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BANGLADESH’S FURNITURE INDUSTRY FORGING FORWARD TO FLOURISH

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FROM THE

EDITOR

Flourishing Furniture On July 26, the Central Bank revealed the Monetary Policy Stance for H1, FY2017-18. Like the previous half-yearly stance, this time too the Central Bank took a cautionary approach towards money growth. Having discerned the trend of MPS over the past 4 half-years, from expansionary to accommodative to cautionary, it is evident that the economy is safeguarding itself from the drastically falling remittance inflows, lower exports and possible upcoming high inflation risk.

e-commerce furniture startup scenario has also started to bolster since many of the small startups are cracking big online deals now. Even now, discerning the market demand, the local furniture players are expanding their span of market reach in countries like Canada, Nepal, Bhutan and the like. This phenomenon is a witness that Bangladesh is making international-standard furniture, which cater to the taste and affordability of the burgeoning middle-class slice of the society.

Over the last decade, furniture industry has shown laudable performance by having an average of 25% export growth over the years. The industry generated employment for 2.5 million workers who directly contribute in financial inclusion. The

Adnan Rashid Assistant General Manager IDLC Finance Limited

INDUSTRY & EQUITY ANALYSIS TEAM ASIF SAAD BIN SHAMS

ADNAN RASHID

SUSHMITA SAHA

Email: [email protected]

Email: [email protected]

Email: [email protected]

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Cover Story BANGLADESH’S FURNITURE INDUSTRY Furniture has been rightly regarded as one of the booster sectors, which has employed approx. 2.2 million people in the country already. The sector has a growth rate of 19% per year since 2010, which demonstrates the colossal promise.

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EXPERT OPINION Rising from scratch Selim H. Rahman

Design & Printing: nymphea l www.nymphea-bd.com

Chairman and MD, HATIL Complex Ltd

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Policy in Review Monetary Policy Stance: H1, FY2018

16 IDLC News

18

32-33

Comparative Analysis

Industry Update

PERFORMANCE ANALYSIS OF

• Plastic

TOP 10 COMMERCIAL BANKS

• Pharma

WITH IDLC

• Steel

20

• Telecom

New Idea! Doctorola

22 Economy At a Glance

24 Youth Leadership NSU YES! Club

26 Trailblazers In Conversation with

Anis A. Khan CEO & MD, Mutual Trust Bank Limited

34-35

NEW !

NEW !

Month In Brief

36

NEW !

For the Record

37

NEW !

Analytics Trends In Home Loans Of Financial Institutions

38 Capital Market Review

All rights reserved. No part of this journal may be reproduced in any form, by print, photoprint, microfilm or any other means without written permission from the publisher.

BANGLADESH’S FURNITURE INDUSTRY FORGING FORWARD TO FLOURISH By S. M. Farabi Ferdous

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COVER STORY

BANGLADESH’S FURNITURE INDUSTRY FORGING FORWARD TO FLOURISH

In Bangladesh, Micro and Small and Medium enterprises (SME) are of paramount importance.The knack of SMEs to grow the industrial base and escalating the volume of foreign trade has made them a national developmental priority, especially in terms of moving Bangladesh to a more sophisticated manufacturing and service base than currently exists. Given the pre-eminence of SMEs in terms of creating jobs in the country, there FINTECH is an emphasis on selecting booster sectors, whichTHE have highFRONTIER promise IN forBUSINESS/BANKING growth and, within these, identifying NEW sub-sectors, which provide an overall impetus for economic growth. Furniture has been rightly regarded as one of the booster sectors, which has employed approx. 2.2 million people in the country already. The sector has a growth rate of 19% per year since 2010, which demonstrates the colossal promise. There are more than 75,000 SMEs in operation in different parts of the country, having an average of 15 people working in a single enterprise. With no exception to the other SMEs of the country, furniture enterprises are mostly male-owned, family run enterprises with a sole proprietorship.

Furniture Industry in Bangladesh

actively working on materializing the potential of this sector.

Traditionally, the furniture industry in Bangladesh has been regarded as a cottage based industry. In early 90’s, the furniture industry in Bangladesh transformed from cottage based industry to mechanized mass production oriented industries. Since then, the furniture businesses started to grow with modern machinery, innovative designs and the use of assorted materials.

Furniture industry can emerge as the country’s second largest employment generating sector, after RMG. At present more than 45,000 enterprises and nearly 2.5 million un-skilled and semi-skilled people are engaged in this sector. On average 60% of raw materials of furniture sector are imported from different countries. Of those, timber, wood coating materials, hardware & accessories, world class fabrics etc. are major importable items. Scarcity of skilled manpower in handling modern equipment and machinery is limiting the prospect of growth of this industry, which can be addressed through setting up more Technical Schools with a curriculum of short-term trade courses.

The main variations of products are wood, processed wood & Medium Density Fiber (MDF) board, laminated board, particleboard, rattan/bamboo and wrought iron furniture. For a more personal domain such as one’s home, the preferred raw materials are solid wood, a combination of solid wood with other materials like cane, rattan, laminated boards, plywood and MDF. For office furniture designs which are usually focused on the more contemporary style, the usage of materials like plastic, MDF, laminated boards and wrought irons are preferred. Around 70% production of furniture sector of Bangladesh is home furniture and 30% is office furniture.

The total export growth target for the Fiscal 201314 was nearly 13% from USD 28 billion last fiscal. According to Export Promotion Bureau data, in the last fiscal year of 2011-12, the country achieved 16% growth in furniture export to earn over USD 31 million. The figures showed, that in the Fiscal 2009-10, the furniture export volume was USD 19 million, while it amounted to USD 21million in 2010-11 and USD 27 million in 2011-12. In the fiscal 2011-12, the total export volume was USD 27 billion.

At present, Bangladesh is producing a wide variety of international standard quality furniture. People in Bangladesh are now going to choose local furniture instead of foreign. The export of furniture and allied products from Bangladesh started from 1995. There is good potential for the export of furniture and Bangladesh’s furniture industries are ready for that. It is estimated that, by 2018 Bangladesh will earn export potential of crafts furniture accessories worth of USD 20 million along with furniture worth USD 60 million. At present two relevant associations i.e., Bangladesh Furniture Export Association (BFEA) and Bangladesh Furniture Industries Owners Association (BFIOA) are

FURNITURE IS A LABOR INTENSIVE SECTOR AND BANGLADESH HAS LARGE LOW COST MANPOWER WHICH IS A VITAL FACTOR IN BECOMING COMPETITIVE IN THE WORLD MARKET. 5 of 40

According to Bangladesh Furniture Industries Owners Association (BFIOA), currently, the country’s furniture exporters have been exporting to the US, Canada, Australia, UK, Middle East, Gulf countries, and other Asian countries, like India, Japan, Taiwan, Singapore, Thailand and Vietnam. In the furniture market, the major players are Otobi, Akhtar Furnishers Ltd, Navana Furniture, Hatil, Partex Furniture etc.

At present two relevant associations i.e., Bangladesh Furniture Export Association and Bangladesh Furniture Industries Owners Association (BFIOA) are actively working on materializing the potential of this sector. Bangladesh Furniture Export Association has 19 members.

A study on “Export markets entry strategy for Bangladeshi furniture manufacturers” was conducted by the Center for Industrial Studies (CSIL), an independent economic research and consulting company founded in Milan. The study shows that Bangladesh is able to export USD 40 million by 2015 with an additional USD 10 million export of accessories & soft furnishing. This export volume can increase up to USD 1 billion by 2020, provided that there is increased productivity, better market linkage and ensured compliance standards. The potential can be materialized through exploiting low labor cost which is a vital factor in becoming competitive in the world market. In wood furniture manufacturing, labor accounts for up to 40% of the total costs. In Bangladesh labor costs account for 20% of the production. Here, the hourly wage rate in furniture is between USD 0.06 - 0.40, less than in China (USD 0.500.75) which is the largest furniture exporting country.

The rapid growing furniture sector of Bangladesh constitutes approximately 70,000 enterprises all over the country. Most of the enterprises are of small and medium scale.

Sector Profile

Export (USD Millions)

42.58 27.14 19

Medium

Total

70953

81

71034

Local market share at sales price (Billion BDT)

42.2

24.45

66.65

Manpower involved (Millions)

1.77

0.03

1.8

No. of Enterprises

The furniture industry in Bangladesh has been experiencing healthy growth over the last 6 years. The domestic market is exhibiting an upward trend and is currently worth BDT 67 Billion. (Source: EU Technical Report, 2012) Also, within that time, exports of wooden furniture has increased by CAGR 104% to USD 38.94 Million (source: EPB), while the total number of enterprises has grown by 68% to 71,034 (source: EU report).

Bangladesh Furniture Export Trend Source: EPB 50 45 40 35 30 25 20 15 10 5 0

Micro & Small

Firm Size

38.94

31

21.38

The growth in terms of turnover is around 19% per annum. The industry is currently employing about 1.80 million people directly. It has not been long since Bangladesh started exploring the export market, but within a very short span of time, local manufacturers have started exporting to the USA, Japan, European countries, various provinces in India and other South East Asian countries. In the export market, the average export growth of the furniture industry has been slightly above 20% annually. In the last fiscal, the country achieved 16% growth in furniture export to earn over USD 31 million according to Export Promotion Bureau data. In the Fiscal 2009-10, the furniture export volume was USD 19 million while it amounted to USD 21 million in 2010-11 and USD 27 million in 2011-12. There is a huge opportunity, but the sector needs a large number of skilled workers to meet the rising demand.

2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Industrialization is the only way for a developing country like Bangladesh to gain in economy. Our goal to emerge as a middle income country by 2021 much depends on how we can explore and commercialize our industries. Though Bangladesh is mostly known for its garments and textile industries, there are other industries that have the potential to capture the global market in the near future. Furniture sector is one of them. Furniture sector was included in the Export Policy, 2009-2012 as a Special Development Sector and in Export Policy, 20122015, it has been upgraded as a Highest Priority Sector due to extreme export potentials.

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CATEGORY

FURNITURE

HOME FURNITURE

ENGAGED ENTERPRISES

75,000

Bed

Bed as a single item holds the majority of the market share among all home furniture. Solid wood is the main raw material used to produce bed frames. Among other alternative materials, processed wood, metal, and cane are also used.

Sofa

The major raw materials used to produce sofas are solid wood (sometimes processed wood, cane or metal), upholstery fabrics and sponge-foams.

Cabinet

There are different types of cabinets used in a home scenario like, kitchen cabinet, show cabinet, dinner cabinet, cabinet for clothes, storage cabinet etc. The major raw materials used to produce cabinets are processed wood (sometimes solid wood), glass etc.

Table

Dining tables, side tables, center tables, study tables, dressing tables etc. The major raw materials used in table production are solid wood (sometimes processed wood), glass, mirrors, metal pipes etc.

Chair

The major raw materials used to produce chairs are solid wood (sometimes processed wood and metal pipes), padding materials (sponge-forms etc.), upholstery fabrics etc.

Accessories

Stools, hangers, wall shelves, shoe racks, mirror frames, bowls, showpieces etc. Solid and processed wood, metal pipes, mirrors, glasses, etc. are the main raw materials for production of such items.

EMPLOYMENT CREATION

2.5 MILLION EXPORT DESTINATIONS US, Canada, Australia, UK, Middle East, Gulf countries, and other South Asian and East Asian countries

OFFICE FURNITURE Tables

Office tables can be defined as different types like executive tables, working tables, work stations, conference tables, computer tables, etc., which are mostly produced using processed wood (sometimes solid wood), glass, locks, etc.

Chairs

Office chairs are mostly made out of metal pipes (sometimes solid and processed wood), padding materials (sponges, foams, etc.), plastic, upholstery fabric (sometimes PU), mechanical, adjusting device, etc.

Shelves and Cabinets

Shelves and cabinets used in office spaces are produced out of processed wood (rarely solid wood and metal pipes), glass etc.

Waiting lounge sofas

Used at offices and hotels; are made out of processed wood (sometimes solid wood and metal pipes), upholstery fabric or PU etc.

Factory Furniture

In the scenario of Bangladesh, the majority of the factory furniture consists of working tables, trolleys, and adjustable high stools.

Ship Furniture

Ship requires all kinds of furniture including the home and office range, furniture for hotels and restaurants.

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In the last fiscal, Bangladesh earned USD 7 million from the furniture export to the US market and then USD 5 million from the Swedish market. Meanwhile, the Ministry of Commerce has set a furniture export

target of about USD 38 million with 20% growth for the current financial year while the government has set the total export target of USD 30.5 billion.

Categorization of furniture enterprises of Bangladesh Based on material used to produce furniture, the SMEs in Bangladesh can be categorized according to the table below: Category

Product

Raw Material Source

Solid Wood Furniture

All sorts of domestic and office furniture made from Timber

Majority of the wood is imported from Myanmar, Ghana, Ivory Coast, Malaysia, USA, Canada, and a few other European countries. The import duty on wood is 10.22%.

Processed Wood Furniture

Medium density fibre board (MDF), plywood, melamine laminated board, veneered particleboard, etc

Except particle board, and melamine laminated board, all other processed wood is imported from different sources, like China, Malaysia, and India. The import duty on processed food is 92.30%.

Metal Furniture

Mostly office furniture made from Stainless Steel

Stainless Steel is imported from China.

Cane and Rattan Furniture

Home furniture, decorative

Obtained from both the local sources and imported sources (Indonesia and Malaysia).

Majority of the raw materials used in the sector are import based and the import duties are quite high on processed wood (92.30%), which is now becoming the main raw material to produce furniture in the global furniture Industry. The duty on solid wood is 10.72%, which is low but due to the cost and environmental reasons, use of solid wood in furniture is getting reduced in all over the

Information Flow

Supplier

world in recent years. Processed wood furniture is replacing solid wood furniture gradually. Therefore, the high import duties on major raw materials may hinder in achieving competitiveness in the export market. Cane and rattan furniture are environment friendly and are mostly used in home furniture like, sofa, chairs, tea-tables and for other decorative purposes.

Marketplace

Manufacturer Retailer

Customer

Distributor

Manufacturer

Retailer

Production Flow

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Top players HATIL Complex Limited

The company has around 64 showrooms in Bangladesh, and is also expanding business internationally. Hatil’s export coverage includes USA, Canada, Australia, Saudi Arabia, Kuwait, UAE, Thailand, Egypt, Russia etc. In addition to nationwide presence, Hatil is the only Bangladeshi Furniture brand that operates singlebrand showrooms in Australia and Canada. Hatil is committed to manufacturing environment-friendly furniture and is the proud recipient of the HSBC-Daily Star Climate Award. The company is also the only FSC certified furniture manufacturer in Bangladesh.

Established in 1969, Hatil started off as a timber company. It rebranded itself as a furniture producer in 1989. Hatil has 48 years of accumulated experience in wood processing and furniture manufacturing. It offers a wide range of products including home furniture, office furniture, doors, furniture for children, etc. The company is also providing “Smart Fit” furniture which includes space-saving furniture like wall cabinets, sofa cum bed, space saving bed, etc. Hatil has one of the largest manufacturing plants which employs over 2000 people.

Basic Information of Hatil Complex Ltd Established

1969

Product profile

Wooden, Melamine Laminated Chip Board, MDF, Cane and Metal furniture

No. of Showrooms

64

Countries exported to

USA, Canada, Australia, Nepal, Bhutan

Potential export destinations

India, and the Middle East

NAVANA Furniture Limited

Designing Furniture. The annual production volume of the company is BDT 1,200,000,000. The company has around 44 outlets across Bangladesh and is also expanding business internationally. At present, around thousands of people are employed in the corporate office and manufacturing plants of Navana furniture in Bangladesh.

NAVANA Furniture Limited, a sister concern of Navana Group, was founded in 2002. NAVANA Furniture has its factory in Savar, operating in more than 12,000 sq. m. area. It sells Office solutions, Home solutions, Medical and Lab solutions, Industrial solutions and Interior

Basic information of NAVANA Furniture Limited Established

2001

Product profile

Home furniture, office furniture, project furniture, doors, wardrobes, sawn timber

No. of Showrooms

44

Countries exported to

India

Potential export destinations

European countries and Middle East

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Akhtar Furnishers Limited (AFL) Akhtar Furnishers Ltd (AFL) commenced its business in 1976. At present, around 800 people are directly working under the shade of Akhtar Furnishers Ltd. The company have their own seasoning capacity of 2000 cft. solid wood a month. The annual production volume of the company is BDT 1,200,000,000.

Basic Information of Akhtar Furnishers Ltd (AFL) Established

1976

Product profile

Wooden, Melamine Laminated Chip Board and MDF

No. of Showrooms

32

Countries exported to

Australia, UK, USA

Potential export destinations

UK, UAE

SWOC Analysis

STRENGTHS

 Lack of awareness on technology and high volume production machines

 Low Labor Costs

 No export marketing initiatives by the producers

 Hand Carving Skills

 Lack of proper branding and marketing initiatives as well as effective PR tools including website

 Large domestic market with high growth rate  Workers are easy to train  Existence of strong leather industry



 High quantity of available workforce  Capacity of product differentiation

 High growth in the purchase ability of domestic consumers due to high GDP growth of the country

 Entrepreneurial skill

OPPORTUNITIES

 With quality improvements, a large export market can be tapped

WEAKNESSES

 Backward linkage factories are growing  Government has listed Furniture sector as a thrust sector for high export potentials, which may enable the sector to enjoy duty exemption on raw material import of exporting furniture.

 Majority raw materials are imported, not easy to get  Problem with working and manufacturing process  Absence of raw material processing service provider

 Global Export Facilities for Bangladesh

 Absence of design service providers

 Contemporary Hand Carving Existence of forward linkage industry

 High cost of capital  Low Marketing, Accounting and Management skills

 Migration of furniture industry

 Lack of quality assurance  Lack in abiding environment and safety compliances

CHALLENGES

 Practice of wide range product manufacturing

 Frequently disrupting electricity

 Knowledge on modern furniture making is low

 Political instability

 Knowledge on surface finishing is low

 Image distortion due to recent negative working condition issues in RMG sector which also poses a threat

 Low access to finance for manufacturers  Lack of skilled labor in furniture making

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The chief raw materials used are wood, laminated board, wrought iron furniture, and processed wood & medium density fiber wood, particle board and rattan bamboo. However, most of these materials need to be imported. Of the woods; Tic, Gamar and Hardwood come from Africa, while Barmatic wood comes from Myanmar.

 Unfavorable tax and import duty policy  Industry is overtaking carpentry which may result in the loss of hand carving skills

Value Chain Analysis Here is a typical solid-wood manufacturing flow chart. Most high-end companies follow this type of program during the manufacturing process 





 

  



Growth Factors  Improve

capacity of Business Intermediary Organizations for building and developing technical skills, marketing skills, management skills, environment skills of the members.  Enhancement of Business Intermediary Organization’s and small business’s understandings on export market requirements. Establish linkage with international relevant bodies and trade bodies and play an active role in the matchmaking for joint ventures, foreign investment, expedite technology transfer and stimulate export deals of local SMEs with foreign buyers.  To enhance advocacy and lobbying supportive activities; deal and negotiate with the relevant Governmental bodies on the issues like implementation of export friendly import duty structure on raw materials, improvement of infrastructural support, policy improvements in favor of better access to formal financing, introduction of bonded warehouse facilities for duty free raw material import on exporting commodity or cash incentives on export etc.  Develop a web portal cum database where all its members’ portfolio is listed, which will play an important role in the future development of export linkages. Enable SMEs to disseminate own information to the foreign buyers.  Create awareness on necessary technologies required for enhancing quality and productivity and facilitate the applications via training.  Properly seasoned timber/wood is not available for furniture manufacturers and there is no existence of service providers for seasoning, which results in poor quality assurance and will surely hinder the possibility of export business enhancement, so establishment of a timber seasoning self-sustained service center for SMEs is a crucial need.  Facilitate furniture designer’s creation process and assistance to SMEs to develop new exportable furniture line, branding cum PR materials and local and export marketing.

The lumber is  Carefully selected  Air-dried and kiln-dried to about six or seven per cent moisture content  Rough-cut to eliminate all warps, knots checks and splits Clean stock is assembled into dimensional stock of various sizes, glued under pressure, and cut into rough shapes of pedestals, legs, posts, or drawer and frame component These rough-cut solid parts are further refined by bond sawing, then  Shapers contour the rough edges.  Dovetail machines cut interfacing joints  Boring machines pre-bore holes for dowels Master carving machines carve up to forty duplicate images at one time Sanding is one of the most critical operations because the condition of the piece in the “raw” determines how well the finish will look. The wood may be sanded by various belt, wheel and drum sanders, as well as by hand All parts are now ready for assembly. Component parts such as drawers, doors, tops go through sub-assembly All parts flow to the cabinet room where the final assembly takes place. They are fitted together and thoroughly fastened with dowels, glue and screws, either in combination or as a single procedure. The assembled piece is placed in a hydraulic press to ensure, tightly fitted joints and, at this point, further reinforcements such as corner blocks are added.



Table legs and leaves are numbered to assure proper fit because these items are shipped flat in a box and assembled at the store or at home.



Drawers and doors are fitted properly

(The writer is a Senior Executive Officer, Credit Risk Management and can be reached at [email protected])

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EXPERT OPINION

SELIM H. RAHMAN CHAIRMAN AND MANAGING DIRECTOR, HATIL COMPLEX LTD.

RISING FROM SCRATCH HATIL, has 48 years of experience in wood processing, and furniture manufacturing, thereby always ensuring that their customers get furniture which is aesthetically pleasing, functionally superior and durable. HATIL, a pioneer in exporting furniture in Bangladesh, currently supplies furniture to USA, Canada, Australia, Russia, UAE, Thailand, etc. HATIL is committed to excellence in everything they do, and are the only FSC Certified Furniture Manufacturer in Bangladesh. MBR recently had a one-to-one conversation with Selim H. Rahman, the Chairman and Managing Director of HATIL Complex Ltd.

Selim H. Rahman

Chairman and Managing Director, HATIL Complex Ltd. MBR: Please tell us something about how HATIL was started.

on the spot, and said that instead of buying the timber from me, she would be purchasing doors instead! This was how HATIL was established in 1989. Then, the customers who bought doors for me began demanding for furniture. Hence, arising purely out of customers’ needs, HATIL began manufacturing furniture. Although, HATIL is renowned for selling furniture, we actually started out by selling doors.

SHR: My father, the late Al-Haj Habibur Rahman, founded H. A. Timber Industries Ltd., in 1966, and used to only sell timber. Previously, the practice was that people would buy wood and have carpenters build the furniture in their homes. I worked for my father for two years, doing the same work that he had been doing. Although the business was doing well, I was not enjoying my work.

MBR: What is the significance behind the name “HATIL?” SHR: Many people have searched for the meaning behind the name HATIL but have been unsuccessful. H.A. Timber Industries Ltd. was established by my father in 1966. What a lot of people are unaware of, is that when I joined the company in 1989, I changed the name to “HATIL” by using the acronym of the company’s name!

A chance meeting with an employee gave rise to my entrepreneurial spirits. There was a gentleman in my father’s factory, who had previously been employed in a factory in Saudi Arabia which manufactured solid wooden doors for various construction projects. From him, I got the inspiration to expand our current product line to include door manufacturing. With a little capital from my father, I rented a small space opposite my father’s sawmill, and purchased seasoned wood from him. I also hired one carpenter and was developing plans with him, when luck favored me again.

MBR: What is the secret behind HATIL’s immense success? SHR: We have always been very focused on providing the best quality products for our customers. When we first started out, a customer would come to our showroom, choose a product he liked, and sign on the product, because he wanted to be assured that he would receive the product that he verified with his own eyes.

A customer arrived wishing to purchase wood from me. Over the course of our transaction, I found myself telling her about my plan of manufacturing doors. She seemed impressed, and she gave me BDT 50,000

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However, the scenario is quite different now. A customer would like a product in our showroom, and insist that we send him a fresh piece from our warehouse, without verifying the quality of the product. This shows the immense faith that customers have in our products and in our company. This positive perception and faith of customers could be a big contributing factor to our success.

diesel fuel for the generators, on top of paying BDT 25 lacs for the electricity bill. Delays at the port also cost us, both in terms of money and time. Moreover, the poor road conditions make it very expensive to send products from Dhaka to the Chittagong port. However, our biggest cost challenge, is the incredibly high import duties on raw materials. Since Bangladesh has to import most of the raw materials for manufacturing furniture, the import duties are incredibly high. Even though the Government has agreed to give us an incentive of 15% i.e. 15% of the import duty would be covered by exports, it is still not enough. We cannot also avail the government’s bonded warehouse facilities since we do not have a 100% export-oriented factory. Unless we are sure of getting orders which will maximize the new factory’s capacity utilization to the fullest, we cannot go for such ventures.

MBR: What do you think about the furniture industry in Bangladesh? SHR: At present, the furniture industry in Bangladesh has two types of players – there are the smaller companies who buy wood, hire carpenters and make furniture, and then there are some big companies who have achieved the international standard and are manufacture furniture using machines. However, there is a lot of scope for growth in the furniture industry of Bangladesh. Just like the garments industry, the furniture industry is labor-intensive, and can create jobs on a massive scale. With the implementation of the right Government policies, the furniture industry could be the second largest exporting sector, after RMG.

MBR: How does HATIL differentiate itself from its competitors? SHR: In the past, furniture in Bangladesh were old fashioned, stocky in build and took up a lot of space. These sorts of furniture were best suited for the large houses that were very popular in the past. When I see furniture stores in Mirpur, still selling those antiquated designs, I notice that they waste almost 50 cft of wood making those furniture. If all the shops in Mirpur are doing the same thing, just imagine how much wood is being wasted! I consider this a waste of the country’s natural resources.

MBR: What challenges did you face when you started out? How do they differ from your current challenges? SHR: Initially, when I started out, I had limited capital. Additionally, carpenters would require advances, but then delay coming back from holidays, which would in turn cause production to halt for days. Since, furniture manufacturing is a technical job, carpenters would try to dominate negotiations, which was also quite challenging.

We also ensure that we never compromise on quality; starting from sourcing the best raw materials to smoothing the production process – we ensure that consumers get the best quality products from us. We have been practicing the Japanese quality management philosophy “Kaizen” since 2007. Additionally, we care deeply for the environment and won the HSBC-Daily Star Climate Award in the Green Operation Category in 2013.

The current challenges that we face are quite different from our past challenges. The biggest challenges we are facing now are in terms of cost, which is hampering our price competitiveness in international markets. Every month, we are paying BDT 14 lacs to purchase

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POLICY IN REVIEW

MONETARY POLICY STANCE: H1, FY2018

MONETARY POLICY STANCE: H1, FY2018 The Monetary Policy Stance for H1, FY2018 focuses on expediting short and medium-term macroeconomic management, and endorsing socially responsible financing which would help achieve the government’s environmentally sustainable growth objectives. The cautionary Monetary Policy Stance for FY2018 focuses on price stability, poverty reduction, economic growth, and employment generation. mitigated by the subdued global inflation brought on by the tightening of money supply in the US and the EU, and the low inflation prevailing in India. Bangladesh Bank’s FY18 monetary program intends to set a cautious, flexible course to contain the annual average CPI inflation within the set target ceiling of 5.5%.

The Monetary Policy Statement (MPS) for the first half (H1) of 2018 was announced on July 26, 2017 by Fazle Kabir, the Governor of Bangladesh Bank. Bangladesh Bank (BB) decreased its credit growth targets for both the public and private sectors due to the slow investment trend. A “cautionary” stance was adopted after taking into account falling remittance inflows, lower exports, and rising inflation risks. 

Highlights of Monetary Policy Statement (MPS): July – December 2017 (H1) 





Broad Money (M2) grew by 11.7% against the FY17 ceiling of 15.5%. The FY18 monetary program has set 13.9% growth ceiling for M2, and a 12% yearly average growth ceiling for Reserve Money (RM). An annual average has been adopted for the first time, in place of the point-to-point target for RM, for improved adherence with the chosen monetary stance. The benchmark repo rate remains unchanged at 6.75 % following a review.

GDP (Gross Domestic Product) growth was 7.24%. A target of 7.4% real GDP growth has been set for FY18. Although, the output growth momentum looks robust, low FY17 export growth of 1.7% and workers’ remittance inflow downturn to negative 14.5% pose threats to the external and local demand led growth outlook for FY18.

 To

support the Government’s inclusive and environmentally sustainable production and employment growth goals, policy supports for financing of farm/non-farm MSME output initiatives will be continued, with greater emphasis put on employment focused sectors, and “green” projects of adopting environment friendly production practices. Additionally, the Central Bank has plans of taking initiatives to facilitate FDI through dedicated help desks/support units in banks.

Domestic Credit grew by 11.3% against the FY17 ceiling of 16.4%, and has been set at 15.8% for FY18. Private Sector Credit Growth was 16% against the FY17 ceiling of 16.5%, and has been set at 16.3% for FY18. Increase in the net sales of National Savings Certificates (NSCs) caused public sector bank borrowing to fall to negative 16.2%, causing domestic credit to remain well below the FY17 monetary program ceiling. Growth ceiling for Public Sector Credit has thus been set at 12.1% for FY18.

 Multidimensional

efforts are being made to gradually transform Bangladesh Bank’s present “monetary targeting policy based framework” to a “financial price targeting based framework,” and this is expected to continue in FY18, with especial importance given to improving BB’s forecasting abilities, and getting rid of obstructions to market-based financial pricing, including high NPLs (Non-performing Loans) arising out of slack lending practices, and non-market pricing of the Government’s non-bank NSCs borrowings.

Mean inflation decreased to 5.44%, below the FY17 ceiling of 5.80%. However, the upward trend in food prices, caused by the flash floods in the haor regions during the fourth quarter of FY17, are indicative of an inflation outlook. Some of the risks associated with domestic inflation may be

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MAJOR INDICATORS MPS REMITTANCE

FOR THE LAST SEVERAL HALF-YEARLY MONETARY POLICY STATEMENTS, THE CENTRAL BANK HAS BEEN TAKING A “CAUTIOUS” APPROACH, WHICH THE ECONOMISTS REGARD THE RIGHT ONE CONSIDERING THE CURRENT ECONOMIC CONTEXT.

1600

1465.68

1338.31

1400 1200 1000

1056.64

1150.64

958.73

800 600 400 200 0

Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16

In FY17, remittance inflows declined by 14.5% due to decreased demand for migrant workers in major migrant labor hosting countries, and increasing difficulties in accessing legitimate channels for sending money home.

INFLATION BROAD MONEY

8.50% 7.50%

7.03%

6.50%

6.10%

7.48% 7.47% 5.92%

5.50%

5.49%

4.50% 3.50%

General

4.90% Food

16.43%

7.05% 5.71%

4.56%

4.51%

Non-Food Dec 15 Jan 16 Feb 16 Mar 16 Apr 16May 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16

Broad Money (M2) grew by 11.7%, well below the FY17 ceiling of 15.5%, and was a key player in helping contain the CPI inflation of FY17.

Average CPI Inflation gradually declined to 5.44% in June 2017, well below the programmed FY17 ceiling of 5.80%.

PRIVATE SECTOR CREDIT GROWTH

INTEREST RATE SPREAD 4.95%

4.84%

4.86%

16.40% 16.20% 16.00% 15.80% 15.60% 15.40% 15.20% 15.00% 14.80% 14.60% 14.40%

4.85%

4.80% 4.75% 4.70% 4.65%

4.72% 4.65%

4.60% 4.55% 4.50%

13.40%

5.51%

Jan 16Feb 16Feb 16Mar 16Mar 16Apr 16Apr 16May 16May 16Jun 16Jun 16July 16July 16Aug 16Aug 16Sep 16Sep 16Oct 16Oct 16Nov 16Nov 16Dec 16Dec 16

4.85%

13.55%

13.07%

2.50%

4.90%

13.76%

Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16

In FY17, the intermediation spread between weighted average rates on bank deposits and loans has narrowed by only 12 basis points, reflecting high levels of NPLs in banks with lax lending disciplines.

16.20%

16.06%

15.97%

15.60% 15.30%

15.88%

15.60% 15.20% 15.01%

Jul 16 A ug 16 Se p 16 Oct 16 N ov 16 De c 16 Ja n-17 Fe b-17 Ma r- 17

Private Sector Credit Growth grew by 16% in May 2017, well within the targeted ceiling of 16.5%, and helped increase private investment and consumption.

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IDLC NEWS

IDLC NEWS

Dhaka Bank Limited signs MoU with IDLC Finance Limited for partnership on various financing facilities

IDLC Finance Limited – country’s leading Non-Banking Financial Institution has recently partnered with Dhaka Bank Limited – one of the reputed banks in the industry. The purpose of this partnership is to have a synergy between the organizations. Through the MoU signing it is expected that both the entities will have a successful partnership for implementation of financing medium to large-scale projects for Corporates in the area of Trade Finance, Agency Service and Treasury Deals.

Mr. M. Jamal Uddin, Deputy Managing Director & Head of Business of IDLC Finance Limited and Mr. Emranul Huq, Additional Managing Director of Dhaka Bank Limited formalized the signing in an agreement signing ceremony. The Ceremony was adorned with the presence of Mr. Arif Khan, CEO & Managing Director of IDLC Finance Limited. Senior officials of both the organizations were present during the signing ceremony.

1st session on Environmental & Social Risk Management for IDLC employees

As a part of E&S Team’s activities on capacity development program of IDLC Employees, the 1st session on Environmental & Social Risk Management of IDLC employees was held on July 27, 2017 at IDLC Knowledge Center.

Comparison between ERM 2011 & ESRM 2017



Frequently Ask Questions regarding ESMS Software



Sector specific checklists & Corrective action plan before financing

E&S team will arrange another 2 sessions by this year for building readiness of IDLC employees on E&S Risk Management which is now an integral part of credit risk assessment and sustainable business practice.

It was a half-day session for business RMs & CRM representatives with the covered Issues like:



New ESRM 2017 Guideline of Bangladesh Bank

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IDLC NEWS

HALF-YEARLY EARNING DISCLOSURE OF IDLC

Half-Yearly Earning Disclosure of IDLC

1st Half 2017 (January – June 2017) Performance Highlights of IDLC Finance Limited:

compared to 2.34% and 22.30% respectively, in the same period last year. The NPL (Non-performing Loan) ratio stood at 2.84% as at June 30, 2017 compared to 2.98% as at December 31, 2016.

Net Profit After Tax of BDT 1,169mn, 33% year on year growth Diluted Earnings Per Share (EPS) in H1 2017 is BDT 3.28 against BDT 2.72 in the same period last year Customer assets grew by 13% in 2017 to reach BDT 70bn

While our core lending business continued its growth momentum and delivered consistent financial performance in the first half year of 2017, our subsidiaries produced exceptional results to elevate the overall profitability to a new height

IDLC Finance Limited reported Net Profit after Tax of BDT 1,169mn in the first half of 2017, recording a substantial growth of 33% from the same period last year. Earnings per Share (diluted) also increased 21% to reach BDT 3.28 for the period. In these 6 months IDLC acquired 5,779 new customers and grew the Customer Assets portfolio by 13% or BDT 7,927mn to end the first half with a loan book of BDT 70bn. This growth in customer assets was driven primarily by the SME Loans, which experienced a healthy 18.6% growth in this period. SME loans currently comprise 45% of the total loan book of IDLC with close to BDT 31bn. The other business segments of the company - Corporate and Consumer Finance – and, especially the two major subsidiaries – IDLC Investments Limited and IDLC Securities Limited – also delivered strong performance.

Arif Khan CEO & Managing Director IDLC Finance Limited.

In the reported period, IDLC’s annualized ROA and ROE figures stood at 2.77% and 22.89% respectively,

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PERFORMANCE ANALYSIS OF TOP 10 COMMERCIAL BANKS* WITH IDLC TOP 10 COMMERCIAL BANKS* * Considerations

 BRAC Bank Limited

 Pubali Bank Limited

 Dutch-Bangla Bank Limited

 Southeast Bank Limited

 Eastern Bank Limited

 The City Bank Limited

 Islami Bank Bangladesh Limited

 Trust Bank Limited

 Prime Bank Limited

 United Commercial Bank Limited

RETURN ON ASSETS (ROA)

Half-yearly annualized

3.0%

1.

Period of the financials: Half-yearly 2017

2.

Based on two criteria : Loan Portfolio and Net Profit after taxes

2.8%

2.5%

1.6%

2.0%

1.5%

1.5%

1.4%

1.1%

1.0%

1.0%

0.8%

0.8%

0.7%

0.7%

0.7%

Pubali Bank Limited

Prime Bank Limited

0.5% 0.0% IDLC Finance Limited

RETURN ON EQUITY (ROE)

Half-yearly annualized

25.0%

22.9%

BRAC Bank Limited

20.1%

20.0%

Eastern Bank Limited

The City Bank Limited

Trust Dutch-Bangla Southeast United Islami Bank Bank Bank Commercial Bank Limited Limited Limited Bank Bangladesh Limited Limited

19.7% 16.3%

15.7%

15.0%

14.3%

11.7%

10.3%

10.0%

9.2%

9.1%

Pubali Bank Limited

Southeast Bank Limited

7.1%

5.0% 0.0% IDLC Finance Limited

LOANS AND ADVANCES (In Billion)

as of June 30, 2017

Trust Bank Limited

BRAC Bank Limited

Eastern Dutch-Bangla The City Bank Bank Bank Limited Limited Limited

Islami United Bank Commercial Bangladesh Bank Limited Limited

Prime Bank Limited

661.7

700.0 600.0 500.0 400.0 300.0 200.0 100.0

186.2

186.8

169.5

171.0

178.3

181.3

Trust Bank Limited

Eastern Bank Limited

Prime Bank Limited

BRAC Dutch-Bangla The City Bank Bank Bank Limited Limited Limited

207.0

213.7

Southeast Bank Limited

Pubali Bank Limited

237.3

70.2

0.0 IDLC Finance Limited

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United Islami Commercial Bank Bank Bangladesh Limited Limited

LOAN PORTFOLIO GROWTH  (Y-T-D, %)

NET PROFIT AFTER TAXES (In Billion) (6 months, 2017)

20.0% 17.3% 18.0% 16.0% 12.7% 14.0% 12.0% 9.3% 10.0% 8.2% 7.9% 7.4% 8.0% 6.1% 5.8% 5.0% 6.0% 3.4% 3.1% 4.0% 2.0% 0.0% Trust Bank IDLC Finance Eastern Bank Islami Bank Southeast Dutch-BanglaThe City Bank United Pubali Bank Prime Bank BRAC Bank Limited Limited Limited Bangladesh Bank Limited Bank Limited Limited Commercial Limited Limited Limited Limited Bank Limited 3.5

2.91

3.0

2.27

2.5 2.0

1.91

1.71

1.42

1.5

1.32

1.91

1.18

1.17

1.14

Trust Bank Limited

IDLC Finance Limited

Pubali Bank Limited

1.0

0.88

0.5 0.0 Islami Bank Bangladesh Limited

COST-TO-INCOME

(Half yearly, 2017)

BRAC Bank Limited

The City Bank Limited

Eastern Dutch-Bangla United Southeast Bank Bank Commercial Bank Limited Limited Bank Limited Limited

73.0%

80.0% 70.0% 60.0% 50.0% 40.0%

Prime Bank Limited

33.2%

36.7%

37.3%

IDLC Finance Limited

Trust Bank Limited

41.9%

44.6%

Eastern Bank Limited

Pubali Bank Limited

48.9%

49.0%

Prime Bank Limited

Islami Bank Bangladesh Limited

55.2%

60.7%

62.9%

30.0% 20.0% 10.0% 0.0% Southeast Bank Limited

NON-PERFORMING LOAN

31st December,2016

9% 8% 7% 6% 5% 4% 3% 2% 1% 0

The City Bank Limited

BRAC Bank Limited

United Dutch-Bangla Commercial Bank Bank Limited Limited

8%

2.8%

2.98%

3.2%

3.4%

Eastern Bank Limited

IDLC Finance Limited

Trust Bank Limited

BRAC Bank Limited

3.9%

4.8%

5.2%

5.4%

Islami Southeast Dutch-Bangla Pubali Bank Bank Bank Bank Bangladesh Limited Limited Limited Limited

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5.9%

Prime Bank Limited

6%

The City United Bank Commercial Limited Bank Limited

NEW IDEA!

DOCTOROLA

DOCTOROLA Doctorola.com is a tech-based startup whose purpose is to make healthcare service delivery easily accessible and convenient, to make positive impacts in peoples’ lives. It is the pioneer online doctor appointment service platform in Bangladesh, which provides information about doctors and appointments in real-time through a fully integrated system. The company has displayed remarkable growth over the last two years, and recently, MBR had an opportunity to have a one-to-one conversation with Mr. Mohammad Abdul Matin Emon, Founder, Managing Director & CEO of Doctorola.

How it all started

displaying relevant information like whether a doctor’s chamber location has changed or fees have increased or appointment timings are different.

Mr. Mohammad Abdul Matin Emon, an entrepreneur at heart, wanted to establish a business which could sustainably support his expenses, and growth, but also create an impact. He convinced his friends (co-founders of the company) of the importance of investing in the healthcare sector, despite none of them having a background in healthcare. After much deliberation, the founders decided to contribute in the management aspect of the healthcare service industry in Bangladesh.

Doctorola answer around 400 to 450 medical queries on a daily basis, either through their call center or by means of Facebook chats. The company has a team of 10 trained agents and 5 in-house doctors who respond to these sorts of queries. Trained agents match patients’ symptoms and needs against a basic guideline and refer to the type of doctor best suited for treatment. When symptoms are too medically advanced, these patients are referred to the in-house doctors who are able to provide advice on the best course of treatment or referrals to other doctors.

Initially, they conducted a survey of 12 hospitals and discovered that almost 70% of the patients were coming from outside Dhaka, suffering long journeys and high expenses. They also became privy to the common phenomenon where everybody wishes to get treated under the few prominent doctors in Bangladesh, who are almost always overbooked due to the large demand of patients. Hence, Mr. Abdul had the idea of establishing “Doctorola,” an online doctor appointment service platform which would ensure that patients had access to the doctors best for them, as opposed to the best doctors.

Doctorola host live shows on Facebook six days a week, where specialists hold 45 minute sessions answering patients’ queries via phone or Facebook comments and Messenger. This particular service is incredibly popular and every show gets between 20,000 to 45,000 views on average. Additionally, Doctorola hold live radio shows called “Doctorolai Amar Daktar” in partnership with Colors FM Radio. Doctorola also regularly publish a blog which covers a wide range of topics of medical interest, written by a doctor, and has over 200 video contents on different medical topics.

Service Offerings Doctorola help make online appointments for patients. The company is not focused on getting people appointments with the best doctors, but appointments with the doctors best for them. The company also checks whether the patient goes through with the appointment and ensures that patients attend all follow-up checkups with their appointed doctors.

Overcoming Challenges  Financials

Initially, the founders invested their own money to finance the development of the platform for Doctorola, which took almost six months to complete. Later, they were able to present their business idea to venture capitalists, and raise investment capital to fund their

The company is also dedicated to maintaining an online directory of doctors which is updated regularly,

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business. Doctorola is the first Bangladeshi startup to raise investment funds using venture capital. 

changing this mindset of patients; although there has been some progressive change, there is still a long way to go.

Doctors’ Mindsets

Future Aspirations

Initially, when the company first started out, doctors were unwilling to sign up on Doctorola’s platform, unimpressed by the company’s initiative, and having no faith in the business proposition. After the first three months of establishing the organization, Mr. Abdul and his team were only able to convince 19 doctors to join their platform. However, over the last two years, Doctorola has been greatly able to overcome this challenge by convincing doctors all over Bangladesh of the benefit of joining its cause. Currently, there are around 7,500 doctors who have partnered with Doctorola, ranging from small and mid-level doctors to well-known specialists. In the past, the company had to spend hours trying to convince doctors to join their cause; at present, there are around 20 to 25 new sign ups on Doctorola, on a daily basis, with doctors proactively contacting the organization themselves. Changing the mindset of doctors and the processes of the hospitals has been an immense challenge which Doctorola was able to successfully overcome. 

At present, Doctorola deals with around 500 patients daily. The company’s vision is to increase this number to 30,000 patients by 2020, which would still only be 5% of the total number of people who require medical attention in Bangladesh on a daily basis. The company also offers discounts on hospital tests to make treatments more affordable for the patients. Currently, Doctorola is offering this benefit to 37 hospitals – it intends to increase this number in the future. The company is in partnership with 500 hospitals at present; it aspires to be connected with every hospital in Bangladesh in the future. Doctorola is working on establishing more partnerships to create more valuable products. The company intends to bring “telemedicine” to Bangladesh within the next two months. Telemedicine means “remote consultation” – a man, living in the rural areas, could opt to consult a doctor in Dhaka over video conferencing.

Patients’ Mindsets

Doctorola also proposes to bring health insurance to Bangladesh to increase the affordability of treatment for the citizens. Additionally, it wishes to create a referral system, where, depending on a patient’s needs, one doctor could refer him/her to another doctor. A patient could visit the doctor in his village who would recommend him to a specialist, provided that his medical needs were beyond the local doctor’s capabilities. Mr. Abdul’s ambitious plan is to create an effective referral network in Bangladesh over the next 8 to 10 years, which will be commercially sustainable as a business model.

People have a negative opinion regarding the country’s healthcare sector – most people believe doctors to be swindlers incapable of providing the right treatments, and hospitals to be businesses, which are only focused on making money, not patients’ welfare. This lack of faith in local doctors’ abilities has pushed more people to embrace the practice of going abroad for treatment, which has led to the booming of the medical tourism sector. Doctorola’s biggest challenge till date has been

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KEY INFO PRIVATE SECTOR CREDIT GROWTH

SME CREDIT DISBURSEMENT

16.03%

BDT

IMPORT

5%

MONETARY AND CREDIT DEVELOPMENTS

11%

Industrial raw materials 39% 9%

1892

Intermediate goods 9%

Net Foreign Assets of banking system

Consumer goods 11% 10%

1892

Others 15%

Net Domestic Assets of banking system

Petroleum & petro.prodts. 5% 11%

39%

879

Machinery for misc. inds. 10%

Currency outside banks

Capital machinery 11%

6997 Deposits

Monetary and credit developments as of June 2017 (in Billions of BDT)

REMITTANCE

bil

July-March, FY 2016-17, 22.38% Growth Y-O-Y

in May 17

15%

1128.98

2016-17

2015-16

1.01

Jan

1.15

0.96

Dec

1.31

0.95

Nov

1.14

1.01

Oct

1.1

1.06

Sep

1.35

1.18

Aug

1.2

1.01

July

1.39

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ECONOMY AT A GLANCE SEEING ECONOMIC TREND IN DATA

llion

SPREAD OF LENDING & DEPOSIT RATE

LIQUIDITY POSITION OF THE SCHEDULED BANKS 0.59%

7.62% Specialised Banks 11.09% 4.85

State owned Banks Private Banks (Other than Islamic)

4.84

41.20%

4.8

Private Banks (Islamic)

4.76 4.73

4.72

4.7

4.71 4.65

Foreign Banks

4.69 4.69 4.65

39.50%

Total liquid assets for December 2015 was BDT 2577.94 billion

Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17

EXPORT

INFLATION Non-Food Inflation (point to point)

6.98%

4.35%

Jul-16

7.00%

4.30%

Aug-16

6.19% 5.10%

Sep-16

5.58%

5.33%

5.56%

5.41%

Oct-16

Nov-16

4.49% 5.38%

Dec-16

Food Inflation (point to point)

6.53%

6.84%

6.89%

6.94%

7.37% 7.51%

3.10%

3.07%

3.18%

3.30%

3.44% 3.67%

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Inflation rate in June 2017 increases as non-sood inflation creeps up

23 of 40

Jun-17

2%

41%

JUTE

WOVEN GARMENTS

42%

2%

19% 13%

KNITWEAR

FROZEN FOOD

OTHERS

YOUTH LEADERSHIP

NSU YES! CLUB

NSU YES! CLUB NSU YES! (Young Entrepreneurs Society) Club is the premier business club in North South University, dedicated to youth development, and youth empowerment by means of various informative and challenging events, seminars and workshops. Since its inception in 1994, the club has always thrived to create a platform to advocate future entrepreneurs, and is currently renowned as the best student-run organization amongst all universities in the country. MBR recently had an opportunity to have a one-to-one conversation with Farhana Shahnaz, the current treasurer of NSU YES! Club.

MBR: Tell us about the start of this club.

where teams from all across the nation faced cases and eliminations, with each round being more challenging than the previous.

NSU YES! Club: The chief grounds behind the formation of NSU Young Entrepreneurs Society (NSU YES!) Club was to offer a powerhouse to the most creative and passionate minds in the university where they could gain the experience and knowledge needed to compete in the vying world of leaders and executives. This is truly in line with the YES! Motto - “Join. Experience. Achieve.”

The club is also responsible for the biggest marketing competition in the country in terms of the sheer number of participating teams and prize money, “Ad Maker Bangladesh”. Last year, the club had 305 teams from 50 universities across Bangladesh commencing on this creative fight to win the crown of the best Ad Maker, which was an immense achievement. Furthermore, NSU YES! also regularly conducts a series of seminars each year called “NSUers Meet Corporate Icons (NMCI)” to help students gain hands-on advice from corporate leaders on how to prepare for the professional life that awaits them in the future.

The journey began back in 1994 with only a handful of members. The founding president was Shayukh Ahmed who led the club during 1994-1998. He is currently the chairman and CEO of Xurtials, and he has devoted his time and effort into making multiple ventures as an entrepreneur. As founding general secretary, Chowdhury Abd-Allah Quaseed was responsible for arranging the seminars and entrepreneurship promoting events, which the club is so famous for now.

MBR: Briefly describe your recruitment process. What qualities do you look for in potential members?

The current Executive Board is composed of Fahim Abrar (President); Aurthima Naznoor (Vice President- External Affairs); Zardar Rafid Sayeed (Vice President- Internal Affairs); Syed Rehan Ahmed (General Secretary); and Farhana Shahnaz (Treasurer).

NSU YES! Club: The journey to becoming a fullyfledged Yes!er (member of NSU YES! Club) is a thorough and exhaustive one. Recruitment is held only once a year during the Spring semester. Interested students have to fill out a form and face the initial interview round. Selected applicants may pass through to the evaluation stage which is composed of various rounds that help determine potential skills of the participants. This stage is essential as only a handful make it through to move on to the next stage of the recruitment process. Selected members prepare for the final interview with the Executive Body of NSU YES! who then narrow it down to the future flag bearers of the club.

MBR: Briefly share the activities (competitions, workshops, seminars) of this club. NSU YES! Club: In 2017, NSU YES! “Organized Masters of Ideation”, an inter-university business strategy competition, for the fifth time in a row, which is renowned as one of the flagship events of the club. The competition kicked off with intra-university workshops and rounds

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NSU YES! Club expects all of its members to display remarkable communication and leadership skills, while also being adept at multitasking, since these qualities are essential for success in the future professional world. However, the qualities which the club searches for most in its members are passion and diligence, the kind that can be harnessed into bearing a vision someday.

positions in respected multinational corporations, or have taken the initiatives to start their own organizations. Following in that spirit, the club expects its current and future members to carry on this legacy and achieve similar feats. The club believes that wherever YES!ers go, they should be able to triumph against all odds, due to the plethora of educative and unforgettable experiences NSU Yes! has given them.

MBR: What challenges do you face? How do you overcome them?

MBR: What are the club’s plans for the future?

NSU YES! Club: Just like every organization out there, one of the biggest priorities of NSU YES! Club is to keep its members as involved and interested in the club, as possible. The club considers this their biggest challenge, especially once an event ends. In order to keep the team spirit going, the club came up with Member Development Programs, and Leadership Programs, which include competitions for debate, writing, and even sports. These activities not only keep the team spirit going but also help build and strengthen rapport amongst existing members. Another common challenge which the club faces regularly is helping members balance their club and academic obligations. All the events hosted by the club require intense commitment from all the members in terms of time, and both physical and mental efforts. Juggling club duties with academic responsibilities is especially difficult if events overlap with exam sessions. Hence, the seniors in the club work to help out the newer members deal with both responsibilities.

NSU YES! Club: The club’s plans for the future include wishing to not only continue hosting the aforementioned three events successfully every year, but also to take these events to greater heights with every passing year. In addition to that, the club has plans to integrate with youth oriented organizations such as SBYA (Social Business Youth Alliance) and GDG (Google Developer Group) Sonargaon to help build a forum for its members which they can use to build networks and accelerate.

Just like every organization out there, one of the biggest priorities of NSU YES! Club is to keep its members as involved and interested in the club, as possible. The club considers this their biggest challenge, especially once an event ends.

MBR: How do you want to see your members down the line once they get in the professional world? NSU YES! Club: It is quite a well-known fact that most of NSU YES! Club’s respected alumni have either secured

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TRAILBLAZERS

ANIS A. KHAN MANAGING DIRECTOR & CEO, MUTUAL TRUST BANK LIMITED.

Anis A. Khan

Managing Director & CEO, Mutual Trust Bank Limited. Anis A. Khan, a Fellow of the Institute of Bankers, Bangladesh (IBB), is the Managing Director and CEO of Mutual Trust Bank Limited (MTB). Prior to his current job, he served as the CEO and Managing Director of IDLC Finance Limited for six years. For 21 years, he was engaged in a variety of roles with the then British-owned Grindlays Bank plc. and its successors – ANZ Grindlays Bank and Standard Chartered Bank, both in Bangladesh and overseas. Recently, MBR had the privilege of having a one-to-one conversation with Anis A. Khan to get an idea about his professional life, his insights on the current financial sector of Bangladesh, his areas of interest and experiences in life.

Childhood

training courses, where he made the acquaintance of many people from across the world, which helped enrich his experiences and increase his exposure to international banking practices.

Anis A. Khan passed a wonderful childhood, surrounded by a flock of family members. Being the eldest in his family, he grew up amidst love and support of his family and assorted uncles, aunts, and cousins. Having been raised in such an affectionate environment, Khan had certain virtues inculcated in him from his early life.

After the completion of his Management Trainee program in 1983, he was immediately appointed as the Manager of New Market Branch of Grindlays Bank p.l.c., which was then located in the Balaka Cinema Building, Dhaka. It was quite a coincidence that this bank branch was where he had his account in his Dhaka University days and had come to know the staff quite well. Although the employees of that branch initially showed skepticism about him due to his young age and perceived inexperience, he was eventually able to win them over with his friendly personality and kind nature.

Grooming at Grindlays Bank Khan started his professional career as a Management Trainee in Grindlays Bank p.l.c. At that time, the Management Trainees of Grindlays Bank were groomed and trained in such a manner that they could be placed in crucial positions as they progressed through their professional life. He had the opportunity of learning right from scratch. As a Management Trainee, he was sent abroad, quite frequently, on

After serving as the Manager for a brief spell, he was summoned one day in June 1984 to the bank’s Head

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CAREER SNAPSHOT

Office at Hadi Mansion, 2 Dilkusha Commercial Area, Dhaka to meet Mr. Alan J Cooper (the Country Head

CURRENTLY SERVES AS:

at that time), and asked to take over the role of the

 Vice Chairman of Industrial & Infrastructure Development Finance Company Limited (IIDFC)

Chief Financial Officer). Khan was apprehensive

Country Planning Manager (equivalent to today’s about taking on this responsibility, as he did not have

 Independent Director and Chairman of the Board Audit Committee of Berger Paints Bangladesh Limited (BPBL)

an accounting certification; however, Mr. Cooper was

 Director of BD Ventures Limited

future career progression.

quick to assuage his fears and encouraged him to take on the role, which proved to be invaluable for his

 Chairman of the Board of Governors of the Association of Bankers, Bangladesh Limited (ABB)

Rebranding, and a new beginning

 Member of the Council of the Institute of Bankers, Bangladesh (IBB)

Mr. Alan Cooper immediately sent Khan off to the

 Member of the Board of Governors of the Dhaka School of Bank Management

those days), India for on-the-job-exposure under the

bank’s Regional Head Office in Mumbai (Bombay in supervision of Mr. Arun Nangia (an engineering and

 Vice President of the Bangladesh Association of Publicly Listed Companies (BAPLC)

business graduate who was the CFO equivalent of South Asia at that time). Nangia set up a comprehensive

 Life Member of the SAARC Chamber of Commerce and Industry (SAARC CCI)

training program for him and he was sent on rotation to large departments across the Regional Head Office and

 Trustee Treasurer of the CSR Centre

Bombay Main Branch. He had to learn the intricacies of bank accounting including segmented balance sheets and varied calculations relating to returns, productivity, costs, etc. It was an incredible learning experience, by which he was fast-tracked and prepared for his Country

PREVIOUSLY SERVED AS:

Planning Manager’s role back in Dhaka.

 Director of Eastern Bank Limited, 2004 – 2008

In March 1986, he was appointed as Manager,

 Independent Director of Chittagong Stock Exchange Limited (CSE), 2004 – 2008

Foreign Trade at the bank’s area office at Agrabad, Chittagong. He was again sent off to Mumbai on

 Director of the Credit Rating Agency of Bangladesh Limited (CRAB), 2004 – 2009

an intensive residential training course – ‘Finance of Foreign Trade’ (FOFT) conducted by Grindlays

 Bangladesh Rating Agency Limited (BDRAL), 2011 – 2013

International Training (GRIT), which equipped him with the knowledge of foreign exchange and trade

 Vice President of the Metropolitan Chamber of Commerce & Industry, Dhaka (MCCI) for two terms – 2014 & 2015

operations including letters of credit, bills, guarantees and indemnities. At that time, the bank’s major part of import and export business was conducted from

 Chairman of Bangladesh Leasing & Finance Companies Association (BLFCA), 2006 – 2009

Chittagong, and the volumes were significant and work pressures quite intense.

 Chairman of Primary Dealers Bangladesh Limited (PDBL), 2014 – 2016

In mid-1987, Khan was appointed as Senior Relationship Manager, Corporate Banking at the Area

 Chairperson of the SWIFT Member & User Group of Bangladesh (SMUGB), 2014 – 2017

Manager’s Office in Chittagong. He then went on to

27 of 40

become the Area Operations Manager, Chittagong, after

CEO & Managing Director of IDLC in early 2003. He

which stint he headed Operations, Administration,

was initially reluctant to take up the job and return

Data Centres and Corporate Affairs at the bank’s Head

to Bangladesh, so soon after settling down in Dubai

Office in Dhaka. He returned to Chittagong for one last

and the varied banking exposure he was receiving.

stint as the Head of Business Banking and Area Head.

However, his mentors and guides, both in the UAE

He was then given the responsibility of executing

and Bangladesh, convinced him to return and take a

the Business Banking Proposition Project (BBSP)

leadership role in the country’s expanding financial

of ANZ Bank in Bangladesh, under the guidance of

sector.

the Country Head Muhammad A. (Rumee) Ali. This project was executed in other countries by McKinsey

Khan had spent 21 years in total with Grindlays Bank

& Co, International Consultants, and a dedicated team

p.l.c. and its successor banks.

from the bank’s headquarters in Melbourne, Australia.

Tenure at IDLC Finance Limited

In Bangladesh’s case, this was not to be so, and, thus, a determined Rumee Ali sent Khan to Melbourne, Australia in 1999, to learn about the project and its

At the time Anis A. Khan joined IDLC Finance

complex toolkits. On his return to Dhaka, Khan set

Limited, it used to be called Industrial Development

about to execute the project, which was successfully

Leasing Company of Bangladesh Limited and had

accomplished in December 1999, saving the bank

only two branches – one in Chittagong and the other

more than AUD 150,000 in fees and expenses. As a

with the headquarters at Hadi Mansion, 2 Dilkusha

result of this project, the management and business

Commercial Area, Dhaka. He believed that IDLC

flows, processes, and procedures in the Corporate

had the potential to be a company offering multiple

Banking Division of the bank was fully modernized

services, and should not only be limited to leasing.

and made customer-friendly.

Therefore, with the support of the Board of Directors, he ushered IDLC into an era of diversification and

In 2000, Standard Chartered Bank (SCB) acquired

expansion.

ANZ Grindlays Bank branches and businesses all the way from Greece to Bangladesh. Rumee Ali,

He fondly remembers his colleagues during the

who by then had become the Country Head of both

initial IDLC days - Syed Ehsan Quadir, currently the

ANZ Grindlays Bank and Standard Chartered Bank

Managing Director of United Finance Limited, Md.

in Bangladesh, appointed Khan as the Country

Minhaz Zia, former Managing Director of SABINCO

Integration Manager to spearhead the merger process

and now Chairman of Asian Tiger Capital Partners,

of the two banks in Bangladesh, under his supervision,

Arif Khan, the present CEO and Managing Director

mentoring, and guidance. He was also asked to take on

of IDLC Finance Limited, the late Ashfaq Ahmed

the role of the newly created position of Head of Legal

who headed Corporate Finance, Ziaul Hoque Khan,

& Compliance of both the banks.

CFO,

Bilquis Jahan, Head of Human Resources

and now carrying out the same role at BRAC Bank The merger process went well despite many

Limited and M. Jamal Uddin, currently IDLC Deputy

challenges, on completion of which he was selected

Managing Director, all of whom he says are brilliant

as an expatriate employee in 2002 by SCB and posted

and accomplished finance professionals, top managers

to Dubai, United Arab Emirates as the Regional Head

and inspirational leaders. They and the other

of Legal & Compliance, The Gulf. This was another

colleagues were supportive and helpful during the first

exciting learning role, giving him rich exposure to all

phase of expansion and diversification that was most

parts of the bank across the UAE, Oman, Bahrain, and

enthusiastically launched across the country. Under

Qatar. While in Dubai, Khan was offered the role of

his leadership, the company began offering structured

28 of 40

finance products, syndication finance services, SME loans, home loans, work order financing, factoring, an array of attractive deposit products and schemes, capital market and merchant banking products and services, all of which were a resounding success with the rapidly expanding clientele.

rebranding at the bank to help propel it forward. Now in his ninth year at the bank, Khan, with the support of his management team and other colleagues, has expanded the branch network from thirty-six (36) to one hundred eleven (111) and set up fourteen (14) MTB Smart Banking Kiosks and two hundred and thirty-four (234) ATMs. The bank has also introduced

He also believed in expanding the footprint, and the

chip-embedded Visa and MasterCards, placed over

company set out to open branches in the major areas

3,000 POS machines with merchants, opened four (4)

of the capital city like Dhanmondi, Gulshan, Uttara

bill collection booths and two (2) foreign exchange

and in Bogra. The Chittagong Office was relocated,

booths, and a lounge at Hazrat Shahjalal International

expanded, and made most customer-friendly. After

Airport (HSIA), Dhaka. The bank introduced Agent

a number of attempts, Khan was finally successful in

Banking services in June 2016, and has in just over a year, opened twenty-five (25) such centers across the

convincing the IDLC Board to purchase an entire floor

country, as part of its financial inclusion endeavors.

in Bay’s Galleria, a landmark building in Gulshan 1, to which the Head Office was relocated from Dilkusha

The bank has also set up a stock brokerage subsidiary,

in April 2006. He set up IDLC Securities Limited

MTB Securities Limited in September 2010, which

as a fully owned subsidiary of IDLC and the stock

has the largest branch network in the country and is

brokerage firm quickly became one of the leading ones

one of the leading firms in terms of volume. Another

in the country. He then set up the Merchant Banking

subsidiary company, MTB Capital Limited (MTBCL)

business under a separate Division, which also proved

was inaugurated in April 2011 and then MTB

to be successful. He also believed that the company’s

Exchange (UK) Limited started operating in London,

name was too long and difficult to remember. Thus,

United Kingdom in February 2011.

he proposed changing the name to IDLC Finance Limited, which idea was welcomed and approved by

In October 2010, MTB moved its Corporate Head

the company’s Board of Directors. This name has now

Office to MTB Centre in Gulshan, Dhaka from where

become well established and well branded across the

the bank’s business and operations are now managed

country, giving instant recognition to its products

from a well-equipped modern and functional building.

and services and activities. Khan recounts his six

The bank also inaugurated its own 12-storied building

years at IDLC to be a rewarding, wonderful, and an

- MTB Tower, on Kazi Nazrul Islam Avenue (Bangla

unforgettable experience.

Motor) in October 2014, which houses amongst other divisions and departments, a state-of-the art

His work at MTB so far

auditorium and conference centre.

Anis A. Khan joined Mutual Trust Bank Limited (MTB) as its Managing Director and CEO on April 15, 2009. Interestingly, he again started working in an office in Dilkusha Commercial Area, where the headquarters of MTB was located. The members of the MTB Board of Directors are renowned entrepreneurs and business leaders of the country, and they gave Khan a clean chit to build the bank anew. As is his hallmark, he unleashed an era of expansion and diversification and

MTB is now well poised to expand its business and clientele and become one of the most sought-after banks in the country and an employer of choice for the younger generation coming into the work force.

Leadership in Bank and NBFI What makes Khan an erudite professional is the experience of leading both a bank and an NBFI, and

29 of 40

being the Chair of both the concerned associations, namely: (Association of Bankers, Bangladesh Limited (ABB) and Bangladesh Leasing & Finance Companies Association (BLFCA). As opined by Khan, while both banks and NBFIs (Non-banking Financial Institutions) are quite similar in terms of processing loans of different types and having similar capital market responsibilities, they have certain underlying differences. Although both institutions offer similar services in certain sectors, banks operate on a larger scale. They are licensed to conduct multifarious operations, which makes them versatile in terms of offering services in the areas of Retail Banking, Corporate Banking, Islamic Banking, SME Banking, and so forth. Banks also deal with cash transactions and have a variety of payment instruments, which NBFIs do not. Additionally, banks have to worry about both physical and cyber security and remain on constant guard against thefts, frauds, and forgeries. Compliance with rules and regulations including Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) are other key areas, banks have to constantly concentrate on.

the banking and non-banking financial sectors in this area. However, Khan believes that since Bangladesh is more prosperous now and has better macroeconomic indicators and higher foreign reserves, some liberalization would be welcome for the marketplace and entrepreneurs. Although, there have been many relaxations in regulations, it is still not enough in comparison with other countries. He believes that especially in trade (exports and imports), there should be more liberalization; and the exporters and importers should be able to conduct business, free of hassles, up to certain reasonable limits.

Thoughts regarding the Financial Sector

HE IS THE ONLY KNOWN INDIVIDUAL TO HAVE HELD BOTH ROLES, AND HE BELIEVES THAT IT PUTS HIM IN A UNIQUE POSITION TO OFFER VALUABLE INSIGHT ON BOTH THE BANKING AND NONBANKING SECTORS.

Reforms both sectors should implement Mr. Khan previously served as the Chairman of Bangladesh Leasing & Finance Companies Association (BLFCA), and is currently serving as the Chairman of the Board of Governors of the Association of Bankers, Bangladesh Limited (ABB).

NBFI Sector Khan believes that the NBFI sector of Bangladesh is well matured now. As the Vice Chairman of the Industrial & Infrastructure Development Finance Company Limited (IIDFC), he has the opportunity to know how well or poorly an NBFI is performing on a monthly basis. Despite not working as an executive in this sector anymore, he still takes keen interest in how the companies are doing and is well informed about each company’s performance. He remarked that companies like Uttara Finance, Phoenix, IPDC, and United Finance were all doing well, while IDLC Finance Limited and LankaBangla had profits, which were greater than many of the banks. He also appreciated the present upward growth trend of IPDC Finance following a complete transformation.

Khan believes that there are too many banks and non-banking financial institutions currently in operations, for a country of Bangladesh’s size. He recounts his positive experiences as the head of the Integration team in Grindlays Bank, which led him to appreciate the favorable business consequences of Mergers & Acquisitions for any company. He believes that a number of banks, and even a number of NBFIs should form mergers and become larger companies. He remarks that although mergers initially creates downsizing of jobs, they are imperative to ensure the continued success of a business and has longterm positive implications. Only by focusing on the business, can help people later on.

Banking Sector Earlier, when Bangladesh had low foreign reserves, and the financial sector was at its nascent stage, Bangladesh Bank was very strict in regulating both

30 of 40

The Art Aficionado

a close friend, a professional acquaintance, or an employee - he makes it a point to wish everyone on his or her birthday and anniversary. Even if he is physically unable to meet or talk to these people, he ensures that he sends them little notes or text/ WhatsApp messages, on their special days. He likes making people feel special; this may be in the form of attending weddings or by consoling a bereaved person. He believes in sharing whatever he has with people around him, as he feels that material possessions are temporary, but people and memories are forever.

Anis A. Khan’s passion for art was cultivated from a young age. When he was in Faujdarhat Cadet College (FCC), he wished he could paint as well as his friends did, however he says he was not gifted in this area. His fondness for art began with his admiration of his friends’ sketches and paintings. When he was a teenager, he used to cut out photos of paintings from a calendar published by a German company called Bayer, and paste it on his walls. Looking at his wall adorned with these pictures, helped grow his appreciation for the works of the old masters like Leonardo Da Vinci, Raphael, Rembrandt, Van Gogh, Monet and Picasso and led to his yearning to collect paintings for himself. When he ventured into the professional world, he started his collection by buying paintings of typical Bangladeshi landscapes, costing around BDT 2,000 or BDT 3,000. However, he remembers that he could not even afford those and often paid the art dealers in installments. He even used to take loans to be able to buy paintings.

Khan puts a lot of emphasis on being people-oriented. He said that he has had a fondness for people all through his life, and he tries hard to be thoughtful and caring. These qualities, apart from making him a revered and much sought-after professional, have helped him earn many cherished friends for life.

He reminisces an incident where Nur Mohammad, the proprietor of the Divine Art Gallery in Chittagong (and now also owner of another one in Dhaka), offered to sell him five paintings of Quamrul Hasan for BDT 100,000. Khan was unable to buy the paintings, even after Mohammad gave him an option to pay BDT 20,000 and repay the rest later. He believes that those paintings would easily be worth more than BDT 1,000,000 each now. Although he regrets not being able to buy those paintings, he believes that the decision he took back then was wise.

Advice to young professionals Khan marvels at the rich variety and amount of information available on the internet now. He believes this is a great boon and a ready tool for our young professionals, who can easily mine the knowledge available, in a split second, and enrich their thoughts and excel in their work. He remarks that our younger generation has better access to knowledge and information due to the technologically advanced era that we live in. He believes that they should take advantage of this vast encyclopedia of knowledge, and tailor themselves to whatever suits their talents, interests and passion. He wishes young people should never stop learning and they must continue to expand their knowledge base. Khan believes that by utilizing the sources of information now so available at their fingertips, young people should choose what they feel most drawn to and excel at that. Working hard in school and colleges, and doing well in exams, both written and practical, will lead to rich academic attainments, which in turn will greatly help them get ahead in their professional career.

Over the course of his long and exciting career, he had the good fortune of making the acquaintance of many artists, and took to frequenting art exhibitions and galleries. These interactions and visits helped fuel his appreciation and love for art, and slowly, after collecting for many years, he has now amassed quite a significant collection of a variety of paintings created by renowned painters of the country. He is also now very happy to serve as a member of the Board of Trustees of the Society for the Promotion of Bangladesh Art (SPBA).

Key to success: Being people oriented Khan has always been a very sociable person and cares deeply about people. Whether it is a family member,

31 of 40

INDUSTRY

UPDATE BOOM TIME FOR PLASTICS Due to diversification in the manufacturing process, Bangladesh’s plastic industry is booming and contributing significantly to the national economy. Currently, there are 3000 plastic products manufacturing units which employ around 1 million people. Hygienic plastic pallets, used to package raw materials of various industrial products, are now being manufactured locally. Plastic products are exported to more than 106 countries. The basic material required for producing plastic products is “polymer.” The lack of poly-olefin units ensure that the country imports 100% of polymers in addition to 150,000 metric tonnes of raw plastic, per annum. Additional challenges include a lack of modern technology, world-standard knowledge, skills, and experience, and capital resources. However, existing reserves of natural gas and petroleum fields offer prospects of setting up a poly-olefin plant in Bangladesh.

PLASTIC

PHARMA EXPORTS IN MILLIONS OF USD

PHARMA

FY 17*

90.3

FY16

81.2

FY15

72.6

FY14

59.8

FY13

48.3

FY12

44.3

FY11

41

FY10 0

PHARMA SECTOR PROJECTED 15% ANNUAL GROWTH

36.2 20

40

60

80

100

According to research conducted by LR Global, Bangladesh’s pharmaceutical sector could grow at 15% in the coming five years, due to growing local markets and new export frontiers. Currently, the industry meets 98% of domestic demand, and exports to over 125 countries. The growth of the sector can be contributable to two effective policies: Drug Control Ordinance 1982 (forbade foreign pharmaceuticals from selling imported drugs) and the World Trade Organization’s agreement on Trade-Related Aspects of Intellectual Property Rights (permitted the country to reverse engineer patented generic drugs). The relaxation of TRIPS has been prolonged to 2032. The pharmaceutical industry has the potential to emerge as a world-leader of offpatented generics medicine, aided by backward integration, quality research, and skilled human resources. The industry could also become the next thrust sector after RMG.

32 of 40

HUGE GROWTH POTENTIAL IN STEEL SECTOR Bangladesh’s steel manufacturing sector has an immense growth potential, contributable to growing construction activities, rising demand and positive trade prospects. Large investments by steel mills ensured that the annual billet production has risen to almost 40 lac tonnes, putting the country on the course to become self-sufficient in billet manufacturing. Billet imports, due to the duty hike, and increased local production, decreased by 34% to 11.57 lac tonnes, year-on-year. The country may even be able to export billet soon. Scrap imports rose by 99% to 21.64 lac tonnes, to support the industry’s move into backward integration. Presently, Bangladesh’s annual steel consumption is around eight million tonnes, which may grow to eighteen million tonnes by 2030. Coordinated investment and bilateral cooperation with India could propel the local industry to new heights in the near future.

STEEL

TELCOM 4G IN BANGLADESH Private mobile operators predict low returns against the BDT 22,600 crore required to be invested for 4G services in Bangladesh. This is contributable to high spectrum charges and taxation, coupled with low 4G device penetrations and data price rates. The government recently proposed base prices/ megahertz to be USD 30 million (900 MHz bands), USD 35 million (1,800 MHz) and USD 27 million (2,100 MHz). The operators demand for price/MHz to be below USD 15 million, reasoning that revenues were decreasing against increasing data consumption. The top three mobile operators have already tested their 4G networks and found 50 – 100 Mbps of upload and download speed, which is significantly higher than existing 3G services. Currently, only mobile operators Grameenphone, and Robi are offering their customers the opportunity to convert their existing SIMs to 4G Sims. Both the government and the operators are optimistic to launch 4G services as soon as possible in the country.

33 of 40

MONTH IN BRIEF Trade deficit

42%

as a up result of slower growth of exports compared to higher growth of imports

FDI up by almost

28%

Home textile exports fail to reach heights despite having huge potential in home textile, as duty benefits were extended to Pakistan, a cotton grower whereas Bangladesh is a 100% cotton importer

Africa: Cheaper cotton source for Bangladesh textile sector due to its cost effectiveness

Bangladesh is the third largest apparel exporter after China and the EU: World Trade Organization (WTO)

Savings certificates sell like hotcakes with 55%

Portfolio investment in the stock market jumped about six times to USD 324 million.

China European Union (28) Bangladesh Vietnam India

18 25 28

161 117

Top ten exporters of clothing, 2016 (USD billion and annual percentage change,%)

Bangladesh will be the 30th largest economy in 2022 : Statistical Times based on World Economic Outlook by International Monetary Fund (IMF)

ADP spending lowest in eight years

South Asia becomes global Liquefied Natural Gas (LNG) hotspot as Bangladesh enters market. Only India and Pakistan currently import LNG in South Asia, taking in a combined 25 million tonnes, or 8% of global demand last year.

34 of 40

growth in FY17.

Savers switch sides as banks squeeze interests on deposits.

Brexit, currency devaluation affect Bangladesh exports adversely, with export earnings from the UK falling by

6.31%

MONTH IN BRIEF

Textile sector dominates turnover after government proposed to reduce corporate tax on textile sector.

Local manufacture of bikes increase after investment from Honda, Suzuki, Bajaj, Hero.

Banks opt for bonds to raise their capital in line with Basel III requirements for their costeffectiveness

• Bangladesh, Vietnam to push global cotton demand up next year. Yarn-spinning mills in Bangladesh and Vietnam up their production and China continues on a steady course as the world’s largest textile manufacturer

GP starts campaign to convert SIM cards into 4G enabled SIMs

SME credit disbursement jumps by 22.83% in July-March worth of BDT 1128.98 billion from BDT 919.10 billion

Fresh initiative by DSE to list more companies, especially MNCs and SoEs to make market more vibrant and stable

Credit cards to get costlier as the new circular by Bangladesh Bank states the rate cannot be more than 5% from the highest interest rate on any loan offered by the bank.

Central Bank resumes selling US dollar to stabilise exchange market

Flood causes BDT 36 million loss to livestock sector. Around 8,332 cattle head, poultry birds die, The Department of Livestock Services (DLS) statistics show

35 of 40

For the Record

‘WE’LL NOT SUPPORT GROWTH AT THE COST OF INFLATION.’ FAZLE KABIR, Governor, Bangladesh Bank in the wake up recently published “cautious” Monetary Policy Stance for Jul-Dec,FY’17-18

'Respect is a twoway street and Uber's community guidelines help reiterate that clearly and concisely in both English and Bengali' said Uber in a statement announcing their 'community guidelines' for both riders and drivers

‘This process is cost effective and easier.’ MASHRUR AREFIN, Additional Managing Director and Chief Communication Officer of City Bank in response to banks opting for bonds to raise capital

50%

Bangladesh accounted for a share in the GCC labor market, ahead of India and Pakistan according to a statistics by Indianexpress

Import duty cut has led to the decline in paddy prices significantly, as stockists started selling out their paddy fearing a fall in prices GENERAL SECRETARY KM LAYEK ALI, Bangladesh Auto Major Husking Mill Owners Association (BAMHMOA) on recent plunge in rice price

IT WON’T BE FAIR IF THE PRICE IS HIKED WITHOUT ANY VALID REASON.” GHULAM RAHMAN, President of Consumers Association Bangladesh on hike of edible oil price twice in this calendar year

36 of 40

ANALYTICS THE WAY WE WORK NOW

TRENDS IN HOME LOANS OF FINANCIAL INSTITUTIONS

SEEING TRENDS IN THE DATA

Home loans in the banking sector have seen steady growth over the last decade. Informal home loans arise out of savings, and loans from friends, and family. Formal home loan providers include banks (around 80%), financial institutions, and specialized housing finance providers. Total outstanding home loans provided by the formal sector had a CAGR of 20.02% in 2016. As of June 2016, Private Commercial Banks provided the highest amount of loans, and Micro-Credit Lenders the lowest. Delta BRAC Housing (DBH), the leading specialized housing finance institution, sources most of its home loans from customer deposits.

SHARE OF HOME LOAN PROVIDERS IN 2016 (IN %)

0% 4% 8% 12% 21% MCLS FCBS

NBFIS

SP.FIS

55%

SOCBS

PCBS

Outstanding Home Loan of PCBs (in BDT billions)

Total Outstanding Home Loan FY-05-16 ( BDT billions)

Outstanding Home Loan of BHBFC (In BDT Billions)

600

350

500

300

30

250

25

200

20

150

15

100

10

400 300 200 100

35

50

5 0

0

0 FY 05

FY 06

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

FY 13

FY 14

FY 15

FY 05

FY 16

FY 06

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

FY 13

FY 14

FY 15

FY 16

FY 05

FY 06

FY 07

FY 08

FY 09

FY 10

FY 11

Source: BB

Source: BB

Source: BB

Outstanding Home Loan of DBH (In BDT Billions)

Trend of Home Loan to Total Loan

% of NPL to Home Loans & Total Loans

7

8.00%

35

6

7.00%

30

5

25 15

3

10

2

5

1

0

Source: BB

FY 07

FY 08

FY 09

FY 10

FY 14

FY 15

FY 16

6.00% 5.00%

4

20

FY 06

FY 13

9.00%

40

FY 05

FY 12

FY 11

FY 12

FY 13

FY 14

FY 15

FY 16

4.00% 3.00% 2.00% 1.00%

0 2006 2007

2008 2009 2010

2011

2012

2013

2014

2015

2016

FCB = Foreign Commercial Bank NBFI = Non Banking Financial Institution Sp.FI = Specialized Financial Institution SoCB= State-owned Commercial Bank PCB = Private Commercial Bank BHBFC = Bangladesh House Building Finance Corporation DBH = Delta BRAC Housing

0.00%

2006

Source: Survey Data

Source: Survey Data

ABOUT THE RESEARCH

2011 Total Loans

2014

2016

Home Loans

The discussion paper “Home Loan of Banks: Trend and Impact,” published by Bangladesh Institute of Bank Management (BIBM), outlines the trends in home loans in Bangladesh over the last decade. Team members include Md. Mohiuddin Siddique, Professor and Director (DSBM), BIBM; Md. Alamgir, Associate Professor, BIBM; Dr. Mohammad Tazul Islam, Associate Professor, BIBM.

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CAPITAL MARKET REVIEW

MONTHLY MARKET STATISTICS

Monthly Commentary l Market extended the gaining momentum built up in the previous month. Supported by budgetary incentives, coupled with quarter end earnings expectations, investors opted for calculative optimism and went hunting values in large and established sectors. Impressive declarations from Telecommunication, Bank and NBFI sector pumped up excitement in the market. Resultantly, these three sectors led the market in terms of both gain and turnover. Telecommunication gained 10.0% this month, as GP delivered spectacular second quarter result. GP advanced 10.2% in the month of July and 37.4% during January-July, 2017 period, becoming a USD 6 bn company. As the month progressed, impressive earnings declarations in bank and NBFI inspired similar reaction in the respective sectors. Notably, RUPALIBANK advanced 53.6% in July, followed by 27.8% gain DUTCHBANGL during the same period. Heavyweight BRACBANK, ISLAMIBANK and CITYBANK advanced by 8.8%, 10.2% and 12.3%, respectively. NBFI sector also made

substantial gain as ICB and IDLC advanced by 11.2% and 13.6%, respectively. Broad index DSEX advanced 3.6% in July, while DS30 advanced by 2.9%. The gaining momentum attracted investors from the sideline, pushing up activities significantly. Average daily turnover jumped up to be BDT 9.5 bn, compared to only BDT 5.6 bn in the previous month. During this month, all the sectors stayed positive except for Pharmaceuticals (-1.2%) and Fuel & power (-0.1%). Meanwhile, MSCi Frontier market index advanced 1.8% this month. Bangladesh outperformed its regional peers, this month. Among the regional peers, Pakistan’s market declined by 1.2% amid turbulence in political scenario. Sri Lankan market also were on the back foot with a decline of 1.6%. Vietnam, meanwhile stayed flat (+0.9%).

Monthly Market Statistics l Index Movement Indices

Index Point, July 2017

1M Return

3M Return

YTD Return

3Y Return

Bangladesh DSEX

5,860.6

3.6%

7.0%

16.4%

DS30

2,143.5

2.9%

6.3%

18.4%

32.4% 31.8%

DSES

1,315.2

1.4%

4.1%

10.3%

30.9%

51.8%

Peer Countries Pakistan (KSE 100)

46,010.5

-1.2%

-6.7%

-3.8%

Sri Lanka (CSE - All Share)

6,637.4

-1.6%

0.4%

6.6%

-2.6%

Vietnam (VNI)

783.6

0.9%

9.2%

17.9%

31.5%

563.7

0.4%

4.9%

12.9%

-18.7%

MSCI Frontier Markets Index

574.1

1.8%

6.1%

15.0%

-18.5%

All returns are Holding Period Return

Market Statistics (July, 2017)

Graph: DSE Turnover and DSEX

Market Statistics

31-Jul-17

29-Jun-17

% change

Mcap All (USD mn)*

49,099.4

47,112.1

4.2%

Mcap Equity (USD mn)

41,682.0

39,705.3

5.0%

117.9

69.9

68.6%

Daily Avg. Turnover (USD mn) *Equity+Mutual Funds+Debt

38 of 40

Top Twenty Market Cap (July, 2017) DSE Code

Sector

Mcap1 (USD Mn)

Telecommunication

6,351.5

Pharmaceuticals & chemicals Food & Allied

GP SQURPHARMA BATBC

1M Return

3M Return

YTD Return

3Y Return

1.7

10.2%

12.4%

37.4%

44.2%

2,404.4

2.0

-2.5%

-0.3%

13.5%

63.5%

2,246.1

0.4

6.8%

18.5%

24.6%

31.3%

NBFI

1,524.0

1.1

11.2%

1.2%

85.9%

58.1%

Bank

929.2

2.6

8.8%

20.6%

66.2%

355.4%

Cement

872.3

0.9

-3.6%

-7.1%

-25.6%

-26.5%

ICB BRACBANK LAFSURCEML

Daily Avg. Turnover (USD Mn)

RENATA

Pharmaceuticals & chemicals

857.1

0.1

-1.9%

2.8%

5.0%

75.9%

UPGDCL2

Fuel & Power

819.2

0.4

-1.6%

15.4%

28.6%

N/A

OLYMPIC

Food & Allied

711.7

0.6

3.1%

3.6%

-6.7%

107.4%

Bank

708.4

0.9

10.2%

13.6%

23.2%

59.6%

Fuel & Power

621.6

0.2

0.2%

1.6%

2.6%

-24.4%

BERGERPBL

Miscellaneous

607.9

0.0

0.7%

0.5%

-6.2%

117.3%

BXPHARMA

Pharmaceuticals & chemicals

561.5

1.1

-1.2%

0.6%

38.2%

197.7%

Fuel & Power

545.3

0.6

1.0%

2.5%

11.4%

49.4%

ISLAMIBANK TITASGAS

SUMITPOWER CITYBANK

Bank

455.9

8.4

12.3%

30.8%

65.7%

253.9%

Fuel & Power

453.2

1.6

-0.2%

11.8%

1.3%

100.4%

Pharmaceuticals & chemicals

401.2

0.0

0.6%

2.6%

11.9%

7.6%

MJLBD MARICO BSRMSTEEL

Engineering

387.2

0.2

0.6%

1.1%

0.5%

22.4%

IDLC

NBFI

375.7

6.2

13.6%

12.1%

47.5%

204.5%

NBL

Bank

364.3

2.2

6.9%

7.8%

45.9%

71.1%

All returns are holding period return Mcap as on last trading session of the month

1

33Y return of UPGDCL is unavailable as it was listed in 2015

2

Top Ten Gainers’ List (July, 2017) DSE Code

Top Ten Losers’ List (July, 2017)

31-Jul-17

29-Jun-17

% Change

BBSCABLES

90.3

10.0*

803.0%

JUTESPINN

97.3

60.7

60.3%

SAMATALETH

46.5

29.2

59.2%

SINOBANGLA

66.4

42.8

55.1%

RUPALIBANK

42.7

27.8

53.6%

FUWANGFOOD

24.2

15.9

52.2%

BDFINANCE

SAVAREFR

94.7

65.2

45.2%

DULAMIACOT

12.7

9.3

RAHIMAFOOD

184.9

IMAMBUTTON

22.3

31-Jul-17

29-Jun-17

% Change

BDWELDING

DSE Code

18.3

23.7

-22.8%

BEACHHATCH

17.7

21.9

-19.2%

REGENTTEX

26.9

31.3

-14.1%

UNIONCAP

22.1

25.4

-13.0%

236.7

263.9

-10.3%

19.3

21.4

-9.8%

TOSRIFA

27.6

30.5

-9.5%

36.6%

GHAIL

42.1

46.0

-8.5%

140.9

31.2%

PRAGATILIF*

105.2

114.4

-8.0%

17.0

31.2%

SPCERAMICS

15.4

16.7

-7.8%

CVOPRL

*Represents post record date adjustment

*Offer price of BBSCABLES

39 of 40

Top Ten Closed End Funds based on 5 years’ (CAGR) performance DSE Code

Fund

"Price1

"NAV1

"Price/

"Dividend2

(BDT)"

(BDT)"

NAV"

Yield (%)"

NAV Return3 2017 YTD

2016

2014

Redemption 2012-16

Year

NLI1STMF

VIPB

15.3

16.76

91.3%

9.8%

17.5%

20.0%

17.7%

15.7%

2023

SEBL1STMF

VIPB

14.0

15.66

89.4%

9.6%

17.2%

19.3%

16.5%

14.2%

2021

GRAMEENS2

AIMS

16.1

20.24

79.5%

6.2%

16.9%

15.1%

13.6%

12.1%

2021

RELIANCE1

AIMS

11.3

14.42

78.4%

8.8%

13.6%

17.1%

10.7%

11.8%

2027

IFILISLMF1

ICB AMCL

9.1

10.54

86.3%

11.0%

9.8%

14.0%

12.9%

11.0%

2023

1JANATAMF

RACE

7.3

12.37

59.0%

0.0%

12.8%

6.5%

12.2%

9.8%

2020

ABB1STMF

RACE

7.5

13.02

57.6%

0.0%

13.6%

8.9%

9.9%

9.8%

2019

FBFIF

RACE

7.0

12.47

56.1%

0.0%

11.3%

9.1%

9.3%

8.8%

2019

POPULAR1MF

RACE

7.0

12.47

56.1%

0.0%

14.1%

8.2%

11.1%

8.7%

2020

PHPMF1

RACE

7.8

12.20

63.9%

0.0%

14.9%

7.4%

10.9%

8.0%

2017

Price as on June 19, 2017; NAV as latest published

1

On latest cash dividend declared

2

CAGR computed for respected periods, except for 2017, adjusted for dividend. YTD returns of funds debuting within the year represent return generated since debut, hence is not

3

directly comparable with return of funds that operated throughout the year.

Fund Managers’ Performance Fund Manager

AUM (BDT mn)

P/NAV

Dividend Yield (%)

"Fund Managers'

NAV Return

Ranking by Return6"

2017 YTD

2016

2014-16

2012-16

2016

2014-16

2012-16

RACE

31,497

58.4%

0.0%

12.9%

8.5%

9.9%

8.1%

5

4

LR Global

10,184

72.7%

6.6%

10.3%

4.2%

5.6%

5.3%

6

5

ICB AMCL

7,685

88.8%

7.9%

16.2%

13.8%

10.1%

5.6%

4

3

AIMS

4,493

79.3%

6.5%

16.2%

15.5%

12.7%

11.7%

2

2

VAML

3,239

79.5%

3.0%

12.9%

-

-

-

-

-

VIPB

2,406

90.1%

9.7%

17.3%

19.5%

16.9%

14.7%

1

1

SEML

1,601

93.1%

0.8%

6.0%

-

-

-

-

-

ATCP AMCL

893

85.1%

10.6%

16.3%

14.4%

-

-

3

-

CAPM

524

92.7%

0.0%

4.2%

-

-

-

-

-

62,522

69.8%

3.7%

13.1%

9.6%

9.7%

-

-

-

AMC Indus-try

1Position of the respective fund manager in the ranking of 6 managers by return in respective horizon

Upcoming Record Dates Company name

Record Date

SD/RIU

CD

Meghna Life Insurance Company Lim-ited

02.08.17

5.0%

20.0%

National Life Insurance Co. Limited

08.08.17

15.0%

20.0%

Linde Bangladeash Limited

13.08.17

Sandhani Life Insurance Company Lim-ited

20.08.17

Southeast Bank 1st Mutual Fund

22.08.17

13.5%

NLI 1st Mutual Fund

22.08.17

15.0%

Asian Tiger Sandhani Life Growth Fund

24.08.17

15.5%

Rupali Life Insurance Company Ltd.

24.08.17

10.0%

200.0% 20.0%

40 of 40

Rights

BRANCH ADDRESS

BRANCH ADDRESS

CORPORATE HEAD OFFICE IDLC ASSET MANAGEMENT LTD. D.R Tower, (4th Floor) 65/2/2 Bir Protik Gazi Golam Dostogir Road, Purana Paltan, Dhaka-1000

D.R Tower, (4th Floor) 65/2/2 Bir Protik Gazi Golam Dostogir Road, Purana Paltan, Dhaka-1000

DILKUSHA BRANCH

Bay’s Galleria (4th Floor) 57 Gulshan Avenue Gulshan 1, Dhaka 1212

D.R Tower, (5th Floor) 65/2/2 Bir Protik Gazi Golam Dostogir Road, Purana Paltan Dhaka-1000 Tel: +880 (2) 9560111

Tel: +88 02 7763805-6

South Avenue Tower (5th Floor), Unit No. 502, House # 50, Road # 03, 7 Gulshan Avenue, Dhaka 1212

Tel: +88 (2) 734 8213-6

Tel: +88 02 7343766-7

Tel: +88 02 9817647-9

(3rd Floor)

World Trade Center (5th Floor) 102-103 Agrabad Commercial Area, Chittagong 4100 Tel: +880 (31) 711034

Tel: +88 09609994352

MYMENSINGH BRANCH

HABIGANJ BRANCH

Shankar City (1st Floor), Ram Krishna Mission Road, Ghatia Bazar, Habiganj 3300

Swapnaneer Tower (1st Floor), 27 C.K Ghosh Road, Mymensingh 2200

HOME LOAN

AUTO LOAN

CORPORATE LOAN

KUSHTIA BRANCH

Momotaj Tower (2nd Floor), 5/1, Jaliram Agarwal Lane Rokshi Goli, N.S. Road Kushtia

SME LOAN

RANGPUR BRANCH

Paper palace tower House no # 306, Road # 01 Pairachattor Central Road Rangpur.

WOMEN ENTREPRENEUR LOAN

IDLC Helpline# 16409 41 of 40

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bangladesh's furniture industry - IDLC Finance Limited

BANGLADESH’S FURNITURE INDUSTRY FORGING FORWARD TO FLOURISH 2 of 40 SUBSCRIBE NOW Go to: idlc.com/mbr If you have any comments and/or suggestions...

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