Interest rate on deposits slid below the 5-percent mark and well under the inflation rate, compounding the woes of savers who have already been hit by a large hike in excise duty on their balances. In April, weighted average deposit rate stood at 4.97%, down from 5.77% a year ago, according to Bangladesh Bank. However, deposits saw 12.21% year-on-year growth in March, higher than 8.28% registered in March last year. Bankers attributed the deposit growth to the excess liquidity in banks. BB Governor Fazle Kabir in a post-budget briefing said they mopped up BDT 5,000 crore on average every day from banks due to excess liquidity. So much that the 67.0% hike in excise duty on account balances of more than BDT 1.0 million from next fiscal year is unlikely to deter savers to parking their funds with banks. The higher excise duty will only cause sufferings for the middle-class, who depend on returns from their savings for sustenance, said a senior executive of a private bank.
Bangladesh Bank deputy governor SK Sur Chowdhury on Monday asked banks to organise training and workshop programmes for their staff as the vast majority of the bank officials are not properly skilled to perform their jobs. Banks have been performing poorly for long in terms of using the central bank’s refinance schemes that are usually taken to speed up the country’s business activities, he said while inaugurating the training programme on JICA-funded urban safety project with the participation of financial institutions’ officials. The central bank introduced a refinance scheme in March, 2016 with taking financial cooperation from Japan International Cooperation Agency, but the banks failed to disburse any loan to the clients from the scheme, he said at the event organised by the central bank at its headquarters in the capital. The central bank provided the fund from the scheme charging only two per cent interest rate to the banks while they are allowed to add 4 per cent rate meaning.
The country’s trade deficit is on course to surpass its previous record this fiscal year (2016-2017) as the deficit in the first 10 months of FY17 stood at USD 8.17 billion, growing by over 50.0% compared with that in the same period of last fiscal year. The trade deficit, the gap between the export earnings and the import payments, posted record USD 9.32 billion in FY 2011-2012. With the current trend of slower growth in export earnings and soaring import payments, the deficit might even hit the USD 10.0-billion mark this fiscal year, said Bangladesh Bank officials. BB data released on Monday showed that trade deficit in July-April of FY17 was USD 8.17 billion against USD 5.4 billion in the same period of FY16. The deficit rose by USD 1 billion in a single month — in April. Finance adviser to a former interim government Mirza Azizul Islam told New Age on Monday that large trade gap was a usual phenomenon in a developing country, but there was a question of accuracy of actual import payment data in the context of Bangladesh. He said that the country had posted a large growth in imports in recent months where import of industrial raw materials declined and capital machinery increased. He suspected that a section of the businesspeople laundered money abroad through over-invoicing that might increase the overall import payments.
World Bank renews its lower Bangladesh growth forecast at 6.8%
The World Bank renewed its Bangladesh economic growth forecast lower than the official rates for both this and next fiscal years: 6.8% and 6.4% respectively. In a latest economic update the WB stuck to its stance on the GDP growth at 6.8% in the outgoing financial year (FY) 2016-17 although the government has already counted it to be 7.24%. And the growth rate may be yet lower at 6.4% in Bangladesh in the upcoming FY2018, the WB said in its Global Economic Prospects (GEP) report, released Monday from its headquarters in Washington, DC. For the next fiscal, the government, in the meantime, has set in the national budget an up-raised target of 7.4% gross domestic product (GDP) growth. The multilateral global development financier’s projections came hot on the heels of domestic debates over the goals set out in the new budget having a record-high outlay of over BDT 4.0 trillion.
Private sector companies to face strict tax scrutiny
Private sector companies are going to face greater scrutiny in claiming their expenses for employees’ salaries. From fiscal 2017-18, companies will have to pay taxes on the salaries to be paid to employees who avoid tax return submission despite having taxable income. This is also likely to be applicable to those working at management or executive level positions in a firm — a further tightening of rules by the National Board of Revenue to increase collection of payroll tax that remains at a very low level because of non-compliance. The NBR last year framed rules making it mandatory for public sector employees drawing more than BDT 16,000.0 in monthly salary to have Taxpayer Identification Number. The rule, however, has been waived for private sector employees drawing similar amount of wages a month. It also made submission of returns mandatory for public sector employees with basic salary of BDT 16,000.0 and above.
German chemicals giant Linde and its US rival Praxair have finally agreed to a USD 73.0 billion merger. Linde Bangladesh confirmed the deal in a posting on Dhaka Stock Exchange website yesterday. “The proposed business combination of Linde and Praxair is expected to create significant synergies,” said Linde, adding that there are no plans to bring any changes in its course of business in the country. Linde shareholders will be offered 1.54 shares in the new company for every Linde share they hold, while Praxair shareholders will be offered one for one — leading to a roughly 50:50 ownership split, according to the deal. Wolfgang Reitzle, Linde chairman and a veteran dealmaker, is considered the mastermind behind the deal. Reitzle, 68, was the architect of Linde’s USD 10.0 billion deal to take over British BOC in 2006 and re-engineered the USD 50.0 billion Lafarge-Holcim building materials merger in 2015. He will be the chairman of the merged company. Last trading price of each Linde Bangladesh share was BDT 1,290.0 on the Dhaka bourse yesterday.
Ship breakers for withdrawal of VAT on scrap import
The ship-breaking and recycling industries have demanded withdrawal of 15.0% value added tax (VAT) on import of scrap vessels. President of the Bangladesh Ship Breakers’ Association (BSBA) Md. Abu Taher made the demand during a press conference at the Chittagong Press Club on Monday. Members of the BSBA executive committee AUM Jahangir Chowdhury, Master Abul Kashem, Kamal Uddin Ahmed, M Solaiman and Anwar Hossain were present, among others. Abu Taher said the recycling of scrap ships started in the Sitakunda coast of Chittagong back in 1984. Over 500 re-rolling mills of the country have a gross demand of four million (40 lakh) metric tons of raw material every year. He said imposition of 15.0% VAT, instead of specific duty, on the scrap ships imported for dismantling will definitely lead to the hike of rods, angels and bars by BDT 7,000.0 to BDT 8,000.0 per metric ton.
Regent Airways plans to add three new Boeing aircraft to its fleet in order to expand its operation to all countries in the Middle East by next year. “Our main aim is to let our expatriate Bangladeshis enjoy a comfortable and smooth journey at an affordable price,” said M Fazle Akbar, chief executive officer of Regent Airways. He talked about his company’s plans on the sidelines of a programme at the Doha Marriott Hotel in Doha on May 21. The programme was organised on the occasion of Regent’s inaugural flight to the capital of Qatar. Recently, a new Boeing 737-800 aircraft has been added to Regent’s fleet to take the total number of carrier to seven — five Boeing and two Bombardier Dash.
Only one-fourth of the regular return filer firms have so far re-registered online, an important cog for the smooth functioning of the automated VAT system that will take effect next month. From July 1, firms need the 9-digit electronically generated Business Identification Number to run their operations, including import and export. The existing 11-digit BIN will be invalid once the new VAT comes into effect, so firms need to re-register online for the e-BIN, which started at the end of March. Of the 36,858 firms that regularly file returns, 9,768 firms have signed up for the e-BIN. This prompted the revenue authority to direct its field offices to ensure re-registration by all by June 15. “Overall, the numbers of return filers and re-registration are not satisfactory,” said the National Board of revenue in a letter sent to its field offices on June 4.
ICAB takes punitive actions against seven chartered accountants (CAs) and six audit firms
The Institute of Chartered Accountants of Bangladesh (ICAB) has taken punitive actions against seven chartered accountants (CAs) and six audit firms after they were found guilty of professional misconduct. The investigation and disciplinary committee of ICAB recommended the measures recently under different clauses of the ICAB bylaws. The measures include barring the CAs and audit firms from auditing the listed companies, imposing financial penalty and reprimanding them. The firms in question are Shafiq Mizan Rahman & Augustine, Toha Anwar Rouf & Co. M/s Islam Quazi Shafique & Co, MS Hoque & Co, Arif Hussain & Co and SR Islam & Co while the CAs are AKM Mizanur Rahman, Khairul Islam Khan, MM Abdur Rouf, Abu Taher, AKM Monirul Haque, Md Shamsul Haque, Arif Hussain and Sarder Rabiul Islam. Financial penalty of varying amount, ranging from BDT 50,000 to BDT 500,000, has been imposed and in the event on non-payment of the penalty, their membership will be suspended for three months to two years.
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