Liquidity Crisis: From banks to many fronts
Bangladesh economy showed resilience even during the global financial crisis that began in 2008. The economy grew by 6.3 percent on average for more than a decade. The growth rate was over 7 percent in the last two fiscal years. Bangladesh’s gross national income (GNI) per capita now stands at $1,610, well above the $1,242-mark, a prerequisite for becoming a lower-middle income country from a least developed one. But suddenly, this smoothly-run economy was hit by a serious liquidity crisis a couple of months back. As a result, banks’ lending rates have hit double digits again after more than a year, making things harder for businesses and consumers alike. Last week, a first generation private bank failed to honour a cheque of Tk 15 crore. In many cases, private banks were unable to lend money to its clients. This has resulted in spillover effects on non-bank financial institutions (NBFIs) and capital markets. Most of the 33 NBFIs, which rely mostly on banks for funds, are in a liquidity crisis they never faced before. Capital markets have been in free fall since Bangladesh Bank came up with a new monetary policy on January 29. The benchmark index of Dhaka Stock Exchange fell 2.21 percent on Sunday — the highest in more than four years. All these have started taking a toll on investors and consumers as banks have already increased their lending rates significantly.
No official seal for forming company
A new companies’ law currently in the making may eliminate the obligation to obtain official seal as a precondition for forming a company, aiming to create many start-ups. Officials said the latest Companies Act, which is in the final stage of formulation, provides for liberalising the company-licensing process to help spontaneous growth of corner-side entrepreneurs. The final draft of the law, which is currently being reviewed with recommendations coming from parties concerned, is likely to be forwarded to the cabinet by next month. “The new Act is likely to eliminate the requirement of obtaining an official company seal,” Commerce Ministry Additional Secretary Obaidul Azam told the FE this week, adding: “The move is aimed at making the process of forming a company easier.” The move will mean amendment to several sections of the existing Companies Act including section 2 (m), 24 (2), 46 (1), 31, 78 (b), 79 (2-a), 85 (2-a), 128, 129 (1,2,4,5), 208, 225, 262 (d), 347 (4) and 363. The draft Companies Act, which is likely to be passed by parliament within this fiscal, has already incorporated several recommendations for easing the process of forming a company and for protecting the interests of the minority investors, officials informed.
Bangladesh improves in economic freedom index
Bangladesh’s economic freedom score is 55.1, making its economy the 128th freest in the Economic Freedom Index-2018 released by the Heritage Foundation, reports BSS. Bangladesh is ranked 29th among 43 countries in the Asia-Pacific region, and its rank is ahead of India (30th), Pakistan (31st), Nepal (32nd) and Vietnam (35th). Its overall score of Bangladesh has increased by 0.1 point, with improvements in the scores for judicial effectiveness and government integrity outpacing declines in property rights, trade freedom, and labour freedom, said the US-based conservative Heritage Foundation. The report said Bangladesh’s economy has grown by approximately six percent annually for two decades despite prolonged political instability, poor infrastructure, endemic corruption, insufficient power supplies, and slow implementation of economic reforms. The fragile rule of law continues to undermine economic development, it said. Corruption and marginal enforcement of property rights force workers and small businesses into the informal economy, it said, adding that despite some streamlining of business regulations, entrepreneurial activity is also hampered by an uncertain regulatory environment and the absence of effective institutional support for private-sector development. The index uses four broad categories for measurement: rule of law, government size, regulatory efficiency and open markets.
Swiss President bullish on B’desh middle-income status as targeted
Visiting Swiss President Alain Berset on Monday expressed his hope Bangladesh would become a middle-income country within the stipulated timeframe. The Swiss President expressed such optimism while addressing the Bangladesh-Switzerland Business Forum at a hotel in Dhaka, reports BSS. Jointly organised by the Bangladesh Investment Development Authority (BIDA) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the Forum was also addressed by Planning Minister AHM Mustafa Kamal and Foreign Minister AH Mahmood Ali as the special guests. Chief Coordinator on SDG affairs at the Prime Minister’s Office Md Abul Kalam Azad, BIDA Executive Chairman Kazi M Aminul Islam, and leaders of Bangladesh-Switzerland business forum attended the meeting.
Bill passed to offer one-stop service to businesses
Parliament yesterday passed “One Stop Service Bill, 2018” aiming to ensure business-friendly regulations and increase investment. Agriculture Minister Matia Chowdhury placed the bill before it was passed by voice vote with Deputy Speaker M Fazley Rabbi Miah in the chair. Placing the bill, Matia said it was very urgent to ensure delivery of the “one stop service” and make its management effective. The proposed bill says a “one stop service ensuring committee” would be formed headed by a cabinet minister.
NBR awards top 10 VAT payers at DITF
The National Board of Revenue yesterday honoured 10 firms for depositing large amounts of value-added tax from sales at the Dhaka International Trade Fair that wrapped up early this week. Finance Minister AMA Muhith handed over the awards to the representatives of the companies at an event held at the NBR headquarters. Walton Hi-Tech Industries, Rangs Electronics, Hatil Complex, CP Bangladesh, RFL Plastics, Butterfly Marketing, Durable Plastic, Akter Mattress Industries, Rangpur Metal Industries and Agricultural Marketing Company received crests and certificates for paying the highest amount of VAT out of the 588 participants in DITF this year. Of the winners, four — RFL Plastics, Durable Plastic, Rangpur Metal and AMCL — are concerns of PRAN-RFL Group.
Govt moves to build another trade centre
Despite slow progress in the construction of Bangladesh-China Friendship Exhibition Centre at Purbachal, the government has moved to build another multipurpose trade exhibition centre in the city, officials said. According to a proposal made by Export Promotion Bureau (EPB), a small or medium-sized centre is likely to be set up in the city to arrange different types of trade fairs all the year round, they added. The EPB has sent the proposal to the Ministry of Commerce (MoC), seeking its approval. The ministry is now scrutinising the proposal, said a high official who is dealing with the issue. The proposed centre will meet the demand for interim time if built finally.
Government to build 163 MW plant for Mirsarai Economic Zone
The government will build a 163 megawatt (MW) dedicated power plant for Mirsarai Economic Zone (MEZ) to supply electricity to the industrial units to be set up there. BR Powergen Ltd, a joint venture (JV) of the two state-owned power companies – Bangladesh Power Development Board (BPDB) and Rural Power Company Ltd (RPCL), will build the power plant at MEZ.The newly-formed JV firm inked an engineering, procuring and construction agreement (EPC) with Chinese firm Sinohydro Corporation Ltd at Biduyt Bhaban in the city on Monday to implement the power plant project. Sinohydro will install the power plant as the EPC contractor within the next 15 months at a contract value of USD 105 million (BDT 8.90 billion).
Mirsarai economic zone to generate 150,000 new jobs
Mirsarai Economic Zone (MEZ) is being developed as the largest industrial zone in the country with a target to generate 150,000 new employments, reports UNB. Dr M Emdadul Haque, executive member (Planning and Development) of the Bangladesh Economic Zones Authority (BEZA), said while addressing a contract signing ceremony at Biduyt Bhaban in the city yesterday. B-R Powergen Ltd, a joint venture of the two state-owned entities-PDB and RPCL-signed a contract with Chinese firm Sinohydro Corporation Ltd to set up a 163 MW dedicated power plant for the Mirsarai Economic Zone. The Sinohydro will install the power plant as contractor within next 15 months at contract value of $105 million (Tk 890 crore). Emdad informed that already 29 foreign and local firms have been allocated plots for industries in the MEZ. The function was also addressed by Power Secretary Dr Ahmad Kaikaus, PDB chairman Khaled Mahood, RPCL managing director Abdus Sabur and REB chairman Moin Uddin.
Used hybrid cars getting popular
Sales of used hybrid cars are surging for better fuel economy and significantly lower prices than the brand new ones, according to the Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida). In the face of rising demand from reconditioned car importers, the government from this fiscal year has allowed the import of second-hand hybrid cars as well as slashed the supplementary duty. The SD on hybrid cars of up to 1,600cc has been slashed by 5 percentage points to 25 percent for fiscal 2017-18. For hybrid cars of more than 1,600cc but less than 2,000cc, the duty has been reduced by 15 percentage points to 45 percent. For hybrid cars exceeding 2,000cc but less than 3,000cc, the SD has been fixed at 60 percent, down from 150 percent in the previous fiscal year. The government has also cut the SD on hybrid cars with higher engine capacity, according to the National Board of Revenue. Though the cut in SD has caused the prices of hybrid cars to decline, the price gap between new and old cars still remains high.
Spectrum auction to be less competitive
The much awaited spectrum auction scheduled for February 13 has apparently lost competitiveness as only two mobile operators met yesterday’s deadline for paying the earnest money required to participate in it. Banglalink paid BDT 3.0 billion to bid for two bands while Grameenphone paid BDT 1.50 billion yesterday for only one band, confirmed a top official of Bangladesh Telecommunication Regulatory Commission (BTRC). Instead, mobile operator Robi has requested the commission to extend the deadline, said a top official of the telecom regulator. Earnest money is a deposit made to a seller showing the buyer’s good faith in a transaction. State-owned Teletalk did not even apply to attend the auction as it believes to have enough spectrum (25 Megahertz in the 900, 1800 and 2100 bands) to offer 4G service. Meanwhile Citycell, out of service since October 2016, has missed another scope to return to operations. There was a glimmer of a comeback when BTRC announced that Citycell was eligible for 4G licence and spectrum auction.
New CEO of Summit Meghnaghat
Summit has appointed Md Reaz Uddin as the CEO of Summit Meghnaghat II Power Co Ltd, which is expected to be one of the largest combined cycle power plants in Bangladesh. In addition he continuous to be the COO and Director of Summit Meghnaghat Power Co Ltd and Summit Bibiyana II Power Co Ltd. With installed capacity of 590 MW, the Summit Meghnaghat II is expected to begin commercial operation during the first quarter of 2021. Md Reaz Uddin has been with Summit since 2011 and has played a vital role in the implementation of Summit’s existing combined cycle power plants running on cutting edge turbine technology. Md Reaz Uddin has about 25 years of experience in excelling in execution of power generation projects.
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