ICE Business Times,December 2015

DECEMBER 2015 TK. 100

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SK Sur Chowdhury Bangladesh Bank

Muklesur Rahman NRB Bank

Syed Mahbubur Rahman Dhaka Bank

Towards a Banking Nation Dr. Atiur Rahman

Governor, Bangladesh Bank

Abrar A. Anwar

Standard Chartered Bank

Vision Statements On

Finance Investment Infrastructure Technology

Salman F Rahman IFIC Bank

Abdul Matlub Ahmad

FBCCI

Abul Kasem Khan

A.K. Khan & Company Ltd.

Shameem Ahsan BASIS

CONTENTS December 2015

6 8 22

From the Editor Word of Mouth Around the World By the Number

Columns 16 18 20

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Mohammad Zamir Shamsul Huq Zahid Asaduzzaman

IBT Spotlight Vision Statements from Salman F rahman, Chairman, IFIC bank Abdul Matlub Ahmad, President, FBCCI Abul Kasem Khan, Director, AK & Khan Company Shameem Ahsan, President, BASIS

CONTENTS

December 2015

Interviews 24

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Dr. Atiur Rahman, Governor, Bangladesh Bank Dr. Mohammed Farashuddin, Former Bangladesh bank Governor Muklesur Rahman, Managing Director & CEO, NRB Bank Ltd Dr. Zaidi Sattar, Chairman, Policy Research Institute (PRI) Aameir Alihussain, Managing Director, BSRM Group of Companies Dr. Iftekharuzzaman, Executive Director, TIB Sayed Javed Ahmad, CEO, The Bangladesh Rating Agency Ltd Saif Rashid, CEO, JITA Zarif Munir, Partner & Managing Director, Boston Consulting Group (BCG) Saud Anam, CEo, AKSID Corporations Ltd Ali Arsalan, Director, Finance & Marketing, IZUMI & O-Kitchen

Features 27

32 36 42 72 74 76 80 82 84 86

Banking Sector in Bangladesh: Governance Issues by Dr. Salehuddin Ahmed Evolving Paradigms in Risk Management

by S K Sur Chowdhury Cover Story: Towards a Banking Nation From Rags to Riches featuring Deen Mohammad, Chairman, Appllo Ispat Complex Ltd. Inside Out: Meet the PR Maven SCB’s Many Feats Photo Story: A Visit to the Taka Museum Social media: From Paper to Pay Per Tech: Video Games: Then & Now On the bookshelf: When the Going Gets Tough Capital Market Updates from DSE

FROM THE EDITOR Earnest & Young’s Global banking Outlook 2015 hints at an oncoming decade when the banking industry will see both evolution and revolution. With the new era of “mediocre growth” looming, banks will exhibits four megatrends namely: a global market place, digital business, demographic shifts and changing workforce. As the report suggests, banks will have to “reinvent” themselves if they want to stand the test of time. As ICE Business Times turns its spotlights towards the banking sector, it hears the similar statements echoing from our local banking veterans.

Having an inherent tendency to focus on profitability and on the targeted growth of deposits and advances, local banks will no doubt focus on introducing new financial products which will be more aligned with emerging customer needs. On the flipside, with a major portion of our population still remaining unbanked, we’ve seen the current swarm of banks along with Non Banking Financial Institutions (NBFIs) introducing new schemes and products which will ensure greater financial inclusion and bring the unbanked population under the country’s financial sector umbrella. On top of that, we have a dearth of banks in rural outposts.

This is why banking experts have stressed that what we need more are not banks, but branches distributed equally around towns and villages.

In this month’s ICE Business Times we present the views and insights of veteran

bankers from both home and abroad. Using their wealthy pool of knowledge, they tell us how staying abreast of the global trends, demographic shifts and technological advancements will be vital not only for the survival of the industry but also for Bangladesh’s continued evolution towards becoming a developed nation.

With the emergence and rapid rise of plastic money, agent banking and mobile banking in recent years, the retail banking horizon now has a completely different outlook. With the increasing demand for debit and credit cards, the role of cash is on the decline; while the availability of making transactions through agents and mobile phones has meant that people can have their banking needs met without actually having to visit a branch. As such, the growth and evolution of these services has also lead to the materialization of newer risks in the form of cyber threats.

With the greater dependence and expenditure on IT comes the greater need for cyber security and the improvement of other internal processes.

At the same time, helping customers gain more financial literacy will help avoid financial scams. In fact, to achieve all these goals we need government, regulators, investors and banking staffs to work hand in hand for better performing banks reaching out to the masses in order to attain inclusive growth.

The Banking Fair organized by the Bangladesh Bank will push us one step closer to achieving that dream. All the best!

Photographs from

Din M Shibly Kazi Mukul Ashraf Uddin Apu

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Vol. 6 No. 4

December 2015

Publisher & Editor : Director, International Publications : Executive Director : Managing Editor : Assistant Editor : Staff Feature Writer : Designer : Head of Business Development : Finance & Accounts : Sales & Distribution : Business Development

Abul Khair Zeenat Chowdhury Nawshin Khair Tawhidur Rashid Irad Mustafa Asaduzzaman Sk. Yeahhia Toufiqul Alam Md. Abdul Alim Md. Manik Mollah Md. Raju Hossain : Md. Nizam Uddin Forhad

Published by Abul Khair on behalf of ICE Media Limited, Kushal Centre, Plot 29, Sector 3, Uttara C/A, Dhaka- 1230 and printed at M.K. Printers,189/1, Tejgaon I/A, Dhaka-1208 Editorial and Commercial office: 3rd Floor, House: 4, Block: B, Road: 23 A, Banani, Dhaka 1213 Advertising, Sales, Subscription and Distribution: 01812656969, 01759391168, 01920335953, 01716783698, 01913818402 Tel: 09666773313 Fax: 88-02-8901205 Editorial & Marketing Queries: editor@icebusinesstimes.net, businesstimes.1@gmail.com

WORD OF MOUTH

state of affairs

1 1. Prime Minister Sheikh Hasina leaving floral wreath at Shikha Anirban’ (Eternal Flame) on Armed Forces Day

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Queen Maxima exchanging views with Prime Minister Sheikh Hasina and appraised Bangladesh for achieving targets of social development 3. Prime Minister Sheikh Hasina delivering inaugural speech at Bangladesh Development Forum

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4. Prime Minister Sheikh Hasina attending the ceremony at Senakunjo on Armed Forces Day 2015 at Dhaka Cantonment 5. Prime Minister Sheikh Hasina exchanging pleasantries with the members of Armed Forces at the same event

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upcoming

RECOGNITION

Five day long Banking Festival kicks off from today at Bangla academy

With an aim to build a banking nation, the five day long Banking fair kicks off today to be inaugurated by Governor of Bangladesh Bank Dr. Atiur Rahman. The objectives of the fair are to raise public awareness about banking products and services, expand the financial literacy of Bangladesh at international level, extends the Banking sector at its products and services at national level and make it known to the customers, broaden the financial services , push the youth towards banking services. The festival will be continued from November 24th to 28th.

In the festivals there will be stalls for financial literacy, currency museum, Bangladesh Security Printing Press (How money is printed), various publications of Bangladesh Bank, Commemorative coins and notes sale, Services provided to the mass people by Bangladesh Bank, CIPC, etc. In the sidelines there will be debate competition on financial topics and seminar Workshops and round tables including cultural programs in the evening.

ICE Business Times will participate in the fair too .

happening

Youth thronged at the Laptop Fair

A three-day laptop fair took place at Bangabandhu International Conference Centre in Dhaka on November 12. Expo Maker will organized the show for the 16th time. The fair was themed “Laptop for all”. The participants, including Acer, Asus, HP, Intel, Samsung, Gigabyte, Toshiba, Apple, Lenovo, Twinmos, Gigabyt, Logitech, D-Link, Showme, HTC and Gionee, occiped 23 pavilions and 44 stalls at the fair. The companies exhibited laptops of leading global brands, tablet computers, internet devices and antivirus packages, some of which are not yet available in the market. Edumaker, an ICT related educational institution, wwas the main sponsor of the show while different laptop brands like Acer, Asus, HP, Lenovo and Dell were co-sponsors. Four seminar and workshops were also organized on the sidelines of the event.

Country’s Top Online Outsourcers get awarded

About 100 including individuals and organizations received “BASIS Outsourcing Award 2015” at the Institute of Diploma Engineers auditorium in Dhaka on Monday 1st November evening and BASIS organized the ceremony for the fifth time this year to recognize the outstanding performances of individuals and IT Firms who are engaged in online outsourcing.

M A Mannan, State Minister, Ministry of Finance and Planning, handed out the awards as the Chief Guest. Md. Nazrul Islam Khan, Secretary, Ministry of Education attended the ceremony as Special Guests. BASIS President Shameem Ahsan presided over the ceremony. Md. Aminul Islam, Additional Managing Director and Chief Operating Officer of Bank Asia Ltd, Secretary General Uttam Kumar Paul spoke at the ceremony.

BASIS has been awarding IT professionals who bring foreign currencies with their incredible competency in online outsourcing for the past few years. The winners are selected through a series of screening process and interviews. Export value, employment and their contribution in social development are taken into account while selecting the winners.

With the aim of spreading outsourcing through the country, this year top 58 freelancers and IT entrepreneurs from 64 districts were awarded. 8 awards to individual outsourcing professionals and 3 awards to women outsourcing professionals were handed out. 15 companies got recognition for their contribution in the outsourcing sector. Also 10 startup companies were awarded on a category introduced for the first time.

Chief Guest M A Mannan said, “We are working towards creating employment for 3.6 million people before 2020. Outsourcing and IT related jobs will contribute to a great extent in meeting our target. Young professionals will drive our country towards development through their skills and knowledge in IT.” BASIS President Shameem Ahsan mentioned, “BASIS will continue arranging outsourcing award in order to inspire the award winners and to encourage young generation take outsourcing as their occupation in individual and entrepreneur level.

Besides, BASIS has taken initiatives to train 23 thousand skilled workforces by 2018 through BITM. Simultaneously measures are taken to create 10 lac IT professionals in this sector. We anticipate the export income by this workforce would surplus RMG sector as well. BASIS Outsourcing Award was supported by Business Promotion Council, BASIS Institute of Technology and Management (BITM), Bank Asia, Payoneer and Bdjobs.com.” www.icebusinesstimes.net

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leaders meet Queen Maxima Urged about effective “National Financial Inclusion Strategy”

Dutch Queen Maxima arrived here in Dhaka on November 16th morning on a three-day visit at the invitation of Bangladesh government. The trip is part of Maxima's global efforts to raise awareness and foster action towards financial inclusion for everyone. Her execllency Maxima, who was appointed to her UN position in 2009, has travelled Bangladesh in her capacity as the UN Secretary General’s Special Envoy for Inclusive Finance for Development.

She emphasized the importance of a transparent and time-bound action plan to unlock economic opportunity for all. "A coordinated effort involving all stakeholders is extremely important for taking a National Financial Inclusion Strategy in Bangladesh to unlock economic opportunity for all, especially the poor, by expanding access to catalytic financial services," she asserted it while addressing a press conference in Dhaka on 18th November, 2015.

According to her, affordable, effective and safe financial services can play a powerful role in fostering equitable growth and advancing development goals such as poverty reduction, job growth, gender equality and food security.

"With access to a broad range of tools -- not just credit but also savings, insurance, payments, and more -- families can move out of poverty, small businesses can expand into larger ones, and societies and economies can grow stronger and more inclusive," she added.

In this connection, she said the public and private organizations need to work together on having 100 percent financial inclusion in Bangladesh by 2021.

Queen Maxima while appreciating the government's efforts to build a digital Bangladesh said the government of Bangladesh has given a big push for a digital Bangladesh that would help people's financial inclusion. Bangladesh Bank Governor Dr Atiur Rahman, who was with the Queen at the press conference, said the central bank is moving forward in consultation with all stakeholders, including the Prime Minister's Office, the Finance Ministry and Bangladesh Telecommunications Regulatory Commission (BTRC) to formulate a draft on National Financial Inclusion Strategy January next year. The central bank governor said the transaction fee through bKash will also automatically come down once the National Financial Inclusion Strategy is formulated and implemented. Bangladesh does not need any financial support for implementing the strategy as it will be done nationally, he added. United Nations Resident Coordinator and UNDP Resident Representative in Bangladesh Robert D. Watkins conducted the press conference.

During her visit, the Queen met with President Md Abdul Hamid, Prince Minister Sheikh Hasina, Finance Minister Abul Maal Abdul Muhith, and Bangladeshi Bank Governor, Atiur Rahman. In order to achieve her goals, Queen Maxima spent time with members of civil society, the private sector, development partners, and senior officials of the Bangladeshi government. Outside of her meetings in Dhaka, Maxima visited several locations outside the city to understand the needs of low-income customers like garment workers who are paid their wages digitally. She also took the

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time to meet a female entrepreneur who started and grew her business with the help of financial services, with staff and clients of mobile money operations, and banking agents.

The UN has said that access to financial services is important to help reduce poverty, empower women, boost economic development, and achieve development goals as noted in the recently adopted 2030 sustainable development agenda.

“Small entrepreneurs are registering 10 % growth. They need to get rid of 17 % interest burden.”

Abdul Matlub Ahmad, President FBCCI

The small entrepreneurs are running the economy silently and their voices are unheard but they are bound to bear the 17-18% interest rate which makes it difficult for them to run the business. Under this circumstance, the FBCCI President said that the interest rate should come down to a single digit. He also declared that the apex body of business associations in Bangladesh will start SME or Industry fair in all districts of the country. The industry minister Amir Hossain Amu, MP was also present at the event. He said that access to finance is the biggest obstacle for SMEs. However, the government in its National industrial policy -2010 has identified them as the most priority sector considering its importance in the country’s development. Deputy Governor of Bangladesh Bank S K Sur Chowdhury said in the seminar that the central bank is working in line with these proposals. The speakers were at a seminar on SMEs at FBCCI. Entrepreneurs from 23 districts around the country participated and expressed their concerns over the shortage of gas and power supply at the seminar.

They also mention about the high charge of getting a license and various informal costs of doing business.

WORD OF MOUTH

Happening 1. BSRM Group and the British Council partnered to support a yearlong program called ‘Book Reading Competition’ to enhance the reading habit and communication skills of school going children.

BSRM Group Managing Director Aameir Alihussain andBritish Council Deputy Director Matt Pusey inked the Memorandum of Understanding (MOU).

Finance Director Zohair Taherali, Head of CSR Ruhi M. Ahmed of BSRM group and Sarwat Masuda Reza, Mashudul Alam of BC were present to witness the signing held at BSRM Group head office in Chittagong.

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2. A special meeting of the Unitholders of First ICB Mutual Fund, managed by Investment Corporation of Bangladesh (ICB) regarding its conversion to an open-end scheme was held on 18 November 2015.

3. A three-day bootcamp was organized to compete at the international-level final Seedstars Summit.

Over the course of the program, winners of Bangladesh-level were announced and awarded.

4. High-end Tax officials met with the President of CCCI. 5. Green University of Bangladesh (GUB) organized a Club Fair of Fall Semester 2015 to encourage the newly admitted students in co-curricular activities.

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6. Launching of the COAST book “A Tale from Climate Groud Zero” at the VIP Lounge of Dhaka Press Club.

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WORD OF MOUTH

Banking Corner

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1) SME Division of Bank Asia recently arranged a dialogue session with Women Entrepreneurs of Chittagong Zone, where Muhammad Mijanur Rahman Joddar, Executive Director of Bangladesh Bank, Chittgong Office was present as Chief Guest and Kamrun Malek, President of Chittagong Women Chamber of Commerce and Industries (CWCCI) as special guest.

2) Bank Alfalah, owned and operated by the Abu Dhabi Group unveiled new brand identity to its valued customers.

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3) Midland Bank Limited (MDB) signed an agreement with United Hospital Limited to provide special health care facilities to the MDB VISA Platinum Cardholders.

4) Modhumoti Bank Limited signed an MoU with Motor Pool to promote Modhumoti Vehicle Loan.

5) South East Bank Ltd. opened its 117th branch in Jessore.

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6) NRB Bank Limited recently participated in the 2nd UK-Bangladesh e-Commerce Fair 2015 as platinum sponsor held at The Waterlily, London.

7) Dhaka Bank Limited formally launched 1 (One) Month-long Campaign namely, “Consumer Asset Marketing Campaign 2015.

8) Social Islami Bank Limited (SIBL) arranged a Business Review Meeting to evaluate its business position at the Corporate Head Office of the Bank recently

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9) BRAC Bank Limited and TVS Auto Bangladesh Limited have inked a Memorandum of Understanding (MoU).

10) A meeting of the Board of Directors of Islami Bank Bangladesh Limited was held on November 19, 2015 Thursday at the Board Room of Islami Bank Tower

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WORD OF MOUTH

optimism “Bangladesh will be a developed country by 2041”

Prime Minister Shiekh Hasina has said that developed countries should come forward to support countries like Bangladesh to understand and achieve the Sustainable Development Goals (SDGs). She made the appeal while inaugurating two-day Bangladesh Development Forum -2015.

Prime Minister said Bangladesh is a country of limitless potentials. It has everything to emerge as a vibrant economy. We are pursuing an inclusive growth strategy to become a middle income country by 2021 and a developed one by 2041. She added that Bangladesh has been successful in many areas of economic and social development despite various challenges and constraints. She also praised the resilience of the people of our country. The two day long forum included participation of development partners. A fair was also held along with high end seminars and panel discussions that identified the development challenges of Bangladesh.

It is noteworthy that SDG has 169 targets across 17 goals to be achieved by 2030. Of these 14 targets are directly related with health, nutrition and population sector ( HNP). ADB Director, Energy Division Anthony Jude said that Bangladesh should go for setting up a good connectivity within these regional countries with more specific roadmap on its infrastructure development specially on energy and power sector development and opined to prepare an action plan for setting up coal based power station so that the country could adopt the power technology. Taking part in panel discussion, Toru Arai of JICA called for ensuring quality investment in Bangladesh and opined that as per SDG -9 Bangladesh needs to improve its road , road railway and water transport and regional connectivity for financing the growth and termed the connectivity very important for future growth.

Secretaries of different divisions, Ambassadors and High Commissioners were also present in the sessions to discuss future development strategies for Bangladesh which is aiming to attain 10% growth by 202. The Meeting of Bangladesh Development forum was ended through a press briefing on November 16, which was moderated by the Finance minister AMA Muhith where he urged the Development Partners(DP) to involve in private sector in wider spectrum and a huge scale.

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“Traffic tailbacks taking a huge toll on GDP every year.”

Dr S A Samad Executive Chairman, BOI

Dr S A Samad, Executive Chairman of Bangladesh Board of Investment (BOI) and seasoned development economist said in a seminar that traffic tailbacks had eroded the efforts where strict enforcement of traffic rules to bring discipline in traffic management system.

The main causes of tailbacks are lack of enforcement of laws because of fear, not of the coordination. He said it in an seminar held at the BOI auditorium on November 12th where findings of a study report by BOI titled, “Traffic congestion in Dhaka city and its economic impact” was shared with the media. The study was conducted by Sanjoy Chakrabotry, BOI Deputy Director. The findings of the study reveals that traffic congestion in the capital city ends up costing $ 12.61 billion a year, approximately 7% of the country’s GDP. The report also shows that if the situation gets better, it will have a positive effect on our per capita income, making it $ 1392 from the present $1314.

telecom Robi Krishibarta will enhance M-Agriculture

Telecom operator Robi has recently revamped its m-Agriculture related value added service “Robi Krishibarta”. The Robi Krishibarta aims to support the complete value chain of the agro economy of the country. Robi Krishibarta serves the farmers with customized agro content. It will deliver customer centric customized content through a dynamic database. The service will be interactive and communicative to the end-users so that farmers of the country feel comfortable accessing this service. Information related to weather, production and cultivation techniques, diseases and insect information, plant nutrients and water usage, price, demands and current stock, educations and health and government & non-government facilities are currently available from “Robi Krishibarta”. The revamped “Robi Krishibarta” has added prerecorded agricultural information in IVR for 24/7 service in its existing Agri call center. Besides, it is well equipped to serve the farming community with expert informative agent based call center (every day from 8 AM to 7 PM).

Users only need to dial a short code (27676) to subscribe to the service. Based on successful subscription, the user can start listening to IVR content & talk with agro specialists by dialing 27676. Registered Robi users will receive a generic weather update via a recorded call every day in the morning from 27676.

IVR content is available in a manner that is easy to understand for the farmers. Moreover, the IVR contents will be refreshed every week. Both new and previous content will be available in the IVR part. Contents will be uploaded based on the season.

WORD OF MOUTH

RMG Third Bangladesh Denim Expo created a huge buzz

The third Bangladesh Denim Expo took place at International Convention City, Bashundhara, on November 11.

A total of 39 companies participated in the expo; among them, 27 were international companies from China, India, Pakistan, USA, Turkey, Korea, Japan, Thailand, Singapore and Germany.

The theme of this show of Bangladesh Denim Expo was ‘Sustainable Denim’. The expo highlighted eco-sustainable denim developments and consumer trends and sustainability in denim design and accessories.

The two-day event featured a trendzone displaying latest and future denim trends. In addition, a group of international experts addressed all aspects of sustainability, ecology and consciousness -- from manufacturing to dying and wet processing – in four seminars and one panel discussions in the expo.

The subjects of the seminars were “Branding through Green Denim (Environmental Sustainability)”, "Safe and Responsible Supply Chain”, "Innovating Sustainable Denim for New Generation Market", and “Sustainable Wet Processing”. The panel discussions took place on “Building leaders for sustained growth".

High-end Asian Banking Summit took place

Nimai Management Consultants, a UAE-based financial services firm, organized a high end seminar in Dhaka on 3rd and 4th November where bankers and policy makers of the country and abroad were present.

Analysing regional economic trends, banking security in IT, and compliance issues mainly featured in the discussions on the first day.

Nisarg Dugad, Managing Partner of Nimai Management Consultants; Meera Sanyal, former CEO of Royal Bank of Scotland, India; and MA Rumee Ali, chief executive of Bangladesh International Arbitration Centre, took part in a discussion on regional economic trends. SK Sur Chowdhury, Deputy Governor of Bangladesh Bank, was the Guest of honor at the event, while Salman F Rahman, chairman of IFIC Bank, and Abdur Rouf, vice chairman of Mutual Trust Bank, were special guests.

Captain Sunil Saraf, Founder and Managing Partner of NIMAI, observed Bangladesh’s 2021 vision which led him and his business here. “We have seen a crisis in Dubai which is not visible in Bangladesh. NIMAI consultancy in ringing risk management is here to

alert the banks, the corporate and the Governments of potential crises.”

Co-Founder, CA Pankaj Mundra said that the impact of the financial meltdown of 2008 on Bangladesh has been pretty negative. “Fraudulent cases like that of Hallmark have created a negative image. These cases need to be stopped and to do so risks need to be minimized.”

CA Nisarg Dugad another Co-Founder commented on the high rate of interest here. “We have a diverse speaker profile and there will be a lot to learn from them as they are all highly experienced individuals. Risk management issues, pricing issues and even financial inclusion initiatives will be discussed.”

Captain Sunil added that purpose of the summit is to showcase different ideas from all over the world here so that banks and their senior managements can take an introspective look at themselves for reevaluation.

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COLUMN

ACHIEVING SUSTAINABLE DEVELOPMENT GOALS The year 2000 saw 189 UN Member States agree on certain socio-economic development goals. Discussion carried out between economists, politicians and development experts since 1984 was able to identify certain least common denominators required for achieving several shared objectives. The Brundtland Commission set up through a UN mandate in 1984 provided the necessary incentive in this regard. The United Nations Millennium Declaration set forth quantified and time-bound eight goals towards this end. Attached to them were twenty targets and more than sixty indicators. These came to be known as MDGs (Millennium Development Goals).

These goals related to the eradication of hunger and extreme poverty; achieving universal primary education (with special emphasis on gender empowerment to promote gender equality); improvement of maternal health and reduction in child mortality; combating several diseases that have acquired anxiety throughout the worldHIV/AIDS and malaria, in particular; ensuring environmental sustainability and developing a global partnership for development.

Fifteen years later, this year on 27 September, international leaders from more than 190 Member States of the UN have now agreed on another Declaration. They have identified 17 Sustainable Development Goals, associated 169 targets with 304 indicators. It will be a very complex paradigm that aims to address several tiers of parameters related to sustainable development plans of comparatively undeveloped countries seeking to move forward in a holistic manner despite resource constraint.

It has been noted by development economists and sociologists that the world has witnessed significant progress in achieving some of the MDGs. Statistics have revealed that global extreme poverty has declined by an estimated 130 million. Child mortality rates have fallen from 103 deaths per 1,000 live births to 88. Life expectancy has also risen from 63 years to nearly 65.

Another remarkable achievement has been that an additional 8% of the developing world population now has access to clean water. There have also been similar gains in the provision of improved sanitation services- by 15%.

Unfortunately, such progress has not been uniform. The African continent appears to be lagging behind due to political instability

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Muhammad Zamir

Statistics have revealed that global extreme poverty has declined by an estimated 130 million. Child mortality rates have fallen from 103 deaths per 1,000 live births to 88. Life expectancy has also risen from 63 years to nearly 65.

Another remarkable achievement has been that an additional 8 % of the developing world population now has access to clean water.

and lack of available resources. Disparity in income in certain parts of the world has also led to continuance of rural poverty in some countries. This in turn is generating internal migration to urban centers and the creation of slums with its attendant challenges.

Bangladesh, compared to other developing countries has performed remarkably well, especially over the last seven years.

Analysts agree that we have made major progress in the following areas- reducing headcount poverty and the poverty gap ratio (more than 45% of the extreme poor have been pulled out of the poverty trap); decreasing malnourishment and the number of underweight children under five years of age; attaining gender parity in primary and secondary education in both rural and urban areas; increasing the net enrolment ratio at the level of primary schools; lowering infant mortality rates and the maternal mortality ratio; increasing the percentage of one-year old children immunized against measles and polio, reducing deaths from malaria and tuberculosis and in the provision of improved drinking water.

It would be worthwhile to mention here that the British Medical Journal in an article published on 15 September, 2015 has taken note of the advances made by Bangladesh with regard to women and children’s health.

That has been done in the context of positive comparative analysis also undertaken with regard to movement forward in other countries like China, Egypt and Vietnam.

Nevertheless economists have correctly pointed out that Bangladesh still has to overcome quite a few other challenges. They have referred to our government’s progress report entitled ‘Millennium Development Goals: Bangladesh Progress Report, 2015 and its observations related some indicators.

They include- employment to population ratio; proportion of population below minimum level of dietary energy (calorie) consumption; completion of primary schooling up to Grade 5; adult literacy rate of 15+ year-old population till the age of 24 (only 58.5%); ratio of girls to boys in tertiary education; share of women in wage employment in the non-agricultural sector; proportion of seats held by women in the Parliament; proportion of births attended by skilled health personnel; antenatal care coverage and proportion of population with access to essential medicines on sustainable basis.

The Report also accepts the presence of

MUHAMMAD ZAMIR

some other trends that have to be overcome. They include the existence of poverty pockets; functional unemployment and underemployment among the rural and urban youth; continuing dropout rate, quality of education at the primary and secondary levels; universal access to reproductive health and also resource constraints related to the providing of safe drinking water in all parts of the country.

It has been estimated that Bangladesh needs to spend about $ 3.0 billion per year to meet all the goals. Resource constraints have however limited average expenditure to around $ 1.74 billion per year over the last 22 years.

The government has set targets to bring down poverty to 13.5% by 2021 and also achieve universal literacy by the end of this decade. These are ambitious targets and will require not only political will and resources but also public private partnership and corporate social responsibility.

The government, in this regard will also have to address the underlying causes.

That includes- enhanced vulnerability due to natural causes and climate variability, social exclusion and income opportunity.

Yes, we seem to be having a growing informal economy and that is facilitating tertiary growth. Nevertheless, such growth at the end of the day is bound to hurt good, accountable and functional governance. It will also promote corruption and erosion in values.

One way forward for the government would be to implement with greater coordination and seriousness the Social Safety Net Programmes (SSNP) that are in place to meet the basic needs of the people in the following sectors- food, shelter, education and health. The programmes covered within SSNP include Food for Work (FFW), Vulnerable Group Development (VGD), Vulnerable Group Feeding (VGF), allowances for disabled, old age pensions and grants for orphanages. If concerted efforts can be taken, then we can take serious strides forward, particularly in the non-urban areas.

The agreed SDGs adopted during the 70th UNGA will succeed the MDGs with effect from 1 January, 2016. Bangladesh, according to Planning Commission Professor Shamsul Alam will be one of the “early starters� for achieving the SDGs since we have incorporated most of the proposed 17 goals of the SDGs in different sections of our 7th Five Year Plan. It may be noted here that Bangladesh in its Post 2016 Development Agenda has included 11 goals, 58 targets and 241 measurable indicators. That includes improving human

It has been estimated that Bangladesh needs to spend about $ 3.0 billion per year to meet all the goals. Resource constraints have however limited average expenditure to around $1.74 billion per year over the last 22 years.

The writer is a former Ambassador and an analyst specialized in foreign aairs, rights to information and good governance. He can be reached at muhammadzamir0@gmail.com

resources potential through technical education and vocational training, eradicating poverty and removing inequality, ensuring sustainable food security and nutrition for all, particularly the marginalized communities. In addition there will also be emphasis on universal access to health and family planning services and environmental sustainability through the creation of climate change resilient infrastructure. The UN drafted Agenda is slightly wider and envisions greater engagement with the civil society.

However, one must at this point, also draw attention to two basic facts that have hampered the functioning of achieving MDGs by the developing nations. Firstly, developed countries failed over the last fifteen years to allocate the necessary funding to the Least Developed Countries (LDCs) to enable them to come out of the puddle. They have failed to fulfill their commitment of providing 0.07% of their Gross National Income (GNI) as development aid to the LDCs. The other disappointing factor has been the absence of transparent and accurate statistics in matters of development within the LDCs. This second feature has hampered the correct identification of measures that need to be taken in the socio-educational and cultural sectors.

It is understood that this time round the financing plan for the SDGs will be guided by the 134 point Addis Ababa Action Agenda (AAAA). This was adopted in July this year at the Third International Conference on Financing for Development.

This document mentions importance of the private sector within the equation of development and lays stress on private investment initiatives. One expects that this can be achieved through the creation of infrastructure financing through development finance institutions and blended finance that combines concessional public finance with non-concessional private finance. There are also suggestions regarding risk mitigation instruments and pooled funding structures.

From this point of view, the government needs to bring forth greater coordination between their relevant authorities and private sector institutions like theBangladesh Employers Federation (BEF), the FBCCI, and other important Chambers of Commerce. This will enable the examination of new business opportunities and that will facilitate at the end of the day necessary growth within the matrix of achieving the SDGs. Sustainable development needs to be inclusive, integrated and integral.

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COLUMN

Green Banking in Bangladesh

Shamsul Huq Zahid

A total of 24 state-owned and private banks and one non-banking financial institution had signed deals with the BB to disburse loans to environment-friendly projects. The banks borrow funds from the central bank at 5% and they lend the same to projects at between 10- 11%.

Businesses do need finance. The small and marginal ones may avoid taking loans. But most medium and large scale business enterprises can hardly do without it. So, their dependence on banks is almost absolute.

Thus, banks hold a unique position in an economic system where they can dictate terms on the borrowers who have something to do with the environment.

Banks can promote businesses that are environment-friendly and hold back finances to others that are polluting the environment.

However, banks in this part of the world are unlikely to do anything on their own for protection of the environment. Until 2009 the banks had never considered the job of environmental protection their cup of tea. However, it is difficult to say that they are considering so even now.

With the launching of Tk 2.0 billion refinance scheme, styled, ‘Green Banking’ on August 09, 2009, the Bangladesh Bank reminded the banks that they too had a proactive role to play for environmental protection. The scheme was meant for the banks to finance renewable energy projects.

The refinance scheme was undertaken in line with the government’s plan to meet 5% of total electricity demand of the country from ‘green’ energy by 2015 and 10% by 2020.

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However, the utilization of the fund, which is revolving in nature, has been slow. After long six years, the utilization, according to a central bank source, has reached nearly 90%. But the rate of recovery of the loans at the BB’s end has been remarkable, about 100%.

The man at the helm of the central bank is very much interested in making the banking institutions quite aware of the need for promoting environment-friendly lending. The policy guideline the central bank announced on August 11, 2013 on Green Banking is a testimony to that fact.

In the guideline the BB explained why banks of one of the most vulnerable countries, in terms of degradation of the global climate, should exercise wisdom while lending.

What the BB has asked the banks is to remain alert while funding projects that have the potential of harming the environment around them.

But the fact remains that prior to the issuance of the guideline, the banks in the past had financed scores of projects, particularly in textile sector, that are contributing to pollution of environment.

Reports are often published in newspapers how textile mills and other chemical factories are releasing pollutants in rivers and other water bodies. Most factories concerned do not have the effluent treatment plants.

It has been made mandatory for the sponsors wanting to set up new mills and factories to obtain clearance from the department of environment. But the

SHAMSUL HUQ ZAHID

sponsors usually consider the expense on pollution control component of their projects unnecessary. Thus, during the implementation of the project they skip that component to save money.

However, instances of using bribe money to secure environmental clearance certificates are also there.

do this, the sponsors of industries would be forced to ensure measures to protect the environment around them through necessary investments. The financial institutions, if they want to do so, can even force the existing environment-polluting industries to take remedial measures with a view to stopping the latter from causing further damage to environment.

It also remains a matter of scrutiny as to how the banks and financial institutions gives importance to the environmental risk clearance certificate while funding projects.

The BB guideline on Green Banking, divided into three phases, is more or less exhaustive in nature. The phase one is aimed at ensuring commitment towards protecting environment in-house, the second phase relates to formulation of policies involving different environmental sensitive sectors and phase three encompasses the introduction of an efficient environmental management system, covering eco-friendly initiatives and products.

The BB guideline promises rewards for the banks during their CAMEL ratings if they are found compliant with the Green Banking guidelines. The central bank also promised to take into consideration the Green Banking activities of the banks concerned at the time of scrutiny of the prayers for opening new branches.

The Green Bank guideline had asked the banks and financial institutions to complete the actions included in its phase two by December last year. It is, however, not known whether the central bank has taken stock of the situation as far as the implementation of the phase two is concerned.

Undeniably, the central bank has produced an exhaustive and doable guideline on Green Banking. But in this country there is no dearth of similar guidelines, laws and rules. The problem lies in their enforcement and follow-up actions. In the absence of proper enforcement nothing is working in right direction, which has always frustrated the people here.

Banks can promote businesses that are environment -friendly and hold back finances to others that are polluting the environment.

The central bank exercises enough regulatory authority over the financial institutions, particularly those operating in the private sector. There are provisions of imposing penalties for violating rules and circulars issued by it from time to time. But the guideline on Green Banking is seen just as an advisory note that if complied with would earn a few positive points for the banks concerned. Any breach of it does not make the banks or other financial institutions liable for punishment. So, the BB should consider the ‘Carrot and Stick’ policy as far as compliance with Green Banking is concerned.

It is understood that the banks and other financial institutions of the country are yet to take the issue of environmental protection seriously. But they are required to keep in mind that since they are the major stakeholders in the industrial sector, any environmental impact might affect the quality of their assets and the rate of return from their investments.

Thus, it is not for the sake of others but also for their own sake the banks are required to go green and play a proactive role in integrating the environmental and ecological aspects into their lending principles.

If the banks and financial institutions

The writer is a senior journalist. He can be reached at zahidmar10@gmail.com www.icebusinesstimes.net

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COLUMN

The inertia of the colonial mindset

Those of us, who were born after 1975the year during which the Father of the Nation Sheikh Mujibur Rahman along with his family members were assassinated-belong to a transitional generation. We are bearing the legacy of the generation that had had the taste of freedom after a long course of colonial ruling in 1971 but failed to become as open minded as their new found freedom should have made them. The widespread perception amongst this generation that they themselves were inferior while their hypothetical colonial masters were always superior was probably the root cause of this failure. It was imprinted in the DNA of their social existence. All they could do was blindly imitate the rulers’ culture while ignoring global trends. This deceptive mentality took a toll on the development of our national identity. The fact that they were looked down upon and wrongly blamed for many offences by their colonial masters nurtured a sense of self doubt in them regarding their own capabilities. If we look at the current generation more than 30% of them are exposed to technological innovations and an almost infinite pool of information. Those getting this exposure are between the age of 10 and 24. The notable change between these two generations is that the latter don’t hesitate to reach for the stars or to bring the world under their own feet. The people torn in between these two generational attributes, that is, the people of my age, who are in their late 40s or 50s are the embodiment of a lost

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Asaduzzaman

Asaduzzaman is the feature writer of ICE Business Times.

generation. That is why a general negation mentality and a spree of confusion still looms large among the mentality of the average people, a large portion of whom have been trapped in this generational limbo. Due to this we have problems where good achievements are undermined and doing something good creates more foes than friends. In our post colonial country, this negative trend and mindset has led to the birth of many negative issues, most of which have contributed to stifling the growth of our country. We now have a country which suffers from bureaucratic mindsets, corruption in public offices, red-tapism and so on. How long we will have to bear the brunt of these issues no one knows.

This country has 1 million remittance earners, 5 million farmers, 5 million labors and 1 million resilient entrepreneurs. Nevertheless, the noise surrounding the alleged “political brinkmanship” often stops people from noticing the real progress Bangladesh made in last four decades. Society’s deceptive nature invokes them to speak ill of those who are successful. Thanks again to the colonial mentality.

The media is abuzz with the huge amount of remittance our people have been adding to the national exchequer but what about the hefty sum of $ 10 billion that are remitted out from this country being earned by expatriates in various high-end jobs. It is often said that, these jobs are given to Indians, Sri Lankans, and Filipinos - who earn the high-end jobs by showing worldclass skills. However, the claim doesn’t sound legit when we see Bangladeshis winning international accolades in various sectors like agriculture, science, economics and business. On the other hand, pinning hopes on the remittance earners in Middle Eastern countries, Malaysia, Indonesia etc. too is going to weigh heavy on us since many of these workers lack the required skill to get into jobs that earn more money and are respectable. It is high time we realize that we must open our minds and embrace the changes the world of today has to offer, be it education, skill or advancements in the cultural forefront.

If not, the clichés of the past will keep haunting us and all our hopes of a brighter tomorrow will be nipped in the bud.

INTERNATIONAL

China crashes $64 Bn `Underground Bank' moving money overseas. More than 370 people have been arrested or face lawsuits or other punishment in the case centered in eastern Zhejiang province.

$2.3 Bn 1MDB said to nearby $2.3 Bn power sale to Chinese-Led Group. 1MDB is the biggest independent power producer in Bangladesh and Egypt, according to its website. It is the Malaysia’s biggest independent power producer after Malakoff Corp.

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Economic consequence of paris attacks smashes hotels hard.

Within 72 hours, the calculation of lost bookings exceeded $530,000.

118 years Women's long combat for equal wage and work prospects is faraway from over, conferring to a new report from World Economic Forum that approximates it will take another 118 years - or until 2133 - to close the gender wage split worldwide.

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17,000 employees of most of the Reserve Bank of India went on strike on Thursday in what the central bank labelled as "mass unexpected leave".

Four unions had called for the strike to demand healthier pension welfares.

%

$530,000

Wells Fargo Bank has granted to pay $81.6 million to settle claims that it failed to notify proprietors in bankruptcy of changes in their mortgage payments.

17,000

$64 Bn

$81.6

Around the World by Numbers

Shares in the global payments company Square ended their first day of trading on Wall Street up 45%.Square priced its shares at $9 (£5.88), lower than the expected range of $11 to $13. The stock closed at $13.07.

£240m

Royal Mail profits before tax fell 16% to £240 million in the six months ending September compared to the £287 million in same period in 2014.

PERSON OF INTEREST

Dr. Atiur Rahman

Governor, Bangladesh Bank

The Dream Chaser With the help of the technology at hand we are trying to reach out to the doorsteps of the common people with various kinds of financial services.

Doing something for the people of this country was a dream you had been chasing since your boyhood. Has that dream materialized already?

To be honest, one lifetime is not enough to fulfill all dreams.

Nevertheless, it is important that one has dreams to chase, which enables one to go the extra mile to achieve particular feats. One has to have a dream and set out on the journey on right time.

Whether a nation is successful or not, depends on what kind of dream it has. At this stage of my life, I earnestly desire to see the availability of financial services all over the country. I truly believe this dream is totally in line with what the Father of the Nation, Bangabandhu Sheikh Mujibur Rahman envisioned: a socio-economically emancipated Bangladesh.

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[

Born in a village in Jamalpur district on 3 August 1951, Dr. Atiur Rahman - a Bangladeshi economist and author is the Governor of the Bangladesh Bank.

He has been called as “The Banker of the Poor� for his contribution in developing the Bangladeshi Economy.

Son of a landless farmer, Atiur is called the son of soil. He completed his masters in Economics from Dhaka University and obtained his PhD in 1977 from London. On 29 April 2009, Atiur Rahman was appointed as the Governor of Bangladesh Bank, the central bank of the country, for a tenure of four years.

He assumed the title on 3 May 2009 and was reappointed until July 2016. He is the 10th Governor of the Bangladesh Bank. Before his appointment he was a professor in the department of Development Studies at Dhaka University. Before that he had worked at the Bangladesh Institute of Development Studies in different capacities for nearly 28 years and retired as Senior Research Fellow on 4 April 2006. As the Governor of the Central Bank of Bangladesh, he took steps in developing his country's economy by developing programs such as a women entrepreneur's loan, a loan for landless farmer and special programs around Green Finance.

Atiur Rahman was awarded "Central Banker of the Year 2015" from the Asia-Pacific region for stimulating growth and stabilizing the economy of Bangladesh, by the London-based Financial Times owned magazine, The Banker and also awarded as Central Bank Governor of the year 2015, Asia by The Emerging Markets Newspaper (UK based financial newspaper of the Euromoney Group).

The British Parliament lauded Atiur Rahman for women empowerment on March 8, 2015. Meanwhile, The Banker, a subsidiary monthly of the Financial Times of London, published captioned news highlighting the Governor in the People Column of its March 2015 issue under the title "Movers and Shakers". He is the only Bangladeshi who received the title.

In 2014, he received the GUSI Peace Prize International 2014 for his work in the field of economics focusing on the welfare of poor people. He has also been awarded the "World No-Tobacco Day Award 2012" by the World Health Organization (WHO). Atiur was also awarded the "Indira Gandhi Gold Plaque" in 2011, the Atish Dipankar Gold Medal in 2000 and the Chandrabati Gold Medal in 2008.

]

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www.icebusinesstimes.net

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DR. ATIUR RAHMAN

Governor, Bangladesh Bank

To achieve that goal, we have been working to ensure the financial stability of the economy and transparency of the financial sector itself. In the age of social internet and media, remaining connected and being honest with the customers is of utmost importance.

With the help of the technology at hand we are trying to reach out to the doorsteps of the common people with various kinds of financial services.

Bankers as a whole have embraced this dream and are exerting a collaborative effort to fulfill it.

Our success in mobile banking has been lauded by Bill Gates. What’s your take on that?

Nations around the world are embracing newer technologies to accelerate their progress towards the next trajectory of growth. Mobile financing is the new window that introduced us to a new horizon of inclusive banking services irrespective of people’s socio-economic status. Just like everyone else, I also give kudos to our financial institutions, innovators and the common people to popularize it for a greater good. With proper, balanced checking we can make sure that this facility lessens the number of unbanked population in our country. The regulators, government, NGOs and banks-all should work hand in hand to set a time-appropriate and feasible strategy regarding mobile banking.

You are highly lauded for your innovative moves to ensure Macroeconomic stability. What are your comments on this?

To attain inclusive growth, there is no alternate to financial inclusion, which will eventually lead to financial stability. As a result, we will see more investments from home and abroad, which we need currently because that can solve unemployment problems and help us add more into the national exchequer. However, all these are interconnected and the synergy must be there. I, along with my team, at the Central Bank am working hard to sustain that synergy.

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Fortunately our state owned banks only cover 20% of the country’s total financial assets; whereas in India it is 60-67%. This is why; irregularities in the NCBs will not have that big an effect on our economy.

Nationalized Commercial Banks (NCB) are not doing well and you are taking the responsibility of supervising their activities whereas Private Commercial Banks (PCB) are moving forward fast. Why is that so?

Fortunately our state owned banks only cover 20% of the country’s total financial assets; whereas in India it is 60-67%. This is why; irregularities in the NCBs will not have that big an effect on our economy. Yet we don’t want to allow any discrepancies in those banks. We have stringent regulatory guidelines and supervisory mechanisms. We have put Executive Directors as observers and they will ensure that banks are running based on the principles and guidelines under the Memorandum of Understanding (MOU) and loans are given to the right person and repayments are done. In fact one of the major responsibilities of this supervision will be to ensure that state owned Banks have robust depository bills and long term good quality loans for large entrepreneurs only. Good governance is imperative and we are working hard to ensure that.

The next challenge for the Banking in this stage of globalization is of cyber security. What is your take on?

We are very careful about the cyber security. Bangladesh Bank conducts regular cyber audits into the banks and all supervision are done digitally and we make sure that banks use protective software. We are constantly watch-dogging if there is a breach of security in any banks. Our digital team is highly trained and capable of tackling adverse situation.

By 2050, what kind of Bangladesh do you dream of?

I am dreaming of a Bangladesh which will be developed by then. Our per capita income will be at par with a developed economy. That will be an interesting time to reap the benefits of the demographic dividends we are bestowed with. For that, we need to train our young people with the right kind of education and the right employment opportunities need to be present inside the country.

SPECIAL REPORT

The global financial and economic crisis started in 2007 as an aftermath of the housing sector bubble coupled with aggressive lending practices in the US sub-prime mortgage market and lax regulation of the financial sector. The financial crisis, like a contagious disease, spread to the real sector of the US economy and affected both financial and real sectors of the world, making the crisis a global and very serious challenge for economic activities.

Banking Sector in Bangladesh: Governance Issues

By Dr. Salehuddin Ahmed

www.icebusinesstimes.net

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BANK GOVERNANCE

There are many implications which arise from minimizing external and internal shocks but here we will examine the challenges that are faced when dealing with the latter. Recently, the Hallmark and Bismillah Group financial scams, which started mainly at state-owned commercial banks, have demonstrated cracks in the management of these banks. From the Board of Directors to the management group to the lower level officials, these banks have not shown any sign of good governance, transparency and accountability. The disturbing fact is that these irregularities have permeated to private commercial banks as well.

There are several state-owned and private banks that have slightly different governing structures but follow the operational guidelines of Bangladesh Bank in terms of prudential and management norms.

The norms provided by Bangladesh Bank are fairly well formulated and follow international standards. The International Accounting Services Board (IASB) under the Bank for International Settlements (BIS) in Basel, Switzerland, has provided three

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[

Recently, the Hallmark and Bismillah Group financial scams, which started mainly at state-owned commercial banks, have demonstrated cracks in the management of these banks.

major norms namely Basel I, Basel II and Basel III. Basel I of 1988 required that banks and financial institutions have sufficient capital adequacy, which was originally 8% of risk weighted assets (RWA). Later on, it was raised to 10% for banks, including those in Bangladesh. There are some banks in Bangladesh whose required capital adequacy falls short of the norm.

Basel I set up a mechanical, non-market oriented measurement of capital adequacy which could not take care of fundamental risks, e.g. operational risk and market risk.

Basel II, introduced in 2004, took care of the different types of risk for financial intermediaries (i.e. banks) as well as the supervisory review process for the management of banks. The global community realized the inadequacies of Basel I and Basel II during the recent global financial crisis of 2007. Basel III was introduced in 2013 and is supposed to be completed in 2020. The major aspects of Basel III are: first, to strengthen the capital framework of banks and to give more emphasis on equity capital (Tier-1, core capital); second, to ensure global liquidity; third, to highlight systematic risks as well as mitigation measures that address the risks. Two major aspects regarding liquidity are Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).

Bangladesh bank has recently issued a circular to implement Basel-III liquidity ratios. Besides the three international Basel norms discussed above, banks

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The root cause of global recession can be traced back to the mismanagement of banks and financial institutions.

Despite all the measures taken by different countries, with the US taking the lead, full recovery has not yet been forthcoming. The year 2015 will be a challenging one. Small economies like Bangladesh are by no means invulnerable to fallouts from global downturns or negative spill over of policies of large economies and therefore have a strong stake in global stability and economic growth. In forums such as the G-20, countries like Bangladesh need to argue forcefully for the same priority in stability as recovery, as well as for stability action agenda going beyond addressing symptoms (i.e. lapses in risk management, inadequacies of regulation and supervision) to addressing underlying causes (i.e. lax policies, non-compliance of prudential and management norms, poor financial reporting, unbridled liquidity expansion that incubate bubbles.)

SPECIAL REPORT

follow other guidelines prescribed in the various Acts and regulations in their respective countries.

Financial reporting by banks is very important in ensuring the interest of depositors, as well as that of the clients. In Bangladesh, as pointed out earlier, the regulatory requirements of banks follow international standards.

Besides these, the Bank Company Act provides guidelines for the preparation of reports, including audit reports. On top of that, state-owned commercial banks and specialised banks, like Krishi Bank (RAKAB), follow the requirements laid down in the respective Acts through which they were established. The Registrar of the Joint Stock Company (RJSC) also has certain rules for entities registered under the Company Act and the Societies Registration Act. Similarly, Bangladesh Security Exchange Commission (BSEC) has laid down rules for companies to prepare their financial reports. On the whole, requirements for the financial reports of banks, non-bank financial institutions (regulated under the Financial Institution Act) and various companies are quite satisfactory in Bangladesh. The disturbing part is that these requirements are not properly complied with by various institutions.

This means that the implementation (enforcement and compliance) of rules and regulations is the “Achilles Heel”.

Despite supervision and monitoring by the regulatory bodies such as Bangladesh Bank and BSEC, serious mismanagement and malpractices have occurred in the banking sector as well as in the capital market. The disclosure of banks in their financial reports is prepared by following International Accounting Standards-30 (IAS-30). This has been replaced by International Financial Reporting Standards (IFRS-7). According to this format the financial disclosure is more logical, which means that banks now face higher risk in the investment and management of capital. If the required standard is followed then depositors and clients of the bank and the general people will not face any loss. Besides IAS-30, there are also IAS-32, IAS-39 and IFRS -9, which are prescribed for the management, supervision, and

BANK

monitoring of financial intermediaries.

The government of Bangladesh took an initiative in 2001 to promulgate the Financial Reporting Act, which hitherto has not been done. In 2013, a draft was circulated to the main stakeholders, one of which is the Institute of Chartered Accountants in Bangladesh (ICAB) and the other the Institute of Cost and Management Accountant in Bangladesh (ICMAB).

These two institutions have opposing views regarding the proposed FRS Act and the proposition that the constitutions of the Financial Reporting Council (FRC) be headed by the Governor of Bangladesh Bank.

ICAB opposes the establishment of the FRC, while ICMAB supports its establishment. ICAB opposes on the ground that it is a self-regulatory professional body which is competent enough to ensure proper financial reporting. But a very strong point is made by others that a membership organisation like ICAB cannot perform the job of an independent, accountable and autonomous regulatory council like the proposed FRC. It must be pointed out that a balance must be made between the regulation and independence of a bank. This means that banks should neither be overregulated nor should they be left alone to enjoy complete freedom, which often results in banking disasters. This point has been very aptly articulated by Jean Tirole, the Nobel Prize winner of Economics in a book jointly written with his colleagues. It is important to keep in mind what financial regulation is

meant to achieve. The most important objective is to protect depositors, investors, the general public and the real economy (real goods and services) as a whole. The second rationale for regulation is to minimize the domino effect of the systematic risks of the financial institutions which destroy the foundation of economic activities resulting in loss of real output, lower growth, higher unemployment and reduction of human welfare.

Good governance in the banking sector is an important agenda of our country, especially in the present context of the crisis in the banking sector.

Transparency and accountability have recently become an issue of greater concern with revitalized importance in the context of public and private responsibility of managing banks. The International Monetary Fund (IMF) has defined transparency as “an environment in which the objectives of policy, its legal, institutional and economic framework, policy decisions and their rationale, data and information related to monetary and financial policies, and in terms of agencies' accountability, are provided to the public on an understandable, accessible and timely basis” (IMF-1999). Transparency in government operations is an important pre-condition for macro-economic fiscal sustainability good governance, and overall fiscal discipline.

Accountability, in the words of Lessinger (1970), “is the product of a process which means that an agent, public or private, entering into a contractual agreement to perform a www.icebusinesstimes.net

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BANK GOVERNANCE

service will be held answerable to perform according to agreed upon terms, within an established time period and with stipulated use of resources and performance standard .”

Transparency is necessary to ensure accountability among the major group of participants in financial markets: borrowers and lenders; issuers and investors; and national authorities and international financial institutions.

Transparency and accountability are mutually reinforcing. Transparency enhances accountability by facilitating monitoring, and accountability enhances transparency by providing an incentive for agents to ensure that the reasons for their actions are properly disseminated and understood. A perfect example is the Hallmark scandal of the state-owned Sonali Bank which occurred due to the lack of both transparency and accountability.

Both the borrowers and the officials colluded in a non-transparent manner and siphoned off huge amounts of public money. The people who were caught have not yet been subjected to administrative and legal actions, in fact they got “perverse incentives” and the honest and dedicated people working in the same bank and elsewhere are pushed back into inefficiency. As the saying goes, “Bad money drives away the good money.”

The transparency of financial statements of banks is secured through full disclosure and by providing fair presentation of useful information necessary for making economic decisions to a wide range of users. In the context of public disclosures, financial statements should be easy for users to interpret.

Whereas more information is better than less, the provision of information is costly. Therefore the net benefits of providing more transparency should be carefully evaluated by standard setters. The adoption of internationally accepted financial reporting standards is necessary to facilitate transparency and contribute to proper interpretation of financial statements. In the context of fair presentation, no disclosure is probably better than disclosure of misleading information. Left to themselves, markets cannot generate a sufficient level of disclosure. Here is

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the vital role of the accountants, as the bulk portion of useful financial information used by the market participants are provided by the accounting information systems, where the preparers (the employed accountants) provide information which is authenticated by external accountants on the basis of International Accounting Standards (IAS) and International Standards of Auditing (ISA). An accountant should not depend on numbers only, one should engage one's own logic and judgment to analyse a set of numbers.

With the view of strengthening good governance in the financial sector, especially in the banking sector, Bangladesh Bank embarked on several financial sector reforms over the years.

A large number of home grown reforms have already been taken and some are underway. Bangladesh Bank attempted to strengthen the legal framework of the financial sector, bring in dynamism, extend autonomy to the central bank, combat money laundering offences, and stop financing for terrorism. There are several other prudential norms already discussed in the previous section in relation to the Basel Guidelines and the guidelines of various Acts of Bangladesh. One important aspect is the management norms, which concern the fit and proper test for CEOs and directors of a bank, restrictions on the composition and functions of the Board of Directors. Banks have been directed by Bangladesh Bank to include one independent director in the Board of Directors. Audit Committees for all banks were mandated with clear guidelines, and TORs and an early warning system (EWS) were introduced. The Core Risk Management Guidelines on five major risks were introduced quite some time back and credit risk assessment by External Credit Assessment Institutions (ECAI) have been recommended for all commercial banks. However, in recent times we have seen that many of these management norms are not followed by banks. There are several privately owned banks where a number of family members are on the Board of Directors, which is contrary to the notion of good corporate governance.

However, in recent times we have seen that many of these management norms are not followed by banks. There are several privately owned banks where a number of family members are on the Board of Directors, which is contrary to the notion of good corporate governance.

Therefore one of the main challenges for the banking sector is to ensure good corporate governance which will benefit the depositors, borrowers and investors; expand potential markets; broaden ownership; create alternative financing options; accelerate growth; increase employment and help reduce poverty in Bangladesh.

To balance the objectives of good governance and ensure compliance of regulations, three major steps are necessary: (a) a strong and independent central bank with more focus on core banking issues, (b) a well thought out set of prudential and management norms of the central bank that are not subject to frequent changes due to external political/administrative pressure, and (c) a system of prompt corrective actions for management of crises and for legal/administrative actions against persons responsible for crises in a particular bank or in the banking 'system' as a whole.

{About the writer: Former Governor, Bangladesh Bank; Professor, Business School BRAC University}

BANKING SECTOR

Foreign Exchange Risk, Information & Communication Technology Security Risk, Internal Control and Compliance Risk, and Money Laundering Risk.

Evolving Paradigms in Risk Management

S K Sur Chowdhury Deputy Governor, Bangladesh Bank

Central banks around the world, work to ensure that banks and financial institutions operate in a safe and sound manner and comply with applicable laws and regulations. Promoting a healthy risk culture is something that we have been speaking a good deal about here in Bangladesh for more than a decade now.

Our efforts to improve our ability to identify, monitor, and respond to emerging risks facing our banks and financial institutions and touch upon some of the risks we see building up in our financial services industry.

To strengthen the risk management practices of banks, Bangladesh Bank issued industry best practices as early as in 2003 for managing core risks in banking in six broad areas; namely- Asset Liability Management Risk, Credit Risk,

Although we have fortunately been spared some of the worst upheavals that have occurred in other countries, realizing the need to be constantly vigilant, Bangladesh Bank issued sets of guidelines starting from 2010 for capital adequacy in accordance with new Basel Accords and Stress Testing.

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Since the onset of the Financial Crisis in 2008, the global economy has continued to face rough weather. Different jurisdictions continue to be tormented by financial fragilities and macroeconomic imbalances. Although we have fortunately been spared some of the worst upheavals that have occurred in other countries, realizing the need to be constantly vigilant, Bangladesh Bank issued sets of guidelines starting from 2010 for capital adequacy in accordance with new Basel Accords and Stress Testing. To ensure that the banks are prudently managing their risks, especially those can cause systemic threats and jeopardize the stability of the entire financial system, BB imposed prudential requirements to assess banks' risk management capacity and has instructed the banks to establish an independent Risk Management Unit. The RMU not only conducts stress testing for examining the bank's capacity of handling future shocks, but also deals with all potential risks that might occur in future.

Considering the deteriorating environment and climactic scenario as well as challenging social issues in the country; Bangladesh Bank has been taking concerted efforts to guide banks and FIs in protecting their financing from environment and social risks. In January 2011, Bangladesh Bank issued 'Environmental Risk Management Guidelines for Banks and FIs' in Bangladesh. The Environmental Risk Management Guidelines are now being updated as 'Environmental and Social Risk Management Guidelines', focusing more on the concept of environmental and social risk management rather than only environment risk management and exemplify the sources of both environmental risks and social risks.

Bangladesh Bank issued the 'Risk Management Guidelines for Banks' in 2012 as a supplement to the core risk management guidelines issued earlier.

This document promotes an integrated, bank-wide approach to risk management covering the other most common risks in banking companies in Bangladesh; namely- Strategic Risk, Interest Rate Risk,

S. K. SUR CHOWDHURY

Price Risk, Operational Risk, Compliance Risk and Reputation Risk.

Very recently, in September this year, banks were asked to set up a separate Risk Management Division with an organogram prescribed by BB for stronger and timely/updated risk management activities.

The banking industry has changed the way of providing services to their customers and processing of information in recent years.

Information and Communication Technology has brought this momentous transformation. Electronic banking is becoming more popular and enhancing the adoption of financial inclusion. Security of Information for financial institutions has therefore gained much importance and it is vital for us to ensure that the risks are properly identified and managed. In this backdrop, the revised version of Guideline on ICT Security for Banks and NBFIs to be used as a minimum requirement and as appropriate to the level of technology adoption of their operations issued in May 2015.

To keep pace with international initiatives and newly promulgated acts on prevention of money laundering and terrorism financing, there has been a tremendous need to review the Guidance Notes on Prevention of Money Laundering’ issued in 2003. In September 2015, Bangladesh Financial Intelligence Unit issued ‘Money Laundering and Terrorist Financing Risk Assessment Guidelines’ for banking sector and instructed banks to assess their own ML & TF risk considering their customers, products, delivery channels and geographical positions.

They were also instructed to assess regulatory risk i.e. risk arises from non-compliance of AML & CFT measures. Rests of the Core Risk Management Guidelines i.e. Asset Liability Management, Credit Risk, Foreign Exchange, and Internal Control and Compliance are also currently being revisited for necessary updating to cope with changing scenarios.

At the Bangladesh Bank, we commit a tremendous amount of time and resources to identifying, assessing, and communicating emerging risks of

all kinds, allowing bank managers to develop and implement strategies to mitigate the risks at an early stage.

In addition to Annual Financial Stability Report (FSR), publication of which commenced in 2011, Bangladesh Bank is preparing and publishing Financial Stability Assessment Reports from late 2014 with an aim to convey its assessment about key trends in the major segments of the financial system on a quarterly basis. The Report contains trends in macroeconomic indicators, banking and NBFIs sectors’

At the Bangladesh Bank, we commit a tremendous amount of time and resources to identifying, assessing, and communicating emerging risks of all kinds, allowing bank managers to develop and implement strategies to mitigate the risks at an early stage. performances including their liquidity and capital adequacy, major risks to which they are exposed to and their resilience to plausible adverse events, in addition to the capital market developments.

The ongoing earnings pressure due to sluggish business in the country may cause some banks to reach for yield and take on additional strategic risk that could contribute to future vulnerability. We also noticed competition for the limited lending opportunities that exist in the current market environment is intensifying and resulting in weaker collateralization standards, particularly in commercial and

industrial loans.

The shift towards digital banking strikes at the heart of the banking distribution model that has served the industry in the past. Consumers are increasingly using online and mobile to meet their banking needs. Increased business flow through the digital channel will result in the attraction of new customer segments with a higher fraud risk profile and also a potential behavioral shift within the existing customer base. Rapidly evolving cyber threats and information technology vulnerabilities requires heightened awareness and appropriate controls to identify and mitigate the associated risks. The same is true for confidentiality breach and money laundering risks that remain prevalent across the industry as money-laundering methods evolve and electronic bank fraud grows in sophistication and volume.

As a consequence of the financial crisis and its contagion affects throughout the globe, banking regulations are getting increasingly globalized. The recent regulatory reforms is a response to the severity of the crisis, and the changes are intended to make the financial system more resilient. But, in the current sluggish economic context, the issue of whether banks are able to absorb all these regulations while at the same time generate sufficient resources to continue their activities is a big question. As a result, many banks elsewhere are re-evaluating their business models and risk appetites and are seeking new ways to generate returns. As members of the international financial community, Bangladesh Bank also is committed to implement these regulations in our jurisdictions. However, it is crucial to the sutation that we ensure that banks and financial institutions establish and follow appropriate risk management processes as they explore new products, partnerships, and opportunities.

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INTERVIEW

Dr. Mohammed Farashuddin Chairman, Board of Trustees, East West University, Former Governor Bangladesh Bank

[ “What Bangladesh needs more are branches, not new banks.”

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Former Governor of Bangladesh Bank (1998 to 2001) Dr. Mohammed Farashuddin was born in Habiganj in 1942. He obtained his Ph.D. degree from Boston University and is the President of the Board of Directors of East West University.

His career spans 44 years, of which 18 years was spent teaching Economics at the University of Dhaka and at East West University.

During the period of 1972- 75, Dr. Farashuddin worked in the Ministry of Finance and Planning and in the Prime Minister’s Secretariat. During the period 1984-1995, Dr. Farashuddin worked in Iran, the Philippines and Maldives. After returning to Bangladesh in 1995, Dr. Farashuddin initiated and led the establishment of East West University with a view to opening the door of a high quality modern and scientific education for the students of the middle class families at reasonable costs.

Is Bangladesh is an overbanked country?

]

Bangladesh is not an overbanked country rather this view has been propagated by the existing bankers as they want restriction of new entry.

Curbing entry is quite a common phenomenon in the market economy.

Nevertheless, the statistics shows that on an average, one branch of Bangladesh serves 21000 people but in India, the number is 15000. Therefore, what Bangladesh needs more are branches, not new banks.

We need to shed light on the issue of the distribution of these branches.

Number of people per branch in the urban areas is less than that of villages. Due to better transportation

DR. MOHAMMED FARASHUDDIN

and the outreach of technology, lives of villagers have become more dynamic than ever before and for this, banks need to spread their wings to cover more rural outposts to bring more unbanked people under the umbrella of formal banking facilities.

How would you rate Bangladesh’s progress from a ‘basket case’ to middle-income country?

The country is developing: our per capita income, which was $ 170 in 1990, is now $ 1130. In terms of social indicators, our achievements have received kudos. But we need to remember that without sustainable development, our progress will be short-lived. In fact the banking system of Bangladesh is given much less credit that it deserves: a lot of criticism is there but it is growing under the circumstances which is better than many other countries.

Bank deposits are experiencing growth but the spread of this growth is an issue. The lending rate compared to the rate being provided by these deposit accounts is also something to be worried about. The deposit mix comprises of STD/SND accounts, low interest Savings or Current accounts and Fixed Deposit accounts (FDRs).

Most banks are currently providing FDR rates in between the 7-10% range where these accounts are taking up 35% to 40% of the deposit mix. The other accounts which make up for the larger portion of the deposit mix are only offering 3% to 5% interest rates.

Compared to these rates, loans and advances are being given out at much higher rates which can be in the range of 14-18%. This paints an imbalanced picture in the banking scenario.

The banking system has expanded but the capacity of the Bangladesh Bank to supervise has not as the appropriate human resource empowerment is missing. They have endorsed autonomy in the industry and have gained additional powers since the 90s such as the ability to fix the exchange rate.

The streamlining of certain issue is still something that needs to be addressed. In the mobile banking sector regulations have been

The banking system has expanded but the capacity of the Bangladesh Bank to supervise has not as the appropriate human resource empowerment is missing.

established to ensure accountability but there are still cases where agents are pocketing more money than they should be which has not been traceable as of yet. The necessary guidelines will be provided and are in the pipeline but these things should have been tackled a lot earlier.

Bangladesh is encircled in 6 % growth trap but has a vision to achieve 10% growth rate by 2021. Will that be possible?

For more than a decade, Bangladesh has ensured a steady growth rate, with setbacks in 2001 and 2008. Now the question is – how do we achieve a double digit growth? The answer is simple: the private sector will have to invest more. Around 80% of the total investment of the country owes to the private sector, but it is more or less stagnated. Political uncertainty has been throttling businesses time and again. Under such circumstances,

earning the confidence of the private sector, understanding their need and providing everything that will help the economy jumpstart is essential.

The efforts of the government are commendable in terms of building infrastructure but there are external problems like the issues created by the contractors in Dhaka-Chittagong 4-lane. Shortage of gas pressure in large industries is serious as we are the only country supplying 8-12% of our gas for cooking, instead of going for cylinder system.

Around the world, only 20% of the electricity is being produced using gas as nations doing the same with either coal exploration or hydro-based power generation.

We need to strengthen the Board of Investment (BOI) with more authority and skilled human resources so that it can work as a one-stop service center to provide facilities in the quickest possible time.

Last but not least, we need to reschedule our tariff structure and enthuse in electricity generation to supply quality and uninterrupted electricity to the industry although by charging higher price.

The lack of quality human resources are creating vacuum on the top positions of high-end corporate jobs that are being occupied by expatriates. How to tackle this problem?

Of the total number of universities, 63% are privately owned and these also vary from one another in terms of quality. Due to existing laws, instead of having the intention to control, the government is failing to supervise the private universities. To face the challenge of tomorrow, we need to amend the laws soon. Finalizing the higher education commission draft and forming the Accreditation Council are cries of the moment. We need to identify the multitude of demand persisting in the internal job market and prepare our students accordingly so that none of them have to wait months and years after passing without a job. www.icebusinesstimes.net

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COVER STORY

Towards a Banking Nation ICE Business Times caught up with a few veteran bankers and came to learn about the changing scenarios in the banking sector from national and international perspective.

By Asaduzzaman & Irad Mustafa

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EXPERT OPINION

Ambi Venkateswaran A global banking veteran

Accept and Respect the Required Changes

Some may be strong and very quick to respond to the ideology that those tasks that can be completed by technology require no human intervention. However, there is no need to be demotivated by the innovations of technology. With the incorporation of it in almost every professional aspect, the utilization of technology should be embraced. In this, lies the constant success and longevity of economic prosperity.

Ambi Venkateswaran is a banking consultant in the U.S.A., where the primary focus is on risk management for banks and financial institutions. He has 35 years of experience as a bank executive, 26 of which he has served with the Bank of America Corporation. Venkateswaran has had a number of notable positions, which include Senior Vice President, Country Head of India, and Managing Director of North Asia Corporate Banking. He provides his insight into the financial crises of the past.

According to Ambi, the financial meltdown of 2007-2008 was primarily a result of the overleveraged situation of the financial institution due to the housing market bubble.

“Federal Banker, Alan Greenspan contributes to this meltdown, stating that in 2005 the stock market was thriving across Asia, Dubai and China. The real estate

market gained popularity because of the easy availability of credit.” He goes on to say that this irrational exuberance has a definitive effect. “The value of money depreciates and price of gas becomes cheaper as a result of this phenomenon of excess; the successive expansion over the next ten years results in necessary corrections that can be distressing.”

A number of texts have been written in order to analyze and decipher the cause for these crises. “In hindsight, these texts unanimously agree that every country has its own system and brand of democracy. If one were to equate this principle of allocating capital to countries being represented in accordance to the heights of individuals, the overview would be the following: In the world economy, the U.S.A. is 6 feet tall, China is 3, Japan is 3, Germany is 2.5 and the U.K. is 1 foot tall. If the economic structure of the U.S.A. slumps, it will indefinitely compromise the quality of the other economies because of the sheer size it encompasses in the room. This will in turn affect the banking system and economy of all of the surrounding nations.”

Venkateswaran deduces that the banking dilemma is somewhat avoidable if each bank were to do its own business. Furthermore, these banks can create their individual safety nets to protect themselves from collapsing after these crises. “Hypothetically this could have saved Merryl Lynch from collapsing and selling their company to Bank of America. Is this a result of capitalism? According to Hillary Clinton, this is not the case. She stated that the idea of capitalism is very Darwinian, in its theory of survival of the fittest.”

Venkateswaran asserts that this case is contrastive in regards to challenges of Asia. It is different in nature because the correction is taking place among the middle class, the decision makers and the bankers. For instance, in a country such as India, there is a population of 2.7 billion.

The population of uneducated and impoverished citizens equate to 1.5 billion of the total population. A significant number of woman have no franchise and this is a result of a number of social issues; ultimately hampering the economic prosperity. These cases are known as demographic dividends and have a different dynamic. Their unique circumstances and shortage of natural resources inflate the prices of basic necessities such as healthcare, education and other social interactions. If unfettered capitalism is promoted in varying degrees, there will be different models for individual nations such as China and India.

From his experience in Japanese economics, where lending commonly becomes loss; he details that due to the economic

the financial meltdown of 2007-2008 was primarily a result of the overleveraged situation of the financial institution due to the housing market bubble. www.icebusinesstimes.net

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COVER STORY

system and expansion, the currency is negligible at the moment. “Money is used in most countries with the trend of using plastic money such as credit, and debit cards.

Whether it is necessary or not is circumstantial because the general population will accept the change. With the manner in which monetary transactions are continuously evolving, the practice of keeping money in one’s wallet should eventually become a venerable practice because of its convenience. Given that change is inevitable, adherence to the advanced practiced is pragmatic.”

The cultural divergence of economies can vary amongst different societies according to Venkateswaran. He elaborates that India and Japan are not culturally diverse. On the other hand, the U.S.A., and the U.A.E. are culturally diverse and immigrants play a significant impact in their economic development. According to him, Singapore and the U.S.A. are interesting examples of cross culture and its pronounced

Muhammad A. (Rumee) Ali Director, BRAC Bank Limited

Careful regulation in a business friendly manner is needed

Muhammad A. (Rumee) Ali served as a Director of BRAC Bank Limited and as the Chairman of BRAC EPL Investments Limited, BRAC EPL Stock brokerage Limited, b-Kask Limited and so on. Prior to joining in BRAC, he served as the Deputy Governor of Bangladesh Bank and has worked with ANZ Grindlays Bank. His banking experience also includes stints in India, United Kingdom and Australia.

Speaking of his early experience when he joined ANZ

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effects on economic development can also be witnessed.

“This acceptance of diversity will not be as openly welcomed in some Asian societies.” Venkateswaran says that he does not see a Chinese CEO in an Indian company, where as it has occurred in many American companies. Due to the unique history of each country, evolution of ideologies varies. The evolution of the newer ideas can occur through respect but not through forced adaptation.

In conclusion, Venkateswaran postulate that rumors are vicious and can be disastrous for financial performances. In which case management of information is required as opposed to amplification of the negative attributes. “Bank managements have to implement protocols for communication, which entail emergency handling protocol and preparedness. This committee will manage the information, how it is disclosed, and ensure that no aspect of it is altered or misinterpreted.”

Grindlays Bank in 1975 he stated, “I witnessed the command regime of the banking industry. There was five year plan and the whole banking industry and financial system was regulated to that extent and ran according to the Central Bank’s provided interest rate. The lending procedure and policies were all strictly controlled but gradually we moved away from that system.”

He went on to say that Bangladesh is a very good example of how a growing economy can successfully integrate itself with the global economy. “Bangladesh is taking slow steps towards a brighter future for which deregulation was required however I am not in favor of total deregulation.

The banking industry should be regulated in a careful, business friendly manner. It is the only type of business that can create new money. The banks have to maintain their capital adequacy requirement but the rest is the depositors’ money. That is the main reason why I think banks should still be somewhat regulated.”

Being one of the people who helped bKash gain prominence in the financial sector, he said, “Bangladesh’s success in the mobile banking division is quite noteworthy.” There are still problems in the banking industry, regardless of its resilience, which need to be dealt with and in this regard he thinks the Government can take up a more active role.

“Political commitment is necessary to hold things in place so the political will of the Government will play a role in helping remove existing problems in the industry.”

Responding to a question regarding bad debts he went on to say that the Central Bank’s vigilance will be a key factor.“The Bangladesh Bank’s guidance will be required if we are to recover past bad debts where there are about 1.3 million unresolved cases. We can see many examples from around the world where this feat has been accomplished and with the help of modified as well as new regulations, it can be done.”

EXPERT OPINION

Meera H. Sanyal

Veteran global Banker

The Symbol of Shakti

Meera H. Sanyal is a renowned veteran banker who relinquished her banking career to enter public service recently. In her 30 year career, Meera worked with Royal Bank of Scotland, India for 21 years. She is committed to the economic, social and political empowerment of woman and is a member of Clinton’s International Council of Woman Business Leadership. She has also worked with organizations that work to empower rural and tribal woman in India. In 2013, Meera joined the Aam Aadmi Party where she chairs the party’s National Policy Committee and led the Delhi dialogue which formed the party’s manifesto for Delhi state elections.

While speaking to IBT she mentioned that the development

K. Mahmood Sattar

Bangladeshi Banker with global exposure

of markets in our part of the world had been facing challenges as they were still recovering from the global financial crisis of 2008. “There are still many signs which say that emerging economies like Bangladesh’s still face the risk of becoming destabilized. The strength lies in the country’s demographics so the advantages must be taken while it can still be used.” According to her we must spur our economic growth so that all these younger people have jobs. Dwelling on the most pertinent issues of demographic dividends and Bangladesh’s journey in the banking sector she said that certainly Bangladesh had shown the world the good inclusive banking could do. She endorsed our country saying that people across the world have been inspired by what Bangladesh has done. “A lot more innovation is taking place in financial services spaces in Bangladesh than is realized by most people.”

Meera went on to talk about our human resources department, saying South Asia is lagging far behind from the rest of the world in terms of skill development, especially when compared to East Asia which has devoted itself to enhancing the social services it provides while also empowering the role of women in those countries. However, Meera noted that it is a positive sign that both our country’s Prime Ministers have opted to try to follow some of those Eastern policies.

When speaking about the differences between Asian woman and European woman, she replied with a smile saying, “If we are able to empower women economically, socially and politically it will act as an important transformation agent for the country.” She said with determination that in South Asia we have been really fortunate to see a series of politically strong women who have shown the world their strengths.

Touching on the massive digitization of the banking sector the experienced banker said that what Bangladesh has done by providing services through mobile banking services like Bkash is quite wonderful and should be seen as an example by other countries. “If technology can be used to enhance the reach of financial services to empower those who are the poorest of the poor then you will have a radical transformation in the society. The world will learn from these innovations that are taking place in South Asia because these are new and hopeful models.”

Imminent Mergers in the Coming Years

K. Mahmood Sattar has 33 years of experience in his business acumen and is a banking veteran to be reckoned with. Currently, he is an advisor to the RSA Capital while holding the position of Chairman at RSA Advisory Ltd. and also the position of Independent Director at BRAC Bank Ltd. He has had a very successful track record, having worked in admirable positions at ANZ Grindlays Bank, Eastern Bank

Ltd, The City Bank and IDLC. When speaking about the country’s banking industry he said there is a swarm of banks and financial institutions in Bangladesh however out of the total population of the country 56% still remain unbanked. “It is good to see the initiatives being taken by banks, especially in the private sector to bring in greater financial inclusion in our country. www.icebusinesstimes.net

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COVER STORY

“The main concern right now is that we have too many banks in our economy and it is because the regulations in place allow banks to make a lot of money. However, this cannot go on for too long due to the numerous risk areas involved.

Syed Mahbubur Rahman

Managing Director and CEO, Dhaka Bank Ltd.

Infrastructure development will have trickledown effect

Prior to becoming Dhaka Bank’s Managing Director and CEO, Syed Mahbubur Rahman’s banking career involved him working in BRAC Bank, Prime Bank, Standard Chartered Bank, Citibank NA, ANZ Grindlays Bank and IDLC Finance in different capacities. He received “The Asian Banker Leadership Achievement Award 2011-2013”, the most prestigious accolade for banking in the Asia Pacific region, in recognition of his outstanding and progressive leadership skills.

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The responsibility of the financial sector, especially in the case of private commercial banks is huge in terms of the contribution they are making to the country’s economic growth. There are risks involved, however and banks need to prioritize the training of people who will learn to understand local and international risks better. It is the market economy which has allowed the private sector banks to move into such a position of strength after the Bangladesh Bank relinquished their commanding grip. The deregulation of the market economy has provided the necessary thrust which had brought in a certain level of efficiency but for them to maintain this efficiency consolidation is required which will allow them to reduce the cost factor and help them keep with the requirements of the Basel III framework.”

In terms of the current banking scenario, he commented saying, “The main concern right now is that we have too many banks in our economy and it is because the regulations in place allow banks to make a lot of money. However, this cannot go on for too long due to the numerous risk areas involved. In 5 to 6 years time we will be seeing many mergers taking place. From the investor point of view, we should have the ABCs pinned down quite well. We have the right hardworking and cheap labor force that is supposed to attract foreign investors but there are still gaps we need to fix. The image we portray to the world as well as our mindset needs to change. This problem has led us to drop two notches in the World Bank’s recent Ease of Doing Business rankings. We need to improve the infrastructural condition in the country and have adequate provisions of gas and power. Foreign investors are getting dissuaded by the time wastages from utility connections and bureaucracy entanglements in the EPZs. However, these speed bumps will have to be hurdled if we are to reach our 8% growth target.”

Regarding the rise of plastic and mobile money the role of safety and how you use it are extremely important. “You have to approach the unbanked population regarding these things cautiously. The reality is that people are carrying fewer amounts cash day by day since it is easier to make payments through credit or debit cards.”

When asked about whether our current financial sector is overbanked he replied saying, “Bangladesh has a high number of private commercial banks and Non-Banking Financial Institutions (NBFIs) who face a growth challenge at this point. The market has stagnated and imports are not picking up. There is an excess liquidity issue as well and people are not getting adequate returns on their savings.Our inflation rate are 6% and the deposit rate isn’t anything positive either. However, there is still hope. The Government

EXPERT OPINION

has taken the initiative to invest in infrastructure which will have a trickledown effect through our economic activities.”

Not being able to specify exactly when it would happen, he mentioned that soon we would be seeing a number of bank mergers due to the overbanked scenario but before that other changes need to set in. “The Government has taken positive steps in terms of the infrastructural priorities. It has now taken on expressway and monorail projects, both of which will see trickledown effects after they have been properly established. However, there are still many question marks regarding the availability of utility services like gas, water electricity. Provided these issues are solved, we will be able to go a long way.”

The systems in place are slowly becoming more IT based and the use of plastic money is on the rise. “Its usage is increasing but there is also a matter of safety and security in terms of the infrastructural facilities needed to use the cards.”

Regarding the high interest cap and significant operational cost, he opined that interest caps are higher than in many other countries but now, nobody is borrowing from Bank. He then spoke of automation and how the customers are inclining towards that system. “You need to consider unique factors as if customers do not need to come to your branch.

And there are call centers. Our job is to basically think about how to provide services so that customers do not have to visit branches at all.”

Regarding the demographic dividends he reluctantly said that there are shortages of skills in our people. “There are many openings but it is difficult to get the appropriate person for the task. We need to keep investing in human resources and skill development so that the industries in our country can reap the benefits.”

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FROM RAGS TO RICHES

Deen Mohammad

Founder-Chairman, Phoenix Group of Industries

Courage and determination are the two most important attributes of any entrepreneur

ON HIS HUMBLE BEGINNING

My father used to run some departmental stores in Guwahati Assam. During the time of partition, he came to Bangladesh empty-handed. He was lucky that some of his Chinese employees helped him to escape the ruthless communal violence. After that, he successfully started business in Imam Gonj with two of his brother in laws.

After exchanging some properties with a Hindu gentleman, my father’s business picked up as he started a few more departmental stores. I used to sit with him in those stores

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Mostly known in the business world as the Founder-Chairman of Phoenix Group of Industries, Deen Mohammad is one of the top industrialists of Bangladesh who has been working for the economic growth of this nation for a long time. His career started in 1960 when he entered the trading business. Because of his hard work, Phoenix Group of Industries gradually became a multinational company. The other companies included in Phoenix Group are: Phoenix Insurance Company Limited, Phoenix Textile Mills Limited, Eastern Dyeing & Calendaring Works Limited, Appollo Ispat Complex Limited, Phoenix Fabrics Limited, Phoenix Garments Limited, Phoenix Finance and Investments Limited.

Deen Mohammad was the Chairman of City Bank for a while. The Phoenix Finance and Investment Limited was established within the shortest period of time in the history and watch how he dealt with his customers. I was in class five at that time. That is the only business school where I learnt business first hand.

ON THE SPIRIT OF AN ENTREPRENEUR

Courage and determination are the two most important attributes of any entrepreneur.

Definitely one has to take a leap of faith and march forward.

Dangers are imminent in every step but that’s what makes business more exciting.

ON ACCEPTING FAILURE

Trails and travails are parts of an entrepreneur’s life. I had garments and dying factories which was incurring loss. I closed them down. I accepted the failure. It’s important to learn the lesson and move on.

ON THE EASE OF DOING BUSINESS

Lack of adequate infrastructure is the main bottleneck to do business in Bangladesh. The supply of electricity is erratic and power connection is not available. To get gas connection, one has to spend a lot, but in reality, the pressure of gas is very low. These problems have even led me to

of Bangladesh because of the effort put by him. He has been working with various government committees over the years, such as, the Consultative Committee for the Ministry of Energy and Mineral Resources. He was a member of the Executive Committee of Dhaka Chamber of Commerce and Industry.

To honor his contribution in the economic and social growth of Bangladesh, various organizations have presented several awards to Deen Mohammad. Phoenix Finance & Investments Limited was awarded the International Star Award for Quality in the Gold Category from Business Initiative Direction. Recently he gave an exclusive interview to IBT and shared how he made his fortune starting from scratch. close down my two ventures. I feel sorry for all those workers who lost their job.

ON THE FINANCIAL SECTOR

The City bank Ltd. and Phoenix Insurance and Leasing Company Ltd. are the first generation Banking and Non Banking Financial institutions.

Both of them are offering praiseworthy services to its clients. There is excess liquidity in the market but good sign is people are inclined to take loan from the bank. We will have to make investors interested to take more good loans. That’s important for the economy.

INTERVIEW

Muklesur Rahman Managing Director & CEO, NRB Bank Limited

[

Being one of the most versatile bankers with 32 years of experience from reputed foreign and local banks, Muklesur Rahman has played a pioneering role in every area of banking, ranging from retail banking to risk-management.

Through his dynamic leadership, NRB Bank Limited has been recognized as one of the most advanced, techno centric and compliant banks within a very short span of time.

]

How do you assess about potentiality of foreign investment in Bangladesh?

“To get THE right people in the right place is the biggest challenge in the industry.”

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Bangladesh is classified as a ‘Next Eleven’ emerging market and one of the ‘Frontier Five’. According to a recent opinion poll, Bangladesh has the second most pro-capitalist population in the developing world.

Also the next Asian tiger for it’s geographical location and demographical status with immense potential.

But we need to ensure political stability, adequate energy supply and infrastructure support. More importantly sector wise investments like RMG, health, leather, agro-based and infrastructure development and public private partnership (PPP) is required.

Bangladeshi economy is in a transformation stage where the use of IT is huge and Mobile Banking and Agent banking is growing larger day by day. In that respect what are the new plans and innovations which you are brining

MUKLESUR RAHMAN

for your Bank?

IT sector is growing as the vital factor of Bangladesh economy where it came around 15% of total GDP now. Banking is now based on technology and Mobile/Agent Banking are part of it.

So doesn’t matter whether we want it or not, it is the demand of time!

Already 15 banks have launched Mobile Banking, 2 are operating Agent Banking and more are coming up.

As a new and techno-centric bank we are planning for Mobile/Agent Banking too cover up the network, where the biometric and NFC technology to be introduced. We have already introduced most modern version of core banking and card management system, VISA EMV Debit & Credit cards, Call Center and Internet Banking.

Word has it that in time plastic money along with other transactional methods will entirely replace cash transactions. What are your thoughts in this regard?

Already the cash has been replaced by plastic in many partS of the world and the wave is eventually coming to this region! Due to convenience and security, it is spreading widely. It is also a very big business for both the issuer and acquirer.

But simultaneously, the Mobile money is coming up as the competitor of plastic money in our country. Plastic money also would be a big tool to prevent money laundering.

Why and how retail sector & local Lifestyle is improving in Bangladesh?

Highly consistent 6+ GDP growth for last ten years, 55% [highest in the world] youth population, 4% urbanization rate, highly consistent remittance [above USD 14 bn for last three years] & disposable income growth, 105 million mobile user, availability of tangible international consumer products, technology and desire to improve lifestyle – these are reasons behind improving retail sector and local lifestyle in Bangladesh.

How do you see the retail & electronic banking future in Bangladesh?

A country with 160 million people, where 60% are still unbanked – there is no question about the future of retail and electronic banking! Presently, almost all banks are online; most of the banks have ATM, Debit/Credit card, Internet banking and phone banking services. To be very optimistic, I see the future is not only the cashless but also to enable plastic less transactions worldwide, where e-commerce and mobile money are the next era of Retail Banking.

Already the cash has been replaced by plastic in many partS of the world and the wave is eventually coming to this region!

What are your thoughts regarding risk management?

What are the challenges in this respect?

As technology is more acquainted with the banking, the risk parameters are getting more complex. So, any loophole in technology or process can trigger a big risk anytime!

Credit risk, balance sheet risk, internal control & compliance Risk, money laundering risk, foreign exchange risk, IT & communication risk and reputational risk – these are the core risk areas any bank has to manage.

But I think, the lack of monitoring,

supervision, MIS analysis, and risk based approach and knowledge and people skill are the big challenges in these area.

How can you enhance the skill development of your employees? Do you think that you are getting proper manpower from the labor market?

My motto is always ‘Employee First’; so I believe in employee development through mentoring, coaching, brainstorming, motivation, in-house training, external and overseas training as appropriate.

To get right people in right place is the biggest challenge in the industry, there are 56 banks – but there not adequate right people in the market, moreover this is a big challenge for the HR and head hunting companies too in Bangladesh particularly for banking industry.

What are your plans regarding improving Financial Inclusion and Green Banking?

The mobile financial services (MFS) and national payment switch gateway (NPSB) are the revolutionary steps taken by the Bangladesh Bank towards financial inclusion. Towards it, we have already joined in NPSB, launched Tk 10 account and started Mobile & Agent Banking project for financial inclusion.

As a new bank we have already started Green financing and Green banking products like e-Statement, paperless banking through Internet Banking and many more are coming.

How is your bank dealing with cyber security issues?

Cyber security is the biggest challenge for the banks in 21st century. Mainly secure configuration, data security; firewall and monitoring deviations are the key tools for us to protect potential cyber threats. As a techno-centric bank we have established good IT governance through risk assessment, identify and prioritize gaps then update and test accordingly. We are also in the process to PSI DSS

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INTERVIEW

Dr. Zaidi Sattar

Chairman, Policy Research Institute

[ “Relative to the world market of over $75 trillion, Bangladesh is a small economy of $205 billion but growing in size. The biggest challenge for the economy is to create good jobs for more than 2 million people joining the workforce every year.�

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Dr. Sattar started his career as a Lecturer in Economics, Dhaka University in 1968; joined the Civil Service of Pakistan in 1969 and served in various positions in the districts and the Ministries of Bangladesh since 1971. In mid-career, he left for the USA for higher studies in Development Economics.

In 1984, after completing his Ph.D in Economics from Boston University , he joined the faculty of Catholic University of America, Washington D.C., in the Department of Economics and Business, where he taught until 1992. Returning to Bangladesh in June 1992, he served as World Bank Advisor on tariffs and customs reform to the National Board of Revenue (1992-95) and later as UNDP consultant Macroeconomist at the Planning Commission (1995-96).

He joined the World Bank, Dhaka Office, in 1996 where he served as Senior Economist, South Asia Region, Poverty Reduction and Economic Management until his retirement in September 2007.

Between October 2007 and December 2008, he served as Vice-Chancellor, The Millennium University, Dhaka.

Dr. Sattar is a founder Chairman of PRI which began its journey in December 2008.

Dr. Sattar has some 40 publications in international and national journals and numerous papers presented on trade policy, private sector development and growth issues at national and international conferences. He is recognized as a leading expert on trade and tax policy issues in Bangladesh .

He is a life member of Bangladesh Economic Association, and Director of the following institutions: Southeast Bank Ltd., Industrial and Infrastructure Development Finance Company (IIDFC), and Venture Investment Partners Bangladesh Ltd. (VIPB).

]

Chairman, Policy Research Institute

In an age of globalization how prepared is Bangladesh to face the challenges of Globalization or seize the opportunities of globalization?

Globalization, the integration of economies and societies across the globe through technology, trade and investment, has created opportunities for Bangladesh. At the same time it presents formidable challenges to overcome. With the rapid spread of information technology, and reduction of transportation costs, there is no way to avoid the interconnectedness of a globalized world with all its ramifications. Cross-country evidence has shown that globalization has been associated with faster income growth and poverty reduction in the developing countries that have opened their economies the most. Bangladesh has been classified by analysts as a “rapid globalizer” as it opened up its economy for trade and investment. It has reaped the benefits of such openness in the form of higher growth and poverty reduction. But globalization needs to be harnessed to help the poorest in Bangladesh so that they can improve their lives without getting marginalized. Bangladesh is unique among the 49 LDCs in that it exports predominantly manufactured goods (95%) whereas typically LDCs export primary goods like minerals, agricultural and agro-based products.

That presents an opportunity that needs to be seized. Bangladesh needs to undertake structural reforms in many directions – regulatory, trade openness, compliance standards--to maintain competitiveness. Failure to address some emerging policy challenges in the short-, medium- and long-term could hurt export prospects and the climate for private investment, in the process depriving Bangladesh of its growth prospects and the potential for job creation and faster poverty reduction.

What are the notables trends in the global economic order in terms of regionalism and multilateralism in trade? Does Bangladesh stand to gain or lose?

It must be acknowledged that the

multilateral trade institution, World Trade Organization (WTO), is going through rough times. As a reaction to the stalemate in multilateral negotiations at the WTO, especially since launching of the Doha Round (DR), regional trade and investment groupings -- called plurilateral trading blocs -- are gaining momentum around the globe. The most striking of these developments is the emergence of the Trans Pacific Partnership (TPP), a mega trading bloc comprising 12 Pacific Rim countries (USA, Canada, Peru, Mexico, Chile, Japan, Australia, New Zealand, Brunei, Vietnam, Singapore, Malaysia) and covering 40% of global output. The TPP Agreement which is in the process of being ratified by member country governments raises the bar on free trade and investment with second generation standards and regulations that would be hard to meet by countries like Bangladesh. But the inclusion of Vietnam in the TPP will put extra competitive pressure on Bangladesh’s exports to USA (garments) and Japan (shoes). While Bangladesh is unlikely to be a beneficiary of this trading bloc, there is a more promising trade and investment partnership emerging in its neighborhood out of the ASEAN (Association of Southeast Asian Nations) PLUS grouping (ASEAN + China, India, Australia, New Zealand, Japan, and S. Korea), which is expected to morph into a mega bloc under the title of Regional

Bangladesh has been classified by analysts as a “rapid globalizer” as it opened up its economy for trade and investment.

DR. ZAIDI SATTAR

Comprehensive Economic Partnership, encompassing much more than trade.

Yet, to strike an association with this group will not be easy given its current structure of tariffs and protection. Typically, the first order of business in regional trade agreements is the lowering of tariffs on goods.

Bangladesh will need to substantially reduce and rationalize its tariffs to get past this first hurdle. That calls for a long period of adjustment. Until then, making the best out of our WTO membership appears to be the only game in town.

It is fair to say that Bangladesh has been a major beneficiary of the Special and Differential treatment (SDT) and, to its credit, has taken full advantage of the facilities accorded in terms of non-reciprocal grant of market access under various preferential arrangements, including duty free quota free (DFQF) access in several countries (e.g. Canada, Japan, Australia) and country groups (EU).

Though occasionally rules of origin (ROO) requirements undermine the concessionality of preferences, they are still better than nothing. The departure from MFN obligations comes under the rubric of WTO’s Generalized System of Preferences (GSP). EU’s Everything But Arms (EBA) is a major concession to Least Developed Countries (LDCs) including Bangladesh allowing DFQF access, under the GSP umbrella. So are DFQF access offered to Bangladesh by Japan, Canada, Australia, and other countries. Exporters know of the gains in competitive advantage resulting from DFQF access when competitors face higher tariffs. Of the $245 billion that Bangladesh exported in the past 15 years, rough and ready estimates suggest that some $50 billion of these exports would have been the incremental contribution of preferential access.

Bangladesh Economy relies heavily on export led growth. Is this is a sound approach in the face of changing global trends?

Should Bangladesh turn attention to the domestic market?

This is truly the billion dollar question

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INTERVIEW

and deserves answers. Relative to the world market of over $75 trillion, Bangladesh is a small economy of $205 billion but growing in size. The biggest challenge for the economy is to create good jobs for the more than 2 million people joining the workforce every year. That is a formidable task that will have to be addressed through export-led growth, while counting on a steady outflow of migrant workers.

With all its potential, the domestic market is simply not large enough to employ the massive additional labor force entering the job market. This is an inalienable fact of history and economics. Large economies like India and China have relied on export success to boost jobs and growth, just as the high performing East Asian economies that included South Korea.

Vietnam, whose economy is about the same size as that of Bangladesh, exports five times as much as Bangladesh. Bangladesh can ill afford to do otherwise, at least not yet. We do not have to look far. See the job creating impact of Bangladesh’s leading export sector – readymade garments.

True, there is a global rebalancing taking place even as we speak. China, which has become the second largest economy of the world, can no longer count on the excessive consumption (and dissaving) of US and Europe to fuel its growth. It is time to divert attention to its domestic market, stimulate consumption and expenditure, and create jobs. For Bangladesh, that option is many years away. However, the focus on exports and global markets should not be misunderstood as neglect of the domestic market. Our challenge is to rebalance policy incentives such that exports and domestic sales are equally rewarding – with some twist in favor of exports, if I may add. It is critical for policymakers to realize that high protection to import substituting industries creates an anti-export bias because exports must face open competition in the world market without any protection (direct subsidies on exports are prohibited under WTO rules). Producers should be taking advantage of the growing domestic market but must be prepared

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Vietnam, whose economy is about the same size as that of Bangladesh, exports five times as much as Bangladesh.

Bangladesh can ill afford to do otherwise, at least not yet.

to face declining protection over time.

Only then can they be globally competitive over time – a critical requirement for future growth. Finally, consumer interests cannot be overlooked. Having been at receiving end of all the protection tax for far too long they need to look forward to some price relief as well. Lowering of protection, removal of anti-export bias, and price relief for consumers, all come in the same policy package.

As far as Foreign Direct Investment (FDI) is concerned, we have one of the most liberal FDI regime in place but FDI inflows are small compared to what is going into the economies of our comparators.

What is your take on in this aspect of policy?

There is little doubt about the benefits of FDI in terms of higher productivity, technological innovation, market access, job creation and growth, particularly for developing countries.

Even countries like China and India are courting FDI in larger volumes.

Vietnam was a star performer in 2014 receiving $24 billion of FDI, next only to China’s $75 billion. Compare that with Bangladesh’s FDI of $1.3 billion.

We need to offer a friendlier mindset to receiving FDI. True, private

entrepreneurs might be wary of foreign competition but by keeping foreign investors out of Bangladesh’s leading sector, readymade garments, cannot be good FDI policy. We have to work on this. The environment for local as well as foreign investment is summed up by Bangladesh’s ranking in World Bank’s Ease of Doing Business Index and the World Economic Forum’s Global Competitiveness Index. Bangladesh’s low rank in these two widely observed indices reveals the constraints to FDI and the formidable challenge that lies ahead for improving the overall investment climate. Quite apart from energy shortages, land is a major constraint to FDI as land prices are steep and supply rather limited. A strategic development that could be a major step in solving the land constraint for FDI is the fast tracking of several Special Economic Zones (SEZ) for countries like Japan, China, and India. This has the potential for a breakthrough in FDI inflows that have been anemic at best.

Are domestic policies moving in the right direction for Bangladesh to seize opportunities I think by and large we are moving in the right direction when it comes to economic management. The economy has achieved stable annual growth of 6% plus for nearly 15 years, accompanied with a faster pace of poverty reduction, and levels of human development that has surprised many pundits. But given our challenge, I am of the view -- and most analysts would agree -- that there is still room to accelerate our sustainable and inclusive economic progress. Analysts discern two stories about Bangladesh: the good part, which sees Bangladesh making solid progress with exemplary performance in human and material development.

And then there is the part which indicates we are missing opportunities for lack of capacities, infrastructure, and effective institutions. In a highly competitive globalized world missed opportunities could be costly. The glass is therefore half full rather than half empty, as it were.

SPOTLIGHT

vision statements With the surge of extremism all around the world, chaos is the new normal.

On the other hand, with the advent of science and technology, human beings are feeling more empowered than ever before. How do a country like Bangladesh can find its niche and excel? Buzzwords like connectivity, security and endless possibilities are giving us immense hopes; nevertheless, challenges are also aplenty. Just before bidding adieu to 2015, IBT asked four leading business men about the vision Bangladesh should have for the upcoming new year. They share the gems of their wisdom with our readers and tell us how to meet the next big challenges of security, growth and prosperity.

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VISION STATEMENT

Salman F Rahman Chairman, IFIC Bank The experienced businessman warns against the need to be vigilant against oncoming cyber threats in the new IT oriented business landscape.

Cyber Security in the Financial Sector Running a business is all about taking on risks but this also includes the mitigation of risks as much as possible. IFIC Bank Limited was set up at the instance of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/financial institutions aboard. In that respect, it is

All bankers, old and new, know of the change in the horizon but if the necessary security measures are not taken then we will put the whole financial sector at risk.

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the first Bangladeshi born global banking & financial institution.

Banking has taken a new turn this millennium and the new generation of bankers have grasped this very well.

We, at IFIC (International Finance Investment and Commerce) Bank Ltd. have taken the initiative to accept and adopt the positive sides of Information Technology (IT) which is a must to keep up with the ever changing global landscape. The entire financial sector has now embraced the importance of developing their involvement with the IT sector and it is also encouraging to see our Central Bank accepting this change. However, the challenges still remain in ensuring cyber security.

All bankers, old and new, know of the change in the horizon but if the necessary security measures are not taken then we will put the whole financial sector at risk. We need to make regulations and guidelines accordingly and adhere to them strictly. At IFIC Bank Ltd. preparations have been taken for better risk management as we run the risk of losing out on our profits if we do not perceive the dangers from the cyber threats clearly. Hands-on as well as conceptual training regarding software implementation and manipulation is being provided so that our people can mitigate any oncoming money laundering or fraudulent threats from the cyber world.

VISION STATEMENT

Abdul Matlub Ahmad President, FBCCI The ace business leader tells us how his team at FBCCI is exerting relentless efforts to make Shonar Bangla a reality

Bangladesh Rising According to the latest World Bank report, Bangladesh is not in the good books of the world for its position among the backbenchers who have failed to ensure the ease of doing business. Lack of infrastructure and energy as well as bureaucratic tangles have sent constraining reverberations through international investments. One big problem alongside those is the high rate of interest on bank loans that has walloped businessmen in the domestic forefront. Before being elected as the President of Federation of the Business Chambers of Commerce & Industries (FBCCI), one of my foremost commitments was to lower that rate to a single digit. Make no mistake; I am utterly committed to reaching my targeted deadline by working tirelessly.

Bangladesh’s human capital has always been a force to reckon with. They are hardworking and not too expensive like their Asian counterparts. However, to yield higher productivity, we must improve their skill level. The recipe for success in industrialization must have ingredients like competitive labor force, forward looking government and enough money in the Bank. At FBCCI, I along with a bunch of visionary businessmen, I am trying to ensure those ingredients are in place. Political tumults being prevalent in every single continent and with the alarming surge of extremism, there is no alternative but to be united for a greater cause. This is why we have decided to spread our wings and be more inclusive.

“Industry in every district” is a dream we want to materialize.

In pursuit of that, I have made a call to all business chambers around the country: to strengthen their collaboration and widen their network which will enable all entrepreneurs to work on similar agendas and that will be the economic emancipation of Bangladesh. In the process, we have discussed with banks: how to come up with a win-win solutions for businessmen as well as bankers. A lower single digit interest rate will certainly spur investment at home; it will instigate

large industries to become larger, eventually increasing production and creating employments.

The same will give SMEs a big fillip and help them upgrade their status to large industries. We are also in discussions with foreign investors; assuring them that problems like policy logjam that have put various business facilitation processes in a rickety state will be overcome.

Bangladesh is working hard to enter into the league of middle income countries. Our ever expanding middle class have caught the attention of the world market, a reflection of which we saw in a recent report by Boston Consultancy Group.

Our manufacturers and producers will have to set the strategy in a way that will enable them to cater to consumer markets both at home and abroad.

One important thing to do in a young nation like Bangladesh is to change the mindset. The people of this country have never hesitated to roll up their sleeves and work for a brighter future.

Nevertheless, if they don’t understand the importance of looking outside the box, they’ll fail to see the big picture. I am striving to keep the growth story going and for that it is imperative that we engage both parties from public and private sectors. Government bodies have to be more investment and business friendly and expedite processes that will help entrepreneurs have more faith in the system. It will boost their spirit of entrepreneurship. The drive should be made not only in Dhaka and Chittagong but throughout the whole nation.

Gone are the days when the world used to identify Bangladesh as a flood-prone, foreign aid-dependent country. We now act as a role model of many due to our success in ensuring food security along with other social indicators.

Yet just like any rebranding process, we will have to keep on working to make Bangladesh’s presence felt wherever there is an opportunity. We need to set examples so that Bangladesh is perceived as one of the most lucrative investment destinations. My solemn request to the business community will be to take heart and be with us in the march toward a sunnier future. www.icebusinesstimes.net

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VISION STATEMENT

Abul Kasem Khan Director, AK Khan & Company Ltd. The visionary business icon entails how building roads and highways can set us on the new trajectory of growth

The Road to Prosperity Growth requires connectivity, energy and power. We are at the threshold of growth opportunities and this is why we need to provide the much needed thrust to our infrastructure development for the future with an eye on year 2030 and beyond. Proper infrastructural development is a key prerequisite for any rapid economic growth. The formula is a simple one - due to connectivity local and international trade grows which creates jobs and thus prosperity spreads. President John F. Kennedy made the case that networks of major roads are essential in promoting economic prosperity.

Today, infrastructure is the biggest bottleneck. This is not limited to connectivity but also includes energy. The main theme of the Bangladesh Strategy 2030 was connectivity and energy security.

Energy security for the next 50 years must be made a top priority in the Government’s development agenda.

We must bear in mind that when foreign investors invest, they come with a long-term investment plan.

Therefore, in order to attract large

"It is not our wealth that builds our roads, but it is our roads that build our wealth.� – John F. Kennedy

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FDIs, policy planners must keep in mind the infrastructural need for next 50 years. Every country in its developments life cycle will concentrate on accelerating infrastructure development in a planned manner, this has been the case in recent times with China, and the Asian Tigers; Vietnam has also adopted this strategy. We must address the infrastructure developments in a planned cohesive manner and not on piecemeal basis. We need to connect the country with modern and efficient infrastructure for the entire economy for the benefit of all its stakeholders.

Another important aspect that needs to be touched upon is our Education system. We need to put more stress on English. English today is not just another foreign language, but a means of global communication. Our education system requires real assessment in terms of what we are offering compared to other neighboring countries.

We need to do a SWOT analysis on the system.

Most countries are gearing their education system so that each citizen becomes a global citizen in terms of his education standards. They are designing their curriculums in such a way so that their citizen can compete for any job in the global job market in this global village which is becoming competitive every day.

Today, our inward remittance from the job market is nearly USD$20b but on the other hand, we are also remitting out billions of dollars for high end jobs by expats and thus not only depriving our local talents of these jobs but also losing our hard earned dollars. We need to evaluate and assess our current system. If we are to survive in the present flow of globalization, we shall have to be revaluate the entire education system of the country, so that wherever improvements are needed its needs to happen fast.

VISION STATEMENT

Shameem Ahsan President, BASIS Youth icon and IT visionary shares how the IT sector with the right support can become one of the more prominent contributors to Bangladesh’s economy

Bit by bit Lately, the prospects of the software and ITES industry have been looking up. The Industry’s share of GDP is on the rise and we have seen major advancements in last few years in terms of policy support and capacity building. However, there are plenty of opportunities for further development. BASIS has been working towards achieving One Bangladesh vision by 2018 which includes reaching $1 billion in Software, ITES and BPO

The sector has immense support from the government and its subsidiaries.

They are extremely committed to the Digital Bangladesh vision and the sector is expected to have an amazing impact on achieving the same. Software and ITES sector is being given all the necessary aids and attention.

exports. Up till now, we’ve attained $300 million USD exports of that goal. So I am quite optimistic about the prospects of the industry in the near future. It is very likely that the sector will become one of the major players in our economy.

We have the kind of manpower who withproper skill development programs, can be developed into an extremely skilled and competent workforce. Creating competent IT professionals in the country has been one of the main objectives of BASIS. With a view to achieve that objective, BITM (BASIS Institute for Technology and Management) was founded. The sole purpose of BITM is to train and develop appropriate skills in the people interested in working in the sector.

Under the Skill for Employee Investment Program (SEIP), we are training over 23,000 skilled IT professionals throughout the country free of cost by 2019. We’ve already trained and employed 400,000 IT professionals through this program.

Along with that, we are working in collaboration with the LICT project which aims to train 34,000 more.

The sector has immense support from the government and its subsidiaries. They are extremely committed to the Digital Bangladesh vision and the sector is expected to have an amazing impact on achieving the same. Software and ITES sector is being given all the necessary aids and attention. We’re operating in an IT friendly environment with favorable policies. ICT companies are now tax exempted till 2024. This is the best phase in recent times to operate in the industry. I’m confident that software and ITES has all the potentials to be the next biggest sector of our country.

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INDUSTRY LEADER

Man of Steel

Aameir Alihussain

Managing Director of BSRM Group of Companies

“The biggest challenge is to maintain the image. The image that my grandfather and father have established has to be sustained. We are working very hard in pursuit of ensuring that.”

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Born in 1975, Aameir Alihussain is the son of Alihussain Akberali. He completed his graduation in Economics from McGill University, Canada and MBA from Lahore University of Management Sciences (LUMS), Pakistan. Aameir is a third generation entrepreneur where his grandfather late Akberali Africawala was a visionary and trend setter businessman in the steel sector. In 1952 two intrepid businessman Taherali Africawala and Akberali Africawala set up the first steel rerolling mills of the country in Nasirabad in Chittagong. Their sons Mr. Alihussain Akberali and Mr. Zohair Taher Ali have been running the business after the brothers’ demise.

The family had moved to Karachi in 1947 from Gujrat, India and then migrated to Chittagong in 1949. Aameir joined the family business in 2001 and aimed at setting high industry standards for the performance of the company and has been active in the day to day operation of the company.

Soft spoken and very thorough and an avid admirer of modern management concepts in the company, he has successfully built a winning team in BSRM. Recently he caught up with ICE Business Times and talked about BSRM’s vision, mission and various aspects of industrialization in Bangladesh. Excerpts below.

AAMEIR ALIHUSSAIN

Please tell us about the journey of BSRM. My family came to Chittagong in 1949 from Karachi, Pakistan. 1952 was the year when my grandfather along with his five brothers set up the first manufacturing unit of BSRM in Chittagong. That was the beginning of our journey of manufacturing steel. I was lucky that I could spend a lot of time with my grandfather-a man of vision, values and policies. Initially, we couldn’t manufacture much due to then policy that would allow only to produce a certain amount of products based on the type of license that we procured. From 80s onward, the scenario changed. The company started to grow slowly. The biggest breakthrough came in the 90s, as that was the decade when the country also embarked on a more dynamic trajectory of growth. Steel is an ingredient that is very much required for infrastructure development and henceforth necessary for national economy.

In steel industry we are the only third generation company and we hope to do so for next generation and making the business sustainable. The biggest challenge is to maintain the image. The image that my grandfather and father have established has to be sustained. We are working very hard in pursuit of ensuring that. That is also the most rewarding factor of being an entrepreneur to me.

Steel is a very serious sector and you’re maintaining a leading position in this sector for many decades. What is the recipe for this success?

Especially in last 15 years we have done lot of work on corporate governance. So we have established the culture within the organization and ensured job description of each and every employee is informed and acted upon. We have created capacity building within the organization which allowed us to grow. If you do not have the capacity internally and if you are too centralized of an organization it is very difficult to manage the growth. If country is growing it is possible for everybody to grow. Any organization must take measures and preparations so that they can handle and sustain the growth. In ours, we never hesitated to embrace changes because business as usual is no longer an option for corporations around the world. We have to think about ethics and environment; we have to think about revenues as well as professional growth of our employees. To achieve all these, putting the right vision, value and principles in place is highly essential.

You have started from Chittagong and it is a running port in South East Asia and the home of heavy industry?

If you talk about the location, it is excellent and Chittagong should be the industrial hub of the country.

Nevertheless, unfortunately during the period of 70s and 80s, the practice of centralization of government development projects took a toll on the city and the port: they never saw the light of development that can turn it into a world class port and a world class city.

My view is that centralization is not sustainable in the long run. The economy, as the World Bank just projected this year, will experience 6.5% growth. The business community, however, is looking forward toward a double digit growth provided all the right policies and implementations are there in coming www.icebusinesstimes.net

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INDUSTRY LEADER

years. By which I mean Government decision making has to be decentralized. This is 2015 and for every single decision making, if we are at beck and call of Dhaka, processes slow down.

We are grappling with the lack of infrastructure and power. Problems like this should not impede our journey and the government and all other stakeholders of the business community should understand that and come up with solutions.

What is your export portfolio?

Any organization must take measures and preparations so that they can handle and sustain the growth. In ours, we never hesitated to embrace changes because business as usual is no longer an option for corporations around the world.

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We are exporting a very small amount only in India. Of course there is a plan and we are looking for opportunities as long as our first preference is domestic market because here in this market we have higher exposure and acceptance. In the domestic market what we produce is very much competitive and the standard on par with those from other world renowned factories. And the price is good. Our future plan is to expand the business further: we have commissioned one plant and the other is on its way. These will double our capacity and hopefully we will be able to deliver on par with the demand in the market. In case of export, on the other hand, having all the required facilities at the Chittagong port is like a dream come true.

We do not have any raw material or abundant natural resources. Whatever we import, the freight is higher. Due to the lack of a deep sea port, there is transshipment in Singapore, Colombo or Malaysia and smaller bulk and container vessels can enter Chittagong Port.

What’s your thought on the future potentials of Bangladesh?

Bangladesh has a huge potential. However, the challenges are aplenty. Some of the internal challenges are Government policy related, solving which will give high impetus to the industry and will propel growth in the country. If

you look at countries like Japan, which had been replaced by China as the second largest economy of the world, there is so much to learn from them. Both of them hardly have any resources and always depend on earnings from exports.

Singapore is small but its economy is dynamic and large. In Bangladesh, people are the biggest resources we have. By enhancing their skills, it is possible to increase our remittances flow 20 -30%. To do so, we need to give our education system the much needed facelift, which includes ensuring better English education as well as more insertion of vocational education in the curriculum. It will be a shame if a country like Bangladesh lags behind in sectors like RMG and IT only because of the dearth of people who know better English that is essential to deal with international buyers and agencies. There are companies I know who care more about the quality of their work, which is why they are commissioning more outsourcing related jobs to India, instead of knowing that Bangladesh offers better and lesser prices. This is why I believe ensuring better education modules in English language and IT, coupled with more training on information sharing and communication skill will usher a new era of more skilled professionals from Bangladesh. Make no mistake Bangladesh has opportunities to ace further in sectors like IT, Pharmaceuticals, Leather, Jute etc. We will need pathfinders for these sectors who will face the initial hiccups but will eventually create the market. Once the market is set up, orders will follow and business will grow.

What is your future plan?

Steel industry is highly capital intensive. We have resources and are generating profits; ensuring further growth is on our agenda. Being focused is one attribute that helped us become the market leader. That is why we didn’t venture into other sectors. Focusing on our competence, we would like to keep on doing the good job that we have been for many years. We always want to be a part of the Bangladesh success story.

ANTI CORRUPTION

Iftekharuzzaman, PhD

Executive Director, Transparency International Bangladesh

[

During his illustrious career, Dr. Iftekharuzzaman has worked as the Executive Director of Bangladesh Freedom Foundation before which he served for four years from 1995 as the Executive Director of the Regional Centre for Strategic Studies in Sri Lanka, and before that he worked with the Bangladesh Institute of International and Strategic Studies for 19 years, as Senior Research Fellow and Research Director. He worked for one year during 1989-1990 with the Department of International Relations of the University of Tokyo as a post-doctoral fellow.

Dr. Zaman holds degrees from University of Dhaka and Academy of Economics, Warsaw.

Currently, he is the Executive Director of Transparency International Bangladesh (TIB).

Taking time off his hectic schedule, he sat down with IBT to discuss their operational involvement in Bangladesh in their crusade against corruption.

“If we are in denial about the level of corruption in our country, the situation will further deteriorate which will worsen our nation’s branding prospects.”

]

How has TIB contributed to Bangladesh’s progress over the years? How have your operations improved the engagement of the civil society in regards to their participation in social movements to combat corruption in Bangladesh?

Bangladesh has achieved quite a lot in the last four decades in terms of our journey towards institutionalization of democracy and more importantly in terms of social and economic progress.

The country is acknowledged as a successful example for the headway it has made in terms of socio-economic development over the years. Compared

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TRANSPARENCY INTERNATIONAL BANGLADESH

to many other countries in similar levels of development, Bangladesh has achieved higher growth, essentially in the last two decades. We’ve recently been categorized as a lower middle income country and the indicators for that are quite apparent - 6% GDP growth, poverty reduction and greater access to education and health and so on. These are all matters of pride for us. However, we could have done much better if not for our deficits in ensuring participatory, inclusive, transparent and accountable governance accompanied by pervasive corruption in the country. This is evidenced by data from Government and other sources both national and international. Our own research shows that if we could moderately control corruption we could have at least achieved 4 to 5% higher GDP growth.

Therefore, the opportunity cost of corruption and governance deficit is very high. From this perspective TIB has been conducting three main streams of activities.

Firstly, we conduct research on corruption, governance deficit at national, sectoral, institutional and service delivery levels in selected areas of public interest so that we can identify the extent and impact of corruption and identify the processes and systematic weaknesses which lead to corruption and governance deficits. The product of such research is then communicated to the government and other relevant stakeholders so that the problems can be addressed. The second stream is about reaching out to the people. We create awareness among the people about the ill effects of corruption and need for ensuring openness, transparency and accountability as the key response. People in any society are the demand creators so we reach out to them in many different ways through communication programs, by working with the media, wider sections of the public and by creating various platforms.

Lastly, what we have done as something quite unique for the whole Transparency International global movement, which is now replicated in many other countries, are the local level citizen platforms outside Dhaka.

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We didn't want to keep our movement restricted to the capital, and hence went out to create wider and deeper levels of knowledge-based demand for better governance and reduced corruption by engaging people in other districts and sub-districts so they are also a part of the anti-corruption movement.

TIB initially piloted this civic engagement program in six different areas in the country, engaging local civil society supported by the youth engagement and support programs which basically takes the same knowledge-based messages to the local levels and creates the demand.

They are involved with us on a fully voluntary basis. They help identify areas of public interest such as education, health, local government, land administration, climate finance and so on. These are sectors where corruption and governance deficit affect peoples’ lives on a daily basis.

Power to the People Decisions should be taken on the basis of logic, information, judgment or considerations and these should be made public as at the end of the day it is the people who are the owners of the state.

Through our campaigns in different sectors we have been able to demonstrate that corruption is a challenge that may be a reality but cannot be allowed to become a way of life and that it needs to be stood up against by the people. We eventually expanded this program to 45 different places all over the country. And at the core of all these programs is transparency. Transparency is about openness, about the information behind the decisions we take in public.

Decisions should be taken on the basis of logic, information, judgment or considerations and these should be made public as at the end of the day it is the people who are the owners of the state. The power belongs to the people, which is why we have been at the forefront of the movement for the disclosure of information at the local and national level. We were amongst the organizations who worked with the Government for enacting the Right to Information Act, we worked with the Government in enacting the Whistleblower Protection Act for the protection of individuals who disclosed information for the public interest.

Other legal and institutional changes for which we were able to work with the Government and other stakeholders include: the enactment of The Anti-Corruption Commission Act followed by the establishment of the ACC and initiatives to strengthen it; ratification of the United Nations Convention against Corruption (UNCAC) by the Government; incorporation of anti-corruption curriculum for the secondary and higher secondary levels; drafting of a Bill on Code of Conduct of MPs; drafting the National Integrity Strategy in 2013 and progress towards its implementation. The various social accountability tools we have piloted and then applied in selected service delivery institutions have delivered progress in integrity, transparency and accountability, which have been recognized internationally.

How has TIB been pushing the envelope for good governance in the public and

ANTI CORRUPTION

private sectors? Which sector was the most difficult to deal with?

There are hardly any sectors which do not face the aforementioned problems.

Maybe in some sectors the problems are relatively more visible and more information is available. Also, there may be better drivers for change because of the degree of public interest in some sectors compared to others. However, in general, it is difficult to plainly say that X sector is more corrupt than Y sector as the tools for measuring corruption and governance deficits can vary. It is also important to recognize that there are good honest people who try to uphold professionalism and transparency in their efforts to make things better.

Institutional, legal, strategic and policy structures are all present to strengthen the capacity of the sectors but what we lack is the proper practice. We have excellent laws and systems in place which may require some amendments and improvements.

But the more important challenge is that whatever institutional, legal and policy capacity has been developed are not often enforced hence they are not as effective as they should be.

Obviously the work done by Transparency International is meant for the greater good.

However, does this contradict the nation branding that we are trying to do?

In my opinion the opposite happens. If we are in denial about the level of corruption in our country, the situation will further deteriorate which will worsen our nation’s branding prospects. We have to realize that recognizing that we have corruption in different sectors of the economy is actually a demonstration of the courage to confront it. We can temporarily suppress the problem by denying its severity but that will only exacerbate the situation. Foreign investors will eventually get to know and experience corruption and choose to stay away from Bangladesh; and in fact sometimes they will also indulge in the same. In many high-profile cases of corruption in the country

In many high-profile cases of corruption in the country there have been involvements of multinational companies from some of the most highly developed countries.

This is partly because of the denial syndrome which leads to a culture of impunity of the corrupt.

there have been involvements of multinational companies from some of the most highly developed countries.

This is partly because of the denial syndrome which leads to a culture of impunity of the corrupt.

There is no alternative to working against corruption and bringing it into the core of public concern and discourse. We must be courageous enough to acknowledge that yes, we have a problem, but at the same time we are dealing with them by bringing institutional, legal, policy and strategic changes. Control of corruption is now reflected in all public policy documents such as the national integrity strategy, national budget, perspective plan, five-year plan, and even in the political manifesto of the major political parties. These, in effect, will help in creating a better brand image for Bangladesh.

What obstacles have you come across in your crusade against corruption in Bangladesh? How has that affected your operations?

One thing is clear, if in a country like Bangladesh work against corruption was smooth and easy then there would be no need for an organization like Transparency International Bangladesh. My dream was that our work would lead to effective corruption control thanks to which our operations could gradually shrink.

However, that has not happened.TIB has expanded over the years, so would that count as an indicator of our failure? Are we perhaps chasing an unrealizable dream? Absolutely not.

By contributing to the institutional, legal and policy structure, and by creating the demand we have strengthened the capacity of the state to control corruption. It is in the hands of the Government, the accountability institutions like parliament and justice system and specialized bodies like ACC, law-enforcement agencies and administration to deliver rule of law, control corruption effectively by establishing the fact that corruption is indeed a punishable offense and not a zone of impunity. Our task is to create such demands.

To work in an area like this will always be hazardous. We define corruption as the abuse of power and those benefiting from it are powerful people. Therefore, our work is often perceived to be be against the vested interest of a section of the powerful people. Incidentally, your readers would know that when the same people are not in power they happily welcome our work. As a result, there will always be some challenges and risks but we take it as an occupational hazard. Regardless of these hazards we survive with dignity and confidence because all we say, do and advocate for are based on facts, research and analyses. We work with the full consent and approval of the Government of Bangladesh. Our work is essentially meant to strengthen the hands of the government and help them with their promise to control corruption.

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RATING AGENCY

Sayed Javed Ahmad

CEO, The Bangladesh Rating Agency Ltd. What kind of companies BDRAL rating right at the moment?

We are licensed to rate the small and medium enterprises.

Therefore, our ratings are limited to SMEs only at this time. From the government’s part we deal with Bangladesh Securities and Exchange Commission (BSEC) that has given us the license. From Bangladesh Bank’s part, we are an External Credit Assessment Institution (ECAI). These are the two regulators we are working with.

You are working with SME. What kind of ratings do you give them?

Our slogan is “Making SME’s Bankable”. We are chasing the SME owners to rate them to make them bankable, because most of them are not eligible for banking services; especially when it comes to getting loans. We help those who did not qualify for banking services on many grounds. We are glad that Bangladesh Bank is also promoting the idea and trying to bring these SMEs under the umbrella of formal financial services.

How do you rate these companies? Is it based of what kind of business they are doing or what kind of achievements they have made?

“We are chasing the SME owners to rate them, to help them become bankable”

Our rating starts from a bank. When an enterprise goes to a bank for loan, the latter would like to rate this new client before sanctioning the loan. After they send us a request, we sign the agreement with the client (the enterprise seeking loan) and then the whole process begins. Our Field Analysts them go to the location of the business and collect and verify the required data. We have a questionnaire which needs to be filled and signed by the client. After collecting all documents from both the client and the requesting bank, we send these files to our Rating team. They do the analysis and give the best judgments and produce the report which has financial data of the business, personal data of the owner, information about the type and condition of business, etc. So, to make it short, we work as a third party for banks to provide data on a particular company. Banks have their own analysis and when we provide them the report, they compare their data with that of ours and finally make a judgment call on whether that particular company should be granted the loan or not.

Do you recommend giving loans?

We don’t. We only provide suggestions. We show the magnitude of risk involved for a bank with the sanctioning of loan to a company.

BDRAL is an initiative of Dun & Bradstreet (D&B) South Asia Middle East Ltd, located in Dubai. Established in 1841, D&B is the world’s leading provider of business information, knowledge and insight

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What BDRAL and D&B are connected? Please enlighten us.

BDRAL is an initiative of Dun & Bradstreet South Asia Middle East Ltd (DBSAME), located in Dubai, UAE and an affiliate of the D&B in the USA. Established in 1841, D&B

SAYED JAVED AHMAD

is the world’s leading provider of business information, knowledge and insight. D&B has been enabling business communities, regulatory authorities and governments across the globe to decide with confidence for 165 years. DBSAME holds 57% of the total share of BDRAL. Though it is not directly involved here in Bangladesh, as a subsidiary we are doing own rating business. In addition, we are working as a correspondent in their data collection activity. We do the business intelligence reporting part for them, where we collect data they need, and report to them and get paid for.

What’s your take on the SME scenario of Bangladesh? Due to political turmoil, they were hit hard.

We live in a country where avoiding political uncertainties is not an option. It has become a part of life and brings along suffering with it for both common people and businesses alike.

In ours, SMEs are coming from different backgrounds and venturing into various kinds of business. It’s interesting to collect information about businesses, which many of us even never heard of. Being a part of the rating committee, when I look into those reports, at times I am also quite amazed to see the diversified array of business choices people have made.

For instance, I didn’t know that there was a business that collect the trashed plastic bottles (transparent ones), cut them into pieces and re-export to neighboring countries.

Even that business has faced some good competitions in recent times. We try to identify if this kind of competitions are unfair or too stiff for businesses to sustain.

Do you have any suggestions for businesses facing tough competitions?

It could have been a part of our consulting services, which right at the moment is not a part of our portfolio.

We are thinking of proposing to our parent company and the regulators about whether we could do it.

Probably we will render that kind of service in future.

How many banks are you

working with? Do you work with both public and private sector?

The estimation stands around something like 22-25. Any kind of bank that deals with SME can work with us. Since Bangladesh Bank is pushing to release more loans to SMEs, many new banks are being interested to tap into that territory. So the possibility of more collaboration is one the rise.

Do you think banks are too harsh when it comes to giving loans to SMEs? Especially the “stringent” conditions they impose.

That used to be the case.

Nevertheless, things are easing up now.

Do you work with startups? A lot of them are looking forward to venture capital (VC) for financing.

We can only offer services that the regulators allow us to. Under that frame work, we cannot really diversify to new areas without their permission.

But in future we may venture into that area too. Right at the moment, we would like to focus on SMEs, though many of these companies are reluctant to be rated. There are two reasons.

There is a price tag attached to it and they don’t see any benefit associated with the rating. But we try to make them understand the bright side of it.

SMEs, in general, lack in documentation, i.e. accounts, book keeping, cash flow structure

maintenance, etc. We help them become more structured. They also get to see the picture black and white, when the report is finally prepared by us. So we are trying to reach out to them.

Are you doing any kind of promotion to raise awareness? Do you have a social media promotion?

We are promoting through social media like facebook and LinkedIn. We are also in touch with the training institutes who are dealing with SMEs and startups. We conduct sessions and describe to them how they can get our services and what are the benefits associated with it. Our next target is to get associated with business associations. Through them, we would like to raise awareness among SMEs to get rated.

Are you happy with the growth of BDRAL?

The competition among the eight rating agencies in Bangladesh is stiff.

We are the last to get the license though we were the third applicant.

When we received the license, we were in the impression that we would get some sort of exclusivity, i.e. only we would rate SMEs. Later we found out that was quite not the scenario. There are other fully licensed rating agencies, who are also rating SMEs. That sort of put us under a tight competition. Nevertheless, we are working very hard. Besides, the pricing is another issue. We wanted to charge less to encourage more SMEs to take up our service. The minimum charge we fixed was Tk 8,500 which is a very low price for this kind of service. However, I am optimistic that better days are ahead. Hopefully, we can expand our business portfolio and perform better. www.icebusinesstimes.net

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ASHOKA FELLOW

CEO Saif Rashid

gives his insight on JITA

Provision of Empowerment

By Tamzidur Rahman

“When we work using an Inclusive Value Chain we try to involve the unemployed in the process of supply, distribution and retail.

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JITA, derived from the Bengali word Aparajita meaning ‘undefeated’, originated from CARE Bangladesh’s pilot project Rural Sales Program (RSP). The idea of the project is to generate income opportunities for the destitute women of rural Bangladesh. RSP has proved to be sustainable and commercially practical business transformed into the independent social business, JITA, through joint venture of CARE International and Danone Communities.

In the context of Bangladesh, a vast majority of the poor people live in the countryside and the women are the most deprived. Saif Rashid, CEO of JITA shares, “I learnt a very interesting bit of information working at CARE: if a woman was given 20 taka, they’d spend 18 taka for their family whereas a man would spend that amount on himself. Learning this was striking and thought provoking.”

“I didn’t want to start an NGO because no matter how much is accomplished as an NGO, the sustainability of the projects remains questionable.

For instance, a woman is trained and then linked with micro-finance but after some time they give up. We identified the core issue to be the NGOs lack of engagement with the private sector. The private sector and the market are constants – they will endure, they are in demand. The development sector is an evolving and organic entity,” shares Saif on why JITA is a for-profit social business. “As an NGO limits are applicable. So what we’re trying to do different from NGOs is attempt to sustain our efforts over time. Donor dependent projects are only good until the money runs out.”

JITA employs the concept of a market driven Value Chain. The idea is to add additional benefit in both the distribution chain as well as the supply chain. “When we work using an Inclusive Value Chain we try to involve the unemployed in the process of supply, distribution and retail. It is only ‘inclusive’ when people who are not directly capable are incorporated – their capability is developed during the procedure. This also means sacrifice of the competitive edge, initially, with the objective to ensure that the underprivileged players included may gain some of the benefit from the business.”

Another thing JITA does is to ensure that everyone involved gets benefitted in the process.

Regarding this Saif said, “As an example we can look at the organic produce which is bought from a farmer for a minimal price then value is added to it through packaging and marketing, and in turn sold for much higher prices. It becomes ‘inclusive’ as soon as it is warranted that the farmer receives his fair share of the profit. On the other hand an Inclusive Supply Chain will have the exporter providing the farmer with technical knowledge, seeds and other resources for him to grow the produce with a promise to buy only from him. This way the farmer benefits as much as the supplier. The Value Chain is very effective when it comes to what JITA is trying to achieve as it guarantees sustainable progress for both sides of the businesses involved.”

JITA started different kinds of activities related to woman empowerment. They try to provide the rural women with skills that are in demand at the market. They consider whether the skills being provided have a market or not. It is important to understand the market first and then offer the training. According to Saif Rashid, JITA goes by the saying, “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.”

Although it’s a very fundamental philosophy, it is still missing from the development sector. “So before we trained individuals to work on a product, we’d first find a buyer who was willing to buy regular supplies. That way the product has an opportunity to be marketed properly. This way the skill provided will remain useful in the long run,” says Saif.

There are lots of stigmas regarding women working outside home or simply having an income in rural Bangladesh. “Such mindsets dictate that women should stay at home and take care of their families while the men earn a living.

Overcoming such barriers and attitudes is also part of what JITA does. To empower women by giving them income opportunity, skill and links with the market - that is the core objective.”

SPECIAL INTERVIEW

Zarif Munir

Partner & Managing Director The Boston Consulting Group

[ “We have had many investors reach out to understand the report better, to get to know Bangladesh better, to really see how they can be A part of the growth story. ”

The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy.

Zarif Munir is a Partner and Managing Director with BCG. He is based in Kuala Lumpur, Malaysia. He focuses on operational improvement for large diversified companies. IBT recently approached him to get insight on the recent BCG report on Bangladesh titled “The Surging Market Nobody Saw Coming”.

]

What intrigued the The Boston Consulting Group about Bangladesh in the first place?

To be honest, there is nothing new about the tremendous potential of Bangladesh. In fact the title of our report "The Surging Consumer Market Nobody Saw Coming" is a little tongue-in-cheek humour. It is one of the few countries that have demonstrated solid growth over a long period of time and every time you visit Dhaka you can sense the energy and forward movement of the city.

What intrigued us about Bangladesh www.icebusinesstimes.net

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SPECIAL INTERVIEW

was the leapfrogging phenomenon among consumers. Leapfrogging straight to digital without stopping at analogue leapfrogging into mobile money without worrying about opening traditional bank accounts; leapfrogging into branded products at the first instance of sufficient disposable income. We wanted to understand this shift, particularly as the growing middle and affluent-class population (MAC) experience it.

In every developing market we see these consumers as the real bellwether for the underlying economic wellbeing of the country and a leading indicator for how consumers will react to big

changes – technology to accelerate purchases, mobile solutions for education and health care, consumer debt and the like.

While the base is still small in Bangladesh (10 million people falling within the MAC population), the next layer immediately below the cut-off of USD$5000 per annum is significant, which makes Bangladesh comparable to much larger economies in Asia.

If Bangladesh continues to leapfrog, as it has done with technology, and finds another sector or two that grows rapidly like the Ready Made Garments Sector, in 10 years the total MAC population will be much larger.

Where is the party?

A two-wheeler Motorcycle is a very popular vehicle in Bangladesh both in urban and rural areas and it has a nickname here as many people know it as Honda. The name came from the world-famous Japanese company that is known for its production of world-class motorcycles. It had the fortune to penetrate the market of Bangladesh and it has reached such heights that the brand itself replaced the name of the vehicle. No doubt that Honda’s product quality helped them to gain that stature but the one must look after the other side of the story, the fondness and fidelity to a brand of

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the people in this part of the world.

Bangladesh may be known as a country of natural disasters and its economy may not be the strongest in the world but nevertheless it has a rich heritage and culture to reckon with.

Not only is its nature endowed with tremendous wealth and diversity but its demo geography is also shaped with rich diversity and taste.

Since the antiquity, traders around the world used to target the people here as their consumers, when Europe’s civilization was in cradle that of sub-continent was shining with splendor then. Calicut was the trade

What was the response from the households like during your research?

Most of the households that we spoke with were incredibly open and helpful.

The key of course was getting our interviewees to discuss their hopes and aspirations. And that takes time and patience.

Overall it was a fantastic experience!

What methodologies were used during the process?

In addition to the traditional interview process we went through a comparative analysis to ensure the results made sense relative to what we had

capital of the whole world with Arabs, Chinese, African and seldom some European merchants used to gather there and from there the lavish products were disseminated throughout the water channels of the area known as modern day sub-continent. One of the world’s greatest travelers, Ibn Batuta was most mesmerized with the lifestyle and the passion of the people in this part of the world and that shows the acknowledgement of quality products is an inherent practice of the people here.

Indeed, poverty was and is part of the people here and the modern industry’s rise and geopolitical phenomena did not help to suppress that either but the cherishment of adorning the life and behold the glorious oriental legacy have never left the mindset and hence the demand of quality products regardless of their price never diminished from the mind of the people in this deltaic region.

It is only a matter of a proper strategy and understanding of mass psychology to that is required to capture the huge market which is often latent rather than being visible.

A recent survey has shown some potentials and pitfalls of this market and with the findings one can make some good careful business plan to achieve success.

To help companies gain a deeper understanding of the middle and affluent class (MAC) in this

ZARIF MUNIR

seen in other markets. The key for us was the inflection points not the trend lines. For this population pool, at some income level, at some comfort level, they start to 'trade up' and suddenly start buying a lot more, valuing quality over cost, convenience over discounts. It's this inflection point that becomes really interesting to study. In some ways you can almost predict when a category will take off, which goods are likely to be successful, what structural enablers will be required.

What kind of response have you received from foreign

stakeholders regarding the report?

The response has been overwhelming.

We have had many investors reach out to understand the report better, to get to know Bangladesh better, to really see how they can be a part of the growth story. As I mentioned earlier, Bangladesh is a country with significant potential, yet many investors still do not see how to create long-term value from opportunities. While some believe asymmetry of information creates advantage, our opinion is that the key first step for Bangladesh is to expand the pie, to make Bangladesh much more accessible, and middle and

These are the findings: Strength Loyalty to brand: Even with the historical perspective, it is seen that people in this country is very loyal to brads. Once a brand thumps its authority it can be rest assured about its eternity if they can sustain the quality. The survey showed, the people in Bangladesh aremost resistant to alter brands and very seldom the price factor can swing them toward a new brand.

Despite their price consciousness, the quality and goodwill seems to be the higher priorities than the price.

Although only seven percent of the country’s current population can be classified as middle income or affluent, the actual number is higher than in many countries as total population is over 160 million. Density of population is a major problem for the Bangladesh but that can be blessing in disguise for the companies as they can cover a huge amount of people with less efforts and expenditure.

The heterogeneity of people’s choice as well as social and economic status is an extreme challenge to mitigate for companies, but again that almost gives them some stability in the beginning and more importantly will not get them off the market as the chance to attract a portion of the population has great possibility. Like a homogenous market the chance of aligned with the market and strike a jackpot is very difficult but again there is no hit or miss situation in this market. The diversity provides some landing space for everyone here.

Despite some static mindset the people in the country seem to be eager for new technologies and specially the people in the urban area is always ready to embrace a new thing that unfolds many opportunities here not only regarding the product but also with marketing and mode of transaction as well.

affluent consumers are certainly part of the answer.

What areas should both local and foreign investors focus on to help meet the demands of the growing MAC population?

Truthfully that varies by industry but the general guidance we would give is as follows – stress quality, establish your brand early, educate consumers on the value of your product, find creative ways to take advantage of the leapfrogging phenomenon, and build strong mobile-centric platforms.

Weakness Social Taboos and fear of credit:

Over the centuries the credit system in the land has been horrible.

The oppression through credit tools has made a profound impact on the mindsets of the people and it is now something they fear. It is a challenge for modern companies here.

Stubbornness:

Often the brand impact is so profound that for a newbie in the business it is an awful place. Despite the best efforts the hegemony of some brands cannot be diminished.

Corruption:

Especially the corruption which arises from political power is detrimental. Often new companies must abide by the corrupted system as they must feed the political hoodlums and this creates all sorts of problems for them that affect the market. increasingly important—but often neglected—market, The Boston Consulting Group’s Center for Customer Insight surveyed around 2,000 households across the country. They asked consumers about their sense of financial well-being, their purchasing habits, and their consumption priorities for some 70 product categories. To help companies anticipate when consumption is likely to take off in these categories, they also analyzed changes in Bangladeshi household consumption of specific goods and services relative to rising incomes.

For the next few years, companies should focus on ramping up their operations to meet growing demand from MAC households in Dhaka, Chittagong, and a handful of other cities. But at the same time, they should begin laying the groundwork for a broader expansion as the The MAC population continues to grow and as buying power spreads swiftly throughout the country. The strong brand consciousness of Bangladeshi consumers suggests that the companies can now establish themselves as being trustworthy while they try to build market share and develop a reputation for delivering good quality.

Those who can accomplish these tasks will reap the biggest rewards in what promises to be one of world’s next big growing markets.

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CONSTRUCTION INDUSTRY

Saud Anam

CEO, AKSID Corporation Ltd.

[

Saud Anam is the CEO of AKSID Corporation Ltd. which is a sales and distribution firm for foreign manufactured products with over 20 years of experience in construction and infrastructure projects. They are also the representatives of Sika, the largest construction chemical manufacturer in the world. Saud grew up in the United States and returned to Bangladesh 4 years ago. Since then he's been working in the construction sector introducing innovations which create better buildings at lower costs. His projects highlight international methods and practices, which save time and increase the quality of construction. Recently, IBT sat down with Saud to hear about the details of AKSID and Sika’s involvement in Bangladesh’s construction scenario.

]

Tell us about AKSID Corp, your partnership with Sika.

“We provide construction solutions and services to companies who need a specific tailored approach for their construction needs.”

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AKSID Corp. is involved in speciality constructions. We provide construction solutions and services to companies who need a specific tailored approach for their construction needs.

We also represent the entire brand of Sika in Bangladesh as their sole distributor and certified applicators.

This means that not only do we sell the products but we are also the only people trained and certified to use their products. Our understanding with Sika is that, not only will we showcase their brand but we will also showcase their level of value and quality. When it comes to construction, the products only mean a small percentage of what you're actually paying for. It has more to do with the application, if you have the best product in the world which is costing you a fortune but you have someone

SAUD ANAM

unskilled applying them then you might as have gone for something much more low-grade as the end result would be the same.

Twenty years ago Sika India had a distributer who would bring Sika products into Bangladesh but Sika never had their own branch office here due to various reasons. However, they weren’t making much of a name for themselves here through their past work. When we joined forces with Sika, we told them that we wouldn't just sell the products; we would make proper presentations and show them how to use it and hence promote the Sika brand in the process. Sika is active in a hundred and eighty countries and sadly Bangladesh is one of the last countries they gotten involved with.

Bangladesh is a country of industry and the market we work in is expanding exponentially. When you're building factories there are rules and regulations you need to maintain. The bigger companies especially the multinationals have certain requirements such as seamless chemical resistant flooring, air tight areas, humidity control, barometric pressure control and so on. That's where we come in as we provide solutions which make sure the people have those very specific needs met.

Where does innovation stand among your priorities?

Thankfully Sika already has the area of innovation covered. It’s been around for a hundred and five years so it’s one of the oldest and largest chemical construction companies in the world. They have been involved in the constructions of some of the biggest and most renowned structures in the world such as the Shanghai Tower, the Jiaozhou Bay Bridge and the Burj Khalifa. The Swiss company has over a hundred and forty production and research facilities all over the world. Therefore, over the course of its existence, not only has it researched every aspect of construction but it has tailor made its products for each aspect of different parts of the world.

The products used in South Asia won’t be the same as the ones used in North America.

is more commonly used in most other parts of the world.

There are a lot of innovative technologies available everywhere in the world but a lot of people aren't willing to pay for them or they aren’t aware of them.

In terms of the technology being used in the industry, have you brought anything new to the table?

There are a lot of innovative technologies available everywhere in the world but a lot of people aren't willing to pay for them or they aren’t aware of them.

Due to this we had to do a lot of market research on what Bangladesh would need. What consumers are willing to pay for now is water-proofing which is a huge problem in factories and homes. This is one of the services we specialize in. Another thing which is Sikas speciality is concrete admixtures. This basically makes concrete more workable in the sense that it lasts longer, is easier to use and hardens better. This also means your concrete won't harden up while the truck is stuck in traffic.

Apart from admixtures and water proofing, there's another big thing people are focusing on now which is flooring technology. Old school factories and buildings use dirty tiles which are ineffective, expensive and hard to maintain. We have been showing people how to create better floors, which not only makes it look nicer but is also cheaper. A lot of people don't opt for this is because they are unaware of this flooring technology and its benefits although it

How has AKSID Corp. contributed to the Bangladeshi labour force in terms of skill development?

We have different teams for each aspect of our operations. One team simply does waterproofing and so they’ve received training from AKSID Corp. and Sika regarding waterproofing. It’s the same with our teams who are involved in flooring, roofing and other construction activities. If someone moves from our company to another after they've been trained, they will use those same methods but at the end of the day hopefully they'll be using Sika products. Our main goal is to teach people these better construction methods which will eventually benefit the overall construction environment in Bangladesh.

Are there any new infrastructural projects that AKSID Corp. might be embarking on? How would they benefit Bangladesh?

The big project that we're working on currently is called the Three Bridges Project. It's going to involve JICA’s Japanese built bridges which connect Dhaka and Chittagong. The existing bridges will be repaired and there will be certain Sika products which are going to be used in this process. CFRP (carbon fibre reinforced plastic) will make the structure more sound and give it more strength. After that the concrete will be repaired using epoxy resin injections. Once the concrete bridge is repaired we are going to build a steel bridge beside it, which is going to increase the width of the entire bridge. That steel bridge is going to be a huge milestone for Bangladesh construction. Not only will they bring in new types of material but the methods of construction will be insanely different for this bridge. There is a huge labour force which is going to take part in this project and they're going to gain a lot of knowledge from the technology and technical support they are going to get.

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RESTAURANT BUSINESS

Ali Arsalan

Director of finance and marketing, Izumi and O Kitchen

[

Studying construction management, and pursing a career in interior and graphic design, Ali Arsalan extended his passion into a space for fine dining and quality entertaining. He is now one of the minds behind two of the most successful high-end restaurant businesses in Dhaka, O Kitchen and Izumi.

]

How did the idea for Izumi formulate?

Biting into the Business

I know it will seem hard to believe but it came out of a few of my friends speaking when we played golf. We always had the desire to open a café, however when my business partner had discovered the space that is now Izumi and we arrived to examine the space the next morning. We realized that the space was too big for a café and decided that it was better suited to be a restaurant. After brainstorming, we wanted to try for an authentic Japanese restaurant because it wasn’t around at all.

By Ashfaque Zaman

“We are fortunate that we have a great chef and kitchen manager in one. This is one of the most integral components of the business”

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Within a few years, a number of restaurants have opened in Dhaka, why do you think this significant increase has occurred?

Primarily it is because there is not much to do except eat in Dhaka. The trends have changed since the ‘90s; a

ALI ARSALAN

time when people would just have a cook and family get together. With the increase in traffic and population, travelling is not as convenient therefore there is a need to localize the kind of food within the individual neighborhoods.

To what do you attribute most your long-term success?

You really have to passionate about what you are doing. It may sound a bit cliché but it is important to know the food that your are serving and the quality that your desire to maintain.

You need to have niche items that you primarily focus on. It may take anywhere from 3 months to a year in order to reach a profitable market but the customers’ continuous satisfaction with the meal that they are having will result in the growth. Do not try to go for a 100-item menu where you are trying to give them a taste of everything. That creates a hectic environment where hypothetically you end up serving a beef, a chicken and a seafood dish in the same sauce. This leaves no one satisfied.

Given your attention to every detail of the restaurant, whether it is food or design, how do you find people to bring into your organization that truly care about it the way you do?

The most important quality that you have to demonstrate for those people that are working for you is that you are willing to put just as much work and more into the business. Your passion should set the standard for the passion that they should have. For example, when we were redesigning the outdoor area, it was a 48-hour project. My partner and I supervised the entire project for the entire duration of the time. This in turn, shows everyone that is working that every job is significant in the smoothly running a restaurant.

As a restaurant manager, how important do you think to have hands-on experience in the business?

We are fortunate that we have a great chef and kitchen manager in one. This is one of the most integral components of the business. You need to know your inventory and this is exactly how. If you are importing certain cut and items, this kind of experience teaches you precisely how to handle it or it will go to waste. Any amount of inventory is costly, some of which needs to be used within a few days or handled in s specific way. If this is not implemented, a kitchen will not run successfully or profitably.

What is the greatest challenge of running a high-end restaurant in Dhaka?

The price. You don’t want to alienate people but you also want to maintain quality. As much as we would like to make it affordable, we do not want to compromise in quality with substitute ingredients. We try to make it more accessible with a lunch menu and through the Iftar menu in order to entice customers and demonstrate that the price for the food is worth it; Japanese food isn’t to everyone’s taste as of it, it is still growing.

What was your greatest setback and what did you learn?

Our greatest setback was during Ramadan, we had an empty restaurant for the first 5 days with hardly two to three tables being booked. We were going to close for the month but by the second week I had come up with the idea of the Bento box as a fixed meal because it will be an unconventional Iftar. By the last week, we were fully booked that year.

It taught me to constantly innovative and perfect that innovation. We only so a limited amount of Bento boxes even if we have space because a standard should be maintain. Once that standard is recognized, it will increase the outcome. We now know there is specified time for profit and for quality.

Of the four restaurant business models (chain

restaurant, retail brand empire, built-to-sell, and restaurant as personal passion), which one do you believe you follow?

We definitely follow the personal passion model because this is something we love to do. Once we had witnessed the success of Izumi, we decided to open O Kitchen four years later. We knew that at that point, we could venture into a wider range of cuisine while maintaining excellent quality.

What is your advice for young entrepreneurs who want to start a new restaurant business?

Frankly speaking from personal experience, you should have a separate source of income. I know this may sound demotivating but on a practical level it is very necessary. My partners and I all had secondary sources of income, and at first if losses incurred we would have to compensate for it from our own pockets. If the losses accumulate, it will be apparent and will decrease the brand value of a restaurant. Given that there is another source to maintain quality and nullify defect, the standard retains and this leads to profit.

Secondly, you should stay within your limitation. Do not try to be too extravagant at first. A professional painter has designed our restaurants however this was not the case when we opened. You should know the limitation and primarily focus on your quality before any embellishments or more extravagant incorporations are made, the grandeur of a restaurant should increase with the success and growth of the restaurant.

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Check out the wonders of O Kitchen’s delicacies in ICE Today’s December 2015 issue or at www.icetoday.net.

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INSIDE OUT

AFM Asaduzzaman

General Manager, Public Relation, Bangladesh Bank

My work volume has reached new heights under the present Government.

AFM Asaduzzaman is a relentless professional who has devoted most of his career to the Bangladesh Bank PR department where he joined in 1983. In his line of work he has successfully made relevant information available to all the stakeholders of Bangladesh Bank through various forms of media and communication.

There has been a sea change in the Public Relations area in the Bangladesh Bank. “Previously we only had two or three people dealing with publications and press releases. However, now the doors have been opened for greater media involvement. With better communication taking place, the scope for the spread of misinformation has reduced significantly. But my work volume has reached new heights under the present Government.”

Regarding his life time working in this field of communication he identified the vast changes. “In the past even the annual reports of Bangladesh Bank was kept a secret and no officer provided any helpful information. However, as I reach the end

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of my service life I am seeing a different scenario as things are more open and most information is available at the click of a button.”| Over the years the banking sector has seen new innovations and this PR maven has stayed abreast of these changes. “There has been the development of human banking, greater financial inclusion and CSR as well. However, I have always conducted myself accordingly regardless of the numerous changes in the industry. I have not let myself be constrained by the 9 to 5 office hours rather I have worked overtime during weekends and holidays when necessary. I have always maintained good relationships with the present and past Governors and have always been prompt with my responsibilities to circulate important notices in hard copies and in mail without any delay.”

Regarding the growing dependency on IT in the financial sector he went on to say, “The growth of IT is rapid and I may have some difficulty keeping up with it which is why I have asked for a larger task force to be assigned to me so now our department has 15 people. This has enabled us to coordinate with any kind of events, national and international.”

SPECIAL

PROMOTION

bank is committed globally to uphold high standards of Corporate Social Responsibility. There are numerous ways we are striving to be a force for good; globally as well as in Bangladesh.

Health

SCB’S MANY FEATS

THE GLOBAL BANK HAS MADE REMARKABLE CONTRIBUTION IN THE LOCAL CSR SCENE

Standard Chartered Bank is the largest international bank in Bangladesh with 26 Branches & Booths and 86 ATMs; employing over 2,000 people. We are the only foreign bank in the country with presence in 6 cities – Dhaka, Chittagong, Khulna, Sylhet, Bogra and Narayanganj; including the country's only offshore banking units inside Dhaka Export Processing Zone (DEPZ) at Savar and Chittagong Export Processing Zone (CEPZ).

Standard Chartered Bank has been actively engaged in the growth and development of Bangladesh. Standard Chartered is the first bank to have setup operations in Bangladesh 110 years ago, and we never closed our doors even during the most difficult periods facing the world; that in itself is a testimony to our confidence in the growth and development of this country. Standard Chartered has been the pioneer in the introduction of modern banking products and services to the industry; helping to open the first sovereign Letter of Credit for Bangladesh, introducing the first ATM machine and credit card, as well as introducing online banking and contact centre facilities to customers.

At Standard Chartered, in addition to contributing to economic growth through our core business activities, we want to have a broader positive impact on the communities in our markets; the

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‘Seeing is Believing’ (SiB), the Standard Chartered Group’s largest CSR initiative, was born here in the hands of Standard Chartered Bangladesh, and continues to restore millions of eyesight every year.

In 2003 Standard Chartered Bank partnered with Islamia Eye Hospital, to combat avoidable blindness and restore eyesight to the underprivileged.

Standard Chartered Bank credit card holders are able to donate their 360 degree rewards points for basic cataract surgeries with regular lens to underprivileged patients at Ispahani Islamia Eye Institute & Hospital. As part of the SiB 10th year anniversary SiB Ambassadors Joanna Lumley and Sir Ranulph Fiennes visited Bangladesh.

Through the ‘Living with HIV’ programme, Standard Chartered helps educate not only our staff but the youth in our communities about HIV/AIDS and its prevention. Under this project we have organized Living with HIV seminars for youth at several universities; as well as for our clients in the Ready-Made Garments Sector; both are high risk populations. In 2014, the Bank ran an infomercial on HIV/AIDS – starring Partha Pratim Majumder, world renowned Bangladeshi Mime artist, at various local television channels to raise awareness about this important issue.

Education Abrar A. Anwar

CEO, Standard Chartered Bank, Bangladesh

Standard Chartered encourages development of youth through education scholarships and sports sponsorships.

Our efforts include sponsorship of Young Learners Club of The British Council; ‘Governor Scholarship’ in partnership with Dhaka University Economics Department Alumni Association (DUEDAA) & Dhaka University Department of Development Studies (DUDS). The bank donated to Utsho Bangladesh, Autism Welfare Foundation as well. The bank also built a classroom in Jaago school for the under privileged students.

Recently the bank in partnership with the British Council and support from the

CSR

Education Ministry launched a physical education teaching aid kit called “Khelte Khelte Shekha”. Thirty six instructional teaching cards based on traditional Bangladeshi Games called 'Khelte Khelte Shekha (KKS)' were distributed to 32,000 secondary schools across Bangladesh under this initiative. In 2014, the Bank was also the Science Education Partner at Dhaka Hay Festival, as a sponsor we hosted special segments for all children with renowned Children Author Ms. Lucy Hawking, daughter of famous cosmologist Stephen Hawking.

Environment and Climate Change The Bank also encourages all corporate bodies in Bangladesh to uphold high standards of social responsibility. We recognize exemplary work in the field of CSR through Standard Chartered - Financial Express Corporate Social Responsibility Award.

Standard Chartered also partnered with The British Council for 'Climate4Classrooms' and ‘3000’miles to go’ campaigns to raise nationwide awareness on climate change issues, mostly amongst school children and teachers.

Agriculture Standard Chartered Bank, Bangladesh honours individuals and institutions who serve as outstanding examples in the agriculture sector of Bangladesh in recent time through the AGROW Award. This award was introduced in 2014. In 2015, Begum Matia Chowdhury, MP, Honorable Minister, Ministry of Agriculture, Government of the People’s Republic Bangladesh graced the ceremony as the Chief Guest. Dr. Atiur Rahman, Governor of Bangladesh Bank attended the ceremony as the Special Guest. The winner & honourable mention in each category received a crest and a certificate from the Honourable Minister for their exemplary contribution. 3 winners in Farmer of the Year categories were handed over prize money of BDT 5 lac with the honourable mentions getting BDT 50 Thousand each.

Women’s empowerment is central to the values of Standard Chartered Bank and critical to economic development.

Women represent a large customer and talent segment for the business and will drive economic growth in Bangladesh in the future.

Arts and Culture Standard Chartered - The Daily Star “Celebrating Life” Contest is a platform for new talents across the country to pursue their artistic and career goals in Film, Photography & Lyrics. The Bank has been sponsoring this for the last 8 years. Apart from the gala annual award giving ceremony, concerts and exhibitions (of photos and films) organized at several districts drew huge crowds. The over-arching theme for “Celebrating Life” 2015 is “The Heritage of Bangladesh”.

Women Empowerment Women’s empowerment is central to the values of Standard Chartered Bank and critical to economic development. Women represent a large customer and talent segment for the business and will drive economic growth in Bangladesh in the future.

With this in mind, Standard Chartered Bank, Bangladesh have partnered with BRAC and Women Win to launch

Goal in Bangladesh. Goal is a unique community program that aims to empower young women for personal and economic development using sport and education as vehicles for change. Within the first 2 years of launch the number of beneficiaries already reached is 6,250 in 4 districts.

Already 500 goal champions came out of the project.

Research & Publications Recently, the bank commissioned a study to assess the social and economic impact of Standard Chartered in Bangladesh. This study was done by Professor Ethan Kapstein from INSEAD. The report assesses the direct, indirect and induced impact of Standard Chartered on Bangladesh and how it positively impacts country’s GDP, employment, trade, various business sectors and the community at large. The Bank has also focused its efforts in the areas of history, culture and art, seeking to make a difference and surface little known events and artwork. Recent works have included publications of books ‘Coins from Bangladesh’ – a special compilation of the history of coins found in this region from Ancient period, medieval period, and Colonial to Modern period. The Bank has also published English version of “Bandhon Hara” by the National Poet of Bangladesh Kazi Nazrul Islam.

The Bank also encourages all corporate bodies in Bangladesh to uphold high standards of social responsibility. We recognize exemplary work in the field of CSR through Standard Chartered - Financial Express Corporate Social Responsibility Award. The 5th Standard Chartered – Financial Express Corporate Social Responsibility (CSR) Award ceremony was held in May, 2014. Grameenphone, BSRM Group of Companies and Unilever won the award.

By continuing to evolve and innovate, by shaping customer expectations beyond the immediate future, and by sharing its global best practices for the development of the country’s banking industry, Standard Chartered remains the foremost financial institution in Bangladesh with its brand promise – Here for good.

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PHOTO STORY

A VISIT TO THE TAKA MUSEUM Photographs By Kazi Mukul

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TAKA MUSEUM

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PHOTO STORY

The Bangladesh Bank’s currency museum, the Taka Jadughar is situated on the first floor of the Central Bank’s training academy at Mirpur. Its predecessor had been opened in their head office in Motijheel but due to the difficulties people had in visiting it along with the size factor the Bangladesh Bank decided to reopen it in a larger space.

Bangladesh Bank has collected paper notes and coins from central banks of different countries. They also collected coins and paper notes from hobby collectors. This museum already has a collection of over three thousand coins and paper notes. Bangladesh bank officials have tried to represent the history from Uari Bateshwar era to present days for the new generation.

Coins of Uari Bateshwar, Sultanate, Mughal, and British colonial periods are all on display at the museum. www.icebusinesstimes.net

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SOCIAL MEDIA

From Paper to Pay Per

By Ariful Bashar

Head of Digital, Red Rocket Inc.

From printed bronze plates of China to Egypt’s papyrus to the domination of television to billboards on every roadside to today’s social media marketing, how we advertise has drastically changed. Not only how it’s done but also how it’s perceived! Creative techniques is what helped grab that extra bit of customer’s attention.

Sparkly billboards with lights here and there and overly hyped voices through radio channels connected people as they drove around the city trying to reach their destinations, thank God for the hours of rush-hour traffic! The most amazing thing that could have happened in this era of technology was the sudden arrival of online marketing.

Where well and mid established brands were concentrated on conventional advertising. Online marketing thundered its way in through Facebook, Google, Instagram, Youtube,

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Websites, E-mails eight to ten years back. Only a few had imagined what it was capable of doing and the best was yet to come.

Out of all the online channels, Facebook had something different in store.

It has the power to transform and inspire. Facebook was no more for just the teens. It was almost a necessity for all of us as a common platform of communication to keep us going about what’s trendy around us and our friends.

To make things a little more interesting and customized, groups and pages came in where birds of the same feather could interact through not just words but pictures, videos, emoticons, likes and shares. It was almost as fresh as any person-to-person conversation. That’s where the new generation fusion Facebook entrepreneurs AKA F-entrepreneurs* came in. What they had to offer was often simple consumable

products; but they had achieved through online marketing what traditional marketing couldn’t. They could afford to be incredibly tiny in terms of operations but yet afford to reach a massive number of people connected to Facebook at almost no cost. The number of f-entrepreneurs soon multiplied to thousands and what social media marketing could do amazed us all.

It was not just plain old advertisement anymore. It was brands that could talk to us, listen to our needs, keep us notified about its latest release and most importantly it gave brands a “Voice”. It was what we called interactive advertisement. Eventually corporate giants joined in to grab a share. They started opening their products and services onto Facebook Pages. That’s when things got interesting.

As we had limited space to offer on our homepage, the number of people, the booming number of pages could reach at a time fell drastically. The layout of Facebook was changed where ads could now be placed on the desktop/mobile newsfeed, and third party apps for Facebookers to see. It was a golden

opportunity for them to take advantage of the grab-a-slice struggle that F-entrepreneurs* were going through. People could now pay their way in.

Where Google ads (GDN & GSN), Youtube ads, E-mail marketing and Website banner placement was still booming, Facebook marketing just aced it. The most amazing thing about it was how it retained its fans with just something as simple a “Like” on the page. Pay per impression, fan, click and all the other promotional methods helped thousands and millions of Facebook fan pages reach out to Billions of fans till date. So what’s next? I would say, the next big thing is not static. You are already seeing it’s domination on Facebook newsfeed. Yes you guessed it right, it’s videos.

Video will keep on dominating the way we consume content. Attach pay per view along with it, and you have the entire world waiting to be moved.

*F-entrepreneurs: A type of online entrepreneurs whose business exist/ existed online because of Facebook/ social media.

TECH

Do better graphics necessarily make better games?

Video Games Then and Now

By Abhijit Asad

It can be safely said that video games have never been bigger in the public mindset than they are now. Now that the mobile gaming industry has taken off, thanks to massive successes like Angry Birds, Cut The Rope or Candy Crush Saga, gaming is not only restricted to owners of computers or esoteric consoles. Anyone with a smartphone has access to a veritable repertoire of high-quality games, including types that could not even be dreamed of even a few years earlier. For example, Clash Of Clans is a terrifyingly addictive game that lets you fight massive strategic battles in huge groups – or

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VIDEO GAMES

‘clans’ – against opponents from all over the world, all from the comfort of your smartphone or tablet.

The non-mobile gaming market is not sitting idle either. PC gaming has continued to steadily get better with the advent of modern video game engines like CryEngine, Unreal Engine 4 and Unity 5, and many game developers have rushed to take advantage of the building tools and advanced features they offer. These engines have also undergone many years of evolution at the hands of their developers, to the point that they can be leased out to third-party developers, who can dispense with the worry of having to craft an engine for the game, instead getting the opportunity to focus on crafting the game experience instead.

Gaming experiences have also become increasingly more interesting and immersive. For example, the first person shooter genre of video games started properly in the ‘90s with id Software’s Wolfenstein 3D, a simple game where the American protagonist was a prisoner trapped in a German castle full of Nazis, fighting his way out. It was a simple yet profoundly visceral experience, with graphics that were revolutionary for the time. The genre continued to evolve with games like Doom and Half-Life, and less than fifteen years later, Half-Life 2 showed up, which pretty much overturned the genre by adding, among other things, a physics-based weapon called the Gravity Gun that allowed players to use parts of the environment in the game as weapons against enemies.

The sheer satisfaction of killing an enemy by throwing a chair, a urinal or a circular saw blade continues to remain as amazing as it was back at the time the game was released.

Such evolutions have been witnessed all over the video game scene, and it comes as no surprise now that a high-end video game now has a production budget that can easily compete with that of a big-name Hollywood film. Did you know that Grand Theft Auto V (an open-world action-adventure game)’s production budget was USD 265 million?

Comparatively, Terminator: Genisys, the latest film in the ever-popular

Terminator franchise, had a budget of USD 155 million.

One thing in terms of which games of many genres have grown to absurd limits is scale. The maps of many open-world games are built over a span of many virtual in-game miles, featuring thousands of characters and props and lines of recorded dialogue which offers so many options of interaction that it is almost too easy to get lost in the middle of it all. One such game is Skyrim, which pits the player in the fictional dragon-infested world of Tamriel, and allows him/her to do thing that range from fighting zombies (‘draugr’) to killing dragons, to cooking delicious meals, to crafting weapon and armour from raw ingredients, to raising children in a homestead with a spouse (a pre-existing in-game character of your choice, who can even be married). It therefore does not come as a huge surprise that many gamers prefer living this much more interesting version of life in favour of the mediocrity of reality that surrounds us from all sides.

Moreover, video games have managed to find more ways of being immersive than by simply being mindlessly addictive or by overwhelning the player with stunning degrees of scale and detail. Many games have integrated into them the issue of moral choices, where the player's good or

firmly established as a serious medium for storytelling. And just like every other medium of storytelling, games have also devised their own ways of manipulating the player.

Many plot twists in video games put cinematic plot twists to shame, because the interactive nature of the events can make the player feel connected to them in a direct manner instead of a distant and fleeting one.

Ask any serious gamer about the plot twists of BioShock or Chrono Cross, and observe their reactions. Worth it.

Recently, Epic Games, the developer of Unreal Engine, pushed forth with a most daring initiative – they chose to make the latest and greatest iteration of their flagship engine free for use by all developers. The effect of this decision cannot be understated, as it potentially allows everyone to become a developer, readily placing high-end tools and assets at their disposal.

While it has given rise to a myriad of mediocre 'shovelware' titles, it has also given rise to numerous high-quality games that have managed to stand out in light of their own strengths. Due to the make-or-break nature of the worldwide video game industry, the wheat separates itself from the chaff pretty much on its own.

Unlike all other media of entertainment, video games are interactive, imbuing the player with a sense of control like none other. With video games proliferating across the board on computers, gaming consoles, phones, tablets and even platform-agnostic web browsers, it can be safely said that video games have successfully captured a massive segment of all consumer demographics.

evil moral choices are tied directly to the events which take place in the game, drastically altering the gameplay from player to player, and even adding replay value to dedicated gamers wanting to explore every aspect of the game, be it out of curiosity or for getting their money's worth.

The introduction of moral aspects has been one of the foremost factors which have allowed video games to be

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ON THE BOOK SHELF

When the Going Gets Tough

By Sohana Nasrin

The Four Stages of Highly Effective Crisis Management: How to Manage the Media in the Digital Age

by Jane Jordan-Meier

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Jane Jordan-Meier takes a very traditional and age old approach to talk about social media, although social media is a relatively new phenomenon in terms of research and knowledge building.

Jordan-Meier, the author of The Four Different Stages of Highly Effective Crisis Management: How to Manage the Media in the Digital Age, talks about four stages of managing digital media that she claims are helpful for crisis management, both for internal and external communication and while doing so places human behavior at the foundation of those four stages. According to her, social media, which are platforms for digital media consumptions, emphasize human behavior. So if someone wants to understand how social media works, he or she really needs to delve deep into the behavioral science and psychology. She also says that although legacy or traditional media also are heavily based on human behavioral pattern, non-legacy or digital media exercises more chances for exerting human behavior.

The book is divided into five sections and the author claims to be talking about the best practices in crisis management and what it means to communicate and manage media in the web 2.0 era. The first section talks about the role of both legacy and non-legacy media in the times of crisis management. The phenomenon of crisis is also discussed and given an operational definitional for contextual understanding. The second section basically shades lights on the four stages of crisis reporting and their characteristics, which are valuable assets in terms of decision making while the crisis is in the scene. The third section is mainly case study based approach where the author mentions about different spokesperson and their roles in time of crisis. This section is particularly interesting because of the roles that the media managers play and sometimes they don’t although they ought to. Section four is solely dedicated to interviews, which draws excerpts from real life

CRISIS MANAGEMENT

interviews that were conducted by different traditional and non-traditional media. This section also talks about training and strategically managing communication with different stakeholders in a media in the time of crisis. The last section of the book is a practical or how-to guide for communication aspect of crisis media management as the section provides a comprehensive guide to new media tools like Twitter, Facebook, YouTube, Digg, Wikipedia, Flickr and other social sites. Throughout the whole book, Jordan-Meier takes time to talk about Twitter claiming that the particular platform is the prime one when it comes to crisis management for its self-correcting and precise nature.

After giving comprehensive definitions of crisis and the media’s role in the time of crisis in the first section, the author lays out four stages: 1) Fact Finding Stage: the author also calls it the “what” stage as this stage is concerned about what has really happened. This stage is the breaking news stage for legacy media when the media are looking for bursting the bubble and spread the news among the audience. According to the author, speculation, panic, rumor, and spread of misinformation – these are the characteristics of this particular stage. The media’s behavior have also been laid out saying media at this stage seek for confirmation, assess impact, gauge implications and start to speculate on cause. The media managers often need to act fast and responsible without much time to think at this stage of the crisis. They also need to lead fact-findings, authorize spoke people, call in external support, decide the key message, and think strategically about the consequences of the news.

Jordan-Meier emphasizes on Twitter saying that it plays a major role acting like a police scanner, and since it can be fed by anyone with the blessings of hash tag, Twitter has potentials of self-correcting itself even though it can be erroneous.

2) Unfolding the drama: As humans, curiosity has been one of our prime interests and unfolding the drama

stage resonates with the spirit of curiosity. Also, it is the stage where audience expect to know a lot of things from the media, e.g. the cause of the crisis, the actual happening, the numbers associated with the crisis and further predictions. Analysis from third parties, media asking hypothetical questions and audience judging the media, content going viral and local media sites providing information, people rallying on social media and blogs, forums and discussion sites – these are the characteristics of the second stage.

The media are expected to be answer the questions of ‘how’ and ‘why’ at this stage and call in experts to validate their answers. The media managers at this stage are expected to assess a lot of information at this stage and take decisions after monitoring the viral contents.

Engagement is also a big part of this stage, where media managers are supposed to engage in social platforms along with their team members.

3) Finger Pointing Stage (Blame Game): The third stage is written rather interestingly and the content is quite amusing showing a good sense of humor on the author’s part. She makes it even funnier saying that this is a stage that you want to avoid at all costs but often that’s far from reality.

The author also suggest that this is the stage where every little secret is revealed and the public relations professional really work hard to let those secret fade away. In any case, the characteristics of this stage are fingers are pointed, other people attach themselves to the crisis, internal blame game, millions of hits on You Tube, Google, anti fan club formation on Facebook, multiple hash tags on Twitter, forums divided into different schools of thoughts, and the crisis becomes global news. Ideally the media should be seeking information and comparing those to the already acquired information and contribute to the social media frenzy in a constructive way. The media managers are advised to be careful to avoid others disorders, continue to monitor media aggressively, response actively to prevent threat or legal

actions, remain available to the media and their stakeholders.

4) Resolution and Fallout: The final stage is made humorous with a crispy comparison between Vegas and Google saying, “what happens in Vegas stays in Google”. The author suggests that the spotlight becomes dim at this stage but this is the stage where it can flare up again, although typically this stage marks the end of the crisis. The community relieves emotions and memories, social media continue to chatter and debate, concluding events start to occur like inquiries, inquests, funerals etc. The media on the other hand are expected to answer comprehensively about the whole crisis and seek evidence that the predicament is over. Jordan-Meier, talking from PR perspectives, says that if this is a PR disaster for a well-known company or person, this is the stage where they would rebuild the reputation with the stakeholders in the society. The media managers are expected to review the crisis, monitor the media and mark closure to the event in a comprehensive but decisive manner.

Towards the end of her book, Jordan-Meier talks about picking a different spokesperson for different crisis’s and she has mapped out few rules to do that in an organized and full-proof manner. She also talks about “pick your panic” saying that we always pick what crisis we want to associate ourselves with, and this might not be the case for natural disasters when people do not have much option but to be victims of crisis, but in other types of crisis, we as audience basically choose our panic and choose how we are going to handle it as media consumers.

The book was an interesting read and written in a very organized manner with bullet points and short sentences. It also has lots of know-hows that might be useful for PR practitioners, media managers, social media strategist, social media managers and so on. The appendix on social media policy research is also very resourceful for anyone who is looking into social media management. Overall, the book is an insightful source.

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CAPITAL MARKET UPDATE

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Disclaimer: Dhaka Stock Exchange does not hold any responsibility for these date.

CAPITAL MARKET UPDATE

Source: Dhaka Stock Exchange

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