Market Turmoil: View From Here

An article was floating around the other day suggesting Bangladesh will benefit from the current economic turmoil. It reminded me of the early days of the dot-com crash, when Sun's upper management were going around saying, effectively, "We will come out of this slowdown [it was not a crash yet] ahead of, and better than, our competition because bla bla bla." But of course Sun suffered heavily - for a host of reasons, lack of execution being a big one (but that's what happens when the Process Police takes over, no?) But Sun's management had not foreseen that, had they? You never know what strikes you in these situations.

I am not predicting impending doom for Bangladesh, but I cannot disregard the possibility that this country will be affected sooner of later. I spoke with the owner of a large export-oriented business last night. Some of his customers are cancelling or renegotiating contracts, and slowing down the buying. I also read about several Garments owners complaining about order cancellations. But maybe garments will be spared the worst. As another friend pointed out, "Americans are not going to start walking around naked!" According to him, this turmoil will give the buyers another chance to squeeze their Bangladeshi vendors a little more for lower prices.

The Taka being pegged to a resurgent dollar will not help our exports, for sure. But on the other hand, since most garments factories buy much of their raw material from abroad, their materiel costs (in Taka) will go down. Your head spinning yet? Mine is.

Banking in Bangladesh seems reasonably healthy. Much of this, I am told, has been because of the very strict regulating oversight of Bangladesh Bank (which, in turn, is influenced by World Bank.) Whatever the reasons, the banks in Bangladesh have not gone into the business of those crazy products and practices that have gotten the Western banks into trouble.

When I was chatting with a senior, respectable banker the other day, he pointed out that two years ago, some young, hot-shot, western-type bankers had given him and his colleagues a lecture on Securetization, Mortgage-Backed Securities, and other instruments that had become fashionable to the Western banks. At the end of the lecture, my friend had said, "But how can we go into this business? I still don't understand what you are talking about!" He might have felt bad about saying those words then, but today he is not losing a lot of sleep over toxic assets.

While banking appears on solid ground, remittances from overseas workers is a different, unpredictable matter. Some are saying that the drop of oil prices means the Middle Eastern countries will be starting fewer construction projects, and so will hire fewer people from here. The other side I heard was that the Middle Easterners are now so addicted to our cheap labor that they will keep on recruiting no matter what. Who knows?

Finally, real estate. When you have 150 million people squeezed into 55000 square miles, land is expensive. Two words: population pressure. Some, specially those who are in the business, don't see much effect on real estate prices. They argue that many of the buyers are local who have accumulated their wealth in Taka and are ready to spend on flats and land. Others say that real estate will have to slow down because the remittances and exports will slow down. Who knows?

On final reckoning, the market turmoil in the West does seem very far away from the average Bangladeshi, because that person is struggling so hard just to make ends meet and take care of those who depend on him or her. The optimist in me says being so close to tbe bottom of the barrel means that the Bangladeshi will not have to bear a heavy brunt of this storm, while the pessimist says that in times of crisis the worst hit are often those at the bottom of the heap. Who knows? Only time will tell.

Good Day for IT in Bangladesh

Yesterday I attended the inaugural ceremony of the Chittagong Custom House Automation Project at the Bd-China Friendship Center. The project is an undertaking by the Bangladesh Army with cooperation from Ctg Chamber of Commerce. It has a large software component which was developed by DataSoft, a Bangladesh software company.

The goal of the project was to "clean up" and modernize the Customs business at Ctg Port. According to the speakers, there were large inefficiencies and a lot of organized corruption which were choking the import/export lifeblood of the nation. The software component of the project is designed to automate the workflow of import/export paperwork.

The total cost of the project came to about Tk 2 crore. Significantly, under previous administrations, projects costing over Tk 300 crore had failed to modernize the port, as one of the speakers pointed out. (I am not sure what the previous large budgets had included.)

DataSoft is using the Build-Own-Operate-Transfer model to run the project. I assume this means they get an amount from every transaction that takes place.

As an example, the number of steps needed to export something through Ctg Customs House has been reduced from 22 to 7. Similar savings in time and cost were shown in other areas of operation.

The entire project was done with local skills (no foreign consultants or companies involved.)

It is not every day that one hears good things about the local IT business from local luminaries. Therefore, this event was a pleasant surprise for me, particularly because of the support for IT shown by all the speakers: the Chief Advisor and two other Advisors, Army Chief and Generals, Ctg Chamber of Commerce Head and NBR Head. I am sure the hard (and smart) work that the DataSoft team put into the project had a lot to do with this IT-friendly attitude.

At the end of the ceremony, the CA officially started the business of the new CTG Customs House by Clicking "OK" on a live program to start the transactions. DataSoft COO Manjur Mahmud - after making a short presentation on the technology - assisted the CA in this. Behind the scenes, DataSoft MD Mahboob Zaman's dynamism played a big role.

The local IT industry has much to be proud of. Despite an overall lack of vision and questionable (or downright bad) decisions by successive governments, and constant pressure from foreign software companies, they have accomplished much. Perhaps this event will usher in a new era of our national pride and support?

Congratulations to all - particularly to the DataSoft team - on this accomplishment. I hope this plays out well in the long run.

I think it is high time for the IT industry in Bangladesh to go on the offensive!

(Full Disclosure: I was once associated with DataSoft as their CTO - but can claim no credit for this project which started after I left.)