Bangladesh Bank buying dollars to keep BDT stable
Bangladesh Bank has kept on buying US dollars from scheduled banks due to the greenback’s demand slide in the business sector amidst a sluggish business environment, said officials of the central bank. The BB bought USD 105.0 million in the first seven days of this month from commercial banks, USD 355.0 million in March, USD 314.0 million in February, and USD 142.0 million in January of the current financial year, 2015-16, according to the central bank data. In total, the central bank has purchased USD 3.05 billion from July 1 to April 7 of the FY16. The BB initiative is aimed at keeping the exchange rate of BDT stable against the greenback. The US dollar started to depreciate against the Bangladesh currency since the second week of February, as the scheduled banks now have surplus dollars due to a lower import financing considering the country’s business volume, a BB official told New Age on Thursday. The exchange rate of the USD against the local currency had continued to depreciate from February 9 till March 10, as it was quoted (buy-sales) at BDT 78.40-BDT 78.41 from BDT 78.65-BDT 78.75. The greenback, however, was stable after Mach 10 as the central bank purchased a huge amount of US dollars in February and March.
Moody’s: Weaker remittances will dampen benefits of lower oil prices for Bangladesh
Lower remittances from Gulf areas, which have been hit hard by the slump in oil prices, will cut the benefits of cheaper oil imports for several Asia Pacific countries including Bangladesh, Moody’s Investors Service said yesterday. “Generally, weaker remittances will immediately impact the recipient countries’ credit profiles via their balance of payment positions. A prolonged fall would also hurt economic growth, given the importance of remittances to household incomes,” it said in a report. Moody’s in a report titled ‘Sovereigns — Asia Pacific: Falling Remittances from the Gulf Dampen Benefits of Lower Oil Prices’ analyzes the potential credit implications of weaker remittances from their citizens working abroad for six Asian countries — Bangladesh, India, Pakistan, the Philippines, Sri Lanka and Vietnam. For these six economies, remittances are equivalent to 3 to 10% of GDP, and between 22 and 188% of foreign reserves. The exposure of Bangladesh to the Gulf nations is the second highest at 54.8% of its total remittances after Pakistan that gets 61.2% of remittances. India gets 52.1% of its remittances from the region while while Sri-Lanka gets 50.9%. “As a% of GDP, remittance receipts are larger than net oil imports in all countries barring India, so changes in remittances will have a greater effect on the current account balance,” it said.
Merchant bankers for allowing untaxed money to prop up stock market
Merchant bankers have proposed the National Board of Revenue (NBR) to allow untaxed money investment in shares for the upcoming fiscal year to prop up the stock market. Tax evasion is widespread in Bangladesh, with assuming that undeclared income could account for lion share of Gross Domestic Product. There is a large amount of untaxed money in our economy. As it is undisclosed, owners are not being able to invest it in any productive sectors, rather this money is being used in unproductive or illegal activities. If the government allows this money to be invested in the capital market without question from any regulator, this money will come to the mainstream and will be utilised in the productive sectors, said the BMBA. For consideration in the new fiscal year, it also put some proposals, including keeping same tax rate for brokerages, merchant banks and asset management companies, providing discount on value added tax rate for listed companies and reducing capital gains tax to 5% from 10% if shares are held for more than a year. Currently, the listed companies get only 10% tax benefit for listing. The VAT rate is same for both listed and non-listed companies. But the listed companies should be allowed a discount of 40% on existing rates for being listed because the listed companies’ accounts are more transparent and they pay more tax and VAT, said the proposal.
Fresh bid on to get World Bank’s budgetary support
The government will hold discussions with the World Bank next week in Washington, DC, in a fresh bid to get the stalled USD250 million budgetary-support credit confirmed. Officials said Wednesday a Bangladesh delegation, led by state minister for finance and planning MA Mannan, will pursue the global lender for confirming the “much-expected” credit within this fiscal as the government’s revenue earning is feared to fall far short of the target. The six-member government delegation is now in the US capital city for attending the spring meeting of the International Monetary Fund (IMF) and the World Bank (WB), scheduled for April 15-17. During July-February period, Bangladesh’s tax-collection shortfall stood at BDT 135.11 billion, indicating an uncertainty over achieving an ambitious tax revenue target set by the government for the current financial year (FY), 2015-16. The revenue board collected BDT 906.54 billion in taxes until February against the target of BDT 1.04 trillion. Officials concerned said the WB had been going slow on confirming its assistance, pledged nearly two years ago, for poor progress in some reforms, especially in five areas. Last month, a WB visiting mission was not satisfied with the initiatives of the government on enactment of the proposed direct tax law, company law, Bangladesh Standards and Testing Institution (BSTI) law, corporatizing one power-distribution company and adjustment of the energy prices to the international market, they said. The government earlier had agreed on reform in the areas for receiving the budgetary-support credit, to be utilized for deficit financing of the national budget.
Government to allocate BDT 2.5 billion for housing fund
After a long period, the government has planned to allocate a significant amount of money for its housing fund (Grihayan Tahbil) in the next fiscal year’s budget, a source concerned said. The size of the fund would be BDT 2.5 billion in the maximum and the plan of the allocation is now in the primary stage, he added. The Bank and Financial Institutions Division (BFID) has recently sought an allocation of BDT 5.0 billion from the Finance Division. The former has requested the latter to take necessary steps for allocation of the fund. The government initiated the housing fund in 1997-98 with a primary allocation of BDT 500 million. The fund is operated by Bangladesh Bank (BB). Some BDT 3.0 billion has been allocated to the fund from the budgetary allocation since its inception. Some BDT 1.6 billion was released to the fund from 2005 to 2006, according to the BFID data. The amount of investable fund was BDT 2.7 billion until February last, the data showed. Some BDT 2.7 billion and BDT 620 million were left with the fund as FDR and SDR respectively until February 2016. Thus, it will not be possible to disburse necessary funding to the projects being implemented. So, an allocation will be needed for the fund in the next budget, sources said.
Private investment, consumption go down in double jeopardy
Private investment in terms of the country’s gross domestic product (GDP) dropped in the current fiscal for an unsure business ambience and recurrent political uncertainty, analysts said. In what is seen as a double jeopardy, overall private consumption also was on a downturn to deny the economy enough spur. And this situation signaled for the government a challenging situation in days ahead in its bid to spur demands and thus drive the economic growth, according to their views expressed Saturday. Economists said Bangladesh’s present uncertain political climate, fragile governance and non-quality public-sector investments are mainly failing to tap in private investments. According to the Bangladesh Bureau of Statistics (BBS) provisional data, the private investment-GDP ratio at current prices this financial year (FY), 2015-16, has declined by 0.39% points to 21.78. In the last FY2015, the private invest in terms of GDP was 22.07. Analysts said the country’s overall investment-GDP ratio increased to 29.38 in the current FY from 28.89 in FY2015 mainly due to higher money injection by government into development works and other expenditures.
Deep cuts in subsidy help offset government revenue shortfall
The government has cut the volume of subsidy by nearly 26% to BDT 189.0 billion for the ongoing fiscal year for hardly having to hand out cash support for fuel. There are few more sectors where the subsidy estimates also fell significantly, according to the finance division. Economists say such cuts are helping reduce the fiscal vulnerability surfaced following low revenue receipts this year. They attribute the lower spending on fund supports mainly to the fall in the prices of many raw, intermediate and finished products on the international market. Dr Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh (PRI), said this cut is helping much to offset the revenue shortfalls. He sees this as a good sign as government’s burdens on the power and energy sectors are falling. Dr. AK Enamul Haque, a professor of Economics at the East West University, said the downsized subsidy is naturally compensating the fiscal pressures as the national board of revenue has been missing its target. It had a big target of BDT 1.76 trillion which came down to BDT 1.5 trillion in the revised budget for the current fiscal year.
IMF cuts growth below government rate
The International Monetary Fund (IMF) also lowered Bangladesh’s economic growth below the latest government-calculated higher rate, putting it at 6.6% in the current financial year. A report of the global financial institution said Wednesday the country’s gross domestic product (GDP) growth in the FY 2015-16 could be 6.6%, after the World Bank had scaled down the rate yet a bit lower. The latest projection came in the “World Economic Outlook: Too Slow for Too Long” report, released Wednesday by the IMF from its headquarters in Washington, DC, ahead of the spring meeting of the twin Bretton Woods institutions. However, the World Bank was more conservative in projecting the GDP growth for Bangladesh as its recent report on “South Asia Economic Focus Spring 2016” forecast a lower 6.3% growth in the current fiscal. The downward revision of the WB projection invoked government reaction, as it came close by government statistical agency’s upbeat reckoning of the rate above 7.0% mark. The Washington-based global lender in its Global Economic Prospect report in January this year had said Bangladesh’s economy would grow at 6.7% rate in the current fiscal.
Market-based pricing policy for CNG is preferable
The owners of compressed natural gas (CNG) filling stations have, of late, raised their voice in chime with others, for reducing the gas price proportionately to the planned cut in price of fuel oil. Earlier, Consumers Association of Bangladesh (CAB) and other stakeholders protested the ‘planned’ hike of the gas prices. Strongly opposing the move to raise prices of natural gas, the pump owners urged the authorities at a press conference this week, to implement the recommendations that were made in 2013 by a high-level committee of the energy ministry for sustainability of their business in CNG sector. Their demand came against the backdrop of the authorities’ move to raise the gas prices by 87.7% on an average, over the existing ones. The government, on one hand, said that the prices of fuel oils would be reduced in phases by BDT 25.0 to BDT 30.0 a liter in view of the marked fall of the global oil prices in the recent times. On the other, it stated that the power tariffs would be raised as well. Last year, the Bangladesh Energy Regulatory Commission (BERC) hiked the retail power prices by 2.97% and gas prices by 26.29%. The owners of CNG filling stations claimed that they had invested BDT 35.0 billion in 2000 to establish 590 pumps across the country with active support of the government. Apart from this, BDT 25 billion were spent to convert vehicles into CNG mode, which played a significant role in reducing air pollution in the capital and other areas of the country as well. If gas price is not proportionately cut, the vehicle owners, they said, will definitely prefer fuel oil.
Ministers contest claims about capital flight
A couple of ministers ruled out Friday skepticism about the siphoning off of about BDT 670 billion from the country, arguing that there is no evidence of such huge capital flight. “I don’t believe it, there is no evidence. Do you have any document [to support it]?” Finance Minister AMA Muhith said in response to critics at a talk-show organised by private television channel Independent TV Friday. Seconding his view, Commerce Minister Tofail Ahmed said the recent much-talked-about Panama Papers had made no mention of any Bangladeshi having siphoned off money from the country. He pointed out that many are in the papers even from India. On the other hand, business leader Kazi Akram Uddin Ahmed said money might be siphoned off at a time when people earn much. But leading economist Dr. Ahsan H Mansur said people got involved in such type of unethical activities in recent years considering the safety and security of their assets. Mr Mansur, also executive director at the Policy Research Institute of Bangladesh (PRI), said the country is losing out following huge capital flight from the country.
BTRC likely to issue more NIX licences
The telecom regulator is now carrying out a market analysis to decide whether to allow more National Internet Exchange operators to route the local internet traffic within the country. Bangladesh Telecommunication Regulatory Commission has recently formed a committee tasked with analyses of the market condition, business scopes and competition factors before it decides the new NIX license issue. Currently there are two NIXs in the country, BDIX and Novocom, who received licence in 2012. NIX routes the local data traffic internally without transferring those to the international arena to save time and cost of the Internet Service Providers. BTRC officials said some other companies have recently showed interest to have NIX licence, prompting the BTRC to commission the market analysis. However, the BTRC in 2010, after formulating the NIX guidelines, called for expression of interest to obtain NIX licence, but no one responded.
Data traffic rockets after 3G rollout
Data consumption in Bangladesh increased six times in the last two years thanks to faster mobile internet services, said a top official of Ericsson. Two years back, total data use was around 50 terabytes a day, which has now crossed 300 terabytes, according to Raj Jain, managing director of Ericsson Bangladesh. “After 3G services evolved in the country, people are using more and more data. These trends showed the users’ hunger for data.” Even when 3G was launched, there was no avenue for users to use high-speed internet, but now users can access faster data services across the country, Ericsson said. At a media briefing at Ericsson’s office in Dhaka on Sunday, Jain said smartphone penetration in Bangladesh will be more than 40 percent by 2018, which is 20 percent at present. Referring to one of their studies — Ericsson Mobility Report November 2015 — Jain said they have their own market calculation process for different markets based on the information and trends of that market. Ericsson has recently signed separate deals with top mobile phone operators Grameenphone and Robi to strengthen their networks for the Chittagong and Comilla regions for 2G and 3G services. However, the value of the deals was not revealed.
‘Discriminatory’ VAT rate hurts superstores’ growth
Multifarious factors, including the existing discriminatory VAT rates, absence of adequate supply chain management and scarcity of suitable space for opening up new outlets have put a break on the growth of the ‘superstore’ business in the country, insiders said. Besides, lack of co-ordination among the government’s oversight agencies and their inconsistent quality specifications and higher import duty on the equipment used for superstores are also responsible for the situation, they added. As a result, a good number of companies, including PQS, Ocean Shopping Mall, Family Needs and Oceania quit their business and more than 40 outlets belonging to superstore chains, namely, Agora, Meena Bazar and Shwapno were closed during the last couple of years, threatening the future investment in the sector. According to superstore operators, the government levied 2.0% trade VAT in 2012, which later in 2015 was raised to 4.0%, resulting in diversion of customers from the retail chain stores to kitchen markets. Though the government declared the sector to be a service industry, it is yet to get any policy support from the government, he told the FE. The government annually gets BDT 250.0 million as revenue from this small sector, which contributes only 2.0% of the total retail market, he said, adding the revenue collection would increase if they are allowed to flourish with necessary policy support.
NBR for uniformity in income tax assessment orders
The National Board of Revenue has instructed its field offices to ensure uniformity in issuing assessment orders in similar cases of income tax to reduce harassment of taxpayers. The tax authority has also asked the income tax commissioners to make sure that uniformity is maintained in the instructions and conditions given during the approval of analogous cases. The NBR has issued the instructions as it found that field offices were following different procedures in assessment and creation of tax demands for similar income tax cases, causing inconsistency in tax assessment orders and harassment for the taxpayers. Taxpayers become aggrieved finding differences in assessment orders with tax demands in cases of the same nature, remarked the NBR instruction. Such differences also give rise to suspicions in taxpayers’ mind about the honesty and integrity of the taxmen. NBR officials said the inconsistency mainly stems from the differences in discretion of the tax officials concerned and violation of NBR order by income tax commissioners in approving the cases. Income tax commissioners head the field-level income tax offices. On the other hand, income tax circle officers, key functionaries at the circle-level offices, have to place almost all the tax cases to the commissioner concerned for getting approval or instructions, although, according to the NBR, the commissioner’s approval or instructions are needed only on some specific tax files involving tax exemption, gift and refund.
Global finance officials seeking ways to boost growth
Facing a shaky world economy and political attacks on free trade, global finance leaders meeting in Washington are searching for ways to increase cooperation to battle a variety of economic threats. The International Monetary Fund is urging countries to launch a new round of public works projects to improve roads and other types of infrastructure in hopes the higher government spending will boost growth. But in an era of high budget deficits, that call has not met with much support. The discussions are being held as part of the spring meetings of the 189-nation IMF and its sister lending organization, the World Bank. Leaders of both institutions are sounding the alarm about the need for greater efforts to boost growth to make sure the world economy does not topple back into recession. The Group of 20, representing the world’s biggest economies, is wrapping up two-days of talks on Friday with treasury secretary Jacob Lew and Federal Reserve chair Janet Yellen representing the United States. Those talks will be followed by meetings Saturday of the policy-setting panels of the IMF and World Bank. In opening news conferences on Thursday, IMF managing director Christine Lagarde and World Bank president Jim Yong Kim stressed the need for stronger policies to combat the growing risks. The two officials sought to address the political backlash against globalization, which has helped propel the presidential campaign of Republican front-runner Donald Trump in the United States and has triggered an upcoming vote in Britain over whether that country should exit from the European Union.
NBR plans to prepare circle-wise taxpayers’ lists
The National Board of Revenue has decided to prepare circle-wise lists of taxpayers, aiming to boost revenue earnings from advance income tax. ‘This list will help the NBR to monitor and collect income tax timely,’ a senior NBR official told the news agency. Currently, there are 31 income tax zones across the country with 649 circles. The NBR official said the revenue board has directed its field offices across the country to prepare the lists and monitor that properly under their jurisdiction. Currently, the contribution of AIT to the total income tax collection is around 53% in the country, which is much lower compared to that of the developed nations. In developed countries like the USA and European ones, the contributions of withholding tax or AIT to total income tax collection is around 90. Some private and government companies and organizations deduct and collect AIT from 53 sectors like salaries, supply of goods, bank interest, fees of doctors and professionals at different rates ranging from 1 to 15% as specified in the Income Tax Ordinance-1984. AIT is creditable during final assessment of tax. The NBR has to refund the additional amount paid by the taxpayers if the total tax is less than AIT. Contacted, a tax commissioner told the news agency that big taxpayers, including corporate houses and financial institutions, usually pay their advance income tax willingly. The commissioner also said the taxpayers pay their advance income tax divided equally in four quarters. The NBR has got a gigantic target of BDT 1.7 trillion revenue collection for the 2015-16 fiscal year against BDT 1.3 trillion last year.
Agents want 16-fold rise in payment for SIM re-registration
Bangladesh Tele-Recharge and Mobile Banking Business Association yesterday demanded raising the payment for re-registration of each SIM more than 16 times to BDT 30. The members of the association and others are responsible for re-registration of mobile connections. The association made the call from a media briefing at Dhaka Reporters Unity. An agent can re-register 35 SIMs a day, as it takes about 15 minutes to complete the re-registration of a SIM, said Shahajan Mia, secretary general of the association. In 2008, the agents received BDT 25 for re-registering every single SIM, but they are being paid at the rate of BDT 1.8 now although the process has become more sensitive thanks to the introduction of biometric system. The association also demanded commission for each BDT 1,000 recharge to be raised to BDT 100 from the existing BDT 27.5 and commission for mobile banking agents to be raised to BDT 6 from BDT 4.2 for every BDT 1,000 transacted. The association urged the government, Bangladesh Telecom-munication Regulatory Commission and telecom operators to meet their demands in seven days.
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