NBR to adopt new technique to increase revenue

The National Board of Revenue is now going to adopt a new technique based
on 'Business- Customs Partnership' trying to increase revenue collection by
preventing tax-dodging tricks. Under the new methodology the NBR will
utilise the existing businessmen and their trade bodies in unearthing the
revenue-dodgers. 'This system is effective and worked in many places
around the world,' NBR member (Customs and VAT Administration) M Farid Uddin
told the news agency on Monday. He said Business-Customs Partnership was
a new idea in the financial world and this has been proved very much
effective in catching the evaders. In this connection, he said the NBR
would sit with the leading businessmen and trade bodies from different
sectors and request them to provide information regarding the culprits, who
are dodging revenue. 'As an example, an importer of a specific item
will know better than the NBR officials about the import of the same item
paying less duty or dodging the duty,' he said about using the decoy to
detect dodgers. He said that the selling price of an item would not be
the same when the item is imported by dodging duty. That means the honest
importer will be incurring loss for the dishonest importer. 'We will take
this kind of incident as our hitting point,' he said. The affected
importer will be our source in this connection and provide information as
he is the most compatible person for giving information. Describing the
reason for taking such technique, the NBR member said that the revenue
authority of the government suspected that due to wrong declaration of the
importers the revenue-collecting agency of the government is losing good
amounts of money. 'According to the new rule we cannot go for 100 per
cent verification of the imported items,' he said about the legal lacking.
After introducing the pre-shipment inspection system, the customs
officials could go for physical verification of only 10 per cent of the
imports. He also said that it would not be viable for the customs
officials to go for cent-per cent physical verification. This will slow down
the release of the imported goods from the port, Farid Uddin added. He
said that the NBR is taking preparation at present to discuss the matter
among the businesses and their trade bodies. The NBR is going to adopt
such technique as the government is apprehending less revenue from import
duty in the coming days. The revenue generation from imports will have
to suffer more as the World Trade Organisation is heading towards a
duty-free world, levelling the frontiers on the economic globe. The
finance minister, who has targeted some Tk 61,000 as revenue income in the
current budget, had emphasised improving the revenue collection by any
means during his visits to the NBR several times. He had also directed
the NBR to find out the pockets from where the government could earn
revenues.

Country to set high octane plant using naphtha

Bangladesh will set up a fuel plant to produce high octane at
Chittagong port city, at a cost of $110 million, by using naphtha, a
leading entrepreneur said on Sunday. 'With the technical assistance
of UOP of the USA and Exxon the plant will be able to produce up to
150,000 tonnes of high octane,' said Azam J Chowdhury, managing
director of Mobil Jamuna Fuels Limited. He told Reuters that MJFL
would use naphtha, a bi-product of the state-run Eastern Refinery
Limited, which exports 100,000 tonnes of naphtha to Singapore
annually. 'We offered ERL to pay more than the price fixed at per
barrel to benchmark spot quotes by price-reporting agency Platts, and
the government agreed to our proposal,' said Azam, also the chairman
of the East Coast Group, a leading oil trading house. Naphtha will
be the principal raw material for producing high octane, or octane 95.
Jamuna Oil Company, a state owned oil distributor, will hold 25 per
cent stake of the MJFL, while IFC, a subsidiary of the World Bank and
DG of Germany and FMO of the Netherlands will hold equal equity in the
plant. 'It will be able to produce octane in the middle of 2011,'
said Azam. He said that if the Bangladesh government did not
procure the octane from them they would export the whole product.
State-run ERL, which has the capacity to produce 1.5 million tonnes of
oil a year, is the only refinery in Bangladesh. Bangladesh imports
up to 3.8 million tonnes of oil a year, including 1.2 million tonnes
of crude oil to meet demand. Bangladesh consumes between 100,000
and 120,000 tonnes of octane. 'The naphtha-based plant will help
save nearly $51 million yearly,' a government official said. Azam
said the firm would also produce liquefied petroleum gas from the
plant by using the same raw materials. 'We will also set up a 5
megawatt power plant by using residual (product) of the plant to meet
our electricity requirements,' he said. Bangladesh imports oil
mainly from Saudi Arabia, Kuwait, United Arab Emirates, India and
Malaysia at a cost of between $2.5 and $3 billion.

China, India may help, not save world economy: Analysts

Fast growing China and India may be important players but the emerging
economic giants alone do not have the clout to drag the global economy
out of its worst slump since the 1930s, analysts say. China, ranked
the world's third largest economy after the United States and Japan,
grew 7.9 per cent in the second quarter this year while India expanded
5.8 per cent in the three months to March. Such rates are
relatively modest by their standards but stand out sharply as the
United States, Japan and Europe are all mired in deep recession as
their economies struggle through the fallout from the global financial
crisis. Chinese and Indian demand has largely kept raw material
prices afloat this year-a key plus for exporting countries such as
Australia and Brazil-while also offering hope against the prevailing
gloom. The two countries 'send out a positive message at a time
when the trend is dark and this can help reassure the markets,' said
Michel Fouquin, international affairs analyst in Paris. But beyond
this psychological comfort, China and India have only a marginal
impact on the wider global economy because they are exporters with
limited domestic demand- ultimately, they are relying on the developed
world to recover first before they too can move ahead once more.
'There is no way that the world economy can get back on its feet again
just through (the efforts of) the emerging giants,' said Eric Chaney,
chief economist with Axa. China and India may drive demand for raw
materials and the other inputs they use in their own exports from
Brazil, Australia and the smaller Asian countries but that is not
enough for recovery in the developed world. 'I'm much less
convinced that either China or India can (provide) a significant boost
to other economies,' said Eswar Prasad of Cornell University.
'India and China can provide an indirect boost . .. by maintaining
domestic demand and providing a sense of confidence to the world
economy that the recovery is in progress ... but their contribution to
the world economy is going to remain modest,' Prasad said. The
United States, Europe and Japan are the key markets for goods and
services sold there by the great exporters such as China which has a
much smaller domestic market despite efforts to boost home
consumption. Richard Herd at the OECD in Paris noted too that in
China, the share of imports in 'total demand is relatively small,
essentially because it's a very large economy and there's a very large
degree of self-sufficiency in many areas.' It has been a
longstanding complaint in Washington that China's economy is
dangerously reliant on exports for growth, leading to huge global
imbalances that can no longer be sustained. US officials said on
Thursday that President Barack Obama's administration will tell China
at an upcoming meeting that the role of consumption as a major driver
of the US economy is diminishing. 'There's been a fundamental
change in the US economy ... US households are raising their savings
rates, so this is going to a less consumption-led recovery than what
they're used to,' a senior official said. 'Our message to the
Chinese is going to be-If you want to achieve your growth objectives,
you're going to have to find a different way of doing it than through
export-led growth,' he said. The bottom line is that 'the global
recovery will only come from a pick up in (consumer) demand in North
America and Europe,' said Chaney. The BRIC four-Brazil, Russia,
India and China-may protest all they want against the dominance of the
dollar-led world trading system but they have no way of opting out of
it given their relatively modest economic strength, said Jean-Paul
Betbeze, economist at French bank Credit Agricole. Longer-term,
their influence will grow but for now they have much more work to do
to meet coming challenges, especially likely changes to their favoured
export-led model of economic development, analysts said. 'The
Chinese have no other alternative but to boost their domestic market,'
said Prasad of Cornell University.

BRTC moves to break monypoly

The telecoms watchdog is set to make ' competition regulations' by
September this year to restrict monopolisation, aiming to ensure a
level-playing field in the rapidly growing Bangladesh telecoms
market. The telecoms regulator has followed the recommendations made
by International Telecommunication Union (ITU), the United Nations
agency for information and communication technology, which recently
reported on Significant Market Power (SMP) of Bangladesh's telecoms
sector. ITU also suggested identifying the operators, who hold SMP,
before finalising the regulations. An operator enjoys market power
when it can unilaterally set and maintain prices and other
commercial terms. ITU recommended setting upper and lower limits of
market dominance for a telecoms operator, to be judged on holding
SMP. In its report, ITU said in the context of Bangladesh, it favours
a market share threshold of 45 percent based on a range of factors,
including revenue, subscriber percentage, and if available, traffic
statistics consistent with global precedents. "If the Bangladesh
Telecommunication Regulatory Commission (BTRC) considers a lower
threshold of 35-40 percent to be set as the presumption threshold
because of a lack of detailed industry statistics, then it would be
supported," said ITU, suggesting a second option. Ever since debut in
Bangladesh, a few operators have dominated the telecoms industry.
Considering this, BTRC sought ITU advice on significant market power
issues. Later ITU undertook a project on SMP and recently submitted
its report to BTRC. Competition regulations are common to markets
around the world. "When a few operators have grabbed significant
market share, regulating competition is a must for all," said a BTRC
official. Competition regulations would apply to all, both private and
state-run operators," said the official. As per telecommunication
laws, BTRC is compelled to break monopolisation and anti- competitive
behaviour by operators. Competition policies may be implemented
through general competition laws or through competition enhancing
rules in specific sectors. The laws aim to promote efficient
competition by penalising or undoing conduct that reduces
competition in a market. BTRC would finalise the regulations after
consulting all telecoms stakeholders. Under regulations, operators
are prohibited from entering into agreements that provide for market
sharing, rate fixing, boycott of another competitor or supplier of
the telecommunications system or equipment, said the ITU. ITU said
the regulator may direct operators in a dominant position to cease a
conduct, which has or may have the effect of substantially lessening
competition in the market. The UN agency also suggested an independent
commission to maintain and promote fair competition, to prevent,
control or eliminate restrictive agreements among enterprises or
abuse of a dominant position. It said although the telecommunications
market in Bangladesh is characterised by a large number of operators
(particularly in the mobile sector), it remains highly concentrated.
In terms of subscriber base, Grameenphone has a 43.9 percent market
share, Banglalink 22.8 percent, AKTEL 18.4 percent, Citycell 4
percent, Warid 5 percent, TeleTalk 3 percent, BTCL 1.8 percent and
Ranks Telecom 0.3 percent, according to statistics updated at the
end of April 2009. BTRC sources said big operators are reluctant to
adopt such regulations in the market. "The big operator does pose a
predatory nature and it is already becoming imminent that the very
existence of small operators is in question because of this issue,"
said Ashraful H Chowdhury, general manager of Warid Telecom. He said
the regulator must enforce a level- playing field for the sake of fair
competition and existence in the long run. "Big operators in the
market enjoy advantages because of size and potential
anti-competitive nature," he said. However, Grameenphone, the market's
biggest operator, refused to comment in this regard at the moment.

BP profits slump 53pc

BP PLC, Europe's second largest oil company, said Tuesday that lower
world oil prices drove second-quarter profit down by 53 per cent
compared with a year earlier and saw little sign of growing demand in
the months ahead. Net profit for the period was $4.39 billion,
down from $9.36 billion in the second quarter of last year but better
than market forecasts. It was better than the $2.56 billion profit
reported in the first quarter, when oil prices were in a deep slump.
Oil prices rose off those lows during the second quarter, with
Brent Blend oil averaging $59.13 a barrel in the second quarter
compared to $44.46 in the first quarter - and $121.18 in the second
quarter of 2008. Oil prices sagged early in the year as economies
around the world went into recession, but have risen amid
expectations of at least limited economic recovery later this year.
Chief executive Tony Hayward offered a subdued outlook, saying he
expected energy demand to be sluggish in the near term. 'The
overall picture is of energy demand now stabilizing following
significant falls in the first half of the year,' Hayward said. 'We
see little evidence of any growth in demand and expect the recovery
to be long and drawn out.' Daily production was up 4 per cent
compared to the second quarter last year, with production ramping up
in the Thunder Horse and Dorado fields in the Gulf of Mexico.
Thunder Horse, operated by BP and partly owned by Exxon Mobil, began
producing oil and gas last year, nine years after the field's
discovery. It's designed to produce 250,000 barrels of oil and 200
million cubic feet of natural gas each day, which would make it the
Gulf's largest producer. Replacement cost profit - a key measure
for oil companies which values crude oil and fuel inventories at
current prices - was $3.14 billion in the second quarter, up from $2.4
billion in the first quarter and far below the year-earlier result of
$6.7 billion.

BB guards money market, not capital market: official

Dhaka, Jul 28 ( bdnews24. com)-A central bank official assured
representatives of the country's twin bourses and the capital market
regulator on Tuesday that it is working for a transparent, vibrant
and buoyant economy. "As the money market's guardian, the central
bank monitors the activities of banks and financial institutions, it
will never hamper the capital market," Bangladesh Bank deputy
governor Murshid Kuli Khan told a delegation from the Dhaka and
Chittagong stock exchanges and the Securities and Exchange Commission.
"The Bangladesh Bank has no business knowing the content of an
individual's portfolio," Khan told the delegation at the BB's head
office. He said the central bank's job is to keep an eye on the
money market, while the SEC has oversight on the capital market.
Khan also said the banking regulator had not mounted an investigation
into the activities of any bank "The central bank is not
investigating investments in the market made by any bank," he said.
"Rumours are the cause of any fall in the market now." DSE president
Rakibur Rahman echoed the BB official, saying the drop in turnover
and indices had occurred without any apparent cause. "It is not true
that panic shook the market over the BB directive for submission of
monthly stock portfolio reports of all banks," said Rahman, contrary
to a previous statement on the matter. On July 15 , Rahman blamed
market intervention by the central bank for the stock market's
downturn-an allegation the bank refuted. Rahman had said the bank's
new directive would stymie the market's growth.

Sugarcane farming drops by half in the north

Sugarcane cultivation by four mills in the north is far from reaching the
target as farmers have opted for other cash crops. Sugarcane growers are
complaining of harassment and delayed payment from sugar mill owners and
unsupportive government policies. The four mills were able to reach the
target only halfway. The four sugar mills in Dinajpur, Thakurgaon,
Panchagarh and Joypurhat, which failed to achieve their sugar production
targets, are counting Tk 153 crore in losses. The sugar mills cultivated
19 ,842 acres of land, while the target was 35 ,950 acres, aiming to
produce 178 ,578 tonnes of sugarcane. The industry people said the target
would no longer be met because of adverse weather conditions. Setabganj
Sugar Mill of Dinajpur cultivated 4 , 300 out of 7 ,000 acres of land,
Thakurgaon Sugar Mill of Thakurgaon used 5 ,492 out of 14 , 000 acres,
Panchagarh Sugar Mill in Panchagarh farmed 5 ,850 out of 10 ,000 acres
and the Joypurhat mill cultivated 4 ,200 out of 4 ,950 acres for
sugarcane farming. The four sugar mills cultivated at least 30 ,000 acres
land last year. This year, the four mills have cultivated 55.1 percent of
land, recording the lowest production of canes in the history of sugar
mills. Generally, at least 55 ,000 farmers under the four sugar mills
cultivate sugarcane, but the number has dropped to 22 ,000 this year. "In
fact, the land under sugarcane cultivation is much lower than shown,"
claimed Ali Mortuza, president of Setabganj Cane Growers Association. Atul
Chandra Roy, 45 , from the village of Dollah under Chirirbandar upazila in
Dinajpur, said he had grown sugarcane every year in the past. " This year
is an exception." He said the farmers reduced sugarcane cultivation because
of the difficulties in obtaining payment from sugar mill owners. Last year,
mill authorities purchased sugarcane from farmers at Tk 153 per maund. But
farmers alleged that most farmers are yet to get their dues and refused to
cultivate this year. "Last year, we staged a series of protests to get our
dues. Even government agencies supported sugar mill owners for their own
interests," said Roy. "In such a situation, it becomes very difficult for
us to make ends meet." Roy said local farmers have now shifted their focus
towards other cash crops and cultivation of vegetables instead of
sugarcane. Officials form the Department of Agricultural Extension
suggested farmer-friendly policies and timely payment to save sugarcane
cultivation.

Stand together to get G20 fund share Muhith calls upon Asia Pacific countries at workshop on recession

Finance Minister AMA Muhith yesterday called upon the Asia Pacific
countries to raise their voice together to claim their share from a
G20 fund created to tackle the fallout of global recession. He also
demanded a proper distribution of the $1.1 trillion fund generated by
G20 leaders in April this year to help developing countries and
stimulate world trade. Of the fund, developing and poor countries will
receive only $50 billion. The World Bank and the International
Monetary Fund are likely to manage the fund. The minister also
expressed dissatisfaction at the poor allocation of $50 billion for
the underprivileged countries to deal with the financial crisis that
originated in the developed countries. "There is a group of vulnerable
countries and what kind of system should be followed to distribute
this fund is very important," Muhith told the inaugural session of a
four-day regional workshop on strengthening responses to the global
financial crisis in the Asia-Pacific region at Sonargaon hotel in
Dhaka. United Nations Economic and Social Commission for Asia and the
Pacific (UNESCAP) and the Bangladesh Bank jointly organised the
programme to work out realistic and viable policy suggestions required
for the region to weather the ongoing global recession. Finance
ministry and central bank officials of 17 Asia Pacific countries,
including China, India, Malaysia, Fiji and Russia, are taking part in
the workshop. Muhith also came down heavily on the global financial
regulators -- IMF and WB -- for their ' sheer failure' to warn member
countries about the recession. "Early warning system has totally
failed. We've to think about restructuring the system," said the
minister. He also urged the participating countries to work together
for restructuring the global financial system that he said had failed
to give the countries warning before the financial crisis. The finance
minister also felt the necessity to change the global attitude to use
resources for trade financing in the wake of the financial meltdown
that has affected trade financing badly. "Reserves could be used for
trade financing such as purchase of fuel, fertiliser and food," Muhith
suggested. Easy access to trade financing is crucial to absorb
financial shock, he said. The minister however said keeping up the
domestic demand is vital to absorb the shock following a decline in
demand. "Creating domestic demand is most obvious to mitigate the
impacts of the crisis," he said. More spending is needed for social
and infrastructure development to keep the domestic demand up amid the
crisis, he suggested. Bangladesh Bank Governor Dr Atiur Rahman
presented a keynote paper at the session chaired by BB Deputy Governor
Nazrul Huda. Nagesh Kumar, director of Macroeconomic Policy and
Development Division of ESCAP, delivered the address of welcome.
Rahman called upon the regional countries to strengthen cooperation in
response to the current crisis. "To grow intra-regional trade is
required to reduce dependence on North American and European markets,"
he said. A strong regional bond market can also help channel regional
savings into real sectors, he added. The governor also echoed the
finance minister for restructuring the global financial system.

Hitachi to take control of key businesses

Japan's Hitachi Ltd., hit hard by the global recession, plans to spend up
to 3.2 billion dollars to take full control of five domestic units with
strong growth prospects, a newspaper said Monday. The sprawling
conglomerate, which last year suffered the largest loss ever for a Japanese
manufacturer, is looking to pay to 300 billion yen (3.2 billion dollars)
for shares in the businesses, the Nikkei business daily said. The tender
offers will begin in late August and are expected to be announced this week,
the newspaper said without naming its sources. The group currently holds
stakes of about 50 to 70 per cent in the five subsidiaries - Hitachi
Maxell, Hitachi Plant Technologies, Hitachi Information Systems, Hitachi
Software Engineering, and Hitachi Systems & Services. The Nikkei said of
its 16 listed subsidiaries, Hitachi chose those firms for their strong
growth prospects. Hitachi Maxell makes lithium-ion batteries, used in
personal computers and many other electric devices, while Hitachi Plant
Technologies constructs nuclear power plants. Hitachi declined to comment on
the report. The Hitachi group, which makes everything from refrigerators
to nuclear power systems, logged a net loss of 787.3 billion yen for the
last business year to March.

Foreign execs head east for jobs as China expands

BEIJING July 27 ( bdnews24. com/Reuters) - He calls himself a Silicon
Valley refugee who has worked for giants IBM and Siemens as well as
software startups. Now Ronald Raffensperger, a marketing director at
fast-growing Huawei Technologies, numbers among the increasing numbers of
foreign expatriates China is counting on to steer its push overseas. China
wants state and private companies to expand globally and skilled
expatriates like Raffensperger are increasingly finding key roles in that
campaign. "Chinese high-tech companies are just beginning to understand
the need for marketing, brand- building and globalisation," said
Raffensperger, who has worked at Huawei, the world's No. 3 wireless
telecoms gear maker, for two years after 30 years in Silicon Valley. "I
bring that global experience to Huawei," he said. That expertise is
becoming more valuable as foreign direct investment into China fell 17.9
percent in the first half and the country's acquisitions overseas face
stiff political headwinds as spotlighted by Chinalco's failed tie-up with
Rio Tinto. China's dynamism has long attracted overseas ethnic Chinese
executives but rising unemployment in developed countries is drawing
non-Chinese foreigners into the country's industries, from automobiles to
financial services. "Foreign expat executives have fewer options today,"
said Michael Norman, a vice-president for Sibson Consulting, a human
resources firm based in North America. "But for those with unique skills
or knowledge there are growing opportunities working for Chinese
companies," he said. China's economy grew a stronger-than-expected 7.9
percent in the second quarter, one reason Sibson -- which is looking for
local partners -- sees high demand from Chinese firms for executives with
specific technical or marketing skills. China International Intellectech
(Shanghai) Corp, an executive search and consultancy, said that last year,
it recommended over 1 ,000 foreign executives -- mostly ethnic Chinese --
for positions in multinationals doing business in the mainland. So far
this year, CIIC has recommended about the same number of expatriate
executives to clients. The list of Chinese companies taking advantage of
recruiting foreign executives is growing as they expand globally. The
Haier group, China's largest appliance maker -- including Qingdao Haier and
Haier Electronics bought a 20 percent stake in New Zealand's Fisher &
Paykel Appliances in May, just months after hiring American Philip
Carmichael as its Asia Pacific chief. Tencent Holdings Ltd hired U.S. game
producer Steve Gray as research and development consultant to develop and
distribute Take-Two Interactive Software Inc's popular NBA 2 K basketball
video game in China. STATE FIRMS JUMP IN Private firms, especially those
in the fast-paced electronics industry, have been the most aggressive in
recruiting foreign talent, but state-owned giants such as Aviation Industry
Corp of China (AVIC) are also beginning to appreciate the benefits. "The
global financial crisis comes just as we are opening to the world, offering
a great opportunity to attract international expertise," said Zhang, whose
company aims to one day challenge the global dominance of Boeing BA.N and
Airbus. AVIC earlier this year announced plans to recruit 13 executives
from around the world in key areas such as research, asset management,
business development and marketing. The aviation giant, like many Chinese
firms, has the ambition -- and the backing of Beijing -- to be a global
champion, but when it comes to execution, the lack of international
experience is a glaring hole in many domestic executives' resumes. Lenovo
Group, China's top personal computer maker, appointed a former Dell
executive, William Amelio, as its chief executive to help integrate IBM's
PC business after buying the unit in 2005 for $1.25 billion. "We decided
to bring in a foreigner to learn and study from," said Liu Chuanzhi, the
company's founder and chairman. Liu said putting current chief executive
Yang Yuanqing -- the heir apparent who eventually took over from Amelio
earlier this year -- in as CEO at the time would have been disastrous. "He
would almost certainly have failed," said Liu. PROBLEMS But going east is
not without its problems. China's highly efficient manufacturing base
seems to be a natural fit for executives with specialized skills honed in
global markets, but the cultural gulf can be formidable. Recruitment
companies and firms such as Sibson reckon the tenure for the majority of
foreign executives at Chinese firms is less than a year, including ethnic
Chinese expats. "As an American, I first came here and said, ' Where are my
people? What is my budget? Give me a general direction and I'll go for
it,'" said Huawei's Raffensperger, a U.S. citizen. "It doesn't work that
way. You have to spend a lot of time listening, asking questions and
understanding how decisions are made," he said.

Saudi burns more crude for power, halts fuel oil import

By Luke Pachymuthu and Jennifer Tan - Analysis SINGAPORE July 27 (
bdnews24. com/Reuters) - Saudi Arabia, the world's top oil exporter,
is burning more crude in domestic power plants to keep new wells
pumping and produce cleaner electricity, likely eliminating demand for
imported fuel this summer. The use of even more crude oil to generate
electricity allows the kingdom to put to use fresh output from a major
new oilfield while holding firm to its OPEC commitment to curb
exports. It also helps the kingdom meet stricter environmental rules.
Estimates on how much crude it is burning differ, but the kingdom's
own data show it has risen in recent years, and it could be as high as
470 ,000 bpd of crude this year, up 62 percent from 2008 , consultancy
FACTS Global Energy says. A Saudi source familiar with the kingdom's
energy sector said the maximum it could burn at power stations would
be 300 ,000 bpd, although another 120 ,000 bpd could be burned to
power refineries and other facilities related to upstream production.
While the rise would have little impact on global crude oil markets
more focused on Saudi exports -- which Riyadh has kept in check to
help drain swollen global stockpiles -- the substitution will likely
curtail its traditional summer fuel oil buying binge. "They won't be
importing fuel oil this summer because they are going to be burning
more crude," a Middle East trade source familiar with Saudi Arabia's
fuel oil import program said. Burning crude instead of fuel oil is
less of a loss to Saudi Arabia now than it has been historically, as
fuel oil prices have strengthened. Fuel oil now trades at a discount
of $5 to benchmark crude, about half the discount on average in 2008.
FACTS estimates that during peak summer power demand, crude burned
could rise as high as 500 ,000 to 600 ,000 bpd. Less is used in winter
when power demand is weaker. "In early 2009 , a significant fraction
of the fuel oil used in the power sector was replaced by crude, partly
due to tighter regulations on the quality and metals content of fuel
oil burned in power stations," said Vijay Mukherji, a FACTS senior
analyst. Saudi data from 2008 seem to support the thesis: Saudi Aramco
produced 8.96 million bpd of crude oil last year, exporting 6.88
million bpd and refining 1.58 million bpd, its annual report showed.
That left 500 ,000 bpd unaccounted for, crude likely to have been used
by power plants, energy facilities or put into inventories -- nearly
140 ,000 bpd more than the year before. Some 50 ,000 bpd of that went
into domestic inventories, according to Saudi data submitted to the
international JODI database. All told, it suggests the kingdom kept
nearly 100 ,000 bpd more crude domestically that it did not refine or
add to stocks in 2008 than in 2007 , according to Reuters
calculations. The kingdom burns a total of 800 ,000 bpd of crude and
oil products to generate power, a Saudi Electricity Co (SEC) official
said, but he was unable to say how much was crude or fuel oil. FACTS
estimates the kingdom used up to 240 , 000 bpd of fuel oil for power
generation last year. CLEANER POWER? Saudi Arabia typically imports
some 38 ,000 bpd of low-sulphur fuel oil from the Mediterranean and
Europe in summer to meet peak power demand as the desert heat stokes
air- conditioning use. The imports top up domestic refinery output.
The shift to burning more crude -- thought to be mostly Arab Light
that has about one-fifth as much metals content as fuel oil -- to
produce electricity is partly due to more stringent environmental
requirements of domestic utilities. "The power stations are getting
tougher on fuel standards... there is now a requirement for lower
metals in the fuel being used," a senior oil trader said. "So they are
now having to burn more light crude, which has lower metals content."
The SEC official said a committee on clean development headed by oil
minister Ali al-Naimi was set up some weeks ago to help implement
tighter rules to cut pollution and carbon emissions to internationally
acceptable levels. He said two years ago, banks signed international
pacts that prohibit them from funding projects which are not
environmentally friendly, adding that the SEC had spent 1 billion
riyals ($266.6 million) cleaning up their Rabigh and Shuaiba plants.
Arab Light has a vanadium content of about 19.7 parts per million,
less than a fifth of the level contained in fuel oil it imports for
power stations. Vanadium is a typical industry indicator for measuring
metals content in fuel. NEW KHURAIS OILFIELD Saudi Arabia has cut
crude output in 2009 to the lowest in six years as part of OPEC
pledges to remove 5 percent off global supply to match recessionary
demand. Estimated output in June of 8.02 million bpd was down from
9.54 mln bpd in August 2008. The cuts come even as the kingdom starts
output from huge new oilfields. Last month, it brought online the
giant Khurais field, which pumps Arab Light. Aramco is slowly cranking
up output at the 1.2 million-bpd facility, the largest-ever single
increase to global supply. The kingdom has the largest spare capacity
cushion it has held for years, so it can burn more crude at home with
no impact on its supplies to international markets.

Bangladesh calls for changed attitude of IMF

Finance Minister AMA Muhith on Monday urged the International Monetary
Fund to support low income countries like Bangladesh with trade
financing to help them face the challenges of the global recession.
He also called upon the LICs to raise their voice to get a fair share
of the US$ 1.1 trillion fund, which the developed nations recently
pledged for bailing out the recession-hit nations. 'If you [IMF]
are thinking simply of supporting a country's BoP (Balance of Payment)
deficit, then you are mistaken,' Muhith told the inaugural session of
an international workshop on Global Financial Crisis at Sonargaon
Hotel. He said Bangladesh does not have a serious BoP problem, but
the crisis lies in trade financing as it has to import economic
essentials like food, fuel and fertilizer with financing at higher
prices from the external markets. 'There is enormous global reserve
and that could be used for trade financing,' he said, stressing the
need for changing attitudes of institutions like IMF with the present
day demands. Bangladesh Bank, the central bank of the country, and
UN Economic and Social Commission for the Asia and the Pacific (ESCAP)
jointly organized the 4-day workshop on ' Strengthening the Response
to the Global Financial Crisis in Asia-Pacific: The Role of Monetary,
Fiscal and External Debt Policies.' Officials from Finance
Ministries and central banks of the region, and representatives from
UN organizations, World Bank, IMF, ADB and NGOs are taking part at the
workshop to share experiences and ideas on how they have responded to
the global crisis and would face in the future individually and
collectively. Finance Minister Muhith said countries like
Bangladesh, facing challenges of poverty alleviation, protection of
social investment and infrastructure development, need some resources
from outside. 'We want to see how the trillion dollar fund is
distributed to the benefit of the LICs,' he said, urging the LICs to
raise their voice in getting a fair share of the fund to support them
keep up with economic growth, protecting the social investment, in
infrastructure development and facing the new challenge of climate
change adaptation. He also called upon the participants of the
workshop to give some thought on the issues to draw attention of the
developed countries in these regards. In his keynote address,
Bangladesh Bank Governor Dr Atiur Rahman stressed the need for faster
growth of intra-regional exports of primary, intermediate and finished
goods as well as capital goods to reduce dependence on the debt-driven
demand markets of North America and Europe. He recommended
development of regional bond market to channel regional savings into
real sector development instead of investing the savings in the
complex western financial markets. The BB Governor called upon the
nations in the Asia-Pacific to urge the more affluent emerging
economies to broaden windows of concessional lending to the
governments of lower income economies. He also urged the nations to
present in the UN, IMF, World Bank and other global forum a unified
front favouring a new global financial architecture that ensures
global financial and economic stability.

Stocks return to green zone

Frustrated at the continuous fall in share prices, a group of retail
investors on Monday staged a demonstration in front of the Dhaka
Stock Exchange building. Dhaka stocks, however, made some recovery
in the late trading with DSE general index finishing with a 13.71-
point gain on institutional buying, market operators said. The
market has been witnessing a downward trend this month after a rapid
growth in the last couple of months. The group of retail investors
gathered in front of the DSE building at about 11:30am and agitated
on the road for about half an hour, witnesses said. The
demonstrators demanded that the authorities should take steps to
arrest any further slide in share prices in the market, the
witnesses said. They blamed 'intervention' by the Bangladesh Bank and
the Securities Exchange Commission, the stock market regulator, for
the slide. Stock market analysts attributed the downtrend to the
investors' 'wait-and-see' policy amid dropping of fund flow to the
market after regulators' 'intervention'. They said the regulators'
move was a reason for squeezing loans by merchant banks. The
Bangladesh Bank recently asked all banks to submit monthly reports on
their stock portfolios, following some allegations of irregularities
in share business. The monthly reports must be submitted within seven
days of a month to the department of off-sight supervision of the
central bank on a regular basis. The market analysts said the
downtrend in the market prompted a section of large-volume traders to
remain inactive and retail investors to sell off their shares for
cash to be used in applying for the initial public offerings next
month. From July 2 to July 26, DSE general index lost 240.14
points, or 7.82 per cent, to close at 2,829. 57. On Monday, DSE
general index gained 0.48 per cent, to finish at 2,843.28. Of the
total 238 issues traded, 164 advanced, 66 declined and eight remained
unchanged. Turnover at the DSE dropped to Tk 398.03 crore from the
Sunday's Tk 462.73 crore. A team comprises representatives from
SEC, DSE and Chittagong Stock Exchange today will hold a meeting
with the Bangladesh Bank at the central bank's building in Dhaka to
exchange views on current stock market situation, said a senior
official of the DSE.

BTMA wants diesel at lower price to keep wheels rolling

The Bangladesh Textiles Mills Association on Monday demanded that the
government should supply diesel to industries at subsidised rate
saying that production in textile mills had dropped by 50 per cent
because of gas supply shortage. They said they were getting gas
for only 12 hours a day to run their captive power plants.
'Electricity generation by captive power plants at our mills,
especially in the Joydevpur- Kaliakoir-Tangail zone, remains suspended
everyday from 11:00am to midnight due to low gas pressure. If the
trend continues we may have to shut down our industries,' said BTMA
president Abdul Hai Sarker at a press briefing at the association
office in the city. He said that textile mills in Kachpur-
Narsingdhi zone were also facing similar problems. Sarker said the
government should take immediate steps to increase power supply to
their industries. 'As we do not get enough gas to run our generators,
the government should supply us diesel at lower prices to enable us
to run our factories.' he said. 'Gas supply shortage is forcing us
to cut production by 45 to 50 per cent. The situation has aggravated
in the last two months. If this situation continues we will face
disaster. We need to raise production to least 85 per cent of our
capacity if we want to make the business viable,' he said. He said
that the BTMA members were currently incurring a daily loss of Tk 10
crore because of drastic fall in production. 'Despite global
economic meltdown, our industries grew at 4-5 per cent in the last
fiscal year. We are lagging behind our rivals in the export market
not because of the global meltdown. Power crisis is the major reason
for the sluggishness,' he noted. Former president of the BTMA, A
Matin Chowdhury alleged that the government had been ignoring the
huge potential of the sector for long. 'The finance minister had
assured us of necessary assistance for growth of the textile sector,
but no decision has so far been made to stimulate the sector hit by
recession,' he said. Things are moving at a snail's pace, he
alleged. 'If the government makes further delay to take necessary
steps to resolve the power crisis, textile sector will definitely
collapse. Besides, the government will have to take measures to
address the issue of labour unrest.' he added.

FDI inflow to major sectors increases

The country saw a rally in the inflow of Foreign Direct Investment in the
past year when major sectors attracted increased investments from overseas.
A Bangladesh Bank survey found that the FDI inflow to the country during
January-June 2008 took a u-turn from the previous year's sluggish trend
while some key sectors attracted good investments from foreign
entrepreneurs. The survey revealed that the infrastructure and service
sectors were the prime recipient of FDI in the past year. Foreign
investment in the gas sector, however, decreased during the period. The
central bank survey has not mentioned any reason behind the decrease,
neither it has made any comment on the increase of FDI to other sectors
including power, telecommunication, banking and textile. It has focused
only on the comparison of the inflow of FDI in the last two years, showing
an overall increase in 2008. According to the survey, FDI inflow to gas
and petroleum sector decreased by $ 9.51 million or 13.36 percent to $
61.65 million during January- June, 2008. During the period, FDI inflow
to power sector increased by $ 7.19 million or 80.25 percent to $ 16.15
million, banking sector by 221.19 percent to $ 119.58 million and textile
sector by $ 17.4 million or 45.78 percent to $ 55.41 million. The
telecommunication sector fetched the highest amount of FDI with $ 210.68
million investment in 2008, which was 136.08 percent higher than the
previous year's investment. The overall inflow of FDI also increased
during the period with $ 483.66 million investment against the inflow of
the same during the previous survey period. Bangladesh Bank conducts the
survey twice a year to monitor the international investment position in
Bangladesh. The central bank also uses the findings of the survey in
compiling balance of payments statistics. The survey for July-December
2008 has not yet been done.

US seeks action with China to beat economic crisis

The United States and China on Monday open their most in-depth talks
since the election of President Barack Obama, with the US side seeking
far-reaching cooperation on the global economic crisis and beyond.
Obama was set to inaugurate the two-day dialogue, part of the US
leader's push to build a broader relationship between the biggest
developed and developing economies. With China increasingly uneasy
about its massive exposure to the US economy, Secretary of State
Hillary Clinton and Treasury Secretary Timothy Geithner made a joint
appeal to Beijing to work together to spur global growth. 'Simply
put, few global problems can be solved by the US or China alone. And
few can be solved without the US and China together,' Geithner and
Clinton wrote in an article published Monday in The Wall Street
Journal. The duo, who will lead the US side in the talks, argued
that measures by Washington and Beijing to create and save jobs helped
the world at large weather its worst economic turmoil since the Great
Depression. 'The success of the world's major economies in blunting
the force of the global recession and setting the stage for recovery
is due in substantial measure to the bold steps our two nations have
taken,' they said. 'As we move toward recovery, we must take
additional steps to lay the foundation for balanced and sustainable
growth in the years to come.' No major announcements were expected
in the Washington talks but a flurry of press briefings could shed
some light on the sometimes fraught relationship of the two
intertwined goliaths. State Councillor Dai Bingguo and Vice Premier
Wang Qishan are heading the Chinese delegation to the 'Strategic and
Economic Dialogue,' which broadens talks with China on the economy set
up under former president George W. Bush. Charles Freeman, a China
expert at the Center for Strategic and International Studies, a
Washington think-tank, said the dialogue's main purpose was to build
confidence between Washington and Beijing. 'While the United States
and China have developed an increasingly close relationship over the
years, there still remains a fundamental sense of mutual strategic
mistrust,' Freeman said. The United States, along with close US
ally Japan, has voiced concern about Beijing's rapid military
build-up; Chinese and US ships have repeatedly confronted each other
at sea. Beijing's human rights record has also long been a sore
point, with many US lawmakers dismayed over recent ethnic violence in
China's Muslim-majority Xinjiang province that left at least 192
people dead. Clinton and Geithner made no direct reference to
China's human rights record in their article but said Washington and
Beijing 'must be frank about our differences.' China is the largest
creditor to the United States and has voiced growing concern about the
fragility of the dollar and the safety of its more than 750 billion
dollars invested in US Treasury bonds. Zhu Guangyao, assistant
finance minister, told reporters in Beijing that China would press the
United States to ensure the safety of its investments. 'As an
important investor, China is deeply concerned about the US economic
situation and hopes the US stimulus policy could make effective
progress,' Zhu said. He Zhicheng, a senior economist at the
Agricultural Bank of China, expected the two sides to talk less about
economics than about strategic issues, including Xinjiang. But He
said that the economic crisis has weakened US leverage over China.
'The US are more dependent on China than during the Bush period,' He
said. 'In the financial crisis, China was in a better position than
the US.' The dialogue is also expected to touch on global warming.
The United States and China are the world's top carbon emitters and
have been at loggerheads in the countdown to a December meeting in
Copenhagen aimed at drafting a new global climate treaty.

EPZ industries show little export growth

The industries at the Export Processing Zones showed little growth in
business with $2.6 billion earnings for the past fiscal ended on June
30 this year. Official data shows the growth in earnings was only 6
per cent over the previous fiscal year's figure. Officials at
Bangladesh Export Processing Zones Authority held ongoing global
recession responsible for the deceleration. The worst hit industries
are those producing non- garment products. The apparel manufacturers
in the EPZ are also facing the impact of the financial downturn, they
said. Compiling the export bills on the goods produced in
industries in eight of EPZs, the BEPZA totaled the export proceeds for
2008-2009 fiscal year at $2582 million. In the previous 2007-2008
financial year, export earning from EPZs units was $2430 millions with
nearly 18 per cent growth over the previous year. 'Global recession
has depressed the export market for Bangladesh manufacturers as it
doses for others. And EPZ industries have suffered much as they are
depending on exports only' , said a senior official at the authority.
He said due to the recession fallouts, export target of EPZ
industries was missing with a gap between the achievement and the
goal. The official admitted that for the just ended fiscal they had
eyed $2.8 billion export earnings, but the global recession down sized
the earnings to 2. 6 billion. 'The amount is not huge, but the
downtrend is a concern', he pointed out and added the industries would
suffer much should the trend continues. The BEPZA officials said
industries other than the textile and garment units suffered much as
the demands for their products fell in the global recession-hit
markets. Eight EPZs in the country accommodate more than 300
industrial units when nearly half of the industries are engaged in
producing goods other than textile and garment. Productions in
these units include tents, golf shafts, camera parts, automobile
accessories, and light engineering products like iron chains. The
BEPZA officials, however, expressed the hope that exports from EPZ
would increase significantly in the current fiscal year as many new
entrants would start their productions. They also referred to the
very recent trend in the global economy that is showing some sort of
rally. 'This is good for our export market and may take the export
earnings indicator to up again,' they said. BEPZA made agreements
with some large Chinese and Taiwanese shoemakers and furniture
manufacturers, who are going to productions this year.

Steps under way to realise Tk 6,500cr in revenue

The government has taken initiatives to realise about Tk 6,500 crore
revenue, which remains unpaid by various organisations, from income tax,
value addition tax and import duty due to cases at the higher court.
Additional attorney general MK Rahman told the news agency that a
request was made to the chief justice for forming necessary benches for
speedy disposal of these cases on the basis of the recommendations of the
government. Earlier, the law ministry advised the office of the
Attorney General for taking necessary measures for speedy resolution of
these cases and based on this, the Attorney General office took the
necessary initiatives. He said the hearing of these cases and their
resolutions are being done at three benches at present and some other
benches have also the jurisdiction of disposal of the cases. Lawyers and
law officers experienced with revenue issues have been given the
responsibilities for handling these cases. The resolutions of these
cases are essential for realising the huge amount of government money, he
said adding that 16,000 cases are under trial. Of the total cases,
Tk 1,700 crore revenue remains unpaid against 1,500 income tax related
cases, Tk 3,000 crore against 2,000 VAT related cases and Tk 1,700 crore
against 12,000 import duty related cases, he said. The National Board of
Revenue is providing assistance to the Attorney General office in
conducting the cases, he said. The NBR has already prepared a list of tax
and VAT default companies. These companies are AB Vegetable Oil
Industries, Korean company Samhoan Corporation, Media World, Inspector
Bangladesh Ltd (EBL), BRAC, Prime Fisheries, Grameen Bank, Pioneer
Apparels, Bengal Development Corporation, Eastern Housing and City Group.
Besides, more companies are involved in these cases. They are Nestle BD
Ltd, Navana Industries Ltd, Quader Textile, Monwara Textile, Bangladesh
House Building and Finance Corporation, Chittagong Jute Manufacturing
Company, Jalalabad Gas Transmission and Distribution System Ltd, Eastern
Bank, Royel Cement, BD Foods Ltd and Bengal Fine Ceramics Ltd.

Porsche axes CEO, sets stage for VW merger

Sportscar maker Porsche conceded a months- long power struggle to
mass-market rival Volkswagen by axing its chief executive and said it
would raise at least 5 billion euros in equity as the two prepared for a
merger. After an all-night meeting of its board of directors, Porsche said
Wendelin Wiedeking, Germany's best-paid executive and its CEO for the past
16 years, along with finance chief Holger Haerter, would quit the group
immediately. Their hasty exit will be sweetened by payoffs of 50 million
euros and 12.5 million euros, respectively. Wiedeking, who had opposed
selling Porsche to Volkswagen, which would have helped the company reduce
the debt he had run up in a botched attempt to take over VW, will be
succeeded by Porsche's production head Michael Macht, the board said in a
statement early on Thursday. The meeting of the non-executive directors,
which include the Piech and Porsche families that between them control
Porsche, approved Wiedeking's proposal to raise fresh equity -- either in
cash or through a contribution in kind -- and endorsed talks to sell a
stake to the Gulf state of Qatar. "This should lay the foundations for the
creation of an integrated automobile group consisting of Porsche SE and
Volkswagen," Porsche said. It was unclear from Porsche's statement who
would contribute to the capital increase and whether it would be taken up
by Qatar. A Porsche spokesman declined to comment further. The board's
unanimous approval signals that the powerful Porsche and Piech clans may be
open to surrendering some of their influence at the maker of the 911
sports coupe. Between them they control 100 percent of Porsche's voting
shares and have resisted selling a stake to an outsider. At 0820 GMT,
Porsche shares were up 1 percent, while Volkswagen's were down around 3
percent, compared with a 0.8 percent fall in the DJ Stoxx auto index and a
flat German market. JOINING FORCES A source at Volkswagen, speaking on
condition of anonymity, told Reuters it was still open whether oil-rich
Qatar would take a stake in the Porsche SE holding company or directly in
Volkswagen, or in both groups. The issue was due to be discussed by
Volkswagen's own board of directors, which gathers for an extraordinary
session on Thursday in Stuttgart, where Porsche's Zuffenhausen
headquarters are based, rather than its own headquarters in Wolfsburg.
Volkswagen, Europe's biggest carmaker, declined to comment. The moves
came as Porsche enters the final stretch of negotiations with Volkswagen to
create what both sides have called an " integrated" auto group, in which
Porsche would essentially become the 10 th brand in Volkswagen's sweeping
automotive empire. Porsche SE, the holding company that controls sportscar
maker Porsche AG, needs to bolster its finances after accumulating more
than 10 billion euros in debt through its botched attempt to seize control
of VW. Porsche was forced to abandon attempts to win control over 75
percent of VW, leaving it with a stake of nearly 51 percent. The failed
takeover attempt opened the door to Ferdinand Piech, VW's powerful
chairman and himself a part-owner of Porsche, to turn the tables on
Porsche. The Porsche and Piech families had been at loggerheads for months
over how to resolve the company's debt woes and the role VW would play.
Piech has pushed for VW to take over Porsche, on condition that Porsche
fixes its finances first.

Asian markets move higher

Increased confidence that the US and Chinese governments will continue with
their loose economic policies, as well as a weaker yen, helped push Asia's
stocks higher on Thursday. TOKYO: Up 0.72 percent. The benchmark Nikkei-225
index rose 69.78 points to 9 ,792. 94. HONG KONG: Up 2.96 percent. The Hang
Seng Index closed up 569.53 points at 19 , 817.70. SYDNEY: Down 0.11
percent. The S&P/ASX200 closed down 4.4 points at 4 ,064.1. Weakness in the
banking sector outweighed gains in resources stocks, dealers said. SHANGHAI:
Up 0.97 percent. The Shanghai Composite Index, which covers A and B shares,
climbed 31.88 points to 3 , 328.49. TAIPEI: Flat. The weighted index fell
4.44 points, or 0.06 percent, to 6 , 980.88. The slight fall ended seven
consecutive sessions of gains. SEOUL: Up 0.16 percent. The KOSPI added 2.45
points to end at 1 , 496.49. It was the index's eight consecutive gain, the
longest winning streak since June 2007. SINGAPORE: Up 1.39 percent higher.
The Straits Times Index rose 34.07 points to 2 , 484.90. JAKARTA: Up 1.65
percent. The Jakarta Composite Index added 35.1 points to end at 2 , 160.71.
KUALA LUMPUR: Up 0.30 percent. The Kuala Lumpur Composite Index gained 3.45
points to 1 , 152.15. Infrastructure group Gamuda added 2.70 percent but
Public Bank lost 1.0 percent to 10.20 ringgit. BANGKOK: Up 2.34 percent. The
Stock Exchange of Thailand rose 13.97 points to close at 612.19. The index
was lifted on strong buying in the energy sector as investors predicted a
rise in global oil prices, an analyst said. MANILA: Flat. The composite
index was down 0.38 points, or 0.01 percent, to finish at 2 , 612.00.
WELLINGTON: Up 0.63 percent. The NZX-50 rose 18.19 points to 2 , 918.63. The
market witnessed its eighth straight gain due to rising optimism. Auckland
International Airport rose three cents to 1.64 dollars. Air New Zealand rose
three cents to 98 cents. MUMBAI: Up 2.61 percent. The 30- share Sensex rose
387.92 points to 15 , 231.04.

Sonali Bank launches online banking

Sonali Bank has launched online and SMS banking services for its
customers. The customers of the bank will now be able to perform their
banking transactions from one branch to another more easily, a news
release said. For SMS banking service, the customers will be able
to obtain some instant information like account balance, interest
rate, account statement, currency rate and others. Beximco Computers
has provided technical support by giving software to Sonali Bank.
The services were launched at a ceremony held at Sheraton Hotel on
Tuesday. Sonali Bank chief executive officer and managing director SA
Chowdhury was present as chief guest in the ceremony while Beximco
Computers Limited general manager Abu Zafar Khan, Bangladesh Online
Limited chief operating officer Syed Samiul Wadood, Sayeeful Islam,
Software Shop Limited Wireless managing director were present as
special guests.

Bad loans, high interest may foil BB’s policy goals: CPD

The monetary policy will not hit its targets if the Bangladesh Bank
fails to help the scheduled banks to recover the defaulted loans,
invest excess liquidities in productive ventures and lower interest
rates, warned the Centre for Policy Dialogue. The CPD also pointed
out that Bangladesh Bank's half-yearly monetary policy overlooks
important issues like bad loans, policy guidelines to encourage
industrial term loans, narrowing of interest rate spread and
integrating microfinance operations. 'The large amount of
non-performing assets has emerged as a source of worry for the
financial sector, which may frustrate the efforts to lessen
inflationary pressure,' the CPD's distinguished fellow, Debapriya
Bhattacharya, told a press briefing on ' Recent monetary policy
statement of Bangladesh Bank (July 2009): an analytical commentary' at
its office on Thursday. According to the BB's statistics, excess
liquidity of the scheduled banks stood higher at Tk 27,716.99 crore at
the end of April 2009 as against Tk 12, 988.58 crore in June 2008,
recording a 113.4 per cent growth. The latest statistics of interest
rate spread — the gap between deposit and lending rates — is also not
encouraging, as the spread remained as high as 5.5 per cent in May
compared with 4.8 per cent at the end of fiscal year 2008-09.
Debapriya appreciated the re- emergence of the forgotten issue of
defaulted loans with the finance minister informing the parliament of
the extent of the bad assets of banks. The prime minister has asked
the finance minister to prepare a report on the defaulters who used
political connections to protect themselves, he added. 'But one
expects to see that the renewed initiative is followed by effective
policy measures,' said Debapriya, regretting that the central bank's
monetary policy missed the vital issue. He appreciated the monetary
policy stance for stimulating investment and economic growth, and
creating employment. 'The monetary policy is consistent with the
economic demands,' he added. He, however, said the central bank is
capable of making dynamic adjustments to its monetary policy in the
course of its implementation in the current fiscal year. He also
recommended formation of a high-powered committee to deal effectively
with the bad debt overhang, infuse more competition in the financial
sector and ensure availability of loans for the private sector from
external sources. He warned that inflation would emerge as a
challenge by the end of the year or early next year as global oil
prices have started increasing although prices of other essentials
like rice and soybean oil have remained somewhat stable. Debapriya
said the country's economy might face a difficult situation if the
increased public borrowings do not go to sectors which create
employment opportunities. He said the credit demands from the
public and private sectors could be met from the huge liquidity in the
banking system. He also pointed out that the budget dependence on
bank borrowing would be increased further if foreign aid and revenue
earnings fall short of the targets and development expenditure does
not decrease. He expressed concern about achieving the agriculture
growth target due to natural disasters as a drought- like situation is
already affecting the present aman crop. 'The central bank should
use the monetary policy as a complementary factor to the fiscal policy
to support agriculture production against the backdrop of the
situation,' he suggested.

BB chief urges banks to have own 5-year plan

Bangladesh Bank governor Atiur Rahman on Thursday urged the banks to
prepare their own five- year plan for the growth of the sector. 'We have
already planned to introduce a five-year strategy and all banks should
prepare their own five-year plan,' he said while inaugurating a three-day
Bank and Non- Bank Financial Institutions Fair-09 at Sheraton Hotel in
Dhaka. He said, 'A five-yean plan will tell us where we will stand after
the period.' The BB chief urged the banks and NBFIs to work hard to earn
greater customer confidence and consolidate their financial bases. He
said the concept of public private partnership could not be successful
without the help of the banks and other financial institutions. The BB
governor also urged the banks and the NBFIs to expand the purview of their
corporate social responsibility. 'Banks and other financial institutions
should consider streaming CSR funds into productive sectors like
agriculture and small and medium enterprises,' he said. Atiur also
emphasised on rationalising the service charges of various banks in the
country and displaying the service charges on their web sites for the
benefit of the people. On the fair, he said such expositions could
solve information asymmetry problem and build confidence among the
consumers. Association of Bankers, Bangladesh chairman Kazi Mahmud
Sattar, and Bangladesh Insurance Association chairman AKM Rafiqul Islam,
among others, also spoke at the function chaired by Sheraton Hotel general
manager Trevor MacDonald. Twenty-five banks and NBFIs are showcasing
and offering their products and services in the fair.

ADB presses Bangladesh for regional integration

The Asian Development Bank president has suggested Bangladesh forge a
better cooperation with its neighbours India and Nepal in transport and
energy sectors. "Regional integration on transport and power will
substantially benefit the South Asian countries, especially Bangladesh,"
Haruhiko Kuroda told a press conference at Sonargaon Hotel in the capital
yesterday. The Manila-based ADB boss, arrived in Dhaka yesterday on his
maiden two- day visit, also viewed that a regional power grid could be
popular among the nations. Kuroda sees no significant progress in
cooperation among the South Asian nations, although the lending agency
has long been pushing for it. "Many discussions were held, but so far very
few investment projects have been implemented in the region," observed the
ADB chief. However, he hopes for a change in future. Pointing to the
benefit of regional integration, Kuroda, also a renowned Japanese
economist, said, "China, Vietnam, Laos, Cambodia and Myanmar have
implemented many regional projects on transport, energy, communication and
water management and become benefited." South Asian countries are the least
integrated in today's highly globalised world. Intra-regional trade is
less than 5 percent despite inking of South Asia Free Trade Agreements
(Safta) by eight nations Afghanistan, Bangladesh, Bhutan, India, th ze
Maldives, Nepal, Pakistan and Sri Lanka. Kuroda also dwelt on the ongoing
global recession and its impacts on Bangladesh, governance and corruption
issues. Also, the recovery trends he focused. "Bangladesh is not so much
affected compared to East Asian nations because it is not so globalised,"
said the ADB chief. He however said a second round effect is already felt
by Bangladesh with a decline in export growth. Kuroda felt that the
country's exports would not fall like what has happened with electronics
and automobiles. He hoped Bangladesh's economic growth would be 5 to 6
percent this year despite crisis. "If the recovery does not take place in
the second half, then it poses challenges for Bangladesh," he predicted.
On the recovery trend, he said Asian giants like China and India are
already showing recovery. Emerging Asian economies also indicate positive
trend. "But G7 economies are still contracting," he said. Kuroda said ADB
is ready to assist the smaller economies that need emergency assistance to
face recession. The ADB has already announced that it would increase its
annual average assistance to Bangladesh from $600 million to $800 million
for the next three years. Meanwhile, Bangladesh's finance minister has
sought additional $500 million this year to face the recession fallout.
The Manila-based multilateral lending agency has formed a $3 billion
counter-cyclical Support Facility, to face the immediate adverse crisis
fallout and help sustain long-term economic growth. But the ADB has
increased interest rate by 200 basis points for the facility, which the
ADB president legitimated saying it is an emergency support. "The interest
rate is still lower than many development lending agencies, including the
IMF," he added. On Bangladesh's anti corruption measures, Kuroda said he
assumed the present government would continue to strengthen governance and
reduce corruption.