Important Business News Extracts – January 08 2017
Bigger bank board is no guarantee of profitability: Study
The size of the board of directors of a bank does not have any impact on its performance both in terms of Return on Equity (RoE) and Return on Investment (RoI), according to a study conducted by the Bangladesh Institute of Bank Management (BIBM). “There is no optimal size for the board of directors of a bank”, said the study titled ‘Corporate Governance in Banks- Impacts on Profitability’. It said raising or lowering the size of a bank’s board is immaterial as it does not guarantee the profitability.
The country’s remittance inflow witnessed a sharp fall by 11.1% in the just concluded year 2016 due to wide difference in exchange rate between institutions and curb market amid falling oil price. Bangladesh received USD 13.6 billion remittance in 2016, which is far below from USD 15.3 billion in the year 2015, according to the Bangladesh Bank data. Remittance earnings saw 2.50% growth in the year 2015 from USD 14.9 billion in the year 2014. The Gulf countries, the largest labor market for Bangladeshi expatriates and also the main source of remittance, are going through an economic crisis due to the oil price slump. As a result, remittance inflow from those countries declined which hit hard the overall remittance inflow in Bangladesh, a senior executive of the central bank said.
Islami Bank Bangladesh Limited and Islami Bank Foundation get new chairmen
Arastoo Khan, former secretary, has been elected chairman of board of directors of Islami Bank Bangladesh while Syed Monjurul Islam, former secretary, has been elected chairman of Islami Bank Foundation, said a news release. They were elected in a meeting of the board of directors of the bank in a hotel of the capital on January 5. Arastoo was the chairman of Bangladesh Commerce Bank. He completed MSS from Dhaka University and masters in public administration from Harvard University in USA. Monjurul, former secretary of Ministry of Health and Family Welfare and Ministry of Shipping, was the chairman of Bakhrabad Gas System Ltd, Jamuna Petroleum Ltd and Standard Asiatic Oil Co. He completed his bachelor of commerce in finance and MBA from the Institute of Business Administration in Dhaka University.
Banking sector woes, remittance major challenges for economy, says CPD
The Centre for Policy Dialogue on Saturday identified rising defaulted loans and weak governance in the banking sector, declining trend in remittance inflow and excessive sales of national savings certificates as major challenges for the Bangladesh’s economy for the current fiscal year. The government needs to focus on lowering the interest rate of NSCs and price of petroleum oils and devaluation of the exchange rate of local currency taka against the US dollar to sustain the economic growth for the FY 2016-2017, the independent think-tank said in its first reading of the state of the Bangladesh economy. Reforms in banking sector, local government management and public investment are also vital for economic sustainability, it said. The CPD released the report at a press conference held at the BRAC Centre Inn in Dhaka.
Export earnings in the first half of the current fiscal year grew by 4.5% to USD16.8 billion from USD 16.1 billion in the same period of the last fiscal year of 2016, according to the Export Promotion Bureau (EPB) data released yesterday. Export earnings in the month of December fell by 3.0% to USD 3.1 billion from USD 3.2 billion in the corresponding period of the previous calendar year. The EPB data showed that earnings from RMG export in the first half of FY17 grew by 4.4% to USD 13.7 billion from USD 13.1 billion in the same period a year ago. Export earnings from the woven sector in the first half grew by 2.9% to USD6.9 billion compared to USD 6.7 billion in the same period of the last fiscal year. The knitwear export in July-December period of FY17 grew by 5.9% to USD 6.8 billion from USD 6.4 billion in the previous fiscal year.
Import payment for capital machinery increased by 80.8% to USD 2.5 billion in the first five months (July-November) of the current financial year compared with that in the same period a year ago, strengthening suspicion of money laundering as the growth came amid dull business and investment situation in the country. The latest Bangladesh Bank data released on Thursday showed that import of industrial raw materials also posted a positive growth in the July-November period of FY17 compared with that of the same period in FY16.
Bangladesh attracted all-time high equity fund worth USD 84.0 million in 2016, while nearly USD 9.0 million in bonds, both witnessing strong rebound from negative territory in 2015. The equity inflow in 2015 was negative at USD 55.6 million and bond also in the same zone at USD 19.1 million, according to US-based EPFR Global, a major financial intelligence firm which mostly tracks global fund movements. The country drew positive foreign funds in bonds at USD 8.7 million in 2014. However, the equity market saw a negative USD 16.3 million fund in that year.
Policy think-tank CPD sees a surge in government borrowing through national savings tools as a cause of concern in state’s debt-servicing liability as it eats up a significant amount of taxpayers’ money. The Centre for Policy Dialogue (CPD) also predicts a total revenue shortfall of some BDT 400.0 billion at the end of the fiscal year for a number of factors, including fall in the prices of commodities on the global market. If revenue grows even at 26 per cent, it said Saturday, the overall shortfall could stand at BDT 260.0 billion up to June 30 next.
Unauthorized foreign drugs entering medicine markets
Foreign drugs are entering the country’s local markets through informal channels due to lax monitoring and supervision, insiders have said. According to them, though authorized agencies are allowed by the Directorate General of Drug Administration (DGDA) to import only registered medicines, about 20.0 to 25.0% of foreign medicines enter the local markets through unauthorized channels.
Bangladesh to seek Indian review of anti-dumping duty on jute
Bangladesh will negotiate with India for a review of the latter’s decision to impose anti-dumping duty on jute and jute goods. The Indian government imposed the duty on Thursday last on jute products being exported from Bangladesh and Nepal. However, Bangladesh is yet to be informed about the duty by India formally. It will take steps once it is informed by the neighboring country, officials said.
Bangladesh Railway to seek additional allocation for mega projects
Bangladesh Railway (BR) would seek an additional allocation of BDT 6.2 billion for the current fiscal year under the mid-term budgetary framework (MTBF) to meet increased expenditure of few mega projects. The expenditure would be higher than the allocation of BDT 91.1 billion for the FY 2016-17 as the BR started revision of the projects being implemented, officials said. In the next fiscal year (FY 2017-18), they said, the BR would seek an additional allocation of BDT 7.3 billion under the MTBF for implementing the projects.
Bangladesh has huge potential in the hospitality industry as the sector has started to follow international standards, said Robin Edwards, the newly appointed general manager of Radisson Blu Chittagong Bay View. The number of five-star hotels in Bangladesh is still low, as the industry here is on the early stages of growth, he said. The new hotels that are opening in Dhaka and Chittagong are helping Bangladesh emerge in the international market, he added. Edwards previously served InterContinental Hotels and Resorts, Starwood Hotels and OCT Hotels for several years and worked in China, Western Asia and the Middle Eastern regions.
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