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Business & Finance News
Sunday, July 21, 2002
Compiled by SDNP
Tk 50 cr needed to open private Jute mills
Staff Reporter, The New Nation
The state-run jute mills owe to different nationalised banks an amount of Taka one thousand crore so far, official sources said. Sources said that timely repayment of bank loans had virtually become difficult for enterprises under Bangladesh Jute Mills Cooperation (BJMC) as they continued to incur huge losses.
Currently, some 29 enterprises including 25 jute units under BJMC are in operation and all the jute mills are in red. During last three years the BJMC suffered at least Taka 800 crore. The Adamjee Jute Mills alone sustanied about Taka 300 crore loss during last three financial years.
However, the closure of Adamjee has virtually eased financial burden of the BJMC and now the BJMC needs working capital to keep its enterprises running.
Necessary steps are being taken to make the remaining 25 jute mills of BJMC viable. If we get financial support of the Government and the banks, we would certainly attain the desired goal, said a high official of BJMC.
The official categorically said that the Government had already decided to take all possible measures to make the jute mills profitable concern. The government has no plan to close any state-run jute mills, the official asserted.
The official also said, at present Taka 275 crore to Taka 300 crore would be needed to procure 15 lakh to 17 lakh bales of raw jute during current financial year (2002-2003).
Jute procurement programme is beginning in full swing this week. Official sources pointed out that the closed Adamjee Jute Mills procured only 10 per cent of total procurement of raw jute for consumption by the other jute mills of BJMC. In view of the shut down of two Jute units at Adamjee would not affect trading of jute and his prices.
However, BJMC also needs Taka one hundred crore more to clear dues of the suppliers who supplied raw jute to the mills.
Meanwhile, the Jute Minister Major (retd) Hafizuddin Ahmed held a series of meetings with the high officials of the ministry and the BJMC over the past several days to review overall situation in the jute sector.The meetings observed that the prospect of jute sector was bright if proper policies to increase productivity could be taken.
As directed by the high level meetings, the BJMC high officials also asked the managements of all the state-run jute mills to undertake necessary measures to increase productivity in order to minimise level of losses.
UNB Adds: Additional 5 lakh bales are expected in the current season from this year's good harvests.
Jute mills, either state-owned or private, are not ready to absorb this surplus quantity of raw jute. Nor are they capable of making up the export gap.
Jute-sector people suggest that arranging low-interest bank loans for raw jute exporters, extending financial support to the closed private mills and increasing efficiency in state-owned mills could enhance domestic use and export of jute.
Only a sum of Tk 50 crore can help rerun the wheels of many of the 25 shut-down private mills that can consume 3 lakh bales of raw jute in addition to 5 lakh bales they used last year.
If bank loans are available in time and at 7 per cent interest rate, as applied to other export sectors, raw jute exporters can raise their export volume.
Raw jute exports fetched a total of US$ 65.6 million (Tk 373 crore) in 2001-02 fiscal year while jute goods added another amount of US$ 223.5 million (Tk 1270 crore) in July-May period of the last fiscal.
Annual jute production varies from 40 to 45 lakh bales, of which 30-35 lakh bales are used locally and 15 lakh bales exported raw.
While jute and jute goods are gaining ground worldwide for environmental reasons, exporters observed, Bangladesh is set to lose market for absence of government support for boosting jute export and its use in local mills for value addition through manufacturing products.
Jute sector earned more foreign currency than each of the prioritised sectors of frozen foods and leather in fiscal year 2001-02, but it is not entitled to 7 per cent bank interest announced for export lending.
Although procurement season has started, banks are yet to decide whether or when they will start lending to jute exporters. "Banks are found more prompt to announce lending plans in advance for leather sector ahead of Eid-ul-Azha," a jute exporter said.
Leaders of Bangladesh Jute Mills Association, the apex body of 35 jute mills in the private sector, approached the Finance Secretary on July 14 for releasing Tk 50 crore.
The amount has been lying with the government against World Bank-aided project for private-sector jute mills and financial support assured by the two successive governments.
"But the secretary said he had no money. The DG of the Monitoring Cell seemed totally negative towards us," said a BJMA executive regretting the attitudes.
The government can arrange money for Adamjee closure and subsidize inefficient state-owned jute mills with hundreds of crores of taka, but can't release Tk 50 crore for private mills, he observed out of utter frustration. "We don't want subsidy. Let the government release the amount it owes to us," he said.
If the government implements at least some of the recommendations so far made by expert committees from home and abroad since 1974, production efficiency of 28 state-sector jute mills now in operation can be raised substantially, said one jute-industry expert.
Raw jute exporters and suppliers, grouped in the Bangladesh Jute Association, however, said they would be able to increase their exports to a great extent if banks assured lending money in time for procuring raw jute right now.
They also demanded bank loans at 7 per cent interest, being given to some other export sectors excluding jute.
"We're frustrated to see that jute, being a vital export item, is kept out of the low-interest export- lending facility," a BJA executive said.
BJA exported little over 14 lakh bales of raw jute worth US$ 65.6 million in the just-out fiscal year to Pakistan, India, China, Ivory Coast, Nepal, Iran, Belgium, Japan, USA and some other countries.
Local mills that also depend on BJA for supply of raw jute owe roughly Tk 40 crore to the association members against the raw materials supplied last year.
Staff Reporter, The New Nation
Share prices on the two stock exchanges of the country marked rises last week but the size of the market was reduced in the backdrop of a potential hope for recovery of the market after a long-term slump and erosion in confidence of the investors. The market suffered, however, from uncertainty and rumour.
Meanwhile, the opinion of stock brokers appeared stronger in favour of bringing quick changes in stock exchanges managements and also in the leadership of the Securities and Exchange Commission (SEC). A good number of brokers, traders and investors maintain that the administrative reforms in the stock exchanges and the SEC has become essential to make the secondary capital market attractive to the real investors. The industrial growth of the country is largely depending on the recovery, development and expansion of a really effective share market and a section of vested groups are creating impediments very tactfully to the growth of the capital market, market operators said.
The small savers who will be deprived of reliable saving instruments due to reduction in number of saving bonds and securities must be provided with alternative beans to keep their money. The stock exchanges in the country failed to emerge as the alternative and it is the failure of the securities and exchange commission to make the capital market effective for mobilisation of capital. The government high levels are now thinking of reforming the administration of these non-banking institution, they said.
The market witnessed a mixed pressure of buying and selling during the week. The continuous lowering of prices of shares of different companies encouraged a buying pressure and many traders preferred to buy shares at declining prices, market observers noted.
However, the Dhaka Stock Exchange (DSE) Weighted Average Share Price Index marked a rise by 0.09 point over the week to close at 919.97 points from 919.88 points of he previous week.
Apart from that, the Chittagong Stock Exchange (CSE) Trade Volume Weighted Index registered a gain by 0.02 point over the week to finish at 1839.14 points from 1839.12 points of the previous week.
The trade turnover in value as well as volume declined on both the stock exchanges.
A total of 2.17 crore shares and debentures valued at Tk 80.28 crore changed hands during the week on DSE as against 2.62 crore shares and debentures value at Tk 98.13 crore of the previous week. Besides, a number of 95.48 lakh shares and debentures worth Tk 17.81 crore were transacted on the CSE in the week compared to 1.22 crore shares and debentures valued at Tk 33.43 crore of the previous week.
The total number of contracts on the DSE was 59,251 and that on the CSE was 11,276 contracts.
The size of the market expanded as the total market capitalisation on DSE increased by Tk 111 crore to close at Tk 6578 crore from Tk 6467 crore of the previous week. Besides, the total market capitalisation on the CSE rose by Tk 104 crore to settle at Tk 5892 crore from Tk 5788 crore.
In trading, Gacchihata Aqua, Pharma Aid, Monno Fabrics, National Oxygen and JH Chemical emerged as the top gaining issues. Chittagong Vegetable, Beximco Limited, Samata Leather were the top losers. Besides, Meghna Cement, Padma Cement, BATBCL, Beximco Pharma and Square Pharma performed as major trade turnover leaders.
The gaining issues cleanly dominated the losers.
Travel agent forum alleges
Star Business Report, The Daily Star
A forum of travel agents, Democratic Front, yesterday alleged the Ministry of Commerce was influenced by ruling party men including some junior ministers to postpone ATAB election scheduled to be held on August 20 after seven years.
"Influential ruling party lawmaker Ali Asgar Lobi and former ATAB president Dr HBM Iqbal influenced the ministry to postpone the election and the junior ministers backed them," MA Mohaimen, a presidential candidate of Association of Travel Agents of Bangladesh (ATAB) polls and also convenor of the Democratic Front, told a press conference.
Golam Mostafa, an ATAB member and general secretary of Bangladesh Association of International Recruiting Agents (BAIRA), Md Abdus Shukur, Syed Golam Sarwar, ABM Amanuzzaman, ATAB members, attended the press conference held at the Jatiya Press Club.
The forum leaders said Dr Iqbal made ATAB a family organisation and election of the association could not be held in the last seven years because of his reluctance. Besides, a fund amounting to around Tk 25 crore has now been missing and no audit was made in the past 12 years, they added.
Although there are around 1700 travel agents, many of them had not been made ATAB members, they said, adding that the membership was awarded at Dr Iqbal's will.
Following an instruction of the commerce ministry, ATAB took all preparations to hold the election, the forum members mentioned. Candidates also submitted their nomination papers.
However, lawmaker Ali Asgar Lobi and former ATAB president Dr HBM Iqbal were not available for their comments.
The commerce ministry recently asked the ATAB to postpone the election for an indefinite period.
According to sources, associate members of ATAB have applied to the ministry to participate in the polls as general members. The ministry took their appeal into consideration and subsequently asked ATAB to postpone its election.
Morshed Khan opens BGMEA web portal in Ctg
BSS, Chittagong, The Daily Star
Foreign Minister M Morshed Khan has urged the businessmen and entrepreneurs to enhance the country's image through producing goods of global standard and displaying them properly around the world with the help of Information and Communications Technology (ICT).
"There is no alternative to facing the challenges of tough competition in the international market. Quality products, hard work, honesty, aggressive marketing and showcasing of high profile products are the best way to survive the present competitive world," the foreign minister said.
He was addressing as chief guest the launching ceremony of the BGMEA's own (Bangladesh Garments Manufacturers and Exporters Association) Web Portal and E-Commerce service at a city hotel on Friday.
The function was chaired by BGMEA's First Vice President Ershadullah.
Vice-Chancellor of the Chittagong University Prof AJM Nuruddin Chowdhury, BGMEA President Kutubuddin Ahmed, Chittagong Chamber of Commerce and Industry President Amir Humayun Mahmud Chowdhury, BGMEA executive Minhajul Islam, Managing Director of the E-Vestra Datasoft Limited Mahbub Jamil also spoke on the occasion.
Morshed Khan said, "We would lag behind in the race in the fast changing global economy and trade if we failed to extract the opportunity of modern telecommunications to capture the international market."
The foreign minister said Bangladesh as a developing country must welcome quota facilities given by any rich country but at present Bangladesh wants an end to prevailing duty imbalance.
He urged all to shun the path of political confrontations and work together to achieve common goal of economic development of the country for a prosperous future of the next generation.
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