Important Business News Extracts – February 19 2017
Bangladesh Bank (BB) to phase out magnetic strip-based bank cards
Bangladesh Bank has taken initiative to phase out the use of magnetic strip in the credit and debit cards of scheduled banks to secure clients’ card-based transactions through ATMs and POS terminals from data skimmers under its National Chip Specification programme. A BB official told New Age on Thursday that some banks had already introduced chip-based credit and debit cards after a major ATM scam in the country in February last year, but the banks also kept magnetic strip in the cards. He said the central bank would develop an app for all local banks to attach it to the chip of their credit and debit cards under the programme. The BB has already formed a working committee comprising representatives of different banks to implement the National Chip Specification programme, he said.
Current account deficit widened further in the first six months of the fiscal year on the back of the sliding remittance inflow and slow export growth. Between the months of July and December of 2016, the current account deficit stood at USD 793.0 million in contrast to USD 1,852.0 million in the surplus a year earlier, according to the central bank’s balance of payments data. The current account balance set foot into the negative territory for the first time in four years in the first quarter of fiscal 2016-17: the deficit was USD 504.0 million and every month it has been gradually increasing. The last time the current account was in the deficit — of USD 447.0 million — was way back in fiscal 2011-12. Since then there had been no deficit in the current account balance at any point in time. A major source of foreign currency for the country in the last 10 to 12 years has been remittance sent by expatriate Bangladeshis, which also keeps the external balance sheet in a strong position. In the first six months of the fiscal year, remittance dropped 17.7% percent — a development that has created a pressure on the current account balance.
Foreign aid has accumulated to a record high of nearly USD 35.0 billion in the current fiscal for the failure of government agencies to utilize it, at huge public expense. Officials concerned portrayed Friday such a backlog in aid utilisation, which has multiple adverse implications for the economy and public finances as the idle money involves debt-servicing costs. Until the last financial year (FY), 2015-16, the total unused confirmed foreign assistance in the pipeline had amounted to USD 22.0 billion.
Two life insurers default on directed claim settlement
Two life insurers missed deadlines set by the regulator concerned for settling policyholders’ claims. They did not settle the claims despite having the means, it is alleged. The Insurance Development and Regulatory Authority (IDRA) had set the time 45 days after hearing the parties. The timelines have already passed by, official sources said. The regulator made the move to hear submissions following hundreds of complaints made by insurance brokers and individual policyholders against the two companies, namely, the BAIRA Life Insurance and the Golden Life Insurance. According to the statistics submitted to the regulator, the BAIRA Life has liabilities worth nearly BDT 1.0 billion as of October 30, 2016.
The government’s spending on its annual development programme rose 39.0% year-on-year to BDT 39,9.7 billion in July-January of this fiscal year as the utilization of local resources went up. The government has set aside BDT 123,3.5 billion for implementing various development projects this fiscal year. Utilisation of the government’s own resources increased 35.2% during the period, while foreign aid spending rose 26.5%, according to the Implementation Monitoring and Evaluation Division. Besides, spending by state-owned enterprises during July-January went up 187.0% to BDT 34.7 billion against BDT 12.1 billion in the same period last year.
Countrywide mega traffic infrastructures under study
The government now moves to build overhead expressways along potential national highways and second bridges over major rivers under a mega traffic plan. Officials said the objective is to make nationwide road infrastructures ready for growing traffic beyond 2030. Building such communications networks is particularly being seen as an imperative for the fact that Bangladesh is poised to become an important regional transport corridor. The Ministry of Road Transport and Bridges (MoRTB) has already directed zonal offices under Roads and Highways Department (RHD) to recommend the possibility of developing the infrastructures in their respective areas, the sources said.
Bangladesh Telecommunication Regulatory Commission is planning to introduce the Cost Modelling System for fixing data prices to protect public interest. According to the industry insiders, such cost modelling helps subscribers avail data services at an affordable price where mobile operators face little or no competition, but in Bangladesh, the scenario is different. Here the operators are facing a breakneck competition to survive in the market, they said, adding that before introducing the cost modelling system, the regulator should know the status of Bangladesh in data pricing in terms of global context. BTRC sources said they are closely working on fixing the system in the best interest of valued subscribers. What the mobile operators are pricing now is a little bit higher, according to the regular. Meanwhile, the regulator has already singed a Memorandum of Understanding (MoU) with the International Telecommunication Union (ITU). As per the MoU, ITU will send a consultant to BTRC that will advise the regulator to provide a way for the commission to find a right way for fixing the data price.
Boosted with the success of its solution business in the retail segment in the domestic market, steel major Tata Steel is now exploring possibility of entering overseas markets like Bangladesh and Myanmar with retail branded steel solution products, reports PTI, on Saturday. “We have a great success in developing brands and distribution network in B2C markets in India. Bangladesh and Myanmar are the two B2C markets which have similar profile as India.” “We see the opportunity there in the B2C markets to build the brand and distribution network,” Tata Steel MD (India and South East Asia) T V Narendran said.
Bangladesh goes up nine rungs in economic freedom index
Bangladesh ranked 128th out of 186 economies in an annual index of economic freedom — ahead of South Asian neighbours India and Pakistan. In 2016, Bangladesh came in at No. 137 in the Index of Economic, a flagship publication of Heritage Foundation, an American conservative political think-tank, and The Wall Street Journal. The index, which is now in its 23rd year, is based on the premise that enhanced economic liberty and individual opportunity are the surest path to greater prosperity. It is intended to be a guiding principle for policymakers as they shape the laws of society. Countries are graded and ranked on 12 measures of economic freedom that evaluate the rule of law, government size, regulatory efficiency and the openness of markets. Although Bangladesh performed better than India (143) and Pakistan (141) in the 2017 index, it lagged behind Sri Lanka (112), Bhutan (107) and Nepal (125).
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