Jeddah-based IDB to sell off two-thirds of its Islami Bank shares
The Islamic Development Bank is selling off two-thirds of its shares in Islami Bank Bangladesh Limited (IBBL) as part of its tenure strategy to drive maturing institutions. The Saudi-based lender is bringing down its share to 2.1% in IBBL from the existing 7.5%, IDB correspondence Dr Arif Suleman said on Tuesday. “There has been a misconception that the Islamic Development Bank is leaving Islami Bank. We are not leaving, we are just reducing our shareholdings,” clarified Suleman in response to queries from journalists on the sideline of the 34th Annual General Meeting of IBBL in Dhaka. Currently, the Islami Bank contributes over 25% in small and medium-sized enterprise (SME) development in the country and its making a positive impact. Globally it is recognized as a highly reputable institution. Despite reduction of shareholding, IDB will remain on board and will be active in IBBL, the IDB correspondence said.
S Alam Group tightening grip on IBBL as IDB cutting stake
Chittagong-based S Alam Group is tightening its grip on Islami Bank Bangladesh Limited as one of its (Group) newly established companies on Tuesday announced that it would buy 3.20 crore more shares of the bank coinciding with the Islamic Development Bank’s declaration of selling the majority of its stake in IBBL. On the same day, the infighting in the IBBL board led to removal of Syed Ahsanul Alam as the bank’s vice-chairman after three weeks of bickering, especially between IBBL chairman Arastoo Khan and Ahsanul.Excel Dyeing & Printing Ltd, a little-known Chittagong-based company that holds a directorship post in IBBL, on Tuesday in a notice to the Dhaka Stock Exchange declared to buy 3.20 crore more shares of the bank at the prevailing market price within 30 days. The IDB, which has grown frustrated with the recent changes in the IBBL board, on the day announced that it would sell off 8.69 crore shares, cutting down its total stake of 12.07 crore shares in IBBL.
Remittance receipts of Islami Bank Bangladesh fell 13 percent in 2016 compared to the previous year. The bank received remittance worth Tk 27,998 crore last year, down from Tk 32,106 crore in the previous year, according to the bank’s latest annual report. The bank’s market share in terms of remittance receipts fell to 26 percent last year from 26.57 percent in 2015. The bank’s business was affected by the recent downtrend in remittance inflow as remittance is a major source of income for the bank, said a senior official. In 2016, Bangladesh’s remittance income stood at $13.61 billion — the lowest in five years, according to central bank statistics. The receipt was $15.32 billion in 2015.
Strong bond market needed to finance infrastructure
Bangladesh needs to develop a strong bond market to meet the financing demands of large infrastructure projects, speakers said at a seminar yesterday. “We need to work together to establish a financial system that will provide various avenues for financing the large infrastructure projects,” said MA Mannan, state minister for finance and planning, at the event held at the capital’s Radisson Blu Water Garden hotel. IDLC Finance and Public Private Partnership Authority jointly organised the seminar on the development of bond market in Bangladesh. Bangladesh’s infrastructure investment requirement is 7 percent of GDP but current investment stands at less than 3 percent. The development partners invest about 1.5 percent of GDP, meaning there is a financing gap of about 3 percent.
IDLC Asset Management Ltd launches open-end mutual fund
IDLC Asset Management Ltd launched its first open-end mutual fund—IDLC Balanced Fund—at a programme at Sonargaon Hotel in Dhaka on Monday. IDLC Asset Management is a wholly-owned subsidiary of IDLC Finance. IDLC Finance is the sponsor of the fund and IDLC Asset Management is its asset manager, the company said in a statement. Investment Corporation of Bangladesh is the trustee and custodian of the fund. IDLC Balanced Fund offers fund management through skilled fund managers mitigating investment risk. Investors can invest anytime, any amount starting from BDT 5,000 (for individuals) and BDT 50,000 (for institutions) with the facility of anytime fund withdrawal at net asset value with the lowest exit load. Investors can also check the present value of their investment every week on the company’s website.
Commerce Minister Tofail Ahmed hinted Tuesday at fixation of VAT rate lower at 12 per cent, but said the announcement would come from the finance minister. He said the uniform VAT (Value Added Tax) rate would not affect consumers. The new VAT rate won’t touch essential commodity prices. We gave VAT waiver on many products,” the commerce minister told newsmen after a meeting with High Commissioner of Brunei in Bangladesh Hajah Masurai binti Haji Masri at his secretariat office The pared-down new VAT rate will be tolerable and realistic, he noted.
VAT collection target to be 40.0% higher: Commerce Minister hints at 12% VAT rate
The government is likely to gun for VAT collection 40.0% higher than current fiscal year’s revised target in fiscal 2017-18 by way of implementation of the new VAT law that commands a uniform 15 percent VAT for most goods and services. Revenue collectors may be given the task of collecting BDT 910.0 billion next fiscal year, up from current year’s revised collection goal of BDT 650.0 billion, said a senior official of the finance ministry. Word on the increased revenue target comes at a time when the policymakers are mulling over a 3.0% point cut in VAT rate under the new law to bring it to 12.0%. In addition, the government is considering increasing the VAT-free turnover ceiling to BDT 3.6 million and hiking the highest threshold of turnover tax to BDT 15.0 million annually to make businesses happy, the official said. Policymakers said although the rate cut may cause a loss of revenue, the end of VAT collection at reduced rates applicable for 65 products and 22 services under the existing VAT law will increase receipts. The government scheme to install 50,000 electronic cash registers at the retail level is also expected to curb tax evasion and increase collection. The new VAT law will take effect from July 1. Also, the increase in supplementary duty rates for some key revenue-generating products and services such as tobacco and mobile will make up for the loss in revenue receipts from the slash in uniform rate to 12 percent.
Bangladesh is set to impose its own carbon tax on fuel next month – despite the hugely climate-vulnerable country producing relatively tiny per capita emissions, reports Reuters. The tax is expected to be put in place on June 1 as part of the country´s annual budget and will be part of a larger bundle of “green” measures, Nojibur Rahman, chair of the National Board of Revenue, told the Thomson Reuters Foundation in a telephone interview. Many businesses and environmental groups have welcomed the plan, saying that Bangladesh – one of the countries considered most threatened by climate change impacts – needs to make a strong statement as governments like that in the United States pull back from action on climate change. The new tax may not make any significant contribution to achieving the Paris Agreement´s goal of keeping average global temperature increases below 2.0 degrees Celsius above pre-industrial levels, they said.
Bangladesh Petroleum Corp (BPC) will hold talks with 10 companies to fix final prices for its long-term oil product imports for delivery in the second half of 2017, two BPC officials said on Tuesday, reports Reuters. The state-owned company is seeking to buy 1.65 million tonnes of gasoil, 245,000 tonnes of jet fuel and 200,000 tonnes of fuel oil in 2017 under the term contracts. Premiums for the contracts will be fixed in the next week, one of the officials told Reuters. BPC last week said it received offers from 11 companies in a separate tender for oil products that is for up to 1.06 million tonnes of gasoil, jet fuel and fuel oil for second-half 2017 delivery.
Seven yrs after, seven projects under first Indian LoC limping
Seven of the projects under the first Indian Line of Credit (LoC) still limp along even after confirmation of the loan seven years ago, while two more LoCs lie in wait. Officials gave Tuesday such a situation with the execution of the seven projects, involving a sum of US$699.07 million. The projects are under the modified US$862 million worth of first LoC. They said completion of the seven projects by Bangladesh Railway (BR) and Bangladesh Standards and Testing Institution (BSTI) was long way off owing to different complexities in way to execution.
Local garment makers are gearing up with fresh investment to enter the global sportswear markets, as demand for the items is on the rise with changes in taste and fashion. Although Bangladesh is the second largest garment exporter worldwide after China, it has little presence in the global sportswear market worth USD 270.0 billion. China and Vietnam are currently dominating the market. Bangladesh exports a few million jerseys during different occasions, although the country has greater potential in the sportswear segment, for both fashion and sports functional wear. “We are setting up a big factory in Gazipur on 50 bighas of land to produce specialised garment items, including sportswear, wind jackets, denim items and swimwear,” said Abdus Salam Murshedy, managing director of Envoy Group, a leading garment exporter. The group is investing BDT 5.0 billion in the proposed plant, Murshedy added. KM Rezaul Hasanat, chairman of Viyellatex Group, said sportswear has two segments – fashion and functional. The fashion segment includes garments that are used like any other apparel item, while the functional items are used for performance during sports. Local manufacturers export fashion sportswear items on a limited scale, but they are yet to explore functional wear, said Hasanat who also ships sportswear to a European buyer.
The third round of Business Finance Challenge Fund (BFCF) worth around 6.0 million pound launched Tuesday to provide grant financing for the potential Micro and Small Enterprises (MSEs) in the country. The BFCF is a component of ‘Business Finance for the Poor in Bangladesh (BFP-B), a programme funded by the UK Aid of the UK government. The fund is implemented by the Nathan Associates London Ltd and Oxford Policy Management, well-known international consulting firms and research institutions. Bangladesh Bank (BB) is the implementing agency and the Financial Institutions Division of the Ministry of Finance is the executing agency. The launching event was held at a city hotel where the fund principles, application process in detail and performance of first and second round were highlighted.
Uber Tuesday celebrated its 180 days of service in Dhaka by reiterating that their strategic focus in 2017 will be to make every Uber ride a great experience for riders and driver partners, according to a press release. “Smartphone apps like Uber can help to use today’s infrastructure, more efficiently at no extra cost. This enables more people to share their journeys and provides an affordable, convenient alternative to car ownership,” said Arpit Mundra, General Manager, Uber Dhaka.
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