Bangladesh Bank Governor Atiur Rahman has recently been awarded with the prestigious Indira Gandhi Gold Plaque 2011 by the Asiatic Society, Kolkata, in recognition of his significant contribution to international co-operation towards human progress.

The award will be handed to Rahman in a ceremony at the Vidyasagar Hall of the Asiatic Society in Kolkata on May 7, Professor Mihir Kumar Chakrabarti, general secretary of the Society, said in a letter.

Rahman is the second Bangladeshi to get the award after Prime Minister Sheikh Hasina who received the same recognition in 2009.

The award was first introduced in 1985, the central bank said in a statement.

Past Gold Plaque recipients include Nobel Laureates Mother Teresa (1987), Nelson Mandela (1989), Rev Desmond Tutu (1990), Yasser Arafat (1993), Professor Amartya Sen (1994), Aung San Suu Kyi (1995), Gabriel Garcia Marquez (1998), musician and composer Pandit Ravi Shankar (2001), and Indian Finance Minister Pranab Mukherjee (2008).

The Daily Star/Bangladesh/ 16th March 2012

Most of the directors of Bangladesh Bank are worried over the plan of floating too many new banks as the central bank is under pressure from the government to give nod to around 12 newcomers.

Rather, they stressed the need for ensuring quality of the new banks, and said approving more than 3-4 banks will be unwise in the present situation.

BB Board of Directors discussed the issue of allowing new banks at a long meeting with Governor Atiur Rahman in the chair.

Proposals for setting up three banks sponsored by non-resident Bangladeshis (NRBs) were placed in the meeting but there were no proposals for allowing local private banks.

A member of the board said threadbare discussions were held on allowing both NRB-backed and local private banks. He said the central bank has been under heavy pressure from the government high-ups to approve around 12 new banks including both NRB-backed and local private banks.

Also, there are pressures on the central bank for giving quick approval to the banks, he said.

The board members said, taking into consideration the present economic condition and the liquidity pressure faced by the existing banks it will not be wise to approve more than 3 to 4 banks.

The board told the central bank management to place the proposals for approving the new banks in the next meeting after strictly scrutinising the merits of the proposals.

Some of the board members told the meeting that it will not be proper for the central bank to approve any bad bank bowing to political pressure, according to officials present at the meeting.

The board member said the central bank must uphold its independence.

A board member said, it should be reviewed strictly and completely professionally whether the criteria set for the proposed banks were met in toto.

Finance Minister AMA Muhith also admitted yesterday that the central bank was under pressure.

Earlier Muhith said, only one NRB bank would be approved but now the central bank is under pressure from the government high-ups to allow three NRB banks. However, Muhith said, “Some pressure may be there.”

NRB banks will have to provide Tk 400 crore as capital in foreign currency, the board said.

The board asked the central bank management to bring together the proposals for the NRB banks and the local private banks.

A central bank official said another board meeting may be held within this month.

On allowing new banks, Muhith at his secretariat office said licences for setting up new banks may be given in the next two months, but a minimum of six months will be required for them to go into operation.

However, about the number of banks to be approved the finance minister said the central bank will decide on that.

The Daily Star/Bangladesh/ 16th March 2012

Atiur Rahman, Bangladesh Bank governor, launches Bank Asia's e-wallet service in partnership with AlertPay at Hotel Purbani in Dhaka yesterday, while A Rouf Chowdhury, chairman of the Bank , looks on. Md Mehmood Husain, president and managing director, was also present.

Freelancers and IT exporters will now receive their payments from foreign buyers without any hassle, as AlertPay yesterday made foray into Bangladesh by launching online payment service in partnership with Bank Asia Ltd.

The tie-up with the Canada-based firm has helped the local bank become Bangladesh's first financial institution to introduce an easy online payment gateway service that analysts say will revolutionise e-commerce in the country.

Bangladesh Bank Governor Dr Atiur Rahman inaugurated the service at Hotel Purbani in the city.

The service, first of its kind in Bangladesh, will allow the country's growing IT freelancers to bring their dollars deposited in the accounts with AlertPay in any of their bank accounts in the country through Bank Asia at a low cost.

Md Mehmood Husain, president and managing director of Bank Asia, said a huge number of youth are now earning foreign currencies through outsourcing as freelancers.

They work for different international organisations, mainly on data entry, data processing, offshore IT services, and business process outsourcing.

He said their earnings are deposited in the accounts of different online payment gateway service providers. Till now, institutional channel for inward remittance for the freelancers was limited.

"We hope this facility will help induce the potential freelancers to work earnestly and encourage other talents to venture for such freelancing, thereby increasing the inflow of foreign remittance, and that too through banking channel," said Husain.

The central bank governor said, through the online service people or institutions would be able to bring their export proceeds easily against exporting non-physical services.

Such services include data entry, data processing, data digitisation, animation and multimedia, software developing and customisation, web-design, mobile application developing, and freelance outsourcing of graphic design.

Rahman said they have taken various steps so that the freelancers and IT service exporters can bring the money they have earned through outsourcing.

He said freelancers would primarily be able to bring $500 at a time to the country through online payment gateway service provider like AlertPay.

"But if necessary, we will consider extending this limit on observation of real income flow," he said.

There are 8,000 to 10,000 IT freelancers in the country, earning $7 million to $8 million a year. They accounted for 20-25 percent of the country's software exports, said Anir Chowdhury, policy adviser of the Access to Information project under the Prime Minister's Office.

Bangladesh earned $15.51 million in the first quarter of the current fiscal year through IT-enabled services, according to Export Promotion Bureau.

He said the AlertPay service would revolutionise e-commerce in the country.

At the same event, Bank Asia also launched Express Cash, a mobile-based money transfer service, to help people send and receive cash within the country.

It makes Bank Asia the 10th private commercial bank to launch the system, which, officials said will bring the country's 80 percent unbanked people under the umbrella of modern banking.

Husain said “Express Cash” is easier and faster domestic remittance service. "It is independent of any specific mobile companies. This is fully web-based, secured and quick to deliver."

A Rouf Chowdhury, chairman of Bank Asia, said the Bank wants to change the scenario of the country's banking system, as Bangladesh's 80 percent people still cannot take banking services.

"How much we will profit is not the main objective of the Bank. We really want to take services to the people," he said.

Dasgupta Asim Kumar, executive director of the central bank, said the central bank has allowed 17 banks to introduce mobile banking.

The rest seven banks will have to launch the service by March this year, he said.

He said mobile banking has not lived up to the expectation. "Only 4 lakh people have registered so far for mobile banking, whereas the country has more than 8.5 crore mobile phone users."

The banker urged banks to keep the service charge at a level that encourages people to transact money through mobile phone.

The BB governor also asked Bank Asia to open 'Express Cash' service points in remote areas.

Md Ahsan Ullah, another executive director of the BB, Rumee Hossain, audit committee chairman of Bank Asia, and Syed Nazimuddin, senior executive vice president of the Bank, were also present.

The Daily Star/Bangladesh/ 16th March 2012

Introduction by Dr Atiur Rahman

The Bangladesh story is a well kept secret. Most of all, it is a story of entrepreneurship. In the early 1970s, there was very little expectation that we would become such a big exporter, or that, in effect, every Bangladeshi would become an entrepreneur. In fact, Bangladesh is the only country in the region that has grown consistently over the past decade, despite political upheavals and natural calamities. The poverty level has halved during the past two decades and income inequality is declining, as shown by the falling GINI coefficient. Other social indices are also improving: immunisation and nutrition is better than India's, for example. Meanwhile, exports are going from strength to strength, and include apparels, leather, shipbuilding (four ships were exported to Germany in the last few months), pharmaceuticals, software and jute. There is also geographic diversification for the destination of those exports, with new markets found in Japan, Russia and all around the world. Bangladesh is one of the lowest cost countries, despite recent inflationary pressures. A flexible exchange rate also helps our exporters. However, there is room for further export growth, which is now gaining 3 percent share of GDP every year, and a per capita income of $800 means the country has massive potential for increased affluence. Bangladesh is also providing for facilities to be an offshore centre for outsourcing. Today, 50 percent of our economy is driven by the service sector, so financial intermediation plays a vital role.

We, at the central bank, have taken the initiative by improving automation, while commercial banks such as HSBC can bridge the gap between local and international activities. Bangladesh certainly welcomes foreign investors and it's worth bearing in mind that foreigners have always enjoyed a stable operating environment here despite challenges of a developing nation. The strategic geographical position of Bangladesh, as a gateway to India and the Middle East, is also important. Finally, looking ahead, perhaps the key to further progress is to elevate the branding of Bangladesh. Meetings such as this one, sponsored by HSBC and FinanceAsia, can do a lot to help this process.

What are the prospects for Bangladesh's principal exports of apparels and textiles?

Dr Zahur Ahmed: Although the US and Europe are important export markets, we have diversified during the past two years, in particular to China, Russia, Australia, the UAE and South Africa. India is likely to be next. The recession in the US and Europe will have just a short-term effect. No other country can support the $300 billion global apparel industry like Bangladesh can, so the prospects look healthy. However, energy costs are getting too high, and we will need to aim towards product diversification.

Lutfe M Ayub: I have been in the business for 20 years, and I still see tremendous opportunities. The global recession is temporary. More important are Bangladesh's low costs, flexibility and entrepreneurial spirit. In 2010, we exported $12 billion worth of goods; in the first 10 months of this year we have already exported $16 billion, finding new markets in Australia, Japan and Africa, and should achieve an average growth rate of 20 percent a year - so will soon reach $40 billion. But, there are socio-economic consequences of this progress. We need to improve the country's physical infrastructure, focus on branding, and enhance our partnership and understanding with the government. Nevertheless, apparels will be a continued success story.

Paul Hollins: We have been sourcing from Bangladesh for a number of years, but increased the level significantly during the past three to four years, and have even started manufacturing in the country. Bangladesh enjoys critical mass that is found nowhere else. On the other hand, it needs better logistics and infrastructure.

Md Mahbub-ur-Rahman: It is important to stress the dynamics of the garment trade. Take this pair of trousers that I brought with me for demonstration. The material was sourced from China, made into the final product in Bangladesh for a Japanese retailer and then sold in Shanghai. Trade between developing nations, specially inter Asia trade, is growing at a much faster pace compared to global growth in trade. This new silk route or really the Asian trade corridor is likely to become much more important for the world economy in the future. HSBC has a role to play facilitating this international trade process, and it is a rapidly developing part of our business. We have a leading position in export and import out of Bangladesh, over 8 percent of the country's international trade is facilitated by us. We are also able to support inter-Asia trade from end to end, linking importers and exporters in Bangladesh with their counterparts in, say China or India, within a seamless global platform.

Sanjay Prakash: In fact, 1 in 10 pairs of jeans in the world is manufactured in Bangladesh, and 1 in 7 sold in the US is made here. Speed and connectivity are HSBC's strengths in this industry, and 40 percent of the banks' lending in Bangladesh is to the apparel sector.

Dr Atiur Rahman: It's also worth noting that the central bank has recently opened a window for foreign exchange transactions in Renminbi, and also introduced other incentives for the growing trade with China.

Dr Syed Ferhat Anwar: In my view, key challenges are to enhance product branding and improve labour productivity. The government can help with the former, by funding research and development for design, while companies need to look outside Bangladesh for alternative manufacturing bases where the cost of land is lower.

How much traction do other export industries enjoy?

Mahmudul Huq: The jute industry has enjoyed considerable growth in the past 10 years. Bangladesh is the world's biggest exporter of both raw and manufactured jute, and exports 85 percent to 90 percent of its raw fibre - India consumes most of its own. Our main export markets are India, Pakistan and China. Indeed, we exported 100,000 tonnes to China last year, compared with 30,000 imports eight years ago. That's a phenomenal growth. The rest of the world takes 20 percent of the country's jute exports, and they are in effect captive customers. Meanwhile, the market in weaving products has stabilised after contracting over 30 years, with exports to India growing during the past five years. This has happened simply through refurbishing old factories, and without help from banks or the government. Yarn for the carpet industry has also posted spectacular growth. Bangladesh was exporting 15,000 to 20,000 tonnes in 1980; now the figure is 400,000 tonnes. Carpets can be made faster and cheaper, but manufacturers still need jute yarn, because it adds weight and volume at the cheapest cost. A further trend is a shift towards exporting spun yarn to China, and eventually we will be exporting the finished product.

Ahsan Khan Chowdhury: Bangladeshis can export anything to anywhere. Our company, for example, trades in difficult markets such as Papua New Guinea, South Sudan and Somalia. Bangladeshi entrepreneurs go to tough markets, and we thrive. That is the beauty of Bangladesh. We learn from experience at home, and then enter new countries gradually, and we will eventually develop global brands. In fact, Pran is already a global brand. Bangladesh's demography and location are also advantageous, and I expect that north-east India will be a big market for us soon. Other features are improving levels of education, resilience against set-backs, high aspirations, and adaptability.

Nazim Farhan Choudhury: We started our graphic design outsourcing company five years ago, and now employ over 200 people in every continent except Latin America although that will change soon and expect to have 400 staff by the end of next year. We design print and online graphics for leading global brands from around the world.

Mahfuz Anam: Bangladesh actually has one of the freest media in the world. There are over a hundred good newspapers in Dhaka, 10 private TV stations and several radio stations. It is a very vibrant media and much more so than in Malaysia, Indonesia or Singapore, for example. And this is healthy for the country. I'd also like to emphasise our country's achievement despite awesome challenges. We have a population of 150 million constrained in a landmass of 144,000 square kilometres, yet we are successful at feeding and educating that population within a democratic framework. It is like an experiment. However, we also need to raise worldwide media attention, diverting its focus from the periodic natural disasters or political unrest. Instead, it should be more aware of our entrepreneurs and our successful human social development, which is happening more often than not. At the foremost, we and our government need to be convinced of Bangladesh's future. There is a great story here, and we should be grateful to HSBC and FinanceAsia for promoting it.

Dr Atiur Rahman: I agree; ours is a story that should be told more frequently in more places. The non-resident Bangladeshis, who supply $12 billion worth of remittances each year, is another dimension. They are widely recognised as hard working, loyal, ambitious and entrepreneurial, setting up small businesses throughout the world. We all should celebrate and encourage this aspect of Bangladeshi culture. In fact, the central bank, as regulator, can and does encourage and nurture these aspirations through dedicated policies and incentives.

Should Bangladesh's companies get bigger, or will the future remain with SMEs?

Dr Syed Ferhat Anwar: Here's an interesting fact - if the world's population were placed in the US, the population concentration would still be less than in Bangladesh. So we and our entrepreneurs should expect to face challenges. Most of them are in the services sector; the country has the greatest concentration of retail outlets - nine per square kilometre. Is this good? Yes for today, but perhaps not for tomorrow. Around 63 percent of the country's population is young, and they are getting better educated. Many will want to seek improved opportunities, maybe travelling abroad. So, we need to rethink our strategy: too many small enterprises will not necessarily be productive.

Ahsan Khan Chowdhury: Starting small is a good place to learn from, but we are likely to graduate to bigger size, despite recent problems such as high gas prices and the global financial crisis acting as short-term constraints.

Lutfe M Ayub: I'd highlight two things - a shortage of natural resources and high population density are significant impediments to other types of industries on a large scale. Hence, the services sector is essential to Bangladesh; no other industry is as suitable, and as capable of providing employment and as less capital intensive. The second point is important - the cost of borrowing money is high in Bangladesh. Indeed, I'd argue that banks need to be more competitive and offer cheaper rates, comparable to the rates that foreign investors can access.

Md Mahbub-ur-Rahman: I sympathise with that point, HSBC continually thinks about alternative ways to help its customers, taking a broad perspective, and using its international connectivity. That means we are willing and able to use our offshore banking book, the largest in Bangladesh, to provide foreign currency support to local firms, bringing competitiveness to local enterprises in international operations. Our experience is very pleasant with Bangladeshi exporters and their business acumen and proficiency. We however, need to be aware that while foreign currency exposure is fine for exporters with a natural hedge, the dynamics are more complex for purely domestic firms. We also need to determine, which is the more important driver, availability or the cost of finance.

Deposit rates need to encourage savings, which leads to higher lending rates in Bangladesh. Otherwise, the availability of financing will be low. Real effective lending interest rates, adjusted for inflation, are not bad in the overall context.

We have exchange control regulations in place, which presents certain operational challenges, but overall it also protects the local economy from a number of challenges. We are happy to find a very supportive Central Bank and the Board of Investment for local companies accessing internationally competitive financing markets.

Lutfe M Ayub: I agree there are other problems, although one - the surge in the price of natural gas - is less of an issue for us as we have moved to alternative fuels. The main concern is lagging productivity due to inadequate mid-level education and lack of targeted training among the workforce.

Dr Zahur Ahmed: We too have adapted to alternative and more efficient fuels, and introduced power-saving practices. I agree that labour productivity needs to improve. Many employees arrive straight out of their protective rural communities. Entrepreneurs need to adopt a patient approach, and try to understand people better. This approach is successful, and efficiency at my plants is now at around 60 percent compared with about half that a few years ago.

Ahsan Khan Chowdhury: Banks such as HSBC have a positive role to play in financing Bangladeshi companies. Lending at global rates of interest would undoubtedly help us. Not just lending, international footprint is also important.

What are the constraints to developing business and entrepreneurial skills?

Sanjay Prakash: A core job for us at HSBC across the globe is to finance and facilitate entrepreneurship. In fact, we run a regional “HSBC Young Entrepreneur Awards” programme in Asia Pacific. And it is worth noting, that Bangladeshi teams have finished within the top three for each of the six years the awards have been organised here. Another issue is the development of local capital markets. These are essential to attract foreign investment and funding for local enterprises; but the corollary is improved corporate governance, shared profits and capital restructuring.

Nazim Farhan Choudhury: One failing is that we don't enhance entrepreneurial skills sufficiently in our education system, in order to prepare the million people entering the workforce every year. The challenge is to teach these skills and techniques on a mass scale, not just at business schools. Also, female entrepreneurship is very important, particularly supported by microfinance, and fostered by support groups. I see more and more female entrepreneurs in my advertising business.

Mahmudul Huq: But, our success in meeting the challenges of educating, employing and feeding a population that has doubled in size since independence is due to our entrepreneurs. And we still feel confident about the future.

Nazim Farhan Choudhury: It's possible that we have inherent entrepreneurial skill sets. But, bear in mind, as Bengalis we have only been in business for a short time. Before independence, most businesses were run by the West Pakistanis, and Bengalis merely concentrated on trading. The first generation of Bengali had businessmen learned from their mistakes, and sent the next generation overseas to study; and they are bringing about a new dimension.

Paul Hollins: The education of management at all levels, specially mid and senior level is essential, so it can organise the labour force and inputs more effectively, allowing entrepreneurs to deliver the final product. At our company, foreign managers train locals who will eventually replace them.

Dr Syed Ferhat Anwar: Most large businesses in Bangladesh conduct in-house training. But, we still lack some of the formal skills, although NGOs have helped.

Ahsan Khan Chowdhury: The private sector has had a crucial role in all aspects of society: education, transport, telecoms and hospitals. Also, the transition from SMEs to larger companies is taking place.

How important is foreign investment for the country's future?

Paul Hollins: As a foreign company operating and sourcing here, we believe that Bangladesh has a sustainable future for us, even as the country becomes richer. There is no alternative to the mass of people in the workforce.

Dr Syed Ferhat Anwar: Foreign direct investment (FDI) is essential especially for infrastructure development. However, the private sector is sceptical about foreign companies, so joint ventures are the best way to start. For example, take the pharmaceutical industry. Local companies dominate the sector, after multinational corporations came in with generic ideas that were inappropriate for Bangladesh - and they failed.

Sanjay Prakash: The impact of the government is important especially a political system that ensures stability. Bangladesh is one of the 11 new frontier countries, and there is interest among international fund managers. The key to attracting them is having the right returns, liquidity and transparency. Entrepreneurs have to 'show themselves', that is, be willing to change capital structures, implement good audits, improve governance and share profits.

Dr Syed Ferhat Anwar: We can build up efficiency through training, but corporate governance here needs to have a local dimension that reflects Bangladesh's uniqueness. This is especially true for small firms.

Md Mahbub-ur-Rahman: The international markets need to be aware of Bangladesh's improved performance, particularly since being rated by S&P and Moody's.

We feel the time is ripe for Bangladesh to access international bond markets as a sovereign. The current low yields and credit concerns in Europe has actually driven up the attractiveness of emerging market sovereign bonds, and we are receiving queries from fund managers on when Bangladesh will issue its first bonds. If Bangladesh goes to the market with arrangers having extensive experience in managing Asian sovereign issues like us, we are confident of a successful issue at an acceptable pricing.

But more important than the pricing, it will open up new avenue of funding for the government for strategic investments. In the process, we will get to tell our growth story to the world's leading investors, which always has a positive impact in line with what we were talking before. Building credibility in small steps is probably one of the best branding possible for us. This will also set the right benchmark for corporates to access the same market.

Sanjay Prakash: HSBC advised Bangladesh Bank in its negotiations with S&P to gain a BB- rating. The country is likely to take a step-by-step approach to issuing a sovereign bond.

How important is recognition, such as that achieved by the HSBC Export Excellence Awards?

Sanjay Prakash: This is the second year that we've run the awards. We felt that it was a way to recognise the value of Bangladeshi exporters, showcase them, and promote trade and competition. The awards have credibility, not least because we appoint high calibre, independent jurors.

Md Mahbub-ur-Rahman: It is a humble way of recognising exporters' strength, stressing our own connectivity and bringing entrepreneurs together.

Nazim Farhan Choudhury: Speaking as a recipient of an award, I'd say that several benefits are that its gets people talking, encourages competition and helps us attract talent that might otherwise go to multinationals. Perhaps more needs to be done to promote the winners of the awards.

Dr Syed Ferhat Anwar: Awards motivate people to achieve better standards. So they have a positive contribution, although maybe some equally deserving companies have missed out in the process. Also, what happens next?

Lutfe M Ayub: The HSBC award is a brilliant idea, and HSBC needs to be applauded for its efforts and initiative. It gives a company a higher profile, helps trade and promotes the country overall.

Sanjay Prakash: One of the challenges we faced was to spread the net wider to include other banks' customers. So, it is not exclusively an HSBC award it is for exporters in general. I also appreciate that we need to promote the award-winners more effectively.

PARTICIPANTS

Dr Atiur Rahman

Governor, Bangladesh Bank

Ahsan Khan Chowdhury

Deputy Managing Director,

Pran-RFL Group

Lutfe M Ayub

Managing Director, Sunman Group

Mahmudul Huq

Managing Director, Sadat Jute Industries

Mahfuz Anam

Editor and Publisher, The Daily Star

Nazim Farhan Choudhury

Managing Director, Graphicpeople Ltd and Adcomm Ltd

Paul Hollins

Operations Director, Dewhirst Group UK

Dr Syed Ferhat Anwar

Professor, Institute of Business Administration, University of Dhaka

Dr Zahur Ahmed

Managing Director, Apex Spinning and Knitting Mills Ltd.

Sanjay Prakash

COO, Commercial Banking, HSBC Asia-Pacific; former CEO, HSBC Bangladesh

Md Mahbub-ur-Rahman

Head of Commercial Banking, HSBC Bangladesh

Moderated by: Rupert Walker

The Daily Star/Bangladesh/ 15th March 2012

BRAC Bank disbursed Tk 2.75 million as ‘spot loan’ to three SME entrepreneurs during the “SME Entrepreneurs and Bankers Conference” in Barisal recently.

Md Abul Quasem, deputy governor of Bangladesh Bank, formally inaugurated the conference which was jointly arranged by SME Foundation and Bangladesh Bank at Barisal Club on February 28, said a press release.

The entrepreneurs who received the loans are – M/s. Sikder Enterprise, M/s. Lamia Clothes and M/s. Fima Fashion & Tailors.

Advocate Shawkat Hossain Hiron, mayor of Barisal City Corporation, Syed Rezwanul Kabir, managing director of SME Foundation, Sukamal Sinha Choudhury, general manager of SME & Special Programmes Department of Bangladesh Bank, Abdur Rahman, head of SME Banking of BRAC Bank and other senior officials of different banks and local entrepreneurs attended the program.

The Daily Sun/Bangladesh/ 10th March 2012