Trade deficit in services widens
Bangladesh’s trade deficit in services widened to USD 4.6 billion in 2015 from USD 4.1 billion a year ago, according to central bank data. The deficit in trade in services that include financial service, insurance and tourism was USD 3.2 billion in 2013. BB data shows Bangladesh received USD 3.0 billion in services trade last year against payments worth USD 7.7 billion, which was one-fourth of the country’s exports for the just concluded fiscal year. The country paid USD 7.2 billion in 2014. This gap in services trade was also caused by rising spending by Bangladeshis who spent more abroad than foreign tourists did in Bangladesh, according to BB data. Such higher trade in services deficit pushed down the current account balance to USD 2.9 billion at the end of April this year from USD 3.1 billion a year ago. Bangladesh’s imports were worth nearly USD 36.2 billion in the first 11 months till May of the last fiscal year against full year’s exports of USD 34.2 billion. On the other hand, wage earners’ remittance fell 2.6% to USD 14.9 billion last fiscal year.
Government’s cost of debt to double
Government borrowing through savings instruments in fiscal 2015-16 is most likely to be nearly double the budgetary target, an exercise that will push up debt servicing cost or interest payment. Net borrowing from savings instruments stood at BDT 300.9 billion during the July-May period of last fiscal year, whereas the initial budgetary target was BDT 150.0 billion, according to central bank statistics. In the revised budget, the amount was increased to BDT 280.0 billion. The full-year net borrowing from savings instruments may cross BDT 350.0 billion, said a finance ministry official. On the other hand, bank borrowing by the government as per Bangladesh Bank’s preliminary estimate was BDT 48.1 billion against the target of BDT 316.8 billion in the revised budget. In the revised budget, the target for bank borrowing was cut from the original budget, but the government was not required to borrow even that amount in the end as sales of savings instruments shot up. On the other hand, the borrowing target for savings instruments was BDT 210.0 billion, which at final count was BDT 287.1 billion. Since the government does not have direct control on savings instruments, borrowing from this source have increased by the day, according to the finance ministry’s Medium Term Macroeconomic Policy Statement released last month.
Central warehouse for farm produce likely by 2017: ADB to finance USD 250.0 million project
The government will build a central warehouse with cool-chain system at a cost of USD 250.0 million for preserving agricultural produce, officials said. The ministry of agriculture (MoA) with support from the Asian Development Bank (ADB) will establish the central warehouse and packing center with cool-chain facilities. The initiative will also help fulfill the phytosanitary requirements of the importing countries, a high official of the MoA told the FE. He said the feasibility study of the project has already been completed. A team of the ADB visited the country recently for pre-appraisal of the project. The ADB will finance the project. The government, businessmen and farmers have long cherished for a central warehouse. The MoA official said the ministry would deal with agriculture production and quality, while the Bangladesh Economic Zones Authority (BEZA) will supervise the preservation system of farm produce. The government is now focusing on the production of agricultural cash crops following the country’s attainment of self-sufficiency in rice production.
RMG buyers postponing visits on security concerns: Orders might be shifted to competitors: BGBA
Global apparel buyers have started postponing their scheduled visits to Dhaka for business negotiations citing security reasons after two recent terror attacks in the country, according to the Bangladesh Garment Buying House Association (BGBA). The BGBA leaders, at a press conference Saturday, also expressed their fear that export orders for next two seasons – summer and fall – might decrease as buyers are not coming. In many cases, foreign buyers have asked their local agents to be present in a third country for meeting along with representatives from other exporting countries following the attacks. The July-August period is the time to receive work orders from the Western buyers for next summer and fall seasons and if they can’t place orders within the set time, they might shift their orders to other sources, Kazi Iftekhar Hossain president of the BGBA said. About 60% of the country’s total export earnings come from orders for the two seasons, he said adding: “If the situation does not improve and buyers don’t feel secure and fail to move freely, we might get less orders for the coming seasons.”
Doing business conditions vulnerable in Bangladesh: Pinkerton Risk Report
Conditions of doing business in Bangladesh are vulnerable along with high risk of natural disaster and business operations risk, showed global risk management company Pinkerton in a report released on Tuesday. The US-based risk management company Pinkerton prepares the report taking 83 different variables into account to help corporate clients assess threats on a country-by-country basis. In Pinkerton Risk Index report 2016, the overall risk for the corporate entities in Bangladesh is 77.5% which is higher than neighbouring Sri Lanka , India [63.8] and Pakistan [75.9]. In Nepal, the risk is higher than Bangladesh at 80.4% and in Myanmar it is 84.3%. Natural disaster risk in the country is 100% as per the report while information technology risk is 85.6% and business operation risk is 81.2%. Economic structure risk is 72.9% and human capital risk is 77.8%. According to the report, violent crime and terrorism risk in Bangladesh is 55.3%, health risk is 45.0% and infectious diseases risk is 40.0%. Social-political-institutional risk is 74.4% and societal upheaval risk is 69.3%, said the report. Singapore is the safest nation to do business while Chad has the highest overall risk as per the report. The United States ranked seventh safest country to do business. Pinkerton president Jack Zahran said terrorist attacks and natural disasters were becoming more frequent, potentially causing widespread disruption to supply chains, reports Reuters.
Government to import furnace oil under open tendering, too: Deregulating fuel-import trade pays off
The government decided to import furnace oil, too, through open tendering as the purchase of diesel and jet fuel under the system paid off. Officials said in such a reversal of stance, the state-run Bangladesh Petroleum Corporation (BPC) has already floated international tender seeking quotations from interested suppliers to buy around 160,000 tons of 180-CST high-sulfur fuel oil (HSFO). The bid-submission deadline is July 20 afternoon. BPC will open quotations to be dropped by the suppliers the same day. The offer will have 75 days’ validity. As per terms tenders, the quantity of the products delivered shall be determined by independent inspector by measurement of the vessel’s tanks immediately upon arrival at the customary anchorage at the discharge port, said a BPC official.
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