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The declining remittance, rising non-performing loans, stagnant private investment, delay in project implementation and contract enforcement and poor port facilities are key challenges for Bangladesh to go into the higher economic growth trajectory, International Chamber of Commerce, Bangladesh (ICCB) said. "Experts observed that Bangladesh may face formidable challenge in moving to a higher growth path of 8.0 per cent plus GDP and earn the status of a middle-income country," said the trade body in its quarterly (April-June 2017 issue) news bulletin editorial on Thursday The foremost challenge lies with stagnant private investment, followed by weak institutional capacity to implement development projects, it added. "Bangladesh economy embraces 2017 with some other challenges including declining remittance and rising non-performing loans from the domestic side. Volatile global and gulf region politics and troubled European economy pose as external threats," the trade body said. In order to step into higher growth trajectory, Bangladesh urgently needs to overcome the hurdle of project implementation delays, reduce an average number of days required for contract enforcement and improve port facilities, among others, the international trade body's Bangladesh chapter said. The bulletin said considering its strategic location, Bangladesh has huge potential to attract more foreign direct investment (FDI) as the central point of eastern part of South Asia, being a connector between South and East Asia.   "Increased private sector investment will allow the country to reap the benefits of annual world trade growth of US$ 1.0 trillion under implantation of WTO Trade Facilitation Agreement." The ICCB further said the main hurdle the country is facing is inordinate delays in implementation of development projects, unreasonable delays in contract enforcement, inefficient management and congestion at Chittagong Port as well as at Dhaka International Airport, the two main gateways to international trade.   As a result, according to the latest World Bank annual ratings, Bangladesh ranked 176th among 190 economies in the ease of doing business while the war-torn economies such as Iraq and Syria ranked 165th and 173rd respectively, it added. The ICCB quoting the PricewaterhouseCoopers (PwC) report said Bangladesh ranked 31st among the world's 32 largest economies in 2016. "Its GDP (PPP) was $ 628 billion, and it was projected to increase to $ 3,064 billion in 2050." "By 2050 Bangladesh, India and Vietnam will become the fastest growing economies, with Bangladesh expected to see an impressive growth that will push it to 23rd place overall. PwC ranked 32 countries by their projected global gross domestic product (GDP) at PPP, and made projections for up to 2050," the bulletin said. According to analysts, Bangladesh now a $220 billion economy is moving forward with mega development projects, including US$ 3.7 billion Padma Bridge, US$ 2.7 billion metro rail, elevated expressway, flyovers, dozens of economic zones and Payra seaport. "Falling interest rates, increasing access to finance and improvement in working conditions at garment factories have made businesses confident of taking new challenges and boosting export earnings." The ICCB bulletin said during last FY2017 many of the fast-track projects have also attracted foreign investments. "The Asian Development Bank announced $1.5 billion fund to build a key train line from Dohazari in Chittagong to Cox's Bazar ( the longest sea beach in the world), in its largest investment in railways in the continent. ADB is funding this new railroad, which is part of the Trans-Asia Railway network, to improve Bangladesh's access to Myanmar and beyond," it added. Referring to ADB, the ICCB said in order to accelerate inclusive growth and reduce poverty and income inequality, the country will require a substantial increase in yearly investments from 29.0 per cent of GDP in FY2015 to 34.4 per cent by FY2020. "More than $11 billion in external resources will be needed during the seventh five-year plan period for public sector investment. Even though the public sector investment has increased to nearly 7.0 per cent of GDP from 5.0 per cent several years ago, the private investment remains static at 22-23 per cent for over five years," the news bulletin said.     kabirhumayan10@googlemail.com....

Published at: 2017-08-18 05:00:04

Dhaka has been adjudged the fourth least livable among 140 cities around the world with a score of 38.7 out of 100. Syria's capital, Damascus, is at the very bottom, with an overall livability rating of just 30.2, while Nigeria's Lagos and Libya's Tripoli are just slightly ahead, with scores of 36 and 36.6 respectively. This latest status of Dhaka was revealed in the Economist Intelligence Unit's Global Livability Report 2017. However, Melbourne, Australian city, has topped the Economist Intelligence Unit's ranking of most livable cities in the world for the seventh year in a row. Melbourne scored 97.5 out of 100 on the annual list, which assesses stability, healthcare, culture and environment, education and infrastructure of 140 cities. Austrian capital Vienna got the second place, with a score of 97.4, and Canada's Vancouver received a rating of 97.3, with both cities retaining their places from 2016. While very little has changed at the top end of the list in the past 12 months, there have been some major changes further down. "While the improvement is marginal, it does reflect a positive note for global livability, which has been beset by mounting instability over the course of the last decade," says Jon Copestake, editor of the survey. "Many of the challenges to livability have not gone away, terror attacks have continued and geopolitical posturing has created further international uncertainty. Perhaps a turning point has been reached but livability levels remain low by historical standards." jasimharoon@yahoo.com....

Published at: 2017-08-18 05:00:04

State-owned Rupali Bank is unlikely to be able to overcome its liquidity problem anytime soon as necessary approval to its proposal for issuance of subordinated bond worth Tk 5.0 billion would take time, officials said. "It will take time to finalise the decision in this regard," a senior official at the Finance Division told the FE. "We sought approval from the finance ministry in favour of the state-owned bank," a high official at the Bank and Financial Institutions Division (BFID) of the ministry said. After receiving the proposal from the cash-strapped bank in June last, he said, the BFID had done primary scrutiny and forwarded it to the Finance Division for its opinion. The bank had a capital shortfall of Tk 6.38 billion as of March last. Around Tk 1.0 billion was provided to the bank from a budgetary allocation of Tk 20 billion earmarked in 2016-17 for recapitalisation of the government-owned banks. "The amount proved to be very insufficient as compared to the capital shortage of the banks," said a senior official of Rupali Bank. Rupali Bank proposed to issue the subordinated bond, with 07 years of its tenor at floating rate, to meet its capital shortfall in Tier-2 under Basel-III guideline. Officials said the bank management had sought approval for the proposal several times and a tripartite meeting was also held this regard in the meantime. The bond will be issued subject to the approval of the Ministry of finance (MoF).    "We want to keep our capital base stronger than the minimum requirement under Basel-III accord and eager to support business growth," said a senior official of Rupali Bank having well knowledge about the issue. The fund to be collected through subordinated bond from the banks and financial institutions will be considered tier-2 capital, according to the bank's sources. Subordinated bonds are debentures for which banks and companies are comprehensively liable with their capital assets. The holders of such bonds forgo the option of being treated as preferred creditors.     rezamumu@gmail.com....

Published at: 2017-08-18 05:00:04

Unrelenting fall in term deposits following decline in interest rates may turn the banks tightfisted in financing long-term investments as funds switch to alluring non-banks and consumption luxuries. Some bankers were of this view the term deposits with the country's banking system decreased by nearly 4.0 percentage points to 53.6 per cent in the calendar year (CY) 2016 -- at minimum seven-year low in terms of percentages -- according to central bank's latest counts. Top executives at commercial banks view that the shrinking of time deposits in total deposits is the result of the cut-down rates of interest they offer to the savers. However, the CEOs consider the development a blessing in disguise as holding such funds involves high cost in terms of interest payments compared to other types of deposit. But, they think the collection of this type of funds cannot be allowed to be too slow when they consider the need for making long-term investment.   The financial stability reports prepared by the central bank from 2010 to 2016 calendar years show that the term deposit in 2010 was 57 per cent, in 2011 56.5 per cent, 54.3 per cent in 2012, 57.5 per cent in 2013, 56.4 per cent in 2014, 57.3 per cent in 2015 and 53.6 per cent in 2016. On the other hand, some non-bank financial institutions are offering attractive rates on term deposits to lure moneyed men. The NBFIs have around 5.0 per cent share in total deposits.   However, the share of current deposits has maintained the second position, followed by savings deposits, since 2011. The savings deposits stood second in 2010 by grabbing 22.64 per cent share of total deposits, according to the reports. The rate of interest on term deposits, according to some CEOs, has been slashed to even 3.0 per cent in some cases. But, on average, it now comes to around 5.0 per cent. And such fall came crashing down from a height of over 12 per cent few years back. The higher interest (yield) rates on government savings certificates are also counted as a major reason for the slowdown in banks' deposit growth. "Term deposits showed a moderate growth of 5.3 per cent in CY16 as against 15.1 per cent in CY15," the financial stability report 2016 said. It said the relative proportions of term deposits decreased whereas savings and current deposits increased moderately in CY16. "The highest interest rate on national savings certificate might be the reason for public attraction rather than investing in term deposit," the report said. Anis A. Khan, managing director and CEO at Mutual Trust Bank (MTB), said the concern is that if the term deposits fall, then the term lending becomes difficult. "The higher the term deposit, the higher the term lending," he told the FE. It may cause mismatch in the deposits and lending in long terms. The banker, however, said actually this is a very complex issue as it considers asset-liability management and needs to be studied how this reduced growth impacts on other variables of the banking industry. Mr Khan, also chairman of the Association of Bankers Bangladesh Limited, said most probably some people have been investing in the equity markets and some in real properties. Md Nurul Amin, managing director and CEO at the Meghna Bank, told the FE that this fall in the deposit is due to the fall in the interest rates and that this fund mostly went to other attractive destinations and consumption. "I cannot say where the funds have actually gone but, maybe, gone for consumption and spent on luxury goods, investment in real estate and other attractive destinations," said Mr Nurul Amin, a senior banker who also served in the bankers' elite club -- ABB -- as chairman.   Asad Khan, managing director at Prime Finance and Investment Limited, a leading non-bank financial institution, told the FE that those who have idle money now invest in other destinations they think will bring bright opportunities in future. "Why will I keep deposit in the banking sector when I have other options with attractive future benefit, like the investment in the purchase of lands and flats?" He, however, said there are some NBFIs offering attractive rates but some which have strong foundations offer at best one percentage point higher than that of the banks.     jasimharoon@yahoo.com....

Published at: 2017-08-18 05:00:04

The volume of non-performing loans (NPLs) jumped by over 19 per cent or Tk 119.76 billion at the end of June this year from December closing last year, despite close monitoring by the central bank. The amount rose to Tk 741.48 billion as on June 30, 2017 from Tk 621.72 billion as on December 31, 2016. The amount of NPLs was Tk 633.65 billion a year before. Bankers attributed the substantial rise in NPLs to lax loan recovery drive in the January-March period of this calendar year (Q1) and less rescheduling in the six months period to June this year.    Senior bankers, however, expressed their fear that the situation might deteriorate further in the July-September quarter as recovery of loans, particularly of small and medium enterprises (SMEs), might face a setback due to the flood in different parts of the country. They apprehended that some borrowers would default repayments against both the rescheduled and restructured large loans during the remaining quarters of the year. Talking to the FE, a senior official of Bangladesh Bank (BB) said the amount of NPLs normally rises during the Q1 and Q3 of each calendar year. "We expect that the amount of NPLs may fall in the final quarter," he said, explaining the recent trend of classified loans. The share of classified loans reached at 10.13 per cent of the total outstanding loans during the period under review than that of 9.23 per cent six months before, according to the central bank's latest statistics. "We're working continuously to contain the volume of NPLs," SK Sur Chowdhury, deputy governor of the BB, told the FE. As part of the move, he said, the BB has already instructed the banks to take effective measures for preventing further rise in classified loans. "It should also be taken care of that no fresh loan turns classified." The BB has also advised the banks to hire senior lawyers for vacating the loan-related writ petitions with the High Court. However, the volume of NPLs was Tk 734.09 billion in the first quarter (Q1) of this calendar year while it was 10.53 per cent of the total outstanding credit, the BB data showed. A portion of large restructured loans will become impaired in the coming months, said Syed Mahbubur Rahman, managing director and chief executive officer (CEO) of Dhaka Bank Limited. The central bank had earlier cleared the proposals of 10 business groups in restructuring their large loans worth Tk 140.48 billion. A total of 22 commercial banks had earlier forwarded the proposals to the BB for approving the loan restructuring on behalf of their clients. Mr. Rahman advised the bankers to strengthen monitoring and supervision on loans, particularly SMEs, to avoid unwanted situation in future. Nurul Amin, chief executive officer (CEO) and managing director (MD) of Meghna Bank Limited, also advised that the bankers to take vigorous efforts in recovering their NPLs and bringing down the rate to single digit from the existing level. Some rescheduled loans along with fresh ones might enter non-performing territory in the coming quarters, he warned. During the first half of the calendar year, the total amount of NPLs with six state-owned commercial banks (SoCBs) rose to Tk 345.81 billion from Tk 310.26 billion on December 31 last. It was Tk 357.16 billion in Q1 of this calendar year. On the other hand, the total amount of NPLs with 40 private commercial banks (PCBs) reached to Tk 317.29 billion as on June 30 last from Tk 230.57 billion in the final quarter of last year. It was Tk 297.27 billion as on March 31 last. The NPLs from nine foreign commercial banks (FCBs) came down to Tk 23.21 billion during the period under review from Tk 24.05 billion in the Q4 of 2016. It was Tk 22.82 billion of the Q1 of 2017. The classified loans with two development-finance institutions (DFIs) also came down to Tk 55.18 billion in the H1 of 2017 from Tk 56.84 billion six months before. It was Tk 56.84 in the Q1 of this calendar year. The NPLs cover substandard, doubtful and bad/loss of total outstanding credits, which stood at Tk 7,316.26 billion as on June 30 last from Tk 6,739.20 billion as on December 31. It was Tk 6,970 billion as on March 31, 2017.     siddique.islam@gmail.com....

Published at: 2017-08-18 05:00:04