IMF Issues

IMF
ISSUE
:

Political shadows dog

economy: IMF
GDP growth to slip below 6pc this fiscal year; Bangladesh
stands to gain from recovery in advanced economies

Olivier Blanchard, IMF's chief economist, speaks at a press briefing. Photo: AFP

Domestic demand in Bangladesh is expected to recover in 2014 as activity is normalising after a

year of political unrest, but economic growth will go below 6 percent this fiscal year in lingering
fallout, the International Monetary Fund said yesterday.
Bangladesh fits the pattern for much of developing Asia as more idiosyncratic risks stemming
from domestic political tensions and uncertainties remain in several countries.
For Asia as a whole, growth is expected to accelerate only modestly, from 5.2 percent in 2013 to
about 5.5 percent in both 2014 and 2015, the IMF said in the World Economic Outlook report
released in Washington.
The IMF said global recovery "has broadly strengthened" and will "improve further" in 2014, but
it trimmed its growth forecast amid a sharp rise in Japan's sales tax and a slowdown in emerging
markets.
An accelerating US recovery will help the world economy grow 3.6 percent this year, the IMF
said, up from 3 percent in 2013 but down slightly from its 3.7 percent projection in January.
Global growth will pick up to a pace of 3.9 percent in 2015, the fund said ahead of the spring
meetings of the IMF and World Bank in Washington this week.
The IMF's growth forecast for the US was unchanged at 2.8 percent, highest among advanced
economies, it said.
A major impulse to global growth has come from the United States, the IMF said in its report,
adding that US growth will pick up to 3 percent next year.
"Put simply, the recovery is strengthening and there is a substantial improvement from last year,"
Olivier Blanchard, the IMF's chief economist, said at a media briefing at the lender's
headquarters.

IMF Issues
4

Faster recovery depends on domestic demand and exports, and Blanchard warned: "Acute risks
Concurring with the IMF forecasts, Zaman said: "One cautionary point from this report is the
slowdown in growth in some new markets for our exports, such as Brazil, Turkey and Russia
though perhaps some of our lower end products might even benefit from this."
In advanced economies, downside risks to activity stem mainly from prospects of low inflation
and the possibility of protracted stagnation, especially in the euro area and Japan, the IMF said.
Other downside risks include adjustment fatigue and insufficient policy action in a still
financially fragmented euro area and risks related to the exit from unconventional monetary
policy.
On the upside, the stronger-than-expected growth momentum during the second half of 2013
could buoy confidence in Germany, the UK and the US, according to the IMF report.
As exports recovered thanks to stronger demand from advanced economies, activity in Asia
picked up in the second half of 2013.
With export demand still robust, Bangladesh stands to gain from the recovery in the advanced
economies.

Govt assures IMF of continued reforms

The government will continue to focus on fiscal prudence and debt management and work to
bring discipline in the state-run commercial banks as part of its efforts to keep the economy on
track.
Bangladesh recently reiterated the commitments to International Monetary Fund (IMF) as the
global organisation reviewed the country's progress on promises before it releases the fourth
instalment of its $985.66 million loan.
An IMF mission led by Rodrigo Cubero, deputy division chief in the Asia and Pacific
Department of the lender, visited Dhaka between March 19 and April 2 to conduct the fourth
review under the three-year Extended Credit Facility (ECF) programme.
In a statement posted on the IMF website on Monday, Cubero praised the government for
ensuring sound macroeconomic policies in the face of difficult times.
"Throughout recent turbulent times, macroeconomic policies have been sound, the government's
economic programme remains on track, and there has been good progress on structural reforms."
As a result, the mission and the authorities have been able to reach a staff-level agreement on
the quantitative targets and policies needed to complete the fourth review under the ECF
arrangement," he said.
The agreement is subject to review by the management and the executive board of the IMF. The
review is expected to be complete by May 2014, when about $140.5 million would be made
available to Bangladesh.
Cubero said real GDP growth is expected to be below 6 percent for fiscal 2013-14 as unrest and
uncertainty in the run-up to the January elections have taken a toll on the economy.
"Imports, remittance, tax collection, and credit growth have all slowed. Inflation has edged up,
largely due to food supply disruptions."
The IMF official said exports, however, have proven resilient, helped by Bangladesh's growing
share of the global textiles market. "Provided that political stability continues and uncertainty

IMF Issues
4

abates, growth should rise above 6 percent in fiscal 2014-15."

'Herdlike' capital means countries must

reform: IMF
Increasingly fickle capital flows mean that countries have to implement domestic reforms to
protect their stability, the International Monetary Fund's powerful advisory board said Saturday.
After many emerging economies were hobbled by sharp capital outflows over the past year, the
IMF's steering committee, the International Monetary and Financial Committee, said that more
volatility was to come, especially as the US tightens monetary policy.
Singapore Finance Minister Tharman Shanmugaratnam, chair of the IMFC, said countries have
to undertake structural reforms over the medium term to protect themselves as the global
economic recovery enters a new phase.
The IMFC, comprised of two dozen of the world's leading finance ministers and central bankers,
singled out increased volatility in capital movements as one of the key challenges for the global
economy.
"What we have observed is more herdlike behaviour in the markets, more herdlike behaviour
driving capital flows," Tharman said at the end of the IMF/World Bank spring meetings in
Washington.
"That's not going to be a short-term phenomenon, that's going to be a continuing challenge," he
said.
"It's partly reflecting a change in the structure of global finance -- more capital flows, and also a
changed composition, with a greater share that's been taken up by bond funds, a greater share
that's been taken up by mutual funds, ETFs."
This translates to more frequent, more sudden reactions to changes in risk perception -- exactly
what hit emerging economies last year when their growth slowed and interest rates picked up
worldwide as the US Federal Reserve began its move away from its crisis-era easy money policy.
That shift is one of a number of challenges to global growth the IMF highlighted during the
spring meetings, with "structural reform" the byword for adjustments needed in the richest to the
poorest economies to adapt to the post-crisis world.
"We are turning the corner. The global economy is faring better," said IMF Managing Director
Christine Lagarde in a press conference with Tharman. At the same time, she cautioned, "it is
uneven, it is too slow, it is too fragile."
"It applies to pretty much all countries -- structural reforms that will improve the competitiveness
of those economies," Lagarde said.
The IMF has spelled out reforms needed like balance sheet repairing for indebted corporations
and governments, cleaning up and strengthening banking systems -- including in Europe -- and
improving labour markets especially to create jobs for the tens of millions of unemployed youths
around the world.
Tharman said that, with investment still weak relative to the stage of recovery, countries need to
strengthen their legal and operating frameworks to give private investors more confidence.
The message came after the G20 economic powers, meeting at the same time in Washington,

IMF Issues
4

failed to demonstrate concrete action to shore up growth and meet their own goal of significantly
boosting the current tepid, five-year forecast for world output.

PADM
A
BRIDG
E:

Padma bridge allocation

Finance Minister AMA Muhith (8 April)
said the allocation for the Padma bridge

project would neither increase nor decrease

in the revised budget of the current fiscal
year. He said the allocation would be Tk
2,100 crore in the revised budget.
"We will be able to spend the allocated

fund this fiscal year. So, the allocation

would not be increased or decreased,"
he told reporters after a meeting of the
Executive Committee of the National
Economic Council.
The minister reacted to the media reports
that said the revised annual development
programme would be increased to Tk 63,000
crore. It is not correct. It will not increase
from the NEC-fixed budget of Tk 60,000
crore," he said. During a meeting between
the finance ministry and the planning
ministry on Monday, Muhith had said the
allocation for the bridge would go up by Tk
3,200 crore, and would be included in the
minutes of the last Thursday's NEC meeting,
according to a number of officials, who were
present at the meeting.

IMF Issues
4

Readymade Garment
9

READYMADE
GARMENT:

Govt again fails

to meet GSP
conditions

The country has once again failed to fulfil the required conditions for reinstatement of GSP status
to the US markets within the deadline of April 15, mainly due to bureaucratic tangles.
The commerce ministry is now set to submit a report which does not contain any account of
substantial progress with respect to the 16-point action plan provided by the US for regaining the
generalised system of preferences.
This is the second time that the government has failed to make an impression on the Obama
administration. The first progress report submitted in November last year disappointed the US so
much that the second deadline of April 15 was set, a month ahead of Obama Administration's
review of the suspension decision.
One of the major conditions was to recruit additional 200 factory inspectors by this deadline, but,
so far, the labour and employment ministry has taken only 25 first-class inspectors through the
Public Service Commission (PSC).
The delay in meeting the recruitment quota, Mikail Shipar, secretary to ministry of labour and
employment, says is due to the need to amend the PSC rules to recruit manpower for non-cadre
posts.
When asked how the 25 inspectors were recruited without amending the PSC rules, he said: The
ministry gets 50 percent quota. If I want to recruit 200 inspectors I need 80 percent quota. So we
need to amend the PSC rules for recruitment of non-cadre posts.
Mahbub Ahmed, senior secretary of the commerce ministry, could not be reached despite several
attempts by phone.

Readymade Garment
9

Another major condition was to amend the laws of the export processing zones (EPZs) to allow
the workers of such special economic zones the right to demonstrate to realise their demands.
So far, a committee has been formed comprising the senior secretaries for amending the laws of
the EPZs, according to the progress report.
The government also could not nab the killers of labour leader Aminul Islam, a major condition
for GSP reinstatement.
It is yet to formulate the rules needed to implement the amended labour law in factories, nine
months after the amendment was passed.
Among the conditions, the labour and employment ministry could inaugurate the database of
garment factories on March 30 and withdraw cases against labour leaders Babul Akter and
Kalpona Akter.
The government has also relaxed the trade union rules and registered 127 new trade unions in
2013 in the garment sector. The government also re-registered two NGOs -- Bangladesh Centre
for Worker Solidarity and Social Activities for the Environment.
The US government suspended the GSP status on June 27 last year citing serious shortcomings
in labour rights and workplace safety.
Only 0.54 percent of the country's total exports to the US could take up the benefits of the GSP.
The commerce ministry in its working paper said other countries like the EU might be influenced
by the decision of the US, for which the country's export will face troubles.

NON-TRADITIONAL MARKETS SHOW GREAT PROMISE FOR

GARMENTS
Garment exports to non-traditional markets are rising at a faster rate than to the traditional
markets owing to the stimulus package and duty benefits by emerging markets for Bangladesh.
In fiscal 2012-13, garment exports to non-traditional markets such as Australia, Brazil, Chile,
China, India, Japan, South Korea, Mexico, Russia, South Africa, Turkey and so on rose 29
percent year-on-year to $2.98 billion, according to data from Export Promotion Bureau. In
contrast, exports to traditional markets of the US, Canada and European...

Govt submits GSP progress report

The commerce ministry yesterday submitted the progress report on the 16-point action plan for
reinstatement of GSP status to Obama administration.
Bangladesh made a good progress in the action plan. The US has already expressed satisfaction
over the progress, Commerce Minister Tofail Ahmed said.
Although not all the 16 points on the action plan were fulfilled, the government is hopeful that it
would go some way towards winning back the Generalised System of Preferences status.
One of the major conditions was to recruit additional 200 factory inspectors by April 15, but, so
far, the labour and employment ministry has taken only 25 first-class inspectors through the
Public Service Commission.
Another major condition was to amend the laws of the export processing zones (EPZs) to allow
the workers of the special economic zones the right to demonstrate to realise their demands.

Readymade Garment
9

So far, a committee has been formed comprising the senior secretaries for amending the laws of
the EPZs, according to the progress report.
It is yet to formulate the rules needed to implement the amended labour law in factories, nine
months after the amendment was passed.
Among the conditions, the labour and employment ministry could inaugurate the database of
garment factories on March 30 and withdraw cases against labour leaders Babul Akter and
Kalpona Akter.
The government has also relaxed the trade union rules and registered 127 new trade unions in
2013 in the garment sector. The government also re-registered two NGOs -- Bangladesh Centre
for Worker Solidarity and Social Activities for the Environment.
The US government suspended the GSP status on June 27 last year citing serious shortcomings
in labour rights and workplace safety.
Only 0.54 percent of the country's total exports to the US could take up the benefits under the
GSP scheme.

RMG factory shut for a lack of work order

A garment factory in Savar yesterday closed its operation permanently in the face of insufficient
work order for the last few months, owners said.
Mohammad Ashek Elahi Sumon, a director of Bonds Fashions at Kalma area in the industrial
belt, said the factory had been facing an acute fund shortage.
Sumon also said the workers were given half of the salary for the month of March on April 13, as
it could not afford a full pay.
The workers started demonstration at 6pm when the factory management said it would pay their
termination benefits on May 10.
They kept Sumon captive for realising compensation and other benefits. He was freed after the
factory officials signed an agreement.
In the agreement, we have agreed to pay the workers before May 10, Sumon said.

Garment exports show resilience

Shipments rise 16pc in the last one year despite industrial disasters like Rana Plaza collapse

Readymade Garment
9

The one word that describes the garment sector is resilience. Exports beat doomsayers, rising
around 16 percent to $23.86 billion year-on-year during April 2013 to March 2014 despite
industrial disasters like the Rana Plaza building collapse.
Our apparel exports are on a growth trajectory as major global brands are working with local
garment makers to improve workplace safety, said Mustafizur Rahman, executive director of
Centre for Policy Dialogue.
The initiatives of the global retailers and brands to ensure fire safety and structural integrity in
the garment factories send a positive message to the international community, he said.
Apparel exports grew at double digits despite various hurdles as the garment makers have
welcomed the transformation initiatives undertaken by major retailers, said Atiqul Islam,
president of Bangladesh Garment Manufacturers and Exporters Association.
BGMEA has shut production at 13 risky factory buildings in and around Dhaka city on
prescriptions from factory inspectors of European and North American clothing retailers, he said.

Garment makers are also working to relocate risky factories to purposely-made buildings, Islam
said.
After the Rana Plaza accident, international brands and retailers are offering lower prices for
Bangladeshi garments, which ultimately increased the volume of orders, said David Hasanat,
managing director of Viyellatex Group, a leading garment exporter.
Global retailers are using the Rana Plaza issue as a bargaining tool to cut prices, he said,
adding that the garment sector witnessed price cuts by around 6 percent over the last one year
despite a rise in production costs.
Hasanat said his company registered a 14-15 percent export growth in the last one year,
compared with the previous year.
The building collapse, however, certainly affected the overall export growth, the CPD executive
director said.
Though the country registered around 13 percent export growth in the first nine months of the

Readymade Garment
9

current fiscal year, the rate could have been more than 20 percent had the building collapse not
occurred, he said.
Garment makers also echoed the same. We could have grabbed more orders had there been no
industrial accidents and political unrest, Islam of BGMEA said.
Global retailers cancelled orders worth around $110 million from 57 factories housed in shared
buildings in the last six months, according to Islam.
Currently, growth rates for apparel shipment are on the decline. In March, garment exports saw a
3.67 percent year-on-year growth, the lowest since November, according to Export Promotion
Bureau.
The sluggish growth is expected to continue until September as a negative image that was
created globally after the building collapse is taking its toll, said Abdus Salam Murshedy,
managing director of Envoy Group.
Envoy Group saw its orders drop 10-15 percent in the last one year, he said.
Exports will face another blow when Accord and Alliance, the two platforms of global retailers,
will start factory inspections in full swing as many plants will have to be shut during the safety
checks, he said.
Rahman of CPD said Bangladesh has immense potential to increase its apparel exports due to the
quality and costs of its products. "If we can brand Bangladesh as a compliant country, many
orders, especially from China, will pour in.
The government will have to fulfil the promises made after the Rana Plaza collapse, Rahman
said.
Bangladesh is now the second largest garment exporter after China. The country has around
4,000 active garment factories, employing nearly 3.6 million people directly, 80 percent of whom
are women, according to BGMEA.
Garment exports accounted for 79.62 percent or $21.5 billion of the country's total overseas sales
of $27 billion in fiscal 2012-13, according to EPB.

Readymade Garment
9

Rana Plaza Compensation

12

RANA PLAZA
COMPENSATI
ON:
Rana Plaza victims
to get compensation
by April 24
Rana Plaza victims look set to finally
receive their due compensation after ILO
Country Director Srinivasa Reddy yesterday
assured the hand-out would begin before the
first anniversary of the disaster.
A total of 3,080 victims will be
compensated, with each victim receiving Tk
50,000 from the trust fund created by
international retailers, he said after a
meeting with Bangladesh Garment
Manufacturers and Exporters Association,
diplomats and researchers.
Reddy, however, did not give a specific date
on which the compensation would be
handed out.
The 580 victims who have already received
compensation from the British retailer
Primark, however, have been excluded.
The compensation figure has been arrived at
following the International Labour
Organisation's convention 121, widely
employed worldwide to pay off victims of
industrial accidents.
Asked if the hand-outs made from the Prime
Minister's Fund would be part of the
compensation, Reddy said the trust fund's
three commissioners would decide if the two

would be merged or not.

Rana Plaza
trust fund
collects $17m
so far
Retailers and brands have deposited a total
of $17 million so far with the Rana Plaza
Donor Trust Fund to compensate victims of
the building collapse that took lives of at
least 1,135 people last April.
The retailers and brands have started
depositing money with the compensation
fund. We will start paying the victims before
the 24th of April, the first anniversary of the
building collapse, Srinivasa Reddy, country
director of International Labour
Organisation, told The Daily Star yesterday.
Of the money deposited, the British brand
Primark is paying $9 million to the 580
workers of New Wave Bottom Ltd, a factory
that was located on the second floor of the
Rana Plaza building. The payment is being
made through the ILO.

Rana Plaza Compensation

12

The ILO is chairing as a neutral body to

disburse the funds to the victims; under
ILO's convention 121, a total of $40 million
is needed to compensate the 3,600 workers
who worked at Rana Plaza, Reddy said.
A total of 29 retailers and brands that
sourced garments from the five factories in
the Rana Plaza building are bound to
compensate, he said.

No transparency in
PM's relief fund for
Rana Plaza victims
The government has failed to show
transparency in collecting and distributing
money for the victims of the Rana Plaza
building collapse, a BNP leader said
yesterday.
There was no transparency and
accountability in dealing with the Prime
Minister's relief fund. It is still unclear who
received how much money from the relief
fund and who contributed to the fund, said
Amir Khasru Mahmud Chowdhury who is
also an adviser to the BNP chairperson.
Chowdhury's comment came at a dialogue
--BBC Bangladesh Sanglap -- to mark the

first anniversary of the building collapse.

Prime Minster's Adviser HT Imam, however,
said the relief fund is handled with "full
transparency". I will give details of the
fund if anybody wants.
The government has so far distributed Tk
22.53 crore to the victims from the relief
fund, he said at the dialogue at Biam
auditorium in the capital.
Nazma Akter, president of Sammilito
Garment Sramik Federation, a platform of
apparel workers, urged the government to
provide compensation to the victims as soon
as possible. Prime Minister Sheikh Hasina
has provided money to the victims as
donation from her fund. It is not
compensation, she said.
Nazma also stressed the need for
coordination among different government
and private agencies and support from major
political parties for improving workplace
safety in the garment sector.
All the missing workers of the Rana Plaza
will get compensation when their DNA tests
will be complete, said Atiqul Islam,
president of Bangladesh Garment
Manufacturers and Exporters Association.

Rana Plaza
survivors left in
desperate straits

Rana Plaza Compensation

12

Most of the survivors, around 66 percent, of

the Rana Plaza tragedy are leading an
inhuman life in the face of difficulties to
meet their daily needs, according to a
survey.
A total of 2,222 victims were surveyed,
including 1,436 survivors and 786 family
members, by ActionAid Bang-ladesh. Of
them, 2.4 percent cannot make ends meet at
all, the survey found.
The objective of the survey was to portray
the current socio-economic and physical
vulnerability of the workers along with
vulnerability of family members of the
deceased, said Aamanur Rahman, deputy
director of ActionAid Bangladesh, a
nongovernmental organisation.
The survey also highlighted the dire need for
compensation. Rahman shared the findings
of the survey at a dialogue organised by
ActionAid at Brac Centre Inn in the capital.
The top three priorities of the survivors are
food and their outstanding house rents and
loans, he said.
Although almost one year has passed since
the building collapse, 73.7 percent of the
survivors are yet to return to work, mainly
due to physical ailment (63.74 percent),
trauma (23.76 percent) and employers'
unwillingness (7.54 percent).
The majority of the respondents have

individual and family incomes between Tk

5,000 and Tk 10,000 a month.
We have found that 55 families have failed
to manage a consistent source of income in
the past 12 months, said Rahman, also a
team leader for conducting the survey. The
much-expected compensation from 28
retailers is still an unresolved issue, he
added.
No lesson was learnt from the industrial
accidents in the past, said Shirin Akhter, a
member of the parliamentary standing
committee on the labour and employment
ministry.
As brands are an important part of the
supply chain, they have some
responsibilities towards the victims, she
said.
The government has a big fund for the
victims. Some workers claimed they have
not received any benefits from the fund. The
government should look into the issue, she
said.
Accord and Alliance, the two platforms of
foreign brands for conducting factory
inspections in Bangladesh, are focusing on
safety only, not compensation, Shirin said.
We should take a

Pass law for justice

to Rana Plaza
victims: rights
activist
Worker leaders yesterday urged the
government to pass a tort law enabling Rana
Plaza victims to secure compensation.
A tort, in common law jurisdictions, is a
civil wrong which unfairly causes someone
else to suffer loss or harm resulting in legal
liability for the person who commits the
tortuous act.

Rana Plaza Compensation

12

The demand came at a press conference of

the Garment Sramik Oikya Parishad, a
workers' association, in the capital.
The association also sought compensation of
Tk 48 lakh each for the dead and missing
workers as per the loss of earnings formula,
which fixes compensation based on the age
of victims and the national life expectancy.
Assuming the average age of the dead and
missing workers to be 25 and the retirement
age of 60, the compensation comes to Tk 48
lakh, said Moshrefa Mishu, president of
Garment Sramik Oikya Parishad.

She also demanded filing of a murder case

against the owner of Rana Plaza, medical
treatment, jobs for the disabled workers and
one family member of the dead and missing
workers.
The government has so far distributed Tk
22.53 crore of Tk 127 crore to the victims
from the prime minister's relief fund, she
said. Has the prime minister decided to use
the relief fund for political purpose instated
of humanitarian reasons?
The labour leader also came down heavily

Tax
15

Tax:
Investors of luxury hotels
get duty cuts
The revenue authorities have reduced import
duties on capital machinery and other
equipment needed to set up luxury hotels, in
a bid to boost the local tourism industry. The
National Board of Revenue will charge 5
percent duty on the import of certain capital
goods and accessories to facilitate
establishment of chain and standard hotels in
Bangladesh, it said in a notice on Tuesday.
The items include interior decor materials,
kitchen and cooking equipment, building
security equipment, fire fighting and
protection.

Export tax cuts

concern IMF

The International Monetary Fund has sought

a concrete action plan from the government
to counter the impact of export tax cuts,
expected to bring in revenue losses of
around Tk 2,000 crore over the next 15
months.
Last month, the National Board of Revenue
(NBR) slashed the export tax on readymade
garments to 0.3 percent from 0.8 percent and
on all other products to 0.6 percent from 0.8
percent, in a bid to make up for the losses
incurred last year due to political turmoil.
The IMF said the political crisis has already
hit revenue collections this fiscal year, and
the export tax cuts, which will run from
April 1 this year to June 30, 2015, will only
deepen the shortfall.
Using data from the NBR, the multilateral
lender has estimated that the tax cuts will
yield forgone revenues of around Tk 2,000
crore.
Subsequently, it has asked the government
to forward a list of administrative measures
that woudl be taken to make up for the
revenue loss, along with a deadline for
adoption and estimated yield in fiscal 201415.
The finance ministry has preliminarily set
the NBR's revenue collection target for next
fiscal year at Tk 150,000 crore, which is 20

Tax
15

percent more than the current year's revised

target.
NBR, however, is yet to finalise on the
measures to be taken, according to a high
official of the tax collector.
The export tax was deducted at source, so
there was little scope for evasion. It was a
sure shot source of revenue for us, so we are
doubtful that the full amount can be
recovered from other sectors. It is too big an
amount.
Meanwhile, the government has informed
the IMF about the host of tax reform plans
that it would propose in the upcoming
budget.
The most noteworthy among the reform
plans is the intent to overhaul the corporate
income tax by gradually reducing the rate
and broadening the base, such that overall
corporate income tax collections are raised.
At present, the corporate tax ranges from
37.5 percent to 45 percent, which
economists and businessmen said was
excessive.
The NBR official said they would decide on
the exact rate cut after discussing with Prime
Minister Sheikh Hasina next month.

NBR's tax receipts

remain sluggish

Revenue collection remained sluggish in the

first eight months of the fiscal year, with the
National Board of Revenue recording the
lowest year-on-year growth in tax receipts
for the period in the last seven years.
Between July and February, collections rose
8.66 percent year-on-year to Tk 68,344
crore, according to data from NBR.
Lower receipts from customs as well as
falling collection growth in VAT and income
tax, the two major sources of revenue,
caused the slowdown in revenue collection.
Falling growth reflects the fall in domestic
demand, said Ahsan H Mansur, executive
director of Policy Research Institute.
During the period, VAT collections grew
13.29 percent to Tk 26,192 crore, while the
pace of income tax collection growth slowed
to 14 percent. Receipts from customs fell
0.86 percent to Tk 20.863 crore.
The collection of tax at source has fallen as
development activities are yet to pick up.
Collection of advance income tax from
exports and imports was also less than
expected, a senior official of NBR said,
seeking to remain unnamed.
The increased tax rebate privileges for
investment also caused a fall in income tax
collection, he said, adding that if the current
pace of collection continues, it will not be
possible to achieve the revised revenue
target.
Subsequently, the NBR last month revised
down fiscal 2013-14's collection target by 8
percent to Tk 125,000 crore.
Mansur said tax collection might improve in
the coming months due to political stability,
pick-up in imports and increased remittance
inflows. But, it may not be enough to
achieve the revised target.
Economic activities will not shoot up
overnight to facilitate tax collection
growth, said Towfiqul Islam Khan, research
fellow of Centre for Policy Dialogue.
He said the government should fix the next
fiscal year's revenue collection target

Tax
15

considering the current fiscal year's

collection.
Tax target should be realistic to ensure
fiscal balance, Khan said.

MCCI pushes for higher

tax-free income ceiling

Banking
21

The Metropolitan Chamber of Commerce and Industry (MCCI) yesterday urged the government
to increase the tax-free income ceiling for individuals and cut corporate tax. The chamber
recommended resetting the tax-free income ceiling at Tk 2.75 lakh from Tk 2.20 lakh for
individuals; Tk 3.25 for women and Tk 3.5 lakh for senior citizens.

BAN
KIN
G

Banking
21

New rule formed to give BB the power to hold elections for board members

Grameen Bank moves closer to

govt's grip
The government has issued a rule that transfers the power to
appoint members of Grameen Bank board from the microlender
itself to Bangladesh Bank, a move that sends the embattled
organisation further into the state's grip.
The central bank will form a three-member commission to elect
nine members of the 12-member board, as per the Grameen Bank
(Election of Directors) Rules 2014, which took effect immediately.
The three-member body would comprise a BB executive director,
who would serve as the chief election commissioner. The other
two posts would be filled by one of the general managers of

Grameen Bank and a director of Microcredit Regulatory Authority.

Finance Minister AMA Muhith earlier claimed there were no electoral rules for Grameen Bank,
but the government actually formulated them on August 25, 1987, which were followed to date.
As per the previous rule, the Grameen Bank board picked an official of the bank to conduct the
elections.
Although the rule was published on April 6 on the website of the BG Press, senior officials of
finance ministry's banking division, the concerned department, were unaware of the new rule at
the time of writing.
Meanwhile, both experts and elected members of Grameen Bank fear the system might politicise
the bank.
Akbar Ali Khan, a former chairman of the bank, said the election system should have been
finalised after discussions with borrowers, members, and other stakeholders.
If the new rule is acceptable to them, there will be no politicisation of the bank. But if they don't
accept the new rule, it will create distortion. If the bank is politicised, it will be destroyed, he
said.
Tahsina Khatun, a member of the Grameen Bank board, said the new rule would create problems
for the bank.
If the government wants to introduce general elections-type voting then the whole voting
process would turn into anarchy. Politics and corruption will creep into the bank. As a result, the
consequence of the bank will be that of other state-run banks.

Banking
21

She said, by giving the central bank power to conduct elections the government is actually taking
control of the bank. We are fine with the current system. We don't need the new one, she said.
However, except for conducting the election the new rule is similar to the previous one. The
chief election commissioner will appoint one official of the central bank to work as returning
officer in each of the nine constituencies.
The constituency is the third and final stage of the three-tier election where members of Grameen
Bank are elected as board members. Officials of the scheduled banks near the regional centres
will be appointed as assistant returning officers to pick winners for the constituency level.
The returning officer will appoint one official from the scheduled banks under his or her own
area as the presiding officer or assistant presiding officer.
As in the past, the election of Grameen Bank will be held in three stages: constituency, regional
and branch.

Challenges for new banks

Over the past decade, Bangladesh economy enjoyed favourable economic environment and grew
at approximately 6 percent with tolerable inflation. Major economic indicators like GDP, exports
and imports have tripled in the last 10 years; industrialisation and trade have soared to
unprecedented heights.
Growth in the real economy has fuelled the growth of the country's banking sector which has
seen an increase in deposits by over 400 percent and assets by around 500 percent in the last 10
years. Simultaneously, per capita GDP has more than doubled and yet more than half the
population is still unbanked.
The central bank's decision to allow licences to nine new banks has the merit. Regardless of
political motivations, a logical argument can be made beyond the unbanked population argument
that more competition will improve service quality and ultimately benefit the consumers.
From the sponsors standpoint, a logical argument can be made about the potential economic
benefit for the sponsors based upon past record, which is estimated to be 25 percent+ over 10
years from inception of a bank approximately 15 percent higher than the risk free rate in
Bangladesh.
Past performance do not guarantee future returns
These all sound great theoretically but the ground reality is different, and challenges faced by the
management and shareholders of new banks cannot be minimised. The banking industry is
already highly competitive. Therefore, unless these new banks get their act together fast,
shareholders could suffer a major setback and even some could face extinction.
Let us refresh our memory about how banks make profit. Banks make money primarily in three
ways. Firstly, from the spread between the deposit and lending rates; Secondly, from the fees
they charge for various products and services, and thirdly from proprietary investments.
This is obviously overly simplified; however, all these modes of earnings potential are possible
to some extent provided that the demand is growing, banks are well capitalised and have the
proper human resource; and the rest happens automatically. So what are the challenges?
It is all about people
At present, the banking sector is suffering from an acute shortage of skilled and adept
professionals.

Banking
21

Except for a few foreign and local banks, unfortunately the quality of staff beyond the CEO,
managing director and DMD levels drops drastically. Depth and breadth of knowledge
unfortunately is poor. This is an ominous sign for the industry since professional human resource
is essential for the growth and development of the industry. These weaknesses obviously
facilitate frauds, mismanagement, and value destruction for shareholders and encourage and
breed substandard corporate governance culture in the financial sector.
The first challenge for new banks will be attracting the right leadership. It will not be easy to
attract talents for a newly established entity. The most likely outcomes are - either you end up
recruiting an unqualified team due to budget constraints or you end up paying a significant
premium for talents.
If you recruit weak managers, then they end up attracting even weaker subordinates and we all
know how that works.
Attracting deposits
While most banks offer similar commodity type products, they are combating with each other in
most cases on price/yield, realistically, the new entrants can gain an initial advantage and capture
market share by offering higher deposit rates.
Falling deposit rates at present driven by recent political uncertainty, risk averseness, lack of
demand for loans and recent spike in demand for short-term government securities provide a
lower rate environment, nevertheless provide no relative advantage to the new banks.
Lending to the right clients
Contrary to popular believe that aggressive marketing or in this case aggressive lending may help
quickly capture market share and drive banks' profitability, in reality success of these new banks
in the long-run depends on ensuring that they lend to the right clients. Most of us are aware of
the result of aggressive growth in the lending portfolios.
As a lender, you only get the stated interest and the principal within the maturity date at best and
you have no upside like equity investors. This is why one must wonder why many banks even
today lend to entities with no real capital or a sliver of capital created from revaluation and other
financial engineering.
If the new banks fall into this temptation, this could be the first nail in the coffin. Chasing yield
and risking principal is the fastest way to go bankrupt.
Tapping the untapped
With around half the population unbanked, the biggest opportunity for new banks exists for
targeting unbanked rural populations with the right products and services. Opening cost-efficient
branches and nimble service centres in suburban and rural areas can substantially boost asset size
and simultaneously, bring the much-needed diversification that every lender requires to spreadout its risk.

Sonali in a tight spot over Hall-Mark bills

Banking
21

Sonali Bank is now under fresh pressure to honour the accepted bills of Hall-Mark Group
amounting to Tk 1,316 crore, after the Anti-Corruption Commission decided not to investigate
the transactions for anomalies.
The state-owned bank has been putting off from paying other banks for the bills for almost two
years now, as it waited on the results of ACC probe to be certain that no fraud was involved.
But ACC's latest move means Sonali has no other option but to make payment to the 26 banks.
ACC has decided not to investigate the non-funded portion of
the Hall-Mark scam. The issue can now be deemed settled, the anticorruption watchdog said in
a letter to Sonali last week.
Of the Tk 3,547 crore embezzled by Hall-Mark Group between 2010 and 2012, Tk 1,709 crore
was non-funded, which comprised mainly letters of credit.
Hall-Mark took out Tk 1,316 crore from other banks by presenting the letters of credit issued by
Sonali, and as per law, Sonali will have to reimburse them upon presentation of the accepted
bills.
After the scam came to light in the latter part of 2012, Sonali stopped paying against any of HallMark's bills, a move which has dragged the state-owned bank into a cold war with the 26 banks.
The remaining Tk 393 crore was from other Sonali branches, which it settled internally.
I think the investigation into Hall-Mark's non-funded loans does not fall under ACC's
jurisdiction as no amount of money was actually disbursed by Sonali, Mohammad
Badiuzzaman, chairman of ACC, told The Daily Star.
He said that Sonali will have to conduct the investigation with the help of Bangladesh Bank.
Pradip Kumar Dutta, managing director of Sonali Bank, told The Daily Star that they will take a
decision on the matter after discussing it in the board meeting.
Meanwhile, the central bank in a letter asked Sonali to clarify its position about the payment to
other banks against the accepted bills.
We have sought one month's time from the central bank in this regard, Dutta said.
However, Zaid Bakht, a member of the Sonali board, said the bank will make payment for the
accepted bills after examining them on a case-by-case basis.
The bank found that many of the accepted bills pertained to fraud, and Bakht said the other banks
had the responsibility to do due diligence before giving acceptance, which they neglected.

Banking
21

Sonali will now have to seek advice from the finance ministry and Bangladesh Bank before
making payment for those bills, he added.
Of the total of 2,342 bills presented, Sonali, however, has already decided to honour 586 of them,
which amount to Tk 150 crore.

BB TO BRING BANKS UNDER CENTRAL PAYMENT SYSTEM BY

JULY
Factors preventing Bangladesh Bank from launching its National Payment Switch (NPS) have
been resolved, and efforts are in full swing to make the services available to customers by July.
Once all the banks join the NPS, a customer using a credit or debit card from any bank will be
able to make low-cost transactions through any ATM (automated teller machine) and POS (point
of sales) across Bangladesh.
We are expected to begin the NPS services on full-scale by July, said Dasgupta Asim Kumar,
executive director of the central bank. Currently, BB is testing 26-27 services that will be
available under the NPS.
NPS, which will be a mother payment and settlement gateway, is likely to increase the
transparency of internal and cross-border electronic payments, optimise all regulatory and
supervisory procedures, and reduce related costs, according to BB.
Commercial banks having an ATM, POS, e-payment gateways or mobile payment switches or
connected to any other shared switch network will be able to send inter-bank payment
instructions to the NPS for clearing and settlement.
In January 2012, BB signed a deal with a Singapore-based company to implement the NPS
project at $5 million (Tk 40 crore), funded by the World Bank. However, the central bank did not
examine whether the vendor can provide the original software.
By the time the installation of hardware was completed and 80 percent of the payments were
made to the firm, BB came to know that Brussels-based OpenWay Group is the original supplier
of the payment switch software across the world.
At the launch of the NPS trial services in December 2012, BB Governor Atiur Rahman said all
the banks would be connected to the switch in a month or two. But only seven out of 56 banks
have joined the NPS so far.
The issue rattled finance ministry officials who later asked the central bank to finish the project
at any cost. Later, BB contacted IT Consultants Ltd, the local partner of OpenWay, to get the job
done.
NPS is moving forward and it will 'go live' fully by June, said Kazi Saifuddin Munir, chief
executive of IT Consultants that also operates Q-Cash, the largest ATM network in Bangladesh.
But the initial benefit will be with ATM transactions. Once the NPS is launched and all banks
join the system, an ATM card holder has to pay just Tk 10 per transaction for using any bank's
booth in the country instead of the current Tk 20-Tk 40, depending on the inter-bank
relationship.
Presently, there are around 6,000 ATMs across the country, of which, Dutch-Bangla Bank has
2,500 ATM booths and Q-Cash has 3,000.

Stock & Corporate

27

STOCK &
CORPORATE

MoF asks BSEC to

shoulder rent for spl
tribunal space
Responsibility to go to
law ministry finally

MoF asks BSEC to shoulder rent for

spl tribunal space. Responsibility to
go to law ministry finally. MoF asks
BSEC to shoulder rent for spl
tribunal space
The ministry of finance (MoF) has asked the securities regulator to bear the rent of floor space,
required to set up a special tribunal for the capital market, from its own funds until the law
ministry gets budget allocations, officials said.
The MoF said this in a letter sent to the Bangladesh Securities and Exchange Commission
(BSEC) on April 21.
The instruction of the MoF came following a BSEC letter, which had been sent to the ministry
on April 13 last, seeking funds for setting up the special tribunal for quick disposal of the capital
market-related cases.

"The BSEC will bear the rent of the space for special tribunal for the time being. The law
ministry will bear its rent if it gets budget allocation in favour of the tribunal in the annual budget
of the fiscal year (FY) 2014-15," the letter of the MoF reads.

Stock & Corporate

27

Stocks flatline on profit taking

Average daily turnover tumbles by 14.47pc on DSE
The stock market closed flat last week that ended Thursday with turnover remaining sluggish as
investors sold shares to net short-term profit on certain stocks.

The week featured four trading sessions instead of five as the market remained closed on 14
April due to Bangla New Year-1421. Among them, two sessions ended on the red while two
others closed higher.

Week-on-week, DSEX, the prime index of Dhaka Stock Exchange went up marginally by 6.19
points or 0.13 per cent to close the week at 4,598.92 points.The other two indices also closed
positive. The DS30, comprising blue chips, gained 27.52 points or 1.64 per cent to close at
1,703.16 points. The DSES went up by 14.71 points or 1.71 per cent to close at 1,034.93
points.The port city bourse, the Chittagong Stock Exchange (CSE), however, went down
marginally with its Selective Categories Index, CSCX, lost 31.99 points or 0.35 per cent to close
the week at 8,868.71 points.
The total turnover amounted to Tk 17.46 billion on DSE which was 31.57 per cent lower than
previous week's total value of Tk 25.52 billion as this week featured one less trading session
compared to that of the previous week. Stocks flatline on profit taking

Stock & Corporate

27

The stock market closed flat last week that ended Thursday with turnover remaining sluggish as
investors sold shares to net short-term profit on certain stocks.The week featured four trading
sessions instead of five as the market remained closed on 14 April due to Bangla New Year-1421.
Among them, two sessions ended on the red while two others closed higher.
Week-on-week, DSEX, the prime index of Dhaka Stock Exchange went up marginally by 6.19
points or 0.13 per cent to close the week at 4,598.92 points.
The other two indices also closed positive. The DS30, comprising blue chips, gained 27.52
points or 1.64 per cent to close at 1,703.16 points. The DSES went up by 14.71 points or 1.71 per
cent to close at 1,034.93 points.

Trading disruption hits stock prices on DSE

The market ended Sunday lower with turnover dropped significantly as the investors remained
shaky following trading disruption on the prime bourse.
Trading was halted on Dhaka Stock Exchange (DSE) at 10.35am soon after resumption due to
technical glitches. However, DSE trading resumed at 1:15pm after two and 40 minutes shutdown
and continued till 3:15pm.DSEX, the prime index of the DSE ended at 4,573.56 points, shedding
19.16 points or 0.41 per cent during the day's brief trading session.
The other two indices, however, closed into green. The DS30, comprising blue chips gained
0.2.05 points or 0.12 per cent to close at 1,677.68 points. The DSE Index (DSES) went up by
0.75 points or 0.07 per cent to close at 1,020.96 points.
The market turnover slowed down following trading disruption. The session witnessed only two
hours of trade (instead of the usual four hours) and total turnover amounted to Tk 2.24 billion,
registering 46.70 per cent decline over the previous session's value of Tk 4.20 billion."Trading
was suspended for two hours in the country's prime bourse - DSE, due to technical malfunction.
Selling pressure ignited as trading resumed since the investors' attitude was downbeat,"
commented International Leasing Securities, in its daily market analysis.

However, some particular scrips like Renata, Marico, Lafarge Surma Cement and GP moved up
against the wind and seized positive return, said the International Leasing.

Stock & Corporate

27

Trade &
Market

Furniture makers
seek financial
lifeline as budget
nears

The furniture industry owners have urged the government to slash duty on
import of raw materials and offer cash support to stay competitive in the
international market. They made the plea at a pre-budget meeting with the
National Board of Revenue (NBR) Monday.
Small, medium and large business associations attended the meeting and
placed their pre-budget proposals for fiscal year (FY) 2014-15. NBR member
(customs policy) Md Farid Uddin chaired the pre-budget meeting.
Bangladesh Furniture Industries Owners Association president Selim H
Rahman proposed reduction of tax to 12 per cent from the existing 74 per
cent on lacquer and wood cuttings.
They said lacquered furniture is 50 per cent more expensive than varnished
types due to high taxes on it. The association leaders also sought tax benefit
on sand paper, screw bolt, lock and handles.
They expressed the hope that prices of furniture could be reduced in the
local market and export in the international market with the tax benefit.
Furniture industry owners expressed their grievances over a recent decision
of NBR to allow luxury hotels enjoy tax benefit on import of furniture.
Bangladesh Soybean and Soya Food Products Association demanded dutyfree facility and exemption of VAT on import of raw materials of baby food.
The association leaders said they have to import isolated soya protean, rice
protean, cashew nut, sun flower oil as raw material of baby food. Currently,
high import duty is imposed on those raw materials which should be
reduced.

Stock & Corporate

27

Last year challenging for Bangladesh,

says ICCB
Calling 2013 one of the most "challenging" years for the economy in recent
times, the Bangladesh chapter of ICC said on Saturday the Padma bridge
project failure, factory disaster, financial scams, US suspension of trade
preferences and political unrest damaged the country's image. Despite the
odds, the International Chamber of Commerce Bangladesh (ICCB), in its 19th
annual council, said the country has been able to attain a GDP growth of 6.03
per cent in 2013 fiscal year.
"Political confrontation during the third-quarter of 2013 resulted in tragic loss
of lives of innocent people in addition to huge economic losses. Otherwise,
the country could have easily achieved more than 7.0 per cent GDP growth,"
the chamber said in a statement.
Although this marks a drop in GDP growth rate for two consecutive years,
growth of over 6.0 per cent is quite respectable where the projected growth
of developing countries is around 5.0 per cent in 2013, the ICCB said
referring to the annual market update of Citibank NA Bangladesh. The drop in
GDP growth rate from 6.23 per cent in FY12 is mainly attributed to
slowdowns in agriculture and service sector.
The slowdown in agriculture sector from 3.11 per cent in FY12 to 2.17 per
cent in FY13 is largely due to the base effect of two consecutive years of
record growth and lower output due to the falling prices along with weatherrelated disruptions. However, Bangladesh has successfully coped with the
global challenges.
Economic growth has also been largely inclusive and broad based, with food
production keeping pace with the population growth, significant increase of
per capita income in real terms, poverty fell sharply to less than 31.5 per
cent coupled with improved life expectancy, higher literacy rate and lower
mortality. Population control programmes have also helped in slowing down
population growth.
The executive board mentioned that Bangladesh has the potential to create
at least 15 million jobs in the next ten years.
The productivity of Bangladeshi workers is on par with Chinese workers in
well-managed firms, with their wages being one-fifth of their Chinese
counterparts (half those in Vietnam), the board said mentioning a WB report.

Stock & Corporate

27

The country's unique competitive position comes at a time when China is in

the process of outsourcing 80 million jobs from labour-intensive industries.
BGMEA President Atiqul Islam thanked ICCB President Mahbubur Rahman and
all the members of ICCB for their unqualified support to BGMEA after the
Rana Plaza tragedy.

Over hundred sub-contracting apparel

factories close down
More than one hundred sub-contracting apparel factories, mostly noncompliant ones, have been closed and many others are at the verge of
closure mainly for want of sufficient work, industry insiders said. They said
the sub-contracting factories have long been facing dearth of work as big
garment makers, who take work orders directly, are either turning away from
the third parties or are opting for the compliant ones in the face of strict
monitoring of safety measures by the buyers.
Lower volume of manufacturing work of their mother companies has also
played a role behind the situation. Sources said, the sub-contracting factories
randomly engage child labour in production and other safety measures like
fire safety, exit facilities and their timely payments are rarely maintained.
And after Tazreen and Rana Plaza incidents buyers have become cautious
working with such factories.
"I had been doing sub-contracting work in my factory for a long, but after the
deadly incidents, my local buyers have become cautious in giving me work
citing poor working conditions and finally I had been forced to close down the
factory last month for want of work," Three Star Apparel managing partner
Abu Ibrahim admitted to the FE.
Another subcontracting factory owner Khalilur Rahman said he and his three
business colleagues who were running business on different floors of a
rented building tried to upgrade their factories to compliant ones but failed
to obtain certifications from the concerned authorities as they failed to fulfill
qualifying criteria.

Stock & Corporate

27

"Following continuous pressure from the mother companies after the deadly
incidents, we have tried to upgrade our factories to a compliant one but
failed as our landlord did not follow the building code while constructing his
houses and finally we had to declare lay-off in our factory," he added.
Mr Rahman, however, urged the authorities concerned, buyers and the big
players to give enough time to the sub-contracting factories so that they
could upgrade their units.
"If the parties do not try to understand the reality, then hundreds of such
factories would face closure and the big players would also face difficulties in
timely shipment."

Oslo Business For Peace Award

28

OSLO
BUSINESS
FOR PEACE
AWARD
Leading businesswoman Selima Ahmad has
won the prestigious Oslo Business for Peace
Award 2014 for her socially responsible and
ethical business practices.
Selima, vice-chairperson of Nitol Niloy
Group and founder of Bangladesh Women
Chamber of Commerce and Industry
(BWCCI), is the second Bangladeshi and
first Asian businesswoman to win the award.
In 2012, Latifur Rahman, chairman and
chief executive officer of Transcom Group,
got the award, the highest form of
recognition given to individuals for fostering
peace and stability through creating shared
value between business and society.
We congratulate you with the exceptional
appreciation you have thus been given by
the Award Committee, and are truly proud to
have you in the exclusive group of Business
for Peace Honourees, the Business for
Peace Foundation said in a letter to Selima
Ahmad.
Other honourees of the award this year
include Ouided Bouchamaoui of Tunisia, Sir
Richard Branson of the UK, Kesha Kumari
Damini of Nepal, Adnan Kassar of Lebanon
and Marilyn Carlson Nelson of the US. They
have been selected out of 120 candidates

Salute to Selima
from 50 countries.
The selected honourees are business
persons who through their own actions
and commitments promote socially
responsible and ethical business
practices in an outstanding way and
stand out as examples to the world.
An independent award committee,
consisting of Nobel Prize winners in
peace and economics, selected the
recipients of the award. They will be
presented with the awards in a ceremony on
May 15 in Oslo City Hall.
With this recognition, Selima Ahmad is
included in the group of exceptional
business personalities like Ratan Tata,
chairman of Tata Group in India, who got
the award in 2010, and Jeffrey R Immelt,
CEO of General Electric in the US, who
won it in 2009.
I am deeply honoured by this prestigious
award which was selected by Nobel
laureates. This award recognises the
strength, sincerity, integrity, intelligence,
commitment and competence of
Bangladeshi women in business, Selima
Ahmad said in her instant reaction,
according to a statement issued by the
BWCCI.
She said she has been working with all her
dedication not only to grow her own
business with value and ethics but also to
see women entrepreneurship and private
sector grow.
Congratulating Selima Ahmad, Nitol Niloy
Group Chairman Abdul Matlub Ahmad said,
Selima deserves this great award as she
relentlessly worked to develop BWCCI as a
voice for women in business.
Her passion to excel through ethical
processes has helped Nitol Niloy Group to
grow into one of the finest organisations in

Oslo Business For Peace Award

28

Bangladesh, he said.
Her business integrity, commitment and
contribution to society are a beacon of pride
and joy for all women of Bangladesh, said
BWCCI President Sangita Ahmed,
congratulating Selima Ahmad.
Selima has been working for the private
sector development for the last 28 years and
is actively involved in developing more than
7,000 women entrepreneurs.
Nitol Niloy Group is one of the reputed
business houses and has 26 companies. Of
them, six are joint ventures and three are

public companies. It has presence in

automobiles, cement, paper, real estate,
electronics and financial services.
The Business for Peace Foundation, formed
in 2007 to promote relationship between
business and peace, has been awarding
businesspersons from across the globe every
year since 2009.
The partners of the Business for Peace
Foundation are The International Chamber
of Commerce, the United Nations
Development Programme, and the United
Nations Global Compact.

Automobile
31

AUTO
MOBI
LE :

Toyota to recall 6.39m vehicles

worldwide

Toyota on Wednesday said it was recalling 6.39 million vehicles

worldwide for five different problems, marking another blow for
the world's largest automaker whose reputation for quality and
safety has been dented in recent years.
"Toyota Motor Corporation announced five recalls involving 26 Toyota models, the Pontiac Vibe
and the Subaru Trezia... since a few models are involved in more than one recall, the total
number of vehicles that will be remedied is 6.39 million," the company said in a statement.
Among the problems are a driver's seat defect, steering column problems, and an engine starter
glitch that poses a fire risk, the company said.

Automobile
31

The vehicles affected include the Corolla sedan, the RAV4 sport utility vehicle and Yaris
subcompact.

BMW recalls half million cars worldwide

German automaker BMW is recalling almost half a million vehicles rldwide

due to an engine part defect, a company spokesman said Friday.
The recall affected models with six-cylinder engines built between September 2009 and
November 2011, the spokesman told AFP.
In Germany alone, the number was relatively small at 10,800, because most BMW cars sold
were equipped with four-cylinder engines.

BAISHAKHI SALES CHEER

BOUTIQUES, RETAILERS

Automobile
31

Fashion houses and boutiques are abuzz

with shoppers who are buying clothes for
their near and dear ones to celebrate Pahela
Baishakh, the first day of Bangla New Year
and the second biggest festival in the
country.
With political clouds clearing slowly,
clothing retailers have registered 30 percent
more sales this time than last year.
People are now on a buying spree as there
is no political unrest, said Azharul Haque
Azad, president of Fashion Entrepreneurs
Association of Bangladesh that represents
more than 50 leading fashion houses.
Political situation influences people's
purchasing sentiment, said Azad, who is also
the managing director of Shada Kalo, a
leading fashion house.
Several corporate houses have also engaged
in promoting sales during Baishakh, which
boosted sales.
Last year, clothing sales ahead of the festival
were hit hard mainly due to the frequent
hartals and political unrest.
At present, the country has around 4,500
fashion houses that sell locally produced
attires with a yearly turnover of Tk 6,000
crore, said Azad.
Of the annual sales figure, Pahela Baishakh's
clothing sales meet up 25 percent and the
month of Ramadan fulfils 50 percent, he
said. We have received a good response so
far, said Biplop Saha, managing partner of

Rang, another leading fashion house that has

13 outlets across the country.
An increasing number of customers are
buying panjabi, fatua, sari and salwar kamij
for the festival, he said, adding that his
company's sales grew around 50 percent so
far compared to the last year.
Soumik Das, another managing partner of
Rang and treasurer at the association, said
Pahela Baishakh is a festival for the
Bangalis, regardless of religion. Cotton
clothes are the most popular ones in this
season, he said.
Sales will increase further today, fashion
house owners said.
A significant portion of sales are generated
in the last two days before Pahela
Baishakh, said Sabuj Siddiki, managing
partner of Deshal, another fashion house.
Siddiki said they expected higher sales
yesterday and also hope to achieve big sales
figure today.
Deshal in its nine outlets countrywide
received a good response on fatua sales
within a price range of Tk 150 and Tk 450,
he said.
Traders are also offering discounts and gifts
to attract customers.
Clothes' prices are a bit higher this time than
last year, said Khalilur Rahman, an
employee of Jamuna Bank, who bought a
panjabi at Tk 1,200 from Aziz Supper
Market in the capital on Friday.

Reference
31

References :
The Daily Star: the daily star is
populated English newspaper in
Bangladesh. Website address is
www.thedailystar.com
The Financial Express : Website is
www.thefinancialexpress.com