Important Business News Extracts – January 17 2017
Bangladesh Bank rejects IFIC bank’s plea to transfer USD 12.0 million for Nepal bank investment
Bangladesh Bank has rejected an IFIC Bank Ltd’s application for transferring capital worth USD 12.3 million or around BDT 980.0 million to make further investment in Nepal-based Nepal Bangladesh Bank Limited. IFIC Bank, which has already invested around USD 16.5 million or around BDT 1.3 billion in NB Bank by transferring capital from Bangladesh, applied in November last year to the BB for making the fresh investment in NB Bank by purchasing rights shares offered by the Nepalese bank. The BB follows strict rules in allowing any entity to take capital out of the country and gives permission to take out fund on ‘case-to-case’ basis only.
Asian Development Bank is set to give Bangladesh a $200 million loan to boost the country’s small and medium sized enterprises (SMEs). On this regard, an agreement will be signed between Economic Relations Division (ERD) and ADB. ADB country director Kazuhiko Higuchi and ERD Secretary Kazi Shafiqul Azam will sign the agreement at The ERD premise in Dhaka, reports BSS citing an official release.
World Bank rejects request for USD 500 million loan for Balance of Payments
The World Bank has rejected a request from government to provide $500 million concessional loan to support the country’s balance of payment against the backdrop of sharp decline in remittance flow. Finance minister AMA Muhith made the disclosure after a meeting with WB country director Qimiao Fan at his secretariat office on Monday. Instead of assisting the country’s BoP the WB expressed interest to provide concessional loan for carry out reform programme in the country’s financial sector, he added. He said they agreed with the WB proposal for carrying out reform in the financial sector after the unprecedented reserve heist from the Bangladesh Bank’s account with the New York Federal Reserve in February.
The World Bank has set its sights on financial sector reforms in Bangladesh in light of events in recent years such as the Hall-Mark scam and the Bangladesh Bank reserve heist. For that end, a high-level team of the Washington-based multilateral lender yesterday offered the government USD 500.0 million for this fiscal year. From next fiscal year, a three-year programme involving USD 9.0 billion will be offered, where financial sector reforms would take the spotlight. A seven-member team led by Sebastian-A Molineus, director of the World Bank Group’s finance and markets global practice, met with Finance Minister AMA Muhith at his secretariat office. Qimiao Fan, country director of the WB in Bangladesh, was also present. The objective of the meeting was to discuss the government’s financial sector reform priorities and explore how best the WB can support Bangladesh in furthering financial sector development, as per the lender’s proposal. After the meeting the finance minister told reporters that the WB earlier wanted to extend USD 500.0 million as budget support.
Bangladesh’s exports gained momentum in most of 2016, but a stronger taka against a basket of other currencies may hurt shipments this year, according to global credit rating agency Fitch. “In 2017, this sector may feel the pinch of further real effective exchange rate appreciation, although Bangladeshi labour costs are still relatively low,” the New York-based company said yesterday. An increase in ‘real effective exchange rate appreciation’ or REER implies that exports become more expensive and imports become cheaper; an increase indicates a loss in trade competitiveness. Fitch said Bangladeshi apparel exports continued to be strong, accounting for 81.0% of total exports and earning the country USD 26.1 billion in the first 11 months of last year, which was USD 24.6 billion in 2015.
BSEC for not providing margin loans against issues having P/E ratio of above 40
The securities’ regulator has asked the stakeholders to ensure proper ‘compliance’ and remain ‘conscious’ for the sake of a sustainable development in the country’s capital market. The stakeholders have been asked to conduct business operation by reducing human error in share trading, strengthening self-regulatory system in every house and avoiding mismatch of margin loan management.
Speedy implementation of infrastructure projects and business and investment-friendly regulations will determine whether Bangladesh would be able to attract more foreign investors and raise GDP growth to a new level, Citibank said in a report yesterday. The US-based bank made the observation in its economic update on Bangladesh for 2016. Bangladesh’s economy grew at an impressive rate of 7.11 percent in fiscal 2015-16, which signifies strong macroeconomic fundamentals, the bank said. There were promising signs as private investment’s share in gross domestic product increased to 23 percent in the last fiscal year from 22.1 percent in fiscal 2014-15 along with stable public investment. For fiscal 2016-17, the government has set the GDP growth target at 7.2 percent.
Bangladesh’s consumers are among the most optimistic in Asia Pacific thanks to their bullish outlook on the country’s economy, quality of life and stockmarket, according to a survey by Mastercard. The country recorded the largest gain of 11.2 points to hit 82.8 points in Mastercard Index of Consumer Confidence in the second half of 2016 – a significant improvement in the overall consumer confidence. A score above 80 points classifies a country as ‘very optimistic’ and a 90-plus score categorises a country as ‘extremely optimistic’. India, with a score of 95.3, tops the index as the most optimistic market in Asia Pacific, with Myanmar, Vietnam, the Philippines and Bangladesh rounding off the top five, it said yesterday. Bangladesh experienced a small improvement in consumer confidence in the previous survey. But now the country recorded the largest improvement among the 17 Asia Pacific markets with increases across all five components and a more than 10 points gain in outlook on stockmarket (+24.6), quality of life (+12.0) and economy (+11.7).
Bangladesh Shipping Corporation mulls establishing JV with Saif Powertec
Bangladesh Shipping Corporation (BSC) will soon start negotiation with Saif Powertec for establishing a joint venture (JV) company, which will buy or charter mother vessels to carry crude fuel oil for Bangladesh Petroleum Corporation (BPC), officials said. In a recent letter, the Ministry of Shipping (MoS) gave go-ahead to a BSC plea seeking permission to start negotiation on signing a memorandum of understanding (MoU) with the private sector company. The BSC will have to take final approval for the MoU documents before inking the deal.
Twenty Western garment retailers have expressed concern over the recent labour unrest in Ashulia and called upon the government to form a new wage board for workers. The buyers in a letter to the prime minister said the unrest may damage Bangladesh’s reputation as a reliable sourcing market. The major signatories in the joint letter sent last week are: H&M, C&A, Esprit, Gap, Next, VF Corporation, Primark, Inditex and Li&Fung.
State minister for posts and telecommunications Tarana Halim on Monday asked all the mobile phone operators to submit monthly call-drop lists to the BTRC to ensure compensation for the affected customers. ‘The mobile phone operators have to pay compensation for more than one call drops every day, and this will be informed to the customer through SMS,’ she told reporters after a meeting with the managing directors and chief executive officers of mobile phone operators at her office. The junior minister said the Bangladesh Telecommunication Regulatory Commission (BTRC) will forward the call-drop lists to the ministry after the mobile phone companies submit those. Besides, the BTRC will take effective measures if any of them is found involved in charging for missed calls to foreign numbers, she added. Meanwhile, the mobile phone operators claimed that the call drop remains within the limit set by the International Telecommunication Union (ITU).
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