at capital weekly 21 december 2008

8/14/2019 At Capital Weekly 21 December 2008

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21December2008AT CAPITAL RESEARCH

EDITORS

Ifty IslamManaging [email protected]

Syeed [email protected]

Jisha SarwarSenior Research [email protected]

Asian TigerCapital Partners

UTC Building, Level 168 Panthapath, Dhaka-1215BangladeshTel: 8155144, 8110345Fax: 9118582

www.at-capital.com

ATCapitalWeeklyUpdate

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Keythemesinthisissueare:BangladeshOverview:BangladeshOverview:BangladeshOverview:BangladeshOverview:

Bangladeshsparliamentaryelectionisscheduledfor29December2008.33politicalpartieswillfieldcandidatesin300constituenciesacrossthecountry.

Webelievethemovebacktodemocracywillseeariseindomesticspendingandprovideawelcomeoffsettotheongoingglobaleconomiccrisisthatmaydragonexportsandremittances.Wealsoexpectthatpropertypriceswillreceivea boostwithpotentialfundreallocation away from thestockmarketbacktorealestate.

TheAwamiLeagues(AL)shareofthepopularvotewasaround40%in2001,whentheBNPwoninalandslide,with 193out of300 seats toALs 62.However, this time, 37%of voters areconsideringvotingforadifferentpartythanin2001,accordingtoanopinionpollcarriedoutbyACNielsen.

Thecriticalissuetoensureapeacefulandsustaineddemocracy,andavoidingthereturntothehartalsandstreetviolencethathadsucha detrimentalimpactontheeconomyinpreviousgovernments,isthatbothsidesacceptthattheelectionhasbeentransparentandfair.

It isencouraging thatboththe ALand BNP partieshavegiven a lotmoreimportance toeconomicissuesintheirrecentlypublishedmanifestosthantheyhaveinthepast.

AL manifesto underlines the following: (a) maintaining price stability and ensuring for the poor areasonable price forfood(b)maintainingmacrostability inthe faceofglobalrecession(c) effectivestepsagainstcorruption(d)generating5000MWelectricitywithinthenextthreeyearsand7000MWby2013,and(e)povertyreductionthroughinducingdynamisminagriculturalandrurallife.

TheBNP prioritizes the following: goodgovernance, poverty alleviation, employment creation, andmakingdemocracymoreeffective.

Bothsideshaveagreedthatthecountrysacuteenergyshortageisoneofthebiggestimpedimentstoeconomic growth. Both manifestos have addressed this issue. The AL has outlined targets forenhancing generation capacity, to 5000MW by 2011, and 7000MW by 2013. These are fairlyconservative targets giventhat current demand is estimated at around 5500MW, and rising. Bothparties want to set up small power plants for quick implementation. The BNP has committed toawardingcontractsforBibiyana450MWandSirajganj450MWpowerstationswithin100daysoftakingcharge.Bothpartiessupportexplorationfornewgas,oilandcoal,withtheALalsosuggestingitwillseektomoveforwardontheRooppurNuclearPowerproject.

GlobalOverview:GlobalOverview:GlobalOverview:GlobalOverview:

The scaleof the global financial crisis was underlined bythe decisionlastweek madeby the US

FederalReserveto followJapanintotheeraofZero-InterestRatePolicy(ZIRP).TheFedcutpolicyinterestratestozero,ormorespecificallyagreedtotargetratesina0-0.25%range.

AlthoughtheUSDollarhasweakenedsharplyto1.44versustheEUR,theslowresponseoftheECBonrateswillneedtobereviewedastheEuropeandownturngathersmoremomentumandthecollapseincommoditypricesincreasestheriskofEuropeandeflation.

OilpricesthisweekplungedtotheirlowestlevelsinceFebruary2004.ThebenchmarkUScrudepricesankbelowtheUSD33-a-barrellevelonFriday.NymexJanuaryWestTexasIntermediatedroppedtoUSD32.40,anearfive-yearlow,beforerecoveringtosettleatUSD33.87,down26.8%thisweek.

According to the Institutefor International Finances(IIF) global economic forecast,World GDP isexpectedtodeclineforthefirsttimeinrecenthistoryin2009withaprojectedfallof0.4%,aftera2%gainthisyear.

ATCwillnotbepublishingaWeeklynextweekduetoATCwillnotbepublishingaWeeklynextweekduetoATCwillnotbepublishingaWeeklynextweekduetoATCwillnotbepublishingaWeeklynextweekduetothethethetheChristmasholidays.Christmasholidays.Christmasholidays.Christmasholidays.MerryChristmas!MerryChristmas!MerryChristmas!MerryChristmas!

AsecondstimuluspackagemightbeneededtohelpkeeptheU.S.economyafloatAsecondstimuluspackagemightbeneededtohelpkeeptheU.S.economyafloatAsecondstimuluspackagemightbeneededtohelpkeeptheU.S.economyafloatAsecondstimuluspackagemightbeneededtohelpkeeptheU.S.economyafloat


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21December2008 AT CAPITAL RESEARCH

_______________________________________________________________________________________ATCapitalWeeklyUpdate 2

Contents Page

BangladeshOverview

ElectionBackground 4

TheManifestos 4

ALmanifestosfortheenergysector 5

BNPmanifestosfortheenergysector 5

ATCComment

6

GlobalMarketsOverview

MadoffCrisistopstheworstyearsincetheGreatDepressionfortheFinancialSector 7

Fedcutsratestozero 7

OilpricescollapsecontinuesdespitelargeOPECproductioncuts 8

IFforecastsglobaleconomytocontract0.4%in2009 8

ProfessorNiallFergusononaradicalsolutiontothecurrentglobalcrisis 8

TheageofObligation 9

StockMarketWeekly

12

WeeklyStockMarketCommentary 13

StockmarketNews 15

Economics 17EconomicsNews 18

SectorNews 20Agriculture/Banking/Infrastructure&Energy 20

LeatherGoods 21

Pharmaceuticals/Telecoms/Textiles 22

Appendices 23AwamiLeagueManifesto 23

BNPManifesto 27


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BangladeshOverviewBangladeshOverviewBangladeshOverviewBangladeshOverviewBangladeshs parliamentary election is scheduled for 29

December2008. 33 political parties will fieldcandidates in300constituenciesacrossthecountry.On22January2009voterswillelect486upazila(sub-district)councils.Some81millionpeopleareeligibletovote;inrecentelectionsturnouthasbeenaround75per cent.Withjustoveroneweekleftbefore the parliamentary elections, it looks likely thatBangladeshwillreturntoanelecteddemocracy intheNewYear.The International CrisisGroup (ICG) published a thought-provoking Report on Dec 11 Bangladesh Elections andBeyond(AsiaPolicyBriefingnumber84).Theynotedthat,anumberof factorscouldadverselyaffect theelectionsandtheir aftermath. Although the election lawsmake electoralmalpracticemore difficult, theElectionCommission (EC)has been reluctant to enforce them. Allegations of rigging

couldsparkapartyboycottorpoliticalviolence;thecontinuedemergencycouldpromptrejectionof results. Technical flawsonelection daywith ballots orthevoter roll couldcause adelayorrequirere-pollinginsomeareas.IndeedBNPleaderKhaledaZiaexpressedconcernsaboutbiasintheEC.TheDailyStaronDec20reportedherassaying, thatanysortof'election engineering' in the upcoming parliamentary pollswouldbringdireconsequencesinthecountry.Thelikelihoodisthatapeacefulreturntoelectedgovernmentwill likely see a boost todomestic investment spending asprojects that have been postponed or curtailed due topolitical uncertaintyareresumed. TheAnti-corruption drivehadlaudableaimsandbothpartieshavecommittedintheirmanifestos to avoiding a return to the systematic andwidespreadcorruptionthatdoggedpreviousadministrations.

Butthebreadthoftheanti-corruptiondriveoftheCaretakerGovernment (CTG) also, undoubtedly, saw greater riskaversion in the business community which in turn sawsharplyreducedinvestmentspending.Webelievethemovebacktodemocracywillseeariseindomesticspendingandprovide a welcome offset to the ongoing global economiccrisis that may drag on exports and remittances.We alsoexpectthatpropertypriceswillreceiveaboostwithpotentialfund reallocation away from the stockmarket back to realestate. The Anti-corruption drive had appeared to targetapartmentpurchases to a greater extent thanstockmarketinvestments. This may have been one factor, along withlimited overseas participation, that has left the DSE moreresilienttothecollapseinotherEMequitiesseenin2008.TherearenoofficiallypublishedopinionpollsalthoughtherehasbeenapresumptionthattheBNPhasbeenhamperedbyinternaldivisiontoagreaterextentthantheAwamiLeague.TheLeaguesshareofthepopularvotewasaround40%in2001,whentheBNPwonina landslide,with193outof300seatstotheLeagues62.However,thistime,37%ofvotersare considering voting for a different party than in 2001,accordingto anopinionpollcarried outby ACNielsen.TheBNPclaimedlasttimetohaveattractedthevastmajorityoffirst-timevoters,butlittleisknownaboutthepreferencesof

26mn new voters this time. In all, nearly a quarter of allvotersareundecided.TheICGReportwentontonotethatKeepingthemilitaryinthe barracks will require the new government and theoppositiontoseekaccommodationwitheachotherandthearmy.DialoguewiththeCTGhasdemonstratedtothepoliticalpartiesthattheycanadvancetheirintereststhroughpeacefulnegotiations. If civilian rule is to succeed in Bangladesh,cooperationmust be placedbefore confrontation. A return tozero-sumpoliticsbythepartiescouldbeanexcuseforthearmystepinyetagain.The general election is likely to be the most closelyobservedinthecountryshistory,withover165,000domesticobservers, primarily from the Election Working Group(EWG),whichwillalsofieldaround42,500observersfortheupazilapolls.Around330EUandU.S.observers,aswellasorganisations such as the Asian Network for FreeElections,will also bepresent.TheUNhas sent ahigh-levelexpertmissiontoassesspreparationsbutwillnothavea formal observation role. Domestic and internationalmonitoring can provide an objective and independentassessmentofthevoteandcount.The ICG report noted that inits first days,thenew gover-nment and par liament will be faced with a ser ies ofchallenges. The constitution requires the next parliamentwithin its first 30 days to vote on presidential ordinancesissued during the emergency.

1 This is likely to be

contentious. The major parties may well endorse theordinances,manyofwhich,suchasthereconstitutionoftheElection Commission and thePublic Service Commission,arepopular.However,anendorsementofCTGreformsisnotthesameasacommitmenttocontinuetheprocess.Equallyimportant andequallycontentious willbe theformationof

parliamentary committees, which should have meaningfulbipartisanparticipation, including the appointment of someoppositionchairpersons.Thepartiesownculturesarekey.Aformer Awami League parliamentarian said, If we cannotpracticedemocracywithinourownparty,thereislittlehopethattheparliamentbeanydifferent.

2

Oursenseisthattheelectionsmaybeclose.Butthecriticalissue toensure a peaceful and sustaineddemocracy, andavoidingthereturntothehartalsandstreetviolencethathadsuch a detrimental impact on the economy in previousgovernments,isthatbothsidesacceptthattheelectionhasbeentransparentandfair.Inaddition,it isimportantthatwemove to a genuine parliamentary democracy where theoppositionhasmeaningfulrightsandan ability toinfluencethedirectionofpolicythroughparliamentarycommittees.Any

returntoexcessivecentralisationofpowerintherulingpartyrisks an unstable equilibrium where the opposition feelscompelledto taketo streetstomaketheirvoiceheard.ForBangladesh tomoveaheadto thenext phase of economicgrowth,itiscriticalthisisavoidedatallcosts.

1When parliament is adjourned (as it currently is) presidential ordinanceshave the same weight as acts of parliament and are valid until one month after

an elected parliament begins to function.2Crisis Group interview, Dhaka, 3 November 2008.

IftyIslam,[email protected]


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ElectionBackgroundElectionBackgroundElectionBackgroundElectionBackground

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Twoparties,theAwamiLeagueandtheBNP,dominatethepoliticallandscape.

4SmallerpartiesliketheJamaat-eIslami

andtheErshadfactionoftheJatiyaPartycanplayimportantrolesasking-makersinpartyalliances.Politicalallegiancestotheseparties are strong, andeach hasbecomeasource ofsocial and financial security for their supporters. Partycoalitions and seat-sharing calculations (the division ofconstituencies betweenalliancepartners)willbeimportant.Underthefirst-past-the-postsystemitisthenumberofseats,notthe%age of thevote thatcounts.ABNP-led four-partyalliancewonacomfortablemajorityin2001(taking214seatsout of300)eventhough the AwamiLeague and its alliesreceivedmore votes.For the smaller partiesin particular,the negotiationwith alliance partners over the seats theycancontest howmanyandhowwinnabletheyare isasimportantastheelectionitself.AwamiLeagueAwamiLeagueAwamiLeagueAwamiLeagueThe Awami League will lead a coal ition of fourteenlikeminded parties into the election. The coalition is moresymbolicthansignificant;noneoftheothermemberswonseats in the last parliament. Tomaximise its chances ofwinning,theAwamiLeaguehasformedanelectoralorgrandalliance which includes the fourteen-party coalition and thethreeotherparties, theLiberalDemocraticParty,the JatiyaParty-ErshadandafactionoftheIslamistpartytheIslamiOikyaJote.

5

AstheICGreportnotesIfelected,theAwamiLeaguesaysitwillratifyinonestrokeofapenalloftheCTGsreformsandendorse the presidential ordinances issued during theemergency.

6Theactingsecretarygeneraloftheparty,Syed

Ashraful Islam, declared, not only the Awami League butany party that will form the next government will have toratify the present governments activities for its ownlegality.

7 SheikhHasinatold theCrisisGroupthattheCTG

had adopted her own partys agenda, the plan we put

forward before the cancelled election.8

She said howeverthatthegovernmentisgoingaboutitillegallyandtheyarefailing none of [the reforms] started by the governmenthavebeendoneproperly.Wewillcontinuewiththereformsbut we will do it the correct theway, by the laws of theland.

9

3ThissectiondrawsheavilyontheICG(2008)Report.

4The two parties have tended to alternate power since the countrys

independence in 1971. The Awami League, considered left of centre, secular,

pro-Indian and rural, has governed twice since independence; the BNP, right

of centre, urban, anti-Indian, Islamic-leaning with close ties to the military,has been in power longer than any other party. While these descriptions are

generally accurate, neither party is rigid in its ideology.5 The faction of Islami Okiya Jote (IOJ) in the Awami Leagues grand alliance

is led by Mishabur Rahman Chowdhury. An Awami League leader says itwas admitted into the coalition because of its commitment to secularism

and the IOJs pro-liberation war position. Crisis Group telephone

interview, 1 December 2008.6 Crisis Group interview, Syed Ashraful Islam, Awami League acting secretary

general, Dhaka, 1 November 2008.7 Ibid.8 Crisis Group interview, Sheikh Hasina, Awami League president,

Washington DC, 30 September 2008.9 Ibid.

BNPBNPBNPBNPThe ICG report notes that the emergency has hit the BNPharderthanotherparties.Thegovernmenthasattemptedtobar109seniorBNPleadersfromstandingforelection,manyof them former parliamentarians and the partys preferredcandidates.

10Internaldivisionsmayalsothreatenthepartyat

thepolls.AbdulMannanBhuiyan,thepartysreform-mindedand popular general secretary expelled for indiscipline, isstandingasanindependent;heandotherslikehimmaytaketheirsupporterswiththem.InthenextsectionoftheOverview,wediscusstheeconomicmanifestosofthetwopartiesandassessinmoredetailtheirplans for the energy sector and make somerecommendations.TheManifestosTheManifestosTheManifestosTheManifestosItisencouragingthatboththeAwamiLeague(AL)andBNPpartieshavegivenalotmoreimportancetoeconomicissuesintheirrecentlypublishedmanifestosthantheyhaveinthepast. While AL has focused more on some economicdevelopment issuessuchas growth andpower generationwith specific short,medium and long-termgoals, BNP hastouchedupon severalmicroeconomic issues inaddition toemphasizingontheneedforpoliticalreforms.AL President Sheikh Hasina announced the partysmanifestowithatargetofraisingGDPgrowthto8%by2013andbringingdownthepovertyrateto25%.Thefactthatthepartyhasformulatedspecificshort-termandlong-termactionprogrammes focusing on economic issues is a promisingsign.ALs timeboundquantitative targetsmakethe partysmanifestoamorespecificonethantheBNPmanifesto.Timeboundeconomicplanswill allowperiodicevaluationsof theprojects,andhencewillpromotethepartysaccountabilitytothepublic.ALmanifestounderlines thefollowing: (a)maintainingprice

stability and ensuring for the poor a reasonable price forfood, (b) maintaining macro stability in the face of globalrecession, (c) effective steps against corruption, (d)generating 5000 MW electricity by next three years and7000MW by 2013, and (e) poverty reduction throughinducingdynamismintheagriculturalandrurallife.SimilartotheALmanifesto,theBNPmanifestoalsofocuseson economic issues, but however, lacks any specific timebound targets. BNP priori tizes the fol lowing: goodgovernance, poverty alleviation and employment creation,andmakingdemocracymoreeffective.Althoughthepartysmanifestoalsofocusesontheneedforincreasedgrowthandreductionofpoverty,it failstoprovideanyspecifictargetforthe goals.However, the party promises to adopt a soundforeignpolicybyestablishingalookeastpolicy.

AnothermainfocusinBNP'smanifestoisonreducingpricesof essentials, however, the party does not specify how itwould accomplish that goal. The party also pledged toincrease power generation, which requires properexploitationofgasandcoal.However,itdidnotpointoutthe

1067 out of the 109 BNP party members on the governments list wereformer MPs. A majority, if not all, of 67 MPs were likely to be nominated

by the party for the 2008 election. A copy of the CTGs list is on file withCrisis Group.


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source of gas - whether it would be bought from theinternational oil companies or BAPEX. Also there lacks aguidelineregardingthemethodofcoalextraction,whichhasbeenacontroversialissue.Manifestos of both the two major parties contain littleguidelines for resource mobilization or a detailed fundingscheme,withoutwhichnopledgescanbefulfilled.Both manifestos stated that the parties will undertake anumberofinfrastructureprojectssuchas,thePadmaBridge,aDeepSeaport,theDhaka-ChittagongExpressway,flyoversandmono railfor removingtraffic congestion,theKarnafulibridge,andthelike.Supportfrommultilateraldonorswillbesought and public-private partnerships will beencouraged.Both parties have addressed inflation as apriority.ALpromisestoeliminateprofiteeringsyndicatesandstopextortionbycreatinganinstitutiontocontrolcommodityprices andprotectthe consumer.The BNPmanifesto doesnot mention anything about syndicates, but promises toreducepricesby increasing foodproduction, improvingthesupplychainbybetterutilizingstoragefacilities,creatinganemploymentgeneratingprogramtoincreasethepurchasingpower of the poor, and directly subsidizing prices ofnecessities.Povertyalleviationisalsoakeyfocusinboththemanifestos.AL promises to reduce the number of poor people fromcurrently 65 million to 45 million by 2013 through acombination of social welfare measures and ruralemployment generation policies. BNP does not mentionanything specific, but it also promises poverty reductionthrougheconomicgrowth.Lastbutnotleast,bipartisancommitmenttowardscontinuingtheanti-corruptiondriveandimprovingthecountry'slawandordersituationislaudable.In their published manifestos, both AL and BNP have

providedstrategiesandproposals for solving the countrysacuteenergycrisisinordertoattainhighereconomicgrowth.ALmanifestosfortheenergysectorALmanifestosfortheenergysectorALmanifestosfortheenergysectorALmanifestosfortheenergysector

Acomprehensivelongtermpolicyonelectricityandenergywillbeadopted.

Economicusageofoil,gas,coal,hydropower,windpowerandsolarenergywillbeensured.

Big and small power generation stations, coalextraction,andoilandgasexplorationwillbegivenpriority.

Under a three year crash program quickimplementationofongoingandunderconsideration

powergenerationstations,importofelectricityfromneighbouring countries,arranging 100/150MW gasturbine projects on an urgent basis, and thereactivationofthepastALinitiativesforconstructing10, 20 and 30MW power stations will beundertaken.

Ascheduleforrepair,maintenanceandoverhaulingorsalvagingof old powerstationswill bemadetoincreaseandstabilizepowerproduction.

SupplyofgasandLPGwillbeincreased.

The Rooppur Nuclear Power Project will be

implemented.

Inthenextthreeyearsorby2011powerproductionwillbeincreasedto5000MWandby2013itwillbefurtherincreasedto7000MW.

Prioritywillbegiventoexplorationandexploitationof oil and new gas fields. Arrangements will bemade to supply gas in the north and westernregionsofthecountry.SupplyofgasandLPGwillbesignificantlyincreased.

A Coal Policy will be formulated safeguardingnationalinterests.

Specialinitiativeswillbetakento ensureeconomicuseofthecoalavailablesofarandalsotodevelopcoal-basedpowerplants.

Priorities will be given to the exploration andexploitation of new coal fields and other mineralresources.

Energy Security:Anenergypolicywill beadoptedtappingallsourcesoftraditionalandnon-traditionalenergy to ensure accelerated rate of economicdevelopment and industrialization. A three yearcrash programme will be taken up to meet theexisting crisis. By 2021, demand for electricity isprojectedtoincreaseto20,000MW.

Toincreasegasproduction,regularsurveysofgasresources and work on well development will beundertaken.

Tomeetenergydemand,effortswillbeundertaken

for regional energy securi ty through mutualcooperation in addition to exploring internalsources.

BNPmBNPmBNPmBNPmanifestosfortheenergysectoranifestosfortheenergysectoranifestosfortheenergysectoranifestosfortheenergysector

The power projects which were approved by theWorld Bank, the Asian Development Bank andJapan, and thoseprojects that are in the pipelinewillbeimplemented.

Within100 days of forming the government, BNPpromises to complete the re-tenderingprocess forsettingupa450MWplantatBibianaanda450MWplantinSirajganj.

InstallationofSmallPowerPlants(SPP)byprivate

investors funded by different banks wil l beencouraged.

Nuclear power plants will be set up for powergeneration.

The gas and coal reservesof the country will beutil ized and new exploration activities will beundertakenimmediately.


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Tofullyutilizegas,oilandcoalanexpertcommittee

will be formed within 100 days of forming thegovernment and a national energy policy will beformulated according to their recommendations.This pol icy will cover power generation andexploration and production of gas, oil and coalreserves.

Initiativeswillbetakentoconductfeasibilitystudiesofhydro,windandsolarenergy.

The Bangladesh Energy Regulatory Commissionwillbemoreactive.

ATCCommentATCCommentATCCommentATCCommentALs target ofachieving5000MWofelectricityby2011 and7000MWby2013doesnotseemtobeanambitioustarget,butconsideringthepowergenerationadditioninthelastfewyearsitseemstobereasonableandlogical.

Regarding power generation, theBNPstated that theywillre-tender the two large power plants of 450MW each -

BibianaandSirajganj within 100daysofforming thenewgovernment. This proposition sounds attractive consideringthecurrentseverepowershortagebutthemajorquestionishowtheselargepowerplantswillreceivegassupplyasthecurrentgasproductioncannotevenfeedtheexistingpowerplants!Bothpartiespromisedtosetupnuclearpowerplants,whichisveryimportantforprimaryenergysourcediversification.ALmentionedtheneedtoformulateawellthoughtoutcoalpolicy,butdidnotspecifyanytimelineforachievingthis.TheBNP expressed their interest on formulating an updatednationalenergypolicy,whichwillnotparticularlyfocusonthecoalsector only.Webelieve, formulatingan articulatecoalpolicy is the first stage of developing the coal sector of

Bangladesh and priority should be given to complete thatwithin a specific time frame. The coal policy has notbeenfinalizedoverthelastthreeyearsandisstillinadraftform.Bothpartiesstatedthattheywillgiveprioritytoexploringandutilizing gas,oil and coal sectors. Along with thatwethinksome timeline for achieving particular targets should begiven.

AL stated that they will prepare a schedule for themaintenanceandoverhaulingofoldpowerplantsto ensurebetter utilization of primary fuel and uninterrupted powergeneration.We appreciatethiscommitmentasanumberofour government owned power plants are very old andrunning inefficiently and technical glitches occur in theseplantsfrequently.TheBNPsmanifestodoesnotoutlineany

measuresinrespectofoldpowerplants.AL discussed the possibility of importing electricity fromneighbouring countries, whereas any mention of regionalintegration in the energy sector is missing in the BNPsmanifesto. We think regional co-operation in the energysectorcouldbemutuallybeneficialforbothBangladeshanditsneighbouringcountries.The BNP stated that it will conduct feasibility studies onrenewable energy in Bangladesh. We think renewableenergycanbeagoodoptionforBangladesh'soffgridareaswhere conventional power generation is not currentlyeconomically viable. Furthermore, BNPpromised that they

will make Bangladesh Energy Regulatory Commission(BERC)moreactive.IftyIslamIftyIslamIftyIslamIftyIslamManagingPartnerifty.islam@at-capital.comJishaSarwarJishaSarwarJishaSarwarJishaSarwarSeniorResearchAssociatejisha.sarwar@at-capital.comMdEmranHasanMdEmranHasanMdEmranHasanMdEmranHasanResearchAssociateemran.hasan@at-capital.com

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GlobalMarketsGlobalMarketsGlobalMarketsGlobalMarketsOverviewOverviewOverviewOverviewMadoffCrisistopstheworstyearsincetheGreatDepressionMadoffCrisistopstheworstyearsincetheGreatDepressionMadoffCrisistopstheworstyearsincetheGreatDepressionMadoffCrisistopstheworstyearsincetheGreatDepressionfortheFinancialSefortheFinancialSefortheFinancialSefortheFinancialSectorctorctorctorBernard Madoffs reported USD 50bn Ponzi scheme has

alreadyseenbanks,hedge funds andother investorswriteoffUSD27bn.Itcapsofftheworstyearsincethedepressionandwillputfurtherliquiditypressureonbankbalancesheets.But perhaps worse are the question marks on the wholehedgefundindustryastohowsuchsophisticatedinvestorscould havebeenso easilyfooled.TheNewYorkTimesonDec 19 published the most comprehensive review of theoriginsoftheMadoffscandal.Itcanbeseenat:http://www.nytimes.com/2008/12/20/business/20madoff.html?_r=1&pagewanted=all

FedcutratestozeroFedcutratestozeroFedcutratestozeroFedcutratestozeroThescaleoftheglobalfinancialcrisiswasunderlinedbythedecision last week made by the US Federal Reserve tofollowJapanintotheeraofZero-InterestRatePolicy(ZIRP).The decision underlines the realityof just how severe thiscrisisis,andthefactthatallindicators,fromtheUSlabourmarket tohousing to global oil prices collapsing to a newcyclicallowandtheAutoBailout,allsuggesttheworstistocomein2009.TheFedcutpolicyinterestratestozero,ormorespecificallyagreed totarget rates ina 0-0.25% range. And it signaledthatithasntrunoutofammunitionevenifitcannotcutratesfurther.Theso called quantitativeeasingmeans it canaddfurtherstimulusaslongastherearestillfinancialassetsthatitiswillingtopurchase.TheFOMCstatementisbelow:The Federal Reserve will employ all available tools topromotetheresumptionofsustainableeconomicgrowthandto preserve price stability. In particular, the Committeeanticipates that weak economic conditions are likely towarrantexceptionallylowlevelsofthefederalfundsrateforsometime.ThefocusoftheCommitteespolicygoingforwardwillbetosupportthefunctioningoffinancialmarketsandstimulatetheeconomy through open market operations and othermeasures that sustain the size of the Federal Reservesbalancesheetatahighlevel....Aspreviouslyannounced,overthe next few quarters the Federal Reserve will purchaselarge quantities of agency debt and mortgage-backedsecurities toprovide support to the mortgageand housingmarkets, and it stands ready to expand its purchases ofagency debt andmortgage-backed securities as conditionswarrant. The Committee is also evaluating the potentialbenefitsofpurchasinglonger-termTreasurysecurities.Earlynextyear,theFederalReservewillalsoimplementtheTermAsset-Backed Securities Loan Facility to facilitate theextensionofcredittohouseholdsandsmallbusinesses.TheFederalReservewillcontinuetoconsiderwaysofusingitsbalance sheet to further support credit markets andeconomicactivity.AsglobalMacrowatcherBrad Stetser hasnoted, overthelastfewmonths,theFedhasmoreorlesstakenoveraslewof functions previously performed by the private financialsystem.

Bankswithspare cash(more deposits than loans) used tolend to banks that were short of cash (more loans thandeposits).NowtheylendtotheFed,andtheFedlendstothebanksthatareshortoncash.Thatwaynobankriskstakinglosseslendingtoabadbank.Moneymarketfundsusedtolendbothtothefinancialsectorand tofirmswithshort-term financing needs. Now they (tosimplify a bit) just buy Treasuries. The Treasury met thisdemand by increasing its issuance, and (to simplify a bit)puttingthecashitraisedondepositwiththeFed.ThatinturnallowedtheFedtolendtoinstitutionsintheUSandabroadthatpreviouslyreliedonmoneymarketfundsforfinancing.ForeigncentralbanksusedtobuyrathersignificantsumsofAgency bonds, and in the process finance (indirectly) theextension of credit to American households. Now foreigncentral banks just want Treasuries. The Fed now plans topurchase rather significantquantitiesof Agencies, in effectmakingupforthefalloffindemandfromothercentralbanks.AsNobelPrizewinnerPaulKrugmannotes,WeareinverydeeptroubleanditisntcleariftheFedsvariousinitiativeswill be enough to pull the US economy out of its currenttailspin.But theFedcan hardlybeaccusedof nottrying.ItisnttheECB.However,it isdifficultto arguethatFedChairmanand hiscolleaguesarenotbeingpro-activeenough.Theyaretakingrisks, but necessary ones that most likely the Bank ofEngland and the ECB may well have to follow. The realcriticismoftheFedisthatitforahostofreasonsdidnttryveryhardto limitthe buildupof financialvulnerabilitiesthatgeneratedthecurrentmess.AlthoughtheUSDollarhasweakenedsharplyto1.44versustheEUR,theslowresponseoftheECBonrateswillneedtobe reviewed as the European downturn gathers moremomentumand thecollapse incommoditypricesincreases

theriskofEuropeandeflation.WearenotconvincedtheUSDollarwillweakenfromhereonatrendbasissoanyreliefforBangladeshi exporters to Europe given theBDT-USD link,willlikelyprovetemporary.

Source:BespokeInvestmentResearchSource:BespokeInvestmentResearchSource:BespokeInvestmentResearchSource:BespokeInvestmentResearch


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Indeed,asthetablefromBespokeResearchillustrates,the6daydeclinein theUSDollartoDec17 isthelargestmoveever.

Source:BespoSource:BespoSource:BespoSource:BespokeInvestmentResearchkeInvestmentResearchkeInvestmentResearchkeInvestmentResearch

Oil Prices Collapse Continues despite large OPECOil Prices Collapse Continues despite large OPECOil Prices Collapse Continues despite large OPECOil Prices Collapse Continues despite large OPECproductioncutsproductioncutsproductioncutsproductioncuts

Oil prices this week plunged to their lowest level sinceFebruary2004,inspiteofOpecslatestefforttosteadythemarket withanagreement to implement the largest supplycut in the cartel s history, which was announced onWednesdayDecember17.ThebenchmarkUScrude price sankbelow theUSD 33-a-barrel level on Friday. Nymex January West TexasIntermediate dropped to USD 32.40, a near five-year low,before recovering to settleUSD 2.35 loweratUSD 33.87,down26.8%thisweek.TheJanuarycontractexpiredatthecloseonFriday,sotherewassignificantlymoretradingin theFebruaryWTIcontract,thebenchmarkfromnextweek,up69centsatUSD42.36a

barrel, recovering from a lowof USD 40.90. ICE FebruaryBrentrebounded64centstoUSD44abarrel,down10.4%thisweek.Opecpledgedtocutoutputby2.2Mbarrelsperday,ontopofcuts totaling 2mb/dagreedearlierthis year.Butdoubtsthat the cartels members would fully comply with theagreement and concerns about the outlook for demandensureddownwardpressureonoilprices.Pessimismontheglobaleconomicoutlookandtheprospectsforoil demandoutweighed thepositiveimpact forpricesofsupplycuts.

Asshownin thechart below, afterrallying 732.6% fromitslowofUSD17.45in2001toitshighofUSD145.29thisJuly,oil is now downan incredible 76.1% from its peak. Inthepast,somecommentatorshavecomparedtheoilbubblewiththeNasdaqandhomebuilderbubbles.AtitscurrentpriceofUSD34,oilonlyneedstofallanotherUSD2toseethesamedeclines that the Nasdaq saw during the bursting of itsbubble. The only difference is that it took years for theNasdaqtoreachitslows,whileoilhasdeclinedbyalmostasmuchinjustafewmonths.At-76.1%in5months,oil'sfall,like the drop in the Baltic Dry Index, is one of the mostextremebubbleburstsinhistory.

Source:BespokeInvestmentResearchSource:BespokeInvestmentResearchSource:BespokeInvestmentResearchSource:BespokeInvestmentResearchAmongthebasemetals,coppersankbelowtheUSD3,000atonne level for the first time sinceMay 2005 with the redmetaldropping7.7percenttoUSD2,930atonneovertheweek,underpressurefromrisingstocklevels.IIFforecastsglobaleconomytocontracIIFforecastsglobaleconomytocontracIIFforecastsglobaleconomytocontracIIFforecastsglobaleconomytocontract0.4%in2009t0.4%in2009t0.4%in2009t0.4%in2009

The Institute for International Finance (the association ofmajor global banks) has just published their latest globaleconomicforecast.Theirprojectionsarethegloomiest.Theyexpect steep declines in real gross domestic product arelikely in the current quarter and in the next quarter in theUnited States, the Euro-zone countries and in Japan.Overall,2009willsee fallsin output in thesecountriesandrisingunemployment,butarevivalofgrowthmaystartinthelate summer of next year, forecast the economists at theInstituteofInternationalFinance.WorldGDPisexpectedtodecline for the first time in recent history in 2009 with aprojectedfallof0.4%,aftera2%gainthisyear.TheIIFforecastthattheU.S.economywilldeclineby1.3%nextyearafteranadvanceof1.2%thisyear,whiletheEuroAreaeconomiesfallby1.5%in2009aftera0.9%dropin2008, and Japans economy fallsby 1.2%next year afterzerogrowththisyear.The IIF predicted further slowing in the leading emergingmarket economies, although their average growth rate in2009at 3.1%,after 5.9%in 2008,willexceedthat ofthematureeconomiesbysome5%agepoints.Particularlyweakgrowthisseenincentral,easternandsouthernEuropewithgrowthofjust0.3%likelyfor2009after4.5%in2008.TheIIFforecast aslowingoftheLatinAmericangrowthratetojust 1%nextyear from 4.5% this year. Stronger growth isseen in Asia/Pacific, yet here too there is a significantslowingwithgrowthin theregionas awhole seenat 5.7%after7.4%in2008theforecastsincludegrowthforChinain2009of6.5%after9.3%this year,anda slowingofIndiasgrowthto5%from6.2%lastyear.ProfessorNiallFergusononaradicalsolutiontothecurrenProfessorNiallFergusononaradicalsolutiontothecurrenProfessorNiallFergusononaradicalsolutiontothecurrenProfessorNiallFergusononaradicalsolutiontothecurrenttttglobalcrisisglobalcrisisglobalcrisisglobalcrisisInperhapsthemostthoughtprovokingarticleofthecrisissofar,ProfessorNiallFergusonofHarvardUniversitysuggeststhat eliminating debt obligations, as to some extent ishappeningviathegrowingnationalizationofbadloansinthefinancialandautosectors,hashistoricalprecedents.We


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reproducehisarticleinfillbelowandstronglyrecommendallofourreaderstotakealookiftheyhavenotalreadydoneso:

TheageofobligationTheageofobligationTheageofobligationTheageofobligationByNiallFergusonPublished:December18,2008|Lastupdated:December18,2008

LiquiditySupplier: detail from TheMoney Lender andHisWife,LiquiditySupplier:detail from TheMoney Lender andHisWife,LiquiditySupplier: detail from TheMoney Lender andHisWife,LiquiditySupplier:detail from TheMoney Lender andHisWife,QuintenMetsys,1514QuintenMetsys,1514QuintenMetsys,1514QuintenMetsys,1514

IntheOldTestamentBookofLeviticus,Godcommandsthe

children of Israel to observe a jubilee every 50 years.NowadayswetendtoassociatethewordwithcelebrationsofroyalanniversariessuchasQueenElizabethsgoldenjubileein2002.But the biblical conception of a jubilee was moreprecise:thatofageneralcancellationofdebts.Thispoint isspeltout inDeuteronomy: Every creditor thatlendethoughtuntohisneighbourshallreleaseit;heshallnotexactitofhisneighbour,orofhisbrother;becauseitiscalledtheLordsrelease.Such injunctionsmaystrike themodern reader asutopian.Howcouldanysophisticatedsocietyfunctionifalldebtswerecancelled twice a century much less, as Deuteronomyseems to suggest, every seven years? Yet we know thatsuchgeneralcancellationsof debt reallydid happenin the

ancient world. In 1788 BC, for example, about 500 yearsbeforethetimeofMoses,KingRim-SinofUrissuedaroyaledict declaring allloans null and void,wiping out some ofhistorysearliestknownmoneylenders.The idea of a generalized debt cancellation is not whollyunknown in modern times. The late Gerald Feldman, theworlds leading authority on the German hyperinflation of1923,drewaparallelbetweentheancientHebrewyovelandthe wiping out of all paper mark-denominated debts as aresultofthecollapseoftheGermancurrency(though,ashe

wasquicktopointout,thosewhosesavingswerewipedoutwerefarfromjubilant).Inthehopeofavoidingthemarksmeltdown,theeconomistJohnMaynard Keynes had repeatedlycalled for a generalcancellationofthewardebtsandreparationsarisingfromtheFirstWorldWar. Thoughno suchintergovernmentaljubileewaseverproclaimed,debtcancellationwaseffectivelywhathappened after 1931, beginning with President HerbertHoovers one-year moratorium on both war debts andreparations.As 2008draws toa close,there are manypeopleon bothsidesoftheAtlanticwhoyearnforsuchasimplesolutiontothe problem of excessive indebtedness. Parallels with theinterwarperiodarenot inappropriate. It is allbutinevitablethatweshallseeseriouspoliticalandgeopoliticalupheavalsin2009,astherecessiontakesitstollonweakgovernments(Thailand and Greece are already reeling) and raises thestakesininter-staterivalries(India-Pakistan).InthewordsofHankPaulson, theUSTreasurysecretary:Weare dealingwith a historic situationthat happens once ortwice in100years.Thestakesarehighindeed.Hasthetimearrivedforaonce-in-50-yearsbiblicaljubilee?Excessivedebtisthekeytothiscrisis;itisthereasonweareconfronting no ordinary recession, curable by a simpledownward adjustment ofinterestrates. Itis the reasonwestillhavetofear,ifnotasecondGreatDepression,thenverylikely the biggest recession sincethe 1930s.Wearelivingthroughthepainfulendofanageofleveragewhichsawtotalprivate and publicdebt in the USrise from about155 percent of gross domestic product in the early 1980s tosomethinglike342percentbythemiddleofthisyear.Withaveragehouseholddebtrisingfromabout75percentofannual disposable income in 1990 to very nearly 130 percentontheeveofthecrisis,alargeproportionofAmericanfamilies are submerging under the weight of their

accumulated borrowings. British households are in evenworseshape.Lookingback,wenowseejust howbigaproportionofUSgrowth since 2001 was financed by mortgage equitywithdrawals. Without that as a means of financingconsumption,theeconomywouldbarelyhavegrownat1percent a year under President George W. Bush. Lookingforward,weseejusthowharditwillbetostabilisepropertyprices and the prices of the securities based on them.Already,attheendofSeptember,onein10Americanhomeowners with a mortgage was either at least a month inarrearsorinforeclosure.Oneinfivemortgagesexceedsthevalueofthehomeitwasusedtopurchase.The financial sectors debts grew even faster as banks

sought to bolster their returns on equity by levering up.According to one recent estimate, the total leverage ratios(on-and off-book assets andexposuredivided by tangibleequity)forthetwobiggestUSbankswere88:1forCitibankand134:1forBankofAmerica.Theburstingofthepropertybubblecausedsuch ratios,whichwerealreadytoo high onthe eve of the crisis, to explode as off-balance-sheetcommitments and pre-arranged credit lines came home toroost.Only by borrowing from the Federal Reserve on anunprecedentedscalehave the banks been able to stay inbusiness


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With estimates oftotallossesonriskyassetsnow rangingfromUSD2,800bn(1,850bn,1,960bn)toUSD6,000bn,achainreactionis underway thatwillleave nosectoroftheworld economy untouched. The American economy iscontractingatanannualisedrateof5percent.Commercialpropertyis followingtheresidentialmarketinto freefall.TheStandard&Poors500 indexis down43percentsince itspeak in October last year. The market for credit defaultswapsispointingtoasurgeindefaultsoncorporatebonds.The automotive industry is already (against the will ofCongressand theoriginalintentionof theTreasury)on lifesupport.TheUSisatthecentreofthecrisisbutEuropeand

Japanmaysuffer even larger aftershocks.As forthemuchfeted emerging market Brics Brazil, Russia, India andChina their stockmarkets have been droppinglike,well,bricks.What makes this crisis of burning interest to financialhistorians is the knowledge that weare witnessing a real-time experiment with not one but two theories about theDepression.Ononeside,BenBernanke, Fedchairman, isapplyingthelesson of Milton Friedmans and Anna Schwartzs AMonetaryHistoryoftheUnitedStates,whicharguedthattheDepression was in large measure the fault of the centralbank for failing to inject liquidity intoan implodingfinancialsystem. Mr Bernanke has not merely slashed the federal

funds ratetobelow 0.25percent.He haslentfreely tothebanksagainstundisclosedbutprobablytoxiccollateral.Nowheisbuyingsecuritiesintheopenmarket.TheresulthasbeenanexplosionoftheFedsbalancesheetand of the monetary base. With assets approaching USD2,263bn and capital of less than USD 40bn, the Fedincreasingly resembles a public hedge fund, leveraged atmorethan50:1.Howfallowyearsledtoagoldenjubilee

Every seven years,God toldMoses, the children of Israelshouldneithersowtheirfieldsnorprunetheirvineyardsakindofself-imposed recession.Aftersevensuchsabbaticalyears, the trumpet of jubilee should be sounded: And yeshallhallowthefiftiethyear,andproclaimlibertythroughoutall the land unto all the inhabitants thereof: it shall be ajubilee unto you; and ye shall return every man unto hispossession.Landthathadbeensoldwastoberedeemedorreturnedtothe originalseller andthe poorwereto berelieved: Ifthybrother be waxen poor, and hath sold away some of hispossession, and if any of his kincome to redeem it, thenshallheredeemthatwhichhisbrothersold...Ifthybrotherbewaxenpoor...thenshaltthourelievehim:yea,thoughhebe astranger ...Take thounousuryofhim ...In addition,Jewswhowereslavesweretobesetfree.Tomoderneyes,however,themoststrikingofthesedivineinjunctionswas that debtswere tobe cancelled aspart oftheLordsrelease.Ontheotherside,MrPaulsonhasemergedasanunwittingdiscipleofKeynes,runningahugegovernmentdeficitinaneffort notmerely tobailoutthefinancialsectorbut also toprovide a public sector substitutefor sharply falling privatesector consumption. Even before President-elect BarackObama launches his promised infrastructure investmentprogramme, estimatesof next yearsdeficitrunashigh as12.5percent.Once, monetarism and Keynesianism were consideredmutuallyexclusiveeconomictheories.Sosevereisthiscrisisthat governments al l over the world are trying bothsimultaneously.Although commentators like to drawparallelswithFranklinRooseveltsNewDeal,intruththemeasurestakensincethecrisis began in August 2007 more closely resemble those

taken during the world wars. After 1914, and again after1939, there was massive government intervention in thefinancialsystem.Banksandbondmarketswere reducedtomerechannelsforthefinancingofhugepublicsectordeficits.Thatiswhatishappeningtoday,butwithoutthestimulustomanufacturing thattheworldwarsprovided.We arehavingwarfinancewithoutthewaritself.Yet the effect ofthese policiesis essentiallyto add a newlayer of public debt to the existing debt mountain. Addedtogether, the loans, investments and guarantees made bytheFedandtheTreasuryinthepastyeartotalaboutUSD7,800bn, compared with a pre-crisis federal debt of aboutUSD10,000bn.TheTreasurymayhavetoissueasmuchasUSD2,200bninnewdebtinthecomingyear.

For the time being, the distress-driven demand for dollarsand risk-free assets is pushing down the cost of all thisborrowing.Treasury yieldsareat historiclows.Butit is notwithout significancethat the cost ofinsuringagainst a USgovernmentdefaulthasrisen25-foldinlittleoverayear.Atsome point, with most big economies adopting the samefiscalpolicy,globalbondmarketsaregoingtostartchoking.Is it really plausiblethat thecurefor excessiveleverage intheprivatesectorisexcessiveleverageinthepublicsector?Mighttherenotbeasimplerwayforward?Wheneconomists


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12/35



StockMarketWeeklyStockMarketWeeklyStockMarketWeeklyStockMarketWeekly

MarketMarketMarketMarketssssummaryummaryummaryummary

DSEDSEDSEDSEpppperformance:30erformance:30erformance:30erformance:30ddddaysaysaysays

DSEDSEDSEDSEpppperformance:erformance:erformance:erformance:52w52w52w52weekseekseekseeks

ValuationsnapshotValuationsnapshotValuationsnapshotValuationsnapshot

RegionRegionRegionRegionalstockmarketperformance(lastweek)alstockmarketperformance(lastweek)alstockmarketperformance(lastweek)alstockmarketperformance(lastweek)

MarketMarketMarketMarketnnnnewsewsewsews

Janata Bank intends totakeBDT 900 premium initsproposedIPO

Citi Bank, NA to launch custodian service in

Bangladesh


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WeeklyStockMarketCommentaryWeeklyStockMarketCommentaryWeeklyStockMarketCommentaryWeeklyStockMarketCommentaryTheDGENendedtheweekdown1%,withaveragedailyturnoverdown27%frompreEidtrading.Withtheexceptionof2007,historicallytradingafterEidulAdhahasgenerallyslowedwithtradingvolumesdroppingsharplyasinvestorsextendtheirbreaks.

ThismonthislitteredwithgovernmentholidaystheexchangeswereclosedforEidforoneweek,followedbyVictoryDaylastweek,withChristmasDaythiscomingweek,andElectionDayandNewYearsEvethefollowingweek.Thecountrytendstotakeaccruedleaveduringthisperiod.Businessandstockmarketactivityhasslowed.There has beenmuch speculation aboutmarket reaction after the elections. InpreviousWeeklies wehave discussed as theElectionapproachesandwemovetoapoliticalgovernmenttherewouldpotentiallybeaflightofcapitaloutofthemarket.The2007bullrunwhichsawtheDSErise87%wasbelievedtobeinpartduetotheflightofblackmoneyintothemarket,asthecaretakerembarkedonitsanticorruptiondrive.Investorsdonotneedtoshowthesourcesofcapitalinthestockmarketcomparedtootherassetssuchasrealestate.Weexpecttheremaybeliquidationsinholdingsoverthecomingmonthsasthebusinesscommunityturntheirattentionbacktonewinvestments.Howeverascurrentmarketsentimentsuggeststheremaybeaninitialriseinthemarketaftertheelection,asinvestorsgainsomeconfidence.WehaveonlybeenableobtaindatafromtheDSEcoveringthelastelectionin2001whichsawasharpriseinthemarket.


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Whilemostsectorsweredown,FuelandPowerstoodoutwitha4.8%rise.Webelievethisreflectsinvestorsentimentafterthetwoleadingparties,theAwamiLeagueandBNPpublishedtheirelectionmanifestosbothprioritizingtheneedforimmediateactiontoalleviatethecountrysEnergyshortages.(asdiscussedonpage5)

WehavehighlightedthekeymoversintheFuelandPowerSector:

SummitPowerCompanya20%riseintheweek-bothALandBNPpromisedtoincreasepowergenerationif theywouldbeelected.IncreasingpowergenerationmeansallowingmoreIPPsto comeintooperation - this islikely tobenefitthecountrysleadingoperatorofpowerplants.PowerGrid-up10%-morepowergenerationmeansmoretransmissionrevenues.PowerGridistheonlystateownedtransmissioncompanyinthecountry.Desco up9% - transmittedpower isdistributed totheend consumersthroughdistributioncompanies.DESCOis oneofthemajordistributioncompanieswhichcoverspartofDhakacity.JamunaOil,PadmaOilandMegnaOilallupwiththepriceofoilcontinuingtofallininternationalmarkets,couplewiththegovernmentannouncingthattheywillcutlocalpetrolpricesthisweek,itisexpectedthatconsumptionofpetroleumproductswillrise.Therevenuesofthethreeoildistributionriseinlinewithconsumption

TitasGasfell2%-Whilethepoliticalpartiespromisedtoincreaseexplorationactivitiesandgasproduction,thefallinTitasislikelytobeafunctionofitsrecorddaterecentlypassingon15

thDecember,withitspricefalling.WeexpectTitastoreboundthisweek.

Andthefinalthreecompaniesisthissector:BOChaslittleco-relationwiththefuelandpowersectorasitsmainproductlinesareindustrial gases, medical oxygen andwelding electrodes. Eastern Lubricant is theonly government owned lubricant blendingcompanyinthecountry.BDWeldingisaweldingelectrodesandindustrialgasesmanufacturingcompany.


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StockMarketStockMarketStockMarketStockMarketNewsNewsNewsNewsJanataBanktotakeJanataBanktotakeJanataBanktotakeJanataBanktotakeBDTBDTBDTBDT900premiumforshares900premiumforshares900premiumforshares900premiumforsharesTheDailyStar,Thursday18December,2008Janata bank is at its final stage of issuing shares at anominalvalueofBDT100(USD1.5)eachatasubscription

priceofBDT 1,000 (USD14.5).ThedifferenceofBDT 900(USD13)willgotothesharepremiumaccount.JanataBankis thesecondstate-ownedcommercialbanktobelistedwiththecountry'sstockmarket,afterRupaliBank.Rupaliwaslistedwiththestockmarketin1986aspartofitsprivatisation process recommended by the World Bank.Bangladesh'scapitalmarketisdominatedbythepresenceoffinancialinstitutionsandpresentlysharesofsome46privatecommercial banks are being traded on both Dhaka andChittagongstockexchanges.Accordingto sources in thefinanceministry, theother twostate-ownedbanks,Sonali andAgrani,willalsobelistedinthecountrysstockexchangessoon.

The Investment Corporation of Bangladesh (ICB), licensedasanissuemanager,willdealwiththeIPOofJanataBank.Janata Bank has BDT 80bn (USD 1.2bn) in authorizedcapitalandBDT25.9bn(USD0.37bn)inpaid-upcapital.Atthe end of June, total deposits of Janata Bank were BDT2,027.9bn (USD 29.4bn) and total advances were BDT1,327.8bn (USD 19.3bn). Classified loans and advancesstood at BDT 202.7bn (USD 2.9bn). The return oninvestment(ROI)andreturnonassets(ROA)were6.5%and2.4%,respectively.JanataBank,whichwasnationalizedaspertheBangladeshBank (Nationalization) Order 1972 immediately after thecountry's independence, has 849 branches including fouroverseasbranchesin UAE.Itis affiliatedwith1,202foreign

correspondentsallovertheworldand42exchangehouses.http://www.thedailystar.net/story.php?nid=67486

CitibankNAlaunchesdirectcustodyandclearingservicesCitibankNAlaunchesdirectcustodyandclearingservicesCitibankNAlaunchesdirectcustodyandclearingservicesCitibankNAlaunchesdirectcustodyandclearingservicesFinancialExpress,Thursday18December,2008Citibank, N A formally launched its Direct Custody andClearing(DCC)servicesinBangladeshonMonday.Citibankwill beable tochannelmore portfolio investments into thecountrysgrowingsecuritiesmarketthroughthisservice.Under thescheme,Citibankwill providedirect custody andclearingservicessuchasequityandfixedincomesecuritiessettlements, safekeeping, pre-matching, registrationcorporate actions, income collection, proxy services, cash

management,foreignexchange, reporting,marketexpertiseandinformationservicestoitsclients.Through the initiative, Bangladesh has joined the world'slargest proprietary direct custody and clearing network-spread across 54 countries where the same service isofferedbyCitigroup.http://www.thefinancialexpress-bd.info/search_index.php?page=detail_news&news_id=53434


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ResearchTeamResearchTeamResearchTeamResearchTeam

Ifty Islam

Managing Partner

[email protected]

Syeed Khan

Partner

[email protected]

Zia Shams

Senior Research Associate

[email protected]

Rashed Hasan

Research Associate

[email protected]

DGENPerformanceLTMDGENPerformanceLTMDGENPerformanceLTMDGENPerformanceLTMDGENPerformanceYTDDGENPerformanceYTDDGENPerformanceYTDDGENPerformanceYTD

Turnoverleaders

(Allfiguresinmn) BDT USD

ACI Formulations Ltd 1064 15.5

BeximcoPharma 770 11.2

TitasGas 624 9.1

BeximcoPharma612

8.9UttaraBank 587 8.5

ACILtd 426 6.2

ShinepukurCeramicsLtd. 426 6.2

NBL 211 3.1

GrameenOne:Scheme2 196 2.8

IslamiBank 182 2.6Source:DhakaStockExchange

Bestperformers* Worstperformers*

%Change %ChangeBEXIMCO 32.5 IslamiBank -91.2

ACI Formulations 28.9 ArbeeTextiles -90.3

ACI Ltd 25.7 MetroSpinning -23.3

Renewick Jajneswar 20.5 AftabAutomobiles -20.1Shinepukur Ceramics 19.7 QuashemTextiles -14.3

Bangladesh Online 17.7 Al_AminChemicals -11.1

Beximco Pharma 16.9 DESCO -9.9

BEXTEX Ltd 16.9 BengalFineCeramics -9.8

Summit Alliance 15.0 NationalPolymar -9.5

Dhaka Fisheries 14.4 BDDyeing -9.1

*ByclosingpriceSource:DhakaStockExchange

Correlationwithotherindices*

S&P500 Sensex

NIKKEI225

KSE100 SSECI

FTSE100 HangSeng DSE

S&P500 1

Sensex 0.49 1

NIKKEI225 0.40 0.50 1

KSE100 0.13 0.31 0.10 1

SSECI 0.28 0.41 0.22 0.04 1

FTSE100 0.81 0.48 0.41 0.21 0.38 1

Hangseng 0.65 0.58 0.46 0.09 0.50 0.73 1

DSE 0.10 0.14 0.09 0.06 0.03 0.13 0.11 1

*Basedonthelast80monthsUSDreturnsSource:ATCapitalResearch

Marketcap.bysector*

Banks 49.8%

Fuel&Power 14.5%

Pharmaceuticals 10.4%

Insurance 6.3%

Cement 5.4%

Miscellaneous 3.4%

Engineering 2.6%

Foods 2.3%

Textile 1.9%

Tannery 1.3%

Service&RealEstate 1.3%

IT 0.5%

Ceramics 0.1%

Paper&Printing 0.1%

Jute 0.03%

Total 100%

*AsofSeptember30,2008


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EconomicsEconomicsEconomicsEconomicsSelectedmacroeconomicindicatorsSelectedmacroeconomicindicatorsSelectedmacroeconomicindicatorsSelectedmacroeconomicindicators

ForeignaidworthUSD2.14bnlikelythisfiscalyear

Slightcutindomesticoilpricesthisweek

MajorcreditcrunchunlikelyinBangladesh

Don'tshutmigrantworkersout:Rightsorganizationsurgerichcountries

Takadepreciatedby0.58pcagainstUSDintwomonths

BBasksbankstocutremittancecosts

BBstrengthensinterventioninforexmarket

Jisha Sarwar

Senior Research Associate

[email protected]

AidDisbursementsinQ1FY09comparedtoQ1FY08AidDisbursementsinQ1FY09comparedtoQ1FY08AidDisbursementsinQ1FY09comparedtoQ1FY08AidDisbursementsinQ1FY09comparedtoQ1FY08

MarketnewsMarketnewsMarketnewsMarketnews

LatestBangladeshInflationRatesLatestBangladeshInflationRatesLatestBangladeshInflationRatesLatestBangladeshInflationRates

15151515----DecDecDecDec----07070707 2222----DecDecDecDec----08080808

15151515----DecDecDecDec----08080808

Forexreserves(USDmn) 5,338.60 5,384.31 5,561.80

USD-BDTaveragerate 68.6089 68.8556 68.8897

Callmoneyrate 10.43 8.85 9.75

NovNovNovNov----07070707 NovNovNovNov----08080808

PPPP 2007200720072007----08080808

Remittances(USDmn) 617.39 767.35 7,914.78

Annual%agechange 3.12 24.29 32.39

SepSepSepSep----07070707 SepSepSepSep----08080808

PPPP 2007200720072007----08080808

Imports(USDmn) 1,651.60 2,168.70 21,629.00



PPPP 2007200720072007----08080808

Exports(USDmn) 1,044.29 1,477.60 14,110.80



PPPP 2007200720072007----08080808

CurrentA/CBalance(USDmn) 20.00 46.00 672.00

OctOctOctOct----07070707

RRRR OctOctOctOct----08080808RRRR 2007200720072007----08080808

Taxrevenue(USDmn) 472.17 504.76 6,868.43


Source:SelectedindicatorsbyBangladeshBank,17December2008

AugustAugustAugustAugust SeptemberSeptemberSeptemberSeptember OctoberOctoberOctoberOctober

General 207.27 210.14 209.31

Inflation 10.11 10.19 7.26

Food 223.77 227.66 226.88

Inflation 12.36 12.07 8.08

Non-food 185.72 187.10 186.13

Inflation 6.55 7.19 5.95

Source:BangladeshBank

Source: Bangladesh Bank


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EconomicNewsEconomicNewsEconomicNewsEconomicNewsForeignaidworthForeignaidworthForeignaidworthForeignaidworthUSDUSDUSDUSD2.14b2.14b2.14b2.14bnnnnlikelythisfiscallikelythisfiscallikelythisfiscallikelythisfiscalyyyyearearearearFinancialExpress,SundayDecember21st,2008

BangladeshisexpectedtoreceivemorethanUSD2.0bnindonorfundsthisfiscalyear."AnestimatedUSD2.14bnworthofforeignassistanceistobe available for the current fiscal," a senior EconomicRelationsDivision(ERD)officialsaid,addingthatitwouldbethe highest amount of donor funding received byBangladesh. Foreign donors have already pledgedassistanceamountingtoaroundUSD3.0bnforBangladeshforFY09.ForeignaidalsorosesignificantlyinFY08,mainlyforpost-Sidr rehabilitation purposes - Bangladesh received foreignassistanceofaroundUSD2.08bninFY08.http://www.thefinancialexpress-bd.info/2008/12/21/53748.html

SlightcutindomesticoilpricesthisweekSlightcutindomesticoilpricesthisweekSlightcutindomesticoilpricesthisweekSlightcutindomesticoilpricesthisweekFinancialExpress,SundayDecember21st,2008

Thegovernmentis expectedto cutdomesticoil pricesatarangeofbetweentwotofivetakaperlitrewithinthisweek,corresponding with a dramatic fall in oil prices in theinternationalmarket.Experts, however, said the move to cutprices in the localmarket at the proposed margin would not be realisticcompared to the current drastic fall in the internationalmarket.Crudepetroleumiscurrentlytradingatafive-yearrecordlowof USD 34 per barrel in the international market.The last price adjustment in Bangladesh was done onOctober 27

th, when thegovernmentreduced prices of fuel

oilsbynearly11.7%onaverage,drivenbyasubstantialfallinpricesintheinternationalmarket.http://www.thefinancialexpress-bd.info/2008/12/21/53746.htmlMajorcreditcrunchunlikelyinBangladeshMajorcreditcrunchunlikelyinBangladeshMajorcreditcrunchunlikelyinBangladeshMajorcreditcrunchunlikelyinBangladeshFinancialExpress,SaturdayDecember20th,2008

TheexternalshocksstemmingfromtheglobalfinancialcrisisareunlikelytocreateamajorcreditcrunchinBangladeshasthe country's financial exposure remains low, according totheWorldBank.TheWorldBankstatedthatBangladeshsresilienceisduetoitsrelativeinsulationfrominternationalcapitalmarketsanda

paltry foreign portfolio investment. An area of concern isremittance inflow as the oil-rich Gulf economies, whichaccount for around 63% ofthe country'stotal remittances,arebadlyaffectedbythecrisis."Unlike the global financial institutions, Bangladeshi bankshave no exotic or toxic derivative engagements. The off-balancesheet itemsaremostly verybasic swapcontracts,whichshouldnotcreateanysignificantunexpectedlosses,"according to the Bank's preliminary assessment of thefinancialsectoreffects.

The Bank stated that the foreign exchange reserves ofBangladesh Bank and commercial banks have limitedexposuretothesecuritiesmarketsoftheUnitedStatesandEuropean Union nations. Furthermore, the country has alargely closed capital account,andcapital flowsare in theform of soft loans and foreign direct investment.AsofSeptember2008,BangladeshBank'sforeignexchangereservesamountedtoUSD5.8bn.Infinancialyear2008,thecountry's net foreign financing, mostly concessionalborrowing from multilateral lenders, totaled USD 1.75bn,whileforeigndirectinvestmentwasUSD650mn,accountingforonly0.8%ofGDP.Don't shut migrant workers outDon't shut migrant workers outDon't shut migrant workers outDon't shut migrant workers out:::: RightsRightsRightsRights organizationsorganizationsorganizationsorganizations urgeurgeurgeurgerichcountriesrichcountriesrichcountriesrichcountriesTheDailyStar,SaturdayDecember20th,2008

Bothlocalandinternationalrightsorganizationsemphasizedthepositivecontributionsthatmigrantworkersmaketowardseconomicgrowth,asmillionsofmigrantworkersfacelayoffsaroundtheworld.The InternationalLabour Organisation revealed a forecast,pointingtoworseningconditions formigrantworkersduetotheglobalfinancialcrisis."Although the economic crisis is still unfolding and its fullimpact remains unclear, it should be counterproductive forgovernments indeveloped countries toclosetheirdoors tomigrants,"theInternationalOrganisationforMigration(IOM)stated.Economicwoesaredragging down remittances.TheWorldBanknowestimatesthatremittancestodevelopingcountriesin2009willbelessthanUSD283bn.AccordingtotheWorldBank,intheworstcasescenario,inFY 09 Bangladesh may receive only USD 8.9bn inremittances, down from the initial target of USD 10bn,creatingpressureonforeignexchangereserves."Closingdoors willundoubtedly encouragemigrants to usethe exploitative, abusive and often life-threatening backentrance into destination countries offered by humansmugglers and traffickers," said IOM Director GeneralWilliamLacySwing.Rightsactivistsemphasizedtheneed toundertakemassiveskillbuildingprogrammes inBangladesh to developskilledmanpower, as required by the manpower importingcountries, and start international advocacy to reduce thecostsofmigration.


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http://www.thedailystar.net/story.php?nid=67288

Takadepreciatedby0.58Takadepreciatedby0.58Takadepreciatedby0.58Takadepreciatedby0.58%%%%againstagainstagainstagainstUSDUSDUSDUSDintwomonthsintwomonthsintwomonthsintwomonthsTheDailyStar,TuesdayDecember16th,2008

Bangladeshtaka(BDT)hasbeendepreciatedmarginallyby

0.58%againsttheUSdollar,followingariseindemandforthegreenback.Thedepreciation ofBDTstarted fromOctober19followinganincreaseindemandfortheUScurrencyintheinter-bankforeign exchange market to settle import payment bills forpetroleum products, fertilizers and food grains.OnOctober 19

th the US dollar was quoted atBDT 68.52-

BDT68.54intheinter-bankforeignexchangemarketagainstBDT68.52onthepreviousworkingday.USdollarwastradedatBDT68.88-BDT68.92intheforeignexchangemarket onMonday compared toBDT 68.88 thepreviousworkingday.

http://www.thefinancialexpress-bd.info/search_index.php?page=detail_news&news_id=53398BBstrengthensinterventioninforexmarketBBstrengthensinterventioninforexmarketBBstrengthensinterventioninforexmarketBBstrengthensinterventioninforexmarketTheFinancialExpress,TuesdayDecember16th,2008

TheBangladeshBank(BB)hasstrengtheneditsinterventionin the foreign exchange market by providing support tocommercialbanksforsettlementoffueloilimportbills.Thecentral bank tookthe initiativeaimingto keepthe country'sinter-bankforeignexchangemarketstable.As part of the operation, the BB provided overdraft (OD)facilities forUSD40mn to a state-owned commercial bank(SCB) forsettlementof its petroleumproducts import bills.BBalsosoldUSD14mnatthemarketratedirectlytoaSCBandaforeigncommercialbanktomeetthegrowingdemandforthegreenback.Importofpetroleumproductsrosesharplyby56.6%toUSD923.03mnduring the first quarter ofthe current fiscalyearcomparedtoUSD578.31mnduringthe sameperiodof thepreviousfiscalyear,accordingtocentralbankstatistics.

http://www.thefinancialexpress-bd.info/search_index.php?page=detail_news&news_id=53405


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AgAgAgAgriculturericulturericulturericultureMaizeseedfirmsfearslumpinsalesMaizeseedfirmsfearslumpinsalesMaizeseedfirmsfearslumpinsalesMaizeseedfirmsfearslumpinsalesTheDailyStar,Sunday,December21,2008

Maizeseedsalesmay declinesignificantly,as farmers arereluctant togrow the crop because of lowprices resultingfromtheshutdownof thousandsof poultry farmsduetoanoutbreakofthebirdflusinceearlylastyear.Agovernmentrestrictiononmaizeexportandhighfertilizerpriceshavealsobeenblamedforthelowdemandformaize.Maizecultivation isexpected todecline for the first timeinBangladeshafterincreasinggraduallysincelate the1990s.AccordingtotheDepartmentofAgriculturalExtension,totalproduction ofmaize hit a recordhigh of over 2mn tonnesduringthelastcropseason,upfromabout1.2mntonnesinthepreviousseason.Thepriceofmaizehadbeenincreasinginthe global market since 2006. According toWorldBankdata,maizepricepertonnehititshighestinQ4FY08,and

then started declining due to the economic meltdown indeveloped economies. In November, the average price ofmaizepertonnestoodatUSD163.8,downfromUSD183.1inOctober.Inthelocalmarket,eachmaundofmaize(dry)isbeingsoldatbetweenBDT450(USD6.53)andBDT460(USD6.67),which is lower than the minimum price of BDT 520 (USD7.55)amaund,fixedbythegovernmentinAugust.http://www.thedailystar.net/newDesign/news-details.php?nid=68002

FalliFalliFalliFallinricepriceslikelytodiscouragefarmersfromachievingnricepriceslikelytodiscouragefarmersfromachievingnricepriceslikelytodiscouragefarmersfromachievingnricepriceslikelytodiscouragefarmersfromachievingBoroBoroBoroBoro

11111111targettargettargettarget

TheFinancialExpress,Sunday,December21,2008

Fallingpricesofriceininternationalandlocalmarketsmightdiscourage farmers in allocating more areas for Borocultivation,which could lead toa lower productiontargetinthe current season. The production target of Boro, thecountry'ssingle largest crop accounting foralmost 60% ofannual food grain yield, has been targeted at 18.01mntonnesforthecurrentseasonendinginApril,2009.QuotingtheDepartmentofAgriculturalExtension(DAE),thequarterlyfood situation report stated thatBoro cultivationareamightdecreaseslightly,hamperingthetarget.Inthelastcroppingseason,localfarmers,encouragedbyarecordpricehikeofriceglobally,cultivatedBoroonabout4.6mnhaofland,upby 8.2% from the previous season, which helped themsurpassthetarget.ThequarterlyreportalsostatedthatricepricesstarteddecliningfromitspeakinAprilduetobumperBoroharvestandafallinpricesintheinternationalmarket.

Inthecomingmonths,internationalricepricesareexpectedto fall further, especially if wheat prices continue to fall,addedthereport.ThereportalsostatedthatthetotalareaundercultivationwillincreaseforAman riceandwheatby0.31mn and 0.03mnha,respectively,whileareafor Ausricewillbe reducedby0.03mnhectares.

11MostimportantandscientificallydevelopedricecropofBangladesh

http://www.thefinancialexpress-bd.info/2008/12/21/53742.html

BankingBankingBankingBanking

BBasksbankstocutremittancecostsBBasksbankstocutremittancecostsBBasksbankstocutremittancecostsBBasksbankstocutremittancecostsTheDailyStar,TuesdayDecember16th,2008

OnMonday theBangladeshBank (BB)instructed bankstotakemeasures toreduce the time and cost oftransferringremittances, as about 40% of remittances flow in fromabroad through informal channels, locally known as hundi.BB Governor, Salehuddin Ahmed, held a meeting withrepresentativesfromtheministriesoffinance,foreignaffairsand expatriates welfare and eight banks, in order to findwaystoincreaseremittanceinflowsinthefaceoftheglobaleconomic crisis, and direct the money through legalchannels.InFY08,remittanceinflowwasUSD7.9bn.Inthelastfive

months of thecurrent year,BangladeshhasreceivedUSD3.75bn in remittances, which means that monthly averageinflowisUSD700mn.The central bank stated that remi ttance inflows toBangladesh did not fall yet, despite the world financialmeltdown.Four measures to increase remittance inf lows werediscussedduringthemeeting:cuttingdowntimeandcostsoftransferring remittances,bringing remittancesthrough legalchannels, creating opportunities for investment of remittedmoneyandwelfareofexpatriates.Areportpresentedatthemeetingstatedthatabout40%ofremittances flowing into the country were through informal

channels.BBadvisedbanks andexchange houses tobecompetitiveandcutcostsoftransferringremittances,especiallyincasesofsmalltransactions.Bankers said costs of remitting funds have already comedownandareexpectedtodeclinefurther.Thecentralbankaskedbankstocreatesmallinstrumentsforsmall savers. BBdirected the bank branchesorexchangehouses overseas to keep their organizations open onholidaystohelpexpatriatesremitfunds.http://www.thedailystar.net/story.php?nid=67288

IIIInfrastructure&Energynfrastructure&Energynfrastructure&Energynfrastructure&EnergyChevrontolaunchseismicsurveyinBlock7fromJanChevrontolaunchseismicsurveyinBlock7fromJanChevrontolaunchseismicsurveyinBlock7fromJanChevrontolaunchseismicsurveyinBlock7fromJanuaryuaryuaryuaryTheFinancialExpress,SundayDecember21,2008

US-based Chevron Bangladesh will start its seismic survey inBlock 7 in the first week of January to explore potential gasreserves and initiate subsequent explorations. The company will

continue the two-dimensional (2D) survey until mid 2009 in the

block that covers the south-western districts of Barisal, Patuakhali,

Jhalakathi and Pirojpur. Further development work in the field,

SSSSectorNewsectorNewsectorNewsectorNews


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such as exploration of hydrocarbon, would depend on the findingsof the seismic survey.

Chevron has already relinquished 25% of the explorationacreage ofBlock 7 toPetrobangla in accordance with thePSC.Theprojectentails450kmoftwo-dimensionalseismicdataacquisition.http://www.thefinancialexpress-bd.info/search_index.php?page=detail_news&news_id=53766

FundshortagetoFundshortagetoFundshortagetoFundshortagetoaffectaffectaffectaffectimplementationofeightpowerplantsimplementationofeightpowerplantsimplementationofeightpowerplantsimplementationofeightpowerplantsTheFinancialExpress,SaturdayDecember20,2008

Theimplementationofeightbigpowerplants,plannedtobebuiltbythenextthreeyears,isexpectedtofaceobstaclesasthefundsproposedfortheprojectsaremuchlowerthantherequiredamount.ThegovernmenthasproposedtogiveBDT38bn(USD551.5mn)tothepowerdivisioninordertocarryouttheentiregeneration,transmissionanddistributionworkinthenextfinancialyear(2009-10)underthemediumtermbudgetaryframework(MTBF)mechanism.Butaccordingtoaplanning commission official, implementation of the eightpowergenerationprojectsinthepipelinealonewouldrequire

morethanBDT40.50bn(USD587.81mn)during2009-10.Seven of the eight power plants in the pipeline will add1290MWofelectricitybyFY2012andtheremainingonewilladd 360MW by FY 2014. Daily demand for electricity inBangladesh is over5000MW. InBangladesh, all thepowerunitscombinedgenerateonly3400MWto3700MWofpowerperday.Following the severe electricity crisis, thepresentcaretaker government took an initiative to generate morepowerandpreparedashorttomid-termpowerdevelopmentplan.Under the plan, 5,875MW of electricity generation istargetedbyFY2012.http://www.thefinancialexpress-bd.info/search_index.php?page=detail_news&news_id=53632

IDBtoincreasefixedinterestrateonloanforfueloilIDBtoincreasefixedinterestrateonloanforfueloilIDBtoincreasefixedinterestrateonloanforfueloilIDBtoincreasefixedinterestrateonloanforfueloilNewAge,ThursdayDecember18,2008

The Islamic Development Bank (IDB) has decided toincreasethefixedinterestratebyaround1%forbankloansforfueloilimport.TheIDB,whichprovidesthegovernmentwith around USD 1 to 1.2bn annually to import fuel oils,recentlyasked thegovernmentto increasethe interest ratetoLIBOR[London InterbankOfferedRate] plus2.75%fromDecember29

th,thebeginningofthenewHijriyear (Islamic

calendaryear).Forthelastoneyear,IDBhasbeenchargingarateofLIBORplus1.75%.TheIDBprovidesamajorityofthefundsfortheBangladeshPetroleum Corporation, which annually imports around3.8mntonnesoffueloilsuchasdiesel,kerosene,octane,jet

fuelandcrudeoils.http://www.newagebd.com/2008/dec/18/nat.html#1

FivelocalcoFivelocalcoFivelocalcoFivelocalcompaniempaniempaniempaniesselectedtobidforpowersupplysselectedtobidforpowersupplysselectedtobidforpowersupplysselectedtobidforpowersupplysystemof3islandssystemof3islandssystemof3islandssystemof3islandsNewAge,WednesdayDecember13,2008

Five local private companies have been selected by thegovernmenttoparticipateinthebiddingprocessfortakingover electricity generation, transmission and distributionsystemsofthreeislandsHatiya,SandwipandKutubdia.Thechoseninvestorswilltakeovertheexistingpowersupplysystems in the islands which are not connected with thenationalpowergrid,andwillinstallnecessarypowerplants,transmissionlinesanddistributionsystemstosupplypower.ForHatiyainNoakhali,fourcompaniesAssociationofKEL,GBB, Navana and Global have been pre-qualified forparticipatinginthefinalbidding,whichisexpectedtobeheldin February 2009. Energypac, along with GBB andAssociation of KEL, were pre-qualified for Sandwip andKutubdia.Theselectedbidderswillinstallfueloil-basedorrenewableenergy-based power plants to supply electrici ty toconsumers.TheinterimgovernmentinMarch2007approvedthe RAPSS guidelines to allow private sector investors totake over electricity distribution systems and set upmini-powerplantsin15remoteareas,whichwerenotconnectedtothenationalgrid.However,ithasbeendebatedbysomepower officials that handing over power supplysystems toprivate companies might cause consumers in the ruralislandstopayhigherpricesforelectricity.http://www.newagebd.com/2008/dec/17/front.html#12

NewindustriesinChittagongstartgettinggasfromearNewindustriesinChittagongstartgettinggasfromearNewindustriesinChittagongstartgettinggasfromearNewindustriesinChittagongstartgettinggasfromearlylylylyDecemberDecemberDecemberDecemberTheFinancialExpress,SundayDecember14,2008

GasisfinallybeingsuppliedfromDecembertonewfactoriesin the fuel-starved Chittagong region after suspension foroverayear.Around40newfactoriesarewaitingtogetnewgasconnectionsfromthismonth.An increase of gas production from two wells in theBakhrabad gas field and the fal l in demand for gas

correspondingwiththewinterseasonhasfacilitatedthenewgasconnectionstoChittagongindustrialunits.The Chittagong region has been undergoing a severe gassupplycrisisforseveralyearsduetotheunusualdeclineinproductioninthecountry'sonlyoffshoreSangugasfield.TheScottish Cairn-operated Sangu gas field is now supplyingaround 34 million cubic feet (mmcf) of gas per day,comparedtoaround172mmcfdduring2006.http://www.thefinancialexpress-bd.info/search_index.php?page=detail_news&news_id=53224

LeatherLeatherLeatherLeatherGoodGoodGoodGoodssssLeatherexportsmaysufferslumpLeatherexportsmaysufferslumpLeatherexportsmaysufferslumpLeatherexportsmaysufferslump

TheDailyStar,Thursday,December18,2008Leather exports are expected to drop by 25% this year,influenced bya slump indemand ininternational markets,despite higher collection of rawhide. Owing to the globalfinancial crisis, demand for finished leather and leathergoodshasdeclinedin internationalmarkets.Theindustryisexpected to be hit badly this year, as exports of finishedleatherhavealreadydroppedby 20%in thefirst quarterofthecurrentfiscalyear.Pricesoffinishedleatherandleatherproductsmaydropbyupto40%thisfiscalyear.


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ThepriceofpersquarefootoffinishedleatherdeclinedfromUSD4.70toUSD4.20inthelasttwomonths.Thepriceoffinished leather was USD 4.95 per square foot in FY 07,which declined to USD 4.70 last fiscal year, according toBangladeshBankdata.http://www.thedailystar.net/story.php?nid=67573

PharmaceuticalsPharmaceuticalsPharmaceuticalsPharmaceuticals

PopularPharmatoenterNigeriPopularPharmatoenterNigeriPopularPharmatoenterNigeriPopularPharmatoenterNigeriamarketamarketamarketamarketTheDailyStar,Thursday18December,2008PopularPharmaceuticalsLtdsignedanagreementtoexportformulations toGenericGlobal Ltd,Nigeria. Anaudit teamfromtheNationalAgencyforFoodandDrugAdministrationand Control (NAFDAC), Nigeria, who visited the plants ofPopular, expressed its satisfaction at the medicinesmanufactured there. Popular Pharmaceuticals Ltd andPopularInfusionsLtdareexpectingregistrationforeighteenspecializedformulationswithinthenextcoupleofmonths.

Popular Pharmaceuticals brands are expected to beavailable in Yemen from early 2009 as Yemen SupremeBoard ofDrugs and Medical Appliances of theMinistry ofPublic Health carried out an audit from October 20 toOctober26,2008andapprovedthemedicinesmanufacturedbyPopularPharmaceuticals.Currently,thecompanyexportstoKenya,SriLanka,Macau,SomaliaandAfghanistan.

http://www.thedailystar.net/newDesign/news-details.php?nid=67592

TeTeTeTelecomslecomslecomslecomsWiMaxbiddersin'doublebind'WiMaxbiddersin'doublebind'WiMaxbiddersin'doublebind'WiMaxbiddersin'doublebind'TheDailyStar,TuesdayDecember16,2008

The BDT 2150mn (USD 31mn) bid price for eachWiMaxlicense acquisition has become a 'double bind' for thetelecoms regulator, asa majorityofthe seven bidders arenow reluctant to buy the license at such a price. Threebidders -- BanglaLion Communication, BRAC BD MailNetwork Ltd and Augere Wireless Broadband BangladeshLtd--wontheWiMaxlicensesthroughanauctionorganizedbyBangladeshTelecommunicationRegulatoryCommission(BTRC)inSeptemberthisyear.However,sinceBRACdeclinedtoacquirethelicence,BTRCinvitedthefourthhighestbidder-Bteltobuythelicence.ButBtel, and also other bidders includingBangladesh InternetAccess and Packet One, refused to take the expensivelicence.

Resultantly,BTRCaskedtheseventhhighestbidder-MangoTelecom-to become a WiMAX operator. Mango is yet torespond to this proposal.Industry insiders said the foreignequitypartnersofthelocalWiMaxbiddersaredisinclinedtoinvestinthesectorastheysaythehighauctionpriceisnotviableinamarketlikeBangladesh.http://www.thedailystar.net/story.php?nid=67291

TextilesTextilesTextilesTextilesRMGRMGRMGRMGexportstoUSfaringfineexportstoUSfaringfineexportstoUSfaringfineexportstoUSfaringfineTheDailyStar,Wednesday,December17,2008Export ofreadymade garments (RMG)to USA,one ofthemajor export destinations for Bangladeshi apparels, willmaintainitspreviousgrowthrateinOctoberassalesoflow-end products are still high.Althoughthe ExportPromotionBureau(EPB)isyettopublishitsmonthlyexportfiguresforOctober, industry insiders have stated that exports oftrousersandsweaterswillbehigherthismonthcomparedtoprevious months. According to industry experts, export ofapparel items inNovemberwill be better compared to thesameperiodlast fiscalyear.AlthoughexportsmayslowinDecember due to sluggish production, apparel export isexpectedto gainmomentum fromJanuary,as thefactoriesarenowbusywithmakingproductstobeshippedforthenextseason(summer).AccordingtostatisticsfromtheBGMEAandUSITC(UnitedStates InternationalTradeCommission),apparelexportsto

USAfromBangladeshincreasedby28.7%inthefirstquarterofthecurrentfiscalyear.TheBGMEAdatashowedthatin

thefirstquarter(July-September)ofthecurrentfiscalyearatotal of USD 774.3mn worth trousers were exported fromBangladesh, compared to USD 2.51bn in Q1 FY 08.SweatersworthUSD741.87mnwereexportedinQ1FY09,comparedtoUSD1.47bninQ1FY08.http://www.thedailystar.net/newDesign/news-details.php?nid=67485


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grenadeattackofthe21stAugust,2004throughproperinvestigationwillbearranged.Ruleoflawwillbeestablished,TheHumanRightsCommissionwillbestrengthenedandmadeeffective,andanOmbudsmanwill beappointed.Humanrightswillbestrictlyenforced.iii.Theon-goingreformprogrammeof theElectionCommissionandelectoralsystemwill continue.TheParliamentwillbemadeeffectiveandthegovernmentwillbemadeaccountableforall itsactivities.Wealthstatementandsourceofincomeof thePrimeMinister,membersofcabinet,Parliamentmembersandoftheirfamilymemberswillbemadepubliceveryyear.Exceptforsomespecific subjects related to the security of the state, Parliament members will be allowed to express differing opinions.iv.Useofreligionandcommunalisminpoliticswillbebanned.Securityandrightsofreligiousandethnicminoritieswillbeensured.Courtesyand tolerancewill be inculcatedin the political cultureofthe country. Militancyandextortion will be banned.AwamiLeague will take initiative to formulate a consensual and unanimous charter of political behavior.v.OpportunitieswillbecreatedfortheexpatriateBangladeshistotakepartinnationalreconstructionandtheirrighttofranchisewillbeensured.Specialinitiativeswillbetakentoattractexpatriatesremittanceinproductiveinvestment.Aconsultancynetworkwillbedevelopedtofruitfullyuseexpatriatestalents.vi.Administration will be free from politicization and will be pro-people. Efficiency, seniority and merit will be the basis ofappointment andpromotion inpublic service.Administrativereform,right toinformationande-governancewillbe introduced.ApermanentPayCommissionwillbesetupforcivilservants.vii.Inordertoprovidesecuritytoeverycitizenofthecountry,policeandotherlawandorderenforcingagencieswillbekeptabovepoliticalinfluence.Theseforceswillbemodernizedtomeetthedemandsofthetime.Necessarystepswillbetakentoincreasetheirremunerationandotherwelfarefacilitiesincludingaccommodation.viii.Rangpurwillbemadeanewadministrativedivision.6.LocalGovernment:Union,UpazillaandDistrictCouncilswillbestrengthenedthroughdecentralizationofpower.DistrictCouncilswillbetransformedintocentresforimplementationofprogrammesoneducationandhealthandallotherdevelopmentplans,andprogrammes,andformaintenanceoflawandorderEveryunionwillbemadetheheadquarterfordevelopmentandadministrationoftheareaandbedevelopedasaplannedruraltownship.AndeveryUpazillaheadquarterwillbedevelopedasanindustrialgrowthcentreandaplannedtownship.Thepowerandsphereof responsibilityofCityCorporationandmunicipalitieswillbeenhanced;thestandardandqualityofcivicfacilitieswillbeimproved.7.AgricultureAndRuralDevelopment:i.Ourmainaimistoensure"foodforall"bytakingallpossiblemeasuresandtomakeBangladeshself-sufficientinfoodby2013.Subsidyforagriculturalinputswillbeenhancedandavailabilityofinputswillbemadeeasier.Theamountofagriculturalloanwillbeincreasedandthelendingproceduresimplified.Incentiveswillbeprovidedfordevelopmentofruralwarehousing.Fairpriceforallcropsandagriculturalproductswillbeensured.Effortswillbemadetoattainself-sufficiencyintheproductionoffish,milk,egg,livestock and salt. Efforts will be directed to exporting surplus products after meeting domestic requirement.ii.Loanforsharecropperswillbemadeavailable,employmentfacilitiesforfarmlabourerwillbecreatedandtheywillbebroughtunderruralrationingsystem.iii.Appropriatemeasurestofacethechallengesofglobalizationwillbetaken,includingdevelopingcommercialagriculture,useofgeneticengineeringmethods anddevelopmentofnonagriculturalsector invillages.In order to increaseagricultural production,specialemphasiswillbeplacedonmodernizationofagriculture,innovationoftechnologyandexpansionoffacilitiesforresearchin

agriculture.iv.VillagedevelopmentwillincludeprovisionofurbanfacilitiesanddistributionofKhaslandamonglandlessfarmers.Effortswillbetakentoensurethatleaseofkhasponds/haorsisgiventogenuinefishermen.Alllandrecordswillbecomputerizedandalandreformcommissionwillbeformedtoensureincreasedproductionandsocialjusticeinthedistributionoflandandwaterbodies.v.Measureswillbetakentoreclaimlandinthecoastalareas.8.EnvironmentandWaterResources:Anintegrated policy andplanwillbe formulated toprotect thecountryfrom theadverseeffectsof globalwarming;tocreatepollutionfreeenvironmentandto savewaterresources.Projectswill beundertakenforriverdredging,waterconservation, floodcontrol,preventionofrivererosionandprotectionof forestry.Attemptswillalsobemadeforrestoringandmaintainingecologicalbalance.InitiativeswillbetakentoimplementtheGangesbarrageprojecttoexpandirrigationfacilities, prevent salinity and to solve the problem of scarcity of sweet water in the Sundarban region.Effectiveregionalandinternationalco-operationwillbesoughtforenvironmentalprotectionanddevelopmentofwaterresources.Modernscientificmethodswillbeadoptedtopreventwaterandairpollutionandinthedisposalofwaste.9.CommerceandIndustry:i.Short, medium and long term plans will be made and implemented for poverty reduction, efficient management for quick

industrialization that can provide employment, speedy expansion of stockmarket, maintenanceof law & orderand discipline,eliminationofbribeandcorruptionandadministrativedifficulties,avoidanceofpoliticalinfluence,creationofaninvestmentfriendlyenvironmentandacompetitivemarketsystem,adoptionofinnovativetechnology,andprovisionofinfrastructuralfacilitiesthatareabletoattractentrepreneursandexpanddomesticmarket.ii.InordertoencourageinvestmentbylocalandforeignentrepreneursandexpatriateBangladeshis,theONE-STOPfacilitywillbemadeeffective by simplifying legal and procedural formalities.Measureswill beput in place to protect indigenous industries.iii.Developmentof IT industry, strengthening of RMG and textile sectorsand expansion of foodprocessing,pharmaceuticals,leather,chemicalproducts,toys,jewelryandfurnitureindustrieswillbegivenpriority.Specialinitiativewillbetakenforalternativeuseofjuteandtomakejuteindustryviable.Smallandhandicraftindustriesandagro-basedindustrywillbeencouragedandwillbegivenallcooperationintheexpansionofmarketsathomeandabroad.Expansionintourismsector,increaseinlaborexport,andinvestment of remittance received from expatriate Ba

at capital weekly 21 december 2008

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