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.