Business is losing social values and ethics

From the dawn of civilisation human is involved with business. In the name of barter trade, mutual exchange on account and many other forms of business facilitated men to survive in the society with the needful. With the passage of time business crossed the borders of villages, cities, and even countries. From the early twentieth century, the concepts, postulations, and theories about business developed; and in western countries, especially the USA, business and business administration are inducted as subjects to be researched and learned. From 1900-1970, with the rise and fall of capitalism, communism, and socialism; and now in the ages of mixed economy, the definition and concepts of business have undergone significant modifications. 

Business had been defined in many fashions in last hundred years. According to modern concepts, an activity will be called 'Business' when it runs after profit, adds some value to the society and it must carry ethics. These three conditions are three pillars of the legitimacy of business. Past economic theories stressed much on profit maximisation but the modern outlook is different and for them the profit is only secondary. Today business is regarded as a social institution forming an integral part of social system.With the initiation of globalisation, the businesses across the world are so interconnected that the wind of recession of any economy can affect the world economy easily. In our country, after 1990s the businesses-- both public and private have expanded considerably. In last 30 years many industries have been grown to maturity while many others are still growing. But some recent events indicate that business is losing social values and not practicing ethical standards as expected. 

Very recent Hallmark group and Sonali Bank scam of almost Tk 40 billion is the burning example of under-applied ethics. According to newspaper reports, the corruption continued for the last three years. The top brass of the bank completely failed to perform their duties and swindled. The Hallmark also coerced and adopted unethical ways to get the loan. In the recent collapse of stock market the institutional investors showed very disapproving behaviour. They were equally responsible for making the bubble and burst. Their withdrawal of so much money at a time from market harmed the individual investors most. The recent scams of so-called multi level marketing (MLM) like Destiny and Unipay2U fraudulently collected billions of taka from general people. Already Unipay2U is vanished and Destiny is under probe and trying to avoid apprehension by the law enforcers. 

Another business, popularly called 'click business', exploited many innocent people by misguiding them. Showing the opportunity of earning money without labour, a company called 'Dolancer' looted Tk 2.0 billion recently and ran away. Land grabbers are so powerful in the city that not only they are grabbing governmental lands but also sometimes private lands by threatening the legal owners. They are executing these illegal schemes by appointing local terrorists and paying kickbacks to the law enforcers. Sometimes they are backed by influential political leaders. These land grabbers have the signboard of business but never show social values and hardly exert ethical behaviour. To exploit the best opportunity many businesses do not consider the environment issue. The city's residential areas have lost residential nature. Some textiles, tanneries, manufacturing industries are operating their businesses at the heart of the capital city. They continuously are polluting the environment and rivers of this city. The mighty 'Buriganga' has lost the status to be named as river. Consequently, in the latest livability ranking by The Economist, Dhaka has got the last place out of 140 cities of the world. Last year it was ranked as second last. 

The multinational and local big companies are exploiting the benefits of the third world. They are taking advantage of cheap labour, lack of consciousness about environment issues, uneducated and ignorant people. How much the society is receiving from them is an issue to ponder. Some banks provide education scholarship to students from their corporate social responsibility. It is really commendable, but over publicising them is how much justifiable is a question. The cost of advertising would support many more students. The luxurious initiative of haunting beauty with a lavish budget by some multi-national companies (MNC) also come under scrutiny when it is found that many brilliant students cannot manage funding of education owing to poverty. 

All these events involve businesses and corporations. These show an obvious lacking of ethics and social values. As large amount of resources are concentrated in the business sector, it is supposed to play a leading role in augmenting the material and social welfare of a nation. Though business is an artificial entity and is seen like a person, it is operated by a group of human beings. Hence, the disharmony between business and social value, ethics ultimately means the society is losing values. 

The term 'Corporate Citizenship' is also commonly used to refer to the moral obligations to the society. This implies that, like an individual, corporate shall be guided by some social norms. Against this backdrop, business should exert high level of ethics and must exercise 'Social Audit' which will evaluate how a business discharges social responsibilities.

This article was published in The Financial Express, Views & Opinion, September 23, 2012

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Vulnerable Bangladesh: Water Insecurity

Considering geographic, topographic, demographic and socio-economic characteristics, Bangladesh is regarded as one of the most vulnerable countries in the world. The affects of climate change, sea level rise, enhanced monsoon precipitation, water crisis, power shortage, higher temperature have exacerbated the problems that already impede thedevelopment of Bangladesh. Weighing the scale and magnitude of the problems the water crisis and insecurity is the most important issue for Bangladesh in short as well as long run. Bangladesh will face severe challenges in the coming decades if it doesn't pay superior attention in this issue. Bangladesh is called the land of river and canal. Most of the principal rivers are borned at Himalaya and then flows in Bangladesh through other countries (India/China/ Nepal/ Tibet) and ends at the Bay of Bengal. The three major rivers of Bangladesh are Ganges, Meghna and Brahmaputra and the river basin of this big three is around 64% in India, 18% in China, 9% in Nepal and 3% in Bhutan (Rafiqul Islam, "A ticking time- bomb" in Dhaka Courier, Sep, 2010, Vol. 27, and p.17).

As Bangladesh is surrounded by India from three sides, naturally there are some disputes about sharing of water of trans-boundary rivers. Although Bangladesh has 54 major trans- boundary rivers with India but there is only one ambiguous water sharing treaty on the Ganges river signed on December 12, 1996, where India removed the guarantee and arbitration clause in getting of minimum water. The water of river is a divine gift from the almighty. Human life is completely dependent on water and actually the water of river is not a matter of sharing. In Western Europe and North America the countries do not share the water rather they utilize, take care and make development of the trans-boundary rivers on the basis of mutual agreement. But there is hardly an amiable understanding with India in 40 years after liberation. In that time India had taken the advantage and utilized the big share of water by breaching the international laws about river. As Bangladesh has many trans-boundary rivers with India and India is in the upper position therefore they have some comparative advantage.

River Teesta at the time of dry season

 

India have constructed almost 35 water diversion projects on the upper Ganges to divert water at other places in India in the name of extending irrigation facility before the flow of water reaches farakka. For this reason the amount of water in farakka is in declining and the share of water for Bangladesh is affected nastily. India started construction of farakka dam without any understanding with newly freed Bangladesh and completed the construction in 1974, then they launched the dam on an experimental basis but dramatically it is active till now and their experiment never stopped. For this reason thedownstream of Padma river in Bangladesh is seriously hampered and the agricultural sectors are damaged harshly in absence of adequate water.

Now-a-days India has planned to construct several dams in major international rivers to divert water on their land without any negotiation with Bangladesh. In a recent move Indian govt. has drastically changed the flow of trans-boundary Rivers by constructing embankments on Muhuri, Kacchua, Fulchari, Chhagalnaya and many other places in Tripura. Tipaimukh dam is another threat to Bangladesh. Proposed Tipaimukh project on the trans-boundary Barak river in Manipur state will have adverse impact in the flow of Surma and Kushiara, which are the principal source of meghna. The consequence of Tipaimukh dam will be so destructive that the Sylhet- Shunamganj area will be desert and agriculture of that area will be seriously damaged. Former UN water expert and visiting faculty of BRAC University told in meeting that the water dispute with india is as old as the inception of Bangladesh and if india will implement the project (Tipaimukh), the downstream of Meghna river will lose its water flow and the country will gradually turn into desert amid acute water crisis. The Teesta water sharing issue has recently added a new extent to the old disputes. During the dry season, especially beginning in September and going up to March, Bangladesh requires the Teesta waters for agriculture. So, there is an urgent need for an agreement of Teesta water sharing with India, although, during the dry season, flow of the Teesta goes down to anywhere between 5,000 and 6,000 cusecs while the demand for water by Bangladesh and India are 8,000 cusecs and 21,000 cusecs respectively (Editorial, The Daily Star, January 12, 2010.) Now we get 39% share of the water and we are demanding 50-50 while West Bengal Prime Minister Mamata Banarjee wants to give us 25% share in signing treaty. It is not only embarrassing to us but also insulting.

According to water experts, the whole world is seriously concerned about conserving their water resources for water security where Bangladesh is destroying its surface and underground water; this will ultimately damage Bangladesh in the long run. A recent report of strategic foresight group titled "The Himalayan challenge: Water security in Emerging Asia" stated, "A decrease in water supply by up to 22 percent in next two decades, rise in sea level and increase in population might push Bangladesh to the risks of food insecurity, outbreak of water-borne diseases and loss of biodiversity. Water availability on per capita cubic metre basis is estimated to decline from 2150 at present to 1860 in 2030 in case of China, from 1730 to 1240 in case of India, from 7320 to 5700 in case of Bangladesh, from 8500 to 5500 in case of Nepal." India should consider the reality of Bangladesh too. They expect the transit from us but in return they will give nothing or something too little is not a good idea. The logical sharing of water and transparency in inter-relations between Bangladesh and India will lead to a good mutual understanding we hope or who knows the third world war may happen for water in the coming century.

This article was published in The News Today, 09/09/2011 Click Here to read newspaper version

MLM business worldwide and its abuse in Bangladesh

Multi level marketing is popularly known as MLM business. Wikipedia defines MLM business as a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a down-line of distributors and a hierarchy of multiple levels of compensation. Such kind of business is also known as pyramid selling, referral marketing, network marketing, home-base marketing, holiday business, teamwork marketing, freedom enterprise and so forth. However, minor differences may arise with the use of different nomenclatures while undertaking in-depth discussion on MLM. In developed countries MLM is well-known but in Bangladesh and South Asia this concept is relatively new as this was not practised before. For this reason, many misconceptions prevail in people's mind about MLM business. Multi-level marketing is recognised in many parts of the world as legal, fair and promptly spread business. The subject is also included in the curriculum of many universities, for instance, University of Illinois, USA (http://www.uic.edu/cba/cba-depts/ms/FacultyProfiles/king.html), University of Auckland, New Zealand (http://www.shortcourses.auckland.ac.nz/courses/165/).

Historically, the multi-level marketing concept was first introduced in 1945 by the California Vitamin Company (shortly afterwards to become Nutrilite). Basic mechanism was applied by Dr Carl Rehn Bourgh, a renowned chemist of America. The plan allowed Nutrilite distributors with at least 25 regular customers to recruit new distributors and draw a 3.0 per cent commission from their sales. Unlike traditional direct selling, this was an ongoing payment whenever the customer re-ordered; allowing direct sellers to build a sales organisation that could generate an additional income. Through the procedure, he started to attract many customers through word-of-mouth of existing customers. Through first customer many potential consumers went to him for buying which made a good profit, and from that amount of profit an attractive portion was offered to the first customer and other team-members complying with the conditions of the commission plan. MLM concept has been applied to many products selling like non-durable goods such as detergent, rice, sugar, soap; services such as telephone service, health service, traveling packages; and even unsought goods such as insurance. Gillette, Colgate and Palmolive applied MLM to sell products.

Organisations need to market products and services, and sometimes themselves to enhance goodwill and ensure market position. Except appropriate marketing in today's business world, organisations may lose their market share, customers, channels and eventually experience loss. So, organisations have to adopt vibrant marketing strategies. From marketing viewpoint, there are two parties, producer (marketer) and customer (consumer) and to develop a good interaction between them two types of marketing concepts are evolved - Traditional Marketing (TM) and Multi -level Marketing (MLM). The traditional marketing (TM) strategy is channel based and dominated by several layers of middlemen. The manufacturer produces goods and services that reach the customers through various channels of distribution - from producer to wholesalers, wholesalers to retailers and retailers to consumers. The more stretched the distribution channel is the more complex the distribution process is. Maintaining the distribution channel deserves a grave attention of the producer as well. Thus, the product price goes high, because of the cost of transferring goods and margin of middlemen. TM process also requires a large capital involvement. Marketing and sales departments require manpower, office, logistics, infrastructure etc. Advertising and promotion also requires a high level of care and capital.

In case of MLM the necessity of distribution channel like TM has been reduced. Only some middlemen exist who are manufacturer's in-house middlemen. The work of agent, dealer, wholesaler and retailer is done by consumer-seller. The word-of-mouth strategy is widely used here. The consumers act as distributors, sell product and convince other consumers to reorder. If possible, a customer can recruit another customer as distributor and exploit the commission from the sales of his own recruited distributor. The newly-recruited distributor will then be considered as the former's down-line. The customers have to meet individual sales-target to gain the commission. A standard commission package is set by the manufacturer to calculate the commission for consumer-sellers. Thus, in addition to selling one can enjoy a smart amount of commission from his down-line's sales. Hence, customer's yield from MLM depends largely on teamwork. Where in TM only producers and middlemen are benefited from the perspective of earnings, in MLM customers-cum-distributors can also get a share of the producer's profit. However, the mechanism of channel is undermined in MLM; various good products are available to the consumer in a relatively lower price. MLM is financially less-risky as products are distributed by volunteer forces who decide which market to enter or leave and how much time to spend, whether to work part-time or full-time. So, consumers enjoy less restricted environment here. Since, in network marketing distributor sells the products directly to the customer; costing of showroom, promotional schemes and other advertisement could be extensively reduced for the manufacturer. If any particular business adopting MLM is collapsed then consumer-cum-distributors' maximum loss would be the opportunity cost of time spent.

There are also many criticisms of MLM strategy. Critics argue that with the availability of e-commerce, online shopping, capability of advertising and selling directly to consumers, MLM has become obsolete. The very early distributors can exploit the benefit of MLM where the recent distributors get nothing. The most important drawback of this method is that, swindling is easy by using the banner of MLM. People get misguided as some vested quarters execute 'ponzi scheme' by taking the signboard of MLM. Nevertheless, the MLM obtained its popularity in the developed countries and is acquiring popularity in the developing countries as well. Malaysia is considered as the largest market for MLM companies. In Canada, USA, Panama, Australia, South America, UK, New Zealand, Japan, China MLM is prevalent. 

A word of caution: before involvement or investing in any business, a thorough study on that subject and a feasibility test must be carried out.

Bangladesh perspective: Bangladesh is a populous country of about 160 million people. It is a vast market of many present and prospective businesses. Telecommunication, food products, cosmetic products, banking and insurance have already climbed the peak of success by exploiting the market. As the population is comprised of mostly semi-educated and uneducated people, many fraudulent businesses play their black magic by swindling in this huge market. The latest edition of deceptive schemes has arrived with the cover of Multi-level marketing, briefly called MLM. Many educated youths are unemployed and are continuously searching for earning source. By attracting them and using their ardour many hoodwinkers swindle millions of takas using the signboard of legal business, most recently through MLM. Destiny, Sitetalk, E-links, Daehsan and many small MLMs are still in business. Earlier, the people had their experience with UniPay2U and Jubok. Jubok has collected hard-earned money of many people and failed to repay those. Many victims have not yet been able to recover their loss from investment in Jubok. Unipay2 has collected millions of takas by convincing people about purchasing gold in foreign countries and pledged to pay such a high return which is incredible to any rational person. However, people invested and suffered a huge loss. Nevertheless, the Destiny 2000 Limited, popularly known as Destiny, emerged in December 2000 and acquired a position that surpassed all their competitors. According to its website, the company has 27 sister concerns with many more coming, 2800 employees, 4.3 million consumer-distributors and over US$ 70 million yearly turnover. Destiny Group has its active subsidiaries such as Destiny 2000 Limited, Destiny Tree Plantation Limited, Destiny Multipurpose Cooperative Society Limited. The meteoric rise in asset accumulation of destiny is absolutely perplexing. Its total accumulated asset was more than BDT 3742 million in 2009-2010 and BDT 1065 million, 366 million, 62 million, 104 million in the earlier sequential fiscal years. (Source: Destiny Website). A newspaper reported that, the destiny multipurpose co-operative society amassed wealth to the amount of Tk 33.5 billion as on March 31, 2012 of which an amount of Tk 11.1 billion was received from Destiny 2000 Ltd. (The Financial Express, June 10, 2012).

People have an inborn tendency to get rich in shortcut. This hankering largely influences the unemployed young people. Most ponzi schemers first target those youths and ensure their involvement. As the MLM is based on word-of-mouth strategy, they train young people not only to sell products but also to recruit the down-liners. Thus, they execute a pyramid structure. But it is observed worldwide that, the very early distributors can only exploit the benefit of MLM where the recent distributors get nothing. So, how they accumulated such a phenomenal growth in asset is a dubious matter.The ownership of Boishakhi TV is also now under dispute. Another controversy has arisen on the matter of banking by Destiny. It is very much harmful to the economy if any non-bank institution operates lending and depositing. Because the central bank cannot anticipate the money supply in the economy and therefore cannot control the supply, swiftly. An allegation of money laundering has been brought against Destiny. According to a newspaper report, one of its overseas directors, Noel G. Carey, laundered Tk 700 million in the guise of payment through one a letter of credit (LC). The Tk 700 million import payment has been made to the same man where no physical goods or services were transferred. (Tk 7.09b embezzled, Tk 700m siphoned off, The Financial Express, June 10, 2012). Destiny has allegedly evaded tax. 

As there was no specific law regarding direct selling and multi-level marketing, many MLM companies have apparently indulged in spurious business activities and the government was also inattentive to this issue. A tactic that Destiny used in attracting people was to invite the renowned persons and VVIPs in their programmes and used the photos with them in website and banners. Thus, many gullible people get convinced about Destiny. Though Bangladesh Bank has halted the bank accounts of Destiny, it allegedly transferred a lot of money from those accounts. Reportedly, its directors, hold a total number of 443 bank accounts where funds worth only Tk 1.77 billion could be traced. Among the total number of bank accounts, 225 were found closed. (The Financial Express, June 10, 2012) 

MLM is only a strategy to market goods by man to man where channels are mostly eliminated. But using this concept to deceive people is worrisome. The government should monitor the activities of MLMs seriously and protect the interest of the people by making proper laws and applying them effectively. 

This writing was published in The Financial Express, (Thursday, July 05, 2012)

Link: Click here to view the newspaper version

Our film industry deserves a grave concern

Now-a-days every country is very much desperate about their economic expansion. To do this, various sectors are given priority by countries in the world. In our country, garments and textile, agriculture and export of many things including manpower, shrimps, frozen fish, pharmaceuticals, cement, jute etc are deemed to be the catalyst for rapid expansion of the economy. Often several sectors are given incentives to encourage and facilitate their businesses. But unfortunately as an industry film making has failed extensively to contribute to the expansion of economic growth. Even, it failed to attract the heed of the top brass of the government to prove itself as a factor of upsizing the economy.

We are very well informed about the film industry of the USA and India, popularly known as Hollywood and Bollywood respectively. Both the industries are successful in contributing to their own economies. Developing our own industry to that height is very difficult but not an impossible dream. Some of our films have gone to some prestigious platforms like 'Cannes' festival and 'Swiss' festival. But these events are not recurrent. In Bangladesh, traditional commercial movies are very poor in every category in respect to a good one. To be frank, the target customers of those films are the people of very lower class in society. There is nothing to learn, to enjoy, to be thrilled or even to watch with family. Myriad problems in the films include low class production, poor scripting, slipshod plot, substandard ideas, plagiarism, vapid acting and many others. It is not very long that our film industry was flooded with total insanity, nudity and vulgarity. But it is a good sign eventually that level of bareness in films is over. Still it needs a huge reform. Tactically, many film makers and most of the cast and crew are untaught in their field. However, a few creative, learned and cultured people still exist in our film arena but they are too little in number to dominate the sector. This learned and dedicated persons are out of fund and some cash-rich, dishonest and speculative quarters are abusing the industry with their fund. Now general people are not willing to visit the cinema halls for recreation and in good families, going to theatre halls is a taboo. But the cessation of going to cinema halls can hardly contribute to the economy. According to a BBC report, Bangladeshi film-making industry is worth $ 20 million and in recent years, the number of cinema halls in Bangladesh has reduced from about 1,500 to just over 600. (Source: http://www.bbc.co.uk/news/business-15178289)

By nature, humans cannot work for long without taking recreation and entertainment. Film is the most ancient and acceptable way to be entertained. But the traditional commercial Bangla movies have lost their appeal to satisfy the appetite of viewers' minds. Thus, the Bangladeshi movies have been compelled to sacrifice their market to Hindi and Kolkata's Bangla movies (A.K.A. Tallywood). Empirically, to many people it is a matter of puncture of prestige to watch Bangla films. Frankly speaking, I observed in many places that Kolkata heroes 'Dev' and 'Jeet' are very popular in Bangladesh and their movie songs as well. Culture of watching Hindi movies are common from the very past. 

But it is a good sign that some Bangladeshi films like "Aha!", "Guerrilla", "Monpura", "Swopnodanay", "Moner Manush", "Matir Moina" and "Runway" had recently been acclaimed globally.In the age of satellite TV, it is even hard for a good film to take audiences in the theater halls while our commercial movies are still upholding their substandard quality. Sometimes the excellence of nation's culture is determined by their films since films express the nation's identity. If the aggression of Hindi films and production of substandard Bangla films continue to run, then we will lose our identity one day. The fettles of Bangla movies is now so vulnerable that some days ago The Bangladesh Motion Pictures Exhibitors Association urged the government to allow Bollywood movies to be screened in local cinemas to inject new blood into the business. The industry is on the brink of deterioration because of exorbitant increase in some protagonist's emolument, piracy, alleged non-collaboration from Bangladesh Film Development Corporation [BFDC] and alleged unfavourable behaviour of Bangladesh Film Censor Board.

Once, our film industry was very rich with creative people, exceptional thoughts and efficient technical minds. But we lost many veterans in our Liberation War which was deliberately done by the Pakistani perpetrators and their collaborators with a view to crippling the nation intellectually. We still could not fulfil their gap after 41 years of freedom. So it is not an easy task to revitalize this industry. To do this the government should take some needful steps to resuscitate the whole sector. The first step for the government could be to develop a long-run plan. The universities should launch separate departments on film, television and acting. Mechanical and technological matters are related with films. Hence, didactic courses should be commenced on those by government institutes. Scholarships should be provided to the students of films to earn the highest excellence in this sector. More governmental and private patronization is necessary for developing this industry. Film producers are eligible of receiving bank loans for funding films in India. But allegedly in Bangladesh, no banks have any policy of granting advances in this specific sector. Since film making has spillover effects in economy and stake of several industries (viz. audio, music channels) are related with film industry, specific laws should be passed to prevent piracy, plagiarism, and unfairness in film making. In many countries of Asia, the film exhibition business is stretched and evolved into a gainful concern on the ground of profitability, entertainment of viewers and improvement of social atmosphere. Ultimately, a rational approach to film industry is a must from the high-ups of government and from the society as well for the survival of Bangladeshi film and its contribution to economy.

This Article was published in The Financial Express, Saturday Features, (June 09, 2012)

Link: Click Here to see the paper version

Sahara in Bangladesh: Opportunity or threat?

Subrata Roy Sahara

On May 23, 2012 a Memorandum of Understanding (MoU) has been signed between the housing and public works ministry of Bangladesh and India's large conglomerate Sahara India Pariwar for large-scale investment in the housing industry. The Sahara India Pariwar belongs to Subrata Roy Sahara, a mechanical engineer by profession, who has been named among the 10 most powerful people of India by 'India Today'. In 2004, the Sahara group was termed by the Time magazine as the second largest employer in India after the Indian Railways. Subrata Roy also owns Pune Warriors India (IPL cricket team), Grosvenor House Hotel(London), Aamby Valley City and has 42.5% stake in Force India (source: Wikipedia). Born in Bihar, aged 64, he loves to address himself as managing worker instead of managing director or CEO of Sahara group. Through subsidiaries he involves himself in a variety of businesses in India, such as-- real estate, media, film, tourism, healthcare, hospitality, sports, information technology and so on.

With the purpose of doing business in Bangladesh, Sahara developed a company titled Sahara MatrivumiUnnoyon Corporation Ltd and appointed an influential ruling party leader's son as its director and pioneer of their business in this country. Sahara sought 100,000 acres of land from the government to build a township. Though the government is still reticent about the content of the MoU but according to a newspaper report, the MoU would expire if no definite agreement is arrived within 36 months from the date of its signing. 

Mixed responses are heard from different quarters whether the advent of Sahara group in Bangladesh is a threat or an opportunity. Government is allowing Sahara in Bangladesh as per its policy of foreign direct investment (FDI) in the backdrop of high demand for housing in the city of Dhaka. Sahara corporation also announced to invest initially $100- 125 million. No doubt, this sounds good. But allowing FDI in a vital sector as real estate has reasons to be fraught with adverse reactions because we have a fast growing real estate industry of our own. Strategically, it is not sagacious to allow FDI in priority sectors where we have scope, strength and potential to flourish. It is a general perception that vital sectors like power, energy, irrigation, housing, real estate, telecom etc., should be kept off the ambit of foreign investment because the return will be siphoned out of the economy in the form of dividend and divisible profit. According to the REHAB, the association of the real estate developers, with their collective efforts they are successfully implementing their housing and real estate projects, handing over some 12,000 flats and 6,000 plots to the buyers annually. This definitely indicates the growing strength of this sector in Bangladesh. 

Every country, no matter the size of its economy, has its own strengths and potentials in some sectors which the respective governments try as far as practicable to protect. Countries in the Middle East are endowed with oil and minerals, so are China and Japan with the manufacturing of electronic goods, garments and car respectively. In Bangladesh, besides RMG, real estate must be reckoned with as our strength. Hence, permitting FDI in this sector is not viewed in good grace by all concerned, within and beyond the industry. While the local entrepreneurs developed the industry over a period of last two decades and made available skilled workforce and necessary logistics, allowing a foreign developer to reap the ready benefit is a sheer neglect to the domestic players, and more so, a negation of prospects in terms of income generation from a home-grown industry. 

Already Transparency International Bangladesh (TIB) has raised questions about the MoU and asked the government to divulge the conditions since land in Dhaka is sparse, and without a cost-benefit analysis and proper risk assessment it is unwise to sign any such contract. That Sahara's proposal will not be well received by many in this country is a fact that Sahara knows well enough. And if I am not wrong, the mega offer by Sahara to be the main official sponsor of the Bangladesh cricket team is a corporate trick to turn public sentiment positively towards them, let alone business. 

FDI is always welcome to us but not in the primal sectors by ruining our potentials. There are many underdeveloped sectors where investments, both foreign and local, are very crucial and the profits could be shared on a win-win basis. In the aforementioned context, our expectation to the government is that they will address this issue with utmost seriousness in order to ensure that nobody is be allowed to indulge in a zero-sum gain. A wrong step forward can destroy our real estate industry with dire consequences. Looking at the self interest of an individual or of a vested quarter is despicable, while looking at the collective interest of the country is commendable indeed.

This article is published in The Financial Express, Views & Analysis, (Sunday, June 03, 2012)

Link: Click here to see the newspaper version

Solar energy to mitigate the problem of power shortage

Solar home equipment

Bangladesh is populated by a huge 162 million people. The people are mostly rural based, poor and live their life doing cultivation and small businesses. Roughly 25 per cent people live in the urban areas. After 1990's, Bangladesh is experiencing a rapid growth in its economy. Industrialisation is mainly contributing to the economic growth by giving the pace in the wheel of development. Nevertheless, many problems encumber our economic development and the most acute one is power crisis. No less than 40 per cent of the total population is deprived of the blessings of electricity. The main consumers of electricity are residential places and industries. In the summer times like now the demand for electricity is the highest. Now-a-days total demand for electricity is about 6700 MW of which the government is capable of supplying roughly no more than 5000 MW against the soaring demand. Hence, we are undergoing an anticipated load shedding which also varies by duration in various neighbourhoods. It could be sour to hear but true that the government will not meet the full demand of residential houses by depriving the industries to retain the full swing of economic growth.

This is the high time to think about alternative energy production which could solve the problems. One of the options could be the solar energy which best fits with our country conditions as nature blessed us with relentless sunlight. More than one million households in off-grid areas use solar system but regrettably solar energy is not being used where it should be, in the megacities like Dhaka. People use diesel-based backup power in the apartments and commercial buildings at the time of power failures but the supply of diesel is limited in the world and its use adversely affect the environment, including air and sound pollution. Solar home system (SHS), on the other hand, is completely environment-friendly, reduce pressure on grid electricity, reduce load shedding and free up power to supply to the off-grid people. 

According to a report of April of this year, per unit price of electricity, for residential connections, ranges between Tk 3.05 and 7.90. Per unit price of electricity for small industries is Tk. 6.02. For lean periods, the rate is Tk. 5.11 per unit. For peak hours, it is Tk 7.33. For big industries, per unit price of electricity is Tk 5.90. The flat rate is Tk 5.16. During peak hours, it is Tk 8.08. According to the Power Development Board (PDB), per unit cost of electricity (on an average) is Tk 6.68. However, the cost for fuel-fired plants is Tk. 16. 

The government has to subsidise the power sector to supply electricity at a lower rate to the consumers. As a result, other sectors suffer fund crisis and the huge subsidy widens the budget deficit. If the government decreases the subsidy on electricity to develop other sectors; inflation soars on the ground of electricity price hike and it dwindles the purchasing power and swells the woes of the people. To meet the soaring demand the PDB operates some fuel-run power plants but it needs to spend Tk 200-240 million (Tk 20-24 crore), a day to produce power from the fuel-run plants. However, Tk 90 billion (Tk 9,000 crore) is needed to buy fuel, but the finance ministry is ready to pay only Tk 62 billion (Tk 6,200 crore) and due to this financial crisis, the PDB is not able to produce power to its capacity and there are frequent power cuts every day. 

High-rise buildings, both residential and commercial, are built in Dhaka city with no proper urban planning. Now-a-days building apartments by developers are very common. The landlords and developers in Dhaka are cash-rich and high-yield earner through house rent and flat sale respectively. The government should compel them to establish SHSs on rooftops to cover the maximum usage of power from solar systems. According to Dr A K Enamul Haque, Economics professor at the United International University, there is opportunity in Dhaka city alone to produce nearly 600 MW of electricity if all dwellers produce 10-20 per cent of their power consumption using solar systems.

Therefore, the builders and land developers should design the land area and buildings in a fashion that is environment-friendly and more prone to seizing the unhindered sunshine. Many developed and developing countries use solar system for meeting their demand of electricity. For instance, Gujarat in India has set up a Solar Park with 600 MW capacity. Approximately 8.0 million tonnes of carbon dioxide emissions will be reduced by the park annually.

The government has already taken some measures to popularise SHSs but the exposure is very low. What the government should do is to make a specific law on using SHS for power generation. 

This article was publishes on The Financial express, Views & Opinion, (Monday, May 28, 2012)

Link: click here to see the original view

Need for keeping a close watch over sustainability of public debt

  
 By Asif Reza Akash

"Blessed are the young, for they shall inherit the national debt" — Herbert Hoover

When a government spends more than it collects in taxes and other forms of revenue, it has a budget deficit. This deficit is financed by borrowing from the private sector. The accumulation of past borrowing is national/government/public debt. Generally, contents of public debt are: a) currency (when the central bank is a part of government), b) short-term debt (e.g. treasury bills), c) floating debt (e.g. provident fund, small savings etc.), d) special floating debt (e.g. issued securities to international organisations like International Monetary Fund (IMF), the World Bank (WB) etc., e) permanent/funded debt (maturity is usually between three and thirty years), f) external loans (obligations owed to foreigners- governments, institutions, firms or individuals). In general, however, the currency obligations of the government are usually excluded from the definition of the public debt and only the floating, funded, external and other obligations are included in it. 

The most popular source of taking debt is foreign aid. Most laymen think that aid is something that is non-repayable in nature. But the fact is, depending on the conditionalities, aid may be in the form of 1) hard loans, 2) soft loans, 3) grants, 4) tied aid and untied aid. The recipient country has to pay higher amount of interest (at the commercial rate) for hard loans, and nominal interest at the rate of two per cent or less with long repayments period in the case of  soft loans ordinarily received from international financing institutions. In the case of tied aid, procurement of goods and services from the donor country is obligatory, but in the case of untied aid, the recipient country is free to procure the goods and services from any country at a competitive price. All aid except grants adds to the debt burden of the recipient country and has to be repaid.

Whether public debt is a curse or a blessing is a very debatable issue in the field of macroeconomics. The first US secretary of treasury and economist Mr. Alexander Hamilton believed that "a national debt, if it is not excessive, will be to us a national blessing." While the fourth president of the USA Mr. James Madison argued that "a public debt is a public curse" .Whether public debt is a curse or a blessing but public borrowings have a profound effect on various dimensions of economy; distribution, capital accumulation, income and employment stability, and so forth. This way, public debt is both a source of problems and a tool of economic management in the hands of the authorities concerned. Simply, as long as the return on investments is higher than the cost of borrowings, public debt is beneficial until then. But most economists are critical of the external aid because of its adverse macroeconomic effect.

According to a research titled 'Analyzing Bangladesh's Debt Sustainability Using SimSIP Debt' by Bernhard G. Gunter and A. F. M. Ataur Rahman, Bangladesh's total public debt at the end of 1993, amounted to Tk 725 billion. Six years later, at the end of 1999, it just surpassed the Tk 1.0 trillion level; and at the end of 2006, Bangladesh's total public debt amounted to nearly Tk 2.0 trillion (about US$32 billion). The amount has still continued to increase. This increase in public debt levels has worried many observers inside and outside Bangladesh. Such trends seem to indicate that Bangladesh's debt is not sustainable. However, calculation of Bangladesh's public debt as per cent of its gross domestic product (GDP) provides a different picture; this ratio has actually decreased from 58 per cent in 1993 to less than 47 per cent in 2006. According to CIA world fact book, the data to Bangladesh's public debt as percentage of GDP were as followed:

Country	2004	2005	2006	2007	2008	2009	2010
Bangladesh	43	44.5	46.7	37.4	34.5	39.7	39.3

However, Bangladesh, forty years ago, was a country with abysmal poverty among the economic of the world. Henry Kissinger openly referred Bangladesh a,' a bottomless basket case'. But the living standard of its population has been improving and poverty has extensively been on the decline. Nevertheless, the amount of public debt does not always matter; rather, the sustainability of public debt matters. 

Bangladesh Economic Update, a report published by Unnayan Onneshan, a multi-disciplinary research centre based in Dhaka, revealed that the public debt issue was putting an upward pressure on real interest rate crowding private investment out. Public debt is also increasing the demand for debt servicing payments and reducing the government's capacity for public investment. The spending in the social sector has been the prime causality of this development. The per capita debt burden in fiscal year (FY) 2010-11 in Bangladesh increased 8.41 per cent than that of FY 2009-10, rising from $151 to $163. This is 22.99 per cent of Bangladesh's per capita GDP and it might increase to $171.83 in FY 2014-15, reflecting an increase by 5.42 per cent, the report said. Total debts of Bangladesh in FY 2010-11 stood at about $23,322 million, which was 22.21 per cent of its total GDP. Total domestic borrowing as percentage of GDP remained between 1.5% and 3.0% of GDP over the last ten years, according to the report. In FY 2010-11, total external debt of Bangladesh stood at $21,347.4 million which was 20.24 per cent of its GDP. The government may have to borrow Tk. 177.57 billion from domestic sources in FY 2014-15 and its outstanding external debt will then stand at $23.47 billion, according to figures reported by a national English daily in one of its recent issues.

Every year an increasing amount of our budgetary expenditure has to be spent on payments of interest on the outstanding amount of public borrowings on a cumulative basis and also on debt amortisation i.e. , repayment of the principal amount of such debts in phases. The overall debt service now involves annually more amount of more than what is spent on social security, safety net and welfare, out of the annual budgetary allocation. Furthermore, excessive borrowing from the banking sector, as has been witnessed in recent times, tends to crowd out the private sector, in terms of their access to bank credits. If this trend about government borrowing continues, this will also impact adversely its capacity to extend development spending. 

Against this backdrop, the government should try to keep a careful watch on the sustainability of the public debt. Every effort should be made by it to help avoid the recurring deficit budget on a larger scale and to allocate more fund - not squeeze it - for infrastructural development activities, with a simultaneous drive being made for strengthening its capacity to improve the implementation performance relating to the Annual Development Programme (ADP). Public-private partnership (PPP) should also be actively promoted. Unfortunately, the government has not been able to make progress, in real terms, about exploiting the potential for PPP programmes. Meanwhile, the tax collection authorities will need to make sustained efforts on a vigorous scale to raise the level of domestic revenue collection. Corruption should be curbed effectively. All political leaders and lawmakers must rise above their individual selfishness and well-being as well as narrow partisan interests.

This article was published on The Financial Express, Views & Analysis, (Sunday, January 22, 2012)

Link: Click here to see the newspaper version

Border killings: When would it stop?

By Asif Reza Akash

Bangladesh and India share an international border of about 5000 kilometres. Five Indian states adjoin 28 Bangladesh districts on the border. India has already fenced in about 70 per cent of the border, secured by BGB Border Guard Bangladesh (BGB) and Border Security Force (BSF) of India, with barbed wire. The major peacetime duties of both forces include preventing the trans-border smuggling, especially narcotics, fake coins and currency, explosives, human trafficking, illegal cross-border movement of people and prevention of other crimes.

It is a matter of tension that the indiscriminate and extrajudicial killings have increased significantly in the border, mostly by the BSF men who killed 1000 Bangladeshi citizens over the past decade (Source: Human Rights Watch), that is, one killing every four days over the period. Have any punishments been given to the culprits involved in these killings? The BSF insists that there are internal investigations, and are unwilling to reveal anything. This apparent impunity encourages the BSF members to continue the killing spree. Human Rights Watch defined it as 'Trigger-Happy Culture' of BSF. 

"The border force seems to be out of control, with orders to shoot any suspect," said Meenakshi Ganguly, South Asia director of Human Rights Watch. The organisation found numerous cases of indiscriminate use of force, arbitrary detention, torture, and killings by the security force, without adequate investigation or punishment. The investigation and report of HRW is based on over 100 interviews with victims, witnesses, human rights defenders, journalists, law-enforcement officials, BSF and BGB members. In many of the cases investigated by the Human Rights Watch, the victims were cattle rustlers - farmers or labourers hoping to support their meagre livelihood as couriers in the lucrative, but illegal cattle trade which is rampant at the Paschimbanga border. Reportedly, the illegal trade between the two countries amount to 3/4th of regular trade. 

The Indian satellite channel NDTV recently telecast a video where several BSF jawans (personnel) were seen severely beating up a Bangladeshi youth after stripping him naked for failing of pay them a bribe of Indian rupee 1000 (US$23). When everyone is singing the song of humanity, how are we turning a blind eye to these killings? The Bangladesh government is obliged to protect the lives of its citizens, even those who may be involved in illegal trade. It should demand of the Indian government to stop these killings. Unfortunately, comments of Bangladesh ministers and leaders of the ruling party are sometimes confusing. In the last official visit, Indian premier Dr Manmohon Singh assured that border killings would cease but actually it is not true. When nine Indian fishermen were apprehended by Sri Lankan navy inside Lankan territorial waters, India did not take it so easily. 

The Indian premier asserted that they would not take any action which will cause any harm to Bangladesh, but they are building 'Tipaimukh Dam' which, many quarters fear, may become a death trap for the people living in the north-eastern part of Bangladesh. India is poised to enjoy transit facilities through Bangladesh, but in turn giving us virtually nothing. Even, they are not willing to give us our legitimate share of water of the trans-boundary rivers. As the upper riparian country, India always takes the absolute advantage of the international rivers, but when China does the same with India they raise a hue and cry. 

We urge all Bangladeshis, including expatriates, and to the world community to raise their voice against these extrajudicial killings in the India-Bangladesh border. 

This article was published on The Financial Express, Editorial, (Saturday, February 12, 2012)

Link: Click here to see the original version

State-owned 'TeleTalk' needs to be revamped

Bangladesh is now a land of about 165 million people. Since 1990s the country has been experiencing a rapid growth in its economy and business at a rate higher than any time in the past. The credit for this vibrant growth mainly goes to the readymade garments (RMG), remittances and export-oriented industries. The telecommunication sector has been playing a big role in the economy, especially following the introduction of cellular mobile phone service.

Bangladesh introduced cellular mobile phone service after India and Pakistan. In the huge mobile phone market in Bangladesh there are 6 operators: (i) Citycell (joint venture with SingTel Asia-Pacific Investment Limited), the first mobile communication company of Bangladesh, was set up in 1993 and it is the only CDMA network operator in the country; (ii) Grameenphone, popularly known as GP, a Norwegian company (stake of the Norwegian Telenor is 55.8 per cent; Grameen Telecom has 34.2 per cent share and public share is 10 per cent), came into Bangladesh in November 28, 1996; (iii) Robi (stake of Axiata Group Berhad is 70 per cent and that of NTT DoCoMo is 30 per cent), came in 1997; (iv) Banglalink, a subsidiary of Egypt-based Orascom Telecom, started in 2005; (v) TeleTalk, the only state-owned company, started operating on December 29, 2004; and (vi) Airtel (formerly Warid, stake of Bharti Airtel is 70 per cent and that of Warid Telecom 30 is per cent), launched commercial operations in 2007. 

According to Bangladesh Telecommunication Regulatory Commission (BTRC), the number of mobile phone subscribers in Bangladesh as of February 2009 was 45.21 million which reached 85.455 million at the end of December 2011. Considering the annual revenue and number of subscribers, GP is clearly the market leader followed by Banglalink, Robi, Airtel, Citycell and Tele Talk. So, it is crystal clear that the private-owned telecoms are dominating our market. The incentives both from the government and the private sectors have contributed to the growth of this industry. It is now one of the biggest sectors of Bangladesh. The vast market of telephone in populous Bangladesh has enticed many investors, both foreign and local, to invest in this sector. 

However, the state-owned TeleTalk remains a back bencher in the mobile phone business with only 1.218 million customers out of 85.455 million at the end of December, 2011. TeleTalk is the weakest competitor in the market with only a 1.43 per cent market penetration. When TeleTalk first came into operation it brought in a hope among the people. The mission statement of TeleTalk is "Desher Taka Deshey Rakhun" (Keep your money in your country) but ultimately it could not retain its customers' expectation with a weak network service in this highly competitive market. TeleTalk had 1.147 million subscribers as up to July, 2010 which shows the growth rate of subscribers is hardly increasing.

Strategically it is wise to keep the vital sectors like power, irrigation, telecommunication, energy, gas etc reserved for domestic investment. But for rapid economic expansion FDI was allowed in our telecom market. Now we are experiencing the outflow of return on FDI in the name of dividend and divisible profit from the telecom sector. The public company is not, however, capable of generating a vibrant profit by competing with its rivals. 

Russia's AFK Sistema and UAE-based telecom operator Etisalat showed interest to buy stakes in the state-run TeleTalk. Recently Vietnam's Viettel also wanted to invest $250 million in TeleTalk. However, nothing has happened as yet. 

TeleTalk should undertake a fish-bone analysis to detect its problems. But at first it should seek and attract investors so that there arises no liquidity crisis at the time of resuscitation. Then a huge development of network coverage is needed. By keeping the privilege of 3G in mind TeleTalk can make contract with modern engineering and technological companies of developed countries. A strong customer-based marketing strategy (advertising, sponsoring, strategic partnership, CSR etc.) should be formulated. A chain of customer service centres should be developed throughout the country with optimum number of smart and vivid customer care associates. The cost efficiency and effectiveness should be kept in mind. To do all this, a partial or complete change in management team and corporate strategy may be necessary. Corruption, inefficiency, mismanagement and political interference should be reduced to the minimum. 

Before creating expectation TeleTalk must develop ability to satisfy those expectations of the customers. If necessary, the brand name and logo might be changed. Eventually, if TeleTalk can give all the facilities that its rivals do and for once the customers are convinced that it is our phone, let us talk through this phone and contribute to the country by keeping the money in the country; then TeleTalk will patently become the market leader in country's telecommunication.

This article was published in The Financial Express, Views & opinions (Saturday, March 24, 2012)

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