At Capital Weekly 15 September 2008

15 September 2008 AT CAPITAL RESEARCH
AT Capital Weekly Update

Weekly News Update
Key themes in this issue are:
Global Markets:
• The bankruptcy of Lehman Brothers, the acquisition of Merrill Lynch by Bank of
America and the collapse of AIG’s stock price are unprecedented and exceptional.
• Following the nationalization of Fannie Mae/Freddie Mac and the Bear Stearns
collapse, we are seeing the biggest challenge to global markets since the depression.
• The US government was right to say no to a bailout given moral hazard risks. It seems
likely AIG will be forced to merge and other brokerages will remain under pressure.
• EM currencies are now under additional pressure having already fallen sharply on the
collapse in oil and other commodity prices in the past few months.
Bangladesh:
• We believe that enthusiasm for the BBBF and PPP initiatives, make sense for a
capital-starved economy where the public sector is also capacity constrained.
• A responsibility for the Caretaker Government is not only to ensure the continuity of the
BBBF and similar such institutions, but to facilitate and encourage greater ownership of
economic policy issues by both major political parties.
Special Focus on Bangladesh’s Aid Budget

• Bangladesh receives in excess of USD 1.2bn in foreign aid. In two special focus
articles this week we discuss how to get leverage from aid by targeting it to increase
EDITORS access to private sector flows.
Asian Tiger Capital Partners
• Secondly we discuss the need for reform of technical assistance programs and the
Ifty Islam
importance of local capacity building relative to reliance on foreign consultants.
Managing Partner
ifty.islam@at-capital.com
Did Lehman bankruptcy reflect global investment banker hubris?
Syeed Khan
Partner
syeed.khan@at-capital.com
Professor Jahangir Sultan

Senior Advisor
jahangir.sultan@at-capital.com
Asian Tiger
Capital Partners
UTC Building, Level 16

8 Panthapath, Dhaka-1215
Bangladesh
Tel: 8155144, 8110345
Fax: 9118582
www.at-capital.com
Contents Page
Overview – Global Markets 3

Wall Street’s “Perfect Storm”: A tale of hubris, denial and financial kamikaze 3
The US government needed to “just say no” to another bailout 3
Asian markets suffer collateral damage from Lehman Bankruptcy – how long will DSE remain immune? 3
Week ahead a crunch time for Wall Street 4
Bank of America acquires Merrill: AIG next in the firing line? 4
From subprime housing crisis to Lehman bankruptcy 4
EM recoupling: Asian currencies continue to suffer from global rout 5
Global housing collapse – SPLAT! 5
Comrade Paulson of the United States Soviet Republic 5
Overview – Bangladesh 6
BBF one year on 6
Appendix 7
Special Focus I: Getting leverage from Bangladesh’s Aid budget 8
Special Focus II: Making Foreign Aid more Effective 10

A critique of technical assistance 10
Greater use of local consultants 11
Recommendations for aid recipient governments 11
Recommendations for donors 11
Recommendations for the international community 12
Recommendations for civil society organizations 12
Stock Market Weekly 13

Weekly Stock Market Commentary 14
Stock Market News 15
Economics 17
Economic News 18
Sector News 19
_______________________________________________________________________________________
AT Capital Weekly Update 2
Ifty Islam, Managing Partner
Asian markets suffer collateral damage from Lehman

Overview – Global Markets Bankruptcy – how long will DSE remain immune?
Wall Street’s “Perfect Storm”: A tale of hubris, denial and

financial kamikaze
Bangladesh’s capital markets continue to move in relatively

tight ranges and appear to be an island of stability in a sea of
incredible global financial turbulence. The events happening
elsewhere in the world are both unprecedented and
unimaginable. For the movie buffs among our readers who
have seen the George Clooney Film “the Perfect Storm”
directed by Wolfgang Pietersen, the scene where we see the
confluence of three hurricanes over the Atlantic most
accurately sums up what is happening on Wall Street right
now. Lehman, the fourth largest investment bank and last
year's biggest underwriters of mortgage-backed securities,
plans to file a Chapter 11 petition in the US Bankruptcy Court
for the Southern District of New York. The filing will be by the
holding company and won't include any of its subsidiaries.
This event that seemed inconceivable given the long line of
prospective suitors interested in purchasing the firm or its
asset management arm as recently as a month ago.
Late Sunday night, Bank of America struck a deal to buy

Merrill Lynch for USD 29 a share, or about USD 50bn.
Bloomberg described events as the biggest shock to the
financial system since the Great Depression while one
market watcher noted that ``The tectonic plates beneath the
world financial system are shifting, and there is going to be a
new financial world order that will be born of this. Lehman's
collapse wipes out a company that had a market value of
USD 45.5bn in February 2007. Merrill's sale to Bank of
America for USD 29 a share, while about a 70% premium to
Merrill's value on Friday, compares with the company's USD
86bn market capitalization in January 2007. At the time of writing, namely early afternoon September 15
in Dhaka, Asian stocks, US futures and the dollar tumbled as
The US Government needed to “just say no” to another credit market turmoil pushed Lehman Brothers Holdings Inc.
bailout into bankruptcy and Merrill Lynch & Co. to accept a takeover
from Bank of America Corp.
The US government (in our view correctly) drew a line in the
sand in refusing to bailout or give any guarantees to either Macquarie Group Ltd., Australia's biggest investment bank,
Bank of America or Barclays Bank to limit their liability to the slumped 11% as the New York Times reported American
tens of billions of dollars of illiquid commercial mortgage International Group Inc. is seeking a USD 40bn bridge loan
backed securities on their books. Yes certainly they might from the Federal Reserve. Stock indexes fell more than 4%
have provided a temporary reprieve to Lehman. But following in Taiwan, the Philippines and India. Standard & Poor's 500
the recent nationalisation (or “Conservatorship” as it is known Index futures expiring in December slumped 3.6% to
in polite government circles) of Fannie Mae and Freddie 1,213.80. Bloomberg reported that the MSCI Asia Pacific
Mac, and bailout of Bear Stearns via a government excluding Japan Index lost 5.21, or 1.5%, to 348.82 at
guarantee in the sale to JPMorgan, the risks to the US 3:40p.m. in Sydney. Stock markets in Japan, South Korea,
national balance sheet was becoming unsustainable. Hong Kong and China are closed for holidays, tempering
Increasingly the home of the capitalist system was becoming losses for the Asian gauge.
a “United States Socialist Republic”, or USSR, with a growing
dominance on ownership of the public sector of the financial The dollar declined against the yen, while Treasuries and
system. But far worse than the credit risk to the US gold rose, as investors sought safer assets. The cost to
government was the dramatically increased risks of what protect corporate bonds from default surged on concern the
economists call “moral hazard”, that is government decisions tumult on Wall Street will tip the global economy into a
encouraging private sector banks to take risky decisions on recession.
the basis that the public sector would bail them out if things
went wrong. They have all the upside with little downside While the lack of foreign participation in the Bangladesh
which would result in excessive and foolhardy risk taking. stock market has so far left it relatively immune to the wild
gyrations on Wall Street, we would recommend a more
_______________________________________________________________________________________
cautious and defensive stance for investors in the DSE. The
outlook for the global economy remains bleak and the
collapse of financial giants in the US, with the Treasury
relatively powerless is, is a salutary lesson for Bangladeshi
regulators about the uncontrollability of financial markets
when sentiment truly turns.
Week ahead a crunch time for Wall Street
This week will be crunch time for global financial markets.

Richard Bove, one of Wall Street’s best known banking
sector analysts noted that “We will be entering uncharted
territory. The company has USD 600bn in assets and USD
550bn in debt outstanding. Forcing liquidation will set off
problems in other companies and markets everywhere.”
From a legal perspective, bankruptcy severs all counterparty
contracts, and therein lies the systemic risk. This would be
the first time we've tested how much damage will be done by
a bankruptcy.
On Sunday, there was an extraordinary trading session on

Wall Street as the major banks tried to offset their
counterparty agreements with Lehman Brothers with each
other to stop a seizing up and collapse in liquidity of the
financial system. In addition, 10 major commercial and
investment banks announced Sunday night that they would
pool USD 70bn of their own money to create a borrowing
facility. The ten institutions, which include Citigroup Inc.,
Credit Suisse Group, Deutsche Bank AG, could tap the pool
to help them ride out the crisis. The banks also said they are
mutually committed to trying to mitigate market volatility. The
Federal Reserve will expand its lending facilities in the wake
of the likely demise of Lehman Brothers Holdings Inc., taking Source: Bespoke Research
a wider array of securities, including equities, as collateral for
its loans in order to ensure that the financial system has The chart below highlights as of September 12, who were the
enough liquidity. biggest casualties on the crisis last week. With Lehman gone
and Merrill having been taken over, AIG and WAMU seem
Bank of America acquires Merrill: AIG next in the firing line? the next source of instability. Given the size and breadth of
activities, clearly AIG turbulence does pose much bigger
The next potential target for short sellers is likely to be AIG, risks to the global financial system.
once the world’s largest insurance company. The Wall Street
Journal noted that AIG executives spent the weekend trying
to raise cash, either from asset sales or a capital infusion
from private-equity firms, or both. AIG executives were
meeting with regulators to see if they could transfer capital
from some of its subsidiaries to the holding company. During
the weekend, AIG turned down a capital infusion from a
group of private-equity firms led by J.C. Flowers & Co.
because an option tied to the offer would have effectively
given them control of the company. The proposed option
would have allowed the firms to acquire AIG for $8 billion
under certain conditions. That price is just one-fourth of AIG's
current market value. The wealth decimation they have
suffered and the speed of their descent is extraordinary. By
way of context, AIG had over USD 1 trillion in assets at the
end of the second quarter. Its shareholders equity -- assets
minus liabilities -- stood at about USD 78bn at that point. The
chart below illustrates that AIG has been by far the worst
performer year-to-date among majors including Citigroup (C),
General Motors (GM), Merck (MRK) and General Electric
(GE).
From subprime housing crisis to Lehman bankruptcy
_______________________________________________________________________________________
'Evercore Partners Inc. Chief Executive Officer and Former Global housing collapse – SPLAT!
Deputy Treasury Secretary Roger Altman said in an interview
on CNBC. ``But as to whether we've seen the last of this
crisis, I think the answer to that is clearly no. And exactly
where it goes from here and how it unfolds, I'm unsure.''
Nouriel Roubini, an Economics Professor at New York
University, said the independent securities firm model is
``fundamentally flawed'' and that every securities firm will
need to combine with a bank to gain a deposit base and
greater access to loans from the Federal Reserve.
EM recoupling: Asian currencies continue to suffer from

global rout
Swings in emerging-market currencies may foreshadow

further losses for traders already suffering from the broadest
declines this decade. A JPMorgan report notes that volatility
in options covering currencies from the Brazilian real to the
South Korean won is rising at a faster rate than those for the
euro and pound. Rising volatility was an element of past
financial market upheavals, including the global slump in
stock markets from 2000 through 2002 after the technology Comrade Paulson of the United States Soviet Republic
bubble burst.
The trigger this time is speculation that developing nations

can no longer withstand simultaneous slowdowns in the
economies of the US, Europe and Japan and the resulting
lower appetite for high risk assets. The 26 emerging-market
currencies tracked by Bloomberg are down an average 5.5%
since June, compared with an increase of 2.2% in the first
half of 2008.
The biggest losers since June in emerging markets have

been the Iceland krona, Bulgarian lev and Brazilian real.
Each has fallen more than 10%. Only China's yuan has
appreciated, gaining 0.15%. Morgan Stanley suggests that
India's rupee and South Korea's won may decline the most
because the ability to buy and sell financial assets such as
stocks is easier for foreign investors in those countries than
in most other developing nations.
Declines in oil, nickel and wheat from records have pushed

the MSCI Emerging Market Index down by more than a third
since October, leaving the index 25% below its 200-day
moving average. Over the past two decades, the difference
grew this wide only in the aftermath of Sept. 11, the USD
40bn Russian default and Mexico's currency devaluation in
1994. Each time, the index rallied 20% or more in the next
three months.
_______________________________________________________________________________________
Ifty Islam, Managing Partner
A report in the September 15 Daily Star noted that the RRC

Overview – Bangladesh held seven meetings and submitted 33 recommendations in
11 interim reports, but nearly all recommendations remained
BBBF one year on unimplemented. RRC Chairman Akbar Ali Khan stated that
“Only one recommendation by RRC -- posting gazette
On Sep14, I attended the "Dialogue on Public-Private notifications on the Web -- has come through...No other
Partnership for Economic Development" held to recommendations are fully implemented yet. He blamed slow
commemorate the first anniversary of the Bangladesh Better implementation on the ministries and divisions that he said
Business Forum (BBBF) and the Regulatory Reforms did not take necessary steps. Professor MA Taslim, a BBBF
Commission (RRC). The BBBF is a 41 strong committee, member, said: "Things will change gradually…It's an ongoing
headed by the Chief Adviser, almost equally split between process. Nothing will happen overnight.” But we would argue
the public and private sectors, whose goal is to be one of the that if the private sector accepts such a slow pace of
primary interfaces between the public and private sectors. implementation then the major “raison-d’être” of the BBBF
Five working groups – all co-chaired by non-civil servants – ceases to exit. We need to maintain the pressure for
deal with business entry and operations, business finance, necessary policy decisions to be taken in a timely fashion.
infrastructure, macroeconomic policy and skills development.
The Chief Adviser noted that “"The caretaker government
has now approved 226 separate recommendations to
support investment that are now implemented or in process
of implementation…This is one indication of our steadfast and
sincere commitment to transform this partnership from an
idea into reality. The government is not the answer to all
problems in the market, but it can facilitate solutions to the
problems…It is ultimately the responsibility of the business
community to take the lead and solve the problem. That is
the best and only way forward for us” We summarize the
major policy proposals, implemented, approved and pending
in the appendix to this section.
We believe that enthusiasm for PPP initiatives more broadly

and the BBBF specifically, make sense in the context of a
capital starved economy where the public sector is also
significantly capacity constrained.
Anything less will make it difficult for Bangladesh to increase

its rate of growth from 5-6% towards that of some of its more
successful regional neighbours.
We would also argue that a responsibility for the Caretaker

Government (CTG) is not only to ensure the continuity of the
BBBF and similar such institutions, but to facilitate and
encourage greater ownership of economic policy issues by
both major political parties. As Bangladesh males the
transition back towards an elected government at the end of
this year, it is extremely important that both the Awami
League and the BNP feature the goal of delivering dynamic
One area we need to have greater progress is more frequent economic growth as a central element in their political
assessment (we would argue monthly) of what the current manifestos and policy priorities. To date, there appears to be
policy initiatives are and why there has been no progress little dialogue on economic issues among the political parties.
made. It was interesting to see the number of power Transformational economic change has been electorally
generation proposals the BBBF has considered but has popular in countries as diverse as India, Singapore,
failed to see any resolution. Similarly on overcoming traffic Malaysia, Korea and Taiwan. We need to ensure that
congestion or establishing the second submarine cable. All delivering a more effective enabling environment in terms of
these proposals are “under consideration” but decisions can more power generation (and specifically developing
be taken with the necessary persistence and tenacity from Bangladesh’s coal reserves) as well as progress on roads
the private sector to pressure the government to take a and ports.
decision.
_______________________________________________________________________________________
Appendix
Infrastructure
SUMMARY OF INITIATIVE Recommendation Implementation Status
Bangladesh Better Business Forum
BBBF Progress
Recommendation Implementation Status
• ICT Task Force.
Implemented
• Trans-Eurasia Information Network-3 Connectivity.
• Internet Bandwidth costs reduced.
• 5 BBBF Sessions, 40 Sessions of the 5 working • Tax Holiday extended for ICT sector for 5 years.
groups
• 249 Recommendations proposed, 113 approved
- 52 implemented, 61 under implementation, 128
under under review.
Skills Development
Business Entry & Operations

• National Skills Development Council (NSDC)

Implemented
formed.
• Enhance professional skills in ICT:
- ICT professional skills assessment and
• Company Registration Certificate in 3 days. enhancement program (IPSAEP) approved in
Implemented
(RJSCF). principal.
• Trade License in 3 days (City Corporation).
• Environmental Clearance Certificate in 30 days
(DOE).
• TIN Certificate within 24 hours (NBR).
• Monitoring Cell formed at Customs House (NBR).
Business Finance
Macro Economic Policy

• Loanable SME funds: 40% to small enterprises.

• Increased SME re-financing to Tk. 50 crore.
• NGO assistance in SME loan distribution &
Implemented
• SME tax & VAT incentives. recovery.

• Continuation of tax rebate facilities to public limited • SME skills trading enhanced: SME foundation.
Implemented
companies declaring dividend over 20%. • Women SME entrepreneurs: enhanced re-
• Lower Import financing rates: essential financing.
commodities. • 99 SME Service Centers approved.
• Reduced Import duty for capital machinery,
intermediate goods and raw materials.
_______________________________________________________________________________________
Special Focus: Foreign Aid - Part I developmental considerations. Another concern is a lack of
ownership of recipient countries in their development
programmes and a resultant dominance of expensive and
A Leveraged Strategy for Bangladesh’s Aid Budget (this ineffectively targeted technical assistance programmes
an expanded version of the article published in the Sep 11 Daily Star staffed with foreign consultants.
Business Section)
DR Ngaire Woods, the Director of the Oxford University
We have just seen the conclusion of the third High Level Global Economic Governance Programme, published an
Forum on Aid Effectiveness that was held on Sep 4 in Accra, interesting paper noted that “Donors have begun to
Ghana, attended by ministers from both donor and recognize that incoherence is a problem. The World Bank,
developing countries as well as the multilateral agencies. the IMF, and a few donors using sector-wide approaches
With an aid budget in excess of USD 1.2bn, it is important
that the people of Bangladesh be engaged in the debate on Sector Wide Approaches (SWAPs) have been attempting to
whether the resources are being effectively employed to help enhance coordination and coherence. In Canada, the
achieve the Millenium Development Goals (‘MDG’) especially Netherlands, Australia, the United Kingdom and the United
poverty reduction via faster growth, reducing corruption and States, efforts have been underway to weave the various
better political, regulatory and corporate governance. diplomatic, military and development initiatives into a more
coherent and effective response to failing. What donors are
Of the total aid to Bangladesh major donors are the World failing to do is allow space for recipient governments to
Bank, the Asian Development Bank, Japan, and the UK define their own priorities and set down frameworks that
which collectively provide more than 80% of all official would compel donors to act better. “
development assistance (ODA). The UK is Bangladesh’s
largest bilateral partner, currently providing approximately In the Sep 9 Financial Times, Adrian Wood, former
20% of ODA. Other bilateral donors include Canada, Professor of Economics at Oxford and DFID Chief Economist
Denmark, Germany, the Netherlands, Norway, South Korea, 2000-2005 noted that “There are various reasons to be
Sweden and the United States. The EC and most UN concerned about high aid dependence, but the most worrying
organisations also have programmes in the country. Saudi is the undermining of good governance by distortion of
Arabia recently provided US$50 million in flood political accountability. Governments that are highly
relief/support. dependent on aid pay too much attention to donors and too
little to their citizens. This might not matter if the interests of
Three of the key stated goals and challenges that have citizens and donors were identical. But all donors have some
emerged from conference, the so called “Accra Agenda for non-developmental motives and, even when they seek to
Action,” include: promote development, they have their own priorities. The
result is confused and shifting policies, volatile aid and
1) Country ownership is key. Developing country spending and, as a result, slower growth.”
governments will take stronger leadership of their own
development policies, and will engage with their parliaments He goes on to note that some developing countries, most of
and citizens in shaping those policies. Donors will support them in Africa, have had high levels of aid dependence – in
them by respecting countries’ priorities, investing in their excess of 10% of gross domestic product, or half of
human resources and institutions, making greater use of their government spending – for decades. It is questionable
systems to deliver aid, and increasing the predictability of aid whether this has been helpful. He outlined a plan for donor
flows. agencies to limit aid to less than 50% of domestic tax
revenues.
2) Building more effective and inclusive partnerships. In
recent years, more development actors—middle-income What we want to focus on in this article is, how can the aid
countries, global funds, the private sector, civil society budget be targeted, much like in formulating investment
organizations — have been increasing their contributions and strategy, so we get the most leverage or return on capital for
bringing valuable experience to the table. This also creates each dollar spent. Aid also needs to be focused on the most
management and co-ordination challenges. Together, all attractive risk-return projects, that is, with careful
development actors will work in more inclusive partnerships consideration not only for the potential impact but the risks in
so that all our efforts have greater impact on reducing achieving that outcome.
poverty.
3) Achieving development results and openly accounting for

them—must be at the heart of everything we do. More than
ever, citizens and taxpayers of all countries expect to see the
tangible results of development efforts. We will demonstrate
that our actions translate into positive impacts on people’s
lives. We will be accountable to each other and to our
respective parliaments and governing bodies for these
outcomes.
However, there are a number of challenges for both donors

and recipient countries in formulating their aid strategy.
Often, the geopolitical and foreign policy goals of certain
larger donor countries tend to outweigh the optimal
_______________________________________________________________________________________
Which areas should aid be focused on as far as encouraging Another important element is increased transparency of
private sector development and growth? Clearly the three procurement that requires accountability on aid effectiveness
key enablers are 1) access to finance; 2) better infrastructure and results. Accra states that: “We will make aid more
(especially power); 3) more effective civil service. If we think transparent. Developing countries will facilitate parliamentary
of economic growth in athletic terms, this is the oxygen boost oversight by implementing greater transparency in public
needed to see growth jump from 6% currently to 8%. Access financial management, including public disclosure of
to finance can be split into external and internal sources. As revenues, budgets, expenditures, procurement and audits.
the table shows, FDI and portfolio flows dwarf the aid budget. Donors will publicly disclose regular, detailed and timely
How can the latter be used to attract more of the former to information on volume, allocation and, when available,
Bangladesh? On the external side, a greater portion of results of development expenditure to enable more accurate
Bangladesh’s development budget should be spent on budget, accounting and audit by developing countries. “
helping facilitate increased FDI. This might include efforts to
support Brand Bangladesh Initiatives as well as reforming the In conclusion, as the Accra accord states, Bangladesh needs
Board of Investment (BOI). The IFC-BICF are already to take greater ownership and participation of its
encouragingly supporting enhancing BOI effectiveness in co- development budget to achieve the maximum impact on
operation with the FBCCI. On internal access to finance and economic development. This is a goal that is not only critical
developing domestic capital markets, the ADB is already to achieving rapid poverty reduction, but one the First World
supporting efforts in capacity building for stock market taxpayers funding development agencies would undoubtedly
regulators. We also need a renewed push to develop the approve of. The decision by DFID to solicit feedback on their
bond markets. We need greater focus on the evolution of a website on how Bangladesh can use its aid budget is a
private equity and venture capital capability in Bangladesh welcome first step. We are all stakeholders in process and
that can be the critical link between FDI and access by local should seek cooperative solutions in getting leverage from
companies to greater growth, strategic and risk capital. On Bangladesh’s large aid budget.
civil service reforms, the Bangladesh Enterprise Institute is
working actively with the support of a number of multilaterals
on capacity building in the civil service. The World Bank and Private sector FDI & portfolio flows to developing countries growing more rapidly
UNDP have made a valuable contribution towards alternative than Donor Aid (figures in USD bn)
energy and disaster resilience.
Flow type 2000 2001 2002 2003 2004 2005 2006 2007e
These are all positive trends. But, when discussing the Foreign
66.6 N/A 69.8 69.8 77.0 85.1 85.4 87.4
effectiveness of foreign aid, an often heard complaint is that aid
donors have a “consultant culture” with an overreliance on Net FDI
144.5 155.0 137.0 122.8 162.8 208.5 227.4 287.2
expensive foreign firms that offer poor value-for-money. They flows
typically engage for short periods of time with little continuity Net debt
in focus or local knowledge or context. Clearly there is a and equity 150 154 144 210 323 416 524 798
flows
need for overseas expertise when it is not available within
Current
the country. Foreign consultants can also at times bring account 36.3 12.8 62.0 117 164 310 431.0 426
global perspective in technical areas such as how Public- balance
Private Partnerships have worked in different parts of the Change in
world. But there may be a suspicion that some globally reserves
-42.6 -80.4 -167 -292 -402 -391 -634 -1091
renowned consultants drag out projects as a consequence of (- =
a lack of familiarity with the situation on the ground. Clearly increase)
Bangladesh needs to develop its local experts and one way Source: IFS, World Bank Debtor Reporting System and staff estimates
this might happen is if the larger donors insisted global firms
like PWC and Bearing Point used part of the Bangladesh
revenues to open a Dhaka office that employed more locals.
This would encourage valuable knowledge transfer that
would offer sustained long-term benefits. We discuss a
strategy for more effective deployment of technical
assistance and local capacity building in the special focus
article below.
The Accra Accord states that “Global funds and programmes

make an important contribution to development. The
programmes they fund are most effective in conjunction with
complementary efforts to improve the policy environment and
to strengthen the institutions in the sectors in which they
operate. We call upon all global funds to support country
ownership, to align and harmonise their assistance
proactively, and to make good use of mutual accountability
frameworks, while continuing their emphasis on achieving
results. As new global challenges emerge, donors will ensure
that existing channels for aid delivery are used and, if
necessary, strengthened before creating separate new
channels that risk further fragmentation and complicate co-
ordination at country level. “
_______________________________________________________________________________________
My experience talking with staff of all the major agencies in
Special Focus: Foreign Aid Part II Dhaka is that, by and large, they are as passionate about
Bangladesh maximizing its chances of reaching its Millenium
Development Goals and PSRP targets and as committed to
Making Foreign Aid more Effective more effective targeting of aid and building local capacity as
critics of the existing system. But proactive policy
“Conditionality of aid should move away from recipient suggestions are key rather than just criticism.
countries being responsible to donors...to their electorate.
The only conditionality that matters, is of the government to A critique of technical assistance
their people.”
(Gordon Brown, 2005) As the quotes below show, there has been consistent high
level criticism for almost 40 years:
The previous article on getting leverage from Bangladesh’s
Aid Budget highlighted the importance of developing local “Experience indicates that technical assistance often
capacity as well as prioritizing the areas of aid spending that develops a life of its own, little related either in donor or
were likely to result in the largest potential payback in terms recipient countries to national or global development
of enhancing growth and attracting private sector FDI and objectives.” Pearson Commission, 1969.
investment flows.
“The vast bulk of technical experts and expertise at present
In this article, we focus more intensively on the specific issue provided by the UN and donor system have outlived
of technical assistance and alternatives. We draw heavily on theirusefulness….the time has come to rethink the purpose of
an excellent and thought provoking report by Action Aid aid and technical assistance within the UN system.”
entitled “Real Aid – Making Technical Assistance Work” Richard Jolly, Institute of Development Studies, 1989.
(http://www.actionaid.org.uk/doc_lib/real_aid2.pdf)
“The use of expatriate resident technical advisers by aid
While that report and some of the other recommendations donors is a systematic destructive force that is undermining
that appear in the NGO and academic literature on aid may the development of capacity.”
appear overly critical of donor agencies, recent initiatives Edward Jaycox, former World Bank Vice President and
such as the DFID consultative process to develop a new aid African Director, 1993.
strategy when their current plan expires in April 2009
underlines an encouraging degree of openness. DFID states “Almost everyone acknowledges the ineffectiveness of
that “(we) are developing a new strategy for its programme in technical co-operation in what is or what should be its major
Bangladesh. The key aim is to consider how we can improve objective: achievement of greater self reliance in the
our aid programme to better target the challenges that recipient countries by building institutions and strengthening
Bangladesh faces in terms of poverty reduction, governance local capacities in national economic management.”
and overall economic growth.” UNDP, 1993.
(http://www.dfid.gov.uk/consultations/default.asp)
“The main traditional form of technical assistance – the long
term assignment of experts – is becoming an anachronism…it
is no longer viable in the form it has taken for many years.”
Netherlands Ministry of Foreign Affairs, 2002.
If the other bilateral agencies as well as the multilaterals

(World Bank, ADB and UNDP) take a similar approach, then
Bangladesh can hopefully have a much larger impact on the
development process and the most effective use of the aid
budget.
_______________________________________________________________________________________
“Nowhere is the challenge of increasing real aid as a share of projects, drawing up terms of reference, procurement,
overall aid greater than in the case of technical assistance. management, monitoring and evaluation in line with capacity
At least one quarter of donor budgets – some USD19bn in building plans.
2004 – is spent in this way: on consultants, research and
training. This is despite a growing body of evidence – much of — Ensure technical assistance contributes to capacity
it produced by donors themselves and dating back to the building. Ensure that all technical assistance is used to build
1960s – that technical assistance is often overpriced and capacity and not merely to fill gaps. Include performance
ineffective, and in the worst cases destroys rather than builds criteria on capacity building as part of contracts, and
the capacity of the poorest countries. Like a relic from an terminate any projects that fail to meet these criteria. Take
earlier age, technical assistance has been largely insulated account of the need for technical advisers to understand the
from donors’ efforts to improve the quality of their aid and to local political, social and cultural context. Ensure that more
act on the widely advertised principles of ownership and gender disaggregated impact assessments of projects are
partnership. Too much of it continues to be identified, carried out, make the findings publicly available and ensure
designed and managed by donors themselves, tied to donor the lessons learnt are incorporated into the design of
countries’ own firms, poorly coordinated and based on a set subsequent projects. Provide the right incentives for staff to
of often untested assumptions about expatriate expertise and build their capacity and to utilize the skills gained.
recipient ignorance. For all these reasons, technical
assistance tends to be heavily overpriced and under- — Ensure transparency and accountability in the use of
evaluated and has proven stubbornly resistant to change. “ resources, both donor and government. Ensure that
procurement is carried out according to competitive
Greater use of local consultants principles. Report on the use of funds to parliament, NGOs,
women’s groups, media and the general public.
The Action Aid report also notes that another reform shift that
has taken place in some countries has been the greater use — Ensure that women’s rights are fully taken into account,
of local consultants, which can help to bring down costs and including in project design, consultant selection, identification
ensure greater understanding of the local political, social and of beneficiaries of training projects and ultimate beneficiaries
cultural context. The data does not allow any rigorous of reforms.
assessment of the extent of this trend, but instances of
significant change can be identified. For example, DFID’s Recommendations for donors
office in India established a contract and procurement advice
section in the late 1990s to streamline technical assistance — Allow southern countries to take the lead in the capacity
procurement in line with DFID’s untied aid policy. This body building process. Pledge the finance necessary to support
has helped to develop a transparent and competitive market the government’s capacity building plan, in a way that is fully
by mentoring the development of in-country services and untied, predictable, co-ordinated and channelled through a
developing specialist panels of consultants in areas where host government managed fund. Provide 100% of technical
there is a lack of in-country capacity. As a result, the share of assistance flows through untied, government led capacity
expatriate technical assistance providers fell from 90% to building mechanisms and allow the country to spend the
55%, and there was a sharp fall in DFID’s procurement funding on their priorities, enabling them to take account of
costs. the opportunity costs of spending money on technical
assistance. Do not provide any technical assistance outside
Sweden has, according to its official statements, almost of national capacity building plans, or which there is no
entirely abandoned all direct contracting of technical capacity to strategically manage or make use of.
assistance by its aid agency SIDA. Sweden is officially
committed to ensuring that technical assistance is procured, — Make maximum use of country systems, including for
contracted and managed by recipients. Sweden’s official procurement, financial management and reporting. Where
policy states that: “Sweden has in principle decided against a domestic stakeholders believe that there is a significant risk
continuation of technical assistance, but it is still provided at of resources being diverted, donors may need to use pooled
a very reduced level. Sweden opposes the sending of mechanisms for procurement and financial management
bilateral technical assistance professionals for project outside of country systems. However, this should only occur
implementation. Local consultants have been increasingly in exceptional circumstances, on an interim basis.
employed in the last years in Swedish technical assistance.”
— Do not use technical assistance to either substitute for or
The Real Aid Paper concludes with a number of focused and complement conditionality. Advisers should offer a range of
helpful strategies for making technical assistance more policy options to governments to enable them to assess the
effective as well as greater local capacity building. These implications of the various choices open to them, including
include: the likely impact on women and girls.
Recommendations for aid recipient governments — Be fully transparent, to both citizens and poor countries,
about funding for technical assistance and its impact,
— Draw up capacity building plans based on national including on women and girls.
development strategies. Identify what, if any, role there is for
donors to support these capacity building plans. Do not
accept any donor technical assistance that falls outside these
plans, or that there is no capacity to manage or make use of.
Take responsibility for identification of technical assistance
_______________________________________________________________________________________
Recommendations for the international community Appendix
— Ensure greater cost effectiveness, by ensuring that all The UK, the World Bank, Asian Development Bank and
technical assistance contracts are fully competitive and that Japan have developed a joint strategy approach (see Annex
bids are made fully transparent. Encourage competitive A). This mirrors our close working with these partners across
domestic, regional and international markets for technical South Asia. The joint strategy aims to maximise aid impact
assistance provision. Improve provision of information on by sharing Analysis, dividing responsibilities and reducing
potential contractors and their quality standards, including transaction costs for Government and donors. Each partner
new start-up businesses. Invest more in local research has agreed with Government which sector/policy issues it will
institutes. Support the development of local contractors lead, which it will play a supporting role, and which it will not
in southern countries. engage with. We are leading on support to extreme poor,
governance and pro-poor private sector growth. We support
— Strengthen the targets agreed under the Paris Declaration. the national health sector programme (World Bank lead) and
The new target should read that, by 2010, 100% of technical the primary education sector programme (Asian
assistance flows should be provided through untied, Development Bank lead). We are not directly involved in
government led capacity building mechanisms which allow agriculture (World Bank leads) or major infrastructure
the country to spend the funding on other areas. There transport (Asian Development Bank lead). The table below
should be annual reporting on progress towards this sets out the agreed division of lead responsibilities.
objective, on a donor-by-donor basis.
— Collect and make available more data on donor-by-donor Lead responsibilities of the joint strategy partners in
spending on technical assistance and the gender Bangladesh
disaggregated impacts of such spending.
Poverty monitoring, livelihoods
Recommendations for civil society organisations for the extreme poor, access to
justice, strengthened human
UK
— Ensure that any technical assistance either provided or security, public expenditure and
used by CSOs is locally driven, has capacity building as an financial management reform,
explicit aim, and prioritises the rights of women and girls. participatory governance.
Trade, labour force, banking
— Do not subcontract as providers of donor-funded technical sector, microfinance, agriculture,
assistance except in situations where there is strong demand The World Bank environment, health, water and
from government, and a clear plan for transferring skills to sanitation, justice system, tax,
strengthen permanent civil service posts. Promote the use of procurement, local governance.
local experts and local knowledge.
Power, ports, roads and
— Act as a watchdog to ensure that donors, governments and railways, urban infrastructure
Asian Development Bank
the international community are using technical assistance to primary education, Anti-
build sustainable capacity, in an accountable and transparent Corruption Commission.
manner. Rural infrastructure, indigenous
Japan people, private sector
And finally – some foreign aid humour! development.
_______________________________________________________________________________________
Stock Market Weekly
DSE performance: 52 weeks Market news
• Many Z category companies are non-existent
• State-owned banks cut capital deficit
• Book-building for IPO within 3 months
• Square Pharma marks its footsteps in Hong Kong
DSE performance: 30 days Regional stock market performance (last week)
Market summary Valuation snapshot

Sector P/E
DSE General Apr-08 May-08 Jun-08 Jul-08
Index performance DSE 20
Index
Banks 22.2 22.6 21.7 19.2
Opening of this week 2,803.0 2,410.0 Cement 14.7 17.6 12.4 11.2
Closing of this week 2,850.2 2,442.3 Ceramic 43.7 42.7 42.0 50.3
Change within a week (%) 1.7% 1.3% Engineering 38.9 41.4 39.1 38.4
Change within a week (Point) 47.2 32.3 Food & Allied 28.2 28.5 13.2 19.3
Fuel & Power 25.8 26.2 23.6 16.1
This Last % Insurance 28.1 32.4 26.9 22.8
Capitalization and turnover
Week Week Change Investment 64.9 65.2 53.1 33.5
Number of Trading Days 5 5 IT 18.4 17.6 20.0 20.3
Market Capitalization (USD bn) 14.52 14.44 0.6% Jute 16.4 16.0 16.0 16.3
Total Turnover (USD mn) 253 202 25.3% Miscellaneous 23.0 25.9 23.2 25.2
Daily Avg. Turnover (USD mn) 51 40 25.3% Paper & Printing 9.2 9.5 9.2 7.9
Total Volume (mn) 126 82 54.0% Pharmaceuticals 26.7 29.8 28.1 25.6
Daily Avg. Volume (mn) 25 16 54.0% Service & Real Estate 20.5 19.5 20.8 20.5
Tannery 25.1 23.1 19.8 21.3
This Last Textiles 14.9 14.4 15.2 16.3
Weighted avg. P/E Ratio* Issues Source: Dhaka Stock Exchange
Week Week
This Week 20.63 Advanced 121 117
Last Week 20.26 Declined 118 129
% Change 1.83% Unchanged 12 5
*Weighted on Market Cap. Not Traded 37 37
_______________________________________________________________________________________
Weekly Stock Market Commentary December 31, 2001. The DSE investigation also found that
the company has bank liabilities (to state owned banks) of
The stock indices gained for the third consecutive week. The BDT 3bn (US$43.9 million). It is questionable that it has any
benchmark DSE General Index (DGEN) gained 47 points operations at all!
during the week to close at 2,850, 2% higher than previous
week’s close. Rupali Bank was the top loser this week. Rupali’s losing
streak started when the trading of its share recommenced in
Dr Salahuddin Ahmed, the CEO of DSE, attributed the recent early June after the privatization effort of the bank failed.
gains largely to retail speculation. He told the media that, Rupali’s DSE price is still 58% higher than its price on CSE.
“more than 80 percent of the investment mostly by retail Rupali’s share price on DSE would have adjusted close to its
investors went on speculative side." The recent uptrend is price on CSE if there was no circuit breaker on its shares on
due mainly to high levels of trading activities around 15-20 DSE. The inevitable decline of Rupali share price on DSE
stocks, some of them Z category stocks. will make a significant impact on the indices (Rupali is the 6th
largest company in terms of market capitalization).
The banking sector, which accounts for the majority of
market capitalization, was out of favor in recent weeks. Stock Market News
Though almost all the private commercial banks are already
listed, the banking sector continues to supply more than 50% Many 'Z' category companies are non-existent
of the new securities to the market, by issuing stock The Financial Express, Saturday, September 13, 2008
dividends and right shares. Banks accounted for almost all
the right issuances this year. Seventeen Z-category companies out of the 28 surveyed by
the Dhaka Stock Exchange (DSE) have been found
This week the Social Investment Bank, a Sharia based bank, inoperative for years. The 17 companies raised a total of
declared that it will issue right shares at a ratio of 1:1. The BDT 540.5mn (USD 7.89mn) from the primary market
current market capitalization of Social Investment Bank is between 1983 and 2002. Of the remaining 11, only two are
BDT 4.73bn (USD 69mn) (considering the 17% stock fully operational and nine partially.
dividends already declared). A 1:1 right issuance will
increase supply of securities significantly in the market where
a BDT 500mn (USD 7.3mn) IPO is considered to be large. http://www.thefinancialexpress-
In an effort to strengthen its Islamic credentials, the Social bd.info/search_index.php?page=detail_news&news_id=45353
Investment Bank also changed its name to Social Islami
Bank - Shariah based banking in Bangladesh is generally Book Building for IPOs
perceived to be more lucrative than conventional banking. The Daily Star, Monday, September 15, 2008
Dhaka Bank, a private commercial bank focusing mainly on
conventional banking, has recently started offering Islamic Book-building, a modern and widely practised price fixing
banking services from all of its branches. Earlier it used to mechanism for IPO, will be introduced within three months in
offer Islamic banking from selected outlets. a bid to encourage the private sector entrepreneurs to list
their companies on the stock exchanges, the Securities and
Five "Z" category shares (Saleh Carpet, Shinepukur Exchange Commission chairman said yesterday.
Holdings, Progressive Life Insurance, BD Luggage and
Beximco Fisheries) featured on the list of top 10 gainers this “Although there is a scope for further modification in the draft
week. 92 stocks on DSE belong to the Z category. According of the book-building system, it is in the final stage. We will
to DSE, a company is relegated to Z category for one of the now work to transform it into legal form and hope we can
following reasons: 1) it has failed to hold the current annual introduce the system after two or three months,” said the
general meeting; ii) it has failed to declare any dividend; iii) it SEC Chairman. Faruq Ahmad Siddiqi.
is not operational continuously for more than six months; iv)
its accumulated losses after adjustment of revenue reserves, The SEC chief said the country's capital market is dominated
if any, is negative and exceeds its paid up capital. by financial sector companies, as banks, financial institutions
and insurance companies have been listed on the stock
One would expect Z-stocks to be at the bottom of the list of exchanges to fulfill regulatory requirements. “Apart from this,
any investors’ picks, but with the free floats of the Z category as many as five state-owned enterprises offloaded shares
shares being small, share prices can be easily influenced during the last couple of years. But, the private sector
and manipulated. This coupled with limited knowledge of the companies are not being listed or raise capital from the stock
risks in investing in such companies, has meant that some market with that pace,” he said.
retail investors have see an opportunity for gains. We feel
exchanges should take tougher action on these companies The reasons behind the private sector entrepreneurs'
and suspend trading, due to market distortions and the risk unwillingness to list their companies on the stock exchanges
for investors. are that they do not want to share their family business with
others, lack of knowledge about the capital market, and
An example: Saleh Carpet, a Z category share and this reluctance to disclose their financial statements, the SEC
week’s top gainer with a 59 percent increase. A DSE chief said.
investigation revealed the company's registered corporate
office in Chittagong remained closed since 2003. Listed with “Another major reason is the absence of a fair and modern
the DSE in 1995, the company submitted its last audited pricing mechanism. In most cases, the entrepreneurs feel
accounts to DSE for the year 2001, reporting a net loss of
BDT 2.86mn and an accumulated loss of BDT 1,047mn till
_______________________________________________________________________________________
they will not get accurate price for their companies' shares,”
Ahmad said.
http://www.thedailystar.net/story.php?nid=54855
Saleh Carpet trade on DSE suspended

The Daily Star, Wednesday, September 11, 2008
Dhaka Stock Exchange suspended the trading of Saleh

Carpet, a Z list company after finding some irregularities in
the company. The company has not been running any
corporate office since 2003 and not submitting any financial
report to the bourse or the capital market regulator since
2002. Notably, Saleh Carpet owes BDT 4.72bn (USD
0.07bn) to Bangladesh Shilpa Bank, Bangladesh Shilpa Rin
Sangstha, Investment Corporation of Bangladesh and Sonali
Bank. Accumulated losses stood at BDT 1.05bn (USD
0.02bn)as of December 31, 2001. Share prices rose
constantly for the last two weeks. This abnormal price jump
forced the DSE to stop the company's trade.
GP shareholders promise to put IPO beyond dispute

The Daily Star, Tuesday, September 10, 2008
Grameenphone shareholders have committed to keeping the

share-offloading issue beyond internal disputes, indicating
that the process of largest-ever initial public offering (IPO)
will get through. In a joint statement, Telenor and Grameen
Telecom dismissed the uncertainty over the USD300mn
share offloading. Norway's Telenor owns 62 percent shares,
while Grameen Telecom holds the remaining stake in
Grameenphone, launched in 1996. Telenor controls the
management of the country's largest cellphone company.
Earlier, both the parties had ended up in conflicts on a range
of issues, which created speculation of uncertainty over the
IPO, scheduled to come through this month.
_______________________________________________________________________________________
DGEN Performance LTM DGEN Performance YTD
Turnover leaders Best performers* Worst performers*

(All figures in mn) BDT USD % Change % Change
Titas Gas 1,842 26.9 Saleh Carpet 59.3 Rupali Bank -22.3
BEXIMCO 1,005 14.7 Sinobangla Industries 29.7 BCIL -12.4
ACI Limited. 948 13.9 Grameen One: Scheme2 26.8 Sonargaon Textiles -12.1
ICB AMCL 2nd NRB M.F. 934 13.6 ICB AMCL 2nd NRB M.F. 26.3 ICB Islamic Bank Ltd. -9.9
Grameen One: Scheme2 916 13.4 Shinepukur Holdings 20.7 Maq Enterprises -9.4
Lankabangla Finance 598 8.7 Pragati Insurance 19.6 Samorita Hospital -9.4
Aims 1st M.F. 495 7.2 Progressive Life 18.7 Lexco -8.5
Beximco Pharma 455 6.6 Bangladesh Luggage 16.7 Amam Sea Food -7.9
S. Alam Cold Rolled Beximco Fisheries 15.8 Safko Spinnings -7.1
440 6.4
Steels Ltd. Aims 1st M.F. 14.8 Standard Ceramic -6.8
Union Capital 409 6.0
Source: Dhaka Stock Exchange *By closing price
Source: Dhaka Stock Exchange
Market cap. by sector*
Banks 52.6%
Fuel & Power 12.2%
Pharmaceuticals 10.4% Correlation with other Indices*
Cement 5.7% S&P NIKKEI KSE FTSE
500 Sensex 225 100 SSECI 100 HangSeng DSE
Insurance 5.7%
S&P500 1
Miscellaneous 3.0%
Sensex 0.49 1
Engineering 2.6%
NIKKEI225 0.40 0.50 1
Foods 2.4%
KSE100 0.13 0.31 0.10 1
Textile 2.1%
Tannery 1.5% SSECI 0.28 0.41 0.22 0.04 1
Service & Real Estate 1.0% FTSE100 0.81 0.48 0.41 0.21 0.38 1
IT 0.5% Hangseng 0.65 0.58 0.46 0.09 0.50 0.73 1
Ceramics 0.1% DSE 0.10 0.14 0.09 0.06 0.03 0.13 0.11 1
Paper & Printing 0.1% * Based on the last 80 months’ USD returns
Source: AT Capital Research
Jute 0.03%
Total 100%
*As of July 31, 2008
Research Team
Professor Jahangir Sultan

Shahidul Islam
Senior Advisor
Investment Manager
jahangir.sultan@at-capital.com
shahid.islam@at-capital.com
Rashed Hasan Syed Najibullah

Research Associate Research Assistant
rashed.hasan@at-capital.com syed.najibullah@at-capital.com
_______________________________________________________________________________________
Economics
Export performance across different sectors (USD mn) Market news
9-Sep-07 30-Jun-08 9-Sep-08 • Excess liquidity of banks declines

Forex reserves (USD mn) 4,931.14 6,148.82 5,245.21
USD-BDT average rate 68.7000 68.5297 68.5200
• Bangladesh Bureau of Statistics set to go for new CPI
Call money rate (%) 7.05 4.78 8.99
and base year
Aug-07 Aug-08 2007-08

• Tax revenue collection rises 19%
Remittances (USD mn) 470.95 732.98 7,914.78
Annual percentage change -0.06 55.64 32.39
• Banks warned of risky lending
Jun-07 Jun-08 2007-08

• Petroleum prices to be adjusted in every 3 months
Imports (USD mn) 1,521.00 2,156.60 21,629.00
Annual percentage change 9.67 41.79 26.07
Exports (USD mn) 1,218.03 1,469.51 14,110.80 • Bangladesh Petroleum Corporation (BPC) plans to set
Annual percentage change 9.52 20.65 15.87 up deep sea oil jetty
Tax revenue (USD mn) 438.06 541.77 6,906.54
Annual percentage change 22.55 23.67 27.06 Latest Treasury yields
Source: Selected Indicators by Bangladesh Bank, 10 Sep 2008 Weighted

Auction date Tenor & security type
average yield
Top exported items (USD mn) 7-Sep-08 91-day T-bill 7.77%

27-Jul-08 182-day T-bill 8.01%
7-Sep-08 364-day T-bill 8.51%
19-Aug-08 5-year T-bond 10.60%

2-Sep-08 10-year T-bond 11.72%
9-Sep-08 15-year T-bond 12.14%
26-Aug-08 20-year T-bond 13.07%
Source: Bangladesh Bank
S Adeeb Shams
Research Associate
adeeb.shams@at-capital.com
_______________________________________________________________________________________
Economic News collected revenues amounting to BDT 70.9bn (USD 1bn) in
the July-August period of the 2008-09 fiscal, while the
Excess liquidity of banks declines amount was BDT 59.6bn (USD 871mn) in the earlier period.
The Financial Express, Saturday September 13, 2008 The government has set a tax revenue collection target at
BDT 545bn (USD 8bn) for the 2008-09 fiscal year.
Liquid assets of scheduled banks stood at BDT 483.8bn
(USD 7.1bn) as at 30 June 2008, against BDT 448.4bn (USD http://www.thefinancialexpress-
6.5bn) at the end of June 2007, an increase of over BDT bd.info/search_index.php?page=detail_news&news_id=45319
35.4bn (USD 517mn), according to Bangladesh Bureau of
Statistics.
Excess liquidity of scheduled banks fell to BDT 129.9bn

(USD 1.9bn) as at 30 June 2008, from BDT 142.79bn (USD
2.1bn) at the end of June 2007, according to a Bangladesh
Bank review.
Total SME loans increased by 11.1% in the year to over BDT

350.37bn (USD 5.1bn) as at 30 June 2008. Institutional
category-wise SME loans rose at the end of June 2008
compared to March 2008, in foreign banks by 20.7%, private
banks by 17.5%, non-bank financial institutions by 6.3%,
state-owned banks by 3.3% and specialised banks by 1.5%.
Disbursement of industrial term loans during April-June 2008

stood at BDT 55.8bn (USD 814mn) compared to BDT 49.1bn
(USD 717mn) during January-March 2008. Recovery of
industrial term loans increased to BDT 39.2bn (USD 572mn)
during April-June 2008, compared to BDT 37.7bn (USD
551mn) during January-March 2008.
http://www.thefinancialexpress-
bd.info/search_index.php?page=detail_news&news_id=45354
Bangladesh Bureau of Statistics set to go for new CPI and

base year
New Age, Friday September 12, 2008
The Bangladesh Bureau of Statistics is set to revise the

current consumer price index with an updated base year and
incorporation of changes in lifestyle, consumption patterns
and a widened food basket. According to a BBS official, the
new CPI, with an updated base year of 2005-06, is to be
prepared from next month.
CPI is presently measured with 1995-96 as the base yearand

consumers' lifestyles and consumption patterns have
dramatically changed over the years.
Unnayan Shamannay, a local research organisation, recently

calculated the average inflation rate to be at 22% during the
last fiscal year, while it was officially announced to be around
10%. The new CPI is to include 103 new items in the food
basket for rural areas and 120 for urban areas.
http://www.newagebd.com/2008/sep/12/busi.html
Tax revenue collection rises 19%
The government's overall tax-revenue collection grew by

nearly 19% during the first two months of the current fiscal
year, compared to the corresponding period during the last
fiscal year, reflecting a lower than expected rate of growth,
according to official sources. The National Board of Revenue
_______________________________________________________________________________________
Sector News
Agriculture Banks warned of risky lending
The Daily Star, Friday, September 12, 2008
Tea exports rebound on rising output
The daily star, Tuesday, September 09, 2008 Bangladesh Bank (BB) has advised commercial banks not to
do any lending violating the core risk guidelines. The central
Tea exports have increased this year with an increase in bank also said the credit deposit ratio should be below 82
domestic production (up 6.2% on the year) and competitive percent. The advice followed separate meetings between the
pricing in international markets. Export earnings from tea central bank and two commercial banks-- AB Bank and
stood at USD 14.89mn in 2007-08, up 114.55 percent from Eastern Bank.
USD 6.94mn in 2006-07. Total production of tea stood at
58.83mn kg in 2007-08, up from 55.42mn kg last year. The meetings are part of the BB move to protect the banks
from doing risky lending. More than 70 percent banks exceed
Export earnings fell sharply in 2006-07, due to a shortfall in this limit. AB Bank's lending was 85 percent of its deposit and
tea production, which consequently drove tea prices up. Eastern Bank's 97 percent. Out of 48 banks, credit deposit
While Pakistan is the biggest market for Bangladesh's tea, ratio of eight banks is more than 100 percent, while that of 11
Afghanistan, Kazakhstan, Saudi Arabia and the United Arab other banks is more than 90 percent. The ratio is more than
Emirates are also major markets for local tea. 82 for the balance.
http://www.thedailystar.net/story.php?nid=53941 http://www.thedailystar.net/story.php?nid=54421
Shrimp industry facing setback Infrastructure & Energy

The Financial Express, Sunday, September 07, 2008
ATC Comment
The shrimp industry, the second biggest forex earner after
RMG, is facing serious production setbacks due to We welcome the tender evaluation committee’s pragmatic
widespread virus infections affecting the shrimp stock. There recommendation for the Powertek bid for the 450MW
also concerns over fry supplies following indiscriminate Bibiyana independent power plant consortium, despite
catching of immature fries some fishermen and mother issues with pricing. With demand increasing 8% per year
shrimps i being caught by foreign fishing trawlers. from a base that is significantly undersupplied, capacity
generation constraints need to be resolved as a priority. This
According to District Fisheries Department shrimps were case also raises issues around government subsidisation of
cultivated on about 70,000 hectares of land this year and a fuel costs to consumers. The Powertek consortium has
target was set to produce 18,000 tonnes of shrimp worth offered to sell electricity to the Bangladesh Power
about Tk 9.0 billion (USD 131.44 mn). Development Board (BPDB) for 4.5394 US cents a kilowatt-
hour - almost double the amount than the Bangladesh
http://www.thefinancialexpress- Power Development Board (BPDB) buys electricity from the
bd.info/search_index.php?page=detail_news&news_id=44897 450MW Meghnaghat and 360MW Haripur independent
http://www.thefinancialexpress- power plants installed in 2001.
The government in the poverty reduction strategy paper
Banking (PRSP) has set a target of providing over 2.6mn new
electricity connections between 2009 and 2011 and
State-owned banks cut capital deficit increasing the generation capacity by an additional
The Daily Star, Friday, September 12, 2008 1,700MW. While we feel connecting 2.6mn customers is an
admirable target, it seems ambitious given existing
Three state-owned commercial banks cut their capital deficit consumers do not receive uninterrupted electricity supplies.
by BDT 62.2bn (USD 0.91bn) in the three months to March, Current issues of scarce gas resources and unexploited coal
turning cumulative losses into assets through a valuation reserves are particularly prescient. We feel efforts should be
adjustment. After a fall in the shortfall, the banks' integrated prioritized: 1) excavation of existing resources including coal;
capital deficit stood at BDT 9.6bn (USD 0.14bn) at the end of 2) exploration of new primary sources ; 3) generation of
March, down from BDT 71.8bn (USD 1.05bn) in December energy; 4) ensuring quality and uninterrupted electricity to the
2007. existing consumers; and 5) adding new consumers by
expanding the transmission and distribution network
According to a quarterly evaluation report by Bangladesh
Bank, the banks counted their integrated losses as 'goodwill' Infrastructure & Energy News
and converted the losses into 'other assets'. After the end of
December, the banks transferred the cumulative losses of Prices of petroleum fuel to be adjusted in every three months
BDT 87.91bn (USD 1.28bn) into assets. Sonali Bank The Financial Express, Sunday September 14, 2008
converted BDT 65.7bn (USD 0.96bn) of cumulative losses
into assets, followed by Janata Bank BDT 8.9bn (USD The government is likely to introduce a permanent pricing
0.13bn) and Agrani Bank BDT 13.3bn (USD 0.19bn). formula on the sale of petroleum fuels on the domestic
market through periodic adjustments. The Energy Division of
http://www.thedailystar.net/story.php?nid=54420 the Power, Energy and Mineral Resources Ministry is now
_______________________________________________________________________________________
devising a formula to provide a permanent solution to the into 28 exploration blocks. India and Myanmar which have
problem that government has been facing for long in dealing discovered huge gas reserves in their parts of the Bay
with the fuel-price adjustments. The Chief Adviser's Special opposed the bids, stating they would not allow any
companies to search hydrocarbon in the disputed blocks
Assistant for Power and Energy, M Tamim said that the bordering their territory.
pricing would be adjusted every three months if the gap
between local and international market prices are more than The Chief Advisor's special assistant for energy and power M
2%. Tamim had earlier said the dispute over maritime boundary
with the neighbours would be resolved in line with relevant
The government enhanced the prices of all kinds of international law and bilateral deals. He also said many
petroleum fuels by about 35% with effect from July, 2008 countries like Vietnam, China, Japan and Thailand have
when the overseas petroleum prices was nearly USD 150 similar disputes, but these have not hampered global oil and
per barrel. International price levels have come down to gas companies' exploration of hydrocarbon there.
below USD100 currently.
http://www.thefinancialexpress- bd.info/search_index.php?page=detail_news&news_id=45514
Bangladesh Petroleum Corporation (BPC) plans to set up
Providing 2.6mn new electricity connections in 3 years deep sea oil jetty
targeted New Age, Sunday September 14, 2008
The Financial Express, Sunday September 14, 2008
The Bangladesh Petroleum Corporation (BPC) is planning to
The government has set an ambitious target, in next poverty set up a deep sea jetty to facilitate the unloading of imported
reduction strategy paper (PRSP) to provide over 2.6mn new crude oil from mother vessels and directly pump it to the
electricity connections by installing 50,000km of distribution Eastern Refinery through a pipeline. ‘It will save a huge
lines acrossthe country in the three years and a target of amount of money we had to pay for transporting crude oil by
generating 1,700MW additional electricity in its three years lighter ships from mother vessels to the refinery,’ said a
implementing period. senior BPC official. The BPC is awaiting approval to prepare
a feasibility study from relevant authorities. The Islamic
According to the PRSP document: Development Bank has already agreed to finance the project.
• the Rural Electrification Board (REB) would connect A 4-member BPC team headed by its chairman went to India
2.0mn new consumers by expanding 40,000 km of by the invitation of Bharat Petroleum Corporation Ltd to visit
distribution lines from FY2009-2011; and and learn about unloading and operational methods used by
• the Power Development Board (PDB) will give 0.4 mn its Kochi Refinery Ltd.
new connections by expanding 6,000km of distribution
http://www.newagebd.com/2008/sep/14/busi.html#2
lines and other power distributing agencies; and
• Dhaka Electricity Distribution Company Ltd (DESCO)
BDT 1.2bn project for export infrastructure development
and West Zone Power Distribution Company Ltd. will The Daily Star, September 8, 2008
connect a total of 0.2mn consumers by installing
4,000km of distribution lines. An export infrastructure development project worth BDT
12bn (USD 174mn) has been approved to reduce the
The PRSP for the financial year 2009 to FY2011 is now growing pressure on Chittagong port infrastructure as
awaiting approval of the government's highest body –The demand increases. The project, which includes an inland
National Economic Council (NEC). container depot (ICD) at Dhirashrom near Tongi, construction
of double railway lines from Chittagong Port to Faujdarhat,
and procurement of 10 railway engines and 120 flat wagons,
has received the approval of the project committee of the
Planning Commission.
Dhaka-Delhi talks on maritime boundary disputes tomorrow
The Financial Express, Sunday September 14, 2008
The process for approval of the export infrastructure
Bangladesh and Indian officials will meet in Dhaka on development project began in 2003but was delayed.
September 15 to end an impasse over maritime boundary, Construction work under the project will begin in November
which has been in place for nearly three decades in an 2009 with completion planned for 2014, Bangladesh Railway
attempt the remove the main obstacle to the country's sources said. Following completion, 15 percent of the
offshore search for oil and gas. The meeting was convened containers in Chittagong will be handled through the ICD by
after New Delhi strongly opposed Bangladesh's move to 2016 and 30 percent by 2026.
lease out offshore blocks close to India's maritime territory
for exploration. The country's first ICD was constructed at Kamalapur in 1987
with capacity of 90,000 TEUs. In fiscal year 2007-08, a total
Although India and Myanmar share the hydrocarbon rich Bay of 82,000 containers were handled in the ICD. However this
of Bengal with Bangladesh, they haven't demarcated the sea is only 10% of the containers handled in the Chittagong Port.
boundary yet, resulting in the recent disputes over Dhaka's
http://thedailystar.net/story.php?nid=53836
hydrocarbon exploration bids in its offshore blocks. The
disputes arose in February 2008 after the state-owned
Petrobangla invited bids from foreign companies for
exploration in the Bay, after it divided the offshore territory
_______________________________________________________________________________________
Tender body advises 450MW Bibiyana IPP award for lone BERC extends time further for licences
bidder The Financial Express, Thursday September 11, 2008
The New Age, Thursday September 11, 2008
The Bangladesh Energy Regulatory Commission (BERC)
The tender evaluation committee for the 450MW Bibiyana has extended further the time limit by two months for
independent power plant has recommended awarding the obtaining operating licences for captive/ standby electricity
tender to the lone bidder Powertek consortium. Last week, generators. The BERC set April 30 as the initial deadline for
the consortium offered to sell electricity to the Bangladesh seeking licences for use of captive generators - this was later
extended twice until August 31, 2008.
Power Development Board (BPDB) for 4.5394 US cents a
kilowatt-hour which is almost double the amount than the The BERC Chairman said the Commission will take
Bangladesh Power Development Board (BPDB) buys necessary action against the users who will fail to obtain
electricity from the 450MW Meghnaghat and 360MW Haripur licences for their captive and standby generators within the
independent power plants installed in 2001. extended timeframe. The Commission received around 200
applications for issuing licences until August 31, out of which
‘We will also seek a decision from the committee on it had already issued around 100 licences.
mitigating losses the BPDB will be incurring by buying
electricity from the Bibiyana plant as the power board’s http://www.thefinancialexpress-
selling price to consumers is much lower than that of the bd.info/search_index.php?page=detail_news&news_id=45217
Powertek offer,’ said an Power Division official. He also said
the government would either need to further subsidise the Petrobangla Wants Guarantee from Cairn Energy
power board or increase customer tariff at consumer level for Energy Bangla, Tuesday September 9, 2008
buying electricity from Bibiyana.
Petrobangla has asked for a guarantee from Cairn for
http://www.newagebd.com/2008/sep/11/front.html continuing gas production from the Sangu gas field before
giving any approval to company's proposal to spend between
US firm to help BGFCL quantify gas reserves
The Financial Express, Thursday September 11, 2008 USD 7.31mn and USD 9.30mn for well intervention work at
Sangu. In a joint meeting with Cairn, Petrobangla officials on
The state-owned Bangladesh Gas Fields Company Ltd September 8 asked the company to a submit proposal
(BGFCL) has recently signed a contract with Houston-based showing a firm assurance of the possibility of increasing gas
Geotrace Data Integration Services Ltd to measure production from the field as earlier intervention works were
remaining gas reserves in their operational gas fields. not fruitful. Cairn has performed the same work twice in the
Geotrace will provide its Tigress three-dimensional (3D) last four years but failed to increase gas output.
interpretation software to BGFCL to help quantify the gas
reserves in its decade old gas fields that account for around http://energybangla.com/index.php?mod=article&cat=GasSector&art
39% of the country's gas production. icle=941
Pharmaceuticals
ATC Comment
39%
50% We continue to be encouraged by Bangladesh’s leading
pharma companies and their push into new markets. Already
leading the way amongst LDCs, the recent MHRA
9% accreditations awarded to Square, Eskayef and Renata,
demonstrate the potential for the Bangadesh pharma sector
to position itself as a preferred manufacturing destination
2% globally.
BGFCL SGFL BAPEX IOCs This week, Square started exporting to Hong Kong, who
follows patent protection regulations. Over the last few years,
Source: Petrobangla Bangladesh has proven its ability to efficiently manufacture
good quality generics at a low cost. Many developed nations
The Energy Ministry recently decided to conduct extensive are looking to offshore their lower margin generic production
seismic surveys in five of the largest state-owned operational activities - international certifications like the UK MHRA
gas fields expecting the reserves to be much higher than the approval are necessary to establish Bangladesh as a
initial estimations. The Energy ministry initially estimated the contract manufacturing hub.
reserve of these fields at 11.42Tcf and after decades of
consumption their net remaining recoverable gas reserves as This week, according to an IMS report, the sector revenues
on June 2007 would be around 7.70 Tcf. The seismic grew by 10% year on year. While this remains positive, this
surveys will take three years to complete. represented a fall from the 15% growth in the prior year.
Square continues to lead the pack with 18% market share,
http://www.thefinancialexpress- with Incepta at No 2 with 9% market share, pushing Beximco
bd.info/search_index.php?page=detail_news&news_id=45222 to third.
_______________________________________________________________________________________
It has been a tough period for Beximco with various political Renewable Energy
problems including the imprisonment of Director, Salman. F.
Rahman. Managing Director, Nazmul Hasan revealed that Indian Cabinet Okays Biofuel Policy
Beximco has not been manufacturing at full capacity for the The Daily Star, Sunday, September 14, 2008
past year but hopes to regain the second position.
The Cabinet has approved implementation of the National
Finally, local dominance has driven the only MNC, Sanofi Biofuel Policy. The policy calls for scrapping taxes and duties
Aventis out of the top ten. At the end of calendar year 2007, on bio-diesel and declared goods status being conferred on
Aventis was positioned at eight, but is now absent from the bio-diesel and bio-ethanol and has set an indicative target to
top ten. blend 20 percent ethanol in petrol and non-edible oils from
plants like Jatropha in diesel by 2017. Declared goods status
Pharma News
products attract a uniform central sales tax or VAT rate rather
Square Pharma marks its footsteps in Hong Kong than varied sales tax rates effectively reducing the tax
The Financial Express, Sunday September 14, 2008 burden.
Square Pharmaceuticals Ltd, the market leader in the local http://www.thedailystar.net/story.php?nid=54580

pharma industry, has recently started to export drugs to
Hong Kong. Square is was the first company in Bangladesh Dhaka for multi-donor trust fund to tackle climate change
to attain the UK MHRA certification. The New Nation, Thursday, September 11, 2008
Hong Kong, despite having a GDP per capita as high as BDT Finance Adviser, Dr ABM Mirza Aziz who led a 39-member
2.8mn (USD 42,000), has a relatively small pharmaceutical Bangladesh delegation to the UK-Bangladesh Climate
market worth around USD 715mn which is comparable with change conference, commented that Bangladesh would
the USD 600mn of Bangladesh. Square has already require 6bn USD over the next 15 years for a mitigation and
registered five products in Hong Kong and has more than 20 adaption programme, as the UK made a fresh pledge of GBP
products awaiting registration approval authority of the 75mn pound to Bangladesh for climate change projects in
Department of Health, Hong Kong. the next five years.
http://www.thefinancialexpress- The Finance Adviser said the assessment is based on the
five pillars - risk identification, strengthening emergency
preparedness, infrastructure investment for risk mitigation,
Square maintains lead, Incepta 2nd, Beximco slips to 3rd
institutional capacity building and risk financing.
position
The Financial Express, Saturday September 13, 2008 The Adviser said despite the resource constraints, the
Bangladesh government is committed to facing the challenge
The year-on-year turnover of around 255 local drug of climate change, and urged the international community to
manufacturers grew nearly 10% in the fiscal year (FY) 2007- help implement the country Climate Change Strategy and
08 standing at BDT 40bn (USD 583.9mn). This figure is 1.2% Action Plan 2008.
less than at the end of the calendar year 2007 which was
BDT 40.5bn (USD 591) according to IMS. Around 80% of the The Bangladesh government has also established a
revenue is accounted by approximately the top 30 dedicated Climate Change Fund with an initial endowment of
companies. USD 45 million. The Adviser proposed the establishment of a
Multi-Donor Trust Fund (MDTF) to supplement the
Square remains the market leader with turnover of BDT government efforts that would be a window for the NGOs and
7.5bn (USD 109.5mn), representing growth of nearly 15% CSs to directly have access to funds for climate related
from last FY, and market share of over 18%. The top ten activities.
companies in order of rank are: Square Pharmaceuticals,
Incepta Pharmaceuticals, Beximco Pharmaceuticals, Acme, http://nation.ittefaq.com/issues/2008/09/11/news0185.htm
Eskayef Bangladesh, ACI Bangladesh, Renata
Pharmaceuticals, Aristo Pharmaceuticals, Drug International Telecoms
and Opsonin Bangladesh.
BTRC unveils guideline on telecom infrastructure sharing
Incepta revenues increased by 8% year on year and stands The Daily Star, Tuesday September 09, 2008
at BDT 3bn (USD 43.8mn) with a market share of 9.1%, .
Incepta has moved up to the second position pushing The Bangladesh Telecoms Regulatory Commission has
Beximco Pharmaceuticals to third whose revenue dropped finalized the guidelines for infrastructure sharing between
from BDT 4bn (USD 58.4mn) in 2007 to BDT 2.9bn (USD telecom service operators. Under the guideline, telecom
42.3mn) in 2008. Beximco management have intimated that operators can share or lease both physical and non-physical
they expect to regain the second spot by October this year. infrastructure (including spectrum) to other operators. This
move should help ease the capital expenditure burden of the
http://www.thefinancialexpress- 6 mobile and 12 fixed line telecoms companies. Spectrum
bd.info/search_index.php?page=detail_news&news_id=45349 constrained operators such as Grameenphone would benefit
from leasing spectrum from other mobile companies while
the likes of Teletalk- an operator with limited infrastructure,
could take advantage of using base stations of other Telcos.
_______________________________________________________________________________________
UAE-based Warid has recently signed an infrastructure Chinese co to invest BDT 340mn in a garment manufacturing
sharing agreement with both CityCell and Banglalink. Under industry at Karnaphuli EPZ
the deal, both companies are now sharing their base The Financial Express, Monday, September 8, 2008
transceiver stations (BTS) and other infrastructure. The top
three operators have already rolled out their network over A Chinese company, M/s. Blossom Textile Limited, plans to
and across the country - Grameenphone has 11,000 BTSs, invest BDT 340mn to set up a garment manufacturing factory
followed by Banglalink's 5,000 and Aktel's 3,000. Grameen at the Karnaphuli Export Processing Zone. The factory will
and Banglalink have also developed a fiber optic network. employee 2,000 Bangladeshis and 50 foreign nationals.
http://www.thedailystar.net/story.php?nid=53940 http://www.thefinancialexpress-
Textiles
Wal-Mart wants rebate on garment orders: Demand for 2
ATC Comment percent discount may hurt exports
The Daily Star, Monday, September 8, 2008
Troubles continue for the RMG sector. After weeks of labour
unrest, concerns have taken a new twist, with global Wal-Mart, the world's largest retailer of clothing, has
economic uncertainty finally starting to filter into requested a 2 percent rebate on its current orders of
Bangladesh’s RMG sector. Disappointing export figures for Bangladeshi RMG products. According to an export-oriented
July-August (a 7% fall), coupled with Wal-Mart’s request for a garment factory owner, Wal-Mart had instructed him to give a
2% rebate on sales puts further pressure on the sector. We 2 percent rebate on sales. Industry insiders said the US-
wait to see if the export decline is just a seasonal dip or more based Wal-Mart buys RMG products worth $1.7 billion a year
seriously the lagged effect from the US and European from Bangladesh, buying from more than 200 garment
decline. Walmart currently buys USD 1.7bn from 200 RMG factories in Bangladesh.
businesses – 2% of a very large number is significant. With
falling sales, pressure on pricing and consequent margin http://www.thedailystar.net/story.php?nid=53804
pressure does not bode well for manufacturers needing to
pacify workers who struggle to make ends meet – any wriggle Taiwan to invest BDT 500mn in a textile yarn manufacturing
room that was once there is fast diminishing. industry at Comilla EPZ
The Financial Express, Tuesday, September 9, 2008
The BGMEA’s compliance audits are a welcome move – a
move that will help BD protect and extend its global position. M/s. Hun Hsin Textile Co. (BD) Limited, a Taiwan-based
Implementing consistent measures to push more company, plans to invest BDT 500mn to establish a textile
manufacturers to reach international standards and ‘ethical yarn manufacturing factory at the Comilla Export Processing
sourcing initiatives’ demanded by foreign buyers will increase Zone. The company will create employment opportunities for
export competitiveness. 1,237 Bangladeshis and 11 foreign nationals.
Malek Spinning Mills, one of the better performing mills in the http://www.thefinancialexpress-
textile sectors plans to IPO - a positive move for the listed bd.info/search_index.php?page=detail_news&news_id=44985
textiles sector. While the sector leads exports, only a handful
of high quality textile companies are listed, with the majority BGMEA conducts social compliance audit on 1,381 factories
being low quality. Last year the Cotton USA Licensee Malek The Financial Express, Friday, September 12, 2008
Spinning Mills Ltd. mill produced 12.58mn kgs of yarn and
had a turnover of BDT 2.40bn. Their Salek Textile mill The BGMEA, as part of ensuring social compliance, audited
produces 42 tonnes of open end yarn per day. 1,381 member factories out of 2,435. The audit was carried
out in collaboration with IFC Advisory Services for South
Global players are also continue to move to BD - both M/s. Asia-South Asia Enterprise Development Facility (IFC-
Blossom Textile Limited and M/s. Hun Hsin Textile Co. (BD) SEDF). This monitoring data is now being stored in database
Limited announced plans to invest BDT 840mn in two EPZs. software which will allow BGMEA to efficiently evaluate and
assess compliance standards and take action to faciliate
BGMEA asks PDB to ensure smooth power supply to RMG further improvement. This is the first comprehensive
factories approach to evaluate the social compliance in the industry.
The Financial Express, Monday, September 8, 2008
Leaders of the BGMEA exchanged views with Power
Development Board (PDB), Chittagong, on irregular power
Malek Spinning Mills to float IPO
supply, excessive load shedding and various power related
problems at the BGMEA regional office. According to The New Age, Friday, September 12, 2008
BGMEA first vice president, due to such problems in
The Malek Spinning Mills Limited has initiated a process to
Chittagong, RMG industrial units are compelled to use their
IPO by signing an agreement with Grameen Capital
own generators at a high cost. In response, PDB chief
engineer said that enhancement of power supply in
Management Limited to manage its the listing. Through pre-
Chittagong is not possible without increasing the gas supply.
IPO private placement and IPO, the company is planning to
raise a BDT 175bn fund for the implementation of company’s
http://www.thefinancialexpress- expansion programme and to set up chemical chip and fibre
bd.info/search_index.php?page=detail_news&news_id=44891 plants.
_______________________________________________________________________________________
Apparel export shows sluggish growth in Jul, Aug

The New Age, Sunday, September 14, 2008
The garment export sector has registered lower than

expected growth in the first two months of the current fiscal
year. Bangladeshi garment manufacturers received
comparatively poor volumes of orders from US and EU
buyers as demonstrated bya decline in Utilisation
declarations (UD) in July and August. UD is the mandatory
documentation which every exporter has to obtain after
receiving confirmed orders from foreign buyers, from the

BGMEA or BKMEA. While orders for certain knit products
tend to be low at this time of year, there remain concerns that
the global slowdown may impact the domestic garments
sector.
_______________________________________________________________________________________
AT Capital Team – Dhaka
Ifty Islam Managing Partner (880-2)-8155144, ext. 132 ifty.islam@at-capital.com
Syeed Khan Partner (880-2)-8155144, ext. 109 syeed.khan@at-capital.com
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Masud Khan Senior Advisor (880-2)-8155144, ext. 113 masud.khan@at-capital.com
Junaid Khan Investment Advisor (880-2)-8155144, ext. 121 junaid.khan@at-capital.com

Shahidul Islam, CFA Investment Manager (880-2)-8155144, ext. 122 shahid.islam@at-capital.com
Taufique Hasan Investment Manager (880-2)-8155144, ext. 123 taufique.hasan@at-capital.com
Syeda Tasnuva Akhter Research Associate (880-2)-8155144, ext. 127 syeda.tasnuva@at-capital.com

S Adeeb Shams Research Associate (880-2)-8155144, ext. 128 adeeb.shams@at-capital.com
A. M. A. Bari Nahid Research Associate (880-2)-8155144, ext. 130 nahid.bari@at-capital.com
Mohammad Emran Hasan Research Associate (880-2)-8155144, ext. 131 emran.hasan@at-capital.com
Sohana Alam Seraj Office Manager (880-2)-8155144, ext. 132 sohana.alamseraj@at-capital.com
Ahmad Sajid Research Associate (880-2)-8155144, ext. 135 ahmad.sajid@at-capital.com
S.M. Rashedul Hasan Research Associate (880-2)-8155144, ext. 137 rashed.hasan@at-capital.com
Tami Zakaria Research Analyst (880-2)-8155144, ext. 125 tami.zakaria@at-capital.com

Abdullah-Al-Farooq Research Analyst (880-2)-8155144, ext. 133 abdullah.farooq@at-capital.com
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Md. Zahidur Rahman IT Analyst (880-2)-8155144, ext. 140 zahidur.rahman@at-capital.com
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Syed Najibullah Research Assistant (880-2)-8155144, ext. 136 syed.najibullah @at-capital.com
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AT Capital Team – North America

Zarif Munir Senior Advisor zarif.munir@at-capital.com
Professor Jahangir Sultan, Ph.D. Senior Advisor jahangir.sultan@at-capital.com
M. Nasim Ali Senior Advisor nasim.ali@at-capital.com
Iqbal Hussain Senior Advisor iqbal.hussain@doctors.org.uk
© Copyright 2008. Asian Tigers Capital Partners Limited, Level 16, UTC Tower, Panthapath, Dhaka –
1215, Dhaka, Bangladesh. All rights reserved. When quoting please cite “AT Capital Research”. The
above information does not constitute the provision of investment, legal or tax advice. Any views
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Asian Tigers Capital Partners or its affiliates. Opinions expressed may change without notice. Opinions
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15 September 2008 AT CAPITAL RESEARCH

AT Capital Weekly Update

Key themes in this issue are:

Special Focus on Bangladesh’s Aid Budget

Professor Jahangir Sultan

UTC Building, Level 16

Overview – Global Markets 3

Special Focus I: Getting leverage from Bangladesh’s Aid budget 8

Special Focus II: Making Foreign Aid more Effective 10

Recommendations for civil society organizations 12

Stock Market Weekly 13

Asian markets suffer collateral damage from Lehman

Wall Street’s “Perfect Storm”: A tale of hubris, denial and

Bangladesh’s capital markets continue to move in relatively

Late Sunday night, Bank of America struck a deal to buy

Week ahead a crunch time for Wall Street

This week will be crunch time for global financial markets.

On Sunday, there was an extraordinary trading session on

From subprime housing crisis to Lehman bankruptcy

EM recoupling: Asian currencies continue to suffer from

Swings in emerging-market currencies may foreshadow

The trigger this time is speculation that developing nations

The biggest losers since June in emerging markets have

Declines in oil, nickel and wheat from records have pushed

A report in the September 15 Daily Star noted that the RRC

We believe that enthusiasm for PPP initiatives more broadly

Anything less will make it difficult for Bangladesh to increase

We would also argue that a responsibility for the Caretaker

• ICT Task Force.

Business Entry & Operations

• National Skills Development Council (NSDC)

Macro Economic Policy

• Loanable SME funds: 40% to small enterprises.

• SME tax & VAT incentives. recovery.

3) Achieving development results and openly accounting for

However, there are a number of challenges for both donors

The Accra Accord states that “Global funds and programmes

If the other bilateral agencies as well as the multilaterals

• Many Z category companies are non-existent

• State-owned banks cut capital deficit

• Book-building for IPO within 3 months

• Square Pharma marks its footsteps in Hong Kong

DSE performance: 30 days Regional stock market performance (last week)

Market summary Valuation snapshot

Saleh Carpet trade on DSE suspended

Dhaka Stock Exchange suspended the trading of Saleh

GP shareholders promise to put IPO beyond dispute

Grameenphone shareholders have committed to keeping the

Turnover leaders Best performers* Worst performers*

Professor Jahangir Sultan

Rashed Hasan Syed Najibullah

Export performance across different sectors (USD mn) Market news

9-Sep-07 30-Jun-08 9-Sep-08 • Excess liquidity of banks declines

Aug-07 Aug-08 2007-08

Jun-07 Jun-08 2007-08

Source: Selected Indicators by Bangladesh Bank, 10 Sep 2008 Weighted

Top exported items (USD mn) 7-Sep-08 91-day T-bill 7.77%

19-Aug-08 5-year T-bond 10.60%

Source: Bangladesh Bank

Excess liquidity of scheduled banks fell to BDT 129.9bn

Total SME loans increased by 11.1% in the year to over BDT

Disbursement of industrial term loans during April-June 2008

Bangladesh Bureau of Statistics set to go for new CPI and

The Bangladesh Bureau of Statistics is set to revise the