Geert Bekaert and Campbell R. Harvey's


Chronology of Economic, Political and Financial Events in Emerging Markets




Major Political and Economic Events


The export of gold jewelry was allowed under the Jewelry Export Scheme. Exporters must register with the Export Promotion Bureau in addition to their normal registration with the Chief Controller of Imports and Exports.a3(first entry)


Banking crises (late 1980s to 1996): four banks account for 70% of total credit had estimated 20% of NPLs. From late 1980s up to 1996, the entire private/public banking system is technically insolvent.a2


The coverage under the Exchange Rate Fluctuation Burden Absorption Scheme will also be given to foreign currency loans channeled through nationalized commercial banks on the basis of relending by the Government; previously, only the loans channeled through the Development Finance Institutions were covered.a3


Authorized dealers were allowed to grant, without reference to the Bangladesh Bank, loans in domestic currency to foreign-owned manufacturing companies located in Bangladesh to the extent of 140% of their paid-up capital, reserves, undistributed profits, and unremitted dividends as disclosed by their last audited balance sheet.a3


The upper limit on foreign exchange that may be brought into Bangladesh without declaration at the time of arrival was increased to $2,500 a person, irrespective of the resident status of the person.a3


(1)The requirement to obtain prior permission from Bangladesh Bank to issue and transfer shares in favor of nonresidents against foreign investment in industrial ventures in Bangladesh, or to transfer Bangladesh shares and securities from one nonresident holder to another nonresident, or to remit profits earned by nonbank and nonfinancial foreign firms operating in Bangladesh was waived; (2) the purchases of Bangladesh shares and securities by nonresidents, including nonresident Bangladeshis, in stock exchange in Bangladesh were allowed, subject to meeting procedural requirement; (3) industrial units in the private sector were allowed to borrow abroad on commercial terms with the approval of the Board of Investment.a3


The restrictions on remittances of profits by tea companies were removed.a3


Authorized banks were permitted to lend to foreign-owned and -controlled industrial firms operating in Bangladesh without prior approval.a3


Authorized banks were permitted to transfer savings of expatriates, at the time of the completion of employment in Bangladesh, provided that their salaries and benefits were initially certified by the Board of Investment.a3


Industrial units operating in the export processing zones (joint venture or fully foreign owned) were allowed to obtain short-term foreign currency loans without prior approval from Bangladesh Bank.a3


The introduction of the Insider Trading Laws.a4


Bangladesh Bank ceased to deal in the currencies of ACU member countries. a3


The BB set individual limits on the open exchange position for authorized dealers based on their paid-up capital and reserves.a3


The BB set authorized dealers' net open positions at 12.5% of capital.a3


(Provisions specific to commercial banks and other credit institutions) Authorized dealers' net open position was set at 12.5% of capital.a3


The first prosecution under the Insider Trading Laws.a4


Five listed companies announced a no-dividend payout for fiscal year 1996/1997.


In the second quarter, the DSE (Dhaka Stock Exchange) modified its membership policy to allow foreigners in, aiming to raise the DSE's broker roster from 250 to 300. The Securities and Exchange Commission of Bangledash approved a new netting system that allowed all deals to be settled on the same trading day.


Heavy monsoon rains brought about massive flooding. The DSE ended the open-outcry system and started the new screen-based automated trading system on Aug 10.


The central bank announced a surprise devaluation of the taka by 3%.


The main opposition party, Bangladesh Nationalist Party, and its supporters enforced a 48-hour nationwide strike to protest undemocratic policies of the current administration.


An alliance of three major opposition parties organized strikes to oppose three-day municipal election as well as weaken the government of Prime Minister Sheikh Hasina in the hope that early parliamentary elections would be called (slated for 2001).


The Bangladesh Central Bank revealed that GDP growth fell to 5.6% in fiscal 1997/1998 from 5.9% in the previous year. Bangladesh Finance Minister S.A.M.S. Kibria announced that the economy was back on track after last year's flood.


A pro-investment budget drastically reduced import duties on raw materials and included an amendment to investment laws to allow pension and insurance funds to invest up to 25% of their funds in equities.


Bangladesh launched its first private-sector mutual fund, AIMS First Guaranteed Mutual Fund in the second quarter.


The Bangladesh Securities and Exchange Commission cracked down on 16 listed companies for allegedly forging share certificates. The taka devalued 3%.


While the opposition was boycotting Parliament, the government enacted a public-security law requiring special tribunals to deal with offenders of public peace.


The IPO of Aims First Guaranteed Mutual Fund, the country's first private-sector mutual fund, was oversubscribed by eight times.


A foreign securities company entered the local markets. The Bangladesh Securities and Exchange Commission (SEC) approved the draft for scriptless trading and permitting commercial banks to do merchant banking.


The central bank depreciated the taka by 6%. The opposition called another crippling strike, protesting against the government's move to raise petroleum prices by 13%.


The SEC introduced a new Z group of shares, with trade-for-trade settlement for defaulting companies.


The SEC announced that all public limited companies needed its approval for capital issue.


The government decided to stop the export of natural gas until 50 years of reserves were located.


Tea exports declined.


The taka depreciated 6.5% and the markets witnessed the largest trading volumes of the year as capital inflow into the country rose and investors switched between asset classes.


Monsoons lashed the country.


The election campaign overshadowed economic development efforts.


The Bangladesh Nationalist Party (BNP) won with enough margin to make decisions freely. Begum Zia promised the support the United States in its efforts against terrorism.


Government increases the price of some fuels by as much as 90% in an effort to balance the country's budget.


Parliament approves temporary law meant to speed up legal process for dealing with violent crime. Opposition says it will be used to stifle dissent and help establish a one-party state. bbc


President Chowdhury resigns after ruling Bangladesh Nationalist Party (BNP) accuses him of taking an anti-party line.


Iajuddin Ahmed sworn in as president.


Parliament passed the Joint Drive Indemnity Act 2003, granting immunity to the armed forces from legal proceedings in civil courts for their activities under the countrywide anti-crime drive running from October 16th 2002 to January 9th 2003.


The IMF in mid-June approved the disbursal of a US$490m concessionary loan under the three-year PRGF loan. And the Asian Development Bank (ADB) has agreed to provide US$260m to set up three power plants. a17


The opposition Awami League (AL) began its boycott of parliament, where the coalition led by the Bangladesh Nationalist Party (BNP) enjoys a two-thirds majority. a17


The leaders of the seven south Asian countries—Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka—attended the 12th summit of the South Asian Association of Regional Co-operation (SAARC) signed the Islamabad Declaration, committing themselves to fighting terrorism and promoting economic growth through a regional free-trade zone.


Opposition calls series of general strikes in what it says is an attempt to force government from power.


The government announces plans to triple farm subsidies to $152m (85m) to boost production.


Parliament amends its constitution to reserve 45 seats for women. The female MPs will be selected in proportion to each party's support at the last election.


Regulations on Foreign Investors


Restrictions: Foreign investors are free to invest in any industry except the production of arms and other military equipment, production of nuclear energy, mechanized extraction within the boundaries of the reserved forests, security printing of currency notes or minting, and transportation of railroads or air.

Taxation: 10% individual income tax and 15% institutional income tax. No tax on capital gains.a6


No change.a7


Restrictions: Foreign investors receive national treatment and are allowed full ownership in most sectors. The International Monetary Fund reports that foreign investments, with the exception of investments in the industrial sector, require approval. b3

Taxation: Corporate tax rates for industrial companies whose shares are publicly traded is 35% and the rate of those whose shares are not publicly traded is 40%. Tax rate on income of all other companies including banks, financial institutions, insurance companies and local authorities is 45%. b4