Important Business News Extracts – January 02 2017
Testing year for banks
The year 2016 witnessed an intense competition among banks in terms of rates, but it was a boon for the clients as they got improved services and better facilities at costs lower than before. Increasing off-shore borrowing by reputed local business houses has reduced banks’ scope to lend more, while rising nonperforming loans are eating up profits in the name of provision. Banks with surplus liquidity also offered additional benefits in the just-concluded year to retain good customers who have a record of regular loan payments. Amid this situation, bankers predicted that their profits would erode in 2016 compared to the previous years. Accordingly, the government will also get less revenue from the banking sector.
Remittance slumps to USD 13.6 billion in 2016, hits 5-year low
The country’s inward remittance dropped to a six-year low to USD 13.6 billion in the just-concluded year as many expatriate Bangladeshis preferred illegal channels to banks while sending money to their relatives, Bangladesh Bank officials said. The inward remittance decreased by 11.13% to USD 13.6 billion in 2016 compared with that of USD 15.3 billion in 2015, according to BB data released on Sunday. The remittance inflow stood at USD 14.9 billion in 2014, USD 13.8 billion in 2013, USD 14.2 billion in 2012 and USD 12.2 billion in 2011. The exchange rate between the US dollar and the taka now stands at BDT 78-79 in the banking sector, but the ‘curb market’ traders offer BDT 82.0 to BDT 84.0 against USD 1.0 to clients. The NRBs in the Gulf countries are now sending their hard-earned money through the hundi channel, but the local agents of the hundi system disburse the money to the relatives of the expatriate Bangladeshis through mobile banking, the paper said. The monthly inward remittance also dropped by 26.96% to USD 958.7 million in December, 2016 compared with that of USD 1.3 billion in the same month in 2015. The inflow dropped for the six consecutive months till December.
Migrants in Malaysia: Employers start paying foreign workers’ tax
Around six lakh Bangladeshi migrants in Malaysia would be benefited as the Southeast Asian country’s government has asked employers to pay the levy of foreign workers. Malaysian Deputy Prime Minister Ahmad Zahid Hamidi on Friday said the employers would no longer be able to deduct the wages of their foreign workers for the levy or tax on their monthly income. “Malaysian employers will be responsible for paying the levy of foreign workers beginning Sunday [yesterday],” reported The Star of Malaysia, quoting the minister. The foreign workers employed in construction, manufacturing and service sectors were paying levy of Malaysian Ringgit 1,850 or equivalent to Tk 32,713, while workers in plantation and other sectors were paying MR 600 or equivalent Tk 10,610 annually since 2013.
The government has drafted a law to make the Wage Earners’ Welfare Board a statutory organisation to extend welfare services to migrant workers and their family members, said senior officials.The draft Wage Earners’ Welfare Board law-2016 has been submitted to the expatriates welfare and overseas employment ministry for taking necessary action to present it before the cabinet as soon as possible, they said. With the enactment of the law, the Wage Earners Welfare Fund which was operated by government notification issued in 2002 would be defunct and it would be replaced by the Wage Earners’ Welfare Board. The board would be governed by the board of directors to be appointed by the government with EWOE ministry secretary in the chair, board director general as member secretary and other directors from different ministries and stakeholders concerned.
Finance Minister AMA Muhith has said the government plans to strengthen Grameen Bank further so that the Nobel Prize winning microcredit lender becomes more relevant in changing times. “I think we should revive it in a new style,” he told reporters at his secretariat office yesterday. Muhith said when Grameen Bank was founded in 1983, it had two aims: to provide loans to the poorest and to make the habit of regular repayments.
Corporate tax payments by most large companies went up significantly in the first four months of the current fiscal, with four private commercial banks and three mobile companies topping the list. Official sources said the seven companies paid the highest amount of corporate income tax in the July-October period of the fiscal year (FY) 2016-17 among top 50 taxpayers under the Large Taxpayers Unit (LTU) of the National Board of Revenue (NBR). HSBC, UCB, Standard Chartered and Citi Bank NA are the four banks among the top ten large taxpayers while Grameenphone, Robi Axiata Limited and Banglalink are the three mobile-phone operators. The others among the top-ten corporate taxpayers are Titas Gas Transmission and Distribution (T&D) Limited, US-based Chevron Oil and Gas company and American Life Insurance Company. GP paid the highest amount of corporate income tax worth BDT 2.20 billion in the July-October period of FY 2016-17. However, the company paid BDT 661.0 million in FY 2015-16. Banglalink also paid higher amount worth BDT 264.0 million against BDT 247.0 million in the same period in 2015-16. Tax payment by Citi Bank NA came down significantly. The bank paid BDT 20.0 million during July-Oct period this year against BDT 447.0 million in the corresponding period of last year.
GLOBALLY, 2016 has been an unprecedented year. Brexit, Trump, rise of populism, refugee crisis and terrorism will continue to define the political and economic scenario of the world in 2017. Inside the country, a number of positive as well as challenging developments will shape the dynamics of Bangladesh’s journey in 2017. As most big economies are still struggling to recover from slow growth, Bangladesh’s major economic boost will have to come from within the country. Stability in Bangladesh, both economically and politically was strong in 2016. This has helped in achieving higher growth of gross domestic product that crossed 7 percent in fiscal year 2016. Industry played the main role in higher GDP followed by the services sector. Low petroleum prices in the global market helped inflation rates to stay low since Bangladesh spends a significant amount on petroleum products. Export earnings increased at a higher rate than imports and export-GDP ratio increased in FY2016 while import-GDP ratio declined. Higher export of readymade garments contributed to this growth.
The year 2017 looks set to be a milestone year for the telecom sector with the planned launch of the country’s first communication satellite and the rollout of fourth generation mobile services. The immediate past year was no less eventful. The year saw the landmark merger of Robi and Airtel, completion of biometric re-registration of SIMs and the legal tussles with Citycell, the country’s oldest operator. The six operators re-registered a total of 108.5 million SIMs until the deadline of May 31, and at the stroke of midnight blocked about 25 million unverified SIMs. The long-drawn-out merger of Robi and Airtel was completed in November to create the country’s second biggest mobile operator. The merger fee was BDT 1.0 billion and the spectrum charge came to about BDT 3.5 billion. The telecom regulator shut down the country’s oldest mobile phone operator, Citycell, on October 21 last year for failure to clear dues of BDT 4.8 billion. After partial payment and an order from the Supreme Court the company was allowed to operate again but found no customers. The year also saw market leader Grameenphone be slapped with a fine of BDT 300.0 million for providing unauthorized services. Bangladesh also started exporting bandwidth to India in 2016. The country met with a setback in the form of global ICT Development Index, where it slipped down two notches to 14 out of 175 countries. The government also took the initiative to digitize other sectors of the economy and allocated more than BDT 83.0 billion in fiscal 2016-17 for the purpose.
Living costs in city rise 6.5%: Consumers Association of Bangladesh (CAB)
The cost of living in Bangladesh rose 6.47% in 2016 from the previous year due to hikes in house rents and some essential food items including rice, pulses and sugar, a consumer rights campaigner said yesterday. The Consumers Association of Bangladesh or CAB also found that the prices of food and services rose 5.8% in the just concluded year. The CAB prepared the report taking into account the costs of 114 food items, 22 essential commodities and 14 utility services. The increase in the living cost however did not take into consideration the real expenditure for education, health and transport. The increase in 2016 is 0.09 percentage points higher than in 2015, when the cost of living rose 6.4%. The prices of all varieties of rice increased 2.87% on average, while the prices of all kinds of pulses soared 10.0% on average. The prices of imported garlic soared 72.06% — the most in 2016. The prices of locally produced garlic, an essential cooking ingredient, rose 47.0%.
The government has given Hazaribagh tanners three more months to relocate their factories to Savar Tannery Industrial Estate, as the tanners again missed the deadline — December 31– for doing so. In a statement yesterday, the industries ministry said no raw hides would be allowed to enter Hazaribagh after January 31. The decisions came as neither the government nor the tanners have finished their respective construction work at the tannery estate. Earlier, the ministry had set several deadlines for shifting the factories to Savar from Hazaribagh but the tanners missed all of those.
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