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Topics - Shahnoor Rahman

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The big question on economists' mind is, how will the 9 per cent ceiling on bank lending rates impact the conduct of monetary policy?

Currently, the Bangladesh Bank practises a quantity-based monetary policy framework. At the beginning of the fiscal year, the BB announces reserve and broad money targets to support the GDP growth and inflation objectives. The monetary programme does not set the level of interest rates or the exchange rate.

These are left to be market-determined through practices customary in the lending-borrower (interest rate) and buyer-seller (exchange rate) relationships embedded within a set of regulatory code of conduct.

Remember, under a market-determined setting, there is no such thing as "the interest rate".

Deposit rates vary by types and tenure, while lending rates vary by borrower risk profile and loan tenor. Supply and demand forces generally determine the level of interest rates in each market segment.

The BB influences interest rates by influencing the quantity of liquidity available at any given point in time in the money market subject to its stance in the foreign exchange market.

The regime under which the BB can conduct the monetary policy will change from April 1, 2020. Interest rate will be fixed at 9 per cent for most lending (except credit cards).

But the BB notice promulgating the interest rate ceiling is silent on the deposit rate. So, formally only the lending rate is being capped.

The assumption appears to be that the lending rate cap will automatically lower the deposit rate below 6 per cent.  After all, how many banks, if any, can afford to operate with just 3 per cent spread?

The key question is whether the BB is left with any choice on setting the levels of reserve and broad money.

Note that the 9 per cent ceiling is binding for most bank loan market segments. Interest rates on loans to large corporates, small- and medium-sized enterprises (SMEs) and home owners are in double digits, ranging between 9.5 and 16.5 per cent.

The imposition of interest rate below these market rates makes it a binding ceiling. Other things equal, this will reduce the supply and increase the demand for loanable funds, thus creating excess demand at the ceiling rate.

Since lenders cannot be forced to lend more than what they are willing to, the short side of the market will prevail, i.e. the total amount lent will equal the total the lenders are willing to lend -- and not the total the borrowers are willing to borrow.

The BB has the option to make it equal the amount the borrowers are willing to borrow.

It can do this by lowering prudential controls such as the cash reserve ratio (CRR), increasing the loans-deposit ratio or providing liquidity support at reduced policy rates.

The BB implemented a mixture of these policies in 2018 and 2019. Yet the average lending rate stayed above 9 per cent. More will, therefore, be needed to accommodate the excess credit demand resulting from the 9 per cent ceiling.

Absent such regulatory and/or direct BB accommodation, the impact of the ceiling will be contractionary as the supply of liquidity in the economy will fall through credit rationing.

This, in turn, will decrease consumption and investment demand because of tighter financing constraints.

The high-risk sectors such as the cottage, micro and small enterprises are more likely to be excluded as will all borrowing categories where the marginal cost of providing loans (including risk premia) exceed 9 per cent.

The demand-induced recession in the excluded sectors may subsequently ripple through the rest of the economy -- with consequences for the overall level of employment and incomes.

The alternative is to accommodate the increased demand for loanable funds.

The ability to relax regulation to increase the supply of loanable funds has its limits. The CRR can at best be zero and the loan-deposit ratio cannot exceed 100 per cent.

Policy rates can, in theory, be negative, but in practice it is highly unlikely in Bangladesh.

The BB can engage in open market operations to inject liquidity directly into the banking system.

Whatever the method used, the immediate impact will be to increase the supply of loanable funds beyond the level demanded before the interest rate ceiling became effective.

A monetary expansion will ensue.

Sustaining the ceiling at 9 per cent over time will require the BB to fully accommodate the growth in demand for credit irrespective of what the macroeconomic targets of the monetary programme warrant.

Such expansions risk rising inflation that is already cost-pushed by gas, electricity and water price increases.   

The bottom line is that the space for manoeuvring monetary policy when faced with expanding demand for credit is severely constrained by the interest rate ceiling.

Interest rate can no longer respond to upside aggregate demand shocks to stabilise the economy. For instance, in the absence of the ceiling, a rise in demand for credit will increase both the quantity of money traded in the credit markets as well as the interest rate.

The latter will soak part of the initial increase in demand, thus limiting its impact on aggregate demand for goods and services and hence on inflation.

A binding ceiling will prevent such increase in the lending rates and allow credit to expand as much as originally because of accommodation from the BB. All that the central bank can choose is how to accommodate the excess demand.

It can administer a yet-to-be-fully-specified set of directives to banks for allocation of credit to various sectors at the desired level and ensure that they have enough liquidity to implement such directives.

The known unknowns in this case are the credit market outcomes.

One possibility is a fall in credit in the absence of monetary accommodation.

Another possibility is a rise in credit made possible by easing regulatory controls while introducing directives on credit allocation and ensuring their enforcement.

If this proves to be inadequate, the BB can inject additional liquidity.

The extent of liquidity decline if it decreases and that of liquidity increase if it increases will depend on the extent of monetary accommodation and the effectiveness of credit directives at the level of borrowers and lenders.

A variety of intermediate outcomes are conceivable between these two extremes.

Interest rate ceiling will eat up monetary policy space through increased fiscal dominance.

Any increase in domestic financing of budget deficit will create pressure for monetary accommodation.

If non-bank borrowing is used, the supply of loanable funds to the private sector will dry out.  This will need to be met by regulatory easing and forbearance, of which there is not much room, or direct liquidity support from the BB.

Using bank borrowing will have the same effect on the supply of loanable funds, the difference being a possible rise in risk-free rates available to banks, which further acts as deterrent to lending to the private sector at the ceiling rate.

Note that there are no ceilings on the risk-free T-bills and T-bonds rates. Yields on these instruments of short and long maturities currently range between 7 and 9.1 per cent.

Domestic financial markets in Bangladesh do not have enough depth to absorb the placement of public debt.

The BB will have no option but to accommodate increased domestic financing needs of the government to mitigate any adverse effect on private credit growth due to expanded options to banks to place funds at attractive risk-free rates.

This will amplify the impact of fiscal expansion on aggregate demand.

The exigencies of the budget will take precedence over controlling inflation and supporting growth. Fiscal policy considerations will get primacy in conducting monetary policy.

The above discussion assumes the regulatory changes introduced to make it easier for banks to lend at 9 per cent do not have any unintended consequences. Such consequences are likely when monitoring and enforcement are weak.

Credit misallocation and asset price bubbles often result from lending rate repression both in theory and in practice.

Influential borrowers availing excessive cheap credit may put them to speculative investments in asset markets, thus causing credit misallocation and asset price bubbles.

Rise in financial disintermediation cannot be ruled out either. By increasing systemic risk to financial stability, these will create formidable new challenges for financial regulation.

If we accept the proposition that interest rates in Bangladesh are high because risk premia are high, and not predominantly because of non-competitive behaviour by banks, then the ceiling cure is most likely to be worse than the disease.

Risk premia are high because of high inflation risk, as evident from BB surveys of inflationary expectations and high business risk as evident from high rates of wilful loan default.

Interest rate ceiling cannot address either the inflation risk or the default risk, not to speak of broader business risks.

Inflation risk is best handled through sound macroeconomic management. A pre-requisite in this regard is a central bank able to conduct monetary policy with some degree of independence to keep inflation low and predictable.

Structural problems require structural policy responses. Structural reforms, including regulatory and legal reforms in the financial sector, are needed to address business risks.

Fixing lending rate uniformly at a predetermined level is equivalent to not only shooting the messenger but also disabling the monetary policy apparatus.

Interest rate can no longer serve as an automatic stabiliser and a link in the transmission of monetary and fiscal policies.

Additionally, when both the credit controls and liquidity support are imperfect as well as unpredictable, the BB will also suffer from credibility gap, thus further undermining the traction of its policies in shaping macroeconomic stability and regulating the financial secto


Bangladesh's per capita income will cross $4,000 within next decade and this will act as a springboard for the country looking to become a high-income economy, according to Hitoshi Hirata, chief representative of the Japan International Cooperation Agency (Jica).

In 2019, Bangladesh recorded an 8.15 per cent growth in GDP while per capita income reached $1,906 as per data from the International Monetary Fund.

"This is a very rapid growth. If a country achieves an average of more than 7 per cent growth per year, per capita income can be doubled within 10 years. So, it should be very easy for Bangladesh to double its per capita income within 10 years," said Hirata during an interview with The Daily Star on Thursday.

Since 2018, Japanese firms began to show interest to invest in Bangladesh and Hirata hopes this trend will continue through the country's partnership with the Jica.

"We are very pleased to be a partner that provides support for the development of infrastructure in Bangladesh as it will directly help the country attract more Japanese investors," he said.

The Matarbari deep seaport in Cox's Bazar, which is being built with financial backing from the Jica, is a good example of how the agency assists in developing the country.

The proposed deep seaport will be accessible for container ships that require more than 18 metres of depth and considering that Chattogram Port, the premier port of Bangladesh, is only accessible by vessels requiring less than 9 metres of depth. Logistic costs should diminish greatly once the project is complete in 2024.

The Jica is also involved in the construction of the third terminal at the Hazrat Shahjalal International Airport (HSIA) in Dhaka, which is expected to be complete within 2023.

"These two infrastructure projects will become logistic hubs in the country by 2041 and about 40 per cent of all container ships anchored in the country will be handled at the Matarbari Port," Hirata said.

The HSIA will have the capacity to accommodate an additional two crore passengers following the construction of the terminal, for which the Jica is providing 70 per cent of the funding.

Currently, the airport can handle eight million passengers a year but that number is expected to reach 14 million by 2025 and 24.8 million by 2035.

Besides, 42 per cent of Bangladesh's LNG supply will come through the Matarbari channel by 2041 while power plants in the area will account for 40 per cent of the country's energy production.

Therefore, both projects play vital roles in the implementation of the BIG-B concept, which was announced during Japanese Prime Minister Shinzo Abe's visit to Bangladesh in 2014.

"Since the plan was declared, our lending commitment to Bangladesh sped up and reached over $2.5 billion per year while it was only $1 billion in 2014," he added.

The Bay of Bengal Industrial Growth Belt initiative, simply known as BIG-B, aims to accelerate industrial agglomeration along the Dhaka-Chattogram-Cox's Bazar belt and beyond, encompassing developing economic infrastructure, improving investment environment and fostering connectivity.

Currently, there are more than 40 projects in implementation, of which 31 are being developed to improve infrastructure. This includes a few large-scale schemes for both hard and soft infrastructure.

Over the past five years, Japan has more than doubled its support for infrastructure development in Bangladesh and will continue to do so due to good bilateral relations, said Hirata.

Bangladesh has improved immensely in areas such as power generation, transport and port facilities in the last 10 years and this led to greater foreign investment in the country.

"Therefore, both Bangladesh and Japan will benefit from the projects currently in implementation as it will attract more foreign investors, including Japanese ones, for various sectors," the Jica chief representative to Bangladesh said.

Movement from Dhaka to Chattogram has now become far smoother thanks to the JICA's support in the construction of three bridges: Kanchpur, Meghna and Goumti.

"We tried to improve the infrastructure level between Dhaka, Chattogram and Cox' Bazar under the Big-B initiative to help attract foreign direct investment, not only from Japan but from other countries also," he said.

Bangladesh is very promising for Japanese investors due to the rapid economic growth shown by the country for the past few years. Besides, there is also a massive consumer market.

The purchasing capacity of Bangladesh's middle class is on the rise and the people are very comfortable with Japanese products, according to Hirata.

"If you consider the history of Japanese investment abroad, you will notice that the island nation first invested in ASEAN countries such as Thailand, Indonesia and Malaysia before going on to Singapore."

"Upon closer inspection, you will see that Japanese firms began investing in these countries in greater numbers once the infrastructure of those countries was developed."

"Now the next destination is definitely Bangladesh as infrastructure improvement is going on," Hirata said.

The number of Japanese firms operating in the country will also increase after the completion of the Japanese special economic zone in 2021.

After that, automobile, food processing, and leading manufacturing companies will come to Bangladesh and help diversify the economy, he said.

However, the ease of doing business in the country needs to be improved if Bangladesh hopes to compete with neighbouring countries like Myanmar, Thailand and Indonesia, he added.

Bangladesh's taxation system, customs duty, enforceable policies and value added tax system are some of the major challenges faced by Japanese firms looking to invest in the economy.

Investors make their decisions based on government policies. Therefore, if any government frequently changes policies on an ad-hoc basis, investor confidence is lost.

"Investors need policy support, and incentives to invest in any economy," said Hirata, adding that countries like Myanmar and India constantly improve their policies and incentive plans to attract FDIs.

Hirata also lauded the government's long-term plans while insisting that Bangladesh can become a developed country by 2041 if the economy continues to grow.

The government will need to provide quality education at primary and secondary schools since highly skilled individuals are required to achieve the country's goals, he added.

Bangladesh will be a top choice for Japanese companies seeking to expand their businesses in Asia and the Oceania in the next two years due to its high potential and profitability, according to a survey of the Japan External Trade Organisation (JETRO).

About 70.3 per cent of all Japanese firms in Bangladesh are mulling over an expansion while 23.4 per cent would like to remain the same and 1.6 per cent are considering a reduction.

As of December 2019, around 300 Japanese companies were conducting business in Bangladesh with investments reaching $386 million. Just a decade ago, there were merely 82 firms from Japan operating in the country.

In another project, the Jica will assist in the construction of a new dedicated railway bridge over the Jamuna river to improve the capacity and safety of rail transportation, said Hirata.

The agency also encourages the development of prototype motorcycle parts through technical support to local metal and plastic part manufacturers.

Besides, the Jica helped draw up the revised strategic transport plan, which outlined short-term (2025), and mid to long-term (2035) transport plans for Dhaka. The plans were approved in 2016.

The ongoing construction of metro rail and bus rapid transport projects will help solve the city's traffic congestion and could save over 35 million man-hours per day, according to Hirata.


It has been more than two months since Evana Nasrin has opened an outlet named Mokam in a shopping centre in Dhanmondi.

The 150-square-foot shop houses women's clothes, sarees, kurtas, jewellery, cosmetics and some food products. The items are showcased in a way that apparently gives an idea to a shopper that all the products are owned by the shop operator.

A curious look inside the store however tells a different story. The shop, Mokam, has three brands owned by three women entrepreneurs.

They are selling their products in a common space disregarding competition for customers' attention -- a relatively new phenomenon in the capital where commercial space is too expensive to bear for many small businesses and start-ups.

"This is beneficial for small entrepreneurs like us. By sharing space, we can display our products and brands without the high investment needed to open a store," said Nasrin, owner of Evana's Crafts, one of the three brands at Mokam at Anam Rangs Plaza at Dhanmondi, Dhaka.

It all started several months ago, when Nasrin found a suitable space to showcase her products for further her business.

But the monthly rent of Tk 50,000 was beyond her means. She approached two other women entrepreneurs to share the space and the expenses and they jumped in.

Today, the three share costs for the store based on the ratio of space they use.

"We, the small entrepreneurs, do not have huge capital and opening a store requires a lot of investment that most of us cannot afford," said Shabnam Rose, owner of Shokher Gudam, another brand that has displayed sarees and hand-made jewellery in the space.

The prices of each square foot of commercial spaces are almost double that of residential spaces in many areas in the densely populated Dhaka, said a Farhaduzzaman, marketing in- charge of Eastern Housing.

A senior official of another realtor said the prices of commercial space start from Tk 10,000 and go up to Tk 100,000 each square foot depending on location.

"When we share space, it reduces our cost and risks. It all becomes affordable for us," Rose said.

Irin Hoque Ivy, chief executive of a multi-brand store Kayara, said it requires Tk 15-20 lakh to open a shop in relatively popular shopping areas in Dhaka and it is not possible for young entrepreneurs to arrange the capital.

Through her five outposts of Kayara, nearly 100 women entrepreneurs are displaying their products, mostly clothing, jewellery, cosmetics and bags, on payment of rent, service charge for the space and other costs.

Sales persons sell items of all entrepreneurs, marking brands in sales receipts to keep records, and proceeds from sales are credited to the accounts of entrepreneurs at the end of the month, she said.

Ivy signed up for this type of store in 2016 at the capital's upmarket Banani neighbourhood with the capital she got from her family.

Some 22 women fashion designers, including Ivy, put up their products for display in the store under their respective brand names.

Today, Kayara has five showrooms: four in Dhaka and one in Chattogram.

"This is a win-win for both of us," said Ivy, who offers space to small entrepreneurs.

She said several women entrepreneurs who started with Kayara have gone on to open their own stores later.

Anyone with the ability to make 40-50 clothing items can start join a multi-brand store.

"The more multi-brand stores there are, the more the women entrepreneurs will be benefited," she said, while calling for easier bank loans for female entrepreneurs.

Many women entrepreneurs are becoming loan defaulters for the high cost of doing business, said Fahmida Khatun, executive director of Centre for Policy Dialogue.

Multi-brand stores can reduce the cost of business and enable many women entrepreneurs to succeed as such store will help them compete and market their products better in a competitive environment.

"This is good for customers too as they get a number of brands in a single store."

The government has a lot of land and it can offer space to women entrepreneurs in groups at nominal rates, Khatun said.

Hasina Newaaz, vice-president of the Federation of Bangladesh Chambers of Commerce and Industry, demanded the government establish a market in each district so that women entrepreneurs can showcase their products.

Both Evana and Rose said Mokam has so far been good for their business.

"The responses that we have seen have been beyond our expectations. We did not need to inject funds to bear the expenses of our store since the day we opened," Evana said.

Rose said she is reinvesting the proceeds of sales to expanding her business.

She said they also market their products online.

"But physical presence of a store is important for growth as only a certain community can be reached through online marketing," Rose said.

Evana, who has also put her brand in another multi-brand store at Rifles Square in Dhaka under the same concept, said she plans to open more branches of Mokam as space-sharing with other reduces her cost while enabling her to expand her business.


The state coffer's receipts from the banking sector, which accounts for about one-third of the National Board of Revenue's Large Taxpayers Unit's collections, are likely fall in the wake of interest rate caps on loans and deposits, said taxmen and bankers.

"This is going to reduce banks' operating profits," said Trust Bank Managing Director Faruq Mainuddin Ahmed, adding that the decline in banks' income will invariably lead to a reduction in tax collection.

Banks accounted for 35 per cent of tax collection of Large Taxpayers Unit, the main tax collector for income tax under the NBR, in the first half of the current fiscal year.

One of the reasons banks' profits will shrink is because of inclusion of consumer loans to the 9 per cent interest rate bracket, he said.

Consumer loans do not require any security and the recovery process is cumbersome and requires more manpower for supervision.

"If the interest rates on consumer loan are reduced to 9 per cent, no bank will be able to manage. This is why bank's income will drop and so will their profits," he said, while welcoming the lessening of interest rates for industrial credit for giving a boost to industrialisation.

All the banks have downsized their budgets to cope with the new interest rates, Ahmed added.

Taxmen said the effect of interest rate reduction and subsequent drop in profitability of banks are likely to be visible in the next fiscal year as banks will pay tax based on their incomes in the 2019 calendar year.

The LTU is responsible for collecting tax from 439 big companies, including banks and insurances, along with 720 individuals.

Its total collection was nearly one-fourth the total income tax of Tk 73,000 crore collected by the NBR in fiscal 2018-19.

The LTU logged in Tk 17,420 crore last fiscal year and the amount of collection from the banking sector was 38 per cent of its total receipts.

Between July last year and February this year, the LTU collected Tk 10,200 crore and the contribution of banking sector continued to remain more than one-third of its total tax receipts, according to taxmen.

On the surface it seems banks' income will decline for interest rate cuts, said a senior official of LTU seeking to remain unnamed.

But if the demand for loans increases because of the lower interest rates and the amount of defaulted loans improves, there would be no effect on tax collection, he added.

Tax collection from the banking sector will definitively reduce if there is no improvement in default loan situation, said Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue.

"If banks do not improve their efficiency, the new interest rates may affect profitability of the banking sector and the collection of corporate income tax from the sector," he said.

"It needs to be seen how the move impacts the overall economy of the country," he said, adding that if the economy is benefitted by the interest rate cuts, revenue collection is expected to rise.

The reduction of deposit rate though will hit the tax receipts on interest earnings from savings and fixed deposits.

Deposit growth in banks saw a steep decline in January, in a development that can be viewed as the direct impact of the capping of interest rate on savings to 6 per cent.

"Tax will decline proportionately in line with the drop in deposit rate," said a senior official of Tax Zone-1 that looks after collection of the withholding tax from interest incomes on depositors.

The NBR collected Tk 6,577 crore tax on interest income of saving and fixed deposits last fiscal year, up 9 per cent year-on-year, according to data from the field office.

The tax authority collects 10 per cent tax on interest earnings of depositors with Taxpayers Identification Numbers (TINs) and 15 per cent from those who do not have TINs.

Banks deduct the tax on behalf of the NBR while crediting the interest income to savers.


Bangladesh's gross domestic product may contract by as much as 1.1 per cent in the hypothetical worst-case scenario of a significant outbreak of coronavirus in the country, said the Asian Development Bank (ADB) in an analysis.

That means, the novel virus, which is yet to arrive in Bangladesh, could wipe $3.02 billion off the $300 billion-plus economy.

In such a scenario, 894,930 jobs will be lost, according to the ADB.

The ongoing COVID-19 outbreak affects China and other developing Asian economies through numerous channels, including sharp decline in domestic demand, lower tourism and business travel, trade and production linkages, supply disruptions and health effects.

The magnitude of the economic impact will depend on how the outbreak evolves, which remains highly uncertain, the Manila-based lender said.

China is the biggest trading partner of Bangladesh and the biggest source of raw materials. The world's second largest economy accounted for more than a fifth of the country's imports of $56 billion in fiscal 2018-19, Bangladesh Bank data showed.

The world's second largest economy is also emerging as an export destination for Bangladesh.

Bangladesh receives 5-6 lakh tourists every year and of them a major portion comes from China.

"There are many uncertainties about the COVID-19, including its economic impact," said ADB Chief Economist Yasuyuki Sawada in a statement.

This requires the use of multiple scenarios to provide a clearer picture of potential losses.

"We hope this analysis can support governments as they prepare clear and decisive responses to mitigate the human and economic impacts of this outbreak," he added.

The new coronavirus disease, now known as COVID-19, was first identified in Wuhan, in China in early January. Since then, it has spread to another 88 countries as of Friday, according to the World Health Organisation.

The ADB analysis explored three scenarios given the very large uncertainties.

In the best-case scenario, the outbreak is contained relatively quickly, with travel bans and precautionary behaviour abating after two months, when the outbreak intensified and quarantines as well as travel and other restrictions were imposed.

In the moderate scenario, the outbreak is more widespread and lasts longer, with travel bans and precautionary behaviour abating only after three months; there is a larger decline in China's consumption growth of 2 percentage points for the year, relative to a no-outbreak scenario.

In the worse-case scenario, the outbreak is even more protracted, with precautionary behaviour and restrictive policies remaining in place for six months; there is a large decline in both consumption and investment growth in China, with both down by 2 percentage points relative to a no-outbreak scenario.

In the hypothetical worst-case scenario, the duration of travel bans and sharp decline in domestic demand will be six months in China and the outbreak in other developing economies lasting three months.

In such cases, there will be 2 percentage points decline in China's consumption relative to no-outbreak scenario, China's investment relative to no-outbreak scenario and decline in selected developing economies' domestic consumption.

In the best case scenario, the country's GDP will lose $8.37 million and there will also be job cuts for 1,870 people. In the moderate and worse cases, there will be GDP loss of $15.84 million and $30.31 million and job cuts of 3,790 and 6,950 respectively.

"These should not be interpreted as a prediction that an outbreak will occur in any of these economies. In most of these economies there are very few cases of the COVID-19," the ADB said.

Rather, they are meant to guide policy-makers in determining how costly an outbreak could be, so they can properly evaluate the benefits and costs of prevention and early response.

In Bangladesh, tourism revenues will decline by 0.001 per cent in the best-case scenario, 0.002 per cent in the moderate case scenario and 0.003 per cent in the worst-case scenario.

The range of scenarios explored by the ADB suggest a global impact of $77 billion to $347 billion, or 0.1 per cent to 0.4 per cent of global GDP, with a moderate case estimate of $156 billion or 0.2 per cent of global GDP.

Two-thirds of the impact falls on China.

The magnitude of the impact of the lethal, pneumonia-like virus, which is sweeping the globe, on Bangladesh's international trade of Bangladesh as well as overall commerce -- cannot be ascertained yet.

In fact, the real impact would be clear in March, the finance ministry of Bangladesh said in a document recently.

"There is no doubt that there will be at least short-term impact. And if the outbreak persists for a long time, this will have far-reaching impact not only on Bangladesh but also on the global economy."

The barriers to imports from China, the epicentre of the virus, will hurt the export-oriented sectors and disrupt the supply chain, the finance ministry said, adding that the overall trade may be affected to some extent because of the coronavirus.
Star Business Report

BBA Discussion Forum / Personality vs. Character
« on: March 03, 2020, 04:09:13 PM »
I once conducted a job interview with someone I found to be passionate, energetic, intelligent, engaging, and prepared. As I asked her questions designed to produce an accurate picture of her potential future performance, I remained attuned to my emotional reactions to her demeanor, trying to hear what my inner voice was telling me about her. At the end of the interview, I found myself excited about the prospect of her coming to work for me. I had to remind myself to remain cautious, however, as I reflected on just how easy it is to confuse personality with character and how critical it is to separate them.
What's the difference?

Personality is easy to read, and we're all experts at it. We judge people funny, extroverted, energetic, optimistic, confident—as well as overly serious, lazy, negative, and shy—if not upon first meeting them, then shortly thereafter. And though we may need more than one interaction to confirm the presence of these sorts of traits, by the time we decide they are, in fact, present we've usually amassed enough data to justify our conclusions.

Character, on the other hand, takes far longer to puzzle out. It includes traits that reveal themselves only in specific—and often uncommon—circumstances, traits like honesty, virtue, and kindliness. Ironically, research has shown that personality traits are determined largely by heredity and are mostly immutable. The arguably more important traits of character, on the other hand, are more malleable—though, we should note, not without great effort. Character traits, as opposed to personality traits, are based on beliefs (e.g., that honesty and treating others well is important—or not), and though beliefs can be changed, it's far harder than most realize.
Why does it matter?

The problem in forming judgments about a person's suitability for important roles in our lives (employee, friend, lover, spouse) is that we all have an uncanny predilection for observing attractive personality traits and manufacturing out of them the presence of positive character traits (that is, if someone is outgoing, confident, and fun we're more likely to think they're honest, moral, and kind). But it's far from clear that the one kind tracks with the other. In fact, as I recounted in Listening To Your Inner Voice, that assumption often gets us into trouble.

We unconsciously tend to connect personality to character for two main reasons: we want to like people we already like, and the most reliable way to assess a person's character is laborious and time-consuming. (We actually need to observe people in character-challenging situations in order to make reliable deductions about their character. For example, if we observe someone lie easily, we can be reasonably certain from even just one instance that they've done so in the past and will do so again in the future, as the best predictor of future behavior is past behavior.)

This is because the beliefs that drive us to do things like lie easily, or tell the truth, are present in us at all times. They may remain "dormant" until circumstances stir them up in such a way that they motivate observable action, but they're rarely hidden away deliberately. Which begs the question: might there be a way to glimpse such beliefs without waiting for circumstances to put them on full display?

In a word—yes. Not so much by speaking directly with people whose character you're trying to uncover, but by speaking with people who know the people whose character you're trying to uncover. This is why, for example, wise prospective employers always call references.

The challenge, though, once we do is that prospective employees provide references they expect will speak well of them. The trick, then, is to ask questions of a person's references designed to get them to reveal their most accurate judgments honestly.

BBA Discussion Forum / attitude vs personality
« on: March 03, 2020, 04:07:05 PM »
Personality is the identity and attitude is a learned behavior. Personality is subjective and attitude is objective in nature. Personality has the tendency to change over time while attitude remains the same all through life. Personality is a combination of these characteristics to give birth to an attitude.

BBA Discussion Forum / Bangladesh Inflation Rate
« on: March 03, 2020, 04:04:48 PM »
Bangladesh inflation rate eased to 5.57 percent in January of 2020 from 5.75 percent in the previous month. Food prices advanced at a softer pace (5.12percent vs 5.88 percent in December) while non-food products cost rose faster (6.30 percent vs 5.55 percent). The inflation rates for rural and urban areas were 5.52 percent and 5.67 percent, compared with December's figures of 5.76 percent and 5.73 percent respectively. On a monthly basis, consumer prices rose 1.17 percent, after decreasing 0.23 percent in the previous month.

BBA Discussion Forum / Bangladesh Poverty Rate 1983-2020
« on: March 03, 2020, 04:03:42 PM »
Poverty headcount ratio at $5.50 a day is the percentage of the population living on less than $5.50 a day at 2011 international prices. As a result of revisions in PPP exchange rates, poverty rates for individual countries cannot be compared with poverty rates reported in earlier editions.

    Bangladesh poverty rate for 2016 was 84.50%, a 3.2% decline from 2010.
    Bangladesh poverty rate for 2010 was 87.70%, a 1.6% decline from 2005.
    Bangladesh poverty rate for 2005 was 89.30%, a 2.3% decline from 2000.
    Bangladesh poverty rate for 2000 was 91.60%, a 1.1% decline from 1995.

BBA Discussion Forum / Bangladesh Literacy Rate 1981-2020
« on: March 03, 2020, 04:03:19 PM »
Adult literacy rate is the percentage of people ages 15 and above who can both read and write with understanding a short simple statement about their everyday life.

    Bangladesh literacy rate for 2017 was 72.89%, a 0.13% increase from 2016.
    Bangladesh literacy rate for 2016 was 72.76%, a 7.62% increase from 2015.
    Bangladesh literacy rate for 2015 was 65.14%, a 4.04% increase from 2014.
    Bangladesh literacy rate for 2014 was 61.09%, a 0.08% increase from 2013.

BBA Discussion Forum / Bangladesh Trade Balance 1960-2020
« on: March 03, 2020, 04:02:49 PM »
External balance on goods and services (formerly resource balance) equals exports of goods and services minus imports of goods and services (previously nonfactor services). Data are in current U.S. dollars.

    Bangladesh trade balance for 2018 was $-23.68B, a 81.28% increase from 2017.
    Bangladesh trade balance for 2017 was $-13.07B, a 26.76% increase from 2016.
    Bangladesh trade balance for 2016 was $-10.31B, a 28.73% decline from 2015.
    Bangladesh trade balance for 2015 was $-14.46B, a 28% increase from 2014.

BBA Discussion Forum / Bangladesh Economic Growth 1960-2020
« on: March 03, 2020, 04:02:18 PM »
GDP at purchaser's prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Data are in current U.S. dollars. Dollar figures for GDP are converted from domestic currencies using single year official exchange rates. For a few countries where the official exchange rate does not reflect the rate effectively applied to actual foreign exchange transactions, an alternative conversion factor is used.

    Bangladesh economic growth for 2018 was $274.02B, a 9.73% increase from 2017.
    Bangladesh economic growth for 2017 was $249.72B, a 12.79% increase from 2016.
    Bangladesh economic growth for 2016 was $221.42B, a 13.5% increase from 2015.
    Bangladesh economic growth for 2015 was $195.08B, a 12.84% increase from 2014.

The idea of the proposed central admission tests in public universities has been promoted as a fairer, inexpensive alternative to the existing system of university entry. The new system promises to be the most efficient way of relieving admission-seekers and their parents of tremendous physical, mental and economic pressures that they endure due to separate university tests. This change demands a massive cultural transformation in higher education. But the way it has been put forward seems to be unnecessarily hasty and does not raise confidence that reasonable efforts have been made to implement it across a large and complex system.     

If implemented, the standardised tests are expected to be a transformative event, a life-determining one for the students. That is why, due diligence is required before the plan is set in motion. But the current situation gives one the impression that everything is happening too fast. Not even the new admission procedures have been publicised yet. The lack of visible preparatory efforts to steer and monitor the implementation of the uniform testing system, given that not enough time is left before the next admission season, is deeply worrying.

Since no pilot experiment has been conducted before taking the decision of implementing it countrywide, no one really knows how the whole system will work and what challenges it will face. While it is of utmost importance that the universities have a stake in decision-making at every step of the way, it has not been the case. So, the decision seems to have been imposed from the top.

The big question now is how it will be conducted; who will ultimately be responsible for such a massive-scale testing situation; who will develop the questions and who will evaluate the scripts. Not just the students, but teachers also have no clear idea about these issues. Perhaps it would have been more logical to take such an important decision after developing necessary strategies to counter possible challenges. For example: at a time when preventing the leakage of question papers is still an ongoing struggle and a highly sensitive and important task, a single leakage can ruin the chances of its success. Even the quality of invigilation in different places may have different standards. Also, in order for the students to make informed choices, they need a discipline-based ranking of universities. We do not know when and on what basis it will be done.

This concern is particularly important because of a problem that is inherent in our culture of educational policymaking. Contemporary experience shows that major changes in our education sector occurred too quickly and without necessary preparations, resulting in failures to achieve intended outcomes. Replicating reforms and changes implemented successfully in other countries often turned out to be a recipe for disaster here. Though the multiple-choice question (MCQ) format could have been an efficient way of assessing learning outcomes, here it has been reduced to a testing method that deals with the mechanical repetition of something to be learned. This is because we have never had enough trained teachers capable of drafting multiple-choice questions that effectively test learning outcomes. The same can be said about the much-publicised introduction of the creative question method at secondary schools. On the other hand, it is hard to say if the Primary Education Completion (PEC) and Junior School Certificate (JSC) exams actually have any effect on improving the quality of education or they are just adding undue burden on the young students.

The problem we have is that almost half of the students finishing higher secondary education will not find a place at a public or government university. The testing system is not just a way of measuring competency or proficiency; more importantly, it is effectively a way of shutting down access to public-funded higher education. The proposed central tests appeal to the logic of convenience above anything else. This is important, but at what cost? What will happen to the diverse enrolment mechanisms, essential for a good number of disciplines? We are still in the dark about the whole process. Almost no discussion took place involving stakeholders at universities.

The major challenges that any unified system faces are related to ensuring equality and diversity. Our education system has become increasingly pressurised with centralised exams. The addition of another massive, centralised and annual tests runs the risk of imposing additional burden on an already highly-pressurised system. If the centralised exam is the only thing considered by universities for enrolment, and there are no interviews or other admission criteria, then it will be hard to control the mushrooming of coaching centres. Due to this special characteristic, it runs the risk of increasing inequality in education by widening urban-rural gap and regional differences. If the uniform tests take place as a singular annual affair, it may put excessive strain on students by shrinking the horizons for many of them, especially those from the poor and disadvantaged backgrounds. Soon it may also turn into a dreaded and stressful exercise. That is why, implementing another such exams requires careful consideration and gradual advancement.

If we are relying only on MCQ for standardised exams, leaving out comprehensive tests and diverse admission criteria, then we're actually going backwards, since many universities are already implementing those things to value creative and critical thinking. To ensure that students with diverse interests do not fall behind in their quest for securing the subject of their choice, holding general testing and subject-specific cluster testing can be a possible solution.

On the other hand, every testing involves evaluation. While standardisation of testing has been talked about quite a lot in recent years, the issue of standardisation of evaluation has not been raised at all. If we are to see a comprehensive evaluation system for the integrated tests, it will demand massive preparations involving a huge number of teachers, not just those who are affiliated with the ruling party. I have not yet seen or heard anything about any preparation of that sort.

At this point, it is hard to imagine how the proposed central tests will be able to overcome the challenges faced by the existing system (like the difficulty in selecting innovative talents who are otherwise not very competitive, question paper leakage, and so on). A bottom-up approach to address these will be much more useful.

It is possible to address most of the concerns of the autonomous universities about the proposed system through careful planning and necessary engagement. In that case, any arrangement must uphold the autonomy of the universities. We expect that the issue of the unified system will be discussed by the academic councils, the highest body for taking any academic decision in public universities, and a decision will be taken as soon as possible. For the UGC and the government, there is no harm in recognising the central role of the universities in the whole testing and evaluation process, given that they are the leading autonomous institutions of the country. The universities should have the final say—maybe through comprehensive tests (if not included in the standardised tests) and interviews—when it comes to enrolment. The introduction of the new system, therefore, requires long and engaged discussions.

Lekha pora kore je, gari ghora chore shei!"— an idiom very familiar to Bengalis that promises "cars and horses", in other words, wealth, provided we studied sincerely.

As a fresh post-grad student, I'm toiling two days a week after work hours, sitting through three-hour night classes and breaking my neck over many assignments. And I'm yet to earn a "gari" (car) or a "ghora" (horse).

Despite working for seven years, it seems like skills in MS-Office or other apps fall short of being relevant when applying for jobs. Employers now put your logic and experience to test, to see how you tackle real-world problems they never wrote about in exam guidebooks.

Someone in an interview board once inquired, "If a colleague asks you for a confidential file under your reporting supervisor, what will you do?" Using my communications academic background, and my ad-hoc learned logic from past job experiences, I answered, hoping it was the best answer. Clearly it didn't work out the way I thought it would. After almost a decade, the realisation dawns: the textbooks from our years of formal education never mentioned the skills needed to succeed in the job market.

Add to that, the unrealistic "skill" expectations from employers that causes graduates to suffer from cognitive dissonance regarding their formal years of learning. Unemployment, occurs in the absence of right skills rather than scarcity of jobs. In 2019, a World Bank report found: one in three students remain unemployed right after graduation and only 19 percent of college graduates are being employed in full-time or part-time jobs; while the rest are unemployed ("One in Three Students Unemployed", The Daily Star).

With a majority of the youth sitting jobless, it's baffling to see that we're still clinging to the idea that, good grades ensure good jobs. Especially when the stats on unemployment suggests otherwise. Bangladesh Bureau of Statistics (BBS) shows that more than 46 percent of graduates remain unemployed; additionally, graduate tracking surveys from last year states that 30 percent of college graduates and 20 percent of university graduates have remained unemployed for over a year.

The impact of the asymmetry between knowledge read and knowledge learned in practice is most apparent when considering the bleak employment scenario for Bangladeshi youth, at a time where there are 2 million people entering the labour force every year as the World Bank says.

The reform of teaching practices (or the lack of it) in educational institutes is a tale as old as time. A major dent in our education system is the dependence on rote-learning. Addressing the issue, a 2015 report in this newspaper said that "as per a 2012 baseline survey on class-III students conducted under the Third Primary Education Development Programme, only 20 percent of students had the competence level of class-III, 30 percent had the level of class-I, and 50 percent had the level of class-II", stating further that teacher's insincerity is what contributes to the gap in learning.

We have received theoretical knowledge under local boards (SSC, HSC, Dakhil) or foreign boards such as Edexcel, Cambridge. Nurturing skills however was not an area explored by our alma mater. This dire need for trained teachers is reflected in their methods of teaching along with their proficiency in English. At the moment, 55 percent of English and mathematics teachers in secondary schools aren't equipped with any proper training in their respective subjects, says the Education Watch Report from 2018-2019. Looking back at my own schooling experience, I too can corroborate that many subject teachers didn't have a strong command over English, although they were following an English medium curriculum.

But despite knowing well there's a dearth of career-centric education in Bangladesh, employers expect candidates to think on their feet. So, imagine how puzzling it is, when students, regardless of which medium they were instructed in, applying for jobs get rejected without any scope for feedback which would include their lack of fluency in English and other job-related practical skills.

The problem isn't the inability to learn a foreign language, rather handling the rejection that comes with it. Rejection sans constructive criticism only makes a job seeker feel incompetent; and professional inadequacy at any level, is a big baggage to carry. So where to from here? There's academic merit, but spoken English isn't good enough, there's experience but the skills aren't befitting. You're now riddled with enough anxiety to make you second guess your abilities.

With the rising uncertainties, eager graduates are exposed to, inconsistencies of the advertised skills required in the job market. And I'm no stranger to this myself! In an attempt to transition my career in communications, I had accepted a job offer from an organisation, only to realise it was more content writing and less communications; and from there began the monotony of serial underemployment.

Many like myself, dive into the rat-race of earning big money—only to wind up in a workplace with strict hours and decent salary—but with work that gives no scope for learning, thus, killing whatever is left of one's creative skills or productivity. With the job market being a tight squeeze, many professionals surrender to underemployment for the sake of survival; and the 1.38 crore underemployed masses can vouch for this ("1.38 cr people underemployed", The Daily Star, 2019)!

Hence, it's imperative that educational institutes teach these skills to the youth prior to graduation, and make them better armed with employer-approved skills and knowledge before entering the job market. Furthermore, partnerships with skills developing bodies will help rectify the misconceptions surrounding good grades and employment in Bangladesh.

A skills heavy curriculum like Bangladesh Youth Leadership Center (BYLC) has helped in tackling knowledge, skills gap and unemployment among students in English, Bengali and Madrasa schools since 2008, through a plethora of opportunities such as job placement opportunities, career guidance, mentoring, training on strategic thinking and ability to communicate, thus mitigating the divide and discrimination between students and employers.

Similarly, if higher education was more subject specific, it could enable students to be more proactive when they are prepping to get in and out of jobs. For example, a journalism student, as part of the course, could be sent to shadow print or broadcast media journalists for a simulation of what the job entails.

If employers are looking for a communications expert with tech skills in Illustrator, InDesign or Photoshop, there should be a course or workshop that focuses on teaching the basics of such software. At the end of the day, what needs to be communicated to students is that, CGPA is merely an indicator of who to employ, the skills are what ensure job security.

While private universities are arranging job fairs regularly, there's no guarantee that access to an organisation, let alone an interview will happen instantly after applying. Employability is dependent on communication skills such as speaking, listening, constructively arguing, resolving conflict, coping with failure and participating in teamwork. Such workshops and training sessions, prior to graduation, will allow students to quote these abilities in their CVs, showing tangible proof that they aren't just book-smart.

There are many students who still firmly believe that a high CGPA might be their saving grace. But rising unemployment is a clear indicator of it being otherwise. The complacency towards this learning loop goes to show that we are also part of the problem. The reform we've been discussing for ages needs to be addressed and implemented by universities. If that pans out, maybe someday, the unemployed population and individuals like me can afford the "gari-ghora" that education promises.


Global stocks slumped again Friday to mark the largest weekly drop since the 2008 global financial crisis over fears the coronavirus could wreak havoc on the world economy.

Crude oil prices tumbled as well and analysts said central banks, especially the US Federal Reserve, might have to shift into crisis-resolution mode with urgent interest rate cuts.

Frankfurt headed the losses in Europe, shedding almost 3.9 per cent as the market closed.

Leading European stock markets have lost more than 10 percent in just one week, with London's FTSE 100, which fell by 3.4 per cent on Friday, dropping 11.3 per cent.

Wall Street also had another difficult day, with the Dow finishing down 1.4 per cent at 25,409.36, which meant a drop of more than 12 per cent for the week.

But US indices cut their losses after Federal Reserve Chair Jerome Powell released a statement saying the US economy remains  "strong" but vowing to  "use our tools" to provide support if needed.

The markets in Shanghai, Sydney and Tokyo all closed down 3.0 per cent, while Jakarta shed more than four per cent.

"The panic mode is full on," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

"The coronavirus outbreak has certainly hit businesses, and it might have a longer-than-expected negative impact on company earnings and global growth," she added.

Meanwhile, the Japanese yen continue to benefit from its status as a haven investment in times of economic uncertainty, making solid gains against the dollar.

Yields on 10-year US Treasuries hit new all-time lows.

Concern that global crude demand will crash meanwhile sent oil prices down again: in London, Brent crude fell 3.2 percent, while the US benchmark WTI crude dropped 4.9 per cent.

"Another day, another sell-off," remarked analyst Stephen Brennock at energy consultancy PVM Associates.

"Risk assets took a significant step lower... as market players continued to squirm with unease over the growing coronavirus crisis." In addition to central banks, governments also faced pressure to provide support.

French Economy and Finance Minister Bruno Le Maire said the virus would be considered  "a case of force majeure for companies," meaning they would not be penalized if they failed to meet deadlines on public contracts.

The virus has now proliferated worldwide, emerging in every continent except Antarctica, and prompting governments and businesses to curb travel and public gatherings.

On Friday, Nigeria reported the first new coronavirus case in sub-Saharan Africa, as the World Health Organization warned against the  "fatal mistake" of complacency. Iceland reported its first case too.

The Geneva International Motor Show was the latest major event to be canceled after Switzerland banned large gatherings.

The virus has killed more than 2,800 people and infected more than 84,000 since late December

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