At Capital Weekly 01 February 2009

01 February 2009 AT CAPITAL RESEARCH
AT Capital Weekly Update

Key themes in this issue are:
Bangladesh Overview:
• Last week, the Bangladesh Bank published their latest Quarterly Report on the Economy for the
Oct-Dec 2008 period. Their central expectation remains that GDP growth for FY 08/09 will only slow
modestly to 6%. However they also acknowledged growing storm clouds in the global economy
that might affect Bangladesh, at least in their risk scenario
Weekly News Update
• BB appears reluctant to make any early shifts in its exchange rate policy but underlines the need to
increase the scope for fiscal policy measures to tackle any spillover of the global crisis on
Bangladesh.
• We discuss some potential objectives for the Financial Crisis Taskforce, which is about to be
announced by the Finance Minister, MA Muhith. One is some form of “Early Warning System” so
that the Government and the central bank, receive evidence on which sectors are suffering either
through collapsing demand in key export markets, sharp declines in commodity prices or indeed
exchange rate shifts in regional competitors such as India, Pakistan, Sri Lanka or Vietnam.
• At the Davos World Economic Forum, recession gloom permeated with Microsoft Founder Bill
Gates suggesting that it could take 4 years for the world to return to growth.
• Dubai’s property market, once a favorite destination of foreign investors, is in dire straits as
developers face a collapse in sales amid dire investor sentiment and banks shy away from providing
mortgages. This suggests that remittance flows to Bangladesh are likely to decline in 2009.
Special Focus Reports:
• A Strategy for Diversifying Exports: In our first special focus article, we summarize some of the
recent research on the optimal structure and objectives of Export Promotion Agencies (EPAs) and
then outline a number of target sectors for Bangladesh to most effectively diversify exports.
• A Report published by UNDP identifies seven sectors in Bangladesh that have great potential for
export diversification by utilizing Bangladesh’s comparative advantages – local raw materials, cheap
labour, and existing industries and resources. The sectors are – agro processing, light engineering,
herbal medicine, home textiles, Jute diversified products, Specialized crafts – handmade paper and
EDITORS leaf baskets, Export of human resources
• EM Capital Flows to Slump in 2009: In our second special focus report this week, we summarize the
latest IIF report on capital flows.Net capital flows to EM are forecast to be USD 165bn in 2009 down
Ifty Islam from USD 466bn in 2008 and USD 929bn in 2007. The IIF forecast global growth to slump to -1.1%
Asian Tiger Capital Partners
Managing Partner in 2009, a far more bearish forecast than the IMF which recently cut their 2009 Global forecast to -
ifty.islam@at-capital.com 0.5%
Syeed Khan
• However despite the more challenging environment, Bangladesh is still well poised to capture a
Partner growing slice of a diminished FDI pie given it had the best performing stockmarket and most
syeed.khan@at-capital.com resilient economy in the region in 2008.
Jisha Sarwar
Senior Research Associate WEF 2009 Davos Gloom as Global Recession Prospects Worsen
jisha.sarwar@at-capital.com
Asian Tiger
Capital Partners
UTC Building, Level 16

8 Panthapath, Dhaka-1215
Bangladesh
Tel: 8155144, 8110345
Fax: 9118582
www.at-capital.com
Contents Page
Bangladesh Overview
Doom and Gloom at Davos WEF 2009 3
Middle East property market continues to slide signaling risks for manpower exports and remittance flow 3
BD Finance Ministry to Set up Financial Crisis Taskforce 4
BB believe Domestic Demand Might be Positively Influenced by arrival OF newly elected Government 4
Export Risks are emerging outside the RMG sector given Global Slowdown 4
Export Diversification Increasingly Important 4
Remittance Slowdown Risks Underline Need for More Effective Vocational Training for Manpower Exports 4
Still few Signs of Imminent Moves on Exchange Rate 5
Price pressures have been declining internationally 5
Impact of Global Financial Crisis on Bangladesh Economy Still Uncertain 6
BB Recommends Increasing Scope for Fiscal Policy Stimulus to Tackle Crisis 6
Special Focus 7
Export Diversification 7
Capital Flows to Emerging Market Economies – 2009 Outlook 13
Stock Market Weekly 18

Weekly Stock Market Commentary 19
Stock Market News 20
Economics 22
Economics News 23
25
Sector News
Agriculture/ Banking 25
Ceramics/ Infrastructure & Energy 26
Pharmaceuticals / Real Estate/ Technology/ Telecoms 28
Textiles 29
_______________________________________________________________________________________
AT Capital Weekly Update 2
Ifty Islam, Managing Partner
ifty.islam@at-capital.com
Bangladesh Overview
Last week, Bangladesh Bank published their latest Quarterly
Report on the Economy for the Oct-Dec 2008 period. Their central
expectation remains that GDP growth for FY 08/09 will only slow
modestly to 6%. However they also acknowledged growing storm
clouds in the global economy that might affect Bangladesh, at
least in their risk scenario, and emphasized the need for fiscal
discipline and more effective tax collection in order to ensure
their was latitude for fiscal support for sectors and industries
which are more vulnerable to the global downturn. This As the Financial Times reported on Jan 31, Officials say that
suggestion is timely, given the number of reports in the local press projects not yet sold to the public – as much as half all announced
in the past week on the textiles, ceramics and manpower sectors developments – will be shelved until market conditions improve.
all signal some early signs of slowdown. The government is also considering helping developers who are
finding it hard to complete projects. But more building sites are
Doom and Gloom at Davos WEF 2009 falling silent as funds dry up, despite official assurances that the
government will not allow the city’s skyline to be marred by half-
Globally the picture is turning increasingly negative. At the Davos built structures.
World Economic Forum, economic gloom permeated with
Microsoft Founder Bill Gates suggesting that it could take 4 years The authorities have yet to reveal a plan for financing the
for the world to return to growth. It was a WEF driven by tensions property sector, having assumed that deposit injections into the
over the global financial crisis. As John Gapper of the FT noted, country’s banks last year will be enough to revive lending. The
“The WEF had an impossible task this year – to forge harmony out government estimates that, at most, 34,000 units will enter the
of tension, particularly over the financial crisis and how the world market this year, only half the number predicted by several
can recover from it. Instead, Davos became the place where the research reports, including Morgan Stanley’s August forecast in
pent-up dismay and anger over what Wall Street wrought boiled which the US bank also spoke of a 10 % price decline by 2010.
to the surface… Beneath the verbal sparring, the week exposed
some big obstacles to the stated aim of many speakers – to ensure With local banks reluctant to lend, financing Dubai’s property and
that the world tackles the economic crisis together, rather than infrastructure developments will remain its greatest challenge this
being drawn into a repeat of trade protectionism in the 1930s. year. Jeffrey Culpepper, Middle East head of investment banking
That brought the Smoot-Hawley Tariff Act of 1930 but the for Credit Suisse, stated that “Possible access to federal [UAE]
problem now is more one of capital than trade.” funding will drive how much Dubai can and cannot do to maintain
growth…If you look at all the mega-projects announced, without
While global bankers continued to cower amid the lectures from federal funding and with the current dislocation in the global
politicians, a major potential fissure in the global economic system finance markets, some will be hard to finish on schedule.”
is the growing dispute between the US and China over the
former’s claim of Renminbi manipulation and the latter’s criticism
of US banking and sub-prime misdeeds as the source of the global As the FT notes” “Dubai’s ambitions may rest not only on the
downturn. health of the global economy, and with it a revival of the oil price,
but also on the attitude of global banks and capital markets. Dubai
Middle East property market continues to slide signaling has spent three decades transforming itself into a global city; its
risks for manpower exports and remittance flows future now depends on the world reciprocating this grand vision.”
Dubai’s property market, once a favorite destination of foreign Separately, it was reported that Standard & Poor’s on Wednesday
investors, is in need of major financial restructuring as developers downgraded two prominent Bahrain-based investment companies
face a collapse in sales amid dire investor sentiment and banks shy to junk status as signs mount the Gulf’s financial system is
away from providing mortgages. Prices fell 23 % between the flagging.
third and fourth quarters of last year, according to HSBC’s index
covering mortgage issuance – although anecdotal evidence Arcapita and Investcorp were both downgraded to BB+ from BBB
suggests some distressed properties are selling at about half pre- and put on negative outlook for further downgrades by S&P,
summer peaks. which cited the “difficult operating environment” for the two
alternative investment companies. Arcapita and Investcorp are
the latest in a long line of credit downgrades in the Gulf, which
had initially seemed impervious to the financial crisis. However,
after oil prices tumbled and debt markets froze last autumn,
profits have been slashed and analysts fret about an overexposure
to wilting property markets in some countries.
_______________________________________________________________________________________
In December, Fitch downgraded the individual ratings of 17 banks in 2009 is still consistent with a marked absolute slowdown in BD
across the Gulf while S&P revised its outlook on seven of Dubai’s growth prospects in an environment where China is likely to grow
government-linked entities from stable to negative. below 6% this year and the Institute for International Finance (IIF)
forecasting global GDP contracting at 1.1%.
Investcorp, which is listed on the London Stock Exchange,
manages about USD17.7bn in global alternative assets such as Below we outline some of the key highlights of the BB Quarterly
private equity, hedge funds, and real estate. Arcapita manages Report.
about USD5bn predominantly in private equity and real estate
according to Islamic principles. Nearly USD4bn of Investcorp’s BB believes domestic demand might be positively
assets under management are the bank’s own capital, which may influenced by arrival of newly elected government
expose it “to significant risks as real estate and private equity
investments in particular are relatively illiquid,” S&P said in a BB: “Thus PAU (Policy Action Unit) projections show that the
statement. economy is now well poised to achieve a GDP growth rate of
around 6.0 % in FY09 if the present trends are sustained.
S&P analyst Mohamed Damak stated that Arcapita’s revision was Moreover, with an elected government in power and adoption of
due to its “weak liquidity profile amid an increasingly difficult new economic measures by the present government, it is likely
operating environment.” The agency said Arcapita had not been that business confidence and investment climate would further
able to fully place investments made in 2008 with clients, improve in the coming months and if no drastic shock to the
triggering a decline in liquidity and an increase in its leverage present buoyant export growth takes place, the economy could
ratio. grow faster in FY09.”
BD Finance Ministry to set up financial crisis taskforce
On Jan 31, Finance Minister MA Muhith confirmed that “the

proposed high-powered committee would be in place anytime to
work out strategy to face the possible effects of global recession
on the country's economy.” A Daily Star article also confirmed
that “As per the proposal, the finance minister would head the
committee to be represented by political leaders, trade body
leaders and stakeholders of trade, industry and business to keep
close watch on the effects of the financial crisis and take remedial
measures…” and that “Experts and trade bodies suggested
possible mechanisms to face the challenge would be to reduce
lending rates to a tolerable level particularly for the export-
oriented and manufacturing sectors and keeping exchange rate
stable and competitive.”
Source: BB
Recent comments from the BB suggest, it seems unlikely that the
central bank is considering any imminent change in exchange rate Export risks are emerging outside the RMG sector given
policy though keeping it “stable” may not be consistent global slowdown
necessarily with maintaining “competitiveness”.
BB: “The positive near term outlook of this quarterly is
It seems likely that one of the goals of the Financial Crisis underpinned by several factors covering both policy and
Taskforce will be to institute some form of “ Early Warning institutional dimensions. With continuing slowdown of global
System” so that the Government, both key ministries and the growth, the risk of export demand slowing down and remittances
central bank, receive evidence on which sectors are suffering losing momentum cannot be fully ruled out. The possibility of
either though collapsing demand in key export markets, sharp export slowdown for RMG products is low due to Bangladesh's
declines in commodity prices or indeed exchange rate shifts in export concentration in the low-price and basic product segment
regional competitors such as India, Pakistan, Sri Lanka or Vietnam. of the apparel market in the advanced countries. However, the
Targeted temporary fiscal measures such as cash subsidies or weakening possibility is higher for exports of several other items
reduced taxation might be appropriate. An alternative is for the such as shrimps, leather and leather goods, electronics, ceramic
central bank to encourage commercial banks to offer lower tableware, vegetables, and similar other items. Although the
interest loans to vulnerable sectors. There has also been some talk export shares of these items are low, it is important to monitor the
of a two-tier exchange rate system with certain exporters export performance of the vulnerable items and take appropriate
receiving more favorable BDT exchange rates than the economy measures so that strong export growth is sustained…”
as a whole. But this seems the least workable and appealing of the
various policy measures. Export diversification increasingly important
While Bangladesh has been far more resilient than almost every BB: “Along with remaining vigilant regarding price
other economy in the region to the spillover effects of the global competitiveness, more efforts are needed toward diversifying the
downturn, we believe the government’s initiative in pursuing the export basket, adding more value added products to export items,
taskforce is timely and to be commended. Relative GDP resilience and exploring new markets in order to expand both export
_______________________________________________________________________________________
products and destinations. For the RMG sector, it would be critical in the world market for much of Bangladesh's major exportable. A
to ensure smooth and production friendly environment and better policy to support export growth could be to reduce the cost
uninterrupted access to power and other inputs to retain of doing business, and ensure smooth and production friendly
competitiveness. It may be useful to adopt a comprehensive export environment along with uninterrupted access to inputs to improve
(including export of services) promotion program to expedite the competitiveness especially of the RMG sector. The present
implementation of short and medium/long term export promotion circumstances and the current state of macroeconomic
measures employing a product and country specific approach. fundamentals do not provide enough justification of pursuing any
policy of letting the exchange rate to depreciate to any significant
Remittance slowdown risks underline need for more extent. Besides, any large depreciation of Taka is not likely to
effective vocational training for manpower exports increase Bangladesh's exports appreciably in the present global
situation. On the other hand, it might adversely affect the
BB: Since much of the remittances come from low skilled workers country's gradually improving domestic growth prospects through
from oil-rich countries of the Middle East, their remittances do not raising import cost of capital goods and other essentials.
face much immediate risk as these economies have accumulated Therefore, it would be important to keep a close watch on
large reserves from the oil price boom. The fall in oil prices might exchange rate movements of currencies of Bangladesh's close
partially wipe out the windfall gains, but the massive programs of competitors in the export market and assess the pressure on the
modernization and infrastructure buildup in the region are likely to country's current exchange rate policy of maintaining reasonable
be tempered but not halted. As such, migrant workers from exchange rate stability and Bangladesh's competitiveness.”
Bangladesh would continue to be in demand. However, new
recruitments might slow down. Remittances from USA and Europe
could face modest but temporary setback. As such, Bangladesh's
policy priority should be to resolve the hurdles facing expatriate
workers at skilled technical and service workers.
Still few signs of imminent moves on exchange rate
BB:” In recent months, there has been some sharp cross-rate

movements through strengthening and weakening of currencies of
Bangladesh's major trading partners the impact of which on the
country's export competitiveness is an issue that needs careful
consideration. In adopting an appropriate foreign exchange rate
policy, Bangladesh needs to take into account a number of
considerations including (i) direction of trade covering both origin
of imports and destination of exports; (ii) industry composition of
trade flows; and (iii) origin of capital inflows especially Source: BB
remittances.”
Price pressures have been declining internationally
BB: “In the global market, prices of most food and non-food items
have fallen sharply in recent months largely in response to
depressed economic prospects, especially in advanced economies,
resulting from the global financial crisis. The IMF international
commodity price index (2005=100), which includes both fuel and
non-fuel price indexes, decreased by 43.4 % by end of Q2 FY09
from the end of the previous quarter….Prices of major food items
with reference to the consumption basket in Bangladesh also
declined in a similar fashion. The price of rice in the international
market declined by around 23 % in Q2 FY09 although the price still
remains 46 % higher than the price in the corresponding quarter of
the previous year.
BB:” This quarterly reports that although Bangladesh's real

effective exchange rate has somewhat appreciated in recent
months, Bangladesh still enjoys competitiveness. In addition, since
the exchange rate issue has inflation dimension, Bangladesh needs
to confront the challenging tradeoff between keeping inflation
down and achieving better competitiveness through exchange rate
management. Any improper exchange rate adjustment can harm
even the exporters, if this raises costs through increasing domestic
prices of imported raw materials especially in the presence of
limited scope for exporters to raise prices due to sharp competition
_______________________________________________________________________________________
prudent to (i) trim low priority expenditure and improve revenue
collections to help protect fiscal position and the government's
ability to finance priority projects; (ii) rationalize tariffs/duties on
imports of nonessential/luxury goods and similar goods produced
locally as a means of increasing the fiscal base as well as to
support priority domestic production, (iii) prepare an action plan
to create some fiscal space to respond to any downturn in
economic activities or external shocks due to the ongoing global
crisis. In particular, tax collection efforts need strengthening
especially since earning from customs duty is likely to slowdown in
the coming months due to falling value of imports resulting from
declining commodity prices in the international market. “
Prices of other primary commodities like wheat and edible oil

demonstrated large declines during the quarter. Average price of
crude oil (petroleum) stood at USD 41.53 per barrel at the end of
Q2 FY09 as compared with USD 99.29 per barrel in Q1 FY09 after
experiencing a record high of USD 131.50 per barrel at the end of
FY08. Overall, there has been a rapid decline in prices of both food
and non-food commodities in the international market that
propels favorable inflation prospects for Bangladesh in FY09”
Impact of global financial crisis on Bangladesh economy

still uncertain
BB: “Although Bangladesh suffered significant loss of income in

the external sector from severe terms of trade shock originating
from higher food and petroleum prices, the loss was partly met by
compensating growth in remittances.5 Nevertheless, potential
channels of transmission of multiple downside risks of the global
financial crisis still remain including lower inflow of foreign aid and
foreign capital, adverse effect on exports, downward pressure on
remittances, and slowdown in investments and growth. It is
important, however, to recognize that significant uncertainty still
surrounds the nature, scope, and severity of the crisis and the
extent and duration of slowdown of global growth so that it is
extremely difficult to predict the impact of the crisis on the
Bangladesh economy. “
BB recommends increasing scope for fiscal policy stimulus

to tackle crisis
BB: “The fiscal sector had to withstand significant pressure during

H1 FY09 due to rapidly rising cost of subsidies and other current
expenditures. In view of the large demands for public funds that
are already accommodated in the FY09 budget, it would be
_______________________________________________________________________________________
of EPAs services), but which are not yet exporters. The use of
office representation abroad has a positive impact on exports in
Special Focus: Export Diversification the full sample, but a negative impact in a sub-sample of
developing countries, suggesting that in poorer countries EPAs
There has been a great deal of justifiable national pride in the
efforts should focus on on-shore activities. This means that in
resilience of Bangladesh’s twin USD 10bn+ export sectors, Ready
poor countries, overseas export promotion through trade fairs is
Made Garments (RMG) and Manpower, to the global financial
often a poor use of money. There should be greater focus on
crisis of 2008. But, it has been evident for most policymakers that
helping companies and sectors domestically to develop their
it will be difficult for us to move to the next phase of Bangladesh’s
export strategies. The International Trade Council (ITC), a UN
economic development without developing new industries.
agency, noted that “In an ideal trade support network, the
However, the next major export sectors, footwear/leather goods
national trade promotion agency would act as a first-stop shop for
and frozen foods/aquaculture, are barely worth USD 500mn.
the business community and, through its referral system,
There has been much talk about developing strategies for export
coordinate the trade support network’s overall response to the
diversification, but the question is how we can translate the
individual exporter.
rhetoric into policy reality.
Another export promotion specialist, M Czinkota in, ‘National
This Special Focus summarizes some of the recent research on the
Export Promotion: A Statement of Issues, Changes, and
optimal structure and objectives of Export Promotion Agencies
Opportunities” noted that “The key determinant of export
(EPAs) and then outlines a number of target sectors for
performance is the increased competitiveness of firms. … Export
Bangladesh to most effectively diversify exports.
promotion must have a decidedly inward looking component,
which makes the production of goods and services cheaper,
An Effective Export Promotion Agency
faster, and better competitiveness of firms. …”
A recent paper surveying export promotion agencies (EPA) in 104
Why Should Governments Promote Exports?
developed and developing countries (“Export Promotion Agencies:
What works and doesn’t work” Lederman, Olereagga and Payton)
Firms profit from exporting and export promotion services are
which offered a number of valuable insights that is relevant for
available from private sector organisations (e.g., industry
Bangladesh. One can divide the services offered by EPAs into four
associations and chambers of commerce) and business consulting
broad categories:
firms. That begs the question, ‘What role is there for
government?’
1) country image building (advertising, promotional events, but
also advocacy);
As Boston Consulting Group (BCG) has noted, supporters of
government-sponsored export promotion argue that governments
2) export support services (exporter training, technical assistance,
can effectively lower the barriers that stop firms from exporting.
capacity building, including regulatory compliance, information on
These barriers include internal capability failings and difficulties in
trade finance, logistics, customs, packaging, pricing);
gaining access to international markets. The argument is that
many firms are discouraged from exporting because of the cost to
3) marketing (trade fairs, exporter and importer missions, follow-
them of lowering these barriers, but that government can use its
up services offered by representatives abroad);
institutional strength to provide services that do so. Governments
can realize benefits of scale and scope by providing services across
4) market research and publications (general, sector, and firm
a large number of exporters.
level information, such as market surveys, on-line information on
export markets, publications encouraging firms to export,
On the issue of firm capabilities, many (especially smaller)
importer and exporter contact databases).
businesses lack the procedural knowledge, functional expertise
and/or financial resources needed to meet the increased
Other the instruments that developing countries have used to
challenges and risks that exporting represents. Furthermore, such
support exporters (and at times, domestic suppliers to exporters)
firms may be unable to assess the benefits of exporting that can
are the provision of credit at favorable interest rates, preferential
offset those risks. Decision-making in small firms is highly informal
prices for inputs like electricity and transport, lower tax rates,
and relies heavily on individuals and personal contacts.
tariff exemptions, and preferential access to foreign currency. For
each USD1 of export promotion, the authors estimated a USD 40
On the issue of international market access, supporters of
increase in exports for the median EPA.
government sponsored export promotion argue that the
government can reduce regulatory and information barriers
In terms of what type of institutional arrangements, objectives
relatively simply and cost effectively. For a firm acting alone,
and activities lead to a stronger impact on exports their results
however, the high cost of doing this is likely to outweigh the
suggest the following: EPAs should have a large share of the
potential benefits, if it is indeed possible for a private firm to do.
executive board in the hands of the private sector, but a large
The more unfamiliar a destination country is, or the more
share of their budget should be publicly funded. The proliferation
rudimentary its institutions, or the greater the role of government
of small agencies within a country leads to an overall less effective
in its economy, then the more helpful it is for exporters (including
program. EPAs are more effective when focusing on non-
large firms and well-established exporters) if their own
traditional exports, or have some broad sector focus (e.g.,
government has a trade presence there. Government involvement
agriculture, manufacturing, tourism, high-tech, etc...). They should
also focus their activities on large firms (which can take advantage
_______________________________________________________________________________________
may, in some circumstances, add to the exporting firm’s credibility • Customised training; or
in the destination country. • One-on-one development
The case for government promotion of exports is likely to be Governments can also offer initiatives designed to assist export-
stronger in a country like New Zealand where hurdles such as ready firms to understand, explore and enter offshore markets.
small scale and isolation, are higher. Services can range from desk information to in-market support,
and differ according to the stage of the export process at which
Opponents of government involvement in export promotion point they are provided. The progression from desk information to in-
to the fact that, rather than correct market shortcomings, it may market support mirrors the increasing usefulness that existing and
worsen the situation. Although an advocate of government- potential exporters attach to the services.
sponsored export promotion, Czinkota observes that:
The chart below lays out these options and the standard portfolio
Institutionally, it appears to many that export promotion of programmes employed by export promotion agencies.
organizations over time have become bureaucratised and
politicised. Export promotion authorities have often become the Classification of Export Promotion Programmes
grazing grounds for retired officials and have served as havens for
job generation. Governments are accused of using export
promotion events such as trade missions merely as tools to reward
political friends. Goals have become blurred and efficiency is low.
Just like the creation of state-controlled firms, export promotion
institutions, in many instances, are said to have become a good
idea gone bad.”
Effective integration and coordination is the preferred approach –

it makes the best use of resources, helps create cohesion among
service providers, and avoids the confusion that can be created
when exporters have to navigate their own way through a
multiplicity of services and agencies. However, attaining effective
integration and coordination can be difficult, because it requires
existing departments or agencies to accept a more limited role –
an objective likely to meet with some resistance.
Source: BCG
The most common criticism of export promotion programs, from

users and independent commentators alike, is that they focus too
heavily on highly visible but not necessarily high value services.
Trade fairs and missions are typical targets of this criticism. In

many countries they are the best funded and most heavily
patronised programmes, yet assessments of their effectiveness
diverge widely. For example, some analysts assert that they are
‘generally highly regarded by firms’ for giving low-risk exposure to
foreign markets. The argument here is that trade fairs and
missions can provide the experiential (hands-on) knowledge that
managers (especially of smaller firms) often make decisions on.
Yet a number of researchers have found that ‘trade mission
programmes were not considered very effective by those who had
Source: BCG participated in them’. This accords with those interviewees who
believe that trade fairs and missions are too often ‘paid vacations’
Programmes driven by personal or political agendas rather than by commercial
imperatives.
BCG also highlighted that National export promotion
organisations can and do undertake a large and diverse range of The reality is that the effectiveness of trade fairs and missions will
initiatives at either or both of the pre-export and export-ready depend on a host of factors, including how potential participants
stages. Pre-export initiatives are designed to build onshore export are screened, the level of financial contribution required of them,
capacity and can be categorised according to the type of the preparatory work undertaken, the event itself, the network of
assistance they provide: contacts that the TPO staff has in the destination, the subsequent
• Checklists, publications; follow-up with the firm, and the extent to which the visits are
• General education; integrated with other export development and promotion
_______________________________________________________________________________________
programmes. Their effectiveness is also dependent on the cultural promotion of herbal medicines. Moreover, herbal medicines and
context of the participating business community, i.e. Asian medicinal plants have been placed on the list of special
exporters rely far more heavily on the introductions and networks development sectors by EPB, which indicates government interest
provided by such events than do their western counterparts. in developing the industry. There is a huge market for herbal
industry products worldwide, with an annual trade of USD 80bn in
Market intelligence is also treated by some export promotion 2000. Trade in these products is growing at an annual rate of 10
agencies as a high priority service. Yet the information provided is percent (IRIS 2005). Europe alone captures 38 percent of total
often ‘too general, irrelevant, and outdated’ . It is customised and world imports of herbal products. India and China are the
difficult-to-obtain information that is most valued by firms. dominant exporters of herbal products in the international
market, but Bangladesh has great potential to enter the market as
A common theme raised in the BCG research was that TPOs well.
should reduce spending in many traditional areas of activity and
focus their efforts on clearly higher value programmes. The two The home textiles sector makes use of the same supply chains as
areas typically singled out as needing attention were: customised the RMG sector, and thus can take advantage of existing
support for entry and establishment in offshore markets, and the infrastructure and skills in Bangladesh. The export of home
development of firms’ internal capacities and competence. textiles from Bangladesh has increased significantly during the
past few years.
In Czinkota’s view:
The key determinant of export performance is the increased Another item with export potential is jute diversified products,
competitiveness of firms. … Export promotion must have a which include geo-textiles for land erosion control, jute reinforced
decidedly inward looking component, which makes the plastics, jute laminates, pulp and paper, decorative fabrics,
production of goods and services cheaper, faster, and better. carpets and handicrafts. Because of the increasing demand for
environment friendly fibres worldwide, these products have huge
The ITC agrees, arguing that ‘the fundamental constraint to export potential.
improved export performance [is] the inability to develop
internationally competitive export capacities that are consistent The traditional handicraft production is another sector with
with market requirements’. export potential. Within this sector, the international market for
handmade paper has been increasing in recent years. Bangladesh
Potential Export Diversification Sectors can take advantage of this recent increase in demand while it is at
its peak by using its comparative advantages and increasing its
A Report published by UNDP titled “Export diversification for supply capabilities.
human development in the post ATC-Era” (2007) identifies seven
sectors in Bangladesh that have great potential for export
diversification by utilizing Bangladesh’s comparative advantages –
local raw materials, cheap labour, and existing industries and
resources. The sectors are – agro processing, light engineering,
herbal medicine, home textiles, Jute diversified products,
Specialized crafts – handmade paper and leaf baskets, Export of
human resources
Bangladesh has export potential in agro-processing products such

as fresh or processed fruits and vegetables. Another possibility is
Black Bengal Goat and while at present, goat meat exports from
Bangladesh are yet to be significant, the sector has high potential
due to growing world demand.
Below are some of the common constraints in export
In the case of light engineering, the local market is large and diversification faced by a number of LDCs, as identified in the
untapped. With a low wage and skilled workforce, coupled with a UNDP paper
low start-up cost and a simple production process, this sector has
high potential for being lucrative and for generating employment There are a number of policy-induced, structural and demand-side
opportunities. The Light Engineering Sector consists of over 7,000 problems faced by Bangladesh with regard to export
firms, employs 800,000 people and generates annual revenue of diversification. Other least developed countries, such as Cambodia
USD 1.6bn (IRIS 2005). The light engineering sector plays a and Nepal, are also faced with similar challenges.
significant role in providing machineries and spare parts to other
key sectors such as agriculture, transportation, construction and Government policies and promotional measures
RMG.
For the development and expansion of non-traditional export
There is also a huge market for herbal products worldwide, and sectors (such as agro-processing, light engineering, etc.), there is
with proper policy support and programmes, Bangladesh can no alternative to effective government policies and promotional
significantly increase its export of herbs and organic products. In measures. A number of policies and programmes have been put in
1997, the Bangladesh National Food and Nutrition Policy was place in Bangladesh, Nepal, and Cambodia for the promotion of
adopted, which recognized the need for further research on and the sectors discussed above. For example, the trade regimes in all
_______________________________________________________________________________________
these countries have been made liberal with a view to reducing • In addition, expanding units in agriculture are not
the anti-export bias, and several export promotion measures have eligible for tax holidays in Bangladesh. This discourages
been introduced. However, study shows that in all these countries investors from expanding their businesses and
only a few sectors (mainly the RMG sector) have been the penetrating international markets. Due to poor post-
beneficiaries of such trade liberalization policies and export harvest handling, a significant portion of production is
support measures. For example, in Bangladesh and Cambodia, the also lost, and the lack of cold storage facilities in transit
performance of non-RMG sectors has not been encouraging to airport often creates problems for exporters.
despite the decrease in anti-export biases over time in these • Poor quality of seeds and poor packaging also dampen
economies. This underscores the importance of making existing export prospects.
policies and support programmes effective by making necessary • Other constraints facing the agro-processing industry
policy reforms. include: the existence of only a few processing plants;
traceability and SPS requirements; lack of low-interest
Business environment loans; and lack of information on market prices and
Several business environment surveys (e.g., Doing Business Report marketing skills among exporters.
of the World Bank and Global Competitiveness Report of the WEF) Within the agro-processing sector, three sub-sectors, namely the
have indicated that the overall business environment in all these goat meat, fruit processing and vegetable processing sectors, face
four countries is far from satisfactory. Corruption, inefficiency in a number of supply-side constraints.
government organizations, an inefficient tax administration and • In the case of goat meat, the most severe problems are
an underdeveloped property rights regime are among the major the lack of technological advancement; inadequate R&D
factors responsible for a poor business environment. Hence, in goat farming as well as meat processing; lack of
effective diversification of export portfolios becomes difficult required training and market research; lack of quality
under such a business environment. assurance; and above all, lack of government policy
initiatives.
Skilled workforce • For the fruit processing industry, the major constraints
Diversification of export portfolio and promotion of high value- are imbalanced product quality; lack of product
added export products require skilled labour force, which is channeling from the remote areas to urban and export
lacking in Bangladesh as well as the other LDCs. This underscores markets; absence of processing plants; lack of
the need for investing in human capital in these LDCs. specialized cold storage; lack of market information; lack
of competitiveness; and inadequate post-harvest
Supply-side constraints techniques.
Supply-side constraints that are common in Bangladesh and the • The vegetable processing sector has been facing
other mentioned LDCs countries include high lead-time, poor constraints such as inferior seed quality; inadequate
physical infrastructure, lack of access to credit and inefficient land post-harvest technology; inferior packaging quality; lack
transportation. These constraints seriously undermine the export of quality assurance; and inadequate cooling chain and
prospects of non-traditional sectors, and thus work against the storage facility.
effectiveness of export diversification strategies. Therefore, easing
the supplyside bottlenecks should be the top priority for the Measures
governments and concerned institutions in these countries. • Bangladesh should obtain internationally recognized
certifications: While there is a tremendous opportunity
Demand-side constraints for Bangladesh to export fruits, vegetables and black
In addition to various internal constraints, a number of external goat meat, the developed country markets require
factors also act as impediments to the successful expansion of quality assurance and the ability to locate where tainted
non-traditional export sectors in these economies. Three major food originated in the value chain. In order to assure
demand-side constraints are the high tariffs in the US market, quality to market products internationally,
stringent Rules of Origin (ROO) in the EU market, and stringent internationally recognized certifications should be
standard-related requirements in the developed country markets obtained by the companies concerned, primarily
in general. For example, the UNDP paper states that Sanitary and EurepGAP and Hazard Analysis and Critical Control Point
Phytosanitary requirements in the EU is one of the major (HACCP).
constraints on the expansion of export of vegetables, fruits and • Marketing support is essential: Training for exporters
goat meat from Bangladesh. Therefore, it is crucial for Bangladesh should be organized to help them acquire market
to make efforts to modernize its testing laboratories and ensure information, forecast demand trends and identify
the quality of their exports. markets. Workshops should be held to equip them with
skills and tools necessary for undertaking market
Sector-specific supply-side constraints impeding export research. The Export Promotion Bureau (EPB) of
diversification and measures that need to be taken Bangladesh should facilitate training for enterprises as
well as strengthen its own capacity to assist them by
Agro-processing sector training its permanent staff in market forecasting and
Constraints trend analysis. In all these activities, the coordination
• There are several constraints facing this industry. High between EPB and the Department of Agricultural
duty on raw materials and packaging materials are a Marketing under the Ministry of Agriculture is vital.
major concern as it increases the costs for exporters
whose prices are set by the international market.
_______________________________________________________________________________________
Generic spare parts/light engineering the part of EPB and exporters, is also critical to promote
Constraints exports.
• The most significant supply-side constraints facing this
sector are the lack of modern technological adaptation, Home textiles
and adequate training and skill development. Constraints
• Others include lack of infrastructural facilities (mainly • High import duty on cotton; poor product development
inadequate supply of electricity); capabilities; lack of consistency and quality; lack of
• Lack of quality control facilities general management and business skills; and weak
• High import duties on inputs and machineries; linkage between producers.
• Lack of metal-testing and R&D facilities. • Low-skilled human resources; lack of R&D activities; lack
Measures of innovation of new designs and ideas; and limited
• Providing training to workers to enhance their skills is marketing and promotional activities.
critical. Firm managers should also be trained in basic
business, including financial and management skills. Measures
• The creation of a metal-testing facility to ensure quality • Home textiles exporters require assistance in preparing
is equally important. catalogues, stalls, and display items.
• There is also a need to link the R&D activities of all of • Producers also require training in basic business
the engineering colleges with the private sector. techniques and further market research support.
• In order to promote exports, EPB should provide • EPB needs to facilitate their participation in major
expanded assistance to exporters to attain international European trade fairs.
production techniques. EPB should also maintain a • Design in innovation is a further area where investments
market information centre with updated information on will have a significant impact.
light engineering materials and organize workshops on • There is also a room for the home textiles industry to
how best to use the resources on offer. Likewise, there improve backward linkages to grassroots handloom
is a need to create an industrial park with a view to weavers.
attracting investment to the LES.
Jute diversified products
Herbal medicines and medicinal plants Constraints
Constraints • A lack of modern technologies and international market
• The major problems identified by the exporters of this needs assessment.
sector are the lack of testing and quality control and • A lack of a wide product line and product development
standards. facilities; poor image of the products; and limited R&D
• There is a lack of knowledge about the preservation of activities.
raw materials and land, and about ensuring export • Other problems include limited financing options;
quality. difficulty in entering overseas markets; competition
• There is a shortage of trained scientists to research on from the synthetic sector; high labor costs; and
new uses for plant species. Hence, there is a shortage of obsolescence of machinery need to be addressed.
R&D initiatives and programmes for skill and knowledge
development in this line of production. Measures
• The industry also faces problems such as limited • Modernization efforts and technical upgradation must
knowledge of raw materials, and storage and processing be given priority.
techniques; shortage of marketing channels and • R&D efforts to commercialize jute technical textiles and
knowledge; and limited access to materials for geo-textiles should be pursued.
commercial planting. • Market promotion programmes can be pursued to
increase consumer awareness about jute products and
Measures highlight the environmental advantages of jute
• There is a need to cluster grassroots producers and offer products. There is immense potential for increased jute
training not only in appropriate collection techniques use in the domestic market. Various market promotion
but also in commercial production. programmes can be pursued to increase consumer
• At the institutional level, it would be beneficial to awareness about jute and highlight the environmental
establish a tissue culture lab to help supply the needed advantages of the product.
planting materials. • In order to strengthen coordination among the several
• It is also important to increase the number of jute-related government organizations and to synergize
professionally trained herbal medicine practitioners and the integrated development of the jute sector as a
researchers. The government needs to provide whole, the non-functional Diversified Jute Product
assistance and grants for re-orientation and training of Institute should be revamped. This body should
teachers, research workers and drug inspectors. subsume, merge, and integrate the functions of various
• EPB should be assisted to establish a research wing institutions currently operating in the jute sector.
entirely devoted to the incubation of the herbal
medicine sector. Marketing research training, both on
_______________________________________________________________________________________
Specialized crafts – handmade paper and leaf baskets
Constraints
• The major supply-side constraints identified in the
handicraft industry are the lack of uniform product
quality, creative designing and trained human resources;
• Limited access to business and market information; and
difficulties in exploring international markets.
Measures
• There is a need to develop coordination and linkages
among producers and to establish a databank of
producers and networks with a base in the local
chambers.
• In the case of design, existing design institutes require
assistance to develop curriculum related to handicraft
innovation, and training is needed so that local
producers acquire the skills to produce new designs of
high quality.
• EPB should offer marketing support and stock
appropriate materials and publications, including those
on foreign technology. EPB should also facilitate
participation of producers in trade fairs and
international events; monitor the quality and
presentation of products; and advertise the uniqueness
of Bangladeshi materials and designs in international
fairs.
Conclusion
The new government appears to be committed to a policy of

change with the immediate economic priorities being the energy
sector and bringing down the price of essentials. However,
Bangladesh has significant potential in several export-oriented
industries, including pharmaceuticals, leather goods, frozen foods,
shipbuilding, and information technology-enabled services (ITES).
But a more effective policy of export promotion and
diversification coupled with economic diplomacy will be critical if
Bangladesh is to follow other Asian Tigers like Malaysia, and more
recently Vietnam, into developing dynamic new export sectors
and concurrently attracting substantial FDI.
Ifty Islam
Managing Partner
Jisha Sarwar
Senior Research Associate
jisha.sarwar@at-capital.com
_______________________________________________________________________________________
GDP barely slowed (6.5% to just under 6%) versus massive
economic dislocations and moves into recession in other EM
Special Focus: Capital Flows to Emerging economies and even Asian developed ones is again a strong
Market Economies – 2009 Outlook marketing case for BD. The much documented "Walmart effect"
whereby BD RMG exports have been resilient due to the focus on
EM Capital Flows set to decline… lower end garments popularized by Walmart has certainly been
the dominant theme. This and our remittance flows from the
The Institute for International Finance (IIF), an association of the Middle East might slow. But Bangladesh has the opportunity to
major global financial institutions, published their latest report on benefit from a relocation of production from China, Taiwan and
capital flows to Emerging Markets. They note that the outlook for Korea and elsewhere as a lower cost manufacturing hub.
private capital flows to emerging economies has deteriorated
significantly in recent months. Net flows are now projected to be 3) New Elected Government/Change Agenda
just USD 165 billion in 2009, down from USD 466 billion in 2008
(Table 1). This estimate for capital flows in 2009 is an The move back to democracy, free and fair elections and an
unambiguously weak one, and a decline of 82% from the boom overwhelming popular mandate for the Awami League
year of 2007 (USD 929 billion). It is also down substantially from government contrasts with instability in much of the rest of the
IIF’s estimate for 2009 made just four months ago. Then, they region. The Cabinet appointments and commitments underline
projected net flows for the year to be USD 562 billion. this is a government driven by a "Change Agenda". This is also
likely to be attractive to foreign investors relative to the period of
To an extent, this sharp downward revision for 2009 is a reflection uncertainty during the CTG period.
of a very tough environment for capital flows that became
increasingly evident as 2008 Q4 progressed. As a result, IIF’s SUMMARY OF IIF 2009 OUTLOOK
estimate of the outturn for 2008 has been revised down sharply,
from USD 619 billion, net, in October 2008 to a current estimate The rest of this section summarizes the key highlights of the IIF
of USD 466 billion. It is also consistent with the much weaker Forecast.
global growth outlook that they now envisage for 2009, which
both reduces the supply of external finance, as lenders and While all components of net private capital inflows have recently
investors turn more risk averse, as well as the demand for weakened, it is not surprising that the most significant drop in
external finance for both consumption and investment spending. prospect is for net bank lending, which is forecast to shift from a
net inflow of USD 167 billion in 2008, to a net outflow of USD 61
…but Bangladesh well-positioned to attract greater FDI billion in 2009, a USD 227 billion negative swing. This would be a
dramatic reversal from the peak year of banking sector net flows,
Bangladesh is a fundamentally capital-constrained economy and of USD 410 billion in 2007.
needs to attract more foreign direct investment (FDI) into critical
sectors like energy and infrastructure. The gloomier outlook for The region most directly affected by the slump in capital flows is
flows to EM means that we need to compete more effectively for Emerging Europe, which had been heavily dependent on external
foreign investment. finance. Among our sample of countries from the region, strains
have been most evident in Russia and Ukraine, although some
On a positive note, Bangladesh starts 2009 in perhaps the smaller countries in the region (not in IIF’s sample) have been hit
strongest relative position in terms of being an attractive harder.
investment destination in its history. Three potential factors that
can help it attract greater FDI this year include: Many of these difficulties seem likely to linger, as least through
the first half of 2009. The economic outlook could turn somewhat
1) Stockmarket decoupling positive in the second half of the year, and this would help
The DSE in 2008 only fell 7% relative to 50-75% declines in the stabilize a number of difficult emerging market situations.
BRICs (Brazil, Russia, India and China), around 60% in Vietnam and Moreover, years of steady policy reform and institutional
70% in Dubai. So BD had one of the best stockmarkets in the strengthening in many key emerging economies have left them in
world albeit driven by our relative lack of integration into global much better shape to handle the current global downturn, severe
capital markets/the low percent of foreign investors in Bangladesh as it is. Most have some—albeit limited—latitude to run counter-
equities. But this lack of correlation of our stockmarkets to either cyclical fiscal and, especially, monetary policies in the months
EM or developed stockmarkets, makes us an attractive ahead.
diversification play from a portfolio perspective. There had been
much hype about EM decoupling but most EM markets suffered Significant vulnerabilities remain, however, especially for large
as much or more than the developed markets, certainly in terms emerging market corporate borrowers with sizeable roll over
of their capital markets, but increasingly in terms of their needs. Private sector borrowers have at least USD 100 billion of
economies as the Economist articles this week underline. debt service for market-based borrowing falling due in the first
Bangladesh is perhaps one of the few truly "decoupled EM half of 2009. At the current level of market access, borrowers
markets" seem able to issue not much more than half this total. Policy
makers in both mature and emerging markets would be well
2) Economic resilience/Low cost Manufacturing hub advised to address this refinancing problem head on in the weeks
While our stockmarket performance might reflect our lack of and months ahead.
integration, our economy's resilience in 2008, when Bangladesh
_______________________________________________________________________________________
evident as 2007 progressed, particularly in the form of lost export
markets. Moreover, net private sector flows to emerging
Table 1 economies—which had soared to remarkably high levels in 2007—
Emerging Market Economies' External Financing began to fall steadily in 2008. Through the middle of 2008,
billions of U.S. dollars however, the underlying economic performance of emerging
2006 2007 2008e 2009f economies was quite robust—sufficient, indeed, to provide an
Current account balance 383.9 434.0 387.4 322.8 important global offset to U.S. economic weakness.
External financing, net:
Private flows, net 564.9 928.6 465.8 165.3 These developments changed conspicuously in 2008Q3, since
which time the overall global economy has been in recession,
Equity investment, net 222.3 296.1 174.1 194.8
economic growth in emerging markets has slowed precipitously,
Direct investment, net 170.9 304.1 263.4 197.5
while private capital flows to emerging markets have slumped.
Portfolio investment, net 51.5 -8.0 -89.3 -2.7 Three factors seem responsible for this sudden shift in business
Private creditors, net 342.6 632.4 291.7 -29.5 cycle conditions. First, the progressive tightening in monetary
Commercial banks, net 211.9 410.3 166.6 -60.6 policy in most emerging economies— put in place in 2007 and the
Nonbanks, net 130.7 222.2 125.1 31.1 first half of 2008 in order to temper rising headline inflation—
Official flows, net -57.5 11.4 41.0 29.4 began to bite in those economies. Second, the spike in oil prices,
IFIs -30.4 2.7 16.6 31.0 which reached a peak in July, acted as a huge drag on global
Bilateral creditors -27.1 8.7 24.3 -1.6 manufacturing activity, and a tax on oil consumers, that became
1
Resident lending/other, net - -425.3 -449.8 -271.6 fully evident in August. Third, and most significantly, the renewed
336.5 flare up in global financial turmoil that came on the heels of the
Reserves (- = increase) - -948.7 -444.3 -245.9 U.S. government's taking Fannie Mae and Freddie Mac into its
554.8 conservatorship and the failure of Lehman Brothers in September
had an immediate and severe impact across emerging economies
e = estimate, f = IIF forecast and markets (Chart 2).
1
Including net lending, monetary gold, and errors and omissions. Chart 2: U.S. Equity Volatility and EM Bond Spreads
The Global Financial Crisis Worsens
Significantly reduced capital flows to emerging economies are part

of the broader financial and confidence crisis that has swept
through the global economy in recent months. Historically, there
is a positive correlation between global growth and our measure
of net private capital flows to emerging economies, with a 1 %age
point change in growth typically corresponding to a change in net
capital flows of about 0.9 % of emerging economies’ combined
GDP (Chart 1). Based on this relationship, our current estimate of
an overall global contraction of about 1.1 % in 2009 is fully
consistent with the projected slide in private capital flows to just
1.1 % of emerging market GDP (or USD165 billion). Of course, the
softness in capital flows is both the result of, and a contributor to,
weak global growth. At first sight, it is not obvious why emerging economies and
markets should have been so affected by the post- Lehman
turmoil, especially given how well they had survived previous
episodes of acute mature market weakness in August and
December 2007 and March 2008 (Bear Stearns). In retrospect,
three factors seem particularly important in explaining this rapid
and severe contagion:
• The near seizure of global interbank markets in the weeks

following the collapse of Lehman Brothers delivered a sharp blow
to global activity, as access to short-term financing for production
and trade dried up. The result was a global scramble to preserve
liquidity among banks, non-financial business and households.
Ironically, many banks in emerging economies found themselves
with severe funding difficulties even though their exposures to
troubled assets in the United States were limited. Despite holding
substantial foreign currency reserves, their own central banks
were either unable or unwilling to supply banks with dollars,
Emerging economies had exhibited remarkable resilience through leading to significant dislocations, and forcing many banks in
the first year of the current phase of global turmoil. They were emerging market economies to suddenly turn very restrictive in
certainly affected by the slowing in the U.S. economy that became their own lending activities. Some of these tensions were eased
_______________________________________________________________________________________
after the Federal Reserve established swap lines with central allowing central banks across the world to run easier monetary
banks in Brazil, Mexico, Korea and Singapore on October 29th. By policies. Federal Reserve and Bank of Japan official policy rates are
that time, however, six weeks of damage had been done. now close to zero, and rates will be cut below 2 % by the
European Central Bank and Bank of England in coming months.
• Second, although most emerging market governments had been Low G7 short-term interest rates typically form a very favorable
restrained in their borrowing through the latest expansion, backdrop in promoting capital flows to emerging economies.
borrowing by both financial and nonfinancial private companies— Falling headline inflation is also giving central banks in emerging
in both local and foreign currency—had been relatively heavy. economies the scope to ease policy, especially in Emerging Asia,
Banks in emerging markets—especially (but not exclusively) in but increasingly so now in Latin America and Emerging Europe.
Emerging Europe—had borrowed abroad in term debt markets (as
well a short-term interbank markets) in order to fund aggressive The tumbling oil price is also playing an important role in shifting
rates of local lending growth. On the investor side, hedge funds income (and saving) from oil producers to oil consumers. The loss
had been important investors in emerging market corporate debt, in income (as reflected in a declining current account balance) is
and the post-Lehman squeeze on them added to the difficulties in most evident among large oil producers (GCC countries and
emerging markets. Conditions in emerging corporate debt market Russia). The gain is most pronounced for oil consumers (the
had been deteriorating before September, but took a severe turn United States, Euro area and Asia). These oil price shifts are
for the worse through Q4. playing an important role in helping resolve some of the
imbalances that have proven to be a threat to global stability.
• Third, the collapse in commodity prices—especially oil prices— Most specifically, they are helping U.S. consumers rebuild their
after September has hit many emerging market borrowers hard. saving rate even through a phase of weak nominal income growth.
Many resource-based companies had increased borrowing in
order to finance ambitious production expansion schemes. The The stresses during this phase of weak growth for emerging
greatest strains have come in parts of Latin America (Ecuador, market borrowers result mainly from difficulties in rolling over
Argentina and Venezuela) and Emerging Europe (Russia and market-based debt under conditions where it is not just their own
Ukraine). prospects that have deteriorated, but also those of their lenders.
Moreover, borrowers in emerging markets now face the prospect
Global Economy Likely to Decline in of being “crowded out” by the massive borrowing needs of G10
2009: A First in Modern History governments. We estimate the U.S. Federal borrowing
requirement to be about USD1.75 trillion in the current fiscal year.
The global economy has recently weakened decisively. Through G7 governments are also extending significant guarantees to
much of 2007 and early 2008, the U.S. economy had slowed, but banks and other corporations in their own economies (including
demand growth elsewhere was holding up quite well. This pattern some industrial companies), while G7 central banks have provided
of relative strength shifted after midyear, and the most extreme, unlimited amounts of liquidity (via swap lines) to banks within
synchronized downturn of the whole post-war period has taken their jurisdictions. While many of these support programs look
hold in recent months (Chart 5). warranted and helpful, they have the sideeffect of creating an
“insider/outsider” problem, whereby relative conditions facing
The result is that output in the three largest mature economies— banks and companies in emerging market economies are made
the United States, Euro area and Japan—is likely to fall by 2.1 % in more challenging.
2009, while growth in emerging markets will slow very sharply, to
just 2.7 %, half the pace of 2008. All emerging regions will slow. In Comparison with Previous Episodes
Emerging Asia, the moderation will be substantial, with Chinese
growth slowing to 6.5 % and growth in the region as a whole The current slump in net private capital flows to emerging
moderating to 5.4 %. In Latin America, Mexico will experience a markets is shaping up to be the most dramatic on record. This is a
recession, and regional growth will slip below 1.0 %. Recession will remarkable development, since the two previous serious crisis
be more widespread across Emerging Europe and the region will episodes—1981-86 and 1996-2002—were periods of very severe
be the weakest among emerging economies. The contraction will adjustment for emerging market economies. Net private inflows
be especially acute in Ukraine. fell from a peak of 3.5 % of emerging market GDP in 1981 to a
trough of 0.3 % on GDP in 1986; they fell from a peak of 5.7 % of
Chart 3: IIF Net Private Capital Forecasting Errors and the
Trend in Private Flows GDP in 1996 to a trough of 2 % of GDP in 2002. This time around,
however, net flows seem likely to fall from a peak of 6.9 % of GDP
in 2007 to just 1.1 % of GDP in 2009 (Chart 6).
The current episode thus contrasts with the two major previous
episodes over the past 30 years in a number of important
dimensions. First, not only is the severity of the decline more
extreme (5.8 points of GDP, versus 3.2 and 3.7 %age points of
GDP, respectively, in the previous two episodes), but the time
frame over which it occurred has been more compressed. Of
course, it is perfectly plausible that the current downturn will be
more extended than just two years; both previous episodes had
Low commodity prices and suddenly weak global demand have an early phase of sharp adjustment, followed by a second leg
pushed goods price inflation rates down sharply, and this is down a few years later. For this reason, it is perhaps more
_______________________________________________________________________________________
appropriate to compare the projected decline in the current all regions in 2008 and, most likely, in 2009. The most extreme
episode (of 5.8 %age points of GDP) with the declines in the first swing underway, however, is in flows to Emerging Europe, which
two years of the previous episodes of 1.6 %age points between are estimated to contract from about 13 % of GDP (USD393
1981 and 1983, and 3.2 %age points of GDP between 1996 and billion) in 2007 to 1 % of GDP (USD30 billion) in 2009. Such a swing
1998. is unprecedented in scale, and helps explain why financial strains
have been most acute, and are likely to remain so, across
Emerging Europe.
Second, the scale of the boom in private flows to emerging

economies in the upswing of the current episode was
unprecedented. At their peak (in 2007), net inflows amounted to
almost 7% of GDP, or USD 929 billion. This contrasts with a There are also a number of interesting comparisons in financial
previous peak of 5.7% of GDP in 1996, or USD320 billion. variables between the current episode and the last extreme
capital flow downturn, of 1996-99. In the downturn of the 1990s,
Third, the relationship between net private sector flows and the there were regular currency crises which, in turn, often developed
overall current account deficit of our sample of 28 emerging into debt crises, in large part because of the impact of
market countries was very different in this episode. Between 1979 devaluations on the local currency value of foreign currency debt.
and 1990 net flows and current account balances broadly In the current phase of difficulties, currency depreciations have
matched one another. From 1990 through 2002, net flows been less significant (at least to date), or where they have
exceeded the current account deficit (reflecting a steady occurred (as in the case of Korea) have been far less traumatic
accumulation of foreign assets by both the private and public than was the case in 1997-98. On the other hand, equity market
sectors in emerging economies), although they tended to move in weakness has been more pervasive, as the stresses resulting from
line with one another. After 2002, however, the relationship high levels of corporate sector leverage (both domestically and
between the aggregate current account balance of emerging externally financed), falling commodity prices, and weakening
economies and net private capital flows changed dramatically. As export markets have become more evident. Net bank lending to
a whole, emerging economies moved into sizeable current our sample of 28 emerging economies peaked at USD 410 billion
account surplus, at the same time that net private capital inflows in 2007, and fell by about USD 240 billion, to USD 167 billion in
soared. Emerging economies were thus dramatically 2008. A similar pace of decline is in prospect for 2009, which
“overfinanced”, with this degree of over-financing exceeding 10% would lead to net outflows (payback) from borrowers in emerging
of GDP in 2007. The offset to the substantial flow of capital into economies to banks of about USD 61 billion for the year as a
emerging economies was thus an even greater outflow of capital whole.
from emerging markets back into mature markets (including
reserve accumulation), helping to sustain the rally in fixed income Commercial bank debt was repaid on a sustained basis between
instruments there that has more recently turned to disaster. 1998 and 2002. Until 2002, net lending by banks had quite closely
Moreover, the buildup in foreign exchange reserves in emerging tracked the overall current account deficit of emerging
economies was not fully sterilized, and this contributed to very economies, with net repayment during 1998-2002 coinciding with
rapid rates of growth of money and credit in most emerging the emergence and then the rise in current account surpluses of
economies after 2002, most notably in Emerging Europe. the emerging markets. Since then, however, bank debt has
soared, even as the current account position of emerging
Fourth, the regional pattern of flows is important (Chart 7). In the economies improved (Chart 8).
previous two expansion phases (1978-81 and 1990-96) there was
a dominant region that attracted more flows than other regions.
In the early 1980s, the dominant region was Latin America. In the
early 1990s, lending to Latin America surged once again, although
this was tempered by the Mexican crisis in 1994-95 and its
aftermath. Following that, lending surged to Emerging Asia,
setting the stage for the Asian crisis in 1997-98. This time around,
lending surged to all regions in 2007, before contracting sharply to
_______________________________________________________________________________________
Chart 8: Net External Financing of Emerging Economies
The pattern of the shift in bank lending flows is common across

the major groups of emerging economies, although the
magnitudes are most severe in Emerging Europe and Emerging
Asia:
• Net banking flows into Emerging Europe peaked at USD 217

billion in 2007, of which USD 107 billion were accounted for by
flows into Russia. In 2008, these flows fell to USD 123 billion (of
which Russia accounted for USD28 billion). In 2009, net
repayments by Emerging Europe borrowers to commercial banks
of USD 27 billion are expected, with Russia repaying USD 49
billion.
• Net banking flows into Emerging Asia were USD 156 billion in
2007, but fell to just USD 30 billion in 2008. In 2009, net
repayments to banks of USD 25 billion are forecast. By country,
the bulk of the adjustment between 2007 and 2009 is accounted
for by Korea (where net flows are forecast to fall by USD 87
billion), China (down USD 52 billion), and India (down USD 32
billion).
• Among regions, the magnitude of the banking shock is least

severe for Latin America, where net inflows of USD 31 billion in
2007 and USD 9 billion in 2008 are forecast to become net
outflows of USD 12 billion in 2009.
Ifty Islam
Managing Partner
_______________________________________________________________________________________
Stock Market Weekly
DSE performance: 52 weeks Market news
• Government to allow private investors to raise fund

through debt market
• ICB to buy BD Welding stakes
• Grameen Mutual Fund floats 3rd scheme this year
• Beximco Pharma to raise BDT 4.6bn (USD 67.1mn)

from GEM
DSE performance: 30 days Regional stock market performance (last week))
Market summary Valuation snapshot

DSE General Sector P/E
Index performance DSE 20
Index Aug-08 Sep-08 Oct-08 Nov-08
Opening of this week 2695.58 2,199.3 Banks 19.08 18.24 15.62 15.62
Closing of this week 2671.06 2,189.2 Cement 10.96 10.34 10.32 8.91
Change within a week (%) -0.9% -0.5% Ceramic 49.92 43.93 41.76 32.17
Change within a week (Point) -24.5 -10.1 Engineering 39.11 41.36 40.8 31.94
Food & Allied 17.85 19.44 17.09 14.77
Fuel & Power 17.81 20.2 19.14 16.29
Capitalization and turnover This Week Last Week % Change
Insurance 23.17 24.77 23.12 17.69
Number of Trading Days 5 5 Investment 45.08 55.48 28.93 21.42
Market Capitalisation (USD bn) 14.87 14.80 0.50% IT 41.44 45.64 47.89 33.96
Total Turnover (USD mn) 200 209 -4.1% Jute 16.16 16.16 14.18 14.18
Daily avg. Turnover (USD mn) 40.03 41.75 -4.12% Miscellaneous 25.46 33.95 32.2 23.32
Total Volume (mn) 119 124 -4.06% Paper & Printing 8.36 8.08 9.97 7.32
Daily avg. Volume (mn) 24 25 -4.06% Pharmaceuticals 23.97 28.45 30.25 26.26
Service & Real Estate 20.57 22.87 23.55 18.74
This Last Tannery 19.05 19.89 18.44 14.87
Weighted avg. P/E Ratio* Issues
Week Week Textiles 15.74 15.45 14.55 12.43
This Week 17.06 Advanced 144 104 Source: Dhaka Stock Exchange
Last Week 17.34 Declined 121 158
% Change -1.6% Unchanged 3 2
*Weighted on Market Cap. Not Traded 31 29
_______________________________________________________________________________________
Weekly Stock Market Commentary
The NBFI sector rose by 6.7% this week. The Bangladesh Leasing
The market remained relatively flat week on week, down only
and Finance Companies Association (BLFCA) met the Finance
0.8% following the steady decline over the previous 3 week. This th
Minister on 25 January this year and made the following
however masked the intraday volatility in the market, which was
demands:
likely a function of active trading by portfolio managers. Daily
average turnover was down by 4.1% compared to last week.
It has been reported that the large institutional portfolio • To reduce corporate tax rates which currently stand at
managers have been sitting on the sidelines waiting for the 45% for Banks and NBFIs.
market to reach the bottom of its current downtrend, with most
of the activity being driven by retail investors – this view is • Restoration of depreciation allowance for leased
supported by the evidence of low cap stocks seeing volatility in vehicles, machineries, plant and furniture which had
sectors such as IT, Foods and Engineering, which are often been cancelled in financial year 2007 - 08.
purchased by retail investors drawn by the small ticket stocks
Since 1 January, 61 companies have declared their half yearly As bank stocks continue to fall, we believe they are reaching
profits. Among them 43 have posted profits while 18 declared attractive pricing levels.
losses and 23 have reported higher profits compared to the
corresponding period last year.
Out of 297 issues, 161 advanced, 111 declined, 4 remained
unchanged and 21 were not traded. Among the top ten gainers, all
of them were from Z-list categories. Among the A-category stocks
the largest risers included Apex Weaving, Aftab Automobiles and
Monno Jute Stafllers.
Last 4 weeks performance:

2850
2800
2750
2700
2650
2600
2550
The largest sector in terms of market capitalization - banks - fell

by 2.9% this week. As we have discussed in earlier weeklies, we
believe the sector will remain under pressure as:
• Banks have released lower than expected 2008 full year
earnings.
• In 2009 Trade Finance earnings of banks are expected to

remain under pressure, with commodities’ prices
remaining low and remittance related banking revenues
suffering as the recession deepens in the global
economy.
_______________________________________________________________________________________
The third scheme of Grameen Mutual Fund One will be floated
Stock Market News this year. AIMS of Bangladesh, the asset management firm of
Grameen Bank, will float the minimum BDT 3bn (USD 43.57mn)
Government to allow private investors to raise fund through scheme through an initial public offering (IPO) and a private
debt market placement.
The Financial Express, Sunday February 1, 2009
The 'Grameen Mutual Fund One' was registered under the
The government will allow private investors who will invest in Registration Act 1908 on May 09, 2001 and received an SEC
developing physical infrastructures to raise funds from the debt registration on August 27, 2001. With a 15-year initial tenure, it is
market. Different types of private entrepreneurs such as the first mutual fund that floats multiple schemes in Bangladesh.
independent power producers (IPPs), telecom companies and the The face value per unit of the third scheme will be BDT 10 (US
like will be able to raise long-term funds through bonds. 14.52 Cents). Apart from Grameen's third scheme, the AIMS plans
to launch its own second mutual fund targeting non-resident
In Bangladesh, banks and financial institutions predominantly Bangladeshis (NRBs).
finance projects. “In FY08, the amount of industrial term loans
disbursed by commercial banks and non-banking financial Presently, 14 mutual funds are being traded on the Dhaka Stock
institutions (NBFIs) stood at BDT 201.5bn (USD 2.9bn) compared Exchange.
to only BDT 6.9bn (USD 100.2mn) given out by new capital issues
through private placements, public offerings, and right offerings in http://www.thedailystar.net/story.php?nid=73136
the capital market," according to a Bangladesh Bank report.
Beximco Pharma to raise BDT 4.6bn (USD 67.1mn) from GEM
The BB report also pointed out several supply and demand side The Daily Star, Tuesday, January 27, 2009
weaknesses of the capital market. Lack of benchmark bonds and
benchmark yield curve, limited interest of financial intermediaries Beximco Pharmaceuticals Limited (BPL) announced a subscription
and businesses are the major supply side problems while limited agreement with GEM Global Yield Fund Limited (GEM Global), USA
investor base, intermediaries with limited expertise in dealing to raise BDT 4.6bn (USD 67.1mn) by issuing its shares or warrants.
with debt products and low confidence in corporate borrowers The company decided to issue ordinary shares worth BDT 4.1bn
are the demand side problems. The debt market is still very and warrants worth BDT 0.5bn. The company intends to utilize the
shallow as trading of government treasury bonds started in capital for its BMRE, diversification and working capital.
December 2005 in the DSE, and until the end June 2008, eight
debentures, 84 treasury bonds, and one corporate bond were The shares of the company will be issued under the variable
traded in the country's capital market. pricing method at 90% of the average market value on the Dhaka
Stock Exchange, whereas the warrants will be issued at BDT 200
http://www.thefinancialexpress- per warrant/share. By 2010, Beximco Pharma expects to increase
bd.info/search_index.php?page=detail_news&news_id=57593 its turnover and net profit to BDT 10bn (USD 0.14bn) and BDT 2bn
(USD 29mn), respectively.
ICB to buy BD Welding stakes
New Age, Thursday January 29, 2009 http://www.thedailystar.net/story.php?nid=73138
The Investment Corporation of Bangladesh (ICB) has signed a

memorandum of understanding with five sponsor directors of
Bangladesh Welding Electrodes, a listed company, to buy 3.6mn
shares out of 10.4mn shares of the company. The sponsors will
sell their holdings in the company outside the trading floor of the
stock exchanges, subject to the approval of the Securities and
Exchange Commission and other regulatory authorities.
The sponsors and directors of BD Welding, which was listed with

the stock exchanges in 1999, hold 48.1% stakes in the company,
while institutions hold 6.9% stakes and the public owns 45% of the
shares. The Chittagong-based company, which is being traded
under the B category on the stock exchanges, mainly produces
welding rods and industrial oxygen.
http://www.newagebd.com/2009/jan/29/busi.html#5
Grameen Mutual Fund floats 3rd scheme this year

The Daily Star, Tuesday January 27, 2009
_______________________________________________________________________________________
DGEN Performance YTD DGEN Performance LTM
Turnover leaders Best performers* Worst performers*

(All figures in mn) BDT USD % Change % Change
Beximco Pharma 1715 25.1 Quasem Textile BEMCO
65.6% -16.5%
Shinepukur Ceramics 806 11.8 Quasem Silk BSRM Steels Limited
64.9% -12.3%
Limited
Padma Printers 47.4% Atlas Bangladesh -10.4%
BEXIMCO 689 10.1
Saleh Carpet 44.9% Sinobangla Industries -9.7%
Summit Power 501 7.3
Tulip Dairy & Food 40.6% Apex Tannery -9.36
Aftab Automobiles 414 6.1
M. Hossain Garments 38.2% Fu-Wang Ceramic -8.9%
Titas Gas 397 5.8
Rangamati Food 35.5% Miracle Ind. -8.8%
ACI Limited 298 4.4
Beach Hatchery Ltd. 34.8% Al-Arafah Islami Bank -8.4%
Aims 1st M.F. 277 4.1
Sreepur Textile 32.3% Quasem Drycells -7.6%
BATBC 270 4.0
Padma Cement 30.4% Social Investment Bank -6.8%
Grameen One: Scheme2 266 4
Source: Dhaka Stock Exchange
*By closing price
Source: Dhaka Stock Exchange
Market cap. by sector* Correlation with other indices*

Banks 52.6%
S&P500 Sensex NIKKEI225 KSE100 SSECI FTSE100 Hangseng DSE
Pharmaceuticals 10.4%
S&P500 1
Fuel & Power 12.2%
Insurance 5.7% Sensex 0.609533 1
Miscellaneous 3.0% NIKKEI225 0.479296 0.57751 1
Engineering 2.6% KSE100 0.137983 0.245628 0.136849 1
Textile 2.1%
SSECI 0.315464 0.411735 0.245613 0.09449 1
Foods 2.4%
Tannery 1.5% FTSE100 0.843726 0.610483 0.494904 0.238387 0.431538 1
Service & Real Estate 1.0% Hangseng 0.704434 0.677905 0.526227 0.110829 0.509843 0.786434 1
IT 0.5% DSE 0.161589 0.193995 0.103366 -0.05588 0.035032 0.131261 0.143725 1
Ceramics 0.1% * Based on the last 86 months’ USD returns
Paper & Printing 0.1% Source: AT Capital Research
Jute 0.03%
Total 100%
*As of November 30, 2008
Research Team
Ifty Islam
Syeed Khan
Managing Partner
Partner
syeed.khan@at-capital.com
Mohammad Emran Hasan

Senior Associate
emran.hasan@at-capital.com
_______________________________________________________________________________________
Economics
Selected macroeconomic indicators Market news
27-Jan-08 20-Jan-09 27-Jan-09

Forex reserves (USD mn) 5328.63 5430.92 5543.93 • IMF suggests tight monetary policy: Existing policy too
USD-BDT average rate 68.5800 68.9499 68.9010 expansionary to deal with soaring inflation
Call money rate 19.17 9.48 9.33
• BB warns govt. of hefty borrowing
Dec-07 Dec-08 2007-08 • Shrinking global job market worries BB governor

Remittances (USD mn) 635.34 765.79 7,914.78
• ADB to provide USD 2mn for micro-insurance
Annual %age change 14.46 20.53 32.39
• FDI proposals decline
Nov-07 Nov-08P 2007-08
Imports (USD mn) 1,661.80 1,816.50 21,629.00
Nov -07 Nov -08P 2007-08 The growth of credit to private sector has been
Exports (USD mn) 1144.47 1297.47 14,110.80 strong, registering a year-on-year growth of 24.3% in
November 2008
Sep-07 Sep-08P 2007-08

Current A/C Balance (USD mn) 20.00 46.00 672.00
Dec-07 Dec-08P 2007-08

Tax revenue (USD mn) 524.12 538.81 6,868.43
Source: Selected indicators by Bangladesh Bank, 28 January 2009
Latest Bangladesh Inflation Rates
Oct-08 Nov-08 Dec-08

General 209.31 207.14 204.90
Inflation 7.26 6.12 6.03
Food 226.88 223.98 220.64
Source: Bangladesh Bank
Inflation 8.08 6.68 6.83
Non-food 186.13 184.95 184.29
Inflation 5.95 5.25 4.76
Source: Bangladesh Bureau of Statistics
Jisha Sarwar
Senior Research Associate
Jisha.sarwar@at-capital.com
_______________________________________________________________________________________
Economic News sector suffered significant pressure caused by rapidly rising costs
of subsidies and other current expenditures.
IMF suggests tight monetary policy: Existing policy too
expansionary to deal with soaring inflation The central bank also suggested that the government intensify
The Daily Star, Sunday February 1st, 2009 tax-collection efforts as earnings from customs duty is likely to
slow down in the coming months due to falling value of imports
resulting from commodity price declines in the international
The International Monetary Fund (IMF) suggested that Bangladesh
market.
should adopt a tight monetary policy, stating that the existing
policy is 'too expansionary' to deal with soaring inflation.
The BB report said growth in tax revenue fell short of target while
expenditure increased forcing the government's bank borrowing
Escalating food and fuel prices in the international market caused to exceed BB's monetary target.
inflation in the country to go up, which averaged 10% in FY 08. "It
will be more difficult to check inflation if oil and food prices rise During the first half, the total deficit financing was BDT 133bn
further in the international market," stated Thomas R Rumbaugh, (USD 1.93bn), of which BDT 90bn (USD 1.31) was from domestic
adviser to the Asia and Pacific Department of IMF. sources that included bank financing of BDT 70bn (USD 1.02bn),
while BDT 42.9bn (USD 0.62bn) came from foreign sources.
The IMF said Bangladesh's economy rebounded quite well in the
second half of FY 08. A strong revival in domestic economic According to the report, ADP (annual development programme)
activity and rapid growth in garment manufacturing and implementation rate was 24% in the first half of FY09, with
remittances contributed to the country’s 6% GDP growth in FY 08. priority given to implementation of projects in social and physical
Rumbaugh said Bangladesh's monetary policy has been very infrastructure sectors like electricity, gas and agriculture.
expansionary in the last six months, adding that the budget for the
current fiscal year is also expansionary, with the government "The possibility of export slowdown of RMG products is low due
making a significant upward adjustment in fuel prices recently. to Bangladesh's export concentration in the low-price and basic
"Credit growth is a bit high and has reached 23-24% in recent product segment of the apparel market in the advanced
times," the IMF senior official said, adding that the broad money countries," the report said. However, exports of items such as
circulation is also hovering at around 20%. According to shrimp, leather and leather goods, electronics, ceramic tableware
Rumbaugh, the government needs to make an adjustment in the and vegetables, might be hampered.
monetary policy to curb credit growth and inflationary pressure.
He added that monetary policy should be reactive to inflation as The growth of credit to private sector was strong, registering a
further increases in international oil and food prices will cause year-on-year growth of 24.3% in November 2008. "The monetary
pressure on the balance of payments and fiscal position. and credit growth requires careful monitoring in order to avoid
the buildup of any excess demand pressure in the economy," the
Rumbaugh stated that at present Bangladesh's balance of report said. Although the major share of private credit went to
payment is in a good position. Bangladesh's medium term outlook productive sectors, the share of agriculture was low (less than 7
is positive, Rumbaugh said, but inflationary pressure is a major %of total bank advances).
challenge. Political uncertainty surrounding local and national
elections is a short-term risk while dealing with climate change is a http://www.thedailystar.net/story.php?nid=73512
long-term challenge for Bangladesh, he added.
Shrinking global job market worries BB governor
http://www.thedailystar.net/story.php?nid=45937 The Financial Express, Friday January 30th, 2009
BB warns govt. of hefty borrowing The apparent shrinking of the worldwide job market could turn
The Daily Star, Friday January 30th, 2009 out to be detrimental to the country's economy, Bangladesh Bank
Governor Salehuddin Ahmed said on Thursday.
Bangladesh Bank (BB) yesterday warned the government of excess
bank borrowing and suggested three measures to help reduce "We are observing the situation closely," the central bank
"fiscal pressure", as the government’s borrowing from the banking Governor said, "as many of the traditional destinations of
system exceeded BB's target in the first half of the current fiscal expatriate workers are shutting their doors to foreign employees,"
year. he added, "either by stopping new recruitment or sending back
the hired ones". He added that if this trend continues, it will have
The central bank recommended an increase in duties on imports a negative impact on remittances and the overall economy.
of luxury goods and cuts in the government's unnecessary costs in
the next six months. The BB also suggested that the government "So, this could mean a major setback to the export of manpower
make an action plan to create some "fiscal space" to respond to and the inflow of remittance to the country if these trends
any downturn in economic activities or external shocks stemming continue," Salehuddin said when asked whether the global
from the global recession. financial turmoil could have a negative effect on the country's
economy.
According to the Bangladesh Bank Quarterly Report published
recently, during the first half of the current fiscal year, the fiscal The country’s manpower exporting industry is already suffering
_______________________________________________________________________________________
from the global recession as a number of major recruiting nations, Registration is merely an investment commitment by an
including Saudi Arabia, Malaysia, UAE, Qatar and Bahrain, have interested investor, but not an actual investment.
stopped hiring foreign workers for the time being.
The number of foreign investment proposals registered with the
Nevertheless, expressing an optimistic outlook about the BoI in 2006 was 166 worth USD 1,471mn, and 131 proposals
country's overall economic situation, the BB Governor observed worth USD 3.8bn were registered in 2005.
that the export of RMG and other commodities are likely to http://www.thedailystar.net/newDesign/news-
remain unscathed. details.php?nid=72952
http://www.thefinancialexpress-bd.info/2009/01/30/57409.html
ADB to provide USD 2mn for micro-insurance

The Daily Star, Thursday January 29th, 2009
The Asian Development Bank (ADB) will provide a grant of USD

2mn to develop the micro-insurance sector in Bangladesh and
help reduce the vulnerability of the poor from sudden losses in
income.
According to the ADB, around 20,000 people in Bangladesh are

expected to directly benefit from the grant provided from ADB's
Japan Fund for Poverty Reduction (JFPR). The grant will finance
development of low-cost insurance services to protect the
livelihoods of the poor, especially women, from risks such as
accidents, illness, theft, and natural disasters. It will also fund an
insurance awareness campaign and provide training for at least
50,000 rural poor households.
Although microcredit is well-established in Bangladesh, micro-

insurance, while gaining in popularity, is still a relatively new
concept. It is estimated that 93% of the country's total population
has no access to insurance services.
At least 20 microfinance institutions will undertake capacity

training on micro-insurance operations to develop expertise in
insurance underwriting, screening, financial management, product
development and marketing.
The Japan Fund for Poverty Reduction (JFPR) is an untied grant

facility established by the Japanese government and ADB in May
2000. From an initial contribution of USD 90mn, the fund now
stands at well over USD 360mn, of which USD 224mn has been
committed.
http://www.thedailystar.net/newDesign/news-
details.php?nid=73417
FDI proposals decline

The Daily Star, Monday January 26th, 2009
Foreign direct investment (FDI) commitments were very low in

2008 both in terms of value and the number of proposals,
according to Board of Investment (BoI) data. In 2008 interested
foreign investors only registered 13 projects worth USD 60mn
with the BoI. Canada alone expressed interest to invest about USD
53mn in a project. About 141 projects worth USD 327mn were
registered in 2007.
_______________________________________________________________________________________
Sector News
people and operating 1,183 branches. However, the bank is losing
Agriculture its share to private banks led by the Islami Bank Bangladesh
Limited (IBBL). Last year its operating profit stood at BDT 6.42bn
Bengal Meat suffers from global economic crisis (USD 93.2mn), which is 23% less than that of IBBL.
The Daily Star, Sunday, February 1, 2009
Launched in 1984, the Islamic banking system has grown rapidly in
Bengal Meat, the country’s only meat processing company, has Bangladesh where 90% of the people are Muslim. Deposits of the
been hit by the global economic recession, as plunging demand Sharia-compliant banks have grown from 21% to 24.4% of the
has caused the company to suspend mutton exports. According to total banking deposits, or BDT 347.30bn (USD 5.04bn), in the
an official of the company, mutton exports to Dubai’s stores have 2007-2008 financial year. During the same period deposits in the
been suspended since November. The company used to export 1 conventional banks grew by only 15 %, according to Bangladesh
tonne of mutton a day to Dubai. Bank data.
The BDT 350mn (USD 5.1mn) plant can process 1,000 goats and As of June 2008, six private banks out of the country's 48
100 cattle-heads, but a decrease in global demand coupled with a commercial banks were operating as full-fledged Islami banks.
disruption in its supply chain have affected its capacity utilization.
Set up in 2006, Bengal Meat is the first company to export meat IBBL with its 196 branches handled 23% of the total USD 8.9bn in
from Bangladesh, and has ensured Australian standard quality in remittance sent by Bangladeshis working abroad in calendar year
its plant. 2008.
http://www.thefinancialexpress- http://www.thefinancialexpress-
bd.com/search_index.php?page=detail_news&news_id=57591 bd.info/search_index.php?page=detail_news&news_id=57486
1
Bumper yield of mustard expected in Pabna : 30,000 hectares Automated clearing house by June
likely to produce 36,000 MT The Daily Star, Thursday January 29th, 2009
The Daily Star, Saturday, January 31, 2009
An automated clearing house, a system essential for electronic
Farmers and officials from the Agriculture Extension Department fund transfer, will be set up in the central bank by June.
(AED) are hopeful that there will be a bumper production of
mustard in Pabna (see footnote) this year following a good yield of The Bangladesh Automated Clearing House will process cheques,
the crop last year. A good yield of mustard in Pabna last year credit and debit payment instruments with the help of magnetic
inspired the farmers in the area to cultivate the crop in a large ink character recognition and imaging technologies. The system is
scale this year. This year farmers have cultivated mustard on over based on a centralized processing centre located in Dhaka with
30,000 hectares of land in the district, which is a little more than branches in seven other cities. The system will support both intra-
the cultivation target fixed by the AED while filed reports show regional and interregional clearings.
that the rate of production will be much higher than the target of
30,000 MT. The area of cultivation would be more if untimely rain
The government has been working with the United Nations
during the cultivation period of the crop did not hamper mustard
Development Programme for introducing e-commerce in the
cultivation at the primary stage.
country. A project called "Digital Signature: Methodology and
Deployment in Bangladesh" is underway to build the digital
http://www.thedailystar.net/story.php?nid=73712
payment systems.
Banking
Sonali and Janata banks to introduce Islami banking in March details.php?nid=73402
The Financial Express, Saturday January 31st, 2009
Janata Bank's local office earns BDT 2.11bn (USD 30.65mn) profit
State-owned banks - Sonali and Janata – plans to introduce Islamic The Financial Express, Tuesday January 22nd, 2009
banking in March this year. The central bank has approved the
introduction of Islamic banking operations in five branches each A local office of Janata Bank Limited earned a record profit of BDT
for Sonali and Janata Banks. 2.11bn (USD 30.65mn) in 2008.
Sonali bank, which was converted to a private limited company in The local office facilitated import and export businesses worth
late 2007, is the largest bank in the country, employing 22,181 BDT 80bn (USD 1.16bn) and BDT 35.7bn (USD 0.52bn)
respectively, accounting for 77% and 47% of the total earnings of
the bank.
1
Pabna is a city in the west-central region of Bangladesh and the major city of Pabna The bank also performed well in other areas – deposits increased
District. It is located on the Padma river (Ganges) and has a population of about by 111%, income without interest grew by 103%, recovery of
138,000.
_______________________________________________________________________________________
targeted defaulted loans increased by 162%. The total recovery of
the branch was more than double than the last two years. http://www.thedailystar.net/newDesign/news-
http://www.thefinancialexpress-
bd.info/search_index.php?page=detail_news&news_id=57019 Infrastructure & Energy
Ceramics Offshore blocks to be awarded to IOCs with 'due diligence'

Recession creeps into ceramic tableware
th
The Daily Star, 29 January 2009 The government will consider awarding the offshore blocks to the
successful bidders selected through last year's bidding round. The
newly appointed Adviser to the Prime Minister stated that the
government is keen to expedite offshore oil and gas exploration to
meet the growing energy needs of the country.
Awarding of the nine offshore blocks in the country is awaiting a

decision by the government following the selection of two
international oil companies (IOCs) as the successful bidders in July
2008. The caretaker government invited bids for offshore
exploration in February 2008 after dividing its sea territory in the
Bay of Bengal into 28 blocks. The US oil and gas giant
ConocoPhilips was selected for eight offshore blocks and Irish
Tullow for one block by the state-owned Petrobangla during the
bidding. State-run oil and gas company, Petrobangla made the
selection after evaluating the bids from seven companies
including Chinese giant CNOOC Ltd, Australia's Santos Ltd and the
Local ceramic tableware manufacturers are affected by the global Korean National Oil Corporation. The caretaker government had
financial crisis as their exports have been declining rapidly for the then committed to signing production-sharing contracts (PSCs)
last few months. with the winning companies by October 2008.
“Our exports came down by around 20% in December compared If awarded, ConocoPhillips would be given up to nine years time
to the previous month,” said Iftakher Uddin Farhad, chairman and for exploration in the eight deep-water blocks and Tullow would
managing director of FARR Ceramics Ltd. FARR Ceramics exported have eight years for the single shallow-water block. The
BDT 26mn (USD 0.38mn) worth ceramic tableware in October companies have pledged to invest a total of USD 492.52mn in
2008, which fell to BDT 21.9mn (USD 0.32mn) in November and to exploration.
BDT 14.8mn (USD 0.21mn) in December. According to statistics
from Export Promotion Bureau (EPB), Bangladesh exported http://www.thefinancialexpress-bd.com/2009/02/01/57641.html
ceramic tableware worth BDT 245mn (USD 3.56mn) in September
2008, which declined to BDT 210mn (USD 3.05mn) in October and DPDC project to bring consumers under pre-paid metering
BDT 166mn (USD 2.41mn) in November. network
However export earnings from ceramic tableware in the July-
November period of the current fiscal year was BDT 70mn (USD The Dhaka Power Distribution Company (DPDC) has planned a
1.02mn) higher than that of the same period in FY 08. BDT 3.73bn (USD 54.2mn) project to bring its consumers under a
pre-paid metering network within the next couple of years. "We
Bangladesh's export markets include the UK, the USA, Spain, Italy, have initiated a mega pre-paid metering project (phase-1) with
Australia, New Zealand, Norway, Sweden, Russia, the UAE, the funding support from different donors including Asian
Denmark, Germany, France, Mexico, Turkey and the Middle East Development Bank (ADB) and Korea International Cooperation
countries. Agency (KOICA)," said a senior DPDC official. According to the
plan, after the meters are supplied to the clients, the DPDC will
Shinepukur Ceramics is one of the two largest manufacturers of adjust the installation cost with individual users' electricity bills
ceramic tableware in the country, with the second being Monno within a year.
Ceramics. Shinepukur exported USD 18mn worth ceramic
tableware in FY 08. The company accounts for about half of the After officially becoming a public limited company in July 2008,
total tableware exports from Bangladesh. the DPDC has taken various steps to upgrade its electricity
distribution systems, reduce its systems losses and improve its
In addition to the global turmoil, the industry is facing increasing service delivery systems. The company's average systems loss
challenges with the rise in prices of raw materials. The industry declined to 19.81% at the end of December 2008 from 22.89% at
needs to import all the raw materials required for producing the start of its operation. The company posted a net operating
ceramic tableware. The total tax for import of the raw materials profit of nearly BDT 288.92mn (USD 4.2mn) in November last
stands at 30 % that includes 7 % import duty and 15 % VAT (value year. At present, the DPDC alone purchases around 23% of
added tax).
_______________________________________________________________________________________
electricity sold by the Bangladesh Power Development Board Bangladesh to seek regional cooperation in energy sector
(BPDB). The Financial Express, Wednesday January 28, 2009
http://www.thefinancialexpress- State Minister for Foreign Affairs Dr Hasan Mahmud, who

bd.com/search_index.php?page=detail_news&news_id=57653 attended the third SAARC ministerial meeting on energy
cooperation in Colombo on January 27, said Bangladesh will seek
Bapex eyes 2.5tcf new gas in 7 years regional cooperation particularly in the renewable energy sector.
The Daily Star, Sunday February 1, 2009
He said a decision would try to be reached regarding a consensus
Bangladesh Petroleum Exploration Company (Bapex) aims to on the regional approach for setting up hydropower plants among
discover around 2.5 trillion cubic feet (TCF) gas and expects to these countries. At the ministerial, he would project Bangladesh's
provide an extra 200mn cubic feet gas per day (mmcfd) within the position on various issues, including the setting up of a SAARC
next seven years. By 2015-16, Bapex plans to drill 15 exploration energy network, fixation of imported fuel and the saving of
wells and expects to find gas in at least six instances. energy.
Since its inception in 1989, Bapex was given only eight projects till http://www.thefinancialexpress-
last year, almost entirely leaving exploration and development of bd.com/search_index.php?page=detail_news&news_id=57245
the oil and gas sector to foreign companies. As a result, Bapex
now produces a paltry 40mmcfd gas, while four foreign BPC at last earns profit after ten years
companies -- Chevron, Cairn, Tullow and Niko -- produce around The Financial Express, Tuesday January 27, 2009
700mmcfd. When it started producing gas from two small fields of
Fenchuganj and Salda, it was offered a tariff of only BDT 7 (US The state-owned Bangladesh Petroleum Corporation (BPC) has
10.2 Cents) per thousand cubic metres, while the foreign oil earned some profit in the last two consecutive months of trading
companies receives a tariff of BDT 200 (USD 2.9) for the same after being in the red for the last ten years. BPC's profit in
amount. November, 2008 was BDT 1.54bn and BDT 1.50bn in December
2008. Despite last two months' profit the corporation is counting
In August 2008, the government, responding to a proposal from losses of around BDT 15bn in the current fiscal years' trading since
Bapex, increased its gas sales tariff to BDT 25 (US 36.3 Cents) per July 2008.
thousand cubic metres effective from July 2008 and approved its
seven-year investment of BDT 32bn (USD 464.8mn). http://www.thefinancialexpress-
bd.com/search_index.php?page=detail_news&news_id=57127
Chevron to re-evaluate Bibiyana gas field
Rental power the best short term solution: Aggreko The Financial Express, Monday January 26, 2009
The Daily Star, Friday January 30, 2009
Chevron will conduct a re-evaluation of the Bibiyana gas field to
Leading international rental power provider Aggreko believes that delineate its latest reserve position. According to the state-owned
Bangladesh will have to rely on the rental power system as the hydrocarbon corporation Petrobangla, an approval will be given in
best short-term solution for the next few years until it can bring this regard to the US-based international oil company (IOC) within
some large power projects. Debajit Das, managing director (Asia) this week.
of UK based Aggreko, said he sees inevitable load shedding of
700MW to 2000MW this year even after the addition of 742MW The decision for re-evaluating came amid a debate over the level
new generation capacity. of gas extraction from the country's second largest gas field,
where reserve was initially estimated at about 2.4 trillion cubic
Aggreko has been operating a 40MW diesel-based rental power feet (TCF) after its discovery in 2000. A group of energy experts in
plant in Khulna since June 2008. As the government seems to be Petrobangla is opposed to gas production of more than 500mn
highly committed to ensuring smooth irrigation for the agriculture cubic feet a day (MMCFD), arguing that this might lead to an early
sector, it might consider installing a rental power system for a death of the gas field. On the other hand, another group of
period of six months to cover the irrigation season. Petrobangla experts favour increasing the production level to
more than 500 MMCFD. Petrobangla director Muktadir Ali,
The Khulna plant is Aggreko's first venture in Bangladesh. The however, said the move to re-evaluate the reserve is undertaken
British company is generating 6,000MW of power around the as part of the gas purchase and sales agreement (GPSA) signed
world. Aggreko's power generator uses Cummins engine, but the with the IOC.
whole package is designed and developed by the company itself.
As the design follows a “plug and play” policy, installing a plant for The gas production at the Bibiyana gas field began in February
Aggreko is just a matter of mobilising equipment from one place 2007 with a daily production of 200 MMCFD. There was a plan
to another. that production would be increased to 600 MMCFD within a few
years to meet the growing demand.
bd.com/search_index.php?page=detail_news&news_id=57058
_______________________________________________________________________________________
are almost equal to Mumbai's."We have a demand for 100,000
Pharmaceutical units of flats a year. But the realtors can provide only 8,000-9,000
flats annually," Probal said."The demand for new flats is still very
Beximco Pharma down in London trade high. So naturally, I don't see any chances for overheating or a
The Daily Star, Friday, January 30, 2009 sharp downturn in the sector in the coming years," he added.
Probal said over the past few months, sales of high end flats have
declined in Dhaka. He further stated that the group's 453 member
companies have over 2500 housing projects under construction,
but together they "have a very small amount of exposure to the
banking sector."He also said hard-savings rather than bank loans
are fuelling the housing prices in the city. "For years apartment
sales in both Dhaka and Chittagong have been driven by the NRBs
(Non-resident Bangladeshis) and the country's growing middle-
class," he said.
bd.info/search_index.php?page=detail_news&news_id=57407
Technology
Prices of global depository receipts (GDRs) issued by Beximco
Pharmaceuticals fell by around 47% in the Alternative Investment Digital Bangladesh pledge rings again: Govt purchases may go
Market of the London Stock Exchange (LSE) since September 1st online
th
2008. Each GDR of Beximco Pharmaceuticals closed at GBP 13.5 The Daily Star, 28 January 2009
st
on January 28, down from GBP 25.5 on September 1 2008,
according to the LSE website. However, the company, one of the The major promises made by the ministers at the inauguration of
leading drug manufacturers in Bangladesh, is among some globally the BASIS Softexpo-2009 included introduction of the e-payment
renowned companies that are experiencing price-drops, as a system, e-governance, along with introducing an ICT curriculum at
result of the ongoing financial meltdown. However, Beximco the secondary level of education.
Pharma has been performing well in the Bangladesh stock
markets. Finance Minister AMA Muhith said all government purchases
should go through online payments or e-commerce to ensure
Beximco started trading GDRs in the Alternative Investment transparency.
Market in the London bourse on October 21st, 2005. In the first
phase, the company raised around BDT 1.4bn (USD 20.33mn) from 'Softexpo' is a yearly event of the Bangladesh Association of
international institutional investors by issuing 20mn GDRs. In June Software and Information Services (BASIS) that aims to showcase
2006 the company raised GBP 6.5mn by issuing an additional products and services by local and foreign software developers.
8.2mn GDRs. The US, Saudi Arabia, Hong Kong, Singapore, Japan, South Korea,
Sri Lanka and Russia are also showcasing their products and IT
The profit margin of the pharmaceutical company has been enabled services at Bangladesh China Friendship Conference
declining since 2005 mainly due to rising prices of raw materials Centre.
and higher competition both in the local and international
markets. Bangladesh's software industry has a less than 1 % market share
in the USD 300bn global market. The country exported software
http://www.thedailystar.net/story.php?nid=73516 and IT enabled services worth USD 25mn in 2008.
Real Estate The export target of IT-enabled services of USD 30mn by 2009 did
not satisfy Commerce Minister Faruk Khan. He said the export
Realtors rule out central bank's fear for housing price bubbles target could not be set higher due to a lack of government
The Financial Express, Friday January 30, 2009 support.
The central bank has started monitoring the country's real estate http://www.thedailystar.net/story.php?nid=73220
prices to prevent a "bubble-burst" in the housing sector that may
drag down the banking sector. The Real Estate and Housing Telecoms
Association of Bangladesh (REHAB) stated that a team from
Bangladesh Bank led by a deputy director has been assigned to Telecoms watchdog made all too mighty: Ordinance passed
monitor real estate prices and the sector's exposure to banks. skirting ministry's opposition, existing laws
th
The Daily Star, 29 January 2009
REHAB president Tanvirul Haq Probal, however, ruled out any The caretaker government on December 22 approved an
possibilities of a housing "bubble" or "over-heating" of the sector, ordinance amending the Telecom Act, 2001 bypassing the
although he agreed that housing prices in some parts of the city
_______________________________________________________________________________________
telecoms ministry and in contradiction with existing laws, making
BTRC very powerful. Textiles
The approval appears surprising as earlier that month the finance EPB moves on duty-free garment export to India
ministry rejected BTRC's proposal to amend the Act to make it The Daily Star, Thursday, January 29, 2009
more powerful and financially independent.
The Export Promotion Bureau (EPB) is taking a number of
The finance ministry observed that many of the proposals violate initiatives to encourage apparel manufacturers to fully utilize the
the constitution. opportunity of exporting 8mn pieces of readymade garment
(RMG) products to India a year under a South Asian Free Trade
Telecoms ministry sources say in the all inter-ministerial meetings Area (SAFTA) agreement. Of the total quota, affiliated BGMEA
the ministry officials stood against the BTRC proposals. But the members will get a 70 % share, while BKMEA members will have
commission had it approved apparently by convincing the Ministry the rest. An apparel unit owner will be able to supplying as many
of Law and other authorities concerned, they add. Finance as 0.2mn RMG pieces a year after submitting the required
ministry insiders say the new judicial power of BTRC officials documents, including a confirmed irrevocable letter of credit.
enacted in the ordinance was beyond their knowledge.
Regulatory Reforms Commission (RRC) Chairman Dr Akbar Ali details.php?nid=73404
Khan said the ordinance should be discussed in parliament. "The
concerned parliamentary committee should scrutinise the
ordinance whether it is truly good for the country," he added.
Please refer to the following link to see some salient features of

the amendment to the Telecommunication Act, 2001
Private landline operators get financial concessions

The Daily Star, 27th January 2009
The telecom watchdog officially announced financial concessions,

including a 50% reduction in yearly licence fee, for private landline
operators.
The yearlong persuasion for a respite from the financial burden as

per the licence agreement has partially been resolved after a
meeting between Bangladesh Telecommunication Regulatory
Commission (BTRC) and Association of PSTN operators of
Bangladesh (APOB).
But, the APOB members said two major issues, including

interconnectivity and fixing up a unique market tariff, are yet to
be settled.
Interconnection tariff is now a new dilemma for the landline

operators. Industry insiders said mobile companies are reluctant
to come up with rational revenue sharing. The PSTN operators
have to pay BDT 0.4 a minute to the mobile operators and the
same amount is charged when mobile operator's calls enter the
PSTN network.
After entering the market in 2005, the 11 private landline

operators added only 0.5mn customers to their networks by the
end of December 2008. Among the 11 private landline operators,
Ranks Telecom Ltd is the market leader, followed by Dhaka Phone
and Peoples Telecom.
_______________________________________________________________________________________
AT Capital Team – Dhaka
Ifty Islam Managing Partner (880-2)-8155144, ext. 132 ifty.islam@at-capital.com
Syeed Khan Partner (880-2)-8155144, ext. 109 syeed.khan@at-capital.com
Akther Ahmed Senior Advisor (880-2)-8155144, ext. 108 akther.ahmed@at-capital.com
Masud Khan Senior Advisor (880-2)-8155144, ext. 113 masud.khan@at-capital.com
Jisha Sarwar Senior Research Associate (880-2)-8155144, ext. 119 jisha.sarwar@at-capital.com

Mohammad Emran Hasan Senior Associate (880-2)-8155144, ext. 120 emran.hasan@at-capital.com
S Adeeb Shams Research Associate (880-2)-8155144, ext. 128 adeeb.shams@at-capital.com

Ahmad Sajid Research Associate (880-2)-8155144, ext. 135 ahmad.sajid@at-capital.com
M. Emrul Hasan Research Associate (880-2)-8155144, ext. 138 emrul.hasan@at-capital.com
Abdullah-Al-Farooq Research Associate (880-2)-8155144, ext. 133 abdullah.farooq@at-capital.com
Ohidul Alam Chowdhury Analyst (880-2)-8155144, ext. 130 ohidul.alam@at-captial.com
Sohana Alam Seraj Office Manager (880-2)-8155144, ext. 132 sohana.alamseraj@at-capital.com
AT Capital Team – North America/Asia
Zarif Munir Senior Advisor zarif.munir@at-capital.com

Professor Jahangir Sultan, Ph.D. Senior Advisor jahangir.sultan@at-capital.com
M. Nasim Ali Senior Advisor nasim.ali@at-capital.com
Iqbal Hussain Senior Advisor iqbal.hussain@doctors.org.uk
Robert Kraybill Senior Advisor robert.kraybill@at-capital.com
© Copyright 2008. Asian Tiger Capital Partners Limited, Level 16, UTC Tower, Panthapath, Dhaka – 1215, Dhaka, Bangladesh.
All rights reserved. When quoting please cite “AT Capital Research”. The above information does not constitute the provision
of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily
correspond to the opinions of Asian Tigers Capital Partners or its affiliates. Opinions expressed may change without notice.
Opinions expressed may differ from views set out in other documents, including research, published by Asian Tigers Capital
Partners Limited. The above information is provided for informational purposes only and without any obligation, whether
contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the
information given or the assessments made.
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01 February 2009 AT CAPITAL RESEARCH

AT Capital Weekly Update

Special Focus Reports:

UTC Building, Level 16

Stock Market Weekly 18

BD Finance Ministry to set up financial crisis taskforce

On Jan 31, Finance Minister MA Muhith confirmed that “the

Still few signs of imminent moves on exchange rate

BB:” In recent months, there has been some sharp cross-rate

BB:” This quarterly reports that although Bangladesh's real

Prices of other primary commodities like wheat and edible oil

Impact of global financial crisis on Bangladesh economy

BB: “Although Bangladesh suffered significant loss of income in

BB recommends increasing scope for fiscal policy stimulus

BB: “The fiscal sector had to withstand significant pressure during

Effective integration and coordination is the preferred approach –

The most common criticism of export promotion programs, from

Trade fairs and missions are typical targets of this criticism. In

Bangladesh has export potential in agro-processing products such

The new government appears to be committed to a policy of

Significantly reduced capital flows to emerging economies are part

• The near seizure of global interbank markets in the weeks

Second, the scale of the boom in private flows to emerging

The pattern of the shift in bank lending flows is common across

• Net banking flows into Emerging Europe peaked at USD 217

• Among regions, the magnitude of the banking shock is least

• Government to allow private investors to raise fund

• ICB to buy BD Welding stakes

• Grameen Mutual Fund floats 3rd scheme this year

• Beximco Pharma to raise BDT 4.6bn (USD 67.1mn)

DSE performance: 30 days Regional stock market performance (last week))

Market summary Valuation snapshot

Last 4 weeks performance:

The largest sector in terms of market capitalization - banks - fell

• In 2009 Trade Finance earnings of banks are expected to

The Investment Corporation of Bangladesh (ICB) has signed a

The sponsors and directors of BD Welding, which was listed with

Grameen Mutual Fund floats 3rd scheme this year

Turnover leaders Best performers* Worst performers*

Market cap. by sector* Correlation with other indices*

Mohammad Emran Hasan

27-Jan-08 20-Jan-09 27-Jan-09

Dec-07 Dec-08 2007-08 • Shrinking global job market worries BB governor

Sep-07 Sep-08P 2007-08

Dec-07 Dec-08P 2007-08

Source: Selected indicators by Bangladesh Bank, 28 January 2009

Latest Bangladesh Inflation Rates

Oct-08 Nov-08 Dec-08

ADB to provide USD 2mn for micro-insurance

The Asian Development Bank (ADB) will provide a grant of USD

According to the ADB, around 20,000 people in Bangladesh are

Although microcredit is well-established in Bangladesh, micro-

At least 20 microfinance institutions will undertake capacity

The Japan Fund for Poverty Reduction (JFPR) is an untied grant

FDI proposals decline

Foreign direct investment (FDI) commitments were very low in

Ceramics Offshore blocks to be awarded to IOCs with 'due diligence'

Awarding of the nine offshore blocks in the country is awaiting a

http://www.thefinancialexpress- State Minister for Foreign Affairs Dr Hasan Mahmud, who

Please refer to the following link to see some salient features of

Private landline operators get financial concessions

The telecom watchdog officially announced financial concessions,

The yearlong persuasion for a respite from the financial burden as

But, the APOB members said two major issues, including