La Semaine Dernière A Mes Yeux

(23 juillet --- 28 juillet )

Selon un reportage, le ministre des Finances a divulgué identité de 300 sociétés défaillantes au parlement.

Selon un reportage, l’autorité de Payra Power Plant à Barishal a imposé restriction sur le service des ouvriers locaux. Cependant, l’autorité a affirmé qu’il solderait arriéré des ouvriers. Police a arrêté 12 ouvriers bangladais pour la mort de l’ouvrier chinois pendant une escarmouche.

Selon un reportage, le ministre des Affaires Étrangères des États-Unis a placé Bangladesh parmi les pays où le traffic des hommes sont endémique. Pour la troisième fois consécutive Bangladesh a été resté dans le même groupe. Dans son rapport "Trafficking In Persons", State Department , le gouvernement bangladais n’a pas pris le pas d’empêcher le traffic des hommes.

Selon un reportage, gouvernement a annulé les intérêts sur les crédits des banques publiques pour 2018, coûtant le gouvernement Tk 11,92 milliards.

Selon un reportage, un train s’est écarté de chemin de fer à Moulvibazaar en tuant 1 personne et blessé plus de cent personnes.

Selon un reportage, une fille ,victime d’attaque incendiaire par ses proches, a succombé à ses brûlures à l’hôpital.

Selon un reportage, environ 4.500 bijoutiers ont rendu légal 12.000 Kilo d’or, de diamant et d’argent clandestin en payant Tk 1350 million d’impôt en trios jours de la fête de bijou.

Selon un reportage, un homme a été massacré devant sa femme à Barishal. La tuerie a bouleversé le pays. Le tueur a harcelé beaucoup de fois sa femme.Police a arrêté 4 coupables pour la tuerie.

Selon un reportage, la société véhicule partage , Pathao, a licencié 300 salariés dans un jours à cause de manque de fond.

Selon un reportage, police a arrêté un Nigérian qui possèdait Crystal Meth.

Selon un reportage, les argents clandestins dans les comptes de banque suisse, opéré par Bangladais, ont augmenté par 29 percent dans un an. La Banque central de Suisse dans un rapport “Banks In Switzerland-2018” a divulgué l'info.

Two Good Things About Budget 2020

I have found two  positive things about the budget for 2020: government plans to allocate Tk 500 million to scientific research and to allow foreign teachers in Education sector. Sources of both information are press reports. I have not had the chance to look at the budget documents where these propositions are broached. Ministry of Finance website posted  some documents , which are snippets of statistical information revealing where the money will stem from and where it will be spent.

Given that education spending as  percentage of GDP hovers  around  2 percent,government embarks on a project to create a "Digital Bangladesh". John Stuart Mill in his "On Liberty" wrote:

The worth of a state , in the long run, is the worth of the individuals composing it; and a state which postpones the interest of their mental expansion and elevation to a little of mere administrative skill , or of that semblance of it which practice gives in details of business; a state which dwarfs its men, in order that they may be more docile instruments in its hands even for beneficial purposes--will find that with small men no great thing can really be accomplished; and that the perfection of machinery to which it has sacrificed everything will in the end avail it nothing, for want of the vital power which, in order that the machine might work more smoothly, it has preferred to banish.

So increasing the expenditure on education to facilitate human development initiatives as well as making a knowledge based society is an obligation. This novel objective is marred by swollen spending of Education as a result of inclusion of Rooppur Nuclear Power Plant cost, as revealed by a report. By coining  two different sectors , education and technology, into one Education and Technology ministry simply concatenated spending of two sectors. And Rooppur Power Plant project is one of the costliest project, already costing $11.52 billion, Bangladesh has ever undertaken.  Annual allocation to this power project simply increases the spending of Education ministry and gives a cosmetic swollen look. It does not mean any genuine commitment. Just take a look at the following two graphs: first one shows spending on Education(plus technology), Health and Defense as percentage of total spending. Inclusion of technology places the share of Education above the other two sectors as percentage of total public expenditure. The next graph shows gross allocation(development plus non development) on Education and Technology sector. Please note it includes non development expenses, which means salaries, operational expenses and other infrastructure related costs are included. It barely captures any genuine commitment from the government towards education sector. If we take a closer look at the allocation we see that this year Tk 32,101 crore has been proposed for Defense sector. Of which Tk 29285 crore will be spent on operational expenses and Tk 148 crore will be used for development expenses. Unfortunately, the wage employment we have created in the defense sector is not that good. We see that our agencies miserably failed to forewarn about drug invasion, about expulsion of Rohingyas  from Myanmar, to maintain the existing inventory( we have lost more fighters in accidents in the last 10 years) and to foresee merger acquisition in the corporate world. Merger of Telenor and Axiata group came to the light when Telenor group divulged the news on its website. No agency managed to get prior information and told BTRC to take a precautionary step. More recently, Bangladesh Petroleum Corporation incurred Tk 6000 crore loss in LNG purchase in a year due to price fluctuation in the international market. No agency saw it coming. One of the LNG terminal owner is the brother of a former chairman of parliamentary standing committee(defense). What is going on? Let's cut it short and get back to the point.

(Data Source: CPD)

(Data Source: Bangladesh Economic Review 2018)

 Diverting funds to scientific research is a bit late move but much appreciated one. But how and where this money will be spent demand some serious thought and discussion. The important thing is who will bear the onus of deciding where the fund should go. If part of this fund is meant for academic research then professional bodies, like Academy of Science, will decide the priority sectors. If  part of it is meant for industry oriented research, then industry representatives, scientists, experts and public officials will decide which industries will be chosen. I had the chance to see the progress of many development projects as an NGO worker and journalist. Frankly speaking the experience was not pleasant. I saw first hand that non-technical staff cornered the technical staff and non-development spending ate up a big part of project spending. Unless it is absolutely needed, it is better to avoid recruiting non-technical staff. Or try to recruit undergrad or grad student of respective discipline. It will eradicate any communication gap , give the students an exposure and help checking spending. Often this kind of non-technical position creates poor jobs that lead to further corruption to obviate income vulnerabilities of the position holder.

I do not want to talk about here the academic research and  want to discuss mostly on industrial research. In industry oriented research, I think it is better to spend the fund on areas that will give quick result in the short span of time. This success in short period will fetch more fund later. Two sectors that come to my mind are textiles and agro processing/ food processing. We have tertiary  and technical institutions aimed to cater to the demand of these two industries. Our agriculture sector itself is a success story and bevy of research work is going on. Unfortunately, we do not pour enough fund to textile and RMG research. Expertise and foreign collaboration are also lacking here. We have formed so many strategic partnership with friendly countries but did not manage to get strategic partner in key research areas. For instance, Russians are implementing power and arms delivery projects with huge price tag. We could easily seek their assistance in research initiatives in other areas using  thawing relations and as a condition to the ongoing projects. They would love to step in to explore new areas of cooperation that will have strategic values and will work as a good PR to improve their image, already marred by cost controversy. I would like to see Russian and Bangladeshi textile engineers come together to initiate research projects aiming to bring automation in RMG manufacturing( particularly in Knit items), to innovate machine to make high-end T-shirts, to make low-cost effluent treatment plant and  to innovate sophisticated fabrics. The acquired knowledge could be jointly used, sharing the intellectual property.This kind of partnership  will not only boost our capability but will give us an edge over our rivals for a significant period. Similarly, our agro processing/food processing industry can start research work to tap the markets of South and South East Asia. For instance, our biologist, fisheries experts and entrepreneurs could try to innovate alternate but cost effective environment for crab production, for eel production. Research activities can also be taken to increase dairy products and meat production. Bangladesh could easily export processed pork meat like ham, bacon etc  to South East Asian countries and China. Part of this fund may be spent to discover a suitable pork species or develop the local varieties and to discover vaccines for them.

One of the good thing of industry based research is that once one makes some result venture capitalist and private investor come forward with funds. Projects that involve high market potential and high risks usually vie for this kind of fund. If this happens,  most of the government fund for research may go to academic research.

Creation of research minds largely hinges on the education sector. A great part of your population have to be at the same wavelength to comprehend the gravity of a situation, to know what to do at a critical stage and to respond to changing situation. To create that stock, nurturing of minds at every stage of learning is a must . It is great to learn that government plans to recruit foreign teachers. In English medium schools and in private universities, foreign teachers are already working. But their number is not significant. Our educational centers have fallen victims to tribal politics. Even school management committee occupied by political stalwarts. Universities have fallen into the hands of anarchists.World class graduates churned out by public universities till Ershad regime still dominate the private and public sectors. That momentum is not maintained. We never try to search the answer behind it. As many of our graduates contribute to foreign economy and education sector, time has come to open up our education sector to foreigners. We have already seen the tremendous contribution they make to textile and cricket. Unfortunately, the old guards already voiced strong opposition to such plan. It is not objective criticism when many critics tried to seek privilege and lobbied for making their son  a public university  teacher. However I have not seen them criticizing the defense budget. Going after the defense services may cost one the privileges of being a public university teacher even if he was son of former registrar of the same public university or hailed from a cadet college. Foreign teachers and educators have less chance to become victims of tribalism and they can discharge their duties at ease during  the tenures of different regimes.  Moreover, they impart new ideas, vision , approach to see things and learning techniques among students who do not have chance to know about these stuffs and lost interest in learning. As a teacher of French as a foreign language I had the chance to attend training programs conducted by French pedagogy trainers. Those training programs were mind blowing sessions. Simple dictionary becomes a magical instrument of learning. At least dozen of funny ways are there to learn new things with the help of dictionary. It is a pity that many of us have reluctance to use dictionary. Back in February, host of a TV show on  new books published at Ekushey Book Fair begrudged a book of poems after encountering too many unknown Bangla words. He said," I don't like reading books that need a dictionary by my bed side." It appalled me to see such people occupied the position due to their strong political connection.We do not see too many professors working as consultants to media outlets when we have nearly three dozens of private TV stations and radio stations. What lacks is air of professionalism and learning. It is prevalent even at the highest learning center. At a university, a teacher was justifying the claim of not subscribing to foreign journals by saying " they cost a lot and become irrelevant after a certain point of time".

Foreign educators will alter the current atmosphere of learning. I also found the claim that foreign teachers will launder money every year  a bit asinine. One will find it hollow when he looks at the condition of our financial institutions. Who did run and operate those troubled banks? Who were at the management committee? I have no doubt in my mind that foreign teachers will add great value to our education and to society in general. Just make sure that there is a pool of foreign teachers registered with University Grants Commission at the tertiary level of education. This is the area where we do need their contribution to break the vicious cycle of the anarchists who are quite successful in bringing academic operations of public universities to a complete halt. Many of these leaders' sons or daughters are never admitted to public universities. They hold stakes at private universities.French way in dealing with the anarchists is quite exemplary. In the 90's French railway workers called general strikes frequently and crippled the whole railway network. One French administration decided to deal with these trouble makers by creating a reserve of foreign railway workers taking full advantage of EU common market.

The allocation to scientific research,a belated step but a welcoming one, is just a mere step toward the creation of knowledge based society. But additional laws and amendments are needed to make sure how the knowledge based output will be shared, protecting the intellectual right of researchers and institutions. Prerequisite to the illuminated knowledge based society is learning environment that shapes curious minds. Allowing foreign teachers in our education sector is a little step towards that goal. I hope government will trash the fictitious claims made by old guards and allow foreign teachers to play their role at every stage of our education.

La Semaine Dernière A Mes Yeux

(14 juillet --- 21 juillet)

Selon un reportage,   un ancien ministre dans une conférence de presse a accusé une force de sécurité pour avoir enlevé son neveu,un enseignant dans une école à Chattogram. Le neveu disparu s’est trouvé près d’une rizerie à Mymensingh. Une voiture blanche l’y a déposé.

Selon un reportage, police a arrêté un policier accusé d’avoir dissiminé la vidéo de témoignage d’une étudiante,brûlée à la mort au toit d’une école religieuse à Feni.

Selon un reportage, accrochage entre salariés de China Harbor Engineering et ceux d’une société bangladaise a laissé un ancient soldat de l’armée de la terre mort à Chittagong. Son cadavre mutilé s'est trouvé près du site dún projet de China Harbor Engineering Limited.

Selon un reportage, des ouvriers bangladais et des ouvriers chinois de Payra Power Plant se sont engagé dans une escarmouche après mort d’un ouvrier bangladais à Barishal.Un Chinois a succombé à la mort. Six ouvriers chinois ont été hospitalisés.

FDI In SME Could Be The Savior

Reports emerged on the press insinuate that government plans to finance huge budget deficit by borrowing more than Tk 470 billion from banks. The ailing banks are facing liquidity crisis. Many private investment projects stalled due to cash crisis. The decision will put the banks further into trouble by diverting funds from investment towards budget financing. In addition, job creation will also be affected as funds for investment and SME opportunities will dry out.

In the wake of withering number of large and medium enterprises, as indicated by another news report, SMEs remain a beacon of hope for employment creation and revenue generation, relieving the worries of cash-strapped government and financial institutions. Perhaps no other sector  like the SME adds so much value to the  economy. Its small size and dependence on local markets for ingredients and final products make it special. But its glorious journey may come into a halt if government decision comes into effect.

This sector is already a victim of government's biased policy. When it comes to industrial credit, we see that there is discrimination in its disbursement. Moreover, much of the blames for accumulation of bad loans should be attributed to large and medium industries.

Bangladesh Bank SME statistics say that during the July-December in 2017-18 , our  banks disbursed Tk 1693.4 billion of  industrial credit. Of which Tk 1313.6 billion went to large industrial units, Tk 221.5 billion went to medium units and Tk 158.3 billion went to small industrial units. In 2018-19(Jul-Dec), industrial credits for larger and smaller enterprises increased to Tk 1569.77 billion and Tk 179.62 billion respectively. Whereas medium enterprises’ industrial credit decreased to 203.06 billion.

(Data source: Bangladesh Bank)

Now if one takes a look at the default loans, he will be puzzled. In 2017-18 (Jul-Dec), default loan for large industries was Tk 325.09 billion, it was Tk 117.3 billion for medium industries. For small industries , it was Tk 55.18 billion. Within a year, default loans registered an increase. In 2018-29(Jul-Dec), default loans for large, medium and small industries were TK 370.61 billion, Tk 149.09 billion and Tk 76.43 billion respectively. Please note on both occasions default loans for small enterprises were relatively small.

(Data Source: Bangladesh Bank)

Many of this diverted funds will again be pumped into trouble-ridden banks to keep them operational. And we just see all they did in the past to increase the volume of default loans. Since government is cash strapped and wants to create jobs, it behooves the government to allow FDI in SMEs. There are many unseen benefits.

Recently India allowed FDI in retail sectors. Its impact reached beyond borders. As global supermarket brands are opening their outlets across India, RMG factories witness a jump in orders emanating from India.Bangladesh's recent RMG export growth in India is largely ascribed to this factor. Indians are getting top-notch woven items and Bangladesh gets a chance to diversify its RMG export market.Now more orders mean more jobs and reduction in trade deficits.But the biggest advantage of FDI in SME is superior management, supply-chain network and introduction of new services and technology, which will change the whole industry to the core by bringing professionalism and alleviating worries from market uncertainties.

I have been arguing for FDI on SMEs for quite some time. Government seems busy fetching huge amount of FDI in sectors where value addition to the economy is little and and worsening of government expenditure is on the rise. A recent report says Bangladesh's entrance to LNG market also augments subsidy to Bangladesh Petroleum Corporation as LNG price oscillates between  low and high prices in international market. Furthermore, this kind of huge investment only fills the coffers of crony capitalists, who have deep ties with politicians , bureaucrats and defense establishment.

FDI in SME will not be astronomical amount like that in the power or infrastructure sector. But the value they will generate will be enormous. Take for instance the example of our agro-processing and food processing industry. Idea that simple bakery items could be produced using automation never crossed our minds. Quality, price, hygiene and value addition were ensured. Mango pulp and pickle  factories or tomato sauce production units in the muffossil towns introduced contract farming model and saved the marginalized farmers from volatility in the market.

I think government should welcome with open arms if a Philippino wants to set up a boutique shop in Dhaka, a Thai wants to launch a food processing business or a Tamil desires to open a restaurant in Dhaka. One may argue Bangladeshis know how to run this kind of business so we do not want any FDI here. Wrong. Better management, introduction of new ideas and technologies, better worker-employer environment are lacking here. Many years ago I read a report on BBC Bangla about a Pakistani RMG exporter based in Adamzee Export Processing Zone. His factory offered salaries more than his Bangladeshi counterparts do in addition to benefits. Plus he is very kind to his Bangladeshi workers and set up a grievance redressed system that took attention to workers' woes.None of his workers descended to street even when unrest broke out in that industrial zone. This kind of management services and good practices will spread to whole industry when others will take notice of them.

But the biggest advantage will be a great leap forward to an intervention free market. Our country is infested with cadre-based political ideologies and unwanted intervention of  men-in-uniform and men-in-plain clothes. Businesses incur costs to entertain their demands and the parasite-infested business environment drives the good ones out of the market. FDI in SMEs, it is expected, will significantly improve that climate by acting like a scarecrow. Reason for optimism lies in the examples set by donor-funded projects. Since these projects require a certain degree of accountability and transparency, many government officials are not interested to siphon off money from these projects. On the other hand, quality of solely government funded projects has recently been called into question.

It is regrettable that government plans to draw money from banks to finance projects that bear no fruit while neglecting vital sectors like SME. FDI in SME will create the aseptic conditions in our economy, gradually destroying the favorable breeding ground for parasites. At first glance it may appear eccentric. Given the deteriorating business climate, no other solution seems pragmatic and more appropriate beside it.

La Semaine Dernière A Mes Yeux

(7 juillet ---- 14 juillet)

Selon un reportage, les voleurs ukrainiens ont ciblé 5 autres GABs à Dhaka. Ils on utilisé le malware pour prendre contrôle de GAB. Police bangladaise a arrêté 15 Ukrainiens pour avoir volé Tk 1,6 millions depuis les GABs.

Selon un reportage, le ministère des affaires étrangères a appelé les ambassadeurs de Lebanon et de l’Iran au Bangladesh. Ils ont été accusés de corruption.

Selon un reportage, un dirigeant du bureau de l'anti-corruption a été accusé dávoir pris pot de vin depuis un policier corrompu. Le bureau l’a licencié et arrêté pour interpellation. TIB a critiqué le gouvernement pour ne pas avoir appréhendé le policier corrompu.

Selon un reportage, la mauvaise créance des banques bangladaises a franchi le seuil de Tk 1 trillion en provoquant la Banque centrale de tenir une réunion avec PDGs des banques troublées dont 4 banques publiques et 3 privées.

Selon un reportage, le ministre des Finances s’est inscrit dans l’hôpital à la veille de placer son premier budget au parlement. Ce n’est pas grave. Le ministre est tombé malade pendant son discours au parlement. Le Premier ministre a fini son discours budgétaire. Il était aussi absent dans la conférence de presse.

Selon un reportage, un des groupes persécutés au Bangladesh, les Biharis, ont manifesté contre harcèlement de Police et demandé justice pour l’assaut incendiaire qui a laissé 9 morts dans le camp de Kalshi en 2014. Ils se disent que Police n’appréhende jamais les aggresseurs , dont les fidèles du parti en exercicice et un deputé . Cependant, Police a récemment préparé un procès-verbal en accusant des Biharis comme coupables.

Selon un reportage, une fille indigène a été mis à feu par un de ses proches à Narasingdi. Depuis longtemps, il l’a harcelée.

Selon un reportage, 64 Bangladais qui se trouvent dans un bateau au large de Tunisie ont dit à la Croix Rouge qu’ils n’avaient aucun envie de revenir au Bangladesh. Ils sont tous lourdement endettés et désrent d’aller en Europe.

Selon un reportage, Police a trouvé cadavre d’un conducteur de service véhicule-partage Uber à Uttara.

Default Loans: In Search Of Root Cause

Default loans have reached Tk 1 trillion mark by the end of this March, as indicated by press reports citing Bangladesh Bank. It is in stark contradiction to government's stance to not allowing the default loan to increase even by one Taka. Default loan situation is so dire that Bangladesh Bank convened a meeting with the directors of seven troubled banks to know more about piling up of default loans. According to news reports, key borrowers failed to pay their installments in time  in spite of rescheduling their loans.

What is alarming  is that banks with sound records are also being contaminated by the rapid rise of default loans. Of the seven banks, three are private: Islami Bank, Al Arafah and National Bank. Earlier default loan problem had not taken a virulent form in these banks.

Bangladesh Bank in its annual report observes that non performing loans (NPL) have the potential to trigger spill over effect and to have profound risks for financial stability by making policy implementation harder.

In 2010, the amount of NPLs was Tk 227.1 billion and rose to Tk 893.4 billion by the end of June 2018. A little less than 50% of those NPLs belong to state-owned commercial banks(SCBs).Meanwhile, NPLs for private commercial banks (PCBs) and for foreign commercial banks(FCBs) stood at Tk 389.8 billions and Tk 22.7 billions respectively. One may argue that SCBs operational and client base are much bigger than those of PCBs and FCBs. Gross NPLs to total loans or net NPLs to total loans, which Bangladesh Bank uses to measure asset quality, may give a better indication of comparison of bad loans by types of banks. In 2010, gross NPLs to totaloans by SCBs was 15.7. Meanwhile, it was 3.2 percent for PCBs and 3.0 percent for FCBs. By the end of June 2018, gross NPLs to total loans for SCBs, PCBs and FCBs  rose to  28.2 , 6.0 and 6.7 respectively.Its is evident that percentage of bad loans to total loans is far more higher in SCBs than those in PCBs and FCBs. How the decision was made at the management board and its implementation calls for greater attention.

(Data Source: Bangladesh Bank)

Bangladesh Bank's management of Equity and Entrepreneurship Fund, a fund created to provide capital for promising businesses, is not beyond controversy. Couple of years ago reports surfaced on the press that thugs swindled hundreds of crore taka from the fund submitting fake documents.

So there is doubt over its ability to rein in curbing NPL.

Bangladesh Bank measures profitability of a bank in terms of its Return on Asset(ROA), Return On Equity(ROE) and interest rate margin. Bangladesh Bank observes that NPL tends to bring down ROA and ROE.

I did a small study on the interaction between ROA and the NPL annd gross NPL to total loan. My objective is to find out whether NPL and NPL to total loans influence ROA. I gleaned data on these three variables for the period between 2010 and 2018(June).In fact, I ran a logit model to see probability of ROA in the presence of NPL and gross NPL to total loan. To get the probability of ROA,P,I hinged on relative frequency, which I got by calculating the ratio of ROA at a particular level of NPL to total ROA in the industry at that level. Taking natural logarithm of P/(1-P) gives us the logit. Next the equation L = a + bNPL+cNPLLOAN+u was transformed by a weight. The weight  was derived by multiplying total ROA, P and (1-P) for a corresponding level of ROA. Then I took the square root of weight and then multiplied the above equation by square root of the weight. Transformed equation looked like:

sqrt(weight)L = sqrt(weight)a + sqrt(weight)bNPL+sqrt(weight)cNPLLOAN+sqrt(weight)u
or
wL= wa+bwNPL+cwNPLLOAN+wu

Then I ran an ordinary least squares regression using the transformed equation. The advantage of this transformed data is that it eschewed heteroscedasticity and yielded efficient estimates of the coefficients.

For SCBs the model fitted well, but for the PCBs and FCBs I was not that lucky. The result of statistical analysis for SCBs indicates that for a unit increase in the weighted NPL the weighted log of the odds in favor of ROA increases by 0.0055492. Alternatively, for a unit increase in the weighted NPL the weighted odds in favor of ROA increase by 1.28 percent. The odds could have been much higher without NPL.

Meanwhile for a unit increase, 1 percent in this case, in the weighted gross NPL to total loan the weighted log of the odds in favor of ROA decreases by 0.0944032. In other words, for 1 percent increase in the weighted gross NPL to total loan the weighted odds in favor of ROA decrease by 19.54 percent.

The above findings are pretty much in line with the Bangladesh Bank observation that NPL slows down profitability of banks.

What led the management board of these banks to endorse these bad loans left many puzzled. Recovery of the loans requires higher time, money and effort, increasing the operating expenses. One of the tools Bangladesh Bank uses to measure capability of management is the ratio of total expenditure to total income(EI). For SCBs, EI was 80.7 in 2010. A gradual rise was recorded till 2016 when it reached to 90.2 then lowered in the later years, 81.7 in 2017 and 83.9 in 2018(June). Meanwhile, for PCBs it was 67.6 in 2010, 73.8 in 2017 and 78.4 in 2018(June). For FCBs, EI was 64.7 in 2010, 46.6 in 2017 and 44.3 in 2018(June). This means FCBs managed to lower EI significantly in recent years. The operating expenses are much higher for SCBs and PCBs than those for FCBs. This is clear indication that management board of FCBs are more capable in dealing with their assets(loans ) and in running businesses in this country. The solution also lies here. What does make them different from the SCBs and PCBs? Who are the members of these boards? Did they face intervention from making and implementing decision?

(Data source: Bangladesh Bank)

Now we come to the same roundabout. Poor governance at banks leads to piling up of bad loans. Sheer size of this loan spurs operational expenses and makes expectations of sound banking process untenable. At the end of the day, it contributes to corrode depositors' trust and to augur calamity for the whole economy. Fixing corporate governance instead of injecting further taxpayers' money is the prerequisite.

La Semaine Dernière A Mes Yeux

(1 juillet --- 7 juillet)

Selon un reportage, un magistrat misogyne a fait assez de polémique dans la presse et le réseau social après il avait fait raide dans les marchés, boutiques et restaurants afin de protéger les droits de consommateurs. Il a mis deux boutiques de beauté à l’amende pour avoir gardé des produits qui ne portent pas la durée de validité. De plus , il a aussi pénalisé une boutique de vêtements , très connu dans la region por sa haute couture, pour avoir vendu un Panjabi à prix différent. Dans tous les cas, les amendes étaient exorbitantes. Toutes les boutiques sont opérées par femmes ou possèdent les femmes comme PDG.De plus, il a publié ses actions dans son compte de facebook et accordée interview à une télé. Un porteparole de la boutique s’est dit que c’était une erreur humaine.Quand une nouvelle de son déchargement est devenue virale, un ministre a dit que la décision avait été faite avant ses raides populaires et le gouvernement l’avait réinstallé.

Selon un reportage, un véhicule de police a percuté des ouvriers de confection en tuant 3 personnes.

Selon un reportage, police a appréhendé six ressortissants de l’Ukraine pour avoir fait un retrait clandestin des argents depuis GAB à Badda Dhaka. Ils ont employé un noveau modus operandi qui n’a pas envoyé un relevé d’identité bancaire au serveur de la banque. Un banque a déjà perdu millions de Taka à cause de ces escrocs. Mais elle ne l’a pas divulguée à la presse.

Selon un reportage, le chef de RAB s’est dit que 300 terroristes disparaissaient sans laisser trace après ils avaient été accordés la mise en liberté provisoire sous caution.

Selon un reportage, Une cour australienne a condamné une étudiante bangladaise et djihadiste à 42 ans de prison pour avoir tenté de tuer un Malais. Sa sœur a été aussi arêtée pour avoir attaqué des policiers bangladais pendant interpellation.

Selon un reportage, police américaine a déjoué une tentative terroriste à New York Times Square par un Américain , originaire du Bangladesh. Police l’a arêté et a fait un procès-verbal.

Selon un reportage, des maisons du groupe minoritaire ont été vandalisées à Sylhet . Un faux compte de Facebook a été utilisé pour avoir incité haine.

Selon un reportage , la foule a mis les véhicules de fonctionnaire à feu à rue de Dhaka- Tangail. Les embouteillages les ont mis en colère.

Selon un reportage, les douanes du Qatar a arrêté un pilote de Biman Bangladesh Airlines pour avoir échoué de montré son passeport. Il l’a laissé au Bangladesh. Il s’acheminait vers Finlande pour voler le vol de Premier ministre au Bangladesh.

Spare The Cane, Correct The Commerce

What has started as a mere drive to protect consumers' rights develops into debate that demands attention and further discussion. As soon as the Ramzan started a drive led by a government agency to oversee violation of consumer rights was initiated. One of the officials came to the attention of the media after he had fined top beauty parlors and shopping mall. There are no short of panegyrics for him. But it was his action against country's top fashion outlet, which maintains a well-organized supply chain of handicraft items, that provoked a debate, opening new avenues for serious thought.

He fined the outlet because it sold one kind of panjabi at two different prices in a week. Owners called it "human error" and apologized to people. But the misogynist official broadcast his actions on his social media account and even gave interviews to private TV channels. Soon news broke out that he had been discharged from his duty. The decision was made prior to his drive against the fashion outlet. But sympathy for him deluged the social media and his removal was attributed to the foul play by the outlet. Alerted by the reactions, a minister came forward to tell the press that he had been reinstalled. But decision and counter decision did not stem the debate but left many questions unanswered.

In our country , public officials face some restrictions while giving frank views and opinions to the press. They usually need superiors' nod. Has there been any change to such rule? If not , then how could he appear before the TV and broadcast his actions on Facebook?

Most of his victims are non partisan brands and many are run or operated by women. Some of the charges were whimsical. For instance a renowned beauty parlor was fined because it kept imported goods that had no validity date. For that reason, he slapped exorbitant fine to the parlor. The fashion outlet in question is run by world's largest NGO. It is also country's biggest marketplace for numerous  local artisans scattered across the country. Most of the profits earned have gone to support social and developmental programs run by this NGO. NGOs have a tough time during the tenure of this government.

The drive did not insinuate a conspiracy theory. But given the type of entrepreneurs who bore fully the brunt of this campaign , it would not be exaggeration to call it a publicity stunt.

The timing of the drive also calls into question the motive of this drive.The drive disported the people but disquieted the business community. This kind of trumpeted campaign cannot be seen throughout the year. Just a year ago similar campaign at a mega shopping mall during the Ramzan brought forth the issue. Back then, a raiding team seized cache of mobile phones from a mobile shop. Ramzan is the month that accounts half or quarter of the annual sales of boutique shops and markets. Retailers often hoard imported goods sold by migrant workers and these goods do not have any valid documents. Furthermore, businessmen have tendencies to stock goods due to the surge in demands in this month. Just imagine how much a mobile shop owner could stock in this month. Now should it be punished for illegal hoarding?

In a corruption-stricken country where businessmen are paying unofficial levies to stalwarts, men-in-uniform and functionaries regularly, they can only stay at the business by compromising consumers' rights. This is perhaps the case in Bangladesh.

In a country where party apparatchik and former foot-soldiers became editor ,owner  of media and journalists , there have been growing tendency to portray business community as "blood sucker", "money making machine" and "super normal profit maker", this vilification made a banal impression among consumers about them.

To my dismay, I noticed none of businesses associated with parties or defense establishment were touched. Eventually the motive of such drive came under closer scrutiny.

I am not against this kind of drive. But it was not done in an even handed way. And vindictive behavior may soil its fruition. Such harsh measures may lead to dishonest practices at a later date to recuperate the "loss" the businessmen incurred during the drive. So instead of improving consumers' rights this kind of action may further worsen it.

I also noticed this kind of drive was blind to the roadside illegal markets that generate steady-stream of revenues to cadre-based parties. I have no issues with such market if it really lifts a person out of poverty. Last year I noticed a recruitment advertisement of an SME financing company operated by a principal law enforcement agency. How could a state organ that is supposed to  do a certain task run such business that may lead to contradict the very objective it is designed to do? If microcredit institutions or SME financing companies were to finance the markets then there would be no issues until they operate within some legal framework. But recently we witnessed incidents of attacks against grass-root level workers of microfinance institutions and mobile financial services. This is more true for the high-end garments boutique owner NGO that also operates a mobile financial service.

Another thing that came to the light is that we really do not have any standard of consumer goods, rating of businesses. It will be wrong to treat a family run business with that of a conglomerate, to equate a street food seller with a posh restaurant , to compare the services of a chain boutique shop on a per with those of a retail clothes seller. It is unjust to expect hygiene and services exist in developed country from a local restaurant and retail shop as we do not see and practice here the degree of governance  prevails in those countries.

Many developed countries in fact are on the verge of changing the rules to make business economically viable and to better use of resources. For instance, France is making a law that requires unsold nonfood goods closer to the end of their shelf life be banned from destruction and be recycled , reused and remade. Not all parts or ingredients become redundant after a certain period. Some of them could be reintegrated into the production process. This is called smart policy making. Bangladesh should take cue from France.

Before securing consumers' rights, we need to rank our businesses, to rationalize quality standards of goods and services.We need to introduce Corporate Governance Index.For that a dialogue is needed between government and guilds and between consumers and guilds.

Comeuppance and severe chastisement cannot often achieve the desired goals.Failure of two-year-long caretaker government is the stark reminder. It tried to cleanse corruption from politics and business through heavy handed methods. The ensuing result is shocking: old habit did not die , in fact, turned worse and our banks and share market were literally plundered.Innovative ways can be explored eschewing harsh methods. At the end of the day, it is the objective that matters most and if it is achieved by employing mean that inflicts no collateral damage then that is the best alternative mean.

La Semaine Dernière A Mes Yeux

 (24 mai --- 31 mai)

Selon un reportage, la Banque centrale a alerté toutes les banques  à portable au propos de virement clandestin  depuis l’étranger à la veille de la fête religieuse.  Dans le mois de jeûne, les migrants bangladais virent d’argent depuis l’étranger sur les comptes de leurs proches. De plus en plus de Bangladais préfèrent les banques à portable  puisque ça fait moins de temps. Il se peut qu’ils fassent des virements  clandestins . Donc, le renseignement de Bangladesh Bank a demandé aux banques à portable d’identifier les comptes quit font virement clandestin.

Selon un reportage, American Apparel And Footwear Association dans un communiqué a conseillé à Premier Ministre bangladais de retirer les plaintes contre les dirigeants d’ouvrier de la confection et de recruter encore les ouvriers licenciés pour avoir participé dans la protestation en janvier cette année.

Selon un reportage, une nouvelle organization des droits de l’homme s’est dit que les forces de sécurité avaient extrajudiciarement tué 118 personnes de janvier à avril. Pendant la période 354 femmes et 234 enfants ont été violés.

Selon un reportage, police dans son enquête n’a pas trouvé que le conseiller de Teknaf et dirigeant du parti en exercice  était  tué par les feux croisés entre deux bandes de trafiquants de drogue. RAB dans sa plainte s’est dit qu’il était pris entre deux feux par les trafiquants.

Selon un reportage, Daech a revendiqué une tentative d’attaque contre une camionette de Police à Malibagh. Dimanche soir, Daech  a fait exploser une bombe dans une camionette qui appartient à renseinement policier, blessant un agent de Police. 

Selon un reportage, police a préparé procès-verbal contre 16 culpables pour avoir participé à la tuerie d’une étudiante de l’école religieuse.

Selon un reportage, le renseignement policier a accusé 125 personnes dont des dirigeants de la filiale du parti en exercice pour avoir distribué les questions pour argent à la veille des examens publics.

Selon un reportage, une organization des droits de l’homme a demandé explication pour les morts mystérieuses de deux personnes dans la prison. Le mecredi un tueur a été tué par un autre détenu qui y avait envoyé six heurs avant. A la fin d’Avril, un avocet a été succombé à ses brûlures après des gens lui ont mis à feu dans la prison de Panchagarh.

Decoding Our External Sector

 This week I tried to take a deeper look into the composition of our import expenditure and export earnings.Import always dominates over export in our external trade. I am more interested in what constitutes the import and export items. In addition I tried to find link between illicit financial flow and our external sector.

I delved into the sententious stat given in the appendices of Bangladesh Bank annual report. I leafed through several annual reports starting from 2013-2014. I was befuddled when I had found that data were not easily tractable in subsequent reports. Data of many of the import items lack coherence in subsequent reports. For instance, I checked the data for food, edible oil, textiles, capital machinery and other import items for Fy2011, FY 2012 and FY 2013. To my dismay, I found that what was  reported in the annual report of 2013-2014 was different from subsequent annual reports. If this is the case for immediate past year, then the data maybe provisional or revised, as often indicated by Bangladesh Bank. But for the report of 2013-14 this is not the case. And I remind you I am talking about here about three consecutive fiscal years: 2011,2012 and 2013. For the above mentioned items in 2013-14 report ,reported data are not identical in subsequent annual reports. By the way, data in the annual reports for 2014-15, 2015-16 and 2017-18 are similar.  I got the PDF format of the reports from Bangladesh Bank website.

While decoding our investment for an earlier post, I also faced ordeal in gleaning information. To my horror I noticed that proposed investment figure in Tk  published on Bangladesh Investment Authority website was deliberately swollen. Someone tempered the figure by putting an extra zero at the end of the figure. Luckily I had checked the data with the one reported in Bangladesh Economic Survey. I also endured similar problems while I collected data  from Police websites. I think webmasters and persons responsible for running the government websites should be more scrupulous.

Now get back to the import data. To obviate the troubles in analysis, I depended on the most recent annual report and for data on earlier fiscal years (i.e.FY2008, FY 2009) I trusted the annual report for 2013-14.

Our import is composed of many items. Among them food grains, edible oil, POL,chemicals, fertilizer, plastic, raw cotton, yarn, textiles, iron & steel, capital machinery and other items constitute the biggest part of  import spending. Others( other items) alone turns out to be the the biggest contributor to import spending, followed by textiles, capital machinery, iron and steel, POL and raw cotton. For instance, provisional estimates of 2018 shows that we spent $6.8 billions on textiles, $5.46 billion on capital machinery, $4.83 billion on iron,$3.65 billion on POL, $3.25 billion on raw cotton and $ 15.88 billion on other items.And our import spending on textiles, capital machinery, iron and steel , yarn and raw cotton has been increasing for many years. Many of these items are used as ingredients of manufactured goods and used in setting factories or implementing development and investment projects.

On the other hand , decomposition of our export items reveals that woven garments, knitwear, home textile , footwear and jute goods fetch more foreign currency for our economy. For instance in 2018, woven garments brought $15.43, knitwear, fetched $15.19, home textile earned $878.68 million , footwear accounted for $809.69 million and jute goods brought $869.87 million. Woven garments, knitwear and footwear registered consistent growth over the years. It is highly compatible with our growing external sector. Projection made by Bangladesh Bank shows that both export and import will continue to grow in the coming years.

(Data Source: Bangladesh Bank , GFI)

Global Financial Integrity in its report on illicit financial flows claimed that between 2004 and 2013, a total of $55 billion was laundered abroad from Bangladesh. In January this year, in its new report GIF claimed that in 2014 $9 billion was drained out of Bangladesh. Moreover, in 2015 at least $5.9 billion was laundered abroad. Now many of the illicit transactions had taken place through trade misinvoicing, as reported by GFI. In export bill, export earnings are reported less than the true amount. In import bill, import spending is reported more than what it actually is. In addition, fake documents are created to do import and export by trading nothing or trading goods that value less or more than the true reported goods.

So the more our external sector grows, the more our hard earned currency launders abroad. According to GFI, gross trade misinvoicing in the period between 2004-2013 was $92.02 billion, of which $49.13 billion was trade misinvoicing outflows and $42.89 billion was trade misinvoicing inflows that means Bangladesh also witnessed illicit inflows of capital in the above mentioned period. If we break trade misinvoicing  outflows further, we will see over invoicing of import bills accounts for $18.21 billion of the total outflows and under invoicing of export bills accounts for $30.92 billion of the total outflows. To be more precise, in the given period we loss on average $1.8 billion due to over invoicing import bills and $3 billion due to under invoicing export bills every year. In light of this  we can say export sector is more responsible for illicit financial outflows than the import sector.

This thing is happening when we are having a current account deficit. We need to export more, import less and get more remittances in order to improve the current account situation. Government put forward lots of cash incentive packages to increase remittances and augment the export. Many economists opposed the move and pressed for depreciation of Tk. To them, it will augment the export, remittances and at the same time it will restraint the import.

Just bring  the illicit financial flow into play. In this case any initiative to boost export has a caveat: chances of illegal capital flight have also gone up as per our earlier discussions. But the idea of depreciation of Taka instead of cash incentive appears to be reasonable here. By slowing down import for some period it will curb the clandestine capital flight associated with over invoicing of import bill. At the same time it will increase the risk of capital outflow through under invoicing of export bill. If the former outweighs the latter then we can say that this depreciation measure will be boon for the external sector. Another note of caution is that slow import  will also stall the clandestine capital inflow through under invoicing of import bill, which was $42.9 in the given period. So curbing the money laundering and improvement of current account deficit put our policy makers in quandary.

Money laundering has been taking place for a long period of time. In a corrupt country these bad practices are deeply rooted in our society.We would  stem the trade misinvoicing if we were able to device the means. Since we do not have that mechanism, depreciation of Taka appears to be an acceptable solution right now to improve the current account situation.