keystone quarterly review · plicity with such activities; ... and 4 foreign commercial banks) ......

Continued in pg. 20

Political Violence Threatens Stability and Growth Ever since the highly questionable January parliamentary election and the subsequent Upazila elections,

the law and order situation within Bangladesh has continued to deteriorate. Local and regional politi-

cians now openly collaborate with the underworld elements, struggling for the control of government

properties and resources; segments of law enforcement agencies have lost credibility due to their com-

plicity with such activities; and there are talks of bringing back the ‘Black Law’ to stifle the media. This

has already taken a negative toll on the economy, with 11 banks (3 state-owned banks, 4 private banks,

and 4 foreign commercial banks) experiencing a negative lending growth, and according to BOI, foreign

investment proposals have fallen by 56.5 percent from the first quarter to the

Slowdown in Remittance The export of manpower is the primary source of foreign currency receipt for Bangladesh. The annual

remittance (currently at USD 14.2 billion) ranks ahead of woven garments (USD 12.4 billion) and Knit-

wear fabrics (USD 12.1 billion). Remittance has been playing a very significant role towards Bangla-

desh’s sustainable economic development and poverty alleviation. Most of the expatriates from Bangla-

desh are working in Saudi Arabia, UAE, Malaysia, UK, Kuwait, USA, Oman, or Singapore. Besides, new

employment opportunities for Bangladeshi workers have also been created in Bahrain, Qatar, Jordan,

South Korea, Brunei, Mauritius, and Italy among others.

Keystone Quarterly REVIEW

Apr-Jun 2014

Contents

Politics: the Command Post

www.keystone-bsc.com

Continued in pg. 17

Social Safety Nets in Bangladesh: Achievements and Challenges

Pg. 1, 2-5, 21

Political violence threatens stability and growth

Pg. 1, 20-21

Slowdown in Remittance Pg. 1, 17-19

Graduate Unemployment in Bangladesh Pg. 6-8, 22

Flower Production, Export, and Marketing in Bangladesh

Pg. 9-10, 22

Economic Indicators Pg. 11-15

Energy Indicators Pg. 16-17

News Update Pg. 23

References and Contact Pg. 24

Economic Trends

Lead Story

Keystone is a premier consulting company that provides comprehensive solutions and intelligence for businesses and organizations.

Volume 8

Social Safety Nets in Bangladesh: Achievements and Challenges At its inception, social safety net programs

(SSNPs) in Bangladesh were of two types, cash or

in-kind transfer to the poorest. The general de-

velopment paradigm of recent years has recog-

nized two key facts about poverty: i. the large

role that vulnerability plays in defining and per-

petuating poverty, and ii. the sustainable growth-

risk-poverty nexus, whereby Continued in pg. 2

Note: Data sources are listed in page 24

Keystone Quarterly Review


natural and social risks pushes the poor

into deeper poverty which in turn hinders

economic progress and subsequent trickle

-down effects. By protecting vulnerable

households against livelihood and food

security risks, SSNPs create a favorable

path towards sustainable and pro-poor

growth, making them an essential tool in

fighting poverty.

Despite improvements in poverty situation over the past decade, incidence of poverty has remained

quite high in Bangladesh. Table I presents a snapshot of poverty condition in Bangladesh. HIES 2010

estimated that 31.5 percent households (roughly 50 million people) were living below upper poverty

line. Furthermore, about 56 percent of these poor (about 28 million people) have an income inadequate

to meet basic food and nutritional need. This is an improvement from the historically observed levels

(for example, poverty level was 57 percent in 1990 and 40 percent in 2005). SSNPs were essential in

this reduction in poverty level. In 2010, 24.6 percent (30.1 percent of rural and 9.4 percent of urban)

households received benefits from SSNPs whereas in 2005, this was only 13 percent. Although contribu-

tion of SSNP in fighting poverty has been commendable, there remain questions about efficacy in target-

ing of beneficiaries – whether or not benefits are reaching the poorest; quality of implementation; and

leakages.

Regulatory Framework of SSNP in Bangladesh

The Government of Bangladesh (GoB) implements a wide array of SSNPs. These programs address pov-

erty and vulnerability from a broad perspective, including education, health and nutrition, employment,

and disaster response programs targeted to the poor. At least 23 ministries are involved in planning and

implementation of SSNPs in Bangladesh with Ministry of Disaster Management and Relief (MoDMR)

being the most important. Department of Disaster Management (DDM) under MoDMR undertakes risk

reduction and humanitarian assistance programs. DDM aids MoDMR through knowledge creation, exe-

cution and co-ordination among stakeholders in formulation, review and execution of legislations, poli-

cies and guidelines relevant to safety net programs. MoDMR has delegated the tasks of its various pro-

grams to the Deputy Commissioner (DC), Upazila Nirbahi Officer (UNO), Project Implementation Officer

(PIO), Union Committees, Ward Committees, tag officers (officers from other departments/ministries,

appointed to monitor implementation in some of the program) and contractual field supervisors for

Employment Generation Program for the Poorest (EGPP).

Evolution of SSNPs in Bangladesh: 1950s onwards

SSNP in Bangladesh has been shaped by natural disasters and broad social context of the country. Histo-

ry of SSNPs in Bangladesh can be traced back to as early as 1950s with the Comilla model of integrated

rural development. These programs pursued goals of providing employment in slack seasons and of

rural infrastructural development. Food grains received as aid was used in most cases as remuneration

for the poor people working under the programs. Hence, these programs came to be known as Food for

Work (FFW) programs. Following the famine of 1974, FFWs were significantly scaled-up around the

country. However, following the dual flooding of 1987 and 1988, concerns were raised about the dis-

persed focus of FFW (and other similar programs). It was recognized that SSNPs have to be expanded to

cover particularly vulnerable groups.

Conditional Cash Transfers (CCTs) were started in early 1990s with the objective of promoting women

education. Following the 1998 flood, post-disaster food security programs such as VGF became an im-

portant part of the SSNP portfolio. Since the turn of the century, 5 major developments have taken place

in the safety net portfolio:

% of population living under upper poverty line

Average Monthly House-hold Income (BDT)

Year 2005 2010 2005 2010

National 40 31.5 7,203 11,480

Urban 28.4 21.3 10,463 16,477

Rural 43.8 35.2 6,096 9,648

Table I: Poverty and Income in Bangladesh: 2005-2010

Source: Household Income and Expenditure (HIES) Survey 2010, 2011



Sharper focus on geographic targeting;

Greater focus on employment;

Attempts at structuring safety nets within an integrated and comprehensive framework;

Movement away from in-kind transfer towards cash transfer to program beneficiaries to prevent wastage and leakage;

An effort to integrate MIS in program management.

Overview of current SSNPs in Bangladesh

The government of Bangladesh plans to increase public

expenditure on SSNPs to 3 percent of the country’s

GDP by 2015. In FY 2012, a total of BDT 253.7 billion

has been allocated for social protection SSNPs in Bang-

ladesh, accounting for 11.4 percent of the total budget,

which was 1.4 percent of GDP, according to an ADB

estimate. This compares poorly with other South Asian

economies. Figure 1 compares Bangladesh`s social pro-

tection spending as a percentage of GDP with other

countries.

Total expenditure on SSNPs can be divided into 4 broad categories of SSNPs: i. employment generation

programs; ii. programs to cope with natural disasters and other shocks (emergency relief); iii. Transfers,

and iv. CCTs. Currently, there are about 98 specifically designed SSNPs in Bangladesh. Despite a large

number of programs, the top 5 programs implemented by MoDMR accounts for a third of the total allo-

cation.

SSNPs in Bangladesh are more prevalent in poorer districts. This is known as geographic targeting. Ta-

ble II shows the division-wise percentage of population receiving benefits from SSNPs and divisional

poverty level. Proportion of households receiving benefits from SSNP is highest in divisions with high

poverty headcount, such as Khulna (32.1 percent), Barishal (39.4 percent), and Rangpur (42.3 percent),

and lowest in divisions with low poverty headcount, such as Dhaka (30.5 percent) and Chittagong (26.2

percent).

In recent years, the rural-urban difference in coverage has widened, with greater focus being placed on

the rural regions. However, rapid urbanization is taking place in Bangladesh with an average urban

growth rate of 3.6 percent. 40 percent of the urban population live in slums and squatters and estimates

suggest that as many as 87 percent of urban population is working in the informal sector. If these trends

continue, SSNP coverage in urban areas may have to be scaled-up soon.

Figure1.: Share of GDP spent on social protection

Source: ADB, 2012

Figure2. Program Category-wise alloca-

tion in SSNP, FY 2011-12

Source: Bangladesh Ministry of Finance

Division Upper Poverty Line

Headcount (%)

% of Household Receiving Benefit

Overall Rural Urban

National 31.5 24.57 30.12 9.42

Barisal 39.4 34.43 37.20 20.66

Chittagong 26.2 19.99 24.50 7.44

Dhaka 30.5 18.87 27.80 5.99

Khulna 32.1 37.30 43.27 16.66

Rajshahi 29.7 20.66 22.85 10.17

Rangpur 42.3 33.65 35.11 23.68

Sylhet 28.1 23.51 26.06 10.50

Table II : Geographical Targeting SSNPs, Bangladesh

Source: BBS, 2011



Greater attention has also been paid to seasonal vulnerability in recent years (assistance during monga

period, for example). However, implementation has been poor. For instance, EGPP is aimed to provide

employment for rural agricultural laborers during the lean period from October to December and from

March to May. However, MoDMR website reveals orders to complete implementation of EGPP by the

end of June, a period that coincides with the harvesting season. This defeats the primary purpose of the

program. In addition to assuring timely allocation and implementation, targeted coverage will have to

be extended, specifically to the southern coastal areas and haor areas that are exposed to extreme cli-

mate cycles and shocks.

Ground-level reality of SSNP implementation in Bangladesh

Operation manuals are rarely followed in implementing SSNPs. In some workfare programs, such as

such as EGPP, operation manual mandates miking and other publicity activities to inform the people

about the program and to invite applications from aspiring beneficiaries. In humanitarian assistance

and CCT programs, a list of potential beneficiaries is supposed to be maintained, and updated, regularly

at Union/Ward office level. However, beneficiaries are often selected at the discretion of the Ward Mem-

bers, Union Parishad Chairpersons (UPCs), and other implementing officers, often in exchange of mon-

ey. Ghost beneficiaries, overlapping coverage, complete capture of fund by elites, and depriving individu-

als or communities based on political affiliation is common. In case of workfare programs, it is also com-

mon to find projects selected on the basis of personal gain of elites and use of heavy machinery to com-

plete projects that contradicts the essence of workfare programs.

The beneficiary and project lists are sent from Union/Ward level administration to Upazila or District

level for verification purpose. Implementation guidelines are available for almost all of the major SSNPs

with detailed guidelines of monitoring and supervision needs. Common monitoring tools include site-

visits, maintaining muster-rolls, measurement books, et cetera. However, monitoring activities are spo-

radically done. Three issues including i. political pressure to overlook local elite’s misuse of funds, ii.

lack of manpower in relation to workload, and iii. misappropriation by implementing officials lead to

poor quality of monitoring and reporting. The situation is further exacerbated by the lack of appropriate

motor-bikes for monitoring purpose, or availability of computer and internet connection for record-

keeping, in many Upazila and Union Parishads. A lack of independent verification of reports received

from Upazila level is another big issue.

Payment mechanism requires changes as well. Payment in food-grains is unpopular for two reasons: i.

many workers/beneficiaries are unwilling to take food-grains as payments/benefits; they prefer cash,

and ii. the listed-price of the allocated food-grains are usually significantly higher than the market price;

this makes the task of project implementation committees very difficult. Another major concern is the

quality of the allocated food-grains. Leakages are also high for food-grain allocations. As a result, the

MoDMR has a made a move to move away from food-grain transfers to cash transfers. However, this too

is not without some concerns. With food-grain allocations, price fluctuation of staples can be stabilized

around the country. Discontinuation of food-grain allocation may lead to greater suffering of the poor-

est. Furthermore, leakages are high for cash transfers as well. Payment mechanisms are often not fol-

lowed for the following reasons:

It is argued that the necessary paperwork is significantly high and will deter poor people from the

programs if all requirements are to be met;

Sometimes, manipulation of process flow takes place for misappropriation of funds, through the use

of ghost workers, muster-roll manipulation, et cetera;

Sometimes, the manipulation of processes is forced. Work begins as soon as the allocation is made

centrally by MoDMR to Upazilas and by Upazilas to the Unions. However, delay in fund reaching the

banks forces the concerned implementation officers to find a way to pay the workers/beneficiaries.



Furthermore, Mis-targeting, non-poor population receiving SSNP benefit, is common in Bangladesh. Ac-

cording to HIES (2010), safety net coverage has been extended to nearly 25 percent of population. How-

ever, an International Food Policy Research Institute (IFPRI) in 2013 has revealed that in case of some

SSNPs, about 60 percent of beneficiaries were not poverty-stricken. Personal or political affiliations,

rather than level of poverty, often become the underlying selection criterion at ground level. This im-

pedes the primary objectives of SSNPs.

Payment in cash, through banks, may still be the best option for SSNPs. However, timely allocation of

funds and strict monitoring and record-keeping has to be maintained at banks. Furthermore, to improve

targeting, a Bangladesh Poverty Database (BPD) may be developed.

Issues of SSNPs in Bangladesh

Benefit amount is another contentious issue. In monetary terms, average benefit received from SSNPs

was measured at BDT 483 per household at national level . Ahmed, Narayan, and Zaman (2009) found

that benefits from the public SSNPs are inadequate, arguing that, ‘…food benefits from VGF and usual ben-

efits from the cash programs are just 21 or 31 percent of the lower poverty line, respectively. Even in the

VGD program where wheat allocations are three times that of VGF program, the benefit package amounts

to only 62 percent of the lower poverty line’. Currently, the compensation provided in workfare programs

such as EGPP is lower than usual market rate, intended to promote self-selection of beneficiaries. Given

that majority (61 percent) of the households in Bangladesh has a single earner in the family, and with

4.5 members per family, on average in rural areas, the compensation translates to about BDT 880 a per-

son for 20 percent of families in rural areas and is well below the poverty line.

Transparency and accountability condition in SSNPs is unsatisfactory, with beneficiaries’, as well local

communities’, awareness of programs quite low. Usually, the whole of project and beneficiary selection

process is conducted with minimal transparency and publicity, with local community members having

little or no participation. A PPRC study found that signboards providing basic information about the

project were not found in many instances. Lack of community involvement hinders valuable inputs from

community members and at the same time creates a situation conducive for political capture of alloca-

tion and process.

Another major problem lies in the administrative structure of SSNPs. A large number of intermediaries

are involved in entire process of decision-making, monitoring, and reporting. Government officials often

complain about the lack of literacy among Ward Members which results in deviation from operation

manuals and project designs in workfare programs. In addition, it is also complained that the volume of

paper-work necessary to implement SSNPs is significantly high.

Lack of an independent complaints registration and redressal committee is another major issue, as the

complaints are usually about various program functionaries, who are also the complainees.

The Way Forward for SSNPs in Bangladesh

SSNPs have made valuable contribution towards reducing poverty and vulnerability of some of the most

economically disadvantaged population of the country. In addition, it has also contributed, as well as

benefited, from economic development of the country. However, further contribution is stunted with

administration, leakage, and targeting issues. Considering the country context, necessary reforms in

SSNP include:

Development of an integrated system of digitized poor list to improve targeting of beneficiaries;

Development and maintenance of Union development plans to improve project selection;

Continued in pg. 21



Despite shortage of skilled labor being cited as an impediment

towards economic growth of developing countries, paradoxically,

large portion of university graduates – presumably the most

skilled portion of labor force – are without jobs. A recent report by

Economic Intelligence Unit (EIU) has placed the graduate unem-

ployment rate of Bangladesh at 47 percent. Only Afghanistan (65

percent) has a higher graduate unemployment rate in South Asia.

Bangladesh is heading towards a major demographic transition. The percentage of population between

ages 15-64 rate has increased from 60.9 percent (2004) to 65.2 percent (2013) in a span of just 10

years. By 2020, the country is projected to have more than 31 million and 115 million people between

ages 15-24 and 15-64, respectively. This presents the country with a rare window-of-opportunity to

earn demographic dividends. High quality education and employment assurance will facilitate skill de-

velopment which would allow the country to mobilize its youth bulge to attain productive transfor-

mation necessary to join the league of Middle Income Countries (MICs).

Synopsis of Graduate Education in Bangladesh

Tertiary level enrollment rate in Bangladesh has been historically lower than its neighboring countries.

Figure 1 shows GDP per capita level and enrollment level in Bangladesh, India, and Vietnam in 2000 and

2011.

Against an income level of USD 356 per capita, Bangladesh had a tertiary enrollment rate of 5.43 percent

in 2000, almost half of India (9.5 percent) and Vietnam (9.3 percent). By 2011, tertiary enrollment rate

in Bangladesh increased to 13.5 percent, more than half of India and Vietnam, despite the Bangladesh’s

income being less than half of India and Vietnam. High enrollment rates made way to an unprecedented

level of graduate education in Bangladesh, with about 20 million students admitted in universities or

affiliated colleges. In 2012, 60 private

and 32 public universities offered

190,646 (78,702 remained unfilled) and

58,818 seats respectively. In addition to

these, the number of seats in open and

national universities was 629,475

(81,114 remained empty). More than

two-thirds of the seats were offered at

undergraduate level. Enrollment has

not been uniform across disciplines.

Figure 2 shows enrollment in different

discipline in the year 2012:

Cloud in the Horizon Graduate Unemployment in Bangladesh

Figure 1: Comparison of Income Level & Tertiary Enrollment in Bangladesh, India and Vietnam

Source: Data from World Bank & UNESCO

Figure 2: Discipline-wise Enrollment in Bangladesh, 2012

Source: University Grants Commission, 2012 Bangladesh


Total number of enrolled students, at 2012, was highest in humanities and arts (642,095 enrolled stu-

dents), followed by business (512,111), and social science (470,379). By comparison, students enrolled

in medicine, science, engineering, and agriculture (combined) was only 287,021. Enrollment pattern

also varies among public, private, open, and national universities. 88 percent of all arts and humanities

students are enrolled in open and national universities whereas 80 percent enrolled students in private

universities are engineering, business, of law students.

Graduate Job Market in Bangladesh

Table I below shows major occupational classes` growth rates and 2010 shares.

Employment growth has been uneven. Overall

employment growth in 2005-10 was 3.2 percent.

Administrative and managerial positions record-

ed a 28.2 percent growth in 2005-10 periods

whereas clerical employment decreased. It is sur-

prising that students with masters degree make

up 8 percent of clerical jobs, pointing towards

possibility of underemployment of graduates as

well. The EIU recently undertook a study of high-

er education in South Asia on behalf of British

Council. Table II shows their estimated graduate

unemployment rate.

Graduate unemployment in Bangladesh is estimated at 47 percent. This is very high comparing with

neighboring countries such as India (33 percent), Pakistan (28 percent), and Sri Lanka (7.8 percent).

Several worrying and perplexing trend emerges from Labor Force Survey (LFS) 2010 data. The unem-

ployment rate among the people with masters degree (11.5 percent) is higher than those with bachelors

degree (0.43 percent). The unemployment rate among doctors and engineers is 14.7 percent (31 per-

cent for females, and 48 percent for rural females) – a tremendous waste of valuable human and finan-

cial resources, depriving the rural population of badly needed access to basic healthcare.

Explaining the Paradox

An unemployment rate among graduates begs the question of whether the country needs as many grad-

uates as it is producing. Yet, most sectoral analysis concludes skill-shortage to be a major impediment

towards growth. Sectors such as RMG, IT, healthcare, agro-processing, development, manufacturing, and

infrastructure development has been reported to face sever skill-shortages. The explanation is that the

country is not producing the right kind of graduates.

The disconnection between market needs and the curriculum of higher education institutions is a major

contributor to high levels of graduate unemployment and underemployment. There is historical

Graduate Unemployment in Bangladesh

Table I: Employment scenario for tertiary students

Occupation Overall

growth rate in % (2005-10)

Graduate level (2010)

Masters level (2010)

Engineering and Medical (2010)

Technical & Vocational

(2010)

Professional & technical 1.88 20.24 14.59 2.33 1.33

Administrative, managerial 28.2 9.14 11.61 1.02 0.15

Clerical -0.34 13.79 7.99 0.5 0.6

Service workers 2.12 1 0.37 0.1 0.06

Sales workers 4.89 2.6 1.21 0.1 0.18

Agro-fisheries 2085 0.15 0.3 0.03 0.06

Production & Transportation 3.95 0.62 0.35 0.04 0.09

Source: Labor force Survey (LFS) 2010

Table II: Unemployment in South Asia

Country Graduate unem-ployment, latest

available (est.) (%)

Total country unemployment

(2012) (%)

Afghanistan 65 NA

Bangladesh 47 5

India 33 8.5

Nepal > 20 NA

Pakistan 28 6

Sri Lanka 7.8 4

Source: EIU, 2014


precedence for this (for example, the first public textile university in Bangladesh was established in

2011, 3 decades after the industry took off). Arts and humanities, with no real market demand, account

for a large share of the students (31 percent) enrolled in graduate or higher studies. These graduates

are being forced to work in administrative and managerial fields. This disconnect is less pronounced in

private universities, with their enrollment trend in line with actual market demands.

Another big issue is the quality of graduates. Many of the businesses complain about lack of soft-skills:

English language, computer, communication, and problem-solving skills. The University Grant Commis-

sion (UGC) has admitted to the lack of quality, stating that although graduate education has been ex-

tended, quality has not been at par in some universities. Factors such as outdated curriculum, lack of

effective quality assurance, and a dearth of effective accreditation and quality assurance mechanisms is

a constant shortcoming. Course grades are often wholly based on the performance in written exams,

with less emphasis on presentations, case studies, and other analytical assignments. Pre-tertiary educa-

tion also promotes a culture of rote-memorization that prevents development of problem-solving mind-

set. Although steps have been taken to overcome these problems at primary and secondary level, there

is a long road ahead.

Weak governance and low salaries have been an issue in retaining and attracting the sector’s top talent.

The situation is exacerbated with politicizing appointments in administrative positions (such as VC) or

academic positions (such as professor) in the universities. Lack of incentives and limited access to re-

sources are the main challenges toward enhancing the quality of faculty members.

Effects of Graduate Unemployment

The young-demography of Bangladesh places the country in position to earn demographic dividend.

Demographic dividends arise in 2 ways: (i) via declining dependency ratio, something that the country

is already enjoying, and (ii) via productivity gains, through increased education and training of youth

coupled with investment in high value-added industries. Lack of skilled labor force has always been

identified as a barrier to attract foreign investment to Bangladesh. This is especially true for some of the

key industries identified in Perspective Plan of Bangladesh (2010-2021) as potential drivers of growth.

Such industries include IT, ship-building, and high-value RMG among others. If the mismatches between

labor market demand and supply are not reduced, shortage of skilled-labors would continue to be a bar-

rier towards economic progress. In addition, graduate unemployment is a barrier to productive trans-

formation of economy. The path from LDCs to MICs is demarcated by moving resources from production

to low-value added products such as RMG to higher value products.

It has been observed worldwide that wage and salaried workers’ share in the economy almost doubles

during transformation from an LDC to Lower Middle Income Countries. Share of employment by wage

and salaried workers is 31.7 percent in LMIs whereas it is more than 20 percent in Bangladesh. Gradu-

ate or tertiary-educated youth are the most skilled in the economy and are necessary for entry in high

value-added product industries. Hence, graduate unemployment may be a roadblock towards produc-

tive transformation required for Bangladesh to move towards LMI country status.

Recommendations

The usefulness of tertiary-level education is often determined by the economic and social realities and

the aspirations of the country. Keeping this broad context in mind, some necessary measures to miti-

gate graduate unemployment problems have been identified. They include:

Enrollment and job market demand has to be kept in line. The private universities have performed

well in realizing and responding to market conditions. The onus, now, is on public universities.

Network of co-operation between employers and education providers can be established, following

the example of Indian IT industry, to ensure convergence between skill requirement and availability.


Continued in pg. 22



Silver Lining

Commercial flower production in Bangladesh is a fast growing

sector with potentials to be one of the leading export industries of

the country. Commercial flower production started in Bangladesh

in the early 1970s and grew robustly in the 1980s as large-scale

production began in Jhikargacha upazila of Jessore district (Khan,

2013). Jessore, Chittagong, Cox’s Bazar, Rangpur, and few other

key districts has turned out to be the major flower producers,

comprising of 70% of flower-production area, and are the homes to

about 4,500 flower farmers. Currently, 10,000 hectares lands are used for country’s flower cultivation

(BSS, 2014).

Factors such as climate, workforce, and development of

retail-chains in the urban areas; rising incomes; and popu-

lation have contributed to growth of the industry (Khan,

2013). The flower industry in Bangladesh is dynamic and is

gradually reaching out to the global market, with the pre-

sent export volume, USD 16.6 million, expected to grow

15% annually.

Stakeholders of Flower Industry

Stakeholders of this industry include farmers, investors,

traders (both wholesaler/retailers and exporters/

importers), and the end-users. The government will be needed to act as a facilitator as well. However,

most importantly, the farmers, the backbone of the industry, will need support in the form of finance,

access to market through necessary infrastructure for product marketing, technological knowhow of

flower cultivation etc. Initiatives are needed from both the government and private sector to boost flow-

er production, to extend market facilities, transportation, build processing plant, etc, to turn this indus-

try into a substantial source of employment generation and foreign exchange earnings.

Domestic Market

The demand for flowers in the domestic market is increasing. The current volume of production is inad-

equate to meet the demand for domestic consumption. Several varieties of flowers such as chrysanthe-

mums, tuberoses, gladioluses, orchids, gerberas, anthuriums, and Thai-roses are imported. BDT 2-3 mil-

lion are spent every year to import flowers, ornamental foliage etc. Flower imports increased 5-folds

between 2002 and 2007, and the trend is expected to continue unless domestic production can keep

pace with the increasing domestic demand. The demand-supply gap of 30% is mainly for the upscale

urban population of Dhaka. To meet the demand of this high-end clientele, retailers prefer imported

flowers. Therefore, there are ample opportunities for local flowers to meet the demand of domestic con-

sumption (Khan 2003).

International Market

Bangladesh export flowers to countries such as

France, Germany, Italy, Japan, Switzerland, UK, USA,

et cetera. The global-market of floriculture is cur-

rently facing a 6% annual growth rate, rising from a

USD 100 billion dollar industry in 2003 to around

USD 181 billion dollars by 2014.

Flower Production, Export, and Market-ing in Bangladesh

Figure 1: Growth Prediction of Flower Export in

Bangladesh (Millions of USD)

Source: EPB Flower export exceeds target, Dhaka

tribune

Figure 2: Global Market Floriculture Industry Export volume

(in USD billions)

Source Floral Industry


The floral export basket for Bangladesh consists of tuberoses, roses, orchids, and other types (BSS,

2014). Currently, country’s flower market is estimated to be valued at about EUR 95 million. According

to a report by Bangladesh Sangbad Sangstha (BSS), the industry exceeded its target by 10.6% during the

FY2011-12, earning USD 35.02 million. According to Bangladesh Export Promotion Bureau (BEPB), this

growth-rate for FY2013-14 exceeded 15%. However, there are steep competition from key players such

as Holland, Kenya, Israel, Columbia, and other flower producing countries. An estimate of market share

projects that Holland is the industry leader, with 59% market-share while Columbia 10%, Italy 6%,

Spain 2% and other countries comprise of 24% total market share. As the industry is growing, Bangla-

desh has potentials to be a major player in flower production and export.

Regional Competitors

Thailand is the world’s fourth-largest exporter of cut-flowers. A wide-range of cut-orchids is exported

annually, with average amounting to $65.37 million in 1993 and $68.20 million in 1994 . Thailand gen-

erally exports orchid cut-flowers to Japan, Italy, Germany, Netherlands, Taiwan, USA, and other coun-

tries. Currently as of 2014 this export has experienced a stellar growth to over 100 million dol-

lars (Sahavacharin 2014). India Government of India has identified floriculture as a sunrise industry

and has accorded it 100% export-oriented status. Owing to the steady increase in demand of fresh cut-

flowers, the floriculture industry has become one of the important Commercial trades in Agriculture.

Hence, commercial floriculture has emerged as a hi-tech activity, taking place under controlled climatic

conditions inside greenhouses. India exports flowers to Bangladesh, Germany, Japan, Netherlands, Sin-

gapore, Srilanka, UK, and USA. About, 232.74 thousand hectares area was under Cultivation in floricul-

ture in 2012-13. Production of flowers is estimated to be 1.73 million tonnes loose flowers and 76.73

million tonnes cut-flowers in 2012-13, with earnings of UDS 36.5 million (Apeda, 2013).

Factors Contributing to the Growth

Cost versus Margin Analysis: A recent study by Bangladesh Rural Advancement Committee (BRAC) used

cost and margin analysis on rose varieties to suggest that it is quite profitable for farmers and retailers

to be in the flower industry. Each farmer receives margins of BDT 1, on average, per rose-stick, while

retailers enjoy margin of BDT 3-4 per rose-stick. Therefore, as the margins are high, farmers and retail-

ers will find it profitable to be involved in the industry, leading to growth.

Population Growth and Rising Income: Bangladesh (population of over 160 million) has one of the fast-

est growing populations in the world. The middle and upper-middle income groups have a high propen-

sity towards including flowers in various festivities. The middle-class has been undergoing a massive

cultural transformation with rising income level and global exposure through internet and international

travel. The higher (and rising) disposable income of the middle-income group show signs that the flow-

er industry’s growth is inevitable. The disposable income has risen steadily from BDT 19,619 to BDT

31,080 per year from 2003 to 2014 , exuding a healthy trend.

Analyzing Strategic Frameworks in Floriculture Industry Development Model: The current growth in the

flower industry of Bangladesh is organic in nature since there is no comprehensive strategy to further

expedite the growth momentum. A growth strategy is necessary to ensure that the current rising trend

is not slowed down by international competition. Therefore, a comprehensive analysis needs to be un-

dertaken in line with Three Strategic Frameworks: technology, economic, and government regulations.

Technology: The technology for flower production in Bangladesh is inefficient and needs to improve

significantly to yield different variety of flowers. The production-mix of flower varieties must be chosen

in-line with the growing demand of each specific type of flower breed in the international market. A

greenhouse environment should be used for hybrid-variety rose productions. Leading flower exporting

countries, such as Holland, uses variety of artificial lighting systems to ensure the optimum growth of

the flowers. Furthermore, fertilizer grades also need to be in high-quality for ensuring the highest yield

of variety of hybrid-flower production during a seasonal cycle.


Continued in pg. 22



1. Real Sector

Economic Indicators

Month Inflation % (P-2-P) [Base Year 1995-96]

Food Inflation % (P-2-P) [Base Year 1995-96]

2013 2014 Change 2013 2014 Change

June 7.97 6.97 -13 % 8.53 8 -6 %

May 7.86 7.48 -5 % 8.4 9.09 8%

April 7.93 7.46 -6 % 8.57 8.95 4%

Growth forecasts for FY 2015 are higher

than that in FY 2014. Budget for FY 2015

targeted a growth rate of 7.3 percent,

slightly higher than the target in FY 2014

(7.2 percent). However, BBS estimated

GDP growth to be around 6.12 percent for

FY 2014. Multilateral agencies such as

World Bank and ADB forecasted GDP

growth of 5.9 percent and 6.2 percent

respectively for FY 2015.

Inflation (p-2-p) decreased to 7.46 percent in April and again increased marginally to 7.48 percent in May before reaching 6.97 percent by June, 2014.

Food inflation started at 8.95 percent in April and increased to 9.09 percent in May before reaching at 8 percent in June, 2014.

Inflation

Credit to Public and Private Sector

Month Current Account Balance (USD million- latest 12 months)

[converted from BDT to USD using monthly average exchange rate]

2013 2014 % Change

March 9,811 953 -75.0%

February 3,456 2,122 -38.6%

January 3,172 2,531 -20.2%

Current Account Balance Trade Balance

Month Trade Balance (USD million- latest 12 months)

2013 2014 % Change

March (6,295) (8067) *estimated

-28.15

February (6,844) (7,785) -13.75

January (7,397) (7,908) -6.91

Import Coverage Ratio



Annual Trends of Selected Macroeconomic Indicators: FY 2006-07 to FY 2012-13 (in %)

Fiscal Year GDP Growth Export Growth Import Growth Foreign Aid Remittances FDI Inflows

FY 2007 6.4 15.69 16.35 4.01 24.49 6.46

FY 2008 6.2 15.87 26.17 26.43 32.39 -3.03

FY 2009 5.7 10.31 4.16 -10.39 22.42 24.96

FY 2010 6.1 4.11 5.41 20.60 13.40 -4.95

FY 2011 6.7 41.49 51.48 -20.25 6.03 -14.67

FY 2012 6.3 5.93 -1.49 19.68 10.24 -14.01

FY 2013 6.03 11.22 -7.06 37.02 12.59 9.15

FY 2014 6.12 11.65 17.91 31.04 -1.66 -11.7(E)

2. Financial Sector

Interest Rate Spread

Month

Interest Rate Spread

2013 2014 Change

May 4.98 5.22 0.24

April 4.99 5.14 0.15

March 5.06 5.15 0.09

Repo and reverse repo rate stands at

7.25 percent and 5.25 percent respec-

tively after Bangladesh Bank imple-

mented a downward revision by 50 ba-

sis points effective from 01 February

2013. The weighted average yield on 91

-Day T-bill rate has decreased to 6.92

percent in June 2014 from 7.26 percent

in March, 2014. The weighted average

call money rate in the interbank market

started with 7.2 percent in April howev-

er it decreased to 6.24 percent by June.

Loan-deposit ratio in scheduled banks

increased from 101.4 in January 2014 to

102.1 in April, 2014 – pointing towards

a reversal, albeit slow, in investment

climate. The ratio is expected to in-

crease further in coming months if po-

litical stability is restored.

Bangladesh Bank Interest Rates

Loan to Deposit Ratio

In March 2014, interest rate spread was

5.15%, slightly higher than recommended

level of Bangladesh Bank (less than 5%).

Interest spread decreased to 5.14% before

rising to 5.22% in May. The spread has

been higher than the interest spread ob-

served in the same months in 2013.

Economic Indicators



Contribution to Broad Money Growth

Broad money (M2) growth has de-

creased in 3rd quarter FY 2014 from

15.92 percent in February to 15.30 per-

cent in March and reduced to 15.12 per-

cent by April. Net foreign asset growth

hovered around 36 percent for the en-

tire quarter. Private sector credit

growth showed weak signs of recovery,

reaching 12 percent in April from 11 in

February. Growth of credit to govern-

ment has fallen sharply from 19 percent

in February to 12 percent in April.

DSE General Index Monthly Closing

DSE update The performance of Dhaka Stock Exchange (DSE) has remained weak in the April-June, 2014 period. The

primary bourse of the country showed signs of recovery in April with DSEX reaching the period high of

4700 in the last week of April. This was followed by a downward rally that plummeted the index to

nearly 4300 on 22nd June, 2014. The index peaked at 4702 in 24-April-2014 and reached its lowest at

4322 on 22-June-2014. Some signs of recovery were seen in the last week of June, 2014. However, Given

the unfavorable macroeconomic and political conditions in short term, the bearish market is likely to

continue.

Financial sector has remained depressed in the quarter; with sectoral PE of 11.81, the lowest among all

sectors. It is interesting to note that Market PE has increased from 15.41 in April to 18.38 in June with-

out corresponding increase in DSEX index. This might be due to lower earnings by listed firm and is like-

ly to depress the market further at least in medium term.

CSE update Chittagong Stock Exchange (CSE) showed trends similar to DSE, with the prime index, CSCX ending the

quarter at 8,507, down by 247 points, or 2.8 percent, from the beginning of the quarter.

Economic Indicators

Apr14 May14 Jun 14 (E)

Financial Sector 11.37 11.24 11.81

Manufacturing 27.31 26.48 23.35

Services & Mis-cellaneous

19.74 19.42 17.86

Overall Market 15.41 15.96 18.38

Table I: Price Earnings Ratios of DSE

Sources: DSE & Keystone Estimates



3. External Sector

Woven Garments Export

(USD million) Knitwear Export

(USD million)

Month 2012/13 2013/14 % Change 2012/13 2013/14 % Change

June 1116.78 1183.14 5.94 1085.63 1130.74 4.16

May 997.72 1092.26 9.47 1008.37 1115.72 10.64

April 835.17 944.95 13.14 795.11 972.38 22.29

March 991.77 993.37 0.16 854.68 920.69 7.72

Monthly Export Growth

In March, 2014 country's export earnings

witnessed a small positive growth of 1.4

percent (m-o-m) from February 2014,

dipped by only 0.1 percent in April and

then rose by 12.9 percent and 2.9 percent

in May and June of 2014 respectively. The

total earnings in the four month has been

7 percent higher than the same months in

previous year. Knitwear has been a key

driver of export earning in this months.

Monthly Import Growth

Monthly import growth was negative at

the turn of the year and then rose sharply

to 28.3 percent in March, 2014 with eid

coming ahead. Both April and may regis-

tered positive import growth of 1.8 per-

cent and 11.5 percent respectively before

reaching -13.9 percent in June, 2014.

Regional Export and Import

In March 2014, woven export registered a

growth of only 0.16 percent. However,

growth subsequently increased to 13.14

percent (April), 9.47 percent (May) and

5.94 percent (June). Knitwear export regis-

tered better growth of 7.72 percent

(March), 22.29 percent (April), 10.64 per-

cent (May), and 4.16 percent (June).

Economic Indicators



Month

Remittance (USD million)

Foreign Currency Reserves (USD million)

Exchange Rate

BDT/USD BDT/INR

2013 2014 %

Change 2013 2014

% Change

2013 2014 %

Change 2013 2014

% Change

June 1057.63 1280 21.02 15315.23 21558.03 40.76 77.76 77.63 -0.17 1.35 1.3 -3.78

May 1087.19 1215.83 11.83 14531.40 20267.50 39.47 77.75 77.63 -0.16 1.38 1.31 -5.07

April 1194.40 1230.57 3.02 14829.10 20370.1 37.37 77.93 77.65 -0.36 1.44 1.29 -10.42

4. Fiscal Sector

Revenue Through NBR (Million USD)

Owing to shortfall in revenue collection,

the government had revised down the

revenue target for the FY 2013-14 fiscal

year by 8.09 percent to BDT 1.25 tril-

lion. As of May, 2014, NBR has been able

to collect BDT 1165.5 billion.

The government has set revenue target

of BDT 1.49 trillion for FY 2014-15.

Fiscal Indicators

In the budget of FY 2014-15, revenue as

% of GDP was estimated to be about

17.7 percent. However, NBR revenue

collection target has been increased

from BDT 1.25 trillion for FY 2013-14

(revised) to BDT 1.49 trillion in FY 2014

-15. This represents a 19 percent in-

crease in target and is unlikely to be

met. This has the potential to further

increase budget deficit.

Monthly Remittance Growth

Remittance receipts in March registered a

growth of 10 percent before slipping to -

3.5 percent in April, 2014. After a growth

of -1.2 percent in May, remittance again

increased by 5.3 percent in June. This

quarter not only did the growth slow; in

February 2014, remittance earning nearly

dropped to 2013 level of USD 1163 mil-

lion. However, remittance earning has

gained momentum.

Economic Indicators

-

2,000

4,000

6,000

8,000

10,000

12,000



From April’14 to July’14, the percentage share of installed capacity of electricity generation has- Increased from 65 percent to 66 percent for gas based generation whereas it decreased from 19 per-

cent to 18 percent for HFO based generation. The percentage share of power generation from hydro, diesel, coal and power import remained un-

changed.

From April’14 to July’14, the percentage share of generation capacity - By IPPs, all rental power plants, APSCL and other decreased by 1 percent each Share of BPDB increased by 4 percent

Energy Indicators

Monthly Fuel Import (Million USD and % Change)

Month Crude Oil Petroleum Products

2013 2014 % Change 2013 2014 % Change

April ** 0 119.8 - 280.6 352 25.43

March ** 165 32.37 -80.4 305.3 572.4 87.50

February 0 78.43 - 245.4 288.31 17.48

January 79 86.36 9.4 476.9 171.19 -64.10

Gas and Coal Production

Gas (MMCM) Coal (M. Ton)

April’14 1957 25,392

March’14 2015 15,965

February’14 1819 119,891

Primary Energy

Government of Bangladesh has permitted Independent Power Producers (IPPs) to import HFO fuel without requiring No Objection Certificate (N-O-C) from BPC.

** Estimated as fresh LC opening in the following months

Power

Electricity Generation, Demand and Loadshed and No. of Plants in Operation

Month

Plants in Operation (Avg.)

Peak Demand (MW)

Peak Generation (MW)

Maximum Loadshed (MW)

Total Generation (MkWh)

2013 2014 Change 2013 2014 Change 2013 2014 Change 2013 2014 Change 2013 2014 %

Change

May 83 88 5 6350 7100 750 6223 7142 919 370 371 1 3345 4152 24.13

April 82 90 18 6500 7350 850 6314 7176 862 487 549 62 3592 3999 11.33

March 79 87 8 6250 7358 1108 6080 7358 1278 445 0 -445 3501 3551 1.43

The plants in operation was the highest in April’13 and lowest in March’14. The peak demand decreased gradually from March-May, 2014. Maximum loadshed of 549 MW was

seen in April with no loadshedding in March.



Energy Indicators

SHS installation in April and June 2014 decreased significantly than that in 2013.

Biogas plant installation was higher in April-May 2014 than that in 2013.

Renewable Energy

Economic Trends

Flow of remittance in Bangladesh from FY2008-09 to FY2012-13

Table I shows that the flow of remittance into Bangla-

desh experienced a steady growth from the fiscal

year 2008-09 to fiscal year 2012-13. Remittance was

highest in FY2012-13 (USD 14.5 billion) and growth

rate was highest in FY2009-10 (13.4 percent). Lowest

remittance figure was observed in 2008-09 (USD 9.7

billion) and lowest growth rate was observed in 2010

-2011 (6.1 percent).

Monthly Trend in Remittance Growth,

FY2013-14

As illustrated in figure 1, from July 2013

to June 2014, there has been significant

remittance fluctuation. Overall, there has

been a growth of 2.2 percent. The worst

period for remittance was between July

and August 2013 (negative 18.6 percent

growth) followed by October to Novem-

ber 2013 (negative 13.8 percent growth).

Remittance Growth, despite Slowdown in Manpower Export

As illustrated in Figure 2, in the next page, the export of manpower was slightly above 850,000 workers

for 2007 and 2008. At present, the figure is half of that, at only 375,000. Manpower export rate has been

declining due to the heavy regulations implemented by the governments of manpower-importing coun-

tries. However, remittance has continued to grow due to increase in stock of migrant workers. Other

reasons behind increase in remittance:

Continued from pg. 1 Slowdown in Remittance

Total 3.12 million Solar Home Systems have been Installed to date.

Monthly Installation of Solar Home Systems (SHSs)

More than 35,304 Biogas Plants have been installed to date.

Monthly Installation of Biogas Plants

Year Remittance (in bil-

lion USD) Growth rate

(%)

2008-09 9.68

2009-10 10.98 13.43

2010-11 11.65 6.10

2011-12 12.84 10.21

2012-13 14.46 12.62

Table I: Yearly remittance inflow (for FY2008-09 to FY2012-

13)

Source: Bangladesh Bank data

Figure: 1 Remittance inflow FY2013-14, monthly basis

Source: NCCI



Slowdown in Remittance

Rapid growth of Bangladeshi skilled and semi-

skilled workers being sent abroad due to de-

mand influx for foreign workers by various

countries caused accumulation of stock of

Bangladeshi workers. Therefore, incremental

remittance has been inflowing from the addi-

tional stock each year.

Increased inflow of remittance through official

channels.

Government and private recruitment agencies

have launched pre-departure training program

(language, culture, custom, value system, rules

and regulations of the host countries) for the workers.

Identification of new destinations of manpower exports, such as Italy, Russia, Japan etc.

Recent Decline in Remittance

Remittance inflow, however, has dropped for the first time in several decades in the just concluded fis-

cal year. Remittance fell during FY2013-14 by 1.7 percent, from USD 14.5 billion to USD 14.4 billion.

Causes for Decline in Manpower Export and Remittance by Countries

Saudi Arab is the biggest market for Bangladesh’s manpower export, with at least 150,000 semi and

unskilled Bangladeshi workers working in the country, on average, over the last few years. The average

annual intake is less than 14,000 workers now. According to several analysts, regaining the Saudi mar-

ket can be the key to stopping the rapid decline of manpower export. However, even after several diplo-

matic efforts, satisfactory results have not been obtained.

UAE: Between 2007 and 2012, 250,000 Bangladeshi workers were imported annually by UAE. However, due

to fraudulent activities by some manpower exporting agencies, and lack of farsightedness by Bangladeshi gov-

ernment, manpower import from Bangladesh has stopped completely.

Kuwait: A ban imposed on import of manpower from Bangladesh still stands and all efforts to lift the

ban has been futile.

Malaysia imported almost 450,000 workers from Bangladesh between 2007 and 2008. However, due

to fraudulent activities by manpower exporting agencies, Malaysia has stopped its manpower import

from Bangladesh. Following several diplomatic efforts, Malaysia agreed to take 500,000 workers from

Bangladesh over a 5-year period.

Recent Trend in Remittance Inflow from Major Work Place Destinations

In figure 3, in the next page, a year-wise comparison between 2013 and 2014 shows that apart from for

Qatar and Oman, remittance inflow from all other countries have declined by a minimum of 10 percent.

Remittance from Saudi Arab and UAE has taken the largest hit. Reasons behind slowdown in remit-

tance:

Fall in manpower export to the traditional destinations, such as Saudi Arabia, the UAE, and Kuwait,

is the main reason behind the decline in remittances.

Due to the detrimental effect of Arab Spring, businesses in the region are, at the moment, conserva-

tive in their approach to hire temporary workers from developing countries.

Dispute between Bangladesh Association of International Recruiting Agencies (BAIRA) and the Min-

ister for Manpower Export (MoME) is taking its toll on the chances of prospective workers’ chances

Figure: 2 Yearly trends in manpower export (in thousands)

Source: The Daily Prothom Alo



of going abroad for work. BAIRA blames

the government of hindering the man-

power export growth, primarily due to

Bangladesh Embassy’s negligence in at-

testing visas.

Average earnings of Bangladeshi work-

ers have reduced due to overabundance

of sector-specific skilled workers from

previous years. Proliferation of workers

has put a downward pressure on overall

wage level.

According to the World Bank, with in-

creased unemployment and/or lower

wages, the propensity to save may have

decreased because of ratchet-effects on consumption. Conventionally, if income falls, then con-

sumption should fall proportionally. However the lagging-effect has blocked such decline.

Several countries such as Sri Lanka, Philippines, Indonesia, et cetera, are competing with Bangla-

desh in manpower export. The workers from the competing countries are trained prior to their em-

ployment abroad, improving their human-capital, and giving them an edge.

Implications of Diminished Remittance Inflow:

Rural infrastructure development will take a hit since at least 45 percent of the rural infrastruc-

tures are built with remittance currency.

A fall in remittance will lower foreign currency inflow, harming the foreign reserve and import vol-

ume. This may lead to inflation.

De-stabilization of exchange rate, unless export in other sectors, such as RMG, fisheries, etc., are

significantly improved.

Negative effect in propensity to consume may cause a chain-reaction in the supply-chain of the

economy, impacting both rural and urban development sectors.

What Can be Done?

The government can form a research bureau which will oversee various industrial sectors in sever-

al new markets. One vibrant example can be the market of Alberta, Canada: an oil rich state, suffer-

ing from skilled manpower shortage. The bureau can identify such markets and advise the govern-

ment.

Steps should be taken to stop illegal worker immigration.

Banks should streamline their processes further to enhance a proper inflow of remittance from the

existing worker pools.

BAIRA needs to actively work with the government to identify further potential weaknesses of the

sector.

GoB should aim to develop the skills of workers and take necessary measures to improve bilateral

relations with various manpower-importing countries in the world. The situation of UAE should not

be repeated.

Figure 3: Remittance amount by country (in million USD)

Source: BSS and Bangladesh Bank



Politics: The Command

second quarter of this calendar year.

On 3rd May, 7 people, including Chandan Kumar Sarkar, President of Narayanganj District Bar Associa-

tion, and Nazrul Islam, Ward Commissioner and a ruling AL leader were murdered. Nur Hossain, the

alleged mastermind behind the murders, has since fled to and been caught in India. Attention immedi-

ately shifted towards Shamim Osman, MP, who recruited Nur Hossain into AL. A phone conversation

between the two, taking place shortly after the killings, was also leaked. However, Shamim Osman is yet

to even be questioned by the police, with Additional Secretary Shahjahan Ali Mollah, the head of the

committee formed to investigate this case saying that Shamim Osman is not a person of any interest.

Father-in-law of deceased Nazrul Islam alleged that 3 RAB officials, Lt Col Tarek Sayeed Mohammad,

Major Arif Hossain, and Lt Commander MM Rana, involved in the killings (they were allegedly paid BDT

60 million for their participation) were simply going to be forced into retirement for their crime. The

Supreme Court (SC) issued a rare and exemplary written directive, from the bench comprising Justice

Mirza Haider Hossain and Justice Khurshid Alam Sarkar, ordering the police to arrest the three RAB offi-

cials. The PM did not take kindly to this interference in the matter by SC and was openly critical of the

SC directive during a press conference.

On 16th April, in Narayanganj, Abu Bakar Siddique, husband of environmental lawyer and human rights

activist, Syeda Rizwana Hossain, was abducted from his car. The abductors let him go unharmed two

days later. BNP Joint Secretary General Ruhul Kabir Rizvi, claimed that the same group that was behind

the disappearance of Ilias Ali and his driver in April, 2012 was behind the abduction of Abu Bakar Sid-

dique as well. Joint Secretary General Rizvi could not substantiate his claim, however, with any corrobo-

rative evidences when journalists asked him.

On 20th May, Ekramul Haque, Upazila Chairman of Feni, was shot in his car and his car was set on fire.

Prime Minister Sheikh Hasina immediately directed the law enforcement agencies to capture these ‘anti

-liberation elements and evil forces’, pointing towards rival BNP. BNP Acting Secretary General Mirza

Fakhrul, meanwhile, claimed that the government was trying to shift blame on BNP, on what was an in-

fighting issue between members of AL. All these claims were made on the same day of the killing, before

a full-scale investigation could be launched by the appropriate agencies to get to the root of the killings.

These two events seem to illustrate that the tendency of AL and BNP lie towards political blame-game

rather than finding the truth.

The brutal torture and murder of 17 year old Tanvir Muhammad Tawki, a promising A-level student

and son of a civil social activist, once again in Narayanganj, is another example of political violence.

Tawkee was tortured and murdered last year because of his father’s political activism, where he sup-

ported Dr. Selina Hayat Ivy, opposition of Shamim Osman in mayoral election. The criminals are yet to

be brought to justice.

In the midst of all these, there have been two bright spots for Bangladesh. The Hague verdict regarding

maritime territories allows Bangladesh to carry out oil and gas exploration in the area and harness ma-

rine resources. The fact that India too has accepted the decision points towards a new era of maritime

cooperation between the two countries. Similarly, the visit of Sushma Swaraj, Minister of External Af-

fairs of India, to Bangladesh, soon after election of Narendra Modi, may point towards greater bi-lateral

cooperation and undertakings between the two countries. But for growth and stability to get back on

track, internal issues need to be resolved first.

For Bangladesh to get back on the right side of functioning democracy and good governance, the follow-

ing are needed: repression of opposition political activists need to stop and the police, and other law

enforcement agencies, need to be freed up from political interference and not be used for suppressing of

Continued from pg. 1 Political Violence Threatens Stability and Growth


opposition politicians. Furthermore, extra-judicial measures, such as ‘crossfire’ and ‘contract’ killings

need to be stopped. Moreover, there should be delineation of river banks and transparent procedure for

allocation of public resources, such as land, and sand from rivers. Notably, most of the political violence

have their roots in unfair competition over grabbing public resources.

Above all, the top-level political patronage of delinquents needs to stop. For example, the PM’s recent

support to the family of Shamim Osman, as he faces allegations of murder, is not befitting her status. Nur

Hossain has reportedly received backing from HT Imam, an adviser to the PM. Narayanganj dwellers are

of the belief that without such top-level backing, Nur Hossain could not have become so powerful. A Dai-

ly Star editorial, a local daily, was very critical of this, condemning the ‘…series of killings, abduction, and

robbery by criminals under the patronage of their political overlords’, calling the entire power-structure

as ‘mafia politics’. This practice of political patronage of criminals needs to be discontinued, if political

violence is to stop. Otherwise, achievements over the past decade and ambition of Bangladesh becoming

a pluralistic middle-income country is unlikely to be realized.

Politics: the Command Post


A system of cross-and-check, whereby, evidence of work completed (before-and-after photos, for

example) will have to be submitted with all reports. Regular third-party verification may be a useful

tool as well. Use of MIS systems for record-keeping can improve this.

Timely allocation of funds and implementation of projects is critical in programs targeting a specific

time period (for example, lean periods).

Benefits paid to beneficiaries have to reflect basic cost of living.

The monitoring system is manpower-intensive; either a less manpower-intensive monitoring sys-

tem has to be developed or monitoring capacity of concerned units (Upazila Parishad, Union Pari-

shad, etc) has to be increased.

Emphasis has to be placed on raising public awareness about the SSNPs and encourage participa-

tory planning and development at the rural level.

Training and capacity development at ground level, including elected officials in charge of ground

level implementation, would increase quality of implementation.

Development of an independent, third-party complaint registration and redressal committee at the

Union level.

Complexity of the process-flow encourages deviation from the operation manuals. Tasks should be

simplified, paperwork reduced, and duplicitous tasks (for example, maintenance of both job-cards

and muster-roll for attendance keeping under EGPP) should be removed.

Multiplicity of programs should be reduced and clusters of similar programs brought under the

same umbrella. For example, FFW and Test Relief (TR) both targets development/maintenance of

rural infrastructure and price stability. The 2 programs can be merged.

Conclusion

Social protection is a basic human rights recognized by United Nation's Universal Declaration of Human

Rights (UDHR). Social protection is also a fundamental right guaranteed in the constitution of Bangla-

desh. SSNPs of Bangladesh have been instrumental in poverty and vulnerability reduction of the ‘poorest

of the poor’ in Bangladesh. However, with a national poverty level of 31.5 percent, there is still a long

road ahead.

Lead Story

Continued from pg. 1 Social Safety Nets in Bangladesh: Achievements and Chal-lenges


Sectoral employment-demand forecast should be made available to students, educators, and adminis-

trators to facilitate better selection of majors, and offering of courses.

Robust regulation of private universities, to ensure quality of admission test, procedures, exams, and

graduates.

The government may look into international options such as international associations in providing

accreditation and other quality assurance mechanisms. Use of international accreditation has helped

Singapore and Malaysia in gaining international reputation in tertiary education.

Modern laboratories, scholarships, and good salary for researchers are necessary. This will prevent

brain-drain from Bangladesh and expose students to latest advancements in their respective fields.

Conclusion

Failure to absorb graduates in the job market will not only result in unproductive investment and re-

strict the scope of reaping the upcoming demographic dividend, but may also result in upheaval and

social disorder. Thus the government has to take necessary steps in increasing information in the mar-

ket, ensuring proper regulation with/without help of third party, and creating an enabling condition for

the country’s most talented to work.

Cloud in the Horizon

Continued from pg. 8 Graduate Unemployment in Bangladesh

Silver Lining Continued from pg. 10 Flower Production, Export, and Marketing in Bangladesh

Economic Factors: The margin for retailers and farmers can be further increased by minimizing cost of

production, better preservation, minimizing wastage, and maintaining lead time for export.

Government Policies and Incentives: A recent World Bank Technical Paper on horticulture in Kenya

said that a commercial horticulture sector needs government policies that provide an environment in

which the sector can thrive. The paper also argues that although no direct intervention is required, in-

vestment in infrastructures in rural areas such as water, health-services, and education can lead to a

significant growth in the industry. Government subsidies in fertilizers and floriculture training are two

leading factors that can transform the small base of floriculture industry of Bangladesh into a dominant

exporter (Rikken 2011).

Challenges Faced in Floriculture Industry of Bangladesh

Flowers in Bangladesh are cultivated in open spaces. However, for maximum yield and quality, the

cultivation should occur in a greenhouse environment.

Emphasis should be given on producing high-demand and value-driven flowers such as Hybrid Or-

chid Variety, Exotic Colored Roses, Carnations, Gerbera, Gladiolus, et cetera, that requires less water

and sunlight, making these varieties suitable for indoor maintenance.

Exports of flowers, a highly perishable product, are regularly hampered due to air-freight delay,

compromising quality. Flowers notably have a very short shelf-life.

Lack of farmer training and knowledge in managing the periods between the pre- and post-

cultivation periods have detrimental effects on quality of floral yields.

More robust techniques in packaging are needed to ensure that flowers for export are transported

in fresh state.

Conclusion

From a strategic perspective, floriculture industry of Bangladesh has massive growth potentials and can

one day compete with the leading flower exporters such as Netherlands, Kenya, Columbia, Ecuador and

Israel. However, a growth strategy must be set up by transformational leaders to make the industry a

dynamic and vibrant export sector of Bangladesh.



News Update Sector News Vibe

Agriculture Scientists have come up with a potato variety resistant to Late Blight disease,

virus, and drought that wreak havoc on potato production every year.

Banking

Bangladesh Bank raises reserve requirement for banks from 5.5 percent to 6

percent.

Commercial banks’ lending rates have gone down to a 3 year low due to poor

demand for money and a decline in their cost of funds, according to bankers.

Business

Stocks plunged 1.14 percent on June 8, the highest single day fall in June, as

investors were upset by a budgetary proposal that imposes a 3 percent tax on

their capital gain above BDT 1 million.

Economics

World Bank approves USD 60 million for VAT reforms; the number of active

registered VAT-payers to double in 5 years.

NBR’s tax receipts remain sluggish; growth rate slowest in 7 years

Education The Daily Star awards 1,639 students of O&A levels for their outstanding re-

sults; 64 students obtained world’s highest scores in different subjects

Energy

Bangladesh and China signed five deals, including one for building a 1,320

megawatt coal-based large power plant in Patuakhali.

Japan to invest USD 1.2 billion in Bangladesh priority sectors, including power

generation, in FY2015-16.

Environment

Gabkhan Channel, a vital river route, is losing its navigability

Rising sea level, an emerging threat to human security, may cause some deci-

sive impacts for the people of Bangladesh such as extreme salinity concentra-

tion in soil and water, damage of inhabitation and forests, fresh water crisis,

eroding beech and coastal land, acute health hazards, loss of fisheries and bio-

diversity etc.

Industry

Leather Industry hit record exports of USD 1 billion in the first 10 months of

FY2013-14

6 more RMG factories identified for shutdown due to structural flaws by 2

international inspectors

RMG Garment exports show resilience as shipments rise 16 percent in the last year

despite industrial disasters such as Rana Plaza collapse

Society

3 Rab officials have been forced into retirement for their alleged involvement

in the abduction and killing of 7 people in Narayanganj

MV Miraj-4 sank in the Meghna with 200 people on board; death toll reached

31.

Allocation for safety net and welfare schemes may rise 11 percent to BDT 138

billion in the upcoming budget, amounting to 5.5 percent of total expenditure

SI Jahidur Rahman arrested for his role in extortion, abduction, torture, and

custodial murder of trader Mahbubur Rahman Sujon. This is the second time

Jahidur Rahman has faced similar charges, last time in February, 2014 for the

murder of a 28 year old. He was not punished.

Sports

Bangladesh cricket in quandary as internal-politics in BCB cited as a reason behind all-rounder Shakib Al-Hasan’s suspension from the game for 6 months and all international competition till December 31, 2015.

Technology Skype co-founder Morten Lund says Bangladesh is the next tech hub.



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Keystone Business Support Company Ltd. Suite 6C-1, Building 2, House 5A, Baily Heights Road 94, Gulshan 2, Dhaka 1212 Phone: +88 02 8836305, +880 1780 372160 Fax: +88 02 9898074 Email: [email protected] Website: www.keystone-bsc.com


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Keystone Team

Contributors: Ahsan Senan; Mursalin, Ahmed Tarif; Mustafiz, Rubiya Binta; Sadeque, Sariya Syeda; Siddiqui, Shihab Reviewers: Choudhury, Liaquat Ali; Khan, M Fouzul Kabir; Shams, Khalid; Uddin, Mesbah

keystone quarterly review · plicity with such activities; ... and 4 foreign commercial banks) ......

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