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Monday, March 9, 2009

[ALOCHONA] [khabor.com] Priority # 1, It's economy stupid

I still stand on my prediction about Real Estate Collapse in Bangladesh:
 
"Bangladesh Real Estate bubble will be burst within year and so, so Govt should be prepared with huge layoff in that sector as well as other sectors.  Most of the Real Estate bubble in Bangladesh were created by NRBs and corrupted money in Bangladesh.  NRBs are real squeeze in financial aspect and won't be able to continue support the sky rocket price of land and apartments in Bangladesh."-- M M Chowdhury, Friday, January 30, 2009.
 
Regards,
 
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Global Recession

The global recession stokes fears that falling exports and an ebbing remittance inflow may take shine off the country's burgeoning real estate. Photo: Faisal Parag
Realtors feared the global recession might undermine the real estate sector's prospective growth unless special initiatives are taken, although the sector began to expand after a two-year sluggish trend when its growth slowed to 7.05 percent in 2006-07 from 8.31 percent a year earlier.

Construction takes up 9.16 percent of GDP (gross domestic product), according to 2006-07 data.

As exports and remittances are two major inputs to the economy, a negative impact of a prolonged and deepened global financial crisis on these two sectors is likely to affect the real estate sector.

"The remitters and their families buy around 35 percent of our total flats, while 40 percent apartments are sold to businesspeople majority of whom are exporters. So if exports and remittances are affected, there will be a negative impact on the real estate sector, said Sheikh Aftab Ahmed, chief operating officer of Shanta Properties Ltd, a real estate company.

Besides buying flats, people also undertake different construction works including building houses with the remittance that might be affected if inflow of foreign currency decreases on the global financial crisis, he added.

According to official reports, the country's exports slumped in the months of October and December of the current fiscal year that the businessmen attributed to the global financial meltdown.

Although the overall remittance inflow remains positive so far, reports said overseas workers in the Middle Eastern countries, the main source of remittances for Bangladesh, are now being forced to leave jobs.

In January some 4,817 migrant workers came back home on job losses, while the number was 701 in the previous month, according to official statistics.

"We all know that the recession in the USA originated from housing sector later crept into other potential sectors including banking and insurance," said Tanveerul Haque Probal, president of Real Estate and Housing Association of Bangladesh (REHAB).

Against this backdrop, the government will have to take safeguard measures so people do not lose confidence and invest in real estate sector, which he said would keep the economy rolling.

More investment in the sector will create more employment and keep the linkage industries of the sector vibrant, he added.

The realtors also urged the government to increase the volume of public construction works under the Annual Development Programme (ADP) to keep the real estate sector and hundreds of its linkage industries pulsating.

Bricks, cement, rods, furniture, paints and tiles are the main backward linkages of the real estate sector.

This year works in the real estate sector increased compared to the last two years, said Abdur Razzaq, general secretary of Imarat Nirman Sramik (building construction workers) Union of Bangladesh. But yet many of the construction workers do not get jobs regularly.

Now around 75 percent of some 40 lakh construction workers of the country can manage a job everyday but if the market performs badly, there will be a shortage of demand for workers, said Razzaq.

He however said the sector is performing better now compared to previous year since the job rate of the construction workers was around 65 percent last year.

Motaher Hossain, a member of Bangladesh Brick Manufacturers Owners Association, said recently consumption of bricks has increased what he believes due to a reduction in rod prices that led to resumption of different construction projects.

"But the performance of the construction sector is yet to reach the expected level as the implementation of public works has been very low for the last two years and the trend is still continuing," he added.

Forty percent of bricks produced in the country are consumed by the public sector, while the rest 60 percent by the private sector, he said.

According to statistics, the government implemented 69.58 percent of the original ADP for fiscal year 2007-08.

However rod manufacturers said reduction in prices has given rise to a demand for rods, inspiring different re-rolling mill owners to resume operations.

Now prices of 40-grade rod hover between Tk 41,000 and Tk 42,000 per tonne that was around Tk 65,000 in June last year, said Masudul Haque Masud, former general secretary of Bangladesh Re-rolling Mill Owners Association.

Prices of 60-grade rod are now ranging between Tk 50,000 and Tk 51,000, down from around Tk 70,000 in mid-last year.

But the cement manufacturers said their export to the seven-sister states of India jolted in recent months due to an imposition of 12 percent additional duty by the Indian government on cement import from Bangladesh.

"The production capacity of 50 cement factories in the country is between 14-15 million tonnes when the domestic demand is from 8 million tonnes to 9 million tonnes, which led to a shut down of 15-20 small cement factories in recent times," said Mostafa Kamal, president of Bangladesh Cement Manufacturers Association.

He suggested the government should construct concrete roads instead of making roads with bitumen to increase cement consumption.

"Many countries in the world construct roads with concrete as these are much more durable than bitumen-made roads, Kamal said, adding that such construction will increase domestic cement consumption.

Asked whether the global recession would take its toll on the real estate sector, Prof Nazrul Islam, an urban expert and Chairman of University Grants Commission (UGC), replied in positive.

"The rich, upper-middle and middle-class people are the main customers of the real estate products, so the real estate sector will be affected as the financial crisis is expected to reduce incomes of the people of these brackets dependent on remittances and exports," said Islam, also honorary chairman of Centre for Urban Studies.

He said a major use of remittance is house building, so reduction in remittance inflow is likely to slow housing works and impact all stakeholders.


--- On Fri, 2/20/09, M. M. Chowdhury (Mithu) <cgmpservices@yahoo.com> wrote:
From: M. M. Chowdhury (Mithu) <cgmpservices@yahoo.com>
Subject: [khabor.com] Priority # 1, It's economy stupid
To: cgmpservices@yahoo.com
Date: Friday, February 20, 2009, 4:23 PM

Dear All,
 
I get lots of inquiries why I do talk about USA economy and Bangladesh economy same times.  My answer is, if you are hungry, you are hungry, it does not matter you live in Bangladesh or India or any part of the world. Helping people is one of the fundamentals, it does not matter which religion you follow.
 
I also believe that crises starts at USA and spiral down to Bangladesh too, that's why its smart move to  track where it started and how Bangladesh can survive in the upcoming economic crises.
 
I also get lots questions why I do not go back Bangladesh and work for the people with my understanding expertise.  I still believe that I can be helpful for Bangladesh being in USA, but if my representation helps people in Bangladesh, I may think about going back.
 
Even though I live in USA but my heart is with 150 million people in Bangladesh.  I am happy with my life and what I have and I am not looking for power in Bangladesh.
 
The intention of my write-up and advice in blogs and media are to make people in Bangladesh aware about what to expect in future and make ready Bangladesh Govt to be prepared for the upcoming challenges and opportunities.
 
I also use harsh word time to time because I have learned that same set of rules do not apply everywhere.  I will be prudent and effective when I know how to give carrot and provide stick at the same times as far as we dealing with Bangladesh and its people including politicians.
 
If we are concern citizen in Bangladesh, we will be looking current Govt to focus on the following priorities:
 
# 1: Economy

#2 : Law and Order

#3: Job Creation
 
#4: Bringing Foreign Investment in Bangladesh.  This may be tough by looking at the world economy.  For example, I am pushing an American company to invest/joint- venture for $30-50 Million in the Pharmaceuticals sector in Bangladesh, but it seems getting tough day by day with the current financial situation in USA.
 
#5: Feed 150 Million People
.
.
.
.
.
.
.#100: Case against War criminals since it will take time and will need UN help to bring war criminal from Pakistan, unless the scope is narrowed.

#101: Name changes on Airports, bridges, bathroom, etc.
 
I hope that I was able to describe my point.
 
Note: if you read my article, I not only tell what is the problem, I also put the solution. This is little different than others. We always complain but never give solution how to over come. Please read carefully what I have said. My intention was developing Bangladesh economical condition as much as possible with policy and strategic planning.
 
Regards,
M. M. Chowdhury, USA


--- On Sun, 2/8/09, M. M. Chowdhury (Mithu) <cgmpservices@ yahoo.com> wrote:
From: M. M. Chowdhury (Mithu) <cgmpservices@ yahoo.com>
Subject: Financial and Strategic Warning to Current Govt in Bangladesh
To: cgmpservices@ yahoo.com
Date: Sunday, February 8, 2009, 7:34 PM

I am so much worried about few of Moran Ministers in Bangladesh that they may sink the ship in Bangladesh while they are in driver seats.  The reason of my frustration is that they are stoning wrong birds to accomplish people needs.  Now I am hearing the following statements:
 
 
2) Signing Transit Agreement with India is not ripe time yet.  Every country is building bunkers for their survival, nobody will give you more, so signing with them won't help you a penny.
 
3) South Asian Security Force.  A recipe for a disaster unless Bangladesh is Iraq or Afghanistan situation.  US canceled TIFA since they are in big hole in financial situation.
 
4) Trail of Razakars should be second priority under the current financial condition of Bangladesh.  This will take off our real focus of emergency needs in Bangladesh.
 
5) Law and Order is deteriorating - Taj.  This is the benchmark for any Govt success.
 
6) Mr. Zillur as a President is a wrong choice in wrong time.  Bnagladesh needs a dynamic, strong, visionary person to lead Bangladesh in this tough time.  No time to bring oxygen tanks and carry all places.
 
The bottom line is that why either AL or BNP parties does not have qualified people to run Bangladesh and establish the priorities that they need to focus.  I am more than convinced now that Current Govt needs to bring expertise and experiences NRBs to develop few strategic plan and focus which will help Bangladesh next 3-4 years.
 
I hope that someone in AL Govt listening my call.  Even they do not listen to me,  I have nothing to loose but I believe that I should do for Bangladesh as much as possible with my power and limitation.
 
God Bless Bangladesh and help poor people in this coming financial storm. 
 
Regards,
M. M. Chowdhury (Mithu), Virginia, USA


--- On Sun, 2/1/09, M. M. Chowdhury (Mithu) <cgmpservices@ yahoo.com> wrote:
From: M. M. Chowdhury (Mithu) <cgmpservices@ yahoo.com>
Subject: Bangladesh Needs Local Stimulate Package
To: cgmpservices@ yahoo.com
Date: Sunday, February 1, 2009, 9:25 PM


The following are real strategies which will help Bangladesh to ride over this upcoming financial turmoil:
 
1) Provide stimulate package to ICT companies and provide all Govt ICT projects to locals to make digital Bangladesh.  If some one in current Govt knows what digital means to them.  Use local programmers and networking engineers to employ as much as possible.  This will create enough works to keep ICT going with creating more jobs.
 
2) Provide enough finance to build the Pharmaceuticals park at Munshigonj.  20% works was done, complete this projects which will create huge jobs for now.
 
3) Since overseas market is bad,  few of NRBs might be interested to come back Bangladesh to develop this country with their expertis and experiences.  Govt needs to make sure to provide tax free income during their stay in Bangladesh like Middle Eastern Countires.  Provide enough facilities and security to perform their work during living in Bangladesh.
 
4) If there is less corruption in Bangladesh,  NRBs might be interested to invest in Bangladesh to take opportunity during this financial turmoil.
 
5) Bangladesh Govt needs to adopt new policy to attract NRBs in Bangladesh.
 
Regards,
M. M. Chowdhury (Mithu), Virginia, USA
www.changebanglades h.org

--- On Fri, 1/30/09, M. M. Chowdhury (Mithu) <cgmpservices@ yahoo.com> wrote:
From: M. M. Chowdhury (Mithu) <cgmpservices@ yahoo.com>
Subject: Perfect Storm is coming to Bangladesh
To: cgmpservices@ yahoo.com
Date: Friday, January 30, 2009, 5:28 PM

Dear All,
 
You may wonder what kind of storm I am talking about.  It's  economical storm that Bangladesh never experienced before.  I am little bit worried that economists and present Minsters in Bangladesh are not paying much attention about this storm.  Well the problem is that if you do not know a Storm is coming, then you won't be prepared for it.  There will be a situation that we will start blame game, he or she didn't tell me, I didn't know, nobody even PM didn't say this.  Well then listen from me please.
 
My conservative estimate is that economical storm in the world will exist until 2012,  if you can ride on this storm, then you will survive, if you can't then good luck.  I like to provide few strategic outlines what to do in this perfect economical storm in Bangladesh.
 
1) Current Govt should recognize that a perfect storm is coming.  If USA could recognize this storm in 2006,  USA won't be in this position now.
 
2) Put resources in place so Govt can take care its people and feed them trough out the storm period.
 
3) Stop biased or favoritism in Bangladesh.  Once I am hungry,  I won't say I am AL or BNP,  all I will say give me food and job to survive.  So based on basis of human rights,  its current Govt duty to help people regardless his or her party affiliations.
 
4) Bangladesh Real Estate bubble will be burst within year and so, so Govt should be prepared with huge layoff in that sector as well as other sectors.  Most of the Real Estate bubble in Bangladesh were created by NRBs and corrupted money in Bangladesh.  NRBs are real squeeze in financial aspect and won't be able to continue support the sky rocket price of land and apartments in Bangladesh.
 
5) Pharmaceuticals is the only sector which is recession proved in Bangladesh.  I have asked BNP Govt in 2005 to modernize this sector, CTG in 2007 and I am asking AL Govt in 2009 to pay attention and use NRBs expertise to develop this sector.  This is the only sector that you have no choice but to bring experts NRBs in Bangladesh to develop this sector for future growth.
 
6) NRBs and people in Bangladesh should lower their life style to ride on this storm.  Excessive waste will bring up other people's misery.
 
God Bless Bangladesh and help her 150 Million poor people in this coming perfect Storm.
 
Note:  My advise is not to direct any individuals or parties or NRBs, but to reach out to them and what we can do for the people during this bad economical  times.
 
Regards,
M. M. Chowdhury (Mithu), USA
Director, Political and Economical Development in Bangladesh
Change Bangladesh organization, USA
www.changebanglades h.org


--- On Tue, 1/20/09, M. M. Chowdhury (Mithu) <cgmpservices@ yahoo.com> wrote:
From: M. M. Chowdhury (Mithu) <cgmpservices@ yahoo.com>
Subject: [khabor.com] Why USA won't able to get out of this financial mess
To: cgmpservices@ yahoo.com
Date: Tuesday, January 20, 2009, 12:41 PM

Dear All,
 
I think and believe that we in USA are concern like any others about financial impact in USA and rest of the world and where this will lead us in the next 8 years.  I congratulate President Obama for taking the USA leadership but I am cautious like others even though I have campaign for Obama among Bangladeshi Community in USA.
 
Let's see the scenario why USA is in this position which is very different than 1930's and what steps should be taken for the incremental improvement.
 
Reasons for this mess
 
1) More than $20T, start with Trillion dollars of investors money has been lost in the last 12 months including personal 401K money. So the people confidence in companies is lower than ever.
 
2) More than 500,000 jobs have been cut per month by companies in USA, if it's continue then at the end of 2009 total 6 million jobs will be lost.  Adding 2 million jobs already have been lost in the last 24 months.  This is creating a nightmare for the consumers to spend  discretionary money.
 
3) Two third of the economy are depended on consumer spending,  when consumer stopped buying like before,  companies can not make money, their stocks goes down and companies start laying off to make baseline profit for the company.  This is called a cycle of uncertainty.
 
4) Biggest problem is that USA consumers has borrowed two times of their house worth for the last 5 years.  For example, if a house price is $100K in 1999, it went up to $300K in 2006, so extra $200K was borrowed from foreign countries to mortgage people's houses in USA.  Therefore, deficit went over the roof.  If this is continued,  few wealthy countries might not be interested to invest in USA like before because losing confidence into USA economy and their investment returns.
 
5) Once people lost jobs, they can not afford to pay high mortgage which they could not afford at the first place.  US Govt can not pay everybody extra interest for the mortgage they owe to banks.  This might come over $10T, start with Trillion.
 
6) Once companies make less money, the Govt tax collection also becomes low.  So more deficit for USA.  Intake is higher than delivery.
 
7) USA does not have leadership of many technologies like before, so USA has more competitors than before i.e. China and India.
 
8) More liability for baby boomers in years ahead, means need more money to take care her citizens like Social Security and Medicare.
 
9) Iraq war alone costs USA close to $1T and need another $1.2T to take care veterans health and financial liabilities.
 
10) Dollar might go down compare to others currency once foreign countries start withdraw their investment or stopped new investment in USA, i.e.  stop buying USA Bond.
 
Options to way of of this mess:
 
So what do USA have now?  President Obama's sweet talks might not bring much fruits unless he can show leadership and put new policies in place very quickly, so situation does not get out of control.  I personally think that President Obama should do the following for the love of this country.
 
1)  President Obama should provide executive order to cut military budget of $465B to only $50B.  Bring all military installation back home unless foreign countries provide the bill.
 
2) Provide middle class incentives as soon as possible.
 
3) Stop giving big money to banks but give direct loan to consumers from Govt Treasure.  I know it does not sound Capitalist,  but US Govt does not have any other option.  For example,  If I know that this consumer will not able to pay back my money,  I won't make loan to him even I get pressured from Govt unless Govt takes all the toxic assets.  Same situation, Banks are not lending even they got US Govt money.  Banks know consumers do not have enough money or may lose job soon whichever is first.
 
4) Provide stimulate money if there is any Corrective and Preventive Action (CAPA) in place for the new projects which will create jobs.
 
I hope and pray US gets out of this mess but I am very pessimistic now based on the scenario I have presented you here, unless miracle happens in USA.
 
God bless USA and her people.
 
Regards,
M. M. Chowdhury (Mithu), Virginia, USA
 


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