Important Business News Extracts – February 22 2017
Proposal on postal bank awaits PM’s nod
The Posts and Telecommunications Division has sought approval from the prime minister to open a postal bank in order to take basic banking services to the remote areas of the country. If the government goes ahead with the proposal already sent to the premier, the postal department will become the country’s largest bank with 9,866 offices across Bangladesh. The postal department has set out a plan to restructure its service and targeted banking and e-commerce to generate revenues.
Slump in interest rate on deposits worries Bangladesh Bank
The interest rate on banks’ deposit fell drastically, much to the central bank’s concern. Now, the rate of interest on savings deposit ranges from zero to 4 percent; most of the banks are giving 2 to 3 percent interest, according to central bank statistics. If the advance income tax, excise duty and banks’ service charge are taken into account, the depositors’ profitability falls further. And if inflation adjustment is made, depositors do not get any profit; rather, it becomes negative.
BDT’s depreciation on the horizon, Standard Chartered says
Standard Chartered Bank has predicted a modest depreciation of the domestic taka against the US dollar this year and the next, as it remains overvalued in comparison to peers. Most of the Asian currencies have depreciated against the dollar in recent years, but taka remains exceptionally strong, which is not sustainable, he said. Subsequently, the British bank predicted that a dollar will trade at BDT 80.0 this year and BDT 83.0 in 2018. Yesterday, a dollar traded at BDT 79.3, according to the Bangladesh Bank.
Industries, individuals to get easy loans for switching to energy-efficient technology
The government is adopting a new financial scheme to help individuals as well as industries switch to energy efficient technologies. The government has named it ‘concessionary financing’ under which individuals may take loans at a minimum interest rate for buying energy efficient electrical appliances, such as industrial machineries and household products. The state-run Sustainable and Renewable Development Authorities said that overall energy consumptions could be reduced by about 30.0% by only changing electrical appliances in industries, commercial facilities and houses with energy efficient ones. The Japan International Cooperation Agency is providing Bangladesh USD 104.0 million soft loan for introducing the scheme. SREDA will oversee the scheme in the next two years. The Infrastructure Development Company Limited and Bangladesh-India Friendship Power Company (Pvt.) Limited will disburse the credit.
Industrial units setting up solar panels on rooftops
Entrepreneurs are making the best of the rooftops at their industrial units by installing solar panels to meet part of their energy demand and cut reliance on the national power grid. In the last three months, 30 companies showed interest in setting up solar panels on their factory rooftops, said a senior official of Infrastructure Development Company Ltd (IDCOL). Designer Fashion Ltd, a unit of Bengal Group of Industries, has already started installing a 300 kWp solar panel at its woven garment factory in Savar, said Md Raziur Rahman, who is in charge of activity coordination at the factory. Rahman said the company wants to meet 14.0% of its electricity demand through rooftop solar energy. Industrialists eye green energy at a time when the demand for electricity is growing to meet the requirements of Bangladesh’s USD 220.0 billion economy, expanding by more than 6.0% a year. The country witnessed a rise in peak electricity demand by 8-9.0% from fiscal 2009-2010 to 2014-15 due to an increase in population, urbanisation and expansion of economic activities, according to the draft Energy Security Study by the power division.
New finance company act limits family directors to two
The government moves to enact a new finance companies act for updating the existing overall regulations to ensure good governance in the sector. Officials said the Finance Companies Act 2017 will replace the Financial Institutions Act 1993 and create an important provision that won’t allow more than two directors from a family. And the maximum number of directors of NBFIs can be raised to 15 from the existing 11. Under the proposed law, the directors will be prohibited from holding simultaneously similar posts in multiple number of banks and NBFIs. As per the draft, no director can continue for more than six years in two terms. One can become director again after taking a pause for one term.
Decision to offload 15.0% Power Grid Company Bangladesh (PGCB) shares soon
The government would soon take a decision to offload 15.0% shares of Power Grid Company of Bangladesh Ltd. (PGCB) in the capital market in addition to existing 25.0%, officials said. He said the government recently formed a high-powered committee, which is expected to submit recommendations in this regard within a couple of weeks. The power division had a meeting on offloading more shares of the company on February 16. Listed on the Dhaka bourse in 2006, the share having a face value of BDT 10.0 each ranged between BDT 46.0 and BDT 69.7 each in the last 52 weeks, and closed at BDT 56.1 each on Monday. The company’s paid-up capital stood at BDT 4.6 billion and authorised capital is BDT 10 billion, while the total number of securities is 460,912,991. The government owns 76.3% stake in the company while institutional investors 18.5%, foreign investors 0.8% and the general public 4.6% as on January 31, 2017, the DSE data shows.
The High Court on Monday extended by three months an order it issued on February 9 staying fine of BDT 300 million imposed on mobile phone operator Grameenphone by Bangladesh Telecommunication Regulatory Commission. The bench of Justice Syed Refaat Ahmed and Justice Md Salim also posted for February 26 the next hearing in the writ petition filed by Grameenphone challenging the fine. It also asked the commission to submit to the Supreme Court registrar Grameenphone’s bank guarantee of BDT 300 million submitted by the mobile operator as ordered by the bench on February 9. The bank guarantee will remain in the court’s custody until the disposal of the writ petition and the winner will be entitled to encash it, said commission’s lawyer Sayed Mahsib Hossain. Grameenphone filed the petition on February 7 after the commission rejected its plea for a revision of the commission’s decision to fine the telecom operator BDT 300 million on charge of violating rules while providing broadband services.
July-January income tax BDT 37.8 billion short of target
Income tax collection by the National Board of Revenue faced a shortfall of BDT 37.8 billion against the target in the first seven months of the current fiscal year due mainly to sluggish economic activities and declining interest rates of bank deposits. According to the NBR data, 31 income tax zones of the revenue board across the country collected BDT 284.9 billion in July-November period of the FY 2016-17 against the target of BDT 322.6 billion set for the months. Income tax collection, however, grew by 18.6% or BDT 44.6 crore in the period compared with that of the same period of the last FY 16, the data showed. In July-November of the last fiscal year, income tax collection was BDT 240.3 billion.
BGMEA seeks duty waiver in US, Brazil for RMG products made from their cotton
As the US and Brazil pay no duties on the cotton they export to Bangladesh for its apparel industry, they should offer duty-free access for Bangladeshi RMG products made from their cotton to their markets, said manufacturers. Bangladeshi RMG products currently do not have duty-free access to these markets, even though the two countries enjoy duty-free access for the cotton they export to Bangladesh. Moreover, the US suspended Generalised System of Preferences (GSP) facilities for Bangladesh on June 27, 2013. In a letter sent to the US ambassador to Bangladesh on February 16, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Siddiqur Rahman asked for duty-free access to the US for Bangladeshi RMG products made from cotton imported from the US. A similar proposal was sent to the Brazilian government via the Ministry of Foreign Affairs on Sunday.
Bangladesh Submarine Cable Company Ltd has been connected with the country’s second undersea cable up to the landing station in Kuakata, said the state-run company yesterday. Md Abdus Salam Khan, acting managing director of the company, said the cable was officially launched during a management meeting of the SEA-ME-WE 5 in Istanbul yesterday. Experts said activating a submarine cable without simultaneously putting in place the onshore transmission link is like inaugurating a seaport that does not have a road or rail linkage. So it will not have a positive impact unless the back linkage is ready.
Large corporate groups have started investing in tea plantation in recent years, riding on the wave of demand from local consumers — a development that has been welcomed by seasoned producers. In the last few years, Square Group, a giant in consumer products, textile and pharmaceuticals; Ha-Meem Group, an apparel manufacturer and exporter; and Orion Group, an industrial conglomerate, entered the fray. Three other consumer and industrial giants — Akij, TK and City — followed soon after.
Bangladesh connects with 2nd submarine cable today
Bangladesh is going to be connected with a second submarine cable today that will provide another 1,500 gbps bandwidth to the country. The inauguration of the second submarine cable will be held in line with the SEA-ME-WE 5 consortium’s move to launch its global operation on the same day. The South East Asia-Middle East-Western Europe 5 (SEA-ME-WE 5), a consortium of 15 leading telecom operators from 17 countries, would announce its operation at a ceremony in the Turkish city of Istanbul.
Major Currencies Exchange Rates Movement in Last Seven Days
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.
ABOUT DHAKA BANK
Dhaka Bank has truly cherished and brought into focus the heritage and history of Dhaka and Bangladesh from Mughal outpost to modern metropolis. Most of its presentation, publications, brand initiatives, delivery channels, calendars and financial manifestations bear Bank’s commitment to this attachment.