HK’s old airport set for multi-billion dollar takeoff

It's probably the most valuable strip of derelict land in the world.
The defunct Kai Tak airport sits right in Hong Kong's Victoria
Harbour and is estimated to be worth up to 40 billion dollars -- the
equivalent, experts say, of around 30 of the world's tallest
skyscrapers. "It is a jewel," said Nicholas Brooke, chairman of Hong
Kong-based Professional Property Services. "I'm sure it's the most
valuable piece of derelict land in the world." And Kai Tak was, until
it closed in 1998 , also one of the scariest airports in the world.
Planes would make a gut-tingling sharp turn over hilly Kowloon and
then pass so close to apartment blocks that passengers felt they
could almost touch laundry as it dried on balconies. But, since the
new Norman Foster-designed airport was opened on reclaimed land a
half- hour's fast train ride from the city, the Kai Tak site has been
crumbling. "Kai Tak is right at the heart of Hong Kong," said Brooke,
who sits on the Harbour Enhancement Committee, a group that advises
the government on land use around the city's waterfront. "To have
the opportunity to create a business district or a residential
district right in the centre of a capital city -- it's unique," he
added. "And that is why it has attracted such a high value, a land
value of between 25 and 40 billion dollars." The land is worth
around 30 International Finance Centres, Brooke said, referring to a
huge glass and steel tower that dominates Hong Kong's skyline and is
the world's fifth biggest office building. To further try to
illustrate the sheer scale of the land's value, Brooke added: "In
terms of medium rise property, it's worth two square kilometres ( 0.8
square miles) of Manhattan -- and all of ( London's) Canary Wharf." In
a city where a luxury studio apartment sold recently for more than
three million dollars, there is no shortage of developers who would
be keen to get a slice of the old airport pie. There is water on two
sides, views over the harbour and no pesky residents or businesses
that need to be moved out of the bulldozers' way. Kai Tak has been
dormant for more than a decade because the city's authorities
struggled to reach a consensus about what exactly to do with it. It
is in their interests to make use of the site, as almost a third of
the Hong Kong government's revenues come from land sales. Also,
thanks to a moratorium on land reclamation from the ever-shrinking
harbour, there is unlikely to be any more new land in the future to
sell-off -- further pushing up Kai Tak's value and increasing the
need for action. And now, finally, work has begun on an ambitious
redevelopment scheme. A scale model of plans for the site sits in the
lobby of the government's planning offices on the outskirts of
Kowloon. The 320 hectare (790 acre) site will have a sports
stadium, a public park and, at the tip of the peninsula, a cruise
terminal. And, of course, in the middle of the old runway will be
some of Hong Kong's most exclusive housing. Eric Yue Chi-kin,
Kowloon's chief planning officer, buzzed proudly around the model: "
Going down here is the runway precinct," he said, pointing at some
apartment blocks that look -- even in model form -- hyper expensive.
"It is a very unique location, because it has water on two sides and
has a very spectacular, panoramic view to the Victoria Harbour." The
Hong Kong government plans to pump 2.6 billion dollars into getting
the infrastructure up to scratch, and hopes to put the contract for
the first phase, the cruise terminal, out to tender by the end of the
year. Mak Chi-biu is the chief engineer for the site and the man in
charge of turning Yue Chi-kin's dream into reality. He stands in a
tall building looking down over the long slab of broken,
weed-infested land that cuts into Victoria Harbour -- and out into
Hong Kong's future. "The whole development cost will be about 12.8
billion dollars," he said, sweeping his hand up to the tip of the
peninsula, where the cruise terminal will be. "The idea is to make
Hong Kong a cruise hub of the Asia-Pacific region." So the runway,
which was expanded by the slave labour of prisoners of war during the
Japanese occupation in World War II, will again have construction
workers swarming all over it. It should all be finished somewhere
around 2025. But property experts urge the government to be cautious
and stick to the elements of the plan which offer something to the
public. "Kai Tak is an asset that I think has to be shared by
everybody," Brooke said. "You could build luxury there and sell it
all off to investors from mainland China. "But I think we have to
build something where there is a range of housing so that people from
all walks of life can participate. There is a great danger that you
do something very exclusive and you shut out the majority."

Economic Crisis-A double blow to charities

For many social-service charities across America, the recession has
delivered a staggering one- two punch. Sharp drops in donations and
investment income have been coupled by soaring demand for their
services. The casualties so far include countless needy clients
losing assistance and thousands of nonprofit workers who've been laid
off. Some local charities have shut down; even many of the largest
nationwide operations have made painful cutbacks in staff, spending
and programs. "Nonprofits are generally at the whim of the economy
... but we've never seen anything like this," says the Rev. Larry
Snyder, president of Catholic Charities USA. "Increasing numbers of
our own volunteers and employees have been forced to become clients
of our services." The cutbacks are forcing charities to rethink how
they operate and make changes that are likely to outlive the
recession. Nonprofits, like regular businesses, are learning to do
more with less. Those that survive will emerge more efficient. "It
gives you a mindset to be more creative," American Heart Association
CEO Nancy Brown says. "We're thinking even better and more
innovatively than we were 10 months ago." Numbers help illustrate the
magnitude of the challenges. Giving to social-service charities fell
by 12.7 percent in 2008 , according to the Giving USA Foundation,
and there's been little evidence of a resurgence so far this year.
Simultaneously, many state and local governments are cutting back on
funding for nonprofits or delaying payments as they struggle to
assemble their budgets. That double hit to charities' revenue comes
at a time when the national poverty rate has reached an 11- year
high of 13.2 percent. Nonprofit officials hope giving levels will
rise once the recession ends, but for now many are thinking hard
about how to use their dwindling resources. "We can't be in recession
- there are too many people relying on us," Brown says. Brown's
organization laid off 371 staff members across its national
affiliates - 10.5 percent of its work force - and chose not to fill
more than 200 vacant positions. To save money, it's cut travel costs
and promoted resource-sharing among its affiliates. World Vision,
which aids disadvantaged children and families worldwide, has
intensified efforts to thank donors and enable them, through high-
tech improvements, to keep track of how their donations are used. And
some local Salvation Army branches resorted to deploying their red
kettles - normally reserved for the Christmas season - to raise
money in July. "This is the most financially challenging period of
time we've had," says Major George Hood of the Salvation Army, who
was among the national officials who opposed that move yet
understood it because of the branches' desperate financial situation.
"We're committed to doing whatever it takes to get the job done." The
American Red Cross in Greater New York cut its staff from 186 to 145
earlier this year as private donations fell by 25 percent. Leaders
of the chapter insist that emergency response operations will not be
affected, but say they will spend fewer resources on planning for
future disasters. The chapter, like many across the Red Cross system,
has always made extensive use of volunteers, and is now relying on
them even more, spokeswoman Marianne Darlak says. Nationally, the
picture regarding volunteering is mixed. Many nonprofits report a
surge of volunteers, including recently laid-off people looking for
meaningful tasks. Yet according to a report last month by the
National Conference on Citizenship, based on surveys of 3 ,889
people, 72 percent of Americans have cut back the time they spend
volunteering and performing other civic activities - largely because
of the recession. Some charities are examining their priorities and
scaling back. CARE, one of the biggest U.S.- based international aid
organizations, is now focusing on empowering impoverished women. Its
headquarters staff has been reduced by 43 , and the remaining 255
employees saw their pay cut. "Absolutely, it's a very useful process
- to rethink and prioritize," says Kymberly Wolff, CARE's senior
vice president for resource development. "What many nonprofits do is
become very scattered, trying to do all things for all people. This
crisis has forced us to become very strategic, and concentrate on
serving those who need us the most." Some once-flourishing local
charities have been unable to survive. Family Services of the Mid-
South, a 115- year-old nonprofit, is closing this week after
transferring a few of its programs to other agencies. The Destiny
Foundation of Central Florida, which ran a children's clinic, thrift
store and food pantry in Orlando, has suspended its operations and
may close. A recent survey by the Human Services Council of New York
City, encompassing 244 local nonprofits, found that 60 percent had
seen some decrease in public funding and 73 percent reported
reductions in private donations. More than half had laid off staff in
the past year, and 35 percent had eliminated programs. One of the
city's oldest and largest charities - the Brooklyn Bureau of
Community Service - has laid off about 50 of its 550 employees. It's
also eliminated a program that helped disabled people make the
transition from welfare to work, and scaled down a program that's
helping kids from troubled homes avoid foster care. Reductions in
both donations and city funding were to blame, says executive
director Alan Goodman. "It's like being nibbled to death by ducks - a
little here, a little there," he says. "The end result is we have
less money and fewer staff." Goodman says becoming "leaner and meaner"
is of limited consolation when he looks at the big picture - and
wonders if more government support is needed to rescue the charitable
sector. "You'll find a whole lot of smaller nonprofits will just go
out of business - totally wiped off the face of the map," he says.
"Some of the most robust ones will weather the storm, but I don't
think anyone will come through it unscathed."

American Chamber elects new president

American Chamber of Commerce in Bangladesh ( AmCham) elected Aftab ul
Islam as president for 2009-10 in its 13 th annual general meeting (
AGM) in Dhaka yesterday. Islam, director and chief executive officer
of ATAZ Bangladesh Ltd, started his career at a US- based
multinational IT company and was previously elected as president for
AmCham in 2001. He has also been elected as a director of the
Federation of Bangladesh Chambers of Commerce and Industry for two
periods -- 2005- 07 and 2008-10. The government recently also
appointed Islam as chairman of the SME Foundation. Khalid Hasan,
managing director of The Nielsen Company Bangladesh Ltd, was elected
as vice president of AmCham at the AGM at Dhaka Sheraton Hotel.

Deutsche Bank wants to shed 1 ,300 German jobs

The biggest German bank, Deutsche Bank, said on Wednesday that plans
to eliminate German posts as reported in the press were not new. "We
do not comment on the figures. But we announced last October a plan
to cut 1 ,100 jobs in Europe and at the same time the creation of 2
,500 client advisory posts. That has not changed," a bank spokesman
said. Earlier on Wednesday, the business daily Die Welt had reported
that Deutsche Bank wanted to eliminate or farm out 1 ,300 German
jobs, but without resorting to outright redundancy. In late 2008 ,
Deutsche Bank employed 80 ,000 people worldwide, including almost 28
,000 in Germany, It warned in March however that some jobs might be
cut. The bank appears to have rebounded from the international
financial crisis after suffering a hit last year. In both the first
and second quarters of this year it has posted net profit of more than
one billion euros (1.46 billion dollars) however.

Tourism fair starts today

A three-day international tourism fair organised by Tour Operators'
Association of Bangladesh ( TOAB) begins today. GM Quader, civil
aviation and tourism minister, is scheduled to inaugurate the show
styled Bangladesh Travel and Tourism Fair (BTTF) 2009 at Bangabandhu
International Conference Centre. "The main objective of the fair is
to create awareness about local tourist destinations and potentials
of the country among other participants," said Taufiq Uddin Ahmed,
president of TOAB. "We have beautiful tourist spots in the country,
but we lack sufficient infrastructure. We need more investment, both
local and foreign, to develop the sector further," he added. The TOAB
chief was speaking at a press conference yesterday to announce the
exposition. Ahmed said more than 100 foreign delegates would attend
the fair that include tour operators and travel agents from India,
Nepal, Sri Lanka, the Maldives, Bhutan, China, Thailand, Malaysia,
Indonesia, Singapore and Myanmar. Travel agents, airlines, financial
institutions, training institutions, souvenir shops, cruise lines,
hotels and resorts from home and abroad are likely to take part in
the fair. The fair will remain open from 10 am to 8 pm every day with
an entry fee of Tk 20 per person.

ECB grants 75 billion euros in exceptional one-year loans

The European Central Bank said on Wednesday that it lent eurozone
banks a little more than 75 billion euros (110 billion dollars) for
one year in an exceptional move aimed at boosting the economy. It
was the second time the ECB offered an unlimited amount of funds for
12 months at its benchmark rate of 1.0 percent, but the amount
taken up was nearly six times less than the record 442 billion euros
taken up in late June. That suggested conditions on interbank money
markets have improved significantly in the past three months as
economies worldwide rebound from the worst global slump since the
Great Depression. The one-year loans are the most spectacular of the
ECB's raft of so-called enhanced credit measures designed to pump
funds into the economy and unblock credit channels between
commercial banks and the wider economy.

Deadline looms for Bharti-MTN deal

The fate of a major tie-up between India's top mobile firm Bharti
Airtel and South Africa's flagship cellular group MTN hung in the
balance on Wednesday with the deadline for talks due to expire.
Shares of Bharti Airtel rose nearly one percent or 3.65 rupees to
hit 422.5 rupees in morning trade with time running out on the
exclusive talks. A spokesman for Bharti said it was not known when
an announcement might be made. The deadline for the conclusion of
discussions, which began in May, has already been extended twice.
"The two parties are in exclusive talks until the end of September,"
a spokesman said. The estimated 24- billion-dollar alliance could
prove the world's biggest cross-border deal this year. The talks
between MTN, Africa's largest cellular group, and Bharti, are aimed
at forging a giant with annual revenues of over 20 billion dollars
and 200 million customers. India's Financial Chronicle, quoting an
unnamed finance ministry official, reported Wednesday that Bharti
had asked MTN for two more weeks of exclusive discussions. There was
no comment from Bharti. "We'll most likely see another extension,"
investment analyst Rajay Ambekar of Prudential South Africa told AFP
by telephone.

Draft of telecom law finalised: Minister

The draft of the amended Telecommunication Law-2001 has been
finalised with a provision to realise a maximum of Tk 300 crore in
fine for setting up illegal voice over internet protocol. The
amendment of the existing law is required to make it updated and make
the process of foreign investment in the telecommunication easier,
Post and Telec-ommunication Minister Rajiuddin Ahmed Raju told the
news agency yesterday. He said they have proposed to amend some
clauses of the law keeping most of the law intact. The minister also
said they would give more licences of international gateway (IGW) and
interconnection exchange (ICX) to discourage VoIP. "The tariff of
the incoming and outgoing rate of the international calls will be
reshuffled phase by phase," he said. "The illegal VoIP business will
be discouraged, if we are able to increase the number of licences of
legal VoIP and rearrange the tariff," the minister said. In the final
draft, the amount of fine for illegal VOIP is proposed to be reduced
in line with the request of privet operators. According to the
draft, anyone can appeal against the allegation of setting up illegal
VoIP, the minister said.

Malaysia, Saudi Arabia set up $2.5 investment fund

Malaysia and Saudi Arabia on Wednesday said they would establish a
2.5 billion dollar partnership to invest in economic and energy
projects here. The joint-venture company is a collaboration between
government development and investment firm 1 Malaysia Development
Berhad (1 MDB) and Saudi Arabia's PetroSaudi International Limited
(PSI). In a statement the companies said the fund would target the
renewable energy sector and " long-term sustainable economic
development" projects in Malaysia. It is also aimed at attracting
further investment from the oil-rich Middle East region to Malaysia,
the statement said. It did not specify details of each company's
investment in the joint venture or where the fund would invest.
Foreign investment in Malaysia has plummeted this year as a result of
the global financial crisis. Its economy is expected to contract by
5.0 percent this year. It is targeting about 30 billion ringgit
(8.65 billion dollars) worth of investments, down from 62 billion
ringgit last year amid a tough investment climate.

Shrimp exports dogged by environment worries

Policymakers and diplomats yesterday called on shrimp industry
operators to diligently work towards protecting the environment from
degradation and ensure health and labour issues for sustainable growth
and continued shrimp exports. "We have attached importance to growth
of the fisheries sector in our election manifesto. At the same time,
protecting the environment is also a priority for us. We have to do
farming, but not at the cost of the environment," said Commerce
Minister Faruk Khan. "We cannot destroy our canals and river systems
in coastal areas in the name of shrimp farming. You should try to
ensure that the environment is protected," he told industry operators
at the opening of a two-day workshop -- Shrimp Export from
Bangladesh: Prospects and Challenges -- at Dhaka Sheraton Hotel.
Fishery Products and Business Promotion Council, Bangladesh Shrimp and
Fish Foundation and Bangladesh Frozen Food Exporters Association
organised the event in collaboration with the commerce and fisheries
and livestock ministries. The programme was organised at a time when
freshwater prawn exports from Bangladesh endured a six-month
'voluntary ban' after cancellation of about 50 consignments to
Europe, due to a health hazardous nitrofuran contamination.
Stakeholders said the voluntary ban, which was imposed in May, was to
allow the industry to detect the source of the contamination. The ban
will expire in November. Khan expects the problem will be solved by
year-end. According to the industry people, fresh water shrimps
account for over 20 percent of total annual export earnings worth
more than $400 million from the frozen food sector. Shrimp exports
to the European and US markets account for remaining earnings. Khan
said the ban affected export earnings. " Necessary steps have been
taken to remove the problem. By December, we should have a
solution," he said, adding that testing facilities for uncontaminated
shrimp exports are being expanded. "The government is trying to do
its best and will do everything to see the sector flourish, provided
environment and compliance issues are addressed properly," said the
commerce minister. US Ambassador James F Moriarty said the shrimp
industry is now the second largest export earner of Bangladesh and
provides hundreds of thousands of jobs. "This is not a small
achievement and it is difficult to overstate the importance of the
sector, both locally and nationally," he said, expecting the sector
to continue growth in the coming years. "Growth should however not
come at the expense of environmental degradation. Following
environmentally safe shrimp industry practices, with an eye towards
sustainability, is critical for the industry," said Moriarty. "The
environment should be seriously considered and protected, as
businesses and the government work to develop the shrimp industry."
He also suggested producers adhere to international standards,
particularly in regard to health, environment and labour standards.
"The good news is, meeting with health, safety and environmental
standards will ensure increased demand for Bangladeshi shrimp," he
said. Stefan Frowein, head of European Commission Delegation to
Bangladesh, stressed the need for producing safe shrimps to ensure
entry into the European market. "We seek guarantees that products are
hygienic and safe for consumption. Whenever we have concerns, it is
because of the legitimate expectation of our consumers to have safe
food. "

Citi urged to expand in China

A top Chinese banking regulator said US investment bank Citigroup
should "absolutely" be expanding its operations in the Asian giant,
according to a media report Wednesday. Citigroup's China unit was
"very prudent and careful" during the global financial crisis and
now should extend its network here, Yan Qingmin, director of the
Shanghai branch of the China Banking Regulatory Commission told the
Wall Street Journal.

India pruning negative list Envoy says as footwear show begins

India is pruning more products off its negative list to make overseas
trade easier, said the country's high commissioner to Bangladesh
yesterday. Pinak Ranjan Chakravarty said now the number of products
on the negative list is 400 , which were 700 a few years ago. The
envoy called upon both the Bangladeshi and Indian businessmen to come
up with joint venture investment to increase bilateral and regional
trade. He was speaking at the inaugural ceremony of the fourth
'Buyer-Seller Meet cum Exhibition' of Indian footwear components and
accessories at Bangabandhu International Conference Centre in Dhaka.
India, the second largest footwear products maker in the world,
manufactures footwear and accessories worth $7 billion a year of
which products worth $3.6 billion are exported. Chakravarty
suggested that the Bangladeshi businessmen and entrepreneurs hold
seminars, organise road shows and conferences abroad to attract more
foreign investors. Council for Leather Exports India and Indian
Footwear Components Manufacturers' Association organised the two-day
exhibition, participated by 23 Indian footwear companies. Saiful
Islam, president of Leather goods and Footwear Manufacturers and
Exporters Association of Bangladesh, said a process is underway to
set up a joint venture of footwear accessories in the country. He
said Bangladesh started exporting footwear in 1990 when there was
only one exporter, but now 70 companies export shoes with an average
30 percent export growth over the last few years. "The total annual
turnover will be half a billion dollar if we can use 60 percent raw
materials from the local market," he said.

Bankers back more credit raters

Bankers demand more credit rating firms to assess corporate clients
under the Basel II framework that is to be implemented from January
next year. They placed the demand at a meeting with Bangladesh Bank
Governor Dr Atiur Rahman on Sunday. Under the Basel II agreement of
the Basel Committee on Banking Supervision, the central bank as the
regulator has allowed banks to use credit ratings from External
Credit Assessment Institutions to calculate their net capital reserve
requirements. BB believes rating corporate clients would be the
biggest challenge for banks, in the absence of an adequate number of
rating firms. "The number of credit rating agencies in Bangladesh is
not sufficient. It is difficult for them to rate all corporate
borrowers in time," said Nazrul Huda, deputy governor of the central
bank. There are only two rating firms -- CRAB and CRISL -- in
Bangladesh. Bankers said it would not be possible for them to rate
thousands of corporate clients. "Two firms alone will not be able to
rate all corporate clients. More rating firms are needed, " said
Muhammad A Rumee Ali, chairman of BRAC Bank. The BB governor said it
is vital for all corporate clients to be rated. "Ensuring credit
rating of corporate clients is a matter of utmost importance," Rahman
told the chief executives of all commercial banks at the meeting.
The central bank has stressed the need for more credit agencies.
Eleven firms turned in applications to the Securities and Exchange
Commission for licences. Meanwhile, BB also found that most local
banks are not ready to implement Basel II from the stipulated time
frame of January 2010. Only seven private banks are fully compliant,
with five others partially compliant. However, no state-owned bank is
ready to adopt Basel II, said Huda. All nine foreign banks operating
in Bangladesh are fully prepared to implement the requirements of
Basel II, Huda added. Basel II is an internationally agreed deal
signed by the central banks of several countries. Implementation of
Basel II is essential to Bangladeshi banks, as BB has agreed upon it.
Under the deal, banks here will have to comply with international
standards that include capital adequacy, risk management and greater
disclosure of bank business data. "We have been working on the matter
for the past three years. Now we see most banks are ill-prepared to
adopt the accord," said the deputy governor. Risk-weighted asset for
state-owned banks will reach Tk 18 ,000 crore, while it will be Tk 4
,000 crore for private banks in January 2010 , if they adopt Basel
II, he added. According to the deal, the ratio of capital to
risk-weighted asset for a bank will be 10 percent. Banks will require
additional capital worth Tk 2 , 300 crore, as a bank has to raise its
paid-up capital to Tk 400 crore from Tk 200 crore now to adopt
Basel II. There are 48 banks: 30 private, nine foreign and nine
state-owned, including five specialised banks.

Oil climbs

World oil prices rose on Wednesday on the back of a weaker dollar, as
traders awaited the weekly energy inventories report and the latest
reading on economic output in the United States, analysts said. New
York's main contract, light sweet crude for November delivery, won
one dollar to stand at 67.71 dollars per barrel. Brent North Sea
crude for November delivery gained 91 cents to 66.40 dollars a
barrel in London.

Financial crisis turns corner Losses down $600 b, IMF says ahead of annual meeting in Turkey

Likely losses from the financial crisis in the three years to 2010
have been reduced by $600 billion to $3.4 trillion as the world
economy grows faster than previously expected, the International
Monetary Fund said Wednesday. The organisation warned however that the
impetus for far-reaching financial reforms risked being lost if the
improving situation leads to complacency. In its half-yearly Global
Financial Stability Report presented in Istanbul, Turkey, the fund
said concerted efforts by governments and central banks to deal with
the crisis and fledgling signs of a global economic recovery have
helped limit the losses. The report came ahead of the IMF and World
Bank annual meetings in Istanbul on October 6- 7. "Systemic risks have
been substantially reduced following unprecedented policy actions and
nascent signs of improvement in the real economy," the IMF report
said. "There is growing confidence that the global economy has turned
the corner, underpinning the improvements in financial markets," it
added. The IMF said its analysis suggests that US banks are more than
halfway through the loss cycle to 2010 , whereas in Europe loss
recognition is less advanced, reflecting differences in the regions'
economic cycles. A top IMF official noted that the conference in
Istanbul was taking place just over a year since the Lehman Brothers
bankruptcy triggered the sharpest phase of the global financial and
economic crisis. "Fortunately, the situation is very different
today," said Jose Vinals, IMF Financial Counsellor and Director of
the Monetary and Capital Markets Department. "We are on the road to
recovery, but it doesn't mean that risks have disappeared." "Bank
balance sheets have been stabilized," Vinals said. But "there is
still a substantial need for capital" to safeguard the financial
system. Over the last year, governments around the world have bailed
out banks and stimulated their economies by increasing spending,
while major central banks have slashed interest rates and pumped
cheap money into the financial system in an attempt to get liquidity
flowing again. The growing confidence has been most evident in stock
markets around the world - most of the world's major indexes are now
in positive territory for 2009 as investors have grown more
optimistic about the outlook for the world economy. Stock markets
usually rally between six to nine months before actually recovery
emerges and most economists reckon that most of the world's leading
economic regions will be growing by the end of the year at the very
least. Already, the recessions in France, Germany and Japan have
officially ended, though it will take many years for the lost output
to be recouped. The IMF's reassessment of the potential losses
stemming from the financial crisis comes ahead of Thursday's World
Economic Outlook, when the fund will publish its latest estimates for
the global economy. In Wednesday's report, the IMF indicated the
outlook would raise its baseline forecast for global growth, with
advanced economies expected to register positive growth in 2010 ,
and emerging economies projected to rebound significantly. Most
analysts expect Thursday's report to show that 2010 global growth
will be revised up to 3 percent from 2.5 percent.

Padma bridge looks to market for Tk 4 200

The government plans to raise Tk 4 ,200 crore from capital market
for the construction of the country's largest civil engineering
project -- Padma Multipurpose Bridge. The amount, which will meet the
fund deficit to construct the bridge, may be raised through issuance
of equity shares and securitised, convertible, zero coupon and
amortised bonds. A proposal for raising the fund is awaiting approval
of the cabinet committee on economic affairs, finance ministry
officials said. Investment Corporation of Bangladesh (ICB) has
prepared the proposal and submitted it to the finance ministry last
month. "We have submitted the proposal to the finance ministry in
mid-September," said Iftikhar-uz Zaman, general manager of ICB.
Although the proposal was scheduled to be placed in the last meeting
of the cabinet committee for its approval, it will be placed in the
next meeting as the commerce minister was absent in the previous
meeting, the officials said. The 6.01- km-long bridge between Mawa
and Jajira over the Padma river will cost around Tk 17 ,000 crore,
of which financing of around Tk 12 ,800 crore has been ensured from
different sources, including Asian Development Bank, World Bank,
Islamic Development Bank, Japan International Cooperation Agency and
Abu Dhabi Fund. The bridge will connect the southwestern region
directly with the capital and other parts of the country. The ICB in
its proposal has recommended three alternatives for raising the fund
from the public. According to the first alternative, the fund can be
raised through issuing bonds and equity shares. The debt-equity ratio
will be 70 :30 , meaning bonds worth Tk 3 ,000 crore will be
issued, while Tk 1 ,200 crore will be raised through equity shares.
In the equity portion, the government and public ratio will be 51 :49
, which means the government will buy shares worth Tk 612 crore,
while Tk 588 crore will be raised from general public. In the second
option, the ICB said, the fund may be raised through issuance of
securitised bonds at an eight percent annual interest rate in four
phases. The ICB suggested issuance of Tk 1 ,500 crore securitised
bonds in the first phase or in fiscal year 2009-10 , Tk 1 ,000
crore bonds in second phase or in 2010-11 , Tk 1 ,000 crore bonds
in third phase or in 2011-12 and Tk 700 crore in the last phase
or in 2012-13. Here the grace period of the bond will be five years
and the total time will be 25 years including moratorium period.
Securitisation is a structured finance process, in which assets,
receivables or financial instruments are acquired, classified into
pools, and offered as collateral for third-party investment. It
involves the selling of financial instruments, which are backed by
the cash flow or value of the underlying assets. The ICB in the third
alternative recommended that the fund can be raised through issuing
convertible, zero coupon and amortised bonds during FY 2009-10 to FY
2013-14. Convertible bonds worth Tk 500 crore may be issued in FY
2009-10. The bonds can be converted into shares after two or three
years. Another Tk 200 crore may be raised by issuing convertible
bonds on toll collected by Bangabandhu Multipurpose Bridge Authority
( BMBA) in the same year. In the second fiscal year, the ICB proposed
issuing convertible zero coupon bonds worth Tk 1 ,000 crore, of
which 50 percent will be converted into shares and the rest 50
percent will be interest bearing. In the third and the fourth fiscal
year, each Tk 1 , 000 crore may be raised through issuing amortised
bonds. Amortisation is the gradual repayment of a debt over a period
of time, such as monthly payments on a mortgage loan or credit card
balance. In the fifth year, the BMBA will issue convertible bonds
worth Tk 500 crore. The ICB said the proposed bonds may be
considered as "approved securities" to encourage banks and financial
institutions to invest in such securities for statutory liquidity
reserve benefits. The proposed bonds or shares may be traded in both
Dhaka and Chittagong stock exchanges. Those who will invest in the
bonds should enjoy tax benefits, but not less than the benefits to be
enjoyed by the investment in zero coupon bonds. The tax benefit to
zero coupon bonds, which was given previously, should be provided, the
ICB said. Considering the social benefits of the project, the
government may consider relaxation of VAT fully or partially from
income of the Padma bridge. Bangladesh Bridge Authority will need to
appoint or form a company, trustee, issue manager, assets management
company and law firm to perform their respective duties and
responsibilities.