A new ray of hope for SMEs

They may be allowed to raise funds from capital market

The Chinese consortium will work to create an SME-based board in the Dhaka Stock Exchange so that small entrepreneurs get the opportunity to raise fund from the capital market. “It will help to boost the SMEs as well as the capital market,” said Wang Jianjun, president and chief executive officer of Shenzhen Stock Exchange (SZSE).

The consortium of SZSE and Shanghai Stock Exchange will emphasise innovation and product diversification so that investors can get a variety of options to put their money in. Wang’s comments came yesterday on a roundtable styled ‘Bangladesh-China capital markets’, jointly organised by the Policy Research Institute and the Chinese consortium at the capital’s Le Méridien hotel. Liu Fuzhong, a director of SZSE, hoped that SME-based board will foster the sector in Bangladesh like it did in China. “The SME sector in China has bloomed,” he said, adding that the sector is now creating employment opportunities. Only 20 percent of the Chinese SMEs take loans from banks. The rest turn to the capital market to raise funds, he added.

In its proposal to the DSE, SZSE has offered to share its experience in market design, information disclosure, supervision, investor suitability management, IPO promotion and other areas of interest for the development of an SME market in Bangladesh. SZSE has developed a financing supply chain for startups by involving venture capital firms, investment banks, small-loan companies, banks and other financial intermediaries. It also worked with the Chinese government to design incentive programmes and public policies to offset market failure resulting from information asymmetry, which is often associated with small companies, the proposal added.

Salman F Rahman, private sector development adviser to the Awami League president, expressed his disappointment that startups cannot raise funds from the stockmarket.

CRISIS IN BANKS

BB asks state lenders to hand in action plan

Bangladesh Bank yesterday sought an action plan from five state lenders on how to bring down their defaulted loans and reduce their capital shortfall this year. The five state-owned banks — Sonali, Janata, Agrani, Rupali and BASIC — were asked to submit the action plan before the central bank in the shortest possible time, said a BB official.

The instruction came in a quarterly meeting with the five banks, held at the BB headquarters in the capital. The central bank meets with the five banks every three months to supervise and monitor their financial health.

The sate lenders are sitting on large default loans and capital shortfall for a long time now as they frequently breached the credit norms while sanctioning loans. The five banks’ default loans stood at Tk 36,555 crore at the end of December last year, up from Tk 30,295 crore a year earlier. At the end of the last year, four of the five banks faced capital shortfall amounting to Tk 8,852 crore — an indication of their alarming financial health.

Dhaka to see six new luxury hotels

Dhaka is set to welcome half a dozen international hotel chains over the next couple of years, brought about by the growing influx of business travellers to Bangladesh. “The economy is expanding and so is the number of guests,” said Md Jashim Uddin, vice-chairman of Bengal Group of Industries, which is constructing a 370-room hotel in the capital’s Niketan area for about Tk 600 crore. The property will be managed by Swiss hotel chain Swissôtel Hotels and Resorts. “We want to make the ultimate business hotel, which we do not have in the city yet,” he added.

Bengal is not the only local business group pouring in funds to expand the capital’s luxury hotel landscape; Jamuna, Marium and Premier are entering the fray too.New business opportunities have come up for construction of large infrastructure projects such as the Padma bridge, Rooppur nuclear power plant, metro rail and LNG terminals.

At the same time, the flow of business travellers related to the export-oriented garment industry is set to get bigger as the apparel makers chase an export target of $50 billion in 2021. Altogether, the new hotels are expected to bring forth investment of about Tk 5,400 crore, according to industry insiders and a banker.  Marium Group is establishing a 200-room hotel in Hatirjheel area for about Tk 1,500 crore. The property will be christened the Holiday Inn Dhaka City Centre and is expected to open its doors to guests by the end of this year.

“There is a huge demand for luxury hotels. In fact, it is more than the supply in the city,” said Alam Ahmed, managing director of Holiday Inn.

Jamuna Group has struck a deal with Marriott International, the American luxury hospitality chain, to set up the 700-room JW Marriott Dhaka. The hotel will be located at Jamuna Future Park in Progoti Sarani. Premier Group is building JW Marriott’s sister brand Courtyard by Marriot in the capital’s Gulshan area. Unique Group, the parent company of Westin Dhaka, is establishing Sheraton Dhaka in Banani, while Lakeshore Hotels has teamed up with Thai hospitality group Dusit International to set up a business hotel in Uttara for Tk 150 crore.

Once all the under-construction properties become operational, the total supply of upscale hotel rooms in Dhaka will more than double to 3,000 from existing 1,250, according to industry operators. The new entrants will also drive up competition, and possibly lower the room tariffs, said MA Awal, director of sales and marketing of Pan Pacific Sonargaon Dhaka. He went on to state that the supply is growing faster than the demand. Al-Amin, director of sales and marketing of The Westin Dhaka, differs in opinion.

“The room rates in upscale hotels in Dhaka are high, which reflects the solid demand,” he added. Shahidus Sadeque, director of marketing and business promotion of InterContinental Dhaka, which is expected to resume welcoming visitors later this year, has a similar position. The economy grew steadily in the last five-six years, but the number of international hotels has not increased to that extent, he said.

“Our market is under-supplied. We have only half a dozen of international hotel brands whereas Kolkata has more than a dozen of such hotels,” he added. At present, five international hotel chains are serving in Dhaka: Marriott International’s brands Westin and Le Meridien, Radisson, Pan Pacific and Amari. About 3.1 million visited Bangladesh in the last six years and the average occupancy rate in the upscale hotels in Dhaka is 60-70 percent, according to Syed Mehran Hussain, manager marketing of Four Points by Sheraton, which began operations last year. “And the number is increasing day by day. With the rise of visitors, the number of star-hotels is also increasing.”

Govt to build flats for poor people in Ctg

CHATTOGRAM, May 2: The government is going to construct nearly three thousand flats for the floating people in Chattogram. The Ministry of Housing and Public Works will construct the flats on 13 acres of land in Bakolia Char area in the city. Twelve 14-storey towers will be constructed and each flat will measure 800 square feet with solar-powered electricity generation and all other required utility services, said Housing and Public Works Minister Engineer Mosharraf Hossain. After visiting the project site on Monday evening, the minister told the media at Bakolia that the flats will be built primarily for the poor people having no housing facilities. The flats will be rented to them at Tk 1,000 per unit per month only.
He said that the flats will be constructed as part of a government-sponsored housing project titled Housing for All.
Under the same project, the government has already started construction of several thousand flats in Dhaka.
“Work is starting very soon in Chattogram as well and the site has been finalised on the bank of the Karnaphuli River at Bakolia in the city. A vast tract of land has surfaced along the river and primarily we have selected 13 acres of land there for the multi-storey buildings,” he said. As many as 2, 688 flats of 800 sft each in 12 towers will be available. Senior officials of the Housing department in Chattogram, Chairman of Chittagong Development Authority Abdus Salam and other concerned officials visited the site with the minister. The flats will have rainwater harvesting facilities.  The estate will have school for their children, playground and prayer houses for both the Muslims and Hindus, so that the poor people can live with dignity there.
Thousands of floating people live in the port city in thatched houses measuring 150 to 200 square feet hired for Tk 3,000 per month or more.  In most cases they don’t get electricity, gas and water connections and so are forced to have those utilities connected to houses illegally through unfair means. According to the estimates of the real estate association office, a flat of 1300 square feet is generally rented at around Tk 15,000 to 16,000.