Read more about May’s business and international news
Growth projections remain confusing
The country’s growth hovering around 6% for a decade is likely to recede to 5.4% this year, says the World Bank. This forecast is far lower than the government’s projection at 6.5%, already lower than a 7.2% target. International Monetary Fund predicts the growth would be below 6%, following the political unrest over general elections that shattered business confidence. The Asian Development Bank’s growth projection is 5.7%. The economy has suffered a loss of $1.4 billion due to the turmoil. For attaining a higher growth, the finance minister would try to boost investment which has stagnated at around 25% of GDP for the past five years.
Megatrends to transform business
Businesses may need to create their own talent pool or attract workers from other locations. Company executives believe they will need to fast track their knowledge about training, multi-lingual working environments, and migration issues. Some 1500 CEOs covered in the17th annual global CEO survey said sustainability is core to business success. Resource scarcity and climate change, urbanisation and demographic changes consistently feature in the top three megatrends set to transform business. Despite the prospects of the rise of middle class consumers, the CEOs felt, there would be more demand for raw materials, water, energy and carbon putting pressure on supply chains, communities, infrastructure and governments.
Vitalising the ‘missing middle’
Further bank efficiency is needed to help SMEs to overcome access to finance, according to Asia SME Finance Monitor 2013. This requires diversified SME financing models and nonbank financing. In Bangladesh, non-performing loans of small enterprises doubled in recent years. Banking on microfinance experience, the country needs to focus on SME financing to vitalise the ‘missing middle’ between micro and large-medium enterprises. SME finance is seen as an instrument to realise sustainable, resilient economic growth. In Asia, SMEs account for 98% of all enterprises and 66% of the national labour force and contributed 38% of GDP during 2007–2012.
Businesses in India’s election fever?
Pakistan’s talks with India on the most favoured nation status has been postponed, till the installation of a new government in New Delhi. UAE-based non-resident Indians are expected to increase their investment inflows to India after the general elections, said a survey which forecast a better environment for retirement planning. If BJP is voted to power, it would reverse a decision by the Congress to allow multi-brand foreign retailers. However, the World Bank President termed India a difficult place to do business, calling for necessary reforms. Meanwhile, local companies are targeting the rural market, given growing incomes of around 850 million consumers living in 650,000 villages of India.
Bumper mango output likely
The country’s mango-growing hub – Rajshahi-Chapainawabganj region – is expected to see a better business this season. More than 85% of the mango trees in orchards and homesteads have bloomed during this year, where a bumper crop is likely. There are about three million mango trees of different ages, of traditional and high-yielding varieties on 32,816 hectares. The region, which accounts for over 60% of the national mango output, witnessed over 70% increase in area-wise cultivation in a decade. Research, technology and profitability played a key role in the expansion of mango cultivation. Enormous prospects for mango-farming prompted experts to forecast that Bangladesh could emerge as a mango exporting country in the near future.
Merger, acquisition and accusation
Holcim Ltd. and Lafarge SA agreed a merger to create the world’s biggest cement maker with more than $40 billion in sales and cut overcapacities and energy expenses. Holcim’s bid for Cemex’s western German plants is already being probed by the EU. In India, Sun Pharmaceutical Industries Ltd. is taking over troubled domestic rival Ranbaxy Laboratories Ltd. from its Japanese owner, Daiichi Sankyo Co., in a deal valued at $3.2 billion. The US has barred imports from four out of five of Ranbaxy’s factories. Britain’s Vodafone had taken full ownership of Vodafone India from Piramal Enterprises Limited. Drug maker GlaxoSmithKline, already facing corruption accusations in China, is now investigating allegations of bribery in Iraq.
Surviving the loss of disappearance
Malaysia’s flagship carrier is trying to overcome the economic blow of the disaster by responding with new management and a safety campaign. Malaysian Airlines was facing financial challenges even before the mysterious disappearance of its Boeing 777 on March 8. Afterwards, its shares have fallen to a record low and sales taken a hit. Airline officials have said they are still focused on the needs of passengers’ families and are holding off on fully assessing how the crisis is affecting its business. In the past, other carriers have gone out of business after airline disasters. The airline booked a full-year loss of $356 million in 2013.
Digital finance may help 200m businesses
Digital solutions and new technologies can help attain universal access to financial services by 2020. Experts, during the World Bank Group’s 2014 spring meetings, regretted that 2.5 billion people in developing countries are deprived of such services. Over 200 million small businesses lack access to financing. ‘Digital money allows common people to contribute to nation-building efforts,’ Kamal Quadir, CEO of bKash, told a seminar meant for showcasing innovations. Using mobile money, ‘the poor contribute to generating many multiplier effects of the value’. It can help growth in sectors like agriculture, transportation, water, health, education, and clean energy.
Corporates in emerging markets exposed to shocks
The mix of investors in emerging markets’ stocks and bonds has evolved considerably over the past 15 years, which has made capital flows and asset prices in these countries more sensitive to events outside their own borders, says an IMF research report. Its latest Global Financial Stability Report found improvement in financial stability in advanced economies but deterioration in emerging economies. Higher debt loads and lower debt servicing capacity make corporates more vulnerable to tighter external financing conditions. The IMF analysis observed that more opportunities opened up to invest in emerging markets, and that larger direct foreign participation in local financial markets could transmit global volatility to local asset prices.
A prerequisite for MIC status
Bangladesh needs to focus on high-quality learning and strong behavioural skills from early childhood for linkage between market and institutions, suggests a study. Improving skills and productivity are crucial for the country to achieve middle income country status. Currently, most of the labour force is in the informal sector with low levels of education.The study styled ‘Seeding Fertile Ground: Education That Works for Bangladesh’ finds that 67% of the labour market has qualification less than a primary education. Only 25% of grade-5 students master Bangla competencies and only 33% master Mathematics, according to the report prepared by the World Bank in consultation with society, the government, academia, think-tanks and development partners.
