TT-Clean: 77.1 | TK BC-Selling: 78.1
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TT-Clean: 77.1 | TK BC-Selling: 78.1
TK OD-Sight: 76.88 TK | TC-Selling: 78.1 TK


TT-Clean: 77.1 | TK BC-Selling: 78.1
TK OD-Sight: 76.88 TK | TC-Selling: 78.1 TK

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Important Business News Extracts – June 01, 2017

Agriculture sector NPLs rise 14.0% in July-April

The amount of classified loans in the agriculture sector increased by more than 14.0% or BDT 6.08 billion during the first 10 months of the ongoing financial year (FY), 2016-17, despite the central bank’s close monitoring. The non-performing loans (NPLs) of farmers rose to BDT 49.26 billion during the July-April period of this FY from BDT 43.17 billion in the same period of the previous FY, according to the Bangladesh Bank’s (BB) latest statistics. The total amount of outstanding loans in the sector rose to BDT 371.5 billion in the July-April period of FY 17 from BDT 324.5 billion in the same period of last fiscal. However, the share of NPLs considering the outstanding loans came down to 13.26% during the period under review from 13.3% in the same period of FY 16, the BB data showed. Meanwhile, the central bank has asked the banks for taking effective measures, so that fresh loans do not turn into classified ones. The instruction was given at a meeting held at BB headquarters in the capital on Wednesday.


Private sector credit growth rises for 6th month

Private sector credit growth continued to maintain an upward trend in April, six months in a row, as banks are now focusing on disbursement of consumer and farm loans to sustain their profitability, said Bangladesh Bank officials. Rise in import payment in recent months also put a positive impact on private sector credit growth, they said. In April, the year-on-year private sector credit growth stood at 16.2%, which is close to the monetary target of 16.5% set by the central bank for the second half of this financial year, according to the BB data. The year-on-year credit growth rate in the private sector stood at 16.1% in March, 15.9% in February and 15.6% in January this year. The growth stood at 15.6% in December, 15.0% in November and 15.2% in October 2016. Credit flow to the private sector stood at BDT 7.5 trillion in April, 2017 against BDT 6.4 trillion in the same month of 2016. The figure was BDT 7.4 trillion in March 2017 against BDT 6.4 trillion in the same month of 2016.Retail banking products helped the private sector to maintain a higher growth, a BB official told New Age. The banks set interest rate between 8.0% and 11.0% for their consumer credit like personal loans as the credit demand from industrial sector has been maintaining a sluggishness for long, he said.

Source: http://www.newagebd.net/article/16739/pvt-sector-credit-growth-rises-for-6th-month

Possible fall in interest rate spurs savings certificate sales

An unprecedented number of buyers Wednesday lined up at the Bangladesh Bank’s Motijheel Office, the principal office of Sonali Bank, and various other bank branches, hoping to buy savings certificates before the rate is cut, as announced, reports bdnews24.com. The interest rate cut for savings certificates was announced by Finance Minister Abul Maal Abdul Muhith on May 21. But he had not provided details on how much would the cut be and when the new rate will take effect. The interest rate on bank deposits is currently between 4.0-6.0%. The interest rate on saving certificates is between 11 to 12.0%. The interest rate on savings certificates was reduced in 2015 in an attempt to curb sales, but sales only continued to increase. As a result, the government will have to lower the rate again, Finance Minister Muhith said. The lower interest on bank deposits and the uncertainty in the stock market have led to more purchase of savings certificates. A decrease in deposit interest rates spurred further sales. The announcement of the interest rate cut has now led to a rush to purchase certificates under the current rate.


Bump up infrastructure spending: Business community urges government

The perennial energy crisis, infrastructure bottlenecks and volatile global economy have sent the private investment scenario in Bangladesh into a lull over the last few years. In this backdrop, the business community demanded the government increase its infrastructure spending to 6.0% of GDP from existing 2.87% in fiscal 2017-18. The contribution of private investment will need to be raised to 34.0% of GDP from the almost stagnant 23.0% for increasing the GDP growth rate to 8% in a year, he said. In 2016-17, private investment to GDP ratio is expected to be 23.01% — only 0.02%age point higher than the previous year, according to provisional data from the Bangladesh Bureau of Statistics. Infrastructure development means not only improvement of roads and highways but also ensuring adequate supply of energy and power to the industrial sector and enhancement of port facilities for smooth movement of export and import goods. For example, South Korea invested 10.0% of its GDP in 1990s to improve infrastructure; now Vietnam is doing the same. “Many Asian nations are increasing infrastructure spending and reaping benefits,” Khan said, adding that the Bangladesh government has also raised the GDP spending for infrastructure development from 2.87% to 3.0% in fiscal 2011-12. But it could not ensure sufficient development, he said.

Source: http://www.thedailystar.net/business/bump-infrastructure-spending-1413772

Underperforming banks should merge

The banks that are failing to keep pace with the fast-growing financial sector should merge with each other, according to a top banker. Kazi Mashiur Rahman, managing director of Mercantile Bank, likened the fast-growing banking sector to a busy highway. “Banks that cannot run in the highway because of a lack of well-trained bankers should merge,” he said in an interview with The Daily Star recently on the occasion of the bank’s 18th anniversary. Mercantile commenced its operations in 1999. It now has 119 branches, including five SME branches. The bank has an offshore banking unit in Gulshan and one in the Chittagong Export Processing Zone. Bangladesh Bank should formulate a merger act and take initiative to help banks amalgamate taking into cognisance their performance.

Source: http://www.thedailystar.net/business/banking/underperforming-banks-should-merge-1413730

New managing director for LankaBangla Finance

Khwaja Shahriar has recently been appointed as the managing director of LankaBangla Finance Ltd, the company said in a statement yesterday. Prior to the appointment, Shahriar had been serving the company as deputy managing director. Before joining LankaBangla, he served Brac Bank for several years in different positions, including the head of corporate banking. He completed his graduation from Dhaka University and obtained bachelor of business in banking and finance degree from Monash University, Melbourne and an MBA in finance from Victoria University in Australia.

Source: http://www.thedailystar.net/business/new-managing-director-lankabangla-finance-1413766

Awami League government’s big election budget today

The Awami League-led government presents today (Thursday) its final full-scale budget before the next polls with an up-raised outlay of over BDT 4.0 trillion — foreshadowed by strains on some economic indicators. Economists foresee some major macroeconomic concerns in the coming financial year, beginning July 01, with possible impact on aggregate demand that gauges economic health. Finance Minister AMA Muhith is set to place the national budget over 4.0 trillion, which is equivalent to less than 18.0% of Bangladesh’s GDP or gross domestic product. It happens to be last full-pledged budget in the Awami League-led government’s present tenure, as the next general election is due halfway through the financial year 2018-19. Muhith hinted in a pre-budget discussion that the size of block allocation would rise significantly. Many believe achieving a BDT 2.88-trillion total revenue target could prove a daunting task for the government as it expects higher receipts from VAT sources under a new law which will be implemented from the next financial year after its passage in Parliament way back in 2012. The total revenue will have to be increased by 29% to make it around BDT 2.88 trillion. A big chunk of the money will come from the National Board of Revenue (NBR), which is eyeing a 34% enhanced collection of BDT 2.48 trillion. The remainder will come from non-tax revenues like profits and dividends of government-owned enterprises, and the third biggest sources is non-NBR. The deficit worth BDT 1.12 trillion, which is equivalent to around 5.7% of GDP, will be financed from both internal and external sources. Of the total budgetary outlay, BDT 1.53 trillion would be set aside for development expenditure and the rest for non-development spending. Salaries and allowances of government staff, interest payments and subsidies account for more than half of the non-development expenditure. The finance minister will be looking for means to boost public spending for achieving higher economic growth at 7.4% as the private sector still grows at much slower pace than expected. The government expects the GDP in nominal terms at BDT 22.243 trillion at the end of the financial year to June 30, 2018.


Weak budget implementation, external sector blight GDP gain

The country’s economy has gone through some challenges both in internal and external areas like weak budget implementation, stagnant private investment, low level of employment generation, slower export earnings, decline in remittance inflow despite a record-high GDP growth in the outgoing fiscal year of 2016-2017. Finance minister AMA Muhith announces the national budget for the FY 2017-2018 today against the backdrop of the challenges and comfortable stability in political environment and overall macroeconomic arenas. Along with the other discomforts, the Value-Added Tax and Supplementary Duty Act-2012 which will come into force on July 1 has created resentment among the businesspeople against the new law as they think that the single 15.0% VAT rate stipulated in the regime would affect small- and medium-scale businesses and consumers. Economists and business leaders said that the overall economic performance was relatively good and stable in the outgoing FY17 mainly because of political and macroeconomic stability, like the previous FY16. According to the latest provisional estimation of the Bangladesh Bureau of Statistics, the country’s gross domestic product or GDP growth will be 7.24% in the outgoing fiscal year, highest ever in the history of the country. According to the Export Promotion Bureau, export earnings grew by only 3.92% in the first 10 months of the current fiscal year and stood at USD 28.7 billion against the annual target of 8.0%. On the other hand, remittance inflow has been in the negative terrain throughout the July-April of FY17 and in the first 10 months of the fiscal year, inward remittance went down by 16% from that of the same period in the last fiscal year. The country received USD 10.28 billion in remittance in the period against USD 12.25 billion in the same period of FY16, according to the Bangladesh Bank data. The share of private investment to gross domestic product increased only by 0.02%age point to 23.01% in FY17 from 22.99% in the previous year.

Source: http://www.newagebd.net/article/16737/weak-budget-implementation-external-sector-blight-gdp-gain

Government requests Asian Development Bank to finance private sector enterprises

Bangladesh has requested ADB’s private-sector lending arm to finance private enterprises to help the country score double-digit economic growth, in a divergence from its current funding practice. Officials said Wednesday the government had made the plea to the Asian Development Bank (ADB) during the Bank’s recent meeting in Japan, as the private sector is emerging as growth engine. “Currently, ADB helps the government of Bangladesh only for public sector development works. Now we have requested the Bank to come forward with their loans for the private sector, too, as that is the growth engine in the country,” Economic Relations Division (ERD) Secretary Kazi Shofiqul Azam told the FE. World Bank Group’s two lending arms — the International Finance Corporation and the Multilateral Investment Guaranty Agency (MIGA)- finance and support Bangladesh’s private-sector enterprises for the growth in their business. The IFC had already confirmed USD 635 million for 13 projects in Bangladesh until last financial year (FY), 2015-16. Its committed total portfolio in Bangladesh as of June 2016 amounted to about USD 1.0 billion in 47 projects. The Corporation promotes sustainable growth and private-sector development in Bangladesh by investing in critical infrastructure, boosting financial inclusion, enhancing textiles competitiveness, and supporting reforms to make doing business easier for the private sector. MIGA has already given guarantee to many private firms in Bangladesh to get foreign loans and supports. According to the ADB, its PSOD provides key support for job creation, access to finance, and business opportunities across ADB-member countries. In the last calendar year, 2016, the Asian Bank approved USD 2.5 billion in new financing to support private-sector operations in the region, while mobilising USD 5.8 billion in direct value-added co-financing. The combined USD 8.3 billion fund for 2016 was 15% higher than in 2015, billed a new record. ADB’s private-sector operations are focused on assisting member-countries in achieving the Sustainable Development Goals as well as the targets laid out in the Paris Agreement on climate change.

Source: http://print.thefinancialexpress-bd.com/2017/06/01/174116

24,000 MW target by 2021, Prime Minister tells Jatiya Sangsad (Parliament)

Prime Minister Sheikh Hasina said on Wednesday that work was underway for increasing power generation capacity to 24,000 MW by 2021, reports BSS. “A total of 34 power plants having 11,363 MW capacity are under construction and these plants would come into operation from 2017 to 2021,” she told the parliament. “Awami League government has undertaken time-befitting, realistic and sustainable plan for constructing new power plants aimed at ensuring power for all,” she said while replying to a question from opposition bench member Fakhrul Imam in the Jatiya Sangsad (JS). The Prime Minister said the government in its second consecutive tenure increased power generation to 3,332 MW after assuming office in 2014. Besides, thirty-four more power plants having the capacity of 4,917 MW are now in the process of bidding and those are expected to go into operation from 2018 to 2023, she informed the House.

Source: http://print.thefinancialexpress-bd.com/2017/06/01/174131

Country’s 18 power plants out of operation

Out of 122 power generation plants in the country, 18 now remained out of operation for various reasons, including technical fault, maintenance, overhauling, gas shortage, drop in water level, and non-renewal of contracts with the owners of private power plants, according to official data available with PDB website. These 18 plants have a generation capacity of 2,160 MW while the country’s 122 plants’ total installed production capacity is 12,179 MW and derated capacity 12,578 MW, according to a report by UNB. Out of the 18 power generation units, some with 793 MW capacity remained out of production for gas shortage while others with 195 MW capacity cannot generate electricity due to a fall in water level in hydropower plants. Besides, the production of some 545 MW power looks uncertain for various reasons, including long maintenance time and expiry of contracts with the government. Of them, only 100 MW Baghabari plant was supposed to resume operation on May 30.


Paramount Textile to form consortium for power plant

The board of directors of Paramount Textile has decided to form a consortium named Paramount-Aggretech Energy Consortium for establishing a 100 MW HFO Fired Engine Based Power Plants in Shirajgonj, said an official disclosure on Wednesday. The consortium will be formed with Paramount Spinning, Paramount Holdings and Aggretech AG, Germany for establishing a 100 MW HFO Fired Engine Based Power Plant on Build, Own and Operate (BOO) Basis upon getting permission from the concerned authority at Baghabari, Sirajgonj, Bangladesh under Bangladesh Power Development Board (BPDB), said the disclosure. The board of directors of Paramount Textile has also decided to act as the lead member and contribute 55 per cent share capital of the total share capital of the consortium amongst the members of the consortium. Each share of Paramount Textile, which was listed on the Dhaka bourse in 2013, closed at Tk 32.70 on Tuesday on DSE. The company’s paid-up capital is Tk 1.17 billion and authorised capital is Tk 2.0 billion, while the total number of securities is 117.32 million. The sponsor-directors own 60.75 per cent stake in the Paramount Textile, while institutional investors own 10.78 per cent, and general public 28.47 per cent as on April 30, 2017, the DSE data shows.

Source: http://www.thefinancialexpress-bd.com/2017/05/31/72219/Paramount-Textile-to-form-consortium-for-power-plant

Import duty on mobile set may go up in budget

The government may increase customs duty on mobile handset import in the budget for the next fiscal year of 2017-2018 in a bid to encourage local manufacturing of the product, officials of the finance ministry said. Local manufacturers of digital devices including mobile handset, laptop and tab may also get duty benefit on import of raw materials for producing the devices in the country, they said. The government may also remain stick to the single 15 per cent value-added tax under the new VAT law despite a strong resistance from the business community to the rate. The business community has been demanding a cut in the rate and introducing multiple VAT rates. The government, however, may announce some measures including extending the VAT-exempted turnover ceiling and upper limit on annual turnover for imposing turnover tax, widening the coverage of VAT exemption for goods and services and imposing the supplementary duty on import of more products to give relief to both the businesses community and consumers. The next budget may also see a slight increase in the tax-free income limit for individual taxpayers from the current Tk 2.50 lakh.

Source: http://www.newagebd.net/article/16738/import-duty-on-mobile-set-may-go-up-in-budget

14 cos invest $135m at Uttara EPZ so far

A total of 14 companies have so far set up factories on 140 plots at Uttara Export Processing Zone (EPZ) in Rangpur It created employments for 24 thousand people, 65 per cent of them are rural women. This was disclosed by Deputy Manager (Commercial Operation) of Uttara EPZ Khaled Mahmud, according to a report by BSS. The 14 companies, including five from Hong Kong, one from the United Kingdom and eight locals, have invested 135.63 million US dollars at the EPZ. The foreign companies are producing export-oriented wig, coffin, spectacle, leather bag, belts, wallet, sweater and other products for global market while local ones are producing readymade garments, other goods and accessories for foreign companies.

Source: http://www.thefinancialexpress-bd.com/2017/05/31/72233/14-cos-invest-$135m-at-Uttara-EPZ-so-far

Local and Global Stock Indices

Index NameClose ValueValue ChangePercentage Change
Nikkei 22519,650.57↓27.28↓0.14%

World Commodities

CommodityClose ValueValue ChangePercentage Change
Crude Oil (WTI)*$48.77↑0.45↑0.93%
Crude Oil (Brent)*$50.31↓1.53↓2.95%
Gold Spot*$1,268.82↓0.1↓0.01%

Major Currencies Exchange Rates Movement in Last Seven Days





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