Important Business News Extracts – February 02 2017
Remittance inflow rebounds onto upturn, crosses USD 1.0 billion in January
A drive across the country and abroad to plug the holes began to remedy recent remittance downturn, boosting monthly turnover above USD 1.0 billion again in January. As part of the moves, a research group is now working to find out various factors, including the flow of inward remittances using illegal channel, which cause fall in the official receipts of remittances. The remittances from Bangladeshi nationals working abroad were estimated at USD 1.01 billion in January, up by USD 50.7 million over the previous month. In December 2016, the remittance was USD 958.73 million. It was USD 951.4 million in November. The flow of inward remittances fetched USD 1.15 billion in January 2016. The inflow of overall remittances dropped by nearly 17 cent in the first seven months of the current fiscal year (FY) against the same period of the last fiscal. The remittance receipts came down to USD 7.2 billion during the July-January period of the FY 2016-17 from USD 8.7 billion in the same period of the previous fiscal, the Bangladesh Bank (BB) data showed. Under the relaxations, the amount of security deposit for drawing arrangement came down to USD 10,000 from USD 25,000 while security deposit for Non-Resident Taka (NRT) account got trimmed down to BDT 0.2 million from BDT 0.5 million. Besides, the BB officials are scheduled to meet with senior officials the Ministry of Expatriates’ Welfare and Overseas Employment on February 09 to discuss the overall situation.
The much talked-about sovereign wealth fund is likely to be formed with Bangladesh Bank’s foreign currency reserves and finances from multilateral donor agencies following recommendations from a high-powered committee. For the past decade, the economy had been stuck in the 6 percent growth trajectory and the lack of adequate infrastructure has been blamed for it. To address the issue, the government has decided to use the sovereign wealth fund to bankroll long-term physical infrastructure projects like the Padma bridge for the most part. Foreign currency reserves currently stand at upwards of $32 billion, which is enough to honour eight months’ import bills. But the central bank does not just sit on the reserves: it invests in lucrative areas. In recent years the rate of interest in the world market has dropped sharply, and in many sectors it is zero percent. As a result, Bangladesh Bank’s returns from its investment have shrunk. This prompted the government to devise ways to utilise the reserves for a cause that will accelerate the economic growth and the idea of creating a sovereign wealth fund came up. In 2015, the government formed a seven-member team led by Bangladesh Bank Deputy Governor SK Sur Chowdhury to evaluate the prospects of creating the fund. The team submitted its report to Finance Minister AMA Muhith in December. In its report, the committee said the government may buy foreign currencies from the central bank with funds raised by issuing treasury bonds in local currency.
Import grows in H1 as companies ramp up capital machinery purchase
The country’s imports grew by 11.25% or USD 2.3 billion in the first-half (H1) of the current fiscal year (FY), driven by robust procurement of capital machinery, officials said. The actual import in terms of settlement of letters of credit (LCs) rose to USD 22.6 billion in the July-December period of FY 2016-17 from USD 20.3 billion in the same period of the previous fiscal, according to the central bank’s latest statistics. In contrast, opening of LCs, generally known as import orders, increased by 9.3% or USD 1.96 billion to USD 23.0 billion in the first six months of FY’17 from USD 21.06 billion a year ago. Import of capital machinery or industrial equipment used for production rose by 60.0% to USD 2.87 billion in the H1 of this fiscal year against USD 1.7 billion of the same period of FY 16. The capital machinery imports for the apparel, pharmaceuticals, and food processing and shipbuilding industries increased significantly in the H1 of FY 17, according to the BB official. Meanwhile, import of industrial raw materials grew by 4.92% to USD 8.0 billion during the period under review from USD 7.7 billion in the same period of the FY’16. During the period, import of machinery for miscellaneous industries witnessed a 7.11% growth to USD 2.35 billion from USD 2.2 billion in the same period of the previous fiscal. On the other hand, import of intermediate goods, like coal, hard coke, clinker and scrap vessels, increased by 9.82% to USD 1.8 billion in the first six months of this fiscal from USD 1.7 billion in the same period of the FY 16. However, import of petroleum products dropped by 19.63% to USD 1.2 billion during the July-December period of FY 17 from USD 1.4 billion in the same period of the previous fiscal.
Net foreign investment in the capital market soared more than nine times year-on-year in January, as overseas investors kept up their buying spree of Bangladeshi shares for five months. Foreign investors bought shares worth BDT 6.1 billion and sold shares worth BDT 4.3 billion to take their net investment to BDT 1.9 billion in January, according to data from the Dhaka Stock Exchange. But the sales outstripped purchases during the same period a year ago, resulting in a negative position. The investors bought shares worth BDT 3.2 billion and sold shares worth BDT 3.5 billion in January last year. Foreign investors continued to inject more funds into Bangladesh, a frontier and emerging market in the region, analysts said. Also known as portfolio investment, foreign investment accounts for only 1.0% of the premier bourse’s total market capitalization, which stood at BDT 3.7 trillion at the close of trade yesterday. Net foreign investment in 2016 was BDT 13.4 billion, up from BDT 1. 9 the previous year.
The government will provide Tk 330 million cash incentives to more than 0.2 million farmers for the cultivation of Ufshi Aus, vegetables, and sugarcane in the fiscal year (FY) 2017-18. Under the financial package, the farmers will get chemical fertiliser and ferroman trap to catch for pumpkin cultivation, exhibition materials for jute crops and assistance for irrigation. Agriculture Minister Begum Matia Chowdhury briefed the media on Wednesday at her ministry about the financial incentives for the farmers to produce more agriculture produce.
The government is set to provide Tk 31 crore in incentives to encourage farmers to grow paddy during the aus season that begins in March. Under the scheme, 2.26 lakh farmers will be given seeds and fertiliser for free, along with cash for irrigation to cultivate the high-yielding and Nerica varieties of aus rice, the dry season crop. “We are continuing the flow of incentives to ensure the advancement of agriculture,” Agriculture Minister Matia Chowdhury said at a media briefing at her ministry. The government has been providing incentives for the past eight years in the form of input support to rejuvenate cultivation of rice during aus and boost food production to meet the growing needs of the population.
The ministry of finance has proposed that diesel and kerosene prices be cut by eight per cent per litre , and petrol and octane by five per cent. On January 29, it sent the proposals to the energy division in a position a paper on the ground that the consumers in the country should get the benefits of low oil prices in the global market, officials told New Age. The finance ministry made proposal within a fortnight of the state minister for energy and mineral resources Nasrul Hamid ruling out cuts in fuel oil prices. Since April 24, when in the face of severe public criticism the government nominally reduced the prices, consumers in Bangladesh have been buying diesel and kerosene at Tk 65 for per litre, octane at Tk 89 per litre and petrol at Tk 86 per litre.
Grameenphone revenue grows 9.6%, draws 8.8 million new internet users in 2016
Grameenphone Limited said it enjoyed a ‘solid year’ in 2016 with 9.6% revenue growth and inclusion of 8.8 million new internet users. CEO Petter Furberg came up with the figures at a press conference at a city hotel on Tuesday, according to bdnews24.com. Furberg said during the year, the telecom operator also completed the biometric verification ‘successfully’ and rolled out 90% of sites with 3G capability. Grameenphone’s revenue growth in the year was BDT 114.9 billion. Its subscription base grew to 58 million at year-end with 46.1% market share, until October. The number of its subscribers grew 2.2%. It posted BDT 22.5 billion net profit after taxes. The company’s data revenue grew 69.7% with 56.1% growth in user and 167.9% in volume.
Increasing gas supplies by 28.32 million cubic metres per day from imported Liquefied Natural Gas may push up average gas price by more than five times the current price in the domestic market. The distribution utilities realise Tk 6.22 for each cubic metre of natural gas from the consumers on an average. The price would need to be increased to Tk 32.532 for the operation of the utilities at breakeven point if 28.32 mmcmd gas is imported and blended with 76.46 mmcmd indigenous gas as the National Board of Revenue is unwilling to waive taxes and duties, an energy division official told New Age on Wednesday. On Tuesday, Petrobangla, the state-run Oil, Gas and Mineral Resources Corporation, presented a summary of a report it had prepared to estimate price impact of the imported natural gas at an energy division meeting with state minister for power and energy Nasrul hamid in the chair. At a meeting held on January 16, the energy division asked Petrobangla to prepare a report on the possible cost of natural gas supplies if 28.32 mmcmd gas was blended with the supplies of indigenous gas, said officials.
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