Important Business News Extracts – January 05 2017
Bangladesh averts being blacklisted in APG report
Bangladeshi has averted being blacklisted for money laundering and terrorism financing in the final report of Asia Pacific Group on Money Laundering. They said the country’s diplomatic efforts helped it avoid the risk of being on APG blacklist. The cabinet meeting recently approved the final mutual evaluation report on anti-money laundering activities of Bangladesh. The APG postponed its 19th annual general meeting due on July 23-28 last year in Dhaka after terror attack. Bangladesh authorities feared that the terror attack might have a negative impact on the report. The Bangladesh delegation has taken assistance from Bangladesh alternative director of the World Bank, according to the report. Bangladesh was kept out of the gray list in 2014 after being placed there alongside the countries with a bad record in regulatory affairs on money laundering in 2008 by the Paris-based Financial Action Task Force. The APG is an affiliate body of the task force.
Grameen Bank’s net profit rebounded in 2016, with the microcredit pioneer logging in Tk 100 crore on the back of increased loan disbursement and recovery. A stable economic environment and the absence of any major natural disaster helped the bank raise the profits from only Tk 2.43 crore in 2015. Its net profit came down sharply in 2015 following the implementation of the national pay-scale for its 21,000 employees with retrospective effect. The lender had to spend Tk 450 crore on the additional salary expenses. The new pay-scale encouraged the employees to put in more efforts in lending and recovering loans. The bank disbursed Tk 18,754 crore last year. Its outstanding loans stood at Tk 11,824 crore in 2016 which was Tk 9,642 crore a year ago. Last year, the bank also recovered Tk 105 crore in bad loans. The bank saw lower-than-expected profits in 2014 and 2015. In 2014, it made a profit of Tk 43 crore. Bankers said the bank’s activities slowed in 2013 and 2014 because of various uncertainties that affected its profit margin.
ICB Securities, ICB Capital to waive interests of around Tk 3.59 billion
The ICB Securities Trading Company Limited and ICB Capital Management Limited have decided to waive interests of around Tk 3.59 billion counted in margin accounts having negative equity. Of these two companies, ICB Capital Management will exempt interest worth around Tk 1.9 billion, whereas ICB Securities Trading Company will waive interest of around Tk 1.69 billion counted in their clients’ margin accounts. The move comes to restore activities in the affected investors’ margin accounts which witnessed erosion after 2010-11 stock market debacle. Meanwhile, the ICB has also started the implementation of its decision earlier taken to waive interest of Tk 1.62 billion counted in their clients’ accounts having negative equity. To execute their latest decision, both of the subsidiaries of the ICB will waive interests up to 80 per cent counted during January 1, 2011 to June 30, 2016. The interest waiver facility that will be provided by ICB Securities Trading Company Limited and ICB Capital Management Limited may vary considering the type of margin accounts maintained by the companies. In some cases, the amount of waiver may be 100 per cent. A total of 556 clients of ICB Securities Trading Company Limited are entitled to get 80 per cent waiver of interests, while 34 clients will get 100 per cent waiver.
Stocks maintained the upbeat momentum for the nine consecutive sessions on Wednesday as investors continued their buying spree amid growing confidence. Market insiders said spontaneous participation backed by hopes and enthusiasm coupled with persistent upbeat market trend continued to lure investors to take position on sector specific stocks. Maintaining the previous day’s upward movement, the market started with an optimistic note, but faced some quick-profit booking sell pressure in middle of the session. However, rest of the session went up steadily, ultimately ended 18.87 points higher. DSEX, the prime index of the DSE, went up by 18.87 points or 0.37 per cent to settle at 5,156.60, which was the highest level of DSEX since October 30, 2014, when DSEX was 5,173.23. DSEX added about 232 points in the past nine consecutive sessions. The two other indices also edged higher. The DS30, comprising blue chips, advanced 3.28 points or 0.17 per cent to close at 1,855.93. The DSE Shariah Index (DSES) rose 5.23 points or 0.43 per cent to close at 1,218.47. Turnover, the most important indicator of the market, remained encouraging and the total turnover stood at Tk 12.09 billion, which was 13 per cent lower than the previous day’s Tk 13.91 billion.
Argon Denims Wednesday dominated the turnover chart of Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) as investors were active on its shares. Five most-active shares in terms of value on the premier bourse were Argon Denims, Beximco, Bangladesh Building Systems, GPH Ispat and DESCO. According to statistics available with the DSE, about 12.86 million shares of Argon Denims were traded, generating a turnover of nearly Tk 447 million on the day. It was 3.70 per cent of the premier bourse’s total turnover value. Each share of the company, which produces medium and premium range denim fabrics, traded between Tk 32.20 and 35.30, before closing at Tk 35.30 on the day, soaring 9.97 per cent over the previous day. Argon Denims was also the day’s highest gainer.
The government revenue earnings from the Dhaka bourse marked 11 per cent rise in first half (July-December) of the current fiscal year (FY) compared to the same period a year ago, as trading volume was on the rise. Analysts said the government earnings from the DSE rose as trading volume increased significantly in November and December, which helped higher tax collection, as earnings is related to trading volume. The government bagged tax worth about Tk 886 million in July-December period of the FY 2016-2017, which was Tk 800 million in the same period of the previous fiscal, according to statistics from the DSE. The government earned the amount on TREC (trading right entitlement certificate) holders’ commission and share sales by sponsor-directors and placement holders. The DSE, on behalf of the government, collects the tax as TREC holders’ commission and share sales by sponsor-directors and placement holders at the rate of 0.05 per cent and 5.0 per cent respectively and deposits the amount to the government exchequer. Of the total revenue earnings of Tk 886 million in the first six months of the current FY, Tk 672 million came from the TREC holders’ commission and Tk 214 million came from the share sales by sponsor-directors and placement holders, the DSE data shows.
Bangladesh’s exports in December fell three per cent from a year earlier to $3.1 billion, seven per cent below target, reports Reuters.For July-December, the first half of the country’s 2016-17 financial year, exports rose 4.4 per cent to $16.8 billion from a year earlier. Shipments of readymade garments, comprising knitwear and woven items, totalled $13.7 billion in July-December, up 4.4 per cent on-year. Exports in the last financial year that ended in June 2016 hit a record $34.24 billion, up 9.7 per cent from the previous year, on the back of stronger garment sales.
The current account deficit was at its highest level in the country’s history during July-November period of the current fiscal year (FY) 2016-17. The deficit is being attributed by experts to fall in remittance and lower than expected level of export receipts. Last time when the current account experienced a large deficit — $447 million — was in the fiscal year 2011-12. But, it was in the negative at $726 million during July-November period of FY ’17, official statistics showed. The current account deficit is a matter of concern for the economy as it may hit the overall balance of payments (BoP) position. The BoP, however, still remains surplus at $1.9 billion, down by $141 million from the same period of the past financial year. According to experts, if both current account and private capital account turn deficit, then the BoP runs into deficit; that is, the central bank is losing reserves. When BoP becomes negative, then the International Monetary Fund (IMF) intervenes and provides capital in aid. Exports grew by 6.15 per cent during the period while imports by 9.5 per cent. It also showed that remittance fell by nearly 16 per cent during the period under review. Economists view the trend with concern but opine that there should not be any ‘panic’ as it may rebound if proper steps are taken to mop up remittances.
Summit Group has signed an initial contract with Petrobangla to set up a liquefied natural gas terminal on Moheshkhali Island in Cox’s Bazar at a cost of about $500 million. Summit LNG Terminal Company, a unit of Summit Group, will develop the floating facilities in 18 months after signing the final contract, the company said in a statement yesterday. The floating terminal will supply 500 million cubic feet of natural gas per day. The LNG will cost the government $0.45 per 1,000 cubic feet of natural gas. Summit will transfer the facilities to Petrobangla after operating it for 15 years. Summit will implement the project jointly with US-based GE as equity investment partner, and plans to implement the LNG terminal project with its own funds. LNG will be the easiest, most cost-effective, environment-friendly and quickest solution to meet the primary fuel demand as the current supply of gas will start declining in 2018. This is the third LNG-related agreement the government has signed so far. In December, Petrobangla signed an initial agreement with India’s energy company Petronet to set up an LNG re-gasification terminal on Kutubdia Island and a pipeline at an estimated cost of $950 million. In July, the state-run corporation and US-based Excelerate Energy signed the final deals to set up Bangladesh’s first LNG terminal, which will handle imported LNG and supply it to the national grid from early 2018. The terminal will be set up at Moheshkhali in the Bay of Bengal.
The construction of the proposed 130-kilometre cross-country pipeline to carry diesel is facing yet another setback as the Indian firm has, allegedly, reneged on the agreed term of bearing the costs, said sources. India’s state-run Bharat Petroleum Corporation Ltd (BPCL) in a recent letter to the Bangladesh Petroleum Corporation (BPC) agreed to provide the pipeline construction cost from Indian credit line instead of its own coffer. It is a violation of the terms of memorandum of understanding (MoU) inked between the two companies in October last year as the BPCL had agreed to build the pipeline at its own cost to export around 1.0 million tonne of diesel to Bangladesh for 15 years. The BPCL in its letter requested the BPC to inform about the latter’s position over the changed status. The BPC has not yet responded to the BPCL letter. In the MoU, the BPCL had agreed to build the pipeline spending money from its coffer subject to import of diesel by state-run BPC from the BPCL’s Numaligarh refinery in Assam for 15 years. The BPC and the BPCL also had agreed to fix the premium rate of US$ 5.50 per barrel to Mean of Platts Arab Gulf (MoPAG) diesel assessments on cost and freight (CFR) basis meaning that the price would be above US$ 5.50 per barrel from international price of diesel. The cost of fuel transportation and the loss from evaporation are covered from the premium. Two state-run oil entities also had agreed to stall the initial plan of building a joint venture company to share the costs of building the oil-carrying pipeline. The proposed pipeline would carry around 1.0 million tonne of diesel per year to Bangladesh’s northern region, once it is constructed.
Bangladesh stands eighth in Asia among the recipients of official development assistance (ODA) from the developed OECD countries with its 4.0 per cent share in the total inflow to the continent. The country received US$2.42 billion in net assistance from the developed countries in 2014, OECD (Organisation for Economic Cooperation and Development) in its data showed Wednesday. Afghanistan has been placed on top of the list with 9.0 per cent of its ODA share among the Asian nations while Bangladesh’s next-door neighbour India stood 5th with 6.0 per cent share. The OECD bloc unveiled Wednesday the final data on foreign aid in 2015, showing that its member-nations provided a total of $131.4 billion in 2015, an increase of 6.6 per cent in real terms over 2014. Net ODA as a share of gross national income (GNI) of the OECD nations was 0.30 per cent. The Asian countries received $59.17 billion out of total $131.4 billion ODA handouts from the OECD donors. According to the grouping findings, Bangladesh received the highest 60 per cent of its total ODA in 2014 for social sector, 16 per cent for economic sector, 9.0 per cent for production sector, 8.0 per cent for the humanitarian cause, 6.0 per cent for multi-sector, and 1.0 per cent in general programme aid.
Land tariffs for economic zones to be finalised today
The tariff plan prepared by Bangladesh Economic Zones Authority for leasing and renting lands in 16 economic zones will be finalised today. Under the plan, if approved at a meeting of Beza’s governing body, the tariff for per square metre land will range between $0.35 and $0.8 in case of leasing while it will range between $0.9 and $2 in case of renting. The land tariff varies depending on the types of infrastructure — developed, undeveloped and specialised. It is necessary to fix the tariff to allocate lands—which are developed or being developed under the authority and supervision of Beza in economic zones—to the entrepreneurs for setting up industrial units. An economic zone is a designated area in a country with special economic regulations that differ from the rest of the country. An entrepreneur can enjoy various benefits, including tax incentives, from the authorities by setting up an industrial unit in an economic zone. Earlier in July, a tariff plan with higher prices than the latest proposal was placed at the governing body’s meeting for approval. But the governing body, instead of approving the plan, reset a committee headed by the senior secretary of the Finance Division and asked it to come with a revised tariff plan. The revised tariff plan will be of two types. The first will be made for Mirsarai, Feni, Shreehatta, Dhaka-2, Araihazar and Gazaria economic zones. The second plan is meant for Cox’s Bazar, Moheshkhali 1, 2, 3 and 4, Moheshkhali Special, Moheshkhali, Sabrang Tourism Park, Naf Tourism Park and Mongla economic zones. The service charge will be 10 percent of the amount of any utility bills such as gas, electricity, water, recycling, purification and effluent treatment, while the regulatory fee has been proposed at Tk 500 for each permit.
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