Important Business News Extracts – December 19 2016
Bad loans weigh down banks
A first generation private commercial bank has been fighting a loan default case worth about Tk 100 crore in court for the last 15 years, meaning it had to keep provisioning for the amount every year. But it came as a great relief to the bank a couple of months ago, when the court gave the verdict in its favour. In another case, a borrower of an Islamic bank defaulted on loans amounting to about Tk 600 crore. It is difficult for any local bank to keep such a big amount aside from its annual profits as provision. So, the bank took approval from the central bank to make the provision spread across three years — Tk 200 crore each.
Half the population lack access to financial system: Study
Mobile banking system has brought positive outcomes on money transactions, savings, health, and education status of the household of internal migrant workers of Bangladesh, according to a study. The study also showed that around 50 per cent of the country’s total population don’t have access to any sort of financial system while nearly 74 per cent of the rural population are unbanked, which can be potentially reached through mobile banking. The study titled ‘Mobile Banking and Remittances: Evidence from Local Migrant Workers of Bangladesh’ was conducted by Dr Abu S. Shonchoy, a visiting scholar at the New York University, and presented by him at a seminar, arranged by International Growth Centre (IGC) at a city hotel on Sunday.
New pension scheme takes effect from July ending one-time payout
Many of government officials are opting for early retirement to avail full gross pension payments in one go before the provision terminates next July, said officials. “We got information from different state-run entities that many government employees who have served more than 25 years in service are willing to leave office before reaching the last day of their retirement age to avail themselves of the opportunity,” a senior official of the Ministry of Finance (MoF) told the FE. He would not tell the number of employees who have retired early or sought early retirement. He said the number of such government employees could increase further as the time for effect of the reformed pension scheme nears. Prime Minister Sheikh Hasina approved in November last a revised pension scheme for retiring public servants. The scheme is expected to be effective from July 01 next year.
The country’s import payments registered a 17.84% growth in November against a 5.8% growth in the corresponding month a year ago. According to the latest Bangladesh Bank data, letters of credit involving USD 3.8 billion were settled in November this year against USD 3.2 billion settled in the same period of 2015. The import payments accounted for USD 3.02 billion in November of 2014. A BB official told New Age on Sunday that the settlement of LCs, or actual import payments, increased significantly in November of the current fiscal year 2016-17 as the import of capital machinery, sugar, edible oil, pulses, petroleum products and some other items increased during the month. In November of 2016, import of capital machinery posted a growth of 76.44% from that in the same period of 2015. Settlement of LCs for capital machinery amounted to USD 319.1 million in November of 2016 against USD 180.9 million in the same month of 2015. The BB official said that the import of capital machinery increased in November as the government imported the item to speed up the construction process of the Padma Multipurpose Bridge. Besides, some importers have recently settled LCs for the capital machinery to set up the power plants, he said. Import payments for edible oil (refined) and milk food in November of 2016 increased to USD 91.5 million and USD 21.35 million respectively from USD 46.1 million and USD 14.4 million in the same month of 2015. The prices of edible oil and milk food have recently increased in the global market which fuelled up the import cost of the two items, the central banker said.
Kolkata hospitals accept Taka, $ from Bangladesh patients
Some Kolkata hospitals have started accepting payments in US dollar and Bangladeshi Taka. Demonetisation may have choked the flow of Bangladeshi patients to Kolkata, but has done a huge favour to city hospitals treating them, according to a report by Times of India. The Bangladeshi taka -which has so far been unacceptable -is now being readily received by at least three private hospitals in the city along with dollars. Some have even opened exchange counters to make it easier for the visitors. With cash still inadequate, it has helped both visiting patients and hospitals to get around the payment blues.
The government has taken all-out measures to offset the recent downslide in remittance earnings by diversifying and widening Bangladesh’s manpower export market, especially in Australia and Russia. Official sources said on Sarurday that manpower export potentials are brightening in Australia, Russia, European Union, Thailand and the Middle East. In addition, steps have also been taken to generate more employment in zero costs in Saudi Arabia, Malaysia and Qatar, officials at the expatriate welfare and overseas employment ministry said on Saturday, according to a news agency.
DESCO to sell 29.3 million shares at ‘prevailing’ market price
The government will sell above 29.3 million shares from its holding at Dhaka Electric Supply Company (DESCO) at ‘prevailing’ market price. Bangladesh Power Development Board (BPDB), one of the corporate sponsors of DESCO, made the declaration Sunday through the websites of both the stock exchanges. The BPDB, also the custodian of government’s shares at DESCO, will sell 2,93,10,425 shares out of its total holding of 29,31,04,259 shares of the DESCO at prevailing market price (in the public market) through stock exchange within next 30 working days, according corporate declaration made by DESCO. The proposed sales of DESCO’s shares will be the first one for offloading the SoEs’ shares after 2010-11 stock market debacle. The DESCO was listed with the stock exchanges in 2006 by offloading 25.0% shares through direct listing method. The share price of DESCO Sunday rose 0.41% or BDT 0.2 to close at BDT 48.40. Currently, the government holds 75.0% shares at DESCO, whereas institutes hold 18.18% shares, foreign investors 0.57% and public hold remaining 6.25%, according to DSE information. As per the un-audited quarterly statement, the company’s earnings per share (EPS) was BDT. 0.57 for July-September (Q1), 2016 as against BDT. 0.67 for July-September, 2015, while the net asset value (NAV) per share was BDT. 37.83 as of September 30, 2016 and BDT. 37.04 as of June 30, 2016.
Bangladesh expects record tea output in 2016: Commerce Minister
Bangladesh’s tea output in 2016 is expected to hit a record 80.0 million kg from 66 million a year earlier, the commerce minister said on Sunday, a volume that may be big enough to make imports unnecessary, reports Reuters. The country became a net importer of tea after ranking as the world’s fifth-largest exporter in 1990s, due to a big increase in domestic consumption. ‘Tea production this year is likely to hit all-time high of 80 million kg,’ Tofail Ahmed, the minister, told reporters when announcing a tea exposition on January 12-14. Domestic consumption has been rising by more than 3% annually, in line with economic growth. Bangladesh has imported tea mostly from India and Thailand, market sources said. Tea is sold at the country’s sole auction center, in the port city of Chittagong, where most of it is picked up by domestic buyers. Bangladesh also exports a small quantity, mainly to United Arab Emirates and Saudi Arabia, where many Bangladeshis work.
Beximco gets approval from US to export third medicine
Beximco Pharmaceu-ticals is expanding its footprint into the US, one of the highly regulated drug markets in the world, as it has recently received approval from the US Food and Drug Administration or FDA to sell a type 2 diabetes medicine. The local drug manufacturer is now set to launch Metformin Hydrochloride extended-release tablets in two strengths — 500mg and 750mg — in the US market in the middle of next year, Beximco said in a statement. This is the third product from Beximco approved by the FDA. Beximco first introduced Carvedilol, a prescription drug for treating hypertension, in the American market in August. Sotalol Hydrochloride, a generic version of cardiovascular drug Betapace, is the second product of Beximco that is likely to be introduced in the US market by the first quarter of 2017. Metformin Hydrochloride tablets are generic equivalent of Bristol-Myers Squibb’s Glucophage XR tablets in 500mg and 750mg strengths. Metformin is indicated as an adjunct to diet and exercise to improve glycaemic control in adults with type 2 diabetes mellitus. Annual sales for Glucophage XR in the US were USD 918.0 million for the 12 months to October 2016, Beximco said, citing data from the Intercontinental Marketing Services. Beximco Pharma, a unit of Beximco Group, first received the permission from the FDA to export medicines to the American market in November last year. Beximco is one of the largest exporters of pharmaceuticals, with footprints in more than 50 countries. It exported medicines worth USD 15.0 million in fiscal 2015-16. Its net profit rose to BDT 1.95 billion at the end of 2015 from BDT 1.5 billion a year earlier.
Sinobangla to invest BDT 160.0 million for expansion
The board of directors of Sinobangla Industries has decided to go for expansion of the factory with an estimated cost of BDT 160.0 million, said an official disclosure on Sunday. The board has decided to purchase some additional land adjacent to factory premises and some capital machinery (1 Tape Line, 20 Looms, 1 Bale Press machine, 1 Auto Cutting Sewing machine, 1 Printing machine and 8 Sonic Sewing machines) and construct an additional warehouse. According to the disclosure, the total estimated cost of the expansion would be BDT 160.0 million approximately (USD 2.0 million). “After completion of the expansion, total monthly production of the company will be enhanced by 150 MT approximately,” said the disclosure. Each share of the company, which was listed on the bourses in 1999, traded between BDT 29 and BDT 32.10, before closing at BDT 29.2 on the day.
United Airways (BD) Ltd may resume operation soon with the addition of seven new aircraft to its fleet, said officials. “We have already inked necessary agreements with the aircraft suppliers to purchase seven aircraft of three separate models for smooth flight operations,” Chairman and Managing Director of United Airways Captain Tasbirul Ahmed Choudhury told the FE. He said the airliner also had written to the Civil Aviation Authority, Bangladesh (CAAB) for carrying out inspection of the airplanes prior to their induction into the existing fleet. As per the agreement, the aircraft suppliers have already agreed to take partial payment in exchange for United Air shares and the remaining amount in cash (at the face value of BDT 10 each with a lock-in period of one year), he said. “We have already paid BDT 880.0 million to two separate institutions, including Phoenix Aircraft Leasing Pte Ltd, against the dues for previously supplied aircraft,” he said. “Some BDT 3.12 billion would be paid to the aircraft suppliers for new aircraft after completion of inspection by the CAAB,” he said. “We got an application from the United Airways (BD) Ltd and would sit with the airliner soon for discussion,” CAAB Director for flight safety and regulations Chowdhury M Ziaul Kabir told the FE. The seven aircraft the United plans to add include two airbus A340-300s, three ATR 72-500s and one Boeing MD-83, the airliner’s top brass said. Of them, the airbus A340-300s would to fly to London, Manchester and Gatwick, said Mr Choudhury. ATR 72-500s would carry passengers on regional and domestic routes, while the Boeing MD-83 would fly mostly to the Middle East. With the addition of the new seven, the total number of aircraft in the fleet would rise to 17, he said.
Robi, Teletalk using fibre optic grid of banned co
Private mobile phone operator Robi and state-run operator Teletalk are using fibre transmission network of Bangla Phone although the telecom regulator warned mobile operators not to do business with Bangla Phone which doesn’t have a licence, said officials of the Bangladesh Telecommunication Regulatory Commission. BTRC officials said that during a recent inspection at the Robi office the commission had found that the operator was using Bangla Phone’s fibre transmission network in more than 1,000 sites of the company. They also said that most of the sites were set up in 2013 and located mostly in Chittagong and Comilla regions. Teletalk is also using Bangla Phone’s network in its 1,000 sites of which 580 sites are in the Dhaka division, they said. ‘We are currently working on our findings.
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