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.

KL maintaining Bangladesh worker ban: FM

Malaysia has made it clear to foreign minister Dipu Moni that Kuala Lumpur
is maintaining its embargo on Bangladeshi workers, the foreign ministry said
on Thursday. Dipu Moni met Malaysian foreign minister Datuk Anifah Aman on
the sidelines of the 16 th ministerial meeting of the ASEAN Regional Forum
in Phukhet, Thailand. Earlier this year, overseas employment minister
Khandker Mosharraf Hossain stated that Kuala Lumpur had taken a " political
decision" to lift the ban that had forced some 55 ,000 Bangladeshi workers
out of Malaysia earlier this year. "Lifting the ban was just a matter of
time", Hossain had told bdnews24. com on May 7. Dipu Moni, in Phuket on
Thursday, enquired about Malaysia's latest stance, the foreign ministry said
in a statement. Aman told Dipu Moni his government would lift the ban on
Bangladeshi workers after Malaysia had fully recovered from the effects of
the global recession,. "The Malaysian foreign minister said it was a
reiteration of the existing decision so that unscrupulous manpower agents
did not send prospective workers when there are still no jobs available,"
quoted the statement. "He (Aman) reassured that the decision to take
Bangladeshi workers still holds, " it said. "They will be taken once
Malaysia starts recovering from the current economic recession". The
Malaysian government on March 10 cancelled 55 ,000 visas for Bangladeshi
workers because of a " politically sensitive" statement made by a
Bangladeshi diplomat. Bangladesh labour counsellor Talat Mahmud had told a
Malaysian TV channel that his country had no problem amid the world
recession as 70 ,000 more Bangladeshis were going for jobs despite the
economic slowdown in Malaysia. The counsellor told the same to Malaysia's
state-run news agency, angering people and politicians in Malaysia, hard hit
by the global economic meltdown. The far-eastern country subsequently sent
thousands of Bangladeshi workers back empty-handed. Foreign minister Dipu
Moni and Hossain in April visited Malaysia and had talks with the leaders of
the new government there for lifting the ban. The diplomat was later
withdrawn. Around 500 ,000 Bangladeshis live in Malaysia. Dipu Moni meets
Hillary Clinton Dipu Moni also met US secretary of state Hillary Clinton,
Russian foreign minister Sergey V Lavrov, European Union foreign policy
chief Javier Solana and other leaders. On her meeting with Hilary Clinton,
the statement said, "Secretary Clinton said that her government had a lot of
interest in South Asia and especially in Bangladesh." "In their exchange,
they agreed that a number of areas where the two countries can work together
include issues related to climate change, women, children, human rights and
counter-terrorism," according to the statement. Dipu Moni also met her
Australian counterpart Stephen Smith, the statement said.

GP revenue grows 10 % in Q2

Dhaka, July 23 ( bdnews24. com)—Top mobile operator Grameenphone's
revenue has grown 10 percent to Tk 1 , 628 crore in the second quarter
of this year from Tk 1 ,477 crore in the same period last year. "The
increasing revenue-growth trend … demonstrates that the management is
willing to make the right changes at the right time to bolster the
company during the pause in the economy," Grameenphone CEO Oddvar
Hesjedal said in a statement on Thursday. The company's cumulative
investment now stands at Tk 14 ,400 crore including Tk 480 crore in
2009. Revenue rose with the growth in the number of subscribers, and a
higher average price per minute, said GP. It was also boosted by
interconnectivity revenue after introduction of international gateway
in Bangladesh, which were partly offset by reduced fees on local
interconnect calls. Grameenphone added 106 ,000 subscribers during the
second quarter but still saw a slight decline in subscription market
share to 45 percent, the statement said. The company has adjusted its
investment in network with the current growth in subscriptions and
traffic volumes. Following the reduction in local interconnection
rates in the previous quarter, the Bangladesh Telecommunication
Regulatory Commission lowered the international call termination rate
to minimum USD 0.03 from USD 0.04 , with effect from May 19. Telenor
chief says GP going strong Jon Fredrik Baksaas, president and CEO of
Telenor, GP's parent company, said in a statement from Fornebu that
Grameenphone, among its subsidiaries, was delivering a "particularly
strong quarter, both in terms of revenue growth and Margins". Earlier
this month, the Securities and Exchange Commission gave formal
approval for Grameenphone's long- awaited IPO. The approval was
subject to satisfactory and successful completion of certain
conditions, including changing the denomination of shares from Tk 1 to
Tk 10 , and incorporating the audited financial statements for 2008 in
the IPO Prospectus. The Grameenphone IPO will be by far the largest
IPO ever completed in Bangladesh.