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Business & Finance News Tuesday, September 02, 2003 Compiled by SDNP Head Lines Unreliable public sector service hampers country’s growth: WB ECONOMIC REPORTER, The Independent To meet the challenge of greater coverage, the Government of Bangladesh (GOB) will have to carry out policy changes that affect the pricing of infrastructure services and the governance and operations of these sectors, observed a World Bank report titled "Private Solutions for Infrastructure in Bangladesh' released recently. Efficient and reliable infrastructure services were essential for economic growth and have a major impact on the investment climate, it added. Underscoring the need for improving the quality and quantity of infrastructure services , the report said that infrastructure services were critical to poverty reduction and the achievement of the Millennium Development Goals (MDGs) in Bangladesh. "Unreliable public-sector service provision has imposed substantial costs on the Bangladesh economy and hindered growth. Power shortages reduce industrial output by an estimated US$1 billion per year and GDP growth by 0.5 percent per year. Congestion in the nation's ports leads to higher ship-ping costs, reducing the country's competitiveness. With the end of the Multi-Fiber Arrangement in December 2004, Bangladesh may be unable to maintain its market share of textile exports. Improving the country's transport system, along with other actions, will be essential to reducing product delivery times" the report added. It said that maintaining and increasing the growth rates that Bangladesh realised in the 1990s would be important if poverty reduction was to accelerate. The national Poverty Reduction Strategy under preparation aims at a 7 percent growth rate. "An important target is halving the incidence of poverty by 2015. The current state of infrastructure services will likely hinder the achievement of these goals.The poor rank access to infrastructure as one of their most important needs and as a critical input into moving out of poverty. In Bangladesh, studies have shown that per-capita expenditures average 6 percent higher in communities with electricity and 12 percent higher in communities with telephones. Bangladesh has developed some successful approaches to providing infrastructure service. The report observed that several of the approaches Bangladesh had developed for providing infrastructure services were admired by other countries in the South Asia region.These approaches include: Sustaining the efficiency of the rural power cooperatives, Palli Bidyut Samities (PBS), in collecting bills and maintaining low levels of system loss relative to much of the region. Constructing independent power projects on schedule, at the lowest costs in the region, and free of major controversy as in India and Pakistan; Extending telecommunications services to rural areas through the Grameen Telecom village phone program and more generally through the rapid growth of private cellular operators, which. now serve almost 1 million consumers, compared to the 600,000 main lines provided by the Bangladesh Telegraph and Telephone Board (BTTB). Providing the vast majority of rural households with access to groundwater through a unique, privately financed hand-pump program. "These successful initiatives share some common features, such as effective governance of service providers, either through private management and ownership or genuine consumer ownership. Competition also has played a role in some of these initiatives. Despite the success of these programs, most consumers in Bangladesh still receive services from poorly managed and relatively unresponsive public-sector entities. As a result, Bangladesh sees low levels of efficiency and coverage of infrastructure services. Even within the South Asia region, performance is by and large below par. Bangladesh logs behind much of the region in extending modem infrastructure services to its citizens" the WB report said. It said that Bangladesh laged behind other countries in the South Asia region in terms of providing access to modern infrastructure services. The country was further behind competitor nations in extending modern infrastructure services to its citizens, the report said. For example, China's telecommunications sector provides about 24 telephone mainlines per 100 people, or about 30 times the levels achieved by Bangladesh. , the report informed. The report revealed that national averages mask important differences in access to services between urban and rural areas in power and telecommunications. Although 60 percent of urban households had an electricity connection, only 22 per cent of rural households do. BSS, NEW DELHI, The Independent Sept 1: India has said it would oppose at the fifth World Trde Organisation [WTO] ministerial meeting in Cancun, Mexico, set to begin on September 10, any farm trade talks that could adversely affect developing economies. India's Commerce Minister Arun Jaitley told Delhi daily, the Pioneer, in an interview that the government of India had already communicated to WTO headquarters in Geneva that it "does not accept" the agenda, basically a US-EU farm trade proposal that favours continuation of special safeguard mechanism enjoyed by the developed economies of the world. But the developing economies would enjoy similar safeguard mechanism on import sensitive items alone under the agenda pushed by US-EU, he explained. Jaitley, who will lead India's negotiating team at the WTO, said about 20 countries including China have joined a "coalition of the unwilling," forming an effective platform to oppose trade talks that could affect adversely the interests of the developing economies. Representing half of the global farm population, Jaitley said the coalition would include, among other countries, Argentina, Brazil and South Africa. On investment, the other issue, he said, India would oppose the idea of considering it a matter outside the multilateral framework, lacking clarity on scope and content, and could involve compromising sovereign policy space. US-EU alliance on farm trade, inspite of their political differences over the Iraq war, was not unexpected, said the report quoting analysts. The US and the EU, instead of letting their discord affect their trade interests, came together on mutual grounds of export subsidies and equally keen to push their common interest in greater market access at the cost of developing nations. The resistance put up by the coalition, India thinks, would make it clear that 'other voices of concern' would have to be heard without letting Cancun become just another forum for bilateral and subregional trade negotiations between the US and the EU. The government of India, said Jaitley, wants India to be agricultural export hub in future which calls for a balanced approach at the multilateral forum. Last year India exported farm products worth 31,000 crore rupees. WB to release 'Global Economic Prospects 2004' tomorrow ECONOMIC REPORTER, The Independent World Bank Report that highlights need for success at Cancun Trade Talks will be release in Dhaka tomorrow. A trade deal that addresses the concerns of developing nations could spur global growth and reduce poverty by as much as 144 million people by 2015, according to a new World Bank report issued recently. The report is being launched on the eve of a meeting of the world's trade ministers in Cancun next week that will review progress on WTO negotiations on the Doha Development Agenda. The report Global Economic Prospects 2004: Realizing the Development Promise of the Doha Agenda presents a detailed overview of the world economy, and the near- term outlook. It also offers a rigorous analysis of global trade issues, particularly those that head the agenda for discussion at the WTO meeting this month. The report project that growth for Asia has declined to 4.2 per cent in 2002 from 4.9 per cent in 2001. The slo down in the region can be traced to adverse weather condition and a decline in agriculture output in India, Nepal and Bangladesh. UNB, COX’S BAZAR, The Independent Sept 1: The border trade between Bangladesh and Myanmar came to a halt today as traders at the frontier went on a strike for an indefinite period to protest harassment during transporting goods through the Teknaf highway. Importers, C&F agents and Transport Owners-Employees Unity called the strike as the authorities failed to meet their 10-point demand, the deadline for which passed off on Sunday. Their demands include stoppage of BDR activities in the government declared Customs area, shifting of trade ghat to specified places and reestablishing the supremacy of the Customs authorities along the border belt. Exports and imports between Bangladesh and Myanmar, carried across the river Naf in Teknaf, yields about Tk 10 lakh in revenue each day. In July, the government earned Tk three crore from the border trade in the Teknaf area. Ministers to add free trade, SMEs to APEC meet agenda
Reuters, Tokyo, The Daily Star While these issues are usually outside a finance minister's remit, Thai Prime Minister Thaksin Shinawatra -- who hosts an Asia-Pacific Economic Cooperation (APEC) summit meeting next month -- has insisted that they are tackled before the leaders discuss ways to promote regional prosperity, they said. The thorny issue of the Chinese yuan, which is now virtually pegged to the dollar at what critics see as an unfairly, low level, may pop up during the Sept 4-5 finance ministers' meeting in Phuket but is not on the official agenda, the officials added. "Issues like small-and medium-sized enterprises are of great concern to Prime Minister Thaksin ... and I would expect a brief report to be produced from the (finance ministers') meeting," said Hiroshi Watanabe, the head of the international bureau at Japan's Ministry of Finance (MOF). On regional trade arrangements, including free-trade pacts, talks will centre on issues like intellectual property and streamlining customs procedures, officials said. "This is a finance ministers' meeting, so the aim is not so much to reach an agreement on a specific issue," a MOF official said, adding that issues like disputes over the treatment of farm products would be dealt with at a different forum, such as the World Trade Organisation (WTO). Foreign exchange was unlikely to be a major issue. "The need for intervention to prevent overshooting and volatility in exchange rates has already been confirmed at the Group of Seven and other gatherings," a third MOF official said. Watanabe denied speculation that Washington and Tokyo would join together to urge China to revalue its yuan currency. Snow is in Tokyo on Monday and leaving for Beijing on Tuesday before heading to Thailand. Watanabe said Tokyo's position was that China should do what it thought best for itself, taking into consideration its WTO membership and bigger role in the global economy.
Abduction of businessmen to hurt investment Star Business Report,The Daily Star Experts at a workshop yesterday called for removing bottlenecks in the growth of private sector in Bangladesh. They identified power as major infrastructure concern needing immediate improvement to spur investment. Abduction of businessmen
to hurt investment But reforms in telecommunications, transport, ports and customs as well as effective measures against corruption will also be critical to get rid of the impediments to development of private enterprises, they said. Addressing the opening session, World Bank (WB) Country Director Christine I Wallich pointed out the recent abduction of several businessmen in Bangladesh and said it will discourage investors. She said it is possible to improve law and order by bringing reform in police forces and jail, and introducing modern management for police administration. "The process proved successful in New York, Johannesburg and Mexico City," she added. The daylong workshop titled 'Improving Investment Climate in Bangladesh' was jointly organised by Bangladesh Enterprise Institute (BEI), a private sector research centre, and the World Bank at Pan Pacific Sonargaon Hotel in Dhaka. Commerce Minister Amir Khosru Mahmud Chowdhury was scheduled to address the opening session while Finance and Planning Minister M Saifur Rahman at the concluding session but none of them attended. The workshop was split into five working sessions on power, telecommunications, port, business friendly regulatory environment and role of civil service. The World Bank country director said inadequate infrastructure facilities, weak governance and financial system retard economic growth most. "Improvement of those are pre-requisites for development of investment climate," Wallich told the opening session. Terming small and medium enterprises (SMEs) the principle contributing sector to the country's economy, the WB country director said government has to facilitate easy access to credit for SME entrepreneurs. Clive Harris of World Bank gave a presentation on Country Framework Report on Infrastructure. BEI President Farooq Sobhan presented a paper on Bangladesh's Investment Climate Assessment at the opening session. He said the government has to keep in mind the situation in post-MFA scenario. The paper was based on a survey on 1,000 manufacturing firms including garments, textiles, food and food processing, leather and leather products, electronics, chemicals and pharmaceuticals located in Dhaka and Chittagong. According to the paper, erratic power supply is the worst hurdle to investment in Bangladesh. Corruption is the next big problem, with the customs and tax departments being the most corrupt. Environmental and labour and social security agencies are also high on the corruption matrix. PDB counts loss due to expensive IPPs Speakers at a technical session on 'Unhindered Power Supply for Sound Investment Climate' observed the costly independent power producers (IPPs) are causing financial loss to the Power Development Board (PDB) which buy electricity from them. They recommended that combined cycle plants of the IPPs should be pursued for increasing electricity generation as the tariff rates of two such projects -- Haripur and Meghnaghat -- are competitive, compared to others. High level of systems loss and low revenue collection are the main constraints hindering private investment in the power sector, they pointed out. Chairman and Managing Director of Delhi Transco Ltd of India Jagdish Sagar made a presentation at the session chaired by former secretary Azimuddin Ahmed. Chairman of Dhaka Electric Supply Authority (DESA), top officials from the PDB and trade union leaders took part in discussion. In order to reduce systems loss over a specified period of time, the discussants suggested disconnecting the lines of consumers who are not paying bills regularly. Besides, they said, private sector should be engaged in more areas to takeover metering and billing services while performance verification audit and remote metering for high-tension consumers may be introduced. Azimuddin Ahmed said the tariff rates of some 800 megawatt power generated at Haripur and Meghnaghat combined cycle plants are very competitive, Tk 2.79 and Tk 2.72 per unit, but around 400 MW power purchased from other IPPs, mainly barge mounted plants, is very expensive. "So, combined cycle plants should be encouraged in future." "PDB is facing a loss of Tk 65 crore only for buying power from IPPs and selling it to other distributors," he said, adding that it is possible to cut the loss by at least half by taking some measures. Azimuddin Ahmed said domestic clients consume around 40 per cent of the total power generation but pay less than the industrial consumers. The rate should be adjusted immediately, he suggested. |
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World
Bank Country Director Christine I Wallich speaks at the opening session
of workshop titled 'Improving Investment Climate in Bangladesh', jointly
organised by Bangladesh Enterprise Institute (BEI) and the World Bank,
in Dhaka yesterday. BEI President Farooq Sobhan is also seen.
Photo: Star