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BGMEA ELECTION New panel protests attack on leaders

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BGMEA ELECTION

New panel protests attack on leaders

Star Business Report

Swadhinata Parishad, a candidate panel of the upcoming election of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), staged a protest yesterday alleging an attack on their leaders by supporters of other panels.

“Some people from the BGMEA attacked our leaders and officials while we were returning from the office of the election commission situated inside the BGMEA office at around 11:00am today (yesterday),” said Zahangir Alam, convener of Swadhinata Parishad.

“We want legal action against the attackers and we denounce this attack. We want the BGMEA declare the attackers persona non grata,” he said at a human chain the parishad formed in the city’s Karwan Bazar area around 3:30pm.

Yesterday was the last day for submission of the nomination paper for the biennial election of the garment makers’ platform which is scheduled to be held on April 6.

Alam said 19 out of his panel’s 26 candidates had submitted their nomination papers.

“We want the BGMEA election to be held. Anybody can come to power after the election. We will congratulate the elected representatives of the BGMEA,” he said. Siddiqur Rahman, the BGMEA president, said he was not aware of the attack on the election candidates as none had lodged any complaint with him yet.

Previously the BGMEA had over 6,000 members but now it had declined to 2,200 who have 3,200 active garment factories, Rahman told a group of reporters at his office in Dhaka yesterday.

This year, there are 1,596 valid voters in Dhaka region and 359 in Chattogram.

Two panels, including Forum and Sammilito Parishad, usually elect 35 directors through the BGMEA election. Later, the directors of the winning panels elect the presidents and directors for a two-year tenure.

Swadhinata Parishad is contesting for the first time.

The tenure of the current BGMEA board expired on September 22 in 2017. However, the board was able to convince the commerce ministry to extend its tenure several times.

14 banks see unusual rise in default loans

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14 banks see unusual rise in default loans

AKM Zamir Uddin

Default loans in 14 banks surged abnormally in 2018 — in a development that will weaken the country’s banking sector further.

Experts and bankers attributed the sector’s declining health to the poor lending practices and politically-influenced loans, calling on the government and the central bank to address the issue immediately.

The 14 banks are Janata, AB, Islami Bank Bangladesh, Modhumoti, National, NRB, NRB Global, Shahjalal Islami, Social Islami, South Bangla Agriculture and Commerce, Farmers (now Padma), Trust, Union, and Meghna.

Last year, Janata Bank accumulated the highest volume of default loans amounting to Tk 11,406 crore, taking the total to Tk 17,225 crore, according to data from the central bank.

The non-performing loans (NPLs) in the banking sector went up by a hefty 26.38 percent, or Tk 19,608 crore, last year and Janata Bank was solely responsible for 58 percent of the increase.

The central bank has discovered that the state lender had disbursed a large amount of loans to Crescent and AnonTex groups, violating rules. A major portion of the loans has recently turned bad, putting it in a precarious situation.

The Farmers Bank, one of the fourth-generation banks that got licence in 2013, also faced a sudden rise in the delinquent loans as it earlier disbursed loans breaching rules.

The NPLs in the bank, which has recently been renamed as Padma Bank to sweep up its image crisis, rose 340 percent year-on-year to Tk 3,184 crore last year.

Md Ehsan Khasru, managing director of the bank, said the lender had not disbursed any loan last year; rather it put its efforts to recover the NPLs.

“The previous management and the board of directors are liable for the rise in the default loans in the bank. The default loans will come down this year because of our ongoing recovery programme,” he said.

The default loans at Trust Bank surged 164.50 percent year-on-year to Tk 1,529 crore last year.

Faruq Mainuddin Ahmed, managing director of the bank, said some of its borrowers had earlier obtained stay orders from the High Court so that they were not categorised as defaulters.

But the court vacated the orders last year, fuelling the bank’s classified loans sharply, he claimed.

National Bank, a first-generation bank, saw an increase of 37 percent in default loans to Tk 2,210 crore last year.

ASM Bulbul, additional managing director of the bank, said that the lender had put the accounts of unscrupulous borrowers into the default zone as part of its strategy.

“The policy will help the bank put pressure on the borrowers and compel them to repay the loans,” he said.

In terms of percentage, Modhumoti Bank, a fourth-generation lender, faced the highest NPLs. Classified loans in the bank rose 555 percent year-on-year to Tk 58 crore last year.

Default loans at Meghna Bank, also a fourth-generation lender, stood at Tk 172 crore in 2018 in contrast to Tk 93 crore a year ago.

Adil Islam, managing director of Meghna Bank, however, said the NPLs in his bank were relatively lower than those of many other banks. “Yet, we have formed a number of recovery units to retrieve the classified loans,” he said.

The banks with higher defaulted loans have been in crisis to run operation, management and monitoring, said Salehuddin Ahmed, a former governor of the Bangladesh Bank.

Some banks, including Janata have breached credit discipline grossly while disbursing loans, which was not expected at all, he said.

The central bank is yet to take any remarkable measure to restore the corporate governance in the banking sector. As a result, the crisis has prolonged, Ahmed said.

AB Mirza Azizul Islam, a former finance adviser to a caretaker government, said both the state and private lenders had been distressed by the political influence.

Political connection with the management and board of directors should be delinked in order to ensure the sound financial health of the banks, he said.

The NPLs in the banking sector stood at Tk 93,911 crore last year, up from Tk 74,303 crore a year ago.

London remains top destination for European tech funding

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London remains top destination for European tech funding

Reuters, London

London remained the top destination in Europe for technology investment in 2018, with nearly double the amount being plowed into companies in the British capital than nearest rival Berlin, data showed on Wednesday.

Technology companies in London attracted 1.8 billion pounds ($2.3 billion) in venture capital funding, 72 percent of the total 2.5 billion pounds raised by UK tech businesses, according to data from funding database PitchBook on behalf of the Mayor of London.

Eileen Burbidge, a partner at venture capital firm Passion Capital, said London was the leading hub for financial technology thanks to its position as one of the world’s biggest financial centers, while its universities helped to create companies offering artificial intelligence (AI).

“We get a lot of calls and inquiries from investors in the US and Asia looking for fintech opportunities,” she told Reuters. “In fintech, AI and a few other sectors such as life sciences and robotics, London genuinely leads the world.”

London’s tech sector and its mayor, Sadiq Khan, have warned that Britain’s departure from the European Union could damage its appeal. However, Burbidge said there was no sign of this happening yet, beyond companies asking many more questions when looking to hire from abroad.

The data from PitchBook showed that both Berlin and Paris gained ground against London in the race for funds across Europe, and that London failed to match the record levels it attracted in 2017, but the gap still remained significant.

Berlin attracted 937 million pounds of investment in 2018, almost double the previous year’s total, while 797 million pounds went to tech groups in Paris as President Emmanuel Macron stepped up his promotion of the country.

In Britain as a whole, investment in AI rose 47 percent to 736 million pounds while 1.2 billion pounds went into the booming fintech sector and companies such as digital banks Revolut and Monzo.

Total venture capital funding in European tech slipped slightly in 2018, with 10.44 billion pounds raised, against 10.47 billion pounds in 2017.

Bangladesh biggest textile machinery market for China

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Bangladesh biggest textile machinery market for China

Four-day expo begins in Dhaka

Refayet Ullah Mirdha

Bangladesh will continue to grow as a major textile machinery market as local textile millers are expanding business riding on higher demand for garment items from international consumers, industry people said yesterday.

Local fabrics makers, textile millers, spinners and garment manufacturers spend a few billions of dollars every year to buy machinery.

“Bangladesh is the biggest machinery market for Chinese textile and garment machine manufacturers,” said Chen Ji, secretary general of the China Sewing Machinery Association.

Ji said Chinese sewing machinery manufacturers exported equipment worth more than $1 billion to Bangladesh every year.

“The textile and garment business will continue to grow in Bangladesh over the next many years as the demand is increasing every year both in the international and local markets,” Ji told The Daily Star at the 16th Dhaka International Textile & Garment Machinery Exhibition 2019, also known as DTG 2019. The Bangladesh Textile Mills Association (BTMA) and Yorkers Trade & Marketing Services Co. Ltd, Hong Kong jointly organised the four-day exhibition at the International Convention City Bashundhara in Dhaka. This is the largest textile machinery exhibition in Southeast Asia, the organisers said.

This year 1,200 exhibitors from 37 countries are showcasing latest machinery in the textile and garment sectors at 1,650 booths set up at the venue. Last year, 1,100 exhibitors from 36 countries took part.

Judy Wang, president of Yorkers Trade & Marketing Services Co., said every year the number of participants was increasing as renowned textile and garment manufacturing companies in the world wanted to sell their goods in Bangladesh.

Local spinners can meet 80 percent of the demand of the knitwear sector, while only 35 -40 percent of the woven sectors’ demand can be met by local suppliers, she said.

“So, there is room for further big investment in the woven sector where local entrepreneurs will need to install machinery worth of billions of US dollars,” she said.

Wang said the DTG was a very good platform to invite international buyers targeting the woven sector, which has immense potential to grow.

BTMA President Mohammad Ali Khokon, in his inaugural speech, said buyers of textile and apparel products now recognised Bangladesh as one of their major sourcing destinations.

“Textile machinery manufacturers value Bangladesh as the centre of textile and clothing machinery business hub,” he said.

Shafiul Islam Mohiuddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, urged the government to continue policy support and political stability.

“We need predictable and consistent policies. We want to know what the price of energy would be in the next 10 years. We do not want any erratic policy in the financial sector.”

Create more jobs for youths

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Create more jobs for youths

President asks businessmen as DITF kicks off
Bss, Dhaka
—————-

President M Abdul Hamid yesterday urged the business community to come forward to create more job opportunities for the country’s youths.

“Thousands of meritorious youths come out successful every year with higher studies…it is urgent to create job opportunities for them and you have to come forward in this regard,” he said.

The president was addressing the opening session of a 24th Dhaka International Trade Fair (DITF-2019) at Sher-e-Bangla Nagar in the afternoon. Stressing on the need for setting up new industries and factories in the country to utilise the comparative facilities and explore its potentials, the president said, “This will help enhance employment generation and investment”.

He further called upon both the local and foreign investors to explore the potentials of Blue Economy as the government’s marine-based economic activities have opened a new horizon of progress.

Abdul Hamid underscored the need for attaining expertise to expand trade and commerce, creating new markets and diversifying the country’s export baskets.

“You have to take pragmatic steps to produce quality goods along with enhancing productivity, branding products, and making those more attractive,” he said. The president also urged business leaders to take necessary steps to increase export of jute and agro products, including frozen shrimp, mango and potato.

He said Bangladesh exported 750 items of products to 202 countries during fiscal 2017-18 while the export volume reached at $41 million.

Abdul Hamid hoped that the DITF would play an important role in implementing the multi-faceted economic plans, which would help accelerate the country’s development.

Later, the president inaugurated the month-long DITF-2019 and visited several stalls and pavilions there.

The Ministry of Commerce and Export Promotion Bureau (EPB) jointly organised the trade fair, which will remain open for all from 10:00am to 10:00pm every day.

A total of 550 stalls and pavilions, including 60 premium pavilions, 38 premium mini pavilions, 20 reserved pavilions for women, 26 foreign pavilions, 18 general pavilions and 22 food stalls, will be set up in the fair venue.

Different business entities from India, Bhutan, Pakistan, China, the United States, the United Kingdom, Nepal, Australia, Germany, Hong Kong, Thailand, Vietnam, the Maldives, Mauritius, Russia, Iran and Swaziland are participating in the fair.

Commerce Minister Tipu Munshi, Commerce Secretary Md Mofizul Islam, Federation of Bangladesh Chambers of Commerce and Industry President Md Shafiul Islam Mohiuddin, Export Promotion Bureau Vice-Chairman Bijoy Bhattacharjee, business leaders, secretaries concerned to the president and senior civil and military officials were, among others, present.

‘Chinese loan won’t be debt trap for BD’

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‘Chinese loan won’t be debt trap for BD’

Five loan deals, three MoUs to be signed during PM’s visit to China, Foreign Minister A Momen tells media

 

Chinese loan will not be a debt trap for Bangladesh as the country examines the feasibility of the loan project cautiously, foreign minister Dr AK Abdul Momen said on Friday.

The minister made the remark when his attention was drawn to criticism that loans taken under the Chinese Belt and Road projects flung many South Asian countries into the debt trap.

He was briefing reporters about Prime Minister Sheikh Hasina’s upcoming visit to China at the foreign ministry.

He said due to this caution many loan agreements were dropped as those were not found feasible for Bangladesh, he added.

Hasina will start for the Chinese city of Dalian on July 1, by a special flight of Bangladesh Biman and will return home on July 5.

The foreign minister said that five loan agreements and three MoUs will be signed during the PM’s Beijing trip. These are: Framework agreement of “Expansion and Strengthening of Power System Network under DPDC Area, government concessional loan agreement on “Expansion and Strengthening of Power System Network under DPDC Area Project”, preferential buyer’s credit loan agreement of “Expansion and Strengthening of Power System Network under DPDC Area Project,” framework agreement on “Power Grid Network Strengthening Project under PGCB” project, and agreement on Economic and Technical Cooperation between the two governments.

The MoUs include the establishment of Investment Cooperation Working Group and its implementation plan on hydrological information sharing of Yalu Zhangbo /Brahmaputra River; and cultural exchange and tourism programme.

Responding to a question, the minister said the amount of the loans for which agreements will be signed during the visit is yet to be finalised.

Responding to another question, the minister said China maintains identical relations with Bangladesh and Myanmar and the perception that the Asian giant is biased toward Myanmar is not true. About the Chinese veto in the UN Security Council’s resolution against Myanmar, he said that there might be other reasons behind that.

The minister pointed out that China was eager to resolve the Rohingya crisis from the beginning and it wanted to settle the problem through bilateral discussions between Myanmar and Bangladesh.

The prime minister will attend the summer conference of the World Economic Forum, which will be held from July 1 to July 3 in Dalian city of China.

She will speak at the World Economic Forum on July 2 with the focus on ‘Future of Asia’ and Bangladesh’s socio-economic development.

From Dalian, she will go to Beijing on July 3 and on the same day she will attend a meeting organised by expatriate Bangladeshis in China, the FM said.

During the meeting, she will meet the Chinese President Xi Jinping on July 5.

The Prime Minister will meet the Chinese Prime Minister Li Keqiang twice-the first on July 4 and then on July 5, the minister mentioned.

The foreign minister said Rohingya issue will be key focus of the PM’s meeting with top Chinese officials.

mirmostafiz@yahoo.com

$100b garment export possible by 2024

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$100b garment export possible by 2024

Tipu Munshi says as yarn and fabrics show kicks off

Star Business Report
January 24, 2019

Bangladesh will be able to export $100 billion worth of garment items by 2024 as the international apparel retailers are placing an increasing number of work orders, said Commerce Minister Tipu Munshi.

“By 2021, when Bangladesh will also celebrate its 50th anniversary, we will be able to export garment items worth $50 billion.”

Last fiscal year, garment shipments fetched $30.61 billion, according to data from the Export Promotion Bureau.

Munshi’s comments came at the inauguration of the 15th Dhaka International Yarn and Fabrics Show at the International Convention City, Bashundhara in Dhaka.

“Now we are in the second position in garment exports globally after China. We have immense potential for bagging more work orders.”

But entrepreneurs need bank loans at lower interest rate for rapid expansion of the business, he said.

The government has been developing 100 special economic zones across the country.

The local and foreign investors are allowed to invest in them and contribute to export receipts, the minister added.

This year, 370 companies from 22 countries are participating at the four-day exhibition to showcase products like yarn, denim fabrics, knitted fabrics, yarn and fibres, dyes, chemicals and innovative raw materials.

The fair is open for all from 10:30am to 7:30pm, said Meherun N Islam, president and group managing director of CEMS Global, the organiser.

Shafiul Islam Mohiuddin, president of the Federation of Bangladesh Chambers of Commerce and Industry; Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association; Atiqul Islam, former BGMEA president; and Monsur Ahmed, vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association, also spoke.

Infrastructure loans to be cheaper: AIIB

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Infrastructure loans to be cheaper: AIIB

Star Business Report
January 30, 2019

Bangladesh’s infrastructure borrowing costs will dip this year as lenders vie for a slice of the vast opportunities that the country’s fast-growing economy is presenting, said the Asian Infrastructure Investment Bank (AIIB) yesterday.

The proclamation was made in the lender’s first publication styled “Bridging Borders: Infrastructure to Connect Asia and Beyond”. The study profiled eight countries in the Asia-Pacific region with great need for infrastructure financing: Bangladesh, India, Pakistan, China, Indonesia, the Philippines, Turkey and Russia.

“In contrast to other countries in the report, a marginal reduction in infrastructure borrowing costs over the next 12 months is expected in Bangladesh due to a more competitive domestic financing environment,” the report said.

Lending spreads are expected to narrow as the financial sector strengthens thanks to more long-term lenders in the market.

“There is growing awareness of Bangladesh’s economic potential,” said Jang Ping Thia, principal economist of the AIIB.

At present, loans from the World Bank come with 2 percent interest, India 1 percent, China 2 percent, and the Japan International Cooperation Agency less than 1 percent.

Although infrastructure construction activities will scale up in Bangladesh this year, there are structural challenges in the form of high construction costs, delays and efficiency issues that can put a damper on the intentions.

“High costs pose an ongoing structural challenge to infrastructure development in Bangladesh,” the report said.

The World Bank found that per kilometre cost of road construction in Bangladesh is the highest in the world, which has been supported by the study’s findings too.

“Dhaka’s construction costs on a per metre basis are higher than the other seven focus countries and are significantly higher on a purchasing power basis.” Furthermore, the significant cost and time overruns for projects reduce cost efficiency, it said. The cost of construction materials is likely to rise in line with the projected depreciation of the taka as well as inflationary pressures due to expansionary policies.

The weakening of the taka against major currencies is due to the trade deficit, resulting from the significant imports needed to support the government’s plans for infrastructure development.

The bulk of costs in Bangladesh relate to material costs, and the market for construction materials is less stable due to the country’s high dependence on imports of items such as paving materials, aggregates, stones and structural steel.

Although Bangladesh is self-sufficient (or close to it) in cement and billets, it still requires imports of raw materials for these products, according to the study.

“The prices of industrial raw materials globally are projected to remain flat year-on-year but the projected depreciation of the taka is likely to lead to increased costs for construction materials in Bangladesh.”

Subsequently, Thia called for improvement in construction costs and project implementation to further accelerate government activities.

“Bangladesh is a fast-growing economy and its improving economic conditions present a great opportunity to address infrastructure shortfalls,” said Joachim von Amsberg, AIIB’s vice-president for policy and strategy.

The country will continue to be a priority market for the China-led multilateral lender in 2019, in what can be viewed as further endorsement of the country’s growing stature on the global stage.

The infrastructure-focused lender, which began its journey in 2016, has so far approved three projects amounting to $274 million in Bangladesh’s energy sector and is set to approve four more projects involving $640.60 million in transport, energy and water sectors. The projects under review include the Mymensingh-Kewatkhali bridge and the Sylhet-Tamabil road upgradation.

AIIB’s interest rate on loans for public sector projects is priced according to consensus among multilateral lenders: the lowest is 0.75 basis points over LIBOR (London Interbank Offered rate) and the maximum is 1.45 basis points for 35-year tenure, Najeeb Haider, its investment operations manager, told The Daily Star in June last year.

BB to crack down on habitual defaulters

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BB to crack down on habitual defaulters

Wants amendment to laws, will hold meet with bank MDs and experts on Feb 6

AKM Zamir Uddin

January 29, 2019

The central bank has moved to reform the existing acts to clamp down on habitual defaulters, whose tendency to go to courts to stall paying back loans has sent the sector’s non-performing loans to an alarming level.

As of September last year, the ratio of NPLs stood at 11.45 percent of the total outstanding loans. In terms of amount, it is Tk 99,370 crore.

The Bangladesh Bank is set to hold a meeting on February 6 with banks’ managing directors. Law Commission Chairman ABM Khairul Haque and Bangladesh International Arbitration Centre CEO Muhammad A (Rumee) Ali will explore all legal routes with a view to handing out exemplary punishment to habitual defaulters.

When banks step in to realise the defaulted loans the habitual defaulters go to courts, thwarting the move, said a BB paper. The trick used by the habitual defaulters has created an impediment to recovering the default loans.

More than Tk 75,000 crore of default loans is pending with the money loan courts because of the drawn-out process to settle the cases. Even then, the money loan court can give a maximum six-month civil imprisonment to a defaulter in line with the Artha Rin Adalat Ain 2003, said Imran Ahmed Bhuiyan, a deputy attorney general.

“There is an urgent requirement to reform the money loan court act to reduce NPLs,” he added.

Subsequently, the BB has asked the banks’ MDs to place their opinions on how to speed up recovery of default loans and ensure exemplary punishment for habitual defaulters at the meeting on February 6.

“We will give probable solutions upon hearing the proposals placed by banks,” Haque told The Daily Star.

As per the act, the courts issue decrees in favour of banks to float tenders to sell the mortgaged assets when defaulters fail to make payment in line with verdicts, according to Bhuiyan. In most of the cases, the banks fail to find buyers for the mortgaged assets, fearing it may invite trouble for them in future, he said. “And then the banks apply to the courts to get the ownership of the mortgaged properties. In my long experience I have seen that the ownership of the majority of the mortgaged assets remains disputed,” said Bhuiyan, also a financial lawsuit expert.

As a result, the lenders fail to enjoy the ownership status, and the cases remain stuck with the court.

So, there should be a provision in the law that will resolve the question of ownership of the mortgaged assets before floating the auction, which will help settle the cases at the earliest, he added.

Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), a platform of banks’ MDs, welcomed the central bank’s initiative. “This is long overdue.”

Lenders have been demanding for long to reform the acts in order to recover the default loans.

“It takes a long time to resolve the cases at the money loan courts because of the lengthy process of the Artha Rin Adalat Ain,” said Rahman, also the MD of Dhaka Bank.

The authority concerned should set up a dedicated bench with the High Court to settle the cases pertaining to default loans, he said.

In a joint meeting held on January 12, the Bangladesh Association of Banks, a platform of sponsors of private banks, asked the ABB chairman to prepare a working paper on how to recover default loans.

The two organisations have taken the decision as part of the instructions given by Finance Minister AHM Mustafa Kamal on January 8 to stem further rise in default loans.

GP logs record profit

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GP logs record profit

January 29, 2019
Star Business Report

Grameenphone logged a record Tk 3,520 crore profit last year, its highest to date, driven by significant growth in voice and data revenue.

The profit is 28.47 percent higher than what the largest mobile phone operator in the country posted a year ago.

This led GP to recommend Tk 28 in dividend per share for the full 2018. The shareholders as of the record date of February 17, 2019 will be entitled to the final dividend, subject to the shareholders’ approval at the 22nd annual general meeting scheduled for April 23.

The operator said revenue grew 3.4 percent to Tk 13,280 crore in 2018. Data revenue grew 21 percent to Tk 2,550 crore and voice call revenue was up 6.6 percent. GP acquired 74 lakh new subscribers in the year, registering 11.3 percent growth and ended the year with 7.27 crore active users. It also added 59 lakh internet subscribers. Some 51 percent subscribers of the operator now use mobile data.

“Grameenphone delivered a strong business performance driven by excellent execution in the market with the launching of 4G in February and witnessed a healthy growth in voice and data revenue,” said Michael Patrick Foley, chief executive officer of GP, at a press conference at his office in Dhaka.

“We will continue to drive our proven strategic priorities with speed and agility while providing value to our customers, employees and shareholders.”

GP Chief Financial Officer Karl Erik Broten said, “With the growth potential of the market and our focus on operational efficiency, simplification, and driving value for our customers, we are optimistic in delivering profitable growth going forward.”

Last year, GP invested Tk 3,400 crore to modernise network for the 4G rollout, pay licence and tech-neutrality conversion fee, and acquire spectrum. It contributed Tk 8,420 crore to the national exchequer.