abroad.

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redit Rating Information and Services Limited (CRISL) is the first credit rating company in Bangladesh. The company was incorporated with the Registrar of Joint Stock Companies in 1992 and Credit Rating Company rules 1996 as a recognised ECAI, and has been operating as the first rating company in the country since 1995. Initially, all credit risk assessments were done internally by SEC Bangladesh (Security Exchange Commission of Bangladesh), which acts as the regulatory body for external rating institutions. This scenario has been changing slowly as dependency on, and trust of, credit rating agencies grow stronger. The genesis of the CRISL is linked with the Bangladeshi government’s efforts to organise the first ever Euromoney Conference in Bangladesh in 1994, where a large number of international investors and world investment forum members were invited, with a view to gaining some insight into the financial stability of the South Asian country. The participants concluded that the reason Bangladesh had not been receiving the desired level of investment was that the country did not have a rating agency, and the country had not been rated officially by any international rating body. In absence of the above, some international rating agencies, based on the limited financial information available at the time, gave Bangladesh a ‘C’ rating, which meant a highly speculative and risky country for investment. In late 1994, Dr Muzaffar Ahmed, a leading Bangladeshi economist and business professor at the University of Dhaka, took the position of CEO at CRISL, a position which other financial experts had considered carried too much responsibility, for too little reward. Dr Ahmed immediately visited several rating agencies in India to get a better understanding of those companies, their operational methods and their prospects. Upon returning to Bangladesh he discussed the project with a few select professionals and business people, making detailed presentations, ultimately convincing them to join with him, and invest in CRISL. Since its beginnings CRISL has played a major role in reversing the financial mistakes made by the newly independent Bangladeshi government of the 1970’s, particularly non-performing loans. Dr Ahmed recently said: “The Central Bank instructed all banks to be rated every year in the financial sector, which means all the banks have to submit a credit rating to the Central Bank every year. This has a tremendous impact on the economy, since banks are required to report on their compliance status. As a result, in the last 10 years the number of non-performing loans (NPL) of our banks has substantially decreased.”

An advertisement supplement by UPPER REACH

6

BANGLADESH

LONG–TERM VIEW IS THE BEST POLICY FOR INSURANCE LEADERS
Green Delta is about to celebrate its 26th anniversary – testament to its philosophy of always looking for long-term growth colleagues’ first-hand experience working abroad got the company off to a flying start. In 2010, GDIC was once again the highest premium collector, and despite the worldwide recession, GDIC Green Delta Insurance Company Limited (GDIC) is is still producing the numbers. It reported a 24.95 one of the leading private non-life insurance com- per cent increase in gross premium to BDT panies in Bangladesh, providing an array of in- 2,001.31 million, a remarkable investment income of BDT 577.10 million, an insurances such as fire, burglary, crease in profit after tax reachmarine, and health. ing BDT 502.41 million, a 63.80 In January 2012, GDIC will per cent growth in the available celebrate its 26th anniversary. solvency margin, and a shareWhile GDIC was incorporated on holders equity growth by 46.15 December 14, 1985, as a pubper cent standing at BDT 3,127.20 lic limited company, actual opmillion. In Mr Choudhury’s speech eration of the company started to the company’s shareholders on January 1, 1986, with a paid he confirmed “that with the right capital of only BDT 30 million strategic guidelines and timely (£253,000). Since the privatiexecutions of plans, GDIC has sation of the insurance sector successfully overcome hurdles Green Delta was the fifth comduring the year 2010.” pany to be established, gaining “As a part of the diversified Initself a reputation as one of the vestment strategy, we have almost respected companies in ready received the approval for a the business. Merchant Banking license from Nasir A. Choudhury, managSecurities and Exchange Coming director of GDIC, has played mission and started the operaan important role in the growth tion in the name of Green Delta LR of the company thanks to his 50 NASIR A. CHOUDHURY, Financial Services Ltd and our years of experience in the inGreen Delta Mutual Fund has startsurance sector which started Managing Director of GDIC ed to trade in both Dhaka and Chitin 1958. Mr Choudhury attended two different insurance courses for a total of tagong stock exchanges,” Mr Choudhury added. Green Delta’s success can be attributed to its 14 months in the UK and Germany, and upon completing them was posted in Pakistan Insurance multiple strategies concerned with long-term sucCorporation’s Regional Office at Chittagong, which ceeding. Creating value for its customers, inbecame the Bangladesh Insurance Corporation af- vesting in and developing talents of its employees, committing to ethical conduct, and assumter independence. Success for GDIC began from day one. It was ing social responsibility are just a few of the ways the first insurance company to be launched pure- GDIC is focused on maintaining a strong financial ly by professionals, and Mr Choudhury and his stance, both for now and for the future.

ENCOURAGING FURTHER GROWTH IN THE CAPITAL MARKETS
Using technology and innovation the Dhaka Stock Exchange is working towards a stronger exchange and future capital market stability The Dhaka Stock Exchange (DSE), Bangladesh’s first and most important stock exchange, is located in Motijheel, in the heart of Dhaka. In mid-2010, DSE had over 750 companies listed with a combined market capitalisation of $50.28 billion (£32.28 billion). Part of this achievement is due to the country’s political stability during the past couple of years, and the strong workforce and the capacity to produce cheaply have also contributed. “The purchasing power of the people is increasing, and as a result local business is increasing,” says Shakil Rizvi, president of the DSE. The financial market continues to develop as the concept of privatis- SHAKIL RIZVI, President of the Dhaka Stock Exchange, ing formerly nationalised industries addresses the press evolves. “The government is supplying new issues to public companies as well as ests of the investors are protected at all times: to government companies. As a result new com- there is no unsettlement.” Mr Rizvi is promoting usage of the exchange to panies are coming into various sectors, and this is beginning to change the market,” explains enhance socio-economic conditions. “There is a tax benefit from the government for companies listing Mr Rizvi. A sturdy infrastructure and foreign invest- on the DSE. For an unlisted company it is 37.5 per ment are essential to fully realise the country’s cent and for a listed company it is 27.5 per cent. This potential. “We need international support. Inter- creates an opportunity to be listed. If we declare a national businessmen should come here to make dividend, foreign investors can take the dividend.” Both public and private companies are encourprofit and help develop our country,” adds the aged to list to enhance the capital market. Mr Rizvi DSE’s president. DSE policies protect foreign investments. Mr extends an open invitation to all readers, “Come Rizvi says, “Our security measures follow those to Bangladesh, invest more money and receive of British rules and regulations. Here the inter- more in returns.”

THINK GLOBAL, ACT LOCAL
HSBC is a truly global business which has put down roots at a local level Generally understood to mean a set of economic, environmental and social imperatives, the concept of corporate social responsibility (CSR) is taking centre stage in business models all over the world. Though relatively new to the Bangladeshi corporate sector, institutions such as HSBC are leading the way in integrating its practices into their work philosophy.

ICB: YOUR INVESTMENT SOLUTION

“We do not term it as CSR, but rather corporate sustainability (CS) because there is a connotation in CSR of doing charity. Our growth model is more about co-existing in the country and trying to sustain businesses together,” explains Sanjay Prakash, CEO of HSBC in Bangladesh. With offices in 87 countries, HSBC is a truly international enterprise, but it has established firm roots in Bangladesh, with local workers comprising 99 per cent of its staff, as Mr Prakash proudly asserts: “There are only three expats here out of 1,050 people.” CS is very much a part of the company’s DNA, and is embedded is in all its credit procedures. “Each time we lend money to any corporate body, we make sure that they comply with good practices from a corporate sustainability point of view. We would not fund any project which violates the en-

There are only three expats here out of 1,050 people.”
SANJAY PRAKASH, CEO of HSBC in Bangladesh

The second largest corporation in terms of market capitalisation on the stock exchange, ICB offers a wide array of commercial and investment products to global investors Since 1991, Bangladesh’s economy has prospered with an average GDP growth of 5 per cent, and the government has set a 7 per cent target for this year. The role of foreign direct investment is not to be underestimated in this growth. “In Asia we are one of the three largest countries in terms of foreign remittances. Last year our export sector grew by 44 per cent. FDI in Bangladesh grew by about 30 per cent in 2010 when it only grew by 4.56 per cent globally,” explains Mohammad Fayekuzzaman, managing director of the Investment Corporation of Bangladesh (ICB). ICB was created in 1976. The purpose, explains Mr Fayekuzzaman, “was to create a capital market. There was no private sector, so ICB had to play a strong role.” Today, it is one of the country’s largest investment banks and has evolved with the times. “We have reformed ICV and created three

vironment or pollutes rivers, for example, or if we found children working in the factories,” he adds. Each year, HSBC Bangladesh contributes to four different areas: education, under-privileged children, climate and environmental issues, and cultural preservation. “In all our activities – for example, supporting underprivileged children, installing rainwater harvesting systems, promoting Bangladesh’s young entrepreneurs at a regional level, tree plantations, art and cultural endeavours – our staff play a key role,” Sanjay commented. As the leading international bank in the country, HSBC is committed to supporting Bangladesh’s international trade, particularly the exporters, he added.

subsidiary companies established to compete within the private sector.” As a result, net profits have more than tripled since 2001. The Bangladeshi government has an Equity Entrepreneurship Fund (EEF), now under the responsibility of ICB, which encourages innovation and aims to create new entrepreneurs, giving unemployed people a chance to build their own business, particularly in the IT and agricultural sectors. “We provide 49 per cent equity for the sponsors, not through a loan. They are obliged to return it in the fourth year using their profits. If they do not make a profit, they will simply return the amount they received initially, and become a 100 per cent owner of the company.” Looking into the future, Mr Fayekuzzaman envisions an alternative market. “There should be a new market where these new companies can trade and sell venture capital.” Furthermore, ICB has a Unit Fund Scheme that contributes to the industrial development of the country. “I invite non-resident Bangladeshis to invest in this fund so they can contribute to the stability of the capital market.”

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BANGLADESH

7

FARMING INFRASTRUCTURE
A strong agricultural sector is vital to the nation’s wellbeing
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griculture is the single most important sector in Bangladesh’s economy today, contributing about 20.24 per cent to GDP in 2009-10. The growth rate of this broad agriculture sector for 2009-10 was estimated to be 4.67 per cent. “The highest priority in this country is agriculture,” Abul Maal Abdul Muhith stressed, who has been the Finance Minister of Bangladesh since January, 2009. The agriculture sector is so important to Bangladesh not only for the numbers it contributes towards the country’s GDP, but also for what it does for the people of Bangladesh. This sector has given Bangladesh food security, while also making an overwhelming impact on the macroeconomic objectives of poverty alleviation, employment development, and human resources development. As a result, the Bangladeshi government is paying close attention to agriculture and fishing, and doing everything in its power to maintain its upward curve. Against a backdrop of global recession, commodity price hikes and food shortages, measures have been taken to meet the increasing food demand by increasing domestic production. Special emphasis has been given to build up a modern

PPPs changing the face of modern Bangladesh
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he private sector’s contribution to the total investment in Bangladesh’s economy is remarkable. The contribution of private investment in the national economy amounted to 20.19 per cent of GDP in 2009-2010, rising from 19.67 per cent the previous year, while public investment sector contributed only 4.77. A total of 24.96 per cent of GDP came from investments. An analysis of the investment data reveals that while the contribution of the public sector in total investment is gradually decreasing, the contribution from the private sector is steadily increasing. Multiple private sectors are showing steady growth. Thanks to participation in health and medical services, there are currently a total of 43 privately owned general insurance companies, and 17 life insurance companies in Bangladesh. To continue encouraging these private investments, the government is offering various incentives including financial assistance. At present, there are 40 private medical colleges, 11 dental colleges, and 2,114 private hospitals and clinics with a total of 33,727 beds. In addition, 4,509 privately run diagnostic centres are currently operating. Private-sector participation in pharmaceuticals is also significant. More than 97 per cent of total domestic requirements are met by local production. At present, Bangladesh is exporting 182 different brands of medicines to 73 countries worldwide, including the UK and the USA. In the 2009-10 fiscal year, private sector credit increased, mainly due to mandatory lending and refinancing to the agriculture sector, lending to small and medium-sized enterprises, and other priority sectors including trade. On the other hand, net outstanding government borrowing from the banking system declined due to an increase in revenues, and the higher level of financing from non-bank sources. As a result of the growth in private investments in multiple sectors in Bangladesh, the government has instituted reforms in privatisation schemes, to give momentum to the process and also put in place the necessary institutions and infrastructure to create a private sector-led, investment-friendly environment. It is also implementing short, medium and long-term plans to create an investmentfriendly environment and a competitive market system, both of which will ensure adoption of innovative technology and infrastructural facilities to attract entrepreneurs and expand the domestic market. In addition, the government is implementing its industrial policy, first outlined in 2009, to realise the goals of Vision 2021. Its major aims are to revamp small and medium-sized enterprises, stimulate employment creation, and increase the availability and use of information technology. The government is also keen to allocate investment resources in privatepublic partnership for risk-averse greenfield start-ups, infrastructure for industrial clusters and parks, and the development of employment-intensive industries in difficult and remote areas.

Young population spurs demand for data services
Using the latest and best technology, Citycell is growing by delivering quality services to the nation’s young population Citycell (Pacific Bangladesh Telecom Limited) is Bangladesh’s and South Asia’s pioneering mobile communications company and the only CDMA (code division multiple access) mobile operator in Bangladesh. The company was founded in 1989 and in 2008 was converted to a publicly listed company. Citycell is currently owned by Singtel with a 45 per cent stake, and the remaining 55 per cent is owned by the Pacific Group and Far East Telecom. The telecommunications company is a customer-driven organisation whose mission is to deliver the latest in advanced telecommunication services to Bangladesh with a full range of mobile services for consumers and businesses that are focused on the unique needs of the Bangladeshi community. Mehboob Chowdhury, a highly-regarded Bangladeshi business consultant and recurrent senior executive to many telecommunication companies in Bangladesh, presently runs the company. He is known to have worked with all six of the non-government telecommunication operators. “The telecom sector has become a mass market,” said Mr Chowdhury. “In working towards developing a ‘Digital Bangladesh’ it is important to understand that we have a young population, the majority of which are under the age of 25. This means to digitise Bangladesh, appropriate applications need to be created to meet the needs of this demographic. As a network operator, I can provide these tailored applications to the youth. “And Citycell has made the move. 3G technology has taken a shift and we have decided that we will become the most data-centric provider in the country. We launched EV-DO in 2010 which provides 3.7 megabit speed on a broadband wireless network. We are focusing on data and information services. We were the pioneers in Bangladesh and we are again, because we have taken a stand that we will be the first choice when it comes to data services.” Keeping in line with the company’s vision of leading from the front, Citycell was proud to announce that its wireless broadband service, Zoom Ultra, won the award in the category of the Best Emerging Market Initiative at the Asia Communication Awards, held in Singapore earlier this year.

The highest priority in this country is agriculture.”
ABUL MAAL ABDUL MUHITH, Finance Minister of Bangladesh

agricultural system, with the introduction of new technologies and expansion of opportunities for agricultural research. Furthermore, measures for increasing subsidy on inputs to agriculture, expanding irrigation and making agricultural inputs more available, preserving the harvest and ensuring fair price of crops and agro-products have been taken, with the aim of increasing productivity. The target for agricultural credit disbursement in 2009-10 was fixed at Tk. 11,512.30 crore, of which Tk.11,116.88 crore was disbursed, achieving 96.57 per cent of the target. Rice and jute are the country’s primary products, though maize and vegetables are assuming a greater importance. Tea is grown in the northeast, and due to fertile soil and an ample water supply, rice can be harvested up to three times a year. The livestock sector has become increasingly significant, and the government has taken steps such as producing and distributing vaccines, supplying ducklings and chickens at lower prices, expanding artificial insemination programs, and preventing and controlling avian influenza. All the measures contribute to the same goal – to achieve self-sufficiency in milk, poultry and livestock production, and to meet the protein demands of a rapidly growing population.

In working towards developing a ‘Digital Bangladesh’ it is important to understand that we have a young population, the majority of which are under the age of 25.”
MEHBOOB CHOWDHURY, CEO of Citycell

An advertisement supplement by UPPER REACH

8

BANGLADESH

No easy route to long-term success
One of Bangladesh’s hardest-working industrialist tells his story, while looking forward to increased business with the UK
Mr Kamal is something of a visionary leader, with aspirations to bring out the best in people, to encourage them to come together and become innovators and agents for change in the country. He hopes his own experience can serve as an example to others: following the war and the epidemics which devastated Bangladesh, Mr Kamal worked relentlessly, for the equivalent of about $5 (£3.20) per month. When asked about his subsequent success, he says simply, “You need to be hard-working and have ambition. If you are hard-working, you will be successful.” Typically, despite his wealth, Mr Kamal is not resting on his laurels, and feels his country must not do so either. “This year, China and India’s growth is around 10 to 12 per cent, so we are not happy with our 6.5 per cent. We are talking to the Honourable Prime Minister and the Honourable Ministers of Commerce and Finance about infrastructure. Our entrepreneurs are trying to reach a target of 8 per cent growth in one to two years, and this is not impossible because our entrepreneurs are very aggressive and intelligent.” He feels a route to further success lies in increased business with the UK. “The bond between UK and Bangladesh is very strong and goes back a few hundred years. The UK has engaged with so many development projects in Bangladesh, and there are huge number of Bangladeshi migrants in the UK who could play a pioneering role in investing in infrastructure, energy, IT, education and tourism.” As for the Meghna Group of Industries itself, the future looks bright. “We have been growing fast and there are other projects in the pipeline, like expansion in our cement sector. Several other projects, such as chemical and seed-crushing, are under construction. By 2013 the total turnover of the group will be close to $2 billion. At the end of 2013 we may have over 15,000 regular and casual workers.” With such numbers comes a certain responsibility, which Meghna Group of Industries does not shirk. “Our group is contributing a lot to CSR (corporate social responsibility). We make houses for homeless people, including sanitation and bathrooms. We are also involved in donating money for both national and international disasters, such as tsunamis, local floods and cyclones. I have involved myself with a university and hospitals, and school and college with boarding facilities.”
MOSTAFA KAMAL Chairman and Managing Director, Meghna Group of Industries

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ack in 1976, Mostafa Kamal started his journey with a small trading initiative for essential consumer goods at the Moulvi Bazaar, in the heart of Dhaka’s wholesale trading market. His vision was to switch from trading to industrialisation in order to cater to the demand of the local market and decrease overdependence on imports. Thus, Meghna Group of Industries (MGI) was formed, which is now one of the largest and fastest-growing conglomerates in the country. Mr Kamal set up his first industry in 1989 in the industrial park at Meghnaghat, Sonargaon, in the district of Narayangonj. Over the years, Meghna Group of Industries has added several industries to its portfolio, and today has 29 industries ranging from construction to fast-moving consumer goods (FMCG) to heavy industrial products. Presently, MGI employs about 15,000 permanent and casual workers.

We have been growing fast and there are several projects in the pipeline.”

THE POWER COMPANY
Formed over 50 years ago, Rahimafrooz has grown from a family business to a government partner, and will soon be a billion-dollar concern
Founded in 1954 by Abdur Rahim, Rahimafrooz represents a remarkable success story. Mr Rahim was not a rich man when he started his company, but it has grown steadily (and recently spectacularly), now exporting to 44 countries around the world, with a turnover of $275 million (£177 million). The company employs 2,000 workers directly, and provides work for another 20,000 indirectly. Over the past 10 years, growth has averaged 27 per cent, making the company’s Vision 2015 mission to become a billion-dollar business a realistic proposition. While it has recently diversified into consumer electronics and retailing, the production of batteries has always been Rahimafrooz’s core business. This has led to the company’s interests in supplying power for telecoms, railways, power stations, electric vehicles, ships, buoy lighting, fork lifts and many other areas. Its automotive division alone produces over 200 varieties of batteries, made in the largest battery manufacturing plant in South Asia. Rahimafrooz takes pride in the fact that all materials used are manufactured in Bangladesh to ISO standards, and that it is active in environmentally responsible schemes for battery collection and recycling. Indeed, its green credentials are typified by its long-standing involvement with solar power: thanks to company and the government’s efforts, Bangladesh has the largest penetration of small-scale solar energy solutions in

NIAZ RAHIM Company Director, Rahimafrooz

the world, with over 1.2 million homes fully utilising solar power. Son of the founder, and company director Niaz Rahim recently announced a new venture: “We have set up a 50 megawatt power plant in Thakurgaon. This is the first time the government has allowed the production of power from the private sector.” Mr Niaz is also confident about the future for business in his country. “Decisions are now being made in a more timely manner. The government is focusing heavily on power resources and infrastructure development right now which is important, and which is going to help move Bangladesh forward as a nation.”

An advertisement supplement by UPPER REACH

BANGLADESH

9

Orion Group pioneers PPPs to add drive to national growth
The conglomerate is making history by partnering the government on infrastructure and power generation projects
ne of the leading industrial corporations in the country, the Orion Group encapsulates true Bangladeshi entrepreneurial spirit. Its chairman, Mohammad Obaidul Karim, has led the company to pioneer a number of firsts in Bangladesh, achieving a level of success unparalleled in the country’s history. From modest beginnings, the group’s operations now span 11 diverse sectors, namely agro products; aviation management; cosmetics and toiletries; construction; energy; hospitality management; infrastructure development; textiles and garments; pharmaceuticals and health care; power generation; and real estate. Since its inception, the group’s main objective has been to target rural poverty reduction and foster sustainable economic development in its position as a world-class corporation, creating products and services of real value, and generating employment. “I think of our company as a family of 18,000 people,” says Mr. Karim.” We always try to maintain great relations with our employees, and we provide staff with benefits such as loans, donations and our assistance programme.” The chairman is extremely optimistic about the business possibilities and growth potential inherent in Bangladesh. “When I see something in other countries, I think it can also be possible here. People say things are impossible; however I always ask why something is not possible. I feel there is always opportunity,” he says. Jatrabari-Gulistan Flyover Projec t Such positivity has seen the group make important inroads into developing the nation’s infrastructure. Planned and well-designed connections boost a country’s appeal for both local and foreign investment, as poor, inefficient communications deter investors and frustrate national advancement efforts. Therefore, the government has encouraged private-sector participation to accelerate infrastructure development and the Orion Group has been the first to take up the mantle. Leading the charge, Orion Group incorporated Belhasa Accom and Associate Ltd and submitted a bid for the Jatrabari-Gulistan Flyover Project. After a highly competitive selection process, the company was awarded the contract to design, construct, maintain and operate the flyover using privately obtained fi-

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government is very keen to complete projects such as this flyover and is giving us maximum support. If we need police support for anything, it is provided immediately,” says Mr. Karim. “Presently, we are facing traffic jam issues because we are digging up ground in the middle of a narrow road. There is some inconvenience, however Bangladeshis understand the value this project will bring once completed. We are receiving a lot of support from local people.” Dhaka is one of the most congested cities in the world. The World Bank predicts its population, currently 13 million people, could rise to 25 million by 2020. After completion of the four-lane flyover, which will be named the Mayor Mohammad Hanif Flyover, the city’s third elevated expressway will greatly improve links between the Dhaka metropolitan area and at least 30 other districts, including the port city of Chittagong, Mongla, Sylhet and Barisal. Superlati ve achievements The Orion Group has not only blazed trails in PPPs, but it has also taken real estate to new heights. It reshaped Dhaka’s skyline when it constructed the country’s tallest building, the 39-storey City Centre, and also has plans to create a new satellite town near the capital. Its pharmaceutical arm was the first company in Bangladesh to produce amino acids and to manufacture anti-cancer drugs, bringing down the cost of cancer medication from 2,100 taka (£17) to 350 taka (£2.85) per box. In agriculture, the group is currently collaborating with a Dutch company to grow mushrooms on two large plots of land. “Our location and facilities are ideal,” says Mr. Karim. “European companies have tried going to China for these agroproducts, however they have found Bangladesh is a better more cost-effective producer.” The company has plans to develop an agricultural industrial park and produce vegetables targeted at European markets.

MOHAMMAD OBAIDUL KARIM, Chairman of Orion Group

nance on a build-own-operate-transfer (BOOT) basis. The concession agreement was sealed in June 2005 and construction began in June 2010. The Jatrabari-Gulistan flyover breaks new ground in Bangladesh. “This is the first infrastructure project in Bangladesh under a public-private partnership (PPP) agreement. Previously there was no such type of investment and it was a dream that a private entity would be able to invest in infrastructural development,” says Mr. Karim. “Initially, the flyover was to be seven kilometres long, now it is 10 kilometres. The investment is around $290 million and we are working on raising these funds from completely local sources.” In addition to entering unchartered financing territory, other challenges facing the Orion Group include the required construction time for the project being shortened by a year, to two and a half years construction time, and the physical constraints imposed by the site being in such a built-up area. “The

Power gener at ion A reliable, affordable supply of energy is vital to maintaining Bangladesh’s socio-economic development and industrialisation. The government has set a goal of providing electricity to all citizens by 2021, so power generation has been highlighted as another priority area for private-sector involvement. Through its joint ventures, IEL Consortium and & Ltd and Dutch Bangla Power & Associates Ltd, the Orion Group now has two 100MW power plants in operation. “It is frustrating that our country’s international image is not so good, even though we did not take a single penny from the outside world; we raised the funds here and we completed a 100MW power plant in only 217 days. I challenge you to find another company that can complete such a project in the same timeframe using the particular European technology we have brought over,” says Mr Karim. The group has been awarded two more concessions to build power stations generating 300MW and 650MW respectively. “The government is serious about power production. We used to have a large natural gas reserve, however, now there is a shortage. So, we are going to set up a coal-based power plant, which will be much cheaper. We are on our way to producing electricity at low cost,” says Salman Obaidul Karim, Orion Group’s managing director and son of the chairman. “In our power sector, demand is significant at the moment, which represents an opportunity for foreign involvement. Our company’s projects have set examples showing foreign investors that infrastructure and power projects are feasible and can be completed quickly.”

Salman Obaidul Karim, Managing Director of Orion Group

An advertisement supplement by UPPER REACH

10

BANGLADESH

MADE IN BANGLADESH
An economy which once relied heavily on agriculture is now focused on improving its industrial sector fter gaining independence from Pakistan in 1971, the early Bangladeshi governments enforced a socialist economy upon its population with the nationalisation of all industries. The lack of an entrepreneurial culture resulted in a lack of engineers, technicians, managers and administrators. But by the mid-Eighties the government implemented policies aimed at encouraging private enterprise, investments and imports, and the Bangladeshi economy started to show signs of growth. Today, the country's economy is not only strong, but growing rapidly: according to the International Monetary Fund (IMF) Bangladesh ranked as the 43rd largest economy in the world, among the Next Eleven, or N11 of Goldman Sachs, with a gross domestic product of $269.3 billion (£174 billion) in 2010. Growing at an average rate of 6-7 per cent per annum, more than half the GDP now comes from the service sector while a large part of the Bangladeshi work force continues to

From farm to factory: making the transition
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be employed in the agricultural sector. More recently, the industrial sector of Bangladesh has begun playing a more important role in contributing to the country’s economy with the textile and leather industries particularly becoming key players. Bangladesh has also become a leading player in the production of electronic goods and motor vehicles. At present the country manufactures large amounts of auto-rickshaws – three-wheeled vehicles with Honda engines that are widely used all over South-East Asia. The Bangladeshi automotive industry has a number of large manufacturing plants throughout the country producing the Mitsubishi Pajero, Hino bus and Tata bus, as well as a number of different motorcycles. TagAZ, a Russian and South Korean car manufacturer recently announced that their third factory will be opened in Bangladesh next year. “Previously, Bangladeshi people were more interested in trading but gradually they are moving towards

Previously, Bangladeshi people were more interested in trading but gradually we are moving towards industrialisation.”
DILIP BARUA, Minister of Industries,

DILIP BARUA, Minister of Industries
Mr Barua is confident that Bangladesh can compete with international industry. “Bangladeshi people are very efficient and they have a bright future. They are able to make cars, ships, and electronic goods very efficiently and they will prove themselves successful in the development of every sector.”

industrialisation. Now, Bangladesh is in a transitional stage to move towards industrial business from trading. Our honourable Prime Minister is very concerned about this matter with a visionary outlook towards the concept of industrialisation,” said the Bangladeshi Minister for Industries, Dilip Barua, recently.

ONE STEP AHEAD
Within 20 years, Apex Adelchi’s workforce grew from 350 to 7,500 people and the company’s progress is symbolic of Bangladesh’s energy and vigour

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he Bangladeshi leather industry developed during the 1970s and grew significantly in the 1990s. During that decade, the export market grew at an average rate of 10-15 per cent annually, averaging yearly exports that accounted for $225 million (£145 million). Apex Adelchi Footwear Limited (AAFL), formerly Apex Footwear Limited, is one of the major manufacturers and exporters of leather footwear of Bangladesh that went into commercial production in the nineties. Though the company has diverse interests, Syed Manzur Elahi, chairman of Apex Group, says: “Because our shoe business is our core strength, we will concentrate on that.” Apex Adelchi first set up in Shafipur, once an economically depressed area where most of the population worked as farm hands, and transformed the region’s working landscape. Following Apex’s first factory opening, many of the smaller companies who made rubber soles, threads and insoles relocated to the area boosting the local economy, creating new employment opportunities and attracting workers from surrounding districts and towns. Apex Adelchi is a prime example of how the leather industry has developed over the past two decades. In 1990 AAFL produced 1,000 pairs of shoes each day and employed 350 people. Today, its workforce is made up of more than 7,500 people distributed in two factories and its production capacity totals 15,000 pairs of shoes per day. Continuous training programmes

and generous salaries have helped the company to maintain a strong and loyal work force. Mr Elahi says: “I have been in the business since 1973 and I have never had a single strike. Over the years, I have learnt that to have a happy pool of workers, you need to make sure that floor management behaves properly when dealing with the workers. Our workers are to be given the respect they are due.”

as China and Vietnam. It is currently the leading exporter of leather footwear from Bangladesh to major shoe retailers in Europe, North America and Japan. In 2010, the company exported over 3.6 million pairs of shoes to 120 major shoe retailers

I have been in the business since 1973 and I have never had a single strike.”

Syed Manzur Elahi, Chairman of Apex Group
and department stores in 30 countries, producing revenues of $100 million. Fuelled by the growing international appetite for leather, the domestic tannery industry has rapidly expanded its production base. Apex Tannery, a sister concern of AAFL, is the largest in Bangladesh and with its independent effluent treatment plant (ETP) it safeguards the environment and the community it operates within.

Bangladesh’s leather is known all over the world for its quality. This is due partly to the luxurious vegetation the country boasts which encourages large populations of livestock. Traditionally, natural farms and fields do not apply barbed wire fencing which can damage the skins of animals. AAFL, for example, has experienced significant export growth as global buyers are relocating to Bangladesh from countries such

Two per cent of the global livestock population is found in Bangladesh, providing Apex Tannery with plentiful stocks of raw material. It can produce from both local and imported sources freely without import duties and, due to the country’s pro-export policy, AAFL is able source any required shoe component duty-free for re-export. AAFL’s achievements are not solely export-based; in 1997 it established its local retail wing and today it has the fastest growing shoe retail network in Bangladesh. Trading as Gallerie Apex within the domestic market, its product range of quality leather designs follows European trends and has received a phenomenal response from Bangladeshi consumers. Apex is also known as one of the country’s most socially responsible firms. Compliant with industrial and environmental regulations it also works in areas of healthcare and education to ensure the future of the country. Some of the company’s corporate social responsibility (CSR) initiatives, for which it has an annual budget allocated, are helping drug victims re-establish themselves in society through retraining and employment and contributing to flood-affected victims in distressed areas. As part of its plan to continue expansion within the leather sector, Apex became one of the major pioneers and stakeholders in the apprenticeship programme for disaster-affected people organised by the Centre of Excellence for Leather Skills Bangladesh Limited (COEL), and is providing technical support and lending its premises over the next three years to prepare 2,400 new trainees. AAFL has set elevated objectives for the near future and aims to increase its export volume by 200 per cent and up its domestic sales 275 per cent by 2015. The stakes are high but the company is confident in its abilities to outshine global competitors.

JUST WHAT THE DOCTOR ORDERED
One of the newest entrants into the pharma scene, Apex Pharma is raising standards to new heights angladesh, a country that was previously known for natural resource-based sectors such as textiles in the business world, has now emerged as one of the fastest growing pharmaceutical-exporting nations. After tobacco, the pharmaceutical sector is the second largest revenue generating industry in Bangladesh, and the country looks set to emerge as a respected source of quality medicines. The million-dollar industry is continuously expanding, rising to new heights with new and improved products, and Apex Pharma Ltd (APL) is fast becoming a shining star in the Bangladeshi pharma sector. This year has been particularly significant for APL for several reasons, most notably that it signed a deal with Sanofi-Aventis Limited, a global pharmaceutical giant, to market, promote and distribute selected Sanofi-Aventis’ products. Sanofi-Aventis, based in France, is the number one pharmaceutical multi-

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national in Bangladesh. AM Faruque, managing director and chief executive officer of APL, says: “I am very delighted with this groundbreaking agreement which will take advantage of both companies’ strengths to deliver high quality medicines to the maximum number of doctors, chemists and patients.” Iftekharul Islam, managing director of SanofiAventis Bangladesh Limited, adds: “Through this agreement we are appointing Apex Pharma as the distributor for our five selected products and we believe their broad coverage will be a useful addition for the purpose of offering quality medicines to a maximum number of doctors, pharmacies and patients.” This year, APL also created history in the Bangladesh pharma industry by introducing the firstever team of professional graduate pharmacists as “Medico-Marketing Executives”.

The aim of this unique initiative is to enhance the quality of pharmaceutical company medicinal communication and services to the medical profession. It will bring a new dimension to the relationship between pharmaceutical manufacturers and the medical community that will provide a tangible benefit to the healthcare system by encouraging best use of APL’s range of products. This initiative is comprised of more than 100 fully trained pharmacists in the first phase. Importantly, it also creates a new career path for pharmacists in Bangladesh. “Apex is coming on in a big way,” said Mr Faruque. Another milestone for APL this year was the signing of a comprehensive contract with Rob Walker GMP Consultancy Ltd (RWGMP) to obtain UK MHRA and Australian TGA accreditations for its purpose-built manufacturing facility. RWGMP is based in the UK and has vast experience in obtaining MHRA accreditations in Europe, Africa and Asia. APL is moving fast towards attaining its operational vision of becoming a global

centre of excellence for pharmaceutical manufacturing. The company intends to continue partnering with multinational companies to ensure access to the latest manufacturing technologies and newest products. Apex Pharma look set to achieve its vision to become one of the top 10 pharmaceutical manufacturers in Bangladesh within the shortest possible time.

An advertisement supplement by UPPER REACH

BANGLADESH

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QUALITY PRODUCTS AND CARING POLICIES MAKE RAK A MARKET LEADER

SPORT
HOWZAT! Bangladesh has shown it can stage world-class events and has enhanced its position in the sporting world
he 2011 ICC Cricket World Cup was first time Bangladesh had co-hosted such a major international sporting event and enabled the former Pakistani province to display its capacity to showcase world-class sporting competitions and cemented its place as a global cricket destination. Headquartered in Dhaka, the Bangladesh Cricket Board (BCB) is the nation’s main governing body for the sport and was instrumental in the success of the competition. “We got a lot of support from the ICC and from the government,” says Abu Hena Mustafa Kamal, president of the board at BCB. “The government gave us moral support, financial support for the development of our stadiums, and provided enough security. The government has also physically come to visit us and wanted to see that we can do it, so that we can upgrade our image to the world. Then from the Cricket Board, we had a professional and serious approach.” The BCB was formed in 1972 and is responsible for the operation and development of cricket, maintenance of venues and selection of the national team. “Our ideology for the World Cup was to get everyone in Bangladesh involved in it,” says Mr Kamal. “We fixed giant screens in all the district

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so many people who are willing to spend money on cricket. But cricket is a game that needs a lot of money to nourish it and develop it,” says Mr Kamal. “During the World Cup I raised about $5 million [£3.2 million] from the private sector for the benefit of the game.” The BCB now hopes to build on the momentum generated by the publicity around the World Cup as it prepares for Bangladesh’s upcoming role as the host for the ICC World Twenty20 championship in 2014. Twenty20 cricket, or T20 as it is also known, was originally introduced in England as a professional intercounty competition in 2003. A T20 game involves two

S.A.K. EKRAMUZZAMAN, managing director of RAK Ceramics, outlines the benefits of manufacturing in Bangladesh, and considers the country’s requirements for further economic growth Contributing to the nation’s economic success are companies such as RAK Ceramics, a manufacturer and marketer of ceramic tiles, bathroom sets and other sanitary ware established in 2000. With an average annual turnover of more than BDT 5 billion (over £42 million) in its 11 years of existence, RAK has established itself as one of the sector’s leading manufacturers. Mr Ekramuzzaman, managing director of RAK, comments on the factors behind Bangladesh’s success. “We have a very enthusiastic workforce. The availability of labour is another strong success factor. If you offer a reasonable salary, the migration of workers is minimal.” This, he says, has helped shaped present-day Bangladesh. “Bangladesh is now self-sufficient. The people are not starving and a large market exists here. There are explored and unexplored markets here, both for local and international entrepreneurs.” Regarding the ceramic industry, Mr Ekramuzzaman’s area of expertise, he says: “I can say that, we have enough demand that we can sell what we produce in the same day. Our company is already booked for orders for the next six months.”

However, Bangladesh’s economy is in such a prime position that certain developments require urgent attention before economic growth continues, primarily infrastructure. Mr Ekramuzzaman shares this thought: “We have very poor infrastructure, which needs to be built up first. We need to develop roads, highways, gas, and electricity amongst other aspects of the country.” Public-private partnerships have been introduced in Bangladesh, though they are in their early stage. RAK’s managing director is optimistic that “they will continue to grow so as to aid the growth of both infrastructure and the economy as a whole.” RAK is also making its way into the housing sector, and has already embarked on a project to build 2,500 flats in Dhaka city to help the lower-middle class population. Another plan for 5,000 flats is under way. RAK profits are shared with the community. “We are contributing approximately 2 per cent of profit to assist with health and education programs.” Maintaining a quality standard of life of its workers is one of the company’s main concerns. “We employ 5,000 people and pay the best salaries in Bangladesh. We provide 100 per cent life insurance coverage to employees. The company contributes 5 per cent of its profit before taxes towards the Workers Profit Participation Fund and Welfare Fund. We are just like a family,” he explains.

Here, cricket is very popular, and nobody plays it just for money; we play for passion.”

ABU HENA MUSTAFA KAMAL, President of the Board at BCB
headquarters and main areas of the capital so that people could enjoy the matches together. People were glued to the games because they had never seen them presented that way before.” As well as being a leading businessman, BCB’s president is passionate about cricket. He has been involved in the sport and its development in Bangladesh for the past 30 years. “Like me, there are

teams, each having a single innings of around 75 minutes, batting for a maximum of 20 overs. Hosting the ICC World Twenty20 competition will further heighten Bangladesh’s international profile in the sport and strengthen the BCB’s push for improved facilities nationwide. “We are trying to spread cricket all over Bangladesh,” says Mr Kamal. “We are trying to arrange international cricket all over the country, or at least in the major cities of Bangladesh.” School cricket is very popular and the BCB runs a talent programme that scours the country for the best young players in its attempt to develop Bangladesh as a regional hotspot for cricketing expertise. “Here, cricket is very popular and nobody plays it just for money; we play for passion,” says Mr Kamal. “Just give us a little more time; Bangladesh will not let you down.”

An advertisement supplement by UPPER REACH

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BANGLADESH

THE UNDISCOVERED PARADISE
Not just another tourist destination, the untouched wonders of Bangladesh offer authenticity and beauty to global explorers
n a world overflowing with established holiday destinations, one cannot help but be charmed by the natural beauty of Bangladesh; one of the few outstanding countries in Asia yet to be fully explored. Composed of many unspoiled features, Bangladesh has so far remained one of the region’s best kept secrets; but a new wave of resorts offering everything from ecotourism to the lap of luxury is emerging, and this magical place will not remain hidden for long. No matter where your interests lie, Bangladesh has something to offer. The world’s longest unbroken beach – Cox’s Bazar – is truly stunning, providing a tranquil escape from the bustling and vibrant hubbub of one of the world’s most populated megacities, Bangladesh’s capital Dhaka. Superb five-star resorts meet international standards, while those looking for something more economical will find an array of beachfront hotels which cater to recession-hit budgets while maintaining excellent service. This is a country where genuine adventure is not a possibility but a certainty. You can chug down mile-wide rivers in 19th century river-boats, or stroll the rolling hills of the Comilla district where long-lost Buddhist temples and cities are waiting to be rediscovered. Take a trip to the exquisite tea gardens of Sylhet stretching as far as the eye can see, then finish your afternoon with a fresh cup of fine tea, before indulging in the superb local cuisine. (It is a little known fact that the people of Sylhet are largely responsible for making the British a curry-loving nation, being among the first to introduce ‘Indian’ restaurants to the UK). You must also explore one of the world’s great wonders – The Sundarbans, (pronounced shunda-bans) – home to one of the planet’s largest mangrove forests and an endless variety of wildlife including the pride of Bangladesh – the Bengal Tiger, an endangered and majestic animal still relishing its natural habitat. “We have everything that tourists like to see. We have the hills, we have the sea, we have vast plain lands, we have rivers, we have archaeologically important sites, and most importantly we have our wonderfully hospitable people – they have a natural smile on their faces,” says G.M. Quader, former Minister of Civil Aviation and Tourism. Bangladesh is any inspired artist’s masterpiece come true. Its rich tapestry of colour and texture deliver captivating surprises around every corner, so if you are hungry for an unforgettable holiday destination, Bangladesh awaits you with its unique smile.

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We have the hills, we have the sea, we have vast plain lands, we have rivers, we have archaeologically important sites – and most importantly, we have our wonderfully hospitable people.”

G.M. QUADER Former Minister for Tourism, Current Minister of Commerce

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