SEC to stop stock rumours

The stock market regulator will take action against those who spread
rumours in the market to make it unstable, the top boss of the watchdog
said yesterday. "There might have some rumour-based trading with some risks,
but that should not be reckless," said Ziaul Haque Khondker, chairman of
Securities and Exchange Commission (SEC). He was addressing the inauguration
of a daylong training programme for journalists, who are currently involved
in capital market reporting. Capital Market Journalists' Forum ( CMJF) and
Dhaka Stock Exchange jointly organised the programme at the DSE training
academy in the city. Some 40 journalists from newspapers, electronic media
and news agencies participated in the programme. It was the first session
of a six-month-long training programme. Unscrupulous investors often spread
rumours and make the market unstable that harms the general investors.
The SEC chief said the depth of the market is increasing gradually with the
market capitalisation to GDP ratio reaching over 20 percent and having
some 20 lakh beneficiary owners' (BO) accounts. He said successful
monitoring of all banks' stock portfolios by the central bank will help
keep the market sound. "What the central bank is doing, as part of its
monitoring activities, is a timely step, as the banks contribute about 40
percent of the total capitalisation in the stock market," Khondker said.
The central bank recently through a directive asked all banks to submit a
monthly report on their stock portfolio. Khondker also said the commission
is considering measures to introduce rating or grading system to rank the
mutual funds' performance so the investors can get idea about the
strength of the funds. He also urged the journalists to write objective
and analytical news on stock market, saying: "Nowadays many investors are
influenced by your reporting and make their investment decisions
considering these reports." DSE President Rakibur Rahman and CMJF President
Ziaur Rahman also spoke at the inauguration. Salahuddin Ahmed Khan,
professor of finance at Dhaka University and former chief executive
officer of DSE, delivered a lecture on 'Capital Market', while Farhad
Ahmed, executive director of SEC, spoke on 'IPO Procedure: Book Building
Method and Direct Listing', and Mohammad Abdul Hannan Zoarder, executive
director of SEC, delivered lecture on 'Regulatory Framework of SEC'.

Govt's bank borrowing up ADP falls far short of implementation target

The government's borrowing from the banking system in the last fiscal
year was 3 percent higher than its target although the
implementation of annual development programme (ADP) is lagging far
behind the target. The revised ADP size was Tk 23 ,000 crore last
fiscal year. In the revised budget for FY 2008-09 the government's
borrowing target was Tk 10 ,698 crore. But finally the government
borrowedz Tk 10 ,964 crore. In the current fiscal year (2009- 10) a
bigger borrowing target has been set at Tk 16 ,755 crore, which is
about 56 percent higher than previous fiscal year's target. Data on
ADP implementation until June has not been available yet. However
ADP implementation was Tk 14 ,088 crore in 11 months until May.
The government would have to spend Tk 8 ,912 crore in one month to
implement the full size of the ADP. In the 11- month period the
government on an average implemented ADP of Tk 1 ,280 crore. So it
is impossible to spend Tk 8 ,912 crore in one month, said planning
ministry officials. The government can at best implement Tk 4 ,000
crore to 5000 crore, they added. Although the government is lagging
behind the ADP implementation target by about Tk 4 ,000 crore, it has
exceeded the borrowing target. Finance ministry officials said
revenue income was lower and foreign assistance might not be
available as per target that increased the borrowing. The National
Board of Revenue's (NBR) target for revenue income was Tk 53 , 000
crore. NBR high officials said they would be able to achieve 99
percent of the target, meaning that there might be Tk 500 crore to
Tk 1 ,000 crore deficit against the revised target. As the
government's borrowing increased, its expenditure on payment of
interest went up. The government's total outstanding domestic
borrowing was Tk 105 ,039 crore until April. This year 19.2 percent
of the revenue budget would be spent on payment of interest. In the
current fiscal year the amount to be spent for interest payment has
been estimated at Tk 15 ,808 crore. Every year, the actual payment
of interest in the revised budget stands higher than the estimated
cost on payment of interest. The estimated expenditure on payment of
interest was Tk 12 ,565 crore last fiscal year, but in the revised
budget the actual expenditure stood at Tk 13 ,314 crore.

High interest rate sets back growth: Muhith

Falling investment and a high interest rate are the two major weak
spots in the economy, not the exchange rate or market intervention,
Finance Minister AMA Muhith said yesterday. "A high interest rate
hurts investment growth," Muhith said at a seminar on exchange rate
management under the floating regime. Bangladesh Institute of
Development Studies (BIDS) organised the seminar in collaboration
with Manusher Jonno Foundation, a nongovernmental organisation at
the BIDS auditorium. Muhith backed the ongoing floating exchange rate
regime and the central bank's intervention in the market and said:
"Bangladesh Bank's intervention has so far been justified". The
minister also hailed the country's debt policy and termed it '
unparalleled'. Muhith defended the current basket of currencies
against the taka. " Bangladesh's economy is highly dollarised and
even domestic transactions are done by dollar -- sometimes," he
said. He opposed a suggestion to widen the basket. But the minister
said the country lags behind in two major areas -- investment and
interest rate. The third weak area, according to Muhith, is the
capital market. "Investment cannot grow partly because of the high
interest rate," he said. "But it takes time to reduce the interest
rate further." The minister said the capital market must be deepened
to enhance investment. "Improving administrative capacity is also
vital to utilise public investment for the sake of infrastructure
improvement." Dr Salehuddin Ahmed, the immediate- past governor of
Bangladesh Bank, said currency devaluation would not benefit
exporters, but would add to the cost of doing business. "If the taka
is devalued to 75 against the dollar from present 69 exporters'
competitiveness will increase no more than 1 percent," said Ahmed
quoting a hypothetical study during his tenure at the central bank.
Ahmed also opposed the dual exchange rate policy once demanded by
exporters and a section of economists. Backing BB's intervention in
the foreign exchange market, the former governor said the central bank
does it from a neutral approach. In fiscal 2007-08 , the central
bank bought $650 million from the market and sold $533 million
back. "The intervention depends on the market situation," Ahmed
added. Bangladesh entered the floating exchange rate regime in May
2003. The first ten months remained relatively stable with just less
than 1 percent depreciation. The rate kept rising from mid-2004 and
reached its peak at Tk 70 against the dollar in 2006 from Tk 58 ,
which means a 20 percent slide. Since 2007 , the market has remained
stable and has been moving between Tk 68 and Tk 70 despite global
meltdown, declining domestic demand and devaluation of currencies by
many countries, including India, Pakistan and Vietnam. Dr Debapriya
Bhattacharya, distinguished fellow of Centre for Policy Dialogue,
said those who are promoting currency devaluation are doing it from
a narrow export outlook. "Currency devaluation will not help domestic
demand grow," he noted. Bhattacharya said interest rate cuts are more
important than devaluation of the taka. BIDS Director General Dr
Mustafa K Mujeri chaired the seminar addressed among others by
former top International Monetary Fund official and Executive
Director of Policy Research Institute Ahsan Mansur and economists MA
Taslim and Zaid Bakht. Earlier, Dr Monzur Hossain and Mansur Ahmed,
two researchers of BIDS, had made a presentation on the exchange
rate management.

Calls for 'new world order' at NAM summit

More than 50 heads of state from the developing world met Wednesday in Egypt
to tackle the fallout from the global economic meltdown, with calls for a
"new world order" to prevent a repeat of the crisis. Cuban President Raul
Castro said in a speech at the opening session of the Non-Aligned Movement
summit that the financial crisis had hit developing nations the hardest.
"Every country in the world must seek just solutions to the global economic
crisis," Castro told the 118- member body at the gathering in the Red Sea
resort of Sharm el-Sheikh. "We call for a new monetary and economic world
order... we must restructure the world financial system to take into
consideration the needs of developing countries." Global power dynamics also
need to be addressed, Libyan leader Moamer Kadhafi said, demanding a
restructuring of the UN Security Council which he branded a form of
terrorism " monopolised by a few countries that are permanent members."
"This represents a danger toward international peace. We have suffered all
sorts of harm from the Security Council, it has become a sword over our
necks," he said. "The Security Council is terrorism." Kadhafi said he wanted
to correct the imbalance at the Security Council, demanding a permanent seat
for the 53- member African Union, which he chairs. But the developing
world's military ambitions looked set to steal the summit limelight, with
nuclear-armed South Asian foes India and Pakistan to hold talks on Thursday
aimed at relaunching stalled peace talks. New Delhi and Islamabad's fraught
relations deteriorated after terror attacks in the Indian commercial capital
Mumbai in November last year which killed 166 people. The attacks were
blamed by India on the banned Pakistani militant group Lashkar-e-Taiba, and
Pakistan has acknowledged they were partially planned on its soil. Indian
foreign secretary Shiv Shankar Menon met his Pakistani counterpart Salim
Bashir on Tuesday ahead of the meeting between Indian Prime Minister
Manmohan Singh and Pakistani Prime Minister Yousuf Raza Gilani. Singh has
voiced hope that Pakistan will promise action against those behind the
attacks when he meets Gilani for only the second high-level contact between
the two sides since the Mumbai bombings. Pakistan said on Saturday that it
would "probably" put the five accused of involvement in the attacks on trial
next week. The attacks left in tatters a fragile peace process launched in
2004 to resolve all outstanding issues of conflict, including a territorial
dispute over the divided Himalayan territory of Kashmir. India, along with
host Egypt, is one of the founding members of the NAM, the largest grouping
of countries outside of the United Nations, aimed at giving a voice to the
developing world. The summit will "provide a chance for discussions over the
international economic crisis, which first started in the industrialised
countries, and greatly impacted the developing countries, especially
Africa," Zimbabwe Foreign Minister Simbarashe Mumbengegwi said on Tuesday.
He said industrialised states "should not be given free rein to manage such
a crisis." Founded in 1955 , NAM's 118 member states represent around 56
percent of the global population. NAM states consider themselves not
formally aligned with or against any major power bloc. Set up during the
Cold War, the movement sought to distance itself from both the Western and
Soviet blocs, but today its raison d'etre is questioned after the collapse
of the Soviet Union and the ensuing shift in power politics.

Trade union debate heats up

Labour leaders yesterday emphasised trade unionism in the apparel sector to
ensure workers rights, while owners expressed their concerns over the role
of such unions in the industry. However both the sides were unanimous on
bringing the culprits to book, who are responsible for the damage caused
to the prime foreign exchange earning sector. A vested quarter is behind
the recent labour unrest, they told a discussion in Dhaka. The Centre for
Policy Dialogue organised the dialogue on "Investment scenario and the
recent incidents in the industrial sector." Chaired by CPD Chairman
Professor Rehman Sobhan, it was addressed by Commerce Minister Faruk Khan
as chief guest. Dr Debapriya Bhattacharya, the distinguished fellow of the
private think tank moderated the discussion, aimed at suggesting ways and
means to resolve frequent RMG workers' unrest. "Why do you (owners) fear
trade unionism?" questioned politician and a labour leader Shahidullah
Chowdhury. " Look at the issue positively and things will improve," he said.
Dr Wajedul Islam Khan blamed factory owners for not following the ILO
convention ratified by Bangladesh, which allows trade unionism.
Politicians Haider Akbar Khan Rono, Monjurul Ahsan Khan and Saiful Haque
also agreed with them on trade unionism. "There are genuine reasons for
workers' demonstration. They are deprived of due wages and overtime
payment," Rono said. "Healthy trade unionism can resolve many of the
problems faced by the garment sector," said Monjurul Ahsan Khan. Tuhin
Chowdhury, a garment worker, said retired army officials who are employed
at almost every factory often create constraints for workers, instead of
helping them. President of the Federation of Bangladesh Chambers of
Commerce and Industry (FBCCI) Annisul Huq, also a garment factory owner,
said they are afraid of trade unionism because their experience in this
regard is not good. He also smelt outsiders' involvement in the recent
destruction in some garment factories. Fazlul Hoque, president of the
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) echoed
the FBCCI chief's view. Rokia Afzal Rahman, a former adviser to the
caretaker government, said, "It seems that some incidents are instigated
from outside." Abdul Hye Sarker, president of Bangladesh Textile Mills
Association, and AK Azad, the owner of the recently burnt Hameem Factory,
urged the government to investigate when and why an owner failed to pay
wages to his or her workers. The commerce minister said the Awami
League-led government is pledge- bound to allow trade unionism to ensure
workers rights in all sectors. "We want it. We have mentioned it in our
election manifesto," Faruk Khan said.