US banks still in tight straits despite profits

US banks, at the centre of the global economic crisis, reported robust
earnings for the second quarter of 2009 even though many—especially smaller
banks — remain in tight straits, experts say. In the flood of financial
results for the April- June period there was a clear breakwater between the
nation's large financial institutions, sheltered by the demise of rivals
like Lehman Brothers in the financial storm, and regional banks, many of
which are still bleeding red. The four behemoths that emerged from the US
financial system meltdown have raised enormous profits: $2.7 billion for
JPMorgan Chase, $3.2 billion for Bank of America and Wells Fargo, and even
$4.3 billion for the worst-hit of the lot, Citigroup. 'These results come
from the investment bank' side and not from commercial lending, which is
crucial for economic activity, said Cesare de Novellis, an analyst at
Meeschaert New York. These profits came on the back of a powerful rally
in equity markets and a renewed vigour in bond markets, he said.
Investment bank Goldman Sachs, whose general public activities are
limited, saw quarterly profit jump 65 per cent from a year ago, to 3.4
billion dollars. The strong results have revived the debate over bonuses
paid to traders, which seem to be heading for the stratosphere after laying
low in recent months. Citigroup, which was bailed out by the federal
government with 45 billion taxpayer dollars, and Merrill Lynch, which agreed
to a government-secured takeover by Bank of America to escape bankruptcy,
found the means to pay bonuses last year of $5.33 billion and $3. 6 billion,
respectively, according to a recent report by the New York state attorney
general's office. The managing director of the International Monetary
Fund, Dominique Strauss-Kahn, said he was 'appalled' by the return of the
big bonus culture that had promoted the risk taking responsible in part for
the financial system crisis. After a star Citigroup trader pressed the
bank to pay him a 100-million-dollar bonus this year, the US House of
Representatives passed a measure capping executive compensation at the large
companies rescued by the government. 'President Barack Obama's
administration pushed the idea of reforming the financial system, but for
the moment it only has succeeded in mopping up the losses of big banks, ' De
Novellis said. The banks that have fattened their bonuses the most
'already had reimbursed the public funds, so the government can no longer
pressure them to limit' the payouts to their hot-shot traders.

Indians to refine business skills at 'finishing schools'

The traditional image of finishing schools is of the Swiss Alps, where
elegant young ladies from well-to-do families learn to walk, talk and make
conversation before entering polite society. Now India is looking to the
model for the three million or so graduates it produces every year to refine
the skills they need to succeed in business and give the country a sharper
edge in the global marketplace. The 'finishing schools' in Mumbai, New
Delhi, Hyderabad and Bangalore are to open later this year, as part of a
two-million-dollar project by the Indian School of Integrated Learning and
British training firm Speak First. 'The finishing school is taking
graduates and anyone else of that academic level through a programme which
will give them all the skills that a business could possibly want,' Speak
First' s Amanda Vickers told AFP in Mumbai. 'A lot of people (in India)
are academically really well qualified, very bright and intelligent, all the
things that most businesses want. But where there is a gap is in the skills
that you need to succeed in business.' India has seen massive foreign
investment into the likes of its IT, banking and outsourcing sectors,
attracted by a massive, educated — and cheaper — workforce, fuelling close
to double- digit economic growth in recent years. But both Vickers, Speak
First's managing director, and ISIL chairman Vijay Moza said Indian
employees could do better when it comes to 'soft skills'.
Misunderstandings have often arisen from telephone manners or email
etiquette with clients and even colleagues based elsewhere in the world that
may just be a simple case of cultural difference, they said. A common
bugbear among foreign businesses and individuals here is of many Indians not
wanting to say 'no', leading to frustrations when requests are not completed
on time or even at all, said Vickers. Too much respect for clients and
superiors can be construed as a lack of directness while attempts to be more
direct can come across as aggression, she added. Teaching communication,
interpersonal and negotiating skills as well as cultural awareness is simply
'reflecting a business need' in an increasingly globalised world, she said.
For his part, Moza said he has heard frequent complaints from company
bosses not just about many graduates' lack of workplace skills but the time
and money it costs to get them up to speed. 'Finishing schools' would
help fill the gap left by the Indian education system that does not have the
resources to teach personality development, said Moza.

No mutual fund under Tk 50 crore

The Securities and Exchange Commission from now on will not allow any mutual
fund worth below Tk 50 crore. The commission took the decision at a
meeting on Sunday, said a senior official of the stock market regulatory
body. He said the step would strengthen the mutual fund sector. The
SEC's move came following a proposal from the Dhaka Stock Exchange on what
should be the lowest worth of a mutual fund of getting SEC approval. The
premier bourse, however, had proposed that mutual fund of below Tk 100 crore
should not be allowed. A number of mutual funds are waiting for the
approval of the SEC for raising funds through issuing initial public
offerings with a number of financial institutions recently decided to float
mutual funds. Currently, a total of 17 mutual funds are listed with the
bourses. Of them, ICB and its subsidiaries have managed 13 mutual funds,
AIMS Bangladesh three and BSRS (Bangladesh Shilpa Rin Sangstha), and Prime
Finance have one each. Meanwhile, the subscription of IPO of ICB AMCL 2nd
Mutual Fund began on Sunday and will finish on August 16. For the
non-resident Bangladeshis, the closing date will be on August 25. The
mutual fund, sponsored by ICB Capital Management Ltd, will float 50 lakh
shares of Tk 100 each totalling Tk 50 crore. Resident Bangladeshis will
get units worth Tk 30 crore, while units worth Tk 5 crore will be reserved
for NRBs, and another Tk 5 crore for mutual funds. Sponsors will get units
worth Tk 10 crore. ICB Asset Management Company Ltd, a subsidiary of
Investment Corporation of Bangladesh, is working as asset manager of the
fund.

Manpower export drops by 50 per cent

When Anita Gimmi was unable to find work in her native Nepal last year, she
borrowed 1,300 dollars and travelled to Qatar to take up a two- year
contract with a cleaning company there. Less than a year later, the
26-year-old has been forced to return home still heavily in debt after
becoming one of thousands of foreign workers to be laid off as the economic
downturn hits Southeast Asia and the Middle East. Many Asian countries
including Nepal, Bangladesh, the Philippines and Pakistan have registered
increases in foreign remittances this year. In Bangladesh, where in the
past year alone remittances contributed 11 per cent to GDP, government
figures show a huge drop in the number of people going abroad to seek work.
Almost 251,000 people left the country between January and June — a 50
per cent drop on the same period last year, according to the Bureau of
Manpower and Employment Training. BMET director general Masud Ahmed said
the slowing of economies in the Gulf region, where many Bangladeshis are
employed, was a key reason for the downturn. 'Unless their economies
pick up, we don't see any major boost in the country's manpower export,'
Ahmed told AFP. Pakistan's economy relies heavily on its roughly four
million expatriates — around two million of them in the Gulf — and
registered a record 7.81 billion dollars in remittances for the 2008/9
financial year. But economist AB Shahid said this was 'due mainly to the
transfer of settlement dues by Pakistani expatriates whose services have
been terminated in recession-suffering Gulf countries. ' Vietnamese
welder Tran Trung Hieu left for Slovakia last November on a three-year
contract, but was expelled in May after his company terminated the contract
citing the economic downturn.

Dhaka stocks open week higher

Dhaka stocks opened week higher with increased participation of investors on
Sunday, the first trading day of the week, market operators said. The
general index of Dhaka Stock Exchange gained 19.12 points, or 0.65 per cent,
to close at 2,974.74, and its all share price index advanced by 17.96
points, or 0.73 per cent, to finish at 2, 493.35. DSE20 index of blue
chips, however, lost 2.31 points, or 0.10 per cent, to close at 2,212.73.
A DSE stockbroker said the market maintained a positive run as
institutional and big-volume investors remained active. Of the total 239
issues traded, 159 advanced, 77 declined and three remained unchanged.
Turnover at the DSE increased to Tk 738.81 crore from the Thursday's Tk
689.03 crore. The DSE has decided that DSE indices as well as opening
prices of the shares of a company will be adjusted following corporate
benefits as per prescribed methodology of the International Organisation of
Securities Exchange Commissions with effect from September 1, 2009. DSE
official sources said the bourse took the decision with a view to reflecting
the appropriate market position. Under this system, opening price of the
concerned company and respective DSE indices will be adjusted to the extent
of corporate benefits. As a result, respective indices will not show any
abnormal low position on the ex- dividend/ex-benefit date. And as such,
circuit breaker will not be withdrawn on the ex- dividend date.

Apex Tannery recommends 21 per cent dividend

The board of directors of Apex Tannery has recommended 21 per cent cash
dividend for the year 2008-2009. Date of AGM: 30.09.09, Time: 11:00am,
Venue: Officers' Club, 26 Bailey Road, Dhaka-1000. Record Date: 24.08.09.
There will be no price limit on the trading of the shares of the company
today following its corporate declaration. Dandy Dyeing As per audited
accounts as on 31.12.08, Dandy Dyeing has reported net loss of Tk 20.32
million with EPS of Tk 32.78 as against Tk 4.74 m and Tk 7.64 respectively
as on 31.12.07. Accumulated loss of the company was Tk 106.48 million as on
31.12.08. Net asset value per share of the company was Tk 71.75 as on
31.12.08 as against Tk 38.96 as on 31.12.07 against face value of Tk 100 per
share. The board of directors did not recommend any dividend for the year
2008. Date of AGM: 24.11.09, Time: 11:30am, Venue: ICAB Bhaban (9th Floor)
100, Kazi Nazrul Islam Avenue, Karwan Bazar, Dhaka-1215. Book Closure:
12.11.09 to 24.11.09. Rupali Life Insurance Company Limited As per
un-audited half yearly accounts as on 30.06.09, the company has reported an
increase in life revenue account of Tk 118.21 million with total life
insurance fund of Tk 1,198.96 million as against last year's half yearly of
Tk 84.10 million and Tk 829.01 million respectively. Bank Asia Sea
Fishers Ltd, one of the corporate sponsors/ directors of the bank, has
further reported that it has completed its purchase of 12,000 shares of the
bank at prevailing market price through Stock Exchange as announced earlier.
Peoples Insurance SM Nurul Islam, one of the sponsors of the company,
has reported his intention to sell 4,000 shares out of his total holdings of
8,224 shares of the company at prevailing market price through Stock
Exchange within next 30 working days. Union Capital Limited MA Salam,
one of the Sponsors/ Directors of the company, has further reported that he
has completed his sale of 1,00,000 shares of the company at prevailing
market price through Stock Exchange as announced earlier. Square
Pharmaceuticals Ltd Trading of the shares of the company will remain
suspended on record date today.

World pins recovery hopes on rising house prices

For homeowners around the world struck by the collapse of property markets,
figures showing the downward spiral may be halting are the most meaningful
signs yet of a possible economic recovery. As battered banks and stocks
rally again, news that US house prices are finally rising after nearly three
years of traumatic decline offers the greatest hope to hard-pressed
homeowners from California to Krakow. The sub-prime home loan crisis in
America was the pressure-point that exposed underlying global financial
chaos — and many economists say property prices there are the linchpin for
confidence in broader economic recovery. US home sales have been rising
and the latest Standard & Poor's/Case Shiller index of home prices in 20
major US cities showed a 0.5 per cent increase between April and May — the
first monthly rise since 2006. 'This is the first time we have seen
broad increases in home prices in 34 months. This could be an indication
that home price declines are finally stabilising,' said Standard & Poor's
analyst David Blitzer. Data from the National Association of Realtors
also showed the median price of existing US home sales was 181,600 dollars
(127,200 euros) in June — 15 per cent lower than a year ago, but up from
174,700 in May. Celia Chen, an analyst at credit rating agency Moody's,
said there were 'tantalising signs that the descent in house prices is at
least moderating,' but warned that house prices will not reach their 2006
highs until 2020. Joel Naroff at Naroff Economic Advisors disagreed with
that downbeat view, saying the increase 'could start increasing much more
rapidly than projected.' Analysts remain sceptical on the longer-term
outlook for property prices as stable economic growth remains vulnerable to
rising unemployment and government strategies for a clean exit from
recession after unprecedented fiscal stimulus. But that is doing little
to dampen cautious optimism on property markets. Official data in China
is showing house prices in 70 cities up 0.8 per cent in June from May,
rising for the fourth straight month, while real estate investment
nationwide rose 9.9 per cent in the first half of the year. In Britain,
house prices rose by 1.1 per cent in July to just under 160,000 pounds
(187,600 euros, 267,700 dollars) from June, but were down 12.1 per cent over
12 months, a survey from home-loans provider Halifax showed this week. In
neighbouring Ireland, however, prices have fallen by up to 40 per cent from
their peak in 2006 and are still going down — with the government now
working to provide 90 billion euros in guarantees to the loan market.
Likewise, Spain's second-biggest bank BBVA has forecast that house prices
after a decade- long, tourism-fuelled property boom will still fall by
nearly 30 per cent between 2008 and 2011 before they start to recover. In
the Gulf emirate of Dubai, house prices have almost halved over the past
year. The sector there is struggling with a shortage of liquidity and job
security for expatriates who represent over 80 per cent of the population.
The decline in Dubai has had wider implications, with US bank Morgan
Stanley saying world steel production will remain below 75 per cent capacity
as it awaits a revival in the construction sector in the Middle East.

Stocks hit highest levels this year

Reassured by second quarter results and by a series of encouraging
indicators, the world markets have rebounded significantly since the start
of the summer, and climbed to their highest levels this year. This week,
Wall Street's Standard & Poor's 500 broad-market index surged above 1,000 on
Thursday and the Paris CAC 40 on Friday rallied 1.24 per cent to 3,521.14
points — both highs not seen since last November. In Tokyo, shares on
Thursday reached a 10- month high with the benchmark Nikkei-225 index rising
135.56 points to 10,388.09, the best finish since October 6. The previous
week, it was London's and Frankfurt's turn with the FTSE 100 index of
leading shares and the Dax which reaching 4,600 and 5,300 points
respectively. Meanwhile, oil prices rose on Thursday to 76 dollars a
barrel in London, the highest level this year. The markets had returned
to levels last seen in October and November after the collapse in September
of the American bank Lehman Brothers, considered the epicentre of the
financial crisis, according to analysts. After the bank's failure, there
were fears for the future of the entire capitalist system, they said. But
the stock market rebound showed that the system 'is not going to collapse,'
said Francois Duhen of CM-CIC Securities. Second quarter results,
including those of the American banks, prompted the rebound, with results
from JPMorgan Chase to mid-July providing a kickstart. 'Businesses
showed that they can restructure themselves and improve their margins
quickly,' said Christian Parisot, shares strategist at brokers Aurel.
Economic indicators showed that in the United States property prices had
stopped falling and that industrial production had started to pick up, said
Frederic Buzare, of Dexia Asset Management. If the worst of the crisis
appears to have passed, it is still difficult to talk of a recovery while so
many uncertainties remain. A recovery would require the type of growth
not yet borne out by the statistics, said Parisot. 'There are
encouraging signs, but there is still the question of consumption' and just
beneath the surface of employment, he said. On Friday, monthly US
employment statistics reassured the markets, with an unexpected drop in the
number of people out of work.

EC shipping operators want new law enforced

The government is under mounting pressure from the European
Commission to scrap a new licence rule which makes it mandatory for
foreign shipping lines to have local partners with 51 per cent stakes
for continuing their operation in the country. In a latter to the
finance minister, AMA Muhith last week, the EC director general
(trade), David O'Sullivan, urged him to allow operation of the fully
foreign-owned companies under the previous rule, said the National
Board of Revenue officials. Before introduction of the new rule on
June 11, 2009, by the NBR, foreign shipping operators could operate
in the country with 100 per cent stakes. Referring to a meeting
between the EU ministerial troika and prime minister Sheikh Hasina
on June 9, the EC director general said assurances were given that
the fully foreign- owned companies already operating in the country
would not come under the purview of the new rule. The intense
lobbying by the EC has, caused resentment among local shipping agents
who termed the pressure 'unlawful' and contrary to ' level playing
field' in the country's growing export and import business. They
said the NBR had introduced the new rule as per the Customs Agents
Licencing Rules 2009 mainly to stop capital flight from the country.
They pointed out that the capital generated by the local shipping
companies had no such chances. At present, three fully
foreign-owned companies control more than 50 per cent of the
country's export and import trades worth more than $30 billion. The
companies are – Danish giant Maersk Line, APL, a subsidiary of the
Singapore-based Neptune Orient Lines and the Japan-based Nippon Yusen
Kaisha. There are seven other foreign-owned shipping companies,
including PIL and Sea Consortium, which are operating in the country
under joint venture. Lobbying by the foreign shipping operators
under the banner of the EC has intensified to have the new rule
lifted. They will have to abide by the new directive before seeking
renewal of their licences. 'The intense lobbying means the foreign
shippers want to control the country's growing shipping trade,' said
Ahsanul Huq Chowdhury, chairman of the Bangladesh Shipping Agents
Association. He told New Age that local shipping agents were
really concerned over the move by the foreign shipping companies to
control our shipping trade. He observed that the foreign diplomats
concerned had violated diplomatic norms by trying to interfere in the
matter. He said they were surprised by the move of the foreign
diplomats. He warned that they might go to court to protect the local
shipping business if foreign companies were allowed to operate with
100 per cent ownership. According to the EC director general, the
new rule would create a number of problems for foreign shipping
lines and could force them to sell major portion of a company's
stakes to their local partners. The new rule also stipulates that a
foreign shipping company operating in the country will have to
appoint a local managing director or a chief executive officer.
Besides, the number of foreign employees in such companies will not
exceed two. The new rule also said the foreign shipping lines would
have to reinvest at least 25 per cent of their net profit each year
and the paid-up capital in joint venture will not be less than $1
million. However, the licence validity period has been extended to
four years instead of the existing two years. Chittagong Customs
House (import) commissioner, Syed Golam Kibria said they would act
as per new rule and revise the criteria while issuing licences to
foreign shippers.

BB to help increase investment

The central bank will encourage and cooperate local investors to invest in
the country as well as will monitor the banking share in the capital
market, governor Atiur Rahman has said. He also said the central bank
has decided to find out way to ensure proper utilisation of the foreign
currency reserve, which crossed $8 billion. 'In case of utilisation of
the foreign currency, the central bank will consider to deposit the
capital in the offshore bank branches with low interest rate,' the
governor told reporters at a news conference at his office on Sunday on the
occasion of his 100-day tenure in the bank. Atiur also said the
country's big investors would take fund from the country's foreign
exchange reserve instead of foreign agencies. Besides, the central bank
would invest in the government investment plan along with government
venture programme. Regarding question of separation of the merchant
banks from the commercial bank, he said the commercial bank would not be
negatively affected when prices of shares in the capital declining. 'I
had not commented about the status of the country's shares but the central
bank has always ensured financial stability of the commerce banks.' The
governor also said that the central bank had ensured providing account
reports within three days from earlier one month. He further said the
central bank had almost completed automation of the central bank clearing
house, which would be online by November. Regarding five years strategy
plan Atiur said the central bank had already prepared the five- year
strategy that would be implemented within short time. The country's
sharecroppers will first time take loan from the commercial bank as the
central bank has already created Tk 500-crore revolving fund, he added.
The governor also said the central bank had already formulated the
policy for giving loan to the sharecroppers. 'The amount of the default
loans would not be possible to reduce if the government does not address
the sick industries' as loan defaulters.' The finance ministry and the
central bank are now working to formulate the policy for devising a way
out for the loan defaulters of the sick industry.

New bond on cards for renewable energy development

The government is considering floatation of bond to create a separate
fund exclusively for the development of renewable energy, the
agriculture minister said yesterday. "We have taken many steps to
promote renewable energy and business to benefit the poor and bring
down the cost within their capability. We are also thinking of
floating bond to create a separate fund, " Matia Chowdhury told a
roundtable conference in Dhaka yesterday. Bangladesh Renewable Energy
Society (BRES) organised the discussion on 'Implementation of
National Renewable Energy Policy' at the Bangladesh Institute of
International and Strategic Studies (BIISS). Prime Minister's Adviser
on Energy Tawfiq-e- Elahi Chowdhury also spoke at the programme.
"Alternative energy sources of power for irrigation are now on the
high agenda of the government," Tawfiq said. Through the renewable
energy policy, rolled out by the immediate caretaker administration,
the government sets a target to meet 5 percent of the total energy
demand by 2015 and 10 percent by 2020. The policy also aims at
setting up an institution, Sustainable Energy Development Agency
(SEDA) , for development and promotion of sustainable energy in
Bangladesh where nearly 40 percent of about 150 million population
are connected to the national electricity grid. The discussants said
development and expansion of renewable energy can meet much of the
energy demand and reduce dependence on fossil fuel such as coal, gas
and oil to generate power. They also demanded faster implementation of
the policy and formation of SEDA to help expand the technology,
mainly solar system, which can also be used to light street lamps,
supply electricity to the national grid along with lighting off-grid
remote areas. To light homes in off-grid localities, the government
had earlier initiated measures to promote renewable energy
technologies such as establishment of Solar Home Systems (SHS) in
remote areas. To promote the renewable energy further, the
government, in its current fiscal year has exempted solar panels from
VAT and taxes while Bangladesh Bank had earlier also launched a Tk
200 crore fund to facilitate establishment of ETPs (Effluent
Treatment Plants) and renewable energy technologies. Spelling out her
government's top priority on energy, the agriculture minister said,
"We are actively promoting renewable energy and energy efficiency.
To bring the technology forward, especially for irrigation purpose,
the minister called on the scientists and stakeholders to come up
with solar-based technology to operate irrigation equipment. "This
will save a huge amount of money," said Matia. Chaired by BRES
Chairman Muhammad Zamir, the discussion was also addressed by South
Korean Ambassador Suk Bum Park, Charge D' Affaires of the German
Embassy in Dhaka Rolf Deiter Rein Heard, Grammeen Shakti Managing
Director Dipal C Barua and Chairman of Rahimafrooz Renewable Energy
Ltd Niaz Rahim.

Australia offered $21 m compensation

A Hong Kong-based shipping company will pay Australia 25 million
dollars (21 million US) in compensation for a massive toxic oil
spill during a wild storm, officials said Saturday. Swire Shipping's
cargo liner Pacific Adventurer released about 200 ,000 litres (53
,000 US gallons) of heavy fuel oil off the coast of Queensland
state as it travelled through cyclonic weather on March 11.

Stimulus allocation next week

The government will finalise distribution of the Tk 5 ,000 crore
funds announced in the national budget for fiscal 2009-10 to help
fight the impact of global recession by next week, said the textiles
and jute minister yesterday. "We will finalise the distribution
process of the funds that have been reserved as a stimulus package
to help fight the effects of financial meltdown," said Abdul Latif
Siddiqui. "The government is keen to safeguard the textile
industry." "The government is eager to run the factories of Bangladesh
Textile Mills Corporation (BTMC) that are in the red, under public
private partnership programmes. We hope this would help them
overcome losses," he added. He was speaking at a discussion on the "
Prevailing Problems of the Textile and Jute Sector", organised by the
Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at
its office in Dhaka. The minister said the government would take
measures to ensure an uninterrupted supply of gas and electricity and
reduce bank interest rates to a single digit to help maintain growth
of the textiles sector. "We are in talks with local banks to reduce
the bank interest rate down to a single digit for entrepreneurs," he
said. Abdul Hai Sarker, president of Bangladesh Textile Mills
Association (BTMA), said the government should help create backward
linkages for the sector, which would help reduce its dependence on the
import of basic raw materials. He also stressed the need for
continuous government support, both policy and financial, to the
sector. Kamran Tanvir Rahman, director of FBCCI, said the government
should provide more cash subsidy for the jute sector, as it faces a
liquidity crisis. At the same time, the government should provide a
20 percent incentive on the export of raw jute, he said. He also
said formulation of a Mandatory Packaging Act would help increase the
consumption of jute in the local market. Annisul Huq, president of
FBCCI, chaired the event.

Healthier Ford focuses on new product line production

Ford Motor Company, the only one of the country's Big Three
automakers to avoid bankruptcy, has pledged to accelerate its new
product lines as it tries to consolidate a four- year turnaround
effort. "Within five years, Ford expects to have reduced the age of
its global product portfolio by 20 percent," the company said this
week. In July, Ford reported a 2.3 percent increase in auto sales --
the first month it has posted a year-over-year gain since November
2007. The company acknowledged that the positive movement was mostly
due to the government's "cash for clunkers" program, which subsidised
the cost of new cars for some Americans, but analysts are upbeat
about Ford's overall health. "We think Ford could be profitable (on a
sustained basis) by the end of 2009 ," said Deutsche Bank analyst Rod
Lache. In an attempt to capitalise on that momentum, Ford is
preparing to wheel out several new and revived lines, including the
2010 Ford Taurus. "This isn't about staying the course. It's about
prospering after the downturn," said Lewis Booth, Ford's chief
financial officer. "My job is to make sure we have the proper balance
of resources to protect our future," he said. Ford officially
launched its new advertising campaign for the 2010 Ford Taurus
bolstered by a positive safety rating from Insurance Institute for
Highway Safety.

BB boss downplays jitters over excess liquidity

Bangladesh Bank Governor Dr Atiur Rahman yesterday played down
worries over the level of excess liquidity in banks and said the
condition would rather favour investors. "This is the time for
investors to borrow money at a lower interest rate," said Rahman in
his address to a half-yearly business conference of the state-owned
Janata Bank at Biam auditorium in the city. The global financial
crisis has made money costlier in many countries, including India,
but the situation is reverse in Bangladesh, the central bank chief
said. The banking sector in Bangladesh is awash with excess liquidity
worth nearly Tk 30 ,000 crore due to a sharp decline in investment
demand. The governor however said banks have invested their idle money
in the central bank's investment tools, such as treasury bonds and
bills. "The real excess liquidity will be worth Tk 7,500 crore," said
Rahman. The governor also focused on the interest rate, farm credit,
foreign exchange reserve and separate pay-scale for state-owned bank
officials. Rahman said he supports the idea of separate pay scale for
all state-owned commercial banks and the central bank as well.
"Reduction of corporate tax by 2.5 percentage points should be
reflected in the interest rate," Rahman said. He said Bangladesh Bank
is trying to bring the interest rate down to a single digit. "But it
won' t be too easy," he said. The banking system in Bangladesh is
often blamed for high interest rates ranging from 12 percent to 18
percent. A couple of months ago, the BB capped the lending rate for
some sectors at 13 percent. Economist Qazi Kholiquzzaman Ahmad
stressed the need to expand banking services to rural areas. Janata
Bank Chairman Suhel Ahmed Chowdhury and Managing Director SM Aminur
Rahman also spoke.

Leather maker switching to value added products

Manufacturers and exporters now increasingly opt for producing value
added products, including footwear and leather bags and purses, amid
a demand decline in finished leather on global market because of the
ongoing recession. Industry people said major exporters are
concentrating on developing their own expertise to manufacture high
quality footwear that caters to the needs of the globally renowned
brands. These brands outsource from Bangladesh. The exporters say
this new development will help overcome the global crisis fallout to
some extent. Data from Export Promotion Bureau, the state- run agency,
shows over 10 percent rise in footwear exports in the immediate past
fiscal year, while the rise is more than 90 percent in the case of
leather bags and purses. The data point to the significant drop in
finished leather exports in FY 2008-09. Leather footwear exports rose
to $ 186.93 million from $ 169.60 million a year earlier, while
$16.89 million was earned from leather bag and purse exports in FY
2008-09 against $8. 87 million earnings in FY 2007-08. Industry
insiders see the declining global demand for fashionable and costly
leather items as an opportunity for the country to make footwear that
is ordinary but essential. In the last six months, around 40 percent
of the 120 companies opted for making value added leather products.
The number of such exporting companies was 80 just a year ago. Tipu
Sultan, chief executive officer (CEO) of Bengal Leather Complex Ltd,
said the demand decline has prompted local exporters to go for
manufacturing value added items. "The slump in consumption of finished
leather globally has led to the growth in exports of these value
added products," he pointed out. "We produce high quality finished and
crushed leather, which is used in producing footwear, bags and
purses," said Sultan, also former chairman of Bangladesh Finished
Leather, Leather Goods and Footwear Exporters Association.
"Simultaneously, we have offered competitive prices, which has
increased demand for our products in the global market," he
elaborated. The cost of production of quality leather shoes is lower
in Bangladesh than in China and India, and this is the main reason for
getting more orders from European countries, according to industry
people. China, India and Vietnam were the largest leather shoe
exporters in the world, but in recent years these countries are
failing to make and sell quality low-cost leather shoes due to WTO
anti-dumping rules. Sultan said now Bangladesh is getting more orders
from Germany, Italy, France, Japan and Canada. Earlier, these
countries used to go to India and China to meet their demand for
shoes. "Another big reason behind this growth is the technology we
have adopted now is from Italy, which creates trust about the quality
of our products among buyers," he added. The country started
exporting leather footwear in 1994 on a small scale to neighboring
countries, including India and Nepal. Currently, the market size of
locally made leather footwear stands at around Tk 1 ,700 crore, of
which at least 45 percent is exported. The country exports around
six million pairs of leather footwear a year. Bangladesh mainly
exports men's footwear, ladies sandals and shoes and sport shoes to
European countries, China, Canada, Saudi Arabia, Dubai, Iraq, Jordan,
India and Nepal. Along with the branded shoes, the country also
exports non-branded shoes. Apart from footwear, the country has
witnessed a huge growth in export of leather bags and purses. At
present, the annual market size for leather bags and purses stands
around Tk 100 crore. Reza Ashikur Rahman, managing director of
Rahman Leather Bangladesh, said his company went for manufacturing
value added products from November last. The company that was
earlier engaged in leather processing and exporting has now shifted
to produce leather bags and purses. "We already have started
exporting to Nepal on a very small scale from March, and have
received two orders from Japan and the Maldives," he said. Meanwhile,
exports of luxury leather items, such as photo frame, gift boxes,
puffee, jewellery boxes, footstool and floor cover have declined a
lot, which forces the entrepreneurs to find alternative ways for
survival. Tushar Kona Khandker, CEO of Colonial, an export oriented
company that manufactures leather home appliances, has recently
opened its showroom in Dhaka to reach out to domestic consumers.
Colonial produces a wide range of luxury items like wall mirror,
photo frame, gift boxes, puffee, jewellery boxes, footstool and floor
cover. These items are mainly exported to the USA, Canada and the
European Union. "Our company exports reduced to $.2 million from $1
million last fiscal, due to the financial meltdown worldwide,"
Khandker said. Rezaul Karim Ansari, the incumbent chairman of the
sectoral trade body, has sought government' s special incentives to
safeguard the leather industry. "Leather exporters have lost almost
half of their running capital in the face of global recession. So the
government should pay special attention to safeguard the industry,"
he suggested. Ansari also demanded 25 percent cash incentive for
finished and crushed leather exports. Earlier, the government
announced Tk 3 ,424 crore stimulus package in April to cushion the
blow of the global financial meltdown, where value added leather
products have received cash incentives to fight the recession fallout.
The stimulus raised such incentives to 17.5 percent from the
existing 15 percent. However the industry is faced with a dearth of
skilled people and quality designs, according to the industry
insiders. Sultan said the government should take initiatives to
develop expertise and train people in the sector that would help the
survival of the age-old industry.

BANGLADESH BANK to extend to sharecropper loans through BRAC

Bangladesh Bank (BB) will provide low-interest loans to three lakh
sharecroppers in 160 upazilas through nongovernmental organisation
Brac. Bangladesh Bank Governor Dr Atiur Rahman said: "We are to
introduce the programme next season and the central bank board has
approved Tk 500 crore in principle for this purpose." The governor
said Brac would form small groups of sharecroppers, train them and
distribute the loans. The loans will be disbursed at a 10 percent
interest rate. Regions that are lagging behind in terms of
development would be prioritised in receiving the loans. Rahman
fulfilled 100 days in office as the central bank chief. On the
occasion, he took questions from reporters on the issues ranging
from his accomplishments to future plans. On loan defaults, Atiur said
coordinated efforts are required to retrieve bad loans: Sick
industries and wilful defaulters will have to be identified. The
governor added that the government should form a committee, which
would decide upon the action to be taken against loan defaulters.
Rahman also said the definition of loan defaults should be changed.
The government is yet to pass an ordinance of the past caretaker
government in parliament to redefine loan loans and reform the
banking sector. "We have written a letter to the government about
it. We hope the government would take steps soon." He mentioned that
the finance minister had earlier said the wholesale loan defaults
would be rescheduled. He said he would soon meet the finance
minister to discuss these issues. The central bank governor said he
sat in talks with the prime minister and the finance minister on a
separate pay-scale for the central bank. He is optimistic that the
plan would get through. The central bank is set to provide loans for
large investors and exporters from its foreign currency reserve,
under a special arrangement, in an effort to fuel investment. Rahman
said the central bank is going to take steps to utilise the excess
liquidity and foreign currency reserve to increase investment. The
government should immediately take steps to implement a 500- megawatt
power project with its own resources, instead of looking for donor
assistance, the governor told reporters. According to statistics, the
foreign currency reserve touched an all-time high of $8.05 billion
yesterday. On the other hand, excess liquidity with commercial banks
on June 30 was Tk 34 ,762 crore, also a new high in the history of
banks in the country. The presence of vast excess liquidity points to
a gloomy investment climate. A central bank report said import
expenditure decreased substantially, in comparison to export earnings
and remittance and the excess liquidity was because of a presence of
more foreign currency in the market. The BB governor said: "We are
taking several steps to expedite investment. We will extend loans
through the banks under special arrangements to the big investors who
otherwise take term-loans from outside." He said investors could take
loans from the banks that have offshore branches and the rate of
interest would also be low.

SEC restricts floatation of mutual funds below tk 50cr

The stock market regulator will not allow floatation of any mutual
fund below Tk 50 crore. Fund managers hailed the initiative to fix
the minimum size of a fund in order to make it cost effective.
Issue, management and financial costs are higher for a small size
mutual fund in proportion with larger ones, said the Securities and
Exchange Commission, which fixed the minimum size at a meeting
yesterday. "Besides, it will ensure qualitative supply of investment
securities in the market," Ziaul Haque Khondker, chairman of SEC,
told The Daily Star after the meeting. Prior to the new rules, there
was no ceiling in mutual fund sizes. "It's a welcome move. It will be
cost effective for mutual fund floatation and management," said
Yawer Sayeed, managing director of AIMS of Bangladesh, an asset
management company. In yesterday's meeting, the SEC decided that from
now on no company can hold board meeting during the trading session
if the meeting is expected to take any price sensitive decision such
as dividend and financial statement. The company can hold the meeting
after trading hours or on holidays.

BRAZILIAN cotton growers team in DHAKA

A five-member delegation of AMPA, the Cotton Growers' Association of
Mato Grosso in Brazil, arrived in Dhaka yesterday to meet textile
millers in Bangladesh. AMPA President Gilson Ferrucio Pinesso was
leading the delegation, says a press release. During the visit jointly
arranged by AMPA, Olam International Limited of Singapore and DSM
Commodities of Bangladesh, the delegation will promote Brazil cotton
in Bangladesh.

BANGLADESHI Prime Minister adviser suggests interest rate cuts

Prime Minister's Adviser for Economic Affairs AKM Mashiur Rahman
yesterday advised banks to lower interest rates to boost investment.
"The bank interest rate is still high in relation to inflation and the
high interest rate is a risk in itself," Rahman said. The adviser was
speaking as the chief guest at a dialogue on "Globalisation of Basel
II: Its Implementation in Bangladesh", organised by the
International Chamber of Commerce- Bangladesh (ICC-B) at Dhaka Chamber
of Commerce and Industry (DCCI). Under the Basel II Framework, Rahman
said, it is intended to promote a more forward-looking approach to
capital supervision that encourages banks to identify the risks they
may face today and in future, and to develop and improve their
ability to manage risks. Rahman added that the quality of the
borrowers is significant to proper capital supervision. He called
upon businesses to proceed carefully considering the uncertainty and
inadequate knowledge on the subject of banking regulation and
protection. A rescheduling of loan distorts the interest rate in the
credit market, he added. Rahman appreciated Bangladesh Bank's
introduction of quarterly reporting system and said it might have an
effect on regulating the financial market. At the dialogue, ICCB
President Mahbubur Rahman an important source of losses and a
build-up of leverage occurred in the trading book since the financial
crisis started in mid- 2007. A main contributing factor was that the
current capital framework for market risk does not capture some key
risks, he said. Bearing that in mind and as part of its strategic
response to address weaknesses revealed by the financial market
crisis, the Basel Committee has reviewed Basel II and has developed a
series of proposed enhancements to strengthen the framework. Basel
II consists of three pillars, including setting out minimum capital
requirements, defining the process of supervisory review of a
financial institution's risk management framework and determining
market discipline through improved disclosure. "Implementation of this
new accord is a challenge for many developing countries, including
Bangladesh," said the ICCB president. Mamun Rashid, chairman of the
ICC Standing Committee on Banking Technique and Practices, said the
implementation of Basel II is not possible without proper
implementation and accountability of the stakeholders. Timothy D
Rees, Citigroup Basel II programme director of Asia Pacific, Sydney,
made a presentation. ATM Nasiruddin, former executive director of
Bangladesh Bank, Dr Toufic Amed Choudhury, director of Bangladesh
Institute of Bank Management, and Ahmed Kamal Khan Chowdhury, deputy
managing director of Prime Bank Ltd, were also present.