Bangladesh Bank puts cap on dollar rate for importers
Bangladesh Bank yesterday put a cap on the US dollar at inter-bank exchange rate plus BDT 2.0, to control the recent volatile market, said bankers. The central bank informed the treasury officials of the commercial banks about the ceiling at a meeting yesterday. The average Bills for Collection (BC) selling rate crept up 3.49% to BDT 83.66 against the dollar in just two weeks since April 11, according to data from Bangladesh Foreign Exchange Dealers’ Association (BAFEDA). Banks use this rate to sell dollars to importers. Citibank NA and Standard Chartered Bank quoted the BC selling rate of a dollar at a highest of BDT 84.80 yesterday. Some other banks quoted the rate at BDT 84 or more for a dollar yesterday and the rate went up to BDT 84.65 for remittance payments, said bankers. The inter-bank exchange rate was BDT 80.1 for a dollar yesterday. So, banks would have quoted the exchange rate for import payments at BDT 82.1. The central bank will inject dollars into the market today to stabilize it, said another treasury official of a private bank..
Bangladesh Bank sells dollars worth 96.0 million in April for government payments
Bangladesh Bank has increased its volume of US dollar sales in April mainly to clear import payments of government entities amid rising value of the greenbacks against the BDT in local money market. The BB sold USD 96.0 million to the scheduled banks in the first 26 days of this month for clearing payments against different government purchases including petroleum oil and fertilizer imports, said officials. The central bank started selling US dollar in February this year after a year of purchases as the BDT has become weak in recent months against the greenbacks. BB sold USD 23 million in March and USD 22 million in February this year. The BDT has continued to depreciate against the US dollar over the last few months as the inflow of remittance decreased significantly as many expatriate Bangladeshi workers were using illegal channels instead of banks to send money to their relatives, Bangladesh Bank officials said. The country’s import demand also picked up remarkably in the recent months of the current fiscal year 2016-17 that also played a role in depreciating the BDT against US Dollar, they said. The BB data showed that the Dollar appreciated almost every day in the formal banking channel since January 10 as it was quoted (buy-sales) at BDT 80.03 on April 25, up from BDT 78.7 on January 10 this year.
The government is set to inject Tk 17.50 billion into five state-owned banks (SoBs) and Grameen Bank (GB) to help them reduce their capital shortfall, officials said. The finance minister has already given his approval to a proposal in this regard, they added. According to the proposal, the fund is set to be provided to five state-run banks and Grameen Bank except for Probashi Kallyan Bank (PKB), they also said.
IDLC Finance’s net profit soared 67% year-on-year to BDT 601.0 million in January-March, mainly driven by earnings from the capital market, including brokerage commission and investment income. In the first quarter this year, IDLC’s income from investment through its capital market subsidiaries shot up 266.0% to BDT 333.0 million, while earnings from brokerage commission rose 45.0% to BDT 356.0 million. SME, corporate and consumer financing, the other major business segments of the company, also saw notable growth. The focus remains firmly on continuing the good performance for the rest of the year, said Arif Khan, chief executive officer and managing director of IDLC Finance. The company’s operating income rose 30% year-on-year to BDT 1,659.0 million at the end of March. The earnings per share reached BDT 1.8, up from BDT 1.11 a year ago. During the January-March period, IDLC acquired 3,169 new customers, while the customer assets portfolio grew 9% to BDT 67.7 billion. The growth in customer assets was driven primarily by SME loans, which experienced 11% growth during the period. Khan said IDLC will open four new branches this year — in Rajshahi, Barisal, Chowmuhany and Dhaka.
Strategic investment in CSE to ‘help explore economic benefits’
The Chittagong Stock Exchange (CSE) Tuesday held a road-show to uphold its potentials and future plan as part of its move to get strategic investors. Managing Directors and top officials of different banks, merchant banks, business conglomerates, group of companies and head of different foreign missions, among others, attended the event held at a city hotel, according to a CSE statement. At the road show, CSE Chairman Dr. A. K. Abdul Momen said Bangladesh is now a lucrative destination for global investment, especially its capital market has enormous potentials to grow with its growing economy. CSE Managing Director Mr. M. Shaifur Rahman Mazumdar made a technical presentation on the CSE’s strength, future plan, projected financials and valuation. Mazumder said the port city bourse is maintaining wide exposure to international and regional exchanges through different forums. SE now is in a position to transfer of 25% of its paid up shares out of this block shares to potential strategic investors.
Greater support to food likely to raise subsidies next FY
Government subsidies may bloat over 15% to BDT 275.0 billion in the next financial year particularly for food support for the commoners amid price rises. Officials began calculating bigger budgetary allocation for food and allied farm products in the upcoming FY2017-18, beginning July 01. People familiar with the development at the finance division told the FE Wednesday they want to allocate more on food and agricultural sector for easing prices of key staples that would help rein in the headline inflation in the coming fiscal. Economists conversant with such developments said such rise in subsidies has grounds as the price of rice remained high and could shoot up further as a result of recent boro-crop damage in unusual summer-season flashfloods. The finance officials said the total subsidy is equivalent to 1.2% of gross domestic product (GDP), and BDT 40.0 billion is proposed now for food –nearly BDT 3.0 billion higher than that of the current revised amount of subsidy. The original estimate for food subsidy in the national budget for the current fiscal year was BDT 28.2 billion. And the subsidy for its allied products is also set to rise by BDT 4.0 billion in the next fiscal year, people dealing with the reckonings at the finance division told the FE. The government usually allocates BDT 90.0 billion for the agricultural sector which covers entire agriculture including fertilizer. The allocation is likely to fall short by BDT 30.0 billion in 2016-17.
Revenue collection shot up 20.0% year-on-year to BDT 1.1 trillion in the July-February period of the current fiscal year. The receipts in February increased 18% year-on-year to BDT 134.8 billion, according to National Board of Revenue. Analysts attributed the rise in revenue collection to increased imports and steady growth of domestic economy. The latest figures show that the tax administrator will have to collect additional BDT 737.3 billion in the rest of the months to June 30 to reach the possible revised goal of BDT 1.8 trillion. Initially, the government gave the revenue authority the task of collecting BDT 2031.5 billion for the current fiscal year ending in June, which is 39% higher than the actual collection of BDT 1.5 trillion last fiscal year, according to data from the finance ministry. NBR’s income from imports rose 22% year-on-year to BDT 346.3 billion during July-February. Receipts from VAT, also known as consumption tax, increased 18% to BDT 416.9 billion during the period this fiscal year, while collection of direct tax went up 18% to BDT 329.6 billion. The government is likely to fix BDT 236,000 crore as the collection target for the NBR for the next fiscal year.
Upcoming budget to ensure employment: National Board of Revenue (NBR)
NBR Chairman Mohammad Nojibur Rahman yesterday said the basic objectives of the upcoming budget are social development and security, poverty reduction, enhanced GDP and generation of more employment in the country. The upcoming budget will benefit honest businessmen and also consider economic ability and welfare of the mass people in the country, reports BSS. The board of revenue will take all kinds of steps to protect honest businessmen from dishonest ones to materialise the vision 2021, he reiterated. The revenue boss revealed this while addressing a pre-budget view-exchange meeting with the government officials, chamber leaders and others concerned at the conference hall of Rajshahi Chamber of Commerce and Industry (RCCI) as the chief guest. RCCI and Revenue Authority arranged the meeting with RCCI president Md Muniruzzaman Moni in the chair. Nojibur Rahman said the government will attach top priority to agriculture, power, communication, human resources, health, digital technology and education sectors in the next budget.
Cabinet body okays power import from India’s Adani
The cabinet committee on public purchase approved on Wednesday a total of 11 projects involving more than BDT 21.97 billion. Approval for importing power from Adani Power Ltd, India at BDT 6.8901 a kilowatt hour (kwh) was among the proposals. The cabinet committee on economic affairs also approved a total of seven projects that include: Expansion and strengthening of power system network under DPDC area (PGCB Part), approval for importing urea fertilizer from Saudi Arabia for the fiscal year (FY) 2017-18, commercial contract between the government and the China National Machinery Import and Export Corporation (CMC) for the construction of Dhaka-Ashulia Elevated Expressway, construction of embankment and dredging of Modhumoti river at Alfadanga of Faridpur and purchase of one Vehicle Mounted Data Interceptor. Commerce Minister Tofail Ahmed presided over both the meetings at the cabinet division. The government is going to import electricity from 1,600 megawatt (MW) coal-based power plant owned by Adani Power Ltd located at Jharkhand in India.
Dhaka-Ashulia elevated expressway work to begin soon
Dhaka-Ashulia Elevated Expressway construction work is expected to start within a short time under a direct government-to-government agreement. The cabinet committee on public purchase on Wednesday approved the Bridges Division proposal to construct the elevated expressway at a meeting presided over by Tofail Ahmed as an alternative chairman. After the meeting additional secretary to the cabinet division Mostafizur Rahman told reporter that China National Machinery Export and Import Corporation will be appointed as the implementing firm of the USD 1.36 billion project. As per the proposal, the project will be implemented in principle under Public-Private Partnership (PPP) initiative. At first no one participated in the Expression of Interest, but later seven firms took part in the tender process, according to sources. Dhaka-Ashulia elevated expressway is expected to improve the communication with the northern part of the country. On February 24, 2011, Prime Minister Sheikh Hasina gave verbal instructions to build an elevated expressway on the Dhaka-Ashulia road.
Spectra Engineers Ltd in association with a Chinese venture capital firm is set to build a 35-megawatt solar power plant in Manikganj in line with the government plan to generate 10% of power from renewable sources by 2020. The development comes after the cabinet committee on public purchase approved the proposal form the Power Ministry for Spectra Engineers and Shunfeng Investment to build, own and operate the power plant on Wednesday. Additional secretary to the Cabinet Division Mostafizur Rahman told reporters that the government will buy solar power at BDT 11.12 per unit from the plant for 20 years. Spectra Engineers Ltd will bear the cost of land acquisition, setting up of sub-station and transmission line, according to the ministry’s proposal. Between October 2015 and April 2016, the government gave approval to five companies, aiming to generate 332 megawatts of solar power. The government will pay the plants BDT 11.12 to BDT 3.6 for per unit of electricity. Of the five plants, the largest will be located in Teknaf in Cox’s Bazar by SunEdison Energy Holding (Singapore). The government will purchase power from this company at BDT 13.69 per unit.
The government is set to rescue Teletalk from the tight corner it finds itself in by taking care of Tk 3,256 crore of the operator’s dues. The decision to covert Teletalk’s debts to equity was taken in a meeting of the Executive Committee of the National Economic Council on Tuesday, said Tarana Halim, state minister for telecom, yesterday. The state-owned mobile operator has about Tk 1,600 crore outstanding with the Bangladesh Telecommunication Regulatory Commission for 3G spectrum. This sum will now be written-off or showed as cleared. Teletalk also has another Tk 1,656 crore outstanding with a Chinese bank. The government is the guarantor for the loan, according to Kazi Md. Golam Quddus, managing director of Teletalk; it will now pay off the amount. Tarana said she would write to the finance minister by next week about the equity issue and is hopeful of getting an immediate response. However, after the meeting the planning ministry sent out a press release that said Prime Minister Sheikh Hasina, who is also the telecom minister, has instructed Teletalk to search for a foreign company to merge with.
The government is working to make internet cheaper at the consumer level, said Tarana Halim, state minister for telecom, yesterday. She also plans to request Finance Minister AMA Muhith to cut some of the taxes for internet in the next budget. Currently, the end users have to pay 15% VAT, 5% supplementary duty and 1% surcharge on their internet usage. Tarana is also exploring if a better revenue sharing model can be worked out for the mobile operators. At present, mobile operators have to share 5.5% of their gross revenue with the telecom regulator. They also have to forward 1% of their gross revenue to the social obligation fund. The telecom division will go for cuts on either the VAT and other taxes on internet usage or the mobile operators’ revenue sharing%, she said. The telecom and gateway operators were also asked to share their total costs for providing internet service to consumers within two days, she said.
Analysts yesterday urged the government to cut duties on imports of green technologies and interest rate on eco-friendly products promoted under the central bank’s refinancing scheme. The cut will encourage the industries to embrace energy-efficient solutions, they said. For example, they said, equipment used in the eco cooler is more expensive than the conventional air conditioners because of high import duties, refraining big firms from using green technologies to save energy.
Lack of manpower in managerial role to hinder growth
Lack of availability of competent manpower for managerial role in different industries would hinder Bangladesh’s aspiration to become a middle-income country within 2021, experts in a discussion on Wednesday observed. They expressed the concern while participating in the discussion on ‘Capacity Building of Management Professionals : Way Forward for Bangladesh’, held at Chamber Building in the city. Bangladesh Employers Federation and Centre for Policy Dialogue jointly organised the discussion. CPD research director Khondaker Golam Moazzem presented a keynote paper on capacity building of management professionals in Bangladesh.
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