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COMMENTARY
Insurers may get SEC waiver (Author: Sajjadur Rahman)
Posting Date:2010-07-28
Five insurance companies, which have applied for initial public offerings (IPO), may be exempted from having the minimum paid-up capital required by new laws.
The Securities and Exchange Commission (SEC) has recently sent these companies' IPO applications to the finance ministry for consideration.
The Bangladesh Insurance Association (BIA), which represents insurance companies, recommended the move, saying that the new laws are not yet implemented, so the companies should be allowed to have an IPO with their existing paid-up capital capacities.
The companies are Bangladesh National Insurance, Desh General Insurance, Meghna Insurance, Padma Life Insurance and Sunflower Life Insurance.
As per the new laws -- Insurance Development and Regulatory Authority Act 2010 and Insurance Act 2010, passed in March this year -- companies both life and non-life (general) have to increase their paid-up capital.
The amount of paid-up capital for a general insurance company was raised over 166 percent to Tk 40 crore from Tk 15 crore, and for a life insurance company, it was raised by 300 percent to Tk 30 crore from Tk 7.5 crore.
According to the SEC, Bangladesh National Insurance applied to raise Tk 13 crore by IPO, Desh General Insurance, Meghna Insurance and Sunflower Life Insurance Tk 9 crore each and Padma Life Insurance Tk 11 crore.
“We've sent the IPO proposals of these companies to the ministry of finance. These companies will be exempted from the paid-up capital requirement after the finance ministry's nod,” an SEC member told The Daily Star Tuesday.
AKM Rafiqul Islam, president of BIA, said he has recommended these companies' IPO proposals.
Nasir A Chowdhury, managing director of Green Delta, a leading general insurance company in the country, also supports the IPO move of the five companies.
The insurance industry plays a vital role in Bangladesh's capital market, which has a scarcity of securities. Currently, the insurance sector tops the securities list with 44 companies in the country's two bourses followed by banks 30 and mutual funds 26.
Although 171 government treasuries are listed in the market, not a single one is traded.
Investors believe the listing of five insurance companies would help cushion the bubble market.
sajjad@thedailystar.net
Shrimp exports face new hurdle (Author: Star Business Report)
Posting Date:2010-07-28
Shrimp exports face a new challenge as European Union has recently imposed rules making it mandatory for at least 20 percent of consignments from Bangladesh to go through a check.
The EU tightened the rules on the ground of a 'lack of appropriate laboratory capacity for the testing of certain residues' risky for human health, according to the Official Journal of European Union.
The latest sanction came into effect on July 15 with exporters fearing that it would hurt their competitiveness by increasing the costs of exports.
The government has moved to cushion exports from the fallout of the EU measure, and now plans to send a delegation to EU headquarters in Brussels by mid-August.
“We are worried. The check will increase the stay time of our consignments at ports and push up the costs of exports,” said Maqsudur Rahman, vice president of Bangladesh Frozen Foods Exporters' Association.
“We will also have to count increased charges for bank interests, port demurrages and testing fees,” said Rahman.
The new EU measure came after the frozen food sector that creates more than 10 lakh jobs witnessed the second straight year of downturn in exports.
Shrimp dominates the export basket of frozen foods, the third biggest exports sector after readymade garments, jute and jute goods.
Frozen food exports, after plummeting 15 percent in fiscal 2008-09 due to a fall in prices amid global recession, dipped 2.06 percent to $445.18 million in fiscal 2009-10 from $ 454.53 million, according to Export Promotion Bureau data.
Processors blamed the fall in exports on the slow recovery in demand after the economic meltdown and a six-month voluntary ban on prawn exports to Eurozoe.
The EU took the decision to check 20 percent of consignments observing inadequate laboratory capacity for testing certain pharmacologically active substances such as chloramphenicol, tetracycline, oxytetracycline, chlortetracycline and metabolites of nitrofuran, insiders said.
A EU inspection team visited Bangladesh in January this year and found shortcomings in lab testing capacities.
In the past EU used to check Bangladesh's consignments on a random basis. The failure to improve the testing capacities in line with the EU recommendations led to the sanction, the insiders said.
Stakeholders said Bangladesh has four testing machines including two at Department of Fisheries (DoF). The laboratories in Bangladesh are not recognised internationally.
The EU along with seeking testing certificates from Bangladesh on some residues such as oxytetracycline and chlortetracycline wants method validation of parameters of certain antibiotics.
Habibur Rahman Khondaker, assistant director of DoF, however, said they have made progress in various areas including improvement of laboratory facilities and ensuring traceability.
Khondaker claimed that improvement in various areas has reduced the number of rapid alerts issued by EU in case of higher residues. 'Last year we got 60 rapid alerts from EU. But so far this year, we have received only six,” he added.
“We have completed method validation of parameters for almost all the antibiotic items. Method validation of the remaining parameters is under process and we expect to complete within December,” he said.
M Shamsul Kibria, joint secretary of the fisheries and livestock ministry, said a team would visit Brussels to seek withdrawal of the EU sanction.
“We will negotiate for withdrawal of the decision and place our progress reports before them. We will also improve the capacities of our labs to comply with their requirements,” he said
SEC approves 3 firms' rights offers (Author: Star Business Report)
Posting Date:2010-07-28
Three listed companies have received a go-ahead from the stockmarket regulator to raise capital through issuing rights shares.
The Securities and Exchange Commission (SEC) gave the consents at a meeting on Tuesday, presided over by the commission's Chairman Ziaul Haque Khondker.
The three companies, which received the approval, are: Confidence Cement, Asia Pacific Insurance and Daffodil Computers, SEC officials said.
Confidence Cement will issue three rights shares against 10 existing shares at an offer price of Tk 700 each, including a premium of Tk 600, Anwarul Kabir Bhuiyan, executive director of SEC, said after the meeting on Tuesday.
The cement manufacturing company will raise more than Tk 50 crore through issuing more than 7.5 lakh ordinary shares of Tk 100 each.
Asia Pacific General Insurance will offer one right share against one existing share at an offer price of Tk 150.
The insurance firm will take Tk 50 as premium for each right share with Tk 100 face value.
The company will collect more than Tk 31 crore by issuing more than 22 lakh rights shares.
With the SEC permission, Daffodil Computers will release one right share against one existing share at an offer price of Tk 10.
The IT company will raise around Tk 20 crore by issuing more than 2 crore rights shares of Tk 10 each.
LankaBangla Securities to get indicative price next week (Author: Star Business Report)
Posting Date:2010-07-27
The indicative price of LankaBangla Securities shares will be set within the next one week through bidding by institutional investors, as part of the stockbroker's plan to go for IPO using book building method, officials said yesterday.
At least 15 institutional investors from minimum three sectors, including five merchant banks, will take part in the bidding to determine the indicative price of each LankaBangla Securities share.
Determining the indicative price is a prerequisite for going to discover the share price of a company that intends to go public using the book building method, a modern pricing mechanism for initial public offering (IPO).
Setting the indicative price is also required to obtain regulatory approval at the first stage.
'After getting an indicative price, we will submit the IPO prospectus to the regulator for its consent to go for price discovery,' said Mohammed Nasir Uddin Chowdhury, chief executive officer of LankaBangla Securities.
He was speaking at the roadshow on LankaBangla Securities, arranged for the institutional investors at the Dhaka Sheraton hotel yesterday.
A roadshow is required by the book building regulations before price discovery where a company's fundamentals are displayed to the institutional investors.
AAA Consultants and Financial Advisers, the issue manager of the LankaBangla Securities IPO, presented the fundamentals of the brokerage firm at the roadshow.
If approved by the Securities and Exchange Commission, LankaBangla Securities will be first listed stockbroker in the Bangladesh market.
The brokerage firm's existing paid-up capital is Tk 55 crore and will float three crore ordinary shares of Tk 10 each. After the IPO, its paid-capital will reach Tk 85 crore.
Of the three crore ordinary shares, 20 percent or 60 lakh shares will be reserved for the institutional investors, who individually can apply for maximum 10 percent of the 60 lakh shares.
With the IPO proceeds, the company will go for business expansion and diversification such as increasing margin loan facilities, branch expansion, software upgrade and acquiring fixed assets.
A subsidiary of LankaBangla Finance Ltd, the firm will also go for strategic investment in other companies, participate in bond market and effectively activate dealership activities.
The half-yearly earnings per share (EPS) of LankaBangla Securities, the top performer on the two bourses in terms of turnover in the last four years, is Tk 16.20 to June this year.
LankaBangla Securities started operations in the capital market in 1998. Now it has eight branches across the country, and two more branches are in the pipeline.
The stockbroker, which was rated AA2 by Credit Rating Agency of Bangladesh, is a 90.9 percent owned subsidiary of LankaBangla Finance Ltd, a leading listed non-bank financial institution. LankaBangla Finance is engaged in leasing, credit cards, merchant banking, corporate finance and financial consultancy
Stocks shake off jitters (Author: Star Business Report)
Posting Date:2010-07-27
Stocks bounced back strongly yesterday, as the regulator slackened some market-cooling measures, a day after the market suffered the steepest drop in 14 years.
The regulator's flexible stance helped the investors boost confidence, stockbrokers said.
The Securities and Exchange Commission on Sunday decided to increase the single-client borrowing limit to Tk 10 crore from Tk 5 crore for stockbrokers and extend the deadline for adjusting the margin loan for those clients whose credit exposure is over Tk 10 crore to September 30 from August 31.
'The sweetener brought an end -- at least for the time being -- to the panic sale that took place Sunday on a reaction to the regulator's market-cooling tightening of credit,' said a stockbroker.
The benchmark index of Dhaka Stock Exchange -- DSE General Index -- jumped 125 points, or 2 percent, to 6,325.
Banks, telecoms and non-bank financial institutions were mainly behind the increase in the market. Shares of the other sectors also rose.
Advancers beat losers 198 to 46. However, eight securities remained unchanged on the premier bourse, which traded more than 5.11 crore shares and mutual fund units on a turnover of Tk 1,285 crore.
LankaBangla Finance topped the turnover leaders with more than 14.75 lakh shares worth Tk 68.84 crore.
Chittagong stocks marked a sharp rise with the CSE Selective Categories Index increasing 1.91 percent to 12,131.
More than 71.13 lakh shares and mutual fund units changed hands on Chittagong Stock Exchange on a value of Tk 104.77 crore.
Gainers beat losers 120 to 63 with one scrip remaining unchanged on the port city bourse.
RAK Ceramics (Bangladesh) Limited topped the turnover leaders with more than 2.79 lakh shares worth Tk 6.54 crore being traded on the floor.
Apparel makers raise trade issue with US official (Author: Star Business Report)
Posting Date:2010-07-27
Leading apparel makers and exporters on Sunday placed a series of demands, including duty-free market access, to a visiting US state department official.
But the diplomat was quiet on the demands.
The apparel makers and exporters placed their demands before Atul Keshap, acting deputy assistant secretary for the South and Central Asia region, at The Westin Dhaka hotel.
AK Azad, the newly elected president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), hosted a dinner in honour of the US official.
Keshap focused on strengthening bilateral relationship and highlighted Bangladesh's potential to grow further.
“I am taking the notes of today's discussions to Washington DC,” he said.
Keshap said his country is pleased to work with Bangladesh on different issues such as food, energy security and climate change.
“Please see to it that we get zero tariff facility enabling us to enter the US market,” AK Azad requested the US official.
If Bangladesh were allowed the facility it would not affect the US apparel producers, said the FBCCI chief.
Senator Jim McDermott introduced a bill in the US House of Representatives in November last year to offer greater duty-free facilities to 15 least developed countries, including Bangladesh.
But soon after the placement of the bill, various US textile organisations and trade associations of South and North American and African countries have been opposing Bangladesh's inclusion for the purpose.
“If sub-Saharan and African countries can get duty-free benefits, why not Bangladesh,” said Mahbubur Rahman, president of International Chamber of Commerce, Bangladesh.
Fazlul Hoque, the immediate past president of Bangladesh Knitwear Manufacturers and Exporters Association, said they have to compete with the giant China in exporting to the US market.
“We've to pay 15 percent duty for apparel exports to US,” said Hoque.
Anisur Rahman Sinha, the single largest apparel exporter to the US market, said if the US extends zero duty facility to Bangladesh, they could take care of the workers' grievances.
Sinha told the US diplomat how Bangladesh had supported the US in addressing the child labour issues.
Abdul Hai Sarker, president of Bangladesh Textile Mills Association, said they import nearly half a billion dollars worth of cotton from the US every year under duty-free facility.
“The import of US cotton will just double if Bangladesh's apparel exports are made duty-free,” said Sarker.
Stocks in tailspin (Author: Star Business Report)
Posting Date:2010-07-25
Benchmark index dives by more than 3pc
Dhaka stocks yesterday suffered the biggest drop in a decade, mainly because of the regulators' market-cooling tightening of credit.
The regulator's move to cap single-client borrowing, and the central bank's show-cause notice to seven banks -- for not adjusting their overexposure to the capital markets -- prompted a panic sale in the secondary market, stockbrokers said.
The benchmark index of Dhaka Stock Exchange -- DSE General Index -- nosedived 204 points, or 3.19 percent, to 6,200.
The benchmark index of Chittagong Stock Exchange -- CSE Selective Categories Index -- also plummeted by 366.47 points, or 2.98 percent, to 11,903.84.
The DSE's was the steepest drop since the 1996 crash, when the market bubbled and then burst. On November 5 of 1996, the index rose to 3,649 points from 957 points on July 2 of 1996.
But the market started plummeting from November 6 of the same year with the index shaving 233 points on the day. The index went down by some 600 points to 3,065 points on November 30, and the decline continued to May of 1999.
The stockbrokers blamed the regulators' intervention in controlling the credit flow into the market.
'Securities regulator's and the central bank's move pulled the market down,' said Md Shakil Rizvi, managing director of Shakil Rizvi Stock Ltd, a brokerage house.
However, he said, the market should not panic over the latest measures. 'The banks' exposure to the stockmarket will be less than 10 percent of their total market capitalisation,' explained Rizvi, also president of the DSE.
He also said they may sit with the Securities and Exchange Commission (SEC) to discuss its latest regulatory measures, which are eroding the investors' confidence.
The SEC stepped in at least four times in the last two months to calm the market through controlling the credit flow.
The latest measure -- capping credit exposure to a single-client borrower at Tk 10 crore for merchant banks and Tk 5 crore for the stockbrokers -- came into effect yesterday.
Prior to that, the SEC also tightened the credit facilities by reducing the loan margin ratio to 1:1 from 1:1.5, and slashing the price-earnings (PE) ratio for marginable securities to 40PE from 50PE.
Last week, Bangladesh Bank (BB) served notice on seven banks for not complying with its directive on adjusting their overexposure to the stockmarket. Earlier, BB also asked all commercial banks not to invest more than 10 percent of their liabilities in the stockmarket, and to adjust their exposure by August.
Yesterday's shock, which reigned over the entire trading session, also prompted the SEC to increase single-client borrowing to Tk 10 crore from Tk 5 crore for the stockbrokers.
The SEC also extended the deadline to September 30 from August 31 this year for adjusting the margin loan for those clients whose credit exposure is over Tk 10 crore.
Most investors came to know about the latest move after the trading session.
Panicked by the cooling measures of the SEC, many rushed to sell shares, even at huge losses.
'I incurred Tk 6 crore losses today [yesterday], as I had to start selling to adjust my portfolio in line with the SEC directive on single-client exposure,' said Md Sabuj Mia, an investor.
'Now I heard of an increase in single-client exposure and expansion in the deadline for adjustment. Who will take the responsibility for my losses?'
The premier bourse's four major sectors -- banking, non-bank financial institutions, fuel and power, and engineering -- contributed heavily to the dip in the market.
All sectors, except mutual funds, closed lower, as selling pressure dominated the board
Investment drop alarms MCCI (Author: Star Business Report)
Posting Date:2010-07-25
A leading chamber yesterday expressed concern over the bleak investment scenario.
The Metropolitan Chamber of Commerce and Industry (MCCI) said there are some signs of improvement, but the actual increase in investment would depend on how effectively the government addresses the power and energy crises.
'The acceleration of growth would depend upon the success in raising investment, especially in the private sector,' said the MCCI in its review on economic situation for April-June 2010 (Q4 of FY10).
The chamber said raising public investment through improved implementation of annual development programme and success in rapidly institutionalising the public-private partnership efforts in the infrastructure sector will be important to crowd-in private investment.
It stressed quick and innovative actions in economic management to improve implementation capacity, raise the level of economic activity, and make progress towards realising the social goals, including the poverty reduction targets.
The government should keep inflationary pressure under control through judicious coordination of fiscal and monetary policies, said the MCCI.
The recovery from the slow growth in the previous quarters enabled the economy to achieve a 6 percent growth during fiscal 2010, surpassing the 5.74 percent growth in the previous fiscal year.
Exports recovered from a negative growth in the second and third quarters, recording a 2.4 percent growth in the eleven months of the fiscal year till May 2010.
The review also said revenue collection, inflows of remittances and growth in industrial and services sectors also rose in the April-June period, compared to the previous quarter.
The chamber said the supportive conditions in the Bangladesh Bank's latest monetary policy were intended to facilitate the recovery of exports and attract new investments.
Crop production is expected to exceed the fiscal 2008-09 output, although it may fall short of the FY10 target, said the chamber.
The target for food grains production for FY10 was set at 35.05 million tonnes, 9 percent higher than the actual total production
A prudent policy for growth (Author: Mamun Rashid)
Posting Date:2010-07-25
Through monetary policy the central bank of a country controls supply, availability and cost of money so as to achieve optimum economic growth while maintaining price stability. Monetary policy is relatively flexible: immediate changes can be made in response to shocks, as opposed to fiscal policy, which takes longer time to manage and implement.
Monetary policy can be expansionary: increasing the total supply of money, as opposed to being contractionary, which decreases cumulative money supply. Expansionary policy is adopted usually when confronted with unemployment during recession by lowering interest rates. Conversely, contractionary policy is espoused to stabilise inflationary pressure through elevated interest rates. Lately, we have been hearing about 'accommodative monetary policy' -- warranting a balance between growth and inflation. In such policy, we see relatively quick shifts from expansionary to contractionary measures and vice versa to fine-tune growth in an economy prone to inflationary pressures.
Advanced economies formulate monetary policies based on a wide range of factors, including short and long term interest rates, velocity of money, exchange rates, bonds and equities, government versus private sector spending/savings, international capital flows and financial derivatives. Developed nations often use advanced tools like quantitative easing, an asset-repurchase programme employed by the Bank of England to combat recession.
Conversely, emerging economies' monetary policies are often constrained by underdeveloped financial markets, low per capita income and significant poverty. The scenario is complicated additionally by existing political and economic pressure. The central banks of the emerging world have to design prudent regulations and maintain exchange rates within a specific range while managing domestic activity and inflation.
Monetary policies in Bangladesh adopt similar tools and techniques as in other emerging economies maintaining restrictions in external capital account. Monetary aggregates based policies and programmes retain relevance in economies with restricted capital accounts; policy tools influencing growth of money stock, namely monetary programme targeting broad money growth path, adjustments in cash reserve and statutory liquidity requirement (CRR, SLR) are used as appropriate, besides adjustments in key policy interest rates (repo, reverse repo interest rates in Bangladesh).
Since inception, monetary policy in Bangladesh was conducted with full direct control on interest rates and exchange rates, as also on the volumes and directions of credit flows. However, as of today, directed lending has been abolished and gradual liberalisation of interest rate has taken place. Thus, interest rates have become market driven. Exchange rate has become floating, with Bangladesh Bank (BB) buying or selling currencies to keep liquidity at a desired level, though we at times hear about 'managed float' or 'moral-suasion.' BB has reverted over to open-market operations mainly through government treasury bills (T bills) auctions. As a result, cash reserve ratio (CRR) and statutory liquidity ratio (SLR) have become more stabilised.
Bangladesh's Monetary Policy Statement (MPS) for July-December 2010, released by the central bank recently, is focusing on continuous watch towards locating and neutralising the likely inflationary pressures from the growth supportive monetary and credit policies, which to the extent feasible, will be targeted to selected priority productive sectors.
Deepening of financial inclusion of agriculture, small and medium enterprises, renewable energy and ecological footprint will continue to remain as priority sectors, while at the same time, the BB continues to discourage expansion in lending for wasteful consumption and unproductive speculative investment. The discussion of the core strategies adopted by the central bank in the MPS July-December 2010 is categorised into the following facets:
Inflation outlook: Despite easing in domestic annual point-to-point CPI (consumer price index) inflation trend from March 2010, the 12-month average domestic inflation crept to 6.51 percent in April 2010, exceeding marginally the ceiling targeted for FY2010. BB thinks the average inflation will continue to creep up for some months before starting to decline in line with the trend in point-to-point CPI inflation.
Growth outlook: Output growth performance in agriculture sector was robust in FY2010. The agriculture ministry estimates FY2010 farm sector growth at 4.39 percent against last year's 4.60 percent. Industrial sector is expected to grow at 6.42 percent against last year's 6.46 percent.
The government's provisional estimate for overall FY2010 GDP (gross domestic product) growth is 6.09 percent against last year's 5.88 percent. For FY2011, BB thinks that GDP growth rate would be around 6.70 percent subject to a few conditions.
External sector outlook: BB thinks that both export and import in FY2011 are projected to grow at double-digit rates with workers' remittance inflows settling down around lower double-digit growth level. This will narrow down current account surpluses, with corresponding moderation in foreign exchange reserve growth. The need for US dollar purchases (with attendant infusion of equivalent taka liquidity) to limit taka appreciation will decrease, easing inflationary pressure.
Capacity utilisation: Domestic investment gets discouraged due to the prevailing high cost of funds. The central bank has, therefore, prescribed lending rate ceilings in priority economic sectors to accelerate growth and employment. As treasury yields and deposit rates have declined, BB has taken mandatory as opposed to advisory steps to diminish interest rates and service charges. BB programmes have placed greater directional emphasis on credit needs of agriculture and SMEs, which are underserved by the market.
However, BB is also aware of the potential diversion of this targeted lending to non-priority sectors and the possible inflationary pressure and has prepared to adopt adequate measures to stop wasteful credit growth.
Exchange rate management: The central bank has kept taka at an undervalued stable level with continuous foreign exchange purchases from the domestic market to protect export competitiveness and to maintain incentive for remittances. In the existing recessionary environment this is possibly a prudent move, as export sustainability has become an imperative issue. However, as discussed earlier with the growth of import this requirement will decrease.
Monetary policy statements in developed countries are generally short and precise, primarily focusing on the state of the economy and the stance (e.g. expansionary, contractionary) the monetary authorities might be taking to sustain growth and to keep inflation at a reasonable level. It is more of a framework or direction -- rather than detailed discussion of the policy measures. Monetary policy in an emerging economy like Bangladesh should more be able to draw a balance between inflationary pressure and investment growth, thereby creating jobs in a labour surplus economy.
The writer is a banker and economic analyst, and can be reached at: mamun1960@gmail.com
Partex Group splits (Author: Sajjadur Rahman)
Posting Date:2010-07-05
Partex Group, one of the largest family-owned manufacturing and service-based companies in Bangladesh, has split its business into two groups to improve management procedures.
Sultana Hashem, wife of company founder MA Hashem, and her two elder sons own one part, Partex Group. MA Hashem and their three other sons have retained different units of the rest of the company under Partex Holdings.
“We started the break-up process in 2006 and now it is complete,” Aziz Al Kaiser, the eldest son and vice chairman of the present Partex Group, told The Daily Star.
Kaiser, who is on his mid-40s, said there is no family feud among them. “The split was made for better management practices.'
Rubel Aziz, the youngest son and a director of Partex Holdings, said the division was taken on amicable terms.
With a modest start in 1959, Partex began with tobacco trading and prudent entrepreneurship under the leadership of Hashem. It now owns over 25 units -- from tobacco to food, water, soft drinks, steel containers, edible oil, furniture, yarn and the IT sector.
The group employs over 10,000 people.
The new Partex Group owns Star Particle Board Mills, Danish Condensed Milk, Danish Food Products, Danish Milk Bangladesh, Danish Distribution Network, Partex Furniture Industries, Corvee Maritime, Ferrotechnic Ltd, Rubel Steel Mills, Partex Ltd, Partex Builders, Partex Agro Ltd, Partex Housing, and Partex Laminates.
Partex Holdings, under Hashem, owns Amber Cotton Mills, Amber Pulp and Paper Mills, Partex Beverage, Partex Plastics, Partex Real Estate, Star Vegetable Oil Mills, Star Coconut Mills, Dhakacom Ltd (ISP), Fotoroma, Partex Spinning, and Danim and Hashem Corporation (Pvt) Ltd.
Small, medium and large family owned businesses dominate over Bangladesh's $100 billion economy, which has been growing at over 5 percent a year since 1995.
Besides Partex, Akij Group, Nasir Group, Square, Ispahani, Abul Khair Group, ACI and PHP are some prominent family-owned businesses in the country.
Although large family-owned companies are usually split in different countries, it did not happen to that extent in Bangladesh.
“The break-up process started before 1/11 (January 11, 2007). I have done it for my necessity,” founder of the company MA Hashem said. “It is better to divide the business among the five sons before my death.”
Now, the new Partex Group dreams to grow faster in the local market, while Partex Holdings has focused on export markets.
“We'll rebrand the name Partex Group and expand it,” said Kaiser.
Rubel Aziz said they own export-oriented companies of the former group except a few.
“Eventually, every brother will be separated in business,” he said.
sajjad@thedailystar.net
Profit from pre-IPO share sales taxed (Author: Star Business Report)
Posting Date:2010-07-05
The government has imposed a 5 percent tax on profits from sales of shares or mutual fund units that an investor receives through pre-IPO placement.
Companies raise capital through pre-IPO placement, before going for an initial public offering. Many sponsors and individual placement holders make hefty profits by selling the placement shares or mutual fund units after the lock-in period.
The levy on placement holders is tagged with the provision of tax sponsor shareholders or directors of listed companies, according to a letter that the National Board of Revenue (NBR) has recently sent to the Securities and Exchange Commission.
The provision read that a 5 percent tax at source has been imposed on the profit made by sponsor shareholders or directors or placement holders from the sales of their shares or mutual fund units.
The NBR also asked the stockmarket regulator to collect the tax from the sponsor shareholders or directors or placement holders, officials said.
The SEC said it is now trying to find ways of collecting the tax.
'Till date, only the sponsor shareholders or directors are required to make earlier announcements for share sale. But now, the placement holders may also be required to make earlier announcements for share or fund unit sale, so that the amount of profit made can be identified,' said Ziaul Haque Khondker, chairman of SEC.
The finance minister in his budget speech said only the sponsor shareholders or directors of listed companies would be brought under the tax net. But the provision of tax on placement holders has been kept in the finance bill.
A portion of the initial public offer is placed with private investors right before the IPO is scheduled to hit the market. The investors will be able to sell the shares at a higher price after the lock-in period attached to the placement. This is how they make profits.
Bangladesh outshines India in RMG exports (Author: ab Bhattacharya, New Delhi)
Posting Date:2010-07-05
Bangladesh and Vietnam proved stronger resilience in textile exports than India in the face of slowing demand, a study shows.
India's textile and apparel exports to the US market shrank by over 10 percent in 2009 calendar year, much more than exports from Bangladesh, China, Vietnam and Indonesia, according to the study by the Federation of Indian Chambers of Commerce and Industry.
While this allowed Vietnam to go past India in terms of market share of US imports, others are also catching up, the study finds.
India's market share of US imports of textiles and apparels grew from 5.73 percent to 5.9 percent between 2008 and 2009, but during the same period the market share of import from Vietnam increased from 5.53 percent to 6.2 percent.
While Bangladesh's annual textile and apparel exports to the US were 11.5 per cent in the last five years, India's exports reached 4.2 per cent in the same period, the FICCI says.
Bangladesh's apparel exports to Europe rose 3.6 percent in 2009 over the previous year, while countries like India, China and Turkey recorded lower exports, which increased the market share gap between Bangladesh and India.
The US and European Union are the main markets of Indian textile and apparels and account for more than 60 percent of the exports.
Bangladesh a role model of food security (Author: Reaz Ahmad--The Dailystar)
Posting Date:2010-05-30
Bangladesh will be showcased at the upcoming Group of Eight (G8) summit in Canada and Asia Food Security Investment Forum in the Philippines as a model among developing countries due to its success in steadfastly pursuing sustainable food security.
Dr Shenggen Fan, director general of the International Food Policy Research Institute (IFPRI) disclosed this to The Daily Star in an exclusive interview on the sidelines of the two-day 'Bangladesh Food Security Investment Forum' rounded off in Dhaka on Thursday.
“The reasons why Bangladesh's case will be projected as a model are: 1) its achievement in the past in augmenting food production; 2) Bangladesh government's strong commitment to ensure food security; and 3) its advancement in drafting a national food policy plan of action,” explained the chief of the Washington-based food policy think-tank IFPRI, a co-organiser of the forum held in the capital.
On Wednesday, Prime Minister Sheikh Hasina inaugurated the forum, hosted by the Bangladesh government with cooperation from the United States Agency for International Development, Bangladesh Institute of Development Studies, IFPRI and Food and Agriculture Organisation of the United Nations, and other national and international development partners.
“Bangladesh will be showcased at Asia Food Security Investment Forum and also at G8 summit so that other nations get inspired in pursuing food security,” said Shenggen Fan.
Asia Food Security Investment Forum is scheduled to be held in the Philippines from July 7 to 9 while G8, an economic and political forum for the leaders of eight of the world's most industrialised nations, will hold its next summit in Canada on June 25-26. The G8 includes United States, United Kingdom, Canada, France, Germany, Italy, Japan and Russia.
“In the past decade especially, Bangladesh has made impressive economic and social progress towards achieving many of the Millennium Development Goals. Poverty, for example, has fallen from 57 percent of the population in 1990 to 40 percent in 2005 despite repeated natural disasters and external shocks, and economic growth during the last decade has averaged an impressive annual growth rate of 6 percent,” said Fan, who joined IFPRI in 1995 and took over as its DG in December last year.
The number of people in the world suffering from hunger and poverty has risen to more than one billion, and Bangladesh is not immune to this reality, he said.
“Overcoming challenges to food security has played and continues to play a significant role in the development agenda of Bangladesh. According to IFPRI's 2009 Global Hunger Index, food security has improved in Bangladesh since 1990, with the country moving from an extremely alarming to an alarming level of hunger,” said Fan, who had held positions at the International Service for National Agricultural Research in the Netherlands and the Department of Agricultural Economics and Rural Sociology at the University of Arkansas, US, prior to joining IFPRI.
The proportion of undernourished in Bangladesh fell from 36 percent of the population to 26 percent in 2006, he added.
Shenggen Fan, who did Ph D in applied economics from the University of Minnesota, noted that with population continuing to rise, arable land getting scarcer and climate change forcing the weather pattern to become erratic, Bangladesh is bound to face more challenges in the future than in the past in sustaining food security.
“There will be frequencies of cyclones, droughts and rains in years to come. Global food market is unlikely to be stable anytime soon and food prices will remain volatile,” predicted the IFPRI chief. Bangladesh should build up an 'optimum stock' of food grains, and diversify its food trade partners instead of relying on neighbouring India only, he suggested.
Given both the current state of food insecurity in Bangladesh and the challenges it will face in the future, Fan said a comprehensive policy framework is needed that places focus on investment strategies in three major areas. These are agricultural research and extension; improved access of farmers to well-functioning markets; and improved insurance and targeted social safety net programmes for vulnerable groups, specially undernourished women and children.
He stressed that across these three areas, attention needs to be focused on capacity building and good governance.
Despite tremendous accomplishments in the past, an IFPRI literature notes, 50 million people in Bangladesh still live in extreme poverty, and 36 million are chronically hungry or malnourished. Over 40 percent of Bangladeshi children lack the nutrition they need for healthy lives.
Shenggen Fan pointed out that public investment is one of the most direct and effective instruments that governments can use to promote growth and food security, and for poverty and hunger reduction.
For making correct investment decisions, Fan said, a government needs good analysis and also needs to strengthen its research capacity. “Good people (capable of doing research) are out there (in Bangladesh), what they require are proper incentives and right environment.”
Farm, SMEs take centre stage in BB’s 5-year plan (Author: Star Business Report)
Posting Date:2010-05-30
Bangladesh Bank has identified 17 strategies in its five-year plan to become a caring regulator for its stakeholders.
In the Strategic Plan 2010-2014, announced yesterday for the first time in its profile, the central bank has set its core focus on agriculture, small and medium enterprises (SMEs) and financial inclusion.
The BB strategies are aimed at addressing its development issues and the changes it needs. It has also framed an action plan for implementing the strategies.
In line with the strategic plan, the branch offices of the central bank will receive feedback from the grassroots farmers and SMEs to make the monetary policy more effective.
'Only becoming a regulator will not do, we will have to be a caring and facilitating regulator to bring in changes,' BB Governor Atiur Rahman said at the launch of the plan at Hotel Purbani in Dhaka.
'A roadmap for a shift from our present condition to the goal we will reach in the next five years has been drawn in the plan.'
All BB departments and branch offices will drill down the strategies into performance management system-compatible components such as key performance area, performance outcome and timeline.
The central bank governor said: 'If the mindset is not changed, no change will come. No doubt we will make mistakes, but we will learn from it and will not repeat the same mistake.'
According to the plan, the BB would conduct a business confidence survey and develop a 'house price index time series' for making the monetary and macroeconomic issues more pragmatic.
The central bank also plans a financial inclusion impact survey to investigate the extent to which agriculture and SME finance are contributing to output growth and poverty reduction.
The BB will develop separate financial stability unit specialised in identifying and assessing potential risk areas, and recommend prompt corrective actions.
The plan will ensure effectiveness of national taskforce and coordination committee to enhance regulatory and supervisory framework against money laundering.
The plan also envisages suitable amendment to Money Laundering Prevention Act 2009, and Anti-terrorism Act 2009.
Forming inter-agency coordination committee and arranging periodic meeting with law enforcement agencies are also the aims of the plan for an effective coordination to control money-laundering activities.
For increased emphasis on meeting financing needs of agriculture and SMEs, the BB will support partnerships of banks with microfinance institutions and mobile telephone operators for delivery of financial services to the clients in the remote rural areas.
Various steps will be taken to promote online banking, e-commerce and e-payments. The central bank will establish 'National Payment Switch' bringing about interoperability of the existing e-payment networks in cooperation with the government.
To modernise the interface between the existing software and newly built ICT platforms and enhance the scope of intranet portal, it will expand the existing intranet portal. The BB will also track compliance and change status in major functional and operational areas.
The plan said Islamic banking flourished in Bangladesh as elsewhere. Supervisory and regulatory provisions for Islamic banking need to be spelt out more elaborately than at present. The central bank will review the existing regulatory and supervisory practices in light of international standards drawn up by Islamic Financial Services Board.
For the banks that conduct both conventional and Islamic banking, the BB will identify the needs for segregation ensuring appropriate treatment of conventional and Islamic banking deposits.
The central bank has formulated the strategic plan after discussions with different banks, financial institutions, development partners and other stakeholders.
BB Deputy Governor Murshid Kuli Khan and other high officials spoke at the launching ceremony, also addressed by high officials of different banks and financial institutions and development partners.
SEC rejects PHP Power's appeal (Author: Star Business Report)
Posting Date:2010-05-30
stockmarket regulator has rejected PHP Power Generation Plant’s appeal for a waiver of conditions for an initial public offering (IPO) under the book building method.
PHP Power is a concern of a Chittagong-based PHP Group.
The book building rules state that a company can offload shares worth an amount equivalent to at least 10 percent of its paid-up capital.
PHP Power's existing paid-up capital structure and its proposed IPO size do not fulfil the condition.
'The commission has rejected PHP's appeal for a waiver,' said a senior official of the Securities and Exchange Commission.
'However, it doesn't mean PHP cannot go for IPO. The opportunity is still there with fixed price IPO system. Even the company can proceed for IPO under book building method, if it can fulfil the requirement through raising the paid-up capital first,' he said.
The official added that PHP could also seek premium with the fixed price IPO system.
PHP Power's existing paid-up capital is Tk 9 crore, and it has Tk 18 crore in reserve, which, the company told the SEC, will be added to the paid-up capital. It means the paid-up capital will be Tk 27 crore.
But according to book building rules, a company having below Tk 30 crore in paid-up capital is not allowed to go for IPO using the book building method, a modern pricing mechanism.
Public investment a must to drive growth (Author: Star Business Report)
Posting Date:2010-05-25
Boosting public sector investment is necessary to help the economy grow 8 percent and reduce poverty, said the World Bank (WB) country director yesterday.
'You have to increase investment, particularly by the public sector, for resource mobilisation,' Ellen Goldstein said.
She was speaking as the guest of honour at the regular luncheon meeting of the American Chamber of Commerce in Bangladesh (AmCham) at Dhaka Sheraton Hotel.
Goldstein suggested the government increase investment in infrastructure, because weak infrastructure is considered one of the biggest threats to growth.
Bangladesh will be able to attain an 8 percent rate of growth if the government can improve the investment climate, alleviate urban congestion, strengthen governance, reduce vulnerability and improve health and nutrition, she said.
Goldstein said public investment is also required to take the country to a middle-income status by 2021.
According to her, a lack of transparency in public procurement is a worrisome factor.
On the Investment Climate Assessment (2007), Goldstein said Bangladesh is in the bottom half on the global ranking (119th out of 180 countries) on ease of doing business and in the bottom half in seven of 10 other categories.
The report finds that an access to land is the biggest limiting factor for business, followed by power supply and corruption, she said.
According to her, the power situation is the biggest constraint to growth. Demand for power increases 8-10 percent annually, with no increases in the supply, she added.
Goldstein said the sovereign credit ratings by Standard and Poor's and Moody's, a stable currency, ample foreign reserves, abundant remittance, strong demographics, low labour costs, dynamic entrepreneurs and emerging middle class, were some of the positives for the country.
On export growth and diversification, she said if Bangladesh can get 10 percent of the Chinese market, it will more than double its total export of labor intensive goods and create millions of jobs.
AmCham President Aftab-ul-Islam suggested
GP unveils new package for rural people (Author: Star Business Report)
Posting Date:2010-05-25
Grameenphone Ltd yesterday launched a new package in an effort to connect rural customers to its network at affordable costs.
The package -- Baadhon -- will be available for Tk 1,499. The connection will include a handset, and customers will also get free talk time worth Tk 120 and a welcome tune on activation.
The handset -- enabled with both Bangla and English languages -- will also be available without a connection for Tk 1,350.
Grameenphone, the country's largest mobile operator, introduced the package at a time when other operators are in a fix as rural customers provide a poor business case.
'We believe actual mobile penetration is much lower than what we calculate, in terms of connection sales. So a big segment remains untapped in mostly the rural areas,' said Arild Kaale, chief marketing officer of the company.
'Our aim is to ensure equality between the urban and rural customers. We believe everyone can talk at affordable prices with our new package,' said Kaale.
Raihan Shamsi, deputy chief executive officer and chief financial officer of Grameenphone, unveiled the package at a programme in Sonargaon Hotel. Kazi Monirul Kabir, chief communication officer, was also present.
The six mobile operators added 5.63 crore customers to their networks as of April. The mobile penetration rate is about 33 percent. Grameenphone is the market leader with 2.5 crore customers, followed by Banglalink with 1.49 crore and Robi with 1.08 crore.
Grameenphone's focus on the rural areas is not new. The company started its Village Phone Programme in 1997, the year the company began operations. Under the programme, the company has more than 2.1 lakh customers. The Village Phone Programme is a unique initiative to provide universal access to telecommunications service in remote, rural areas.
DSE seeks clarification from Pragati on land sale again (Author: Star Business Report)
Posting Date:2010-05-11
Dhaka Stock Exchange (DSE) yesterday sought a second explanation from Pragati Insurance about the sale of the listed insurer's lands in Dhaka.
Pragati says it has received price quotations from several parties for the land.
The bourse seeks to know whether the insurer followed an appropriate procedure in collecting the price offers from the parties intending to buy the piece of land, a DSE official said.
In a letter to Pragati, the DSE wanted to know from the company which procedure or method the insurer followed in collecting buy offers to sell its own land located at Panthapath in the capital.
Earlier on May 9, the DSE enquired about the Pragati land on a rumour that the company has agreed in principle to sell it or entered into a deal with a third party for this purpose.
Brushing aside such rumour, Pragati made it clear to the enquirer that it had neither finalised the land sale nor inked any deal with any individual or organisation.
The company will publish 'price sensitive information' as soon as the matter is finalised, Pragati said in a reply, which was posted on the trading server and DSE website yesterday.
Contacted, ATM Rafiqul Islam, managing director of Pragati Insurance Company Limited, said his company has maintained all procedures in line with rules on the sales of land.
“We've published advertisements in several newspapers. We've also invited developers and financial institutions in writing to buy the piece of our land,” he said.
He however said he did not receive any DSE query until yesterday evening.
Pragati was listed on the stockmarket in 1996. On the Dhaka bourse, the company's each share traded between Tk 1,649 and Tk 1,722.75 yesterday
A trouble for govt: Inflation (Author: Star Business Report)
Posting Date:2010-05-11
Inflationary pressure is a big challenge to the government, said former caretaker government finance adviser Akbar Ali Khan yesterday.
The government should be able to anticipate inflationary pressure and act accordingly, said Khan at a pre-budget discussion, co-organised by Unnayan Shamunnay and Manusher Jonno Foundation at CIRDAP in Dhaka.
“It has become a necessity to give the poor a respite.'
Bangladesh Krishi Bank Chairman Khandoker Ibrahim Khaled presided over the discussion titled “Inflation and this budget: Thinking of the marginal'.
The inflation rate showed a rising trend for the past several months, but came slightly down to 8.78 percent in March.
Khan said the poor fall in trouble when inflation rises. Rising inflation also troubles politicians, he added.
The former adviser cited an example of India that anticipates inflation and, accordingly, undertakes follow-up actions to address the issue.
He also suggested the government take long-term measures in tackling inflation.
Khan also demanded the release of a white paper in parliament on infrastructure. “The government should publish a white paper on how it wants to fix the infrastructure problem.” He said there should be a debate in parliament.
Khan asked the government to give MPs (members of parliament) enough time to discuss the upcoming budget.
To address the 'syndicate syndrome', he suggested the government form cooperatives involving the masses.
Ibrahim Khaled said the country has developed significantly despite a lot of hurdles.
Stocks jump as investor confidence rises (Author: Star Business Report)
Posting Date:2010-05-11
Dhaka stocks yesterday jumped around 3 percent, driven by three major sectors shares -- telecommunication, bank and energy.
The rally in share prices also pulled up the single-day turnover on the premier bourse to another new high at Tk 1,874.84 crore, which was recorded at Tk 1,866 crore on Monday.
Market insiders said the rising investor confidence had helped the market take a bullish trend.
“The investor confidence is backed by the finance minister's recent positive speech on stockmarket. It encourages general investors to put money on securities,” said Nasiruddin Ahmed Chowdhury, senior vice-president of Dhaka Stock Exchange.
The finance minister recently pointed to government's special focus on capital market development and promised necessary measures in this regard.
Another factor for the record turnover is, Chowdhury said, floatation of new mutual funds in the market.
There might be some possible impacts of the upcoming budget, as the investors are expecting some budgetary measures on the stockmarket, said Chowdhury, also chief executive officer of LankaBangla Securities.
Others also pointed to the impacts of the news about share denomination, approved by the finance ministry.
The benchmark DSE General Index shot up 160.7 points, or 2.88 percent to 5,728.23. The broader DSE All Share Price Index also went up 126.93 points, or 2.77 percent to 4,707.01.
The rise in indices was contributed by Grameenphone, the sole constituent in the telecommunication sector. Each Grameenphone share jumped 8.56 percent to Tk 287.20.
In the banking sector, Bank Asia, Islami Bank and AB Bank had the highest gain 11.08 percent, 3.97 percent and 3.23 percent respectively.
In the energy sector, Titas Gas advanced 2.57 percent and Desco 1.85 percent.
Gainers beat losers 165 to 74 with two securities remaining unchanged. A total of 4,75,92,652 shares traded on the prime bourse.
Chittagong stocks also marked a sharp rise. The CSE Selective Categories Index shot up 321.77 points, or 3.06 percent to 10,833.85. The CSE All Share Price Index went up 488.23 points, or 3.02 percent to 16,609.66.
A total of 50,53,079 shares worth Tk 124.14 crore changed hands on the Chittagong Stock Exchange. Of the traded issues, 124 advanced, 50 declined and nine remained unchanged
SEC to look into Dhaka bourse's stance on Desco disclosure (Author: Sarwar A Chowdhury)
Posting Date:2010-05-10
The stockmarket regulator will look into why the premier bourse did not post any information on the setting-up of a power plant by a listed state-owned company.
Any price sensitive information should be disclosed the soonest on exchanges' server and websites, and the market regulator should be informed about it as well, said Ziaul Haque Khondker, chairman of the Securities and Exchange Commission.
'We will look into why the DSE (Dhaka Stock Exchange) has not posted the information on its trading server, while the CSE (Chittagong Stock Exchange) has made it public,' he said.
DSE has sought and received a clarification from Dhaka Electric Supply Company (Desco) on a report on the setting-up of a power plant, but the bourse management did not post it on its trading server and website.
The DSE has sought an instruction from the market regulator on whether the bourse would make the clarification public.
The DSE says the news on setting-up of a power plant by Desco, which was published in an English daily, and the Desco clarification do not match.
If the clarification is posted on the trading server and DSE website, it may create confusion among investors and so the bourse has sought a further instruction from the SEC, a DSE official said, asking not to be named.
The online disclosure of price sensitive or other information about listed companies is a major task of the DSE.
A listed company is required to publicly clarify any rumour, or report whether it is true or false, according to listing regulations of the Dhaka bourse.
Dhaka Stock Exchange (Board and Administration) Regulations, 2000 also says 'the CEO is responsible for market-related information technology and surveillance of trade on the bourse.'
Asked about the matter, DSE Chief Executive Officer Sati Pati Moitra refused to make any comment, and referred this correspondent to the monitoring department of the DSE, where nobody is authorised to speak to the media.
But a former chief executive of the DSE said it is the bourse's responsibility to disseminate information as soon as possible.
“Otherwise, some people can take advantage of it,' said Salahuddin Ahmed Khan, who had served as the DSE CEO for five years. 'If the management can't take any decision on the issue, or if the management thinks any certain information may create confusion, the share trading of the company concerned should be suspended until disposal of the matter.'
The DSE sought a clarification from Desco on April 5 after the English daily reported a day earlier that Desco was set to build a 100-megawatt furnace oil-run power plant in Ashulia.
On April 5, Desco replied to the Dhaka bourse that no decision had been taken by the company to build any power plant of 100MW near Dhaka city.
No proposal was sent to the Power Division for approval either, it said.
Desco listed directly on the stockmarket in 2006. On the DSE yesterday, each Desco share traded between Tk 1,970 and Tk 2,204.25.
sarwar@thedailystar.net
Power crisis to dim investment prospect: MCCI (Author: Star Business Report)
Posting Date:2010-05-10
Uncertainty in the energy sector development may adversely affect prospective investment although growth momentum in Bangladesh's economy continued in the third quarter of the current fiscal year, said a leading chamber.
All the important manufacturing sub-sectors have been witnessing a decline in growth since the beginning of fiscal 2009 and this trend seems to have continued till the first quarter of 2010, said Metropolitan Chamber of Commerce and Industry (MCCI).
However, recent trends in the growth of domestic demand buoyed by remittances and the recovery of exports suggest that manufacturing production may have picked up in the second quarter of FY10, according to a review of the chamber for the January-March period.
In the quarterly review, MCCI said crop production slowed down because of drought in the Aus season and inadequate rainfall in the Aman season.
'Much will now depend on the production of the Boro crop to determine whether the food grains production target in the present fiscal year would be achieved.'
However, the livestock, fishery and forestry sub-sectors showed good growth in the quarter under review.
In the services sector, several of its sub-sectors such as wholesale and retail trade, real estate, and financial intermediation showed good growth in the third quarter.
The overall services sector growth was slightly lower than the trend growth of 6.4 percent witnessed since FY2003-04.
The average rate of inflation (12-month annual average consumer price index) rose to 5.95 percent in the third quarter of FY10 from 5.42 percent in the previous quarter.
Inflation on a point-to-point basis increased to 9.06 percent at the end of February from 8.51 percent at end-December.
'This was the highest point-to-point inflation in sixteen months,' said the review.
On the external front, merchandise exports in January of the third quarter increased by 3.49 percent compared to 1 percent in the previous quarter.
This indicates that the global demand is rising gradually, which resulted in improving export performance, especially in raw jute, jute products, leather, petroleum by-products, bicycle, footwear, agro-processed food, terry towel and ceramic products, the review said
Turnover soars to all-time high (Author: Star Business Report)
Posting Date:2010-05-10
Single-day turnover on the premier bourse hit an all-time high of Tk 1,866 crore yesterday, but most stocks were in the red.
News surrounding the finance ministry's approval for listed companies to convert face value of shares from Tk 100 to Tk 10 had a positive impact on banking and non-bank financial institutions (NBFI) shares.
Currently, most banks and NBFIs have Tk 100 in share face value. Many have submitted proposals to the regulator for permission to denominate the face value of their shares and many others announced their decisions to make such changes in face value.
Investors rushed into taking positions in bank and NBFI stocks, expecting more declarations from the companies on denomination of face vale, market insiders said.
'The rush led the single-day turnover to an all-time high,' said a market analyst.
The previous highest turnover was Tk 1,690.99 crore on February 2.
Of Dhaka Stock Exchange's top 20 turnover leaders, 11 were banks and NBFIs. Most of them are set to change the face value of shares.
EXIM Bank, Al-Arafah Bank and Southeast Bank moved up. EXIM Bank was up 8.71 percent, while Al-Arafah up 10.59 percent and Southeast Bank up 6.04 percent.
Among NBFIs, Peoples Leasing, Prime Finance and International Leasing were up 14.49 percent, 4.13 percent and 10 percent.
The benchmark DSE General Index fell 13.48 points, or 0.24 percent, to 5,567.52, largely due to a decline in Grameenphone prices. Each Grameenphone share declined 5.12 percent to Tk 265.30.
The broader DSE All Share Price Index also fell 11.19 points, or 0.24 percent, to 4,580.08.
Losers beat gainers 131 to 111 with two securities remaining unchanged. A total of 5,13,68,584 shares traded on the prime bourse.
Chittagong stocks also marked a fall. The CSE Selective Categories Index slid 34.37 points, or 0.32 percent, to 10,512.07. The CSE All Share Price Index declined 45.98 points, or 0.28 percent, to 16,121.43.
TABLE-Bangladesh Bank auctions treasury bills (Author: REUTERS)
Posting Date:2010-05-06
DHAKA, May 2 (Reuters) - Bangladesh Bank, the country's
central bank, on Sunday auctioned 2.00 billion taka worth of
treasury bills for 91-day and 364-day. Details:
TENOR OFFERED ACCEPTED RANGE OF IMPLICIT YIELD,
PCT mln taka mln taka Low High
91-day 2,930.0 200.0 2.36 2.37
364-day 1,809.6 429.6 4.15 4.25 Note : 1.30 billion taka and 70.4 million taka were
devolved on primary dealers for the 91-day and 364-day bill
respectively. ($1 = 69.25 taka)
Debate heats up on duty-free access to US (Author: Star Business Report)
Posting Date:2010-05-06
Business leaders, economists and politicians yesterday disagreed with US Ambassador James F Moriarty as he said Bangladesh's exports to his country will not increase even if it allows duty-free market access for Bangladeshi products.
“Taxes for Bangladesh's exports are actually paid by the US consumers, not by the Bangladeshi manufacturers, for which the existing taxes are not hindering Bangladesh's exports,” the ambassador said.
He said Bangladesh is competing with big players such as India and China in US apparel market, and so it does not deserve any special treatment as enjoyed by some African countries.
The envoy made the comments when Centre for Policy Dialogue (CPD) Chairman Rehman Sobhan said the US is 'creating trade distortion' by providing special facility to some selective countries.
They were speaking at a seminar on 'US-Bangladesh Trade and Economic Cooperation' organised by Metropolitan Chamber of Commerce and Industry (MCCI) at its conference room at Motijheel in Dhaka.
“Although the US is promoting the market-driven international trading system, unfortunately it paves the way for an uneven playing field for Bangladesh by imposing higher taxes on it and allowing some countries duty-free facility,” the CPD chairman said.
Mustafizur Rahman, executive director of CPD, a leading think tank, said such comments by the ambassador are 'disappointing' for Bangladesh's apparel sector.
He said although the average tax regime in the US is around 2 percent, Bangladeshi products have to pay more than 15 percent tax to enter the US.
MCCI leader CK Hyder said the readymade garment sector of Bangladesh might not emerge without the US market access facility.
Jatiya Party (Ershad) lawmaker Barrister Anisul Islam Mahmud said the manufacturers are the lone sufferers of the taxes as the buyers cut their tax while placing orders to the manufacturers.
He said if Bangladesh's apparel exports costs for the US and European markets are compared, the difference will show who actually pays the tax.
Commerce Minister Faruk Khan, Prime Minister's Adviser HT Imam, Citibank NA Bangladesh CEO Mamun Rashid, former ambassador Ashfaqur Rahman, Chief Executive Officer of Bangladesh Foreign Trade Institute, Dhaka, Mohammad Ali Taslim and Chairman of Tariff Commission Md Mozibur Rahman spoke, among others.
Amir Khasru Mahmud Chowdhury, former commerce minister, M Humayun Kabir, former ambassador to the US, and Zaidi Sattar, chairman of Policy Research Institute, were the panel discussants.
Humayun Kabir said Bangladesh has to pay around 15.5 percent duty for its main export item, apparel, and paid around $573 million as duty in 2008.
MCCI President M Anis Ud Dowla also spoke.
The US is the largest single market for Bangladesh's exports that fetched $3.75 billion last year, he added
ESCAP forecasts 6pc GDP growth (Author: Star Business Report)
Posting Date:2010-05-06
Bangladesh will post 6 percent economic growth in the current fiscal year, the United Nations' regional development arm predicts in a survey.
The Economic and Social Commission for Asia and the Pacific (ESCAP) linked the growth to a recovery of credit to the private sector, inward remittances and enhanced execution of the government's capital budget.
But a former finance adviser to caretaker government, who presented the survey report at a function in Dhaka yesterday, said this growth would not be achieved due mainly to an acute energy crisis.
'My forecast is that the growth will be 5.5 percent,' said Mirza Azizul Islam.
Referring to last fiscal year's 5.9 percent growth, which was underpinned by buoyant exports, remittances and agriculture, he said the overall export growth was 10.3 percent in 2008-09, which was downbeat until February this year.
Bangladesh will require an average export earning of $1.8 billion per month from March to June this year to reach last year's export growth, said the former adviser.
He said the highest-ever export earning in a single month was $1.57 billion in July 2008.
Also, the remittance inflow till March was strong, but it will significantly fall short of previous fiscal year's amount at the end of this year. 'To reach 22.4 percent growth of FY09, Bangladesh still requires $3.4 billion over April-June with an average $1.2 billion per month, while the highest-ever remittance was $1.05 billion in November 2009,' he said.
Imports of machinery and raw materials also showed a negative trend till February this year, Mirza Aziz said, adding: 'Most importantly the existing capacity cannot be properly utilised because of acute crises of gas and electricity.'
So, the former adviser felt the ESCAP prediction of 6 percent growth is 'most unlikely'.
He, however, said if the energy crisis can be addressed immediately through short-term measures, the growth rate might reach the target.
The ESCAP in its survey titled 'ESCAP Economic and Social Survey 2010' also forecast its 54-member economies' growth for fiscal 2009-10.
It said all the countries in the Asia Pacific region are expected to perform better, with the exceptions of Azerbaijan and Afghanistan.
ESCAP forecasts 6pc GDP growth (Author: Star Business Report)
Posting Date:2010-05-06
Bangladesh will post 6 percent economic growth in the current fiscal year, the United Nations' regional development arm predicts in a survey.
The Economic and Social Commission for Asia and the Pacific (ESCAP) linked the growth to a recovery of credit to the private sector, inward remittances and enhanced execution of the government's capital budget.
But a former finance adviser to caretaker government, who presented the survey report at a function in Dhaka yesterday, said this growth would not be achieved due mainly to an acute energy crisis.
'My forecast is that the growth will be 5.5 percent,' said Mirza Azizul Islam.
Referring to last fiscal year's 5.9 percent growth, which was underpinned by buoyant exports, remittances and agriculture, he said the overall export growth was 10.3 percent in 2008-09, which was downbeat until February this year.
Bangladesh will require an average export earning of $1.8 billion per month from March to June this year to reach last year's export growth, said the former adviser.
He said the highest-ever export earning in a single month was $1.57 billion in July 2008.
Also, the remittance inflow till March was strong, but it will significantly fall short of previous fiscal year's amount at the end of this year. 'To reach 22.4 percent growth of FY09, Bangladesh still requires $3.4 billion over April-June with an average $1.2 billion per month, while the highest-ever remittance was $1.05 billion in November 2009,' he said.
Imports of machinery and raw materials also showed a negative trend till February this year, Mirza Aziz said, adding: 'Most importantly the existing capacity cannot be properly utilised because of acute crises of gas and electricity.'
So, the former adviser felt the ESCAP prediction of 6 percent growth is 'most unlikely'.
He, however, said if the energy crisis can be addressed immediately through short-term measures, the growth rate might reach the target.
The ESCAP in its survey titled 'ESCAP Economic and Social Survey 2010' also forecast its 54-member economies' growth for fiscal 2009-10.
It said all the countries in the Asia Pacific region are expected to perform better, with the exceptions of Azerbaijan and Afghanistan.
Diplomatic missions yet to speed up export efforts (Author: Unb, Dhaka)
Posting Date:2010-05-06
Bangladesh's diplomatic missions and commercial wings are yet to speed up efforts to brighten their performance. Most are below their export targets.
The country's export earnings are gradually coming out of a negative trend as the export earnings in March marked 18.38 percent growth compared to the same month of the previous fiscal year.
According to the statistics available at the Export Promotion Bureau for the July-February period of fiscal 2009-10, it was found that most diplomatic missions and commercial wings failed to reach their export targets.
The actual export earnings for the period were $10.02 billion against the $11.29 billion target.
Of Bangladesh's 44 diplomatic missions abroad, 20 missions achieved their export targets while other 24 failed.
The export growth of seven missions, out of the 24, was higher than the same period of 2008-09. They are Dubai, Singapore, Ankara, Islamabad, Canberra, Manila and Kathmandu.
The export growth of the remaining 17 missions was lower.
These 17 missions are Brussels, The Hague, Berlin, London, Rome, Ottowa, Stockholm, Madrid, Pretoria, Tashkent, Washington, Seoul, Paris, Bangkok, Riyadh, Kuwait and Brunei.
Vehicle trackers win urban hearts (Author: The DailyStar--Jasim Uddin Khan)
Posting Date:2010-05-05
The vehicle tracking system (VTS) has helped retrieve about a dozen covered vans and goods trucks stolen on different highways since the introduction of the technology in Bangladesh in June 2009.
The use of VTS also gained popularity among car users in metropolitan cities, by which owners can check on the routes taken by their drivers.
“We helped the police recover five stolen covered vans and one taxi in the last six months by locating the vehicles,” Gorky Sobhan, a director of Monico Ltd, told The Daily Star.
Two other VTS providers -- Nexdecade Technolofies (Pvt) Ltd, NITS Service (Pvt) Ltd -- also helped the police track stolen cars.
A vehicle tracking system entails an electronic device installed in a vehicle to enable the owner or a third party to track the vehicle's location. In Bangladesh, most vehicle tracking systems use global positioning system (GPS) modules to accurately locate a vehicle.
Three operators have so far sold a total of 6,000 VTS devices. Eighty percent of these devices were sold to corporate users.
“Users also take advantage of the technology to manage their fleet to save traffic hours and dictate right direction to their drivers,” Gorky added.
NITS Service Private Ltd is taking the lead in sales with approximately 3,000 devices sold by April 2010.
NITS established dominance in the market as it sold VTS devices on bank credit.
“Most of our commercial vans are equipped with VTS. We are getting positive responses from customers as we have information that some customers successfully recovered their stolen vans,' said Tanmoy Kumar Saha, sales and marketing executive of NITS Service.
Only four organisations -- Grameenphone, Monico Ltd, NITS Service and Nexdecade Technologies Ltd -- have so far received licences from Bangladesh Telecommunication Regulatory Commission to provide VTS.
Sayeduzzaman, manager of Nexdecade Technology (Pvt) Ltd, said the local vehicle trackers now provide services such as engine lock, door lock, mileage detection and fuel consumption.
He said the module is installed at a cost of Tk 12,000 with a Tk 6,000 to Tk 7,000 annual maintenance cost, which is similar to the price charged by other service providers.
Vehicle theft is common to Dhaka. According to Dhaka Metropolitan Police, more than 50 cases on average are filed in Dhaka city a month for carjacks.
With the tracker in place, the police can locate the stolen vehicle by simply following the signal emitted by the system.
jasim@thedailystar.net
SEC rejects ICB appeal for mutual fund extension (Author: Star Business Report)
Posting Date:2010-05-05
The stockmarket regulator has rejected an appeal of the Investment Corporation of Bangladesh (ICB) to allow trade of its eight mutual funds up to 2017.
In line with an earlier directive of the Securities and Exchange Commission, the ICB will have to pull out its eight mutual funds from the stockmarket by December 2011.
'In response to the ICB letter that requested allowing trade of its eight mutual funds in the capital market until 2017, the SEC has rejected the prayer of the corporation,' according to a web posting on the Dhaka Stock Exchange yesterday.
Earlier in December last year, the SEC instructed that the mutual funds having no maturity period and those of which had passed 10 years after listing will have to be pulled out from the market by 2011.
Considering investors' interest in mutual funds that helped those grow, the ICB placed its appeal to the capital market regulator on April 28.
These mutual funds, which pay out hefty dividends every year, were floated between 1980 and 1996 and all of them have passed more than 10 years.
A mutual fund is a professionally managed collective investment scheme that pools money from many investors and invests it in stocks, bonds and short-term money market instruments.
Currently, 24 mutual funds with their combined issued capital of around Tk 1,000 crore are traded on bourses.
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