Deposits with bank yield negative earnings
Cash savers now lose out on their deposits with the country’s commercial banks as the rates of interest on all kinds of deposits have fallen to such an extent that counts negative. On the other hand, the bankers are still charging high on the money they lend to borrowers, leaving a broad margin that fetches the banks substantial returns. Economists are of the view that so low interests on deposits discourage saving and divert funds. The interest rates on deposits have mainly fallen each month for the last couple of years, coming down to 3.0% in savings accounts and just above 5.0% on time deposits. The latest rates are less than 50% of what previously were, banking sources said. Economists dub the existing rates of interest negative in terms of real rate of return on deposits. They cautioned that if the situation prevailed, the saving tendency will be impacted upon, leading to fall in national savings. However, there are no statistics how much they are losing each month or each day as interest earnings from their deposits as the central bank does not calculate it. But the clients, mostly the commoners, have lost at least two% points over the past one year.
World Bank lowers GDP growth estimate for FY16 to 6.3%
The World Bank has downgraded its estimate of Bangladesh’s GDP growth in the current fiscal year to 6.3% from the 6.7% it had forecast earlier in January. However, the Bangladesh Bureau of Statistics in last week estimated the gross domestic product growth in the current fiscal year 2015-2016 at 7.05%. The WB made the forecast in its half-yearly report titled South Asia Economic Focus released on Sunday in Washington, DC. For the next fiscal year, 2016-2017, the multilateral lending agency has projected that the Bangladesh economy would grow by 6.8%, lower than the government’s estimate of 7.2%. ‘In Bangladesh, growth is stable in near-term outlook. Growth is projected to rise to 6.8% in FY17 on the back of further increase in government consumption and investment, a recovery in private investments, and an easing of regulatory and infrastructure constraints, and returns in creditor’s confidence with improvement in governance in the financial sector,’ the WB said in the report. Government consumption expenditure is projected to grow at 20%, reflecting the implementation of nearly a 100% pay increase for government employees, it said. Regarding the GDP growth for the current fiscal year, the report said the real GDP was projected to grow at 6.3% compared with an estimated 6.5% in the previous year. The growth rate forecast by the bank is slightly lower than its earlier projection, reflecting weaker economic indicators in the first four to six months of 2015-2016. The WB said inflation may edge up in FY17–18 on account of higher public sector wages, a one-off effect of the introduction of the new VAT system.
Fuel prices may see cuts by 15-25%
The government plans to slash the prices of diesel, kerosene, octane and petrol by 15.0% to 25.0% to allow the economy to benefit from the slump in oil prices in global markets, officials said. The finance ministry has sent a proposal to the energy ministry to cut the prices of octane and petrol by 15.0% and that of diesel and kerosene by 25.0%. The price of octane might come down to BDT 84.2 a liter from BDT 99.0 now. Petrol might be BDT 81.6 a liter, down from BDT 96.0, while diesel and kerosene may sell at BDT 51.0 from BDT 68.0 a liter at present. The energy ministry slashed the price of furnace oil by 30.0% to BDT 42.0 a liter on March 31, as per the instruction of the finance ministry. State-run Bangladesh Petroleum Corporation, the lone importer, refiner and marketer, will still make a huge amount of profit despite the price cuts, said a finance ministry official. Incorporating all costs and taxes, it costs BPC BDT 61.3 to produce a liter of octane, BDT 62.5 for petrol, BDT 49.3 for diesel and BDT 48.3 for kerosene. If the prices are not cut, BPC will make a profit of at least BDT 114.0 billion in the current fiscal year.
NBR eyes government officials to offset revenue deficit
Taxmen are now targeting the government officials with hefty salary packages for extracting a considerable amount of income tax from them to offset the revenue shortfall in the current fiscal year (FY), 2015-16. Officials said the National Board of Revenue (NBR) has geared up its move to collect tax from the government officials following their recent pay hike. The revenue board has recently urged all the government secretaries to pursue officials of their respective offices to pay due taxes to the public exchequer in line with the income tax law. NBR Chairman Md Nojibur Rahman has sent Demy Official (DO) letters to all the secretaries, requesting them to instruct their relevant departments to deduct tax at source from salaries of the bureaucrats. In Section 50 of Income Tax Ordinance 1984 there is a provision for deduction of tax at source. The officials have to pay income tax on their basic pay and two festival bonuses. “In the new pay-scale, salary of the government officials increased substantially. With the hike, the volume of income tax at source will go up,” the DO letter reads. A government official will have to calculate his net payable income tax by deducting possible payment of at source tax and tax rebate. He will show the tax amount in his salary bill every month as at-source tax, it said.
Shipment of medicines fails to get expected global share: Experts suggest capturing highly-regulated markets
Despite attaining a steady growth over the years, the country’s export of pharmaceutical products is yet to grab the anticipated level of share in the global market, officials and industry insiders have said. According to them, the country’s drug export posted an average 14% growth over the last seven years, mainly due to an increased demand in Asian, African, North-American and some EU markets, including – Myanmar, Nepal, Afghanistan, Sri Lanka, Singapore, Indonesia, Kenya, Venezuela, Mexico, Costa Rica, Colombia, the United Kingdom, Germany and Denmark. Official figures have showed that shipment of pharmaceutical products registered an 11% growth to reach USD72.6 million in fiscal year (FY) 2014-15 compared to USD69.1 million in 2013-14. Export earnings from the sector was recorded at USD59.8 million in FY 2012-13, USD48.24 million in FY 2011-12, USD44.3 million in FY 2010-11, USD41.0 million in FY 2009-10, and USD36.19 million in FY 2008-09. According to industry insiders the volume of pharma export could have been several times higher, if some highly-regulated markets, including the US, Canada, Australia and those of some of the EU countries, could be captured.
Pran to export USD 3.0 million of cassava to New Zealand
Pran, a food processor and agribusiness company, has bagged its maiden USD3 million export order from New Zealand for cassava, a tuber used to produce starch and glucose. Cassava is a staple crop in parts of the world. It is used much like potato and admired for its versatility in cooking. Md Mizanur Rahman, chief of export at Pran, said the company has secured the contract from Khan’s 2nd Generation Ltd, an Auckland-based company. The cassava will be shipped off to New Zealand this month through Chittagong port. Sylvan Agriculture Ltd, a unit of Pran, has recently signed a deal with the Australian company. As per the deal, Khan’s 2nd Generation Ltd will import the tuber crop for the next two years, said Rasedul Hasan, country business manager at Pran Australia.
EU outlines six-point agenda for business climate dialogue
Difficulty in establishing business in Bangladesh, tax transparency and repatriation of profits are among the six-point agenda that the EU (European Union) has outlined to be discussed in the upcoming business climate dialogue between Bangladesh and EU business council, sources said. Besides, the EU will place other issues like alternative dispute solution mechanism (mediation), licenses and investment in the service sectors (freight forwarding) and pharmaceutical products to the dialogue to be held in Dhaka on May 12 next, they said. “The EU has sent a bunch of agenda to the ministry of commerce (MoC) recently. We have not fixed our agenda yet. The ministry is working to complete the country’s agenda,” a source close to the process said. Bangladesh and the EU want more diversified economic relation and to reach it to a new height through dialogue, he added. The senior secretary of MoC and the ambassador and head of EU Bangladesh will lead their respective sides. The commerce minister will preside over the dialogue. The European Union Business Council Bangladesh (EUBCB) was officially launched on February 4, 2015 in Dhaka.
Bangladesh’s digital footprints growing
Bangladesh has been included in a list of 50 countries for its growth in areas of smartphone uptake, mobile broadband and high-speed internet access in 2016. The country ranks 49th in Huawei’s Global Connectivity Index 2016, one spot better than Pakistan, which was positioned last on the list. Neighboring India came in at No. 44. The index, which is now in its third year, measures how the 50 countries, which account for 90% of the global gross domestic product and 78% of the global population, are progressing with digital transformation. The progress is quantified using 40 indicators that cover the supply, demand, experience and potential of five technology enablers: broadband, data centers, cloud, big data and the internet of things (IoT). Investing in these five technologies enables nations to digitize their economies. The index identified three groups of nations: starters, adopters and frontrunners. Bangladesh, with a score of 23 out of 100, was grouped in the ‘starters’ category, which is in the early stage of ICT infrastructure build-out.
Tanners seek more time for relocation
The tanners will sit with the government tomorrow (Wednesday) to seek more time for relocation of their units at Savar due to inordinate delay in building infrastructure at the new sites. This indicates that their shifting to Savar is almost ruled out in the immediate future. “We are ready to go to Savar from Hazaribagh. But infrastructures there are yet to be completed. If we get at least three months’ time more, then it will be possible to relocate 40 to 50 units at Savar,” Chairman of the Bangladesh Tanners Association (BTA) Md Shaheen Ahamed told the FF on Monday. Earlier, the government at an inter-ministerial meeting on March 20 last warned to take stern action against the tanners if they try to take rawhide to Hazaribagh from April, 2016 aiming to compel them to relocate their units. Later the deadline was extended until April 10 which also expired on Sunday last. The tanners asserted that raw hides are not entering the Hazaribagh tanneries. The issue of relocation of tanneries from Hazaribagh to Savar industrial park has been dragging on for years.
Furniture, plastics exporters get cash incentives
The government yesterday announced cash incentives on exports of furniture and plastic products in a bid to boost exports. Furniture exporters will get 15% and plastic products 10% as cash incentive against their exports based on “freight on board” value. Bangladesh Bank issued two separate notices in this regard yesterday. With these two new sectors, the number of categories that enjoy cash incentives on exports now stands at 14. According to the notices, factories that have bond licenses and get duty drawback will not be eligible for the incentives. However, exporters of plastic products have protested the provision. Furniture exporters welcomed the incentives saying that it would help them become competitive in the international markets. Presently, there is no fully export-oriented furniture factory in Bangladesh. Some factories export besides selling their products in the local market.
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