Bank recap fund in budget to be halved in FY17
The government is going to reduce the bank recapitalization fund by 50.0% in next fiscal year’s budget while an amount of BDT 30.0 billion has already been decided to be cut from the current allocation. According to a Finance Division preliminary decision, recapitalization funds will be reduced to BDT 25.0 billion as an amount of BDT 50.0 billion each was allocated in last and this fiscal years to meet the scam-hit state banks’ capital shortfall. Besides, BDT 30.0 billion will be cut from the revised budget of this fiscal year reducing the figure to BDT 20.0 billion from initial allocation of BDT 50.0 billion, as per decision taken by the last meeting of the Budget Management Committee. Under the revised budget, state-run banks – Sonali, Janata, Agrani, Rupali and BASIC – will not get any further money to cover their capital shortfall.
Government to cut bank borrowing target by 18.0% this fiscal
The government is set to slash its bank borrowing target by more than 18% for the ongoing fiscal year (FY), 2015-16, mainly due to lower implementation of the Annual Development Programme (ADP). The Ministry of Finance (MoF) has already downsized the government’s bank borrowing target to BDT 315 billion from the original BDT 385.23 billion, according to a confidential projection. The projection was recently placed at a fiscal coordination council meeting at Bangladesh Secretariat with Finance Minister A M A Muhith in the chair, a senior government official told the FE. He also said the government is revising the bank borrowing target for this fiscal because of lower implementation of ADP and higher sale of its savings instruments in the recent months. The ADP implementation rate came down to 41% in the July-March period of FY 16 from 43% in the same period of the previous fiscal. The government has already slashed ADP allocation by 6.18% to BDT 910 billion from the original BDT 970-billion outlay amid slower pace in project implementation.
State-run bonds fail to attract NRBs
State-run bonds have failed to attract an expected number of expatriate Bangladeshis despite having lucrative yield rates, officials and experts said. They have cited poor publicity and procedural complexities as main reasons behind such declining sales of the bonds. Besides, small investors mainly those who are from expatriate workers don’t consider these instruments profitable following improper facilities to them, they also mentioned. New faces are very rare in this bond market. Investors mainly those who have been awarded as Commercially Important Person (CIP) in Non-Resident Bangladeshi (NRB) category usually purchase the tools to carry on their status for a long time, according to officials. They said the rate of return on the Bangladeshi bonds is comparatively higher than that of other neighboring countries like India, Sri Lankan and Pakistan. The government introduced US Dollar Premium Bond and US Dollar Investment Bond in 2002. Besides, the Wage Earner Development Bond (WEDB) came in the market in 1981.
Bangladesh National Insurance makes trade debut
Bangladesh National Insurance Company Limited made a flying trade debut Thursday as the firm’s share price soared 83% on its offer price, although the market closed lower. The share price of the company, offered for BDT 10, hovered between BDT 18 and BDT 38, before closing at BDT 18.30 on the Dhaka Stock Exchange (DSE). Some 6.02 million shares of BD National Insurance were traded, generating a turnover of BDT 127.34 million on the DSE, which accounts for 3.05% of the day’s total turnover. Each share of the company was traded between BDT 38 and 18.30 before closing at BDT 18.30 on the Chittagong Stock Exchange, gaining 83% from its offer price. The non-life insurer dominated the CSE turnover chart as some 1.36 million shares worth more than BDT 29.25 million changing hands, while it was the fourth-highest turnover leader on the premier bourse. Analysts said the investors showed higher enthusiasm surrounding debutant BD National Insurance throughout the session amid short-term speculation.
Public debt 21.0% up this year
The total outstanding debt of the government would reach BDT 5.86 trillion at the end of the current fiscal year. The amount is up by more than 21% than that of last year despite the fact that the government’s overall budget spending including its execution of annual development program during the fiscal 2015-16 has been on the lower side. The government’s borrowing from the banking system has, however, been cut significantly. Officials of the finance division said the government will have to pay BDT 316.30 billion as interest on its debt during the current fiscal. It was BDT 309.50 billion in the past financial year. The government also pays the principal at maturity. Officials attributed this rise mainly to increase in domestic debts stemming from the national savings certificates, which are still attractive for a particular segment of people due to their higher yield rates. The finance division statistics say the domestic debt stood at BDT 3.3 trillion up to March while external debt totaled BDT 2.5 trillion.
Businessmen set to press for lowering cost of doing business
Businessmen will press the government to remove barriers to foreign direct investment (FDI) and lower the cost of doing business during their upcoming meeting with the government this month, industry insiders said. The meeting will be held under the auspices of the Business Advisory Committee formed by the government. They will also call upon the government to involve them in building infrastructure under public-private partnership (PPP) basis to accelerate the country’s economic growth. The BAC was formed to promote expansion of industries in order to turn Bangladesh into a middle-income country by 2021. The first meeting of the BAC was held in July 2014. The BAC has been assigned to suggest the government ways to expand and develop the country’s trade and commerce. In the first meeting of the BAC, some decisions were taken to form sub-committees to identify problems in different industrial sectors and take initiative to resolve the problems with combined efforts in collaboration with all ministries. But the businessmen said the sub-committees are yet to be formed.
Planning Minister: Bangladesh on right track to achieve economic goals by 2041
Bangladesh is moving ahead on a right track to achieve all the economic targets set in visions-2021, 2030 and 2041, says Planning Minister AHM Mustafa Kamal. “The technically sounds and skilled manpower growth have increased to 7% during the last six years although it was only 1% in 2009 and we will be able achieve the target of 20% within the stipulated time,” said the minister. The minister said: “Several sectors including agriculture, ICT, foot-ware and RMG are the keys, which can play an important role to achieve the economic targets.” As Bangladeshi people have become self-dependent on SMEs, it is also playing a vital role in achieving the targets set in the three visions, he said.
USD 6.0 billion ADB aid package for Bangladesh in three years
The Asian Development Bank (ADB) has come up with nearly USD6.0 billion aid package for Bangladesh in three years until fiscal year (FY) 2017-18, attaching the highest priority to regional connectivity and energy sector, officials said on Thursday. Officials said the Manila-based lender has proposed USD2.79 billion funds as “firm” financial package, while another USD3.35 billion as “standby” money in its three-year business operation plan. “Standby” funds refer to the money that the development partner will provide as assistance for the upcoming projects or the ongoing ones, if the country can utilise the “firm” funds properly. The government officials said the multilateral lender has recently finalised the Country Operation Business Plan (COBP) for Bangladesh, ranging from FY 2016 to FY 2018, allocating the USD6.0 billion funds. Under ADB’s country partnership strategy (CSP) for Bangladesh for the next five years, up to FY 2020, COBP has been framed, an ADB official said. According to the three-year aid programme, ADB has proposed to provide USD660 million assistance in the current fiscal (FY 2016), USD1.04 billion in FY 2017, and USD1.09 billion in FY 2018.
World Bank offers Bangladesh hard-term loans for projects in pipeline
The World Bank (WB) has offered Bangladesh hard-term loan following the latter’s recent graduation to the lower middle income country (LMIC) status, officials said Friday. Officials said the WB recently offered the loan from its USD3.9 billion ‘Scale-up Facility’ fund in addition to loans from the concessional window–International Development Association (IDA). A Ministry of Finance (MoF) official said the terms and conditions of the fresh loan will be harder as its interest rate is nearly 4.0% with a shorter repayment period. The government has already been going slowly on the WB proposal as it has reservation about borrowing the credit at hard terms, they said. Economic Relations Division (ERD) officials said the concessional window of the IDA under its current package-17 has announced additional USD3.9 billion funds as the ‘Scale-up Facility’ for its member-countries. Usually, the WB provides concessional loans under its IDA-17 package for the member- countries including Bangladesh during the financial year (FY) 2014-15 to FY2017 at softer terms and conditions.
Chinese firm to build economic zone in Chittagong
A high-powered committee has selected China Harbour Engineering Company Ltd (CHEC) to develop an economic and industrial zone in Anwara of Chittagong, where some major Chinese industries are likely to be relocated. Officials said the committee recently submitted its report recommending the company eligible for developing the Chinese Economic and Industrial Zone under a joint venture. The state-owned company of China will develop the economic zone under joint venture with the Bangladesh Economic Zones Authority (BEZA). China Harbour will have 70% stake in the EZ while BEZA holds the rest 30%. The economic-industrial zone will be developed on government-to-government (G2G) basis as per recent amendment made to the relevant law. The BEZA will form a ‘special purpose company (SPC)’ to develop the zone. The Authority recently got approval from the Prime Minister’s Office (PMO) for forming the SPC. BEZA executive chairman Paban Chowdhury said the Authority will sign a memorandum of understanding (MoU) with China Harbour before the start of work for the EZ development.
GPH to set up modern steel plant at Sitakunda
Managing Director of GPH ispat ltd Md Jahangir Alam said his company is going to set up a highly sophisticated technology-based steel industry in Kumira of Sitakunda of Chittagong shortly. His company has recently signed a contract with Austrian Primetal Technologies GmBH to set up the new plant which, if installed, will be the Asia’s most modern steel plant. The plant will produce 840,000 metric tons of billet and 640,000 metric tons of rebar and sections and the local buyers will get these global quality products at a comparatively cheaper rate. This new technology based steel plant will use comparatively low quantity of gas and electricity and hence save fuel cost. At least 10,000 people will get direct or indirect job in the plant and the government will get revenue worth BDT 2.26 billion a year. He said this at a view exchange meeting with its channel partners yesterday at a hotel in Teknaf of Cox’sBazar. GPH ispat ltd, a leading steel manufacturer in the country, organized the meeting, a statement of the company said. Additional Managing Director Almas Shimul said the GPH ispat does not compromise with quality of its steel products as a result of which their products are popular in the entire Cox’s Bazar-Teknaf and southeastern bordering belt.
Geological Survey of Bangladesh finds largest limestone reserve in Naogaon
State-run Geological Survey of Bangladesh (GSB) has discovered the country’s largest limestone reserve at Badolgasi of Naogaon, state minister for the Ministry of Power, Energy and Mineral Resources (MPEMR) Nasrul Hamid said Thursday. The limestone reserve was found at some 2,214 feet depth covering 50-kilometre area, he said talking to a group of journalists in his office in the Secretariat. Mr Hamid said a feasibility study would be carried out to ensure its economic viability. “If found viable, the country’s cement factories could avoid import and meet their entire limestone demand from it. This could save huge foreign currencies,” he added.
Tripura agrees to export additional power to Bangladesh
India’s northeastern state of Tripura has agreed to export an additional 100 megawatts of electricity to Bangladesh, over the current supply of 100 MWs. An Indian newspaper ran a report Saturday on the latest development in power-sector cooperation between the two next-door neighbors, quoting a minister. “The Bangladesh government has sought more electricity from India to tackle its power crisis in the eastern part of the country. India’s Power Ministry wanted to know whether the Tripura government is ready to provide additional 100 MWs of power to Bangladesh,” Tripura’s Power and Transport Minister Manik Dey told Indian news service IANS. “The Tripura government has already informed the union power ministry that the state government has no problem to supply 100 MW more of electricity to Bangladesh provided that ONGC must ensure the supply of gas to the 101-MW-capacity power plant at Monarchak,” he added. A 47-km double-circuit transmission line has been erected, linking the power grid at Surjyamaninagar in western Tripura to the Comilla power grid in Bangladesh, to supply electricity to the neighboring country, the Indian news service added.
Orion to set up 635MW coal power plant
Orion Group yesterday signed an agreement with the Power Development Board (PDB) to set up a coal-fired power plant in Munshiganj that will generate 635 megawatts of electricity. Around USD900 million or BDT 7,000 crore will be spent on the plant—Orion Power Unit-2 Dhaka Ltd—that will begin commercial production in the next 45 months, officials said. Zahurul Haque, PDB secretary, and Salman Karim, managing director of Orion Group, signed the agreement for the implementation of the project and power purchase. Obaidul Karim, chairman of Orion Group, said that there is a common belief that coal-fired power plants are harmful to the environment. “But there is no reason to be worried about the environmental hazards, as we will use state-of-the-art technology that will cause less pollution.” Most of the developed countries get 50% to 70% of their electricity from coal-based power plants, he said. Without such plants, it would be difficult to achieve the target of producing 25,000MW of electricity by 2021, he said. Orion Power will sell electricity to PDB and the Power Grid Company of Bangladesh at BDT 6.69 per kilowatt-hour.
United Air compels 200 employees to take unpaid leave
Private carrier United Airways (BD) Limited has recently forced at least 200 employees to take unpaid leave. Apart from that, the airliner could not pay the monthly salary of several hundred employees during the last six month because of its fund crunch. The company’s revenue earning has now been totally stopped as it failed to operate any aircraft on any route due to the technical glitches. Moreover, it has not yet paid its dues of aeronautical and non-aeronautical charges worth over BDT 1.25 billion. “As the employees could not get their due salary for the last six months, many of them have already left the organization,” according to an official source. Dhaka Tribune couldn’t reach Managing Director of United Air Tasbirul Ahmed Chowdhury, despite repeated attempts were made over his mobile number. Besides, none of the top officials of the airlines also declined to talk about the employees’ forced leave without pay issue.
Indentors seek VAT removal for ‘import’ of samples
The country’s indentors urged the revenue board to remove existing procedural hassles in the airports while bringing samples from abroad. Bangladesh Indenting Agents Association (BIAA) said they have to obtain Value Added Tax (VAT) registration as importers and submit VAT returns every month in the VAT office even for a negligible amount of sample from aboard. The association recently demanded the tax authority allow indentors bring sample without paying duty through Dhaka airport customs. MS Siddiqui, President of the BIAA, made the request recently to the National Board of Revenue (NBR) for its consideration. According to the import policy order 2015-18, section 13, indentors are allowed to bring duty-free sample of products. The association has requested the NBR to stop realizing VAT for samples, which will help smooth production in the manufacturing sector, especially pharmaceuticals.
Government to cancel 20 drug makers’ licenses
The Health and Family Welfare Ministry has decided to cancel the licenses of 20 pharmaceutical companies in line with the recommendations made by the Parliamentary Standing Committee on the Health Ministry, reports BSS. Health Minister Mohammad Nasim gave the directives on Thursday while presiding over a meeting with the officials of the Directorate of Drug Administration, an official release said in the city. “The minister asked the directorate to execute the decision fast,” it said. Besides, the meeting in principle endorsed other recommendations of the Jatiya Sangsad body and implement those speedily after review. State Minister for Health Zahid Malek, Health Secretary Syed Manzurul Islam, Director General of Health Services Professor Dr Deen Mohammad Nurul Haque, Director General of Drug Administration Major General Mostafizur Rahman and senior officials of the directorate were present on the occasion. Later, the health minister chaired a meeting to review the progress of the Annual Development Programme (ADP) projects under the ministry. At the meeting, Nasim directed the authorities concerned to implement the programmes of the current fiscal year.
BTRC goes to court to realize BDT 4.5 billion dues from Citycell
Bangladesh Telecommunication Regulatory Commission on Wednesday filed a certificate case against the country’s oldest mobile phone company Pacific Bangladesh Telecom Ltd, popularly known as Citycell, to realize BDT 4.5 billion in dues. BTRC assistant director Hasibur Rahman filed the petition with the general certificate officer at Dhaka district administration office. The case was filed under the Public Demand Recovery Act 1913. The total dues include BDT 3.7 billion in 2G license renewal fee and two instalments of spectrum charges, BDT 124.3 million in annual fees, BDT 254.3 million as revenue sharing, and BDT 103.7 million for the social obligation fund. In the petition, the telecom regulator accused PBTL and 10 directors of the company for their failure to pay the money.
Telcos can get Value Added Service approval if needed
Telecom operators will also be allowed to provide any value added service if the VAS providers are found incapable to do that, according to the latest draft VAS guidelines of the telecom regulator. VAS is provided by a third-party company through the mobile phone networks. The mobile phone companies offer the basic telecom services like voice and data plans, but the other services like missed call alert, welcome tune, and various application-based services are provided by VAS providers. Bangladesh Telecommunication Regulatory Commission officials said the VAS providers are small-time businesses that lack the capacity to bargain with the big mobile phone companies. The BTRC last week published the draft VAS guidelines to get public feedback. A similar attempt made by the BTRC in 2012, however, failed to bring any result as the government at the time did not approve the VAS guideline in face of opposition from the mobile phone companies. According to clause 19 of the draft VAS guidelines, no other operator is allowed to offer a VAS until the VAS providers are found incapable of doing it.
Tarana for tax cuts on handset imports
The Telecom Division yesterday urged the finance ministry to review the tax structure on mobile handsets and accessories to make smartphones more affordable and boost internet use. State Minister for Telecom Tarana Halim said she sent a proposal to the ministry two weeks ago. She spoke at an event, ‘Mobile Handset and its Role in Building Digital Bangladesh’, organised by the Telecom Reporter’s Network Bangladesh at the Westin hotel in Dhaka. “I requested the finance ministry to withdraw the tax and VAT on mobile accessories, to promote the local assembly of smartphones.” However, she is yet to receive a positive response from the finance ministry. Imposing such a surcharge hinders digitization efforts, Tarana said. Terming smartphones as the main component toward building a more digital society, Tarana said the sector’s contribution to the economy would increase if tax and VAT on mobile handsets are slashed. She also urged mobile phone importers and service operators to offer monthly instalment payment options on handsets for customers. To allow for handset models locked to particular operators, some changes must be made to the existing regulations, said Shahjahan Mahmood, chairman of Bangladesh Telecommunication Regulatory Commission. Currently, mobile operators cannot import handsets, but if they were allowed to make joint arrangements, handset prices would drop by 15% to 20%, said Mahmud Hossain, chief corporate affairs officer at Grameenphone.
Uniform tax rate on tobacco products likely
The government may introduce a uniform tax rate on tobacco products irrespective of price range from the next fiscal year making the current basis – the higher the price, the larger the amount of tax paid – obsolete, officials said. The plan comes as the present system is said to have failed in reducing tobacco consumption and generating revenue from increased taxation as majority in the country are consumers of low-end cigarettes. As less tax is imposed on low-end cigarettes than on premium brands, experts believe that there has been no significant reduction in the number of smokers after the increase of tax. A uniform tax rate is, therefore, now under the plan since it is likely to serve the both ends – discouraging the tobacco consumption and generating new revenues.
PwC starts journey in Bangladesh
The UK-based global financial consultancy PricewaterhouseCoopers (PwC) opened its office in Dhaka to offer advisory and taxation services. Finance Minister AMA Muhith inaugurated the office Thursday joined by British High Commissioner to Bangladesh Alison Blake and Deputy Chief of Mission of the US Embassy in Dhaka David Meale. The world’s largest professional services firm having an annual revenue USD 35.4 billion in FY 2015 in a post-inauguration briefing said the company came to Bangladesh with its quality service eying growth in tax, forensics, cyber security, government, digital and infrastructure advisory. At the briefing, chairman of PwC Bangladesh Deepak Kapoor said as the country’s economy continued to grow from strength to strength; they felt that this was the right time for a full-fledged PwC office in Dhaka, offering all PwC services, across various industry verticals.
Bangladesh, other nations sign historic climate deal
Bangladesh signed the historic Paris Climate Agreement at the UN headquarters in New York on Friday aiming to take multiple measures to save the world from disastrous consequences of climate change, reports UNB. Environment and Forests Minister Anwar Hossain Manju signed the deal on behalf of Bangladesh. Some 175 countries, including China and the US, signed the deal. The signing day coincided with ‘International Mother Earth Day’. The signing ceremony turned out to be an event closely resembling the annual UN General Assembly sessions, featuring around 60 heads of state and government, according to a despatch received in the city. The opening session was addressed, among others, by the Presidents of France, Peru, Brazil, Bolivia, Democratic Republic of Congo, Prime Ministers of Canada, Italy and Tuvalu, Deputy Prime Minister of the Russian Federation, Special Envoy of the President of China, US Secretary of State and UN Secretary General.
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