Volume 9 Issue 03 March 2013
DEVELOPED & PUBLISHED BY Industry & Equity Analysis Team Credit Risk Management IDLC Finance Limited
HIGHLIGHTS RESEARCH IN FOCUS • IMF 1st Review under ECF: A tale of Progress and Near Misses
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ECONOMY • Taka to appreciate modestly: HSBC • Forex breaks another milestone
Steelmakers of Bangladesh Forging Ahead amid Overcapacity See page 7
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TRADE • ITFC to continue low cost L/C facility to BPC • SME loan disbursement exhibits positive growth
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BUSINESS • Govt undertakes 6 development projects 17 • Largest ever loan deal with JICA 17
REGULATORY NEWS • EFT charges removed: BB 19 • Stock dealer capacity raised to BDT 30 mn: BB 20
COMMODITY MARKET ROUNDUP • Global food prices at an impasse
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IDLC NEWS • IDLC declares 30% stock dividend at its 28th AGM
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CAPITAL MARKET REVIEW • Investment Insight: S. Alam Cold Rolled Steels Limited 32
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IDLC
in this issue
MONTHLY BUSINESS REVIEW
Volume 9 Issue 03 March 2013
contents COVER STORY
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Steelmakers of Bangladesh: Forging Ahead amid Overcapacity Steel ‒ the cornerstone of most advanced economies path to a progressive society. In Bangladesh, the steel industry is in a position of continuous flux, with new entrants, easing restraints on the ship breaking industry and a booming real estate sector helping things along. But a low per capita consumption and rising overcapacity remain key challenges facing the domestic steel sector.
RESEARCH IN FOCUS
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ECONOMY Creeping food prices propel inflation upwards ADP allocation poor: Jul-Feb 13
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The first review by the IMF finds Bangladesh mostly on target in meeting program commitments. Inroads have been made into managing non-concessional debt level, strengthening financial sector oversight and improving the trade and investment climate; while further improvements have been pledged. Going forward, the IMF envisions the country focusing on structural fiscal reforms aimed at generating higher tax revenues, increasing priority spending and consolidating fiscal and debt sustainability.
TRADE BoP appreciates USD 1.1 bn in single month NBR to proactively target revenue collection
INVESTOR S CORNER
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BUSINESS BD Energy Sector in need of FDI India withdraws duty-free RMG benefits Reconditioned car sector in a slump
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REGULATORY NEWS Internet in Rural Areas: BD Govt. NBR identifies key revenue dampeners
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IDLC CSR INITIATIVES
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MARKET ROUNDUP Major Currency Roundup Commodity Market Roundup
IMF 1st Review under ECF: A tale of Progress and Near Misses
IDLC partners with VSO Bangladesh for Model Village Project
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INTERNATIONAL Coke, IFC to finance Asian women entrepreneurs Richest in the world poorer by USD 17.9 bn
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MONTH IN REARVIEW Business - Firm Specific Corporate Social Responsibility Initiatives Management Change
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Design & Printing nymphea
CAPITAL MARKET REVIEW Market Commentary Investment Insight: S. Alam Cold Rolled Steels Limited
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IDLC NEWS
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IDLC declares 30% stock dividend at its 28th AGM
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RESEARCH IN FOCUS IMF 1st Review under ECF: A tale of Progress and Near Misses Despite numerous incentives to function on the contrary, the economy of Bangladesh keeps growing amidst adversity. Reduced foreign aid credit flow, middling development in the transport infrastructure, heightened political tensions and lapses in regulatory compliance by the financial and apparel sector ‒ the blockades to sustained growth are many. In recent times, the outlook for Bangladesh has received mixed assessment from different global groups. Some, like the American human resource consultancy firm Aon Hewitt, believe Bangladesh to still be lagging in such matters as access to education, talent development, employment practices and so on. Yet, Bangladesh keeps trucking on, growing at 6% to 7% over the last few years. This resiliency has been reflected through positive endorsements by numerous international institutions, banks and focus groups. Notable examples include Goldman Sachs ‒ who has included Bangladesh in its Next Eleven list of emerging economies alongside the BRICS nations as having potential to be future growth drivers in the international scene ‒ and the Asian Development Bank, which finds the country on a sustained growth path despite structural incongruencies along its oftentimes rocky path. Many factors ‒ such as the robustness of the private sector, most notable the banking and apparel industries ‒ have contributed to this positive realization of development. One of the key contributors has been the flow of foreign funds into the economy. Historically, Bangladesh had been very dependent on the amount of foreign grants in regards to its development projects ‒ in 1988 85% of the annual development budget (ADP) was financed through a mixture of foreign grants and loans. While Bangladesh has strived to reduce this proportion, foreign aid remains one of the key propellers of infrastructural and reform projects and multilateral lenders being one of the major development partners of Bangladesh. The International Monetary Fund (IMF) is one such organization. In early April 2012, the IMF approved a loan to Bangladesh worth almost USD 1 bn under its Extended Credit Facility (ECF), to help the country overcome macroeconomic pressures and build a reserve buffer. The amount represented the largest loan ever offered to a member country under the IMF s reformed concessional lending architecture at the time, and was to be disbursed into seven equal installments of USD 141 mn each. The Extended Credit Facility (ECF) by the International Monetary Fund (IMF) provides financial assistance to countries with protracted balance of payments problems. The ECF was created under the newly established Poverty Reduction and Growth Trust (PRGT) as part of a broader reform initiative to make the IMF s financial support more flexible and better tailored to the diverse needs of Low Income Countries (LICs), including in times of crisis. The ECF is the natural successor of the Fund s Poverty Reduction and Growth Facility (PRGF) and is utilized by the IMF for providing medium-term support to LICs through a mix of tailored financial resources, concessional financing (lending) terms and a streamlined flexible program which offers more focused conditionality in regards to these low-income economies. Like its predecessor the PRGF, the ECF supports countries economic programs aimed at moving toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth, as well as facilitating inflow of additional foreign aid. Assistance under an ECF arrangement is provided for a three-year period, and can be extended for up to two additional years. After the conclusion of an ECF facility ‒ either through natural expiration or cancellation ‒ eligible LICs may apply for additional ECF arrangements. The IMF uses quantitative conditions and proprietary structural benchmarks against which it assesses the progress LICs have made against the stated goals and macro-critical reforms agreed to in the ECF agreement, and a review is typically published at regular intervals assessing the efficacy/implementation rate of the program in question. The main objectives of the ECF availed to Bangladesh remain focused on restoring macroeconomic stability, strengthening the external position, and generating higher inclusive growth, with the ultimate result being poverty reduction. Program targets in 2013 are anchored by continued fiscal and monetary restraint, building on initial stabilization gains and locking in
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reserves outperformance. In March 2013, the IMF published the first review of the ECF s program performance in conjunction with the authorities of the Government of Bangladesh. In its report, the IMF finds that the government s structural measures aim to modernize the tax regime, strengthen fiscal controls, solidify financial sector oversight, and improve the trade and investment climate in order to reduce vulnerabilities and achieve development priorities, as laid out in Bangladesh s Sixth FiveYear Plan for FY2011‒15. In short, performance has been broadly in keeping with commitments. The medium-term report of the Fund focuses on four key areas of Bangladesh s macro-economic and reform performance since being granted the extended credit facility. They are ‒ Fiscal Policy and Debt Management: Securing Fiscal Space Monetary and Exchange Rate Policy: Further Strengthening Buffers Financial Sector Reforms: Bolstering Stability Investment Climate: Easing Controls Overall Economic Situation The IMF report finds that Bangladesh made positive inroads into most performance criteria (PC) and indicative targets (IT) set by the IMF s extended credit facility. Positive development in net international reserves and non-concessional external debt levels were observed by the IMF. A number of structural benchmarks were completed with delays or have required more time to build internal consensus, notably on a new value added tax (VAT) law and implementation plan and banking law amendments. The IMF finds that macroeconomic pressures have eased somewhat, allowing for faster-than-forecast foreign reserve buildup. However, the spillover effects from the ongoing
IDLC MONTHLY BUSINESS REVIEW
Eurozone crisis on EU-bound exports pose sizeable risks in the event of a worsening European outlook.
December 2012-end (3.4 months of imports), up by nearly USD 4.0 bn from late 2011.
Provisional estimates show real GDP growth slowed to 6.3% in FY2011-12 from 6.7% in the previous fiscal with weaker net exports and lower investment growth - the main factors contributing to this slight slowdown. Underpinned by moderating macropressures and food prices, headline inflation receded to 7.7% year-over-year in December 2012 after reaching a decade-high 12% in September 2011. However, nonfood inflation remains above the headline rate, but has also moderated.
The IMF finds that fiscal performance in 2012 has been broadly in line with program targets. The overall budget deficit (excluding grants) is estimated at 4.0% of GDP in FY2011-12, excluding fertilizer subsidy overruns to be settled in FY2012-13 (around 0.5% of GDP). Government domestic borrowing has been restrained since the second half of FY2011-12̶a clear reversal from the first half.
Source: IMF
Additionally, fuel and electricity subsidies were largely contained, as lower international oil prices and administered price increases narrowed losses at energy-related state-owned enterprises. The IMF believes that the effect of these price adjustments on the economically vulnerable was mitigated in part by higher spending on social programmes. However, some of these social-related spending experienced delays in execution. Annual Development Program (ADP) expenditure fell short of programmed levels in FY2011-12, but closer engagement with spending ministries and development partners has led to modestly improved performance in the first half of FY2012-13. Bangladesh was spot on in its reduction of non-concessional debt, while most external arrears were met. The IMF expected monetary conditions to further tighten in 2012, and benchmark indicators have backed this up for the outgoing fiscal. Money market rates and Treasury yields rose, in line with earlier repo rate hikes by the Bangladesh Bank (BB), and are now positive in real terms. The stock of reserve money remained within acceptable IMF-approved ceiling at Septemberend 2012, restrained by net domestic assets of the central bank and limits on government borrowing from the Bangladesh Bank. From a peak of nearly 30% in mid-2011, credit growth slowed to around 17.5% year-over-year in November 2012. On its part, BB continued to limit directed liquidity support to primary dealer (PD) banks and meet discretionary repo needs at the higher penalty rate, supported by more stable conditions in the interbank repo and call money markets. More liquidity was injected primarily through foreign exchange purchases, against the backdrop of strong remittance flows, but partially sterilized by the reactivation of auctions of 30-day central bank bills from November 2012 onwards.
Despite slower-than-expected export growth, the balance of payments (BoP) reversed to a small surplus in FY2011-12 from a moderate deficit in FY2010-11. The improvement was due primarily to a narrowing of the current account deficit to an estimated 0.5% of GDP in FY2011-12 compared to 2.0% the previous year. Import growth was restrained by policy tightening and lower oil prices in the second half of FY2011-12, as well as by slowing export growth, given the heavy import content of readymade garments exports. On the other hand, remittances growth picked up in FY2011-12, stemming from an earlier upsurge in worker flows to the Middle East and Southeast Asia. The capital and financial accounts provided further support through oil import-related credits and aid disbursements. Since early 2012, the BDT/USD exchange rate has stabilized, in part due to BoP conditions, allowing stepped-up purchases of foreign exchange by Bangladesh Bank (BB) to rebuild its reserve buffer. As a result, gross foreign reserves were USD 12.5 bn at
Source: IMF
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Macroeconomic Outlook and Risks Despite improvements in the external position, the growth outlook for FY2012-13 remains uncertain due mainly to global factors. The report opines that real GDP growth will moderate further to 5.8% in FY2012-13 on the back of subdued exports and private consumption, the latter due mainly to the impact of lower domestic rice prices during the Aman (winter) harvest on rural incomes. Inflation is expected to be around 8% in June 2013, but decline over the medium term, as improvements in infrastructure is expected to ease supply constraints in the long run. Notwithstanding a further slowing in export growth and expected pick up in oil imports in the second half of FY2012-13, the current account is expected to be roughly in balance in FY2012-13, supported by an additional rise in remittances growth, with gross foreign reserves to remain at USD 12.4 bn at the end of the fiscal.
appropriately restrained to contain inflation and protect reserves. On the other hand, the report finds that remittances still have more room to expand, which could help build the reserve buffer and boost domestic demand due to the increased money supply. Turning to the domestic front, a further escalation of pre-election tensions and deterioration in the financial condition of the state-owned commercial banks pose the greatest risk, possibly affecting growth prospects and public finances and necessitating stronger economic governance and tighter financial controls to avoid undermining public debt sustainability. The IMF reports that the majority of its engagement with the Bangladeshi government resolved around commitments by the latter toward the ECF-program. In that regard, a Memorandum of Economic and Financial Policies (MEFP) was agreed by both the parties on February 10, 2013. In it, the government of Bangladesh committed on consolidating stabilization gains and advancing growth-critical reforms. Some of these are mentioned as follows. Fiscal Policy and Debt Management: Securing Fiscal Space
Source: IMF
The medium term growth outlook is predicated on a timely resolution of issues regarding foreign credit flow to the construction of the Padma Bridge controversy. Regarding risks facing the Bangladesh economy in the near term, the IMF feels the balance will be on the downside, potentially putting pressure on growth and inflation and undermining financial stability. The IMF envisages five key risks looming on the horizon for Bangladesh, Strong intensification of the euro area crisis: About half of exports go to the European Union (EU), predominantly in the flagship garment sector where a doubling of total EU market share over the past five years spurred earlier growth. Further deterioration in state-owned commercial bank (SOCB) finances: Two of the four SOCBs fail to meet minimum riskweighted capital requirements, with another at risk. Intensification of pre-election political pressures: Escalating hostility and lack of fiscal restraint ahead of the upcoming 2013 elections World oil price shock: Petroleum imports (in USD) have more than doubled since FY2009-10, driven by increased reliance on liquid fuel-based power generation. World food price shock: With food accounting for over two-thirds of the consumption basket, the poor would be hard hit. If these risks materialize, the IMF believes that Bangladesh will need to address any negative fallout through the usage of exchange rate and fiscal channels, with monetary policy remaining
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The government s ECF-supported program intends to carry forward key structural fiscal reforms aimed at generating higher tax revenues and increasing spending in development sectors, while keeping a tight rein on fiscal and debt sustainability. The rate of structural reform has been noted to be slow, by the Fund s standards. The multi-lateral lender believes that the recent passage of a landmark VAT law with a single 15% rate could act as the stepping stone to the government s tax modernization strategy. The law provides for three taxes, anchored by a creditable 15% VAT that is chargeable by businesses with taxable annual sales in excess of BDT 8 mn a year (approximately USD 100,000). The new law also has a non-creditable 3% turnover tax, as well as a supplementary duty of varying rates that is chargeable on sales of a specific but streamlined set of goods and services. While the turnover tax and supplementary duties will continue to operate in much the same way as under the current law, the VAT will undergo major changes. The new VAT law will bring all economic sectors (imports, manufacturing, and services) under the scope of the VAT, with tax paid on the basis of actual transactions values instead of highly compressed and arbitrarily negotiated approved values embedded in the rate schedules (for manufactures) and on truncated bases (for imports and services) under the existing law. In addition, the exhaustive list of exempt goods and services from VAT shall be skimmed to broaden the tax base. Previous IMF reports estimated that these changes could increase the tax collections by nearly two percentage points of GDP a year once the new VAT is fully implemented. However, regarding nonconcessional external debt, the IMF still feels that the country should strengthen debt management practices to ensure that nonconcessional borrowing is carefully managed, and this should be reflected in the government s annual borrowing plan, and guided by Bangladesh s mediumterm fiscal and debt sustainability objectives. The fiscal deficit in FY2012-13 (excluding grants) is targeted at 4.5% of GDP, lower than the budgeted target of 5.0% of GDP, with ADP spending now better aligned with implementation capacity. The authorities remained optimistic that programmed revenue targets could be achieved based on additional revenue measures (0.6% of GDP) introduced in the FY2012-13 budget. About half of
IDLC MONTHLY BUSINESS REVIEW
this came from the removal of tax concessions and exemptions. The rest came from new fees and rates. Over the medium term, the Bangladesh economy is expected to adopt a moderate consolidation path by increasing tax revenue and containing subsidy costs, providing ample space to increase ADP spending.
limits on fuel subsidies. In addition, the government has committed to setting retail petroleum prices with a view of keeping them within BDT 10 per liter of the total landed costs (including selling and distribution margins). With the latest fuel price change, the weighted-average difference between international and domestic prices was less than BDT 10 per liter, notes the IMF. To further contain subsidy costs through system loss, the IMF has directed the government to take a closer look at rental power plants as the level of subsidy to that particular subsector has been disproportionate. Also, a more concerted effort was also seen necessary to contain ballooning fertilizer subsidies through better targeting, stricter monitoring, and price adjustments, with subsidy cost capped at BDT 60 bn in FY2012-13.
Source: IMF
Program commitments: Pressing ahead on tax and revenue administration reforms The authorities agreed that steady implementation of the new VAT law coupled with stepped-up efforts to modernize the tax regime were essential to raising revenues. Due to delays in passing the law, ministerial approval of a VAT implementation plan and timetable has been rescheduled to March 2013, with IMF technical assistance provided to expedite the process. A VAT steering committee was established in January 2013 to ensure a smooth VAT roll-out by FY2015-16. While pressing ahead with a new direct tax code, Bangladesh has admitted that more work was required to rationalize the law before seeking cabinet approval. Strengthening public financial management and expenditure control The IMF acknowledges that improvements have been made in cash and debt management and budget integration. However, weaknesses remain in the form of weak and irregular cash-flow forecasting; insufficient cash management procedures; weak accounting and payments systems as well as lack of awareness of cash management procedures, and dispersed debt management responsibilities across several agencies Contain subsidy costs Bangladesh has agreed in part with the IMF to keep total subsidy at around 3.5% of GDP in FY2012-13, factoring in government capitalization of all earlier subsidy-related loan losses at the state-owned commercial banks, with no additional debts being incurred. To this end, electricity tariffs were further raised by about 16% in September 2012 and fuel prices were up to 11% in January 2013. These efforts were undertaken to limit the gap with international prices and stay within budgeted
Source: IMF
Strengthening safety nets and reinforcing priority social spending The IMF finds that work to develop better-targeted subsidy schemes focused on safeguarding the poor is ongoing, with a national poverty registry being developed with World Bank assistance to guide the formulation of conditional transfers and assistance-for-work programs. In the interim, the report noted that scope exists to top up existing safety nets. Bangladesh reiterated its commitment to protect space for social spending over near to medium term, consistent with the current fiscal framework, and adhere to program-related targets in this area. Ensuring sound debt management The government s debt management policy will be anchored by a continued reliance on concessional borrowing and agreed limits on nonconcessional borrowing and guarantees, with program debt ceilings set accordingly. The global lender urged that projects utilizing nonconcessional resources be closely vetted, properly evaluated, and carefully monitored to ensure sound governance and oversight in the use of these funds, including guarantees. In addition, the need to promote fiscal transparency under the existing Public Money and Budget Management Act was emphasized. Nonconcessional borrowing and debt sustainability Under the program, the limit on new nonconcessional external debt maturing in more than one year will be set at a cumulative USD 3.75 bn at 2013-end. This constitutes borrowing of about USD 0.9 bn through 2012 end, new funds availed in January 2013 worth USD 1.5 bn and further loans
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and guarantees of up to USD 1.35 bn for the rest of the year. Much of these funds shall be used for planned base power projects. While no formal announcement has been made in regards to Bangladesh s plan of a sovereign bond issue, the government has reassured the IMF that the former will stay within its ECF-approved debt ceiling. The sovereign bond is to act as a benchmark for more private external borrowing, with limits on such expected to be eased over time, reflecting a move towards a more open investment climate.
sluggish export sector. As a safeguard, new loan classification and provisioning standards in line with international best practices were introduced. Equity markets remain volatile, with the main Dhaka index down by half from its December 2010 all-time high, despite recouping some earlier losses.
Monetary and Exchange Rate Policy: Further Strengthening Buffers Under the program, monetary and exchange rate policy aims to contain aggregate demand pressures, further bringing down inflation and building a reserve buffer, supported by greater exchange rate flexibility and market-determined interest rates. Consistent with its latest monetary policy statement, BB agreed to maintain a relatively restrained monetary policy until nonfood inflation was firmly entrenched in the single digits, while at the same time providing sufficient space for private credit growth. The BB aims to accumulate reserves through foreign exchange purchases as market conditions allow. Concurrently, it will try to avoid pegging the exchange rate at risk of stifling market trading, instead letting the exchange rate absorb external pressures and sterilizing foreign exchange market interventions, as necessary, in order to protect monetary targets.
Source: IMF
In line with above mentioned goals, the central bank intends to increase its reliance on indirect instruments for conducting monetary operations, allowing price signals to gain traction in a more liberalized interest rate regime. To strengthen its liquidity forecasting framework, BB, along with the Ministry of Finance (MoF), agreed to develop better tools for forecasting the Treasury Single Account. Also, the BB wishes to reduce devolvement of T-bills and bonds through development of new auction mechanisms and further measures such as shorter-dated instruments to activate the secondary market for government securities. Financial Sector Reforms: Bolstering Stability The middle-term country review finds that the weakening financial position of the state-owned commercial banks highlight the need to speed up financial reforms and put in place safeguards to minimize potential recapitalization costs. Financial soundness indicators show evidence of some back-sliding in asset quality in the first nine months of 2012 across most types of banks. The IMF believes the likely cause to be stricter oversight by the BB and the
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Heading out into the second half of FY2012-13 and beyond, strengthening bank governance and oversight are key agendas for Bangladesh Bank, believes the IMF. The government looks to anchor reforms in this area with amendments to the Banking Companies Act (BCA). An inter-agency drafting committee finalized an initial set of amendments in June 2012. Also, to support the strengthening of prudential controls and increase the effectiveness of supervision, the BB adopted a new organizational structure in May 2012 aimed at consolidating management of on-site and off-site supervision activities. Training of on-site examiners in critical skills is also being accelerated, supported by ongoing technical assistance from the IMF. To reinforce these efforts, BB will strengthen its bank resolution framework by September 2013, finalizing a contingency plan and a lender of last resort policy. Pertaining to any suggestions, IMF advised local authorities to pursue full codification of a bank resolution under the Banking Commission act. Most importantly, the central bank must better manage the risks its state-banks, especially in the view of capital shortfalls, liquidity pressures, and weak governance exhibited by the big four. In that regard, the BB plans to focus on asset quality, liquidity management, and internal audit and controls. In addition, the authorities indicated they would ensure that new board appointments at the SOCBs would be made in consultation with the BB and maintain with existing regulations. The IMF also urged the central bank to undertake aggressive actions on fraud recoveries and more firmly enforce memoranda of understanding (MOUs) with the state-banks. To this end, the authorities agreed to introduce a new ceiling on aggregate net credit extended by the SCBs to keep new lending in check. Investment Climate: Easing Controls The IMF finds that restrictive exchange controls, rooted in the archaic 1947 Foreign Exchange Regulation Act (FERA), continue to limit trade and investment in Bangladesh, as noted in recent Doing Business and global competitiveness surveys. The government has committed to completing a review of the FERA and its associated rules by September 2013, with the initial aim of better facilitating foreign direct investment and portfolio inflows. Plans of a private-public partnership law by June 2013 are in the works as well.
IDLC MONTHLY BUSINESS REVIEW
Steelmakers of Bangladesh: Forging Ahead amid Overcapacity - Md. Mehedi Hasan
The first industrial revolution in Britain towards the end of the 18th century and the second one in Germany and the United States approximately a hundred years later, were similar in many ways despite being removed almost a century from each other. During the two periods concerned, new products and processes were generated mostly through a steady stream of innovations and inventions. Many of these inventions and innovations would not have had commercial value without iron and steel as critical inputs. Indeed, the early spread of industrialization traced to Western Europe between 1750 and 1800 was enabled by the development of iron and steel, when Britain had industrial monopoly compared to other parts of the world. The same can be said of America in the mid-1800s when the founding of heavy iron and steel industries and the advent of a nationwide rail network that integrated regions across the USA led to the birth of modern industrial capitalism. Thus, history teaches us that industrial development and movement of economies from the primary to the secondary and onto the tertiary stages of production are explicably linked, as the ability of societies in Western Europe, the Americas and in Japan to cope with their environment and provide for the welfare of their people was possible due to their progressive development, mastery and use of iron and steel products during different stages of their history. For developing countries in the 21st century, progress in steel-making technology does not represent starting from scratch; rather the objective should be to obtain, learn and apply the technologies in existence. In short, developing countries need to absorb foreign technology through mimicking, self-teaching, investing in foreign licenses, or technical assistance from international bodies/ developed countries and so on. The economy of Bangladesh is a rapidly developing marketbased economy. According to the International Monetary Fund (IMF), Bangladesh is ranked as the 44th largest economy in the world in 2011 in purchasing-power-parity terms and 57th largest in nominal terms; it has also been included among the Next Eleven or N-11 of Goldman Sachs and D-8 economies. Over the last few years the economy has grown at 6%-7% per annum. Additionally, a separate assessment by the Asian Development Bank in 2012 also theorizes that the Bangladesh economy should exhibit stable 6%-plus growth rate for the next two years, buoyed by a 6.1% growth in the services sector and a massive 9.0% growth in the industrial sector ‒ led by construction and smallscale manufacturing efforts targeted at the domestic market. Prospects indeed look bright for the South Asian nation. However, infrastructural weaknesses remain. Proper national development is only possible through expansion of industrial capacity and infrastructural support by means of self-sufficiency. As stated
before, the movement towards a progressive national economy thus, partially but strongly depends on how we make steel and produce deformed bar and other by-products. Historically, the art of steel shaping and making have long been in practice in Bangladesh.
Source: World Steel Association
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However, changing times have led to changing consumption patterns and demands from both domestic and international audiences; indeed the quality of the steel products has not always met the level of local and international consumers. According to local steel manufacturers, Bangladesh consumes 4 mn tons of steel per annum and per capita steel consumption is 25 kilograms, which is less than half of per capital steel consumption in India. Considering the population of Bangladesh being roughly equal to 160 mn, this penetration is exceedingly poor when compared to India s 1 bn plus populace. Nonetheless, more than 400 steel mills of different categories and sizes currently operate in the country. Together, their combined production capacity stands at 8 mn tons while the industry has a net worth of about BDT 300 bn.
The alternate process contributes approximately 35% of world steel production. Plants used in the alternate process are known as mini steel plants. Steelmaking from scrap metals involves melting the scrap metals, removing any impurities through either a Direct Reduced Iron/Sponge Iron and casting it into the desired shapes. Typically, the alternative process involves the use of Electric Arc Furnaces (EAF). The EAFs melt scrap metal in the presence of electric energy and oxygen. The process does not require the three steps refinement as needed to produce steel from ore. On a smaller scale, this particular manner of steel production has proven to be more economical and costreducing. In Bangladesh, most steel factories are producing steel by following the alternate process due to unavailability of quality coke and iron ore.
Dynamics of the Steel Industry
Quality Testing
Depending on the type of raw materials used, steel can be produced in two distinct manners.
When we talk about quality of steel, we mean the desired specification with respect to chemical composition, cleanliness and gas content. Quality of good steel can be ranked according to the following carbon level which can be tested through an Ultrasonic Thickness Machine (UTM).
Conventional Process: Steel Production from Iron Ore Alternate Process: Steel Production from Scrap Metals The conventional process of steel manufacturing contributes approximately 65% of world steel production. Under this method, steel production is accomplished in an integrated steel plant through three basic steps. First, we ensure that the blast iron furnace in which the iron ore is to be melted has all the correct settings, such as proper temperature and proper containment measures. Secondly, the iron ore is placed in the furnace and melted at about 1700° C. This melts the scrap, lowers the carbon content of the molten iron and helps remove unwanted chemical elements; here pure oxygen is used instead of air. Finally, the molten iron is processed through a variety of means to produce steel.
Figure: Steel making process
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Carbon Equivalent (CE)
Weldability
0 to 0.35
Excellent
0.36-0.40
Very Good
0.41-0.45
Good
0.46-0.50
Fair
Over 0.50
Poor
Source: Seminar on Quality Steel and Its Importance in Civil Engineering Applications, BSRM
IDLC MONTHLY BUSINESS REVIEW
Product Types There are a few types of steel products manufactured in Bangladesh, namely Billet - MS Angle - MS Channel -Flat Bar - Round Bar/ Shaft 40 Grade Deformed Bar - 60 Grade Deformed bar ‒ Deformed Bar Extreme 500 W TMT (thermo-mechanical treatment) bar TMT steel bar is a newer variety of steel used for construction purposes. Earlier, people had been using TOR Steel (trade name for deformed bars) for concrete reinforcement in houses and infrastructure projects, but now usage has shifted more towards TMT steel. TMT bars offer several advantages over the other traditional types of steel. No twisting operation is involved in the production of the TMT steel bar, as a result the steel produced contains no residual stresses in its makeup. This in turn, increases the corrosion resistance. Net Profit margin in Steel Industry Full auto technology with billet plant Manual Production process
3% to 4 % 1% to 2%
Note: Profit margin may vary depending on the market demand & supply condition, raw material cost, exchange rate, backward linkage etc. Most of the firms set up their own billet plants which helps them to secure better margin nowadays.
Business Arenas Factories of steel and re-rolling mills are mainly located at the following areas: Zone
Area
Dhaka
Demra, Shampur, Matuail, Gazipur
Narayanganj Chittagong
Rupganj, Modonganj Bhaitari, Fouzdarhat, Kumira, BaizidBostami, Nasirabad
Production Capacity of Steel Industry in Bangladesh Currently, the demand of steel is around 4 mn tons per annum whereas the combined capacity of the industry is around 8 mn tons. Although the installed capacity of 4 mn tons is not being utilized currently, this overcapacity may prove tricky as a demand fall coupled with the overcapacity may pressurize profit margins.
On the other hand, world steel capacity utilization ratio in 62 countries in July 2012 declined to 78.7% from 80.4% in June 2012. Compared to July 2011, it is 0.8 percentage points lower. Overall, it can be inferred that supply tends to outstrip demand in the consolidated steel industry. Players of the Steel Industry As an emerging country that has been average 6% growth over the last few years, Bangladesh has seen sizeable investment in the steel sector. Big business conglomerates such as PHP and Abul Khair Group have stepped in to take advantage of growing market demand. Kabir Steel & Re-rolling Mills (KSRM) has set up a 300,000-ton mild steel rod plant in Chittagong. The plant has been designed by famous European steel plant designer Pomini, is fully automated and has the capacity to produce from prime quality billets. The KSRM announcement came just a month after the country s largest conglomerate, Abul Khair Group, formally entered the sector, unveiling a BDT 7000 mn investment for an 800,000-ton plant. Bashundhara Group, the realtor-turned-tissue to paper giant, has also decided to enter the steel production market. At present, the group s subsidiary Bashundhara Steel Complex Limited (BSCL) has two Steel Melting Units and two Steel Re-rolling Units with a capacity of 100,000 metric tons per year; one M. S. and G. I. Pipe manufacturing units with the capacity of 20,000 metric tons per year; one LPG Cylinder manufacturing unit with the capacity of 300,000 cylinders per year and one Ferro-Alloy Plant with the capacity 7000 metric tons per year which is in the commissioning stage. Yet another Re-Rolling Mill with TMT technology is under a trial production run, whose production capacity is expected to be 60,000 metric tons per year. Another Chittagong based mill ̶ Ratanpur Steels and Re-rolling Mills has started marketing 75-grade mild steel rod since late 2011 from its state-of-the-art steel factory worth BDT 2000 mn. On the other hand, Sarker Steel has automated its factory with state of the art technology in an effort to increase the quality of its product offering. Currently, the company has a monthly capacity of 5000 metric tons. Baizid Steel also produces high quality 75000 psi deformed bar and has an annual capacity of 180,000 metric tons. Its sister concern ‒ CSS Corporation (BD) Ltd ‒ has a similar annual capacity of 170,000 metric tons billet. Major Players in Steel Market: Domestic BSRM Steel Mills Limited Rahim Steel Mills Co. (pvt.) Ltd. Ratanpur Steel Rerolling Mills Ltd Bashundhara Steel Complex Limited (BSCL)
International ArcelorMittal (UK) Hebei Group (China) Basosteel Group (China) Posco (Korea)
Sarker Steel Limited (SSL)
Wuhn Group (China)
KSRM Steel Plant Ltd
Nippon Steel (Japan)
Abul Khayer Steel(AKS)
Shagang Group (China)
Baizid Steel Industries Ltd Source: World Steel Association
Saleh Steel Industry Ltd.
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IDLC MONTHLY BUSINESS REVIEW
Another big player, Bangladesh Steel Re-rolling Mills (BSRM), has not remained idle in the face of such broad scale mobilization in recent times. In turn, it has aggressively engaged in capacity building. BSRM ‒ producer of high-grade steel ‒ caters to more than 25% of the total domestic steel demand. BSRM had a production capacity of 375,000 tons per year in FY 2012. Currently, it is conducting a trial production run of its newly installed BDT 3.5 bn plant that is expected to have an output level of 300,000 ton per annum. The steel giant has also unveiled plans to invest another BDT 5000 mn to raise its capacity to around 1 mn tons within the next five years. Global Steel Production Status: World crude steel production for the 62 countries reporting to the World Steel Association was 130 mn ton (Mt) in July 2012, an increase of 2.0% compared to July 2011. China s crude steel production for July 2012 was 61.7 Mt, an increase of 4.2% compared to July 2011. Elsewhere in Asia, Japan produced 9.3 Mt of crude steel in July 2012, up by 1.2% compared to the same month last year. South Korea s crude steel production for July 2012 was 5.9 Mt, an increase of 4.4% compared to July 2011. In the EU, Germany produced 3.6 Mt of crude steel in July 2012, a decrease of -2.1% on July 2011. Spain s crude steel production for July 2012 was 1.0 Mt, 7.0% higher than July 2011. In July 2012, the UK produced 0.9 Mt of crude steel, up by 6.6% compared to July 2011. Turkey s crude steel production for July 2012 was 3.1 Mt, an increase of 9.7% compared to July 2011. In July 2012, Russia produced 5.9 Mt of crude steel, an increase of 3.6% compared to the same month last year. The US produced 7.4 Mt of crude steel in July 2012, up by 0.9% on July 2011. Brazil s crude steel production for July 2012 was 3.0 Mt, -4.1% lower than July 2011.
Challenges of steel industry in Bangladesh After a decade of steady growth, local steelmakers are now facing tough times due to a surge in production costs and a slowdown in consumption by both the government and private sector. In addition, a low pressure of gas, depreciation of the local currency, rising costs of raw materials, electricity and bank borrowing, and a tight liquidity situation have hurt the BDT 300 bn steel industry. Competitive Market: Newly invested companies have started operations, with even more in the pipeline while existing companies are looking to expand on existing capacity. The latest investment boom in rod, a key construction component, is likely to outpace the country s annual demand for rod and might result in an investment glut and fierce competition. Economic Crunch: World recession and the socio-political situation that prevailed in 2008 stagnated all development works in the country. This was especially alarming considering that the government accounts for nearly 40% of the total steel consumption. At present, consumption has been down significantly due to a slowdown of the development works of the present government. Financing issues regarding the Padma Bridge and disruption credit flow from the World Bank and other donor firms like JICA, IFC also resulted in an adverse impact on the steel industry particularly, and the construction sector as a whole. Moreover, the stock market crash of 2011 negatively affected the real estate sector badly which lead to the slowdown of demand of steel rod. High borrowing cost and Exchange rate risk: High interest rates of banks and financial institutions were a noteworthy contributor to the reduced profit margins of the steel producing companies. Moreover, the cost of producing a ton of 60-grade rod has increased by BDT 18,000 between January 2011 and January 2012, mainly because of depreciation of the taka against the dollar. Steelmakers import at least 70% of their raw materials, thus fluctuations in exchange rate tend to affect them badly. According to the Bangladesh Bank, Bangladesh imported iron, steel and base metals worth USD 2004 mn during the FY20102011. However, at present the cost of raw materials is stable in the international market and a sizeable number of ships have been stocked in the ship breaking zone (from which a large quantity of steel is procured). A moderate price trend in the coming years is expected. Energy Crisis: The energy crisis in Bangladesh is worsening day by day. Steelmaking requires exhaustive power requirements, in the form of uninterrupted power supply and gas in production. However, the lack of realization of this basic need has posed, and is posing a serious hindrance to growth in the Bangladeshi steel industry. Technology Risk: Many steel factories in the country still use manual production methods, despite new efficiency-enhancing, cost-reducing technology being readily available in the market. An example would be most of the factories in the Shyampur area of Dhaka. Most of the mills there are on the verge of extinction, as they cannot compete with automated factories in terms of cost, efficiency and production volume.
Source: World Steel Association
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Environmental Risk: Bangladesh possesses no iron ore deposits or mines, which render ship-scrapping (and ship breaking,
IDLC MONTHLY BUSINESS REVIEW
by extension) as the major source of raw materials. The ship breaking industry is currently supplying more than 60% of the raw materials for local steel industry. However, Bangladeshi ship breakers found themselves at the forefront of criticism as NGOs and pressure groups exposed some questionable practices of the ship-breakers that posed serious environmental and human hazards. On the ruling of Bangladesh Environmental Lawyers Association (BELA), the judicial courts of Bangladesh established certain environmental standards for all ship breakers to adhere to, and decreed that violation of these standards would result in a ban. The court s decision meant that by 2010 the ship-breaking industry had come to a halt. And it lead to the sharp rise of rod price. However, withdrawal of the ban in late 2011 paved the way for Bangladesh s comeback in the global ship-breaking sector in 2012. Demand for the ship-breaking sector is expected to remain high as Bangladesh s building construction sector solely depends on steel recycled from ship-plates. The demand of steel is poised to increase as the country is in a phase of real-estate boom that also encompasses infrastructure development. Also, the Ministry of Industries (MoI) and international bodies such as the Norwegian Agency for Development Cooperation (NORAD) has also shown its interest to support the local ship-breaking industry in accordance with international standard and law of the land. Currently, the industry is following government s Ship Breaking & Recycling Rules act that was instituted in 2011.
Prospect of backward linkage (Ship breaking Industry) Bangladesh s ship-breaking industry was the world s largest until 2009 when various legal campaigns by environmental groups almost shut down the sector. In 2010, due to court restrictions only 19 vessels were broken. However, last year, courts lifted the ban on the import of ships until government ministries formulate detailed guidelines for the ship-breaking sector. That has seen business pick up pace again, with 150 ships dismantled in 2011. Approximately 143 ships have already been broken in the first six months of 2012. Bangladesh s unique geography is also another reason why ageing ships are taken to the beaches there. The industry is worth around USD 1 bn and shipyard-owners say the sector employs nearly 200,000 workers. Good prospect of this industry will facilitate more steel production in our country. Ship breaking scrap contribution to steel production and consumption in BD (millions) Steel Consumption
5 m tons
Steel Production
2.2 to 2.5 m tons
Scrap steel from ship breaking (SB)
Up to 1.5 m tons
SB Contribution to steel production
50%
SB Contribution to consumption
20-25%
Rerolling mills
250-350 Source: World Bank Report 2010
Steel plays a vital role in infrastructure and overall economic development of a country. Thus, the growth of steel industry is often thought to be a parameter of economic progress. This sector has seen increased activity in terms of new investment during the last few years. To be more cost effective, companies are also upgrading their technology and manufacturing processes. To reduce the dependency on billet import, local companies are now investing heavily to set up their own billet plants. Most of the mid-level and large scale steel mills have installed fume-extraction systems and effluent treatment plants (ETP) to protect the environment by controlling the harmful fumes discharged from the plant. However, excess capacity is very much a reality in the steel industry. Government support towards facilitation of exporting the excess steel will not only stabilize the domestic market, but also provide the millers with an extra source of income. In fact, steel manufacturers have been lobbying for the Bangladesh government to approach India in order to remove the non-tariff barriers for steel exports to the north-east states of the latter country, as Bangladeshi millers believe that particular region to be a good potential market. Apart from that, we have seen that the construction sector of Bangladesh has grown at a calculated average growth rate (CAGR) of 12.2% over the last 10 years. This growth is expected to continue. Although the global economy is passing through a difficult time and our real estate sector is facing a temporary slowdown of demand due to overall macroeconomic pressure and contraction policy of government, the local manufacturers believe the steel industry should continue to grow at 10% in the next few years, riding on government programs centering its vision for 2021, a real estate boom in urban areas and an inflow of remittance in rural areas. One part of those expectations ‒ the real estate boom ‒ has seen slight realization during the tail-end of 2012. Though government steel consumption has gone down significantly, it is planning few very big projects like Padma Multipurpose Bridge and Metro Rail. The two projects will cumulatively cost more than USD 6 bn. Successful implementation of these projects holds a very good potential for top line growth, as steel and steel rods in particular feature prominently as raw materials of the two projects. Above all the government needs to ensure basic infrastructure, power, gas and an educated workforce -without which, industrial growth will sputter. (The writer is working as a Senior Credit Analyst of Credit Risk Management department of IDLC Finance Ltd. He can be reached at
[email protected].)
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IDLC MONTHLY BUSINESS REVIEW
ECONOMY Taka to appreciate modestly: HSBC The latest issue of the Asian FX Focus published by the Hong Kong and Shanghai Banking Corporation (HSBC) envisages that the recent appreciation exhibited by the Taka will lose momentum and moderate, with the USD-BDT forecast to reach BDT 76 against USD 1 by the end of 2013. Some details of the report include,
Two of the major determinants of currency appreciation remain the current and capital accounts, respectively. The report finds that the capital account still remains a potential point of weakness. Positive developments are expected in this direction as well.
The recent downtrend in the USD-BDT exchange rate is expected to continue in 2013 on the back of robust current account flows.
Furthermore, the report finds that the largest driver of the current account is remittances from overseas Bangladeshi workers. This flow is large, given the overall size of the Bangladeshi economy, and is substantial enough to keep the current account in surplus, if going by the 20% growth observed during the first half of FY2012-13 is any indication. However, this strength is directly dependent on the health and economic prosperity of countries where most overseas Bangladeshi workers are based. This would be the Middle East region, where more than 60% of remittance flows come from. A recent World Bank study illustrates that the growth of remittances will be stronger during 2013-15, particularly in regions that rely on remittance flows from the Gulf Corporation Council (GCC), the US and Russia. Another major component of the current account is the trade balance. At present there is a deficit, due to weak demand from Europe and the US,
Although the stock market retains many of its historical weaknesses, positive developments are expected in 2013. The Bangladesh Bank s recent focus on enhancing the shortdated portion of bills/bonds issues (which may attract increased foreign investment) as well as investing in financial infrastructure (launching an electronic trading window on the BB s website, which may make it easier for foreign investors to trade the BDT and invest onshore) has been cited as proof of the positive steps taken to make the equity markets more stable. Factors such as reduced food prices, increased remittance flows possible upward pressure on asset prices and non-food inflation and the lead-up to the elections may pose a suppressive influence on the appreciation of the Taka during the third quarter of 2013.
Creeping food prices propel inflation upwards
and a large oil import bill. However, net outflows from Bangladesh have been on the reducing end, buoyed by lower import in grain and consumer food items due to high domestic stock levels. Considering that 67% of Bangladeshi exports head to North America and the European Union periphery, a protracted slowdown in these regions could prove fatal to the current account condition and remains a credible concern. The report finds Bangladesh cognizant of this threat, and reports that the authorities have been looking to diversify in new Emerging Markets. Combined, the afore-mentioned effects are likely to result in an appreciation of the Taka. The report also notes that the proactive actions taken by the Bangladesh Bank (BB) to build up its foreign reserves may have deflationary pressures on the local currency. Between July 2012 and February 2013, the BB bought more than USD 3.5 bn in its effort to protect the interest of the exporters (textile and apparel in particular) and migrant workers. Concurrently, the sudden shortage of the US dollar from the market led to modest arrested appreciation of the Taka. The report opines that the central bank is unlikely to pursue a different foreign exchange policy in the near future.
Consumer Price Index (CPI) and Rate of Inflation at National Levels (Base FY1996=100)
According to the Bangladesh Bureau of Statistics (BBS), Bangladesh s annual inflation rate picked up in February 2013 due to surging food costs. According to the statistics provided by the BBS, Point-to-point inflation accelerated to 7.87% in February 2013 from 7.38% of January 2013 according to the old base year of 1995-96=100. Twelve month average food and non-food inflation came down to 7.10% and 10.44% respectively from last month resulting general inflation down to 8.19% in February, 2013. Food inflation in February 2013 was 8.34%, up from 7.21% recorded in January 2013. Non-food inflation however, moderated from 7.79% of January to 7.12% in February.
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Source: Monetary Policy Department, Bangladesh Bank
IDLC MONTHLY BUSINESS REVIEW
Forex breaks another milestone Bangladesh s foreign currency reserves passed the USD 14 bn mark on March 5 for the first time in the country s 42 years history, standing at USD 14.1 bn. The Bangladesh Bank has attributed the positive trend in the growth of the forex reserve due to strong remittance growth in recent months, a fall in import levels and a rise in export activity. The deposition of the second tranche of the IMF s extended credit facility (ECF) has further strengthened the forex balance. According to the Bangladesh Bank (BB), the following factors contributed to the positive reserve balance. In the first six months of the FY2012-13, imports dropped by 8%. In the first eight months of the FY2012-13, total remittance went up by 17.34% to stand at USD 9.88 bn. Also, during the period of July-March 2012-13, BB purchased foreign currency worth USD 3.28 bn from the country s banks. Consequently, the central banker decided to use part of the reserve to clear out import bill requirements. The government made a routine payment of USD 784 mn to the Asian Clearing Union (ACU) against imports during the January-February 2013 period. After the payment, the country s foreign exchange (forex) reserve came down to USD 13.452 bn on March 10 from USD 14.234 bn of March 7.
State-owned commercial Banks in a quandary The market share of state-owned commercial banks (SCBs) has been on the declining trend, despite the constant advisory role played by the Bangladesh Bank (BB) on strengthening operations, particularly in rural areas through boosting recovery drives. The BB has advised the SCBs on improvements regarding internal control, profitability and lowering cost of funds. According to the annual report of the central bank, In 2011, the SCBs held 27.8% of the total industry assets as against 28.5% in 2010. The private commercial banks (PCBs) share rose to 60.0% in 2011 from 58.8% in 2010. The foreign commercial banks (FCBs) share in total industry assets remained unchanged at 6.6% in 2011, while that of the government-owned development finance institutions (DFIs) came down to 5.6% in 2011 from 6.1% in 2010. Total deposits of the banks in 2011 rose to BDT 4509.7 bn from BDT 3721.9 bn in 2010 showing an overall increase of 21.2%. The SCBs share in deposits decreased by 0.7 percentile points to 27.4% in 2011 from 28.1% in the previous calendar year. On the other hand, 30 PCBs deposits in 2011 amounted to BDT 2787.5 bn or 61.8% of the total industry deposit against BDT 2266.5 bn or 60.9% in 2010. Nine FCBs deposits in 2011 rose only by BDT 45.1 bn over the year. In 2011, four DFIs deposits were BDT 214.4 bn against BDT 183.4 bn in 2010 showing an increase of 16.9% over the year. The Bangladesh Bank has asked the four SCBs to properly utilize their extensive branch network to increase their market share, and to implement the BB s existing core risk guidelines to minimize their financial risks. On top of an eroding market share, the SCBs operating expenses increased significantly in 2012 as compared to 2011, with state commercial banks stating wage bills as a major component of growing costs. A lack of proper competitive operation policies observed by the country s other scheduled banks has also been blamed for the rising operational costs of the SCBs. Increase in Operating Expenses Name of the Bank
2011
2012
Sonali Bank
10.82
11.19
Change +3.42%
Janata Bank
7.13
7.47
+4.77%
Agrani Bank
6.3
7.02
+11.43%
Rupali Bank
2.95
2.99
+1.36%
Source: Bangladesh Bank
ADP allocation poor: Jul-Feb 13 According to data by the country s Planning Commission, the government has spent only 44% of BDT 550 bn development budget during the July-February period of the current fiscal. The performance of the Ministry of Railway in particular has been below expectations. According to the Planning Division and the Implementation Monitoring and Evaluation Division (IMED) data, All 53 government ministries and agencies spent BDT 241.97 bn, 44% from its BDT 550 bn outlay in the development budget, during the first eight months of the FY2012-13. During the last financial year of FY2011-12, the government spent BDT 175.19 bn, 38% of the then-total ADP outlay of BDT 460 bn. The railway ministry has utilized only 28% of its allocation under the Annual Development Programme (ADP) in Jul-Feb, 16 percentile points down from the average implementation rate of 44% quoted beforehand. The ministries and agencies have spent BDT 164.79 bn, 49% of BDT 335 bn outlay from the government s own exchequer and BDT 77.19 bn or 36% from the BDT 215 bn external resources in the current ADP. Among the 10 major budget holders in the ADP, the Ministry of Industries has become the worst-performer as it could spend only 22% from its BDT 17.22 bn total allocations in July-February period of the current FY2012-13 The second largest budget holder, the Power Division, is the best performer among the top 10 development fund holders as they have spent 61% from their allocations during JulyFebruary period of the current FY2012-13. In light of the poor usage rates by the various government bodies and agencies during the current FY2012-13, the government decided in March 2013 to revise the allocation for the current fiscal s ADP. On March 12, the Planning Commission finalized a Revised Annual Development Progamme (RADP) of BDT 503.66 bn. The RADP will aim to increase fund allowance to the power and transport sectors and support activities by the local government bodies. Of the amount, 63% (BDT 318.66 bn) of the revised development budget will be funded by the government s domestic budgetary resources and 37% (BDT 185 bn) will come from external sources. Additionally, BDT 16.10 bn has been set aside in the RADP in the form of block allocations for special priority projects. This has been done so that the development projects can get additional fund allocations on a need basis.
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IDLC MONTHLY BUSINESS REVIEW
Selected Economic Indicators Item Foreign Exchange Reserve (USD)
Period/ As of
Value/bn
Period/ As of
Value/bn
+/(-)%
March'13
14.03
March'12
9.57
46.66%
Workers Remittances (USD)
February'13
1.16
February'12
1.13
2.00%
Revenue Collection (BDT)
Janurary'13
89.85
January'12
75.59
18.87%
Broad Money (M2) (BDT)
Janurary'13
5,624.77
January'12
4,737.04
18.74%
Reserve Money (RM) (BDT)
Janurary'13
1,062.44
January'12
907.93
17.02%
Total Domestic Credit (BDT) Credit to Private Sector (BDT) Excess Liquidity (BDT)
Janurary'13
5,505.69
January'12
4,817.99
14.27%
December'12
4,304.29
December'11
3,748.56
14.83%
Janurary'13
599.54
December'12
579.91
3.39%
Source: March, 2013, Selected Economic Indicators, Bangladesh Bank
TRADE BoP appreciates USD 1.1 bn in single month Export Import growth (year on year)
Source: Export Promotion Bureau, Bangladesh Bank
The first seven months of FY 2012-13 saw the trade balance fall even further to a deficit of USD 4340 mn; however, this gap was 33.34% higher than the deficit of USD 6144 mn registered during the same period last FY2011-12. The inflow of workers remittances in January 2013 remained at similar levels from December 2012. Thus, a Current Account surplus of USD 821 mn in July-January 2013 (against a deficit of USD 1300 mn during the same period of the last fiscal) was recorded. Aided by a Financial Account surplus of USD 1790 mn (mainly due to the continued increasing trend of the government borrowing from overseas sources and higher inflow of FDI, but this figure was lower than December 2012 numbers) and a year-over-year USD 1474 mn increase in the government s Secondary Income, Bangladesh s positive trend in its overall Balance of Payments (BoP) continued from July 2012 with the BoP registering a surplus of USD 2928 mn for July-January 2013 against the deficit of USD 813 mn during July-January 2012. In the course of a single month, the BoP was an appreciation of USD 1176 mn from December to January 2013.
ITFC to continue low cost L/C facility to BPC The Bangladesh Petroleum Corporation (BPC) has accepted the proposal of the International Islamic Trade Finance Corporation (ITFC) ‒ the lending arm of the Islamic Development Bank (IDB) ‒ to provide the former with letter of credit (L/C) facility for the purposes of oil import. The new deal between the BPC and the ITFC will allow the country to import oil and market petroleum products at a commission price much lower than that of the state-owned commercial banks for the current year. Details of the deal include,
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The BPC has estimated that it would have to import about 5.9 mn ton of crude oil and refined products in the current FY2012-13, up 11.3% from imports of 5.3 mn ton the year before. The company s import bill in the current fiscal is estimated at about USD 5.5 bn, up 14.6% from the previous year s estimated USD 4.8 bn. Of the 5.9 mn ton, the BPC has planned to import 1.4 mn ton crude oil, 3.0 mn ton of diesel oil, 1.2 mn ton of furnace oil, and a combined 300,000 ton of kerosene, jet fuel, petrol and octane.
Bangladesh Petroleum Corporation uses a combination of loans from foreign banks, the ITFC and deferred payment mechanisms to finance its oil imports. The ITFC will charge the BPC the same rate at 0.16% on the L/C in 2013 as that of the last year. The state-owned commercial banks are, however, charging higher commission at 0.40% from the BPC as commission against provision of L/C facility to import fuel oil.
IDLC MONTHLY BUSINESS REVIEW
NBR to proactively target revenue collection Spurred by a sizeable downward trend of import-related revenue collections in the form of taxes and duties in recent times, the National Board of Revenue (NBR) has taken a move to draw a detailed work-plan to increase its revenue collections through an active participation, particularly of its field-level customs officials across the country. In the first two quarters of the FY2012-13, the shortfall in import-related revenue collections stood at BDT 879 mn, compared to its projected target for the period under report. Such revenue collections posted a 7.0% growth, though the projection about this growth rate was much higher for the current fiscal. The annual target of FY2012-13 for tax on import-items had previously been set at BDT 356 bn but the realization of the amount has been harder to materialize since import of major revenue-generating items has been on subpar levels so far in the current fiscal year 2012-13. The shortfall in revenue colletion in total aggregate terms has reached over BDT 30 bn in the July-January period of FY201213, as the NBR collected BDT 530 bn during the time frame as compared to the targeted figure of BDT 560 bn. The slight appreciation of the Taka has had a decidedly adverse effect on the revenue collections at the import stage.
In terms of the domestic currency, dutiable imported items are now lower than before, because of appreciation of the local currency against the US dollar, the reference currency for all economic operators. According to the Policy Research Institute (PRI), the revenue shortfall is most likely because of decline in collections of supplementary duties (SDs) at the local stage, especially from the cigarette-manufacturing sector. Most tobacco firms have shifted production focus towards lower-priced brands due to the government imposition of low price-slabs for lower brand of cigarettes. Revenue collection, thus, has significantly fallen from this sector. For FY 2012-13, the government has set BDT 1.12 tn as the revenue collection target for the NBR. Independent assessment of this target has been on the line of being highly ambitious , particularly in the context of the present political turmoil and economic slowdown. Out of this annual target, the government expects 36% of revenue collections to come from value added tax (VAT), 31.5% from income tax, 17.8% from supplementary duties and 12.9% from import duty.
SME loan disbursement exhibits positive growth Disbursement of SME loans in 2012 by Bangladesh s banks and NBFIs exhibited strong growth in 2012 when compared to the years 2010 and 2011, according to the Bangladesh Bank. The banks and non-banking financial institutions (NBFIs) disbursed BDT 682.62 bn in small and medium enterprise (SME) loans in 2012. The amount also surpassed the set target by 18.20% for the same year. On the other hand, the banks and NBFIs disbursed SME loans amounting to BDT 537.19 bn and BDT 535.43 bn in 2011 and 2010 respectively. The central bank has set a BDT 722.03 bn SME loans disbursement target for the local and foreign banks and NBFIs for the current calendar year of 2013, which is 22.35% higher than 2012 s BDT 590.12 bn target, According to the BB s SME Programme Department, the exemplary performance by the banks and NBFIs in availing greater credit growth in 2012 to the SME sector can be traced back to the Bangladesh Bank s constant supervision and monitoring, and the outstanding performance of the banks and NBFIs themselves.
Manpower Export down in Jan-Feb 2013 The Bureau of Manpower, Employment and Training (BMET) shows that the country s overseas employment continued to exhibit a declining trend over the January-February 2013 period as key manpower export destinations like the UAE (United Arab Emirates) closed its door to Bangladeshi manpower from 2012. The dearth of hiring from the UAE has affected Bangladeshi labor export the most, since the Middle East country used to typically comprise a large portion of total workers sent abroad before mid2012. According to BMET data,
Only 70,526 Bangladeshis got foreign jobs during the January-February 2013 period which is down from 128,179 in the same period in 2012. A total of 38,337 Bangladeshis went out of the country for jobs in January and 32,189 in February 2013. Of them 1,196 workers were employed in the UAE, 5,206 in the KSA, 26,686 in Oman, 7,956 in Qatar, 4,477 in Bahrain and 9,308 in Singapore in during the same time period.
0.6 mn Bangladeshi nationals abroad in 2013, under both the skilled and unskilled labor category. At present, nearly 8 mn Bangladeshis are working in 156 countries across the world. A total of 607,798 workers went abroad with jobs in 2012, the number of which was 568,062 in 2011.
The government has plans to send nearly
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IDLC MONTHLY BUSINESS REVIEW
Category wise Export
Import LC statistics USD in mn
USD in mn
Item
July-Feb 12-13
July-Feb 11-12
Change
Knitwear
6,732.09
6,297.10
7%
Woven RMG
7,098.41
6,261.07
13%
July - Jan, 2013
Item
July - Jan, 2012
FLCO
SOLC
OSTLC
FLCO
SOLC OSTLC
Capital Machinery
1,373
1,175
2,585
1,252
1,499
2,567
Textile Fabrics (B/B & Others)
3,167
2,702
2,571
2,674
2,740
2,673
583
365
346
518
612
366
Chemicals & Chem. Products
2,062
2,165
974
2,450
2,129
1,483
2,327
2,593
1,177
2,745
2,683
1,148
773
628
836
888
870
690
Rice and Wheat
Frozen Food
368.90
444.95
-17%
Home Textile
501.90
557.99
-10%
Petroleum & Petro Products
Leather
230.65
206.94
11%
Edible Oil & Oil Seeds
Chemical Products
67.56
73.33
-8%
Raw Cotton
1,119
1,051
934
1,197
1,084
1,090
Scrap Vessels
624
498
394
358
659
132
Pulses
228
191
179
132
112
81 525
Foot Wear
285.66
243.82
17%
Engineering Products
249.40
230.63
8%
Cotton Yarn
568
562
436
491
604
Agricultural Products
328.77
255.86
28%
Paper and Paper Board
165
165
77
206
201
98
Synthetic Fibre & Yarn
309
272
260
331
434
296
Sugar and Salt
373
550
504
783
592
774
5,543
7,162
6,868
5,267
Raw Jute Others Total
152.06
168.90
-10%
1,385.12
1,167.92
19%
17,400.52
15,908.51
9%
Others Total
Source: Export performance for Jul-Feb FY2012-13; Export Promotion Bureau, Bangladesh Bank
6,611
5,802
20,282
18,721
16,816 21,186 21,087 17,189
FLCO = Fresh LC Opening, SOLC = Settlement of LC, OSTLC=Outstanding LC Source: Major Economic Indicators: Monthly Update; March 2013; Bangladesh Bank
INVESTORS’ CORNER Land crisis deflates EPZ investment According to information shared by the Bangladesh Export Processing Zone Association (BEPZA), investment in the country s economic zones fell by 5.39% during the first eight months of the FY2012-13 compared to the same period in the last one. BEPZA attributes this backwardation to the lack of commercial land available in the EPZs. Investments worth USD 222.68 mn have been made in EPZs up to February FY2012-13, as against USD 235.37 mn for the same period during last fiscal. Land scarcity has been a major issue contributing to the slight fall in EPZ activity, as BEPZA reports that entrepreneurs have been turning away from BEPZA despite keen interest solely due to the dearth of plots in the Dhaka and Chittagong EPZs. During the September-February 2012-13 period, BEPZA saw an exodus of 17 entrepreneurs from the export processing zones, with probable investments worth USD 150 mn not materializing due to the land problem.
Export Processing Zones Statistics Cumulative investment in eight EPZs at the end of February 2013 for the FY2012-13 was USD 2679.64 mn as compared to USD 2456.95 mn at the end of FY201112. Cumulative employment in eight EPZs at the end of February 2013 for the FY2012-13 was 358,772 people while in FY2011-12 it was 340,021 employees. Cumulative export in eight EPZs at the end of February 2013 for the FY2012-13 was USD 32,706.40 mn as compared to USD 29,645.69 mn at the end of FY201112.
16
IDLC MONTHLY BUSINESS REVIEW
BUSINESS Govt undertakes 6 development projects On March 5, the government approved six development projects worth BDT 45,070 mn. Of the total cost, BDT 14,310 mn will come from the government s own fund and the remaining BDT 30,760 mn as project assistance from development partners. The government plans to use these funds in the following manner,
Govt. Development Projects
The Government wants to develop around 1000 km of road at the union and upazilla levels, rehabilitate 300 km of roads at the upazila level and construct about 3000 meter of bridge/ culverts at upazila and union level under Northern Bangladesh Integrated Development Project (NBIDP). Development of 70 growth centres and 74 haat-bazaars and maintenance of nearly 1,300 km of roads have also been included in the NBIDP. The government will require BDT 27,060 mn of which BDT 21,280 mn will be provided by the Japan International Cooperation Agency (JICA). Another project, the Eastern Bangladesh Bridge Improvement Project, will cost the government BDT 11,880 mn and will be used to widen and reconstruct 118 bridges and culverts
Source: National Economic Council
on 12 national and regional highways to ensure safe communications. About 4,500 meter of bridges and culverts would be constructed under the project.
Bangladesh Energy Sector in need of FDI A recent round-table discussion organized by the Centre for Policy Dialogue (CPD) explored the existing reasons hindering high levels of foreign direct investment (FDI) into the country. Speakers at the meet identified lack of good governance, insufficient rules and regulations, corruption, inadequate infrastructure and logistic support as major barriers to Bangladesh achieving its FDI potential. There was much emphasis on the possible positive impacts of FDI in the energy and power sector of Bangladesh. Insights from the event include: Bangladesh s energy sector needs foreign funds as it is a hugely capital and technology-intensive sector. FDI represents an attractive option as it is a non-debt flow of funds from one country to another. The share of FDI in the power, gas and petroleum sectors amounted to USD 2.25 bn in 2010, comprise one-quarter of the total foreign fund that flowed to the country. As such, more initiatives must be taken by the government to increase this proportion.
Germany to finance Bangladesh health MDGs The country s Economic Relations Division and the KfW Development Bank of Germany came to a financing agreement on March 13 which would see Germany disburse BDT 2010 mn in grants to Bangladesh to help the country achieve its healthoriented MDGs (millennium development goals) such as maternal health, nutrition, reproductive health, family planning, control of non-communicable diseases and immunisation.
Largest ever loan deal with JICA The Japan International Cooperation Agency (JICA) has choosen Bangladesh for its largest ever assistance in the form of a loan worth nearly USD 1.04 bn (BDT 82.34 bn) for the financing of four development projects. A part of the loan will be utilised to construct the second Kanchpur bridge, while the rest shall be used to the construct the second 2nd Megna and second Meghna-Gumti bridges on the Dhaka-Chittagong highway and renovate the existing bridges at the same sites. Details of the deal include, The loan will be disbursed in one year s period for implementation of the above mentioned projects. The JICA s loan will be concessional with the interest rate at 0.01% per annum with a 40-year repayment period with a 10year grace period.
According to the ERD, Japan is the largest bilateral development partner of Bangladesh. Since independence, it has disbursed nearly USD 6.5 bn worth assistance towards the development of the nation. Amount Proposed (USD in mn)
Name of Project Construction of 2nd Kanchpur, Meghna Meghna-Gumti Bridge
316
Karnaphuli Water Supply Project
380
Northern Bangladesh Integrated Development Project
224
Renewable Energy Development Project
124
Source: Economic Relations Division
17
IDLC MONTHLY BUSINESS REVIEW
India withdraws duty-free RMG benefits
India has decided to impose a 15.36% duty including a 12.36% countervailing duty (CVD) and 3.0% additional duty on the import of readymade garments (RMG) from Bangladesh, effectively putting an end to the duty-free export benefits enjoyed by the country since September 2011. The new charge, proposed in India s union budget for 2013-14, comprises of a 12% countervailing duty and a 0.36% educational tax. This comes on the back of persistent assertions from the Indian knitwear and garment manufacturers lobby that the duty-free import of
garments from Bangladesh was posing adverse impacts on the local firms in terms of cost competitiveness. On top of it, India has also withdrawn another 12.36% of central excise duty on branded garments manufactured by the Indians, meaning that Bangladesh has been thrown into further competition. In effect, Bangladeshi exporters face the herculean task of reducing their costs of production by more than 24% to remain competitive in the Indian market. Previously, the inclusion of duty free access of 46 RMG items in September 2011 led to soaring Bangladeshi exports to India for 2011-12 since despite the existence of varying tariff and non-tariff barriers by different states, the export of readymade garments (RMG) to India recorded nearly 55% increase in during the period, as revenue earnings stood at
USD 133 mn Chinese loan to BD ICT sector The Government of China has decided to provide a USD 133 mn loan to Bangladesh for developing the country s ICT infrastructure network. The project, titled the Development of National ICT Infra-Network for Bangladesh Government PhaseII will be implemented by the Ministry of Information and Communication Technology. Under the proposed outline of the venture, all government offices at the district and upazila levels will be interconnected through a digital network.
18
USD 50 mn as against that of USD 35.9 mn in 2010-11. However, this presents an insignificant amount when compared to India s domestic textile market valued at more than USD 36 bn. This comes as a sizeable blow to the Bangladesh exporters, who were looking towards India as their next big potential export destination after America and Europe. The impact is to be most severely felt by the small and medium enterprises (SMEs) of the country, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). However, domestic exporters can take solace from the fact that compared to Bangladesh s earnings from its two main export destinations ‒ the United States and Europe ‒ earnings from India represent a small portion of the Bangladesh RMG pie.
Reconditioned car sector in a slump The government incurred a revenue loss of BDT 35 bn over 2010-2012 over the country s sluggish reconditioned car sector. Government policy being favored to new cars in the past two years have seen the once thriving reconditioned car sector struggling to make ends meet. Previously, consumers were able to finance 90% of their reconditioned car purchase through a bank loan; however the highest permissible limit from a bank currently stands at 30% of the cost. This increased contribution on part of the consumer has become a major deterrent for purchase of reconditioned cars.
IDLC MONTHLY BUSINESS REVIEW
REGULATORY NEWS EFT charges removed: Bangladesh Bank Bangladesh Bank (BB) has decided to withdraw charges on all government receipts and payment to individuals and on electronic fund transfers (EFT). BB has also revised charges on clearing cheques by lifting charges on cheques amounting to below BDT 50,000 to facilitate the country s marginal income people. Under the revised provision, The commercial banks are allowed to charge BDT 10 including value added tax (VAT) from their clients for clearing each cheque amounting between BDT 50,000 and below BDT 500,000. Of the amount of BDT 10, the banks will have to pay BDT 8.00 to the BB and the rest BDT 2.00 will be received by the banks. The banks are also allowed to charge maximum BDT 60 including VAT from their clients for clearing each high-value cheque, while maximum BDT 25 including VAT for each regular-value cheque. Of the BDT 60, the banks will get BDT 10, while the BB will get BDT 50. Of the BDT 25, the banks will get BDT 5.0 while the central bank will receive BDT 20. High-value means any bank cheque amounting to BDT 500,000 and above, if cleared on the same day through Bangladesh Automated Clearing House (BACH). The revised charges on clearing cheques will come into effect from March 2013 in line with BB s directive. The Bangladesh Bank has decided to revise the schedule of charges based on the negative feedback from external stakeholders. Under the new system in place, approximately 75% of all cheques will no longer be applicable to EFT charges. The banks earlier charged their clients maximum BDT 50 with VAT for clearing each high-value cheque, while maximum BDT 7.0 with VAT for each regular-value cheque. Besides, the banks charged their clients maximum BDT 7.0 with VAT for clearing EFT. They were allowed to impose 15% of VAT as indirect tax on the services.
ADB to review Bangladesh projects The Manila-based Asian Development Bank (ADB) has decided that it will evaluate the relevance and effectiveness of its operations in Bangladesh. An independent specialist team from ADB headquarters will be in charge of the audit and will hold meetings with major ministries and divisions like the Ministry of Education, the Ministry of Communications, the Ministry of Railways, the Power Division, the Energy Division, and the Ministry of Primary and Mass Education, during its 10-day visit. This recent move from the global lender may have been influenced by the recent irregularities concerning the financing of the Padma Bridge and the halt of foreign credit flow to that massive USD 2.2 bn project. The lender has been financing in the country to assess implementation snags and obstacles and identify appropriate solutions. According to the ADB, the lender typically picks countries from its 67-nation portfolio to conduct study cases on, to ensure that transparent and accountable use of its fund is being made. In that regard, Bangladesh is 2013 s candidate. ADB s Bangladesh portfolio currently includes 59 loans, amounting to a total of USD 5.22 bn, and 39 technical assistances (grants) aggregating a sum of USD 30.15 mn. The average annual assistance by the ADB to Bangladesh currently stands at USD 900 mn. The ADB s cumulative lending to Bangladesh totalled USD 13.96 bn against 226 loans, while its technical assistance funds for 419 projects stood at USD 216.19 mn uptill February 2013. Meanwhile, ADB, in the last couple of years, has emerged as one of the leading development partners of Bangladesh after the WB and the level of its annual assistance to the country has crossed over USD 900 mn.
Internet in Rural Areas: BD Govt. The government has taken an initiative to provide internet bandwidth at upazila levels at low cost. The telecom regulator has awarded around 4,000 km of optical fibre cable to two companies ‒ Fiber@ Home and Summit Communications ‒ to expand countrywide broadband connectivity and telecom services. These two will offer connectivity to some 96,850 government offices, hospitals, colleges, schools, madrasas in districts and upazilas at a low, subsidized cost by the next three years. Fiber@Home will focus on the districts and upazilas of Chittagong, Barisal, Rangpur and Rajshahi divisions while Summit Communications will provide optical fibre cable capacity to Dhaka, Khulna and Sylhet divisions and the greater Mymensingh district. Both firms will provide connectivity for telecom operators and internet service providers on a commercial basis.
19
IDLC MONTHLY BUSINESS REVIEW
NBR identifies key revenue dampeners In a meeting with the Parliamentary Standing Committee on the Ministry of Finance, the National Board of Revenue (NBR) identified four major reasons for significant shortfall in import tax collection ‒ among them were, chiefly sluggish trend in import of major revenue earning commodities and clogged revenue with different government entities. According to the NBR, Uptil January 2013, the import revenue collection posted 5.46% negative growth against its target. The NBR collected BDT 184.80 bn tax from import against its target for BDT 195.49 bn for July-January 2012-13 period. import of products that falls under 3.0% and 12% customs duty declined in the current fiscal over the previous year, causing a BDT 1.32 bn shortfall in revenue collection.
Import of telecommunication products including mobile phone equipments and SIM (subscriber identification module) cards declined by 16% to 20%. Some government entities, including Eastern Refinery, took delivery of products from different customs houses on deferred payment. The NBR owes BDT 3.61 bn revenue from those organizations. Despite these negative trends the NBR s customs wing remain optimistic of achieving the revenue collection target of BDT 356 bn, as import duty collection regained pace in December-January 2012-13 compared to that of the other months in the current FY2012-13. Data shows that the customs wing has achieved 7.24% growth in import revenue collection in the first seven months of the current fiscal over FY2011-12.
Banks’ directors maximum 20 According to the draft Banking Companies (Amendment) Bill 2013 approved on March 18th, a bank can no longer have more than 20 directors. Though the existing law does not specify the number of directors, the ministry of finance (MoF) had earlier tried on several occasions to bring down the number to 15. Under the new ordinance, A bank can have a maximum of 20 directors, where 4 can be independent directors. The amendment will also bring stringent measures to curb frauds in fund collection from people in the name of deposits. If any non-bank organisation collects deposits from the public, it will now have to take approval from the central bank. Bangladesh Bank will also monitor the activities of these organisations and take punitive measures against them if any irregularity is detected. The BB is empowered to remove any chief executive officer of the state banks. The banks exposure to the capital market will be lowered to 25% of their regulatory capital. The previous law allowed for banks to invest 10% of their deposits in the equity markets. The power to suspend any clause of the Act has now been given to the central bank instead of the government, thus thrusting more executive power in the hands of the Bangladesh Bank. However, in exercising the power, the central bank will consult the government
Stock dealer capacity raised to BDT 30 mn: BB The Bangladesh Bank (BB) has raised credit facility for stock dealers up to BDT 30 mn from existing limit of BDT 10 mn in a bid to boost the purchasing power of dealers. The BB has raised the credit facility in view of the prevailing situation in the country s stock market. The latest move by the central bank comes on the heels of the Dhaka Stock Exchange (DSE) recently proposing to the BB for extending the credit facility for stock brokers up to BDT 200 mn.
At a meeting between the five financial regulators ‒ the Bangladesh Bank (BB), IDRA, Bangladesh Securities and Exchange Commission, Microcredit Regulatory Authority and the Registrar of Joint Stock Companies and Firms ‒ it was decided that banks will henceforth need to submit insurance cover notes directly to the Insurance Development and Regulatory Authority (IDRA). This initiative has been taken by the regulators to create greater transparency in tax payment and possible tax evasion by companies, specifically the insurers.
Under the previous directive, a stock dealer was allowed to avail the credit facility up to BDT 10 mn to purchase listed stocks or debentures.
A cover note is a document issued by an insurer as an interim cover for the period before a formal insurance policy is issued later on.
Under the new ordinance, any bank can provide a loan up to BDT 30 mn to a stock dealer on the basis of relation, and by taking a mortgage security. However, the credit facility can only be used to sell or purchase A and B category stocks or debentures.
The IDRA has found previous instances of insurers giving different information to the regulatory and to banks, all in order to pay a lesser tax expense.
All other conditions for receiving bank loans by stock dealers will remain unchanged.
20
Banks to submit cover notes: IDRA
As per the directive, similar to banks and non-bank financial institutions, directors of insurance companies must now avail a credit report from the BB and present it to the regulator for a clean bill of health.
IDLC MONTHLY BUSINESS REVIEW
MARKET ROUNDUP Major Currency Roundup March 2013, Global Markets, Standard Chartered Bank
Money Market The Bangladesh interbank call money rate was around 7% on March 27, 2013.
Foreign Exchange Market Local: The USD/BDT rate fell slightly on March 27, 2013 and the market was very liquid. International: Mounting concerns that Cyprus s rescue deal could see private investors foot the bill in future euro zone bailouts and renewed uncertainty in Italy pushed the euro down to a four-month low against the dollar on March 27, 2013. The euro extended falls, losing 1% on the day against the yen on March 27 on growing worries that a Cyprus rescue deal could see private investors foot the bill for future euro zone bailouts. Sterling slipped against the dollar on March 27 after data confirmed the British economy contracted in the final quarter of last year and that the current account conditions deteriorated. China s Yuan closed slightly weaker on that very day, backing further away from a record high set at the start of the week, after the central bank set a slightly weaker midpoint in response to a rise in the dollar in global markets.
Exchange And Forward Rates
(As on March 27, 2013)
Major Currency Exchange Rates
Major Currency Exchange Rates
BC Sell BDT
BC Sell BDT
TT Buy BDT 75.82
Currency
TT Buy BDT
Currency
Exchange Rate of Some Currencies Currency Per USD
Currency
BDT per Currency
USD
78.45
77.45
CAD
80.68
EUR
102.02
98.04
HKD
10.81
8.94
INR
54.28
1.44
GBP
121.08
117.03
SGD
64.66
60.83
PKR
98.37
0.79
AUD
85.58
80.75
AED
21.54
20.91
LKR
126.77
0.61
JPY
0.85
0.75
SAR
21.09
20.49
THB
29.34
2.66
CHF
84.42
80.31
DKK
14.26
12.28
MYR
3.1
25.14
SEK
12.09
9.68
KWD
272.51
267.37
Source: Standard Chartered Bank
Financial Sector Prices The weighted average call money rate in the inter-bank market fell to 7.51% in March (up to 28 March) 2013. The spread of lending and deposit rate narrowed sharply to 5.13% in January 2013 from 5.33% of December 2012. Bangladesh Bank has changed repo and reverse repo rate at 7.25% and 5.25% respectively after a downward revision by 50 basis point effective from 01 February, 2013.
Treasury Boll/Bond Auction Information Auction Date
Tenure & Name of the Securities
Sale Value (in BDT mn)
Weighted Average Yield (%)
28/03/2013
30 days T.Bill
3351.03
7.25
25/03/2013
91 days T.Bill
5385.533
8.70
18/03/2013
182 days T.Bill
5695.729
11.05
25/03/2013
364 days T.Bill
6315.066
10.94
6/3/2013
5yr T.Bond
5363.4
11.82
13/03/2013
10yr T.Bond
N/A
12.10
20/03/2013
15yr T.Bond
683.5
12.38
27/03/2013
20yr T.Bond
N/A
12.48 Source: Bangladesh Bank
21
IDLC MONTHLY BUSINESS REVIEW
Commodity Market Roundup Cyprus crisis triggers volatile gold, copper movements With many analysts believing that that the problems with Cyprus are symptomatic of greater economic troubles in the Euro Zone, investors have been shy about dipping their feet in commodities trading in general. The USD 13 bn bailout has tarnished gold s safehaven appeal and further weakened copper prices. Gold continues to track the euro zone crisis, but the bailout helped ease investor concerns that the region s debt crisis is worsening. However, announcement of an anti-climatic Italian bond auction and concerns regarding the manner of the Cyprus-style bank bailout, and the likelihood of similar deals being cut by crisis economies and the European Union, sent investors in the international commodity market into a tizzy, seeking safe haven by investing in large quantities of gold. Unsurprisingly, the precious metal, gold closed USD 6 per ounce above its opening trade on March 27. However, the price of gold fell back below the USD 1600 an ounce key resistance level Thursday. Prices of copper also went tumbling near the tail end of March 2013, as fears regarding the viability of the Eurozone bailout and a 2.8% increase in output from the world s top copper producer and modest consumption out of Asia weighed on prices for the red metal. In the domestic scene, the price of gold remained on a downward slump for much of the month, following a similar trend in the international market.
Global food prices at an impasse FAO Food Price Index averaged 210 in February 2013, unchanged from the January 2013 figure. After three straight months of a downward trend, global food prices have stabilized in February in the 210-212 point range; the index was five points or 2.5% below the corresponding month in 2012. Since November 2012, increases in the prices of dairy products and oils/fats have been largely balanced out by declines in the prices of cereals and sugar. Meat prices were generally stable over the period. In February dairy prices experienced a spike, followed by slight upward moderation of oils/fats. Cereal prices went down by 1% from January 2013, but on a year-over-year basis saw an appreciation of more than 8%. The decline mainly reflects the drop in wheat prices and to a lesser extent maize, while rice values strengthened slightly due to increase policy support for the crop in Thailand and India, two of the major producers. Wheat prices eased in recent weeks, reflecting improved crop prospects in the US. Oils and fats were up marginally by 0.4% in February 2013, driven by the expected seasonal production slowdown of palm oil and reduction in inventories from their current high levels. Lower soy-oil values and weaker demand from the biodiesel sector inhibited further prices from rising further. Meat items saw little change from the previous month, and indeed little change since October 2012. While poultry saw a dip in prices, other types of meat remained largely unchanged. High feed prices continue to be of prevailing concern to the industry, while at the same time consumption growth remained small.
International Commodity Prices Commodity
Unit
Price February 27, 2013 (USD/unit)
Price January 29, 2013 (USD/unit)
Change +/(-)
Crude Oil
Barrel
97.23
92.76
4.82%
Gold
Ounce
1603
1604.25
-0.08%
Silver
Ounce
28.33
29.07
-2.55%
Nickel
Tonne
16722.5
16,850.00
-0.76%
Tin
Tonne
23030
23,677.00
-2.73%
Lead
Tonne
2115.1
2310.1
-8.44%
Aluminium
Tonne
1910.3
2030.3
-5.91%
Zinc
Tonne
1899
2112
-10.09%
Copper
Tonne
7617.5
7915
-3.76% Source: LBMA; Worldal; WTRG
22
IDLC MONTHLY BUSINESS REVIEW
INTERNATIONAL Bank compensation rebounds amid global crises Compensation at the world s biggest banks rose in 2012, with 35 of them spending a combined EUR 10 bn (USD 13.1 bn) more on staff than in 2011. Ever since the 2007 financial crisis, the average salary of a banker has been a closely monitored statistic both by the media and by policymakers, as the massive bailouts of the time were wholly sourced from hundreds of billions of taxpayers dollars. Policymakers in particular have argued for the truncating of bank wages as they believe that the large bonuses encouraged excessive, catastrophic risk-taking. A close look at the EuroStoxx 600 ‒ an index that represents large, mid and small capitalisation companies across 18 countries of the European region ‒ and its American counterpart shows us that bank staff costs rose to EUR 275 bn across the group. Two thirds of the banks analyzed increased per person compensation, though several banks credited this increase due to redundancy issues. The compensation ratio - the industry s preferred yardstick, which measures staff expenses against revenue - was up for 18 of the 35 banks. Regardless whether the bank recorded a pretax profit or loss, many leading banks saw a rise in per person compensation. A separate survey by recruitment agency Morgan McKinley showed that bank staff who changed jobs in London in January 2013 enjoyed average pay rises of 23%. To the general public, this rising trend in salaries at a time of austerity is disconcerting. International banks however, assert that these figures can be deceptive. Banks have been slashing jobs left and right, with 93,000 cut in 2012. These massive lay-offs incur redundancy costs that are grouped in with overall staff compensation, which also includes pensions and payroll taxes
Coke, IFC to finance Asian women entrepreneurs
International Economic Forecast Year on year percentage change Global (PPP Weight) Advanced Economies1 Euro Zone
GDP
CPI
2012
2013
2014
2012
2013
2014
2.70%
2.80%
3.70%
4.20%
4.00%
4.30%
1.20%
1.10%
2.40%
2.10%
1.50%
1.80%
-0.50%
-0.10%
1.80%
2.50%
1.30%
1.70%
4.40%
4.70%
5.30%
6.70%
7.00%
7.20%
Developing Economies1
1Aggregated
Forecast as of March 2013 Source: Wells Fargo Securities, LLC
using PPP weight
International Market Movement % Change on year-on-year Markets
Index Mar 26th
One
Dec 31st, 2012
Week
In local currency
In USD
United States (DJIA)
14,559.7
0.7
11.1
11.1
United States (S&P 500)
1,563.8
1
9.6
9.6
United States (NAScomp)
3,252.5
0.7
7.7
7.7
Japan (Nikkei 225)
12,471.6
0
20
10.1
China (SSEA)
2,404.9
1.8
1.2
1.5
Britain (FTSE 100)
6,399.4
-0.7
8.5
1.2
Canada (S&P TSX)
12,706.4
-0.5
2.2
0.1
Germany (DAX)
7,879.7
-0.9
3.5
1
Hong Kong (Hang Seng)
22,311.1
1.2
-1.5
-1.6
India ( BSE)
18,704.5
-1.6
-3.7
-3
Pakistan (KSE)
17,872.2
1
5.7
4.5
Singapore (STI)
3,288.5
0.6
3.8
2.2
The Coca-Cola Company and IFC (International Finance Corporation), a member of the World Bank Group, have announced a USD 100 mn, three-year joint initiative to give women entrepreneurs in Eurasia and Africa access to finance. Considering both organizations had similar women empowerment programs already in place, this collaboration was seen as synergistic. IFC will use its network of local and regional banking institutions to provide entrepreneurial skills training to women entrepreneurs involved in small and medium enterprises (SME) across the Coca-Cola value chain, namely the supply and distribution chain. The two companies are targeting businesswomen specifically due to their low access to finance despite their considerable societal contributions in emerging and developing economies. Also, they represent significant untapped economic potential as developing countries tend to be typically male-dominated. Practical application of the collaboration has already begun in Nigeria ‒ there CocaCola are working with local Access Bank to avail financing to women micro-distributors in the Coca-Cola value chain, in close collaboration with Coca-Cola s bottling partner, Nigerian Bottling Company.
Source: The Economist
23
IDLC MONTHLY BUSINESS REVIEW
Selected Economic & Financial Indicators % change on year-on-year Global domestic product Country United States China Japan Britain Canada France Germany Russia Hong Kong India Singapore Brazil Mexico
Consumer prises
Latest
qtr*
2012**
latest
2012**
Unemployment rate, %
1.6 7.9 0.5 0.2 1.1 -0.3 0.4 2.9 2.5 4.5 1.5 1.4 3.2
0.1 8.2 0.2 -1.2 0.6 -1.2 -2.4 0 4.9 8.6 3.3 2.2 3.1
2 8.5 1 0.8 1.9 0.1 0.7 3.3 3.2 6.5 2.3 3.5 3.7
2 3.2 -0.3 2.8 0.5 1 1.5 7.3 4.4 10.9 4.9 6.3 3.6
1.8 4.3 0.1 2.7 1.7 1.6 2 6.3 4.3 8.8 3.8 6.1 3.7
7.7 4.1 4.2 7.8 7 10.6 6.9 5.8 3.4 9.9 1.8 5.4 4.8
*% change on previous quarter, annual rate. ** The Economist poll or Economist Intelligent Unit estimate/forecast
Current account balance % of GDP rate, % 2012** -475 -2.6 213.8 1.8 60.8 0.9 -75.3 -2.5 -67 -3.5 -64.9 -1.7 239.5 5.3 81.2 1.9 2.9 6.6 -80.6 -4.1 51.4 19.5 -63.5 -3.4 -9.2 -1
Interest rates, % 10-year gov t bonds, latest 1.91 3.3 0.55 1.99 1.82 2.05 1.34 7.32 1.28 7.99 1.58 9.64 7.75 Source: The Economist
Richest in the world poorer by USD 17.9 bn The Bloomberg Billionaire Index (BBI) reports that the 100 wealthiest individuals on Earth dropped USD 17.9 bn of collective net worth from their asset portfolios in March 2013, just after the Standard & Poor s 500 Index fell short of hitting an all-time high. According to Bloomberg, the richest person in the world, Carlos Slim lost USD 5 bn during March 2013. March has not been a good month for Slim as lawyers have been waving fair-play legislation at the Mexican tycoon s telecommunication monopolies, hyping up worries of a dissolution of Slim s America Movil SAB. Stocks of the company plunged to their lowest in almost four years as a result, and the Mexican is now worth USD 67.8 bn. The gap between Slim and Bill Gates ‒ Microsoft s co-founder and the 2nd richest man in the world ‒ now stands at USD 184 mn, the closest it has been since the BBI was introduced in March 2012.
Insight Analysis Wall Street bonuses The bonus pool for people working in the securities industry in the city of New York rose by 8% last year, to USD 20 bn, according to the latest estimates from the state comptroller. And with fewer workers to divide the spoils, the average bonus increased to USD 121,890. The industry employed 1,000 fewer suits last year; it has only regained 30% of the jobs lost during the financial crisis. Business and personal income tax from Wall Street-related activities used to make up around 20% of the state s tax revenues; last year it was only 14%. But the average pay for a Wall Streeter (including bonuses) has risen to almost USD 362,900, still over five times more than New York s other private-sector workers.
24
Source: Office of the New York State Comptroller
IDLC MONTHLY BUSINESS REVIEW
MONTH IN REARVIEW Business Specific News Ananda Shipyard and Slipways Ltd. is set to deliver a fuel replenishing oil tanker at a cost of BDT 720 mn to the Bangladesh Navy in June 2013. The under-construction world-class oil tanker is being procured by the Bangladesh government through its own fund while Janata Bank is supporting Ananda Shipyard with financial facilities for construction. The tanker is able to replenish fuel to Naval ships on both sides while all of them are steaming in sea at both peace and war situations. The tanker is powered with 4000 HP (Horse Power) and can move at 24 km/hour in adverse sea condition. The 270-foot long tanker can carry 2400 tonnes of fuel. Dutch-Bangla Bank (DBBL) and Stamford University Bangladesh signed an agreement for e-Payment of student fees through DBBL Internet Payment Gateway by using DBBL Nexus Debit Card, MasterCard & Visa card. The agreement was signed by Prof. Dr. Lutfor Rahman, Treasurer, Stamford University Bangladesh and Mr. Md. Kamruzzaman, Head of Personal Banking Division, DBBL on behalf of their respective organizations. IFC, a member of the World Bank Group, has made an equity investment in Green Delta Insurance Company Ltd (GDIC) of Bangladesh for up to 10%. Green Delta expects that through this investment, the local company and the insurance industry at large will be able to reap best practices and product offerings. Additionaly, the organization expects this deal to catalyze the non-life insurance sector of the economy, which stood at a measly 0.2% of GDP in 2010. Overall Insurance penetration in Bangladesh is ranked 66th in 2010 with 48th and 93rd places respectively for life and non-life insurances. Lafarge Surma Cement Ltd. entered into an agreement with Madina Cement Industries in March 2013. Lafarge Surma Cement Ltd. will launch Powercrete , a world class product to strengthen its market position in Bangladesh. Under this agreement, Lafarge Surma will be supplying its high quality clinker to Madina Cement from its integrated plant at Chhatak to produce Powercrete. This will be subject to strict quality control by employees of Lafarge Surma to ensure quality control. Furthermore, under the agreement, the production process will follow the highest safety standards. SkyCargo, the freight division of Emirates, will further strengthen its operations in Bangladesh by introducing more dedicated freighters. SkyCargo has recently started serving Chittagong once a week with a Boeing 777 Freighter. The 103-ton capacity freighter, capable of carrying larger consignments, arrives at Hazrat Shah Amanat International Airport every Thursday at 1 pm and departs for Hong Kong at 3 pm. The company is pleased with the full capacity utilization of the cargo, and thus plans to open a new Dubai-Chittagong-Dubai route along with a Boeing 777 freighter-class plane. Standard Chartered Bank and the Asian Development Bank (ADB) have joined hands to support microfinance across Asia. Standard Chartered Bank will originate and service a USD 150 mn portfolio of microfinance institutional loans across Asia to support the growth of the sector by improving access for the poor in Asian Development Bank s developing member countries. The ADB will share the risk of the operation via a programme on risk participation and guarantee on the portfolio for up to USD 75 mn. ADB s support will enable StanChart to extend additional credit to microfinance institutions that will in turn reach more unbanked individuals and finance additional micro enterprises and livelihoods. The regional programme is intended to run till December 2018. This collaboration with Standard Chartered is in line with the country s long-term development and poverty alleviation Strategy 2020 program. City Bank launched the country s first domestic airport lounge of international standard and quality at Hazrat Shahajalal International Airport, Dhaka in March 2013. The lounge named City Bank American Express Domestic Airport Lounge will cater to the City Bank-issued American Express Gold credit card members. The facilities at the lounge will be complementary and include food and beverage, wi-fi connections for internet access, American Express Card service desk and other entertainment options. In March 2013, Baraka Patenga Power Ltd (BPPL) signed an agreement of syndicated term loan worth BDT 2205 mn with eight banks and financial institutions (FIs). The loan shall be used to set up a 50 MW IPP power plant at Patenga in Chittagong. United Commercial Bank Ltd (UCB) served as the lead arranger of the deal. Barakatullah Electro Dynamics Ltd (BEDL) formed the project company, namely Baraka Patenga Power Limited (BPPL) as a 51% subsidiary of BEDL.
Corporate Social Responsibility (CSR) initiatives of the Month BRAC Bank Ltd., as part of its CSR initiatives, took underprivileged children to the Ekushe Boi Mela during the month of February. The children visited the premises of the Bangla Academy and interacted with eminent writers and poets at the fair. BRAC Bank organised the programme in association with Anando Alo, a fortnightly magazine of Channel i Group, also a partner of this year s Boi Mela. Additionally, books given as gifts to 30 children of
Aparajeya Bangladesh, an NGO working for excluded children of the society. Al-Arafah Islami Bank Ltd has provided scholarship worth more than BDT 1.85 mn to the poor and meritorious students of Kurmitola High School recently under its corporate social responsibility activities. Chairman of the Bank, Mr. Badiur Rahman handed over the scholarship cheques to the meritorious students.
25
IDLC MONTHLY BUSINESS REVIEW
Management Change Banks, FIs & Insurance Companies Name Sir Fazle Hasan Abed M Fakhrul Alam SM Abdul Hamid Mirza Elias Uddin Ahmed Mosharraf Hossain KMN Manjurul Hoque Md Khaled Mamun
Position
Organization
Chairman Additional Managing Director Deputy Managing Director Deputy Managing Director Independent Director Director Deputy Managing Director
BRAC Bank Limited ONE Bank Limited IFIC Bank Jamuna Bank Limited Shahjalal Islami Bank Limited Agrani Bank Limited Reliance Insurance Ltd
Position
Organization
Other Organizations Name Md Munsur Ali Sikder
Chairman
Bangladesh Chemical Industries Corporation (BCIC)
Md. Abul Kalam Azad
Chairman
Infrastructure Investment Facilitation Company (IIFC)
Note: The information in this and the preceding pages has been compiled from press reports and miscellaneous publicly available sources unless otherwise specified. The authenticity and correctness of the information has not been verified.
IDLC CSR INITIATIVES IDLC partners with VSO Bangladesh for Model Village Project IDLC has signed an MoU with VSO Bangladesh on March 6, 2013, for undertaking a Model Village Project at Sadarpur village in Rangpur, North Bengal. Under this project, IDLC will conduct various initiatives targeting youth and community empowerment, sustainable livelihood generation, environmental management, and primary healthcare awareness, over a period of one year. PJKUS, a local NGO at Rangpur, will be working as the Management Partner in close collaboration with VSO Bangladesh for implementation of the project activities. Mr. Selim R.F. Hussain, CEO and Managing Director, IDLC Finance Limited, and Ms. Shahana Hayat, Country Director, VSO Bangladesh, represented their respective organizations in the MoU signing event. Mr. Sukamal Sinha Chowdhury, GM, SME and Special Programmes Department, Bangladesh Bank, was also present as the Special Guest in the event. VSO Bangladesh is an UK-based development organization fighting poverty and social injustice in developing countries worldwide. At present, they are working in 30 villages across
Bangladesh under this approach. International volunteers are placed in these model villages to combine their expertise and knowledge with the local community volunteers.
A developed nation is a prosperous nation. At IDLC, we help you contribute to this process. We are in the business of financing happiness.
26
IDLC MONTHLY BUSINESS REVIEW
IDLC NEWS IDLC declares 30% stock dividend at its 28th AGM The 28th Annual General Meeting (AGM) of the shareholders of IDLC Finance Limited was held on Monday, March 25, 2013 at the Bashundhara Convention Center, Dhaka. The Company has approved 30% stock dividend (Bonus shares) for its shareholders for the year 2012. Amid intense competition among the banks and financial institutions IDLC continued to maintain its growth both in terms of business volume and profitability. The Company saw an impressive growth in Net Profit by about BDT 213 mn or 42% higher over last year. At the end of 2012, the IDLC Group s customer loans & advances were BDT 32,595 mn, a 24% year-over-year increase, while customer deposits grew by 31% to BDT 22,008 mn. Non-performing-loans had dropped from 2.32% in 2011 to 2.09% in 2012. Anwarul Huq, Chairman, IDLC Finance Limited presided over the AGM, which was also attended by other Directors ‒ Rubel Aziz, Md. Habibur Rahman Mollah, K. Mahmood Sattar, Farooq Sobhan, M. Amanullah and the CEO & Managing Director, Selim R. F. Hussain. A large number of shareholders were present at the meeting. The Chairman and Managing Director both welcomed the assembled shareholders and thanked them for their continued sponsorship of IDLC Finance. The Chairman said that 2012 had been a landmark year for IDLC because of the major investments in Branding, Core Technology Platform and Process Reengineering. The group s infra-structure had been significantly enhanced and Business Growth had accelerated despite the challenges in the business environment. Shareholders, too, voiced their appreciation at the significant step up in the Group s operations.
27
IDLC MONTHLY BUSINESS REVIEW
CAPITAL MARKET REVIEW Growing heat in political arena has dealt a severe blow to the market, turning March into another depressive month for investors. As business outlook went grim over political turmoil, investors refrained from new investments. Earnings disappointments and slowdown in hype over new listings also affected market sentiment significantly. The resultant erosion in confidence led to an 8%+ shed off from both DGEN and DSEX. Participation also plunged over bearish sentiment, reducing average daily turnover by 51.25% over February. The month made a bouncy start over political agitation, losing 207 points from DSEX on the first session, and restoring 129 points on the next. Both DGEN and DSEX dipped below 4000 level on the first session, and could not climb back over the month. As political volatility continued to stay on top, sentiment turned bearish, dragging prices as well as participation. The downtrend rolled on to March 11, shedding 211 points off DSEX since February 28. Activity also sunk, as turnover dropped below BDT 200 mn, daily. However, new listings continued to dazzle over debut trading session despite the downtrend. PREMIERCEM, GHAIL and GHCL debuted in the first week, and posted 370%, 202%, and 397% first day gains respectively. ORIONPHARM debuted later this month and posted 25% first day gain. The heavy abnormal gained attract significant portion of investors, and new listings dominated turnover for a few sessions. However, as initial hype faded out, these stocks also took downtrend, creating large losses for initial investors. With funds getting further stuck in these shares, turnover got another hit. As political worries topped in mid of the month, participation went through significant ups and downs, indicating investors
panicked reaction to ongoing volatilities. Turnover dried, but indices rebounded slightly, mainly riding on large caps. Within a five session long rally, DSEX restored 133 points, while turnover hovered around BDT 1600 mn. However, the uptrend was short-lived, as shaky sentiment twisted back over changing political dynamics. With fear gripping tighter, panic driven selling pressure climbed up, and market once again turned negative. Disappointing earnings and less than expected declarations by a number of companies also sent sentiment on back foot. The resultant bearish tone persisted for the rest of the month, drying both prices and turnover. All major sectors, suffered with heavyweight Bank sector taking the highest toll. In addition, new listings lost significantly as overall sentiment overshadowed excitements. Thus, as March ended, participants observed the driest month since December 2008 amid vanishing investor confidence. Through series of setting and resetting new year-low records, daily turnover averaged to BDT 1850 mn, while DGEN reached a 273 sessions low of 3722. Corporate activities remained moderate in March. BSEC approved right share issuance of National Housing Finance and Investments Limited (NHFIL) and zero coupon bond issuance of IDLC Finance Limited. In addition to that, the commission also expressed approval to issuance of common stocks of Central Pharmaceuticals Limited. Additionally, BSEC fined Mercantile Bank Securities for breaking the law. Meanwhile, Vanguard Asset Management Company won approval for registration.
Monthly Market Statistics Index Movement (March, 2013) DSEX DSE 30 DGEN
Index Point 3,590.05 1,340.15 3,722.41
Change -383.24 -91.75 -324.82
Market Statistics (March, 2013)
% Change -9.65% -6.41% -8.03%
YTD change -12.23% -9.02% -11.78%
Advanced
Declined
Unchanged
15
215
-
Top Ten Gainers List (March, 2013) 31-Mar-13 BRACSCBOND PRIMELIFE JAMUNAOIL AL-HAJTEX SINGERBD OLYMPIC ISLAMIBANK LRGLOBMF1 MPETROLEUM 4THICB
1,100.00 115.30 175.00 42.20 164.50 97.90 42.10 9.10 167.20 129.60
28-Feb-13 1,030.00 108.90 165.50 40.00 156.00 93.60 40.50 8.80 162.80 127.00
Mcap (All) Mcap (Equity)
Advance/Decline (February, 2013) All Category
Unit
Turnover
31-Mar-13
Mn BDT
28-Feb-13
2,211,709
2,335,772
% Change -5.31%
Mn USD
28,304
29,892
-5.31%
Mn BDT
1,624,648
1,745,702
-6.93%
Mn USD
20,791
22,341
-6.93%
Mn BDT
1,678
2,144
-21.74%
Mn USD
21.47
27.44
-21.74%
Top Ten Losers List (March, 2013) 31-Mar-13
% Change 7% 6% 6% 6% 5% 5% 4% 3% 3% 2%
SPPCL* SAPORTL PRIMEFIN EASTLAND RUPALIINS* SINOBANGLA* 1STPRIMFMF GENNEXT* NORTHRNINS* ULC
44.80 27.80 24.50 41.90 30.10 18.30 11.50 21.90 28.90 25.10
28-Feb-13 90.30 46.00 38.80 66.00 46.90 28.20 17.60 33.50 43.90 37.40
% Change -50% -40% -37% -37% -36% -35% -35% -35% -34% -33%
*% change includes post record date effects
28
IDLC MONTHLY BUSINESS REVIEW
Market Capitalization
Top Ten by Value (March, 2013) USD in mn
DSE Turnover and DGEN
BDT in mn
Top Ten (Value) 31-Mar-13
28-Feb-13 % Change 199.59
Value
SPPCL
82.97
-58%
2397.27
PREMIERCEM*
55.44
-
-
1782.94
BEXIMCO
34.19
57.56
-41%
871.71
RNSPIN
31.76
52.64
-40%
753.84
ENVOYTEX
10.82
38.23
-72%
518.77
PUBALIBANK
17.76
11.11
60%
470.26
KPCL
10.73
32.68
-67%
466.65
GENNEXT
12.92
32.47
-60%
464.35 453.72
OLYMPIC
18.20
8.55
113%
SQURPHARMA
25.95
12.09
115%
444.89 *New Listing
Lowest P/E and Lowest P/BV ratio Lowest P/E
Market Cap Class wise Stock Movement
Lowest Price/NAV
STANDBANKL
5.42
POPULAR1MF
54%
UNITEDAIR
6.19
AIBL1STIMF
55%
BEXIMCO
6.25
MBL1STMF
56%
RNSPIN
6.45
PHPMF1
58%
MERCANBANK
6.47
IFIC1STMF
59%
EBL
6.50
GREENDELMF
60%
ALARABANK
6.66
DBH1STMF
60%
FIRSTSBANK
6.91
1JANATAMF
60%
SHAHJABANK
6.94
EBLNRBMF
61%
JAMUNABANK
7.06
TRUSTB1MF
61%
Top Ten Market Capitalization (March, 2013) Top Ten Mkt Cap GP SQURPHARMA TITASGAS ICB ISLAMIBANK BATBC LAFSURCEML NBL PRIMEBANK PUBALIBANK
BDT (mn)
% Change
198,359 66,219 66,674 52,049 52,666 54,192 34,841 24,701 32,219 26,160
-0.14% 1.71% 0.00% -6.02% 3.95% -0.14% -9.37% -14.29% 6.27% -11.36%
Recent Corporate Declaration Company name Berger Paints Bangladesh Ltd.
Record Date
AGM Date
31.03.2013
21.04.2013
SD*
CD**
Rights
180%
-
Uttara Finance & Investments Ltd.
11.04.2013
27.05.2013
10%
20%
-
Reliance Insurance Ltd.
02.04.2013
08.05.2013
10%
15%
-
Dutch-Bangla Bank Ltd.
03.04.2013
28.04.2013
Trust bank Ltd.
9.04.2013
06.06.2013
10%
Singer Bangladesh Ltd.
01.04.2013
08.05.2013
25%
Argon Denims Ltd.
23.04.2013
07.04.2013
20%
40%
-
75%
-
*SD = Stock Dividend **CD =Cash Dividend
29
IDLC MONTHLY BUSINESS REVIEW
Sector Indicators (February, 2013) Sectoral Indicators Sector
Sector Performance Trailing PE
Price/BV
Fuel & Power
Value in BDT mn 262.29
% of Total Trade 14.18%
Industry Cap 14.29%
Forward PE 11.45
11.18
3.99
October -4.44%
Bank
250.07
13.52%
25.81%
11.67
10.22
1.31
-8.38%
Pharma
236.36
12.77%
9.68%
15.11
17.87
3.70
-3.31%
Textile
221.44
11.97%
3.29%
13.30
14.64
2.31
-13.02%
Travel & Leisure
170.72
9.23%
2.03%
14.34
17.72
1.47
n/a
Cement
139.79
7.56%
4.72%
16.67
20.53
5.20
-9.64%
Food
102.67
5.55%
4.21%
16.97
28.10
4.92
1.91%
Engineering
81.19
4.39%
3.89%
16.28
13.66
2.86
-10.90%
NBFI
76.31
4.12%
7.79%
24.06
25.64
2.28
-15.86%
Tele
56.28
3.04%
13.56%
11.65
11.30
5.45
-0.49%
Miscellaneous
56.04
3.03%
1.48%
7.73
5.54
1.48
-8.85%
Mutual Fund
45.46
2.46%
1.59%
n/a
n/a
0.81
n/a
Life Insurance
33.47
1.81%
1.85%
n/a
n/a
n/a
-5.25%
Non Life Insurance
32.48
1.76%
2.74%
15.71
17.31
2.67
-14.72%
IT
18.51
1.00%
0.26%
19.71
20.56
1.37
-17.54%
Service
12.76
0.69%
0.44%
20.88
19.38
1.70
-27.44%
Ceramic
11.50
0.62%
1.23%
23.27
24.60
1.75
-9.18%
TANNERY
3.14
0.17%
0.67%
10.76
6.30
3.34
-4.19%
Corporate Bond
0.79
0.04%
0.44%
n/a
n/a
n/a
n/a
Jute
0.20
0.01%
0.01%
23.52
25.78
2.64
-15.66%
Paper & Printing
0.03
0.00%
0.02%
33.67
33.92
0.46
-11.11%
14.68
15.57
3.23
1968.19
Weekly (March 24-28, 2013) Update on Open-end Mutual Funds Following table exhibits the open-end Mutual Funds (4) in order of YTD change in NAV. Two open-end funds ICB AMCL Unit Fund and ICB AMCL Pension Holders Unit Fund had NAV above face value, while the other two , Prime Financial First Unit Fund and Bangladesh Fund had NAV below face value. Sl Name of Mutual Funds No.
Initial Fund Size (BDT mn)
RePurchase Price
Selling Price
Effective Date*
NAV
% Change in NAV from last week
YTD Change in NAV
Fund Manager
200
86.00
89.00
3-Apr-13
86.19
-2.06%
6.22%
PAMC
50000
91.00
94.00
31-Mar-13
91.21
-3.12%
1.32%
ICB AMCL
1
Prime Financial First Unit Fund**
2
Bangladesh Fund
3
ICB AMCL Unit Fund
100
265.00
270.00 31-Mar-13 265.34
-1.11%
0.47%
ICB AMCL
4
ICB AMCL Pension Holders' Unit Fund
100
230.00
235.00
26-Feb-13
-4.16%
-3.79%
ICB AMCL
230.27
* For ICB AMCL, effective date is the date from which repurchase price, selling price and NAV are applicable. For PAMC, effective date is the date until which repurchase price, selling price and NAV are applicable. ** Sale and repurchase of Prime Financial First Unit Fund remains closed each Thursday.
Weekly (March 24-28, 2013) Update on Closed-end Mutual Funds Following table exhibits the Closed-End Mutual Funds (41) in order of YTD change in NAV based on latest NAV/unit as on March 28, 2013. On the basis of Price/NAV, 34 Mutual Funds out of 41 were traded below their respective NAV. POPULAR1MF and AIBL1STIMF had the lowest Price/NAV and were traded at 46% and 43%discount, respectively . GRAMEEN1 and ICBAMCL1ST were traded at higher multiple than others, 46% and 34% premium, respectively. Last week, NAV of 40 Mutual Funds decreased and 1 remained unchanged. On the other hand, price of 31 Mutual Funds decreased, 4 increased while 6 remained unchanged. On an average, price of Mutual Funds decreased by 1.98% while NAV decreased by 3.17% from previous week, against a 3.66% decrease in DGEN over the week. In terms of price changes, 35 Mutual Funds outperformed DSEX over last week. Among all the asset managers, VIPB lost the least (0.06%) in terms of average change in NAV of its Mutual fund over the week.
30
IDLC MONTHLY BUSINESS REVIEW
Price (Feb 20, 2013)
Latest NAV/ unit
%Change %Change YTD Price/ of Price in NAV from Change in NAV from last last week NAV week
92.48
79%
DSE Code
Name of Mutual Funds
7THICB
7th ICB M.F.
73.40
5THICB
5th ICB M.F.
8THICB
8th ICB M.F.
2NDICB
2nd ICB M.F.
220.00 221.06 100% 0.00%
6THICB
6th ICB M.F.
44.80
91%
0.45%
4THICB
4th ICB M.F.
130.70 170.23 77%
-1.28%
NLI1STMF
NLI First Mutual Fund
SEBL1STMF NCCBLMF1
Performance against DGEN (YTD)
RedempFund tion Manager Year
-0.81%
-4.42%
29.67%
Outperformed
2013
ICB
120.10 155.44 77%
0.00%
-3.29%
19.04%
Outperformed
2013
ICB
50.00
-2.15%
-3.69%
16.27%
Outperformed
2013
ICB
-4.72%
14.00%
Outperformed
2013
ICB
-4.22%
13.90%
Outperformed
2013
ICB
-3.71%
6.64%
Outperformed
2013
ICB VIPB
67.09 49.00
75%
8.80
11.67
75%
-2.22%
0.00%
3.09%
Outperformed
2022
Southeast Bank 1st Mutual Fund
7.60
11.23
68%
-2.56%
-0.09%
2.74%
Outperformed
2021
VIPB
NCC Bank Mutual Fund 1
9.70
11.07
88%
-3.00%
-0.72%
0.18%
Outperformed
2022
LR Global
FBFIF
First Bangladesh Fixed Income Fund
9.10
10.88
84%
1.11%
-0.46%
0.09%
Outperformed
2022
RACE
RELIANCE1
RELIANCE ONE MUTUAL FUND
8.60
10.22
84%
-6.52%
-2.48%
-0.10%
Outperformed
2021
AIMS
ABB1STMF
-0.65%
-1.74%
Outperformed
2022
RACE
AB Bank 1ST Mutual Fund
7.00
10.72
65%
4.48%
AIMS1STMF
Aims 1st M.F.
39.00
41.13
95%
-0.26%
-3.18%
-2.33%
Outperformed
2015
AIMS
AIBL1STIMF
AIBL 1st Islamic Mutual Fund
5.20
9.17
57%
0.00%
-1.29%
-2.65%
Outperformed
2021
LR Global
IFILISLMF1
IFIL Islamic Mutual Fund-1
4.50
6.89
65%
-2.17%
-3.50%
-2.68%
Outperformed
2019
ICB AMCL
LRGLOBMF1
LR Global Bangladesh Mutual Fund One
8.90
9.63
92%
3.49%
-1.03%
-2.92%
Outperformed
2021
LR Global
MBL1STMF
MBL 1st Mutual Fund
5.10
8.97
57%
-5.56%
-1.43%
-3.13%
Outperformed
2021
LR Global
EBLNRBMF
EBL NRB MUTUAL FUND
6.20
10.19
61%
-1.59%
-1.36%
-3.32%
Outperformed
2021
RACE
1JANATAMF
First Janata Bank Mutual Fund
5.30
8.60
62%
-1.85%
-1.38%
-3.80%
Outperformed
2020
RACE
POPULAR1MF Popular Life First Mutual Fund
5.00
9.28
54%
-3.85%
-1.59%
-3.93%
Outperformed
2020
RACE
3RDICB
3rd ICB M.F.
EBL1STMF
EBL First Mutual Fund
TRUSTB1MF ICBISLAMIC
142.00 166.48 85%
0.00%
-4.00%
-3.99%
Outperformed
2013
ICB
6.60
10.14
65%
-1.49%
-1.84%
-4.52%
Outperformed
2019
RACE
Trust Bank 1st Mutual Fund
6.20
10.01
62%
-3.13%
-1.67%
-4.67%
Outperformed
2019
RACE
ICB AMCL Islamic Mutual Fund
16.60
16.11 103% -4.05%
-5.68%
-4.67%
Outperformed
2014
ICB AMCL
ICB2NDNRB
ICB AMCL 2nd NRB Mutual Fund
10.70
9.96
107% 0.00%
-5.41%
-4.69%
Outperformed
2018
ICB AMCL
GRAMEENS2
Grameen One : Scheme Two
15.20
14.24 107% -5.59%
IFIC1STMF
IFIC Bank 1st Mutual Fund
6.10
10.07
1STICB
1st ICB M.F.
-3.13%
-4.75%
Outperformed
2023
AIMS
61%
-4.69%
-1.47%
-4.82%
Outperformed
2019
RACE
790.00 894.78 88%
-2.05%
-1.73%
-4.84%
Outperformed
2013
ICB
GREENDELMF Green Delta Mutual Fund
5.00
8.40
60%
-1.96%
-1.75%
-4.98%
Outperformed
2020
LR Global
PHPMF1
4.90
8.40
58%
-3.92%
-1.64%
-5.08%
Outperformed
2020
RACE
61%
PHP First Mutual Fund
DBH1STMF
DBH First Mutual Fund
5.30
8.69
-1.85%
-2.14%
-5.34%
Outperformed
2019
LR Global
GRAMEEN1
Grameen Mutual Fund One
37.20
25.50 146% -5.82%
-4.17%
-6.01%
Outperformed
2015
AIMS
ICB3RDNRB
ICB AMCL Third NRB Mutual Fund
5.30
5.97
89%
-1.85%
-5.54%
-6.13%
Outperformed
2019
ICB AMCL
PRIME1ICBA
Prime Bank 1st ICB AMCL Mutual Fund
5.20
6.12
85%
0.00%
-5.56%
-6.13%
Outperformed
2019
ICB AMCL
ICBEPMF1S1
ICB Employees Provident MF 1: Scheme 1
5.70
6.08
94%
-3.39%
-5.59%
-6.32%
Outperformed
2019
ICB AMCL
PF1STMF
Phoenix Finance 1st Mutual Fund
4.90
5.93
83%
-2.00%
-5.87%
-6.32%
Outperformed
2019
ICB AMCL
ICBAMCL1ST
ICB AMCL 1st M.F.
40.20
29.90 134% -0.74%
-6.09%
-6.56%
Outperformed
2013
ICB AMCL
ICB1STNRB
ICB AMCL 1st NRB Mutual Fund
25.50
23.15 110% -1.16%
-6.31%
-6.58%
Outperformed
2017
ICB AMCL
ICBAMCL2ND
ICB AMCL Second Mutual Fund
5.60
6.69
84%
-1.75%
-5.91%
-6.82%
Outperformed
2019
ICB AMCL
1STBSRS
1ST Bangladesh Shilpa Rin Sangstha M.F.
70.70
91.59
77%
-2.88%
-5.12%
-10.88% Underperformed
2013
BDBL
1STPRIMFMF
Prime Finance First Mutual Fund
11.90
9.48
126% -8.46%
-6.32%
-15.96% Underperformed
2015
ICB AMCL
31
IDLC MONTHLY BUSINESS REVIEW
Investment Insight: S. Alam Cold Rolled Steels Limited Company Profile
S. Alam Cold Rolled Steels Limited (DSE: SALAMCRST) Current Price (March 28, 2013)
36.40
Total Number of Share (mn)
98.37
Free Float (%)
53.2%
Forward PE* ‒ SALAMCRST
10.40
Trailing PE ‒ SALAMCRST
10.81
Forward PE ‒ Engineering Sector
16.29
Financials (BDT mn)
2011
2012
Q1, 2013 (unaudited)
Net Revenue
3,034
3,702
918
Gross Profit
685
712
189
Operating Profit
642
657
176
Net Profit After Tax
306
335
86
Total Asset
6,995
10,802
11,576
Total Equity
1,910
2,097
2,056
Per share (BDT)
2011
2012
Q1, 2013 (unaudited)
Restated EPS
3.11
3.41
0.87
BVPS
19.41
21.32
20.90
Others
Q1, 2013 (unaudited)
2011
2012
Gross Profit Margin
23%
19%
21%
Operating profit margin
21%
18%
19%
Net profit margin
10%
9%
9%
ROA
5%
4%
1%
ROE
18%
17%
4%
Stock Dividend
10%
-
-
Cash Dividend
15%
15%
-
S. Alam Cold Rolled Steels Limited was incorporated in 2000 as a manufacturer of Cold Rolled Strip (C.R. Strip). Later, the company started its commercial operation in 2004. Subsequently, in 2006 it was listed in both DSE and CSE. Currently, Product range of the company contains Cold Rolled Coil (C.R. Coil), Baby Coil, Cold Rolled Cut piece (C.R. Cut piece), Off Gauge and Trimming. It has a subsidiary named S. Alam Power Generation Limited where it holds 70% ownership.
Key Revenue Drivers & Company Insight SALAMCRST manufactures and sells high quality C.R. Strips in the form of coils and sheets, which is the key revenue driver of the company. In 2012, the company generated 93.5% of net revenue from sales of C.R. Coils. At Present, SALAMCRST has an annual production capacity of 120,000 M.Ton. Recently, SALAMCRST has set up a Non-Oxide Furnace (NOF) type Continuous Galvanizing Line (CGL) with CTL plant which is under trial operation. This plant will consume the C.R. Coils produced by the company for production of GP/CI sheets. This undergoing plant has an annual production capacity of 280 M.Ton.
Financial Performance Gross Profit Margin dropped to 19% in 2012 from 23% in 2011, as increased electricity cost and spare parts consumption pushed up COGS. Alongside, increased Selling, Distribution and Administrative cost also lowered Net profit margins to 9% in 2012 from 10% in previous year. Recently, the company has reported net profit after tax (excluding non-controlling interest) of BDT 86.06 million with EPS of BDT 0.87 for the period of three months (Oct 12 to Dec 12) as against BDT 90.08 million and BDT 0.92 respectively for the same period of the previous year.
Terminologies Free Float
:
% of total shares not owned by Sponsors/ Directors, and Govt.
Forward PE :
Based on Annualized Earnings of the latest declared quarter
Trailing PE
Based on Latest 12 Months Earnings
:
DISCLAIMER This Document has been prepared and issued by IDLC Investments Limited on the basis of the public information available in the market, internally developed data and other sources believed to be reliable. Whilst all reasonable care has been taken to ensure that the facts & information stated in the Document are accurate as on the date mentioned herein. Neither IDLC Investments Limited nor any of its director, shareholder, and member of the management or employee represents or warrants expressly or impliedly that the information or data of the sources used in the Document are genuine, accurate, complete, authentic and correct. Moreover, none of the director, shareholder, and member of the management or employee in any way is responsible about the genuineness, accuracy, completeness, authenticity and correctness of the contents of the sources that are publicly available to prepare the Document. It does not solicit any action based on the materials contained herein and should not be construed as an offer or solicitation to buy sell or subscribe to any security. If any person takes any action relying on this Document, shall be responsible solely by himself/herself/themselves for the consequences thereof and any claim or demand for such consequences shall be rejected by IDLC Investments Limited or by any court of law.
32
Industry & Equity Analysis Team ASIF SAAD BIN SHAMS
ADNAN RASHID
AVIJITH BARUA
MD. SAYEED
SHAHNAZ SHARMIN DEEBA
Phone: +88 02 8834990 ext: 102 Email:
[email protected]
Phone:+88 02 9898442 ext:153 Email:
[email protected]
Phone: +88 02 9898442 ext:118 Email:
[email protected]
Phone: +88 02 9898442 ext:135 Email:
[email protected]
Phone: +88 02 9898442 ext:135 Email:
[email protected]
IDLC OFFICES AND BRANCHES BRANCH NETWORK OF IDLC FINANCE LIMITED IDLC FINANCE LIMITED
DILKUSHA BRANCH
DHANMONDI BRANCH
GULSHAN BRANCH
UTTARA BRANCH
Corporate Head Office Bay’s Galleria (1st Floor) 57 Gulshan Avenue Gulshan 1, Dhaka 1212 Tel : +880 (2) 883 4990
Eunoos Trade Centre Level 13, 52-53 Dilkusha C/A Dhaka 1000. Tel : +880 (2) 9560111
House # 39A (3rd Floor) Road # 14A, Dhanmondi Dhaka 1209 Tel: +880 (2) 815 7632
Taj Marriot (1st Floor) 25 Gulshan Avenue Dhaka 1212 Tel: +880 (2) 9886837
Monsur Complex (2nd Floor) Plot 59/A, Road 7, Sector 4 Uttara Model Town, Dhaka 1230 Tel: +880 (2) 8932340
MIRPUR BRANCH
KERANIGANJ BRANCH
IMAMGANJ SME BOOTH
NARSHINGDI BRANCH
NARAYANGANJ BRANCH
Khan Plaza (1st Floor) Plot No. 6, Main Road No. 1 Mirpur 10, Dhaka 1216 Tel: +880 (2) 805 1845
A.K Tower, Nagar Mahal Road Nadidhara Ispahani East Agarnagar South Keraniganj, Dhaka 1310
75 Midfort Road (2nd Floor) ImamganjDhaka 1100 Tel: +880 (2) 7343766-7
T Hussain Tower, Holding # 382 Kalibari Road, Narshingdi Bazar Narshingdi Tel: +880 (2) 945 2075-76
Sattar Tower (Ground Floor) 50 S.M. Maleh Road Tanbazar, Narayanganj 1400 Tel: +880 (2) 764 8213-4
GAZIPUR SME BOOTH
SAVAR BRANCH
TONGI BRANCH
CHITTAGONG BRANCH
NANDANKANON BRANCH
Rahmat Tower (2nd Floor) Holding No. 1034, Outpara Joydebpur, Gazipur 1700 Tel: +88 (02) 926 3505
Alam Plaza (2nd Floor) 122/B Jaleshwar, Savar Dhaka 1340 Tel: +880 (2) 774 4961-3
Banesa Complex (Ground Floor) 26, Anarkoli Road Tongi Bazar Tongi, Gazipur.
Jahan Building 4, (Ground Floor) 76/77 Agrabad C/A Chittagong 4100 Tel: +880 (31) 711 034
A.K. Mansion (1st Floor) Holding No. 17 J.C. Guha Road Nandankanon, Chittagong 4100 Tel: +880 (31) 612 732
SYLHET BRANCH
BOGRA BRANCH
COMILLA BRANCH
JESSORE BRANCH
Casablanca (2nd Floor) 982 Dargah Gate Sylhet 3100 Tel: +880 (821) 728241-3
Sairul Complex (2nd Floor) Sherpur Road, Sutrapur Bogra 5800 Tel: +880 (51) 69917
Nasir Center (2nd Floor) 437 Nazrul Avenue Kandirpar, Comilla 3500 Tel: +88 (081) 64907-8
Rashid Center (2nd Floor) 7/A, R.N. Road, Jessore 7400. Tel: +880 421 60892-95
BRANCH NETWORK OF IDLC SECURITIES LIMITED IDLC SECURITIES LIMITED
GULSHAN BRANCH
DOHS MOHAKHALI BRANCH
UTTARA BRANCH
DHANMONDI BRANCH
Head Office 36, Dilkusha C/A (13th Floor) Dhaka 1000 Tel: +880 (2) 957 1842
South Avenue Tower (5th floor) House No. 50, Unit No. 502 Road No.-3, 7 Gulshan Avenue Dhaka 1212 Tel: +880 (2) 988 3898
House No. 109, Park Road Block A, New DOHS Mohakhali, Dhaka 1206 Tel: +880 (2) 8715081
Monsur Complex (4th Floor) Plot # 59/A, Road # 7, Sector # 4 Uttara, Dhaka 1230 Tel: +880 (2) 895 9392 + 880 (2) 895 9046
Municipal Holding No. 405/C (3rd & 4th floor) Road No. 27 (old), 16 (new) Dhanmondi R/A, Dhaka-1209 Tel: +88-02-9102991-3
NARAYANGANJ BRANCH
GAZIPUR BRANCH
KHATOONGONJ BRANCH
CHITTAGONG BRANCH
Rahmat Tower (2nd Floor) Holding No. 1034 Mouza Outpara, Gazipur Tel: +880 (2) 926 3503
M.H No. 3/A Ramjoy Mohajan Lane, (5th floor) Khatungonj, Kotwali, Chittagong Tel: +88 (031) 2866491-3
Ayub Trade Centre (6th Floor) 1269/B Sk. Mujib Road Agrabad C/A, Chittagnong 4100 Tel: +880 (31) 251 4051
SYLHET BRANCH
Sattar Tower (Ground Floor) Municipal Holding No. 50 S.M. Maleh Road, Tanbazar Narayanganj 1400 Tel: +880 (2) 763 2891
Casablanca (2nd Floor) 982 Dargah Gate Sylhet 3100 Tel: +88 (0821) 710292
IDLC INVESTMENTS LTD.
DILKUSHA DMEx BRANCH
DOHS MOHAKHALI BRANCH
GULSHAN BRANCH
DHANMONDI BRANCH
Head Office Eunoos Trade Centre (Level 21) 52-53 Dilkusha C/A, Dhaka 1000 Tel: +880 (2) 957 1170
People Insurance Bhaban (13th floor) 36 Dilkusha, Dhaka-1000 Tel: +880-(2) 9571842
House No. 109, Park Road Block: A, New DOHS Mohakhali Dhaka 1206 Tel: +880 (2) 8715081
Capita South Avenue Tower (5th Floor), House No. 50 Unit: 502 , 7 Gulshan Avenue Dhaka 1212 Tel: +880 (2)-988 3898, 988 9861
House # 405/C (3rd & 4th Floor) 24/C Sk. Kamal Sarani (New) Road # 27 (Old) 16, (New). Dhanmondi R/A, Dhaka-1209 Tel: +880-2- 9102991-3
NARAYANGONJ BRANCH Sattar Tower (Ground Floor) Municipal Holding No. 50 S.M. Maleh Road, Tanbazar Narayanganj –1400 Tel: +880-2-7632891
CHITTAGONG BRANCH
KHATOONGONJ BRANCH
Ayub Trade Centre (6th floor) 1269/B Sk. Mujib Road Agrabad Commercial Area Chittagong 4100 Tel: +880 (31) 251 4051-52
M.H No. 3/A Ramjoy Mohajan Lane, (5th floor) Khatoongonj, P.S. Kotwali Chittagong 4100 Tel: +88-031- 2586491-3
UTTARA BRANCH
GAZIPUR BRANCH
Monsur Complex (4th floor) Plot # 59/A, Road # 7 Sector # 4, Uttara, Dhaka 1230 Tel: + 880 (2) 8959392, 8959046
Rahmat Tower (2nd Floor) Holding No. 1034 Mouza: Outpara, Gazipur Tel: +880-9263503, 9263505
SYLHET BRANCH Casablanca (2nd Floor) 982 Dargah Gate, Sylhet 3100 Tel: +880 (821) 283 2461-3
www.idlc.com
BRANCH NETWORK OF IDLC INVESTMENTS LIMITED