Non Trade Issues Shape Businesses

Businesses hurt by spreading of panic, Buying US jet is to comply decision strategic.

Bangladesh keeps the policy rate same and signals to continue contractionary monetary policy. Meanwhile, it is the deteriorating law and order condition that holds back businesses rather than the short supply of credit to the private sector. Investors and businesses are waiting for the next election. What is interesting govt machinery itself is causing confusion and complicating the situation.

Take for instance, a directive from the Police's special branch to stay alert ahead of July anniversary for possible subversive activities. The Chief of Police and even the Minister of Home Affairs played ignorant about such directive. The panic mongering is created by the govt itself. Police is supposed to provide assurance instead of spreading panic.

This lack of coordination and widespread extortion is hurting business confidence. It is a pity that this apolitical govt,which is largely formed through blackmailing, is facing this kind of troubles. Our restoration to democracy and pre COVID level economy will be challenging compared to Sri Lanka where all the parties reached consensus, ensured justice to all (including victims of ruling party) ,and held a free and fair election.

Meanwhile, as a desperate measure, Bangladesh pledged to purchase 25 aircrafts from Boeing to break the ice on the negotiation table before August 1 deadline. Bangladesh also pledged to buy US wheats for the next 5 years. Soybeans, cotton are also on the commitment list. It is interesting that head of the national flag carrier did not know the purchase of Boeing aircraft. But the ministry officials said it was a strategic move. So far the commitments are for next 5/7 years. It is not known with certainty whether Bangladesh economy will back on track in the next 4 years and the national flag carrier has expansion plan of such big number of aircrafts (Biman does need aircrafts, there is no need).But Boeing also makes combat aircraft. In association with SAAB, Boeing manufactures advanced jet trainer Red Hawk T-7. It has a base price of $20 million, but with spares, munitions, maintenance and training, the cost may reach around $50 million. 25 of such aircraft will cost the BAF, which is likely to retire its entire Chinese F-7 fleet, around $1.2 billion. Adding the purchase commitment of wheat,soybeans,cotton and other US goods (+ services) , Bangladesh's import from the USA may rise to around $4/5 billion in the next 1/2 years, significantly reducing the trade surplus it currently enjoys.

It does make sense buying the T-7 Red Hawk when the country is facing economic crisis and the BAF requires new jets to replace the aging fleet. It is within the budget and in compliance with the US demand from moving away from the Chinese military hardware.

Govt's poor management worsening the law and order,hurting businesses. Bangladesh's prevailing economic conditions and strategic consideration insinuate it is likely to induct US advanced trainer jet.

La Semaine Dernière A Mes Yeux

( 26 juillet --- 02 août)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
26	Riz gonflé,Lait	Riz,Feuilles de Moringa,Œuf(depuis marché),Papaye	Riz,Purée de feuilles de taro,Papaye	---
27	Riz,Lait	Riz,Poulet,Gourde blanche	Pain,Poulet	Riz gonflé
28	Riz,Œuf (depuis marché),Papaye	Riz,Haricot rouge avec sec latya	Pain,Haricot rouge avec sec latya	Riz gonflé,Mangue
29	Riz,Œuf(depuis marché),Haricot rouge avec sec latya	Riz,Épinard d'eau,Haricot rouge avec sec latya	Pain,Haricot rouge avec sec latya	Mangue(depuis marché)
30	Riz,Œuf (depuis marché),Soupe aux lentilles,Haricot vert	Riz,Haricot vert,Purée de banane verte,Soupe aux lentilles	Pain,Papaye	Riz gonflé,Mangue(depuis marché)
31	Riz,Œuf,Purée de banane verte,Papaye	Riz,Papaye,Soupe aux lentilles,Pois chichea	Riz gonflé,Pois chiches	Mangue
30	Riz,Œuf,Soupe aux lentilles,Poulet	Riz,Poulet,Soupe aux lentilles	Pain,Papaye	Riz gonflé,Mangue(depuis marché)
01	Riz,Poulet,Œuf,Soupe aux lentilles,Mangue	Riz,Poulet,Soupe aux lentilles	Riz gonflé,Poulet	Mangue

Combat Aircraft Loss And Governance

[Reproduced below is a piece written back on April 04,2019 to see impact of governance on BAF. I think it is relevant to reproduce it again]

Recently I have come across a very interesting stat posted on the social media page of a defense lover group. It is about the crash record of Bangladesh Air Force since Bangladesh came into being. With one or two minor omissions it includes all the crash data of BAF. BAF suffered 90 aircrafts loss in 48 years.Suddenly the idea of finding the link between governance and crash record came to my mind. Common perception is that under "representative regime" , there would be better governance in every sector and they would run smoothly. There would be better maintenance of aircrafts, better storage facility and better training.

BAF lost 11 aircrafts in 2013-2018, a period many described as "hybrid regime".Having a closer look at the breakdown of crash incidents reveals that crashes under a "representative government" (27) surpasses that(19) under a "non-representative government".

But I hold the common perception and did a statistical analysis.
Though the result is a bit contradictory, it is interesting. The 48 years of Bangladesh is divided into 9 distinct periods. Depending on the nature of the government, the regime is dubbed as "representative" or "not representative". The representative regime, which is assigned to value 1, is assumed to come to power through free and fair poll. I did not decide the type of regime , rather its recognition by local and international bodies decided its type.

Since there are too many regime changes in the 70s, I termed 1972-80 as one distinct period. Then I counted the crash incidents took place in that period. BAF's worst moment came in 1991 when tidal wave rendered 40 fighter jets and 4 helicopters useless.Aircraft loss due to war or natural disaster however was not taken into consideration. For this reason, I ignored the 1971 trainer crash and loss of BAF 44 aircrafts in 1991 cyclone.

To test my conviction that "representative regime" has lower crash record, I ran a Poisson regression. For that, I first tried to find out the total number of combat aircrafts at BAF's disposal at the end of the respective period and proportion of crashed aircrafts to the total number of aircrafts in that period, which I called "fraction" here. Since it is difficult to get the exact number of BAF inventory, I took assistance of Wikipedia to get an approximate number of aircrafts in 2018 and then scaled down the total to glean information for earlier periods.Another thing to note is that I also took into consideration the aircrafts of Army Aviation Group but discarded the ones operated by the Navy while counting the total. Proportion of crashed aircraft to total aircrafts will give a better reading because loss of 1 aircraft from a total of 2 means a loss of 50%. Similarly, a loss of 1 aircraft from 20 means a 5% loss. Absolute number of loss could lead to misleading information. That is why I rest my trust on proportion, "the fraction" in this case.

While running the regression I dropped the observation for 1986-90, because no crash took place during that period. And exposure does not count any zero.

I first ran the regression with exposure( ) and then without the exposure( ) but including the variable that would normalize exposure.

The first run says combat aircraft crash under "representative regime" is 1.185 times larger than that of "non-representative regime". However, since it falls within the 95% confidence interval, I cannot reject the hypothesis that "representative regime" has lower crash records. The second run, without exposure, yields similar results. It is still 1.185 times larger and I cannot rule out that crash record under "representative regime" is lower. Due to the results from regression, I cannot draw a definitive conclusion between BAF aircraft crash and governance.

[Please send your comments, contested views at mrh4478@gmail.com]

La Semaine Dernière A Mes Yeux

( 19 juillet --- 25 juillet)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
19	Pain,Sucre	Riz,Latya	Riz,Soupe aux lentilles	---
20	Riz gonflé,Lait,Œuf	Riz,Poulet,Gourde bouteille	Riz gonflé	---
21	Riz gonflé,Œuf	Riz,Poulet,Purée de poisson	Riz gonflé	---
22	Riz gonflé,Lait,Œuf	Riz,Poulet,Épinard malabar	Riz gonflé	Mangue
23	Riz gonflé,Œuf,Lait	Riz,Poulet,Épinard malabar	---	---
24	Riz gonflé,Lait	Riz,Soupe aux lentilles,Épinard malabar	Riz,Poulet	---
25	Riz gonflé,Lait,Guave	Riz,Latya(depuis marché),Feuilles de moringa	Riz,Latya(depuis marché)	---

Lawlessness Is Still Rampant

Innocents fall prey to violence, Restore law and order to bring back confidence.

Two weeks short of the first anniversary of the fall of previous govt, there is little improvement in law and order situation. Earlier govt said it would need 17000 fresh security personnel to hold a free and fair election. Training of constables requires 6 months and for the sub inspector it will take as long as one year. If the process of fresh recruitment has started in November, by this time we would have 4000 new police , still inadequate to fill the void created by deserted police personnel. Training of soldiers and paramilitary personnel takes a lot of time. What is interesting degradation of law and order is happening while the Army has the magistracy power.Meanwhile, govt is poised to hold an election at the earliest of 2026, an uphill task amid the restive situation on the ground.

Absence of democratic govt cost us dearly. Handling of the tariff dialogue with the USA is criticized right and left. Unless we are able to get a fair concession, we may lose a chunk of the US market. In addition, the democratic govt can handle the law and order condition better than any other form of govt. The economy is suffering dearly since grass-root law and order condition is in tatters. Small businesses and investors shelving up their plan for future. Meanwhile, whatever trickling flow of fund comes to the private sector is not finding any productive use due to the anarchy on the ground.

While govt is incapable of maintaining the law and order situation, it is not so wise to let the political parties to hold so many meetings across the sensitive areas. It complicated the situation.

If the flow of undocumented money into real estate is stopped, it will dramatically improve the law and order situation. This kind of dispute often takes into other forms including the political one and ends up in violence. With a special decree ,govt may stop the flow of illicit money into the real estate, thereby helping many vulnerable groups and families who often fall prey to such violence and add the number of homeless people.

Precondition for holding a fair election and fixing the battered economy is to restore the law and order condition quickly. If it requires foreign boots on the ground then the govt should do that. In Rakhine State, Myanmar allows foreign countries to recruit security personnel from abroad. Bangladesh should do the same in some areas and police deployed there maybe redeployed to other priority areas. Innocent and vulnerable individuals, groups and families fall victims to this lawlessness. Tally of the victims is the eye opener. Govt should walk extra mile to protect the lives of these innocent people.

La Semaine Dernière A Mes Yeux

( 12 juillet --- 18 juillet)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
12	Riz,Œuf,Brinjal,Poulet	Riz,Poulet,Papaye	Riz,Poulet	Mangue
13	---	Riz,Papaye,Œuf,Soupe aux lentilles,Pois chiches	Riz,Papaye,Œuf,Soupe aux lentilles,Pois chiches, Pomme de terre	Jaquier,Mangue
14	---	Riz,Omelette,Soupe aux lentilles,Épinard malabar	Riz gonflé, Pois chiches, Tchanatchur(depuis marché)	Pois chiches
15	Pain, Pomme de terre	Riz,Latya	Riz,Latya,Pomme de terre bhaji	---
16	Pain,Pomme de terre bhaji,Œuf	Riz,Petit taro chinois	Riz,Petit taro chinois	---
17	---	Riz,Poulet,Gourde bouteille	Riz gonflé	---
18	Riz,Lait,Banane	Pain,Banane	Pain	---

Non Trade Issues Halt Trade Talks

Trade talks halted on non trade issues, Nonstatic threat comes from out of the blues.

Bangladesh and the US trade talks enters stalemate over non-trade issues. A nondisclosure agreement bars the two parties disclosing nitty-gritty of the ongoing deal(80% agreed). The press highlighted the disagreement areas on following US sanctions on other countries, restrictions on WTO's MFN clause, less import from China etc.

Earlier when the Chinese trade minister visited Bangladesh a press report claimed that China wanted similar concessions in trade if the US would get some in Bangladesh. If it is indeed true ,then it would put Bangladesh into serious trouble.

There is no doubt that we have to increase our import from the US and to retain the valuable market. But the issues brought up, if the press report is indeed true, mean the end of WTO or redrafting its core rules or inventing another WTO-like organization that will incorporate the new trade realities in this changing world.

Threat is a changing phenomenon. We do not know the exact source from where it may emanate. And threat has many aspects apart from territorial encroachment. So identifying one as foe or friend is really difficult in this world. While addressing the security issues,we have to keep in mind the shifting nature of threat in this complex world. So our security challenges may not be the same as our trading partners.

But we have to keep good relations and retain the markets in the West. As I have said earlier, losing the West favor may lead us to losing the favor of others. Even if this trade talks hits the dead end, we should not retaliate. We should maintain zero tariffs to US goods. So that in future it will give us favorable ground for talks.

As I have said repeatedly, a large part of this tariff impact can be offset through depreciation of currency, which will be difficult in future due to US policy of weakening USD. In recent week, Taka appreciated because of constant flow of USD.Just in a month USD lost 1.7% of its value. As major economies across the world lower their dependence on US treasury bond and USD, there are abundant supply of USD. The central bank did the right thing by buying USD and keeping Taka weak. Otherwise, the Bangladesh Bank has to give incentives to exporters and remitters. 2.5% incentives to remitters cost the govt Tk 70 billion per annum. This is avoided through market mechanism while checking the inflation. I highlighted the thing in the past.

In brief, since threat is an evolving phenomenon in this complex world, it is difficult to give binding commitment on security issues. At the same time, we have to keep good relations with the West. In troubling times, they and their institutions come forward for rescue. Look at the sub Saharan countries,which rely on both the West and China on investment and aid, now look up for help of western institutions amid acute macroeconomic crisis as Chinese investment is drying up. Macroeconomic policy mix and adjustment is the key to face any adverse consequences of tariff.