The government is going to amend the Bank Company Act increasing the tenure of directors of private commercial banks to nine years divided in three terms. Besides, the private bank board can also have four members from an owner family as directors as per the amendment proposal. Financial Institutions Division will place a proposal on the matter at the Cabinet Committee meeting presided over by Prime Minister Sheikh Hasina today. The people concerned think it is good for banking sector as there is no law regarding appointment of directors in private banks. Last year Finance Minister AMA Muhith hinted that the tenure of directors at private commercial banks might be extended up to nine years from existing six years. According to amendment of the provision 15 (10) Bank Company Act 2017, four family members of owner family will be directors instead of existing two directors whatever written in the company law. The directors of a private bank now hold the post two terms and each term is three years. Now it will be nine years in three terms and each tenure will be three years. Former Bangladesh Bank Governor Salahuddin Ahmed said it is bad law for banking sector as owner family will have more controls over the banks. According to the previous law approved in 2013, the banks must take approval from the central bank for the appointment of the directors.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid Bipu has said the government has no plan to cut fuel oil prices, reports bdnews24.com The state minister cleared the government stance on the issue in Parliament on Sunday. Following demands by several quarters after the drop in global crude oil prices to USD 33 per barrel in 2016, the government lowered the prices of diesel and kerosene by 4.0% and octane and petrol by around 10%. Furnace oil price was cut to BDT 42.0 from BDT 60.0 a liter. The government did not respond to demands for more cuts in fuel oil prices. Finance Minister Muhith said by the end of last year that steps to cut fuel oil prices had been taken, but it has not happened yet. In a media briefing during the spring meetings of the IMF and World Bank Group in Washington in April, Muhith said a proposal to cut fuel oil prices was awaiting Prime Minister Sheikh Hasina’s approval. But replying to an MP’s query on Sunday, State Minister Bipu told MPs that the prices cannot be cut now in Bangladesh because the global oil prices are going up. He said Bangladesh Petroleum Corporation may count losses due to devaluation of BDT against US dollar if the fuel oil prices are cut.
The country’s overall trade deficit widened by nearly 47% or USD 2.3 billion in the first nine months of this fiscal year (FY), 2016-17, following higher growth of import payments than export earnings, officials said. The trade gap rose to USD 7.04 billion in the July-March period of this FY from USD 4.8 billion in the same period of the previous fiscal, according to the central bank’s latest statistics, released on Sunday. The trade deficit may widen further in the coming months, if the existing trend of export earnings and import payments continues, according to the Bangladesh Bank (BB) officials. The overall import payments, including those of the export processing zones (EPZs), grew by 11.1% to USD 32.4 billion in the nine months of FY 17 from USD 29.1 billion in the same period of FY 16. On the other hand, the overall export earnings, including those of the EPZs, grew by 4.01% to USD 25.3 billion during the period under review from USD 24.4 billion in the same period of the last fiscal. The country’s current account deficit reached USD 1.4 billion during the period under review from USD 3.35 billion surplus in the same period of FY 16. It was USD 1.1 billion in the first eight months of FY 17. The flow of inward remittances dropped by 16.8% to USD 9.06 billion during the July-March period of FY 17 from USD 10.9 billion in the same period of the previous fiscal, the Bangladesh Bank data showed. The remittance inflow was estimated USD 1.09 billion in April 2017, up by USD 15.12 million from that of the previous month. In March 2017, the amount stood at USD 1.1 billion. It was USD 1.2 billion in April 2016.
Export earnings growth plunges to 3.9% in July-April
Country’s export earnings growth in the July-April period of the current fiscal year 2016-17 slumped to 3.9%, as against 9.9% growth in the same period of FY 2015-16, according to the Export Promotion Bureau’s provisional data. The export earnings increased to USD 28.7 billion in 10 months of this fiscal year compared with that of USD 27.6 billion in the same period of last fiscal year, the data showed. In July-April of FY15, the earnings totaled at USD 25.3 billion. Experts and exporters said sluggish global market and appreciation of the local currency BDT against the dollar caused the slow growth in export earnings. In April this year, the export earnings grew by 3.5% to USD 2.8 billion from USD 2.7 billion in the same month of last year, the data showed. The export earnings growth in April, 2017 also dropped significantly as the growth was 11.8% in the same month of last year. The EPB data showed that earnings from readymade garment exports in the July-April period of FY17 grew by 2.2% to USD 23.1 billion from USD 22.6 billion in the same period of FY16. The growth in earnings from RMG product exports was 10 .1% in the July-April period of FY16.
Eastland Insurance to bring new, innovative digital products
Eastland Insurance Company Limited has announced it would introduce new and innovative digital products to meet the needs and demands of customers and match the development goals of the country. Mahbubur Rahman, chairman the first-generation general insurers in the country’s private sector, revealed the company’s business plan at a function organised at Golf Garden in the city Saturday to celebrate the company’s 30-year achievements. “We believe, diversification of business is essential to face the future challenges. To that end, we are considering new products, including the digital ones, for our customers,” he told the function. Mr Rahman, also the president of International Chamber of Commerce-Bangladesh, said the company was set to strengthen its business to match the country’s faster pace of growth.
Portfolio investment on Dhaka Stock Exchange (DSE) slumps 78.0% in April
Net portfolio investment in stocks slumped 78% month-on-month in April this year, hitting eight months low, as overseas investors booked profit on large-cap stocks. Local stockbrokers who deals with foreign investors, told the FE that the overseas investors increased their share sales in April as the rising share prices prompted them to realize profit while some followed ‘wait-and-see’ strategy. During the month of April, DSEX, the prime index of the Dhaka Stock Exchange (DSE), registered a cumulative loss of 216 points or 3.79% after gaining nearly 684 points in January-March period of 2017. Foreign investors bought shares worth BDT 4.69 billion and sold stocks of BDT 3.98 billion to take their net investment to BDT 700 million in April, according to statistics available from the Dhaka Stock Exchange (DSE). In March, net investment by overseas investors was BDT 3.30 billion, as they bought shares worth BDT 7.11 billion and sold stocks worth BDT 3.81 billion, the DSE data shows. The April’s net portfolio investment in DSE was also the lowest in the eight months since August 2016. In August, 2016, net overseas investment was negative BDT 37.60 million as they bought shares worth BDT 3.69 billion and sold stocks worth BDT 3.73 billion. In 2016, net foreign investment at DSE was BDT 13.40 billion, which was 1.85 billion in 2015. Also known as portfolio investment, foreign investment accounts for about 2.0% of the DSE’s total market capitalization, which stood at BDT 3,746 billion as of Sunday.
ADB development assistance for Bangladesh may double to USD 2.0 billion
The Asian Development Bank hinted at doubling its assistance for Bangladesh economy as it grows rapidly and demands higher investment to maintain the momentum. To support the advances, which an ADB functionary likened to the East-Asia model, the Bank is likely to enhance its financing to Bangladesh in the current year to around USD 2 billion. Hun Kim, director-general at the South Asia department of the Asian Development Bank, made the observations on Sunday morning at a media briefing arranged on the sidelines of the 50th Annual Meeting of the Board of Governors of the ADB in this Japanese port city. This is for the fifth time Japan hosted the annual meeting of the Asian development-financing bank that concluded Sunday. The theme of the meeting was ‘Building Together the Prosperity of Asia’. Last year, the ADB approved 10 projects for Bangladesh, with loans totaling USD 1.1 billion and technical assistance worth USD 7.85 million. Mr Kim, however, noted that Bangladesh has to improve upon its project-implementation capacity to sustain 7.0% growth and reach 8% in the long run. Bangladesh’s Gross Domestic Product (GDP) growth stood at 7.11%, by official count, in the last fiscal year while the target for this year is 7.2%. ADB annual outlook, however, projects 6.9% growth for the current year.
Finance ministry in favor of firms investing abroad
The banking division is in favor of allowing local businesses to invest abroad — a stark contrast to the central bank’s stance on the matter. However, for taking the final decision on the matter, Finance Minister AMA Muhith has referred the proposal to the cabinet committee on economic affairs that has several ministers as its members. Three industrial giants — Akij, Nitol and Ha-Meem — have recently applied to the Bangladesh Bank for permission to invest a total of USD 37.4 million in ventures in three countries. If, in future, export earnings and remittance inflow decrease further, such investment may create opportunity for earning foreign currency for the country, said the proposal from the banking division to the cabinet committee on economic affairs. However, the BB observation projected various negative aspects about allowing local companies to invest abroad. Though the foreign currency reserves crossed the USD 32-million mark quickly, its growth rate has now slowed down, the central bank said. In recent times, import bills have gone up and export growth and remittance inflow have declined, both of which had the effect of driving the current account balance into the deficit from surplus.
Poor FDI weakest point of Bangladesh’s economy: Asian Development Bank (ADB)
Asian Development Bank’s South Asian department director general Hun Kim has identified poor foreign direct investment as the weakest point of Bangladesh’s economy. The FDI flow is very low, which accounts for less than one% of Bangladesh’s total GDP size, Hun said at a press conference on the final day of the 50th annual meeting of the ADB at the Pacifico Yokohama Conference Centre in Yokohama, Japan on Sunday. He said East Asian countries obtained robust growth because of good inflow of FDI. Hun said that Bangladesh should encourage its private sector for further investment and mobilizing more FDI. He also observed that the inflow of FDI was very low in South Asia except in India. The ADB has identified Bangladesh as one of the six Asian countries with growth potential. Bangladesh along with India, Indonesia, Myanmar, the Philippines and Vietnam is gathering momentum after China is transitioning to more moderate and balanced growth. Bangladesh can achieve even eight% growth in future, he said. The ADB would provide loans worth USD 1.8-USD 2 billion, almost double than the 2016 figure, to Bangladesh so that the country could sustain its new found growth rate of seven%. The Manila-based multilateral agency provided USD 1.1 billion in loans to Bangladesh in last year.
The Implementation of new VAT law will affect the country’s real estate sector, said Housing and Public Works Minister Engineer Mosharraf Hossain on Sunday. “There is no example in any country of the world that people will have to provide 15 per cent VAT in all sectors. If number of tax payers is not increased, problems will not be solved by increasing tax,” he said, reports UNB. The minister came up the remarks while speaking at a roundtable meeting at Dhaka Club in the capital. Centre for Communication Network (CCN) arranged the programme, titled “Accommodation Sector in National Economy”. Mosharraf said some 1.2 million out of 160 million people in the country give tax but the rest are out of the tax network, which cannot be acceptable.
Tariff policies should be sector specific: analysts
The government should introduce sector specific policies to eliminate existing tariff discrimination, Mozibur Rahman, former chairman of Bangladesh Tariff Commission, said yesterday. It is not clear from the existing tariff policy what the government wants to encourage, import or export, Rahman said. He spoke while addressing a seminar on “the tariff structure of Bangladesh and sector wise allocation of national budget”. The seminar was jointly organised by the Economic Reporters Forum (ERF) and Dhaka School of Economics in the capital. The existing tariff structure benefits some of the sectors, Rahman said. The National Board of Revenue holds the power of setting up tariff, which is the main job of the tariff commission, he said. The government focuses on tax collection to increase revenue, but it should understand that the increasing tax burden will reduce consumption because of a fall in income, he said.
Weeklong drive to ensure jute packaging begins May 15
A weeklong special drive will be conducted across the country from May 15 to ensure the use of jute bags in packaging of 17 products. Another aim of this drive is to stop use of polythene bags in packaging. State Minister for Textiles and Jute Ministry Mirza Azam made the announcement at a meeting at secretariat on Sunday, reports UNB. The government will conduct the drive on roads, waterways, land ports, goods-carrying vehicles, producing, packaging, export-import organisations through mobile courts.
The telecom regulator is set to start technical and financial audits into Airtel — from the start of its operations in Bangladesh till merger with Robi. Simultaneously, Bangladesh Telecommunication Regulatory Commission is taking an initiative to go for a fresh audit into Banglalink, said BTRC Chairman Shahjahan Mahmood. “We will shortly appoint audit firms for these two operators,” said Mahmood, but did not mention any timeframe for the audits. The regulator is currently running an audit into both Grameenphone and Robi, which is progressing slowly. Airtel launched its operations in Bangladesh in 2006. After ten years of its journey, it merged with Robi last year. Up until the merger, it recorded yearly revenue of around Tk 2,000 crore, but was never profitable.
Asia’s future development funding has to come from the private sector through public-private partnerships, said Takehiko Nakao, president of the Asian Development Bank, yesterday. ADB member states insisted that the lender should invite larger private sector financing to support the region’s development, especially for infrastructure, he said. The ADB would increase its private-sector operations to 25 percent of its regular ordinary capital resources (OCR) operations by 2020, Nakao said, adding that expansion of such private sector involvements in resource mobilisation would be more visible in poorer countries.
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