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While exploring the data protection and privacy law framework of Bangladesh, one will immediately spot a glaring gap which is not only frustrating but also raises economic and national security concerns in relation to the processing of its citizens' personal data. With the total number of internet users in Bangladesh reaching  54 million at the end of September 2015 - a figure that is predicted to increase by millions every year - it is time we took personal data protection seriously.

WHAT IS PERSONAL DATA? Personal data can be defined as the data that relates to a person, also known as a data subject, who is identifiable from that data or other information which is in the possession of the data holder. Personal data is classified as sensitive when it includes the ethnic or racial origin of the individual, opinions which are regarded to be political, religious or similar beliefs, sexual life, the commission or alleged commission of any offence or proceedings relating to offences. There are usually two types of data holders, namely i) data controllers, who determine the manner in which personal data is processed, and ii) data processors (who cannot be employees of the data controller), who process the data on behalf of the data controller.

THE RISK FACTOR: In order to understand the risks associated with the sharing of personal data online, it is important to fully grasp the principles behind its protection such as personal data is required to be processed in accordance with the rights of data subjects and it shall not be transferred to another country unless that country ensures an adequate level of protection. The principles were first formulated in the EU Data Protection Directive of 1995 which can be seen as equally valid for today's Bangladesh.

In the present digital world, personal information has a significant economic and social value. Without any protection, such information can be used in a manner in which people may be discriminated or feel violated about the disclosure of such data. Therefore, it is imperative to have legal protection in order to stop automatic processing of personal information.

THE TRILLION-DOLLAR QUESTION: It has been estimated that data processing will be worth a trillion euros in the EU by the year 2020. Many organisations that have identified the economic potential of being custodians of personal information are looking to countries with large populations and lax laws to gather information in ways that would be deemed illegal in countries that currently have data protection and privacy laws. Bangladesh being one of such countries needs to safeguard its citizens so that current and future generations are not economically exploited, taken advantage of by foreign companies or racially profiled, and do not have their privacy undermined by spying agencies and/or criminals.

Take this straightforward example: imagine a scenario where an individual (data subject) filled in an online application form with all her personal details. Intriguing as it may sound, this simple online act could have a number of major implications. Firstly, the internet service provider (party No. 1) of the data subject can divulge a host of information and capture any information sent through its services as well as session information, such as the URLs (web addresses) visited. Secondly, the website (party No. 2) where the application form is hosted will have access to the data as well as the organisation (party No. 3) that she has completed the form for. Thirdly, to complicate matters further, the data centre (party No. 4) on which her data is hosted may be based out of the country altogether. In such situations, without having proper protection in the form of national legislation in the country where the data subject is based, personal data becomes prone to exploitation by any of the parties in the chain of processing and controlling it. Indeed, it has been recognised that, many big companies have initiated and implemented spying and espionage programmes to ensure they maintain a country competitive advantage. Armed with biometric, location and financial data, countries and organisations could then develop algorithms to impose indiscriminate blocks on citizens of any particular country.

Hence, putting our blind trust in these parties to sensibly handle and store our data in view of the wave of data breaches hitting the headlines every day raises serious questions of integrity in relation to the controllers and processors of personal data.

WHAT'S GOING ON IN THE EU? Contrast this with the United Kingdom which has an effective data protection and privacy legal environment. In addition, the UK has a strong regulator, allowing its courts to recently rule that Google had used cookies to track people surfing the web using Apple's popular Safari browser without the consent of the users and contrary to promises Google had made in its privacy policy. The English court ruled that this activity was unlawful under English privacy law. Specifically, it found that Google had violated both the English Data Protection Act and committed the tort of "misuse of private information".

Moreover, Facebook, another giant data controller, has been sued by some 25,000 users for alleged violations of European privacy laws in a class action suit led by Austrian data protection campaigner Max Schrems, focusing on the way it collects and transfers data. The legal action also claimed that privacy laws are breached in the way the social media giant monitors users when they use the site's "like" buttons. It was brought against Facebook's European headquarters in Dublin, which registers accounts outside the US and Canada. Accordingly, the European Court of Justice held that the transfer of personal data from the EU to the US gives rise to a breach of privacy since the surveillance carried out by the US intelligence services is mass and indiscriminate.

Needless to mention, without any protection in place, Bangladesh may not be even aware of how seriously its citizens could be affected by such invasions.

CONCERNS OVER BANGLADESH: It is no surprise that we are witnessing a constant rise in hacking incidents of databases of governmental organisations in Bangladesh, making the whole situation of sharing personal data online even more distressing. In 2013, for instance, some unknown hackers breached Bangladesh Air Force's website and extracted the full database, which contained more than a million names, family members' names and e-mail addresses.

While Bangladesh is well protected by virtue of the Information & Communication Technology Act 2006 to bring proceedings against perpetrators of such intrusion and unauthorised access, what it fails to take into account is that these perpetrators carry out their operations anonymously and thus, in most cases, it is difficult to identify them. In other words, a preventive framework at the pre-breach level is simply non-existent. Consequently, the mere presence of legislation on post-breach offences will not in fact provide adequate protection given the anonymity of the offenders and the mass surveillance practices of big companies.

The only legislation that provides for the protection, albeit limited, of privacy in general terms is the Constitution of the People's Republic of Bangladesh. Article 43 of the Constitution provides: "Every citizen shall have the right, subject to any reasonable restrictions imposed by law in the interests of the security of the State, public order, public morality or public health - (a) to be secured in his home against entry, search and seizure; and (b) to the privacy of his correspondence and other means of communication".

In addition, there are two guidelines passed by Bangladesh Bank covering ICT (information and communications technology) security and outsourcing arrangements. These guidelines provide two layers of protection in the financial sector. Firstly, banking systems dealing with personal data must comply with certain standards in order for them to be fully sheltered. Secondly, as a safeguard to tampering with confidential financial information, a bank must obtain prior approval from the Bangladesh Bank when it hires a third party based outside of Bangladesh to hold and process its data.

It is worth noting that the neighbouring country, India, has already enacted specific data protection rules and a consolidated privacy bill is in the pipeline. Given India's high profile in the IT (information technology) industry worldwide, rules regarding data protection have led to an increase in investment by multinational data-based companies. Conversely, the lack of data protection and privacy laws has effectively been a restriction to this market for Bangladesh, although we have all the potential to become another influential South Asian player in the digital economy.

To conclude, Bangladesh needs to act promptly not only to protect its citizens' personal data from flowing into the hands of criminals and spying agencies both in and out of the country but also to be able to participate in the trillion-euro prospect of data business. Any law addressing data protection should clearly state the grounds for processing personal data, ensure data subjects' rights to access, delete and object to such data, develop a culture regarding the retention period of data, and establish a data protection authority. Bangladesh already has an Information Commission formed under the Right to Information Act 2009, which can be vested with data protection responsibilities. In any event, institutions dealing with personal data should be required to register with the Commission and give prior notification if there is a possibility that such data will be processed outside of Bangladesh.

In their paper "A Digital Pathway to Financial Inclusion", Dan Radcliffe and Rodger Voohies of Bill & Melinda Gates Foundation outlined how basic mobile connectivity and digital remote payments are the first two necessary steps towards an inclusive digital economy.

MicroSave's work with Equity Bank has clearly shown that an agent-based banking model can indeed be successful and rapidly achieve high volumes of transactions. Indeed, Equity Bank's agent-based banking model looks set to take Kenyan customers to Radcliffe and Voorhies' Stage 3 of a full range of digital financial services. But it is unlikely that Equity Bank could have achieved this rapid up-take without the ground-breaking work of Safaricom's M-PESA in Kenya, which created trust in agent-based systems amongst the population.

Mobile phone companies have a hugely important role to play to create the market - to build people's confidence in digital financial services and local agent-based systems - and thus lay the foundation for digital financial inclusion.

If the Bangladesh Bank (BB) wants to turbo charge financial inclusion, it would allow mobile network operators (MNOs) to act as issuers of e-money with proportionate supervision as discussed by CGAP (Consultative Group to Assist the Poor) in the box below. The reality is that clear and simple rules applied to non-bank mobile money providers can mitigate potential liquidity and solvency risks, as has been pointed out by the GSMA  (Groupe Speciale Mobile Association):Digital financial inclusion: Partnerships are the key

In response, a growing range of central banks across the globe are implementing proportionate supervision, thus encouraging non-banks to serve the mass-market - often in collaboration with banks.

For example, the European Union (EU) Payment Services Directive was implemented across the EU in 2009 specifically "to increase pan-European competition and participation in the payments industry (also from non-banks)". The Central Bank of Kenya's regulation, which gave rise to M-PESA (M for mobile, pesa is Swahili for money) and is used as a model by many, allows MNOs to offer payment and deposit services (backed by a trust account in a scheduled bank). And more recently, Brazil established a new regulatory framework to allow non-bank e-money issuers.

Worldwide, almost all successful digital finance services are MNO-led. This is because MNOs understand technology, distribution, and the marketing and customer service necessary to develop and deliver a volume-based retail business. Furthermore, MNOs see the necessity of protecting their market shares through offering data-based services and thus have the vision, backed by the capacity and will to make the necessary long-term investments. Finally, MNOs have the nationwide outreach to deliver financial inclusion to the furthest corner of the country - in Bangladesh there are some 500,000 agents across the nation.

In response to this reality, central banks are adopting proportional risk-based know-your-customer procedures. As Radcliffe and Voorhies noted in 2014, "Indeed, just 4-5 years after the central banks of Kenya, Tanzania, and Uganda allowed non-banks to launch payments and deposit services, 77 per cent of Kenyan adults and 47 per cent of Ugandan adults have an electronic account, while 46 per cent of Tanzanian households have at least one member of the household with an electronic account."

This has also been the experience in Sri Lanka. Ajith Nivard Cabraal, Governor of the central bank of Sri Lanka, noted, "Achieving financial inclusion through progressive regulation and innovation has been a principal and consistent ethos of the central cank of Sri Lanka."

In 2012, the Central Bank of Sri Lanka (CBSL) finalised an enabling regulatory framework that permitted both bank and non-bank service DFS (Digital Financial Services) providers. This decision was taken to financially include the unbanked/underserved population. As a result of this shift from bank-led to non-bank-led model, a new mobile money service eZ Cash has been launched by Dialog (Dialog Axiata PLC), the largest telecom operator of the country, in June 2012. eZ Cash acquired more than one million customers in their  first year of business; and is currently operating with over two million customers served by more than 20,000 agent outlets across the island. Importantly, eZ Cash has also partnered with multiple banks and telecom operators to provide a wide array of services.

In India, the Reserve Bank of India (RBI) has just issued 11 provisional licences for Payment Banks - including to MNOs such as Airtel, Vodafone, Idea and Telenor. Payment Banks allow MNOs to offer real value-add payment and deposit services to their customers and leverage their existing networks of more than 1.5 million agents to distribute and manage these offerings. This is particularly important/exciting because the MNO business model is based on usage (high volumes of small value transactions), and therefore more aligned to the willingness and ability of the poor masses to pay in small sums; unlike the traditional bankers' business model which is more focused, and dependent on low volumes of high value transactions. MNOs have high levels of brand awareness amongst poor and rural customers that can be leveraged well for cross-selling financial services. MNOs also invest regularly and extensively in marketing and promotions to create channel and consumer awareness.Digital financial inclusion: Partnerships are the key

Since telecommunications is a well regulated service industry, similar to banking, mobile retailers acquiring new subscribers are well-equipped to handle Know Your Client (KYC) norms and service activation processes. They are equally conversant with mobile technology to conduct business.

If the BB still wants to maintain a bank-led approach, in preference to a proportionate supervision-based approach or creating a new class of "narrow" payment banks; then we would suggest the following amendments to the current draft regulations to drive digital financial inclusion:

1. Currently the draft regulations stipulate that no bank or non-bank entity can hold more than fifteen per cent beneficial ownership in equity. This condition would substantially reduce the interest of bank and/or non-bank service providers due to the inability to exert control over the deployment. This also means, bank-led deployments which are already in the market will need to conduct resource-heavy operational and capital restructuring. This could potentially lead to at least some current deployments going dormant, thereby reducing customer interest and trust. We would recommend that at the very least banking entities should individually be able to exert majority control. Also, there could be a scope for the banks to be allowed to operate mobile financial services (MFS) as part of their core business, instead of forming specialised subsidiaries.

2. Currently the draft regulations stipulate that beneficial ownership of MNOs in an MFS platform should not exceed thirty per cent of its total equity. This condition reduces the interest from MNOs who are likely to need control to have a better say over the product and distribution aspects. This is also likely to lead to a situation where the expectation that "MFS platforms will be expected to choose non-bank equity partner entities with promise of bringing in innovative dimensions in business model and technology base" outlined in the draft regulation is diluted. We recommend that the condition be modified to the effect that commercial banks should hold a majority stake (51 per cent) and leave the rest of the capital composition to be determined by the company.

3.    Currently, the draft regulations stipulate that Bangladesh Bank will require multi-bank MFS platforms to operate. We believe these are still early days to mandate interoperability. The new deployments that come into force as a result of the draft regulations are likely to need some time for customer acquisition and building customer loyalty to their products and services before they are comfortable in pushing interoperability. Other countries which have mandated interoperability have seen reduced provider interest as a result. For example, Ghana. We propose that new MFS platforms should be given more time to develop and interoperability should be mandated only after a few years, when the national switch is also in place.

4. Currently, the draft regulations stipulate that transactions in MFS platforms will be conducted only through non-chequing limited purpose accounts termed "Mobile Accounts" in the names of customers, accessible with their mobile phone devices. This can lead to a reduction in scope for product innovation. Other countries which have experimented with basic no-frills accounts such as India and South Africa have not fared well. This would also dilute the value proposition to customers since the scope to develop customised products suited for the needs of specific segments will be limited. We believe that this condition can be removed.

Bangladesh has a long and proud history of being a leader in the provision of financial services to the poor. We believe that adopting proportional regulation to allow MNO-led digital financial services or creating a new type of payment banks could turbo-charge financial inclusion in the country. If neither of these options is acceptable to BB, then we believe that the current draft regulations require the amendments outlined above. These are necessary to ensure that MNOs, who must provide the channels over which mobile financial services operate, are motivated to invest and collaborate with the banks at the core of the system. 


1. Performance Management
Performance management involves understanding the meaning of big data in company databases using pre-determined queries and multidimensional analysis. The data used for this analysis are transactional, for example, years of customer purchasing activity, and inventory levels and turnover. Managers can ask questions such as which are the most profitable customer segments and get answers in real-time that can be used to help make short-term business decisions and longer term plans.

Most business intelligence tools today provide a dashboard capability. The user, often the manager or analyst, can choose which queries to run, and can filter and rank the report output by certain dimensions (e.g., region) as well as drill down/up on the data. Multiple types of reports and graphs make it easy for managers to look at trends. A big benefit for report developers is that they can interact with different aspects of business data including HR, marketing, sales, customer service, and manufacturing data, and get multiple perspectives of how the business is doing.

BizTech, a leading information technology services firm in the Mid-Atlantic region, is hoping to use business intelligence to help it grow sales. Founded in 2001 by Tom Connolly, BizTech’s 2011 revenues were approximately $14M. Tom believes that significant improvement in measuring and reporting performance could help take BizTech to the next level of growth. In particular, BizTech plans to use Oracle’s CRM-OD (On Demand) business intelligence application to improve its opportunity-management process that involves generating, reviewing, and acting on leads. The company’s sales representatives and consultants will be able to generate new pipeline reports, including summaries by practice, regions, and sales representatives. These reports will be actively reviewed in weekly practice meetings, which will promote specific pipeline targets. In addition, learning from these reports can be tied directly to sales representatives’ skills development, coaching, and recruitment strategy.

The good news is the functionality and ease-of-use of business intelligence tools has improved greatly over the past several years. If designed and implemented effectively, these tools give managers a window into a vast amount of business transactions that can help with their everyday decision-making. The main challenge is to ensure that the quality and completeness of transactions entered into the system or the result will be “garbage in, garbage out.” Also, to guarantee a complete picture of the business, multiple databases across functions have to be integrated.

2. Data Exploration
Data exploration makes heavy use of statistics to experiment and get answers to questions that managers might not have thought of previously. This approach leverages predictive modeling techniques to predict user behavior based on their previous business transactions and preferences. Cluster analysis can be used to segment customers into groups based on similar attributes that may not have been on analysts’ radar screens. Once these groups are discovered, managers can perform targeted actions such as customizing marketing messages, upgrading service, and cross/up-selling to each unique group. Another popular use case is to predict what group of users may “drop out.” Armed with this information, managers can proactively devise strategies to retain this user segment and lower the churn rate.

With an increased emphasis on digital, inbound marketing, organizations want to attract prospects to their website with engaging, robust, and targeted content. Running experiments, organizations can test two webs sites, each containing different content such as white papers and demos, events such as webinars, and landing pages and lead form designs. The results of these experiments can help predict which combination of these variables twill lead to the highest conversion rate of site visitors to qualified leads, and qualified leads to customers.

The large retailer Target used data mining techniques to predict the buying habits of clusters of customers that were going through a major life event.2  Predicting customers who are going through big life changes such as pregnancy, marriage, and divorce, is important to retailers since these customers are most likely to be flexible and change their buying habits, making them ideal targets for advertisers. Target was able to identify roughly 25 products, such as unscented lotion and vitamin supplements, that when analyzed together, helped determine a “pregnancy prediction” score. Target then sent promotions focused on baby-related products to women based on their pregnancy prediction score. The result: sales of Target’s Mom and Baby products sharply increased soon after the launch their new advertising campaigns.

The rise in robust statistical/analytical techniques can lead to fast, direct results for data exploring organizations. The big challenge is the lack of qualified statisticians with expertise in the latest business analytical techniques. Another challenge is around data privacy/policy issues. Organizations need to think through the most effective way to use the results of their data mining techniques to improve the customer experience, and not make customers feel that retailers are “spying” on them. For example, Target had to adjust how it communicated this promotion to women who were most likely pregnant, once it had learned that the initial advertising had made some of them upset.² As a result, Target made sure to include advertisements that were not baby-related so the baby ads would look random.

3. Social Analytics
Social analytics measure the vast amount of non-transactional data that exists today. Much of this data exist on social media platforms, such as conversations and reviews on Facebook, Twitter, and Yelp. Social analytics measure three broad categories: awareness, engagement, and word-of-mouth or reach.3 Awareness looks at the exposure or mentions of social content and often involves metrics such as the number of video views and the number of followers or community members. Engagement measures the level of activity and interaction among platform members, such as the frequency of user-generated content. More recently, mobile applications and platforms such as Foursquare provide organizations with location-based data that can measure brand awareness and engagement, including the number and frequency of check-ins, with active users rewarded with badges. Finally, reach measures the extent to which content is disseminated to other users across social platforms. Reach can be measured with variables such as the number of retweets on Twitter and shared likes on Facebook.

Social metrics are critical since they help inform managers of the success of their external and internal social digital campaigns and activities. For example, marketing campaigns involving contests and promotions on Facebook can be assessed through the number of consumer ideas submitted and the community comments related to those ideas. If the metrics indicate poor results, managers can pivot and make changes. For example, low Facebook engagement may mean more interesting and interactive content needs to be created.

With recent advancements in social measurement techniques, we can now calculate one’s “digital footprint” in the social media world.  Companies like PeerIndex and Klout can measure a digital user’s social influence. A Klout score ranges from 1 to 100, based on their algorithm involving number of followers, re-tweets, the influence of the followers themselves, and other variables. Marketers are using social metrics to identify “influencers,” those well-followed individuals who are discussing their particular brand and can serve as a brand advocate. Using Klout’s services, Virgin America identified 120 individuals with high Klout scores and offered them a free flight to promote their new Toronto route.4 These individuals were not obligated to write about their experience. But, between these 120 individuals and another 144 engaged influencers, the campaign resulted in a total of 4,600 tweets, 7.4M impressions, and coverage in top news outlets. Thus, the campaign created a high brand awareness of the new airline route.

Social analyzers need a clear understanding of what they are measuring. For example, a viral video that has been viewed 10M times is a good indicator of high awareness, but it is not necessarily a good measure of engagement and interaction. Furthermore, social metrics consist of intermediate, non-financial measures. To determine a business impact, analysts often need to collect web traffic and business metrics, in addition to social metrics, and then look for correlations. In the case of viral videos, analysts need to determine if, after viewing the YouTube videos, there is traffic to the company web site followed by eventual product purchases.

4. Decision Science
Decision science involves experiments and analysis of non-transactional data, such as consumer-generated product ideas and product reviews, to improve the decision-making process.    Unlike social analyzers who focus on social analytics to measure known objectives, decision scientists explore social big data as a way to conduct “field research” and to test hypotheses. Crowdsourcing, including idea generation and polling, enables companies to pose questions to the community about its products and brands. Decision scientists, in conjunction with community feedback, determine the value, validity, feasibility and fit of these ideas and eventually report on if/how they plan to put these ideas in action. For example, the My Starbucks Idea program enables consumers to share, vote, and submit ideas regarding Starbuck’s products, customer experience, and community involvement. Over 100,000 ideas have been collected to date. Starbucks has an “Ideas in Action” section to discuss where ideas sit in the review process.

Many of the techniques used by decision scientists involve listening tools that perform text and sentiment analysis. By leveraging these tools, companies can measure specific topics of interest around its products, as well as who is saying what about these topics. For example, before a new product is launched, marketers can measure how consumers feel about price, the impact that demographics may have on sentiment, and how price sentiment changes over time. Managers can then adjust prices based on these tests.

In 2009, Whirlpool, the largest manufacturer of home appliances, wanted to discover what their customers and consumers were saying about their products and services on social media platforms.5 They used Attensity360 for continuous monitoring and analysis of conversations across popular channels such as Facebook, Twitter, and Youtube, review and blogger sites, and mainstream news. Attensity’s text analytics findings were incorporated into Whirlpool’s decision models to accurately predict customer churn, loyalty, and satisfaction. This process enabled the company to listen, respond, and measure on a scale unobtainable by manual methods. The results revealed that Whirlpool improved its understanding of its overall business. There was increased satisfaction, faster responsiveness, and overall, more satisfied experiences with customers. The company also incorporated customer feedback to improve its product development and planning process.

While technology has helped companies scale the listening process involving social Big Data, the accuracy of listening tools is nowhere near perfect. Manual work is needed to “train” these technologies on company- and industry-specific keywords with regard to textual and sentiment analysis. Another good practice is to initially do parallel manual and listening tool analysis to understand the accuracy of the tool and determine ways to improve its effectiveness.

With respect to future trends in the Big Data field, the following practices are starting to emerge:

1. Integrating multiple big data strategies.
While a company can be effective with a single Big Data strategy, the most effective companies leveraging big data today are combining strategies. For example, one financial institution is leveraging both Social Analytics (non-transactional, social data) and Performance Management (business intelligence using transactional data) strategies to guide its customer service. The bank traditionally determined its “top” customers based on metrics such as number and balance of accounts; these were the customers who received premium service. Now, the bank is planning to incorporate social metrics into the equation. Those online customers who are very active with respect to mentioning, engaging with, and promoting the bank on social channels will also be considered for high-level service programs. The financial institution believes this is a much more balanced way to segment its most influential customers for customer service.

2. Build a Big Data capability.
We define a Big Data capability as the roles, technologies, processes, and culture needed to support big data initiatives. Perhaps the most critical of these are the roles, and in particular, the expertise and experience needed to devise and implement big data strategies. As mentioned earlier, multiple roles are needed: statisticians who are  skilled in the latest statistical techniques; analysts and decision scientists who understand business measurement and experimentation and who can be the broker between statisticians and business managers; the IT group who provides guidance on selecting big data technologies/techniques and who integrates business intelligence tools with transactional systems such as CRM and Web analytical tools; and business managers and knowledge workers who own the business process and have to be comfortable with the new “language” of Big Data and social analytics. In addition, some leading companies have created specific group structures focused on big data analytics, and social content strategy and integration.

3. Be proactive and create a Big Data policy.
Companies need to keep up with policies and guidelines surrounding the use of Big Data, especially with non-transactional, social data that is often created and accessed outside company walls. Leading companies often have social media policies and certificate programs/training regarding social data use. Big Data policies should also address issues regarding compliance, privacy, and security. Leading organizations clearly communicate and are honest in telling customers and consumers how they are using personal data, such as demographic information and past purchases. A rule of thumb that organizations should follow is to always think about the customer/consumer/employee experience and their personal benefits from big data projects. Big Data projects that create a negative experience with users, despite the company benefits, should be redesigned.

With the cost of data capture and acquisition decreasing at a rapid rate, the real value of Big Data will be in its use. Companies that effectively create and implement Big Data strategies – such as those described above —  stand to gain a competitive advantage. Big data strategies need to take into account both transactional and non-transactional data. In addition, the focus needs to extend beyond using Big Data to answer known questions, to experiment and discover trends that could help managers consider decisions and opportunities they could never have imagined before.

1. Vesset, D., Morris, H.D., Little, G., Borovick, L., Feldman, S., Eastwood, M., Woo, B., Villars, R.L., Bozman, J.S., Olofson, C.W., Conway, S., & Yezhkova, N. IDC market analysis: Worldwide big data technology and services, IDC #233485, March 2012.

2. Duhigg, C. How companies learn your secrets, The New York Times, 2/16/2012.

3. Hoffman, D.L., & Fodor, M. (2010). Can you measure the ROI of your social media marketing?, MIT Sloan Management Review, 52(1), 41-49.

4. Schaefer, M.W. (2012). Return on influence, McGraw-Hill, pp 5-6.

5. IDC Customer Spotlight: Whirlpool corporation’s digital detectives: Attensity provides the lens, March 2011.


BBA Discussion Forum / Ailing banks: Where is AMC?
« on: November 19, 2015, 11:23:22 AM »
The state-owned banks are in financial crisis reportedly due to non-performing loans (NPLs) or default loans. There is no evaluation of efficiency and performance of banks in Bangladesh.

Default loans are typically by-products of financial crises. Some external and internal reasons can severely undermine the capacity and sometimes the willingness of borrowers to continue servicing and repay their debts.

The government has allocated Tk 50 billion in this fiscal year reportedly as per a recommendation by the International Monetary Fund (IMF) under its extended credit facility (ECF) programme in a bid to recapitalise four ailing state-owned banks. According to the policy-makers, the government had no other choice but to allocate the funds in the budget as they were concerned about the financial health of four state-owned commercial banks in Bangladesh - Sonali, Janata, Agrani and Rupali.

The Legal Department of IMF in a paper in 1999, titled 'Orderly and Effective Insolvency Procedures: Key Issues', suggested that in most countries when a debtor has failed to meet his liabilities as these become due, the insolvency system provides the creditors (and sometimes the debtors) with the option to initiate either liquidation or rehabilitation procedures. Creditors often opt for rehabilitation when restructuring of the operations (company reorganisation, downsizing and so on) or balance sheets of the debtor will enable the creditors to recover more than what they would expect through liquidation. Rehabilitation may also serve a broader social interest, for example, by granting the debtor a second chance as well as protecting the jobs of the employees of the debtor. But the policy of the IMF is different than the suggestion given to Bangladesh.

The original policy of the IMF suggested to other countries and its experiences in Korea, China and all ASEAN countries succeeded with the creation of the Asset Management Company (AMC). In many respects, these measures-the AMCs and  development of out-of-court centralised corporate debt workout frameworks-have come to define the crisis asset management setting in these countries.

Banks are in credit crunch of non-performing assets (NPAs) and provisioning of certain amount for the NPAs which limit the fund for extending credits. The solution is not in financing through budgetary allocation from tax-payers' money. Other countries separate the NPAs from banks and transfer those to other organisations for taking care of such assets to come out of credit crunch.

Bangladesh needs a successful NPA management policy guided by well-defined objectives. The following are the most important of these objectives: (a) Asset management policies should aim at restoring liquidity and solvency in financial institutions, restoring confidence in their valuation and enhancing credit discipline (by discouraging opportunistic defaults) and allowing them to resume their normal functions; (b) a high rate of recovery is primarily an equity objective, restoring to holders of assets what is owed to them. In addition, a high rate of recovery performs a signalling function, reassuring lenders at large as to the prospects of any outstanding and new credits; (c) a speedy resolution of the problem through efficient measures and (d) a large overhang of non-performing assets can paralyse financial markets.

Asset management is the process whereby non-performing assets are first identified and organised into one of four categories of actions (1) selling, (2) recovering, (3) restructuring, and (4) writing off of such assets according to their individual characteristics and then resolved.

Asset management policies are institutional arrangements or techniques that facilitate this process:

o To sell a non-performing asset, the market for such an asset must exist and, if there is no such market, it must be organised. The sale of non-performing assets facilitates diversification of risks and reallocation of resources (our law permits such sale but does not evaluate the market demands for such assets).

o To recover a non-performing asset, the AMC initiates a process, often legal, by which a part or the whole of the value of the asset can be recouped through seizure and liquidation of its collateral and/or through sale of other assets in possession of the borrower. The effective functioning of this process largely depends on the existing legal frameworks and procedures, the perceived working of which often will have a significant influence on market valuation of asset and assets in general (the Artho Rin Adalat Act has better provision for such legal actions).

o To restructure a non-performing asset, the holder enters into negotiation with the asset's obligor with the aim of strengthening his ability to service and eventually repay the principal. This usually involves redefining of the terms of the original contract, a process that often entails some concessions on the parts of both the holder and the obligor. Successful debt restructuring can benefit both creditors and debtors. However, the process should be initiated only if the economic return from the rehabilitation of the asset exceeds that of its liquidation,

o To write off a non-performing asset, the holder takes a loss equivalent to its book value and removes it from the balance- sheet. The holder will normally only do so when the prospect of recovery is very low and when the cost of recovery or maintenance of the asset exceeds its value (banks sometimes write off such loans for some influential borrowers but not within their policy or not under the law of the country).

Bangladesh may have a law to set up AMCs entrusting the responsibility of (1) selling, (2) recovering, (3) restructuring, and (4) writing off of some loans etc.

AMCs may be public or private entities as per law, whose main function should be to take over the non-performing assets of distressed financial institutions. These are generally founded on the supposition that they can help facilitate financial restructuring and maximise the recovery of non-performing assets at the same time.

On the other hand, rehabilitation of non-performing assets may be beneficial not only to borrowers and banks but may also produce welfare gains on a wider social scale. For these reasons, policymakers in Asian crisis countries have increasingly focused their attention on debt restructuring and, to facilitate the process, have implemented out-of-court centralised debt workout frameworks.

To minimise the fiscal and/or private cost associated with the restructuring of distressed financial institutions, financial restructuring programmes should aim at maximising the value of restructured financial institutions and that of the assets of closed financial institutions overtime. To achieve these objectives, it has sometimes been suggested that good assets of distressed financial institutions should be separated from the bad ones and that AMCs should be set up as vehicles to take over the latter.

In the USA, the legal provision is to take action against the banks. For example, the US Federal Deposit Insurance Corporation (FDIC) is obliged by law to take over the assets (in addition to the liabilities) of failed banks. In its role, the FDIC is to undertake liquidation of assets of these banks and issue receivership certificates to depositors with uninsured funds and to other creditors of failed institutions, entitling them to a share of the net proceeds from the liquidation.

The policy of Bangladesh is to file case against the borrower, blame the legal system and the existing laws for 'failure' to recover the money for banks. This is not the policy in any other country. They look into weakness of banking policy and different options to solve the issue considering the best beneficial process for banks, borrowers and the economy.

"Climate change is not just an environmental challenge. It is a fundamental threat to economic development," Dr. Jim Yong Kim, former World Bank President

To protect the environment, it is time to work on an issue as green bond, which as a financial instrument is much safer than any other green instruments. Green bonds are usually issued to raise capital for solving a specific local or global environmental disaster and are usually backed by government institutions. In near future, it is expected that green bonds will be available in Bangladesh financial market as an investment instrument.

In 2008, the World Bank launched the 'Strategic Framework for Development and Climate Change' to help stimulate and coordinate public and private sector activity in combating climate change. African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank, World Bank Group and the International Monetary Fund are vowed to work more closely with private and public sector partners to help mobilise the resources needed to meet the historic challenge of achieving the Sustainable Development Goals (SDGs).

Green bonds are often identical to traditional bonds in structure, risks and returns, except that the capital is raised from green bond funds for clean energy, energy efficiency, low carbon vehicle, smart grid, agriculture and forestry, natural resource mitigation or similar projects. These are marketed as 'green' at the time of issuance. Issuers are expected to provide a description of projects to be funded at the time of issuance and to ensure segregation of project funds and provide post-project reporting or verification about how the funds will be used.

The issuer of the green bonds can be banks, non-banking financial institutions, companies, SMEs and other financial institutions. On the other hand, the investors of green bond are typically institutional investors. Other buyers include investment managers, governments and corporate investors.  The financing part of green bond should focus on the large-scale fund, capital-intensive green infrastructure projects, such as energy efficiency projects, transit, or renewable powers among many others, that can be repaid from steady, modest and long-term cash flows.

The bio-financing projects for green bond funds can be large bio-gas plants, bio-energy driven power generation plants etc. Solar-financing projects for green bond funds can be 1-mw or above solar PV plants, pumping through solar pumps, solar cooker assembly plants, solar water heater assembly plants, solar air heater and cooling assembly plants, solar driven cold storages. The other financing projects for green bond funds can be power switch assembly plants for power saving, hybrid cook stove assembly plants, LED light or tube light assembly plants, power generation from municipal waste, compost fertiliser generation from municipal waste, recyclable non-oven polypropylene yarn and baggage manufacturing, palm-oil production plants, supplying and purifying of surface water project, establishing green industry and ensuring work environment and safety in the textile and garment industries.

Climate change affects us all. But it is likely to hit the developing countries the hardest. Its potential effects on temperatures, precipitation patterns, sea levels rise and frequency of climate-related disasters pose risks for agriculture, food and water supplies. The recent gains in the fight against poverty, hunger and disease, and the lives and livelihoods of people in developing countries are at stake now. Tackling this immense challenge must involve urgent mitigation .Addressing climate change requires unprecedented global cooperation across borders.

The World Bank Group is providing support to developing countries and contributing to a global solution, while tailoring our approach to the diversified needs of developing country partners. We are strengthening and building climate change partnerships with our member governments and with a wide array of organisations. The World Bank Green Bond raises funds from fixed income investors to support World Bank lending on eligible projects that seek to mitigate climate change or to help affected people adapt to it. The product was designed in partnership with Skandinaviska Enskilda Banken (SEB) to respond to specific investor demand for a triple-A rated fixed income product that supports projects that address the climate challenge. Since 2008 till now, the World Bank has issued around $8.5 billion in green bonds through 100 transactions in 18 currencies. The World Bank Green Bonds are an opportunity to invest in climate solutions through a high-quality credit fixed income product. The triple-A credit quality of the green bonds is the same as for any other World Bank bonds.

Besides the World Bank initiatives, there are other fascinating examples of green bonds issued for environmentally focused projects around the world. In the US, federal institutions are pioneering the use of green bonds for re-development of brown field sites, following the adoption of the America Jobs Creation Act 2004 and, specifically, its amendment titled 'Brownfields Demonstration Program for Qualified Green Building and Sustainable Design Projects'.  In Europe, in May 2007 the European Investment Bank issued Climate Awareness Bonds raising more than €1 bn with a 5-year maturity plan. The capital is to be invested in renewable energy and energy efficiency projects, aimed at bringing down green house gas emissions and protecting the climate.  In Canada, there are serious proposals for issuing government-backed green bonds to stimulate the deployment of renewable energy production.  In the context of Bangladesh, green bonds are certainly an area to look out for.

There’s sometimes a disconnect between how we talk about leadership qualities (we tend to use words like authority, power, and emotional intelligence) and what we actually require from the people leading teams and other working groups (arguably, competence and a deep knowledge of the specific work that needs to get done). In a forthcoming Journal of Applied Psychology article, researchers from Stanford and Erasmus University explore which set of qualities matters most to team performance. The paper also looks at when power differences contribute to team success, and when they damage it.

I spoke with Stanford’s Lindred Greer about the research; an edited version of our conversation appears below. The other authors on the article are Murat Taraki (lead author) and Patrick Groenen, both at the Rotterdam School of Management.

HBR: What did you hope to learn from this research?

Greer: First, we wanted to understand when it’s ideal to have a strong hierarchy, and when it’s better to let groups manage themselves. People talk a lot about “holocracies” and self-management right now, but from a research point of view they’re largely untested.

Second, we were interested in investigating how good people actually are at recognizing good leadership. We teach our students about things like power poses – how to appear to be someone with authority – and how to fake it ‘til you make it. Those things are based on great research and they have real value, but are we losing sight of whether people actually have the goods? (David Dunning and Justin Kruger at Cornell have great research showing that the least competent people often end up in charge because they’re overconfident about their own abilities.)

In the first study, you simulated how well three different types of teams performed. The teams were searching collaboratively for the best solution to a complex problem. How’d they do?

In one group of teams, influence was aligned with competence: the person who knew the most about the task to be done led the team. These groups performed best.

A second group of teams shared power – they were relatively non-hierarchical. This group did not perform as well as the first, but they did outperform our third group of teams — hierarchical teams with a randomly chosen leader.

We replicated these findings in the field, by the way. We studied 49 teams at a publicly held Dutch company; the teams were auditing finances in search of tax evasion and fraud. If the team leader didn’t have a deep, technical understanding of tax fraud, he or she led the team badly astray.

The last study also looked in depth at how leaders get chosen. Tell us how that went.

Actually, this is a well-known exercise we do every year with students at Stanford. A team is given a list of items they can use to survive after a plane crash has left them in the desert. First they decide whether to stay or wait to be rescued, and then they rank order the importance of the items. We then compare their answers to that of a wilderness survival expert.

When doing this exercise in the context of our current study, one group of teams solved the problem collaboratively, without a leader. We compared these teams to a second group of teams whose members were asked to select a leader to manage group discussions, make final decisions if disagreements exist, and hand in the final rankings.

After 10 minutes of work, we took a break and the teams with leaders were informed publicly of how well each individual was doing, and how well the group was doing. Then they were asked to reconvene and rerank the items – but they could choose a new leader, as well.

This blows my mind: Only 55% of the teams chose the most expert person. Forty-five percent did not choose the most expert person, even though they knew who that was by now. Instead, they chose people who were, for example, taller, louder, or more confident.

Once again, the self-managing groups did better on the task than the teams who chose the wrong leaders, but less well than the teams with the most competent person in charge.

We’ve done this exercise for years, with similar outcomes. This means that I have watched people make poor choices about who to give a leadership role to, year after year. This is powerfully persuasive.

What lessons should managers take away from these studies?

One, we need to pay closer attention to how we choose leaders. Select for competence. Don’t get snowed by political connections or persuasiveness or the appearance of authority. Some of those things can be useful, but competence comes first. It’s essential to use objective measures of performance in hiring and promotion.

Two, pay attention to the dangers of formal hierarchy. For any important decision, you want to bring the best possible information to bear – which means you need leaders who are able to value the expertise of other team members and to share power when they’re not the person best suited to make a decision.

Three, It’s important to know who knows what. Often in a growth setting, like the ones here in Silicon Valley, you lose track. Every couple of months, a team should take stock of what challenges are most pressing, and who has deep knowledge that’s relevant to those challenges. That issue comes up in consulting engagements, too. The person who brought in the client isn’t necessarily the most knowledgeable about the work to be done: leadership roles are better assigned once you understand who knows what, and they may need to shift in the course of the project as new issues arise.

When do self-managed teams, or “holocracies,” work best?

I’ve got some interesting new research on that, but I’m not quite ready to share it. From this set of studies, here’s the lesson I see: If power can’t be aligned with the right set of competencies, an egalitarian team may be a good idea.

I want to go back to your emphasis on “competence.” By that you mean deep knowledge of the technical work being done, is that right?

Exactly. As a result of that depth, competent leaders can enable their teams to seek out new ideas and propose better solutions.

Are top-tier business schools overly focused on developing “leaders” who are ready to take charge of anything? It sounds as if what growth-oriented companies in the STEM fields need most is people who are best-in-class at the technical work, plus good at assessing other people’s strengths.

Both skill sets are important, of course, but we may be over-emphasizing generalized leadership qualities and under-emphasizing task competence. That’s a real risk.

I perused the restaurant menu for several minutes, struggling with indecision, each item tempting me in a different way.

Maybe I should order them all . . .

Is this a silly decision not deserving deliberation? Maybe. But I bet you’ve been there. If not about food, then about something else.

We spend an inordinate amount of time, and a tremendous amount of energy, making choices between equally attractive options in everyday situations. The problem is, that while they may be equally attractive, they are also differently attractive, with tradeoffs that require compromise. Even when deciding between kale salad (healthy and light), salmon (a heavier protein), and ravioli (tasty, but high carbs).

If these mundane decisions drag on our time and energy, think about the bigger ones we need to make, in organizations, all the time. Which products should we pursue and which should we kill? Who should I hire or fire? Should I initiate that difficult conversation?

These questions are followed by an infinite number of other questions. If I am going to have that difficult conversation, when should I do it? And how should I start? Should I call them or see them in person or email them? Should I do it publicly or in private? How much information should I share? And on and on . . .

So how can we handle decisions of all kinds more efficiently? I have three methods that I use, two of which I talk about in my book, Four Seconds, the third which I discovered last week.

The first method is to use habits as a way to reduce routine decision fatigue. The idea is that if you build a habit —for example: always eat salad for lunch — then you avoid the decision entirely and you can save your decision-making energy for other things.

That works for predictable and routine decisions. But what about unpredictable ones?

The second method is to use if/then thinking to routinize unpredictable choices. For example, let’s say someone constantly interrupts me and I’m not sure how to respond. My if/then rule might be: if the person interrupts me two times in a conversation, then I will say something.

These two techniques — habits and if/then — can help streamline many typical, routine choices we face in our lives.

What we haven’t solved for are the larger more strategic decisions that aren’t habitual and can’t be predicted.

I discovered a simple solution to making challenging choices more efficiently at an offsite last week with the CEO and senior leadership team of a high tech company. They were facing a number of unique, one-off decisions, the outcomes of which couldn’t be accurately predicted.

These were decisions like how to respond to a competitive threat, which products to invest more deeply in, how to better integrate an acquisition, where to reduce a budget, how to organize reporting relationships, and so on.

These are precisely the kinds of decisions which can linger for weeks, months, or even years, stalling the progress of entire organizations. These decisions are impossible to habitualize and can’t be resolved with if/then rules. Most importantly, they are decisions for which there is no clear, right answer.

Leadership teams tend to perseverate over this sort of decision for a long time, collecting more data, excessively weighing pros and cons, soliciting additional opinions, delaying while they wait — hope — for a clear answer to emerge.

But what if we could use the fact that there is no clear answer to make a faster decision?

I was thinking about this in the offsite meeting while we were discussing, yet again, the same decision we had debated in the past about what to do with a certain business, when the CEO spoke up.

“It’s 3:15pm,” He said. “We need to make a decision in the next 15 minutes.”

“Hold on,” the CFO responded, “this is a complex decision. Maybe we should continue the conversation at dinner, or at the next offsite.”

“No,” The CEO was resolute, “We will make a decision within the next 15 minutes.”

And you know what? We did.

Which is how I came to my third decision-making method: use a timer.

If the issues on the table have been reasonably vetted, the choices are equally attractive, and there is still no clear answer, then admit that there is no clearly identifiable right way to go and just decide.

It helps if you can make the decision smaller, with minimal investment, to test it. But if you can’t, then just make the decision. The time you save by not deliberating pointlessly will pay massive dividends in productivity.

Hold on, you may protest. If I do spend more time on it, an answer will emerge. Sure, maybe. But, 1) you’ve wasted precious time waiting for that clarity and, 2) the clarity of that one decision seduces you to linger, counter-productively and in fruitless hope for clarity, on too many other decisions.

Just make a decision and move forward.

Try it now. Pick a decision you have been postponing, give yourself three minutes, and just make it. If you are overwhelmed with too many decisions, take a piece of paper and write a list of the decisions. Give yourself a set amount of time and then, one by one, make the best decision you can make in the moment. Making the decision — any decision — will reduce your anxiety and let you move forward. The best antidote to feeling overwhelmed is forward momentum.

As for my lunch, I ordered the kale salad. Was it the best choice? I don’t know. But at least I’m not still sitting around trying to order.

MBA Discussion Forum / Sanchayapatras facilitate welfare of millions
« on: November 09, 2015, 12:16:32 PM »
This refers to a recently-published article styled as "Sanchayapatra- A Trojan horse" (not in the FE) by B P Paul, Chief Economist of the Bangladesh Bank. It has been argued that good sale of savings certificates is an anathema to the growth of capital market. So there is the temptation to clip the wings of the savings certificate scheme to cut down its speed. But there are more important issues in the national economy than just the growth of capital market and again when the latter suffers from frequent lack of transparency.

The BB chief economist mostly confined himself to the theoretical explanation of savings and investment dynamics as enunciated by such economists who largely fail to understand the bread and butter dynamics of the so-called Third World where people were ruthlessly exploited by the colonialists and their stooges for centuries.

The ground realities of countries like Bangladesh are: financial discipline is miserably absent, stock market is more often than not frequented by ruthless scamsters, billions of dollars are getting out of the country through unexplained import bills, rich people are continuously robbing the country in order to build safe homes in Western countries and enriching the coffers of Swiss and other international banks. It is not understood as to why B P Paul is so interested to axe the interest rates of different Sanchaypatras or government-sponsored saving  instruments, the primary aim of which is to give some relief to women and elderly persons and of course to the pension-holders.

It seems very unkind to be prejudiced in favour of private banks and against millions of our poor countrymen who just eke out a living out of these interest rates.  From the long queue found every day before the savings directorate, it is obvious that the people over there in old sarees or way back shirts and trousers could be anything but rich, as claimed by him. Besides, every national saving schemes carry a maximum ceiling of individual investment, not exceeding around Tk. 0.3  to 0.5 million only.

It is also argued that there is no such savings certificate scheme outside Bangladesh. This is not true. There are a number of good savings schemes in India and Pakistan. In India, National Savings Certificates and Sukanya Samridhi Accounts (for women) are very popular projects. In Pakistan, Defense Savings Certificates and Bahbood Savings Certificates for widows and senior citizens are widely acclaimed. Even in Europe, there are countries which are ardent followers of free market economy, but they also maintain many social welfare programmes for their citizens.

The sale of savings certificates should not affect the deposits of commercial banks. First of all, there is a ceiling for purchase of savings certificates. Secondly, the certificates can be purchased through a small number of windows maintained by the National Savings Directorate. But the banks have a wide scope for collecting deposits through a large number of branches in both urban and rural areas. Savings certificate-holders cannot encash the certificates as and when they require, because if they want to encash these before the date of maturity they will have to incur loss. So there is no chance of thwarting the smooth flow of liquidity.

Bangladesh has earned name and fame globally for its economic development and empowerment of the women compared to its neighbours. Among all the savings schemes in the country, the most important and popular one is the Family Savings Certificate. This is exclusively meant for women and elderly people above the age of 65.  Savings certificate schemes should also be considered part of the country's overall social safety net programmes. In this context, it may also be pointed out that the saving certificate-holders are tax-payers.

The chief economist of the Bangladesh Bank may not forget the basics of welfare economy where the accrued interests given to individuals are mostly spent not only for their respective livelihood but also for life-saving medications. Needless to say, these create their necessary purchasing power which in its turn boosts production and enrich the overall macro economy.

Nobel Prize-winning economist Professor Joseph Stiglitz, who was the chairman of U.S President Bill Clinton's Council of Economic Advisors once said:     

"First, the business people generally oppose subsidies for everyone but themselves. For their own sector, there were always a host of arguments as to why some government help was needed. From unfair competition abroad to an unexpected downturn at home, the stories were endless.

 "Second, everyone was in favour of competition in every sector but their own. Again, there were a host of arguments for why competition in their sector would be destructive, or why it needed to be managed carefully.

"Third, everyone was in favour of openness and transparency in every sector but their own. In their sector, transparency might lead to unnecessary disturbances, erode its competitive edge, and so forth."

Therefore, our economic policy should be formulated for the welfare of the people at large rather than for the welfare of the business interests of a few banks.

Business Administration / What's wrong with labour markets?
« on: October 29, 2015, 11:19:46 AM »
Around the world, labour markets are in disarray. Unemployment is high in many countries, especially among the young. At the same time, many companies report having trouble finding qualified workers. Record numbers of people are going into retirement, but many would prefer to work, at least part-time. Information technology (IT) has displaced workers even as it has created new jobs.

These conflicting signals and trends are a symptom of a series of fundamental mismatches between what employers need and the talents of those they would like to hire. There have never been so many highly educated people in the world; yet the crises in Europe, the slow recovery in the United States, and the rise of emerging economies are revealing previously hidden flaws in the labour market. Addressing them will require a broad range of policy interventions.

The problem begins with the education system, which used to be more effective not only at educating and training new generations, but also at sorting them into promising career paths. Unfortunately, schools and universities have not changed much over the last 30 years, even as the world of work has undergone epic upheaval. Online education and training has taken off in the corporate world, but universities continue to resist it. Cost inflation is also severely affecting the accessibility of high-quality education for most of the population.

Young people present two different sets of challenges. In most countries, the population between the ages of 16 and 30 is split into two very different groups. Some are highly educated, but, finding it hard to find jobs commensurate with their skills, join the ranks of the underemployed. Others have lacked educational opportunities or have dropped out of school. In some countries, an entire generation of young people could be lost because policymakers and companies are too shy about experimenting with new ideas, concepts, and schemes.

Meanwhile, rapid technological change, including distributed manufacturing and digital business, has put many people aged 50-65 out of work. As companies scramble to adapt to changing market circumstances, they are trying to reinvent themselves, which often means hiring new employees with different skills. After losing their relatively well-paying jobs, many older workers have either retired prematurely or gone into much less attractive occupations.

This represents an enormous challenge, because it is not easy to retrain large numbers of people displaced by new technology. Both governments and companies have a responsibility to produce solutions, which will entail spending on education and training and redesigning jobs to fit existing skills.

Finally, one of the most severe challenges facing contemporary societies is figuring out what to do with tens of millions of retirees as life expectancy continues to climb. People older than 65 may sometimes be affected by cognitive decline, but they often have useful skills and a wealth of experience. It does not make financial, social, or economic sense to exclude them from the workforce - especially when many of them would enjoy working part time. Governments must adapt laws and regulation to take full advantage of this pool of experienced labour, and companies need to think creatively about how to use part-time employees more effectively. Needless to say, addressing this problem would also ease some of the pressure on pension systems.

Immigration is another phenomenon that must be carefully managed. It is unfortunate that precisely when loosening restrictions on immigration would help labor markets, the world is experiencing a spike in xenophobic attitudes and politics. Governments and civil-society organizations must exercise leadership and help the public understand how immigration can - and does - drive social and economic progress. In an increasingly borderless global economy, the nation-state system that we have inherited imposes too many restrictions on the free movement of people, many of which are counterproductive.

One positive development is that the feminist revolution has finally started to have an effect on the labour market. Gender-based discrimination continues to be a problem, but one sees increasingly large numbers of women occupying important jobs. Women are either the primary or the sole earner in about 40% of US two-parent households with at least one child under the age of 18. It is imperative to continue capitalizing on this trend. A more diverse and deeper talent pool is the key to sustainable economic growth.

Labour-market chaos will not abate until governments and companies address a formidable set of issues involving education, opportunities for the young and the elderly, the virtues and challenges of immigration, and the aspirations of women. Unfortunately, these topics are often politically controversial. That is why well-functioning labour markets increasingly require both firm leadership and open minds.

Bangladesh's rural economy comprises millions of very small informal businesses, mostly in the production and trading of agricultural commodities: producing, buying and selling, and finally, feeding both rural consumers as well as those in large urban centres. Small and marginal farmers also fall in this category who besides meeting domestic market demand sell their produce to the hundreds and thousands of small traders (locally called Beparis) to reach the final consumers. Two striking changes in such small businesses have been the production of exotic fruits and vegetables. This is due to the increasing demand and participation mainly by poor women.

MUSHROOM AS GOOD HEALTHY DIET: One such example is mushroom, which has not been a traditional culinary item for the mainstream population It has been a common item for many small ethnic groups in the Chittagong hill region where they collect and eat naturally growing mushrooms. But today's story is about mushrooms being produced and marketed by poor women from Savar (Dhaka), Tangail and other districts. Mushrooms, specifically button head mushrooms, were first introduced by Bangladeshi owned Chinese-food restaurants, which imported dried/canned mushroom, to use as an ingredient in various dishes. Due to increasing demand from some local producers, non-government organisations and a government training centre started promoting mushroom production and consumption. Although there are many different varieties of mushrooms, it turns out that only oyster mushrooms can be profitably produced throughout the year in Bangladesh. Currently, because of the internet and the TV food shows, mushroom is a familiar vegetable to the middle and upper income urban families in Bangladesh.


Demand: Several small producers in Savar inform that the demand for mushrooms comes from three sources: a) middle and upper income households who buy fresh mushrooms from neighbourhood shops; b) restaurants that buy fresh as well as dried mushrooms; and c) a number of food supplement producers buy dried mushrooms to use as an ingredient in their products. Since mushrooms are produced in the rural and semi-urban areas, sometimes neighbours are also buyers. Since mushrooms are produced in the backyards and supplied to shops and companies after simple plastic packaging. Dried mushrooms are supplied in bulk to large companies.  A quick market check shows that producers receive about 60 per cent of retail price, which is Tk 400 (about US$ 5) per kilogram. Women entrepreneurs report that the price is normally steady throughout the year.

Production: Production and marketing system (the whole value chain) of farmed mushrooms is rather simple. Farmers collect mushroom seeds from seed producers or local government owned farms. The seeds are spread in a mix of sawdust and straw and wrapped with poly bags with small holes all over the bags. These bags are then stored in racks in dark moist rooms. Oyster mushrooms grow out of holes on the polythene bags. Farmers collect them after they reach the right size. After one cycle, they stock the spawn for another cycle. It is important to maintain cool and moist environment for good yield.

Finance: When interviewed, women involved in mushroom farming reported that they started at a very small scale with their own money to first see yields in their homestead, and for family consumption. As they achieved good yields, they expanded by investing more family money as well as borrowing from local microfinance organisations. They reported that it was easy to borrow for such small businesses. Typically, each of these small businesses needs Tk 25,000 to 80,000 (US$ 300 to 1,000) depending on the scale of production. Typical expenses are: construction of a dark space using bamboo, construction of racks also with bamboo, purchase of spawn and preparing the poly bags.

Support services: As indicated, mushroom production did not start in Bangladesh as a business. It has been introduced by the Mushroom Centre through training in Savar and other parts of the country. Besides, a number of non-governmental organisations promoted it among the poor communities as a business to enhance family income. Many producers from Savar took about three weeks of hands-on training on mushroom production before going into the business. However, many other women later learned simple production methods from their neighbours. This is an important process of information transfer in rural Bangladesh where neighbours observe and learn from each other, and information of new business opportunities gets disseminated. 

Women entrepreneurship: Most of the mushroom producers in Savar are women who manage these small backyard productions on their own and sometimes with the help of other family members. It has been reported that the same practice is seen in other parts of the country. All women producers or micro-entrepreneurs have been unanimous about the benefits of choosing this business: it is profitable and at the same it can be managed along with attending the usual household works. Since the production takes place in their backyards, it is easy to supervise. Besides, the traders visit the farms regularly which makes selling easy, without having to bear the burden of transportation.

Two interesting cases of mushroom producers, Anwara Begum from Niphamari and Morsheda Akhter from Tangail are presented here. Anwara Begum started her business in 2008 with the help of her husband and produced and sold mushroom, spawn (seed) to other producers. Morsheda Akhter took training from Savar Mushroom Centre and produces mushroom and mushroom-based food. Both the micro entrepreneurs started their small production inside their houses. As the business grew, they expanded operations by adding additional racks to stack more 'spawn bags'.

Both of them recognise the importance of market demand as well as the training they received to venture into mushroom production, something they never saw before. Experience of other women has been similar: profit and convenience have been two motivating factors.

Traditionally, poor women are not used to dealing with markets. However, rural Bangladesh has been transformed by microfinance programmes that have turned millions of poor women into producers and sellers of goods and services. They buy inputs for their tiny businesses and sell their produces, where they often successfully interact with traders and suppliers.

Not all producers keep track of prices and demand in writing. Usually, the practice is to estimate cost of production of one kilogram versus price. But it seemed to this writer that these small producers may not be considering their own labour since it is a very small part of their daily work.

Several factors inspired them to continue these businesses: regular income that helps the family, enhanced importance in the family due to financial contribution, and convenient nature of the business. 

Profitability and income: The business is profitable. Anwara Begum made an annual profit of Tk 535,000 from sale of Tk 3,285,000 by deducting an expense of Taka 2,750,000. Similarly, Morsheda Akhter earned profit of Tk 527,930 over a period of three years. Anwara Begum has higher costs because she hires labour and markets in distant places as well.

Growth and challenges: As in any business, growth depends on demand, which is gradually increasing as reported by the micro-entrepreneurs. The production is directly linked with the amount of investment, more importantly space availability, since increased scale of production means increased physical space. Besides, diseases are a threat. On the whole, if properly taken care of, mushroom farming has the potential of attracting increasing number of female micro-entrepreneurs in Bangladesh.

Business Administration / Regulating telemarketing
« on: October 18, 2015, 09:54:38 AM »
In a market economy, a business may be expected to act in what it believes to be its own best interest. The purpose of marketing is to create a brand image, competitive advantage through reaching the possible customers. The communicating through Cell telephone is much easier and less costly. The direct contact with an individual is extremely powerful, especially when coupled with its immediacy and has the scope therefore for delivering very timely and contextually relevant messages.

A report in BizReport on a study on Mobile Marketing dated October 15, 2007 revealed that most people aren't happy with the thought of being advertised to on their mobile phones. In fact, according to WebVisible and Nielsen//NetRatings' recent survey of 2,000 U.S. Internet users, a massive 92 per cent said they would be irritated by advertising on their mobile phones.

The report also clarifies that almost three-quarters of those surveyed (74 per cent) said they preferred to search for local products and services rather than having ads sent directly to them. This bodes well for the recently announced Google AdSense for Mobile service.

Two-thirds of respondents favoured more targeted ads. Fifty-six per cent of the respondents said they only get ads relevant to them when using the Internet and 53 per cent said the same about television.

Other preferred sources of local information were printed versions of the Yellow Pages (65 per cent), Internet Yellow Pages (50 per cent), newspapers (44 per cent), White Pages (33 per cent), television (29 per cent) and consumer review websites (18 per cent).

Despite the study report, big businesses in any part of the world buy service of call centres and business processing centres. These centres are independent service providers to big business houses. They can provide service to all types of customer interactions, ranging from travel services, financial services, technical support, education, customer care, and online business to customer support and online business to business support.

The services are also good exportable products with the globalisation of business. It is reported that the USA has more than three million call centres to sell services to large companies with millions of customers. These service providers are struggling to cut costs and increase returns, and because of these they may outsource in English-speaking countries up to 1.5 million US-based call centre jobs that are currently being staffed by Americans. Some countries like India, Philippines and China are gradually replacing the Americans. They are working living in their own countries by the virtue of cheaper and easier communication through Global Superhighways. Bangladesh has just started to take its own share of the market by setting up some call centres.

Some nations in Asia are exporters of tele services to the west. India having a large number of well-educated English-speaking youths has been exporting service to the west for about a decade through hundreds of such calling centres catering to office jobs mostly of big American and European companies making the BPO (Business Processing Outsourcing) and answering to the calls from customers and others.

In the Philippines, 95 per cent of the population can speak in English though their mother tongue is not English. Foreign direct investment (FDI) in call centres has enabled the country in capturing more than 30 per cent of world market share of BPO in contact/call centre services.

This business is now expanding to some other areas of services like MBPO (Medical Business Process Outsourcing), RPO (Research Process Outsourcing), EPO (Engineering Process Outsourcing), ESO (Education Service Outsourcing) etc. These have created job opportunities for qualified specialists in medicine, education and engineering disciplines in Asian countries.

The Bangladesh Telecommunication Regulatory Authority (BTRA) is issuing licenses to call centres. There is a high hope that these call centres will export services to the west and their share of export will be in top of the export list. License Guidelines of Telecommunication Regulatory Authority for Call Centre/Hosted Call Centrer, Hosted Call Centre Service Provider (HCCSP) of Bangladesh Telecom Regulatory Commission.

This has created job opportunities for students and this can be one of the best forms of part-time employment today. There are many call centres which employ college and university students on a part-time basis.

The call centres in Bangladesh are working as agents of different service providers as telemarketer for Bangladesh-based local and foreign banks, insurance and telephone companies. Telemarketing is a method of direct marketing in which a salesperson solicits to prospective customers to buy products or services, either over the phone or through a subsequent face-to-face or Web conferencing appointment scheduled during the call.

Telemarketing calls are often considered an annoyance, especially during the dinner hour, early in the morning, or late in the evening or while in meeting with someone.

Telemarketing is considered as de-marketing. It generates negative image in the mind of irritated customers. It is an attempt or device to reduce or limit demand for consumption of a specific product or service on a permanent or temporary basis. 

People are disturbed in their private life due to the calls of telemarketers in any part of the world including Bangladesh. This is considered as civil offence in many countries. Australia and USA have laws to prevent access to private life by the telemarketers.

AMERICAN EXAMPLE: Now-a-days the policy-makers in some countries are making laws and rules to stop unwanted calls of subscribers. The citizens can register their numbers in 'No Call lists'. The law provides for heavy penalties on companies which call individuals on these listings.

The US Congress first passed the Telephone Consumer Protection Act (TCPA) in 1991 in response to consumer concerns about the growing number of unsolicited telephone marketing calls to their homes and the increasing use of automated and pre-recorded messages. Accordingly, the US Federal Communications Commission (FCC) adopted rules that require anyone making a telephone solicitation call to anybody's home to provide his or her name, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which that person or entity can be contacted. In June 2003, the FCC supplemented its original rules and established, together with the Federal Trade Commission (FTC), the national Do-Not-Call list.

The TCPA can be enforced in at least three different ways: The individual who receives a call after a name removal request has been given to the caller is granted a private right of action in a local court and may sue for $500 in damages for each violation. In some cases, the courts can levy triple damages. Similar suits may be filed for violations of the TCPA's provisions regarding faxes, autodialers, and artificial or pre-recorded messages. States may initiate civil action against offending companies on behalf of their citizens. Complaints may be filed with the Federal Communications Commission, which has the power to impose penalties against parties in violation of the TCPA.

TELEMARKETING IN BANGLADESH: Some foreign banks, insurance companies and discount card companies in the country have begun aggressive telemarketing. They have engaged call centres. They make calls to cell phones and ask: 'Sir, do you maintain an account with us?' They don't even bother to check their own records before calling someone whether he already has an account with them. This kind of telemarketing irritates the cell phone users. This is, in fact, demarketing.

In this situation, Bangladesh needs to make a 'Do-Not-Call Act' like the USA and Australia or the trade associations of the service providers like banks and discount card sellers should maintain a 'Do-Not-Call list'.

Business Administration / An innovative approach to secure dream jobs
« on: October 01, 2015, 09:06:48 AM »
In the true spirit of exploring distinctive opportunities for the students and enriching their career-choice paths, East West University Business Club (EWUBC) is launching its latest initiative entitled "Career Clinic 2015" on the 10th of October 2015. This will be launched to acquaint students with the human resource departments of prestigious corporations and the scenarios of recruitment procedures.

One thing that is widely observed among today's business students and graduates is they are very keen in working for the top and well reputed organisations of the country. They have ambitious dreams to work with the corporate icons and also want to become like them. However, just having the dream or determination is not enough to survive in today's overtly competitive job market. They must be aware of, and strive for, the qualities that their employers are searching for. Due to the lack of this information, many students are lagging behind in achieving the vetted career. "Career Clinic" will be an interactive platform for those students who want to know about the corporate world.An innovative approach to secure dream jobs

The programme will begin with an inauguration session where top level managers from the telecoms, advertising, banking and FMCG industries will interact with the students and conduct grooming sessions. Through these sessions, the managers will give the students a small glimpse of the recruitment scenarios in the corporate world. They will discuss the challenges that graduates will have to face when they will be applying for their jobs and will also provide advice by sharing their own personal experiences.

 Following the inauguration session, the event will proceed with its most attractive feature— the "Career Checkup". It will mainly hold trial interviews for the students. There will be twelve interview boards and each panel will consist of two or three human resource managers from renowned organisations like Standard Chartered Bank, Robi, British American Tobacco, Citibank N.A, Grey, Grameenphone etc. Students who have registered for the programme will be allowed to participate in the interviews. The "Career Checkup" will start with an introductory speech from the human resource managers. In this session, managers will introduce their organisations to the students. They will enlighten students with their organisational culture, working environment and their recruitment process. The interview session of the "Career Checkup" will hold rehearsal interviews of the actual interviews that students may have to face in future. The students will have to prepare themselves just like they would do for an actual interview. Through these interactive interview sessions, students will be able to discover their strengths and weaknesses. They will be provided with the opportunity of talking directly to the human resource managers of their desired organisations and clear any confusion that they may have about their career goals.

Just as people go to doctors for diagnosing their health problems, from now on the business students of East West University will have their "Career Clinic" where they will be able to examine and evaluate their performances in the journey to their dream careers. - See more at:

China's "national team" has probably spent about $144bn to bolster the country's fragile stock market, Goldman Sachs has estimated, raising questions about how much firepower remains if stocks resume their recent sharp descent.

The government has not disclosed either the amount of rescue funds it has allocated to the coalition of state financial institutions - known as the "national team" - or how much of this total has already been invested.

But Goldman estimates that China Securities Finance Corp (CSFC), the state-owned margin lending agency that is the main conduit for injecting rescue funds into the market, has about Rmb2.0tn ($322bn) at its disposal.

This total includes Rmb1.3tn in loans from large commercial banks, Rmb80bn in bonds issued in early July, and equity capital of Rmb100bn. The People's Bank of China (PoBC) has also said it has provided liquidity to CSFC through re-lending and other channels.

Tallying up how much of this Rmb2.0tn total has already been spent is more challenging.

Media leaks about the size of the national team's war chest are likely to have come from officials eager to communicate the government's muscular response to the market turmoil. By contrast, the national team has good reasons for keeping quiet about how much it has already spent, since this could prompt investor worries that the government's resources are nearly exhausted.

Indeed, shares tumbled by 10 per cent last week after local media cited anonymous sources saying that the national team was preparing its exit plan.

"The episode has underlined the difficulty the government faces in the task it has set itself of convincing investors that equity markets will deliver sustained gains," said Chang Liu at Capital Economics.

"The market is driven more than ever by speculation about official intentions and any positive momentum will raise questions about whether support will be withdrawn."

Goldman estimates the current amount spent at Rmb860bn-Rmb900bn. Media reports in early July indicated that CSFC lent Rmb260bn to brokerages to support stock purchases, bought Rmb400bn in stock directly, and invested another Rmb200bn in mutual funds.

Using an alternative methodology that compares fund inflows to the stock market from traceable sources with the total inflows necessary to keep the index at current levels, Goldman reached an estimate of Rmb900bn for national team investment in June and July.

"We believe the current market concern over the Chinese government's potential exit from its market support is probably overdone," Chengjie Liu and his colleagues wrote this week.

"With the government having just spent a considerable sum to stabilise the market, it is too early for them to reverse course, especially given the still-skittish manner in which the market is trading."

The problem for the government is that it apparently has little to show for the money spent.

The Shanghai Composite Index was at 3,682 late last week, just 9.2 per cent above the low point touched at the height of the selldown on July 9 and 28.9 per cent below the seven-year high of 5,178 reached on June 12.

On the other hand, the government is probably not comparing the market's current level to its recent highs and lows, but rather to the unknown depths the index might have plumbed had the national team done nothing.

The Bangladesh Bank (BB) launched on July 30 the Monetary Policy Statement (MPS) for the period of July-December 2015. It follows the expected approach of supporting government's development goals, maintaining reasonable level of inflation and ensuring financial stability. This approach started in early 2006, and the current MPS is the 20th half-yearly MPS. The MPS was drafted after consultations with stakeholders, including economists, academicians, professionals and trade body representatives.

The structured MPS contains information about BB's outlook on the real sector and monetary developments of the past, and the strategy to pursue to attain the targeted levels. In setting the targets, the monetary policy authority considered trends and achievements of the previous monetary growth targets. It is observed that most of the targets in the previous MPS were on track. Average inflation was very much at a comfortable level and exchange rate was stable. The current MPS (July-December, 2015) has accommodated policy initiatives and strategies to create a more investment-friendly environment and stabilise inflation to spur economic growth and development. In the MPS, reserve money is projected to grow at 16 per cent and broad money (M2) at 15.6 per cent considering the targeted growth and inflation. The central bank targeted 16.5 per cent private sector credit growth at the end of 2016 in line with the output growth target of 7.0 per cent and inflation target of 6.2 for the fiscal year 2016.

BB's initiative to divert credit from the unproductive sectors to the productive ones in recent years is really commendable. In the MPS, BB has reiterated its stand to lend only to the creditworthy borrowers in the productive sectors. The targeted private sector credit flows, if productively used, should be sufficient to attain the targeted level of growth. Though general inflation rate has gone down, core point-to-point inflation has increased that demands cautious approach on the part of the Bangladesh Bank. The MPS targets to promote investments through the strategy of selective easing. The developmental central banking initiatives received renewed impetus in the MPS.

Different views have been expressed following the announcement of the MPS. According to some, it is cautious and growth supportive whereas there are some opinions, according to which, the monetary policy is conservative and may not support adequately to attain the growth target. The question is: should the MPS need a branding like conservative, contractionary, expansionary, and accommodative or so? I think, not essentially. In connection with some micro components of the monetary policy, there could be an expansionary approach or for others there might be a cautious or conservative approach. I think, a dual tactic is evident in the current MPS that combines expansionary and cautious approaches, not very different from the previous one.  Considering the outcomes of the monetary policies in the recent times, we should not have expected much surprise in the monetary policy targets and strategies. 

Current credit and financial challenges are well-known. At present, most banks are having excess liquidity and the government borrowing from the banking system is much low. It is well-known that limited borrowing by the government from the banking system could be crucial for achieving the inflation target. This also offers a great opportunity for the banks to lend to the private sector. Though deposit and lending rates fell and interest spread on average decreased between July 2014 and May 2015, it is yet to reach the targeted bracket for all banks of the country. BB will continue its efforts to reduce this spread to ensure greater efficiency, as stated in the MPS. There is no doubt that it is mainly the quality of the credit that matters most in promoting sustainable banking and economic growth of the country.

In recent years, availability of different tools like Credit Risk Management manual, Credit Risk Grading manual, online Credit Information Bureau, legal support, accessibility to tailored software brought positive changes in the credit operation of commercial banks. However, several governance issues and political stability are clearly out of the reach of the central bank.

In this connection, the recent rise in non-performing loans in a few banks is really a matter of concern. Observing the development, Bangladesh Bank has already undertaken some corrective measures. There is no doubt that pushing private investment through improving private credit demand is a critical area to address. For that matter policy supports are there and seem to be adequate. I think, the situation is improving, and a stable business and political environment is expected to help build investors' confidence further in the near future. The new MPS reiterated BB's commitment to strengthen the financial system and improve asset quality.

Financial stability through inclusive and developmental measures received due attention in the MPS. As expected, the declared MPS started strengthening inclusive and green activities of banks for ensuring macroeconomic and financial stability. It is well-known that BB has undertaken a comprehensive financial inclusion campaign to reach out underserved people by making availability of banking services to farmers, low-income people, students, physically handicapped people, hardcore poor, unemployed youth, freedom fighters, etc. Banks are participating  in agriculture/rural credits; putting emphasis on financing women entrepreneurs; developing ICT solutions  for inclusive banking; encouraging creative partnership between banks and MFIs; introducing financial inclusion oriented CSR, etc.  All banks that are in operation in the country, local and foreign, private and state-owned, have more or less come forward in the financial inclusion drive in response to the central bank's policies.  Actually, these developmental initiatives of Bangladesh Bank have already started offering positive outcome and thus contributing to financial stability.

In fact, ensuring 'financial stability' as one of the core objectives of the monetary policy received renewed recognition following the most recent global economic crisis. The renewed recognition of the importance of maintaining financial stability is entirely appropriate and perhaps long overdue. Some central banks of developing countries like Bangladesh Bank have opted to deviate from the mainstream monetary policy approach of developed economies. These central banks have been following monetary and financial policies towards supporting inclusive and sustainable growth. BB's monetary policy approach attempts to serve Bangladesh economy in upholding growth and stability and the economy has been experiencing macro financial stability amid domestic shocks and external turbulences. Based on the experiences of several developing countries, it can be stated that price stability, the primary objective of monetary policy, does not occur in isolation and financial stability is an important requirement for ensuring price stability.

The Central Bank's developmental role in Bangladesh is expected to act as an in-built stabiliser of the financial system. Designing target-specific products and strategies for groups like women, farmers, small enterprises, sharecroppers, etc., are working for Bangladesh. Besides the ongoing inclusive financing, a financing windows totaling USD500 million will be operationalised in the fiscal year 2016 for financing socially desirable and green initiatives.  It is evident in the MPS that alongside targeting and attaining conventional monetary targets, Bangladesh Bank has been working for mainaining financial stability through inclusive measures.

Like a tragedy from Euripides, the long struggle between Greece and Europe's creditor powers is reaching a cataclysmic end that nobody planned, nobody seems able to escape, and that threatens to shatter the greater European order in the process.
Greek premier Alexis Tsipras never expected to win Sunday's referendum on EMU bail-out terms, let alone to preside over a blazing national revolt against foreign control.
He called the snap vote with the expectation - and intention - of losing it. The plan was to put up a good fight, accept honourable defeat, and hand over the keys of the Maximos Mansion, leaving it to others to implement the June 25 "ultimatum" and suffer the opprobrium.
• Greece crisis: live
This ultimatum came as a shock to the Greek cabinet. They thought they were on the cusp of a deal, bad though it was. Mr Tsipras had already made the decision to acquiesce to austerity demands, recognizing that Syriza had failed to bring about a debtors' cartel of southern EMU states and had seriously misjudged the mood across the eurozone.
Instead they were confronted with a text from the creditors that upped the ante, demanding a rise in VAT on tourist hotels from 7pc (de facto) to 23pc at a single stroke.
Creditors insisted on further pension cuts of 1pc of GDP by next year and a phase out of welfare assistance (EKAS) for poorer pensioners, even though pensions have already been cut by 44pc.
They insisted on fiscal tightening equal to 2pc of GDP in an economy reeling from six years of depression and devastating hysteresis. They offered no debt relief. The Europeans intervened behind the scenes to suppress a report by the International Monetary Fund validating Greece's claim that its debt is "unsustainable". The IMF concluded that the country not only needs a 30pc haircut to restore viability, but also €52bn of fresh money to claw its way out of crisis.

They rejected Greek plans to work with the OECD on market reforms, and with the International Labour Organisation on collective bargaining laws. They stuck rigidly to their script, refusing to recognise in any way that their own Dickensian prescriptions have been discredited by economists from across the world.
"They just didn't want us to sign. They had already decided to push us out," said the now-departed finance minister Yanis Varoufakis.
So Syriza called the referendum. To their consternation, they won, igniting the great Greek revolt of 2015, the moment when the people finally issued a primal scream, daubed their war paint, and formed the hoplite phalanx.
Mr Tsipras is now trapped by his success. "The referendum has its own dynamic. People will revolt if he comes back from Brussels with a shoddy compromise," said Costas Lapavitsas, a Syriza MP.
"Tsipras doesn't want to take the path of Grexit, but I think he realizes that this is now what lies straight ahead of him," he said.

Alexis Tsipras arrives in Brussels for an emergency summit after his referendum
What should have been a celebration on Sunday night turned into a wake. Mr Tsipras was depressed, dissecting all the errors that Syriza has made since taking power in January, talking into the early hours.
The prime minister was reportedly told that the time had come to choose, either he should seize on the momentum of the 61pc landslide vote, and take the fight to the Eurogroup, or yield to the creditor demands - and give up the volatile Mr Varoufakis in the process as a token of good faith.
"They just didn't want us to sign. They had already decided to push us out"
Yanis Varoufakis
Everybody knew what a fight would mean. The inner cabinet had discussed the details a week earlier at a tense meeting after the European Central Bank refused to increase liquidity (ELA) to the Greek banking system, forcing Syriza to impose capital controls.
It was a triple plan. They would "requisition" the Bank of Greece and sack the governor under emergency national laws. The estimated €17bn of reserves still stashed away in various branches of the central bank would be seized.
They would issue parallel liquidity and California-style IOUs denominated in euros to keep the banking system afloat, backed by an appeal to the European Court of Justice to throw the other side off balance, all the while asserting Greece's full legal rights as a member of the eurozone. If the creditors forced Grexit, they - not Greece - would be acting illegally, with implications for tort contracts in London, New York and even Frankfurt.
They would impose a haircut on €27bn of Greek bonds held by the ECB, and deemed "odious debt" by some since the original purchases were undertaken by the ECB to save French and German banks, forestalling a market debt restructuring that would otherwise have happened.
• The fight to end Greece's Great Euro Depression
"They were trying to strangle us into submission, and this is how we would retaliate," said one cabinet minister. Mr Tsipras rejected the plan. It was too dangerous. But a week later, that is exactly what he may have to do, unless he prefers to accept a forced return to the drachma.
Syriza has been in utter disarray for 36 hours. On Tuesday, the Greek side turned up for a make-or-break summit in Brussels with no plans at all, even though Germany and its allies warned them at the outset that this is their last chance to avert ejection.
The new finance minister, Euclid Tsakalotos, vaguely offered to come up with something by Wednesday, almost certainly a rejigged version of plans that the creditors have already rejected.
Events are now spinning out of control. The banks remain shut. The ECB has maintained its liquidity freeze, and through its inaction is asphyxiating the banking system.
Factories are shutting down across the country as stocks of raw materials run out and containers full of vitally-needed imports clog up Greek ports. Companies cannot pay their suppliers because external transfers are blocked. Private scrip currencies are starting to appear as firms retreat to semi-barter outside the banking system.
"We have to put our little egos, in my case a very large ego, away, and deal with situation we face"
Jean-Claude Juncker
Yet if Greece is in turmoil, so is Europe. The entire leadership of the eurozone warned before the referendum that a "No" vote would lead to ejection from the euro, never supposing that they might have to face exactly this.
Jean-Claude Juncker, the European Commission's chief, had the wit to make light of his retreat. “We have to put our little egos, in my case a very large ego, away, and deal with situation we face,” he said.
France's prime minister, Manuel Valls said Grexit and the rupture of monetary union must be prevented as the highest strategic imperative. "We cannot let Greece leave the eurozone. Nobody can say today what the political consequences would be, what would be the reaction of the Greek people," he said.
French leaders are working in concert with the White House. Washington is bringing its immense diplomatic power to bear, calling openly on the EU to put "Greece on a path toward debt sustainability" and sort out the festering problem once and for all.
The Franco-American push is backed by Italy's Matteo Renzi, who said the eurozone has to go back to the drawing board and rethink its whole austerity doctrine after the democratic revolt in Greece. He too now backs debt relief.
(L-R) European Central Bank President Mario Draghi, French President Francois Hollande, Spanish Prime Minister Mariano Rajoy, Greek Prime Minister Alexis Tsipras and Italian Prime Minister Matteo Renzi take part in a euro zone EU leaders emergency summit
Greek Prime Minister Alexis Tsipras and Italian Matteo Renzi take part in a eurozone EU leaders emergency summit  Photo: Reuters
Yet 15 of the 18 governments now sitting in judgment on Greece either back Germany's uncompromising stand, or are leaning towards Grexit in one form or another. The Germans are already thinking beyond Grexit, discussing plans for humanitarian aide and balance of payments support for the drachma.
Mark Rutte, the Dutch premier, spoke for many in insisting that the eurozone must uphold discipline, whatever the financial consequences. "I am at the table here today to ensure that the integrity, the cohesion, the underlying principles of the single currency are protected. It is up to the Greek government to come up with far-reaching proposals. If they don't do that, then I think it will be over quickly," he said.
The two sides are talking past each other, clinging to long-entrenched narratives, no longer willing to question their own assumptions. The result could be costly. RBS puts the direct financial losses for the eurozone from a Greek default at €227bn, compared with €140bn if they bite the bullet on an IMF-style debt restructuring.

But that is a detail compared with the damage to the European political project and the Nato alliance if Greece is thrown to wolves against the strenuous objections of France, Italy and the US.
It is hard to imagine what would remain of Franco-German condominium. Washington might start to turn its back on Nato in disgust, leaving Germany and the Baltic states to fend for themselves against Vladimir Putin's Russia, a condign punishment for such loss of strategic vision in Greece.
Mr Lapavitsas said Europe's own survival as civilisational force in the world is what is really at stake. "Europe has not show much wisdom over the last century. It launched two world wars and had to be saved by the Americans," he said
"Now with the creation of monetary union it has acted with such foolishness, and created such a disaster, that it is putting the very union in doubt, and this time there will be no saviour. It is the last throw of the dice for Europe," he said.

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