The flow of inward remittance jumped by more than 16% in May this year over that of the previous month. It was estimated at USD 1.27 billion in May 2017, up by about USD 175 million from USD1.09 billion in April. It was USD 1.21 billion in May last year, according to the central bank’s latest statistics, released Sunday. “The flow of inward remittance increased significantly in May as always happens ahead of the Eid festival,” a senior official of Bangladesh Bank (BB) told the FE. He said the upward trend in inward remittance might continue until the end of this month. Non-Resident Bangladeshis (NRBs) usually send substantial amount of foreign currencies to their near and dear ones ahead of the religious festival, which will be celebrated in the last week of this month. However, the overall remittance inflow dropped by more than 14.0% or USD 1.9 billion during the 11 months (July-May) of this fiscal year (FY) against the same period of the previous FY. The receipts came down to USD11.55 billion during the period of this FY from USD 13.5 billion in the same period of the last FY. Another BB official said the authorities concerned were now working on increasing the inflow of remittance in the near future.
Bangladesh’s exports to China are heavily concentrated on garments despite having duty-free market access of over 4,700 items, senior officials of Standard Chartered Bank said yesterday. Of nearly $800 million exports to China this fiscal year, 84 percent were garments, they said at a press conference to share the bank’s views on the China’s Belt and Road initiative at the capital’s Sonargaon hotel.
The middle-class consumers have another bad news: they will have to pay more to buy a reconditioned car next fiscal year due to a cut in the depreciation rate used to determine the vehicle’s value. Depreciation is the amount of value an automobile loses over time, with the decline in value faster for new cars than for old ones. The depreciation rate impacts a reconditioned car’s price directly as tax is applied on the discounted value. As is practice, reconditioned cars of typically 4 and 5 years of age are brought to Bangladesh from Japan, the depreciation for which is taken to be 45 percent. The rate would come down to 40 percent from next fiscal year. Take, for instance, a reconditioned car that has been used for four years in Japan. The car was sold off at $10,000 and brought to Bangladesh. The tax on the car would be determined by accounting for 45 percent depreciation, meaning the price of the car would be considered to be $5,500. Now after the cut in depreciation rate, the price of the car would be $6,000.
Leaders of the country’s apex trade body in the apparel sub-sector Sunday demanded full withdrawal of source tax and granting of additional 5.0% cash incentives for next two years. They also urged the government to reduce further the corporate tax to 10.0% from proposed 15.0%. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Md Siddiqur Rahman made the demands at a post-budget press conference held at its headquarters in the city. Existing source tax on garment export is 0.7% for the current fiscal year. According to Finance Bill 2016, it would be 1.0% from the next fiscal. If 1.0% source tax on garment export continued, the growth of the country’s ready-made garment industry would be hampered, he said. He termed 1.0% source tax ‘contradictory’ to achieving the 7.4% economic growth in new fiscal year and the government’s industrialisation strategy. “Imposition of such a tax burden on the country’s largest manufacturing industry is not appropriate at all,” he added. “The industry is in dire straits. And we request the government to make the source tax zero% for next two years,” Mr Rahman said. The government in the budget for the fiscal year 2017-18 has proposed reducing corporate tax to 15.0% and a further cut of one% to 14.0% for RMG companies having internationally recognised green building certification from existing 20.0%.
Bangladesh Knitwear Manufacturers and Exporters Association on Sunday demanded to reduce the source at tax at the rate of 0.5% from existing 0.7% for the readymade garment sector for next two years. The BKMEA president AKM Salim Osman said that there was no indication in the proposed budget on changing the rate of tax at source and if the government would not issue further SRO the tax would be one% after June 30 which will affect the knit sector badly. He demanded to reduce the corporate tax at the rate of 10.0% from the proposed 15.0% for the sector. Salim also said that the government should set corporate tax at single digit for the green factories for next five years. ‘Fifteen% single rate of value-added tax disappointed the entrepreneurs of knitwear sector and it will increase the production cost of knitwear industry,’ the BKMEA president said. He demanded 10.0% unified rate for VAT and to issue a circular in this regard. The BKMEA president expressed his concern over the price hike of gas and said that the recent hike of gas price would affect production and price competitiveness.
Government guarantees against loans for state-owned enterprises increased significantly, posing a high fiscal risk to the public exchequer, sources said. The figure may stand at nearly BDT 600.0 billion up to June 30. This was approximately BDT 458 billion up to June 30 in 2016. Government provides guarantees and counter-guarantees against loans negotiated by various state-owned financial and non-financial enterprises. If the contracting organizations fail to repay their loans in time, the guarantees are invoked and the liabilities are passed on to the guarantor (government). However, the figures of guarantees that appeared in the face value and the total outstanding will be much higher which is not available in the government’s budget documents. Guarantees are given for ongoing new projects like power plants, purchase of machinery and meeting working-capital requirements for the SoEs. There were many instances of SoEs having failed to repay their debts, including the case of Biman, and the government having to repay the loans. Such government guarantees mostly go in favour of foreign financial organizations and, in some cases, local banks, including the central bank, as well for loans for its enterprises.
Taxpayers under the universal self-assessment method may enjoy some relief like submission of their revised returns and relaxed auditing of their tax files in the upcoming fiscal year. Tax files of the taxpayers won’t be audited or scrutinised in case of showing 15.0% higher income than that of previous year. Currently, it is 20.0% which many taxpayers found too high as annual income growth. Taxpayers would be able to submit revised tax returns within six months of return submission if they found any fault in tax returns. They can even pay tax within that period in case of less payment with the tax returns. However, a penal tax at a rate of 2.0% per month would be imposed on the tax amount due to delay in full tax payment. The government has moved an amendment to the related provision of the Income Tax Ordinance 1984 through the proposed Finance Bill 2017 placed before Parliament last Thursday. Taxmen also impose restrictions on assessment of a tax file if it is selected for audit. Currently, taxmen can audit and assess tax files simultaneously. They would not audit or ask any question on the disclosed source of initial capital of the business or profession of a new assessee if they show 20% of the initial capital invested in the businesses and profession.
The government’s electronic procurement volume hit the milestone of one lakh last week in what can be deemed a major encouragement for the efforts to establish transparency and accountability in public purchases. As of yesterday, a total of 100,392 tenders were floated and 61,288 — involving BDT 438.3 billion — awarded electronically, according to the Central Procurement Technical Unit website. The system got a mention in Finance Minister AMA Muhith’s budget speech for fiscal 2018-19, in which he presented it as one of the successes of the government’s digitisation process. “About half of the electronic government procurement (e-GP) is currently being done through the system,” said Md Mofizul Islam, secretary of the implementation, monitoring and evaluation division (IMED) under the planning ministry. Muhith is expecting that up to 80% of the public procurement tenders would be done through the e-GP in the near future. To bring all the tenders under the electronic system, the IMED is organising a host of training programmes for both the government officials and bidders. Of the 1,233 government divisions and organisations, 1,103 have already adopted the process for their purchasing.
The World Bank has approved USD 100 million financing to help Bangladesh diversify exports in labour and skill-intensive industries beyond the garment sector and create more and better jobs. The Export Competitiveness for Jobs Project will improve competitiveness of existing and potential export-oriented industries such as leather, footwear, plastics and light engineering, where Bangladesh has demonstrated a competitive edge. The project will help create more than 90,000 jobs in non-garment export sectors, said the Washington-based lender in a statement yesterday. The WB said the project would help firm’s access international markets and enhance their ability to comply with international standards through awareness building and matching grants. The project will address the shortage of skills development, especially in industrial training for women, as well as in infrastructure and technology, according to the statement.
Top telecom operators of the country have urged the government not to impose any fee on tech neutrality in spectrum use as it would hamper the future 4G rollout, sources said this week. Setting such a fee is ‘in effect, penalising the industry’s intent to ensure that spectrum is used more efficiently and discourages innovation’, high-level officials of the telecom operators said in an official letter to the Post and Telecom Division recently. The letter, which was addressed to the State Minister for Posts and Telecommunications Tarana Halim, was signed by Regional CEO of Robi’s parent company Axiata Group Hans Wijayashuriya, Garmeenphone parent company Telenor’s Executive Vice President Petter-Børre Furberg and Head of Emerging Markets of Banglalink’s parent company VEON Jon Eddy. Mobile operators currently use the 2100 band for 3G services and 900 and 1800 bands for 2G services. But after getting technology neutrality, they can use the latter two bands for 4G services, which will be more cost-effective.
Bangladesh is the sixth largest Muslim cosmetics market, according to a report titled State of the Global Islamic Economy Report 2016-17. The answer company of Thomson Reuters prepared the report in association with Dinar Standard, a growth strategy research and advisory firm based in New York. It showed that the estimated size of Muslim consumers’ cosmetic spending in Bangladesh was $2.5 billion in 2015. India is the largest market of Muslim consumers’ cosmetic spending worth $4.7 billion followed by Russia ($3.5 billion) and Indonesia ($3.3 billion). Turkey and Malaysia ranked fourth and fifth with $3.1 billion and $2.8 billion respectively. The report also showed that 40 per cent of Muslim cosmetics market in non-OIC countries and the value was estimated at $22 billion while the size of OIC countries Muslim cosmetic market was $34 billion in 2015. It also mentioned that the OIC countries’ combined import of cosmetic is $12.7 billion or 12.1 per cent of the global import worth $105 billion. This report also estimated that global Muslim spending on cosmetics was $56 billion in 2015 or seven per cent of the global expenditure of $750 billion. This is a growth of 4 per cent from the previous year, and is higher than the global market growth rate of 2.4 per cent. “Muslim spend on cosmetics is expected to reach $81 billion by 2021, a CAGR of 7 per cent from 2015,” it added.
Government’s oil sale profit has reached Tk 73.34 billion in the first ten months of the current fiscal due to the difference of price at which the government buys oil and the price they charge on sales. The oil prices have dipped across the world whereas in Bangladesh the government has increased price of fuel oil. According to the Bangladesh Economic Survey 2017, the state-sponsored Bangladesh Petroleum Corporation (BPC) has made that profit. Most of the other 45 public corporations mentioned in the report made losses. The BPC made Tk 90.4 billion in profits in the twelve months of FY2016 and Tk 4.13 billion in FY2015. The organisation has become profitable in the past three years after repeated losses in previous years. The BPC lost Tk 23.32 billion in FY2014 and Tk 48.32 billion in FY2013. In FY2012, BPC lost Tk 113.71 billion. In 2010-2011 FY, it lost Tk 88.40 billion. From 2012 to 2016 the global price of oil fell gradually from $105 per barrel to $30 per barrel. Now it is back in the $ 50-60 range.
Dhaka is reconsidering minimum import price (MIP) of some products as India said its exports to Bangladesh hit hindrance following a pricing order, officials said. The statutory regulatory order (SRO) was issued in July last year which had modified MIP of some products, including bicycles, ceramic sanitary products, and leaf springs. “The issuance of the order had an adverse impact on Indian exports to Bangladesh of several products,” Indian commerce secretary Rita Teaotia wrote to her counterpart in Dhaka recently. Delhi said the MIP set through the SRO was non-compliant with the WTO (World Trade Organisation) rules and issued to obstruct its export to Bangladesh. A senior official at the ministry of commerce (MoC) in Dhaka told the FE India claims that the MIP for the country was set higher than the MIP for similar products in case of China.
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