BGMEA renews call for govt support
Staff Correspondent
The Bangladesh Garment Manufacturers and Exporters Association renewed its call for the government’s immediate support to apparel exporters to enhance their competitiveness to stay afloat in the post-recession global market and keep the country’s share intact in international clothing market.
A day after conclusion of the Bangladesh Apparel and Textile Exposition, the garment exporters’ club told a press conference on Monday that they found many potential buyers, but the prices they offer were the lowest in the world.
‘The number of foreign buyers has increased in this year’s BATEXPO. But most of the price offers were very low.’ said the BGMEA president, Abdus Salam Murshedy.
He said apart from Europe and USA—the traditional market destinations of made-in-Bangladesh garments— the fair this year saw a significant presence of buyers from Japan, Russia, Australia and South Africa raising their hopes for a better future.
Murshedy pointed out that a possibility of market diversification made them even more optimistic, as the industry suffered huge decline in apparel shipments to EU and US markets.
‘We noticed buyers’ eagerness to purchase, but the poor price offers have disappointed us,’ he said.
The leader of the garment exporters said local apparel exporters are not able to offer further discounts, as they are already operating at a breakeven point following earlier price cuts.
Faruque Hasan, vice president of BGMEA, mentioned that according to the report of the Export Promotion Bureau, export of readymade garments had declined by 27 per cent in September of the current fiscal year.
‘Several months back, the BGMEA predicted such a situation, but unfortunately that was overlooked by many quarters including the government,’ said Shafiul Islam Mohiuddin, another BGMEA vice-president.
Murshedy said that not only the Chinese, the Indian exporters are also taking away the large volume of orders that were supposed to come to Bangladesh.
Seeking policy support of the government, he called for immediate reduction on the cost of finance and development of industrial infrastructure.
Outage and low gas pressure are pushing up per unit cost of production significantly resulting in further erosion of competitiveness of local exporters, the BGMEA president said.
He urged the government to immediately release the stimulus fund to exporters, cut bank interest rate to single digit and reduce port charges.
It was disclosed at the briefing that spot order in the three-day BATEXPO stood at $40 million down by $16 million from 2008’s exhibition.
Some 140 foreign buyers visited the exhibition against 117 in the previous year. Over 2000 buyers’ representatives, stationed in Dhaka, also visited the fair.
BB’s Automated Clearing
House begins trial run
United News of Bangladesh . Dhaka
Bangladesh Bank on Sunday launched the trial run of newly introduced Automated Clearing House, as part of its move to digitalise the country’s banking system.
Under the new automated system, banks will not need to send their cheques physically to the clearing house at the central bank for effecting fund transfer. Now the banks can do the job online from their own offices using machine readable cheques and the funds will be transferred electronically.
However, the banks can also drop their cheques at the ACH at Bangladesh Bank where the machine can take image and data of 300 cheques per minute.
The new magnetic ink character recognition encoded cheques have already been introduced by different banks to integrate with the new system. The encoded cheques will reduce the cheque clearance time to only two hours from the two days required so long.
Initially, the new ACH will run for about 1100 branches of different banks within the Dhaka city. Gradually all the branches across the country will come under the new system.
Bangladesh Bank is implementing the ACH with $8.5 million financial support of the DFID, UK.
Formally launching the trial run of the new ACH system, Bangladesh Bank governor Atiur Rahman said the new system would take few months to be fully operational.
On the first day, three banks — Dutch Bangla Bank, Janata Bank and Dhaka Bank — commenced their online cheque clearing.
The BB governor said the trial run of ACH would continue until all the banks were ready to be integrated into the new system.
He noted that so far 35 of the 39 banks, both private and state-owned, completed all preparations to introduce the new system.
The central bank governor hoped that the rest of the banks will complete their preparations within few months to get the new ACH system fully functional.
He said the main benefit of the new ACH system will go to the business firms and to the remittance earners as they will get their payments within a day instead of waiting for days.
This will facilitate the online banking as well.
‘ACH system is based on latest state-of-the art technology. It’s a most secured system,’ he said.
The BB governor also said the existing clearing system would also continue alongside the new one.
He said the new automated system will contribute one per cent to the GDP through expediting the business transactions.
The function at the central bank was also addressed by deputy governor Ziaul Hasan Siddiqui, ACH project director Chowdhury Mohidul Haque and DFID Bangladesh chief Chris Austin.
A BRAC Bank press release on Sunday said the bank today starts the systems integration testing with the central bank for the Bangladesh Automated Clearing House.
BRAC Bank has been short-listed by the Bangladesh Bank for the BACH project to go live as a pilot basis. BRAC bank has been keeping the pace of developments to meet up the deadline of Bangladesh Bank, the release said.
Government to raise its
share in IDB
Asif Showkat
The government has agreed to pay $1.88 million to the Islamic Development Bank to raise Bangladesh’s shares in a window of the Jeddah-based lender to fill up capital inadequacy and get more loans.
The payments will be made in five instalments starting from December as planned by the Economic Relations Division, finance ministry officials said.
The finance ministry approved the proposal on Sunday.
The ninth board meeting of the IDB had advised Bangladesh to double its shares to 376 in ‘Islamic Corporation for the Development of the Private Sector’ to raise authorised and subscribed capitals in the multilateral lender’s private sector arm.
‘We have placed the ERD proposal to raise the government share in ICDPS before the finance minister. We need to raise our capital in the IDB to get more loans for private sector development,’ a senior official at the finance ministry said Thursday.
The first instalment would be paid in the first week of December.
The IDB said the government will have to increase authorised capital in ICDPS to two billion US dollar from one billion now while subscribed capital should be increased to one billion dollar from 500 million.
The government will have to pay $1.88 million to raise the subscribed capital to $1 billion from $500 million.
The closing date for the first instalment of $3,76,000 is December 2. The fund, equivalent to Tk 2.68 crore, will be bankrolled from the unexpected expenditure management fund kept aside in the 2009-10 fiscal budget.
ERD secretary Mosharraf Hossain Bhuiyan said the government would raise its share in ICDPS to take more private sector loans from the IDB, which has 54 shareholding members.
‘We hope more IDB credit will be used for improvement in the country’s private sector,’ he added.
The government recently signed four agreements with the Islamic Development Bank to borrow $744 million at a high interest rate to ward off possible impacts of the global recession.
Of the total, $500 million has been lent under the Counter-Cyclical Support Facility.
Besides, the IDB has disbursed $1.5 billion credit to Bangladesh for yearly basis to procuring fuel oil from the Middle East.
Yunus sees global crisis
to change business
Agence France Presse . Wolfsburg
Nobel Peace Laureate Muhammad Yunus calls the global economic crisis ‘an excellent opportunity to reflect and redesign’ businesses, and devote creative ones to solving social problems.
Yunus, who with his Grameen Bank—which gives tiny loans to the very poor to help start businesses—won the 2006 Peace Prize, told media here on Saturday: ‘Any problem has a potential of being addressed with a social business.’
‘Social business being a business where you don’t make money,’ he explained. ‘Zero profit for the investors.’
The ground-breaking ‘microcredit’ banker from Bangladesh is backed by corporations like food giant Danone, global water group Veolia, sportswear company Adidas, software pioneer SAP and academics at Kyushu University in Japan.
The first Global Grameen Meeting of companies, foundations, think-tanks, scientific experts and other institutions was hosted by Europe’s largest carmaker Volkswagen at its headquarters in Wolfsburg, northern Germany.
Grameen is a Bengali word for village, and ‘was chosen to indicate that big projects may start small,’ a statement said.
The forum’s ambitious goal is to eliminate poverty by 2030 in both the developing world and advanced economies.
Ideas that sprouted on the Indian sub-continent are being transplanted in Germany, Europe’s biggest economy, and in France, where Danone will draw on its experience with Yunus in Bangladesh to launch a project for the poor in Paris.
‘It’s really a source of inspiration,’ Danone representative Emmanuel Faber told a press conference in the company of Yunus and the other groups.
British investors in city to
explore business opportunities
Staff correspondent
A group of British investors is now in the city on a four-day visit to explore business opportunities ranging from ship building to perfume distribution.
‘Bangladesh-born and non-Bangladesh British investors have started visiting Dhaka to explore the possibilities of investment here,’ Shahgir Bakth Faruk, chairman of British-Bangladesh Chamber of Commerce, said at a press briefing on ‘accessing international markets’ in Dhaka on Sunday.
They will hold meetings with ministers and local business leaders during their visit that started on Saturday.
Shahgir Bakth said it is an opportunity to be invited for investing in Bangladesh. Bangladeshi businessmen can also go to London to find out scope of business there, he added.
He suggested that investors should abandon their old investment ideas, saying, ‘Change is now taking place in Bangladesh. Gone are the days when we had only a few traditional items— jute, tea and leather— to trade. Bangladesh is a country that now exports bicycle, electronic goods and software…We are here to put everything in the reverse gear.’
Faruk said last year BBCC showcased Bangladeshi products in the UK and this time around they are showcasing British products in
Bangladesh.
Currently UK’s investment in Bangladesh amounts to 1.5 billion to 2 billion pounds sterling.
M Abdur Rouf of London Property Parnership stressed the need for creating ‘right environment’ to open up opportunities for investment. ‘May be big, may be small, every penny (in investment) helps,’ he said.
He said Bangladesh-born British citizens run 3.5 billion pound curry industry in the UK. ‘But we don’t get Bangladeshi materials for the industry. Eighty per cent of the materials are imported from India although we have no reason for not buying products from Bangladesh if the quality and packaging are of European standard,’ he said.
SM Ishtiaque Hussain of Maritimus Ltd said his company is in the process of developing a shipyard in Narayangang as there is a huge demand of Bangladesh-made ocean going ships. ‘Bangladeshi workers acquired European standard skills in shipbuilding and the low wage of workers here has given investors a comparative advantage,’ he said.
He said the Maritimus Ltd is also planning to establish a marine academy in Bangladesh to train local people in building ships.
Sheikh Nurul Islam Jitu of Probashi Palli UK Ltd said they were planning to construct a five-star hotel in Bangladesh.
Kevin Ringham, director of UK Trade and Investment, estimated that the investors who are visiting Dhaka are likely to invest about 100 million pound.
Jahangir Kabir Chowdhury of Water Lily Limited, Khurshed Alam of AOC International, Ranjana Chowdhury of Spice on Green and Brian Dent of UK Trade and Investment Department also spoke at the briefing session.
HC withholds ruling on
MF rights shares
Bdnews24.com . Dhaka
The High Court withheld on Sunday a verdict given the same day, which allows mutual funds to issue rights and bonus shares, for seven days.
The move was made after pleas from lawyers defending the Securities and Exchange Commission that barred mutual funds issuing rights and bonus shares through an amendment.
The verdict, however, had said that the ruling would be applicable only on the mutual funds that were listed when the amendment was done on July 22, 2008 by the SEC, said M Zahir, the counsel for the petitioners.
‘The High Court ruling also gave SEC the power to approve the issuance of right or bonus shares,’ he told reporters at the HC premises.
SEC’s lawyer Mahmudul Islam asked for the halt as they would appeal against the verdict, added Zahir.
On July 22, 2007, the SEC amended the rule regarding mutual funds where it prohibited mutual funds to increase its paid up capital through issuing rights shares.
The decision also barred mutual fund operators to issue bonus shares as dividend.
An SEC spokesperson then told the press that the move was to remove the ambiguities in the rule.
‘There are some ambiguities in the rule about mutual funds,’ said SEC executive director Farhad Ahmed.
COMCEC summit aims at increasing
intra-OIC trade
Bangladesh Sangbad Sangstha . Istanbul
The Economic Summit of the COMCEC (Standing Committee for Economic and Commercial Cooperation) of the Organisation of Islamic Conference begins in Istanbul today aiming at increasing intra-OIC trade volume amid the ongoing global economic recession.
The Summit will be participated by a number of Heads of State of the OIC member countries including Bangladesh president Zillur Rahman while Turkish resident Abdullah Gul, who is also the chairman of COMCEC, will preside over the summit.
Meetings of the COMCEC are traditionally held with the participation of the ministers of the OIC member-states in charge of finance and trade. This year, in commemoration of its 25th anniversary, the COMCEC has arranged the economic summit to be attended by a number of heads of state and government for the first time.
During the summit the heads of state and representatives of the OIC member states will evaluate the activities of past 25 years of the COMCEC and also discuss and adopt the future strategy of economic cooperation among the 57 OIC member countries.
In addition to the regular agenda, current international issues like global economic crisis, energy issues and food security will also be discussed in the meeting.
President Zillur will address the summit with other heads of state and government of Muslim countries and is expected to raise the issues related to adverse affects of climate change and various aspects of the global economic crisis.
Throughout its 25-year history, the COMCEC has launched or finalised comprehensive projects in several fields of economic cooperation such as establishment of OIC trade preferential system, trade financing and promotion, investing guarantee and harmonisation of standards, Director General of International Organisation of the Foreign Ministry Mohammad Ali Sarcar told the news agency.
The Bangladesh government has already decided to ratify the preferential tariff scheme and the commerce ministry is working on evaluating the rules of origin, he said.
This kind of multilateral summit would help to increase the trade and commerce relation between south and south, he said.
Mineral export can fetch
Tk 12,000cr: experts
Bangladesh Sangbad Sangstha . Cox’s Bazar
Bangladesh has deposits of at least 1.74 million tonnes of minerals worth over Tk 12,000 crore in the beach sand of vast areas stretching from Najirtek of Cox’s Bazar Sadar to Teknaf, experts said.
‘The total amount of mineral deposits in the beach sand is estimated to be 4.4 million tonnes. The actual heavily rich minerals are around 1.75 million tonnes,’ said former chairman of Bangladesh Atomic Energy Commission Anwar Hossain.
He said the price of the mineral deposit could be realized through exports which have high demand in the global market.
The valuable mineral sands mostly zircon, ilmenite, magnetite, garnet and rutile could be extracted on a commercial basis from the vast areas stretching from Najirartek of Cox’s Bazar sadar to Teknaf, he said.
The Australian government has evinced keen interest to invest in the sector as newly appointed Australian ambassador to Bangladesh Justin Lee conveyed his government’s willingness to state minister of forest and environment of Bangladesh Hassan Mahmud.
Taking the Australian government’s zeal in this regard, the ministry of power and energy of Bangladesh already formed a nine-member committee headed by a joint secretary of the ministry to see the matter. Joint secretary Ashraf Ali Khan is the convener of the committee.
Ashraf Ali told the agency that an Australian company named Premier Minerals had offered an initial investment of Tk 400 crore for extracting zircon, an expensive mineral resource. But, he said the government is trying to pursue the Australian company for six resource items.
The company would place a report before the government and it will give necessary permission to extract the mineral resources, he said adding that the government will consider it on the basis of the report. The committee convenor said they would bargain with the company about price fixing.
In an initial survey, Ashraf said it was found that each ton zircon is worth about Tk 60,000 and others on an average Tk 6,000.
The mineral resources were first found in Cox’s Bazar in 1960s and later Bangladesh Atomic Energy Commission started diverse researches.
During early 1970s, a study conducted by the Australian government suggested the Bangladesh government set up a pilot plant in Bangladesh.
Probable extraction saw some development as a pilot plant with the support of the Australian government was set up in Cox’s Bazar in 1975 for segregation of mineral resources from sea beach.
BAEC scientists recommended the government set up another plant on a commercial basis but no progress was made so far.
Talking to the agency, scientific officer M Moshruzzaman of Sea Beach Extraction Centre in Cox’s Bazar said the mineral resources are now being extracted on an experimental basis and these resources are being sold too on a small scale as per the demand of various organisations in Bangladesh.
Locals expressed their opinions in favour of extraction of the valuable mineral resources saying that a number of new industries would be set up in the sea-resource areas generating jobs if the government take any step to extract the resources on a commercial basis.
On the contrary, the department of environment of the ministry of forest and environment termed the anticipated extraction of mineral sands as not environment-friendly and said it might jeopardise the environment.
But, said the DoE sources, there is still hope that the rich mineral resources would be extracted keeping the environment safe and secure.
Prime Islami Life gets new DMD
Business Desk
Habibur Rahman has recently been promoted to the post of deputy managing director of Prime Islami Life Insurance Ltd.
Prior to the new assignment, he was the senior executive vice-president and company secretary of the insurance company, said a news release.
Habibur started his career in insurance sector in 1987 with Janata Insurance Ltd. Later he joined Fareast Islami Life as first company secretary. In 2001, Habibur joined Prime Islami Life Insurance Ltd as company secretary.
Treasury bills auction
held in Dhaka
Bangladesh Sangstha . Dhaka
Auction of 91-day and 182-day treasury bills was held in Dhaka on Sunday.
A Bangladesh Bank news release said Tk 573.00 crore and Tk 427.10 crore were offered respectively for the 91-day and 182-day bills.
Of those, Tk 53.50 crore was accepted and Tk 446.50 crore was devolved on primary dealers for the 91-day bills.
No bid was accepted for the 182-day bill. The rate of the implicit yield of the accepted bids was 2.30 per cent per annum, the release said.
Asian currencies mixed
on weak US data
Agence France-Presse . Hong Kong
Asian currencies ended the week mixed against the dollar as concerns over the health of the US economy continued to depress market sentiment.
The yen firmed against the dollar as worries over the US economy’s tentative moves out of recession lifted demand for the safe-haven Japanese currency, dealers said.
The Australian dollar took a sidestep as some of the shine came off the global economic recovery and volatility returned to markets, dealers said.
The commodities-based Aussie closed Friday at 91.36 US cents, down from 91.45 US cents a week earlier.
The New Zealand dollar finished local trading Friday at 72.25 US cents, down from 73.24 the previous week.
The kiwi fell midweek on news that New Zealand’s unemployment rate rose to a nine-year high of 6.5 percent in the September quarter.
The yuan closed at 6.8273 to the dollar Friday on the over the counter market, compared with Thursday’s close of 6.8276, and a closing price of 6.8275 to the dollar the week before.
CORPORATE DISCLOSURES
UCL raises size of mutual fund
Business Desk
Union Capital Limited has informed that the board of directors decided to enhance the fund size of UCL 1st Mutual Fund from existing Tk100 crore to Tk120 crore the structure of which will be as follows: Total fund size: Tk120 crore, sponsor Tk15 crore (12.5 per cent), pre-IPO placement: Tk 45 crore (37.5 per cent) and IPO Tk 60 crore (50 per cent) subject to the approval of SEC.
Agni Systems
Terra Bangladesh Fund Limited, one of the corporate directors of the company, reported its intention to sell 1,00,000 shares out of its total holdings of 33,70,560 shares of the company at prevailing market price through the stock exchange within next 30 working days.
LankaBangla Finance
SSC Holdings Limited, one of the corporate sponsors/directors of the company, reported its intention to sell 50,000 shares out of its total holdings of 10,00,000 shares of the company at prevailing market price through the stock exchange within next 30 working days.
Information Services Network
Asheq Ul Islam, one of the sponsors/directors of the company, reported his intention to sell 10,000 shares out of his total holdings of 12,650 shares of the company at prevailing market price through the stock exchange within next 30 working days.
Olympic Industries
The board of directors has recommended 10 per cent cash dividend and 20 per cent stock dividend for the year 2008-2009. Date of AGM: 17.12.09, Time: 10:00am, Venue: Factory premises of the company at Kutubpur, Kanchpur, Bondar, Narayanganj.
Fu-Wang Ceramic
The company has informed that the board of directors recommended for raising paid up capital by issuing right share at 1R:2 i.e. one right share for every two shares at Tk125 each (including premium of Tk 25) on paid up capital (after consideration of 10 per cent stock dividend for the year 2008-2009) subject to approval of shareholder in the EGM, SEC and other regulatory authorities. Date of EGM: 27.12.09, Time: 9:30am., Venue: National Shooting Complex, Gulshan-1, Dhaka-1212. Record date for EGM: 25.11.09.
Orion Infusion
The board of directors recommended 12.50 per cent cash dividend for the year 2008-2009. Date of AGM: 10.12.09, Time: 9:00am, Venue: Bangabandhu International Conference Centre, Agargaon, Sher-E-Bangla Nagar, Dhaka. Book closure: 22.11.09 to 10.12.09.
APEC sees US-China reversal
in fortunes
Agence France-Presse . Singapore
In the 20 years since its launch, the Asia-Pacific’s top economic grouping has witnessed a stunning realignment with China on the march and the United States mired in crisis.
President Barack Obama heads to Singapore for this week’s annual Asia-Pacific Economic Cooperation (APEC) meeting with the US recovery painfully slow, the dollar on shaky ground, and US diplomatic standing in need of repair.
Unlike the United States, China was not a founding member of APEC when the club was launched in November 1989 — five months after the violent Tiananmen Square crackdown made the Asian country an international pariah.
When it did join in 1991, China was still in transition from a centrally planned economy, but is now striking an increasingly confident pose on the world stage.
Poised to become the world’s second-largest economy, it is exerting its influence everywhere—financing America’s debt, becoming a top buyer of natural resources, and making its voice heard on major diplomatic issues.
But despite its reduced circumstances, the United States has a long history of leadership in the region and is still the major marketplace for goods produced by export-dependent Asia-Pacific nations.
‘We believe America plays an indispensable role in Asia in many fields—economic, political, strategic, security,’ the APEC host, Singapore Prime Minister Lee Hsien Loong, said last week.
‘We’ve been talking about a multipolar world, but de facto the US is the most powerful nation in the world and will be so for some time to come,’ said Lee, who will welcome 20 other leaders for the November 14-15 APEC summit.
Lee’s comments came amid debate about the US role in various proposed free-trade zones and economic communities, including a Japanese-sponsored East Asian Community in which Washington’s involvement is unclear.
Charles Morrison, president of the East-West Center in Hawaii, said regional nations were content with the current balance in US-China relations.
‘Asian nations don’t want to make choices and so they’re very comfortable in the framework where the US and China get along together,’ he said.
‘But it’s a very natural thing that, if you’re a smaller power, you want to be able to play off to some extent the larger powers but don’t want a conflict that forces you to take sides.’
Morrison said the United States also carries into this APEC summit the trump card of a ‘very articulate, popular young leader’ in Obama, whose debut presidential tour of Asia will take him to China after Singapore.
Huang Yiping, professor of economics at Peking University in Beijing and a former chief Asia economist with Citigroup, said China would face challenges as it begins to exert its influence more heavily.
‘Obviously the economy is growing significantly and its influence is rising very rapidly.
‘But the issue China will have to deal with is whether or not we are ready to play a leadership role in regional or global affairs and that’s something I think we need to be a bit careful about,’ he said.
‘As a decision-maker you have to make choices. The strategy the Chinese government adopted 30 years ago was that we just want to focus on economic development and we don’t want trouble.
‘Going forward there may be some difficult stages for China as well.’
‘Made in China’ now made in Egypt
Agence France-Presse . Port Said
With cheap labour, investment incentives and unrestricted exports, one Chinese textile group has turned to Egypt as an ideal location to produce its ready-made garments, beating stiff competition at home.
The Chinese-owned Nile Textile Group has set up shop in the Port Said free zone, overlooking the north entrance of the Suez Canal, and developed an industrial estate now hiring 600 workers, 20 per cent of which are Chinese and the rest Egyptian.
Cheap raw materials and favourable export conditions have given the company easy access to foreign markets.
It’s a bargain for the Nile Textile Group, which imports 60 per cent of its basic products tax free and then sends them outside Egypt, mainly to the United States.
Most of their cut-price clothes are now labelled ‘Made in Egypt’ rather than ‘Made in China’.
‘Egyptian free zones allow for export all over the world with almost no restrictions,’ said Mohammed Abdel Samie, the industrial estate’s administrative director.
Local salaries are low enough to compete with those of Chinese workers, even with a system of bonuses offered to the Egyptian workers at the end of each month.
‘In the factories where salaries are fixed, we earn a maximum of 700 to 800 Egyptian pounds (around 130 to 150 dollars) a month. In this company, it works out better for us,’ said factory manager Mansur al-Said.
In the neon-lit factories, Egyptian workers in headscarves work side by side with Chinese technicians in white blouses to the thumping sounds of the sewing machines.
Instructions are posted in Arabic and in Chinese.
As for the daily communication between colleagues, a little extra work was required.
‘They taught me a few words of Chinese and they are learning Arabic,’ Leila Ali, a seamstress, told AFP.
Around 950 Chinese companies have set up operations in Egyptian free zones, representing a total investment of nearly 300 million dollars.
Most of them work in industry (526 companies), 306 companies are in the service industry, 31 in the agricultural sector and eight in tourism, according to Egypt’s General Authority for Investment (GAFI) which oversees free zones in the country.
It is hoped the Forum on China Africa Cooperation (FOCAC), which kicks off on Sunday in the Red Sea resort of Sharm el-Sheikh and attended by about 50 states, will speed up the rhythm with the signing of a Chinese-Egyptian agreement to encourage more investment in the country.
The meteoric increase in economic cooperation between China and Africa in the last few years will be at the heart of the summit, which will be attended by Chinese Prime Minister Wen Jiabao and Egyptian President Hosni Mubarak.
India’s growing telecom
hits rough water
Agence France-Presse . New Delhi
India is still adding a staggering 15 million new mobile phone connections a month but the world’s fastest-growing cellular market has hit rough waters.
A cut-throat price war is hammering down call charges, putting pressure on telecom companies’ earnings and share prices, and threatening a bruising shakeout in a sector that has become crowded with new players.
‘The tariff reductions are hitting revenue growth and with new entrants, there’s less to go round for everyone,’ said Religare Securities analyst Himanshu Shah.
Top Indian mobile phone firm Bharti this month announced a lower-than-expected 13-per cent rise in quarterly net profit from a year earlier while profits halved at number two operator Reliance Communications.
Competition was already fierce but has become even more aggressive as new players unleash deeper price cuts with innovative per-second billing plans that have pushed call costs down to less than a cent a minute.
Some operators are offering rates as low as 0.01 rupees a second, or a fraction of a US cent.
The per-second billing was kicked off in June by the entry of Tata DoCoMo, a joint venture between India’s Tata Teleservices and Japan’s NTT DoCoMo.
‘We’ve seen a wave of price cuts,’ said Shubham Majumder of Macquarie Research. ‘Definitely there’s downside pressure.’
Signs of the trend can be seen in the fall in average revenue per usage or ARPU—an industry profitability measure—which shows the amount companies make for every minute a client talks.
Reliance Communications’ ARPU for the second quarter ending September slid 23 per cent from the preceding quarter while Bharti’s ARPU fell 9.4 per cent.
Akhil Gupta, deputy chief executive of Bharti Airtel’s parent, Bharti Enterprises, said the sector had been afflicted by ‘irrational pricing’.
The ARPU drop reflected the rock-bottom tariffs as well as companies’ growing reliance on lower-spending rural customers as they push deeper into India’s hinterland to grow revenues.
Total telephone penetration, including landline and mobile phones, in the country of nearly 1.2 billion stands at 43 per cent—up from 2.8 per cent in 2000 and testimony to the telecom sector’s blistering growth.
India added 14.98 million new phone customers in September, pushing the number of users to over 500 million — 15 months ahead of a government target for reaching the milestone.
The boom in phone connections has been overwhelmingly driven by cellular services, with mobile customers comprising 40.31 per cent of the 500 million telephone users.
India is the second-biggest cellular market, lagging behind only China, which has over 600 million users.
Urban mobile markets are already saturated but there are still hundreds of millions of customers to be signed up in rural areas—a tantalising prospect for new entrants that see India as one of the few global growth areas.
India invites foreign
investors under reform
Agence France-Presse . New Delhi
India’s premier rolled out the welcome mat for foreign investors Sunday, promising to step up economic reforms to draw global funds and put the country on a high growth path.
Prime minster Manmohan Singh, speaking to a blue-chip international economic summit, said policy would be guided by the desire to create ‘an investor friendly environment.’
India had attracted foreign direct investment of more than 120 billion dollars since 2001-02 but more was needed to develop its vast economy, he told a World Economic Forum meeting in New Delhi. ‘You are all welcome in our efforts,’ he told 600 delegates from around the world, adding that the government wanted to push through reforms to make the country more attractive for investment.
‘We need to strengthen our financial system in various ways to make sure it can provide what is needed for our development,’ he said, promising to open up insurance and other financial sectors more aggressively to generate funds. Since winning a decisive re-election victory in May, the Congress-led government has been able to pursue reforms blocked in the last parliament by communist opposition.
He said the government was aiming for 6.5 per cent growth in this fiscal year to March 2010 despite the worst monsoon in nearly four decades that has hit agriculture, and he forecast ‘over seven per cent’ expansion next year.
CORPORATE NEWS
MTB, BB sign green
project agreement
Business Desk
Mutual Trust Bank Ltd signed a participation agreement with Bangladesh Bank at BB head office recently.
Under the agreement, MTB will get refinancing facility for lending its customers for setting up sustainable energy projects such as solar-energy projects, bio-gas and effluent treatment plants, says a news release. The loans will be distributed among the borrowers through MTB branches and SME service centres across the country.
MTB managing director and chief executive officer Anis A Khan and Bangladesh Bank executive director Md Abul Quasem signed the agreement.
Bangladesh Bank governor Atiur Rahman, deputy governor Md Nazrul Huda and MTB deputy managing director Ahsan-uz-Zaman were also present on the occasion.
Katalyst, AIS sign deal
on info dissemination
Business Desk
Katalyst, a project under the ministry of commerce, has signed a memorandum of understanding with Agriculture Information Service to disseminate agriculture information.
M Nazrul Islam, director of AIS, James Blewett, general manager of Katalyst, and Peter Grüschow, president of Swisscontact, signed the agreement on Thursday in Dhaka, said a news release.
Under the agreement, the two entities will manage, collate and store agricultural information, disseminate those through organising national-level workshops, facilitate improved coverage of agriculture-related activities by the electronic media through collaboration with the media vehicles, and develop and promoting a national crop zoning calendar based on crop profitability, soil fertility and risk vulnerability.
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