VZCZCXRO8523
RR RUEHCI
DE RUEHKA #0079/01 0160942
ZNR UUUUU ZZH
R 160942Z JAN 07
FM AMEMBASSY DHAKA
TO RUEHC/SECSTATE WASHDC 2992
INFO RUEHBY/AMEMBASSY CANBERRA 0278
RUEHLM/AMEMBASSY COLOMBO 7724
RUEHIL/AMEMBASSY ISLAMABAD 1444
RUEHKT/AMEMBASSY KATHMANDU 8878
RUEHLO/AMEMBASSY LONDON 1599
RUEHNE/AMEMBASSY NEW DELHI 9565
RUEHOT/AMEMBASSY OTTAWA 0640
RUEHGO/AMEMBASSY RANGOON 2502
RUEHCI/AMCONSUL CALCUTTA

UNCLAS SECTION 01 OF 02 DHAKA 000079 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PGOV PREL KDEM BG
SUBJECT: BUSINESS SUPPORTS STATE OF EMERGENCY 
 
 
¶1.  (SBU)  SUMMARY:  Business leaders support the January 11 
declaration of a state of emergency, expecting it will allow 
commerce to return to normal under conditions of political 
stabilty.  They believe the general public accepts the state 
of emergency, say the new Chief Advisor is well regarded, and 
express optimism that despite the short-term economic impact 
of the blockade program, the medium to long-term impact will 
be negligible.  END SUMMARY. 
 
¶2.  (SBU)  Business leaders' frustration with the political 
stalemate came to a head on January 6, just days before 
President Iajuddin Ahmed's January 11 declaration of a state 
of emergency.  Already suffering losses from two months of 
political agitations and disruptions at the country's main 
port, the business community feared that continuous agitation 
both before and after a one-sided election could inflict 
long-term damage on the economy and the key ready made 
garment (RMG) sector.  (Some estimate each blockade day cost 
the RMG sector alone 20 billion taka ($29.4 million) and more 
than 50 billion taka ($73 million) for the Bangladesh economy 
generally.)  Most of the major business chambers therefore 
called for the two major political alliances to negotiate a 
compromise political solution.  The Federation of Bangladesh 
Chambers of Commerce and Industry, the country's apex trade 
body, went further.  In their press conference they called on 
the President/Chief Advisor to declare a state of emergency 
if the political impasse could not be resolved quickly. 
 
Business Reacts Favorably 
------------------------- 
 
¶3.  (SBU)  It comes as no surprise, then, that the business 
community is expressing support for the state of emergency 
and a reconstituted Council of Advisors.  Econoff contacted 
several prominent business leaders on January 14 for their 
initial reactions. 
 
¶4.  (SBU)  The RMG sector expressed relief over the turn of 
events.  A major cotton importer summed up reactions: 
"Implementation of the state of emergency was well done; 
there was no alternative."  Now, he says, everyone can get 
back to work.  The woven sector, which depends heavily on 
imports for its main inputs, had begun canceling orders 
because port disruptions were preventing factories from 
importing the textiles they needed.  The knitwear sector, 
which sources most of its yarn domestically, was able to meet 
order commitments by using airfreight instead of sea freight, 
but the additional costs were becoming prohibitive.  RMG 
owners we contacted expect port operations to return to 
normal within two to three weeks.  Officials at the Dhaka 
Export Processing Zone confirm these estimates. 
 
¶5.  (SBU)  Estimates of the number of orders cancelled vary 
widely, with some estimates as high as 50%.  Syed Ershad 
Ahmed of the Bangladesh branch of Expeditors, a global 
shipping and logistics company, works closely with several 
major US buyers, including Wal-Mart and The Gap.  Ershad said 
buyers have not yet turned to other countries to source their 
products, due primarily to the lead times needed to establish 
reliable new long-term supply chains.  If the situation had 
worsened, however, he believes buyers would have reduced 
their commitment to Bangladesh, perhaps turning to India as 
an alternative. 
 
¶6.  (SBU)  American Chamber of Commerce-Bangladesh Executive 
Director Gafur told Econoff that people accept the state of 
emergency and appointment of a new Chief Advisor.  He 
predicts it will take time for any problems or resistance by 
the general public to arise.  Reflecting the earlier general 
state of uncertainty in the business community, he said 
AmCham had been considering postponing their annual US Trade 
Show, set for mid-February, due to exhibitors' unwillingness 
to participate. Renewed business optimism means they many not 
have to reschedule after all, Gafur said. 
 
¶7.  (SBU)  Businesspeople in other sectors also support the 
state of emergency.  Habibullah Karim of Technohaven, a 
computer software developer, told Econoff the business 
community welcomed the end of political agitation. "This 
should have been done a long time ago," he said.  Mohammed 
Mahtab Uddin, whose business interests include publishing and 
ceramics manufacturing, expressed anger at the political 
stalemate and at corruption. He thinks fixing the voter list 
 
DHAKA 00000079  002 OF 002 
 
 
and preparing for elections will take many months but that 
people will give the new Chief Advisor the time he needs. 
The people are "fed up" with the Bangladesh Nationalist Party 
and the Awami League, he opined, and would welcome a third 
option, but no one has the funding or "muscle" to compete 
against the two parties. 
 
Comment 
------- 
 
¶8.  (SBU)  The business community grew increasingly alarmed 
at the prospect of prolonged political agitation and civil 
unrest as a one-sided election appeared inevitable.  Although 
adept at coping with chronic governance and corruption 
problems, blockades and nationwide strikes risked long-term 
damage to the economy, and the business community was willing 
to support almost any solution that could restore political 
stability and normal commercial activity. 
BUTENIS