After signing a multi-billion dollar deal with Pakistan, Iran is planning to take Bangladesh on board its proposed gas pipeline project, and sources say Dhaka has shown keen interest in the proposal.

In a letter written to the Finance Ministry’s Economic Relations Division (ERD), the Iranian envoy in Dhaka has extended his country’s helping hand and said Bangladesh could “join the IPI pipeline project” to augment its energy requirements.

A top ERD official said on condition of anonymity that the letter had been forwarded to the energy division. “The division will now chart its own course,” the official was quoted as telling a Bangla newspaper. The Iranian envoy has reportedly said in his letter that since the pipeline would stretch as far as the eastern Indian city of Kolkata, Bangladesh could be easily linked to the grid.

The ‘Peace Pipeline’, as it is being formally called, will traverse over 1 724 miles (2,775 km) from Iran’s South Pars gas fields to the Pakistani city of Khuzdar. From the Pakistani border area, one branch will go to Karachi, while the other will reach India via Multan

Iran has vast untapped oil and gas resources with experts estimating the natural gas reserves at around 1,045 trillion cubic feet, which is second only to Russia.

A top Bangladesh government official said Iran had assured that if Dhaka gave its approval to the project, the pipeline would be extended till Kolkata. “It is really a great opportunity for Bangladesh as the country’s recoverable gas reserve would start drying up from 2013,” the official said.

Nearly 87 per cent of the country’s electricity needs are met by natural gas generation, and Bangladesh’s national oil company, Petrobangla, has said resources could dry up by 2015.

“Kolkata is very close to Bangladesh. It will be easier for the government to bring the pipeline to our border,” the official said

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Protesters were demanding the minimum wage to be fixed at Taka 5,000
Prime Minister Shaikh Hasina on Saturday warned tough action would be taken against “anarchists” as thousands of workers from Bangladesh’s highest export-earning garment sector took to the streets for the second consecutive day.

The workers were protesting a rise in the minimum wage to Taka 3,000 (Dh165), up from Taka 1,600 – an 80 per cent hike.

The protesters were demanding the minimum wage to be fixed at Taka 5,000.

But the Premier’s comments Saturday came as the suburban Savar and Narayanganj districts witnessed clashes between the workers and riot police – leaving dozens of workers and police injured.

The premier??s deputy press secretary Mahbubul Haque Shakil said Shaikh Hasina had said: ??No anarchy and sabotage in this sector will be tolerated”.

Shaikh Hasina said the street protests were ??designed to destroy the sector??.

The premier had asked workers to concentrate on their work after accepting the new minimum wage, saying ??their reasonable demands will be addressed after the effects of the world economic depression are over and exports increase??.

Shaikh Hasina had criticised the garment industry for paying low wages to some two million workers at 4,000 factories in major cities and city outskirts.

Manufacturers had staunchly resisted any significant wage increase.

Garments made in Bangladesh are mostly exported to the United States and Europe earning the country more than $12 billion a year – nearly 80 per cent of the country’s exports. The following companies are bulk importers from Bangladesh: Wal-Mart, Tesco, H&M, Zara, Carrefour, Gap, Metro, JCPenney, Marks & Spencer, Kohl’s, Levi Strauss and Tommy Hilfiger.

Witnesses to the clashes said workers vandalised several roadside business and had put up barricades to disrupt traffic on two major highways for hours.

They said more than 100 garment workers and 20 policemen were injured when violence erupted in the Savar area, 30km north of Dhaka, when the baton-wielding policemen in riot gear tried to remove the highway blockades.

Police said the “agitators” had also vandalised 50 vehicles including 10 police cars in Savar area.

Highways were also blockaded in Narayanganj, 15km south of Dhaka. However police said the 10,000 protesters there staged a relatively peaceful protest.

Bangladesh Garments Manufacturers and Exporters Association, which represents the country??s more than 4,000 garment factory owners, yesterday called the protests ??surprising?? and demanded that the government deal with the situation with an ??iron hand??.

Association president Abdus Salam Murshedy said: ??It is quite surprising that the workers vandalised the factories and other offices even after the announcement of wage hike”.

Several workers’ unions spurned the new pay structure but others welcomed the hike asking workers to be patient.

Several government leaders, including Labour and Employment Minister Khandkar Mosharraf Hossain, said they feared there was a vested interest behind the protests.

Hossain released the news of the new minimum wage on Thursday saying ??we have tried our best to reach an amicable settlement??.

The raise, the first for four years, would be enforced from November, he said.

The manufacturers “could not be persuaded” to agree to a higher raise as the industry was faced manifold problems including an irregular power supply and infrastructure limitations.

In recent months, thousands of garment workers demanding higher wages staged violent street protests, attacked factories and blockaded highways in and outside the capital Dhaka.

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A one-day summit of the Developing Eight nations, or D-8, ended Thursday in Nigeria with a resolution to deepen economic relations among member states. to sign a preferential trade agreement by next year in an effort to double their trade with each other and strengthen economic co-operation, their governments said yesterday.
Delegates to the meeting said the grouping had failed to realise its potential because only Iran and Malaysia had ratified a trade agreement, the outlines of which were agreed on several years ago. Other nations disagreed on which goods would be subject to reduced tariffs.

“The trade statistics among [the developing eight] countries may appear positive, but this success might be mainly due to existing bilateral trade initiatives rather than the co-operation of the [countries] as an organisation,” Malaysian Deputy Prime Minister Muhyiddin Yassin said.

The most-traded goods within the bloc include petroleum products from Nigeria, petrochemicals and edible oils from Malaysia, consumer goods, cars, and basic raw materials, such as rubber.

Abdul Qadir Memon, Pakistan’s deputy commerce secretary , said on the sidelines of the meeting: “The most important step is the preferential trade agreement, which we are aiming to [implement] by January 1 .

“We thought that by 2006 we would have been able to implement the agreement but unfortunately there have been delays.”

Heads of state and ministers from eight countries – Iran, Nigeria, Bangladesh, Egypt, Indonesia, Malaysia, Pakistan and Turkey – are meeting in Nigeria to discuss developing business ties and reducing trade barriers.

“Though the role of a government as a catalyst and enabler of economic growth remains pivotal, the primary driver of this process must be the private sector,” Nigerian President Goodluck Jonathan told the meeting in the Nigerian capital, Abuja.

Trade between the eight Islamic nations is estimated to be worth about $68-billion a year, or about 3% of global trade.

“While recognizing that the present intra D-8 investments are far below the potential of the member countries, we affirm our resolve to take immediate measures to encourage, facilitate and promote foreign direct investment in the priority areas,” the group said in its declaration, according to the News Agency of Nigeria.
The D-8 said that while government plays a pivotal role as a catalyst of economic growth, economic cooperation among members would be driven by the private sector, with which government authorities would share information on investment opportunities.
The D-8 also pledged to broaden cooperation in the energy sector through the transfer of technology and the development of alternative fuels, renewable sources of energy and the peaceful use of nuclear energy, according to the news agency.
The group’s declaration called on member countries to expedite the ratification and implementation of all pending cooperative agreements, including those on trade, civil aviation, labor and migration, the news agency said.
The D-8, which was established in 1997 to promote economic ties among member states, groups Turkey, Pakistan, Nigeria, Malaysia, Iran, Indonesia, Egypt and Bangladesh. Pakistan will host the next summit of the D-8 in 2012.

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The central bank of Bangladesh will complete its transformation to computerization by the end of 2011, officials told Media Sunday.

The World Bank has urged the central bank of Bangladesh to coordinate and speed up implementation of information technology and to formulate a comprehensive project plan that identifies all the dependencies.

?The current global financial crisis has underscored not only the importance of a sound legal and regulatory framework, but also the need to have legal rules for cross-border insolvency and crisis management,? the World Bank said in an Information Note issued in Dhaka on Sunday.

The Financial Sector Assessment Program (FSAP) findings show that the Bangladesh Bank Order (BBO) and Banking Companies Act (BCA) do not have adequate provision to cope with a changing global financial situation.

?There is thus an urgent need to improve the provisions of BBO and BCA,? the World Bank said, adding that the Bangladesh Bank needs to ensure that it has legal powers to own and supervise payment systems including the automated clearing house and securities depositor
“We’re now working to implement the ongoing Central Bank Strengthening Project (CBSP) along with IT components within the stipulated timeframe,? a senior official of the Bangladesh Bank, the country?s central bank, told in Dhaka.
There is no alternative but to implement the automated system in the central bank to bring dynamism in its overall activities, the bank official added.

The World Bank-funded project began in 2003 and was scheduled to take four years. Unable to complete the major components of the project on time, the central bank had received a two-year extension from the World Bank, which is providing US$ 37 million of the total project cost of $46.13 million.

The Washington-based multilateral lending agency had also agreed to extend the timeframe of the project to the end of 2011, another Bangladesh Bank official said, adding that networking of the central bank has almost completed under the CBSP.

The World Bank is supporting the government initiative to enable the central bank to play its role as country?s monetary authority, bank regulator and supervisor

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Sources :Bangladesh seeks financial help as imported oil bill to meet growing energy needs.State-run Bangladesh Petroleum Corp is seeking help to pay for an estimated $4.3 billion of oil imports in the next fiscal year to run new power plants to meet growing energy needs, a top executive said on Monday.

BPC, Bangladesh’s only fuel importer and distributor, normally buys up to 3.8 million tonnes of refined and crude oil annually at costs between $2.5 billion and $3.5 billion, its chairman Anwarul Karim said.

“But for the next fiscal year our import may rise to 4.4 million tonnes as the government plans to set up several oil-fired power plants,” he told.
Bangladesh now imports oil from Vietnam, Malaysia, Maldives, Kuwait, Saudi Arabia, India and United Arab Emirates.

But officials said it was also looking for other sources to buy the additional fuel.

To meet the rising fuel bill, Bangladesh has asked the Jeddah-based Islamic Development Bank (IDB) to provide more funds, Karim said. The IDB gives Bangladesh about $1.2 billon a year now to pay for oil imports.

“We have also asked Bangladesh’s central bank to allocate additional funds for oil import,” Karim added.

The new power plants fuelled by diesel and furnace oil will add more than 1,350 megawatts of power to the national grid, a partial fulfilment of promises by Prime Minister Sheikh Hasina to ease a nagging power crisis that affects households and industries.

But BPC, which sells many fuels below cost as part of a complicated subsidy programme, has accumulated losses of $2.83 billion that may rise to $3.05 billion at the end of the current fiscal year ending in June 2010

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Bangladesh’s consumers’ price index (CPI) inflation rose to 9.06 percent in February 2010, up from 8.99 percent of the previous month,
The rate of inflation went up by 0.07 percentage point in February, over that of the previous month, mainly because of the increase in prices of food items.

“The inflationary pressures on economy has slightly gone up during the period due mainly to the increase in prices of food items in the local market as well as in the global markets,” a senior official of the Bangladesh Bank (BB), the country’s central bank, told gurumia in Dhaka.

The official also said the existing upward trend of inflation might continue in the third quarters but it particularly in food inflationary pressure would decline in the fourth quarters of the current fiscal year due to arrival of new ?Boro? rice crop along with the government?s market intervention.

Food price inflation rose to 10.93 percent in February from 10.56 percent in January this year on the point-to-point basis due mainly to raise the prices of essential items including rice and sugar during the period.

Despite good domestic output of the ?Aman? rice crop, a recent surge in domestic prices of essential commodities including rice, sugar, edible oil, pulses, onion, garlic and vegetables is the reason for higher inflation during the period under review, the central bank officials said.

The inflation rate moved up to 5.95 percent in February from 5.67 percent of the previous month on the annual average basis, according to the state-run Bangladesh Bureau of Statistics (BBS) data, released on Monday.

The central bank in its latest monetary policy projected a further rise in the country’s CPI inflation on a point-to-point basis in the coming months. However, it expressed hope that the 12-month average CPI would be within a 6.5 percent range by the end of the fiscal year 2009-10, as earlier projected by the BB

…BAck Story:(February2010)
Bangladesh’s consumers’ price index (CPI) inflation rose to 7.24 percent on the point-to-point basis in November 2009, up?from 6.71 percent of the previous month, officials told AHN Media on Tuesday.

The rate of inflation went up by 0.53 percentage point in November, over that of the previous month,?mainly because of the increase in prices of both food and non-food items.

And?that marked an upward trend since the inflation rate moved up to 5.21 percent in November 2009 from 5.11 percent in the previous month on annual average basis, they added.

Food prices rose by 7.84 percent in November from 7.78 percent in October 2009 while non-food items’ prices rose by 6.44 percent from 5.07 percent, the Bangladesh Bureau of Statistics (BBS) said.

“The inflationary pressures on [the] economy has slightly gone up during the period due mainly to the increase in prices of food and non-food items in the local market as well as in the global markets,” a senior official of the Bangladesh Bank (BB), the country’s central bank, told AHN in Dhaka.

He also said the existing upward trend of inflation might continue in the near future because of the?recovery of major economies from the global meltdown with a rising trend of prices of commodities in the international market that would also?push inflationary expectations in the country.

The central bank of Bangladesh in its monetary policy projected a further rise in the country’s CPI inflation on a point-to-point basis in the coming months of the fiscal 2009-10 (FY10). However, it expressed the hope that the 12-month average CPI would be within the budgetary target by the end of FY10.

Food and non-food commodity prices in the global market have firmed up with an up-trend in many cases, according to a report by the?monetary policy, released on Jan. 19. That is why the domestic prices of food grains are holding firm even in the harvesting seasons, it added.

Accordingly, the 12-month average CPI inflation instead of declining is expected to?creep up in the second half of this fiscal year. But it is expected to remain within a?6.5 percent range by the end of FY10, as earlier projected by the central bank of Bangladesh.

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Sources :Bangladesh economy has shown signs of stagnation in recent times with marked slowdown in external trade and industrial investments. A belated impact of global recession caused the slowdown and the economy continues to face stagnation because of the ongoing power and energy crisis, according to some economists.

Sharp fall in exports and investments has apparently caused the slowdown. Overall exports declined by more than 6.0 per cent in July-January period of the current fiscal year and growth in imports also significantly slowed down during the period. Share of imports of industrial raw materials in overall imports came down to less than 36 per cent in July-December from around 41 per cent in the same period of the previous fiscal year. Imports of intermediary goods also came down to 8.5 per cent against 10.5 per cent.

Although steady inflow of remittance has helped maintain good foreign exchange reserve, it is of little significance because of stagnation in industrial investment and export. Even if the economy has not come to a clear stagnation yet, there has been worrisome slowdown. Gas and power crisis is hitting industries hard. It is worrying that although local entrepreneurs have the strength to set up new industries they are handicapped because of this problem.

On the other hand, the inflation trend is also disturbing as rising food prices and lack of infrastructure are affecting general people. Analysing food expenditures of different consumer groups, a Samunnaya study shows that point-to-point food price inflation for small traders was 9.4 per cent in September 2009 and it increased to 13.65 per cent in January 2010. Such inflation for RMG workers was 9.7 per cent and 13.58 per cent respectively, for rickshaw-pullers 9.9 per cent and 13.46 per cent and for day-labourers 9.7 per cent and 13.4 per cent.

However, the country has achieved reasonable successes in areas of human development, population control, food security, poverty reduction and disaster management. It has weathered several external financial shocks, debt crises, kept the rate of inflation at a reasonable level and achieved an average economic growth rate of over 5.0 per cent in the recent past and over 6.7 per cent in the last fiscal.

Against the backdrop of all these achievements, reduction in poverty level is still not satisfactory. Over 40 per cent of the population live below the poverty line. Poor governance, inadequate infrastructure, unbridled corruption and deteriorating law and order continue to be major deterrents to a private sector-led higher economic growth.

Overall weak revenue collection, despite increased income tax collection, and the higher levels of revenue expenditure have exposed fragility of the macro-economic framework in existence. Low ADP implementation, poor disbursement of foreign aid and higher levels of government borrowings were viewed as some of the major weaknesses in the economy. Low disbursement of foreign aid has been a major concern for the economy in the recent years.

Towards the end of 2009, it was clear that the ‘recession-busting’ Bangladeshi economy was experiencing a delayed downturn of its own. The second half of 2009 saw growth fading in exports and remittances. While total year-on-year exports grew by an average of 20 per cent in the first part of last fiscal, export performance dipped to a negative growth by December. Remittances also showed a similar pattern, with growth falling from 30.9 per cent in the first half of FY09 to 15.7 per cent during the second half.

Needless to mention, country’s investment climate is less than healthy, which does not augur well for sustained growth. Concern about the volatile global economic and financial situation, and political uncertainty during the caretaker government’s tenure may have restrained export-oriented industries from building capacity during FY09. But since the elections, other factors, including policy issues and non-availability of gas and electricity, are dampening the investment climate.

The weak investment climate is reflected by surplus liquidity in the banks. Bangladesh Bank data say surplus funds stood at Tk. 339.95 billion at the end of September. Although this was down by about 8.0 billion since June last year, analysts suggest the decrease may be due to purchase of government bonds by the scheduled banks, rather than any surge in commercial lending. There are major infrastructure issues, and the dismal situation in the power sector is probably the most critical. Power shortages are the most serious and immediate of the infrastructure constraints, with damaging impact on productivity and investment.

The country has, as of now, a shortage of 1500 MW to 1800 MW power. In order to ease the problem, the power plants that are near completion, including rental ones, must be made operational. Tender process for new plants should be rapid and transparent. Bangladesh’s long-term energy policy must rely on rapid and efficient extraction of domestic coal reserves. Five good quality coal deposits, with proven reserves of more than 2.5 bn MT have been discovered in Bangladesh. The National Coal Policy needs to be finalised as soon as possible. There is a debate going on about the local environmental and social effects of mining, but there should be an open dialogue about this as soon as possible. Coal can be extracted in a responsible way by ensuring that the interests of the local inhabitants are taken care of. This is vital for sustainable development of the country. There is also a need for speeding up gas exploration in offshore blocks while maintaining transparency. The government should also actively resolve maritime boundary disputes with India and Myanmar to facilitate exploration.

Following a slew of negative data, economists are growing increasingly concerned about the sustainability of GDP growth in the years ahead. According to a report by the World Bank, if the energy situation stagnates or deteriorates and global recovery falters, then export growth cannot be sustained at FY09 levels and real investment growth could decline further. On this trajectory, GDP growth is unlikely to reach even 5.5 per cent, let alone the 6+ growth that Bangladesh has seen through much of the decade.

Indeed, the economy is turning sluggish at a time when most of the developed countries are getting rid of recession. Coupled with strong demand in countries like China and India, such recovery could drive up prices of commodities. The immediate challenge would be to containing inflation, and ensuring food security.

It is important for the government to go for substantial job creation. For this the investment climate needs to be boosted, and the government must also implement the Annual Development Programme (ADP) expeditiously and transparently. The government must take a number of quick steps to handle the macroeconomic situation. The economic stimulus package should be spent wisely, and it should be ensured that credit is available and affordable. Decisions need to be taken quickly regarding the power sector — and this should be done in a transparent manner.

Addressing the weaknesses of the investment climate, complemented by appropriate policy reforms and good governance, should, therefore, be the government’s top concern to enhance the economy’s productivity and long-term growth, and contribute to eventual poverty reduction. The road ahead contains challenges that will test the government’s resolve.

szkhan@dhaka.net

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Denmark has assured Bangladesh of providing more support to the country’s power, energy, ship building industry and trade and business sectors for socio- economic development of Bangladesh.

The assurance came when the visiting Danish Development and Cooperation Minister Soren Pind paid a courtesy call on Prime Minister Sheikh Hasina at her office here.

During the meeting, they discussed wide range of bilateral relations, Danish investment in Bangladesh’s private sector and expansion of Trade and business between the two countries, said Prime Minister’s Press Secretary Abul Kalam Azad after the meeting.

The Prime Minister said her present government attaches great importance to her relations with Denmark as it considers Denmark as a dependable friend and development partner.

She said Bangladesh and Denmark currently enjoy excellent bilateral relations that are characterized by friendly feelings, commonality of views, economic cooperation and increasing bilateral trade, which are well reflected in the economic cooperation between the two countries in various sectors of our development.

Referring to Chittagong Hill Tracts Peace Accord signed during the past Awami League government, Sheikh Hasina said her government is committed to implementing the CHT Peace Accord with a view to upholding political, social, cultural and economic rights of all citizens living in the CHT region.

In this context, she said her previous government was trying to implement the accord fully in line with the agreement. The past BNP-Jamaat government did not take any initiative to implement the accord, she added.

The Prime Minister informed the Danish minister that land commission has so far been constituted in line with the accord to resolve the land related disputes in the hill region.

Sheikh Hasina said her government has also launched different projects for the development of Chittagong Hill Tracts. In this context, she sought more Danish support for the CHT region.

About terrorism, the Prime Minister said her government is firm to root out terrorists and militants at any cost. The terrorists have no boundary and political ideology, she added.

Regarding poverty alleviation, she said the present Awami League government has taken various measurers to build a happy and prosperous Bangladesh by eradicating poverty and hunger.

The Danish Minister lauded the Prime Minister for her able leadership and relentless efforts to turn Bangladesh into a modern technologically advanced one.

Principal Secretary to the Prime Minister M A Karim, Secretary to the Prime Minister’s Office Molla Waheeduzzaman and Press Secretary Abul Kalam Azad were present.

Meeting with Dipu Moni.

Visiting Danish Development and Cooperation Minister Soren Pind has assured of continuing development cooperation with Bangladesh for development of the country.

He gave the assurance during his meeting with Foreign Minister Dipu Moni at state guest house Padma in the capital, Dhaka on Tuesday.

During the meeting, they discussed various issues including food and health security, strengthening democracy, establishing good governance, eliminating corruption, strengthening institutions, instituting rule of law, fighting climate change challenges, providing energy security, conducting counter terrorism measures, empowering women, and meeting crucial infrastructure requirements, a foreign ministry press statement said.

The foreign minister mentioned that the government is putting its efforts in these areas and is working to translate the peoples desire to bring positive changes in all spheres of life to realize the vision 2021.

She also said Bangladesh attaches great importance to the relations with Denmark and considers Denmark as a dependable friend and development partner.

The Danish minister pointed out the need for more high level bilateral visits between the two countries and expressed hope that more high level visits would take place between Bangladesh and Denmark in the near future

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PHARMACEUTICAL trade is one area that Brunei and Bangladesh could improve on, Bangladesh High Commissioner M Shameem Ahsan told The Brunei Times on Thursday.
sources :
The diplomat explained that Bangladesh has been exporting pharmaceuticals for the past nine years and earned some US$700 million ($983 million) annually from the industry, with some US$50 million ($70 million) being earned through pharma exports.

?This covers very-high-end products, including anti-cancer medication, anti-viral drugs and even the H1N1 vaccine,? said Ahsan.
He related that in a meeting with Minister of Health, he had the opportunity to tell him that if Brunei wanted to, it was possible at anytime and at short notice to import the H1N1 vaccine from Bangladesh.Asked what advantages importing pharmaceuticals from Bangladesh had, the High Commissioner said, ?Quality at a very cheap price. For example, the cost of one paracetamol tablet is four cents.?

The pharmaceutical manufacturing companies in Bangladesh have been certified by Medicines and Healthcare products Regulatory Agency from the United Kingdom, and the equivalent from Australia and Singapore, said Ahsan, ensuring that the products were of international-standard quality.

?For example, there are some companies that regularly supply Raffles Hospital in Singapore,? he added.

The High Commissioner said that while some trade between Brunei and Bangladesh does exist, it has not reached the extent that he would like to see. ?Singapore is the regional hub and it is surmised that some kind of re-export of Bangladeshi products is taking place,? he said.

?As for Bruneian products, we cannot confirm what is taking place, but we do see from some of the statistics we have been given that there is a trickle of exports from Brunei in the area of garment manufacturing.?

The High Commissioner believes that some components that go into the manufacturing of garments in Bangladesh came from Brunei, meaning that the finished products coming from Bangladesh used materials from the Sultanate.

While trade between Bangladesh and Brunei is not be as high as he would like it to be, Ahsan said that it was growing. ?Given the right amount of interest on both sides, it will increase. When I came over a year ago trade amounted to less than US$70,000 ($98,000). But in the last financial year ending July 2009, it has grown to US$100,000 ($140,000),? he said.

On the subject of tourism, Ahsan said that Bangladesh had a lot to offer in terms of historical and archaeological sites, but by looking at Bruneian preferences when going abroad, Bangladesh does not seem to offer the attractions that Bruneians find appealing.

?It?s competitive,? he said, adding that there were many contenders offering similar tourism products, such as India, Nepal, Sri Lanka and Myanmar.

?We are looking into eco-tourism, but it is not yet as developed as we would like,? he said.

In addition, there are currently no direct flights between Brunei and Bangladesh. ?It is difficult to say (whether direct flights will be introduced), we still have to look at profitability.

?But that doesn?t mean it will not happen one day. Hopefully, if it does, it will increase tourism between our countries,? he added.

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