Contents DCCI Review March 31st 2012

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2 Contents DCCI Review March 31st 2012 Chamber Views 01 Chamber News 02 National Economy 12 SAARC News 20 Asia-Pacific News 23 Middle East News 26 International News 29 Monthly Bulletin of the Dhaka Chamber of Commerce & Industry (In-house Circulation Only) Vol. XXXII No. 31 (March 01 to March 31, 2012) Published on 30 April, 2012 xämjh KmKY J 31 Study Tour of Re-Tie Project 35 Currency/Share 36 Trade Information 37 Pictorial 38 MEMBERS OF THE BOARD OF DIRECTORS PRESIDENT Mr. Asif Ibrahim SENIOR VICE PRESIDENT Mr. Haider Ahmed Khan, FCA DIRECTORS Mr. M. Bashir Ullah Bhuiyan Mr. Mahabub Anam Mr. T. I. M. Nurul Kabir Mr. Waqar Ahmad Choudhury Mr. ASM Mohiuddin Monem Mr. Osman Gani Mr. Khairul Majid Mahmud Mr. K.M.N. Manjurul Hoque Mr. Abul Hossain Mr. Osama Taseer Mr. Md. Iftekharuddin (Naushad) Mr. K. G. Karim Mr. Absar Karim Chowdhury Mr. M. Abu Horaira Mr. Kh. Shahidul Islam Mr. Hossain A. Sikder REVIEW ADVISORY BOARD Founder Chairman Late Nuruddin Ahmed Chairman Dr. Mizanur Rahman Shelley Members Mr. Sayed Kamaluddin Mr. Moazzem Hossain Mr. A S M Quasem Mr. Zaglul Ahmed Chowdhury Mr. M. A. Momen Mr. Hossain Khaled Published by : Dhaka Chamber of Commerce & Industry (DCCI) Motijheel Commercial Area Dhaka-1000, Phone : (Hunting) Fax : info@dhakachamber.com secretary@dhakachamber.com Web Site :

3 Chamber Views DCCI Review March 31st 2012 Private sector access to credit Private sector has always been the engine of economic growth in Bangladesh. Whatever GDP growth Bangladesh has attained today can be attributed to the country s resourceful and innovative private sector. That is exactly why the private sector is now the biggest employer of manpower. Significant successes in RMG, SMEs and remittances have been struck due to tireless efforts of our business community. And they did it despite hurdles. Today, the banks are charging exorbitant rates of interest on lending. We ve long been demanding steps for lowering these, but there has been no response from the government yet. The small entrepreneurs whom DCCI represents have been hit hard due to inadequate credit flow. High borrowing from the banking sector by the government is the reason behind that. On the other hand, a recent newspaper report said, one hundred big shots have taken away Tk 40,000 crore from the banking sector as loan. If this is the case, what will happen to the small entrepreneurs? With its aim of arresting inflation to a single-digit level by restraining credit growth to private sector and reducing pressures on the external reserves in the context of recent internal and external economic challenges, the Bangladesh Bank (BB) has unveiled its monetary policy statement (MPS) for the second half of the current fiscal year (FY), The BB also otherwise pursued a contractionary monetary policy for the first half of the current FY: interest rate was increased a couple of times, private sector credit growth kept restrained to 18 per cent and curtailed reserve and broad money growth below the target. But due to escalating expansion of borrowings by the government up to a high level of 62 per cent which exceeded far ahead of the original annual target of 28.1 per cent, the MPS could not deliver the expected outcomes. In the first half of the current fiscal such borrowings were mainly attributable to lower foreign aid disbursements, higher level of imports, slower inward remittance growth and rising amount of subsidies, especially to run rental power plants. As such, the fiscal policy stance of the government was not consistent with the BB's monetary stance. In its MPS, the BB made it clear about restraining the growth of private sector credit to 16 per cent and discouraging credit to unproductive sectors, while projecting to bring down the annual rate of increase in government's overall borrowing to 31 per cent. But given the poor rate of implementation of Annual Development Programme (ADP) -- at only 28 per cent in the first half of the current fiscal -- disbursement of lower amount of foreign aid, the achievement of the MPS targets will be a daunting task. Meanwhile, the government, in a desperate attempt to expand the room for fiscal flexibility, is, according to a report, going to make efforts for mobilising higher amount of funds through non-bank borrowings. The BB projected nonbank borrowings through the national savings schemes of Tk 6000 for the current fiscal. The squeezing of credit to the private sector by quantitative credit rationing, restricting the overall growth of money while liberalising lending rate in all sectors (except loans for 'pre-shipment exports' and agriculture) and increasing the benchmark yield on the national savings instruments have limited the overall private sector growth. Many businessmen complain that much of the credit growth to the private sector is attributable to satisfying the demand from rental power plant owners and many productive sectors are actually suffering from credit crunch. Bangladesh Bank's monitoring role should, therefore, go beyond the aggregate numbers and examine the intersectoral deployment of credit. Based on the findings, credit to the unproductive or non-priority sectors should be actively discouraged. Investors in rental power plants should be forced to explore alternative sources of finance including the capital market. Bangladesh Bank must take a firm stand with respect to credit to the public sector. It should refuse central bank credit to the government. It should refrain from exerting pressure on primary dealers to buy government bonds which add to unencumbered, but practically unmarketable assets to the commercial bank's portfolio. Bangladesh Bank should also ensure that the state-owned commercial banks do not simply serve as bottomless money pot for the public sector to the neglect of prudential norms. 1

4 Chamber News DCCI Review March 31st 2012 DCCI expresses concern over energy rationing through factory closure DCCI has expressed its disappointment over the recent government decision to ask the mills and factories to remain shut from 6 p.m. to 6 a.m. DESCO served the notices to mills and factories instructing them to stop their production operations in the stipulated time frame. In a statement, DCCI said, such a decision will have a strong detrimental effect on the trade and economy particularly industrial output and GDP. Many mills and factories have already procured orders for production and delivery to both local and export markets and planned their production on the basis of three shifts. This decision will jeopardize their operations, the leading chamber said adding that the mill and factory owners are already suffering heavily because of the existing high interest rates on borrowing prevailing in the country. This decision will lead to many companies to collapse, it said. DCCI has urged the government to consider other sources of rationing energy such as from street lighting, billboards, shopping complexes, air conditioning in government buildings etc. The chamber said, such a decision may hamper the image of the present government as an "industry friendly government". DCCI calls for finalising Coal Policy The Board of Directors of Dhaka Chamber of Commerce & Industry (DCCI) for the year 2012 led by its President Asif Ibrahim called on Commerce Minister Ghulam Muhammed Quader, M.P. at his secretariat office on March 8. In his address, Asif Ibrahim said, immediate short-term measures need to be taken to find the best ways to use our limited gas resources. He said that BSTI should have its membership with EU Accreditation Authority. He stressed the need for simplification of import under TT and issue of reexport as envisaged in export policy. There is a need for training for Trade Attaché and Commercial Counsellors as they can enhance exports from Bangladesh, the DCCI President said proposing establishment of a separate chemical village for business entrepreneurs of old Dhaka. He also underscored the importance of development of infrastructure and railway network for reducing traffic congestion in Dhaka city for rapid expansion of trade and investment in the country. Asif Ibrahim said, coal-based energy security has to be considered as a long- term strategy for economic development of Bangladesh. A National Coal Policy should be finalized, he said. Besides, he emphasized on role of EPB in organizing more need-based trade missions abroad, full realization of China Plus One strategy and effective steps on Branding and IT related sectors. DCCI President Asif Ibrahim (eighth from left) seen presenting crest to the Commerce Minister Ghulam Muhammed Quader, M.P. (ninth from right) at Ministry of Commerce on March 8. Members of the Board of Directors of DCCI are also seen in the picture. Commerce Minister Ghulam Muhammed Quader said that all sorts of certification process like IRC, ERC should not be time-consuming. He assured the DCCI delegation of all kinds of support from the government to the private sector. He stressed on 2

5 Chamber News DCCI Review March 31st 2012 strengthening and modernizing Trading Corporation of Bangladesh (TCB) for market intervention in times of need. He also informed that considering the upcoming Ramzan, the Ministry of Commerce is taking necessary measures in this regard. He emphasized on creating more awareness regarding consumers' rights. DCCI Senior Vice President Haider Ahmed Khan, FCA, Directors M. Bashir Ullah Bhuiyan, T. I. M. Nurul Kabir, Waqar Ahmad Choudhury, Khairul Majid Mahmud, Abul Hossain, Mohd. Iftekharuddin (Naushad), Absar Karim Chowdhury, M. Abu Horaira, Kh. Shahidul Islam and Hossain A. Sikder took part in the discussion. The discussants stressed the pertinent need for increasing export of nontraditional items, forming an IP policy, strengthening Industrial Police and reducing cost of doing businesses. DCCI Director Mahabub Anam and Secretary Mustafa Mohiuddin were also present. Asif Ibrahim urges developers to follow building code DCCI organized a seminar on "Strengthening Regional Planning & Governance to Support the Land Development and Real Estate Sector of Bangladesh at DCCI on March 6. State Minister for Housing & Public Works Advocate Abdul Mannan Khan, M.P. was present as the chief guest while Chairman of RAJUK Engr. Md. Nurul Huda was present as special guest. DCCI President Asif Ibrahim in his address of welcome said that urbanization has been tremendously burdening the city as more and more people are migrating in search of employment in the city. He said, housing development in Bangladesh is clearly related to social development, environmental sustainability and power, gas and water supply issues. He stressed on effective implementation of Land Policy, making necessary reforms and engaging skilled manpower. He said, the government has to take steps to allocate land for housing projects. It should ensure lands for new housing projects under the Detailed Area Plan (DAP), he said. Asif Ibrahim urged the developers to follow the National Building Code. He underscored the importance of proper financing, reducing rate of interest and tax for this sector. Local colleges and universities could offer real estate certification course that will provide State Minister for Housing & Public Works Advocate Abdul Mannan Khan, M.P. (fourth from left) addressing a seminar on "Strengthening Regional Planning & Governance to Support the Land Development and Real Estate Sector of Bangladesh" organized by DCCI on March 6. DCCI President Asif Ibrahim (third from left), President of REHAB Nasrul Hamid M.P. (second from left), Chairman of RAJUK Engr. Md. Nurul Huda (right), Senior Vice President of DCCI Haider Ahmed Khan, FCA (left) and DCCI Director Khairul Majid Mahmud (second from rlight) are also seen in the picture. students a practical knowledge of all aspects of the real state business, he suggested. He called upon government to formulize a comprehensive Housing Policy. The DCCI President urged the government to make a 'Bangladesh Area Plan' (BAP) for the country. State Minister for Housing & Public Works Advocate Abdul Mannan Khan, M.P. called upon all stakeholders in this sector to conduct their businesses abiding by the rules and procedures of existing law. He also said that competition of both public and private sectors will benefit the middle class buyers of the country. He called upon the entrepreneurs of housing sector for conducting ethical business and to avoid making showy promotional. Chairman of RAJUK Engr. Md. Nurul Huda said, RAJUK will be decentralized by establishing eight different zones in the country soon. He informed, by 2012, all information of RAJUK will be computerized. A longterm Detailed Area Plan will be formulated in consultation with all related to this sector, he informed. 3

6 Chamber News DCCI Review March 31st 2012 International expert on city competitiveness Emeritus Professor Brian Roberts presented the key-note paper. He said, cost of doing business, dynamics of local economy, cost of registration, access to finance, infrastructure and quality of life are some key factors that affect the competitiveness of cities. He underscored the importance of a competitive land development industry. DCCI Director and Managing Director of Caldwell Development Ltd. Khairul Majid Mahmud said, coordination between housing, transports, infrastructure policies can help suggest a feasible Urban Management Policy. He stressed the need for institutional reforms and decentralization of responsibilities and resources to local authorities. He said, taking steps for Canada urged to invest in Bangladesh Dhaka Chamber of Commerce and Industry (DCCI) and Canada Bangladesh Chamber of Commerce and Industry (CanCham) jointly organized a seminar on "Business Development opportunities in Bangladesh" at Hotel Sonargaon, Dhaka on March 5. The seminar was organized on the occasion of ongoing Canada Showcase 2012 and visiting Canadian trade delegation. President of International Chamber of Commerce, Bangladesh Mahbubur Rahman chaired the seminar. better urban management should be one of the priorities of the government. President of Real Estate and Housing Association of Bangladesh (REHAB) Nasrul Hamid, M.P., Managing Director of Asset Developments and Holdings Ltd. Salim A. Khan, Managing Director of Anwar Group of Industries Monwar Hossain and Professor of Department of Geography, Dhaka University Nurul Islam Nazem spoke as designated discussants. They said, we need to look into the matter and take initiatives as soon as possible to make Dhaka one of the best liveable cities in the world. They also emphasized on strengthening RAJUK. They said, the government should support RAJUK in order to make it more functional. DCCI Senior Vice President Haider Ahmed Khan, FCA gave vote of thanks. President of ICC Bangladesh Mahbubur Rahman said that DCCI Directors M Bashir Ullah Bhuiyan, Waqar Ahmad Choudhury, K. G. Karim, M. Abu Horaira, Kh. Shahidul Islam, former Senior Vice President MS Shekil Chowdhury, Secretary General of REHAB Murad Iqbal Chowdhury, Engr. Sarker Amin, Alam Biswas of Energypack Ltd., Md. Alamgir from Jamuna Group, Managing Director of South Breeze Anisur Rahman Khan, DCCI Convenor MS Siddiqui and Engr. Mohsin from Rangs Builders took part in the open discussion session. DCCI Directors Osman Gani, K.M.N. Manjurul Hoque, Abul Hossain, Mohd. Iftekharuddin (Naushad), Absar Karim Chowdhury, Hossain A. Sikder, former Directors M Anwarul Haque, Syed Habibur Rahman, Alhaj Nasiruddin Khan, Alhaj Abdul Aziz Sarker, Director of BCL Associates Ltd. Rafiqul Islam were also present in the seminar. Bangladesh needs foreign direct investment (FDI) and more trade. He 4 President of Canada Bangladesh Chamber of Commerce and Industry (CanCham) Masud Rahman welcoming all said, Bangladesh has huge prospect for Canadian investment. He said, the bilateral trade volume between Bangladesh and Canada is increasing. President of ICC-Bangladesh and former President of DCCI Mahbubur Rahman (third from right) speaking at the seminar on Business Development Opportunities in Bangladesh organized by DCCI and Canada Bangladesh Chamber of Commerce and Industry at Hotel Ruposhi Bangla on March 5. DCCI President Asif Ibrahim (third from left), President of Metropolitan Chamber of Commerce & Industry Maj. Gen. (retd) Amjad Khan Chowdhury (second from left), President of American Chamber of Commerce in Bangladesh Aftab ul Islam (right), Chief Executive Officer of Saskatchewan Chamber of Commerce, Canada Steve McLellan (second from right) and Senior Research Fellow of Centre for Policy Dialogue (CPD) Dr. Kh. Golam Moazzem (left) are also seen in the picture.

7 Chamber News DCCI Review March 31st 2012 also emphasized on diversification of exportable items of Bangladesh to Canada. He said that in consideration of a large number of population, we need to increase our production base. President of Metropolitan Chamber of Commerce and Industry (MCCI) Maj. Gen. (retd) Amjad Khan Chowdhury said, Bangladesh belongs to a large market size. Bangladesh's institutional capacity and legal framework are favourable for investment, he informed. He welcomed the Canadian business delegation to invest in Bangladesh utilizing trained and cheap labour force. He also said that agro-processing, horticulture and dairy can be attractive sectors of Bangladesh for Canadian investors. President of American Chamber of Commerce in Bangladesh (AmCham) Aftab ul Islam said Bangladesh has strong geographical advantage. He said that Bangladesh is surrounded by three emerging markets like India, China and other ASEAN countries. He invited the Canadian investors and entrepreneurs to invest in the IT enabled services in Bangladesh. DCCI President Asif Ibrahim said, 2012 has been marked the 40th anniversary of Canada- Bangladesh relations. He said Canada's trade ties with Bangladesh have grown dramatically in the last few years. In order to utilize benefit of Canadian GSP facility, diversification of products is necessary, he said informing the Canadian trade delegation that Bangladesh has trainable, enthusiastic, hardworking and lowcost labour force suitable for any labour intensive industry. He invited the Canadian investors to take the opportunities to establish 100% ownership investment or joint venture projects. Chief Executive Officer of Saskatchewan Chamber of Commerce, Canada Steve McLellan said, we can share expertise of Canada on agriculture, technology and municipal management. He stressed on enhancing Chamber-to- Chamber relations and know-how. Senior Research Fellow of Centre for Policy Dialogue (CPD) Dr. Kh. Golam Moazzem presented the keynote paper. He showed that the business pattern of Bangladesh is turning into manufacturing industry. He said, there is investment opportunities in the food, RMG, agriculture, agro-processing, IT, construction, telecom, tourism sectors of Bangladesh. He said, the investment climate of Bangladesh is also favourable to any foreign investors. He urged the Canadian investors to increase investment in Bangladesh. He called upon them to take opportunities of Bangladesh's different trade support policies, and incentives to invest in this country. DCCI Directors Waqar Ahmad Choudhury, ASM Mohiuddin Monem, Khairul Majid Mahmud, Osama Taseer and former President M A Momen took part in the open discussion while DCCI Directors K.M.N. Manjurul Hoque, Abul Hossain, Mohd. Iftekharuddin (Naushad), K. G. Karim, Absar Karim Chowdhury, Hossain A. Sikder and Secretary Mustafa Mohiuddin were also present. DCCI hails government's efforts in winning maritime suit DCCI, the largest and prime trade body in the country, has extended its heartiest felicitation and compliments to Prime Minister Sheikh Hasina, M.P. for winning Bangladesh's maritime boundary claim over Myanmar and termed it as an example of diplomatic acumen and farsightedness of the present government. The International Tribunal for the Law of the Sea (ITLOS), based in Hamburg, Germany on March 14 delivered its judgment in favour of Bangladesh on the dispute concerning the delimitation of the maritime boundary of 200 nautical miles as its Exclusive Economic Zone (EEZ) between Bangladesh and Myanmar in the Bay of Bengal. The verdict paved the way for establishing Bangladesh's rights over the offshore blocks of mineral resources claimed by Myanmar and also will have positive impact in reaching a just solution to her maritime boundary conflict with India soon. DCCI President Asif Ibrahim praised the present government's continuous efforts to get the verdict in favour of Bangladesh and said, it is a big achievement for the country. He also said, it is a great victory for our country and its foreign affairs strategy. He urged the government to take initiatives to maximize use of the most of the natural resources in the sea and bring impetus to our trade and economy to achieve our goal of becoming a middle income country by 2021 and the 30th largest economy by

8 Chamber News DCCI Review March 31st 2012 DCCI President attends meeting of ESCAP Business Advisory Council DCCI President Asif Ibrahim, President of International Chamber of Commerce, Bangladesh (ICC-B) Mahbubur Rahman and former Advisor to the caretaker government Rokia Afzal Rahman attended the third session of Business Advisory Council of UNESCAP held in Bangkok on March 19. In preparation for the annual ESCAP Asia-Pacific Business Forum (APBF), the ESCAP Trade and Investment Division organized the third session of its Business Advisory Council (BAC) at the United Nations Conference Centre in Bangkok. Over 25 leading CEOs and senior business executives from the Asia-Pacific region, who are BAC members, attended and worked to set a clear purpose and terms of reference for their work. Participants also deliberated on the future direction of APBF, including the theme, agenda, venue and dates of APBF. Additionally, the BAC meeting discussed substantive issues, including promoting energy security, harnessing information and communication technologies and assistance to Business-to-Business (B2B) networking. United Nations Under-Secretary-General Dr. Noeleen Heyzer was also present in the meeting. DCCI President Asif Ibrahim (back row: seventh from left), President of International Chamber of Commerce, Bangladesh (ICC-B) Mahbubur Rahman (seated fifth from left) and former Advisor to the caretaker government Rokia Afzal Rahman (seated left) at the third session of Business Advisory Council of UNESCAP held in Bangkok on March 19. DCCI organizes consultation programme on Geographical Indications Act DCCI organized a consultation programme on Geographical Indications Act 2011 at DCCI on March 21. Industries Minister Dilip Barua was present as chief guest. DCCI President Asif Ibrahim in his address of welcome said that Geographical Indications (GI) Act is one of the important laws to protect intellectual properties, heritage products and encourage innovation. He said, through the application of GI process we can reap several benefits, such as market access, reduction og tariff where GI can be used as a technique to establish brand and goodwill of a product. He said, the government has made a list of 66 important GI products but these products are yet to be registered because of non-existence of any GI law. To promote awareness of the Bangladeshi GI products, he emphasized on proper marketing policy, training on skill development, GI database and website. Industries Minister Dilip Barua stressed the need for protecting intellectual property rights of Bangladeshi products. He also emphasized on increasing research and development in this sector. He informed that the present government was giving importance to innovation. He said, we need a sustainable policy for protecting our innovation and heritage products. He assured that the Geographical Indications Act and Intellectual Property Act would be enacted soon. Advocate of Supreme Court of Bangladesh A.B.M. Hamidul Mishbah

9 Chamber News DCCI Review March 31st 2012 Secretary, Director-3, WTO, Ministry of Commerce Ms Sharifa Khan and Associate Professor, Department of Law, University of Dhaka Dr Mohammad Towhidul Islam spoke as designated discussants. The discussants said, the draft act should be more focused, specific and business friendly. They also sought immediate finalization of the act through consensus of the stakeholders and its effective implementation. Industries Minister Dilip Barua (third from right) addressing a consultation programme on "Geographical Indications Act 2011" organized by DCCI on March 21. DCCI President Asif Ibrahim (fourth from left), DCCI Senior Vice President Haider Ahmed Khan, FCA (third from left), Deputy Secretary, Director-3, WTO, Ministry of Commerce Ms. Sharifa Khan (second from left), Advocate of Supreme Court of Bangladesh A.B.M. Hamidul Mishbah (right), DCCI Directors Khairul Majid Mahmud (left) and M Abu Horaira (second from right) are also seen in the picture. presented the keynote paper. He, in his presentation, explained in details how the GI Act will provide legal protection and boost export of our products. He referred to different regional GI laws that exist in the EU and also in Africa. He suggested that SAARC countries might make such initiative for which Bangladesh can raise the issue in proper platform. Registrar of Copyrights Office Mohammed Manzurur Rahman, DCCI Director T.I.M. Nurul Kabir, Deputy DCCI Senior Vice President Haider Ahmed Khan, FCA, Director Waqar Ahmad Choudhury, Convenor MS Siddiqui, Secretary Mustafa Mohiuddin and Additional Secretary (R&P) Ferdaus Ara Begum took part in the open discussion session while DCCI Senior Vice President Haider Ahmed Khan, FCA gave vote of thanks. DCCI Directors Khairul Majid Mahmud, Abul Hossain, Mohd. Iftekharuddin (Naushad), M. Abu Horaira and Hossain A. Sikder were also present. DCCI President urges Maldivian businessmen to invest in Bangladesh DCCI President Asif Ibrahim called on Maldivian Minister of Tourism, Arts and Culture Ahmed Adheeb Abdul Ghafoor and Minister of State for Economic Development Abdulla Ameen at Dhaka on March 31. Asif Ibrahim welcomed the Ministers to Bangladesh. He briefed the Ministers about Dhaka Chamber and its wide range of activities for economic development of the country. The DCCI President invited the entrepreneurs of the Maldives to explore potentials of our domestic tourism. He said, in order to increase knowhow between these two SAARC member- countries, exchange of trade delegations will play a pivotal role to DCCI President Asif Ibrahim (second from right) seen exchanging views with the Maldivian Minister of Tourism, Arts and Culture Ahmed Adheeb Abdul Ghafoor (third from right) and Minister of State for Economic Development Abdulla Ameen (third from left) at Dhaka on March 31. High Commissioner of Maldives to Bangladesh H.E. Ahmed Sareer (second from left) and former Director of DCCI and Convenor of the Trade Delegation and Trade Fair Standing Committee of DCCI Syed Habibur Rahman (right) are also seen in the picture. 7

10 Chamber News DCCI Review March 31st 2012 boost bilateral trade. He also called upon the Maldives to invest in the infrastructure development sector of Bangladesh. The DCCI President stressed on more Business-to-Business (B2B) interaction between these two friendly countries. ITC team analyzes Bangladesh s Brand DNA While Bangladesh is recognized as a growth-oriented, high-potential economy, the image of the country abroad lacks elements of positive foundation. Moreover, Bangladesh is only marginally associated with the booming global IT and ITES sourcing market. David Faulks, a branding expert based in Sydney, Australia, and Jacky Charbonneau, who leads the enterprise competitiveness team at ITC, moderated a two-day brand discovery roundtable at DCCI, during which representatives from the chamber, the IT association BASIS, government and other stakeholders brainstormed about ways to address these perception issues. Maldivian Minister of Tourism, Arts and Culture Ahmed Adheeb Abdul Ghafoor invited Bangladeshi investors to invest in the Maldives. He called upon Bangladesh to establish a Trade Centre in Male in order to showcase Bangladeshi products. Regarding exchange of trade delegations, he welcomed trade teams from 'Creating a logo is not enough. To create impact in the market there needs to be a compelling brand story behind the logo, a comprehensive communications strategy and guidelines to manage the use of the identity. You need to invest in experiences. Dhaka's World Marketing Summit earlier this year is a good example of what needs to happen, noted David. BASIS delivered a major industry branding effort around the BangladeshNEXT tagline since October Stakeholders, however, agreed that a significant growth in IT and ITES exports would require development of a positive Bangladesh Brand beyond the sector level. The roundtable exposed participants to best international practice on ways Bangladesh to the Maldives. High Commissioner of Maldives to Bangladesh Ahmed Sareer and former DCCI Director and Convenor of the Trade Delegation and Trade Fair Standing Committee of DCCI Syed Habibur Rahman were also present during the meeting. to create a comprehensive brand blueprint. Furthermore, a gap analysis was undertaken, with roles and accountabilities of key stakeholders clarified to bridge the gap. The roundtable concluded with the development of a branding roadmap outlining further strategic and creative development requirements. We must take our branding effort to the next level to support growth across all sectors concluded Asif Ibrahim, President, DCCI. A conference will be organized to that end in December 2012 by the chamber, in partnership with BASIS and ITC. The roundtable was organized in the framework of the NTFII Bangladesh project. The project is implemented by the International Trade Centre and funded by the Dutch Centre for the Promotion of Imports from Developing Countries (CBI, Ambassador of Senegal calls on DCCI Acting President Ambassador Extraordinary and Plenipotentiary of the Republic of Senegal to India, Sri Lanka, Bangladesh and Maldives Amadou Moustapha Diouf called on DCCI Acting President Haider Ahmed Khan, FCA at DCCI on March DCCI President Asif Ibrahim (left), former Presidents of DCCI Hossain Khaled (fourth from right) and Abul Kasem Khan (third from right) are seen at the two-day brand discovery roundtable at DCCI on March 24. Former President of DCCI Hossain Khaled was also present during the meeting. DCCI Acting President Haider Ahmed Khan, FCA thanked the Ambassador

11 Chamber News DCCI Review March 31st 2012 for paying visit to DCCI. He also emphasized on enhancing bilateral trade relations between the two countries. Former President of DCCI Hossain Khaled proposed for boosting cooperation between Bangladesh and Senegal in the construction and infrastructure sectors. Amadou Moustapha Diouf said, the bilateral trade volume between the countries is still not at the expected level. But there are opportunities to enhance trade, he said. He called upon Bangladeshi businessmen to import iron and ironmade products from Senegal and establish joint ventures in this sector. He also called for helping Senegal by providing technical know-how of the RMG sector of Bangladesh. DCCI former President Hossain Khaled (third from right) presenting DCCI publication 'Commercial History of Dhaka' to the Ambassador Extraordinary and Plenipotentiary of the Republic of Senegal to India, Sri Lanka, Bangladesh and Maldives H.E. Amadou Moustapha Diouf (fourth from right) at DCCI on March 19. Senior Vice President of DCCI Haider Ahmed Khan, FCA (second from right), DCCI Directors Hossain A Sikder (right), KMN Manjurul Hoque (fourth from left), Abul Hossain (second from left) and Additional Secretary (R&P) Ferdaus Ara Begum (left) are also seen in the picture. DCCI Directors KMN Manjurul Hoque, Abul Hossain, Hossain A Sikder and Additional Secretary (R&P) Ferdaus Ara Begum also attended the meeting. BUILD steps for promoting SMEs acclaimed The first meeting of the SME development working committee of Business Initiative Leading Development (BUILD), a joint initiative of DCCI, Metropolitan Chamber of Commerce and Industry (MCCI) and SME Foundation (SMEF) was held on March 5 at the conference room of the Ministry of Industries. Secretary of the Ministry of Industries K. H. Masud Siddiqui chaired the meeting while Managing Director, SME Foundation Syed Rezwanul Kabir, was present as co-chair. DCCI President and Chairman of the BUILD Governing Board, Asif Ibrahim was also present in the meeting. President of DCCI Asif Ibrahim, referring to his meeting with Prime Minister Sheikh Hasina on June 26, 2011, informed that Private Sector Development Policy Co-ordination Committee (PSDPCC) has been A power point presentation was made by acting CEO of BUILD Ferdaus Ara Begum. She explained the BUILD functions and how BUILD can help in creating an enabling business environment for the SMEs. DCCI President Asif Ibrahim (third from left) seen in the first meeting of the SME development working committee of Business Initiative Leading Development (BUILD), a joint initiative of DCCI, Metropolitan Chamber of Commerce and Industry (MCCI) and SME Foundation (SMEF) on March 5 at the conference room of the Ministry of Industries. Industries Secretary K.H. Masud Siddiqui (fourth from right) and Managing Director of SME Foundation Syed Rezwanul Kabir (third from right) are also seen in the picture. 9

12 Chamber News DCCI Review March 31st established in the Prime Minister s Office (PMO) while Policy Co ordination Unit (PCU) will act as the Secretariat of PSDPCC. He said, BUILD will support PCU in suggesting reforms in favour of SME development by initiating research and advocacy to be placed to the PSDPCC. The Secretary of the Ministry of Industries appreciated the formation of BUILD to expedite implementation process of recommendations and reforms for SME development. He also suggested for capacity building of SME supported organizations for further innovation with an eventual goal for rapid industrialization. President, Bangladesh Engineering Industry Owners Association (BEIOA) Abdur Razzaque, President, National Association of Small and Cottage Industries of Bangladesh (NASCIB) Sheikh Abdus Sobahan, President, Bangladesh Plastic Goods Manufacturing and Exporters Association (BPGMEA) Shamim Ahmed, DGM, SME Foundation Muhammad Mujibur Rahman, Additional Secretary, Md. Jahangir Mollah and Director (M&T), Bangladesh Small and Cottage Industries Corporation (BSCIC), Ms Nazz Farhana Ahmed, President, Dhaka Women Chamber of Commerce and Industry (DWCCI) Mrs Monowara Hakim Ali, President, Chittagong Women Chamber of Commerce and Industry (CWCCI) Deputy Secretary, SME Cell, Ministry of Industries A.K.M. Rafiqul Islam and other officials of BUILD and partner organizations were present. They raised several pertinent points for SME development and suggested utilization of research already done and extending support to them for facing the problems of environment and other related compliances required to meet international standard. They also suggested for organized and structured policy reforms for SME Development and at the same time recommended inclusion of other supportive SME organizations in the working committee. Asif Ibrahim concluded the meeting extending thanks to everybody present. First meeting of sub-sector working group for investment The first meeting of the Sub-Sector Working Group for Investment (SSWGI) formed under Trade and Investment Working Committee (TIWC) of BUILD held on March 22. The committee consists of six members and the objective of the committee is to identify potential investment sectors and the possible way-out from the existing problems as well. Asif Ibrahim, President, DCCI and Chairperson Governing Board of BUILD, was also present at the meeting. Ferdaus Ara Begum, Additional Secretary ( R&P), and In charge of BUILD, DCCI, Md. Kamal Uddin, Senior Researcher, MCCI, Murshed Jahan, Dialogue Coordinator, BUILD, Maruf Ahmed, Research Associate, BUILD, Sanwar Nafis, Research Associate, BUILD, Kaniz Fatama, Research Associate, BUILD, Nasib Ul Amin, Research Associate, BUILD, Zahidul Naim Zakaria, Consultant, Capacity for Better Regulation Team, IFC, Mehnaz Tawfiq Chowdhury, Consultant, Capacity for Better Regulation Team, IFC Advisory Services in South Asia were also present. Ten priority sectors were recommended by BUILD based on thrust sectors identified by the government in the Industrial Policy 2010, Export Policy of and booster sector for SME Policy These sectors are labour intensive and the government has announced supportive policy to develop these sectors. Some existing problems of these sectors have been identified at the meeting as well. Ferdaus Ara Begum, in charge of BUILD, DCCI, conducted the meeting extending thanks to all present. Orientation for officials An orientation session for BUILD officials was held in the Dhaka Chamber of Commerce & Industry (DCCI) Business Institute from March 8 to March 11. Four IFC officials worked as resource persons for the programme. They were Shihab Ansari Azhar, Ms.Mehnaz Tawfiq Chowdhury, Zahidul Naim Zakaria and Ferdaus Ara Begum, Acting CEO, BUILD gave introductory remarks. The sessions were organized to give them an idea about BUILD activities: how it will contribute to the national economy and requirement of advocacy for policy reform. The objectives of the session were, among others: 1) To create a private sector friendly business environment and how BUILD can contribute. 2) How BUILD will function and the role of the BUILD secretariat. 3) Bangladesh economy, its potentials and how to tap the potentials for generating more businesses. There were different presentations alongwith case studies so that new ideas for research can be generated. The orientation sessions were divided into different sessions which focussed Business Initiative Leading Development (BUILD), Bangladesh 2012 and Beyond, Case studies on Panigram Resort and Case Studies on Bonded Warehouse to show how a simple reform helped to save a significant amount of money were shown.

13 Chamber News DCCI Review March 31st 2012 DCCI signs MoU with Ocean Paradise Hotel Dhaka Chamber of Commerce & Industry (DCCI) the largest SME representative trade body in the country signed a MoU with Ocean Paradise Hotel at Cox's Bazar on 27 March. DCCI Secretary Mustafa Mohiuddin and Sales & Marketing Manager of Ocean Paradise Hotel Mehrin Rahman signed the MoU on behalf their respective organizations. According to the MoU signed, all Members of DCCI and staff may avail the opportunity of 50% discount at the Ocean Paradise Hotel including certain facilities free in the hotel. The main objective of signing the MoU is to promote local tourism sector and its development. It was signed while the DCCI held its 4th Board Meeting at Hotel Ocean Paradise, Cox's Bazar. visit Cox's Bazar the longest sea beach in the world. DCCI also feels that a proper planning and development of infrastructure may enhance the attraction of Cox's Bazar. As a part of DCCI's effort in promoting business development this corporate agreement was signed. DCCI Senior Vice President Haider Ahmed Khan, FCA, Directors M. Bashir Ullah Bhuiyan, T. I. M. Nurul Kabir, Waqar Ahmad Choudhury, Khairul Majid Mahmud, K.M.N. Manjurul Hoque, Abul Hossain, Osama Taseer, Mohd. Iftekharuddin (Naushad), K. G. Karim, M. Abu Horaira, Hossain A. Sikder and Additional Secretary (Admin) Syed Delwar Hossain were also present during the signing ceremony. DCCI thinks that Bangladesh is a land of immense possibilities especially in the tourism sector. Thousands of tourists both from home and abroad DCCI Secretary Mustafa Mohiuddin (second from left) and Sales & Marketing Manager of Ocean Paradise Hotel Mehrin Rahman (second from right) seen exchanging the MoU between DCCI and Ocean Paradise Hotel after signing at Cox's Bazar on March 28. DCCI Additional Secretary (Admin) Syed Delwar Hossain (left) is also seen in the picture. Duty-Free Quota-Free Access of LDC products to the Republic of Korea Republic of Korea (South Korea) has recently announced Duty Free Quota Free (DFQF) access to 95% of total tariff lines for List Development Countries (LDCs) including Bangladesh. The scheme came into effect from 12 March 2012, and was renewed on 1 January Currently, the scheme covers products of 4802 tariff lines at 6-digit HS code of HS2007, accounting for 95% of the total tariff lines, from the eligible LDCs. South Korea is the 10th largest destination of LDC exports, and Bangladesh's exports to Korea have increased by over 75 percent in 2011 from a year earlier. The list of these items is available at DCCI Research Cell and DCCI website ( For commodity descriptions, any changes to the above tariff lines and its further updated versions you may please contact DCCI Research Cell. 11

14 National Economy DCCI Review March 31st Power tariffs go up again Power tariffs, both at retail and bulk levels, were raised again with retrospective effect from March 1, The retail tariff was raised by 6.25 percent on average and with that the common consumers will have to pay additional charge of Tk 0.30 per unit (each kilowatt hour). The bulk tariff was increased by 7.49 percent on average forcing the distribution companies to pay an additional charge of Tk 0.28 per unit to the Power Development Board (PDB) for their electricity purchase. At present, the average bulk power tariff is Tk 3.78 per unit (kilowatt hour) while average retail tariff is Tk Bangladesh Energy Regulatory Commission (BERC) announced the tariff hike decision disposing off an appeal the state-owned PDB. Following the raise in the fuel price in December, the PDB had pleaded for raising only the bulk tariff by Tk 0.31 per unit. But the energy regulator enhanced the tariffs at both bulk and retail level to offset the loss of the distribution companies alongside the loss of PDB. Announcing the order, BERC Chairman Syed Yusuf Hossain said, "It's not a rise in the power tariff, but an adjustment with the tariff structure". Usually, the regulating agency takes 90 days' time to dispose of any such appeal for power or fuel tariff hike. But this was first time it took less than 15 days to pass its order on the issue. The bulk power tariff was last increased twice last year. About 13 percent was raised in February and again by 33 percent in December last year. Following the rise in the bulk tariff, the retail tariff was raised in three phasesby 5 percent in February on interim basis, then by percent in December, 2011 and again by 7-8 percent in February After the latest power tariff hike, the residential consumer will pay Tk 3.05 instead of Tk 2.87 per unit for consuming up to 100 units, Tk 4.29 instead of Tk 4.04 per unit for consuming up to 400 units, Tk 7.89 instead of Tk 7.43 per unit for consuming above 400 units. The agricultural consumers will pay Tk 2.26 per unit instead of the existing rate of Tk 2.13 per unit while the small industrial consumers will pay Tk 6.02 instead of the existing Tk 5.67 per unit on a flat rate. They will pay Tk 5.16 instead of 4.86 per unit at the off-peak use while Tk 7.33 instead of Tk 6.90 for peak-hour consumption. The 11-kV consumers will pay Tk 5.55 instead of Tk 5.90 per unit at flat rate while Tk 5.16 istead of Tk 4.86 per unit at off-peak hour and Tk 8.08 instead of Tk 7.60 per unit at peak-hour. The 132 kv consumers will pay Tk 5.33 instead of Tk 5.02 per unit as flat rate while Tk 4.82 instead of Tk 4.54 per unit at off-peak hour and Tk 7.51 instead of Tk 7.07 per unit at the peakhour consumption. The 33-kV consumers will pay Tk 5.61 instead of Tk 5.28 per unit as flat rate while Tk 5.08 instead of Tk 4.30 per unit at the off-peak hour and Tk 7.91 instead of Tk 7.44 per unit at the peak-hour. Economy to attain 7 pc growth this year: Muhith Finance Minister AMA Muhith, while presenting in the Jatiyo Sangsad the report on project implementation, progress and the macro-economic situation for the July-September quarter of the current fiscal year (FY ), said the present government in the past three years successfully maintained a steady economic growth by establishing a congenial political and social ambiance for development. The finance minister said the government attained a 6.7 per cent economic growth in the past financial year after effectively fencing off the fallouts of global recession. The inflation was also kept at 8.8 per cent in the period amidst unremitting pressure from rising food and oil prices in the international market, he added. The progress in rural infrastructure, in agriculture in particular, was also constant despite the spillover impact of global downturn, Muhith said expressing hope that this inner strength of the economy made him optimistic about attaining the growth prospect. The minister also referred to the significant increase in revenue collection, which cushioned the government from having the jolt of global economy. According to him, the revenue increased by 21.5 per cent in the first three months of the current fiscal year. He said the revenue earning was 97.5 per cent of the targeted Tk billion (95,187 crore) for the revised budget of FY when the revenue receipt was 18.8 per cent higher than the target for FY Citing the steady growth of revenue, the main source for maintaining fiscal balance and accelerating growth, Muhith said some other major development indicators like qualitative changes in education, gradual improvement in energy and power supply and health services would help drive the economic growth. The finance minister said the government in the past three years constantly pursued and effectively implemented development initiatives in energy, agriculture, industry and social sectors to expedite growth prospect. He cited the benefit of offering health services at people's doorsteps by opening health complexes at the

15 National Economy DCCI Review March 31st 2012 union level and the outcome of the Union Information and Service Centres (UISCs) that provide people with basic information and service of the government. Muhith said the government also offered stimulus to help spur industrial growth and employment that would eventually drive the economy to the upper trajectory. Relating to the ADP (annual development programme), the finance minister said the implementation rate increased, but the use the foreign aid did not follow the rise significantly. According to him, the ADP expenditure increased by 43.9 per cent for the first quarter of the current fiscal compared to the same period of the last fiscal. He said a special taskforce was now working to ensure the ADP implementation. The minister said that the remittance inflow increased by per cent in the first quarter of FY He said the foreign reserve in the first quarter is US$ 9.8 billion, which is able to pay 3.6 months' import costs. Revised budget may witness 5.1 pc deficit of GDP Finance Minister AMA Muhith in Parliament expressed the fear that the budget deficit in the current fiscal year (FY), might exceed 5.0 percent of the gross domestic product (GDP) under the revised budget, report agencies. In absolute terms, aggregate budget deficit under the revised budget is expected to stand at Tk billion (46,328 crore) against the projected amount at Tk billion (45,205 crore) in the original budget or at about 5.0 per cent of GDP under the latter, he added. "In the revised budget, the budget deficit may stand at 5.1 per cent of GDP," said Muhith while presenting the statement of the budget implementation progress for the July- December period of the current fiscal. The minister said the government has spent Tk billion (62,076 crore) from the budgetary allocation until December Out of this amount, Tk billion (12,703 crore) was spent under the Annual Development Programme (ADP) which was at about 27.6 per cent of the total allocation under the development. The government, Muhith said, collected Tk billion (51,663 crore) as its revenue earnings until December of the current fiscal, representing 43.0 per cent of the annual target of Tk billion (1,18,385 crore). The revenue collection in the first half of the current fiscal was more than 51.1 per cent of that of the corresponding period of the fiscal. The Finance Minister informed the house that the revenue earnings target for the current fiscal year might be reduced by Tk 35 billion (3,500 crore) to Tk billion (1,14,885 crore) under the revised budget for the current fiscal. Following the receipts of demands for subsidies from different agencies which would be around 4.3 per cent of the GDP, the government, he stated, is taking steps to allocate 3.2 per cent of GDP as subsidy in the current fiscal from the earlier estimated level of 2.3 per cent. Steps will be taken to manage the rest 1.1 per cent in the next fiscal, he added. The share of project assistance in the aggregate amount of expenditure under the ADP made in the first half of the current fiscal was only 17 per cent, the lowest for the last four years. For this reason, he said the ADP has been downsized by Tk 55 billion (5,500 crore) and will be re-fixed at Tk 405 billion (40,500 crore) under the revised budget for the current fiscal. Of the total expenditure outlay under the revised ADP for the current fiscal, Tk billion (24,405 crore) would come from the domestic sources and Tk billion (16,095 crore), from external sources. Muhith also informed the house that during the July-December period, the top 10 spending-ministries made an expenditure of Tk billion (10,659 crore), which was 23.2 per cent of the total ADP allocation. The country has achieved economic growth of 5.7 per cent in FY year, 6.1% in FY and 6.7% in FY , Muhith said. Muhith said the government set a target to increase the GDP growth rate up to 8.0 per cent by 2014 and 10 per cent by 1017, aiming at turning the country into a middle-income one. "We have designed financial management and development strategy in line with achieving this goal," he added. The minister said the country has been able to maintain the trend of economic growth amid global economic recession while a negative growth performance was witnessed in most developed countries. While presenting the report, Muhith referred to various issues related to the country's economy including inflation, export-import, foreign currency reserve and remittance flows. He also referred to higher prices of fuel and commodities in the international market, high inflation rate in India and huge expenditure on account of subsidy as the major reasons for increasing rate of inflation in the country. He said the export volume during the second quarter of the current fiscal increased by 14 per cent over that of the same period of preceding fiscal. Muhith said the country has also witnessed a 9.3 per cent increase in the inflow of remittance earnings until December of the current fiscal over that of the same period of FY The minister said the disbursement of agricultural credits declined in the first half of the current fiscal from that of 13

16 National Economy DCCI Review March 31st the same period of the preceding fiscal. The government has distributed Taka billion (5,730 core) as agriculture loan until December of the current fiscal. The finance minister also mentioned various successes of the present government in different sectors including agriculture, energy, communications, digital Bangladesh campaign, poverty reduction, facing climate change during the first two quarters of the current fiscal. Finance Minister AMA Muhith informed the Parliament Sunday that the budget deficit in the current fiscal would be the second highest one during the last decade. The government faced 5.3 per cent budget deficit earlier in FY , he added. He said that the government had taken steps to control its expenditure, taking the increased rate of inflation due to expansionary revenue expenditure, volatility in the balance of payment and downward flow of private sector loan, into consideration. Mentioning the energy price-hike, the finance minister informed the House, while placing the report of the economy during the second quarter of the current fiscal, that the government would adjust price of power and energy to reduce pressure on subsidy and to rationalise government expenditure. "The government has already adjusted the price. It will continue to do this in the future in line with the import prices of fuel oil," Muhith said. The finance minister admitted that the economy is under pressure as additional subsidy and expansionary revenue expenditure have fuelled inflation. "The government is trying to control expenditure as it has been putting pressure on the balance of payment and the national economy and causing constraints relating to lending activities in the private sector," he added. About inflation the minister admitted that high powered money (government borrowing from the central bank), taka depreciation, increase in government borrowing due to rise in the amount of subsidy payments, oil price-hike in international market and high inflation in India put pressure on the inflation in Bangladesh. Rise in wage rate, supply constraints and high consumption spending are also putting pressure on inflation, he added. Muhith said that price spiral of oil and food in the international market created risks to the country's economy. "Unabated price hike of oil and food in the international market have created some risks for the economy," Muhith said. "In addition to that, the sovereign credit crisis in Europe and slow recovery of US economy have created uncertainty in the external sector," he mentioned. "We have to take some unpopular decisions to ensure macroeconomic stability and we may take some more unpopular decisions in the coming days," he said. "The steps may create unease in the economy but I firmly believe that that it will help to achieve high growth in the future," he added. Bangladesh s inflation rate highest in S Asia: CPD The Centre for Policy Dialogue (CPD), a local think-tank, said Bangladesh topped the list among the countries in South Asia, in terms of experiencing the highest rate of inflation, in the current fiscal year (FY). The country's oldest think-tank said the rate of general inflation in the country reached 11.6 per cent in January last, way above target of 7.5 per cent and last fiscal's figure of 8.8 per cent. It said the rate of inflation stood 6.5 per cent in India, per cent in Pakistan, 3.8 per cent in Sri Lanka and 6.8 per cent in Nepal. The CPD disclosed this at a press briefing on the current challenges of the Bangladesh economy, held at its office in the city. Distinguished Fellow of CPD, Debapriya Bhattacharya, briefed the reporters while its Executive Director Mustafizur Rahman, Head of Research Fahmida Khatun, and Senior Research Fellow Khondaker Golam Moazzem, were among others, present on the occasion. Replying to a volley of questions, Dr. Bhattacharya said the government needs to focus more on creating a participatory political environment to help maintain a peaceful, stable situation for the economy. "None wants political risks to increase in the country," he added. The think-tank was highly critical of the Indian line of credit to Bangladesh as many conditionalities have been attached to it. In 2010, India announced a suppliers' line of credit worth US$ 1.0 billion with an annual rate of interest at 1.75 per cent. "The conditions attached to the loan are proving to be too heavy for Bangladesh to bear. Only one project for procurement of buses from India by BRTC has so far been executed," Bhattacharya said. Bhattacharya was critical of the latest monetary policy statements (MPS) of the Bangladesh Bank (BB), saying: "This has largely restricted credit flow to the private sector". He said, in contrast, target for growth of credit to the private sector was revised upwards from 28.1 per cent to 31 per cent in the MPS. "At the end of December last, the rate of credit growth to the public sector was a whooping 54.4 per cent, along with a 73.5 per cent rate of growth for the credit to government." About the stock market, Bhattacharya said the current state of the capital market is close to what was prevailing

17 National Economy DCCI Review March 31st 2012 before the pre-boom phase in early Under the prevailing state of the situation in the stock market, it is hard to find reasons for stocks to be overpriced under any rational expectation. "The rational expectation about the market may not be met unless proper measures are taken to ensure discipline there," Bhattacharya added. Bhattacharya said the primary market is stable and eight new companies are in the process of issuing IPOs (initial public offerings). About foreign aid, Bhattacharya said there is a need for making renewed efforts to ensure disbursement of external aid and its utilization from the bulging pipeline. There is $13 billion foreign aid committed by development partners, now availing disbursement for long. The CPD Fellow suggested to the government to settle any controversy with the international development partners at the earliest in a transparent and judicious manner. Terming the public finance as the 'weakest link' of the economy, Bhattacharya said floating sovereign bond appears to be the first option for the government. But Bhattacharya said raising fund through sovereign bonds will be costlier than that of ODA (official development assistance). He was critical of a move by Malaysia to fund the Padma bridge project. "The proposed fund to be raised in Dubai, may not be so transparent," he added. He also said: "The rate of interest on the Malaysian-arranged credit facility will be between 3.0 and 5.0 per cent, while funding by World Bank and other organisations will be concessional in nature - carrying a rate of interest of about 1.0 per cent and having a much longer period for repayment." The CPD Fellow said the gas supply situation in last three years marginally increased but its demand increased by 12.3 per cent, resulting in a yawning demand-supply gap. About the power situation, he said: "Actually the government has added 1600 megawatt power, instead of 3000 MW, as a good number of plants has gone out of operation over the last three years." He said the overall power supply situation is not conducive to undertaking new investment activities. "Actually, there is no investment especially in manufacturing sector, excepting for export processing zones or EPZs," he added. Agencies add: The CPD said the government needs to focus more on creating a participatory environment for forging a political understanding to implement the development programmes during its remaining tenure. "There should be such politics that won't cause any damage to the economy... no Bangladeshi citizen can expect that the political risk will continue to increase," said Prof Debapriya Bhattacharya. Mentioning that political stability is essential to move forward the economy, the CPD distinguished Fellow said there should be understanding to help gear up the pace of development activities, enhance agricultural production and increase energy production. The renowned economist also hinted at a possible financial indiscipline in the country's economy. A slowdown is looming over the investment activities in Bangladesh, which may adversely affect its growth target, he cautioned all concerned. The CPD report focused on four key areas-the state of public finance, development in the monetary sector, capital market movement and balance of payments situation which also cover the export and import situation and remittance inflow. Debapriya said the CPD is not worried about the current GDP growth figures, rather it is more important to consider whether the country could achieve 8.0 per cent growth by 2015 under the targets set in the Sixth Five Year Plan (SFYP). He stated that the government during its last three years refrained itself from taking any serious attempt for structural reforms to address the problems about macroeconomic management and development policy implementation. Debapriya said public finance is the weakest link of the government's overall financial management as revenue expenditure overshoots hefty targets. The revenue expenditure has gone much higher than the earnings, he noted quoting statistics. During the July-December period, he noted, revenue expenditure witnessed a growth of 35.3 per cent, exceeding the annual target of 12.4 per cent. The noted economist also expressed his concern that if the current trend continues, the size of public debt of Bangladesh, which now stands at around 39 per cent of the GDP, would soon become a major concern. Inflation to come down by fiscal end: Atiur Bangladesh Bank governor Dr Atiur Rahman said that the soaring inflation would come down to a comfortable 'single-digit level' towards the end of the current fiscal. "If we can maintain the present coordination between the fiscal and the monetary policies, we're hopeful that the inflation will come down to a comfortable single digit level by the end of the current fiscal," he told the central bank inspectors at their 15

18 National Economy DCCI Review March 31st regional 'Town Hall Meeting on Bank Supervision' at Hotel Agrabad in Chittagong. BB senior consultant Allah Malik Kazemi, deputy governor Abu Hena M Razee Hassan, BB executive directors SM Moniruzzaman and M Jahangir Alam, among others, took part in the daylong meeting held with BB executive director M Naushad Ali Chowdhury in the chair. Giving his view on the current macro economic situation, the central bank chief said the foreign exchange market is stable mainly because of reduced outflow of import payments and the encouraging export growth. "With the growth of remittances above 12 percent, we're projecting a record level of remittance inflow by the end of current fiscal," he added. Atiur asked the bank inspectors to conduct intensive supervision to remove all the irregularities and mitigate all types of risks. "You have to inspect more closely the sanctioning process of the credit disbursement, utilization and recovery of the credit by the bank branches," he said. In many cases, Atiur said, information about illegal or unethical activity in a bank branch comes from lower-level employees. The governor said deposits are substantial outside the Dhaka division. "About 36 percent of depositors' funds in the country are located at bank branches outside Dhaka." He said banks in the country escaped the turmoil of the past several years but that does not mean that the country's baking sector can ignore the reforms taking place in the rest of the world. "We, in fact, have to speed up the reform process. We must put in place additional safeguards that will help prevent a local or national banking crisis from deve-loping in Bangladesh." 50pc interest waiver on margin loans Finance Minister AMA Muhith has said the government has decided to waive 50 per cent interest on the margin loans taken by retail stock investors with investment of up to Tk 10 lakh. The Finance minister made the announcement after a meeting with the stakeholders held at his ministry to finalise compensation for those who lost money due to free fall in the capital market. He said 20 percent of the new IPOs will be kept aside for the small investors under a compensation package. Muhith said the relevant lending institutions, including merchant banks and brokerage houses, would be eligible to waive up to 50 percent interests of the affected accounts for a one-year period. The Finance Minister informed that the rest of the 50 percent interest would be payable in equal three-month installments in three years after transferring those into an interest-free block account. He said these decisions would be implemented immediately. Replying to a query, Muhith said the merchant banks and brokerage houses have promised to waive the interests. Representatives from the Securities and Exchange Commission (SEC), Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE), Bangladesh Bank, Investment Corporation of Bangladesh (ICB), Bangladesh Association of Banks and Bangladesh Merchant Bankers Association attended the meeting. As the capital market has been volatile since December 2010, Prime Minister Sheikh Hasina then met the market stakeholders in November last year and ordered compensation for the retail stocks investors who lost their money to the continuous fall in share prices. Later, a committee, headed by ICB managing director Mohammad Fayequzzaman, was formed to give proposals in this regard and the committee submitted its report to the Finance Minister. On February 22, Muhith said steps would be announced within 10 days to compensate the small investors. NRBs eye share market for big investment Encouraged by the government's recent initiatives and the gradual recovery trend in the country's capital market, non-resident Bangladeshis (NRBs) living in the UK are planning big to pump their idle money into the share market. "People are now interested some encouraging signs are there in the market. I hope a significant amount of money will enter the capital market this year," Syed Belal Ahmed, founder chairman of UK Bangladesh Business Council, told newsmen at his London office. Ahmed said people in the UK understand that this is the right time to invest and want to buy 'good shares' at lower prices. "Many Bangladeshis are living in the European countries like Italy, France, Germany, the Netherlands and Spain. Many of them have talked to us and shown their interest to invest in Bangladesh's capital market," Ahmed, also chairman and CEO of the Curry Life Group, UK, said. Replying to a question, the entrepreneur said the recent initiatives of the government to stabilise the capital market, regulatory improvement, special NRB quota for IPOs (initial public offerings) and government's efforts to bring in new companies in the stock market encouraged the NRBs to come up with a fresh plan. He sought sincere cooperation from the chiefs of the country's two bourses so that the NRBs feel more encouraged to invest in Bangladesh. "They (DSE and CSE) want NRB's

19 National Economy DCCI Review March 31st 2012 investment but they don't have any drive outside the country," Belal said. Contacted, newly elected Dhaka Stock Exchange (DSE) president M Rakibur Rahman said they welcome investment by NRBs in the capital market. "We'll extend our all-out support." Rahman said they are going to introduce e-trading from March 25 which will attract the NRBs. Belal Ahmed said, "It's even more encouraging and lucrative offer for the investors in the UK." PM seeks greater access of Bangladeshi products Prime Minister Sheikh Hasina has said Bangladeshi products need to have a greater access to the international market so that the country could become self-reliant. The Prime Minister said this when visiting UNTCAD Secretary General Dr Supachai Panitchpakdi met her at her Parliament office. She said Bangladesh has huge skilled manpower and numerous items for export. "If we get greater market access of these goods to the developed countries, then there'll be no need for us to depend on others," she said. Hasina said Bangladesh has made good progress in the agro- and foodprocessing industry. She mentioned that it has been possible to maintain a stable economic growth in the country due to the time-befitting steps taken by her government despite global economic worries. The Prime Minister said the government has taken steps to train up people to meet the demand for skilled manpower across the world. Like quality goods, she said, developed countries should welcome skilled workers. Deputy Press secretary to the Prime Minister M Nazrul Islam briefed reporters after the meeting. Ambassador at-large M Ziauddin and Principal secretary Shaikh M Wahiduz-Zaman were present during the meeting. 22 Bangladesh missions fail to achieve export target Twenty-two of the Bangladesh missions abroad could not achieve respective export target for the first seven months (July-January) of the current fiscal year ( ). The key missions like Washington, Ottawa, Berlin, The Hague, and Paris failed to achieve their export target for the period while some other important missions - London, Madrid, Rome and Brussels - have achieved their target. The overall export earning for the first seven months of the current fiscal was US$ 13, million, which is 4.43 percent lower than the strategic target of $ 14, million. The export earning during the last fiscal ( ) totalled US$ 22, million, which was percent higher than the target of $ 18,500 million. Of the 44 Bangladesh missions, 22 met their export targets for the July-January period of the current fiscal, according to Export Promotion Bureau (EPB) statistics. The 22 well-performing missions are Amman, London, Rome, Tripoli, Tokyo, Beijing, Doha, Colombo, Brussels, Muscat, Singapore, Madrid, Seoul, Brunei, Pretoria, Nairobi, Dubai, Thimpu, Kuala Lumpur, Moscow, Manama, and Yangon. Of the 22 Bangladesh missions that could not achieve their seven-month target, exports still marked a rise for 13 of them from the corresponding period of the fiscal. These missions are Washington, Paris, New Delhi, Berlin, Kuwait, Hong Kong, Bangkok, Canberra, Rabat, Ottawa, Riyadh Jakarta and Stockholm. However, nine missions - The Hague, Hanoi, Tashkent, Kathmandu, Ankara, Manila, Islamabad, Tehran and Cairo - saw exports decline during the July- January period of the current fiscal compared to the corresponding period of the last fiscal ( ). The EPB figures revealed that out of the 16 Bangladesh missions having commercial wings, only nine achieved the export targets set for them while the rest seven could not achieve the targets. The nine missions with commercial wings, which achieved the export targets, are in London, Madrid, Dubai, Brussels, Beijing, Tokyo, Moscow, Kuala Lumpur, and Yangon. Although the remaining seven commercial wings could not achieve the target, but earnings of six except Tehran still saw increase over the corresponding period of the fiscal. These are in Washington, Paris, New Delhi, Canberra, Ottawa and Berlin. The 22 Bangladesh missions that succeeded in achieving their targets for July-January of current fiscal accounted for $ million while the export earnings of the rest of 22 missions, which failed to achieve their targets, totalled $ million. The highest earnings over the sevenmonth period, some $ million - almost one-fifth of total exports - were registered from the Washington mission, followed by the mission in Berlin, which accounted for $ million and London $ million. The strong showing from EU member states continued with the Madrid mission fetching $ million. Next is the Bangladesh mission in Italy, which earned almost $ million, followed by the missions in Ottawa and The Hague, with approximately $ million and $ million respectively. The New Delhi mission managed to fetch $ million. 17

20 National Economy DCCI Review March 31st Quader for widening export market to face future risks Commerce Minister GM Quader has called upon the exporters to widen overseas market to tackle any probable risk in exports. "Still there are risks in our economy as 80 per cent of our export is occupied by Readymade Garments (RMG)," he said while inaugurating the'7th Dhaka Motor Show-2012' at Bangabandhu International Conference Center. Bangladesh's export is mainly confined to Eurozone, the US, Canada that is risky package of basket, he added. CEMS Global Conference and Exhibition Management Services Ltd, USA, in association with CEMS Bangladesh, organized the show. President of American Chamber of Commerce and Industry (AmCham) Aftab- Ul-Islam and President of Foreign Investors' Chamber of Commerce and Industry (FICCI) Syed Ershad Ahmed and Monowar A Rahim of Rahimafrooz spoke on the occasion. Quader said the government is facing difficulty in the total trade balance as there is a gap of nine billion US dollars between export and import in fiscal. "We are lucky enough to have strong remittance inflow and good apparel export earning but we must keep alternative export destinations to maintain steady export earning in any adverse situation," he added. The minister said excessive dependence on import is not only putting pressure on export but also on foreign exchange reserves. "The country should go for producing import-substitute goods side by side discourage imports of costly items," said Quader. Highlighting the success story of RMG sector, Syed Ershad said this sector should be replicated in other sectors remaining untapped. "I urge the young investors to come up with investments, either single or joint venture, in the automobile industry to restrict import of auto parts from abroad," said the FICCI president. Aftab-Ul-Islam said Bangladesh is one of the ideal destinations for foreign investment and there is a great potential of manufacturing auto accessories here. The main objective of the expo is to create an ideal business environment for country's automobile industry so that, local players in the industry can display their products, said the organizers. But, local auto industry people say such show does not benefit the local industry. "This kind of show does not give plus or minus point to the local industry, rather it helps expand the market of foreign autos," Abdur Razzaque, President of Bangladesh Engineering Industry Owners' Associations (BEIOA) said earlier. PM wants Japanese entrepreneurs to invest in Bangladesh Prime Minister Sheikh Hasina has said Japanese entrepreneurs may take advantage of the attractive incentives on offer for foreign investors in Bangladesh. "Bangladesh is even ready to offer an exclusive area for the Japanese investors," she said when two members of Japanese parliament- Takashi Nagayasu and Ichiro Tsukada-met her at her official residence Ganobhaban. Referring to the growing need for more power to keep up the economic growth, the Prime Minister particularly sought Japanese investment in power sector. PM's press secretary Abul Kalam Azad briefed reporters after the meeting. He said the Prime Minister said Bangladesh and Japan share common perceptions and views on many global issues. Hasina said the two friendly countries could share experiences in disaster management and its mitigation and mentioned that Japan is a role model for Bangladesh in many areas. She said Japan lost three million people in the World War- II and Bangladesh also lost the same number of people in its War of Liberation in "This provides an emotional bonding where each understands the pain of the other and the suffering, and the destruction they underwent." The premier mentioned that Japan has been a consistent friend and a reliable development partner of Bangladesh since the country's independence. Hasina expressed sincere thanks to Japan for its continued assistance for socioeconomic development of Bangladesh. The bilateral relations between the two friendly countries have touched the milestone of glorious and eventful 40 years in February Hasina also expressed her optimism that the Japanese entrepreneurs would import very high quality items like jute products, handicrafts, and garment, ceramic, leather and IT products as well as other textile items from Bangladesh at competitive prices. The Prime Minister said her government has been tirelessly working to further strengthen the democratic system and make parliament the centre of all political discussions and decisions to ensure good governance and the rule of law in the country. Hasina said new election commissioners have been appointed in consultation with all political parties. "The Election Commission has been empowered to work as an independent commission," she said. The Japanese parliamentary team

21 National Economy DCCI Review March 31st 2012 thanked the Bangladesh government for its assistance after the tsunami last year. They also handed over a letter of the Japanese prime minister to Sheikh Hasina. Foreign Minister Dipu Moni, Ambassador At-Large M Ziauddin and Principal Secretary Sheikh M Wahid Uz Zaman were present on the occasion. Bangladesh's climate adaptation to cost US$5.7bn by 2050 The adaptation costs from the increased risks of cyclones and inland monsoon floods in a changing climate in Bangladesh will be approximately US$5.7 billion by 2050, says a new World Bank report. "Bangladesh will require climatesmart policies and investments to make itself more resilient to the effects of climate change," according to the report titled 'The Cost of Adapting to Extreme Weather Events in a Changing Climate'. The report was released in Dhaka. The World Bank conducted the study in collaboration with the Institute of Water Modeling and the Center for Environmental and Geographic Information Services with financial support from the government of the Netherlands, and the Bangladesh Climate Change Resilience Fund (supported by Denmark, the EU, Sweden, Switzerland and the UK). The report estimates that monsoon floods will affect an additional 2 million people by inundating new areas due to climate change. For cyclonic storm surges, currently 8 million people in the coastal area are vulnerable to inundation depths greater than 3 meters and this number will increase to 13.5 million by In addition, another 9 million people are expected to be exposed to inundation depths above 3 meter due to climate change. Shipbuilding to supersede RMG in a decade: Danish envoy Bangladesh s maritime sector is likely to supersede readymade garments (RMG) in foreign exchange earning in a decade or two, the Danish ambassador in Dhaka said, urging government to come forward with proper strategies and necessary supports for its rapid growth. "The potential of maritime industry in Bangladesh is very, very large-even larger than the RMG sector," Ambassador Svend Olling said at a roundtable on shipbuilding at a local hotel. The textile sector is now the single largest export earner for Bangladesh, which alone makes up over 70 percent of total exports, with a net income of nearly 17.5 billion in Cambridge Maritime College (CMC), a private institute to develop seafarer, organized the roundtable, where eminent lawyer Dr Kamal Hossain spoke as the chief guest. Director of CMC Khorshed Alam, BSS special correspondent Saiful Islam Shameem and managing director of Western Marine Mohammad Sakhawat Hossain, among others, spoke on the occasion. Olling said Bangladesh has a number of competitive advantages in the field of shipbuilding and it should grab it immediately in order to diversify exports, multiply foreign exchange earnings and re-brand its name in the world. He said the maritime sector has remerged in Bangladesh, which has a long tradition of shipbuilding between 15th and 17th centuries. "I see a bright prospect of Bangladesh to brand its name 'Maritime Nation' to rest of the world," the envoy said adding the large population size could be a dividend for cheap labour and build ocean-going vessels in a competitive price. He said Bangladesh now supplies ships at 20 percent low cost than other suppliers in Asia. Industry insiders say riverine Bangladesh has over 200 shipbuilding units and repair yards, but only a handful of them topped the list, with exporting ships to many European and Asian countries. The sector has earned nearly half a billion US dollar in 2010, but exports can reach as much as 2 billion US dollars in next three years. "I could not have a better chance to observe historic March 7 today than hearing such a good news for Bangladesh," said Dr Kamal Hossain, a close associate of Father of the Nation Bangabandhu Sheikh Mujibur Rahman and the key figure to write the national constitution soon after the birth of Bangladesh in Businessmen for alternative markets for cotton import Business leaders have said Bangladesh should look for alternative markets instead of depending only on India that every now and then imposes ban on export of cotton. India, the world's second-largest producer of cotton, on Monday issued an order, rolling back the decision of ban, but not for full resumption of export, according to media reports. Earlier, Indian Trade Minister Anand Sharma promised a full withdrawal of the ban, but it was not done as there was reports to the Indian government that China, which imports 85 per cent cotton of its demand from India, was stockpiling Indian cotton. "I think we should not largely depend on India for import of cotton. We must look for alternative market like Uzbekistan, Australia and USA," M Siddiqur Rahman, acting president of BGMEA, told BSS. "India is the second largest cotton producer, while we are the second largest cotton importer from India. So it is not rational for India to impose ban on export of cotton beyond the business ethics," said Rahman. 19

22 SAARC News DCCI Review March 31st pc intra-regional trade under Saarc needed for higher economic growth 20 The intra-regional trade under South Asian Association for Regional Cooperation (SAARC) should be increased to at least 25 per cent from around five per cent now for higher economic growth in the region, an official said in Dhaka. Speaking at a function at National Press Club in Dhaka, Director General (SAARC) of Foreign Affairs Ministry Syed Masud Mahmood Khundoker said the SAARC countries lagged far behind other trade blocs like Association of Southeast Asian Nations (ASEAN) in intra-regional trades. Export Promotion Bureau (EPB) under the Ministry of Commerce arranged the press conference to mark 11th SAARC Trade Fair and Tourism Mart' "We have achieved a lot in the last 25 years after inception of the Saarc but not up to the mark", DG SAARC said. He further stated that the Bangladesh government's ultimate goal is to make a zero sensitive lists among the SAARC countries to narrow down the intra-regional trade gap. Echoing the same, Vice-Chairman of EPB Shubhashish said intra-regional cooperation is a must to cut regional trade imbalance. "Information sharing among the Saarc countries can help address the trade imbalance," he added. The intra-regional trade under the Saarc umbrella is around five percent while the trades among Asean countries are nearly 40 percent. Bose said Bangladesh's import from the eight SAARC countries stood at $2689 million against the export of US$ million during July February of current fiscal. Analysts say the regional trade imbalance is on the rise despite the SAARC nations initiating many steps including allowing duty-free access of products from each country, reducing negative lists and easing non-tariff barriers (NTBs) by member states. Dhaka, Colombo to boost economic cooperation Bangladesh and Sri Lanka are set for scaling up measures to puff up bilateral economic cooperation particularly in shipping, ICT, agroproducts, construction, cement and pharmaceutical sectors. The two countries signed an 'Agreed Minutes' to this effect at the end of the two-day meeting of the Joint Economic Commission (JEC), which began in the capital city of Dhaka. Officials of the Economic Relation Division (ERD), the host of the JEC meeting, told newsmen that both the countries showed interest to strengthen ties in shipping sector. Bangladesh requested Sri Lanka to increase employment opportunities for its crews and officers on Sri Lanka flagged vessels. Besides, it also invited the shipowners of this SAARC member states for dry docking at Bangladeshi dockyards. The representative of the countries also talked about the introduction of feeder vessels service between Mongla and Colombo ports. On the other hand, exchange of information and experiences of information technology on the basis of common interests like establishing an effective nationwide research and education network, developing and implementing distance education, pursuing best practices in the use of ICT for socioeconomic development programmes, digital libraries, telemedicine, virtualization, computer sciences and engineering were also discussed. Bangladesh insisted Sri Lanka to put special emphasis on facilitating registration of pharmaceutical products for exports to the island country. Cooperation in tea sector through establishing joint venture for promoting export of processed tea from Bangladesh was also addressed at the meeting. The meeting discussed the issuance of notification of further tariff concession for the Least Developed Countries (LDCs). Bangladesh and Sri Lanka inked bilateral agreement in 1979 to extend economic cooperation. New Indian budget offers benefits to small income groups Finance Minister Pranab Mukherjee in the Indian Union Budged has given a marginal benefit on the muchawaited income tax slabs. The biggest beneficiaries would be people having income between Rs. 800,001 to 999,999 per annum. They move from the 30% slab to the 20% slab. The basic slab for income tax has been proposed to be raised to Rs. 0.2 million (2.0 lakh) from the current Rs million (1.8 lakh). This leads to a savings of Rs. 2,000 for all taxpayers earning between Rupee 180,001 to Rupee 199,999. In addition, the finance minister has created new tax slabs. The finance minister (FM), presenting the budget to the Indian parliament, also said that taxation of unexplained money, credits, investments, expenditures etc, will be at the highest rate of 30%, here the slab of income will not be considered.

23 SAARC News DCCI Review March 31st 2012 The union budget to parliament for the coming financial year beginning in April projected fiscal deficit at 5.1 per cent of gross domestic product (GDP) in fiscal year (FY) against an estimated at 5.9 per cent of GDP in FY Total expenditure in FY is projected at 14.9 trillion rupees, up 29 per cent from that of the outgoing fiscal. Net market borrowing by the government is estimated at 4.8 trillion rupees in FY Plan expenditure is budgeted at billion rupees in FY 2012/13, up 18 per cent. The Indian Finance Minister has promised to keep 2012/13 subsidies under 2.0 per cent of GDP. Major subsidies bill is estimated at 1.8 trillion rupees in the forthcoming fiscal. Food subsidy bill in FY is estimated at 750 billion rupees. Fertilizer subsidy bill in is projected at billion rupees. Petroleum subsidy bill in is estimated at billion rupees against the revised petroleum subsidy bill for FY at billion rupees. The Union Government has proposed to inject 159 billion rupees to capitalize state-run banks in 2012/13. The proposed budget expects gross tax receipts at 10.8 trillion rupees, and non-tax revenue at 1.64 trillion rupees in FY It proposes to levy tax on all services except 17 items in the negative list from 2012/13. It proposes to raise service tax rate to 12 per cent from 10 per cent. There is no change in corporate tax rates. It proposes to provide full exemption on import duty of thermal coal for power plants and to double basic customs duty on gold. Pranab Mukherjee expects headline inflation to moderate in next few months and to remain stable thereafter. The proposed budget envisages the Indian economy to grow at 7.6 per cent in 2012/13 against 6.9 per cent in 2011/12. It notes that the signs of economy are turning around in March quarter. About policy reforms, the proposed budget will allow external commercial borrowing of up to $1.0 bn to raise working capital for airlines industry for one year, qualified foreign investors in Indian corporate debt markets and external commercial borrowing to part finance rupee debt in power projects. It proposes to remove sector-specific restriction on venture capital fund investments and hopes to achieve "broad-based consensus" to open multi-sector to foreign investors. The proposed budget allocated 1.94 trillion rupees for defence in 2012/13, up 18 per cent from the revised figure for 2011/12. Furthermore, it proposes to award contracts to build 8,800 km of roads in 2012/13. The Union Government will double allocation for tax-free bonds to 600 billion rupees for financing infrastructure projects in 2012/13. The proposed budget sets disinvestment target in of 300 billion rupees. It expects India to become self-sufficient in urea production in five years and proposes to raise agricultural credit target in 2012/13 to 5.75 trillion rupees Current account deficit of India is projected in the proposed budget at 3.6 per cent of GDP in 2011/12 and furthermore expects smaller current account deficit in 2012/13. Then Indian Finance Minister said: "We have to accelerate the pace of reforms and improve supply side management of the economy." "Economic policy, as medical treatment, often requires us to do something which in the short run may be painful but is good for us in the long run." "As Hamlet, the Prince of Denmark, said in Shakespeare's immortal words, 'I must be cruel only to be kind'." The Finance Minister has proposed to give a deduction of Rs 5000 for expenses incurred on preventive health check-up. A new equity scheme called Rajiv Gandhi Equity Saving Scheme is being introduced to promote equity investments. The scheme will get income tax deduction, which will be purely applicable to the new retail investors who will invest directly into equity up to Rs , with a lock-in period of three years. The investor's annual income should not exceed Rs. 1,000,000. In order to ensure more participation from small towns in initial public offerings (IPOs), the Indian FM has announced that changes have been made in the IPO guidelines. This proposal is intended to help the capital markets in the long-run. The Finance Minister has proposed to allow selected government undertakings to issue tax-free bonds of Rs. 600 billion (60,000 crore), which is double the amount assigned in the previous year. The Indian Finance Minister has proposed to give a tax deduction of up to Rs 10,000 on interest earned from savings bank accounts. This means one can keep up to Rs million (2.5 lakh) continuously in his or her savings bank, get interest (currently 4% in most banks) and not worry about the interest getting taxed. The finance minister has said that Credit Guarantee Fund is to be set up which is likely to reduce the risk of banks. For that reason, the banks might reduce the rate of interest on educational loans. The finance Minister has announced 12% excise duty on branded retail garments but it has been proposed that multi-brand shops are to be supported and the country can expect more number of malls and Super Malls in the future. 21

24 SAARC News DCCI Review March 31st The price of luxury cars is expected to go up. This will disappoint people who were planning for the prices to fall post-budget. The customs duties on the silver and gold prices have gone up to 4.0% from 2.0%. This will make both gold and silver costlier than what they are today. However, the branded silver jewellery is fully exempted from excise duty. The custom duty of LCD and LED panels has been exempted. In addition, the mobile phone parts are exempted from basic customs duty, which is expected to bring down the price of mobile phones. The Interest subvention of 1.0 per cent has been extended for one more year on housing loans up to Rs. 1.5 million (15 lakh). The Finance Minister has also announced that a Credit Guarantee Trust Fund is to be set up to ensure better flow of Institutional Credit for Housing Loans. India's factory output leaps by surprise 6.8 per cent India's industrial output surged by a more than expected 6.8 percent yearon-year in January, defying high interest rates and a global economic downturn. The increase, which outpaced analysts' forecasts of 2.1 percent, was also significantly above the 1.8 percent expansion logged in December and mainly driven by a strong manufacturing performance. Manufacturing production grew 8.5 percent in January, while electricity output was up 3.2 percent. The central bank has hiked interest rates 13 times since March 2010 to battle inflation, but has kept them on hold since late last year amid signs price rises were cooling and the economy weakening. The data was welcomed by the government, which forecast last month that in the year to March economic growth would fall below 7.0 percent for the first time since the global financial crisis. Asia's third-largest economy will probably grow 6.9 percent, the government said, far below last year's budget projection of 9.0 percent and down from the previous year's 8.4 percent, the government said. Analysts have said they expect India's central bank to start unwinding interest rates from four-year highs as early as this week to spur the economy. Nepal to host 26th Asia-Pacific chamber conference in October 2012 The 26th conference of Confederation of Asia Pacific Chambers of Commerce and Industry (CACCI) will be held during the first week of October 2012 in Kathmandu, Nepal. According to press statement issued in Islamabad by Federation of Pakistan Chambers of Commerce and Industry (FPCCI) the theme of the conference for this year is A Vision For Shared Prosperity. The date for holding the conference was decided during the Planning Committee meeting of CACCI held under the chair of its Vice President Tariq Sayeed in Kathmandu. Bhutan businesses affected by Rupee crunch With the banks stopping all kinds of monetary transaction to India, businesses in Bhutan are beginning to feel the impact of Rupee crunch. Some of the fuel depots have run out of fuel, people cannot make transactions to India and Industries are worried it will affect their supply. The Royal Monetary Authority, RMA, issued a circular asking all the financial institutions to stop all kinds of monetary transaction to India for the time being. This is being done to prevent the problem of rupee crunch from aggravating further. An owner of an electronic shop, Sangay Penjor, said he imports all his goods from India. He deals mostly in computer and its accessories. Right now we are facing difficulty because of the situation. We have to completely deal with Indian partners in India and they don t accept Bhutanese currency. If it continues then I think we will have to think about closing down our business. Unlike a few days ago, the counter issuing Indian currency and remittance in all the banks remained empty today. At the Druk PNB, a businesswoman came hoping to send a demand draft to India. Tomorrow, I am leaving to India and I am facing problem. I have to carry Indian Currency, and I can t even make drafts nor remittances. I might not get my goods on time., said Jigme Yangchen a businesswomen. The move has also impacted the oil distributors in the country. All the fuel depots in the Capital have run out of petrol and diesel. Many cars were seen lined up at the Bhutan Oil Distributors waiting to fill-up their tanks. It was the only fuel depot supplying fuel to its customers as it had some reserves. Driving taxi is everything to me. I have to depend and live on this job. And if there isn t fuel then it will be a serious problem, said one of the Taxi drivers. If there isn t fuel there I guess I should stop driving taxi, said another. As of now, the industries in the country have not been affected much. According to the General Secretary of the Association of Bhutanese Industries, it has not reached a stage where they need to panic. Their only concern is that the provision made by the RMA could delay the payment of raw materials which could adversely affect its supply. According to the RMA s provision one has to fill up a form available with the banks, which will be forwarded to the RMA by the concerned bank. Once it is verified by the RMA it will send the form back to the bank and the bank can then transfer the money. But this process will take a minimum of one week.

25 Asia Pacific DCCI Review March 31st 2012 ADB sees robust ASEAN growth in difficult 2012 Southeast Asian economies are forecast to grow by 5.2 percent in 2012, the chief of Asian Development Bank said, though he urged nations to be "vigilant" in an uncertain global environment. "Despite a difficult external environment, we still expect ASEAN growth this year to remain robust at 5.2 percent, above last year's rate of 4.6 percent," Haruhiko Kuroda told finance ministers of the 10-member Association of Southeast Asian Nations (ASEAN) during a meeting in the Cambodian capital. Thailand and the Philippines are likely to show "vibrant growth" after a drop in exports last year, he said, while Singapore, and to a certain extent Malaysia, will see "some slowdown" as they are more affected by external financial turmoil. Looking ahead to 2013, the Manilabased bank expects ASEAN Gross Domestic Product to expand above 5.5 percent on the back of improved domestic demand and exports, as worries about the US and eurozone economies look set to ease. "The region is doing well," the ADB president said, but ASEAN nations -- which also include Indonesia, Brunei, Cambodia, Laos, Vietnam and Myanmar -- should be on guard for "sudden shocks". In the short-term, the countries face high oil prices, volatile capital inflows which could hurt exporters, and the "serious risks" still posed by Europe's woes, Kuroda said. "Should financial panic happen, contagion could spread and liquidity tightens," he added. "Given today's uncertain environment, it is extremely important to remain vigilant in monitoring global events." Kuroda said ASEAN nations should consolidate growth momentum by pushing for greater cooperation and financial integration and reducing their reliance on the US and Europe to drive exports. China says inflation, factory output slowing China s inflation rate slowed sharply in February and factory output eased, data showed, adding to evidence of a slowdown in the economy and giving Beijing more room to relax credit limits. The figures from the National Bureau of Statistics came as the economy faces headwinds over Europe s debt crisis and sluggish growth in the United States, which are hurting export-driven China. The consumer price index rose 3.2 percent in February-the lowest since June 2010 compared with 4.5 percent in January, when spending before the Chinese New Year holiday drove up retail prices, the government said. Before January, inflation had eased for five straight months after hitting a more than three-year high of 6.5 percent in July and analysts had expected the downward trend to resume in February as the economy continued to slow. Premier Wen Jiabao, speaking at the opening of the annual session of parliament, warned consumer prices remained high and the government s aim was to keep the inflation rate within 4.0 percent this year. His remarks suggest policymakers will be cautious in relaxing the tight credit restrictions imposed in the past two years, while as he also forecast 2012 economic growth to slow further from the blistering pace of previous years. The producer price index, which measures the cost of goods at the farm and factory gate and is a leading indicator of consumer prices, flatlined in February compared with a 0.1 percent increase in January. Inflation has triggered social unrest in the past and senior leaders are anxious to keep prices of basic goods such as vegetables, meat and housing under control ahead of a once-a-decade power transition that begins later this year. Beijing has twice lowered the banks reserve requirement ratio in the past three months, effectively increasing the amount of money they can lend, and analysts said they expect further such moves in the coming months. But they ruled out aggressive interest rate cuts, especially against a backdrop of rising global oil prices, as they could fuel inflation in energyguzzling China. We do not expect a big shift in policy settings in the nearterm, with any move to ease liquidity conditions likely to take the form of further cuts in banks reserve requirements, said Brian Jackson of Royal Bank of Canada. JPMorgan expects the inflation rate to slow to 2.8 percent by the third quarter, giving the government wider scope to implement selective policy easing measures to counter the downside risks to growth. Other data showed industrial output rose 11.4 percent in the first two months of 2011, compared with a year ago. The figure was below December s increase of 12.8 percent and analyst forecasts for 12.4 percent, according to Dow Jones Newswires. Urban fixed asset investment expanded 21.5 percent in the first two months, compared with the same period last year, beating expectations for an increase of 19.0 percent. Retail sales rose 14.7 percent in the twomonth period. Beijing combines the January and February figures for output, investment and retail sales due to distortions caused by the Lunar New Year holiday, which falls within the first two months of the year. 23

26 Asia Pacific DCCI Review March 31st China has cut its economic growth target to 7.5 percent this year from eight percent last year, in an official acknowledgement that the exportdriven economy is slowing as the eurozone crisis and slow pick up in the United States hurts demand for its products. The Asian powerhouse expanded 9.2 percent last year, slowing from 10.4 percent in 2010, as global turbulence and efforts to tame high inflation put the brakes on growth. The downward trajectory in consumer prices means inflation can be safely relegated from the top spot of government concerns as Beijing turns its focus to boosting growth, said Alistair Thornton, an analyst at IHS Global Insight. But he noted the tricky challenge facing policymakers as they try to ensure the economy expands at a fast pace while keeping prices under control. China signals further currency reforms at NPC China signaled its intention to further intensify reforms of its currency after Premier Wen Jiabao said Beijing will push for "relatively big-scale" 2-way fluctuation for the yuan. In a speech at the end of the annual meeting of the nation s parliament, Wen also said the yuan may be near an equilibrium value and that policy makers will allow greater movement in the exchange rate. "We will step-up exchange rate reforms, especially in increasing 2- way fluctuations," the 69-year-old Wen said at his last annual postparliament news conference. Chinese officials have indicated they will move to allow the yuan to trade in a wider daily range, one of steps the country has prepared to internalize its currency. Such an argument is bolstered by the fact the People s Bank of China set the yuan s midpoint lower, allowing for greater volatility. Some experts believe that China has achieved a basic equilibrium in the balance of payments and that the yuan is close to fair value; however, the future of the dollar is still cloudy. Rising global commodity prices will leave room for the yuan to appreciate, given the fact that Chinese officials are sensitive to curbing domestic inflation. China is one of the world s biggest importers and consumers of raw materials. As a result, the appreciation of the yuan will be slowed down, but will step up to 2-way fluctuation. China s auto industry faces reshuffle Chinese Premier Wen Jiabao pointed out in his annual government work report that China will mainly focus on incremental control, optimization of stock and the promotion of mergers and restructuring in the auto, steel, shipbuilding and cement industry to enhance industrial concentration and economies of scale. It is expected that the entry threshold to China s auto industry, the world s largest, will be raised, while at the same gaining approval to build whole cars in the country will become harder, ushering a major reshuffle, according to industry insiders. That can already been seen in the Catalogue of Industries for Guiding Foreign Investment 2011 that took effect Jan. 31, in which the assembly of whole cars was moved from the encouraged category to permitted as the central government seeks to curb overcapacity in the industry. Car sales in China hit 18.5 million units in 2011, while production capacity will rise to 25 million vehicles by 2015, according to Li Weidou, general manager of China FAW Group Import & Export Corp. Analysts say 3 major auto joint ventures will be impacted by the news measures, although the full extent of the possible effects are not yet clear. Indian-owned Jaguar Land Rover is planning to establish a 17.5 billion yuan JV with China s Chery Automobile Co. Ltd., with a factory in Changshu, Jiangsu province. The first car is expected to roll of the assembly line by the middle of 2014, with total annual production capacity planned at 180,000 units by Chery Automobile also intends to establish a 2.4 billion yuan JV in northern Dalian with Subaru by 2016, which will primarily produce the Japanese firm s marques in China. Meanwhile, Japan s Mazda is planning to form a 2-way JV, Changan Mazda, with Changan Automobile Group, which will mean the end of the Changan-Ford-Mazda venture with Ford Motor Co. Approval for that JV had been expected by China defends rare earth export restrictions China has defended its restrictions on exports of rare earths, as Washington prepares to launch a fresh trade suit against Beijing at the World Trade Organization prompted by these quotas. The Asian nation produces more than 95 percent of the world s rare earths - - critical to making everything from ipods to low-emission cars -- and its export quotas on the elements have triggered an outcry among major trading partners. U.S. President Barack Obama is expected to announce that the United States -- with the European Union and Japan -- will bring the suit at the WTO, in what could fuel election-year trade tensions with Beijing. Based on environmental protection and in order to achieve sustainable development, China carries out management policies over the export of rare earths, foreign ministry spokesman Liu Weimin said. We believe such measures comply with WTO rules. Beijing has set its 2012 export quota for rare earths -- which have a wide range of applications in the military and technology sectors in particular -- at around 30,000 tons, roughly the same level as 2011.

27 Asia Pacific DCCI Review March 31st 2012 Critics say the restrictions are aimed at driving up global prices and forcing foreign firms to relocate to the country to access them. But Beijing says the measures are necessary to conserve the highly sought-after natural resource, limit harm to the environment from excessive mining and meet domestic demand. China s official Xinhua news agency hit out at Obama s planned announcement, saying the suit was likely to hurt bilateral trade ties and trigger a backlash from China instead of settling the rift. It is rash and unfair for the United States to put forward a lawsuit against China before the WTO, which may hurt economic relations between the world's largest and second-largest economies, it said in a commentary. A better choice for the United States would be sitting down with China faceto-face and solve the problem through negotiations instead of making it an internationalized issue. Liu said China would continue to supply rare earths to the international market, and pointed out that Beijing had also put restrictions on mining the materials within the country. It has for instance stopped issuing new licenses for prospecting and mining rare earths and has also adopted production caps, in what it says is a bid to protect the environment. He also urged other countries with rare earth resources to actively develop and explore these and share the responsibility for supplying rare earths. Obama, facing fierce election-year pressure over China from Republican opponents, has repeatedly called on Beijing to play by the rules of the road as it rises to become one of the dominant players in the global economy. He has already launched a new enforcement center to more aggressively challenge unfair trade violations, including by China. In other disputes, Washington has accused China of artificially undervaluing its yuan currency in order to boost its own exports, hurting U.S. manufacturers and hobbling the economic recovery. But China defends its exchange rate regime, saying it is moving gradually to make the yuan more flexible. Japan to purchase $10bn in China debt Japan will buy 65 billion yuan ($10.3 billion) of Chinese government debt, the country's finance minister said, giving China a mark of approval in the credibility of the yuan as an international currency. Other countries are investing in China through state agencies, but Japan's investment is by far the biggest in the yuan. As a currency with limited convertibility, such bets are symbolic of the shift in global power toward China as the world's fastest-growing major economy. Despite sometimes rancorous political ties between the two neighbours, Japan's economic fortunes are increasingly tied to China's economic growth and consumer demand. China is already Japan's biggest trade partner and the two countries hold the world's biggest piles of foreign exchange reserves $3.2 trillion in China and $1.3 trillion in Japan. "For China, the move is linked to its efforts to internationalize the yuan allowing foreign investments in its debt market will make the yuan more accepted internationally," said Zhang Yongjun, an economist at the China Centre for International Economic Exchanges, a government think tank. Japan's finance minister, Jun Azumi, said that Japan had received permission from China to buy 65 billion yuan in Chinese government debt. He said Tokyo needed to carry out some administrative steps in coming months before purchases could begin. "We feel this is an appropriate amount when considering our mutual goal of strengthening economic cooperation between Japan and China," Azumi told reporters. Japan and China agreed at a summit in December to strengthen financial cooperation and that included increased use of the yuan and yen in bilateral trade as well as Tokyo's buying of Chinese government bonds. The Japanese investment will be handled outside of China's Qualified Foreign Institutional Investor (QFII) program, a quota system and the primary channel for foreign portfolio investment, the Ministry of Finance in Tokyo said. Japan is likely to buy a small amount of debt at first and then increase purchases while considering possible market impact when choosing the timing of the transactions, Azumi added. "The market impact should be manageable because the amount isn't that large and the market for dollars is huge," said Junya Tanase, chief foreign exchange strategist at J.P. Morgan Bank in Tokyo. "Still, this is significant for economic cooperation and reserves diversification. It's difficult to tell now, but it is possible for the amount of bond purchases to increase in the future." Japanese purchases of Chinese bonds would also be a sign of credibility in Beijing's long-term efforts to elevate the yuan's status as an international currency. That effort so far has involved China's promotion of the yuan to settle trade. Beijing has struck agreements with several nations from Malaysia to Belarus and Argentina on the use of the yuan in trade and other transactions. It has expanded a pilot program started in 2009 into a nationwide one allowing firms to settle their trade in yuan. 25

28 Middle East DCCI Review March 31st 2012 Saudi economic outlook bright despite global and regional headwinds 26 Led by Saudi Arabia and Qatar, some regional economies are expected to offer a strong policy response to global and regional headwinds. HSBC said in its Q1, 2012 report "Who's at risk in 2012" that Modest downward adjustments to the oil prices have done little to dent Saudi Arabia's near-term economic outlook. Running at around $100 a barrel over the coming two years, oil earnings will remain sufficiently high to leave the Kingdom with substantial current account surpluses. This will not only ensure that the currency remains well supported, but should also allow the Kingdom to add to its already substantial stock of foreign assets, mitigating the impact a global squeeze on credit might have on the Kingdom. The report said budget will also remain in surplus, with the scale of reserves the state has at its disposal likely to give it the confidence to maintain its expansive fiscal stance, even if oil earnings weaken. In contrast with some of its regional neighbours, the Saudi banking system also appears to have shifted into expansionary mode after an acute credit squeeze that lasted almost two and a half years. With capital levels high and liquidity strong, HSBC said the momentum of credit growth to be sustained, offering support to the private sector and creating a more effective multiplier for increases in public spending. Indeed, HSBC has raised its estimate for real growth in 2011, and although it expects the headline rate of expansion to fall sharply in 2012, this will be largely attributable to a steady fall in oil output as Libyan crude comes back on line. Domestic demand, by contrast, should hold up well. Despite the buoyant near-term outlook, however, substantial challenges persist. With unemployment among nationals continuing to run at double-digit levels, it is clear that hydrocarbon wealth and increasing public spending alone are insufficient to address the growing economic demands of Saudi Arabia's large and overwhelmingly young population. However, the appetite for structural reforms that might support more rapid rates of employment-generating private sector growth still appears muted. Against a backdrop of global economic distress, mounting regional political tension and the uncertain aftershocks of the 2011 Arab Spring, there is actually much in the outlook that is positive. Average growth running at around 3.5 percent is well ahead of the pace of expansion likely in Western economies and stands comparison with many emerging markets. Strong overall public finances and a robust external account position leave MENA as a whole less vulnerable than many of its peers to the ongoing global credit squeeze and weakening of global trade. Even the political environment shows some sign of normalizing. Yet, though the strengths are real, the aggregate figures mask wide variance in economic strength and differences in political order. The headline forecasts also obscure longstanding - and newly emerging - economic and political risks that will weigh on performance over the near term, the HSBC report said. Saudi Arabia ranks second in terms of savings Saudi Arabia, the biggest oil exporter, has remained the world's second largest country in terms of savings. Its rate of savings to the gross domestic product (GDP) stood at percent between 1970 and 2008, Al-Riyadh newspaper has reported quoting an International Monetary Fund (IMF) report. Commenting on the IMF report, Turki Fadaaq, head of research and consulting unit at Bilad Investments, said while giving an advanced position to the Kingdom, the IMF has also given good indicators for the necessity of integration of financial and economic policies so as to rectify aspects of structural defects in the economy. He said the Saudi economy depends on one depleting and un-renewable commodity, which constituted 92 percent of its revenues in the 2011 budget. Before, the Ministry of Planning was unable to diversify the economy for 30 years, which led to fluctuation of revenues coupled with the fluctuation of oil prices. The analyst said the process of diversification of national income needs innovative means to yield quick results in a world that is changing day by day and to realize the required targets in introducing new technologies in the local economy. He said the Kingdom's conservative policy during the last decade enabled it to pay off most of the domestic debts, increase levels of savings, which exceeded the SR2 trillion-mark by the end of January 2012, and

29 Middle East DCCI Review March 31st 2012 invest more than 70 percent of it in global financial instruments. Director-General of Safa Financial and Economic Center Saleh Althaqfi called for creation of income sources other than the oil sector for accelerating the business growth and thus providing more employment opportunities for Saudis than where they stand at the present levels. He also called for employment of more Saudis in government (public), private and vocational sectors. The expert urged the concerned officials to support local enterprises, which will hopefully check the outflow of funds and minimize money transfers abroad. This will result in more money surpluses, which could be utilized in a better way instead of keeping such surpluses for facing future problems not clearly identified, he said. UAE economy grew 3.3 pc in 2011 The United Arab Emirates' economy grew an estimated 3.3 percent in 2011, the economy minister was quoted as saying, slower than analysts had expected but still more than double the pace seen in the previous year. Economy Minister Sultan bin Saeed Al-Mansouri said the UAE, one of the world's top five oil exporters, had faced unprecedented regional and global challenges last year. But he added that it was helped by the rising contribution of non-oil sectors, the ministry's website ( reported. Analysts polled by Reuters in December had forecast the economy would grow 3.9 percent in real terms in 2011, after 1.4 percent expansion in The economy has been recovering steadily from Dubai's corporate debt crisis because of high oil prices and strong trade with Asia, though bank lending has remained sluggish and the once-booming real estate sector weak. The UAE statistics office has yet to release official gross domestic product data for Last November, Al-Mansouri said Europe's debt crisis and weakness in the US economy might slow the UAE's growth to around 3 percent in "We expect growth to slow to 2.5 percent this year mainly as a result of weaker external conditions - the euro zone crisis and slower global growth generally - but also because we do not see oil production increasing from the 2011 high base," said Khatija Haque, senior economist at Emirates NBD in Dubai. "We think the growth this year will be underpinned by public sector spending." The UAE, which enjoys one of the highest incomes per capita globally, avoided social unrest sweeping the Arab world last year but along with other Gulf oil producers it responded by raising public spending, partly on salary and pension hikes. The government has also announced plans to spend $1.6 billion over three years on expanding water and electricity networks in the northern emirates, which have benefited less from oil and trade than Abu Dhabi and Dubai. International sanctions against Iran over its nuclear program may weigh on the UAE's economy this year. The International Monetary Fund said in May 2011 that sanctions then in force could shave off 0.2 to 0.7 percent of the UAE's GDP annually; since then, restrictions on bank financing of trade have tightened further. Qatar pledges to invest $2 billion in Sudan Qatar has promised to invest $2 billion in Sudan, the official QNA news agency reported, as Sudanese President Omar al-bashir visited the gas-rich Gulf state. A Qatari government delegation is to travel to Khartoum in the coming days... to discuss the details of Qatari investments in Sudan of up to $2 billion, QNA said. The investments, agreed during a meeting between Bashir and Qatari emir Sheikh Hamad bin Khalifa al- Thani, would be carried out in the purchase and placement of treasury bonds in different sectors, among them mining, oil, agriculture and services, the report added. Sudan s economy has been reeling since South Sudan gained independence last year, taking with it most of the country s oil production? formerly Khartoum s main foreign currency earner. Bashir, who is wanted by the International Criminal Court on suspicion of war crimes in Darfur, has travelled many times to Qatar, which brokered a peace agreement last year with one rebel faction in the war-torn region. Kuwait targets 4 million barrels of oil daily by 2020 The world s largest energy forum held meetings over oil price fluctuations and safeguarding supplies amid heightened tensions over Iran s nuclear programme and a softening in global growth. Oil ministers and delegates from the 88-member International Energy Forum (IEF) met at their biennial three-day gathering in Kuwait to discuss the role of the forum in tackling market volatility. Ministers discussed energy market fluctuations and the role of the 27

30 Middle East DCCI Review March 31st International Energy Forum and its member states in dealing with them, according to a statement by the organisers. They also discussed behind closed doors the long-term demand for energy, safeguarding supplies and drawing of appropriate policies for ensuring energy supplies, it said. Kuwaiti Oil Minister Hani Hussein said the meeting was held under extraordinary circumstances, citing Iran s recent threats to block the Strait of Hormuz through which most of Gulf oil shipments are exported, and the eurozone crisis, as causes of concerns. He added Kuwait aims to boost its crude production capacity to 4 million barrels a day by 2020, up from 3 million barrels now. The threats regarding the Strait of Hormuz, as well as the eurozone crisis, speculators and price increases are making the situation more complex, he said in a television interview, according to KUNA state news agency. Iranian officials had in January warned they could close the strait if increased Western sanctions over Tehran s controversial nuclear programme halt Iranian oil exports, triggering further US security measures in the strategic transit route. But a top Kuwaiti official said that the state did not receive any requests from its customers to increase production due to a looming cut in Iranian oil exports. We do not expect any special request to increase production, Farouk Al-Zanki, the chief executive officer of state-owned Kuwait Petroleum Corporation, told reports at the forum. He said the state was pumping around three million barrels per day and was working on building its spare capacity. If there is spare capacity and there is demand for it, you will hear about it, he added. Energy-hungry Japan and South Korea earlier this year held energy talks with Gulf states aimed to secure alternative oil resources in case Iran sanctions hit their imports. EU foreign affairs chief Catherine Ashton said on behalf of Britain, China, France, Russia, the United States and Germany that they were ready to hold talks with Iran. The OPEC oil cartel trimmed its 2012 global oil demand growth forecast for the second time in two months because of worries about developed countries economies and higher crude prices. The Energy Minister of the United Arab Emirates, Mohammad bin Dhaen Al-Hamli, acknowledged that oil prices were high and blamed it on uncertainties in the Middle East. The prices are on the high side, but really prices are reacting to what is happening in the Middle East, he told reporters on the first day of the forum. Angola s oil minister also blamed geopolitical concerns for the surge in oil prices, but he said he did not expect crude prices to rocket to the 2008 levels of around $150 per barrel. Oil prices are rising because of geopolitics but are unlikely to rise to the levels seen in 2008, said Jose Maria Botelho de Vasconcelos on the sideline of the forum, according to Dow Jones newswire. I think $ is a good price range, he added. The Organisation of Petroleum Exporting Countries (OPEC) blamed a weak growth in the OECD economies, mainly the situation in Europe, in addition to high oil prices, for the expected ease in demand. It also pointed to tensions between Iran and the West and speculation about Israeli military action against Tehran. The 12-member cartel, which accounts for about 30 percent of global crude oil output, now expects daily demand this year of million barrels per day, down from its forecast a month ago of million bpd, it said in its March monthly report. This still represents growth compared to 2011, when demand was million bpd, according to OPEC figures that were revised slightly downwards. On March 1, West Texas Intermediate crude hit $110.5 per barrel, the highest since May 2011, while Brent North Sea crude rocketed to $128.4 a barrel, the highest since July Turkey: a stable investment destination Turkey s experience in handling the global economic crisis and its success in creating a stable investment environment for local and foreign investors helped it to avoid the negative impact of the financial meltdown that plagued other countries in the region. In a meeting with a senior Kuwaiti media delegation in Istanbul, Mohammed Al-Omar, Kuwait Finance House (KFH) CEO and KFH-Turkey Chairman said he realized that the Turkish government s economic policy is based on legislative stability that preserves the rights of all investing parties. This was a result of Turkey s experience in handling the crisis and its success in creating a stable investment environment for local and foreign investors, he said. Also, Turkey s income has been diversified by focusing on policies and laws that ensure the prosperity of all sectors of the economy, Al-Omar said. Such kind of support is required for projects that will greatly benefit the society and the investor, he added. He noted that the role played by KFH- Turkey is not limited to offering banking services, but has been elevated to liaising between Kuwait and Gulf countries and Turkey. Kuwait and the GCC are keen on establishing better economic and commercial relationships with Turkey, he said.

31 International DCCI Review March 31st 2012 Euro-zone approves nearly $51.5bn in Greek bailout cash The euro-zone approved the first wave of loans for Greece under a heavily-conditioned second bailout, Luxembourg Prime Minister Jean- Claude Juncker said. Euro area member states have today formally approved the second adjustment program for Greece, the head of the Eurogroup of euro-zone finance ministers said in a statement. He specified that a first installment of 39.4 billion euros ($51.5 billion) would be disbursed in several tranches. All required national and parliamentary procedures have been finalized, Juncker said. Describing the financial aid as a unique opportunity for Greece that should not be missed, Juncker stressed that a strong commitment from Athens to fiscal consolidation, structural reforms and privatization was required to return the Greek economy to a sustainable path, which is in the interest of everyone. The first wave of loans is to come from the European Financial Stability Facility (EFSF), the euro-zone bailout fund due to be swallowed up by a larger permanent fund that should enter service at the beginning of July. A spokesman for the EFSF said the money would cover two areas. One is the recapitalisation needs of Greek banks after losses sustained during a write-down of privately-held Greek government debt. This is now thought to be of the order of 25 billion eurosslightly more than initially estimated. The remainder of the loans would cover Greek government financing needs through the end of June, the spokesman added. Greek recovery could come sooner than expected, says official Greece will see the benefits of a landmark debt swap with private creditors sooner than expected if it sticks to planned reforms, a senior bank official who helped steer the deal said. Greeks will start seeing the benefits sooner than expected... I can see the light at the end of the tunnel much sooner than others can, Charles Dallara, managing director of the International Institute of Finance, told Ethnos daily. The IIF, a global association representing over 400 banks and investment firms, worked with Greece and the EU for months on the landmark deal to erase over 100 billion euros ($133 billion) from Athens near and midterm debt. Holders of Greek debt are to receive new bonds with a face value equal to 31.5 percent of the face amount of the debt exchanged, plus short-term European Financial Stability Facility backed by the EU s strongest economies. They will also receive growth-linked Greek securities. I believe that pessimism should go home for awhile and give hope a chance to grow. No other country has ever seen so much debt destroyed. This will happen on Monday in the space of a minute, Dallara said. The record-breaking debt swap is tied to a eurozone bailout worth 130 billion euros which Greece urgently needs to avoid default on March 20 when debt repayments are due. After two years of austerity policies to secure a previous EU-IMF bailout in May 2010, Greece is caught in a deepening recession that has left over a million unemployed, with forecasts for a return to growth repeatedly dashed. Greece can do it, Dallara said. The seeds planted today will take some time to sprout,...it may take months, but it will happen. If the Greeks set forth their determination and if they apply the reforms, their efforts will not be in vain...new jobs will be created and many positive changes will happen... I feel rather relieved and quite happy for Greece, he said. Greeks are people of many qualities, they are good businessmen and the workforce is highly educated. The unemployed have a high level of education, Dallara said. Spain swings budget axe to save 27 bn euros Spain will make budget cuts worth more than 27 billion euros ($36 billion) in 2012, includin g a freeze on public workers' salaries, to rein in its public deficit, the government said. Government ministries will have an average reduction in their budgets of "around 17 percent" this year, Deputy Prime Minister Soraya Saenz de Santamaria said after a weekly cabinet meeting that approved the 2012 budget. "We are in an extreme situation. Our top priority is to clean up public accounts," she said. "This is a moment that demands serious efforts to reduce spending but also structural reforms to cause the economy to grow and create jobs." Spain is racing to reduce to reduce its public deficit to reassure markets that it will not follow Greece, Ireland and Portugal in requesting an international bailout. The government unveiled its austerity budget for 2012 a day after a general strike against spending cuts and labour market reforms that make it easier to cut jobs, when violence flared at protests in some cities. 29

32 International DCCI Review March 31st Denmark in recession after revised data Denmark has entered a recession, official data showed, after growth figures for the fourth quarter of 2011 were revised to show a 0.1-percent contraction. In February, the national statistics institute had forecast slight growth of 0.2 percent in the October-December period, following a 0.1-percent contraction in the previous quarter. A recession is defined by two quarters running of negative growth. "We have revised the numbers because we have received new data concerning the current account, exports and imports, and we have received new numbers from the employment agency and the taxation ministry concerning (among other things) value added tax," Jonas Dan Petersen, an economist at the national statistics agency, told AFP. Experts however viewed the unexpected slip into recession to be "a technical detail," Danish financial daily Boersen was quick to point out in its online edition. Danske Bank analyst Steen Bocian agreed. "Officially, you can say it's a recession because the numbers shrank both in the third and fourth quarters last year," he told AFP, stressing however that the decline was "very small." "I don't think one should lend it too much importance," he said. Statistics Denmark meanwhile pointed out that its revised numbers were seasonally adjusted and the margin of error in terms of gross domestic product (GDP) stood at around 0.5 percent. It also maintained the one-percent economic growth estimate for 2011 it announced in February. Sydbank economist Jacob Graven also played down the economic significance of the recession-tag, insisting to Dow Jones Newswires: "It's not a big deal... Instead of very low growth we have slightly negative growth. It doesn't make a very big difference." Bocian was of the same view. "I am not saying that I am optimistic about the Danish economy in 2012 because we are not expecting very strong growth (but) when you look at 2012-you see a slight improvement," he said. Other experts however stressed the fragility of the Danish economy, pointing out that growth estimates for this year were directly linked to exports. According to Sydbank analyst Michael Staehr, quoted by the Jyllands-Posten daily, "our exports could easily be hit by the global economic slowdown," something that could push the Scandinavian country into a real recession in the near future. New York most competitive city: EIU report A new Economist Intelligence Unit (EIU) research report, commissioned by Citi, reveals that New York ranks first in competitiveness, out of 120 of the world s major cities. The report, entitled Hot Spots, ranks the most competitive cities in the world for their demonstrated ability to attract capital, business, talent and tourists. The 10 most competitive cities in the world are: New York (1st), London (2nd), Singapore (3rd), Paris and Hong Kong (joint 4th), Tokyo, (6th), Zurich (7th), Washington, DC (8th), Chicago (9th), and Boston (10th). New York has been home to Citi since our founding 200 years ago. Our commitment to this city, and its continued competitiveness, are as strong as ever, said Citi CEO Vikram Pandit. With a combined population of about 750 million, the 120 cities ranked in Hot Spots represent approximately 29 percent of the global economy and generated a combined GDP of $20.24 trillion in According to the report, the ten most competitive cities in the US are: New York (1st), Washington, DC (8th), Chicago (9th), Boston (10th), San Francisco (joint 13th), Los Angeles (19th), Houston (joint 23rd), Dallas (joint 25th), Seattle (29th) and Philadelphia (30th). For Hot Spots, the EIU developed a Global City Competitiveness Index that measures cities across eight distinct categories of competitiveness and 31 individual indicators. Categories include economic strength, human capital, institutional effectiveness, financial maturity, global appeal, physical capital, social and cultural character and environment and natural hazards.

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37 EU Ambassador and Head of Delegation visits Re-Tie The EU-funded project Re-Tie Bangladesh: Reduction of environmental threats and increase of exportability of Bangladeshi leather products under the EU SWITCH-Asia is important for Dhaka s leather industry. A successful relocation to the new Leather Industrial Park in Savar should address most of the key environmental challenges faced by this industry. Several factors are now merging together in this regard. In 2003, the Bangladeshi government prepared for the leather park at Hamayetpur in Savar project which would cost Tk 5.5 billion. Since then it floated several tenders for a central effluent treatment plant which were not successful for different reasons but the latest was approved by the cabinet committee on 5th of December 2011 and on 4th of March 2012, the Bangladeshi High Court rejected the petition, filed by the Indian company Indian VA Tech WABAG against the government's choice of bidder, thus clearing the path for the Chinese joint venture of JLEPCL and DCL to get the job. The installment of the plant is planned to be completed within the next 15 months at a cost of Tk 4.8 billon at the under construction Savar Leather Industrial Park. Minister Dilip Barua said at a press conference at his Ministry of Industries on 13th of March 2012: We are hopeful the construction of the plant will be completed within the stipulated time. On the other side, the leather industry was very sceptical for many Ambassador andheadof Delegationof theeutobangladesh, WilliamHanna, interestedintheenvironmental benefitsof theintroducedhvlpsprayguns years, mainly concerning the financial compensation for the costly shifting of the production. But now Haji Belal Uddin, president of BFLLFEA, said that they were all willing to move to Savar. But we could not move as there was no treatment plant. As soon as the government sets up the plant we all will move there. Since European Union countries import a considerable amount of leather and leather goods from Bangladesh every year, Bangladeshi leather goods will not have access to developed countries, including those in the European Union, if the government and the industry fail to re-establish an economically and environmentally sustainable leather industry. Re-Tie project has been supporting both, the government but mainly the industry throughout the last 3 years, and its biggest achievement has been the creation of a huge awareness. This became evident during the visit of Hanna and his EU team, composed of Fabrizio Senesi (Programme Manager Governance and HR), and Jean-Claude Malongo, (Programme Manager Economic Cooperation) on 15th of March The team met with Re-Tie project management, representatives from the industry, and visited several tanneries. Abdul Hai, former General Secretary of BTA, informed that Re-Tie has created a revolution in Hazaribagh. The industry owners and technicians are now aware of many aspects regarding cleaner production, waste management, business match making, and technology adaptation. The activities of the project continued in this sense in March. Several workshops and seminars, for example on OH&S and use of more efficient finishing devices, were conducted. Apart from these training activities, additional measures to implement new technologies were tested, e.g. composting of organic material. The preliminary results are encouraging. 35

38 Share Market DCCI Review March 31st 2012 Share Market Intelligence (as on 31 March, 2012) Top 10 Turnover Leaders Dhaka Stock Exchange Chittagong Stock Exchange Company Volume Tunover Company Volume Turnover (Shares) ( 000 Tk.) (Shares) ( 000 Tk.) BEXIMCO Ltd. 13,282,981 1,561, BEXIMCO Ltd. 1,970, , Grameen Phone 7,909,334 1,494, United Airways 7,680, , Titas Gas 12,989, , Lafarge Surma Cement 4,486, , United Airways 39,654, , UCBL 3,004, , Summit Power Ltd. 11,815, , Grameen Phone 590, , Jamuna Oil Co. 3,648, , BSRM Steel Ltd. 1,079, , MJL Bangladesh 6,679, , MJL Bangladesh 840,955 94, Keya Cosmetics 9,843, , M.I. Cement 723,382 78, M.I. Cement 5,767, , R.N. Spinning Mills 2,043,825 75, National Bank 14,048, , Aftab Automobiles 593,250 75, Top 10 Market Capitals Dhaka Stock Exchange Chittagong Stock Exchange Company Mkt. Cap % of Total Company Mkt. Cap % of Total (M. Tk.) (Mkt. Cap) (M. Tk.) (Mkt. Cap.) Grameen Phone 255, Grameen Phone 253, BATBC 35, BATBC 35, MJL Banglades 20, MJL Bangladesh 20, RAK Ceramics Ltd. 18, RAK Ceramics Ltd. 18, Khulna Power Co. 14, Khulna Power Co. 14, Berger Paints BD. 12, Berger Paints BD. 12, Marico Bangladesh 12, Marico Bangladesh 11, Jamuna Oil Co. 9, Jamuna Oil Co. 9, Linde (BD) Ltd. 8, Delta Life Insurance 9, Beximco Pharma 8, Linde (BD) Ltd. 9, Exchange Rates (as on 31 March, 2012) Currency Buying Selling EUR US$ GBP AUD YEN CAD S PORE$ Source : The Independent 36

39 Trade Information DCCI Review March 31st 2012 TRADE INFORMATION Prepared by DCCI Research Cell 3 March The following Trade Inquiries have been received in the Chamber from different sources abroad. Interested member-firms may like to contact them directly without any obligation on the part of DCCI. FAIRS & EXHIBITIONS Showcase Bangladesh 2012 Date : July, 2012 Venue : Mardeka Square, Kuala Lumpur, Malaysia Organizer : Bangladesh-Malaysia Chamber of Commerce & Industry (BMCCI) Contact: Bangladesh-Malaysia Chamber of Commerce & Industry (BMCCI) House # 14, Road # 27, Block # J Banani, Dhaka-1213 Tel: , Fax: bmcci@dhaka.net Website : BANGLADESH Trade Fair-2012, Kuwait Business Exhibition & Cultural Evening Date :May 24-26, 2012 Venue : Exhibition Center, Kuwait City, Kuwait Organizer : Kuwait-Bangladesh Chamber of Commerce & Industry Contact: Kuwait-Bangladesh Chamber of Commerce & Industry House 55 (4th Floor), Road 06, Block-C Banani, Dhaka-1213, Bangladesh. Tel: , Cell: , Fax: info@kbcci-bd.org, abco_481@yahoo.com Website : 2nd West China Imported Commodity Fair Date : June, 2012 Venue : Chengdu, Sichuan, China The Last date for application is 30 April, Organizer : China Council for the Promotion of International Trade (CCPIT) Contact person : Ms. Catherine Yang Exhibition Dep. China Council for the Promotion of International Trade (CCPIT) Sichuan Council Chengdu City, Sichuan Province P. R. China. Tel: , Cell: Fax: yangduanjie529@yahoo.com.cn Infocomm Media Business Exchange Ministerial Forum Date : 18 June, 2012 Venue : Marina Bay Sands, Singapore Website : Organizer : Singapore Exhibition Services Pte Ltd Organizer : Singapore Exhibition Services Pte Ltd No. 1 Jalan Kilang Timor #09-02Pacific Tech Centre, Singaapore Tel: , Fax events@sesallworld.com Enterprise IT 2012 The 9th International Information Technology Exhibition & Conference for the Enterprise Date : June, 2012 Venue : Marina Bay Sands, Singapore Website : Organizer : Singapore Exhibition Services Pte Ltd Organizer : Singapore Exhibition Services Pte Ltd No. 1 Jalan Kilang Timor #09-02Pacific Tech Centre, Singaapore Tel: , Fax events@sesallworld.com 14 China International Exhibition on Gases Technology, Equipment and Application September, 2012 Venue : Nanijng International Expo Center (Hall A) Jiangsu Province China Organizer : China Industrial Gases Industry Association Contact person : Ms. Jessinca Liu Overseas Relations AIT Events Company Limited CIGIA-China Industrial Gases Industry Association Airport Property Group Building (3rd floor) No.6 Yumin Street Zone B Tianzhu Airport Industrial Park, Beijing China. Tel: , Fax: Website : igchina-expo.com London Olympic 2012: Promoting Trade and Investment Time: July/August, 2012 Venue: London Organizer: Commonwealth Business Council (CBC) 18 Pall Mall, London, SW1Y 5LU United Kingdom Tel: +44 (0) Fax: +44 (0) info@cbcglobal.org Web: 37

40 Pictorial DCCI Review March 31st 2012 DCCI President Asif Ibrahim (right) seen exchanging views with Economist of Trade Department, World Bank, Mariem Malouchethe, Senior Trade Economist of World Bank Nihal Pitigala and Senior Trade Specialist of World Bank Charles Kunaka on March 24 at DCCI. DCCI Senior Vice President Haider Ahmed Khan, FCA (centre) presenting publication set to the Chief Consultant of Japan Development Services Co. Ltd. Kunihiro Konishi (second from left). Senior Advisor of JICA Takayuki Shimizu (left), DCCI Director Waqar Ahmad Choudhury (second from right) and Secretary Mustafa Mohiuddin (right) are also seen in the picture. Senior Vice President of DCCI Haider Ahmed Khan, FCA (second from left) seen exchanging views with the President of Bhutan Exporters Association Geleg Nyeema (centre) and Counsellor (Trade) of Royal Bhutanese Embassay in Dhaka Dorji Rinchen (left) at DCCI on March

41 Pictorial DCCI Review March 31st 2012 DCCI Board Meeting at Cox s Bazar 39