The New Nation - Internet Edition

ALTHOUGH the government was found quite well aware of the need to disburse agricultural loans in significantly higher amounts following the recent countrywide floods to aid agriculture's recovery, the right policy decision appears to be getting frustrated from its implementation at the field level. Reports are noted in the media that the disbursement of these loans is going on at a lackadaisical pace. The flow of the loans has actually decreased to farmers when the fastest receipt of the same in right proportions are needed in many cases by them to carry on production activities fully. The loans would be relied on to buy seeds, fertilisers and other inputs-promptly-to engage in compensatory activities after the large scale destruction of paddy and other crops. In some areas, seedlings planted after the first round of flood were destroyed again in the second round of flooding. Besides, the woes of the farmers would be experienced as unbearable over a large part of the country after Friday's fiercest cyclone.

According to preliminary reports, the cyclone has ravaged 95 per cent of standing crops in 11 districts. The loss figures are likely to mount considerably after a better stock taking is carried out. The farmers in the cyclone-affected areas would require quick and ample distribution of agricultural loans to regain some capacity to engage in farming activities again. If they receive loans quickly, they can attempt fresh planting of rabi or winter crops to make up for the latest losses. A total amount of some Taka 66.19 billion as agricultural loans to be disbursed, was declared as provisioned by the government some months ago even before the flood waters had subsided. But the problem is not availability of resources for giving away as agricultural loans but the administration aspects of such loan disbursement. Krishi Bank and the nationalised commercial banks (NCBs) should play leading roles in distributing these loans efficiently.

The rate of disbursement continues to be so laggard that Bangladesh Bank (BB) had to write to the management of the NCBs to step up the rate of disbursement. Poor monitoring and supervision at the field level are at the roots of such a slow pace of distribution of agricultural loans although from the highest levels of the government, great stress is being laid to this task. The government-run banks which have been given the responsibility to run this special post-flood agricultural loan programme, are short of manpower needed to do the work competently. No less important is running the loan programme cleanly or incorruptibly. Farmers have accepted as an unwritten custom that they have to grease the palms of bank officials to get loans. Typically, a loan taker has to part with, say, Taka 200 for a loan of Taka 2000 as bribe to the loan-dispensers. This practice must be put to an end through improved supervision and monitoring activities in this difficult year for farmers.

A RECENT ILO report highlighted that 20 to 35 per cent of the labour force in Bangladesh engage in at least 50 hours of work per week. This is reflective of the tenacity of the workers in this country. The contribution of workers is a very big input in the production processes. Higher output and its benefits are the results of a motivated work-force ready to work for long periods. From all of these perspectives, Bangladesh is a country that has been blessed with a large work force and also their diligence. However, in today's world, economic progress is not only having a huge number of willing workers although this can be an advantage in lowering wage costs. Only having an abundance of workers does not guarantee competitiveness, specially in the vital export-oriented industries. Bangladeshi entrepreneurs will also need to increase the key 'productivity' of their workers to survive and retain market shares in the fierce international competition. Greater quality output from trained workers do translate into more competitiveness. The significance of this crucial factor must be adequately realised by our entrepreneurs specially in the readymade garments (RMG) which is the country's biggest foreign currency earner.

Bangladesh Bank (BB) authorities some time ago urged the enterprises in the country's textile sector to become more competitive and to do that by mainly making the work-force engaged in this sector more productive in every sense. It has been found out that workers in India and China in some cases produce more in less time and produce better quality apparels in comparison to their counterparts in Bangladesh's RMG industries. Thus, the owners of such industries in those countries have become more competitive in terms of producing more taking less time and also making higher quality goods. This has been possible because the operators of these industries in these countries took pains to improve the productivity of their workers. It seems that Bangladeshi entrepreneurs in general are lagging behind in both understanding these productivity issues and training up their workers adequately to these ends. It is not that all industries have been oblivious to this need. Some foreign owned and operated enterprises as well as ones of local origin are taking care to increase workers' productivity. But it is imperative for such practices to spread to all industries in the country.

Workers in different sectors should be told how their higher productivity and efficiency in all respects are the prerequisites to meeting their demands for higher wages and other benefits. They should then be obliged to agree to a participatory framework in which management would attempt to systematically improve their productivity and efficiency linking any rise in income for the workers to attaining of the productivity goals. The government, on its part, ought to much increase the number of training and skill centres and run them either free or at nominal costs for those who would train in them.

Maswood Alam Khan

House Building Finance Corporation (HBFC), which had been a little laid-back in disbursing new loans for quite a long time, seems to have been vivacious of late, thanks to remarkable changes in her leadership patterns and recent initiatives taken to help solve housing problems in our country, especially in urban areas.

Apartment Credit Policy 2007, newly introduced by the government, is a new course of action to be implemented mainly by HBFC. We are optimistic that the policy will usher in a welcome paradigm shift in bank financing to help people of limited incomes buy their homes not as houses built on lands owned by them but as apartments erected on common lands owned by communities.

Accustomed for ages to living in houses with backyard and kitchen gardens surrounded by ponds and plants and enlaced by creepers and vines we have for about a decade been trying to tune to a different kind of living in box-like homes called apartments which people initially used to compare with holes on lofts where pigeons nestle in.

People used to call these self-contained housing units as flats. But the word 'flat' sounds the overtone of poverty and smacks of a humble abode. With price of these housing units skyrocketing owners of such flats nowadays stylishly call their accommodations as apartments in an American intonation.

According to a new scheme of HBFC, introduced last week, an individual belonging to a middle-class or lower-middle-class group---who does not have a home of his/her own to live in---may avail of a maximum of Taka 4 million (TK 40 lakh) as 'home loan' at a simple interest rate of 12 percent per annum to buy in Dhaka or Chittagong metropolis an apartment to dwell in. The loan along with interests accrued has to be adjusted in full within a period of 15 years at best.

Managing Director of HBFC in an interview telecast over a TV channel assured the general public that his corporation will see that the borrowers of home loans under the new scheme do not have to bear cumulative burdens on account of interest which would be simple in the true sense of the term. It is possible if a borrower is offered a client-friendly amortization and installments deposited by the borrower go straight to the principal loan amount to be adjusted with first. People should know that "lower the outstanding of principal loan amount, smaller the amount of interest to be accrued".

A banker always looks at the equity of the borrower (homeowner's unencumbered interest in his/her property) and the value of the mortgaged property. Equity increases as due installments (known as mortgage payments in western countries) are paid or as the property enjoys appreciation. If borrower's equity is high and the mortgaged property appreciates the banker does not mind to reschedule the loan portfolio with lighter monthly installments expanding the period of repayment or even offer a reverse amortization requiring the borrower to pay back with smaller amounts at initial stages and gradually higher amounts at later stages on a scale like the pyramid with its upside down.

In Bangladesh borrowers are in haven as the rate of interest however high gets diluted by progressively high rate of inflation. To put it simply, if interest rate is 12 percent and inflation 10 percent the effective load of interest on the borrower stands at 2 percent. Moreover, a government-owned bank, unlike other lenders, does not fleece their clients with a plethora of charges.

Nevertheless, loan---though an asset to a banker---is a nagging liability and no genuine borrower, who has no intention to swindle his/her banker, lives in peace till his/her mortgaged property is freed from encumbrance. But many of our borrowers, especially those for home loans as I found during my long experience in a commercial bank, are not really prudent enough to evaluate their present and future capability in paying off their mortgage.

I have a friend, a salaried person, who hates the money matter and his wife, a perfect housewife, takes full care of their family budget. While shopping in the local vegetable & fish market my friend, as strictly advised by his wife, is supposed to buy groceries according to a budgeted checklist which he usually does---except on occasions when he bumps into a salesman displaying a king-sized hilsha fish that he impulsively buys plunking down all the notes and coins from his pocket. My friend's mouth as a matter of fact waters at the sight of a hilsha fish.

There are people whose mouths water at the sound of bank loans and to avail of any loan they become trigger-happy to sign on any papers bankers offer. It is the same story anywhere in the world because money is perhaps more intoxicating than amphetamine, the main ingredient of 'yaba' pills that kills you after making you feel excited.

Present consumerism is driving people crazy not to be content with a mere hilsha fish; they borrow money to buy costly apartments, cars, the latest electronic gadgets, trips abroad for holidaying etc. to quench their ever-increasing thirsts for modernity in life. It's fine as long as people have income and so long as the economy vibrates with income generating avenues. Problem arises when people, who are not sure about their ability to pay off loans, jump on the bandwagon encumbering their hard-earned savings or properties to avail of loans to buy luxuries.

The target groups of the new HBFC scheme on home loans are of those belonging to the middle and the lower-middle strata of our society. Let's say, those who would be availing of the maximum limit of home loan of Taka 40 lakh do belong to the middle class. To repay within 15 years the loan of Taka 32 lakh (with adjustment of 20 percent equity down paid) along with interest the borrower will have to pay back an installment of not less than Taka 30,000 every month (the installment amount being reliant on many variables like amortization method, bank rate, irregular repayments etc. may go up or down). If the borrower lives in that apartment s/he must have a smooth monthly income of at least Taka 60,000 during the next 15 years. Hope, there would be enough people belonging to that middle class who can afford such loans.

But, who are those belonging to the lower-middle stratum? Let's say, one of them is the guy who as the most honest government servant has just retired as a mid-level officer with his last basic pay drawn at Taka 16,000 a month. Given that his receivable pension funds are unencumbered, he would be getting not more than Taka 26 lakh as total benefit of pension. If he has to avail of a loan of Taka 30 lakh under the new HBFC scheme to buy an apartment (say, a livable flat of 1200 SFT with two bed rooms) to live in (he cannot rent out the apartment as he is the prioritized applicant for not having a home in the city) he has to make a down payment of Taka 6 lakh as his equity and his monthly installment would be not less than Taka 23,000 towards adjustment of the loan of Taka 24 lakh within 15 years.

But the point is after spending Taka 6 lakh as down payment he would be left with cash of only Taka 20 lakh of his pension benefit funds which, if invested in the government's pension savings scheme, will fetch a maximum monthly earning of Taka 20,000---not enough even to meet the monthly mortgage payment, let alone meet his other living expenses.

Shouldn't we think of an alternative way of housing for people like the guy with his last basic pay at Taka 16,000 and many others with the same or lower financial status who have been retired and cannot really afford to avail of the HBFC loan to buy a two-bedroom apartment in metropolitan areas?

Thanks to unprecedented progression in medical science and young people's propensity for leaving their parents in the lurch to fend for themselves, retired people in our society nowadays are living longer and lonelier than their forefathers and are not quite aware of how to cope with advancement of their age or with fallibility of their health as they could not get a scope to learn how to grapple with extremities of old age from their fathers or grandfathers who had died when they were comparatively less old---and perhaps less lonely.

How many people (or architectural engineers) in our society do know that an apartment where an octogenarian may live should be equipped with an individual alarm system interfaced with the bed and the bathroom the old man uses (not really an expensive workmanship) so that in any emergency s/he can alert security people on duty on the ground floor of the apartment complex?

Living in self-contained apartments is safe and convenient for any group of people, young or old. Any individual retiring from work plans to spend his/her twilight years in a compact home like an apartment, even if the apartment is a studio apartment of 500 SFT or a tiny bedsit (known as flatette in Australia) of 300 SFT which are very hospitable towards senior citizens in Singapore and England as those tiny abodes are equipped with all the amenities, including even hospital bed elevators, old people may need to use anytime round the clock.

But a retiree in our society is afraid of investing a part or full of his/her nest egg (savings for future use) in buying an apartment---an asset which is very hard to cash in full and impossible to cash in parts.

With an eye on uncertainties of future and cash requirements on emergencies the retirees instead opt for investing their nest eggs in products like the government-sponsored 'pension savings certificates' knowing full well that an investment in pension savings schemes depreciates while an investment in real estates like lands or apartments appreciates. A little modification in the HBFC-proposed 'home loan' scheme providing a window for equity extraction could motivate these pensioners to turn their eyes from savings certificates to home building loans.

"Had there been a way my investment or equity in my home where I myself have been living", a retiree may muse, "could offer me periodical earnings in cash without my renting or selling it out I would have been the last person to buy bonds like pension savings or fixed deposit certificates". His/her musing, though a bit fanciful, is not illogical altogether.

We invest money and time in planting a tree, in rearing a milking cow, in tilling a field or in purchasing a bond---all these investments give us some returns in cash. "Why then should I not expect some cash returns in emergencies---when I am very old, when I have to pay my medical bills or when my children don't take care of me---from my investment or equity in my one-room flatlet the value of which has steadily been increasing? I cannot rent or sell the flatlet out as I am living and wish to die in it." This question was answered by bankers in most of the developed countries many years back though we the bankers in Bangladesh are a little shy about it.

Answer to this retired gentleman's wondering is hidden inside what in banking parlance is known as 'home equity loan' which a retiree may be allowed, as is allowed in many countries other than in Bangladesh, to take for emergencies like medical expenses at old age etc. by offering the lending bank the equity in his/her mortgaged home as collateral for creating a second charge. Home equity loan---if allowed to buy luxuries or provided by subprime or predatory lenders---may, however, be homicidal and abusive.

An old person who is not taken care of by his/her children or who does not have a source of monthly income may also be allowed to enjoy a monthly pension after a particular age, say 65, in the form of a revolving home equity loan which HBFC may declare in their advertisement as an innovative product: "Invest your money (equity) in homes, not in papers (savings certificates). Homes appreciate and papers depreciate. And also enjoy a monthly pension from your mortgaged home when you are mellower or when you are not cared".

The above imaginary advertisement of HBFC, if actually published, may wake up the retiree, the guy who retired with his last basic pay drawn at Taka 16,000, to run to HBFC to avail of a small home loan of not more than Taka 10 lakh to buy a cute bedsit, what the Australians dotingly call flatette, provided there is an attached cantilevered balcony of 15 SFT (5 feet by 3 feet) open to sky and facing east or west where he can relax and smoke a Havana cigar, his wife beside seeping tea, while watching the sun rising or setting.

Shafeen Mustaq

Long perceived as the 'basket case' of a broken India, the recent declaration of emergency in Bangladesh and subsequent cancellation of elections and crackdown against corruption resulted in the arrests of both former Prime Ministers.

Begum Khaleda Zia is the leader of the Bangladesh National Party (BNP), which governed the country between 1991 and 1996 and again from 2001 to 2006. Begum Zia is currently behind bars for corruption. Sheikh Hasina head of Awami League (AL), a party which was in power from 1996 to 2001, is also behind bars for murder as a result of political unrest and corruption.

The arrests were the culmination of drastic measures enforced by the caretaker government which has led to widespread political dialogue hitherto unforseen in Bangladesh. Foreign correspondents, political observers and indeed even the common man are all asking the same question, is this to be the end of personality-based politics in Bangladesh?

Bangladesh's birth was a result of a strong and notable personality in the form of Sheikh Mujibur Rahman, his efforts helped Bangladesh gained independence from Pakistan in 1971 and since then it has endured many forms of rule, from the military to Democratic. While Bangladesh's birth came about as a result of fervent nationalism, the two major parties which have been in power for most of Bangladesh's short history have depleted the patriotism and love of their people through corruption, poverty and poor economic planning.

The vision of two of the most notable leaders Sheikh Mujibur Rahman and Zia ur Rahman, who were assassinated before they could fulfil their vision of a golden Bangladesh, remains incomplete as their heirs struggle with the power and responsibility allocated to them, allocated, some would say undemocratically. For those who are familiar with the personalities and families of the two women currently under arrest, its is perhaps unsurprising to note the smooth succession of power within the family in a supposedly democratic manner. But for those who are used to the concept of democracy, it is startling to note that the heir apparent for both of these political parties have already been selected, namely the sons of the two leading ladies.

Political observers may see this pattern continuing in the near foreseeable future where leadership is based upon one's relation to the leader and subsequent political clout, and it is no surprise that many with political ambitions are willing to marry into these two families to improve their chances of at least getting an important position within their Government. Many may also perceive this concept of succession as having very little to do with Democratic politics and more to do with monarchies, which existed when Bangladesh was a part of India. It is then important to note Bangladesh's lack of progression as a nation which claims to be a people's republic with a Democratic system in place.

In Bangladesh, elections are to take place every five years, it is thus a disappointment to many when every five years, leaders are elected and prompted not based upon ability or experience or competency, but rather on family connection and ability to influence the masses through use of threats and intimidating scare tactics. The same two parties sling mud and the loser cries foul and make claims of electoral fraud. This perpetual disappointment has seen a consistent 'brain drain' as intellectuals leave Bangladesh in despair of its political and economic situation seen as being based on nepotism, cronyism and corruption, to better their future elsewhere.

The caretaker government has stood firm in its cleansing of the parties and the suspected individuals, what remains to be seen is the justice of the judgements handed down. The trials have the potential to forge a new path for Bangladeshi politics, one in which the image of the leader may at last be laid to rest and from its ashes rise a democratically elected party that will encourage Bangladesh to achieve its political and economical potential.

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