Infrustucture is weel to take load of Development .The target of 6 percent GDP growth is unlikely during the current fiscal year due to lack of investment and infrastructure problems, power and gas crisis. This was viewed by experts at a roundtable on ‘Prospects of Bangladesh’s Economic Growth in 2010′ organized by the daily Independent ..
Former Finance Minister M Sayeduzzaman, former Commerce Minister and BNP leader Amir Khosru Mahmud Chowdhury, former Finance Adviser Dr. AB Mirza Azizul Islam, former Bangladesh Bank Governor Dr. Salehuddin Ahmed, Nitol-Niloy Group Chairman Abdul Matlub Ahmad, Dhaka University Prof Dr. Barkat-e-Khuda and Association of Bankers Bangladesh (ABB) chairman K Mahmood Sattar are among those took part in the roundtable.

Ambassador Faruk Sobhan moderated while economist Forrest E Cookson presented the key note paper.

“The economy is giving out mixed signals. I am not optimistic about 6 percent growth in 2010,” said Mirza Azizul Islam.

Viewing that the growth of a country’s economy mostly depends on investment, he said investment scenario does not look bright.

“The growth will not reach 6 percent, if it reaches 5.5, I will be quite pleased,” added the former Finance Adviser. The GDP growth was 5.9 percent in last fiscal (2008-09).

He observed that investment has to be increased to accelerate growth. Lack of energy is the daunting problem towards investment.

“Many of the industrial areas are being subjected to gas rationing. Even there are load shedding. These issues have to be addressed,” he added.

M Sayeduzzaman said that the government is facing some challenges like implementation of the pay hike, initiative for the Public- Private-Partnership (PPP), fiscal stimulus package and safety net schemes.

Despite that, he thought, 6 percent GDP is not very ambitious compared to the past three years. It is achievable. Revenue earning looks very achievable.

He viewed that the gap between national savings and national investment is increasing in the last three years.

Mentioning that low investment, excess liquidity, bubbling housing sector, share market as it doesn’t have the depth are the challenges before the government to achieve the growth, said former Bangladesh Bank Governor Dr. Salehuddin Ahmed.

“I don’t think 6 percent growth is achievable. It may be 5.7 to 5.8 percent,” he added.

Urging the government to encourage the Small and Medium Entrepreneurs (SMEs), he said, “This will create more employment opportunities.”

Explaining the reason for lack of low investment during the tenure of the caretaker government and present government, former Commerce Minister Amir Khosru Mahmud Chowdhury said the private sector is yet to come out of that fear-factor.

Citing that the textile and garment sector was seriously affected due to global recession, he said, “They are eating into their capital. The government should really look into this.”

He also viewed that the industry-labour relation is not good and cited instances of recent disturbance in the garment sector.

Presenting the keynote paper E Cookson said, “We will see a much more rapid growth of economy in 2010 that people didn’t think about.”

He expected that the combined growth for the calendar years of 2009 and 2010 is 6.8 percent. Although one year is slow and another year is high, almost 7 percent growth averaged over the two years, he said.

Faruk Sobhan in his concluding remark said even 10 percent GDP is achievable within thee years provided the major challenges of successful implementation of the development programme can be tackled and energy and power crisis resolved

Source
POLITICAL instability, natural disasters, and corrupt politicians: Bangladesh’s economy has withstood a lot in recent years. But the global economic crisis will test its resilience as much as any of its traditional afflictions. Both its main sources of foreign exchange, workers’ remittances and garment exports, are at risk.

By January 2007, when the army stepped in to install a two-year interim government of unelected technocrats, Bangladesh had topped international corruption rankings for five consecutive years. Yet the economy had grown at more than 6% a year since 2004, and poverty had fallen faster than ever. Donors called it the “Bangladesh paradox”. Of course, no one ever believed in such a paradox. It was a polite way of telling politicians that the country could do even better if they kept their hands out of the till. Think of the progress it could make if they tackled power shortages, invested in education and infrastructure, and improved farm yields!

One of the world’s poorest countries, only twice the size of Ireland, Bangladesh already finds it hard to feed its people. According to the World Bank, nearly 56m out of a population of 147m are still poor. There will be 100m more mouths to feed by the middle of the century. Bangladesh is trading its only abundant resource, labour. Clothing exports, which account for 75% of total exports, more than doubled in the past five years to nearly $11 billion a year.

Over the same period, annual remittances by 5.5m Bangladeshis nearly tripled to $7.9 billion, or 10% of GDP, among the highest share in the world. So the economy is heavily dependent on spending in the high streets of Europe and America and on the demand for labour in the Gulf. Both are dropping off alarmingly (see chart). A closed capital account has protected the financial system. But Bangladesh’s banks are far from robust. In February Fitch, a rating agency, called them among the weakest in emerging Asia.

Domestic policymakers, who long denied the crisis would have a big impact in Bangladesh, now acknowledge that its pricing advantage over rival garment producers counts for little as demand in the West plummets. Yet no one knows how bad things will get. The IMF has said it is ready to assist, but the government has responded that it does not need help. The central bank insists that GDP will grow by around 6% this financial year (ending in June), compared with a 4.8% forecast from the World Bank last November.

Social unrest in Dhaka and Chittagong, the two big cities that account for about 60% of GDP, is already a real concern. This week, the government announced that it would sell rice at highly subsidised prices to millions of garment workers. But a fall in exports alone is unlikely to trigger a balance-of-payments crisis, since it will be accompanied by a big fall in imported inputs. Foreign-exchange reserves, hovering between $5 billion-$6 billion, are enough to cover two to three months of imports. And a sharp fall in food and oil prices has already considerably reduced the import bill. But remittances remain a worry. Last year 875,000 Bangladeshis took on jobs abroad. Saudi Arabia, the biggest employer, has hired only a few thousand workers since the start of the year. Airlines have already cut the number of flights ferrying workers to and from the Gulf.

Until the global financial crisis hit, Bangladesh was on track to meet the Millennium Development Goal of halving poverty by 2015. Progress on overall poverty reduction will depend on a number factors, including the birth rate. But “cash injections”, either through microcredit loans or workers’ remittances, have hitherto played a huge role. Alas, it might not be long before this changes.

Bangladesh economy is expected to grow at a rate of 5.7 percent in the fiscal 2009-10 (FY10), the US-based Citigroup has said in its latest projection.

The Citi, however, has revised upward its earlier projection made in April this year at 5.1 percent.

“While growth in FY10 is likely to slow to 5.7 per cent levels from 5.9 per cent in FY09, the new government’s thrust on infrastructure development is encouraging and would help support industrial activity,” the Citigroup said in a report released Friday from Mumbai, India.

Finance Minister of Bangladesh AMA Muhith in his budget speech, delivered on June 11 last in the national parliament, projected the growth between 5.5 and 6.0 per cent in the coming fiscal.

The report titled ‘Citi’s ASIA Macro and Strategy Outlook: Balancing Act after the Rebound Importance’ also said Inflation could be exacerbated by higher food prices on the back of Cyclone Aila in May 2009. The AHN correspondent collected a copy of the 78-page report.

It also said that export growth is still positive on a cumulative basis, but monthly trends remain erratic. The rising oil prices could be yet another factor, according to the report.

The Citigroup, however, suggested that the country’s agriculture sector needs a close watch in view of the possible slowdown, thus, leaving an impact on ‘headline’ growth.

Although the share of agriculture to GDP has declined to 19 percent from 26 percent levels earlier, the sector provides employment to 65 percent of the labor force.

Monetary indicators point to some slowdown. Broad money growth during July-Mar of FY09 was up 11.9 per cent year-on-year basis from 17.6 per cent in the last year, while credit growth was up 11.5 per cent from 21 per cent in the previous year, according to reports.

“While the Bangladesh Bank could continue to pursue an accommodative monetary policy in the coming months, trends in inflation and monetary variables are likely to be closely monitored,” it added.

The Citigroup expects to see some moderation in export growth, to 10 percent during FY10 from an estimated 9.5 per cent during FY09.

“Factoring in import growth at over 9.0 percent year-on-year basis and healthy growth in remittances, this would result in the current account surplus coming in around 2.5 percent of GDP in FY10 against an estimated 1.7 percent in FY09, the report said.

“The taka (BDT) is likely to assume a depreciating trend, to BDT 72.3 per US$ by the end of FY10 from the present level at BDT 69.1,” it added.

pre

To mitigate the growing housing demand through offering qualitative flats with competitive price to the customers, the Real Estate and Housing Association of Bangladesh (REHAB) is going to organise a five day long ‘Rehab Summer Fair 2009′ from June 4 at Dhaka Sheraton Hotel in the capital.

State Minister for Housing and Public Works Advocate Abdul Mannan Khan is expected to inaugurate the fair at 12 noons at Ballroom of the hotel.

“As a development partner of the government the 524 member organisation of Rehab are working hard to resolve the ‘housing crisis’ as well as establishing a planned city with basic amenities in the country,” Ln.Khaled Mohammad Jewel Mollah, general secretary of Rehab told journalists at a press briefing at the VIP lounge of the National Press Club yesterday.

A total of 175 Rehab members and 4 other financing companies are going to take part in the fair. Besides 15 companies are also participating as ‘co-sponsor’ in the fair, he added.

Engineer Tanveerul Haque Probal, president of Rehab said the overall sale of flats have sharply reduced from 30 to 40 percent from January to March of the current year due to global recession.

The Government could help boost the housing sector by allowing investment of undisclosed money and containing the price of construction materials that could greatly help in fulfilling the growing housing demand, he mentioned.

He called upon the government to reduce the registration and transfer cost of the flats.

Nasrul Hamid MP, member of parliamentary standing committee on Housing and Public Works Ministry and Mahbub Ur Rahman, Secretary of the Ministry would also be present as special guests on the opening day of the fair.

Law, Justice and Parliamentary Affairs Minister Barrister Shafiq Ahmed would be present as chief guest on the concluding day of the fair on June 8 at 7:30 pm at winter garden of the hotel.

ABM Fazlee Karim Chowdhury, Chairman, parliamentary standing committee on Housing and Public Works Ministry and Md Nurul Huda, chairman, Rajdhani Unnayan Katripakkha (RAJUK) are also expected to be present as special guests.

Murad Iqbal Chowdhury, chairman, Mohammed Akter Biswas, convener and Engineer Jahid Hossain, chairman, press and media, of Rehab Fair Standing Committee, among others, were attended it.
……..

 A huge turnout marked the third day of a housing fair in Dhaka  with a good number of visitors and buyers buying and booking plots and flats.

Participants in the show said they have received an impressive response from the visitors.

Real Estate and Housing Association of Bangladesh (REHAB) is organising the show styled REHAB Summer Fair at Dhaka Sheraton Hotel.

Although the three-day exposition was scheduled to end yesterday, the organisers extended it for one more day on request of the customers and realtors.

The show is open from 10am to 8pm today with a Tk 50 entry ticket. A total of 175 real estate companies, along with four financial organisations, are participating in the fair.

“We had to extend the fair for the huge response of visitors and until today around 25,000 people visited the show,” said REHAB President Tanveerul Haque Probal yesterday.

Talking about sales, Mijanur Rahman Khan, accounts officer of Hirajheeel Property Development (Pvt) Company Ltd, said they have already received bookings for 100 plots at their project in Dhaka.

The company has also announced a Tk 200,000 discount on every single booking for plot, officials said.

An official of Concord Real Estate and Building Products Ltd said they sold 20 flats in the last three days.

“We also expect good sales on the concluding day,” said the official.

Rupayan Housing Estate Ltd, which, according to the company officials, has created a huge enthusiasm among customers with its over 800 ready flats near Dhaka.

Moklesur Rahman, senior manager (marketing and sales) of Rupayan, said it is a great opportunity for the customers to get a ready flat at reasonable price.

“During the fair we sold around half of our total flats and we expect to sell another 100 units tomorrow (today),” he added.

Realtors are also offering flats and plots outside Dhaka, including some tourist attractions such as Cox’s Bazar and Kuakata.

An official of Century Realty Limited said they have received bookings for 112 plots in Kuakata. The company is selling a 5-katha plot at the fair at Tk 4 lakh.

Managing Director of RAMS Developments Limited said his company was displaying 12 projects and more than 10 flats have been booked.

Realtors demand safeguard.

Realtors have demanded investment of undisclosed money in real estate sector, a bigger government fund to finance apartment buyers and low import duty on construction materials in the upcoming budget.

As sales of flats and construction works have already slowed down amid declining remittance inflow and export earnings in the face of global recession fallout, the government should incorporate measures in the budget to tackle such challenges, developers said.

“If a bigger fund is ensured for the flat buyers, they will get easy access to loan at low interest rate and ultimately help keep the sector vibrant,” said Tanveerul Haque Probal, president of Real Estate and Housing Association of Bangladesh (REHAB).

He urged the government to create a fund of Tk 1,000 crore in the budget for fiscal 2009-10 to help the middle-income people get loan in easy terms and conditions.

REHAB, an association of around 500 real estate companies, wants to see investment of undisclosed money in the sector even by giving fine.

The sector had enjoyed this facility in different fiscal years during the last Awami League and BNP governments until the last caretaker government withdrew it, said Probal.

Talking on the issue, SM Anwar Hossain, chairman of Advanced Development Technologies Ltd (ADTL), said: “I have strong disagreement with keeping undisclosed money in anyone’s possession. Yet, the government should formulate a policy in this regard so it can’t be siphoned out of the country.”

The realtors demanded reduction of import duty on construction materials such as apartment fittings and electric equipment, and withdrawal of import duty on construction machinery.

REHAB also called for a complete withdrawal of import duty from stone against the backdrop of its low supply from domestic sources and the recent price hike of stone chips that the association said caused apartment prices to rise.

The developers also urged the government to cut registration fee of flats drastically, claiming it the highest in the world.

As Finance Minister AMA Muhith on Wednesday hinted a slash in land registration fee and land tax, the developers also demanded similar move for apartment registration fee.

In Bangladesh registration fee of a flat is around 18 percent of its cost, while it is below five percent in India, Pakistan and Sri Lanka, said Sheikh Aftab Ahmed, chief operating officer of Shanta Properties Ltd, suggesting it should be below 10 percent.

A reduced registration fee will significantly bring down the apartment prices, Ahmed said.

Talking about the registration fee, the ADTL chairman also proposed the government fix separate registration fees for separate areas of the country, which is being practised in many countries.

Determining the economy growth govt innitiating to develop SME .

The government considers a further cut in bank interest rates, especially for small and medium enterprises (SMEs) to help the sector grow faster, said the commerce minister yesterday.

“We have already brought down the interest rate to support the country’s entrepreneurs. We are considering reducing the rate further to help different sectors, especially the SMEs, grow faster,” said Faruk Khan.

“The government is also considering a special package for the SME sector in the next budget for fiscal 2009-10,” he added.

He was speaking at the inaugural ceremony of the fourth SME fair organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at Bangladesh-China Friendship Conference Centre in Dhaka.

The government fixed the ceiling of the bank interest rate at up to 13 percent in April.

“We are hopeful of reducing the rate soon. We are discussing the rate cut at several levels in the government to help new entrepreneurs source capital at a lower interest rate and start a new venture,” the minister added.

He said the government is working to ensure capital sourcing at lower interest rate for SME sector and help improve its infrastructure further.

“We have to develop our local industries and boost domestic economy to fight the affects of the global financial meltdown. So, developing sectors including SME are very important to us,” he added.

“The government is prioritising the SME sector in the industrial policy that we are framing now. Simultaneously, we will take necessary measures to ensure market for locally produced goods,” said Khan.

He said the SME sector plays an important role in export and employment generation, as the country’s 98 percent enterprises fall in SME category, and so the government is giving an extra attention to the sector.

FBCCI President Annisul Huq urged the government to implement the federation proposals through the upcoming budget.

“We want to see the implementation of our proposals in the budget. Increasing number of loan defaulters indicates that the impact of global financial meltdown has already started hitting Bangladesh. So, the budget should have a specific solution to this,” he said.

Huq said the government should pay special attention to the SME sector, as it is the key component of vibrant economy of the country.

The FBCCI chief said the government should give necessary support for the growth of internal economy and the budget should have a reflection of “our proposals.”

“We’re going through a tough time because of global recession,” he said, urging the government to cut duty on import of raw materials for the SME sector.

“The sector has a great potential and the government needs to nourish it further,” he said.

“Although the local entrepreneurs have the ability to produce international standard products, they fail to introduce their products to domestic and global markets due to absence of proper campaign,” said the FBCCI chief.

“A lack of funding, high interest rate, erratic power supply and unavailability of raw materials hold back the growth of the sector,” he added.

He also identified reluctance of the private banks to give loans to SMEs as a major barrier to flourishing the sector.

A total of 86 local companies are displaying their products at 108 stalls at the four-day show that will remain open to visitors from 10am to 8pm with a Tk 10 entry fee.

The products on display include textile, frozen foods, leather and leather goods, plastic products, surgical equipment, medical machinery, sanitary products, agro-based machinery, bicycle, ceramic and melamine products, software, cosmetics, furniture and jewellery.

Khalil Bin Abdullah Bin Mohammad Al-Khonji, chairman of Oman Chamber of Commerce and Industry, and Abul Kashem Ahmed, first vice president of FBCCI, were also present at the ceremony.

Bangladeshi commercial banks have started slashing their interest rates on deposit this month in line with the central bank’s latest interest rate policy.while interest rates on lending remained almost the same in the country’s banking sector.

Bangladesh Bank (BB), slashed its interest rate on repurchase agreement (repo) and reverse repo after nearly seven months aiming to offset the ongoing global financial recession through boosting fresh investment.

“Slashing interest rates on deposit by the commercial banks will encourage investment of fresh funds in different sectors that would also help offset the impact of ongoing global economic recession on the country’s economy” Analyst.

Market is now having more liquidity than the end of the last calendar year because of falling trend of import payments and export performances recently,” the chief executive officer of a private commercial bank said, adding that more banks might also cut their interest rates on deposit in the next months in line .

Meanwhile, only one commercial bank reduced its interest rates on lending this month, while two banks raised interest rates on lending for different sectors, the BB officials said.

The country’s commercial banks are now offering interests in the range between 5.25 per cent and 13.50 per cent on fixed deposit schemes, while the rates for saving accounts varies between 2.50 per cent and 8.00 per cent, according to the central bank statistics.

Currently, the banks provide loans to large and medium scale industries at interest rates ranging between 11 per cent and 15 per cent and to small industries between 10 per cent and 16.50 per cent.

Interest rates on housing loans range between 11.50 per cent and 16.00 per cent and consumer credits 10.50 per cent and 19.00 per cent.

The banks lending rates on working capital to large and medium scale industries range between 10.50 per cent and 16.00 per cent and for small industries between 10.50 per cent and 16.50 per cent, the BB data showed.

Bangladesh world banking :

The central bank of Bangladesh purchased $15 million more in U.S. dollars from two commercial banks on Tuesday to keep the inter-bank foreign exchange market stable.to help Banks comply with the net open position (NOP) rules for holding the foreign currency fund properly.The central bank continues its intervention in the inter-bank foreign exchange through selling and buying of the U.S. currency directly and providing overdraft facilities to the banks.

-Back Story :

17th March, 2009 the BB similarly purchased $18 million from two private commercial banks on the same ground.

The central bank of Bangladesh started the intervention in the market by buying the U.S. currency directly from the commercial banks on Jan. 15. to keep the market steady.

Since then, the BB has bought $307.20 million from commercial banks as part of its intervention in the market, they confirmed.

The analysts of Banladesh economy says that the global recession impact for Banladeshi Garments and Textile sector will not affect downwords in some way it may bring positive result also .

The news from Reuters as follows is also a sign to support this analysis.

From Reuters:Bangladesh’s exports surged 11.86 percent to $1.378 billion year-on-year in January on the back of increased sales of clothing and other textiles, data showed on Thursday, after sales dropped 10 percent in December.

Data from the Export Promotion Bureau showed export earnings in the first seven months of the 2008/09 fiscal year rose 18.16 percent to $9.13 billion.

Earnings from knit textiles during the period rose 26 percent to $3.8 billion from the previous year, while exports of woven garments rose 20.6 percent to $3.39 billion.

Despite growth in clothes exports, foreign sales of frozen food, leather, jute goods, electronics and other items declined as a deepening global slump slashes away at demand for that items.

The government plans to launch a stimulus package for exporters to protect growth and jobs by this month as the financial crisis continued to deepen, said Finance Minister Abul Maal A Muhith.

Some analysts said Bangladesh did not face any immediate upset in its prime readymade garment exports yet because the country sells mostly basic and low-cost products.

Bangladesh has set a $16.3 billion export target for the year to June 2009. Exports in the previous year to June 2008 hit $14.11 billion, of which almost $10.7 billion was from garments. ($1 = 69 taka)

 ”So far Bangladesh has not felt the impact of the financial crisis…But it is possible in the future through Bangladesh’s manpower exports and remittances,” she told reporters here after meeting with Bangladesh’s Foreign Minister Dipu Moni.

Visiting vice-president of World Bank for South Asia Isabel Guerrero Sunday said Bangladesh could feel an impact of the global economic recession and the country needs to prepare social safety net program to face the impact.

Isabel said Bangladesh has time to prepare social safety net program in a way that when the crisis comes the government is ready to help those people who are worst affected in the crisis.

    Isabel who earlier met with Bangladesh’s Prime Minister Sheikh Hasina said World Bank has a program of 3.6 million U.S. dollars for three years for Bangladesh and that program will be available to help through the crisis if it comes.

The global recession stokes fears that falling exports and an ebbing remittance inflow may take shine off the country’s burgeoning real estate.

Realtors feared the global recession might undermine the real estate sector’s prospective growth unless special initiatives are taken, although the sector began to expand after a two-year sluggish trend when its growth slowed to 7.05 percent in 2006-07 from 8.31 percent a year earlier.

Guru : i have a diffrent evaluation ,in this evaluation :As for the global recession the huge amount of foreign currency inflow is running to our contry  so,if proper innitiative can taken to generate the remittence to invest to the productive sector ,like investment for production ,investment for power , investment for mining and such as, the fear about the recession can be turn to as a benificial point.

And the result will boost the economy of Bangladesh