From left, Muhammad Abdul Mazid, former chairman of NBR; MA Taslim, a professor of economics at Dhaka University; AB Mirza Azizul Islam, former caretaker government adviser; Zaidi Sattar, chairman of Policy Research Institute (PRI); Nihad Kabir, vice-president of Metropolitan Chamber of Commerce and Industry (MCCI); Anis A Khan, chairman of the tariff & taxation sub-committee of MCCI, and Ahsan H Mansur, executive director of PRI, attend a press meet on the 2012-13 budget, co-organised by the MCCI and PRI at the MCCI office in Dhaka yesterday.

A panel of economists yesterday doubted the chances of the government of achieving 7.2 percent economic growth in the next fiscal year.

The government may fail to reach the goal due to weak export growth amid a sluggish global demand and the presence of energy and infrastructure constraints to boost investment, they said.

They also expressed concern over proper implementation of the next fiscal year's budget due to weak capacity of government agencies.

They spoke at a press meet on the proposed budget for 2012-13, co-organised by Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Research Institute (PRI) at the chamber's office in the capital.

Only two out of the 19 indicators of the economy -- remittance inflows and revenue collection -- raise hopes, said Mirza Azizul Islam, former finance adviser to a caretaker government.

The remaining 17 indicators are clearly moving towards undesirable direction at varying degrees, said Islam.

His remarks came at a time when exports growth is slowing down, while pressure on the balance of payments is rising due to dwindling foreign exchange reserves coupled with soaring subsidy pressure.

At the same time, the government's dependence on bank borrowing has created concerns among the private sector on availability of credit.

Ahsan H Mansur, executive director of the PRI, said the global economy is experiencing a 'second round of shocks' and Bangladesh has begun to face the impact of it like other countries.

"Slowdown is very much real. It is on our doorstep," he said, adding that the global recession has certainly affected Bangladesh through the export sector and general investors' sentiment, which translated into slower manufacturing and services activities and lower investment.

But a relatively strong domestic demand due to increased remittance inflows helped sustain domestic economic activities and revenue performances, he said.

He said a strong growth in the industrial sector, generally supported by garments, is needed to achieve the government's target of 7.2 percent economic growth.

"This will be extremely challenging in FY2013 due to the weak export demand in the EU and the US," he said.

Mansur hoped the government may achieve the target for 7.5 percent inflation mainly because of the falling commodity prices on the international market and a tight monetary policy of the Bangladesh Bank.

On the budget, Mansur said implementation challenges are enormous for the government due to its capacity dearth.

The 7.2 percent growth target has been set in line with the sixth five-year plan where it was assumed that energy shortage would ease and investment would rise while global economy would remain stable, said Zaidi Sattar, chairman of the PRI.

But gas and power shortages still remain as significant impediments to rapid growth, he said. Poor investment climate stymied new investments, he added.

"If the investment rate is not rising, because domestic and foreign investments are both constrained, it is time to accept reality and reconcile with a lower GDP growth until the logjam of 24-25 percent investment rate is broken," he said.

Prof MA Taslim of the economics department at Dhaka University said the proposed budget is basically a budget driven by the conditionality of the International Monetary Fund.

Nihad Kabir, vice president of the MCCI, said the proposed budget is challenging and ambitious not in terms of allocation but in terms of the government's implementation capacity.

Noting the tight monetary policy, she urged the government not to control inflation in such a way that brings down investment and affects economic growth in future.

Anis A Khan, chairman of the Tariff & Taxation Sub-committee of the MCCI, said the economy is facing a number of challenges, which are likely to stunt growth and bring disorder in the macroeconomic management, if not addressed.

He urged the government to limit bank borrowing within the projected amount of Tk 23,000 crore to avoid crowding out effects on the private sector.

"We suggest boosting revenue collection and using foreign resources more efficiently to finance the budget deficit," he said.

The chamber also recommended proper staffing and training for capacity building of ministries and agencies for effective and transparent implementation of the projects under the annual development programme, said Khan.

He urged the government to waive interest on the incomes of life insurance policyholders, reduce advance income tax on exports and corporate income tax.

The MCCI is 'disappointed' over the government's plan to legalise undisclosed income in the next fiscal year budget, he said.

"The chamber feels that the concession, if allowed, must be limited to the incomes from legal sources and their investment should be restricted to productive sectors only," said Khan, who is also the managing director of Mutual Trust Bank.

Muhammad Abdul Mazid, former chairman of the National Board of Revenue, also spoke.

The Daily Star/Bangladesh/ 14th June 2012

Nirmal Chandra Bhakta, General Manager of Bangladesh Bank and Khondker Fazle Rashid, Managing Director of Dhaka Bank Limited, sign an agreement in Dhaka.

Bangladesh Bank and Dhaka Bank Limited recently signed a participation agreement on refinancing in Hybrid Hoffman Kiln (HHK) or equivalent Technology of Brick Field.

Nirmal Chandra Bhakta, General Manager, Agricultural Credit and Financial Inclusion De-partment of Bangladesh Bank and Khondker Fazle Rashid, Managing Director of Dhaka Bank Limited signed the agreement on behalf of their organisations, said a press release.

SM Moniruzzaman, Executive Director, Bangladesh Bank and Neaz Mohammad Khan, Deputy Managing Director, Dhaka Bank Limited were also present on the signing ceremony.

The Daily Sun/Bangladesh/ 13th June 2012

The Dhaka Stock Exchange and small investors yesterday protested the finance minister's comment that the stockmarket is an 'evil market'.

“It's an evil market. I won't comment on it,” said Finance Minister AMA Muhith, on Monday in parliament, during the passage of the supplementary budget for the outgoing fiscal year.

But Muhith did not explain why it is an evil market.

The minister made the comment three days after he proposed the budget for fiscal 2012-13.

Reacting to Muhith's remark, DSE President Rakibur Rahman said: “It seems that the honorable finance minister has grown impatient."

It remains to be seen whether the incentives announced by Muhith for the stockmarket are being implemented, Rahman said.

The stockmarket is a sensitive market, so any negative comment will influence the market negatively, Rahman said.

During his speech, Muhith had also mentioned that there would be no great impact on the economy if he did not give much attention to the stockmarket.

Referring to the observation, the DSE chief commented, "Economic development will never be possible if the stockmarket is ignored."

The DSE chief urged the minister to consider the stockmarket as an alternative source of funds to develop infrastructure and undertake development projects.

Speaking on investments made by banks in the stockmarket, Rahman said the investments are below 2 percent of the banks' liabilities.

Presently, commercial banks are allowed to invest 10 percent of their liabilities, according to Bangladesh Bank directive.

Ahmed Rashid, senior vice-president of DSE, also protested Muhith's comment that he said might transmit bad signals to the economy.

Small investors, under the banner of Bangladesh Share Investors' Association (BSIA), also protested the minister's remark.

They staged a demonstration in front of DSE and shouted slogans against Muhith.

Mizanur Rashid Chowdhury, president of BSIA, said: “The minister's comment has upset us, as he is our guardian.”

The Daily Star/Bangladesh/ 13th June 2012

Speakers at a workshop observed that green banking can be an avenue to reduce pollution and save the environment aiding sustainable economic growth.

They said banking sector is a major source of financing for commercial projects which is one of the indicators of economic growth recently.

These observations came at a workshop on green banking organised by Bank Asia Ltd in the city marking the World Environment Day, said a press release. Md Mehmood Husain, president and managing director of the Bank, inaugurated the workshop which was conducted by Dr Shah Md Ahsan Habib, professor and director (Training) of Bangladesh Institute of Bank Management (BIBM).

Launching the event, Mehmud Husain highlighted how the developed countries are embracing initiatives that are conducive to the environment in order to ensure well-being of the future generation. He said Banks play a critical role in economic development and they are well equipped to undertake Green Banking activities. He reiterated that Banks should finance the sectors that would ensure sustainable and eco-friendly environment.

Senior officials of different branches of the Bank located in Dhaka city and Chittagong Zonal Office participated in the workshop. At the workshop, Dr Ahsan Habib provided a cognitive understanding of the concept of Green Banking and highlighted the role of NGOs, banks and financial institutions (FIs) in the evolution of Green Banking policies and practices. He underscored the importance of taking such initiatives by the country’s banks and FIs.

Green Banking is a multi-stakeholders’ endeavour where banks have to work closely with government, NGOs, IFIs/IGOs, central bank, consumers and business communities to reach the goal. Green Initiatives by banks include internal environment management, environmental financing/product ecology, environmental disclosure and reporting, formulating and adopting principles and promoting other stakeholders.

The speakers observed that regulatory enforcement by the government, pressure from the civil society and consumers, voluntary supports and responses by the business entities are preconditions to create a congenial atmosphere. A framework of incentives for responsible banks and disincentives for pollutants is an essential element for the development of green banking.

Meanwhile, Bangladesh Bank issued policy guidelines for developing Green Banking practices and Environmental Risk Management and circulars to handle climate change.

Now the central bank needs to play a proactive role in guiding green banking initiatives, the speakers said.

They said the country’s banks may work collectively and move forward by undertaking voluntary initiatives.

Financing environment-friendly projects will also help the financial institutions to avert legal, reputation, security and credit risks, they pointed out.

At present a growing number of banks have been assessing environmental risk while selecting projects for financing.

In the concluding session of the workshop, Md Touhidul Alam Khan, SEVP, Head of Corporate Assets and Client Origination and Team Leader of Green Banking Unit of Bank Asia, highlighted the activities undertaken by the bank and briefed on future course of actions. He informed that Bank Asia has taken a number of initiatives regarding the implementation of environmental policies, strategies and programmes in the area of Green Banking activities.

The Bank has conducted activities related to in-house environment management, financed a number of environment-friendly projects, created climate risk fund, utilised online banking facility to serve the clients through alternative delivery channels and has also arranged workshops/ training for capacity building and awareness.

The Daily Independent/Bangladesh/ 12th June 2012

Bangladesh Bank Governor Dr Atiur Rahman has expressed dissatisfaction over various anomalies found in scheduled banks engaged in unhealthy practices, especially regarding interest rates offered for deposit and lending.

At a meeting with officials of Department of Banking Inspection (DBI) of the central bank Sunday, the governor said the entire banking sector will fall into peril due to risky investment by banks.

A BB high official, who attended the meeting, said the governor wanted to know why irregularities in scheduled banks are increasing despite the central bank’s repeated advice to avoid approving non-productive credit and to provide financial services following the guidelines. The official who wished to remain anonymous said the DBI officials reported that both the state-owned and private banks are engaging in bad practices over lending and mobilising deposits.

“The Governor has become worried over such irregularities found in scheduled banks and asked DBI officials to take firm stance on Bangladesh Bank guidelines and initiate punitive actions against bank managements which won’t abide by the rules,” said the official quoting the governor.

He said the BB inspection teams found a rise in classified loans in recent times. He said classified loans in the banking sector in May 2011 was 6.12 percent which now (May 2012) stands at 6.57 percent.

He said many loans have become classified because of inappropriate assessment of loan proposals.

The Daily Sun/Bangladesh/ 12th June 2012