Net sales of savings instruments hit a record high in fiscal 2015-16, as investors were lured in by interest rates which are 5.0 percentage points higher than those offered by commercial banks on term deposits. The amount was more than double the target set by the government for the fiscal year: it stood at BDT 336.9 billion — the highest in the country’s history — against the target of BDT 150.0 billion. People, be it government employees, private service holders, businessmen or housewives, are running to invest their savings in these tools because of the returns, which are beyond any market rate. Currently, banks offer a maximum of 7.0% interest rate for term deposits and it is a minimum of 11.0% for investments in savings schemes, said the official. The government sold BDT 287.3 billion worth of savings instruments in fiscal 2014-15, while the amount was BDT 117.1 billion the year before. In fiscal 2012-13, the total sales of the instruments were a meagre BDT 7.7 billion.
Bangladesh Bank stands to retrieve USD 15.0 million for now
The Philippines Department of Justice will appeal to a court by August 30 as part of its effort to return USD 15.0 million of Bangladesh Bank’s stolen reserves, the central bank said in a statement yesterday. In February, USD 101.0 million of the BB’s reserve money was stolen from its account with the Federal Reserve Bank of New York by a band of cyber thieves. Of the amount, USD 81.0 million was laundered through the Philippines’ Rizal Commercial Banking Corp without maintaining any norms. The BB has been working on various legal steps to bring back the USD 81.0 million, and has now reached the final stages of retrieving USD 15.0 million of the amount. About the background of the reserve heist, the BB said in the statement that on February 4 an attempt was made to steal about USD 1.9 billion illegally from the central bank’s reserve account with the New York Fed by generating a total of 70 fake payment instructions.
Only 1.0pc mobile bankers process remittances: Study
Bangladesh’s burgeoning mobile banking needs to diversify into savings and credit to harness better financial impact on the rural population, according to experts. Looking beyond domestic money transfer, mobile financial service providers can also facilitate the flow of foreign remittances to offer additional value to the country’s financial sector, they said. “Bangladesh is one of the fastest-growing markets in terms of mobile financial services. If you look at the number of agents, it has grown by four times in the last three years” said Manoj Sharma, Director of MicroSave Asia.
Bangladesh Bank balks at borrowing costly new credit
The central bank has expressed its reservation over borrowing from the World Bank’s newly introduced costly ‘scale-up facility’ fund, fearing mismatch with the local financial market. Ministry of Finance (MoF) officials said Monday the Bangladesh Bank (BB) had recently in writing communicated to the MoF its observations regarding the WB-assured USD 350 million credit for the proposed ‘investment promotion and financing facility project-II (IPFF-II)’. Earlier, following WB’s repeated persuasion on its lending proposal from the scale-up facility (SUF), the government replied in the positive. As per the government decision, some projects, including the central bank- executed IPFF-II, were selected for getting bankrolled from the global lender’s costly USD 3.9 billion additional capital called SUF. According to the MoF officials, the WB recently selected four projects, including the IPFF-II, to provide some USD 350 million for funding. Three other projects are from power and IT sectors.
New incentives on way to boost exports to USD 37.0 billion
The government is set to bring in major changes to the incentive structure for exports to achieve the higher growth target set for this fiscal year. The export target for fiscal 2016-17 is USD 37.0 billion, up 8.0% from last fiscal year’s receipts. The new incentive structure will be announced in a couple of days, according to a finance ministry official. The development comes after a meeting between officials of the finance and commerce ministries on August 8. In the new structure, a 5.0% incentive is likely to be extended for exports of finished leather if the tanneries at Hazaribagh relocate to Savar. The existing 12.5% subsidy on leather goods export will continue. In the current fiscal year, BDT 45.0 billion has been allocated for export subsidies, of which BDT 5.0 billion would go toward jute goods. Various jute goods now get a maximum of 10.0% incentive on their export proceeds, which may be increased to 20.0%.
Exports of perishable goods dropped about 50 percent as floods damaged crops in most of the vegetable growing districts, exporters said yesterday. Vegetable shipments out of the airport in Dhaka plummeted to 70-80 tonnes a day from 150-180 tonnes prior to the floods, said Mohammed Mansur, general secretary of Bangladesh Fruits, Vegetables and Allied Products Exporters’ Association. Floodwaters are preventing traders from collecting the vegetables from the fields in the major vegetable growing districts, including Manikganj, Jessore, Barisal, Bogra, Sirajganj, Savar and Munshiganj. As of last week, crops on 1.25 lakh hectares in more than 23 districts have been inundated by floodwaters, according to the Department of Agricultural Extension or DAE. Vegetable exports have been affected since the first week of June, when floodwaters first started damaging the crops.
The insurance regulator asks 45 Insurance firms to reimburse excess money
The insurance regulator has asked all 45 non-life insurance firms for reimbursing the money spent in excess as their management cost in seven years to 2015. This order is applicable for all general insurers, including the state-owned Sadharan Bima Corporation. A letter issued by the Insurance Development and Regulatory Authority (IDRA) on August 03 to this effect asked them to reimburse the money squandered as expenses within the next five years to 2020. IDRA asks 45 Insurance firms to reimburse excess money. The watchdog earlier had found every general insurer having had allocable and un-allocable expenses during 2009-2015 beyond permissible limits. The IDRA recently heard from all non-life insurance firms about their excess management costs incurred during the seven years under review. It also asked the general firms to prepare an effective action plan on how to reimburse the amount within the stipulated time.
Stock brokers and dealers with minimum paid-up capital of BDT 500.0 million will be allowed to play the role of a market maker — an effort to keep the secondary market stable. A market maker is a person or a licensed firm that is always ready to buy and sell securities to provide liquidity as well as stocks to the markets. After receiving the regulatory permission, one can act as a market maker for a maximum of three authorized securities, according to a draft of market-maker rules recently approved by Bangladesh Securities and Exchange Commission. The stock market regulator has sought public opinion on the draft rules. The regulator will finalize the rules after scrutinizing the public opinion that would have to be submitted to the commission by August 21. The BSEC has formulated the draft rules by amending the existing market maker rules, which was enacted in 2000, as none of the stakeholders in the last 16 years expressed their interest in becoming a market marker. Updated market-maker rules are vital to make the trading of exchange-traded funds functional, as the stock market regulator finalized exchange traded fund rules in June, paving the way for entities like the stock exchanges to run index-based funds.
Bangladesh is unlikely to strike Free Trade Agreement (FTA) with any country until 2025 before losing the facilities it has been enjoying as a least developed country (LDC), a meeting decided on Sunday. Senior Secretary of Commerce chaired a meeting on possibility of Bangladesh’s signing FTA with China and Malaysia at MoC conference room. Asked whether the meeting has decided not to sign any FTA before 2025 he said, “That is not our official position. The facilities we enjoy as an LDC were discussed in the meeting. But we will continue studying the FTA benefits and losses.” Sources said an official of Bangladesh Tariff Commission made a power point presentation in the meeting that concluded with a message that signing FTA with China and Malaysia would not be beneficial for the country now. The meeting was told that as an LDC Bangladesh has been enjoying various tariff preferences in the markets of the developing and the developed countries. The process of Bangladesh’s graduation to a lower middle-income country would not be completed before or around 2025. Until then Bangladesh will continue to enjoy the benefits as an LDC.
The number of active WiMAX internet users in the country declined further as the operators lost 31,000 subscribers in the first six months of this year amid an increasing popularity of the 3G mobile internet. According to the latest data of the Bangladesh Telecommunication Regulatory Commission, the number of active WiMAX internet users came down to 1.12 lakh in June from that of 1.43 lakh in January. In the same period, the mobile phone operators added 62,000 internet subscribers, raising the subscriber base to 5.96 crore from 5.34 crore, the BTRC data showed. The number of internet users through ISP and PSTN operators also increased to 35.20 lakh in June from that of 25.94 in January.
The net profit of Bangladesh Submarine Cable Company or BSCCL rose 28.0% year-on-year last fiscal year, thanks to the bandwidth export by the state-owned firm. Its net profit stood at BDT 165.0 million at the end of 2015-16, up from BDT 129.0 million a year ago. The company’s revenue stood at BDT 610.0 million in 2015-16, which was BDT 540.0 million a year earlier. Presently, the company serves around 130gbps of internet bandwidth out of its capacity of 200gbps. The listed company also announced 10.0% cash dividends for its shareholders. BSCCL is an international long-distance communications and international internet gateway operator that provides various telecom services through the submarine cable network. It was listed on the stock market in 2012. Each share of the company traded between BDT 107.2 and BDT 110.0, before closing at BDT 108.3 on Dhaka Stock Exchange yesterday. The government owns 73.8% stake in the company, while institutional investors hold 11.3%, foreign investors 0.73% and general public 14.2%.
Dhaka-Ctg pipeline set to be built to transport petroleum products
The government has stepped up its efforts to build the country’s first intra-country pipeline to send petroleum products from port city of Chittagong to capital Dhaka in a safer and cheaper way, said officials. The pipeline would be of around 250-270 kilometre in length and would carry initially the country’s mostly consumed petroleum product – diesel –from the BPC’s Chittagong tank terminal to Godnail tank terminal in Narayanganj, a senior official of state-run Bangladesh Petroleum Corporation (BPC) told the FE.
LOCAL MOTORCYCLE INDUSTRY: Industries ministry recommends VAT withdrawal, extension of exemption
The industries ministry has recommended that the National Board of Revenue withdraw value-added tax on production of motorcycle and extension of VAT exemption for one more year to facilitate the industry in the country to flourish. The ministry in third week of July in a letter to the revenue board chairman made the recommendation following an application of the Motorcycle Manufacturers and Exporters Association Bangladesh seeking withdrawal of the VAT on production of the vehicle. The NBR in the current fiscal year 2016-17 imposed 15 per cent VAT on motorcycle production withdrawing the exemption facility which the sector, along with refrigerator and freezer, has been enjoying since 2010.
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