Jamuna shows us the future on Bashundhara's land

I really didn’t know how to react to this. Whether I should be proud of it, should boast about it, or should lament over it. This claims to re-introduce Bangladesh to the global map. This stands tall and big on 41 Lac sq. feet floor space, international food court accommodating 3000 food-lovers, all local and foreign famous brands, 22 line bowling center, 7 halls in the movie multiplexes, health club for 2000 people, 5 big autrium (wonder what this is) and 7 voids, different swimming pools for men and women, own electricity producing plant of 45 MW, car parking facility for 5000 cars, theme park for 2500 children and many more.

Perhaps even a blind man would even read what I am talking about here, similarly even a blind man cannot afford to miss the gigantic presence of the so claimed ‘biggest shopping mall of South Asia’, like the Taj Mahal is to India, the Great Wall to China, the Pyramids to Egypt, the TVCs were comparing it to a man made wonder for Bangladesh…lets give it up for..The Jamuna Future Park…no where else in the world…but in our very own Dhaka…the city of the 21st century, the megapolis of Asia…well…a bit of exaggerating in the last part, got understandably carried away. But Jamuna Group claims that the Jamuna Future Park (JFP) would be our ‘shob ghotonar thikana’…so who knows if it could be also claimed that that day is not far away when Dhaka would become ‘shob ghotonar thikana’ for the residents of Asia…like Singapore, Hong Kong, KL etc. The group claims in its website that “Jamuna Future Park will stand as a symbol of national pride, prestige, progress and economic development of our country as like as the Twin Tower in Kuala Lumpur of Malaysia.” Well, enough of blabbering…the harsh truth is, Dhaka is not anything closer to that yet, nor there seems any correlation between the setting up of the mammoth shopping mall and Dhaka’s becoming an iconic city in the region.

Remember the time when they used to call Dhaka the city of mosques, then they called it the city of rickshaws. Has the time now arrived to call Dhaka the city of shopping malls? Shopping malls which are stuffed with pretty much same products and bored vendors? Shopping malls which are crammed with not so many buyers but more happy wanderers? If we all are happy with it, or even some are happy with it, perhaps its worth it huh? But I doubt how many of the shops in the Bashundhara City are seeing profit and are very happy with the proceedings. Nevertheless, perhaps from the entertainment point of view, the city dwellers might get the chance to experiment with something new at JFP.

However, what aches me is the fact that a city which lacks even the basic infrastructures in terms of traffic management, sewerage, urbanization, green space, even parking lots, has started boasting itself to be hosting the largest shopping mall of the continent. Is it ironic, sarcastic, funny or is it natural? I know very little, and understand even less, so you tell me. I know this much when two big corporates like Bashundhara group and Jamuna group lock horns, they need to outplay each other by establishing flashy shopping malls in a crammed city such as Dhaka. Good for them.

Sometimes I hear people blaming the UK based Sylhetis, that even though they have so much money, they end up spending it in building lavish bungalows, mosques, community centers in the Sylhet region back in Bangladesh. They lament why they don’t invest their pound power in establishing schools, hospitals, roads and culverts. But in the same note, you could also argue why such big corporates of Bangladesh are investing crores and crores of taka in setting up dazzling shopping malls and why not in establishing business incubators, an IT park for the IT industry of Bangladesh or something which might look a bit more responsible? Well, probably the increased number of shopping malls indicates increased demand in middle class consumer power huh? Sometimes theories of economics are really tested in Bangladesh.

The fun business, business of fun

My foreigner boss treated me lunch the other day. While praising the amazingly aromatic biriyani and the Bangladeshi chef, he also mentioned very casually how fun loving he thinks Bangladeshis are. Upon request for specification, he narrated from his recent experiences in tours in Nepal, Thailand and Malaysia. He said that almost wherever he went in those places, he came across scores of Bangladeshis, groups of friends, families, students all having fun, dining, wining, dancing, shopping, taking photos, gambling—in one word—having fun.

He also recalled one prominent restaurant in Kathmandu, where he found out that majority of the diners were not only from Bangladesh, but more specifically from Dhaka. He also exchanged pleasantries with a few, drawing upon his work experience as an expatriate here in Bangladesh. He claimed that even the duet singers who were rendering latest Bolloywood numbers, were flown in from Dhaka. They even sang latest Bangla songs as well, as some of the Bangla speaking audience furnished some request for particular numbers. After a sumptuous dinner in the company of Bangladeshis in the land of the Sagarmatha, my boss went up to the casino to try his luck with the roulette. There too, according to him, were our desi bhais trying their heart and luck out with flashy jackpot machines, plain roulette and other perhaps 53 types of games and gamblings possible with 52 cards. There were smoke, liquor, lights, shouts, calls, cries, sighs, smiles, tensions, laughter—in one word—merry making. And yes, Bangladeshis ofcourse. Fun loving Bangladeshis.

Our conversation over the biriyani dug deeper. We noticed that perhaps there is an increase in the number of domestic tourists within the country, who flock the popular tourist spots down south. We also realize that a certain income class of the society has achieved the ability to frequent more and more the tourist destinations around Bangladesh over the recent few years. But if these are the very tourists who cram the night clubs in Bangkok and the casinos in Kathmandu, thanks to their increased disposable income (or desire to travel whatever the budget be), then why don’t they show the same behaviour while within Bangladesh? I mean its good that we make the economy of the host country richer with our own money spent in their tourist hot spots, but is our demand to have similar kind of services not strong enough that might warrant flourishing of similar services in Kuakata and Cox’s Bazar? Its ironic that hotels in Cox’s Bazar allow BYOB (Bring Your Own Booze), you can drink in your hotel room, in the hotel beach (as long as you drink in bottles of Mum mineral water) or after the sun set. But you cannot set up legal bars there to sell alcohol. You can play loud music from your car, jeep and dance with your friends on the beaches but nothing called a ‘Disco’ can be set up or publicized. Or can it be? Just that no one bothers to, or dares to?

Rules. Rules. Rules. Is that the answer? What rule? Whose rule? Constitution? High court? Imam Shaheb? Abba? Amma? Who sets the rule? Society? Who is this society? Why am I willing to let my hair down and get flown and blown away with power alcohol in foreign discos but not willing to set up these in our tourist destinations? Chele meyera kharap hoye jabe? If we are so fond of Phi Phi island and Nagarkot and we also lament how beautiful our tourist locations are, are we still waiting for Government’s approval to set up infrastructure there? Or are we waiting that the ‘outlook’ of the society will change, then we will install ‘facilities’ as available even in so called Muslim majority nations such as Malaysia, Indonesia (Langkawi, Bali) etc.?

I don’t know if you have noticed or not, due to some ‘unknown’ reasons, the number of ‘DJ Parties’ have increased in town. I don’t want to argue if you think this is against our culture or not and all that jazz and jizz, I saw a poster the other day for a DJ party for Eid Celebration! Not bad huh? Quite a revolution isn’t it? Imam Shaheb will be a sad man seeing this poster, no? How many holud programs have you attended lately which went without a bit of nacha nachi? Globalization or the ‘wave of foreign cultural invasion’ has arrived here long ago, perhaps silently and not with a bang, but how long will we hold us back from the natural desire to jump around and dance around with some music and with friends and family? How long of the shady, close door parties in Gulshan, Baridhara, Uttara? How long of this strange system of doing ‘those things’ privately and wearing a gentle, sober face in the public? Which one are we actually?

Well, you could argue that we are a poor country and also a ‘Muslim’ country and have our heritage of many years, so we better not indulge in such ‘morally decaying’ activities. Honestly, I know little. Its just that I don’t understand if countries like Indonesia and Malaysia can allow same ‘things’ in and around their tourist locations and in major cities, why we cannot do it? Perhaps we are socially, culturally and morally stronger, purer than them right? Let it be then. I will be sober here, to keep the ‘social polices’ happy and put my coin down in the casinos in Nepal.


Disclaimer:

1. As an after-thought, setting up casinos and disco bars are not pre-requisites of a robust tourism sector. The argument is for introducing services, albeit through private sector initiatives, in our own tourist locations. This way, both domestic and foreign tourists will spend for the same service within our territory only. We can show that we can have fun, and we don’t have to keep on crowding foreign locations to prove that. What we have, is just unique, its just a matter of recognizing it and working on it.

2. The author is not a regular drinker, gambler, disco freak or any other socially ‘disturbing’ element, out in the mission to destroy ‘our values’. At the age of 28, he made his maiden visit to Cox’s Bazar in March 2008, this is the first reason of shame for him. He found the place so beautiful and full of potential that he has decided never to return there unless he himself can do something to tap this potential. That is the second reason of shame that he still has not managed to do anything much for the largest unbroken coastline down south. Other than this painfully long blog post.

The Royal Bengal Entrepreneurs Theme

Do you see what we see? We see a young man in black suit and a laptop hanging from the shoulder, waiting patiently behind the bushes. He has war fatigues drawn across his face. He is in mid 20s, medium height and structure. He carries a red and green flag over his shoulder. He is desperate to prey on the grazing executives who are roaming around in a distance, in their own territories, and who are still unaware of the presence of the new threat in town (or jungle?), who are ignorant to spot the potential and the prowess of the formidable challenger behind the bush, who are still unconscious to the emergence of….the Royal Bengal Entrepreneur!



On the proud occasion of the 37th Victory Day of Bangladesh, today on 16th December, this blog proudly and furiously announces a concept that it hopes to enlarge and enrich over the coming years. The Royal Bengal Entrepreneurs are that special breed of innovators, entrepreneurs, executives and managers who are ‘Made in Bangladesh’. They might be trained in the land or in foreign lands, but their talent and deed converge into the betterment of the economy of Bangladesh. We want to establish that the Royal Bengal Entrepreneurs are truly the majestic predators of business innovation and management in the global arena, as the synonymous Bengal Tigers rule the tough mangrove terrains of Sundarbans.

So let us know what you think the Royal Bengal Entrepreneur should be. What should be the ideal profile, keeping in view our socio-economic context? True, we are attempting to brand our breed of managers and entrepreneurs. So join hands and claws, lets leave marks in some territories. Let us know where and how....Aaarrrgghhhhh!

Citibank NA has more reasons to stay in Bangladesh

Because of the man pictured on the left, Citibank managed to raise profits by 64% and broker some of the biggest deals in the country. Yet it is hard to believe that the same person responsible for this growth decided to appear here. Why is this so important? Because the parent company went on a firing binge closing 52,000 jobs worldwide and selling most of what it considered non-core businesses. With HSBC and Standard Chartered having a party on both hemispheres it looked definite that Bangladesh would take a backseat as a non-core business while Citigroup paid $400 million for the naming rights for a baseball field (amidst simultaneously asking for a bailout).

This is more important for this blog because he is a Bangladeshi leading a Multi-National Company. Not just any MNC, it is Citigroup. And he simply doesn't work as a puppet, he is actually calling the shots. While many comments in this blog have pointed out that there is actually Bangladeshi leadership in manufacturing, the Citibank-Mamun Rashid thing is a entirely different deal. First, Mamun Rashid isn't a glorified plant manager with a CEO title. Nor is he a paper pusher or a rubber stamp for head office. He isn't here operating in Bangladesh because Citibank New York officials couldn't be bothered with mundane tasks.

Rashid doesn't manufacture low cost products with a unruly local workforce where MNCs are forced to go with local talent. He actually manages everything Citigroup in Bangladesh. This includes high premium banking. Plainly Citigroup didn't put him here because they needed any Bangladeshi they could find. He is there simply because of his banking talent. And seeing him on the move is more spectacular. He manages to move faster than Standard Chartered or HSBC (otherwise known (literally) as East India Company). He is eager to take these colonial antiquities on with full force.

But on a personal note, most importantly, he stands up to represent Bangladesh. He always promotes Bangladesh in a way that no CEO of Grameenphone or any other MNC has never done or will ever do. Neither Anders Jensen nor Oddver Hesjedal ever utter anything starting with the letter B. Its always about how Telenor did this and Telenor did that. Grameenphone this, Grameenphone that. It makes my ears bleed. GP only started focusing on CSR to repair their tainted image. Even then its CSR in a sense that 2% actually goes for CSR and 98% goes to ads saying that they are indeed actively in CSR (while embezzling more in the process). Why Mamun Rashid felt he had to stoop so low to appear in such a Grameenphone ad is surprising when you consider the vast differences in ideologies between them.

Furthermore unlike the Grameenphone CEOs, Rashid's interviews are always Bangladesh focused. And it isn't about how Citibank delivers 90% mobile coverage to 95% of the people. For him it is always about what Bangladesh has to offer for international businesses, its investment prospects, its growth and how Citibank fits into this scenario. It is never about Citibank as a entity, but it is about the partnership prospects with a country he is from. He is the biggest promoter of Bangladesh I have seen in a long time and long overdue from a MNC. And he is always there at conferences touting Bangladesh and never rants on how Citibank alleviated poverty in Bangladesh through mobile phones. MNCs also owe him for the example he is leading on behalf of them.

Now back from this praise, is 64% growth really that good? I am hearing reports and rumors that Brac Bank may post a profit growth over 70% this year. And this year is supposed to be Brac Bank's 'bad' year. But despite this growth which will probably be overshadowed by local banks and foreign failures, the best reason for Citibank to stay in Bangladesh is Mamun Rashid himself.

Update: This wasn't written to offend anyone. But to encourage those of you at MNCs to reach the top to make the difference Bangladesh needs. Mamun Rashid's praise is long overdue.

All in the name of industrial financing!

IIDFC stands for Industrial and Infrastructure Development Finance Company, IDLC for Industrial Development Leasing Company, IPDC for Industrial Promotion and Development Company and so on for many in Bangladesh. As if these companies are ‘fuelling’ the country’s industries. True, they are financing some industries but more truly (!), they are financing mostly consumers.

Right now they are focused on easier & flashy car loans, home loana, heavy rated FDR deposits, leasing of buses, trucks, cabs, human haulers, vans and proliferated small shop financing covered by very lucrative ‘SME financing.’ Where is the industry here? In worst, IPDC started a vague credit card business (club royal) to enjoy rebated hotel, dinner, spa being a pioneer industrial promoter! IIDFC posted a big outdoor ad on Birdem-PG foot over bridge at Shahbagh to take ‘car loan, home loan from them. Wow! Now pushing someone to buy a car, a flat, a tv, a fridge is called ‘industrial financing.’ Dear finance student/academicians, please redefine your terminology.

Another word that needs to be illustrated is ‘SME’. A very popular, repeatedly uttered term in round tables & editorials. I found no substantial long road in Dhaka city without miscellaneous shops. It is termed SME by our ‘industrial promoters.’ In the name of SME some are doing only retailing, some are writing editorials, some are writing articles in never read journals to become professors from lecturers, some are building capacity like IFC-SEDF, some are disbursing loans to almost micro credit level. CitiNA in commission business, SCB in credit card, HSBC in salary account, BRAC in SME, Dhaka Bank in Car Loan, DBBL in ATM. So country is going to be industrialized soon! Thanks to old fashioned uttara, islami, pubali, ab, agrani. At least you are in ‘industry somewhat.’

Worst consequence of this proliferated consumer financing business are- emergence of enjoying more than you can afford, traffic jams, extra fuel consumption by upper segment at the cost of public, social imbalance, frustration from jealousy, idle money breeds money thoughts (what IPDCs slogan), less interest to value adding business specially in manufacturing & service and as a whole weakening/stagnant real economy but sprouted consumerism that make inflation ultimately an eventuality.

Note: the writer is not against consumer financing business. But he wants an appropriate naming of your organization, equilibrium between industrial & personal financing by FIs.



-Azad A. Kalam

Make way for the Royal Bengal Entrepreneurs

Remember McGyver? Or Oshin? Or Bionic Woman, Six Million Dollar Man, Fall Guy, Manimal, Raven, A-Team, Knight Rider and all those English thrillers, serials that many of us used to religiously follow in the then only state-run television BTV? Since we didn’t have much option in terms of TV channels, so we had to be satisfied with whatever was shown there. But still, we had grown a habit of following certain shows in the TV isn’t it? Also, don’t forget the extremely popular Bangla drama serials such as Oyomoy, Ei Shob Din Ratri, Bohubrihi and the like. Well gone are the days of the monopoly of BTV, scores of other satellite channels have made me a serial remote switcher, nearly suffering from chronic button pressing and channel switching syndromes. I also realized that I have grown out of following any particular TV program in the TV these days, firstly I don’t have much time, secondly internet has taken over my life and thirdly and most importantly, there are just too many TV channels, making it difficult or confusing for me to settle with any particular show, with which I could associate myself.


In the flurry of all the painfully similar drama serials, talk shows and music programs, I was wondering if its ever possible to have a show pretty much like Dragons’ Den, where interested venture capitalists used to hire or fire potential entrepreneurs or executives who they thought could do the talk and walk the mile. It’s a known fact that there are many potential entrepreneurs across Bangladesh who are bubbling with their nascent business ideas, but they just can’t get the headstart due to lack of exposure and/or patronizing. Not everyone needs to be a BBA graduate from IBA or NSU to be a skilled manager, I believe management is more a mental frame of mind, an aptitude and attitude, rather than paper certificates from top-ranked B-schools. Those who have it, can do it, with some initial hand-holding. And they don’t necessary need to be enrolled in a private university or the best business schools. Pretty much like the singing talent shows where wanna-be song birds display their singing talents, similarly, a budding entrepreneur might come up to face a judge panel and/or audience vote to evaluate his/her business idea.

I am not very clear about how the Battle of the Minds operates, something executed by the tobacco producer in Bangladesh…how the participants are selected and why. Similarly, HSBC Young Entrepreneur Award also seems to have a regional appeal and popularity. Bangladeshi students have already shown evidence of merit and potential. But what is not clear is what happens to them afterwards? How many of them have truly been successful in realizing their initial business ideas? If they have succeeded, are we tracking it? If their ventures have failed, do we know why? How many of them genuinely chase their dreams and turn the dreams into reality? Or is it just that they are good in academics which produced a great business plan and landed them with the award? But in reality, they had no intentions to start such businesses?



So the point is, these entrepreneurship awards and close door competitions sponsored by any particular company should graduate itself to the public domain. General people can sometimes be a better judge and powered with technology such as SMS, they can vote out or vote in their preferred entrepreneurs. Finally, the one who wins, shall actually start the business with the seed capital provided by one or many of the venture capitalists sitting in the judges panel.

So I think its time to say au revoir to airy talks in classrooms and seminars on entrepreneurship, and limiting the activities to giving away micro and macro awards to budding Royal Bengal Entrepreneurs with nominal monetary aid. Rather its high time that the movers, shakers and thinkers of entrepreneurship start taking shares in the business ideas or projects which they think can reap great benefits. Actions are louder than words and than this blog post too. So how about a TV program like this to bring me back in front of the TV sets once again, without switching channels this time?



Image courtesy:
http://entrepreneurship.rit.edu/images/entrepreneurship.jpg
http://www.genuinememorabilia.co.uk/images/uploads/Dragons_Den_book.jpg

Let’s grow a cash cow

I was reading an article about the food poisoning in China, and how it affects the whole world. Somewhere in the article I found the name of Bangladesh, and its current operations against food poisoning and other stuffs. I kept reading.
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‘Do I find a new opportunity here?’ I thought. ‘How about starting a new food business? A premium one? ’, I said to myself. ‘Wouldn’t people be paying more for quality food?’
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Think about a corner street burger shop and KFC (Bangladesh). They both are making money. KFC surely makes much money for its quality burgers, and other food items. People spend more than 200 BDT over the high quality burgers of KFC. In Australia, I do not spend AUD 10 on a KFC burger, because first of all it’s crap, and not fresh. Rather I spend my money on quality food items; on fruits, vegetables, and other nutritious foods.
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As I was saying, if anyone starts to grow a premium food shop with quality food items, I believe s/he is going to grow a cash cow. People will certainly spend more to stay safe.
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However, there will probably be no chance for the poor and ill fated people to sneak a look into the premium food shop through the window glasses. But for those who has money will absolutely spend more on the premium food shop items, helping it become a cash cow.

Do Multinationals develop HR in underdeveloped countries

Peter Drucker, the iconic management guru and social philosopher, in his many writings claimed that modern day human lives are immensely influenced by the corporate houses. Why so? We live in society and it has no universal law as the physical sciences do. Drucker believed that society and human beings are in continuous process of change and evolution. Hence, the basic nature of human being is derived not from the absolute truth (from religion) but rather from ever variable psychological and societal parameters. In this essence, comes the concept of knowledge workers to describe post industrial economic men and women. Who creates those knowledge workers to a great extent schools and also corporate houses as knowledge spent almost 50% of our productive life in corporate houses whether big or small. Now my question is how the corporate houses specially the multinational ones are contributing to create knowledge workers in an underdeveloped country?

I have worked in two multinationals in Bangladesh before I started my journey to become a part of new and bold capitalism. My experience is that multinationals do and can play decisive roles in shaping the human resources or creating knowledge workers in an underdeveloped country. I know at least 20 well trained managers, who worked for those two multinationals, are now serving local home grown companies in Bangladesh. This will have a multiplier effect to create better trained managers i.e. knowledge workers in Bangladesh thus increasing the efficiency and productivity of Bangladeshi companies. I have also been instrumental in starting up TQM (Total Quality Management) and inclusive vendor management project for one of the leading MNC in Bangladesh. Initially it has been very tough. There were many oblique remarks such as a disciplined philosophy such as TQM will never work in Bangladesh where indiscipline is the essence. Neither I nor my top management believed that it is impossible. So, we started engaging our shop floor people in problem solving and encouraging people to come up with improvement ideas. We believed that it is all about understanding factors for motivation and concern and then designing right program with proper incentive. For example, we introduced a small program of giving employees free gifts on festivals such as Eid Holidays. And during that time we used to emphasize the fact that if employees don’t take defective products (even though it is free) why will they produce and dispatch defective products for consumers/customers. This created tremendous awareness in our plant level to make our TQM journey successful. Second was to engage people and train them in a very simple manner such as using visuals etc. Third important thing was immense commitment from top management even when business was in trouble. So, these initiatives in fact created about 200 highly trained workers and 20 supervisors.

We have also been successful in creating a participative supply chain even without having very sophisticated IT tools, though we were using some IT tools. How could we do that in a country where suppliers and clients relationship is more of boss and subordinate kind? We ensured free flow of 3 Bs- Bucks, Boxes and Bits. Bucks mean money or value, Boxes mean materials and Bits mean information. This created an environment of trust and confidence for us in our suppliers though initially they were wary about an Indian company. We involved our suppliers to understand our business needs and mechanism and in turn they also let us involved to understand their business financials, economics and needs. Hence, in negotiations table we always had mutual agreement without any acrimony. It may sound quite surprising to many in Bangladesh. We dedicated resources to improve the manpower quality of our suppliers or improve their business process such as purchasing or financing. That is another step which strengthened our collaboration with our suppliers. And above all we pay our suppliers within a week. Many believe that having higher credit is good for business. But in reality it is not because higher credit term is associated with lot of hidden costs. One is the cost of borrowing for suppliers will be higher than a client like my earlier company with access to many banks. And suppliers will definitely pass on this cost to clients. For this reason, we often financed our suppliers also on capital investment projects and went for profit sharing. Yes those things were done based on a little bit complex EVA (Economic Value Addition) model which can be different topic for discussion. Here also, our initiative of suppliers’ development program trained almost 500 workers and 50 supervisors. I am sure that these training and learning will percolate to other companies in course of time. I am proud that our suppliers today publicly say that we are one of the best clients to work with in Bangladesh if not the best, as they have got good financial benefits and even more highly skilled work force, better business processes and opportunity to be our real business associates. I believe that this philosophy also will percolate through our trained managers to other Bangladeshi companies.

Yes there have been many stigmas against multinational companies, specially those ones into extractive industries (Mining, Oil and gas), operating in underdeveloped countries. In some cases there are solid reasons for those stigmas too. But I think that with more moral consciousness among investors/stakeholders about how the money is made will make corporate houses more socially responsible in underdeveloped countries such as Bangladesh..

And thou shall not lie under the influence of alcohol

Not a blog post about the merits of alcohol. I don't drink much, partly because its not readily available in Dhaka, secondly even if it is, I cannot or don't feel like affording it. The thought of getting on a high with such an exorbitant cost never lets me get on a high in the first place. However, all free things in this city come with much excitement and curiousity from ordinary people like me, alcohol is also no exception. Atleast it proved again that its lets you let loose, it brings down your inhibition, either you are at your 'devilest' best, or at your 'pervertest' best, or at your funniest best. Whatever state of mind you experience fuelled by alcohol, the journalist friend of mine spoke his heart out and expressed his true self that evening when we met for the alumni dinner at the posh Gulshan hotel.

For quite some time, I had been chasing this acquaintance of mine, who happens to be a well-connected journalist, to give us some coverage. Us means, this blog...I had been trying to convince him during our previous encounters about the uniqueness of this blog, how it established an alternative platform for consumer-led business journalism, how it gives us a voice to speak about Bangladeshi companies, why and how the google ranking of the blog is high, what are its objectives and future plans blah blah blahs. He always seemed very scatter-brained whenever I used to engross myself passionately about how he or his team could come up with a tiny feature on this blog. I also tried to convince him by assuming that the media is always on the look out for new content to publish, something that might draw the readers attention and interest, so why not give this blog a try? However, all my advocacy and promotion for a little bit of mention finally landed on deaf ears as he ended up with airy assurances and 'bepar ta dektesi' type gestures. I didn't lose heart, somebody gave me a tip once that one should chase journos as they chase you otherwise. However my chase kind of met a premature stop during that alcohol-powered gala dinner evening, when I was hopping from this circle to that circle, with a 'forbidden drink' wrapped with Bashundhara tissue in hand. I could spot my journo friend who seemed to have given in to temptation too early too soon. one peg, two pegs, three pegs and bingo....he was nearly flying...from this crowd to that, from this conversation to that, from this mix to that. I thought a happy moment for him such as this, could be the right occasion to play my persistent record..the 'ek dofa dabi'...I approached him and after a casual introductory chit chat, I again repeated my plea. He slowed down, looked at me with his sparkling eyes and in a lower tone asked me, "Ok ok, I will look into it, how much will you pay?". I experienced some momentarily lapse of quick reflex, as I never took any bribe myself in life, and never tried to bribe anyone, did think of doing it a few times though, it never realized. I recomposed myself and responded like a pro, "Arey that is what I have been waiting to hear from you Bhai!, so YOU tell me what suits you well!". He gave a professional sip at the Smirnoff and told me, "10,000", he will make sure its in the press. This time round, I gave him a 'bepar ta dektesi' gesture and proposed him yet another drink. He extended his ear to ear grin and nodded.

I was wondering what stopped him all this while to just say it in the first place that 'its all about money honey', 'paise fek, tamasha dekh'. Perhaps I was bekub enough not to have received his crafted hints during non-alcoholic times, perhaps I was too naive to realize that this is the way things are done in media here, or everywhere in the world. But good that I realized and learnt, thanks to the 'pagla pani', my journo friend could not hold back his true intentions any further, it came out laughing and rolling through his drowsy eyes and clumsy gestures. He laughed like the happiest person on earth and told me like a sage with utmost composure shortly afterwards that you pay me, you are in tomorrow's dailies, arrange a few foreign trips, you will be regularly in dailies and on air, arrange some free 'refreshments', I will make sure your entrepreneurial efforts, or whatever kind of thing you are into is brought into limelight. I smiled back and nodded, and pretended to be drawn to other acquaintances...slowly getting out of his sight, hoping and believing sincerely that he must have been an exception, taken over by alcohol...and failing the lie test. Hope there are not those who can outplay the intoxicant and keep playing the games they play with the most pwoerful tool of our times--the media.

"Citi Never Sleeps"

"Citi never sleeps" Famous last words?

I had to write this because it is of great concern to the banking world. The bank I work for in New York was under discussions to be acquired by Citibank at some point. How Citigroup evolves or attacks the mess they are in is going to have great consequences. How the Feds respond to Citibank is of greater importance.

Citibank as you may know is on the brink of collapse after 4 years of having the philosophy that they are "too big to fail". Robert Rubin, a man of significant importance to the strategy Citigroup had taken for its demise, is also an advisor on the Obama team. Right now the Feds are negotiating terms of stabilizing the stock price after outcries from investors that CEO Pandit is not doing enough. Pandit contends that all the 'numbers' are right and there is nothing to fear, but those numbers had been right for the last 4 years as well. In short, no one believes him or shareholder Prince Talal who has publicly stated that Citigroup is 'drastically' undervalued. So undervalued that the Prince Talal increased his stake to 5% but not beyond.

Citigroup just decided to lay off 52,000 employees worldwide. Most of the cuts were from New York and London. And I am sure that my job would be at great risk if my employer was timely acquired. But amongst the Asian layoffs 300 are from Singapore and 1000 are from India. If such drastic cuts are being made regionally and the organization has planned to cut 20% of its costs, I have doubts about the existence of Citigroup Bangladesh.

Citibank Bangladesh might be cut out at a time when HSBC and Standard Chartered are aggressively expanding into this market termed by Goldman Sachs JP Morgan as one of the 'Frontier Five' (countries with high long term projected growth). It is a country which Citibank Bangladesh CEO, Mamun Rashid, termed as the "last frontier of banking". Ironically he may not be a part of this frontier for very long. Mamun Rashid's comments has made HSBC and Standard Chartered more aggressive. But while Citi burns have local banks rallied strongly in the stock market. Being in a frontier has helped everyone but Citi.

It has come to my attention that Citibank Bangladesh has hosted a "micro-credit" award ceremony amongst a media frenzy. Yunus wasn't there because Citibank didn't want to deal with a 'higher than thou' attitude. From sources at that event, Citibank NA staff were visibly depressed at a hyped media event. But what does a bank that is associated with all the Fortune 500 companies have in common with micro-credit? Nothing. This summarizes Citigroup for the last four years of existence. Nothing made cohesive sense. Bigger risks doesn't always mean bigger profits. How else does a $300 billion juggernaut become a $20 billion bargain bin company?

Lets not bite the dust

Of the many things we have been trying to promote through this blog's platform, business journalism and contemporary business literature on Bangladeshi companies are one of them. We have blogged about the nascent business journalism industry in Bangladesh, hoping to see more vibrant activities and popularity of those initiatives. Bangladesh Brand Forum is perhaps one of them about which we have been very positive and hopeful. The magazine seemed to have taken off with much fanfare, media coverage and gaudy display of think-tanks and movers and shakers during various summits and conferences. The content of the magazine, the approach, the objectives, all seem to have been heading for the right direction until this September perhaps, when my repeated visits to the neighborhood newsstand started turning out to be unworthy, as the magazine has disappeared from those newsstands and according to my hawker, from the market too. He claimed that the magazine did not hit the stands since September. Now this is not good news and I sincerely hope this is temporary. I wonder what is holding back the magazine which seemed so full of potential, it had great names and perhaps great minds in its board, great contacts, great adverts and above all, great content. We are convinced that entrepreneurship and entrepreneurs are bound to be hit by dust and rust, that is a natural phenomenon, but biting the dust in an entrepreneurial venture never tastes sweet. We hope Bangladesh Brand Forum does not have to bite the bitter dust and continues emboldening the brand Bangladesh.

Grameenphone's First Success in a long time

BTRC fines you
your customers desert you,
RAB robs you,
commercial banks blacklist you,
a chor now means you

Yunus jhamtis you,
CEO quits on you,
VOiP confesses on you,
Newspapers start pointing at you,
your print ads clearly aren't helping you,

$300 million ignores you,
$200 million is oblivious to you,
$150 million overlooks you,
private placement laughs at you,

SEC axes you,
IPO fails you,
Citibank doesn't know what's wrong with you,
Citi is sleeping because of you,

Mamun Rashid's worst failure is you,
SIM tax only calls you,
high rates only apply to you,
world recession ONLY hits you,
... isn't it time you stop being you?

Yet another Grameenphone article, but you knew this from my poetry skills. But now things are very puzzling. The Tk 425 crore bond issue went through without any drama. I was certainly expecting some. First there are 10 investors. One, AK Khan, who sold his stake at AKtel phone to the Japanese NTT DoMoCo decided to invest a part of his USD $400 million bonanza into a competitor he learned to hate but, as it is evident now, also secretly admires. AK Khan is said to have invested Tk 150 crore into Grameenphone. He told Financial Express that it was because banks couldn't offer the 14% interest the GP bond was offering. AK Khan is the only man in Bangladesh with such a liquid and fortuitous position.

Let me remind you that GP couldn't raise $300 million and AK Khan managed to raise more without the help of Mamun Rashid's Citibank. AK Khan will be the man to keep track of this year. I think in our upcoming award show, he would be the Man of the Year. Now back to Grameenphone. The bond issue does have some interesting aspects. Let's start with the positive ones first.

• Inflation is going to rise further. 14% lock in means Grameenphone is thinking early and setting a debt cap on some of its loans
• Market is already in a cash (more like hysteria) crunch. A 14% bond now may be a smart move now if the situation becomes worse
• Banks are becoming increasingly suspicious of the market and GP. Citibank NA sinking means even a local bank thinks twice before investing. Most are overly cautious these days about their investments. Even in New York, LC's and international trades are looked into very deeply in case the corresponding bank collapses. GP may have managed to avoid this paranoia.
  

And now the negatives

• A company of GP's size and status should be able to lock in a loan at 12% instead of a 14% bond. There is no need to issue bonds. It only makes the IPO more risky.
  
• A bond issue is highly suspicious. The Daily Star pointed out in 'quotes' that this bond is 'unsecured and unconvertible'. Meaning like bonds of many large and well-known companies they become junk because the companies won't honor the payments. A bank has some guarantee of a GP asset when it issues it a loan, but in this case AK Khan and banks can claim nothing.
• Fixed Deposit Rates may as well reach 14% with the inflation. Why do they need GP for anyway?
• GP has a new CEO, and like Anders Jensen, may claim he too had no knowledge about a bond being issued or where the excess cash came from. Thereby they are excused of the liabilities and will have an internal inquiry as to who is responsible for these nefarious activities.
  

At this point, I am not sure which way it is leaning. But then again I would like to give GP the benefit of the doubt. But from what has happened last year its better to sit on the fence.

As a side note, what was predicted here, is now getting national coverage. Commodity trade isn't what it used to be

Lost jobs, lost in words, lost in pain

In a country like ours where (1) getting a job is like getting the moon, (2) getting a good job is like getting the sun, the moon and (3) getting a well paid good job is like getting the universe in hand....the topic of losing a job, or being fired can be the least welcome, unwanted and untimely. Nevertheless, the global financial crisis have already started appearing as a Tsunami and lashing at people's livelihoods in the west, hundreds and thousands are being shown the exit with a pink slip in hand under the banner of very interesting terms and jargons used by their ex-employers. 'Streamlining', 'right-sizing', 'special force philosophy', 'business re-engineering', 'cost improvement plans' etc. are only to name a few terms used to disguise the unpleasant act of job termination.

I am not sure how the trend is out here, has there been any social research on this area of Bangladesh? Perhaps its too early, as usually since jobs are scarce here, we don't usually switch jobs as they are found after much struggle...so we prefer to become 'joke' employees, this 'joke' is not that 'joke', this is the Bangla 'joke', once glued, always glued. Also, those who are fortunate enough to be able to dictate terms with employers and do job-hopping from one company to another don't have to bother about the pangs and pains of being fired, of hearing the L-word (layoff) from the devil boss. Baki thaklo those unfortunate ones who are put under the axe wrapped around nice shiny jargons to spell sweet to the ears of the media. How does it happen? in Bangla...how do you say that you are being fired? apnake agun deya holo? apnake jaliya deya holo? What about 'right-sizing'? apnake shothik bhabe size kora holo? I wonder. Or may be all these are done in writing in English, sometimes English has an interesting quality to express harsh terms very vaguely.

Whatever the terms are, I hope we don't fall on the receiving end, God help us prosper fast so that we sit on the other side of the table and start hiring and firing 'others' at our and ofcourse Your will, under the umbrella of interesting and creative Bangla, English, Banglish words. apnake rasta dekhano holo, apnake dourer upor rakha holo, apnake baate falano holo. apnake dhora khawano holo etc.

Image courtesy:

http://www.mediabistro.com/agencyspy/original/layoffs.jpg

http://magazine.uchicago.edu/0206/features/images/feature_consult1.jpg

Empowering the Consumer

Consumer protection law has been promulgated recently. While this is a welcome step I would say promulgation of a law without a well thought out process will continue to be a reactive piece of legislation and will fall far short of the objectives that a consumer would want to see it achieve.

Laws in our part of the world, even if not deficient in their own intent and wording, are at the mercy of a process which winds through red tape, palm greasing and a stately reluctance on the part of those who should be enforcing them. And above all, unless there is a suo moto culture in the judiciary, laws themselves never help by just sitting there. An active and justice-seeking society is equally important to make triumph of justice a reality. While this new law is one good step in the right direction it should be taken as just a beginning of a journey and now more rests on pressure groups and active members of the society to make an otherwise reactive process into a proactive one.

It is necessary that dedicated NGOs having a full time objective of protecting consumers’ rights play an active role. If that is not possible because funding such organizations may be a matter of low priority for donors whose focus is more on primary social issues of the rural, Universities should encourage their students to form societies for consumer protection and they network across the country’s universities to establish a uniform voice on behalf of the society. These individual bodies can form a federation to promote a single voice and the funding can be done by the students’ bodies through a number of means starting from a humble beginning and ending up at an indirect taxation on the consumer, eventually through an act of parliament.

The importance of such a move should be seen in the scope of consumer protection which actually transcends anti-adulteration, anti-hoarding and unjustified price hikes by producers. Ultimately it is the quality of the product or service that should come under constant scrutiny of these bodies (read society). Activities like sample tests of products picked from shelves, consumer polls, chemical lab analyses etc. will be the real service to the society in the realm of consumer protection. Finally through a culture of widespread information sharing a consumer must be made aware all the time which brand of goods is giving a fair value for money.

Empowering the consumer is the only check that can protect the society. A decision of the consumer to boycott a product is far bigger and staggering a punch then a case in the court of law. Society needs to move into that direction. Youth, are you reading?

By Anis Motiwala

Anis Motiwala-Management Consultant

Image courtesy : http://www.wfdsa.org/cepi/ConsumerModule/main.jpg

Introducing Career Coach Quazi

Introducing the Career Coach Quazi who will be featured in this blog every Sunday with answers to your career related questions and queries. 

Email to careercoachquazi@futureleaders-bd.com to ask the coach questions related to your career planning, CV writing, interview techniques, overall grooming and relevent issues.

Career Coach Quazi can assist you in…

1. Identifying your key strengths

2. Discovering your core values

3. Exploring careers that 'fit' your strengths, life purpose, identity and personality type

4. Targeted & traditional job search strategy

5. Forwarding your career branding and communication

6. Effective networking tips

7. Expertise on CV writing

8. Successful interviewing preparation

9. Jumpstarting a new position

10. Work place problems and counselling

Educated and trained in Bangladesh, USA, Japan and Norway, Quazi takes pride in his excellent track record in career counseling, coaching, and training for the past 13 years. Since 1994, he has been presenting career related events all across Bangladesh and in 2004 was awarded with the honor of being an Ashoka Affiliate for his youth development activities. His interest in career coaching began back in 1991 when he did a course on “Career Decision Making Skills” at the Stern school of Business, New York University, USA. Quazi is a regular guest speaker in career talk shows on Bangla Vision, RTV, ATN and on other channels. He is currently the CEO of FutureLeaders--a training and consulting firm seving clients in the private, public and social sectors.

The coach is just an email away to help you shape your career and make the most out of it.  So what are you waiting for?

Enough with Dhaka, move to Chittagong

We ask questions, we seek answers, we remain curious, as we loiter around the streets of Dhaka. Its true that not all answers are found readily, some questions are meant never to be answered perhaps, you are expected to understand which are those questions. For example, one of the questions that keeps me haunting is trying to find out the rationale why the head office of the Coast Guards of Bangladesh is situtated next to my apartment in a residential area? I also try to find out how far is the coast line of Bangladesh from my apartment, my neighborhood and why the head quarters of the saviours of Bangladeshi coastline is choking my small alley? Similarly, everytime I ply through the airport road and the deadly warship and the torpedo intrigue me wondering why even the headquarters of Navy is situated in Banani and not in Chittagong? Well, let me very carefully shy away from blogging about men in uniform and their headquarters, that is not the point, the poing I am trying to drive home is...the reason why on earth and on Bangladesh...Chittagong has been kept at the back seat for so long?

Not only the government offices, I wonder how many of Bangladeshi corporates have their head offices in Chittagong. I am not talking about mere branch offices, I am talking about full fledged, fully functional and possibly flashy headquarter mansions in Chittagong, which merits to be the 'Business Capital' of this country. However, before pointing fingers at others, let me first reflect on my own reasons, why I don't live in Chittagong in the first place, if I love it so much and am advocating it to be officially called the Business Cap of Bangladesh.

1. I live in Dhaka because of historical reasons, since my father owns a house in Dhaka which he got from the government, I grew up there too and thus stay in Dhaka.

2. I am not rich enough yet to buy an apartment in Chittagong and live there

3. The company I work in does not have any function or any activity whatsoever in Chittagong, so I am assigned in Dhaka only

4. I never had any amourous relationship with any woman from chittagong, which never made me think of settling in the port city, or even asking 'would be father-in-laws' for an apartment by the sea side as dowry.

Now I wonder, in a layman's knowedge level, why should Chittagong be the business capital of Bangladesh.

1. It has a port

2. It is close to one of best tourist locations of Bangladesh i.e. Coxs Bazar and the Hill Tracts

3. It has an airport

4. There is still room (literally too) for some modern urban planning to make the city livable, unlike Dhaka which has become unlivable, unmovable, undoable.

5. Many industries are already located in or around Chittagong

6. Chittagong region has a history of great businesspersons and business ventures

So what can be done to encourage more businesses to set up their activities in Chittagong?

1. Offer some sort of tax incentives, lower loan rate for those willing to have their businesses in Chittagong

2. If 'Brand Bangladesh' is targeted more towards external audience i.e. foreign investors, 'Brand Chittagong' campaign should be targeted towards internal audience, and the lead needs to come from those who hail from the great port city

3. Chambers of Industries can take up a role to insist on having headquarters of their member businesses in Chittagong

4. Employees can be offered cash incentives, holiday incentives for accepting to stay in Chittagong on a rotational basis or even permanently. This influx of work force in Chittagong would eventually make way for better services in that region, also creating more demand in domestic/regional tourism surrounding the city.

Well, count these as some really rudimentary thoughts of a curious passer-by like me, who asks questions, sometimes uncomfortable ones for some, but seeks answers...that is for you to give. That is as Karachi is for Pakistan, Mumbai for India, where the political and commercial capitals are kept separate, its high time that we make the Gateway to Bangladesh...that is Chittagong...the Business Capital of Bangladesh. Time to move Motijheel and Gulshan office-para to Halishahar and Agrabad. Perhaps its easier to build from scratch an intelligent 'Vision City' in Chittagong like Putra Jaya in Malaysia than thinking of how to clear the mess and chaos in Dhaka. And the Bangladeshi businesses hold the key to this change in mindset.

Ship Breakers Ask for a Bailout

How international-trendy do we try to be? A lot. How stupid are we? Again quite a lot apparently. Ship breakers have asked the penniless Bangladesh government to 'intervene' in a bubble. This is a tactic taken out of the international rule book of asking for bailouts. In addition, they have sent a written request to Bangladesh Bank for an interest freeze on all their loans and even more fresh subsidized loans. I am trying to imagine the Governor of Bangladesh Bank in his WTF Kodak moment when he reads the request. And believe me he has had more than his share of WTF moments that I fear for his health.

As you may recall, earlier this year, we experienced the sky high prices of many construction materials including steel rods and concrete. This basically put off construction to a standstill and many contractors put off projects in hopes of better times. What did ship breakers do during the era of inflated prices? They went around aggressively buying more ships than they could accommodate. Refused to break down existing inventory in hopes of even more exaggerated prices. If Bangladesh doesn't buy overpriced rods, surely China and US will.

Do you remember oil traders who bought oil at $100 waited for it to reach $140, then $200 but all of a sudden its now worth $64. Do you have any remorse for these people who have caused so much havoc in the last year? Are they asking for a government intervention? Where was this government intervention when prices of rods/oil reached unimaginable prices? What makes speculation worth saving?

Even though local ship breakers have let their imagination run wild, their situation is extremely realistic and critical. Now construction materials are more affordable. This doesn't suit the ship breakers on the speculative and opportunistic empire that they built while dismantling the rational and conservative nature it once had. According to Financial Express, the industry raked up loans near Tk 5500 crore (close to $1 billion) to establish their companies and buy the now-useless junk at the price of gold. But many other newspapers pin the figure at around Tk. 15,000 crore (close to $3 billion) in loans and close to 10,000 crore in danger of going bad. And most of this, was debt financed involving a few select handful of local banks.

Which banks are these? As a reassurance not all banks are involved in this. The ones involved are those that you don't hear about, recognize, see, or even realize that they were banks until they report amazing profits in the neighborhood of Tk 200 crore to Tk 300 crore. And people always wondered how do these banks make money? The answer will now be publicized better. They finance these importers and ship breakers. Because of this opportunistic and speculative sector, these particular banks are going to have one hell of a write-off next year. This is after having yet another year of mind blowing paranormal profits in 2008. But the banks are certain to make it through with flying colors (they haven't asked for any assistance), but the steel breaking industry is in for a rapid change in status quo.

Update: Some of the articles that are published on this site are purposely delayed to give some 'face time' to other articles and to evenly spread them out evenly. This is fine because this is more of an analysis site rather than a news site. But time to time the analysis may come too late or be mistimed. Even though this article pointed some issues out on October 30 (and published November 3/4). The Daily Star is now reporting the same insights on November 5th. Although it is not plagiarism, it is wishful thinking that we may have some big-box media readers.

And thou shall not lie under the state of alcohol

Not a blog post about the merits of alcohol. I don't drink much, partly because its not readily available in Dhaka, secondly even if it is, I cannot or don't feel like affording it. The thought of getting on a high with such an exorbitant cost never lets me get on a high in the first place. However, all free things in this city come with much excitement and curiousity from ordinary people like me, alcohol is also no exception. Atleast it proved again that its lets you let loose, it brings down your inhibition, either you are at your 'devilest' best, or at your 'pervertest' best, or at your funniest best. Whatever state of mind you experience fuelled by alcohol, the journalist friend of mine spoke his heart out and expressed his true self that evening when we met for the alumni dinner at the posh Gulshan hotel. For quite some time, I had been chasing this acquaintance of mine, who happens to be a well-connected journalist, to give us some coverage. Us means, this blog...I had been trying to convince him during our previous encounters about the uniqueness of this blog, how it established an alternative platform for consumer-led business journalism, how it gives us a voice to speak about Bangladeshi companies, why and how the google ranking of the blog is high, what are its objectives and future plans blah blah blahs. He always seemed very scatter-brained whenever I used to engross myself passionately about how he or his team could come up with a tiny feature on this blog. I also tried to convince him by assuming that the media is always on the look out for new content to publish, something that might draw the readers attention and interest, so why not give this blog a try? However, all my advocacy and promotion for a little bit of mention finally landed on deaf ears as he ended up with airy assurances and 'bepar ta dektesi' type gestures. I didn't lose heart, somebody gave me a tip once that one should chase journos as they chase you otherwise.

However my chase kind of met a premature stop during that alcohol-powered gala dinner evening, when I was hopping from this circle to that circle, with a 'forbidden drink' wrapped with Bashundhara tissue in hand. I could spot my journo friend who seemed to have given in to temptation too early too soon. one peg, two pegs, three pegs and bingo....he was nearly flying...from this crowd to that, from this conversation to that, from this mix to that. I thought a happy moment for him such as this, could be the right occasion to play my persistent record..the 'ek dofa dabi'...I approached him and after a casual introductory chit chat, I again repeated my plea. He slowed down, looked at me with his sparkling eyes and in a lower tone asked me, "Ok ok, I will look into it, how much will you pay?". I experienced some momentarily lapse of quick reflex, as I never took any bribe myself in life, and never tried to bribe anyone, did think of doing it a few times though, it never realized. I recomposed myself and responded like a pro, "Arey that is what I have been waiting to hear from you Bhai!, so YOU tell me what suits you well!". He gave a professional sip at the Smirnoff and told me, "10,000", he will make sure its in the press. This time round, I gave him a 'bepar ta dektesi' gesture and proposed him yet another drink. He extended his ear to ear grin and nodded.

I was wondering what stopped him all this while to just say it in the first place that 'its all about money honey', 'paise fek, tamasha dekh'. Perhaps I was bekub enough not to have received his crafted hints during non-alcoholic times, perhaps I was too naive to realize that this is the way things are done in media here, or everywhere in the world. But good that I realized and learnt, thanks to the 'pagla pani', my journo friend could not hold back his true intentions any further, it came out laughing and rolling through his drowsy eyes and clumsy gestures. He laughed like the happiest person on earth and told me like a sage with utmost composure shortly afterwards that you pay me, you are in tomorrow's dailies, arrange a few foreign trips, you will be regularly in dailies and on air, arrange some free 'refreshments', I will make sure your entrepreneurial efforts, or whatever kind of thing you are into is brought into limelight. I smiled back and nodded, and pretended to be drawn to other acquaintances...slowly getting out of his sight, hoping and believing sincerely that he must have been an exception, taken over by alcohol...and failing the lie test. Hope there are not those who can outplay the intoxicant and keep playing the games they play with the most pwoerful tool of our times--the media.

Image courtesy:

http://imagecache2.allposters.com/images/pic/EPH/9077~I-Get-Totally-Drunk-Posters.jpg

When Things Couldn't Get Any Worse

Couple months back, I wrote an article regarding Grameenphone's proposed $300 million IPO. I had concluded that instead of investments in Bangladesh, this money would leave first-class to Norway. GP and others have covered every nook of Bangladesh and they aren't interested in upgrading to 3G anytime soon when barely no one uses the internet, or talks with a smart phone or really knows how to operate a smart phone. (This is meant in a broader sense so don't be insulted if you fall in this category -which you probably do)

I shouldn't gloat. But just recently Telenor bought 60% of Unicom Wireless for a staggering $1.07 billion. This is more astonishing considering Unicom only paid $337 million for the India-wide mobile license earlier this year. Initial estimates are that they have to spend an additional $3 billion in the next three years to compete in a market that already has Virgin, Vodafone, Reliance, Tata and Airtel. Telenor investors didn't really digest this news really well, and the stock tanked 26%.

So Telenor needs $1.07 billion fast. I wrote couple months back that $300 million of the Bangladeshi IPO would be used for not-in-Bangladesh ventures. Since that was delayed to March 2009, a new Bangladeshi bond project worth $60 million in in the works. Newspapers did not connect the dots, but its safe to assume that the $60 million will be used to finance the Indian venture and not any Bangladeshi projects. Furthermore this $60 million bond is to be offered to private institutional investors. The same investors that Grameenphone decided to eliminate and provoke with GP's weird mobile-phone banking proposal. But then again Bangladeshis are highly skeptical of anything that involves India. Now its a double whammy -India and Grameenphone.

But $60 million from Bangladesh isn't going to cut it even if it is successful. Telenor is planning yet another IPO (or share sale to be specific) only this time in Norway. And only this time they 'plan' to raise $1.78 billion from the Norwegian market in the midst of their stock taking a dive and the entire world also taking a dive. It wouldn't surprise me if Telenor decided to hold multiple IPOs worldwide and slash the targets as time passes.

And this is the worst it could get right? Wrong.

Just recently, Russia decided to freeze (not literally as Telenor first assumed) all of Telenor's shares in Vimpelcom (the second largest mobile phone company there). Why? Because only this time instead of Yunus, Telenor has Mikhail Fridman as a partner. To make matters difficult Fridman is not aware what a Nobel Prize is or that he has been nominated for one multiple times. This is one Russian gangster who is too rich to pay off and doesn't make empty threats on Norwegian TV. Instead he works his magic and the next day Telenor has its shares frozen. And this is only his first baby step.

And this time, it is Telenor whining and making empty threats to Fridman.

Creative advertising in full swing

Undoubtedly the advertising industry in the country is booming, with so many classic advertisements and promos through various media. As always, however, we focus always on the rich and wealthy companies and tend to overlook the lower end of the spectrum. This part of the business value chain, with their mostly inherited sense of doing business, are doing their best to spread the word around about their businesses, themselves, their services and other rules and regulations concerning their activities. As the images indicate, perhaps there is much room for some improvement and hand-holding for these small businesses who are trying hard to market themselves.

There is a Problem When the DSE Looks Like This:

Notice something awkward? That is list of the largest companies listed on the DSE. However banks now dominate 11 of the top 20 spots. This is more alarming than reassuring.

Reassurance
The good news first. Banks are a low risk and secure investments in most countries. This is characterized by their low beta factors. The beta factor, which usually ranges from 0.5 to 3, for a stock measures its volatility to the entire market conditions. New and fast growing industries, such as software, have a beta factor of around 2, meaning if the market goes up the stock shoots up 2 times. If the market does poorly, the stock does tend to do two times worse. Old and stable industries, such as banks, have a beta factor of around 1. This makes banks worldwide one of the safest investments.

The DSE fared better in the worldwide recession because all banks had localized investments. The DSE itself is still dominated by these banks. There was no reason to panic other than to a yearning to pose like a now-trendy distressed investor. Granted these effects will likely hit the garments in six months time, but regardless of this the DSE banks won't lose 80% of their market value. That's simply because they haven't invested 80% of their money in the wrong industries. So with more reassurance and relief, people are still shielded.

Lack of Inventories
Now that most investors believe in banks is a good sign of stability and investment security. Banks dominating the stock exchanges also has to do with the nature of their business. For starters there is very little scope for accounting wizardry. Accounting wizardry's main playing field is usually in inventories. The closest thing that banks have to an inventory is 'cash'. And as you know cash is extremely easy to valuate. To realize the full potential of accounting wizardry we have to look into the diamond industry. Diamond is not a commodity and its price depends on very particular characteristics which include the shine, cut and purity. The diamond company can overstate assets and inventories as they please. And most industries extend this shining example in every way possible. But because banks lack this cloudy assets, it is nearly impossible for this magic to take place.

Assets
The second reassurance is that most banks have not reevaluated their assets. This means that the land that they paid Tk 10 lakh for in 1988, is still considered to be worth the same to the bank despite the astronomical increase in land prices. This may give an undervalued and inaccurate picture but it is better than the alternative. When a company tries to reevaluate its assets, it is considered highly controversial. Since no one has a certain valuation, the company in most cases overstate their assets justifying things like competitive-edge and potential for future earnings. This in turn ends up being more harmful and inaccurate rather than undervalued assets. But thankfully (not yet) banks haven't taken this step.

Anybody but Alamgir
The third reason that banks are dominating the DSE is that they use big-box accounting houses for their auditing instead of hiring Alamgir across the road. This is more reassuring because even though Alamgir will find it hard to apply his magic, big accounting firms will clearly look for any possible danger signals. This goes to show that despite the short term idiotic moves here and there by DSE investors, in reality they have a brain. One that works in the long term but clearly it doesn't function on many day to day issues.

The Alarm
But the domination of banks goes to show that the SEC has failed miserably. The telecoms haven't listed yet. Banglalink is not willing to list. AKtel keeps setting a year end date. And GP might list with a $1 at the rate they are slashing their IPO. This in the middle of when the entire industry now has less phone lines than earlier (how is that even possible?). While the telecom industry remains stodgy in their dry spell, the SEC continues to pursue other future Z category stocks instead of other multi-nationals like Unilever.

It was mentioned in one blog that GQ Ball Pen earned all their money in the first 6 months and had losses for the last 6, leaving very little as stock dividends. Yet the SEC continues to pursue future Z category stocks of this caliber and force them to list. The problem is not for them to list, but the fact that these list of Z-ers ask Alamgir to do their accounting holding a fat wad of cash if the magic is applied correctly. The SEC, from day 1, should simply have a list of acceptable accountants that the listed companies must use. If the accounting firm's company does poorly despite auditing then the firm should be removed from the list. What is the point of forcing to list these companies if they won't register a trade in the next century?

Recently in support of future Z-ers, BGMEA during another round table meeting asked entrepreneurs (Zers) to pursue the capital market as a source of funds. This was in reaction to banks already tightening up their belts. But the cost of asking the market to fund your company will appeal to many for the wrong reasons. Like many who have performed this extravaganza in the past, the money disappears right then. DSE still lingers of the stench caused by this bait in its nascent years.

And no one, for the right reasons, will not take funding from the market because as everyone knows, the cost of this money is extremely high when compared to a bank loan. Even in the rare case if an established entrepreneur does raise money through the capital markets he/she is more inclined to pay back the bank and himself first before paying a dividend. The entrepreneur will not care about dividends because he has got himself covered with a fat salary. So as both a top level manager and a shareholder of the company he has no intention to control the salaries paid out. To see why this is very crucial, in banks management and shareholders are in two groups. By keeping an eye on management salaries the shareholders are increasing their dividends. There is no conflict of interest for the shareholder representatives.

What we don't need is SEC to pursue a bigger version of this same capital market lie. Thankfully, as of now, this lie isn't working as evident how banks dominate the top positions. But creating a balanced market place is also necessary and crucial for the future of DSE. The SEC needs to clean up DSE's Z as well as set up accounting standards that prevent the Zs. But as usual, nothing has happened yet.