World Bank country director Johannes Zutt speaks at a briefing at the WB office in Dhaka on Wednesday. — New Age photo

The World Bank on Wednesday projected that Bangladesh’s economic growth would slow down to 5.7 per cent in the current fiscal year, much lower than the government’s projection of 7.2 per cent, mainly due to political unrest ahead of next general elections and lower investment.  

 
The international lender disclosed their projection at a press briefing on Bangladesh Development Update-2013 at its office in Dhaka. 

The WB also said that rebuilding the image of readymade garment industry is the most pressing challenge for the country in coming days along with improving investment situation, removing supply bottlenecks and maintaining economic and financial reforms. 

Earlier in the month, the International Monetary Fund and Asian Development Bank also forecast lower GDP growth for fiscal year 2013-14 at 5.5 per cent and 5.8 per cent respectively.

 
‘Economic Growth targeted for the current fiscal year cannot be achieved. The GDP growth may be even lower than the forecast if the ongoing political disturbance along with other internal strife continues,’ WB lead economist, Zahid Hussain, said. 
Low growth in industry and service sectors will play a role in reduction of the overall economic growth, he said. 

He said that the projected growth would depend on internal stability and structural reforms. 
‘Bangladesh’s overall economy is moving into a more volatile phase,’ Zahid said. 

The risks stemming from the impending political transition have grown significantly while new risks and challenges have gained prominence, including notably the risks associated with the damaged image of the RMG industry, he added. 

He said that inflation might go up because of internal reasons. The election may hamper the implementation of tax policy, good governance and manpower export. These will have an impact on national economic growth.

World Bank country director Johannes Zutt said that the RMG sector has been a key contributor to Bangladesh’s strong economic performance. 

But the industry is now at a critical crossroads, as recent factory fires and building collapse have exposed the hazards the workers face and also severely tarnished the industry’s image, he said. 

‘Bangladesh must act now to articulate and enforce improved standards for building safety and worker health and security, so that the garments industry can continue to grow and other industries can follow its example,’ he said. 

In its update, the WB said that industrial accidents have revived concerns over compliance in labour standards and worker safety, putting Bangladesh’s competitiveness in RMG at risk. 

‘The time to act is now. The most immediate priority for the government is to ensure enforcement of the steps suggested by foreign buyers, international agencies and domestic regulatory bodies,’ it stated. 
It warned that the cost of inaction could be high. 

‘Removing GSP facility by the USA may not hurt the RMG sector unduly, as the benefits to the industry were non-existent, but if the EU truncate or suspend the GSP facility, Bangladesh could see its total exports fall by as much as 4.1 to 8 per cent,’ it said.

The central bank has asked the commercial banks and non-banking financial institutions (NBFIs) to disburse loans under the Japan International Cooperation Agency (JICA)-funded project for improving infrastructure and doing safety assessment in the country's apparel and clothing sector.

"We're ready to release the fund to the participating financial institutions (PFIs) under the project," Mr Masum Patwary, acting general manager of the SME and Special Programmes Department of the Bangladesh Bank (BB), told the FE Wednesday. 

Mr. Patwary also said the central bank would approach development partners for arranging further funds for the project to confirm success of it.

The central bank issued a notification in this connection Wednesday and asked the banks and NBFIs to take necessary measures for sanctioning loans in line with the related operating guidelines. 

Currently 39 banks and NBFIs are eligible for disbursing the loans under the project to interested RMG entrepreneurs for the purpose of retrofitting, rebuilding and relocating their factory buildings. 

"We expect that four banks and one NBFI will sign memorandums of understanding (MoUs) with the central bank shortly for disbursement of the fund," another BB official noted. 

The JICA has already provided Tk 1.0 billion as a soft loan for improving the working environment in the country's ready-made garment (RMG) sector. 

Under the project, an entrepreneur will be given maximum Tk 1.0 million as a soft loan at the maximum interest rate of 10 per cent to develop infrastructure for their garment factories. The loan will be repayable in 15 years including a two-year grace period. 

An MoU was signed to this effect by the JICA, the central bank, Public Works Department (PWD) under the Ministry of Housing and Public Works, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) at a hotel in the capital on October 3. 

The funding is aimed at providing financial support to the RMG enterprises for conducting safety assessment of their buildings under the supervision of JICA experts and engineers of the public works department under the Housing and Public Works Ministry. 

The central bank has taken the latest initiative against the backdrop of the Rana Plaza collapse at Savar in Dhaka on April 24 last, where more than 1,100 people died and hundreds were severely injured.

The ministry of finance (MoF) has instructed the state-owned commercial banks (SoCBs) to submit their business plans to address their problem of capital inadequacy by October, sources said.

Until March 2013, the four state-owned banks had a shortfall, to the tune of Tk 96.42 billion, in aggregate requirement for their capital. Such shortage in case of Sonali Bank stood at Tk 52.44 billion, for Agrani Bank, Tk 21.20 billion, for Rupali Bank, 11.64 billion, and for Janata Bank, Tk 11.14 billion.

The MoF asked the banks to mention, in the business plan, the status of pursuing the conditions of memoranda of understanding (MoU) that they signed with the central bank, the stage of automation of banking activities, realisation of money in cash from the top 20 defaulters, stress test reports, and updated position for preparation of their respective liquidity risk management policy.

The banks were also asked to inform about the status of progress relating to setting up of risk management units in their respective financial institutions. Furthermore, they were directed to provide updated reports about their respective progress in pursuit of the guidelines of the Bangladesh Bank about core risk management. The SoCBs were also told to furnish information to the MoF about the steps that they had taken to settle the pending loan-default cases and audit disputes and to help reduce the burden of their respective non-performing loans.

In the letter sent to the managing directors and the chief executive officers (CEOs) of the banks, the MoF asked for submitting their respective time-specific plans.

Earlier, at a meeting at the MoF conference room, Finance Minister AMA Muhith expressed resentment over poor performance of state-owned banks about improving their operational conditions.

Transparency and good governance, he observed at the meeting, are yet to be ensured in the state-run banks due to the failure of their automation in time. This has been hindering efforts for providing proper services by them to their customers, he noted.

Mr Muhith asked the banks to expedite actions on core banking solutions on a priority basis from the fund given by the government for their recapitalisation.

HN Ashequr Rahman, MP, Chairman of Meghna Bank Limited, inaugurates a branch at Motijheel in Dhaka on Wednesday. 

Meghna Bank Limited opened a branch at Motijheel in Dhaka on Wednesday.

HN Ashequr Rahman, MP, Chairman of the bank, inaugurated the branch, said a press release.

Abdul Alim Khan Selim, Vice Chairman, Tanveer Ahmed, Ashiqur Rahman Lasker, Rehana Ashequr Rahman, SM Jahangir Alam (Manik), Directors, Md Shahidul Ahsan, Rasheq Rahman, AKM Mostafizur Rahman, Sponsors, Md Mohashin Miah, Managing Director and CEO (Current Charge), senior executives of the bank and local elites attended the function.

Maj Gen (Retd.) AR Khan, Vice President, Diabetic Association of Bangladesh, receives replica of an ambulance from AAM Zakaria, Managing Director, First Security Islami Bank Limited, at a function on the occasion of the 14th founding anniversary of the bank at Ruposhi Bangla Hotel on Wednesday. 

First Security Islami Bank Limited (FSIBL) donated approximately Taka 12 crore in September last under its CSR (Corporate Social Responsibility) activities.

The bank contributes almost 5 percent of its operational profit in this project.

This was disclosed at a function on the occasion of the 14th founding anniversary held at Ruposhi Bangla Hotel on Wednesday.

M. M. Niazuddin, Secretary, Ministry of Health & Family Welfare, SK Sur Chowdhury, Deputy Governor of Bangladesh Bank, AAM Zakaria, MD, FSIBL, Barrister M Rafiq Ul Haque, Maj Gen (Retd.) AR Khan, Vice Presidents, Diabetic Association of Bangladesh, Md Saifuddin, Secretary General, Diabetic Association of Bangladesh, Prof Mahmudur Rahman, Chairman, Board of Management of Ibrahim Cardiac Hospital & Research Institute, Prof Dr MA Rashid, CEO of Ibrahim Cardiac Hospital & Research Institute were present on the occasion.

On the occasion, First Security Islami Bank Limited donated one highly configured modern Cardiac Ambulance to Ibrahim Cardiac Hospital & Research Institute, Tk 25 lakh to establish First Security Islami Bank School, Tk 25 lakh to establish First Security Islami Bank Hospital, 5 computers for the students of MM Niazuddin High School, Tk 450,000 as scholarship for the students of Begum Rawsan, Wahed Girls High School, one computer for the students of Pekua GMC Institution, one computer for the students of Shilkhali High School, Tk 3,400,000 for scholarship of meritorious students of Jessore Zila School, Tk 3,600,000 for scholarship of meritorious students of Jessore Govt Girl High School, Tk 800,000 for scholarship of meritorious students of Saint Joseph School, Khulna, Tk 322,000 as scholarship for intellectually disabled students through Banker's Forum.