Tuesday World Business News 1

SoEs owe four state-owned 
banks Tk 1,512 crore 
Staff Correspondent 

The classified loans amount of state-owned enterprises to four state-run commercial banks stood at around Tk 1512 crore till August 31st, 2008, up by about Tk 220 crore from its figure in three months back, sources in the banking sector said.
  The SoEs owe the highest amount of Tk 819.68 crore to Sonali Bank, followed by Tk 428.10 crore to Rupali Bank, Tk 247.51 crore to Agrani Bank and Tk 15.88 crore to Janata Bank in August, 2008, according to the latest figures compiled by the Bangladesh Bank.
  The public sector entities owed Tk 1292 crore to the four state-owned lenders up to May 31st, 2008. Of the amount, the SoEs owed the highest amount of Tk 602.24 crore to Sonali Bank, followed by Tk 429.28 crore to Rupali Bank, Tk 248.57 crore to Agrani Bank and Tk 10.94 crore to Janata Bank, according to the figures compiled by the Bangladesh Bank.
  Providing guarantee from the finance ministry in issuing loans to the financially ailing state-owned enterprises is a main cause for stockpiling of huge bad loans in the state-owned banks, bankers observed.
  ‘Sometimes, we become compelled to issue loans to state-owned enterprises, which suffer from shortage in their working capital or cash to pay salaries to their employees,’ a chief executive officer of a state-owned bank told New Age.
  ‘While providing loans to the SoEs, on many occasions the matter of feasibility of return of the loans had to forgo due to the status of the enterprises,’ he added.
  An executive of Sonali Bank said the finance ministry on many occasions gave guarantee for re-payment of the loan money in favour of the SoEs.
  As per the latest figure, Bangladesh Jute Mills
  Corporation alone accounted for about Tk 902.79 crore or 60 per cent of the total classified loans amount followed by Bangladesh Textile Mills Corporation for Tk 235.99 crore, Bangladesh Chemical Industries Corporation for Tk 89.87 crore, Bangladesh Agriculture Development Corporation for Tk 21.27 crore, Bangladesh Shipping Corporation for Tk 8.33 crore, BFFWT for Tk 12.09 crore and BTB for Tk 10.90 crore.
  The boards of directors of three corporatised banks — Sonali, Janata and Agrani — are expected to take serious
  steps in lending to SoEs, considering their unsatisfactory performance as clients, sources said.
  ‘We will raise the issue to the finance ministry to solve the problems immediately,’ the chairman of a corporatised state-bank told New Age.
  ‘We are ready to disburse agriculture loans among farmers on lower interest rates, but we can no longer afford to lend money to the SoEs to increase our bad debt burden more.’ 
Two lakh festival tourists expected 
Our Correspondent . Cox’s Bazar 

Beach resort town Cox’s Bazar is gearing up for hosting at least two lakh local tourists in the first two weeks of October which will see two biggest religious festivals Eid-ul-Fitr and Durga Puja.
  Hospitality industry people said accommodations in almost all the 110 residential hotels and motels and 50 guesthouses were booked in advance, and festival tourists already started pouring in.
  District administration and law enforcing agencies have taken up measures to ensure safety of travellers, mostly coming with families.
  Abul Kasem Sikder, general secretary of Cox’s Bazar Hotel-Motel Owners’ Association, said they estimated that the beach town would see more than two lakh tourist arrivals. Almost all the hotels, motels and guesthouses have already been booked from October 1 to 12, he informed.
  Deputy commissioner Manjur Alam Bhuiyan on Monday chaired a meeting that discussed the law and order situation of the town, sea beach and other tourist sites like Himchhari, Chokoria safari park, Moheskhali and St. Martin’s islands and Teknaf.
  District commanding officer Lt. Col. Mostahidur Rahman, additional superintendent of police Imam Hossein, senior administration officials Arifur Rahman and Omar Farook, Bangladesh Parjatan Corporation official Sujit Barua and Hotel Seagull managing director Masum Iqbal were among those who attended the meeting. 
State lenders owe NBR Tk 895cr 
in tax arrears 
Asif Showkat 

National Board of Revenue has asked the finance ministry to pay Tk 895 crore in income tax arrears of eight state-owned commercial and specialised banks, ministry officials said.
  These banks did not pay any income tax for the last 22 years since 1986-87 fiscal, the revenue authority said in a letter Monday, requesting the ministry to make the payment from its specified head of expenditures.
  ‘The payment of long overdue tax money will help the NBR meet its revenue income target,’ said a high official of the finance ministry.
  He said the ministry would prepare a proposal to release Tk 895 crore after eid vacation and send it to finance adviser Mirza Azizul Islam for approval.
  Bangladesh Shilpa Bank owes Tk 42 crore in income tax arrears accumulated for 22 years, Rajshahi Krishi Unnayan Bank Tk 4.72 crore and Bangladesh Krishi Bank Tk 89 crore.
  Unpaid income tax of Janata Bank totaled Tk 316 crore, Sonali Bank Tk 279.63 crore and Rupali Bank Tk 48 crore, while Pubali Bank owes Tk 80 lakh.
  The revenue board realised tax arrears of Tk 1,300 crore from Bangladesh Petroleum Corporation through budgetary provision in the last fiscal year. 
Prices of traditional Eid food 
items shoot up as usual 
Staff Correspondent 

The prices of some food items including beef, chicken, certain vegetables, sugar, edible oil, pilau rice, spices and shemai have increased further in the city’s market in the past couple of days.
  Market sources said that in accordance with their traditional practice, traders want to reap windfall profits from Eid shoppers, so they started raising prices from the Shab-e-Kadr on Saturday.
  Beef cost between Tk 200 and Tk 240 per kilogram on Monday against Tk 180 to Tk 200 just three days ago in the different markets of the city.
  Bengal Meat, a supplier of chilled and packaged beef, has raised its retail price to Tk 235 per kilogram from Tk 210.
  The prices of live broiler chicken, which were between Tk 120 and Tk 130, went up by Tk 10 in just a couple of days.
  The retail price of cucumber, carrots and tomatoes also increased in the past two or three days as their demand increased due to the need for salad in every home on the Eid day.
  ‘There is reckless profiteering by traders during any festival because the consumers are helpless then,’ said Haji Mosharaf Hossain, a shopper at Mahakhali bazaar.
  Pilau rice, which was selling for prices ranging between Tk 110 to Tk 120 per kilogram, became costlier by Tk 10 in a week and Tk 20 in month.
  In the past one week the prices of spices, especially cardamom, cinnamon, clove and cumin, increased by Tk 50 to Tk 100 per kilogram.
  The price of liquid milk also increased in different areas of the city as its demand increased sharply ahead of Eid.
  In many areas of the city a one-litre pack of liquid milk, of different brands, cost between Tk 55 and Tk 60 on Sunday against its regular price of Tk 46 to Tk 50.
  ‘Many people prefer to prepare shemai and other Eid day sweetmeats by using liquid milk, so the demand rises sharply,’ said Abu Taher, a grocer at New Market.
  The prices of vermicelli or shemai also increased sharply this year as traders said the price of flour and vanaspati increased sharply.
  Non-packed and unflavoured long shemai cost between Tk 55 and Tk 65 per kilogram, up by Tk 10 over the year, while non-packed lachchha shemai cost between Tk 120 and Tk 160 against Tk 80 and Tk 120 last year.
  The popular 200-gram pack of lachchha, of different brands, cost between Tk 26 and Tk 30 while lachchha of famous brands cost up to Tk 400 per kilogram.
  The prices of edible oils, after declining in the previous few weeks, increased again as traders said there is a fresh uptrend in their prices in the international market, and the higher demand before Eid has pushed up the prices.
  Non-packed super palm cost between Tk 85 and Tk 90 per kilogram in different outlets against Tk 80 a week ago. 
US bailout agreed but financial 
crisis hits Europe 
Agence France-Presse . New York 

US lawmakers agreed a 700 billion dollar bank bailout but the financial hurricane hit European banks full on Monday forcing nationalisations, rescues and a new stocks slump.
  After US lawmakers stitched together a revised agreement on the biggest state intervention since the Great Depression of the 1930s, Britain had to nationalise Bradford & Bingley bank, governments intervened to prop up Belgian-Dutch group Fortis and other European banks got sucked into the storm.
  European and Asian shares were badly hit.
  The US House of Representa-tives was to vote Monday on the plan negotiated through the weekend by rival Democratic and Republican leaders with the White House. But the package was not certain to be passed.
  President George W Bush said the rescue 'sends a strong signal to markets around the world that the United States is serious about restoring confidence and stability to our financial system.'
  But some conservative Republicans and liberal Democrats steadfastly opposed the plan, which includes the immediate release of 250 billion dollars to enable the government to buy up troubled assets.
  'We now have a deal that promises to bring near-term stability to our financial turmoil, but at what price?' Republican Congressman Michael Pence, a critic of the bailout, asked in a letter to colleagues.
  And White House hopefuls Republican John McCain and his Democratic rival Barack Obama offered only cautious backing.
  'The party is over,' said House Speaker Nancy Pelosi. 'The era of golden parachutes for high-flying Wall Street operators is over. No longer will the US taxpayer bail out the recklessness of Wall Street.'
  But any relief internationally came too late for Fortis, one of the biggest banks in northern Europe, which was rescued by Benelux governments for 11.2 billion euros ($16b) at the weekend. Fortis shares rallied by 14.5 per cent in initial trading after crashing last week.
  European shares were badly hit by the uncertainty over the US plan and the bad news.
  Stocks in London dived by 2.51 per cent, Frankfurt shares fell 3.16 and Paris was down 2.87 per cent after Tokyo fell 1.26 per cent and Hong Kong lost 4.3 per cent.
  'Despite the US bail out plan now being committed to paper, there's hardly a jubilant mood expected as the new trading week gets underway,' said CMC Markets dealer Matt Buckland in London.
  'The fact the funds won't be released in one lot but instead a series of tranches is certainly detracting from its appeal.
  'This, combined with the very visible scars of the credit squeeze ... will again weigh in sentiment,' he added, in reference to the B&B and Fortis rescues.
  Barclays Capital analyst David Woo said: 'In our view, while the 'bailout plan' reduces the risk of a systemic collapse, many downside risks remain -- not least those related to a protracted slowdown in the global economy.
  'In addition ... the financial market turbulence is seriously affecting the European financial system as well.'
  He added: 'The weakness in equities ... suggests the market is pessimistic about the likely effectiveness of the Treasury's plan.'
  Motomi Hiratsuka, a trader at BNP Paribas, said: 'We know that we are most likely to avoid a meltdown in the US financial sector, but what matters now is negative news from new regions.'