Business & Finance News

Saturday, August 07, 2004

Compiled by SDNP

Head Lines

Floods taking toll on tourism

The floods are taking toll on Bangladesh's fledging tourism sector as occupancy rate in hotels and  guest houses drops.

"Floods have come as a blow to hospitality business. Usually, business remains dull during this period of the year. To make the situation worse, the floods have led to 30 percent drop in occupancy rate in hotels and guesthouses," said Sadique Ahsan, president of Bangladesh Hotel and Guest House Owners Association.

He said foreign tourists do not take pleasure trips during floods. However, he hopes that the occupancy rate will gradually increase when floodwaters start receding.

Hasan Mansur, managing director of The Guide Tours Ltd, a leading tour organiser, said the floods will add to the nation's perennial image problem as a disaster-prone country that affects tourism industry.

"It will take time to restore tourists' confidence. The bad image is a big problem for tourism growth," he said.

According to unofficial sources, some 5,000 foreign tourists visit Bangladesh a year who spend some $1,000 each during their trips. Besides, about two lakh foreigners come to Bangladesh a year for business or other purposes.

Hotels are witnessing dull business as room occupancy rate drops. Dhaka's two five star hotels -- Dhaka Sheraton and Pan Pacific Sonargaon that largely depend on foreign guests for room occupancy-- are hit hard by the flood spell.

"The occupancy rate here is 65-70 percent but due to the floods the rate has come down by 5 percent. But we have little problem in reservation of programme venues as they are booked in long advance," an official of Pan Pacific Sonargaon told the newspaper seeking anonymity.

An official of Dhaka Sheraton Hotel admitted the business fall due to the floods. He, however, declined to give detailed information about loss. Sheraton Hotel cancelled Malaysian Food Festival, which was due to be held from July 28 to August 3 due to the deluge.

Tour operators usually have little business during this period of the year. But they are now completely out of business as they suspend all tours to the Sundarbans, Rangamati, Bandarban and Sylhet due to the floods.

"Outbreak of water-borne diseases and damaged infrastructure will surely discourage them to visit Bangladesh in the next season," Faridul Haque, president of Bangladesh Tour Operators' Association, said.

The government's hospitality business arm, Bangladesh Parjatan Corporation (BPC), is suffering huge loss due to dull business. "Room occupancy usually remains low during this time of the year but the floods have just deteriorated the situation," an official of BPC said. BPC runs 14 hotels and rest houses.

Abu Fazle Sobahani, general manager (Central Control) at Flight Operations Directorate of Biman, said Biman had to cancel about 20 flights during four days of suspension as floodwaters inundated runway of Sylhet MAG Osmani International Airport.

Though domestic flights resumed operation in July 23, international flights to Sylhet have remained suspended since July 19.

"Biman operates three to four domestic flights a day on average while three weekly flights from London and two from Saudi Arabia that connect Sylhet via Dhaka," he said.

Private GMG Airlines had to suspend 16 flights on Dhaka-Sylhet route when floodwaters entered Sylhet airport runway. "We suspended flights on July 19 and resumed with the evening flight from Sylhet on July 21. We are yet to estimate the loss due to the suspension," an official of GMG Airlines said.

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Weekly Currency Roundup

July 31-August 05, 2004

Local FX Market
US dollar was stable against Bangladeshi taka in the beginning of the week. But then the greenback fell sharply later in the week against Bangladeshi taka due to increased supply in the market.

Money Market:
Bangladesh Bank borrowed BDT 8,605.00 million through the Treasury bill auction held on Sunday, compared with BDT 1,017.00 million in the previous week's bid. The weighted average yields of t-bills of different tenors were almost unchanged from the previous bid.

Call money rate was broadly stable with slight increase at the end of the week. The rate was 4.00-4.50 percent in the beginning of the week, then fell to 3.00-4.50 percent before closing the week at 4.50-5.00 percent.

International FX Market
In the beginning of the week, the dollar rebounded from recent multi-week highs against major currencies on Monday on security concerns. US declaration of High Level threat alert for key financial buildings in New York and Washington gave more impetus to dollar's plunge after US second quarter growth data came in weaker-than-expected on Friday. Swiss franc, the traditional safe-haven in times of geo-political uncertainty, gained against both US dollar and euro. The market is looking forward to US non-farm payroll data due out on Friday for direction on the currency movement ahead of the next FOMC meeting on August 10.

The dollar re-tested a 6-week peak against the euro on Tuesday, boosted by a healthy US manufacturing survey the previous day, and gained against the yen as oil prices rose to a fresh record. A rise in the ISM manufacturing index for July, reported on Monday, suggested a recent soft patch in the US economy may have been a blip and was enough to keep markets focused on a key employment report on Friday. Oil prices rose to a fresh high, with US prices overshooting $44 a barrel after OPEC President Purnomo Yusgiantoro said the producers' cartel had no extra oil to supply the world market and bring prices down.

Later in the week, the dollar held fairly steady within recent ranges as investors remained indifferent to take aggressive position ahead of key US jobs data on Friday that could decided the pace of future Federal Reserve rate hikes. Investors were especially cautious after Wednesday's Institute of Supply Management non-manufacturing survey showed a weak employment reading, even though the report painted a fairly robust picture of the service sector as a whole. In Europe, the Bank of England is expected to raise interest rate by 25 bps, but the European Central Bank is unlikely to shift its stance. Sterling also traded flat but a touch lower against the euro. The sterling had softened a touch after official data showed British manufacturing output unexpectedly fell in June.

- Standard Chartered Bank

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Relief operation continues for flood victims

Poet Shamsur Rahman inaugurated the second phase of relief distribution for the flood victims under World Vision's Kamalapur Area Development Programme on Thursday.

Addressing the children, the poet said it is not easy to do humanitarian work in such crisis and advised them to stand by the distressed in any crisis in future.

The World Vision Bangladesh and its USAID-funded Food Security project donated Tk 46,631,168 for distribution of relief materials among 100,650 families in 16 upazilas and for other projects in Dhaka.

World Vision Bangladesh's USAID-funded Food Security Project distributed 200 matric tons of food and 7,000 packages of items such as saree, lungi, jerry can, glass and plate.

Meanwhile, Oxfam GB Bangladesh yesterday launched an Emergency Flood Response Programme at a coast of Tk 16 crore to help out fifty thousands families affected by floods.

The first phase of the programme includes distribution of food, water purification tablets, soap, saree and lungi.

Seeds, agricultural tools, fishing nets and tubewells will be distributed in the second phase.

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