Bangladesh Economy: News & Updates

[Skallagrim]

Dhaka Sunday August 5, 2012

BBS launches new base year today to
measure inflation

Jasim Uddin Haroon



The Bangladesh Bureau of Statistics (BBS) will launch new base year from today (Sunday) to measure inflation, which is expected to depict a more accurate picture of the macroeconomic indicator.
From today, BBS will use fiscal year 2005-06 as reference base year instead of
FY 1995-96.
This will result in new weightings for the components of its Consumer Price Index (CPI) basket.
The re-basing will also increase the number of goods in the inflation basket as well.
BBS officials said the review was necessary because most people's expenditure have changed over the time.
The country's national statistical office will also modify baskets of CPI products as consumption pattern has changed over the period of old base year of 1995-96.
Abul Kalam Azad, a joint director of the BBS said: "With the passage of time people tend to spend a lot on one item changing the others. There are shifts both in the consumption and expenditure patterns."
He, however, stated that the methodology for computing the figures will remain unchanged.
"The methodology will remain the same. The same formula will be used--- the same concept will be used. It is only the items that are being reviewed," he added.
BBS uses Marshall-Edgeworth formula for computing CPI.
Satya Ranjan Mondol, director of national accounting wing of the BBS said: "We'll provide inflation level on both new and old base years which will continue for sometime. "
BBS sources said more than 75 types of goods will be added to the list of rural areas and nearly 100 items to that of the urban areas.
They said mobile phones, mineral waters and internet are a few of the new items to be added to the new list.
Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh (PRI) said the inflation rate might fall after introduction of new products in the basket.
Mr Mansur said BBS should have taken 2010-11 as base year adding: "Latest base year gives best index."
BBS officials said they usually change base
year after every 10 years. This time, they took much time to change the base year.
A base year is the year used for comparing the level of a particular economic index.
The arbitrary level of 100 is selected so that percentage changes (either rising or falling) can be easily depicted.



BBS launches new base year today to measure inflation

 

[ebr77]

Rising middle class in Bangladesh


Mamun Rashid

All the restaurants located in 'star' hotels, in residential areas or the ones along city roads are having brisk business this Ramadan as far as the sale of ifter items is concerned. Shopping malls are already awake. Be it Agora, Nandan, Dhali, Lavender, Meena Bazar or Shawpno, all superstores are packed with stuff and there are increasing number of people flocking in. The expansion of `KFC', Pizza Hut, Nandoo's or Movenpick are visible clearly. More and more students trying to get themselves admitted to English medium schools, private colleges and universities. Banks are coming up with more `millionaire' like products. There are around four thousand ATMs (Automated Teller Machines) put up by the banks. Move is underway to put up another 200 thousand ATMs in next 10/15 year by a foreign operator. Around 30 million people are using internet per day. I don't want to talk about cell phone here, as it is being used by everyone now and the number has increased to beyond 90 million. Going out for `vacation' is increasingly becoming a usual exercise. More and more ladies are visiting the 'beauty parlours' even in the sub-district levels, more young people are joining the 'fitness' club and all the parks or playgrounds are full in the morning with 'health freak' people. Eating out at least once a month is becoming a regular scene in the urban places. Be it 'Apollo', United, Square or Labaid- all these hospitals' outpatient departments are full, so are their inpatient cabins or emergency rooms. Who are these people? Off the cuff answer is - they all belong to the `middle class'- the fast moving citizenry in Bangladesh. What is their size in the economy, if it is 15 percent of the populace, you are talking of almost 22 million people. With an average family size of 5, you are talking of more than 4 million families. What could be their earning per capita? Our primary estimates put it in the range of USD 10 to 15 thousand a year. What is their source of income? - Salary, small or medium sized businesses, earnings from land sales or real estate rents, or investment in capital market.

Shopping in the `posh' malls, going out to `Kolkata', Bangkok or Kuala Lumpur or Singapore, eating out in the costly restaurants, their sons and daughters owning a PC and hanging out in the lounges, getting admitted in costly private schools, colleges or universities-these seem to be common scenes now a days. Increasing number of people own more than one car or even one apartment.

The middle class has risen and said "yes" to the good life. There has been a definite shift in the financial capacity as well as attitude towards life in the people of the capital and maybe a couple of other major cities during the last couple of years.

Economic definition of demand suggests that you have to have ability plus willingness to call it demand for a product or service. As for the ability part, Gross National Income (GNI) converted to international dollars using purchasing power parity rates is a reasonable measure of real purchasing power of a population.

Bangladesh's PPP(purchasing power parity) GNI per capita has steadily increased. In 2009, the number reached 1,580 in current international dollar with 5-year Compound Annual Growth Rate (CAGR) at about 9%. Polarization has been a part of our economy for a long time, so not everyone can be judged by this number. Besides, there are numbers beyond statistics also.

Call it a layman's approach or a more practical one; let us look at the number of private cars in town. From June 2003 to June 2011, about 400,000 motor cars, jeeps and micro-buses were registered with Bangladesh Road Transport Authority (BRTA) in Dhaka. Fast rising fuel cost, grid-locked roads and import duties could not limit the number of privately owned vehicles despite the government's implicit discouragement toward private transport sector.

People are increasingly spending more for food, clothes and life style management. USD 6.0 billion equivalent reportedly change hands during the month of Ramadan alone. This time, the spending spree was observed even in remote northern or southern districts. Multi-storied shopping malls are coming up at upazila (sub district) level.

"The rise in overseas spending by the middle class and cash transfer to foreign countries have listened the supply-demand gap in the green-back to an all-time high," said a recent newspaper article. Statistics and reasonable estimates suggest that there are more than 1.5 million people in the capital city who fall under the annual income bracket of $10,000 to $15,000.

Although the number of people with greater than Tk.10 million wealth has been reported at 35,000 plus, the real number could be much larger. The flourishing number of private schools, private universities, private medical facilities, expensive restaurants and parlours all support the assumption.

What is the profile of this segment? The popular misconception is that they are the multinational corporation (MNC) crowd -- freshly coming out of business schools -- forming a joint-income family, and purchasing a car and a small apartment within 5 years of graduation.

In reality, the MNC crowd is being marginalized by the new entrants in the Gulshan/Banani/Baridhara area in Dhaka. The segment I am talking about are the proprietors of small and medium businesses, who had a piece of land in a good location in mainly Dhaka, Chittagong Sylhet , Khulna or even Mymensingh or made huge profits in the stock market and decided to lead a comfortable life using the profit generated from real estate price hike and share market boost-up. They are moving from other areas of the city or other cities to live near their children's schools. Owning a car is a must now for the children's and the earning members' transport. They are the rising middle class of the country.

A generation-wise upward shift has taken place as well. The 2nd generation of many lower-middle income households has shifted to middle-income or upper-middle income bracket.

The psychological shift has taken place somewhat silently. "I have to live for others and not for myself: that's middle-class morality" -- George Bernard Shaw's definition holds no more. From a savings-oriented and conservative culture, we have moved towards a more life-style oriented culture. Birthdays, seeing each other days for the girl or the boy, anniversaries- people just wait for an `excuse' to go for a big event or `halla -kalla' to be organized.

Just to clarify here, I am basing the profile more on the expenditure structure than on the earnings structure. As long as the positive attitude towards materialism is not putting pressure on the corruption index, why feel bad in leading a comfortable life. While we have not exactly made significant progress in the corruption indices, we have not gone down in the score either.

A sizeable middle class with strong purchasing power and appetite for amenities is good news for business. It is one of the indicators that say an economy will flourish. The business houses get the signal that there is a viable target market for their product, which makes it worthwhile to penetrate the market. This segment is much higher than the entire population of some African or East European countries in terms of purchasing power and expenditure pattern or nearer to the percapita income of `Dubai or Singapore' city dwellers. KFC and Pizza Hut in Dhaka are much larger than the same franchises in our neighbouring countries in South Asia. Starbucks, Seven Eleven and Carrefour are reportedly mulling entering Bangladesh.

How far these `middle- class' can protect or carry forward the age old social fabric of the nation may be a big question mark and the answer may even and up as "who cares?". They may not be the `Himu' of Humayun Ahmed, or may not take arms if a `1971' like necessity comes up or stand up to protect Bengali language or culture like 1952, they must however represent the `face' of an emerging country like Bangladesh and increasingly a `digital' and responsive Bangladesh.

(Mamun Rashid is a banker and economic analyst. E mail: mamun1961@gmail.com)

 

[Skallagrim]

BB gives Tk 154.33b cash support to banks to stabilise money mkt

The Bangladesh Bank (BB) provided Tk 154.3345 billion in cash under its assured liquidity support and special repo against holding of government securities to the commercial banks Sunday to meet their needs for liquidity, following increased demand from corporate and individual clients, ahead of the Eid festival, official sources said.
Depositors have been withdrawing money
in greater amounts in viewof the Eid-ul- Fitr, one of the major festivals of the Muslims. The country's banking sector will be on the longest period of holidays this year. This has put an extra pressure on withdrawal of cash by the customers of the banks.
The corporate clients are also withdrawing money to pay salaries and bonuses of their employees or, in some cases, to meet the religious expenses (Jakat), bank officials said.
However, the inter-bank call money rate among banks and non-banking financial institutions stood at 15 per cent at its highest, despite injection of a relatively large amount of money by the central bank, a senior official of the BB told the FE. The rate, however, was 6.5% at its lowest.
The BB provided a total of Tk 154.3345 billion under the repurchase agreement (repo) to the banks Sunday, following higher withdrawal of cash by the depositors from all branches.
The BB issued ASL (assured liquidity support) for Tk 61.4745 billion and special repo for Tk 92.46 billion to the banks on the day.
Currently, the rate of interest of special repo is 10.75 per cent per annum, but for the liquidity support facility, the interest rate is 7.75 per cent per annum, according
to the BB website.
The injection of additional liquidity support to the commercial banks would continue, if required, as it is helping to keep the inter-bank call money rate stable, the BB official said.
Usually, the call money rate goes up during the Eid festival due to increasing outflow of cash. The BB has taken several initiatives to keep the call money rate below 15 per cent, and to maintain stability in the money market by injecting the required amount of liquidity.
The transactions in inter-bank call money totalled Tk 62.37 billion Sunday, the BB sources said.
A senior official of a leading private bank said the call money rate increased slightly at its highest range to 15 per cent Sunday from 13 per cent of the last week due to increased withdrawal of cash by the depositors.
The call money rate might increase further in the next two days, as the demand for cash is increasing, he said.
The commercial banks will remain open for two more days (Monday and Tuesday) before the Eid vacation.
Branches of most of the commercial banks, especially in the city's commercial hub Motijheel, were packed with ordinary clients during the working hours Sunday. Most of such clients thronged the branches of the banks for withdrawal of cash.
The country is going to enjoy 15 days of holiday this month, including nine holidays, for Janmashtomy (August 9), National Mourning Day (August 15), Shab- e-Qadr (August 16) and Eid-ul-Fitr (August 19-21) as per the BB official calendar, besides the overlapping weekends.
During this period of long holiday, the banks will make some special arrangements for their clients, especially for the small traders by keeping some of their branches open, the BB official said.
The BB has instructed the banks to keep some commercially important branches open, especially connected with export- import activities, from 9:30am to 12:30pm on August 16, on the occasion of Shab-e-Qadr holiday.
But some officials said it would be difficult to operate banking as usual on that day, as a good number of employees have already taken advance leave, starting from the National Mourning Day until the end of the Eid-ul-Fitr holidays.
Meanwhile, the amount of withdrawal of cash by retail clients is comparatively higher this year than the previous years, because of inflationary pressures, senior bankers and money market analysts said.
A number of small depositors have withdrawn money from the banks during the last few days for Eid shopping. Withdrawal of money might increase in the next two days, as the banks will remain closed for a long time, they added.


BB gives Tk 154.33b cash support to banks to stabilise money mkt

 

[CaPtAiN_pLaNeT]

1,320MW COAL-FIRED PLANT

New Age | Newspaper

Govt selects Malaysian state firm for joint venture

Manjurul Ahsan

The Power Division has approved a proposal of Malaysia’s state-run Tenega Nasional Berhad for the installation and operation of a 1,320MW coal-fired plant under a joint venture company the Power Development Board and the Malaysian company would set up, officials said.

The power plant will be installed at either Anwara in Chittagong or Maheshkhali in Cox’s Bazar. The plant will run on imported coal.

A high-powered delegation, led by the Power Division’s additional secretary Md Mofazzel Hossain will visit Malaysia this month to finalise the memorandum of understanding on the installation and operation of the company, the officials said.

Chinese and Thai power generation companies also submitted proposals to the Power Division for the project.

But a Power Division official told New Age they had preferred the Malaysian proposal as it met the criteria set by the ministry. ‘We are, therefore, going to begin a formal process to implement the project with the Malaysian state agency.’

Both the Chinese and Thai companies wanted to give engineering, procurement and construction contracts to their own firms while Bangladesh wants to award the contracts through a tender process, the official said.

‘Besides, they wanted the joint venture company board to have majority of the people from their side which would have led them to pursue their interest through the board,’ he said.

According to the Malaysian proposal, the project will be implemented on a build-own-operate scheme by the joint venture company.

The power board and the Malaysian agency will have equal share in the project. The board will be set up by with equal number of members from both of the state-run power agencies. The chairman and the managing director of the board will be alternated periodically with people from both the agencies.

The government decided to go for joint venture projects to draw funding for project implementation, the Power Division official said.

The official also said that the government had already initiated land acquisition at Anwara and Maheshkhali for the installation of two imported coal-fired plants with a generation capacity of 1,320MW.

With this, the government has so far initiated three big coal-fired power projects, each having the generation capacity of 1,320MW, in joint venture with equal share with three state-run agencies.

Among other projects, the PDB will sign a power purchase agreement with the Bangladesh-India Friendship Power Company in three months to buy electricity for 25 years from a 1,320MW coal-fired plant to be installed at Rmapal in Bagerhat.

The Power Division has also finalised a draft memorandum to be signed between the power board and China Hudian Hong Kong Company to form another joint venture company to install and operate a 1,320MW coal-fired plant.

Tenega Nasional Berhad is the largest power utility company in Malaysia which has experiences of installing and running a number of plants, with a combined generation capacity of 12,000MW, in Malaysia and Pakistan.

The Power Division has set a long-range target of generating about 20,000MW power from coal-fired plants by 2030.

According to the long-term power generation plan drafted in 2010, the government will generate 11,250MW using domestic coal and the remaining amount using imported coal.

 

[eastwatch]

It is good to see anew BD-Malaysian JV in power sector. But, this news also contain a news about the involvement of an Indian company in Bagerhat. Indian coal is famous for high sulpher content that causes recpiratory diseases like asthma among the people living nearby. So, the GoB must set a limit to the exhaustion of sulpheric fumes and apply to all the power stations run by coal.

 

[CaPtAiN_pLaNeT]

Pharmaceuticals provide a shot in the arm for Bangladesh economy

Pharmaceuticals provide a shot in the arm for Bangladesh economy - khabarsoutheastasia.com

Expanding export industries are fueling Bangladesh's growth, and providing hope for job seekers. Pharmaceuticals may be the next big thing.

By Siddique Islam for Khabar South Asia in Dhaka

September 05, 2012

One year after graduating from Dhaka University, Mohammad Barkatullah is still without a job. But recent developments have made him optimistic about putting his degree in International Relations to work -- especially in export-oriented industries like pharmaceuticals.


A child is vaccinated against polio as part of a vaccination programme in Dodowa, Ghana on April 25th. A Bangladeshi exports promotion delegation visited five West African countries, including Ghana, Senegal, and Liberia, in July in a bid to boost exports from its emerging pharmaceuticals sector. [Olivier Asselin/Reuters/Handout]
"I hope I'll able to use my knowledge of international affairs to explore new markets overseas," Barkatullah told Khabar South Asia.

Bangladesh has been moving aggressively to expand its export base, encouraged by phenomenal growth in the garment industry, which currently accounts for more than 80% of annual export earnings of $23 billion. Pharmaceuticals could be the next big sector.

"Bangladesh has enough potential to significantly enhance pharmaceutical exports because we have the ability to produce high quality medicine at a lower price," Mustafa K. Mujeri, Director General of Bangladesh Institute of Development Studies (BIDS), a think tank, told Khabar.

The industry is poised for a big take off and will help the country's economic growth by creating job opportunities for the vast army of unemployed youth, he said.

Bangladesh could become a middle-income nation

According to the Export Promotion Bureau, Bangladesh exported around $50m in pharmaceutical products during fiscal year 2011-2012, which ended on June 30th. That represents 9% growth compared to the previous fiscal year.

"We hope exports may cross $600m by the end of 2015," said ABM Faroque, a pharmacy professor at Dhaka University and a former Bangladesh Pharmaceutical Society president.

Lower prices and high quality make Bangladeshi pharmaceutical products attractive on the global market, he told Khabar.

Bangladeshi companies have already obtained drug export certifications from 87 countries including the United Kingdom, the United States and Australia. In July, a Bangladeshi delegation visited five West African countries including Senegal, Ghana and Liberia, looking to expand exports to the region.

"I'm confident of expanding our market in West Africa within the next three to four years," Shubhashish Bose, Vice-Chairman of Export Promotion Bureau EPB, told Khabar.

"The five West African countries have a population of 300 million, but there is no pharmaceutical manufacturing factory [located there]. So we're well positioned to expand our pharmaceutical market in the region," Bose said.

Impoverished and irrelevant to the global economy just three decades ago, Bangladesh now hopes highly sophisticated industries such as pharmaceuticals and shipbuilding will propel it into the ranks of middle-income countries over the next decade. According to World Bank projections, annual per capita income could rise to over $1,000 from the current $700.

Farjana Akter Munna, 24, who graduated from Dhaka University last year, hopes to reap the benefits.

"I'm confident the burgeoning export market will create opportunities for us and I'll be able to land a decent job in the near future," she told Khabar.

 

[CaPtAiN_pLaNeT]

Wednesday, September 5, 2012Business

Bangladesh: the next hotspot for investment

Bangladesh: the next hotspot for investment

Singapore's minister says more businesspeople will come here soon to explore opportunities

Singapore's Senior Minister of State for Foreign and Home Affairs Zulkifli Masagos calls on Prime Minister Sheikh Hasina at her office in Dhaka yesterday. Photo: PMO
Star Business Report
Bangladesh gradually becomes a preferred destination for Southeast Asian investors due to its cost competitiveness and a suitable geographical location, said a Singaporean minister yesterday.

“The world was defeated by the growth of China for more than half a decade. But the world today has decided 'China plus one' strategy,” said Zulkifli Masagos, Singapore's senior minister of state for foreign and home affairs.

“Everyone is now looking beyond China for investment due to the rising production cost there, and Bangladesh could be such a place,” said Masagos.

He spoke at a meeting with the leaders of Metropolitan Chamber of Commerce and Industry (MCCI) in Dhaka at the Chamber Building.

The "China plus one" strategy means that a company should invest not only in China but also in another country because the cost of production has gone up substantially in China.

The Japanese government adopted the strategy in 2008 to reduce the over-dependence on China.

So, the global companies are looking for an alternative destination, Masagos said, adding that Bangladesh will have preferences because of its cost competitiveness.

He arrived in Dhaka on Saturday on a six-day visit. The minister said more Singaporean businesspeople are keen to invest in Bangladesh and more business delegations will come here soon to explore new opportunities.

He said Singapore is the second largest trading partner of Bangladesh among the South Asian countries after India.

The two-way trade between Bangladesh and Singapore is heavily tilted in favour of the city-state. Bangladesh imported goods worth nearly $1.7 billion from Singapore, but exported only $179.23 million in fiscal 2011-12, said MCCI President Amjad Khan Chowdhury.

“Singapore is a role model in the entire world for successfully achieving excellence in the field of trade, commerce, industry, tourism, good governance, law and order, transport and housing development,” said Chowdhury.

He said Singapore could be a leading source of investment. In this regard, the government of Bangladesh has taken a number of policy measures in the economic front, especially for market reforms, deregulation and privatisation.

Singapore's investors show a lot of interest, but this is not translated into reality, he said.

"Bangladesh as a least developed country has got duty- and quota-free access to the European Union, Canada, Australia, Japan and New Zealand. By investing in Bangladesh, the Singaporean investors can enjoy market access to these large and important markets," said the MCCI president.

Several well-known multinational companies have been operating in Bangladesh for several years with investments worth more than $10 billion and providing employment opportunities directly and indirectly to more than four lakh people, said Chowdhury

Mahbubur Rahman, president of International Chamber of Commence, Bangladesh, stressed the need for more Singaporean investment in Bangladesh.

"We have good business with Indonesia and even Myanmar, but we couldn't attract much investment from Singapore," he added.

The noted businessman favoured simplification of procedures in setting up liaison office in Singapore to boost trade and commerce between the two counties.

Anjan Chowdhury, managing director of Square Consumer Products Ltd, said Bangladesh should develop human resources with the cooperation from Singapore.

Nehat Kabir, vice president of MCCI, said the Singaporean investors could explore investment opportunities in healthcare, education and real estate in Bangladesh.

Syed Farhad Ahmed, managing director of Aamra Technologies, urged the Singaporean companies to explore IT outsourcing potential in Bangladesh.

He said there is an immense potential in business process outsourcing and knowledge process outsourcing as Bangladesh has a lot of skilled professionals in these areas.

Chan Heng Wing, High commissioner of Singapore, M Anis Ud Dowla, chairman of ACI Ltd, and Salahuddin Kasem Khan, managing director of AK Khan & Company Ltd, were also present.

 

[FRANCIS]

If Pharmaceuticals is the next big thing then what was the first big thing

 

[Chinese-Dragon]

We know this as well.

BBC News - Chinese factories turn to Bangladesh as labour costs rise

 

[Maira La]

(trolling..deleted)

 

[Avisheik]

If Pharmaceuticals is the next big thing then what was the first big thing

the big thing before this was garments....though it is still a big thing now

 

[FRANCIS]

Oh garments ?? Didnt find a single Bangladeshi garment in India itself , leave alone UK .

I agree, it's not a big thing. Big things happen only in supahpowa india:

Riverside $hitting, Agra, India

Oye bacche read this and then dream , dream , dream and just dream and cry

http://www.defence.pk/forums/indian-defence/27787-indian-economy-news-updates-238.html

 

[kobiraaz]

Oh garments ?? Didnt find a single Bangladeshi garment in India itself , leave alone UK .



Oye bacche read this and then dream , dream , dream and just dream and cry

http://www.defence.pk/forums/indian-defence/27787-indian-economy-news-updates-238.html

Out of curiosity, don't mind - How old are you

 

[Riteon]

Seems Indian Pharmaceutical sector is going to have a serious competition....hopefully the larger population and rapidly increasing number companies can offset BD 's cheap cost

 

[Kyusuibu Honbu]

Hope Bangladesh joins India in making cheap generic versions of expensive drugs.