Visualizing The World’s Biggest Rice Producers
It’s hard to overstate the importance of rice to the world.
As a staple food, over half of the global population depends on the crop as a major part of their diet. In fact, rice is considered a vital part of nutrition in much of Asia, Latin America, Africa, and the Caribbean, and is estimated to provide more than one-fifth of the calories consumed worldwide by humans.
This graphic highlights the world’s 10 biggest rice-producing countries, using 2019 production data from the UN’s FAOSTAT and the USDA.
Which Countries Produce the Most Rice?
With 756 million tonnes produced globally in 2019, rice is the world’s third-most produced agricultural crop behind sugarcane and corn (maize), which both have a wide variety of non-consumption uses.
Just 10 countries are responsible for a bulk of global rice production:
| Country | Tonnes Rice Produced (2019) | % of Total |
|---|---|---|
| China | 211.4M | 28.0% |
| India | 177.6M | 23.5% |
| Indonesia | 54.6M | 7.2% |
| Bangladesh | 54.6M | 7.2% |
| Vietnam | 43.4M | 5.7% |
| Thailand | 28.3M | 3.7% |
| Myanmar | 26.3M | 3.5% |
| Philippines | 18.8M | 2.5% |
| Pakistan | 11.1M | 1.5% |
| Brazil | 10.4M | 1.4% |
| Others | 119.0M | 15.8% |
| Total | 755.5M | 100.0% |
At the top of the charts are China (#1) and India (#2), which produced 389 million tonnes combined, accounting for more than half of global production.
They’re significantly ahead of #3 and #4 countries Indonesia and Bangladesh, which produced around 54.6 million tonnes each. Almost all of the top producers are located in Asia, with the exception of Brazil (#10).
Feeding A Growing World
With 84% of rice being harvested in just 10 countries, it’s clear that many countries globally must rely on imports to meet domestic demand.
In 2019, India, Thailand, Pakistan, and Vietnam were large net exporters of rice, shipping out nearly $16 billion of rice combined. Other countries including Iran, China, Saudi Arabia, and the Philippines consume above production numbers and rely on imports to meet their needs.
And not everything makes it from plant to table. In developing countries especially, estimates of 8–26% of rice are lost due to postharvest problems and poor infrastructure.
As the global population continues to grow, rice will continue to be a key source of calories around the world—and as our diets change, it’ll be interesting to see how that role shifts in the future.
Visualizing the Shift in Global Economic Power
As the post-pandemic recovery chugs along, the global economy is set to see major changes in the coming decades. Most significantly, China is forecast to pass the United States to become the largest economy globally.
The world’s economic center has long been drifting from Europe and North America over to Asia. This global shift was kickstarted by lowered trade barriers and greater economic freedom, which attracted foreign direct investment (FDI). Another major driving factor was the improvements in infrastructure and communications, and a general increase in economic complexity in the region.
Our visualization uses data from the 13th edition of World Economic League Table 2022, a forecast published by the Center for Economics and Business Research (CEBR).
When Will China Become the Largest Economic Power?
China is expected to surpass the U.S. by the year 2030. A faster than expected recovery in the U.S. in 2021, and China’s struggles under the “Zero-COVID” policies have delayed the country taking the top spot by about two years.
China has maintained its positive GDP growth due to the stability provided by domestic demand. This has proven crucial in sustaining the country’s economic growth. China’s fiscal and economic policy had focused on this prior to the pandemic over fears of growing Western trade restrictions.
India is Primed for the #3 Spot
India is expected to become the third largest country in terms of GDP with $10.8 trillion projected in 2031.
Looking back, India had a GDP of just $949 billion in 2006. Fast forward to today and India’s GDP has more than tripled, reaching $3.1 trillion in 2022. Over the next 15 years, it’s expected to triple yet again. What is behind this impressive growth?
For starters, the country’s economy had a lot more room to improve than other nations. Demographics are also working in the country’s favor. While the median age in many mature economies is shooting up, India has a youthful workforce. In fact, India’s median age is a full 20 years lower than Japan, which is currently the third largest economy.
Over the last 60 years, the service industry has boomed to around 55% of India’s GDP. Telecommunications, software, and IT generate most of the revenue in this sector. IT alone produces 10% of the country’s GDP. India’s large tech-savvy, English-speaking workforce has proved attractive for international companies like Intel, Google, Meta, Microsoft, IBM, and many others, while the domestic startup scene continues to boom.
The Indian government is also pursuing “production-linked incentives” (i.e. subsidies) for multinational companies looking to diversify their production away from China. If these incentives prove successful, more of the world’s solar panels and smartphones will be produced within India’s borders.
How Will the Global Economy Look in 2031?
By the year 2031, there will be major changes in the global economic power rankings.
As we said before: China will have become the world’s largest economy in terms of GDP and India will be the world’s third largest economy. Let’s also take a look at the top 10 economies by 2031.
| Rank | Country | Region | Projected GDP in 2031 (in Trillions of USD) |
|---|---|---|---|
| 1 |  China | Asia | $37.6 |
| 2 |  United States | North America | $35.4 |
| 3 |  India | Asia | $6.8 |
| 4 |  Japan | Asia | $6.4 |
| 5 |  Germany | Europe | $6.3 |
| 6 |  United Kingdom | Europe | $4.6 |
| 7 |  France | Europe | $4.2 |
| 8 |  Brazil | South America | $3.1 |
| 9 |  Canada | North America | $3.0 |
| 10 |  Italy | Europe | $3.0 |
Out of the top five economies, three are located in Asia: China, India, and Japan—a clear demonstration of how economic power is shifting towards large population centers in Asia.
Europe will have four countries in the top 10: Germany, the United Kingdom, France, and Italy. From South America, only Brazil appears in the top 10.
Under these projections, Russia sits outside the top 10 in 2031. Of course, it remains to be seen how crushing sanctions and global isolation will affect the economic trajectory of the country.
Now, the big question. Is it inevitable that China takes the top spot in the global economy as predicted by this forecast? The truth is that nothing is guaranteed. Other projections have modeled reasonable alternative scenarios for China’s economy. A debt crisis, international isolation, or a shrinking population could keep China’s economy in second place for longer than expected.
Factor Investing: How You May Experience it
Why do investments perform the way they do? This is a question many investment experts have been attempting to answer for years. Luckily, factor investing can provide investors with a data-driven understanding.
In this infographic from MSCI, we use scenarios from everyday life to explain how factor investing works.
What is Factor Investing?
Simply put, investors choose stocks based on the “factors”, or characteristics, that help explain investment performance. They are typically aiming for:
- Higher returns
- Lower risk
- More diversification
While you may not have actively incorporated factor investing in your current portfolio, almost everyone will be familiar with the underlying concepts in real life. Here are five common factors and scenarios where you likely experience their principles.
1. Low Volatility Factor
The low volatility factor attempts to capture excess returns to stocks with lower than average risk. This factor has generally performed best during economic slowdowns or contractions.
How you may experience it: If you want a writing career with relatively reliable income, you’ll likely choose to be a marketer at a large company rather than a self-employed author.
2. Quality Factor
The quality factor attempts to capture excess returns in shares of companies that are characterized by low debt, stable earnings growth, and other “quality” metrics. This factor has generally performed best during economic contractions.
How you may experience it: When you’re purchasing new tires for your car, you might consider characteristics like tread longevity, traction, and fuel economy.
3. Value Factor
The value factor attempts to capture excess returns to stocks that have low prices relative to their fundamental value. This factor has generally performed best during economic recoveries.
How you may experience it: If you want a good deal, you may look for items that are on sale.
4. Momentum Factor
The momentum factor attempts to capture excess returns to stocks with stronger past performance. It has generally performed best during economic expansions.
How you may experience it: When you’re deciding what to watch, you may choose a TV show that has high audience ratings. You’ll likely also recommend it to your friends, which further boosts viewer numbers.
5. Low Size Factor
The low size factor attempts to capture excess returns of smaller firms (by market capitalization) relative to their larger counterparts. It has generally performed best during economic recoveries.
How you may experience it: When you’re learning a new sport, you’ll see larger increases in your skill level than a professional athlete will.
Understanding Your Investments With Factor Investing
These simple concepts are at work in your everyday life and in your investments. Targeting these factors can help you meet your investing goals, including maximizing return potential and managing risk.
From 2000 to 2020, here’s how the risk and return of the above factors compared to the benchmark MSCI World Index.
| Return | Risk | |
|---|---|---|
| Momentum | 9.4% | 14.8% |
| Quality | 8.7% | 13.9% |
| Low Size | 8.0% | 17.0% |
| Value | 7.9% | 17.9% |
| Low Volatility | 7.6% | 11.1% |
| MSCI World Index | 6.6% | 15.6% |
Annualized risk and gross returns in USD from December 29 2000 to December 31 2020 for MSCI World Factor Indexes.
All five of the factors have had greater historical returns than the benchmark index, and some have also had lower risk.
With factor investing, you can better understand what drives your portfolio’s performance.
LightCastle Analytics Wing May 23, 2022
Digital Banking has redefined the financial landscape in Bangladesh during the Covid-19 pandemic. Overnight, people needed to figure out how to use banking services electronically because, despite a pandemic, the demand for credit did not disappear. While residents in the cities rushed to adopt digital banking, rural communities were still hesitant to embrace the technology. Therefore, innovation is paramount to ensure customer satisfaction and improve access to finance for minorities and marginalized communities.
The Beginning
Dutch Bangla Bank Limited (DBBL) is responsible for the inception of mobile banking in Bangladesh. DBBL introduced Rocket in May 2011, which was stipulated to be an alternative to traditional banking that caters to even the poorest members of the society and spreads out banking services outside urban regions. It triggered the usage of mobile banking at an unprecedented rate as the number of registered mobile financial services (MFS) accounts in Bangladesh increased faster than in any other country in 2013. [1]
For Rocket subscribers, an account had to be created through DBBL-approved agents around the country and with a fee of BDT 10. A user must have a cell phone with a registered SIM, NID, and recent photograph to use the banking service.
In the same year, bKash was also launched with the same view of reaching a larger population to improve access to finance for minorities and marginalized communities. In addition, the platform aimed at facilitating foreign remittance, emancipating women through financial independence, enhancing the overall living standards of rural communities, and developing SMEs. Since then, it has done wonders for the financial sector of Bangladesh with incremental innovation to promote financial inclusion, income distributions, and, consequently, economic growth. In retrospect, this was the first innovation in the Mobile Finance Services (MFS) industry.
Challenges in Digital Banking Industry
Digital technology, such as MFS, can improve the financial well-being of the citizens of Bangladesh, where more than four-fifths of the workforce are informal. However, prior to COVID-19, digital platforms were not utilized to their full capacity due to adoption resistance. While the growth was steady, it did not follow the trajectory of smartphone sales which skyrocketed from 86.56 million in January 2012 to 171.85 million in January 2021. [2] From smallholder farmers, and SMEs to enterprise owners, a smartphone has become an inherent part of everyone’s daily lives. However, the digital divide is still prominent due to asymmetric information, high operational cost, and inconsistent services. For instance, in comparison to India, Bangladesh’s cost of mobile data is significantly higher. [3] Moreover, many rural areas lack 24/7 electricity resulting in long network outages and unstable connections. The aforementioned challenges discourage, to some extent, restrict citizens to be aware of the available financial services and reaping the benefits of digital banking.
State of Digital Banking in Pandemic
For urban areas, the pandemic has been the main driving force for producers and consumers to indulge in e-commerce. Since shops and restaurants were closed, people shifted to purchasing products through f-commerce and e-commerce. F-commerce is a branch of e-commerce that acts as a medium for transactions of goods and services through the Facebook platform. While f-commerce facilitates transactions and communication between users and vendors, it also poses challenges for governments and for users. For instance, governments may not have full traceability of the transactions to impose a tax on goods sold, resulting in a loss of tax revenue.
Other than e-commerce, B2P transactions also embraced MFS during the pandemic. Most readymade garment (RMG) owners required their employees to open their own mobile banking accounts in order to receive their salaries and other benefits. Therefore, the garment workers had to get familiar with digital platforms and over time, learned how to avoid paying illegal fees to banking merchants resulting in more savings and improved personal finance. [4] According to a recent survey of garment workers, it has been observed that embracing digital payments aided them in developing knowledge in personal finance. This study also proved that while just a small percentage of the population is linked to the country’s official banking system, those who are left out may nevertheless obtain financial services using mobile phones. The study indicates that Digital Banking will be crucial in the future in developing a resilient economy and improving the lives of the citizens of Bangladesh.
Why Digital Banking is Crucial
Digital banking — whether it is in the form of mobile banking, telebanking, or internet banking – incubates transparency in payment, ensures better cash management, and upskills finance information for consumers. Additionally, it speeds up the rate of transactions and the cash cycle as loan sizes are less so people can borrow more frequently. For instance, bKash in collaboration with City Bank shelled out BDT 500 – 20,000 loans to 2,689 customers totaling BDT 68.3 lakh with a three-month repayment period. [8] More importantly, bKash customers with paper-based KYC were not entitled to the nano loan due to a regulatory embargo eliminating red tapes.
In addition, digital banking can promote access to finance for marginalized communities and minorities. For example, the agriculture sector employs roughly 40.6 percent of Bangladesh’s total workforce. [5] Their ability to access and use formal financial services is imperative as the sector contributes to approximately 13.6 percent of the country’s GDP. [6] One of the main hurdles to these industries’ expansion has been a lack of access to capital. Nano loan services similar to bKash can bridge the gap to provide access to finance for these smallholders and the unbanked population. Therefore, innovation in services, delivery, and technology in the Digital Banking industry will enable new revenue streams for financial service companies while improving access to finance for the mass population.
Innovation in Digital Banking
Technology, although a fickle friend, has become ubiquitous in almost all economies around the world. Artificial intelligence (AI), data analytics, machine learning, and digital channels are projected to drive several professional services into obscurity. Fintech offers digital financial services that automate the process of borrowing and reduces loan disbursement costs, facilitate SME owners to receive collateral for bank loans, maintain financial accounts and keep track of transaction records. However, these benefits require significant technological, social, and legal innovations to trigger adoption. For example, privacy regulatory mechanisms for data ownership and preventing cyber-attacks must be ensured. The platform must be secure while highly robust to address the needs of the mass population. Integrating Blockchain technology will enhance data security and instill trust in the informal workforce.
Blockchain technology is a digital log of transactions that is copied and distributed throughout its network of computer systems in a decentralized manner. It eliminates intermediaries and ensures that all transactions are encrypted, anonymous, and immutable. Those who are unbanked face difficulties sending and receiving money as they frequently lack the necessary documents such as a passport, proof of income, access to the Internet, and a smartphone to create an account. Blockchain technology could alleviate their pain by ensuring their personal identity is safe and secure.
Additionally, innovative digital financial tools can assist low-income populations with building financial resilience. According to CPD’s former senior research associate Md Kamruzzaman, Bangladesh’s digitally delivered services (DDS) trade volume has expanded from $599 million in 2005 to $4,005 billion in 2019. This number is not very impressive when we compare Bangladesh’s DDS trade as a percentage of GDP to neighboring countries. As the textile and garment sectors account for a large portion of the country’s total exports, these industries and their workers should be equipped with digital banking tools. One way to do this is through the use of blockchain applications. For instance, “Leaf” is a Rwandan startup that allows individuals to send and receive money straight from their phone, even if it isn’t a smartphone without any need for a passport or access to the internet. In the same vein, “Kotani Pay” allows Kenyans to send and receive cryptocurrencies and then convert them to Kenyan shillings by dialing a short number on their phone. For these services, the only extra charge for international transactions is the currency conversion. Digital Banking platforms in Bangladesh should establish a way that allows customers to use their own accounts instead of depending on external agents.
Furthermore, the complexity and high operational expenses of banks left many people, especially small-scale workers, and the unemployed behind. The income of farmers and textile workers is uncertain and often erratic. When farmers confront a crisis, such as a flood, drought, or natural disaster, it threatens to overrun their savings. In the case of garment workers, they might need to withdraw small payments instantaneously in an easy and affordable way which cannot be fulfilled by traditional means of banking. One solution to such a problem has been developed in Kenya. Community Inclusion Currencies (CICs), invented by “Grassroots Economics” ensures resilience during challenging times by leveraging blockchain technology. Tokens, backed by the commodities and services in a community, such as water, food, or labor, can be issued. The villagers can then use these tokens to acquire a line of credit secured by their own assets, which they can utilize during an emergency.
While technological innovation will improve user experience, policy innovation will instill trust among users. Obstacles to creating MFS accounts should be minimized to streamline the registration process and encourage both current and potential customers to open and utilize their accounts. A simple registration process could encourage an estimated 2.73 million registered small businesses to open MFS accounts. [7] Security can be maintained by introducing an alternative to the orthodox PIN system such as biometric security software which recognizes the users automatically based on their behavioral or biological characteristics. Daily transactions can also be restricted to prevent money laundering and abuse of technology.
In summary, Even though 85.1% of the labor force is part of the informal sector, most of them are unfamiliar with e-skills. [5] They also cannot access loans from banks as they do not have the necessary documents or collateral. If they’re not saving money in a financial institution, it leads to depreciation and makes people more vulnerable to inflation which is tragic. Digital Banking Platforms and MFS can make a tremendous impact to build financial resiliency in low-income, rural and marginalized communities, and technological and policy innovation can make the impact more effective and efficient.
Shaniz Chowdhury, Content Writer, and Abdullah Reza, Digital Product Manager, at LightCastle Partners, have prepared the write-up. For further clarifications, contact here: info@lightcastlebd.com
If we knew how things going to end or where our journey would take us, do you still make the same decisions? Or would we choose a different path? Can we even escape our fate? Or something what is deep within us lead us to the same end, like an invisible hand?
All of those questions must arise in the mind of investors, regulators and market markets during the longest bearish market trend of the Dhaka bourse. When most of the pandemic-hit markets had been hovering near their historic high level, or at a merely corrected price level. Stock markets in the United States, Europe, India, or even in Pakistan – all came through a prosperous journey after the global financial crisis a decade ago. Investors in Bangladesh are yet to heal the wounds from the 2010-11 market crash as the overall market is still depressed and gradually deteriorating.
For the last couple of years Two bourses, Dhaka Stock Exchange Ltd (DSE) and Chittagong Stock Exchange Ltd (CSE), who operate in the capital market of Bangladesh shows same type of downtrend. Even after the DSE successfully secured a strategic partnership with the Shenzhen-Shanghai stock exchange consortium in 2018 – following its demutualization in 2013. Since then, the market has been bearish, and revenue from daily transactions has fallen drastically. Meanwhile, trading on the country’s premier bourse sank to its lowest level in 13 years on last June 21 with a turnover of Tk 38.64 as investors largely stayed away due to pandemic and floor price. The previous lowest turnover of Tk 40.39 crore was recorded on April 24 in 2007, data from the premier bourse showed.
Despite our overall economy has been growing the capital market showed continuously nosedive posting a negative growth throughout the year 2019 while bourses in other neighboring countries and emerging Asian countries posted growth in the period. In the year 2019, the return at Indian key index, SENSEX, was 14.70 per cent, followed by 10.70 per cent of Pakistani KSE100, 8.10 per cent of Vietnamese VNINDEX, 1.0 per cent of Thai SET and 2.30 per cent of Sir Lankan CSEALL. But Dhaka Stock Exchange (DSE) recorded negative index return of 17.30 per cent in last year among the Asian countries.
Like German philosopher Arthur Schopenhauer said, “Man can do what he wills, but he cannot will what he wills.” Every initiative from the Government, Authorities seems unsuccessful.
But, once a wise man said, “There was never a night or a problem that could defeat sunrise or hope.” After imposing celling to stop free fall of share price and after a 66-day break, due to Covid-19 pandemic market sentiment turns bullish. All credit goes to the new BSEC commission. Every step they are taking so far is hugely appreciated by the investors and the market makers.
Here are some important facts that’s fueling the long-awaited uptrend of the market:
On July 29, the central bank declared monetary policy for the next six months where bank rate was brought down to 4 percent from existing 5 percent. Bangladesh Bank already announced MPS for the next twelve months. The key takeaway is the reduction in repo rate from 5.25% to 4.75%. This is the third reduction in policy rates since March 2020. It is clear that Bangladesh is getting into an interest rate regime it has not seen before. High quality local banks are offering term deposit rates that are below inflation rate (4.5% vs 5.5%). The government treasury yields reflect this new normal (90 days Bills yield 4.45%). However due to a lack of well-developed corporate bond market we are unable to see the impact on corporate bond yields and credit spreads. The Bangladesh Bank also set a 14.8 growth target for the private sector and 44.4 percent for the public sector in the monetary policy.
While talking to a few asset managers and investment bankers, it was learned that institutional investors can now get money at a cheaper rate for investing in the capital market.
One thing is for sure. 2020 is suddenly looking quite a bit more interesting. Until recently, it was all gloom and doom but the last few days look promising. Who would have guessed that FX reserves will increase by US $4bn in a couple of months during this pandemic? That is more than 10% increase in reserves.
The official data recently released by the Bangladesh Bureau of Statistics confirming 5.24% economic growth in the last financial year ending in June should be considered as a “great news” in the time of the coronavirus pandemic when global economies are experiencing the worst crisis since the Great Depression in the 1930s.
That should be a “great news” because the growth rate negated the chilling forecast made by the World Bank in June that Bangladesh’s GDP growth would come down to only 1.6% from a high flying 8.15%.
The $3.9 billion export in July brought a glimmer of hope about a V-shaped recovery. A positive 0.6 percent growth relative to exports in July last year came after nearly eleven months of sustained year-on-year decline with the sole exception of December 2019. According to the countries well known economist Dr. Zahid Hussain, A V-shaped recovery in Bangladesh’s exports depends foremost on the state of health in the global and domestic economy. Assuming the bottom is past, recovery will also depend on how the global multilateral trading system morphs.
The United Kingdom’s Department for International Department (DFID) has launched a new funding to protect workers in developing countries supplying goods to the UK amid the Covid-19 fallout threatening global supply chains.
Under the £6.85 million scheme, DFID will partner with businesses including Marks & Spencer, Morrisons, Primark, Sainsbury’s, Tesco, and Waitrose to improve conditions for workers in countries including Bangladesh, Ghana, and Rwanda, reports The Daily Telegraph.
The BSEC is planning to work on the junk stocks in three stages.
In the first phase, it will upgrade the companies that are very close to booking profits, or have large retained earnings or adequate cash flow.
There are two to five companies in this stage and a decision will be taken about them by checking the last few years’ financial reports, said Islam, who was previously the dean of the Dhaka University’s faculty of business studies.
In the second stage, the regulator will support the companies that are struggling but are making an honest effort to return to profit.
“And in the final stage, we will punish the worst performers by either changing their boards or by deploying administrators,” Shibli Rubayat-Ul-Islam said, who is the newly appointed chairman of BSEC.
The Bangladesh Securities and Exchange Commission (BSEC) has issued an ultimatum to 42 listed companies who failed to comply with the mandatory rule on joint ownership of a minimum of 30 percent shares in their firms’ paid-up capital. The commission has sent letters to the companies asking them to comply with the mandatory 30 percent shareholding rules within 60 days, sources said. The purchase of shares must be announced within 15 working days. If any company fails to comply with the rules within this time; the commission will take regulatory actions.
All those initiatives, incentives and news giving hope to the investors as famous actor Christopher Reeve (the superman of Hollywood) said, once you choose hope, anything’s possible.
New BSEC team wants to establish the concept that capital market is the main source of fund for industrialization. BSEC Chairman, Professor Shibli Rubayat-Ul-Islam pledged to give support to work with VCPEAB on policies to nurture the emerging industry. BSEC will Help Boost the Startup and Venture Capital Ecosystem. He also said, “Our stock market has remained only equity-based. I will focus on launching bond, debenture, Sukuk and alternative investment fund in the market”. He also wants to make DSE a ‘truly’ digitalized trading platform. All those promises and visions is helping all the interest parties gaining confidence and hope.
Hopefully, like Lotus, capital market will shows us the ability to rise from the mud! As Netflix new superhit “DARK” TV serial theory says “Der anfang ist die ende und der ende ist der anfang.” Means, the beginning is the end and the end is the new beginning.
Futureproofing – has been the preoccupation of bKash, the company that revolutionised the mobile financial service in Bangladesh, in recent years.
Which is why, the company is fine with forfeiting profits in the short-term if it means its future dominance is assured.
Over the past two years, the company has invested more than Tk400 crore for product development and marketing activities, according to the annual statement of BRAC Bank, the parent company of bKash.
And in that time, its net profit slid from Tk18.5 crore to Tk62.5 crore in the negative – in what is a steep comedown from its dizzy heights in the preceding years.
In 2019, its total revenue grew 10.9 percent year-on-year to Tk2,416 crore.
“We will continue this investment in 2020 and the company will have to make a loss this year also,” Kamal Quadir, chief executive officer of bKash, told The Business Standard recently.
The company, which is 20 percent owned by Chinese payment giant Alipay, has the capital to absorb the losses.
“The loss is the part of our planned investment,” Quadir added.
But bKash’s move to go for wholesale technology upgrade could not be more serendipitous. The global coronavirus pandemic’s turbocharging of digitalisation means the company is in good stead to make the most of the situation.
Since the onset of the pandemic in March, bKash made loss Tk21 crore in charges from sending money and withdrawals and Tk27.50 crore from disbursing salaries of garment workers from the government’s Tk5,000 crore stimulus package, according to Shamsuddin Haider Dalim, head of corporate communications and public relations at bKash.
It also gained about 70 lakh new customers to take the tally to 4.50 crore in June, according to bKash.
To put things into perspective, Rocket, one of bKash’s main rivals, gained 18 lakh fresh customers during the period.
And the reason for the gulf in new customer onboarding could very well be the well-oiled mobile app that bKash had rolled out in 2018 for both the iOS and Android operating systems, to which it has been incrementally adding on functionalities.
“2019 was a critical period in terms of the business achieving a technological breakthrough and sustained growth across key numerical metrics,” the company said in the annual report, while stressing customer and agent apps.
Today, that app has made the process of new customer onboarding as fuss-free as possible and paying for mobile recharge, shopping, utility bills, internet charges, education fees, tickets and credit card bills as seamless a process as possible.
It allows transfer to and from bank accounts and topping up balance with bank cards.
In short, the app has enough functionalities and interconnectedness to make it an appealing platform for both urban and rural populations alike, and is most likely to stand tall to the emerging threat of upstart Nagad, the mobile financial service arm of Bangladesh Post Office.
Nagad though was ahead of bKash in gaining customers during the pandemic: it saw fresh account opening of 1.26 crore since March to take the tally to 3.5 crore.
Until March, Nagad, which was rolled out in October 2018, had enjoyed disproportionately higher transaction limits and offered lower transaction charges due to being out of the purview of the central bank thanks to the postal act – a privilege that allowed it cannibalise a chunk of other MFS operators’ subscribers.
This could perhaps explain the slump in bKash’s market share to 50 percent at the end of 2018 from 67 percent in the previous year, according to data from the Bangladesh Bank.
Today, Nagad, which has received an interim licence from the BB to operate as an MFS as opposed to its previous form of being a digital financial service provider, is the number 2 player in the market, overtaking Rocket.
And Rocket, the MFS arm of Dutch-Bangla Bank, was coasting on the reputation of its parent. Last year, its transaction value declined 9.54 percent, when bKash saw a 15.7 percent rise. Rocket saw a 10 percent growth in customer base last year, while bKash saw a 23 percent growth.
“Our main target is to bring good experience to customers, ensuring top compliance practice and investment in technology. We are focusing on these three areas,” Quadir said.
He said it is expensive to make sure all compliances in line with requirements of the Bangladesh Bank and the BFIU (Bangladesh Financial Intelligence Unit) and investment in technology.
bKash started its journey in July 2011 as a joint venture between BRAC Bank and American Money in Motion.
Later on, the International Finance Corporation (IFC) of the World Bank Group and Bill & Melinda Gates Foundation joined the mission through equity partnership in April 2013 and April 2014 respectively.
In April 2018, bKash also onboarded Ant Financial Services Group as a strategic partner. The partnership involves Ant Financials investing in bKash and increasing its technological capabilities, allowing it to provide greater convenience and security in mobile financial services.
The company created direct employment opportunity for more than 1,400, and its 226 active distribution houses, 230,000 agents and numerous agencies spread throughout the country indirectly provide livelihoods to thousands more.
Source: TBS
The new licence awarding process will benefit the market only if firms with specialised skill-sets join the industry, experts say
The Dhaka Stock Exchange (DSE) has decided to recommend tougher criteria for awarding new licences for brokerage houses.
The DSE board of directors came up with the decision during a meeting on Thursday.
The premier bourse has got extended time, till mid-July, to comment on the Bangladesh Securities and Exchange Commission (BSEC) proposed Trading Right Entitlement Certificate (TREC) Rules, 2020.
Md Eunusur Rahman, chairman of the DSE board, told The Business Standard, “The board discussed the issues: the new recommendations.”
“The discussion points will go through some processes before being communicated to the regulator,” Eunusur said while declining to share any details.
However, sources confirmed The Business Standard that the board decided to recommend a minimum paid-up capital requirement of Tk 10 crore for companies interested to own a brokerage licence at the DSE.
The draft TREC Rules published on March 25 suggested that paid-up capital of only Tk 3 crore would be enough to avail a TREC – only a brokerage licence, not membership or shares of the bourses.
The proposed rule drafted in line with the previous recommendations of the DSE board had ignited fury among the exchange members as they found the criteria to allow new brokerage players insufficient to ensure capital adequacy and responsibility.
The DSE Brokers’ Association (DBA) had served a legal notice to the DSE board in the second week of April, pointing out the gaps in the very generous conditions offered for new entrants.
They, as shareholders, also had threatened to dissolve the board in a general meeting of shareholders if the board failed to respond to their demands – meant for a healthy brokerage industry.
However, in yesterday’s meeting, the DSE board had come up with much tougher recommendation plans that included non-refundable Tk 2 crore registration fees instead of Tk 5 lakh of the draft rule, application form fee of Tk10 lakh instead of Tk 1 lakh proposed earlier.
Security deposit, which a brokerage firm needs to maintain with its bourse, was recommended to be Tk 3 crore.
However, the draft rule proposed the amount to be Tk 2 crore only.
In the legal notice, the association of the DSE members expressed their concern that the proposed weak criteria would pave the way for some vested quarters including shell companies to be in brokerage services.
However, brokerage services require the same level of trustworthiness and reliability as the one needed in banking.
The DBA also expressed its concern that some new entrants with their less invested capital might tend to wilfully default transaction settlements which will be devastating for investors and the capital market.
Their concern is more relevant now as Crest Securities became the eighth member firm to fail in transaction settlements.
And its directors went into hiding while its anxious clients are gathering here and there every day to make sure that they get back their securities and cash balance in investment accounts.
However, the DSE in a press conference this week expressed its commitment to protecting the interest of the brokerage clients of Crest Securities.
The DSE has frozen all assets of Crest Securities and made arrangements to pay the stock brokerage firm’s clients off from that.
If the assets appear to be insufficient, the exchange will sell off the firm’s membership and TREC licence in the DSE.
Members, as the owners of the bourse, received a TREC or brokerage licence by default during demutualisation and the exchange is going to allow new entrants in the business in coming days.
The new players will only get a business licence, no share at the exchange company.
Experts believe that the new licence awarding process will benefit the market only if firms with specialised skill-sets join the industry.
Or else, it would be another brick in the wall and will create further overcrowding in an already struggling industry.
Source: TBS