Further depreciation of BDT likely if trade deficit widens
The ministry of finance (MoF) foresees the necessity of depreciating taka further if Bangladesh’s external financial imbalance intensifies in the second half of this fiscal year, officials said. Taka depreciated by 5.0 per cent against greenback in 2017. The worries crop up as the ministry of finance (MoF) marks several macroeconomic risk factors for the current fiscal year (FY). Unsatisfactory revenue collection, slower budget implementation, external imbalances, growing non-performing loans, and high inflation are on the flip side of the economy, they added. “Resumption of export demand and a rebound of remittance inflows are expected to moderate the current-account deficit. However, if the current trend continues, external imbalance is likely to be intense, and may lead to local-currency depreciation,” the MoF says in preparing an answer to a questionnaire forwarded by the International Monetary Fund (IMF). In the meantime, the BDT has been depreciating against the US dollar during the last couple of months. The inter-bank rate of the dollar was Tk 82.96 Tuesday while for import payment it was quoted Tk 83.50.
Ease visa, LC rules
Local exporters yesterday urged Austria to ease rules for visa processing and accept Bangladeshi banks’ letters of credit in order to expand bilateral trade. They said the move would also enable Bangladeshi businessmen to frequently travel to the European country. Currently, Bangladeshis have to obtain visa from Delhi in absence of an Austrian embassy in Dhaka. “I want your (Austrian) resident mission in Dhaka as bilateral trade is growing,” said Mahbubur Rahman, president of the International Chamber of Commerce Bangladesh. He also said many Bangladeshi businessmen can’t do business with Vienna as Austrian banks don’t want to confirm Bangladesh’s LCs. So, Austria needs to relax the LC processes as bilateral trade is expanding every year, he told the “Bangladesh–Austria Economic and Trade Forum” at the Metropolitan Chamber of Commerce and Industry (MCCI) in Dhaka. With a mission of easing the LC rules, he will lead a delegation from the local banking sector to Vienna to participate in a global conference on LC and bank guarantee coming June, said Rahman. The Business Initiative Leading Development, a public-private policy dialogue platform, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the MCCI jointly organised the forum on the occasion of a visit of a 25-member Austrian business delegation. The balance of bilateral trade is in Austria’s favour.
Delays and bribes are taking a toll at Benapole
There’s a conceptually absurd argument being made about Bangladesh’s largest land port, Benapole. Trucks are having to wait long periods of time, pay vast fees and even bribes, all of which is reducing the number of them crossing the border and bringing in imports. But then this is the very point of much of the law we have about imports: To impose fees so as to reduce the number of them. Thus, either we complain about what is happening at Benapole and so logically argue that we should reduce barriers to imports, or we applaud what is happening at Benapole as being a valid outcome of our planned policy concerning imports. But no one has been using either of those arguments; instead, we have got a mixed message here: “It’s terrible what’s happening at the land port but we must continue with our policy of making exactly the same thing happen everywhere.”
BSEC finds ‘flaws’ in Chinese consortium bid, may reject it
The Bangladesh Securities and Exchange Commission is likely to reject the Dhaka Stock Exchange’s proposal to make a Chinese consortium as its strategic partner by selling 25 per cent stake as the BSEC found the consortium’s proposal ‘violates’ relevant rules and regulations, said BSEC officials. The stock market regulator, which has been against the selection of the Chinese consortium of Shenzen Stock Exchange and Shanghai Stock Exchange, from the very beginning, on Tuesday sent a number of queries to the DSE about the consortium’s proposal and asked it to submit reply along with tender documents by March 4. A BSEC committee, after evaluating the consortium’s proposal, in a letter to the DSE highlighted that a number of clauses of the proposal was in direct deviations of the country’s relevant laws. According to the BSEC evaluation, the Chinese consortium’s proposal to execute the agreement under the UK law and settlement of any dispute under international arbitration law was in violation with the relevant laws in Bangladesh. Besides, the consortium’s proposal to include a number of other issues including seeking of approval of the consortium to take any other strategic investor by the DSE also violates Bangladesh law, said the BSEC letter. ‘The Chinese consortium’s proposal contains a number of serious issues. We think the DSE will not be able to clarify the clauses and ultimately the Chinese consortium’s proposal will be rejected,’ said an official of the BSEC. He said if the Chinese bid was rejected, the DSE would have to go for fresh bidding. DSE managing director Majedur Rahman confirmed that the DSE had received a letter from the BSEC in which the regulator asked the bourse to explain some queries about share purchasing agreement of the Chinese consortium by March 4.
BSEC seeks clarification from Dhaka Stock Exchange (DSE) on some issues
The securities regulator sought clarification from the Dhaka Stock Exchange (DSE) Tuesday on some clauses of the Chinese consortium’s proposal, submitted to the premier bourse to be its strategic partner. The DSE will have to give reply to the Bangladesh Securities and Exchange Commission’s (BSEC) letter by March 4. The sources concerned said the BSEC committee has sought ‘neutral’ assessment on the USUSD 37-million technical offer, placed by the Chinese consortium in its bid. They also said the Chinese consortium also wanted to execute the sales of the DSE shares as per the UK rules. Besides, the DSE will require approval of the Chinese consortium in case of inclusion of a new director and taking decision on more than 15 %shares of DSE. The DSE MD further said permission is always required from the shareholders in case of taking decision regarding inclusion of a new director or any significant volume of shares. He also said there is scope in the DSE articles of association to take technology services for free from any party.
Unhealthy competition, public distrust grip insurance sector
The existence of too many insurance companies in the country causes unhealthy competition and spreads distrust among the people about the sector, speakers have observed. They came up with the observation while addressing a discussion on ‘state of the country’s insurance industry: underlying problems and prospects’ held at Bangladesh Insurance Association auditorium in Dhaka on Tuesday. Insurance Development and Regulatory Authority chairman Md Shafiqur Rahman Patwari, Bank and Financial Institutions Division additional secretary Manik Chandra Dey, Bangladesh Insurance Association president Sheikh Kabir Hossain and its vice-president AKM Monirul Hoque, among others, spoke at the discussion.
IDRA to crack down on excessive commissioning
The Insurance Development and Regulatory Authority is set to crack down on excessive commissioning by insurance companies to get business as it creates an unhealthy competition in the industry. As per rules, general insurance companies are allowed to spend 15 percent of their premium income to hook business but many are offering as much as 60 percent, said Nasir A Choudhury, advisor of Green Delta Insurance. The excessive commissioning is acting as a deterrent for the sector’s development. “We will soon serve a notice to the insurance companies as the last reminder,” said Gokul Chand Das, member of IDRA. After that if the companies do not comply with the commission rule regulatory action will be taken against them, he said. The comments came at a roundtable organised yesterday by the Bangladesh Insurance Association in collaboration with the news portal insurancenewsbd.com. General insurance companies are supposed to provide risk coverage to the parties but higher commission against the policies put them at risk, Das said. “IDRA will find a way by 2018 to stop the unhealthy commissioning business,” he added. The commission system is deteriorating day by day, eroding the growth of the sector, Choudhury said. Subsequently, he called for a temporary ban on the commissioning system to ease off corruption in the sector. The higher commissioning expense is also crippling the general insurance companies, making them unable to pay even the customers’ claims, said Nizam Uddin Ahmed, founder chairman of Karnaphuli Insurance. “The insurance sector is suffering for lack of efficient manpower,” he said, while urging the IDRA to approve only professionals as managing director of the companies.
FBCCI rejects latest VAT rule amendment
The apex chamber rejected government-proposed amendments to the existing VAT rules to resolve a standoff as it terms the draft a copycat of the ditched VAT and SD Act 2012. The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), in a recent letter to the National Board of Revenue (NBR), rather recommended formulation of the rules in line with the existing VAT law. It also criticised NBR’s delayed move to seek opinion of the FBCCI on the matter, after obtaining approval from the finance minister on the amended VAT rules 1991. “As we said earlier, there is a lack of confidence between NBR and FBCCI,” wrote FBCCI president Md Shafiul Islam Mohiuddin on a note of dissent. The FBCCI sent the letter recently after scrutinising the draft VAT rules as per request of the revenue board. The NBR had earlier sought FBCCI opinion about amendment of the draft VAT rules in a bid to incorporate the provision of digitisation of the taxing system. “We want an impact study on the new VAT rules. The rules should be framed in a business-friendly manner,” the FBCCI president, now in Vietnam, told the FE in Viber communication Tuesday. VAT measures should be customised as per country’s context; it is not universal like customs measures, he argued. “Positive side of the new law can be adopted while negative aspects scrapped,” he said about the much-debated updating of law on value-added tax. Talking to the FE, NBR member (VAT policy) Md Rezaul Hassan acknowledged having received the FBCCI letter. “We are examining the FBCCI’s proposal,” he said, declining to make further statements in this connection.
Graft major challenge for cos to do business in Bangladesh
Terming Bangladesh a potential market for American companies, US Ambassador to Bangladesh Marcia Bernicat said Tuesday corruption still remained a major challenge for companies to do business here. She stressed the need for effective measures to improve the business climate and said the improvement will not only help attract increased volume of FDI (foreign direct investment) but enable domestic companies to make business in a more efficient way. The US envoy mentioned that the government of Bangladesh has taken concrete actions towards making ease of business indicator more favourable by improving level-playing field. “But progress has not yet been seen,” she told a press briefing on the 25th edition of US Trade Show 2018. The three-day show begins in Dhaka tomorrow with more than 150 US companies to be represented by 43 exhibitors from home and abroad.
Energy balance, generation report: PDB oblivious to Power Division directive
Power Development Board (PDB) appears to be oblivious to a directive issued by Power Division to prepare a report on energy balance and generation schedule ahead of the summer. As part of their measures to meet the electricity demand during the summer, the Power Division authorities at a meeting on December 13 last year asked the PDB to prepare a report within seven workdays on the production capacity and demand during summer months.
Power import from India to double by June: Shringla
Bangladesh’s electricity import from India will double to 1,200 MW by June this year, said Indian High Commissioner Harsh Vardhan Shringla yesterday. The policymakers have already discussed the issues related to the import, Shringla said. Bangladesh already imports 660MW of electricity from India. Shringla’s comments came in a seminar styled “Bangladesh-Indian business opportunities”, jointly organised by the International Business Forum of Bangladesh (IBFB) and the Indian Importers Chambers of Commerce and Industry (IICCI) at the capital’s Westin hotel. India is working to remove all the barriers to ensure duty-free access for Bangladeshi products, he said. The work is also going on in full swing to open branches of the Indian high commission in Sylhet and Khulna. Both the countries need to use each other’s infrastructures and strengths for the sake of mutual benefits, he said.
Tk 1,683cr project to transform rail connectivity with India
The government is set to transform about 67 kilometres of meter gauge rail line into dual gauge for Tk 1,683 crore to provide railway transit to India, Nepal and Bhutan and increase trade among the countries. The project, for which India would finance 81 percent of the cost, got the green light yesterday at the meeting of the Executive Committee of the National Economic Council. Bangladesh and India have been laying emphasis on inter-country rail communication, according to the proposal from the planning ministry. The Indian part has broad gauge rail line, while Bangladesh’s is meter gauge, Planning Minister AHM Mustafa Kamal told reporters after the meeting. If Bangladesh’s rails are transformed into broad gauge trains can run between the two countries, he added. By transforming the rail link from Parbatipur to Kaunia in Rangpur to broad gauge, Bangladesh can establish railway transit with India, Nepal and Bhutan through the Rohanpur-Singabad railway link and Radhikapur-Birol railway link. The project will be financed from the Indian Line of Credit (LOC) so that alongside trade and commerce between the two countries, it will also facilitate India’s wish for getting transit through Bangladesh for transhipment of goods, said a finance ministry official.
Petrobangla to pass on high cost of LNG to consumers
State-run Petrobangla would propose to raise natural gas tariff next week, aimed at passing a portion of the imported LNG cost on to the consumers. “We’re working on it with a target of submitting the proposal to the energy regulator by the first week of March,” Petrobangla chairman Abul Mansur Md Faizullah told the FE Tuesday. The import of LNG (liquefied natural gas) is expected to be expensive and substantially increase the cost of natural gas supply in the country. The price hike would be required to meet the increased cost of gas after LNG imports, said the chairman. Petrobangla has already sent the proposal separately to its large consumers like Bangladesh Power Development Board (BPDB) and Bangladesh Chemical Industries Corporation (BCIC). When contacted, BPDB chairman Khaled Mahmood acknowledged getting the proposal. “We shall soon discuss the issue of increased costs,” he said.
LPG price policy underway
State Minister for Power, Energy and Mineral Resources Nasrul Hamid yesterday said the government is working to formulate a LPG (liquid petroleum gas) pricing policy keeping the interests of both importers and users, reports BSS. “Presently one state run organisation and 14 private firms have been bottling and marketing the LPG and more six firms would join production from next year after completing their works,” he said this, while replying to a starred question from treasury bench member M Abdul Latif of Chittagong-11 in the Jatiya Sangsad. Nasrul informed the House that a total of 15 firms including one public firm have been supplying LPG across the country following the present government’s LPG policy, adding, “Meanwhile, the LPG distribution management has been improved.”
How much are we actually earning through software exports?
According to the government, Bangladesh has exported software worth $800 million (Tk80 crore) last year. The objective was set to export software amounting to a billion dollars by next December. However, questions have risen regarding the viability of this objective, as information on the amount of income derived through software export is mostly derived through guesswork. The method of blending institutional information and guesswork has given rise to questions for years. But this time around, Bangladesh Association of Software and Information Services (BASIS) will officially conduct a research on export income that comes from software and service products. Through this, the actual amount that is being earned through software export will be found. The government has targeted to export software and service products worth $1 billion and $5 billion by 2018 and 2021, respectively. Affiliated sources, however, have said that the $800 million export income that the government has shown has a huge difference with the information provided by Export Promotion Bureau (EPB). As a result, there have been doubts over the actual export income.
HC stays NBR move for freezing Robi’s bank accounts
Robi Axiata Limited received a stay order from the higher court Tuesday on release of its frozen bank accounts after settling outstanding administrative and procedural matters with the National Board of Revenue (NBR), said a statement of the company. The High Court (HC) has ordered unfreezing all of the bank accounts of the telecom company. The Large Taxpayers Unit (LTU) under the VAT wing of the NBR on Monday instructed all commercial banks to freeze bank accounts of Robi, claiming Tk 187 million in outstanding VAT and Supplementary Duty (SD). “The dispute arisen as a result of a claim by the LTU, which was under discussion with the relevant authorities, has now been resolved,” Robi said in its statement.
Amid 4G drive, telcos add 39 lakh users in 2 months
The number of active mobile phone subscribers has increased by 39 lakh in last two months (December-January) amid mobile operators’ fresh drives to get new subscribers ahead of their 4G service launch. Three private sector mobile operators — Grameenphone, Robi and Banglalink — have started rolling out the fourth generation mobile services after receiving 4G licences from Bangladesh Telecommunication Regulatory Commission on February 19. State-run mobile operator Teletalk has received the licence, but is yet to launch the services. In December, 2017, the number of mobile phone subscribers rose by 18.87 lakh and in January, 2018 by 20.08 lakh, taking the number of active mobile phone subscribers to 14.7 crore at the end of January this year.
Freelancers look to PayPal boost to tap full potential
The growing number of freelancers across the country reiterated their call for introducing full-fledged online payment service of PayPal in Bangladesh. They, however, admitted to have witnessed some positive impacts of the Paypal’s Xoom service launched in the country last year although a section of freelancers voiced concern as this service does not allow sending out money. Echoing the view, industry insiders and experts say the full-fledged operation of PayPal will give a further boost to the country’s fast-growing e-commerce business and freelancing. It will also help bring in huge foreign remittance and do value addition to the national economy, thereby contributing to the national exchequer, they said.
Butterfly to go public
Butterfly Manufacturing Company has moved to go public under book building method in a bid to expand its business. As part of going public the company has already signed an agreement with its issue manager LankaBangla Investments Limited.
Project to cause resource wastage: experts
Prime minister Sheikh Hasina in the past week approved a project to be implemented without bidding at an estimated cost of Tk 1,100 crore to transmit at least 250 million cubic feet natural gas per day from Bhola to Barisal. Experts said that the project taken without any comprehensive study might cause wastage of resources.
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