July-Jan trade deficit soars 92pc to $10.12b
The country’s overall trade deficit crossed US$10-billion mark in the first seven months of the ongoing fiscal year (FY), 2017-18, mainly due to higher import payments against lower export receipts, officials said. The deficit rose by nearly 92 per cent or $4.84 billion to $10.12 billion in July-January period of FY 18, from $5.28 billion in the same period of the previous fiscal, according to the latest central bank statistics. “Higher import payment obligations, particularly for food grains, fuel oils and capital machinery, pushed up the overall trade deficit significantly in July-January period of FY 18 compared to the same period of FY 17,” a senior official of the Bangladesh Bank (BB) told the FE on Wednesday. The overall import increased by more than 25.20 per cent to $31.18 billion in the period under review of FY 18, from $24.90 billion in the same period of the previous fiscal, BB data showed. The central banker expects that the overall trade deficit may decrease in the coming months, if the upward trend of export earnings continues. The country’s export earnings grew by 7.31 per cent to $21.05 billion in the first seven months of FY 18 against $19.62 billion in the same period of the previous fiscal. “The steady growth of export earnings continued in February that may help narrowing the overall trade deficit in the near future,” the central banker explained. In February 2018, export receipts stood at $3.07 billion, up by 13.53 per cent over the same month in the last calendar year. It was $2.70 billion in February 2017. The BB data also showed that deficit in service trade also increased to $2.58 billion in the first seven months of FY 18, which was $1.99 billion in the same period of the previous fiscal. Trade in services includes tourism, financial service and insurance.
Dollar price accelerates: Import pressure or manipulation?
Despite the rise in remittance inflow and export earnings, the US dollar keeps rising in cost. In February, remittances rose by 22.14% compared to the same period last year. Export earnings in the first eight months of the current 2017-18 fiscal (July-February) also increased by 7.38%. Currently the foreign currency reserve in Bangladesh Bank (BB) stands at over $31 billion. Despite these positive factors the price of the dollar against taka (Bangladeshi currency) keeps increasing. Bangladesh Bank cannot make the currency exchange market normal even after releasing dollars every day. Many question whether the dollar price is being manipulated. Experts think the price is shooting up due to the increase in import expenses. According to BB data, in less than a year taka’s value against the dollar was reduced to Tk4. In July last year, a dollar sold at Tk 80.66, while in March 12, it was selling at Tk85. In some banks the rate was Tk85. The central bank has directed all concerned not to charge more than Tk83. Despite that scores of private banks gave Bangladesh Bank wrong information regarding dollar rate. Bangladesh has been experiencing a volatile situation in the dollar market since June last year. Authorities have failed to contain the price even after releasing dollars due to syndicates, which is why taka’s value is dropping regularly. Allegations are that a number of banks are behind the destabilization of the currency market. A probe conducted by Bangladesh Bank also found that several banks were selling dollars to clients at a higher price than what they were reporting to the central bank. The banks charge Tk2 more for selling dollar from business persons than the rate they declare for the settlement of letter of credit, according to Bangladesh Bank. As a result, the import cost has risen and the foreign currency market has also become unstable. The price of the dollar against taka keeps increasing. This factor is beneficial for remittance and export earnings, but import costs are also increasing.
Work on savings tools’ database begins in July
The government will input all data about investors in savings tools in a central-database repository for modernising management of its borrowing instruments as a sustainable source of deficit financing. Officials said the inputting will begin in July in the next financial year, and on completion of the database building, the savers will get updates on the principal and yields thereon automatically. To this end, they said, the initial preparation starts next month (April). “We will begin preparation to create a database of the existing savings tools under the Directorate of National Savings (DNS),” Joint Secretary and programme director of finance ministry Md. Habibur Rahman told the FE. “We are scrutinising various issues in this connection, a high official of the finance ministry said. Under the move, a self-sufficient central database of clients or investors in national savings certificates will be created linking with the National Identity Card under the DNS.
BSEC offers recipe to boost market
The Bangladesh Securities and Exchange Commission has come up with a proposal to steady the jittery capital market, a document obtained by The Daily Star showed. DSEX, the benchmark index of the Dhaka Stock Exchange, lost 9.90 percent in value since the turn of 2018. The regulator has identified three major points — redefining of banks’ capital market exposure, extending the timeframe for lowering banks’ loan-deposit ratio and increasing the investment capacity of state-owned Investment Corporation of Bangladesh. BSEC made the seven-point recommendation based on the information it got from two stock exchanges, merchant bankers, brokers’ association and other stakeholders.
Bourses asked to ensure co directors jointly hold 30% stake
Bangladesh Securities and Exchange Commission has directed bourses to ensure that all the listed companies comply with the rule regarding all time joint-holding of minimum 30 % shares by each company’s sponsor-directors. The commission on Sunday issued a letter asking Dhaka Stock Exchange, Chittagong Stock Exchange and Central Depository Bangladesh to take immediate moves in this regard. Now, the bourses will send letters to the companies breaching securities laws regarding joint-holding of 30 % shares by directors of the company’s total paid-up capital, said a senior DSE official. The capital market regulator came up with the notification in 2011 after the 2010-11 market crash with a view to increasing sponsor-directors’ share purchasing to stabilize the market. According to the directive, all sponsor-directors of a company listed with any stock exchange must all time jointly hold minimum 30 % shares of the paid-up capital of the company. Even after 7 years of the BSEC directive under section 2CC of Securities and Exchange Ordinance 1969, sponsor-directors of 42 companies are not holding the required shares, shows recent data. Even shareholding by a number of companies’ sponsor-directors has hit 10 % as they continued share selling in the last two years.
Mahbub becomes DMD of City Bank
City Bank appointed Mohammad Mahbubur Rahman as Deputy Managing Director (DMD) of the bank recently. He had been working in the same bank as its Chief Financial Officer since 2011. Prior to joining City Bank, Mr Mahbub was the Financial Management Specialist for South Asia at the World Bank. He also worked with Leads Corporation as Chief Financial Officer and Grameenphone in various capacities including Head of Revenue Accounting.
New DMD of Reliance Finance
Mohammed Abdul Mannan has been promoted to deputy managing director of Reliance Finance Limited recently. Prior to this promotion, he was working as Senior Executive Vice President (SEVP) of that institution. Mr. Mannan is a postgraduate from the University of Chittagong and had his post graduate diploma in Personnel Management from Bangladesh Institute of Management with academic distinction. He started his career with Bangladesh Krishi Bank in 1983.
NBR mulls advance appraisal of returns
The income tax authority has planned to launch a set of measures, including advance or provisional assessment of tax returns, to gear up its revenue collection, said officials concerned. Under the measures, tax returns of the previous year will be assessed, in case of not submission of returns in the current tax year, to determine payable tax in advance. However, actual tax liability will be determined after the regular assessment of tax returns, said a senior tax official. National Board of Revenue (NBR) took the decision in a recent meeting. There are some 1.5 million taxpayers, who regularly file tax returns, out of the 3.3 million Taxpayers Identification Number (TIN)-holders. A number of registered taxpayers refrain from filing their tax returns every year to avoid tax payment, the official also said. Income tax collection of the government is lagging behind, registering a poor 12 per cent growth until January of the current fiscal year (FY), 2017-18. The meeting was held to evaluate the income tax collection scenario in the first half of the current FY, and to assess the need for revising the current strategies and adopting new strategies.
NBR lifts VAT on ship import to ease sea-borne trade
The government has offered exemption from VAT in case of import of large vessels above 5,000 deadweight tonnes to facilitate sea-borne trade. The National Board of Revenue (NBR) issued Wednesday an order, exempting importers from paying 15 per cent Value Added Tax (VAT) on the import of ocean-going ships. First secretary of VAT policy wing Hasan Muhammad Tarek Rikabder signed the order. The revenue board took the decision considering the country’s dependence on imported ships as 95 per cent of the import purchase is being conducted through the ocean-going ships. But the importers have to meet certain conditions to be eligible for the waiver. The ocean-going ships have to be registered as national flag-carriers of Bangladesh and compliance with the international rules of the International Maritime Organisation and other conventions ratified by the country. Ships over 15-year old will not be allowed to import under the facility. The ships have to operate as national flag carriers for shipment of goods for at least five years and will not be allowed to sell or hand over before that timeframe, according to the order.
FBCCI teams up with Singaporean federation to boost trade
The country’s apex trade body has recently joined hands with the Singapore Manufacturing Federation (SMF) to promote the trade ties between the two countries. The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) will work with SMF and share information on trade and investment and organise conferences and exhibitions to boost business between the two countries. Shafiul Islam Mohiuddin, FBCCI president, and Douglas Foo, SMF president, signed a memorandum of understanding in this regard at a programme in Singapore on Tuesday, FBCCI said in a statement yesterday.
Trump’s trade war drumbeats may reach Bangladesh RMG sector
Looming global trade war may affect Bangladesh’s economy and trade particularly exports as the US administration under president Donald Trump is planning to impose additional tariffs on apparel imports. After imposing tariffs on imports of a number of products from different countries, the world’s biggest economy is now planning to impose tariffs on up to $60 billion of Chinese imports targeting apparels, footwear, and technology and telecommunication sectors, according to a Reuters report. Experts and economists said that tariff imposition on readymade garment items would hurt Bangladesh’s export to the US market if the tariff was imposed indiscriminately on all countries. Though the US has kept some countries out of the new tariffs imposed on different products, it does not seem sure whether the tariff on RMG products would be imposed only on China or on all countries, they said. The USA has already imposed additional tariffs on different products including steel, aluminium and solar panel eying China, and paper and lumber targeting Canada by up to 30 per cent.
Chinese money starts to flow in
China has released $174.11 million, the first of its disbursements for the 27 projects it committed to bankroll for $22.5 billion during its president’s visit to Dhaka in October 2016. In February, the Chinese embassy in Dhaka handed over the amount, which is 20 percent of the total costs for two of the projects, said AKM Matiur Rahman, joint secretary of the Economic Relations Division. The Exim Bank of China releases funds twice a year: every six months. “So, we will get another instalment after six months.” The Chinese lender disbursed about $141 million for the multi-lane road tunnel under the Karnaphuli river project and $33.11 million for the third phase of the Info Sarker project. The Karnaphuli river tunnel project will be implemented by China Communications Construction Company, as decided by the Chinese government. The tunnel will connect the proposed Asian Highway to the Dhaka-Chittagong-Cox’s Bazar Highway and the Chittagong Port and Anowara upazila. It is expected to facilitate communication between Chittagong and Cox’s Bazar and ease traffic movement on two bridges over the Karnaphuli river.
Govt approves 162MW power plant project
Bangladesh and China are going to set up a 162-megawatt furnace oil-based power plant under private investment as per the former’s policy. The cabinet committee on purchase approved the plant at a meeting yesterday with Finance Minister AMA Muhith in the chair. The government will buy electricity from the plant at Tk 8.2868 or 10.5350 dollar cents per kilowatt hour. It will be run under the built-own-operate basis for 15 years. The consortium, comprising Changzhou HuTang Coal Power Co Ltd of China and Icon Enterprise Ltd and Chase Power Ltd of Bangladesh will set up the plant at Singair in Manikganj. According to a Power Division proposal, the government will have to spend more than Tk 14,000 crore in 15 years for buying electricity from the consortium. The entity will purchase land, set up transmission lines and a sub-station with its own money, said the proposal. The cabinet committee also extended the tenure of two existing power purchase deals.
Power import from India extended for six more months
The cabinet committee on national purchase at a meeting on Wednesday approved a proposal that will allow power division to extend the tenure of import of 250 megawatt electricity from Indian open market for another six months at a cost of Tk 616 crore. Presided over by finance minister AMA Muhith at secretariat, the committee also approved six more proposals, including establishment of a dual-fuel power plant by an independent power producer in Manikganj, extension of power purchase from a power plant by another independent power producer at Haripur, construction of a bridge over the River Kaliganga in Pirojpur and appointment of contactors for two packages of Comilla-Begumganj regional highway upgrading project. Additional secretary Mostafizur Rahnman of the cabinet division at a briefing said the cost of per kilowatt-hour power would be Tk 5.9859 to be supplied by Power Trading Corporation of India. The country would pay Tk 616 crore to buy the electricity, according to the proposal of the power division. The proposal, signed by power division secretary Ahmad Kaikaus, said the Indian supplier had appealed for extension of the deal after the current deal expired in January.
Mobile cos linger mobile number portability (MNP) operation
Mobile Network Operators (MNOs) are in pursuit of lingering the much-awaited mobile number portability (MNP) service by seeking more time for its implementation. The telecom regulator has declined to give two months more time for introduction of the service, as requested by Association of Mobile Telecom Operators of Bangladesh (AMTOB). As per Bangladesh Telecommunication Regulatory Commission (BTRC) Chairman, the mobile phone users will enjoy the service in May. Once the service is introduced, a mobile phone user can port to another operator retaining his/her number unchanged at a cost of BDT 30, and the process would take highest 72 hours. If any user again wants to change operator, he/she has to wait for 90 days.
LG, Butterfly to make LED TV locally
South Korean electronics giant LG Electronics is set to manufacture LED televisions, refrigerators and air conditioners in Bangladesh, following in the lead of its compatriot Samsung. LG’s local partner Butterfly has shelled out $100 million to set up a plant on 50 acres of land in Bhaluka. The plant will be inaugurated today, said MA Mannan, chairman and managing director of Butterfly. The plant’s manufacturing line for LED TVs will roll first, followed by refrigerators and air conditioners next year. Since June last year, Samsung has been manufacturing four home appliance products in the two factories it set up with Transcom Group and Fair Electronics in the capital’s Mohakhali area and Narsingdi respectively.
Bangladesh 115th happiest nation
Bangladesh is the 115th happiest country according to World Happiness Report 2018 released on Wednesday, according to a website report. The country slipped five notches down compared to the last year’s World Happiness Report but still happier than Indians and Sri Lankans. Among 156 countries, Sri Lanka and India have been ranked respectively 116th and 133rd positions. Bangladesh was ranked 110th in the 2017 Happiness report. Finland is the happiest place on earth, says the report prepared by the Sustainable Development Solutions Network (SDSN), a global initiative launched by the United Nations in 2012. Norway and Denmark positioned the second and third respectively. This year, Iceland, Switzerland, Netherlands, Canada, New Zealand, Sweden and Australia rounded out the other top ten countries. The report ranks countries on six key variables that support well-being, income, freedom, trust, healthy life expectancy, social support and generosity.
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