PUF seeks unfettered coastal cargo movement

The Financial Express, 31 July 2012

CHITTAGONG, July 30: The Port Users Forum (PUF) has opposed a move by vessel owners to dominate the inland water transport business by holding traders hostage.

The opposition came in the wake of issuing a letter by two organisations of inland coastal cargo carriers to the cement factory owners, calling for booking ships through the Water Transport Cell (WTC). The letter voiced concern over falling cargo business by the coastal or lightering vessels, saying it almost halved in the just-concluded fiscal year, compared with a year ago.

PUF leaders raised the issue at a meeting held in the port city today where president of Chittagong Chamber of Commerce and Industry Murshed Murad Ibrahim chaired.

Representatives of Inland Vessel Owners Association Chittagong (IVOAC), cargo agents, C&F agents association, local agents association, Bangladesh Master Stevedores Association, Bangladesh Shipping Agents Association, Chittagong Port Truck Owners and Contractors Association attended the meeting.

The stakeholders urged the inland coastal ship owners to ensure smooth transportation of essential commodities, fertiliser, cement and industrial raw materials from Chittagong port to other destinations of the country.

In his address MA Latif, immediate past president of the CCCI, said that the letter issued by Coastal Ship Owners Association of Bangladesh (COAB) and Bangladesh Cargo Vessel Owners Association (BCVOA) was “illegal” and “unethical” because booking of ships through the WTC will affect the trade as most businesses have procured their own vessels through huge investment to facilitate smooth carrying of their cargoes.

“In the global free market economy, no singular entity should be allowed to reign supreme on others, which the WTC is going to enforce through the COAB and BCVOA,” Latif said.

In the past the entrepreneurs, exporters and importers had to count financial loss worth millions of US Dollars on account of demurrage charges, he said. “To get rid of such demurrages the industrial enterprises procured vessels for carrying their goods investing a lot of money,” he observed.

CCCI president Murshed Murad Ibrahim alleged that the WTC was trying to hold the businesses hostage. But the port users representing all port related activities will vehemently oppose the evil attempts designed by those quarters.

The meeting demanded immediate withdrawal of the letter so that prevailing congenial atmosphere in the sector is ensured.

Fake notes in the Eid market

The financial Express, 31 July 2012

The Detective Branch (DB) of police nabbed six people and recovered fake currency notes amounting to Tk 10 million (one crore) from their possession in separate drives in the capital on Thursday, July 26. The law enforcers also seized a lap top, a printer and materials used in currency making. The detectives produced them before a press briefing at the DB headquarters. The additional deputy commissioner of DB said that the gang had been making forged notes in a rented house at South Mugda. This is a good example and needs to be multiplied to contain the menace of fake notes.

Fake notes are circulating in an apparently unrestricted manner before the Eid. Steps taken by Bangladesh Bank (BB) have little impact. The fake notes have reached bank counters – and, according to media reports, even the central bank vaults (the central bank though routinely refutes the allegation). These notes are coming from cash counters of commercial banks. Bangladesh Bank is worried about this. Some bank officials are obviously associated with those engaged in the business of fake notes. The ring leaders in the business of fake notes have become desperate before the Eid. The common people mostly are the victims.

The National Task Force is holding regular meetings for checking circulation of fake notes. Bangladesh Bank has cautioned the head offices of the commercial banks. All banks have been advised to use machines for detection of forged notes. The suppliers of forged notes are not only busy in the shopping malls but have also reached the ATM booths of commercial banks. Designs of new notes reach the cheats before the new notes are introduced in the market. A former central bank governor has said that fake notes keep on multiplying because those involved in this work are not punished.

There are big syndicates engaged in the business of fake notes. About five thousand cases are in the courts. The culprits are not being punished. They are operating in large numbers in the rural areas where people are not so alert. Foreign agents are also connected with this business. Fake notes are sold at a discount – a note of 100-taka denomination is sold at Tk 40, for example. It is reported that around 50 groups are engaged in the production of fake notes. Bangladesh is flooded by about Tk 200/250 million (20/25 crores) counterfeit notes each month.

In Dhaka, fake currency notes are everywhere – from fish market to kitchen market and from shopping malls to banks. Fake note-holders are spreading these in the whole city. Intelligence sources say that millions of counterfeit takas are entering the country from across the border. Notes are also printed in Dhaka. Citizens of India, Pakistan and some African countries are involved in the process.

It is said that terrorists are directly connected with the forgery of currency notes. This money is funding the terrorists. Fake notes of Tk 500 denomination are pouring into the market every day. Agents are very active in the city. They come to the market with new strategies. Ordinary and simple people are the victims. Business people do not pursue such cases seriously for fear of loss of business. In brisk business on the occasion of Eid, fake notes cannot be identified easily.

On July 5 the border guards detained a person with fake notes at Mirsarai border area and handed over the person to the police station. Uttam Dutta was the person. He came to Bangladesh by swimming across the Feni river. He had several notes of the same serial number in his possession. Border guards detected this discrepancy and detained Uttam Dutta.

Some members of the Lasker-e-Taiyeba were arrested last year at Malibagh. They were connected with the business of fake notes. They were dealing with fake currencies under the garb of a buying house. Most of people are not familiar with fake notes.

Machines used in detecting fake notes are not always effective. The police and RAB officials have launched a drive for about 50 makers of fake notes. Bangladesh Bank has asked the law enforcing agencies to arrest those connected with forgery of bank notes. They have advised the people to be more alert about transaction of bank notes and requested them to submit any information about forgery of bank notes to the nearest police station. The main culprits have, however, remained beyond the reach of law enforcers.

It is essential to ensure punishment to the criminals connected with the production and business of fake notes. The Ministry of Home Affairs, Bangladesh Bank, district administration and the border guards need to take a coordinated action against the culprits. The overall economy and public interest are affected by the forgery of bank notes. Therefore, those connected with forgery of bank notes must not be spared.

Financial discipline has been damaged because of the circulation of fake bank notes. The counterfeiters are circulating the fake currency notes tactfully. The law enforcing agencies have been able to recover a huge quantity of equipment used for producing fake notes. A number of factories have been discovered. These efforts have not been able to stop marketing of the products of the counterfeiters.

Those who are engaged in producing and marketing fake notes are now using modern technologies and the notes appear to be faultless. People find it difficult to distinguish between forged and genuine notes. The counterfeiters buy 100-taka notes from the market and convert them into 500-taka notes. There are allegations that some law enforcers also assist the counterfeiters.

The culprits escape punishment because of loopholes in our legal system. There are only a few examples of meting out severe punishment to the forgers. Many cases are pending in the higher courts. Such cases are lingering in the courts because of the financial strength of the alleged culprits. The government has an opportunity to do something spectacular in eliminating forgery of bank notes and produce a success story.

Experts for passenger vessels on Dhaka-Chittagong route

The Financial Express, 31 July 2012

The government should introduce passenger vessel on Dhaka-Chittagong route, which will reduce the tremendous pressure on roads and work as an alternative to the transportation between the two cities, said a BUET teacher, reports BSS.

“Merchandise are transported through cargo vessels on Dhaka-Ctg river routes. . . why not passenger vessels,” said Professor M Rafiqul Islam, Head of the Department of Naval Architecture and Marine Engineering of the university.

Talking to BSS, Prof Islam said the passenger vessels could be introduced together with inauguration of the Inland Container River Terminal (ICT) at Pangaon in Keraniganj, which is set to be inaugurated this yearend.

Detailing the idea, he said a 200-feet luxurious cruise liner could be built for the route at a cost of Taka 600-800 million each and it could carry 1000 passengers.

Besides, said the BUET professor, 60-metre double haul catamaran vessels or single haul traditional passenger vessels could be introduced on Dhaka-Ctg route targeting middle-income and higher-income passengers. “It’ll eventually be popular among the local and foreign tourists, too.”

Dr Abdullahel Bari, President of Association of Export-Oriented Shipbuilding Industries Bangladesh (AEOSIB), said distance between Dhaka and Chittagong is around 300 km and a passenger ship carrying 1000 passengers can easily reach Ctg from Dhaka in 10-12 hours.

“Passengers can easily move from Dhaka to Chittagong and Chittagong to Dhaka sleeping overnight on river routes. Thus, it would be considered as a leisure trip too”, said Dr Bari, also chairman of Ananda Shipyard.

He said country’s local shipbuilders that are exporting ships have the proven capability to build such passenger vessels, said Dr Bari.

Tofayel Kabir Khan, managing director of Khan Brothers Shipbuilding Ltd (KBSBL), which built country’s biggest shipyard on 300 bighas of land said, “Of course, this is possible under public-private partnership (PPP).”

BB circular on banks’ land purchase

The financial Express, 31 July 2012

Restrictions have been imposed on purchase of any land, floor space or taking lease of space for ten years and more than that for any purposes other than the use of their own by the head offices, said a central bank circular.

The circular, issued on Monday, directed that a bank could only purchase a floor or take a space on lease for the use of its branch within the area of the city corporation.

If a bank wants to purchase land, building, floor space and acquire their lease, it will have to get prior permission of the central bank, the circular said.

BB sources said some banks have been purchasing land or permanent structures without any logical ground or need which is a violation of the Bank Company Act.

The central bank also received allegations of corruption in the purchase of land by a number of banks. In many cases, owners are selling low quality lands or lands with legal complications to banks at higher prices, the sources said.

This circular has been sent to the chief executive officers of all banks.

It said giving loans for buying lands is on the rise. The land price has been on a steep rise as a sequel to a growing propensity by institutions like banks to buy land and their increased demand for it.

Because of the flow of money to such unproductive sectors, it is having an adverse impact on the country’s economy, it added.

The sources said the amount of bank loans for purchasing land has been increasing every year.

However, the amount of loans for land purchases is, in real sense, is much higher than what is shown in the books of accounts of banks because of a diversion of a substantial amount of credits, sanctioned for other purposes, to making land-related deals.

A high official of a bank admitted that many borrowers take loans from banks and buy land. In one or two years, the price of the land increases because of its scarcity and the borrowers then sell the land at a higher price, reaping a bonanza.

FBCCI for cancelling BB circular on non-PD banks

The financial Express, 31 July 2012

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the apex trade body, sought Monday cancellation of a central bank circular, which requires the country’s 25 non-primary dealer banks to accept up to 40 per cent of government securities.

“If the non-PD banks have to meet up to 40 per cent of the government’s loan demand, then the liquidity position of these banks will shrink and as a result they will not be able to invest in any productive sector,” the FBCCI said in a statement.

On July 24, the central bank introduced a new policy on investment in government securities with a view to shifting the liquidity pressure from the primary dealer (PD) banks to non-PD ones, partially.

Under the new policy, the government treasury bills (T-bills) and bonds will be distributed among the PD and non-PD banks at a certain ratio. The PDs will have to receive 60 per cent of the notified amount of investments in such tools while the non-PDs must accept the remaining 40 per cent.

The new policy will come into effect from August 1 this year, according to the circular.

The apex trade body said the new policy would hamper growth in the private sector and ultimately the government would not be able to achieve its targeted growth.

The FBCCI said the circular went against the spirit of the July-December monetery policy where the central bank mentioned that it would pay special attention to the private sector to ensure enough cash flow to it.

“Besides, the liquidity crisis in private banks will worsen as they take short-term loans from people, but 70 per cent of the government loans are of 5, 10 and 20-year terms.”

The BB’s latest move came against the backdrop of liquidity worth around Tk 240 million held in government securities by 12 PD banks after maintaining their statutory liquidity ratio (SLR) with the central bank, which has created a liquidity pressure on the commercial banks.

Govt body for investing 40pc of banks’ capital in stocks

The Financial Express, 31 July 2012

A government committee has recommended allowing the commercial banks to invest 40 per cent of their capital in the share market instead of 25 per cent, as proposed by the central bank, officials said Monday.

Currently, the banks can invest up to 10 per cent of their total liabilities in the capital market.

The Ministry of Finance formed the seven-member committee, headed by former secretary A K Abdul Mubin, to amend the Bank Companies Act 1991 for minimising risk and ensuring good governance in the country’s banking sector.

The committee has been asked to examine the changes proposed by the Bangladesh Bank (BB) in a draft of the Bank Company (Amendment) Act 2012.

The committee has recommended higher investment in the share market by the banks, considering the overall situation of the country’s capital market.

“We expected that the higher investment by the banks will help bring back stability in the country’s capital market through restoring confidence among small investors,” Mostofa Azad Chowdhury Babu, a member of the committee, told the FE.

During the recent months the country’s stock market has been in a bad shape, in terms of market capitalisation of the listed issues, leading to a sharp decline in the indices.

The benchmark index of the Dhaka Stock Exchange (DSE) – the DGEN – came down to 4159,17 points on July 30, 2012 from its highest of 8918.51 points on December 05, 2010, the DSE data showed.

The committee believed that the banks’ financial base is strong enough to invest more in the share market, added Mr. Babu, also vice-president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

On the other hand, the central bank has recommended amendment to the regulations relating to the banks’ capital market investment to minimise risks, the officials said.

The banks should not be allowed to invest in the share market more than 25 per cent, in any form, of their total capital, the BB said in its proposal for the Bank Company (Amendment) Act 2012.

“We’ve proposed the exposure limit as the threshold for the banks,” a BB senior official told the FE, adding that the central bank has recommended the investment limit considering their financial risk.

The central bank earlier estimated that if any bank invests 10 per cent of its deposit and if the share prices slide by 25 per cent from their purchase price, the bank’s capital adequacy ratio will decline by a minimum of 2.0 per cent.

At present, the banks are allowed to invest 10 per cent of their liabilities (deposit) in the share market in line with the section 26 (2) of the Banking Companies Act 1991.

Under the existing rules, holding of equity share in any form should not exceed the approved limit. Additional or unauthorised amount of holding will be deducted at 50 per cent for Tier-1, generally known as core capital, and 50 per cent from Tier-2, generally known as supplementary capital.

HSBC earns $ 12.7b profit

Daily sun, 31 July 2012

HSBC has earned a profit before tax of $12.7 billion, an increase of $1.3 billion, or 11 percent from that in the first half of 2011.

The board of HSBC has declared a second interim dividend of $0.09 per ordinary share for the year 2012.

Profit attributable to ordinary shareholders was $8.2 billion, a decrease of $777 million or 9 percent compared to that in the first half of last year, said a press release.

The net interest income of the HSBC was $19.4 billion, $859 million, or 4 percent lower than that in the first half of 2011. Its net operating income before loan impairment charges and other credit risk provisions of $36.9 billion was $1.2 billion, or 3 percent higher than the first half of last year.

The total operating expenses of $21.2 billion also increased by $694 million, or 3 percent compared to that in the first half of last year. On an underlying basis, and expressed in terms of constant currency, operating expenses increased by 10 percent. HSBC’s cost efficiency ratio remained at 57.5 percent. Loan impairment charges and other credit risk provisions were $4.8 billion in the first half of 2012, $ 467 million lower than the first half of last year.

Hybrid bamboo to enhance production of KPM

Daily Sun, 31 July 2012

Angelica (JB) Limited, a Bangladesh-Japan joint-venture investment company, has shown its interest to invest in enhancing productivity and product diversity of Karnaphuli Paper Mills (KPM) by utilising environment-friendly technology.

The organisation proposed to supply with highbred bamboo to the mill and invest in producing towel, napkin and tissue papers here using bamboo.

Visiting President of the Angelica (JB) Ltd, Ahsan William, showed the interest during a view-exchange meeting with Industries Minister Dilip Barua when a delegation led by William called on him at his office yesterday morning. Barua welcomed the investment proposal saying that Bangladesh would certainly accept it if it was proved sustainable for environment and climate.

Barua said the government has been working relentlessly in turning Karnaphuly Paper Mill into a profitable venture while and effort is also on to increase production capacity of state-owned sugarcane mills.

In the meeting the delegation proposed to arrange production of highbred bamboos near the KPM premises.

In the proposal, the visiting team said meeting total demand of bamboo for KPM is possible through producing higher quality and environment friendly bamboos, which take only six months to grow up.

Besides, they proposed producing highbred sugarcane for meeting increasing demand of sugarcane at the mills, pointing out that at least 11 to 13 percent recovery would be attained from these sugarcane varieties.

They pointed out that turning the KPM and government owned sugarcane mills profitable was possible through producing highbred bamboo and sugarcane in Bangladesh.

NCC Bank holds workshop

Daily Sun 31 July 2012

NCC Bank Limited recently organised a two-day long workshop on “Loan Classification, Provisioning and Rescheduling” for its branch managers in Dhaka.

Mohammed Nurul Amin, Managing Director and CEO of the bank, formally inaugurated the workshop as the chief guest, said a press release.

Japan’s factory output in unexpected fall for June

Daily Sun 31 July 2012

TOKYO: Japan’s factory output turned down unexpectedly last month, official data showed Monday, stoking concerns that turmoil overseas is damaging a recovery in the world’s third-largest economy.

The output decline came amid growing fears about the fiscal situation in Europe-a major market for Japanese products- and a strong yen hurting demand for products from the nation’s factories.

Industrial production in June edged down 0.1 per cent from the previous month, said the ministry of economy, trade and industry-smaller than a revised 3.4 per cent fall in May but well short of market expectations for a 1.6 per cent rise.

Underlining the downward trend, data also showed that factory output declined 2.2 per cent in the April to June quarter from a year earlier.

“Industrial production appears to be flat (in June),” the ministry said in its monthly report, downgrading its earlier assessment in May, which said production was on a recovery path.

The June decrease was largely due to falling output from automakers and other transport equipment manufacturers, the electronics industry, and the iron and steel sector, it said.

A survey of manufacturers released with the production data was mixed with firms expecting factory output to rise 4.5 per cent in July and fall 0.6 per cent in August.

The latest figures came after central bank and government officials said Japan’s economy appeared to be gaining traction, although they warned that weakness in Europe was the biggest threat to any recovery.

“Economic growth is on a much weaker trend than what the government and the Bank of Japan are telling us to believe,” said Satoshi Osanai, economist at Daiwa Institute of Research in Tokyo. —AFP