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VOL IX NO REGD NO DA 1589 Wednesday, December 03, 2003
Headline
Mandatory L/C margin goes
Stock prices surge Circuit-breaker applied
Ammo haul and poor police intelligence
St. Martin losing its scenic beauty to hoteliers
Cabinet sub-committee okays new regulations
94 arrested so far
WB takes new approach for investment in Bangladesh
BCS English: Flawed question paper
ICC to hold int''l confce in city on Jan 17, 18
Introduction of gas metering system runs into bad weather
Int''l confce on shrimp industry begins today
PM seeks WB aid to introduce city underground railway
US ends registration programme for foreign visitors
Waking up to HIV/AIDS risk in the workplace amid calls to businesses to brush up ethics
Japan prices showing first signs of recovery
Visions of wealth work as a prescription for success
News Panel
Editor : Moazzem Hossain
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or fe@gononet.com

Businesses welcome BB decision

Mandatory L/C margin goes

By Siddique Islam



Bangladesh Bank (BB) withdrew Tuesday the mandatory letter of credit (LC) margin restrictions on all imports in line with the policy of further liberalising the market, official sources said.
The BB in a circular issued Tuesday also directed all the commercial banks to set LC margins on imports on the basis of bank-client relationship, the sources at the central bank said.
Lifting of the mandatory LC margins was also a condition imposed by the International Monetary Fund (IMF) for disbursement of loans under the Poverty Reduction Growth Facility (PRGF).
Bangladesh, which received the first instalment of the IMF loans under PRGF in June, is expected to get the second instalment later this month, sources said.
Under the PRGF requirement, the government-imposed LC margins on import of 55 consumable items as well as on import of sugar, rice and wheat were supposed to be phased out by November.
The central bank imposed a 50 per cent LC margin on import of all items except industrial raw materials on December 11, 2000 to check downward trend in foreign currency reserve through discouraging imports.
Later, the non-tariff barriers on some items were raised to as high as 100 per cent following continuous downtrend in foreign exchange reserve.
However, the reserve situation improved significantly during the past two years.
According to the central bank statistics, the foreign currency reserve stood at $2.43 billion Tuesday. The figures were $1.60 billion and $1.30 billion in 2000 and 2001 respectively.
"We lifted the mandatory LC margins on imports to further liberalise the market," a senior official of the central bank told the FE after issuance of the circular.
He said imports would be easier following withdrawal of the mandatory LC margins.
Sources said the IMF and other donor agencies earlier suggested withdrawal of all kinds of import restrictions, including LC margins, to liberalise the trade regime.
The business community welcomed the latest BB move, saying the step would have a positive impact on the national economy as well as business activities.
"Lifting of LC margin on imports is a very positive step for our national economy, which will help reduce the cost of production," FBCCI President Abdul Awal Mintoo told the FE.
He said the decision of the central bank is a step towards a real free-market economy.
The basic cost of some products increased by seven to 10 per cent due to mandatory LC margin on imports, Mintoo said.


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Stock prices surge Circuit-breaker applied

By Raihan M Chowdhury



Share prices in the Dhaka Stock Exchange (DSE) continued to surge Tuesday with as many as 41.08 point or 4.36 per cent rise in the main index-DSE general index (DGEN).
Trading of shares of about 30 listed companies were halted in the market at one stage on the day reflecting a strong buying sentiment among the investors.
Market sources said at around 1-00 pm, BOC gave a price sensitive disclosure that it would disburse a 200 per cent dividend to its shareholders.
"The disclosure electrified the market and prices of a good num ber of company shares began to streak at the highest level of their circuit-breaker limit (10 per cent)," a market operator said.
There was no seller of the shares of Square Pharma, Islami Bank Bangladesh Ltd, Al Arafah Bank, Heidelbergcement, British American Tobacco, BOC, Aftab Automobiles, Atlas Bangladesh and Singer Bangladesh at the second session of the day''s trading when circuit-breaker provision was applied.
Meanwhile, the DSE management Tuesday sent letters to four listed companies asking them whether they had any price sensitive information in support of their unusual rise in the recent transactions.
The companies are Padma Cement, Meghna Pet, German-Bangla JV Food and Meghna Condensed Milk.
Earlier, the bourse management sent similar letters to Bangladesh Chemical Industries Ltd (BCIL), Dhaka Vegetable, Modern Cement, Aziz Pipes, Gachihata Aquaculture, Chic Tex and Rose Heaven.
BCIL and Dhaka Vegetable did not reply to the DSE queries till Tuesday while the other companies in their replies said that they had no such price sensitive disclosures in support of unusual price rise and also their transaction in unusual volumes.
Talking to newsmen Tuesday, DSE Chairman Ahmed Iqbal Hasan said there should be strong rules and regulations to punish the errant listed companies who are depriving the investors years after years of their dividends and dues.
"Delisting is not an adequate punishment to the errant companies, rather refund of the amount of the investors should be ensured in a new legal system," the DSE chairman commented.
He said 64 and 49 listed companies did not pay any dividend in 2000 and 2001 respectively. So far, 76 companies are yet to declare any dividend for the year 2002.
Prices of shares of Agni System, Alpha Tobacco, Apex Foods, Bata Shoe, BAT, Bd Dyeing, Beach Hatchery, Beximco Denims, Beximco Synthetics, Beximco Textiles, Confidence Cement, Eastern Housing, Gachihata, Miracle Industries, Modern Cement and Padma Cement rose between the range of seven per cent to 14 per cent.
Market operators have expressed their concern that prices of some junk shares should not go up in tandem with the price rally of many of the good companies.
"Why prices of weak companies like Gachihata and Raspit will go up, we don''t know and the authority must scrutinise whether there is any manipulation or foul play behind the scene," an investor told this correspondent.
DGEN rose to 983.11 Tuesday from 942.024 of Monday.
At the end of the day''s trading at the DSE, the total turnover stood at Tk 249.10 million from Tk 173.92 million with transaction of 8,444,324 shares and debentures from 5,639,152 shares and debentures, market statistics showed.
Out of 214 traded issues, 206 advanced while only four declined and four remained unchanged.
DSE-20 index also rose to 1258.45 showing a 44.83 point rise from the previous day.


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News Analysis

Ammo haul and poor police intelligence

By Shamsul Huq Zahid



The police personnel who by sheer luck hit a big cache of sophisticated arms and ammunition at a billboard making shop Sunday last at Kuril under Badda police station must have been caught by surprise. They did not expect such a breakthrough.
Yet the members of the police mobile team involved in the recovery deserve unalloyed thanks and appreciation, particularly SI Saidur Rahman and Constable Neyamat Ali who were seriously injured in the encounter with the armed criminals.
Never before, these kinds of arms and ammunition, that too in such a big quantity, were seized by police or other law-enforcing agencies in Dhaka City. Chittagong and the Chittagong Hill Tracts are the areas where law enforcers or members of the Bangladesh Army have recovered these types of weapons and ammunition on several occasions in the recent past.
Investigators are yet to make any headway in their bid to find out the origin and destination of these sophisticated arms and ammunition. But the residents of Dhaka are really worried by the fact that those weapons, or maybe, many more, have had an unhindered entry into the city with a view to beefing up the firepower of the criminals or terrorists, whatever one may call them.
The presence of hand grenades and explosives in the arms and ammunition recovered on Sunday last indicates that those were not meant for ordinary criminals but for people or groups involved either in terrorist activities or insurgency.
But one may not resist the temptation of asking a stupid question: how could those arms and ammunition reach Dhaka from border areas bypassing security checks at different points? Such a question is a stupid one in a sense that, when smuggled goods including drugs in huge quantities can enter the city unhindered, there is no reason for the gunrunners to face any special type of obstruction.
It is hard to believe that law enforcers would allow gunrunning the way, at times, they do in the case of transportation of smuggled or contraband goods or drugs in exchange for bribes. If they really do, they will do it at their own peril.
According to criminologists, gunrunning in Bangladesh, in most cases, happens in the absence of strong intelligence work on the part of law- enforcing and security agencies. Barring that of the military intelligence agencies, intelligence work by civilian agencies here is extremely poor mainly because of inefficient manpower and lack of modern security gadgets.
The quality of people manning the National Security Intelligence (NSI), the Criminal Investigation Department (CID), Special Branch of the police and the detective branches of the metropolitan police is not beyond question. These agencies are supposed to be manned by people of high intelligence quotients (IQs) and clear perception. Above all, they have to be honest and men of integrity. That would, obviously, require a special recruitment process. Unfortunately, authorities have never looked at the issue from that perspective. Police personnel have been traditionally manning these agencies; a sub-inspector serving in Motijheel Thana today may be transferred to the SB tomorrow. Little consideration is paid whether that officer is capable of doing intelligence work.
An English daily in a front-page story Tuesday referred to the growing ineffectiveness of the police intelligence network, basically dependent on informers. It alleged irregularities in the spending of funds meant to be used on informers and lack of trust between the police and informers.
There are several instances where police officials and informers betrayed each other. Dispute over illegal monetary transactions was found to be the root cause of such betrayals, which, in many cases, had cost a number of lives.
Moreover, the track records of informers picked up by the police are not generally clean. They themselves are involved in criminal activities. Thus, dependence on informers alone cannot bring the desired result in curbing criminal activities.
The nature and speed of crimes and criminals have undergone an unbelievable change over the years. But compared to that, the police in Bangladesh have not changed much. They do not have modern weapons, adequate transports and communication equipment. On the top of all, the police do lack the necessary motivation to perform their assigned tasks with sincerity and honesty. That is, however, a broader issue.
Under the given circumstances, it is essential to beef up intelligence work of the police. But the traditional way of addressing problems by the concerned authorities is unlikely to make any difference. The issue of intelligence work needs to be addressed with seriousness.


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St. Martin losing its scenic beauty to hoteliers

By Shakhawat Hossain back from St. Martin



Lands in Saint Martins island is being randomly sold out to private parties, while hoteliers are haphazardly constructing multi-storied complexes in stark violation of the government ban on building in the country''s lone coral island.
Many outsiders, fascinated by the enchanted island, are purchasing land from the local people to build holiday mansions and running hotel businesses leading to ruining of the scenic beauty of the coral island.
Many former and present ministers, businessmen and rich people are in the list of new landowners, sources said.
One katha of land is selling at Tk 15,000 in a suitable place near to the beach, though the price of such land was below Tk 5,000 even a couple of years back, informed locals.
The government had earlier decided to acquire the entire eight-square kilometre island in 1990 to protect its rich bio-diversity and create tourism-friendly atmosphere there, sources said.
But the project did not see light of the day and the government failed to implement ban on land selling in the island, they added.
A project of the government under the banner of conservation of Biodiversity, Marine Park Establishment and Eco Tourism Development is currently going on at a cost Tk 130 million.
Its Project Director Qamar Munir said the construction work of two motels, one marine laboratory and a dormitory for students will be concluded February next. The entire project is spread over a land area of 3.3 acres.
But the project will hardly help to secure the biodiversity of the island, sources said, adding that the abode of many rare species fishes and sea turtles is already in danger due to increased human establishments and habitation.
But even half a decade back, there was hardly any hotel, motel or lodging to host outsiders and tourists.
Most of the tourists either sought shelter from local people if they stayed overnight or returned to the mainland before sunset.
But now, more than 10 brick-built multistoried hotels, motels and lodgings have mushroomed at the prime beach area of the island.
Capable of hosting over 500 tourists daily, these are creating scenic pollution and posing threats to the biodiversity of the resourceful island.
The hotels - Prashad Paradise, Sagar Par, Prabal, Saibal, North Bengal, Simana Periye and Nijhum - are owned by outsiders, who claimed that they purchased the land from the local people.
Some 10 more hotels are also being planned for construction elsewhere in the island though official sources said the government has strictly prohibited construction of new hotels.
The only hotels recognised by the government are Prasad Paradise and Nijhum.
But Prince and another multistoried hotel are being constructed violating the government ban, sources alleged.
However, local people are cashing in on the buying spree of the outsiders by increasing the price of land.
They are not only charging exorbitantly for the lands, but in some cases, the once-simple islanders are even selling the same land twice or thrice to different private parties.


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SOE disinvestment

Cabinet sub-committee okays new regulations

FE Report



A cabinet sub-committee has okayed the proposed new regulations put forward by the Privatisation Commission (PC) to strengthen the process of disinvestment of the state-owned enterprises (SOEs), official sources said.
"After receiving a positive nod from the committee, the proposal is now awaiting the Prime Minister''s approval," the sources said.
Earlier, a high-powered committee headed by PC chairman Enam Ahmed Chowdhury prepared the draft of the new regulations, proposing some changes in the existing rules on tender process and bank liabilities of the SOEs to be disinvested.
The PC also proposed some changes in its operational fields to refurbish the current stagnant situation, which has put the board''s overall activities almost to a halt.
Under the proposed regulations, the PC can invite a maximum of two tenders to privatise an SOE.
"Currently, we have to invite tenders several times to take a decision on privatisation, which delays the entire process," a PC official said.
Responding to a question, the official said under the new guidelines, the highest bidder of the two tenders would be invited to purchase the SOE.
On the SOEs'' financial liabilities, the sources said complexities often arise over the disinvestment process of SOEs due to their liabilities.
Considering the situation, the PC has proposed the writing off of the interest owed to the banking system by the SOEs selected for privatisation.
In this case, the buyer would be liable to payment of only the principal amount of loan received from the bank, the official noted.
On the present stagnant situation faced by the board, a senior PC official said, although the commission is supposed to privatise a total of 32 SOEs in the current fiscal, it has so far failed to invite a single tender in this connection.


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Kuril ammo haul

94 arrested so far

FE Report



A joint force raided Monday night different areas of Mohammadpur for the second consecutive day after the recovery of the biggest ammo at the city''s Kuril area under Badda police station in the early hours of Sunday last.
During the raid, the members of the joint force rounded up 56 persons Monday night for their alleged involvement in different criminal activities.
Law enforcers also arrested 38 persons during sudden block raids at Cantonment, Badda and Gulshan Sunday night. The total number of suspects arrested so far stood at 94.
Police imposed curfew before conducting the raid on different parts at Mohammadpur including Geneva camp, Noorjahan Road, Banshbari and Tajmahal Road. But they could not recover any arms or illegal materials.
The curfew was enforced from 1:15am to 6am when a total of 450 police and BDR personnel raided different houses in area. Before the enforcement of curfew, they cordoned targeted areas, sources said.
Though the police could not recover any illegal arms during the raid, they picked up five listed criminals. The listed criminals were identified as Sumon, Bhulu, Azharul Islam, Nazu and Ismail. The Deputy Commissioner (DC) of the DMP West, Ruhul Amin, led the operation.
Meanwhile, both the police and BDR men could not unearth any clue in connection with arms haul at Kuril.
Earlier, three cases were handed over to the DB police for investigation into the Kuril ammo haul.
Aziz, one the prime accused of the ammo incident, is undergoing treatment at the Combined Military Hospital (CMH), along with two other police personnel. They received bullet injuries while exchanging gunfire.
Meanwhile, Manik, another suspect of the incident who was also the caretaker of the shop ''Tulir Parash'' from where the police recovered the arms, was taken to seven days'' police remand Monday last.


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WB takes new approach for investment in Bangladesh

By Asad-uz Zaman



The World Bank (WB) apprised Tuesday the government of its new approach for lending to improve infrastructures in the country.
Visiting WB Executive Director CM Vasu Dev said this during his meeting with Finance and Planning Minister M Saifur Rahman at his office at Sher-e Bangla Nagar in city.
"I did apprise him (the Finance Minister) of the new approach of lending for infrastructures," Dev told reporters after the meeting.
He, however, refrained from elaborating the ''new approach'' of the WB.
The WB official said there is a bigger opportunity now for the government of Bangladesh to take WB assistance for investment in the infrastructure sectors, which the government is already planning to do.
Asked whether he submitted any proposal, he replied in the negative and said: "General direction of the policies, which the bank is having at the senior management level, is to assist countries more and more in infrastructures and that is what I have suggested and emphasised."
Describing the WB as one of the biggest development partners, the Finance Minister said the bank has committed a huge fund for infrastructural development in the country.
He said it is now the duty of different ministries to prepare profiles for sound projects and submit those to the WB as early as possible.
"They (WB) are ready to finance projects. But we have to send project profiles to them after quick processing of proper and sound projects," he said, adding lenders have already committed over one billion of US dollars.
Referring to his interactions with WB bosses during its recent Annual Board of Governors meeting in Dubai, Saifur said they expressed their readiness to provide even $1.5 billion if it is spent properly.


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BCS English: Flawed question paper

By Md. Ashequl Islam



Amidst great anxiety over the question paper leakage, the BCS examinees passed the second day of their written examinations. Candidates appeared at the examination of Compulsory General English yesterday (Tuesday). The questions did not match with the leaked ones, but some of those were rather confusing and misleading.
Question 5 of the English paper relates to filling in blanks. Here question c was: we urged ----------him to consider it. But the question itself is correct. One example from the Oxford Advanced Learner''s Dictionary is: he urged me to consider my decision.
In question 8 examinees are asked to fill up the blanks with correct verbs. But additional prepositions are required for c, e and f. Here question c was: I think he never -------------me (pray). The correct answer would be: I think he never prayed for me. Again, as for e, the question was: I am not interested--------------you any more (visit). But the answer would be I am not interested in visiting you any more or I am not interested to visit you any more. Question f was: I am sorry ------------you yesterday (rebuke). The correct answer could be: I am sorry for rebuking you yesterday.
The examinees were at a loss over question number 8. They were confused over whether to use an extra word other than the verb or not as they were asked to fill in the blanks only with verbs.
Like the first day, on the second day also, the candidates, who bought the question papers paying big amounts of money, became disappointed when they did not find their much-expected leaked questions.


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ICC to hold int''l confce in city on Jan 17, 18

FE Report



The International Chamber of Commerce-Bangladesh (ICC-B) will organise an international conference titled "Global Economic Governance and Challenges of Multilateralism" to celebrate its 10th founding anniversary.
Prime Minister Khaleda Zia is expected to inaugurate the conference that would be held on January 17 and 18 at the Pan Pacific Sonargaon Hotel.
Thai Premier Thaksin Shinawarta would deliver the keynote speech during the conference.
ICC-B President Mahbubur Rahman disclosed this Tuesday during a luncheon meeting of the organisation held at the Dhaka Club.
Dignitaries like World Trade Organisation (WTO) Director General Supachai Panitchpakdi, Indonesian Minister for Industry and Trade Rini M Sumarno Soewandi, Turkish Minister for Industry and Trade Ali Coskun, ICC Chairman Jean-Rene Fourtou and Executive Secretary of UN ESCAP Kim Hak-Su have confirmed their attendance in the conference.
Representatives from 28 different countries are participating in the event.


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Introduction of gas metering system runs into bad weather

By Tareq Al Naser



The introduction of a modernised pre-paid gas metering system for commercial and household users has run into bad weather as the energy ministry is yet to finalise a policy guideline for the system.
The ministry has planned to introduce the metering system in phases by the end of this year to contain misuse and pilferage of gas by both domestic and commercial consumers.
The Petrobangla prepared a draft guideline and submitted the same to the energy ministry in September last. The guideline is now awaiting the final nod from the ministry, sources said.
Last May, the energy ministry in a meeting with the Petrobangla reviewed a report on the colossal misuse and pilferage of gas by household users in connivance with a section of corrupt gas officials and decided to instal pre-paid meters aiming to minimise the losses.
State Minister for Energy AKM Mosharraf Hossain who chaired the meeting asked the Petrobangla to prepare the draft guideline for the metering system.
"The guideline is now under our active consideration because installation of pre-paid gas meters is the only way to prevent the losses caused to the government coffer. We are hopeful that we would be able to start the installation of the pre-paid meters soon," said a ministry official.
There are about 0.8 million household gas connections in the country, with Dhaka and Chittagong forming the bulk user base.
Sources said the rates of misuse of gas by household consumers are abnormally high in Bangladesh because they get gas supply through pipeline round-the-clock but they pay a fixed charge for the use of any amount of gas.
A recent survey on the household uses of gas detected massive irregularities in the use of gas in the capital. A section of domestic consumers use gas to dry clothes and keep their rooms warm during the winter, it said.
In some areas, gas is used for fully commercial purposes although connections were initially sought for household use, it added.
Earlier, the Titas Gas Transmission and Distribution Company Ltd. (TGTDCL) introduced modernised metering systems at the Demra City Gate Station (CGS) to curb the huge systems loss and gas pilferage in the corruption-prone Narayanganj area.
The TGTDCL installed the gas measurement meter at the Demra CGS to measure the quantity of gas supplied to Narayanganj accurately, sources said.
Narayanganj was the most vulnerable area under the TGTDCL service areas due to long-persisting corruption and the authority have been trying to bring the systems loss down in the area for the last 17 years, the sources added.
The gas measurement meter is also helping the TGTDCL detect the gas systems loss accurately and take necessary actions in this connection.


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Int''l confce on shrimp industry begins today

FE Report



An international conference on global shrimp industry begins today at a city hotel.
Buyers, international organisations, NGOs, donors and trade associations supplying farmed shrimp will discuss the increasing demand for higher standards and certification of shrimp supply chains and constraints faced by the developing countries.
Arranged by Bangladesh Shrimp Foundation (BSF) and Network of Aquaculture Centres in Asia-Pacific (NACA), the first meeting of Global Aquaculture Discussion Forum has brought about 75 representatives from the USA, Europe and Asian countries together to share experiences and ideas on trade in the shrimp aquaculture sector and to seek positive solutions to problems and constraints.
Commerce Minister Amir Khosru Mahmud Chowdhury will be the chief guest while State Minister for Fisheries and Livestock Ukil Abdus Sattar Bhuiyan will be the special guest in the opening session.
BSF Chairman Syed Mahmudul Huq, NACA Director General Pedro B Bueno, acting chief of Party of ATDP Ron Gillespie, USAID acting mission director Beth Paige, president of Global Aquaculture Alliance (GAA) George Chamberlain will also address the conference.
According to industry sources, the main objectives of the forum will be to gain a better understanding of market developments and emerging trading practices in aquaculture products (certification systems, codes of conduct, traceability etc.) and implications for small-scale producers.
Another objective will be to develop a general set of agreements between consumers, buyers, international organisations, NGOs and trade associations from exporting countries on key issues to be discussed during the two-day programme.
Besides, the forum will agree on measures to ensure continued dialogue among stakeholders and a formula for resolving any conflicts that may arise between the stakeholder groups.
A total of 4.2 million people are involved in the shrimp industry of Bangladesh and the country earns $330 million annually by exporting shrimp products mainly to the USA.
International trade in seafood is a multi-billion dollar trade, with global volumes expanding from around $7.0 billion in 1976 to $55.3 billion in the year 2000.
Developing countries dominate seafood exports with over 50 per cent of internationally traded seafood coming from developing countries and developed countries accounting for 80 per cent or more of imports.
Asian developing countries top seafood production statistics.


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PM seeks WB aid to introduce city underground railway



Prime Minister Khaleda Zia sought assistance Tuesday of the World Bank to introduce underground railway system in Dhaka city to ease traffic jam in the capital and help transportation of the low and middle income groups of people, report agencies.
She sought the assistance when the World Banks'' visiting executive director C M Vasudev called on her at the Prime Minister''s Office.
Appreciating Khaleda''s plan for underground railway system as a precedence of her farsightedness, Vasudev said the World Bank (WB) would come forward if it gets a proposal in this connection.
Responding to some other requests, he assured Khaleda that the WB would provide assistance in construction of Padma Bridge and give increased support in power sector and infrastructure building.
The Bank''s executive director highly appreciated various government steps, including reform measures in the financial sector.
He said the WB lauds Bangladesh''s growth rate, macro economic management, low inflation, good foreign exchange reserve and successful introduction of floating exchange rate of local currency.


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US ends registration programme for foreign visitors



NEW YORK, Dec 2 (BSS): The controversial special registration programme under the United States Immigration Department has been annulled.
US Homeland Security Undersecretary Asa Hutchson at a press briefing on Monday said that the decision to scrap the special registration programme would be effective from Tuesday.
Expressing its deep surprise over inclusion of Bangladesh under this programme, the government launched hectic diplomatic manoeuvres to exclude Bangladesh from the purview of this programme.


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Corporate Social Responsibility

Waking up to HIV/AIDS risk in the workplace amid calls to businesses to brush up ethics

By Jem Bendell



GENEVA (Switzerland): The United Nations Research Institute for Social Development (UNRISD) published a paper 17th in the middle of last month on the response of the corporate sector to the HIV/AIDS pandemic in developing countries. It presents results and analysis from the first global survey of transnational corporations'' (TNCs) responses to the pandemic, and complementary research in developing countries, conducted together with the Joint United Nations Programme on HIV/AIDS (UNAIDS).
Among other findings, the paper reports that only 21% of the 100 largest corporations confirmed to the UN that they have workplace policies and programmes on HIV/AIDS. The study also finds there is a wide variation in the specific HIV/AIDS prevention and mitigation aspects of those policies and programmes, and differing coverage provided to employees and their dependents. It finds that communities, suppliers and subcontractors are rarely covered by policies and programmes, even though most company respondents consider that HIV/AIDS-and the risks it poses to their workplaces and other business operations-must be tackled beyond the workplace.
Most companies do not consider how their normal operations and strategies affect poverty. This is despite evidence that some normal practices of TNCs influence poverty levels in developing countries, and the UN General Assembly Declaration of Commitment on HIV/AIDS, which emphasised the importance of poverty in the spread and impact of HIV/AIDS.
Hence the main analytical finding from this research is that the corporate sector is just beginning to wake up to the risks posed to business operations by HIV/AIDS and has still to awaken to its wider responsibilities, which arise from its influence over the conditions that encourage HIV/AIDS prevalence and undermine possibilities for mitigating its effects.
Released to coincide with the opening of UNRISD''s international conference on Corporate Social Responsibility and Development at the UN in Geneva, the author of the report, Jem Bendell, suggests that the international community must act to ensure more companies are not only "waking up to risk" but also "awakening to responsibility" for socioeconomic conditions that influence people at risk from, or living with, the virus.
One possible route forward emerges from the analysis, involving the financial community. Bendell argues that HIV/AIDS may pose significant risks to current and future corporate financial performance, so that the financial community should increasingly be asking whether the companies they invest in are attuned to that risk and managing it accordingly. It is argued that this risk cannot be managed effectively by individual corporate action, but requires an economy-wide response. Hence joint action from the financial community may help institutionalise corporate responses, while sensibly extending the risk management approach to include the risks to economies and societies as a whole. Despite a few new initiatives in the financial sector, there is much still to be done.
Meanwhile, Jill Treanor in another despatch available on the internet and published in a recent issue of The Guardian of London reported: In a separate development, the fund management arm of banking group HBOS is writing to Britain''s top 100 companies calling for more ethical corporate behaviour, particularly in developing countries.
Craig Mackenzie, head of investor responsibility at HBOS''s Insight Investment, said he was aiming to devise a code for corporate responsibility similar to the combined code on corporate governance that sets guidelines for the composition of boardrooms and executive pay levels.
Admitting that the initiative is likely to take 10 years, Mackenzie said: "Ethics really matter. The reason Enron collapsed is because it had very low standards of ethics."
He was trying to find a solution to the problem of shareholding activists using a number of different benchmarks to demand ethical behaviour on issues such as bribery and treatment of workers. This allows companies to complain that shareholders are asking for different things and may be used as an excuse to hide their their record on such issues.
Mackenzie said a clear standard was needed to allow shareholders to work effectively together. He wants shareholders and companies to follow international principles set out in the universal declaration of human rights and the Organisation for Economic Development and Cooperation''s guidelines for multinational enterprises.
The Association of British Insurers, whose members represent a third of the stock market, also has a standard on corporate and social responsibility, though Mackenzie does not believe it goes far enough.
Mr Mackenzie, who is also chairman of the Financial Times Sensitive Index (FTSE) 4Good ethical share index committee, believes that fewer than 10% of the companies in the FTSE 100 have agreed to follow such international standards. Those that do include oil companies such as Shell and BP with large global businesses, often in developing countries.
Such is the proliferation of demands from activists, it was premature to ask companies if they were complying with corporate responsibility codes. Instead, in the letters sent to FTSE 100 companies, he would ask whether they intend to comply.
Mackenzie is also writing to other investors to try to get greater clarity on corporate responsibility guidelines.
The area of corporate responsibility has gained greater importance in the last two years since the pensions act required the £800m pension fund industry to state how their investments take account of social issues.


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US imbalances seen as boon for gold price

Japan prices showing first signs of recovery

By Barney Jopson in Tokyo and Lydia Adetunji in London, FT Syndication Service



The Japanese economy, which has been dogged by deflation for the last five years, has, of late, shown the first signs that consumer prices might be recovering. The core CPI index, which measures prices for consumer goods excluding fresh food, rose by 0.1 per cent from a year ago in October - the first increase since 1998.
Retail sales are also growing for the first time in 31 months, according to data published late last month.
Optimism was tempered by the fact that one-off factors contributed to the increase. But the Japanese figures reflect a broader turn in the global economy, which has shrugged off the deflationary concerns that dominated economic debate earlier this year.
The Organisation for Economic Cooperation and Development (OECD) said late last month that the global recovery would take place in a context of low inflationary pressures. But concerps about deflation have become less pronounced of late.
"[Deflation] is less of a danger than it was six months ago because of more evidence of a global recovery but it''s certainly still a risk that should not be ignored by policy makers," said Paul Ashworth, analyst at Capital Economics.
In the eurozone, inflation pushed up to 2.2 per cent in November, above the European Central Bank''s 2.0 per cent ceiling. But Germany still suffers from high unemployment and low domestic demand, and deflation could become a problem if the euro were to appreciate further.
The Japanese figures boosted confidence in the durability of Japan''s cyclical recovery even though the latest separate data showed lower-than-expected growth in industrial production and a rise in unemployment.
However, analysts cautioned that consumer price increases were due to one-off factors such as rises in tobacco tax and medical costs, and a rise in rice prices due to a poor harvest.
Jeffrey Young, economist at Nikko Citigroup, calculated that, if special factors were stripped out, underlying deflation was 0.3 per cent, and warned that recent strengthening of the yen could increase deflationary pressure.
Takehiro Sato, economist at Morgan Stanley, said: "From a cyclical point of view deflation is fading, but I''m not sure about the sustainability of this increase in the CPU". He predicted the underlying price index would not be positive until the 2005 fiscal year at the earliest.
The rise in prices focused attention on the Bank of Japan''s policy board, which has said it will not tighten its monetary policy unless the price index shows several months of inflation. Its members expect inflationary conditions to continue.
The latest labour market data showed unemployment rose 0.1 per cent to 5.2 per cent in October.
An earlier FT Syndication Service report by Kevin Morrison from London adds: Gold''s breakthrough $400 a troy ounce and the US dollar''s fall to a new low against the euro have given gold bulls plenty of reason for optimism over further gains in bullion prices.
The relationship between the US dollar and gold has been close in recent years. Gold has risen 57 per cent since touching a 20-year low of $250 per oz in August 1999, and the US dollar has dropped about 35 per cent since its high against the single currency in October 2000.
Investors are expecting a further slide in the US currency. Daniel Chornous, chief investment officer at RBC Investments, forecasts the dollar to fall by at least 10 per cent during the next 12 months, which augers well for gold.
"The US has a twin deficit that equals 10 per cent of its GDP - that structural issue as to be fixed before we can start to see any long-term accretion in the US dollar," Chornous told a gold conference late last month.
Nick Barisheff, president of the Millennium gold fund, said the growth in US money supply during the past 30 years was another concern for the dollar.
"US money supply has risen by 1,300 per cent since 1975 - the amount of the increase in money supply last year equated to the total mount of money in the US economy in 1975," he said.
"You can only print so much money before there is serious erosion in value."
John Hathaway, managing director at Tocqueville Asset Management, said gold had fallen in value compared with other luxury goods items.
"Twenty years ago, a Saville Row tailored suit would have cost an ounce of gold, which was about $400 at the time, a Saville Row tailor recently told me a good suit costs about $3,000 today," he said.
China - which is a major influence on many commodity prices, but is so far a small player in the gold world'' - may yet emerge as a bigger factor on gold prices. A representative of China''s central bank, the People''s Bank of China, told a gold conference in London late last month that China may buy more gold for its central bank reserves.
China has increased its gold holdings by a third in recent years to 600 tonnes, worth about $12.4bn or a fraction of its $3801m in official foreign reserves.


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Understanding Entrepreneurship

Visions of wealth work as a prescription for success

By Fergal Byrne, FT Syndication Service



LONDON: Vijay Patel learnt the benefits of "volume buying" at a tender age. As a five-year-old growing up in rural Kenya, he would take orders from other parents for a trip to the local sweet shop a mile away - and then negotiate extra from the local shopkeeper. "I argued that I deserved extra for buying so much - and I would of course let the shopkeeper know that I could buy the sweets elsewhere. And it worked like a treat," says Patel.
The same ability to negotiate has been crucial to the success of Waymade Healthcare plc, the pharmaceutical distribution company that Patel set up in Basildon in 1984, which is now one of the largest pharmaceutical suppliers in the UK. "As a buyer negotiating with the major pharmaceutical companies, I could see that there was a substantial market opportunity to aggregate the buying power of chemists across the country and force down prices," he says.
Waymade''s success has made Patel one of the wealthiest businessmen in the UK and allowed him to realise his dream, when he arrived in the UK in 1967, aged 16 and penniless, of a new life. "If you had asked me when I was growing up what I wanted to be, I would have told you to be wealthy. And I meant it. I was determined to get away from the poverty of my childhood. And England provided me with an opportunity to fulfil that dream," says Patel.
Indeed, during his early years in the UK, Patel was single-minded in his pursuit of that dream. He worked during the day washing dishes in restaurants, or wherever he could find work, while studying for his A-levels at night. And he opened his first chemist premises in 1975, shortly after graduating as a pharmacist from the University of Leicester and completing his training
"Everyone thought I was mad. Here was a 25-year-old Asian with no money, no experience and no collateral who wanted to set up his own chemist. Every banker turned me away. But I was determined. I was like a tornado, working all the days and hours available, seven days a week. I had nothing to lose," he recalls.
Patel opened a new pharmacy every year for the first three years, doubling the turnover every year. He attributes this growth to the strong relationships he built with his clients. "I am a people person," he says. "And I would get to know everyone who came into the shop, learn about their family and their needs, and always look after them and ask after the family whenever they came to the chemist. To succeed in a service business, it''s vital to know your clients."
As the business grew, Patel had to deal with a perennial entrepreneurial challenge: delegation. "My instinct was to try and do everything myself. However, as I opened new chemists, I was forced to give up control, delegate and rely on others, which was difficult to do. Indeed it was only a few years ago that I learnt to stop meddling in every part of the business," he says.
Patel''s brother Bhikhu joined him in 1982, bringing crucial administrative skills. "An entrepreneur can do everything, but he is not necessarily good at everything. I am good at spotting opportunities and negotiating deals, but not so good at administration. The deal with my brother was a simple one: I would make the money and he would look after it. And it has worked like that ever since," says Patel.
Waymade has always been more than a business for Patel, even before the arrival of his brother. "This is my extended family and I never like it when someone has to leave our company," says Patel, who prides himself on knowing (nearly) everyone''s name in the company. He likes to walk around the building talking to staff, sometimes sitting down and working with them on a production line.
Nonetheless, he admits that he can be a demanding person to work for. "I want to see people hit their targets and I don''t accept ''No'' for an answer. I expect everyone to deliver results," he says.
Patel''s quiet demeanour belies his determination: "When things don''t go according to plan, it can be heartbreaking, but there is no time for tears. You just have to get up and keep going. There are contracts we have won, with healthcare contractors where we have been turned down four years in a row. I just say we will go back again next year and bid for the business again," he says.
This persistence has paid off. Sales of £280m are expected in 2003, according to Patel. This growth has been financed without external investment - although Waymade made use of bank borrowing after a difficult start. "At the beginning, I couldn''t get money from any bank. However, the funny thing about banks is that once you have a success or two behind you they are more than happy to lend to you - even, or particularly, if you don''t need it," says Patel.
With the creation last year of Amdipharm, a company that develops and launches new pharmaceutical products, Patel believes he has achieved his goal of becoming a "mini-Glaxo" - a target he set himself more than 10 years ago. Nonetheless, he retains an appetite for growth. "Every time we make a deal, I am like a child saying ''Yes, that''s another one!'' I never sit back and think I have made it. There is always more to be achieved," he says.
Patel says that the motivation for all this is no longer money, but recognition. Indeed, his offices are decorated, with various awards that Waymade and Patel have won over the years, including the Ernst & Young Entrepreneur of the Year award in 2001.
Like many entrepreneurs, Patel is happiest when talking about new opportunities and the future. "We have 700 employees and are active in 30 different countries. But we haven''t even started yet. We are in a new phase of business growth. Over the next year, we will open up our own offices in another five countries and become a true multinational," he concludes.


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