Khulna Shipyard regains
lost pride
United News of Bangladesh . Khulna
Khulna shipyard regained its lost glory as the potential venture turned into a successful profitable business concern through building brand-new ships of international standards besides repairing old ones.
Located on the bank of the River Rupsa, the shipyard was established way back in 1957 with the assistance of a German firm, Stulcken Sohn. Two German and British companies had jointly run the shipbuilding yard till 1965.
After the independence, it was handed over to the state-run Bangladesh Steel and Engineering Corporation in 1972. But the shipyard started incurring loss after 1980.
Under the circumstances, the then government had decided to give it over to the private sector to boost production and business.
Considering the economic prospect, later on, Bangladesh Navy was given the responsibility of running the promising venture on October 3, 1999. Shortly after the makeover under a bailout plan, the shipyard started making a turnaround into a profitable enterprise.
According to sources in the Khulna Shipyard Limited company, some 650 ships have been constructed and renovated while 1,800 repaired at the yard in last 47 years.
‘The shipbuilding industrial unit is capable of building and repairing 2000-ton-capacity ships, but it cannot be done because of inadequate depth of Rupsa Channel (3.4-meter draft). Moreover, big ships cannot ply under the low-height Rupsa Bridge,’ one of the sources told the agency.
The KSY is now able to build modern patrol craft (warship), inland and coastal workboat, harbor/coastal and sea-bound tug, barge, ferry, landing craft, crane barge, hydrographic survey vessel, buoy-handling vessel, search and rescue boat, cargo vessel, tankers and other varieties of ship.
It has also the capacity for repairing war and commercial ships and providing technical assistance.
Also skilled in general engineering sector, KSY is now constructing electrical tower, trailer, iron tank, oil and water tanks, wagon and machinery used in jute and sugar mills. Besides, it built the newly innovated globe digester for paper mill.
Masihur opposes further
rate cuts
Staff Correspondent
The economic adviser to the prime minister, Masihur Rahman, on Tuesday forcefully argued against lowering bank interest rates and continued subsidy to country’s the industries.
Addressing a seminar in the capital, he said that lowering interest rates would invite inflation while continued subsidy to industries would reduce their efficiency.
Moshiur said the interest rates are not that high if interest weavers in rescheduled bank loans are taken into consideration.
Bangladesh Knitwear Manufacturers and Exporters Association organised the seminar titled ‘Bangladesh Knitwear Industry, Recession and Beyond: Challenges and Strategies’ on the occasion of ongoing 5th Bangladesh Knit Exhibition. The remarks of prime minister’s advisers were in response to some businessmen blaming the government and bankers for high interest rates, which raise the cost of production and erode competitiveness of industries at home or abroad.
‘Much lowering of interest rates on bank loans push massive cuts in deposit rates,’ said Moshiur, adding, ‘Declining deposits will risk availability of funds for financing to industries.’
He said current excess liquidity situation in banks was very much temporary and that it was taking place due to the effects of recession.
‘The low rates of interests on bank loans also invite inflations- which is harmful for the industries and the economy,’ the adviser said.
Bangladesh seen next hot spot
for Japan’s outsourcing
Kazi Azizul Islam
The opening of a direct sourcing office in Dhaka by Japanese apparel giant Fast Retail in September 2008 brightened Bangladesh’s prospects to become a hot spot for investors and importers from the world’s second biggest economy.
‘That was the beginning and many Japanese garment retailers and importers have grown interest in sourcing from Bangladesh,’ Tetsuji Okamoto, president of the Okamoto Corporation, leg-wear market leader in Japan, told New Age on Monday.
Tetsuji is among the top executives of nearly 50 Japanese firms who are attending the three-day Bangladesh Knit Exhibition at Hotel Sheraton making the biggest presence of Japan’s apparel industry players in a single event in Dhaka.
Some 130 million pairs of socks were sold in Japan last year under the Okamoto brands and Tetsuji’s organisation also dominates the market of pantyhose, tights and other kitted wears.
Upmarket apparel brand leaders of Japan are now shifting their focus from traditional low-cost production bases like China and Thailand, and looking for newer locations, and many of them find Bangladesh a good choice, local industry leaders and investment promotion officials said.
Major manufacturing facilities of Okamoto, having $240 million annual turnover, had shifted to China and Thailand to cut back on costs and boost profit. But the company is also looking for a way out amid soaring production costs in other Asian locations.
Tetsuji turned up to knitwear fair in Dhaka to identify Bangladesh’s quality socks suppliers, a search he began six months ago. One has already been selected and search for more is on, Tetsuji said.
‘Japanese garment importers never compromise the quality and timely delivery,’ he pointed out adding that Bangladeshi suppliers must ensure that first.
Asked about the possibility of establishing any manufacturing facility in Bangladesh, Tetsuji said, ‘It will take time.’
In the first phase, Bangladeshi suppliers should attain the capacities for meeting Japanese standards and option of joint ventures would come later, he said.
Tetsuji was of the opinion that the Bangladesh’s government should go for promotional activities and using diplomatic channel to get total duty-free market access to Japan. As an LDC, Bangladesh gets duty-free market access to Japan, but socks and some other categories of knitted wear do not get that due to certain rules of origin criteria.
Although Bangladesh is self-reliant in cotton yarns but dependent on import for some specialty yarns and man-made-fibre yarns, which are used in fancy knitted wears and leg-wears.
Tetsuji said that if Bangladesh government persuades the Japanese government to relax rules of origin, many knitted wears will be relieved from seven per cent duty at Japanese ports.
‘Unconditional duty-free access will boost Bangladesh’s garment export much more,’ he said.
In the 2008-2009 fiscal year, Bangladesh exported $74 million worth garments to Japan and the year-on-year shipment growth was more than double.
But industry people hope for a billion dollar plus share in the $24 billion Japanese market of imported garments. Japan’s strategy of shifting focus from one country [China] to more countries further brightens that prospects, they believe.
StanChart’s CMO
arrives in Dhaka
Business Desk
James Galloway, chief marketing officer of Standard Chartered Group, arrives in Dhaka today for a two-day official visit.
His responsibilities within the group include marketing, service quality and direct sales for consumer banking, said a news release. On this visit, James will be accompanied by Anup Suri, group head of direct sales for the bank.
James joined Standard Chartered in 2008 from Westpac Banking Corporation, Australia. James’ career spans nearly two decades bringing expertise across a number of industries, having held senior positions with BP Oil, GE Money and Coles Myer.
Dollar falls on CIT bankruptcy
Agence France-Presse . London
The dollar fell against the euro on Monday amid fresh worries about the US financial sector following the bankruptcy of US bank CIT Group over the weekend, traders said.
In late morning London deals, the European single currency rose to 1.4772 dollars from 1.4715 dollars late on Friday.
Against the Japanese currency, the dollar gained to 90.22 yen from 90.08 yen late on Friday in New York.
Investors had initially bought the yen during Asian trading hours after CIT Group filed for bankruptcy protection on Sunday, reigniting jitters about the woes of the US financial sector.
The dollar recovered losses however owing to fears it had fallen too rapidly, ‘but it will likely remain under pressure,’ said Hideaki Inoue, chief foreign exchange manager at Mitsubishi UFJ Trust and Banking Corp.
Barclays Capital analysts said CIT Group’s troubles had triggered fears among currency traders that the lender could suffer a similar fate to Wall Street giant Lehman Brothers, whose collapse last year rocked world markets.
But they said the CIT bankruptcy, while significant, was unlikely to have a lasting impact on the foreign exchange markets.
‘Importantly, according to the company, the bankruptcy is designed to allow CIT to continue to provide funding to its small and medium-sized businesses, and also, in our view, to reduce the knock-on effects,’ they wrote in a note.
Investor risk appetite was also reduced by a sharp drop in stocks on Wall Street on Friday that sent Asian markets lower on Monday.
Markets were also nervous ahead of monetary policy decisions due this week in the United States, the eurozone, Britain and Australia, as well as key US jobs data on Friday.
‘I think the market will react sensitively (to developments) this week,’ Inoue said. ‘But investors expect no major changes or an exit strategy from the stimulus policy to be announced by the Fed,’ he said.
The US Federal Reserve (Fed) is widely expected to hold its key lending rate steady with a range of zero to 0.25 per cent until early 2010.
CORPORATE DISCLOSURES
Power Grid
The company has informed that a meeting of the board of directors of the company will be held on 04.11.09 at 5:30pm to consider the audited financial statements for the financial year ended on June 30, 2009, matter relating to the 13th AGM and other issues of the company.
Al-Arafah Islami Bank
Badiur Rahman, one of the directors of the bank, has reported his intention to buy 1,000 shares of the bank at prevailing market price through the stock exchange within next 30 working days.
Confidence Cement
The company has informed that the company’s management has finalised decision for balancing, modernisation, rehabilitation and expansion of its 600 M/Ton per day production unit. It is to be noted that the company has two production units having capacity of 1000 MT and 600 MT per day. The board has decided to modernise and update the production process of the old 600 TPD unit as it is not capable to produce port land composite cement as well as it is unable to produce it’s designed capacity. In this regard an international tender will be floated very soon. The management also decided to revalue the fixed assets of the company and this will be done and certified by Rahman Mostafa Alam and Co, chartered accountants.
Source: DSE
EU lifts 2010 growth forecast
Associated Press . Brussels
The European Commission on Tuesday predicted that the EU and eurozone will grow in 2010 at a modest rate of 0.7 percent as the economy moves from a sharp recession to a hesitant and fragile recovery.
The growth forecast was raised from the earlier outlook that the economies would shrink 0.1 percent in 2010.
The EU executive warned however that a ‘better-than-expected’ rebound in the second half of 2009 would likely be followed by slower growth early next year.
High unemployment and the lingering effects of the financial crisis are expected to dampen demand.
The EU sees stronger growth in 2011, predicting that the eurozone would expand by 1.5 percent and the EU by 1.6 percent. It says EU governments should start exit strategies to withdraw economy stimulus programs in 2011.
EU Economy Commissioner Joaquin Almunia warned that the euro would stay at a high value against the dollar over the next two years — which may hold back European exports to the U.S. and other nations by increasing the dollar price of German cars or French champagne.
‘We think that the U.S.-euro exchange rate will be on average $1.48 for next year and 2011,’ he told reporters.
The euro rose to a 14-month high of $1.5061 in spot trading on Oct. 26, according to Thomson Reuters data.
The EU and eurozone likely exited recession in the third quarter of 2009, the EU said, after five consecutive quarters of negative growth. The first official third quarter figures will be published on Nov. 13.
It warned that the upturn is ‘largely driven by temporary factors’ as companies restock after a spending freeze and governments spend billions of euros on stimulus programs to stoke growth.
High unemployment and financial deleveraging — as companies struggle to pay off large debt loads — will likely hold back growth in the longer-term, it said, as households and businesses have less disposable cash.
‘The banking sector is still fragile and the credit sector is stagnating and this is the bad news,’ Almunia said. ‘Credit flows are close to zero or in some cases in negative territory.’
He blames weak demand from potential borrowers and constraints on bank lending as some financial institutions find it difficult to secure funding on wholesale markets. Banks are also focussed on repairing balance sheets badly hit by huge losses when complex securities slid in value last year.
Almunia called on government to push on with programs to buy up or guarantee these shaky assets to allow banks restore credit flows.
He said that ‘without normal credit flows, we will not have a sustained recovery.’
The EU did not change its estimate for the economy of the 16 nations that use the euro to contract by 4 percent this year. It downgraded the figure for the economy of the entire 27-nation European Union to shrink by 4.1 percent in 2009, from an earlier estimate of 4 percent.
Poland is the only EU nation that will report economic growth in 2009, the EU said. Eight countries will keep shrinking in 2010 — eurozone members Spain, Ireland and Greece and non-euro nations Bulgaria, Estonia, Latvia, Lithuania and Hungary. All 27 nations should grow in 2011.
The EU was less pessimistic in this forecast about how high the jobless rate would rise. It earlier predicted that the eurozone rate would rise to a postwar record of 11.5 percent in 2010 but now sees the rate increasing from 9.5 percent this year to 10.7 percent next year.
Inflation will also remain low for the next two years, it said, staying well below the European Central Bank guideline of just under 2 percent. This may sap the case for raising rates from an all-time low of 1 percent in the eurozone.
The commission sees eurozone inflation at 0.3 percent in 2009, rising to 1.1 percent in 2010 and 1.5 percent in 2011.
The cost of bailing out banks, boosting the economy and spending far more on welfare payments to the growing number of the unemployed has loaded European governments with debt as tax revenue collapses. The EU said nations would risk long-term sustainability if they continued to run large budget gaps for several years running, while their populations age, with fewer workers paying for the growing costs of health care and social security.
Collectively, euro area debt is set to rise from 78.2 percent this year to 88.2 percent in 2011, it said — far above a 60 percent limit that EU budget rules set for each euro member to underpin their currency. Only four of the 16 countries would stick to that limit in 2011.
Public debt in euro members Greece, Ireland and Spain is set to soar rapidly, with Greece next year overtaking Italy as running the highest level in the EU at 124.9 percent of gross domestic product in 2010.
IMF sells gold to India
at glittering price
Agence France-Presse . Washington
The International Monetary Fund kicked off the sale of more than 400 tonnes of gold with a wallop, saying Monday it sold almost half to India, the world’s biggest gold consumer, at near-record prices.
The IMF announced it sold 200 tonnes of gold to India’s central bank over a two-week period last month for a total of 6.7 billion dollars to bolster its finances as it increases lending amid the global economic crisis.
The sale to India was nearly half the 403.3 tonnes of gold that the IMF has targeted for sale over the coming years and came as gold prices were close to record highs.
The IMF said the transaction, which was in the process of being settled, involved daily sales that were phased over a two-week period during October 19-30.
Each daily sale was conducted at a price set on the basis of market prices prevailing that day, it said, in accordance with the institution’s founding document.
‘I strongly welcome this transaction with the Reserve Bank of India,’ Dominique Strauss-Kahn, the IMF managing director, said in a statement.
‘This transaction is an important step toward achieving the objectives of the IMF’s limited gold sales program, which are to help put the fund’s finances on a sound long-term footing and enable us to step up much-needed concessional lending to the poorest countries.’
The Washington-based IMF, which currently holds 3,217 tonnes of gold, is the third-largest official holder of the precious metal after the United States and Germany.
India is the world’s biggest consumer of gold, importing between 700 and 800 tonnes of the metal every year or 20 per cent of global demand.
A senior IMF official said that the IMF was ‘lucky’ in selling the 200 tonnes to India for roughly 1,045 dollars an ounce, compared with 850 dollars an ounce in April 2008.
‘Of course, this is only half the sale that we’ve completed, so we don’t want to get ahead of our sales. We still have another half to go—I hope we’ll still be lucky,’ the official said in a conference call with reporters, declining to comment on other potential interested parties.
Gold has found new luster amid the global financial crisis as investors seek shelter from economic uncertainty.
The price of gold shot to an all-time high of 1,070.80 dollars an ounce on October 14 as a weakening dollar made the precious metal cheaper for investors holding other currencies, pushing up demand.
The price of gold has risen by more than 20 per cent since the start of 2009.
Cash-strapped US media rush
to cover Afghan war
Agence France-Presse . Washington
With President Barack Obama seemingly poised to deploy thousands more troops to Afghanistan ramping up the war there, the US media faces a dilemma on how to cover the conflict with dwindling resources.
As the most crippling recession in decades bites into their budgets, US news outlets are caught between having to watch their finances and the need to cover a bloody conflict, once called the ‘forgotten war,’ into which America has poured so many resources.
‘When you put people in harm’s way, you have to make sure you keep them safe. That’s an extraordinarily expensive proposition,’ CBS Evening News executive producer Rick Kaplan told AFP.
‘As it gets more expensive, you have to dial back.’
For some news organisations, a more nimble operation reflects a deliberate choice to get closer to the population in the largely rural country, a far cry from the reinforced compounds some organisations maintained in Iraq.
‘We’re operating differently, but it’s not so much a cost issue, it’s more of a philosophical choice to work in a more low-profile way,’ said Los Angeles Times foreign editor Bruce Wallace.
Coverage has steadily increased, from just two per cent of news programs in the first half of this year to seven per cent since July 1 — making it the number three story overall—according to the Pew Research Center’s Project for Excellence in Journalism.
The ‘real trigger’ was the fraud-marred first round of the Afghan elections in August, said PEJ executive director Mark Jurkowitz.
Major news organisations are now regularly dispatching their star reporters to Afghanistan, and many have migrated directly from Iraq.
But for years, Afghanistan simmered on the back burner, contributing to a ‘big gap’ between the public’s perception of the war as a distant, low-level conflict and the true unfolding situation, said National Public Radio host Renee Montagne, who spent a month there in the summer.
‘People can make their own choice about whether or not a war should be fought, but they should be able to make it based on information,’ she told AFP.
‘The low level of coverage was very noticeable... We were fighting a war and it was the eighth year going into the ninth year and we were rarely there.’
Despite a spike of violence in 2008, Afghanistan accounted for just one per cent of media coverage, according to PEJ’s monitoring of a sample of 55 print, online, television and radio outlets.
‘We had conflicts in Iraq, we had conflicts in Afghanistan, a presidential race, the economy tanking,’ said ABC News senior foreign affairs correspondent Martha Raddatz, who has traveled a dozen times to Pakistan and Afghanistan, and nearly 20 times to Iraq.
Banglalink launches
‘babsha jigyasha 7677’
Business Desk
Mobile phone operator Banglalink and Katalyst, a project under ministry of commerce, launched ‘babsha jigyasha 7677’, a call center-based service to access business related information, on Monday.
Bangladesh Bank governor Atiur Rahman was present at the launching ceremony held in Dhaka as chief guest, said a news release.
Musharraf Hossain Bhuiyan, secretary of economic relations division of ministry of finance, and Feroz Ahmed, secretary of ministry of commerce, attended the programme as special guests.
Under the service, existing and potential SMEs will be provided solutions regarding access to finance such as SME business loan, deposits of different banks, and business documentation processes such as trade license, tax documents.
‘Babsha jigyasha 7677’ is a call center service which is accessible seven days a week, 24 hours a day, by dialing a short code 7677.
Dipon Gas wins ‘International
Star Award’
Business Desk
Dipon Gas Co Ltd, a Bangladeshi company, has recently won ‘the International Star Award in recognition of commitment to quality, leadership, technology and Innovation’.
According to a press release of the company, the director operations and chief executive officer Rashed Mahmud received the award in Geneva. Switzerland-based Business Initiative Directions International Quality Connection conferred the award on the Bangladeshi business entity.
Indian Oil Corporation, Reliance Infrastructure Ltd of India, Korea Electric Power Corporation, Tata of India, Turner Construction, builder of world’s tallest building, Burj Dubai, Russia’s electricity giant RAO, are some of the previous recipients of the award.
Ford posts surprise earnings
Agence France-Presse . Chicago
Ford Motor Co. on Monday posted surprise earnings of nearly a billion dollars in the third quarter and said it was on track to become ‘solidly profitable’ by 2011 after years of painful losses.
The number two US automaker swung to a profit of 997 million dollars from a loss of 161 million dollars the same period in 2008 as it continued to restructure to cope with slumping sales amid the worst global downturn in decades.
The profit amounted to 26 cents per share, a huge surprise to analysts who had expected a 12 cent loss.
The results came after Ford managed to increase market share in North America, Europe and South America and slash operating costs by 4.6 billion dollars in the first nine months of the year.
‘Our third quarter results clearly show Ford is making tremendous progress despite the prolonged economic slump,’ chief executive officer Alan Mulally said in a conference call with analysts and reporters.
‘While we still face a challenging road ahead, our transformation is working and our underlying business continues to grow stronger.’
Unlike rivals General Motors and Chrysler, Ford managed to cope with the economic crisis without resorting to bankruptcy protection or the need for billions of dollars in government aid.
Ford’s debt load after four years of restructuring has hit 26.9 billion dollars. It is also struggling to convince union members to grant the same concessions awarded to GM and Chrysler.
Mulally, who declined to comment on the status of the union negotiations, said the advantages of escaping bankruptcy and reliance on taxpayer money ‘clearly outweigh any potential disadvantages.’
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