Crackdown awaits lavish non-life insurance firms: IDRA issues show-cause notices on all 45 firms
The insurance regulator now plans a tougher crackdown on the country’s 45 non-life insurance firms for their lavish management spending in violation of the rules. Earlier, the Authority had conducted a drive against 17 life-insurance firms which are now in the courts of the anti-graft body, the Anti-Corruption Commission (ACC), for investigations. IDRA people said the excessive management spending by the general firms affects negatively the latter’s ability to settle claims of the clients. The IDRA (Insurance Development and Regulatory Authority) found each of the private sector non-life firms spending much against their limit each year without any control. Same is the case with the state-owned Sadharan Bima Corporation, they mentioned. The IDRA Tuesday issued show-cause notices upon all the 45 non-life firms, asking them to explain why it should not take punitive action against them as per law. They were asked to reply by July 11. They have been summoned to attend hearings to be held on July 24-28 on the charges.
A few changes likely in proposed tax measures: Finance Bill passes thru parliament today
The government may make some changes to the tax measures in the new finance bill before it gets through parliament today (Wednesday), in final consideration of demands from stakeholders. Finance Minister AMA Muhith would move the Finance Bill 2016 in the House for passage with such changes, sources said. Cut in the proposed tax at source for exporters, upward revision of the investment rebate for individual taxpayers, reduction in VAT amount as a prerequisite for making appeal by aggrieved taxpayers are likely among the changes to be proposed. Tax at source for readymade garment exporters may be set at 0.8% for fiscal year 2016-17 against the existing 0.6%. In the new budget, the government proposed to increase the rate to 1.5% for exporters. Jute exporters are likely to enjoy 0.6% tax at source in the upcoming fiscal year. However, corporate tax rate for readymade garment exporters will remain unchanged at 20.0% as per budget proposal made on June 02. Currently, the corporate tax rate for the apparel exporters is 35.0%.
Brexit: garment makers face price cuts
The British buyers of Bangladeshi garment products have started putting price pressure on manufacturers following the freefall of pound sterling as a result of Brexit. The pound sterling sank as low as USD1.35 — its lowest rate against the dollar since September 1985 — before recovering to USD1.37. It has also declined sharply in Bangladesh. On June 22, a day before the Britons went to the polls over the European Union membership, the inter-bank exchange rate of the pound sterling stood at BDT 115.27. The following day it came down to BDT 107.26 and on Monday, it stood at BDT 103.64, meaning the British currency slumped about 10% in the space of five days. For the UK, a weaker exchange rate means its import bills will swell and so will inflation. But it seems the British retailers are not ready to pay more for the garment products they source from Bangladesh, according to exporters.
Bangladesh frozen fish exporters already feeling Brexit pinch
The British move to leave EU has already hit Bangladesh’s frozen fish sector with export consignments worth nearly BDT 1.0 billion getting stuck as UK buyers asked not to make any shipment following Brexit referendum. Experts and exporters feared that country’s frozen fish sector might be the worst victim of Brexit as most of the Europe-bound export consignments go to their destinations via London. Exporters said that the United Kingdom was the highest importer of Bangladesh’s frozen fish and following the Brexit the UK buyers have already asked the exporters to hold delivery. ‘We are in deep concern over the situation as UK buyers have already asked exporters not to make any shipment and the export consignments worth nearly BDT 1.0 billion got stuck due to Brexit,’ SM Amzad Hossain, president of Bangladesh Frozen Foods Exporters Association told New Age on Tuesday. In the EU referendum the British people on June 23 decided to leave the European Union. Following the result of Brexit vote a turmoil situation took place in the UK economy and politics. Due to Brexit the British pound fell by 8.0% and the UK buyers are observing the situation whether they should import shrimps at this moment, Amzad said.
Brexit won’t affect Bangladesh trade with EU: German envoy
Dispelling growing fears, German Ambassador in Dhaka Dr Thomas Prinz said Tuesday Britain’s exit from the European Union (EU) wouldn’t cast any impact on Bangladesh’s trade with the bloc. “No, it (trade) will not be affected due to Brexit. We have contract between EU and Bangladesh which will not be affected if one member leaves,” he told reporters after a meeting with Finance Minister AMA Muhith at the latter’s secretariat office. French Ambassador Sophie AUBERT was also present during the meeting. Dr Prinz said that, maybe, at the later point Bangladesh will have to negotiate with the United Kingdom, when it is out of the EU, on market-access issue. “But at this moment it (Brexit) would not affect Bangladesh’s trade with EU,” he said. Regarding Germany’s national flag-carrier Lufthansa’s stoppage of direct cargo service from Bangladesh the envoy said he is yet to see the letter of the federal aviation authority which looks after the issue.
Foreign aid disbursement goes up by 9.5% in 11 months
The foreign aid disbursement in the country has risen by 9.5% during the period of 11 months of this fiscal compared to the corresponding period of last fiscal, officials said Monday. Economic Relations Division (ERD) data showed the development partners provided USD 2.9 billion worth of concessional assistance during July-May period this fiscal, a 9.50% higher than that in the last FY2015. Official data also showed that the commitment of the external resources including the concessional loans and grants have also increased significantly by 68.0% during the 11 months of the current financial year (FY) 2015-16. According to the ERD, the development partners’ foreign aid commitment has picked up to USD4.76 billion in July-May period of the current FY2016 compared to USD 2.8 billion in the corresponding period last fiscal.
ADP execution rises to 90%
Execution of the annual development program (ADP) is finally going to fall short of expectation as the planning minister scaled it down to around 90%. Planning Minister AHM Mustafa Kamal had earlier aired the hope for cent-percent implementation ADP up to the end of this fiscal. Only two days are to go before the financial year 2015-16 ends. “So far, BDT 791.2 billion of the BDT 939.0 billion revised ADP fund has been spent by the ministries and agencies, excepting the health ministry and the Prime Minister’s Office. I hope some 90%-plus ADP will be executed at the end this fiscal,” he said while briefing journalists Tuesday in Dhaka after a meeting of the Executive Committee of the National Economic Council (ECNEC). A few months ago, the minister had told journalists that he was confident of implementing 100% of the BDT 970 billion original ADP for the outgoing financial year (FY). The ADP was later revised downward to BDT 910 billion in the third quarter of the fiscal due to a poor pace of execution by the ministries and agencies. In the last FY2015, the government spent BDT 711.4 billion or 91% of its BDT 778.4 billion revised ADP.
New VAT measures to bring in BDT 64.2 billion
The government is set to rake in an additional BDT 64.2 billion next fiscal year due to various value added tax measures proposed in the budget. The disclosure comes after tax officials last week presented a picture to Finance Minister AMA Muhith of how much revenue will be gained or lost owing to the various tax measures. However, the proposed VAT waiver to some items would result in revenue loss of BDT 200 million. Muhith, who will present today an amended version of the budget he had proposed on June 2, is unlikely to make any changes to the tax measures save for the source tax on export earnings. The source tax may be brought down to 0.8% or 1% from the proposed 1.5%, said a finance ministry official. The revenue target for fiscal 2016-17 has been set at BDT 2,031.5 billion, up 35.43% from current year’s target. The target for income tax collection would be BDT 719.4 billion and VAT collection BDT 727.6 billion.
Telecom act to be amended: State Minister for Telecom
State Minister for Telecom Tarana Halim yesterday said they will amend the existing telecom act in line with the newly approved national telecom policy, to achieve the targets fixed by the cabinet. The ministry will shortly take initiatives to amend the telecom act, which was passed in parliament in 2001 and later amended in 2010, said Tarana. This law is related to technology, which is evolving every day, Tarana added. In the newly adopted policy, the government wants to achieve 100% teledensity by 2021, which is now 80%. At the same time, the telecom division is working to achieve 45% internet penetration over the next three years and 65% by 2021 — from 27% at present. The long-term target is to achieve 90% internet penetration.
Doreen Power’s subsidiary starts commercial operation
Dhaka Southern Power Generations, a subsidiary of the Doreen Power Generations and Systems which holds 96.8% shares, has started commercial operation recently, said an official disclosure on Tuesday. The company will generate BDT 3.1 billion (approx.) as revenue per year at a plant factory with 80% capacity after completion of the COD of 55 MW Power Plant, the disclosure said. “As a 96.8% shareholder, Doreen Power will be benefited from the above mentioned revenue proportionately,” said the disclosure. Doreen Power, which was listed on the Dhaka bourse in April this year, raised a fund worth BDT 580 million from the public through initial public offering. The power generation company floated 20 million ordinary shares of BDT 10 each, in addition to BDT 19 as premium.
GP seeks to continue Jan-Dec as income year
Grameenphone has sought exemption from following July-June as the ‘uniform’ income year, set by the stockmarket regulator. The lone listed mobile phone operator made the plea as its parent company Telenor has 11 other operations globally that follow January-December as their income year. The change in one company’s income year may create problems to others, especially in the case of financial disclosures, officials said. The company has already placed the issue before Finance Minister AMA Muhith and requested him to allow the operator to continue the income year that it follows now. Mahmud Hossain, chief corporate affairs officer at Grameenphone said that he expects that they will get a positive response from the authorities and can continue to follow January-December as their income year. All taxpaying companies other than banks, non-bank financial institutions and insurance will have to follow the uniform income year from July to June from this July, according to a regulatory directive.
World Stock and Commodities
|Index Name||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)*||$48.21||+0.36||+0.75%|
|Crude Oil (Brent)*||$48.84||+0.26||+0.54%|
|Dow Jones Industrial Average||17,409.72||+269.48||+1.57%|
|USD 1||BDT 78.60*|
|GBP 1||BDT 104.70*|
|EUR 1||BDT 86.99*|
|INR 1||BDT 1.16*|
*Currencies and Commodities are taken from Bloomberg.