|Robert W Gibson
British High Commissioner to Bangladesh Robert W Gibson sees scopes for more expansion of business and economic collaboration with Bangladesh, but he said continued political stability and a fair, competitive policy regime are two important factors which are essential to support the business growth.
In an exclusive interview with The Holiday at his official residence at Baridhara in the city, the British envoy said British firms have over two billon pounds sterling investment in Bangladesh and some new proposals to set up businesses are in the pipeline.
Very well-known British banking institutions such as StanChart Bank and Hongkong and Shanghai Banking Corporation (HSBC) have been operating here for long. “We are talking on more investment proposals in the energy and power sector, discussions are on the table and we hope it will come to a speedy end,” he said pointing to the new business process in the making.
He hinted that discussions on inland and off-shore gas exploration are also in the pipeline but he did not elaborate. To a question, he said infrastructure projects are not much in the priority, British companies work more on engineering and design. British business is more concentrated to the service sectors, he said.
He said Britain is hosting the home of the largest LPG project and as its scope of investment is expanding in Bangladesh, many British companies naturally will have interest. On the investment environment in the country, he said it is obviously there, I must say the policy regimes should be clear to encourage investment. It should be fair and the there should be enough scope to properly implement projects.
He said too much regulations are not supportive to set up new business. There should be competitive business policies which should implemented easily and there should also be an efficient legal system, he emphasized.
Referring to the presence of the British companies in the country, he said the number runs at around 5o now while some other companies are trying to set up operations here. He said the volume of trade has increased about 40 percent over the past five years. Bangladesh’s exports to Britain stood at one billion pound sterling last year. “Your country’s exports are more competitive and Britain is one of the largest homes of Bangladesh exports,” he said adding it takes about 10 percent of Bangladesh’s total exports.
He said, “Britain is very much a trading nation and our relation with Bangladesh dates back to centuries. It’s a historic relation, a very strong relation. We want it to further strengthen it based on mutuality of economic and business purposes.”
He said trade is increasing year by year on both sides, especially RMG exports from Bangladesh figure prominently in the merchandise. Not only UK firms want profitable investments in Bangladesh, Britain also encourages Bangladesh’s investment in the UK, he emphasized.
He said Bangladesh has emerged as a vital economic partner and a strong partnership has evolved over the years. Now Britain not only takes 1/10th of Bangladesh’s exports, Bangladesh receives 1/5th of its remittances from the UK. In addition, the UK is every year increasing its overseas development assistance (ODA) to Bangladesh. It seeks to disburse 1billion pound sterling in aid to different development projects over the next four years. As lead donor to climate fund, the DFID is putting its best efforts to help the country fight back the adverse impacts of global warming and other livelihood challenges, Gibson said.
He praised the contribution of Bangladeshi hospitality sector in Britain, especially in the food and restaurant services. He said UK is a large country having a large population and in the prevailing financial crisis in Britain and all over Europe and America, his country discourages unskilled and low skilled migrant workers to Britain.
The supply shortfall of workers may be met from training locally available young people already in the UK. Business firms or restaurants suffering from workers shortage should take training initiatives.
Gibson said Bangladesh is a country of immense possibility but it should try to maintain stability in the socio-political fronts to create the environment for achieving rapid economic development. The country’s entrepreneurial ability is excellent, he said.
The British envoy, however, has also clearly expressed his empathy on the political issues. He said Britain as a very close friend wants to see stability is helping Bangladesh achieve it’s socio-economic goals. People’s problems should find priority, he said adding he urged both the major political parties and their leader to resolve the transitional issues in a way which will give the nation a free and fair election. It is a matter of Bangladesh to decide by the people and leaders should hold dialogue to respect the people’s will which provides the basis of a working democracy.
British Business Group
UK is the third largest export destination of Bangladeshi product after US and Germany. Total Bangladesh export to UK in fiscal year 2009-10 was US$ 1508.54 million, which is 9.3% of total export of Bangladesh and UK is one of the top source of FDI for Bangladesh. In 2009 (Jan-Dec) FDI from the UK was US$ 88 million out of total US$ 700 million and also UK is the fifth largest source of remittance next to Saudi Arabia, USA, UAE and Kuwait. Total remittance from UK to Bangladesh in fiscal year 2009-10 was US$ 827 million which is around 8% of total remittance received in Bangladesh.
The trade relationship between Bangladesh and UK has strengthened in last couple of years. Total export to UK from Bangladesh, is nearly 10% of our total export earning. Although UK-Bangladesh trade statistics are encouraging in terms of volume and growth but is worrying that almost 80% of Bangladesh’s exports to UK are readymade garment, which enjoys duty free access under EBA (Everything But Arms) policy of European Union. The High Commission remains focused to further improve the growing trend of economic co-operation between our two countries.
Factors of export growth from Bangladesh to UK
Competitive edge in quality and price, Duty free access to the EU Countries policy under EBA (Everything But Arms), Increasing cost of production in China and appreciation of RMB, Increasing compliance (specially in the RMG sector and shrimp) with standards, Strong backward linkage in knitwear and High Commission’s initiatives
Bangladesh exports to UK (Major Items)
Knitwear, Woven garments, Shrimps, Home Textile, Bi-cycle, Light Engineering, product, Vegetables, Frozen Fish, Terry Towel, Tableware, Jute yarn and jute goods, Computer services, Leather Products and Footwear.
Bangladesh imports from UK, (Major Items)
Power generating and industrial machinery & equipment, Scrap metal, Professional and scientific equipment, Textile fibres, Medicinal and pharmaceutical products, Dyeing, tanning and coloring materials, Electrical machinery, apparatus and appliances, Chemical materials and products and Office machines.
Bangladesh UK Investment:
The Bangladesh Government continues its endeavor to attract foreign investment. Foreign investment is encouraged in almost all industrial activities excluding those in the list of “Reserved Industries” such as arms and ammunitions, production of nuclear energy, printing and minting currency notes etc.
Foreign investment in Bangladesh can be either 100% foreign owned or joint ventures.
Total FDI in FY 2010-11 was US$ 913 million which is 30% higher then previous year.
UK has emerged as one of the biggest sources of FDI for Bangladesh. British investment registered with Board of Investment in Bangladesh in 2009 was to the tune of US$ 88.08 million, out of total FDI US$ 700.16 million elevating UK to the top position among countries investing in Bangladesh. Major areas of British investment in Bangladesh include oil and gas, textile, tea garden, financial and other service sectors. So far, about 214 units of British FDI projects have been registered with the Board of Investment of Bangladesh with a total investment outlay of US$ 2,588 million. Sector wise distribution of proposals from UK registered with BOI that investments are heavily concentrated in the service sector which is basically banking, gas exploration, coal mining, telecommunication etc.
Bangladesh offers an unique investment climate compared to the other South Asian economies. Geographic location of the country is ideal for global trade with very convenient access to international sea and air route. Hard working and low-cost labour force suitable for any labour-intensive industry. Broad non-partisan political support for market oriented reform and the most investor-friendly regulatory regime in South Asia.
Bangladesh is endowed with abundant supply of natural gas, water and its soil is very fertile. Although Bangla is the official language, but English is generally used as second language. As a result of low per capita income of only US$ 750, present domestic consumption is not significant. However there exists a middle class with moderate purchasing power. As economic growth picks up, the purchasing power will also grow substantially. And a country of more than 160 million people constitutes a significant market. Most Bangladeshi products enjoy complete duty and quota free access to EU, Japan, USA, Australia and many other developed countries. Investment in Bangladesh is well protected by law and by practice. Agreements for avoidance of double taxation have already been signed with 25 countries and negotiations are going on with many other countries.
Bangladesh government is highly keen to stimulate the economy and transform a poverty-stricken economy to industrialized economy within short time. Government has liberalized the industrial and investment policies in recent years by reducing bureaucratic control over private investment and opening up many areas. Incentives offered by the government are as follows:
(a) Tax Holiday
Tax holiday facility is available for 5 years depending on the nature and location of the industrial enterprise. Industrial undertaking eligible for tax holiday are textile, jute goods, high value garments, pharmaceuticals, melamine, plastic products, ceramics, sanitary ware, steel from iron ore, MS Rod, CI Sheet, fertilizer, insecticide & pesticide, computer hardware, petro-chemicals, agriculture machinery, boilers, compressors, basic raw materials of drugs, chemicals, pharmaceuticals, agro-processing, ship building and diamond cutting. Physical infrastructure investment eligible for tax holiday are Sea or river port, container terminals, internal container depot, container freight station, LNG terminal and transmission line, CNG terminal and transmission line, gas pipe line, flyover, mono rail, underground rail, telecommunication other than mobile phone, large water treatment plant & supply through pipe line, waste treatment plant, solar energy plant, export processing zone. However power generation company can enjoy tax holiday for 15 years. Tax holiday facilities are provided in accordance with the existing tax laws and granted by National Board of Revenue (NBR). (b) Accelerated Depreciation:
New industrial undertakings not enjoying tax holiday can enjoy accelerated depreciation allowance on cost of machinery in the first year of commercial production at 50%, in the second year at 30% and in the third year at 20%. (c) Concessionary Duty on Imported Capital Machinery: Import duty, at the rate of 7.5% is payable on capital machinery and spares imported for initial installation of the industry or Balancing, Modernization, Rehabilitation and Extension (BMRE) of the existing industries. For 100% export oriented industries, no import duty is charged in case of capital machinery and spares. Value Added Tax (VAT) is not payable for imported capital machinery and spares.
(d) Rationalization of Import Duty: Duties and taxes on import of goods which are produced locally is higher than those applicable to import of raw materials for producing such goods. (e) Other Incentives: Tax exemption on royalties, technical know-how fees received by any foreign collaborator, firm, company and expert. Tax exemption on the interest on foreign loans under certain conditions. Avoidance of double taxation in case of foreign investors on the basis of bilateral agreements. Exemption of income tax up to 3 years for the foreign technicians employed in industries specified in the relevant schedule of income tax ordinance. Facilities for full repatriation of invested capital, profit & dividend. Tax exemption on capital gains from the transfer of shares of public limited companies listed with a stock exchange. Special facilities and venture capital support is provided to export-oriented industries under “Priority Sectors” There is no discrimination in case of duties and taxes for the same type of industries set up by foreign and local investors and in the public and private sectors. Incentives to Export-Oriented and Export-Linkage Industries Export-oriented industrialization is one of the major objectives of the Industrial Policy 1999. Export-oriented industries are given priority and public policy support is ensured in this respect. An industry exporting at least 80% of its manufactured goods or an industry contributing at least 80% of its products as an input to export oriented industry or a business entity exporting at least 80% of services is considered as an export-oriented industry. To attract investment in 100 percent export-oriented industries, following incentives and facilities are provided:
Duty free import of capital machinery, Bonded Warehouse and back-to-back Letter of Credit facilities are allowed. Exporter receives duty drawback at a flat rate directly from the relevant commercial banks. There are arrangements for providing loans up to 90 percent of the value against irrevocable and confirmed Letter of Credit/Sales Agreement. To ensure backward linkage, incentives are extended to the “deemed exporters” supplying indigenous raw materials to export-oriented industries. Income tax rebate is allowed to export earning. Raw materials, which are included in the banned/restricted list, but required in the manufacture of exportable commodities, are allowed to import. The imports of specified quantities of duty-free samples for manufacturing exportable products are allowed. Apart from the above-mentioned facilities, other facilities announced and provided in the Export Policy are applicable to export-oriented and export-linkage industries. Incentives at Export Processing Zones (EPZ) : Investment in the Export Processing Zones enjoys following special incentives: Fiscal Incentives: Tax holiday for 5 years, for industries set up on or after 1 January 2012. Duty free import & automatic bonded warehouse facility. GSP facility, Foreign technicians are exempted from income tax for 3 years (for the projects approved before 22 March 09), Remittance of Royalty, Technical and Consultancy Fees allowed, Duty & Quota Free Access to EU, Canada, Australia etc.
Investment protected under Foreign Private Investment (promotion and protection) Act, 1980, 100% foreign ownership permissible, No ceiling on foreign investment, Foreign currency loan from abroad under direct automatic route, Non - resident Foreign Currency Deposit (NFCD) Account permitted, Full repatriation of capital and dividend.
Foreign Investment Policy and Regulations:
The policy framework for foreign investment in Bangladesh is based on the Foreign Private Investment (Promotion and Protection) Act, 1980, which ensures legal protection to foreign investment in the country against nationalization and expropriation. It also guarantees non-discriminatory treatment between foreign and local investment and repatriation of proceeds from sales of shares and profit. However, foreign investors are required to follow the regulations of Bangladesh Bank and (National Board of Revenue) for taxation and customs matters.
Doing Business in Bangladesh
Setting Business: Business in Bangladesh may be carried out by a company incorporated locally or a company incorporated outside Bangladesh, but registered in Bangladesh.
The Registrar of Joint Stock Companies and Firms do the incorporation or registration under the provisions of the Companies Act 1994 which safeguard the interest of the investors and provide the directors with overall power to manage and run the company.
All foreign investment in Bangladesh is to be registered with the Board of Investment. There are no limits for equity participation. Investment is welcome in all sectors, with the exception of: Manufacturing of arms and ammunition or other defense equipment, Forest plantation and mechanized extraction of reserved forests, The production of nuclear energy and Security printing (currency notes) and minting.
Taxation: National Board of Revenue (NBR) is the apex body for matters relating to taxation (income tax, VAT and Customs duty) in Bangladesh.
Income Tax: Income tax is administrated by the Income Tax department of NBR and governed by the Income Tax Ordinance, 1984 and by the Income Tax Rules 1984. Bangladesh has concluded tax treaties with 25 countries to assure foreign investors of fair treatment and avoid double taxation.
VAT: Bangladesh has mostly replaced the former sales and excise taxes with the VAT, imposed at a flat rate of 15 per cent. VAT is not payable for imported capital machinery and spares. But turnover tax is imposed on some small-scale activities, which remain outside the purview of VAT.
Customs Duty: Customs duty and supplementary duty are imposed on imported finished goods as well as raw material as per schedule declared by the government.
Labour Issues/Regulations: The Labour Law 2004, Employment of Labour (Standing Orders) Act, 1965, and the Industrial Relations Ordinance, 1969, regulate conditions of employment in Bangladesh, but there are about 47 labour-related laws, which regulate wages and employment, trade union and industrial disputes, working environment and labour administration, and related matters.
Competitive Sector for Investment in Bangladesh
Bangladesh, traditionally known for jute and tea exports, has recently attracted world- wide attention for readymade garments and leather exports. Bangladesh foresees an expansion of her agricultural sector, as well as increased diversity in non traditional industries and business. Below is a short account of a few potential investment sectors where investment from UK may flow.
Ready made garments and Textile, Power and Energy, Leather and Leather Goods Frozen foods, Information Technology and Business Services, Agro-based Industry.
Ceramic, Light Engineering, Life Sciences, Electronics, Jute and Jute goods, Tourism And Ship Building.
Bangladesh government is highly keen to stimulate the economy and transform a poverty-stricken economy to industrialized economy within short time. Government has liberalized the industrial and investment policies in recent years by reducing bureaucratic control over private investment and opening up many areas. Bangladesh’s regulation of inward investment is recognised as the most liberal in South Asia. Apart from the general investment climate many incentives are offered by the government to attract foreign investment such as tax holiday, accelerated depreciation, concessionary duty on import of capital machineries and many more. Moreover special incentives are offered to the investors who invest in the Export Promotions Zones.
Foreign investments in following areas encouraged
Export-oriented industries, Industries in the EPZ, High technology products which are either import substitutes or export oriented, Undertakings in which more diversified use of indigenous natural resources are possible, Basic industries depending mainly on local raw materials, Investment towards improvements in quality of goods manufactured and the increase of production capacities of existing industries and Labour intensive and/or technology intensive industries.
Incentives to Non-Resident Bangladeshis (NRBs)
Investment of NRBs is treated at par with FDI. Special incentives are provided to the NRBs to encourage investment in the country. NRBs enjoy facilities similar to those of foreign investors. Moreover, they can buy newly issued shares/ debentures of Bangladeshi companies. A quota of 10% has been fixed for NRBs in primary public shares. Furthermore, they can maintain foreign currency deposits in the Non-resident Foreign Currency Deposit (NFCD) account. An additional rebate of 5% on the total sale price of SOEs sold by the Privatisation Commission is granted when the buyer including the NRBs pays the full amount in foreign currency. DFID has recently expressed its interest to develop a Special Economic Zone in Bangladesh that may be ideal place for investment for the NRBs.
Special areas for NRBs
Agro Processing, Shrimp, Frozen fish and vegetable, Textile, ICT, Business Process Outsourcing (Call Center), Tourism, Hospitality, Real Estate, SOE Acquisition, Wage Earner’s Development Bond, US Dollar Bond and Portfolio and Security Investment.
Bangladesh UK Aid & Development
For Bangladesh, UK is the single largest bilateral development partner and for UK, Bangladesh is the second largest recipient of development assistance next to India. UK’s development program is the significant part of UK’s relationship with Bangladesh. Laudable performance of Bangladesh in achieving economic and social development has been an inspiring factor for the UK to continually increase its country ODA to Bangladesh through Department for International Development ( DFID ). Over the past years DFID has concentrated in different development projects aimed at poverty alleviation, rural infrastructure development, primary education, urban development etc. The UK assistance to Bangladesh since independence has been about £ 2 billion, out of which about £ 700 million was provided as project aid and technical assistance. A major share of the development assistance is used for human development and institutional strengthening with an increasing emphasis on governance. In March, 2011, following DFID’s Global Assistance Review the Department has announced a policy decision to enhance its annual assistance to £ 250million by 2015.
Remittance from UK
Bangladesh government recognises that foreign remittance from expatriate Bangladeshis are vital in maintaining a healthy foreign exchange reserve and having a surplus in the current account balance. During the year 2010-11 Bangladesh received remittance of US$ 11.65 billion. The contribution of remittance from UK is particularly significant as it is around 8% of the total remittance received in Bangladesh. Total remittance from UK during the financial year 2010-11 stood at US$ 890 million. UK is the fifth largest source of remittance next to Saudi Arabia, USA, UAE and Kuwait.
|Chairman, JEYMAR group of Companies (Scotland) Ltd.
Raj Hossain was brought up in the United Kingdom. After graduating from London University in Aeronautical Engineering and completing his MBA and Commercial Pilot’s Licence he worked for the Rank Organization in the U.K. as their General Manager for 14 years. He was a consultant and contractor for Cairn Energy plc., and is their landlord for the Halda gas field outside Chittagong, Bangladesh. Raj lives in Scotland and divides his working time between Scotland, USA and Bangladesh where he spearheads substantial interests of his parent company Jeymar UK Ltd., his commitment to the energy and building industry takes him round the world and to many countries such as, Vietnam, Laos, Cambodia, Mongolia, Azerbaijan, Kazakhstan, Uzbekistan, Colombia, Venezuela, Peru, Trinidad, Argentina, Brazil, Cuba, Mexico, Paraguay, Uruguay and Ecuador, said Raj Hossain Chairman, JEYMAR group of Companies (Scotland) Ltd.
He was very apprehensive about further investment in Bangladesh due to a recent change in the country’s financial climate. He came very strongly about the pitfalls the foreign investors were facing in Bangladesh such as inadequate supply of Power, Gas, Transport and Communication, lack of prompt and efficient response and assistance from various relevant departments. The absence of proper insurance facilities also creates a factor of enormous risks that looms over huge industrial investment. The response from government departments are slow if any, most hardly have any answers to one’s queries, Said Hossain.
He also said. There are no proper foreign investors department to facilitate, assist and provide guidance to the foreign investors in this unknown maze of red tapes. There are no rebates or direct incentives on duties or levies to create a more investor friendly, more attractive financial and industrial environment.
On occasions the red tapes turns into barriers which in turn brings about delays, postponement and sometimes leads to total withdrawal of projects discouraging further investments and new foreign investors. Bangladesh must work hard to reduce bureaucracy and at the same time improve foreign investment environment to make investment in Bangladesh more attractive, he added.
He also added, All in all Bangladesh has the ability to further its resources to help foreign investors develop a significant and strong infrastructure that would contribute immensely to the development of this country and would ultimately be of mutual benefits for the foreign investors and Bangladesh.
Domain Technologies is a leading global Application Development company which offers IT Services with offices in Europe, Asia and the Far East. Domain’s expertise lies in helping clients leverage their IT investments by bringing together both business and technology requirements towards solution, said IT Software Specialist Helal Ahmed, CEO, Domain technologies Ltd. He is a computer Science graduate from North South University. Here are excerpts from his interview with Holiday.
Domain Technologies was established in 1994 in the UK. Its activities in Bangladesh began in 1997. The office is equipped with Broadband VPN and Project Collaboration tools, Messaging system and the latest hardware and power backup systems are able to fully meet global clients’ requirements, Ahmed Said.
“At the beginning of its activities in Bangladesh the company thought that it would not be able to provide IT services outsourced from UK, because government officials had no sufficient knowledge about Software outsourcing technologies.
But at present they have gathered sufficient knowledge about this sector and have provided facilities like tax holidays for the company and other IT infrastructure facilities. Our company is small; we should be growing to large industry after some time. If the government continues to support us then we will be able to develop the software industry and take this industry in a position to serve as one of the leading export industry,” Ahmed added. According to him, erratic money transaction system here is a real problem. The government should look into undue delay in payment through the central bank. Such delay is unknown in other countries.
“Service of Domain Technologies was 100 percent export-oriented before 2002 when we were facing global recession. Afterwards our company decided that it will also produce software for Bangladeshi market. Basically we started providing consultancy services to our corporate client and mutational company like British American Tobacco, KAFCO, Unilever Plc, British Oxygen Group Plc in the local market as well as Aegis Plc, Ericsson, Prudential services Asia (Malaysia), Melewar Leisure Group, The e-government Unit (UK), JP Morgan, Griggs Group and many other Multi-national Companies abroad. In addition Domain Technologies provided service to the Bangladesh Government offices, such as Planning Ministry, Ministry of Food and Disaster Management, Power Division, Special Security Force (SSF), providing software support and consultancy and hence working towards the step to digitizing Bangladesh.”, Ahmed said.
Domain Technologies provides technical assistance for strategic planning implementation and management of applications as well as technical delivery through experts having necessary skill to deliver as per requirements, he added.
The government is taking interest in the development of software in the country and the investment policy is good. It will be beneficial to the sector if the government takes more initiatives for the growth of the sector.
|Ms. Mohua Rashid
The Association of Chartered Certified Accountants (ACCA) is the global body for professional accountants. It aims to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. ACCA supports 147,000 members and 424,000 students throughout their careers, providing services through a network of 83 offices and active centres. Its global infrastructure means that exams and support are delivered at a local level, directly benefiting stakeholders wherever they are based.
ACCA’s Bangladesh country office provides various support to students, said Ms. Mohua Rashid, country manager of ACCA Bangladesh in an interview with the Holiday recently. “ACCA is absolutely different from other institutes because the qualifications we provide those equip students with most up to date knowledge on accountancy and business so that they get best career opportunities in corporate or public sector and in or outside the country. Though we only have an office in Dhaka but we provide support to students of other cities of Bangladesh. Presently we have three Approved Learning Partners(ALPs) who are providing the standards in tuition provision that ACCA wants to see. There are a good number other tuition providers in three main cities of Bangladesh and many of them are working hard to improve their standards to achieve the ALP status.
Education enables people to understand what is happening around us reasonably. Educated people are able to take sensible decisions and make right moves and professional qualifications facilitates learners to achieve success in life and allow them to utilise proficiency in a productive way in today’s world,” said Mohua Rashid. “Already we have talked to many Bangladeshi corporate and financial houses and understood that they are in need of qualified accountants. They are looking for people with knowledge and skill in finance who can give leadership in their businesses. ACCA is the ideal body to provide accountants with skills and knowledge relevant to any business” she added.
About education policy Mohua says that her office has a positive education plan to provide sufficient support for students to pass their examinations and her office is working with the employers to provide practical experience opportunities to students. ACCA has a rich research wing; it publishes two research journals named “Accountants and Business’ and ‘Accountancy Futures’ which are rich with contemporary research reports on pressing and emerging business issues. Nowadays environmental issues have become matters of concern. Environmental issues many times act harmfully towards our society and our planet. Concerned people address environmental issues in the course of promotion, teaching and activism. Main current environmental issues include pollution, environmental degradation climate change and resource depletion. Today environmental issues are addressed at a regional or international level by government and non-government organisations. ACCA takes an active part in discussung issues like this through its Research & Insight work. Ms. Mohua Rashid said that a wealth of information on these can be found ACCA’s web.
The stock or equity market is a network of economic transactions for trading of company stock or shares at an agreed price. The function of a stock exchange is to facilitate the exchange of securities between purchasers and sellers. An exchange provides real-time trading statistics and data. This is a subject for careful study. An accountant is skilled in the practice of accounting or who is in charge of public or private accounts. An accountant is responsible for reporting financial results, whether for a company or for an individual, as per government and regulatory authority rules. She wants to see skilled accountancy professionals are coming out with good quality degrees from reputed institutions like ACCA and to make their contributions to the capital market. Mohua Rashid is an enthusiastic leader with an excellent track record in business development. She acquired first-hand knowledge on setting and managing an office by recruiting and managing staff with right skills and by being compliant to government rules. She earned a degree in social welfare and completed post graduation from Dhaka University also acquired a diploma on financial management from ACCA where she studied financial strategies, performance management, risk management, corporate governance etc. She also attended a certificate course on Business English Certificate (level-3) at the University of Cambridge. Now she is pursuing a professional diploma in marketing with Chartered Institute of Marketing, UK. Mohua started working with an international organisation called SMC which works on population control and child health support after which she moved to the British Council where she served for long fifteen years. She has started working for ACCA in 2008.
A mining project must be responsive to the concerns and expectations of the community where it operates. Local community is a primary stakeholder and is the first to face the consequences of mining which could either be positive or negative. Mining could bring significant changes in their lifestyle and socio-economic status. However, it will also create opportunities as well as invite some situations that may not be desirable to the community. Therefore the community should be consulted with and their concerns and expectations considered and well reflected in the planning and design process of any mining project. There should also be a process of disclosure of project-related information and a well established mechanism for resolution of people’s grievances. Early engagement with the community and their participation in the development process is the key to gain social acceptance which is very vital for smooth operation of a mine.
Bangladesh has only a very recent history of mining. While organized coal mining in India dates back to 1774, the first commercial coal production in Bangladesh didn’t start until 2005. This slowness to develop Bangladesh’s coal resources was due to there being a pre-occupation with natural gas and no real focus on coal nor any discussion or debate on mining.
Despite the discovery of coal at Barapukuria in 1985 and the subsequent efforts to develop an underground coal mine from the early 1990s, coal first really drew national and international attention when news broke in 2005 of the discovery of a world class deposit of 572 million tonnes of coal at open pit mineable depth in Phulbari. We then became aware of the concerns, discontent and expectations of the community in the potential mining areas. This is not unusual in any large scale development project, particularly where acquisition of large tract of land is involved and those directly affected will have their lives changed through resettlement.
People have every right to know why their land is being acquired, what the justification for the project is and what the consequences of mining are. Unfortunately, except few donor funded projects such as the Jamuna, there is no such precedent of systematic public consultation and disclosure of information and grievance redress mechanism in the country. For example, the community in the vicinity of the Barapukuria underground mine had never been consulted and informed about potential impacts including subsidence of land and its subsequent impacts due to underground extraction of coal.
Relevant policies and guidelines
Community concerns and expectations regarding large project development are universal. There are many examples of mining communities in other parts of the world raising similar issues during the consultation process. People’s expectation and their logical concerns are addressed. World coal extraction industry has been working jointly with the host government, the community, NGOs and other stakeholders to address these issues and has established various policies, guidelines and screening processes to ensure mining operations safe for the community and environment.
Bangladesh may consider introducing relevant international policies and guidelines or formulate its own in order to promote the mining of its domestic coal ensuring involvement of the community. Stakeholder engagement in every stage of project development and demonstration of commitment will help build trust and ultimately gain social acceptance or approval for mining.
Phulbari Coal Project is the first mining project where stakeholders were extensively consulted and their concerns and expectations recorded during the project’s feasibility study. The project is planning to extract coal from Phulbari using very efficient and economic open pit mining method. From the available project documents, common community concerns/issues are extracted for discussion:
Loss of land
It is natural that a mining community will have concern and discontentment about acquisition of a large tract of land for mine development and resettlement. Land is the basic element of rural economic activity. The government and the project promoter first need to justify the project to the community. A comprehensive consultation and early disclosure of information during planning and design process will play an important role in justifying mining and the land requirement for project development. People also need to get informed about basic nature of open pit mining, i.e. their land will not be lost permanently; itâ€™s a temporary change in land use pattern and the land will be progressively brought back to productive uses after mining.
There are well-established internationally accepted practices for progressively rehabilitating land after the coal has been mined, i.e. as the mine continues to remove overburden to expose new coal, this overburden is placed back in the area where the coal has been extracted thus restoring the land to its original level and enabling it to be rehabilitated for agriculture or other pursuits.
Resettlement and rehabilitation
The government may consider formulating an involuntary resettlement and rehabilitation policy following relevant international policies and guidelines, e.g. International Finance Corporationâ€™s (IFC) Performance Standard 5: Land Acquisition and Involuntary Resettlement and the Asian Development Bankâ€™s (ADB) Safeguard Policy on Involuntary Resettlement. A special provision of returning back acquired land to the original owners and/or their legal ancestors could be considered after completion of mining. This option would give people a sense of security that the government and the project proponent are well aware about the importance of land in their social and economic life and will search every option to return their land back after resource extraction. All these measures will help building trust among the community and bring people on development side.
There is a general concern over getting fair compensation for acquired land and assets, and delay and corruption in the compensation determination and disbursement process. Lack of proper and updated ownership documents to prove land title, especially among the poor, the illiterate and tribal people, is a common problem which makes the compensation determination process complex.
Loss of livelihood
People have fear about loss of livelihoods due to land acquisition and subsequent disruption in agricultural production. Bangladeshâ€™s rural economy is mostly land based and about 80 per cent of the rural population is directly and indirectly dependent on agriculture and associated activities. Undoubtedly open pit mining will disturb land based livelihood but at the same the mining project will also create an enormous opportunity to diversify local livelihoods, e.g. land-based, wage-based and enterprise-based which is more sustainable for the community.
Land-based livelihood will not be completely disrupted due to mining; rather it may create opportunity to make agriculture diverse, more productive and more profitable. Project proponent needs to support the community through training, technology transfer, input support and technical supervision to restore and improve agro-based livelihood. NGOs and local government agriculture extension office may be engaged in the process.
It needs to be kept in mind that an open pit mine only uses about one-third of acquired land at a time for mining. As an example, although the proposed Phulbari coal mine requires a total of about 6,000 hectares of land, the mine will never use more than 2,000 hectares in any stage of mining. Moreover, mined out land is backfilled, rehabilitated and put back to productive uses within 3-5 years. Therefore, despite land acquisition and mining, a significant amount of land will be available for agriculture and other productive uses.
This arrangement will allow agriculture and agro-based livelihoods to be continued in the project area with potential of transforming mostly subsistence agriculture to commercially profitable one. An independent study on impacts of mining on agriculture in Phulbari suggests that farmers may witness loss of overall volume of agricultural production in initial few years of mining but this situation is quickly overtaken and there will be net gain of production over the mine life. This will be realised through the Project providing irrigation, improved agricultural inputs, training (improved farming practices) and strategic crop selection linked to improved marketing.
A mining project will also create many new jobs and new business opportunities for which local people may not have necessary skills and capacity. The people need to prepare through appropriate training, credit support and technical supervision to take the opportunities. Special preference should be given to women, disabled person and vulnerable groups in training and job placement so that they can supplement to the family income. People have common expectation about employment opportunity in mining project. Project proponent should have a plan to meet the expectation and prepare a preferential employment strategy to offer jobs in mine and associated operations to the affected eligible person. Creation of a social investment fund may be considered to support community development initiatives.
People have major concern about displacement from their ancestral homestead land. There is also a sense of uncertainty over their future. These are all very delicate issues and need to be handled with utmost care. The government, the project proponent and the community should work together to ensure proper resettlement and rehabilitation of affected people. People should offer choices of resettlement, i.e. resettlement in areas of own choice or in project sponsored resettlement sites. Community must have a role in selecting their resettlement site. The site should have all basic amenities, i.e. electricity, water supply, sanitation. The ultimate objective of resettlement and rehabilitation should be to provide people improved living standard and facilities that match socio-cultural status and meet expectation of the community. A well planned and well demonstrated resettlement site early in the project development period will give people great relief from concern and uncertainty over resettlement in new areas.
Concern over availability of water
Community has concern over accessibility of water for domestic, irrigation and other uses due to mining activity. It is expected that aquifer dewatering for open pit mine development will lower water table in the vicinity and away from the pit, and surrounding community may face difficulties in getting water. However, as open pit mining requires continuous discharge of groundwater, it will bring huge benefits for the community, if appropriate management measures are put in place.
As an example, Phulbari Coal Project has a detailed water management plan to ensure reliable supply of water to the community, i.e. irrigation scheme in the affected area to supply water throughout the year; piped water supply system in town and affected villages; inject water into the aquifer to limit lowering of water table, etc. Irrigation water is a major input cost for the farmers and free supply of water throughout the year will make agriculture more productive, more profitable. Farmers may cultivate three or more crops in a year on two or single crops land. The community needs to be consulted about the plan, its benefits and reliability of supply throughout the year. The government through appropriate authority should regularly monitor and review the effectiveness of management measures that are taken to address negative impacts of aquifer dewatering on environment and community.
Community has a general concern about pollution and degradation of natural environment, i.e. water, air, noise pollution and soil degradation due to mining activity. Bangladesh has poor track record of managing environmental pollution and protection of forests and wetlands either in public or private level. Such poor precedents justify the concern of the community. Project proponent needs to consult the community about potential impacts of mining on environment. Project’s proposed environmental management plans are to be disclosed through appropriate media, i.e. distribution of information/fact sheets, leaflets, brochures and relevant documents displayed on the projectâ€™s website to allow people to have easy access to the information.
There should be a comprehensive environmental monitoring programme covering project area and potential influence areas of mining to commence well before project development and continue throughout the mine life and beyond. Independent consulting firms, university researchers, environmental activists could be involved in the process to review the effectiveness of management measures, to monitor environmental parameters and to confirm discharge to the natural environment meeting national and international discharge standards. Government may consider developing an ‘environment fund’ to realize compensation for any environmental damage done due to the negligence of the project proponent.
People expect long lasting solution of the country’s severe energy and power crisis. They want that lights are on, power connections are available, industrial and economic activities are not suffering from frequent load shedding and gas crisis. They want more exploration for new gas discovery, new energy sources, responsible mining of coal that meets energy needs and cares environment and community. Local communities of Barapukuria and Phulbari mining region also have similar expectations; they want extraction and utilization of coal lying beneath their soil for the greater interest of the country. But as coal mining will bring significant changes in their societal, natural and economic environment local community also want greater attention to manage those issues. They want to see their concerns are being addressed, logical expectations are met. Here, the government, the project proponent and the third party, i.e. NGOs, civil society and community leaders have a role to play in building trust, ensure participation of community in the mine development planning and assure people about their future. The government specifically needs to justify extraction of coal and its very important role in attaining long term energy security of the country.
Bangladesh requires mining coal in an efficient and economic way to meet growing energy needs. At the same time, world’s best practice management measures are to be put in place to manage social and environmental impacts of mining. There are many examples of responsible mining in the world where operations are meeting energy needs and are very caring to the environment and community. Bangladesh can learn from those operations and mine its coal in a socially, environmentally and economically acceptable and sustainable manner.
The writer is a geologist. He may be contacted at email:email@example.com
The company set-off its business in Bloomsbury, London, in 1991. Now our offices are, in addition to London, also located in Delhi and Dhaka. Associate companies include TCM Group and TCM Realty. We focus on human and cultural side of business. We reduce risk and increase return on international business. We borrow good ideas from one sector and implement them in another and put them into action. Sharing the risk and rewards is our way of doing business. We are proactively engaged in research opportunities on an on a regular basis. Se we provide hands of expertise in market entry, investors protection, restructuring, turnaround, merger and acquisitions, joint ventures outsourcing and international trade. We protect, manage and facilitate business, investment, and connecting trade links between the UK, India and Bangladesh” said Sharif Chowdhury in an interview with the Weekly Holiday recently.
Describing his experience at the outset, the Managing Director of TCM said “I had a bad experience in Bangladesh in 1997 when I signed a contract for providing and maintaining security . I found the environment not congenial and some of the people as corrupt. This was a nagging problem so I decided to close down my operation after two years . But while the environment is still not conducive to do business here, the population and potentialities have increased and opportunities are opening up. However, doing business is still difficult because of lack of trained management and skilled staff., he said.
He said that he was worried about doing business in Bangladesh of frequent demonstrations and strikes affect all business activities. Britain wants the business to continue with Bangladesh to utilize its resources. But the problem of frequent hartals upsetting all economic activities affecting the growth business and development, he said and added let’s carry our business for ten years then we would suggest the solution for hartals and demonstration which are being forcibly enforced “Responding to a question Sharif Chowdhury said that despite all the problems he is still planning to expand his business in Bangladesh to ensure the investors that their investments are safe and protected. But a lot of problems we are they are facing have to be sorted out gradually. Primes include irregular supply of gas and power, beside nagging problem traffic jam and lack of security.
Regarding investment policy he said “Its good and liberal. The policy should be implemented properly to lure the investors into the country. Bank interest rates should be reduced to increase investment.” He suggested that foreign investors should be provided the facilities they require for making investment. Corruption is also a problem that should be tackled seriously. This may help clean business environment otherwise financial institutions would not be able to mark their excellence in Bangladesh. He said Bangladesh‘s environment can be better than other countries in the region. Because of cheaper cost of production, low wages investors don’t hesitate to come to Bangladesh.
Background: TCM Management Limited’s Managing Director Sharif Chowdhury is a law graduate with honours from the University of Kent at Canterbury and earned the UNA Lawrence Wright Scholar. He was trained to be a barrister in London . He has 25 years of management and brand marketing experience. He is a specialist in strategic and innovative marketing and PR. He has raised significant debt and private equity , developed ,implemented, and scrutinized business marketing and PR strategic for brands , product and services valued at over $1.5 billion across a wide variety of markets such as the UK, Europe, India and Bangladesh. He worked with organizations like the British national health service, midland, HSBC, Port of Singapore, British Government, Thomas Cook UNA, McCaan-Erickson, TBWA and LEGO.
|Shah Mominul Islam Chowdhury
Shah Marine & Business Institute (SMBI) is the first ever such training facilities established in Bangladesh in the private sector for those who want to join the merchant navy. It has also established partnership with South Tyneside College in United Kingdom, Britain’s largest and oldest maritime college. South Tyneside College is well known institution and one of the best places to study and get training as merchant navy personnel. It is know for its quality of maritime training facilities. Its foundation was laid by Dr winter bottom in the year 1837, nearly two centuries have elapsed and while everything in the world has changed but its tradition of excellence in study still remains.
SMBI is a private limited company providing international standard maritime academy for the first time in Bangladesh. SMBI provides a direct route of entrance to South Tyneside College (UK) from Bangladesh, said Shah Mominul Islam Chowdhury, Managing Director of SMBI which is a UK-Bangladesh joint venture company in an interview with Holiday about the institute’s activities in Bangladesh.
Explaining why was SMBI established in Bangladesh, Chowdhury said, “I was in UK and have seen at that time Bangladeshi students aren’t coming to UK for maritime education in large numbers like the Indians and other sub continental countries. To enable our students to study marine engineering I decided to establish an international standard maritime institute in Bangladesh and the UK-based Institute agreed”.
For this purpose the South tyneside College representatives visited Bangladesh in 2010 and were satisfied to see activities here and afterwards the SMBI started officially on 23 January 2011. Now, Bangladeshi students can study at South Tyneside College in UK at a much lower cost of Tk.1.7 million compared to Taka 2.7 million previously charged.
“In addition, Chittagong marine academy is the only maritime institute in Bangladesh which is offering academic facility but it is not enough and we need more marine academies, because day by day this industry is growing and opportunity for job is increasing. But we have shortage of marine chief engineers and captains. So after five years there will not be enough engineers or officers in the shipping industry. A marine engineer’s salary per month is up to $15,000.
At first we tried to open a marine university but the existing law says, “If you are to Open University then you will have to be registered as a non profitable organization. But that was not possible for me because we will have to make our own investment for maintaining it. I am in business: I think it is a worldwide business. If our service is good and then students will come but if the service is not good then students will not come”, he said.
“We are not under education ministry because ‘the interest of business’ of this sector is under shipping ministry; so we are under shipping industry and we follow their guidelines and also follow UK guidelines and they are monitoring us. Our administration is good and I have experience in merchant navy. Besides I was a student of British college, so I am familiar with their administrative rules and activities. Here we have maintained quality education. On 18 January 2012 twenty nine cadets of SMBI have already gone to UK to attend at South Tyneside College. They are student of the first batch. We hope they will do well in their academic life,” Chowdhury added.
He further said, “we provide excellent broad based education with focus on professional development in order to equip them with the knowledge and skill necessary for leading the country in its quest for development, We train up tomorrow’s professionals by providing rigorous and high quality degree programs that emphasize logical reasoning and problem solving skills. We provide excellent courses in general science, mathematics along with major courses such as marine, business, etc besides modern relevant laboratory experiences necessary for education in the scientific process in a safe learning environment. The lab is equipped with computers. The primary research goals of the Institute will be to maintain high quality research and to improve research productivity. This will be our future plan, he said.
Regarding class room facilities he said, “All classrooms are well decorated. Students are provided individual chairs and desks with additional larger desks for chart work and drawing purposes. The classrooms have presentation equipments which include overhead projectors and VDU projectors. All classrooms have white boards to enable teaching materials to be displayed. Each classroom can contain up to 25 students comfortably, keeping the group small so that the faculty members are able to provide close attention to individual student needs. Training Aids: Collection of equipments from ships are available which enable faculty members, supervisors and technicians to explain and demonstrate practical operations to the students. These operations include metrology, strength of materials, plant operations, navigation aids and more.
Engineering workshop: There is also an engineering workshop with two centre lathes, and a minimum of 10 workbenches for the student to use.
Computer Lab: A fully air-conditioned computer lab with a minimum of 12 operating computers, at all times, is also provided. All computers are linked to the internet enabling student’s access for research and study purposes.
Cafeteria: cafeteria with a seating capacity of 50 students at a time can also be found at SMBI. Food served is of mixed cuisine to help candidates to get accustomed to various types of food preparations. The diet is well balanced and the food is wholesome.
Hostel facilities: Hostel facilities for the students consist of well designed dormitories and bathrooms. Mattresses, pillows, bed sheets and pillow covers will be supplied to each student on the date of joining. Being the first and only British collaborated maritime institute in Bangladesh ‘Shah Marine and Business Institute worth a visit by everyone.
|Iqbal Ahmed OBE
Iqbal Ahmed is a British investor in the third world. He was born in Sylhet, he completed his Management Diploma in the UK. He is also involved in many charities in the UK and Bangladesh, Iqbal has been appointed to a number of Government committees and advisory bodies, among which are the southern Asia advisory Group under DTI, the competitiveness council, BOND and the Manchester Forum. Also he was the Northwest Regional President of the Bangladesh British Chamber of Commerce. He achieved the company’s excellence in the field. He has been recognised with a Queen’s Award for Export Achievement as an OBE, given for Services to International Trade. Recently he talked to Weekly Holiday on Bangladesh and UK business relationship and others.
About Seamark: Seamark is mainly a producer of all agriculture food to export to the Middle East and Europe. It is the UK’s leading importer and processor of shrimps. In 2000, Seamark opened a fully-fledged processing plant at the bustling Bangladesh port of Chittagong. It proved to be a royal occasion for all concerned and a day still remembered by all who attended. The £10 million investment in the seafood plant, Seamark offshoot, IBCO Food Industries opened in 2006, created to meet the increasing demand for vegetables, fruits, finger foods and seafood. Its operation in Bangladesh processes products ranging from its traditional shrimps to poultry, dry foods, finger foods, frozen fruit and vegetables.
At present Seamark is a £125million worldwide operation and its wide-range of foods make their way to the finest kitchens as ingredients in dishes enjoyed by the diners in the best-known hotels and most revered restaurants. It has an unrivalled global reputation for quality. Its range of products can be found in supermarkets across the world. Seamark’s customers include many of Europe’s leading multiple retailers, food industries, wholesalers and distributors, including Carrefour, Metro, Makro, Costco and Brake Brothers. Its products are also used in the catering operations of a number of major airline operators. It is also home to the acclaimed Vermilion restaurant, which delivers a world-class Thai Fusion dining experience to more than 2000 visitors a week and is now one of Manchester’s top venues. Thus Iqbal Ahmed OBE, Chairman and Chief Executive of Seamark Group has narrated the activities of his group.
Burunga Iqbal Ahmed High school and college
One of the projects the charity is proud to have been involved with is the sponsorship and development of the Burunga Iqbal Ahmed High School and College, which educates 1,200 pupils in Sylhet in north east Bangladesh. This work, improving education for young people in Bangladesh, continues. A group of high-profile volunteers from the UK visited the school as part of the Conservative Party’s “International Social Action” project. The volunteers, including MP Andrew Stephenson, who represents Pendle in the North West of England, gave youngsters at the school English lessons as part of Project Maja, an initiative led by Baroness Sayeeda Warsi.
We are one of the British investors in Bangladesh. We have lot of opportunity by setting up a large business industry in Bangladesh but in the UK it is not a getting chance to establish a large business industry as they have lot of small and medium business industries. They are trying to set up a large industry but all rules and regulation come in the way and we would have to follow them. If we violate those rules then we will have to shut down the operation. But in Bangladesh there are no such rules and regulation. It is not easy to establish and operate a large industry in a foreign country by Bangladeshis. So, I think it is a positive development for a business man of Bangladesh origin and they are able to help increase the country’s economic growth. So, it is our big chance to quicken the increase of our economic growth. We are an over populated country and unskilled people are not in high demand anywhere. They are hard working suited to us as our business environment is suitable for them too. But there is a big challenge for us because our people are not well trained, well educated and skilled. Corruption is a common factor and the Government can not ensue the security of the businessmen and industrialists. There is no tax collection system in the country from the actual business establishments. Priority is given to businessmen with political connection. Actual businessmen are suffering as their problems remain unsolved. Our political situation is not congenial, communication system, infrastructure facilities are not suitable for the development of business enterprises. Transport and communication systems should be properly developed between Dhaka and Chittagong and other parts of the country. Traffic is very poor, all foreign investor are not pleased with the situation. To attract the foreign investment, the Government should take the necessary steps to resolve these problems, he said.
Iqbal Ahmed said we are planning to expand our manufacturing plant and generating market for them. We are planning to enter the financial sector in Bangladesh. We feel very comfortable here. Our business in Bangladesh is better than in the UK because cost is not high, workers’ wages are low, but UK life style is different. Bangladesh’s investment policy is also good but the bank interest rates are very high and should be reduced. Government’s inability to stop load-shedding is forcing many industries to close down their shops. He felt that in the face of global economic crises, the government should reduce tax rate to a minimum level for giving relief to the businessman. He also suggested that bank’s rate of interest should be reduced to a single digit.
Iqbal Ahmed received several National Export Trophy Awards from the government of Bangladesh for highest exports in the years 2002-2003, 2006-2007, 2009-2010 (Gold), 2005-2006 (Silver) as well as a National Fish Medal in 2010.
Standard Chartered Bank is a very high profile banking institution. Registered in England, it is operating in all the continents and contributing to develop economy and business almost everywhere. Its presence in Bangladesh dates back to about 100 years since the British colonial days in India and now it is actively supporting trade and commerce in Bangladesh both in domestic and external trade.
The bank’s Chief Executive Officer (CEO) for Bangladesh Jim McCabe talks about its operations here recently with The Holiday at its corporate head office at the city’s Gulshan business district. He said in a sense StanChart occupies a position as a mother bank in global banking serving business at all levels.
“I am proud we are a big partner to the world economy and business, we are committed to serving the people’s banking requirement from individual customers’ services to retailers in the streets and corporate houses on the top.”
He said StanChart provides specialized finances, give consultants service to setting up new business, provides them initial capital and also help the existing business with working capital and whatever support they need to run exports, imports and meeting other financial obligations.
In Bangladesh they have 26 branches lending support to corporate and consumers businesses. Its presence is too strong here serving all major corporate houses, local and foreign firms, besides offering window to individual banking.
Except the real estate sector, its outreach extends at all levels of financing, Jim said and added that StanChart is the most innovative and pioneering bank and everyday it is doing something that aims at bringing more efficient services to clients and widen coverage to their needs. Even his banking services are extended to disburse wages and salary to garment workers and factory staff, he said explaining the involvement of the bank at the commoners’ level.
At customers level, they are now revamping corporate branches to offer comfortable lobbies to clients where they may feel a different kind of environment and care, mixed with luxury.
This is a small instance of its innovative outreach to the market, he said. In banking here StanChart was the first to introduce credit card and ATM services to its clients. It operates international call centres, provides hedge to currency risks.
Project financing is a major part of its banking in Bangladesh. Moreover, it provides advisory services to clients in big business. The bank is also working closely with Bangladesh Bank. Jim said his bank is also providing advisory services to the government in matters like issuing bonds in global financial market. He said StanChart provides confirmation and reconfirmation services to various instruments of international trading documents. Four largest banks, meaning the state owned banks use these services as the ‘banker to these banks’ in foreign trade.
Jim said his bank manages business very professionally. It always makes sure proper supply of capital to business. He said every bank has different capacity but StanChart is the strongest bank and offers whatever foreign and local currency support business needs. He said when banks and financial institutions in the western world are suffering from meltdown and financial crunch, StanChart remains the most unaffected and strong bank at the global level, free from any adverse impact of the recession. Asked how he can see from his banking window the impact of the western recession in the Bangladesh garment sector in terms of a slowdown in export orders, he said it is still unaffected. He said as of now clients are ok.
On the shortage of foreign currency reserves, he said food import and machinery imports peaked last year, especially the import of equipment of rental power plants and associated rise in oil import has pushed the demand for foreign currency. There was a jump but it had reduced this year and things may gradually settle down. He said Bangladesh is a highly adjustable country where entrepreneurs are skilled and innovative. So they are establishing more and more factories in different areas, however, they are still concentrating in the RMG sector. More foreign investors are also coming here to relocate their business and StanChart is the number one bank here they come to and ask for advisory services in the first place and then capital to set up business. Bangladesh should improve its infrastructure quickly including roads, highways and energy supply, he said.
He said StanCHart clients from Hong Kong, Singapore, India, Sri Lanka contact them first saying they want to come to Bangladesh to set up new business and from our side we give them the right advice. This is how StanChart gets involved from the very beginning of new businesses taking roots here. We help them with project evaluation and then give then initial capital to set up factories and then the working capital to run it, Jim said.
He said StanChart in Bangladesh is working as the banker to vital sectors of the economy. Listing some of them he said pharmaceuticals, garments, retail businesses, consumers’ loans, telecommunications and power plants are very important. Commodity trading, cement companies, food processing firms and a lot of other establishments are taking banking services and capital support to open business and run them. He said running a bank is very hard while talking in reference to the fragile conditions of the banking sector in Bangladesh. He said there is no place for other considerations (political and parochial) beyond the cost-benefit configuration of a project. He said he stands like a rock to support a promising project while opposing non-professional influence. “You may call me Mr Rock,” he said giving his views on how he is running his Bangladesh operation.
He said StanChart is not only in the high profile business. It is equally sensitive to its corporate social responsibility (CSR). The Bank is providing eye surgery and other treatment facilities to patients in Bangladesh. Globally the bank is raising over $100 million to contribute to various CSR activities. In Bangladesh they are supporting crickets, chess and other sports, scholarships, celebrities, music and photography.
StanChart has arrangement with Islami Eye Hospital and Shishu Hospital to give services to people it wants to support based on needs. Jim concluded: ‘banks are not charitable organizations.’