Bank clients fret over govt move to hike excise duty on deposits
Bank clients with relatively small-sized savings are worried as the government is set to hike excise duty on deposits in banks and financial institutions by up to 100 per cent in the national budget for the next fiscal year of 2017-2018. Finance minister Abul Maal Abdul Muhith is going to put forward a proposal in this connection in his budget speech on June 1, officials of the finance ministry said. The planned rise in excise duty has made the depositors worried and many of them said that the decision, if passed in parliament, would make them financially loser as they were paying different types of service charges and the rate of interest on deposit declined sharply. ‘It is totally absurd to double the duty on the balance in a time when the interest rate for deposit products has declined to below 5 per cent,’ said Nessaruddin, a depositor. If the duty is increased, he said, many small depositors would not get any returns after deduction of charges, income tax and excise duty from their bank deposits. Depositors, who first came to know the planned hike through media reports last week, have been expressing their concerns and criticising the National Board of Revenue for placing the proposal to the finance minister without considering its impact.
Inflow of remittances, which witnessed a sluggish trend in recent months, is picking up again as expatriates sent home USD 807.8 million in the first 19 days of May, which is USD 115.8 million up from the same period of the previous month, said the Bangladesh Bank (BB). The country received USD 692.0 million until April 19, the BB statistics show, reports BSS. According to the BB, the country received USD 1,009.5 million as remittances in January and USD 940.75 million in February 2017, but it witnessed a rising trend from March as migrant workers sent home USD 1,077.52 million in March and USD 1092.6 in April respectively. The BB attributed such upward trend in remittances flow to the measures taken by the government, the central bank and mobile banking operators. Two investigation teams of the BB visited Saudi Arabia, Singapore and Malaysia in March to find out the reasons behind the downward trend in country’s remittances inflow. During the visit of the teams, they found that NRBs are using informal channels for sending their money home due to various reasons including easy procedures and no procedural cost.
Transactions on secondary bond market in slow lane
Transactions of Treasury bills and bonds in the secondary market has decreased significantly in the last two months as the rate of interest on the instruments dropped sharply in the primary market due to the government’s decision to squeeze auctions for the tools. Bangladesh Bank officials said that the central bank had recently taken some new measures to make the secondary bond market vibrant, but its initiatives became futile as the return on the tools in the primary market continued to maintain a decreased trend. The higher interest rate on the national savings certificates and bonds made a volatile situation in the secondary bond market as the government was forced to squeeze its auction for T-bills and bonds due to a large investment in the NSCs, they said. The government is now borrowing through NSCs which carry interest rates of 11.04-11.76 per cent while it can take loan from the banks with the interest rate between 2.84 per cent and 7.13 per cent through T-bills and bonds. General clients including banks, non-bank financial institutions, government and non-government organisations and corporate entities are allowed to invest in the secondary bond market through a scheduled bank. No formal auction is required to purchase or sell the bonds through the secondary market, whereas the clients have to depend on the government’s auction to purchase the bonds from the primary market.
Import drops in April as traders wait for new budget
The country’s overall import fell by more than 6.0% in April this year from its previous month as importers slowed down placing fresh import orders ahead of the upcoming budget for the fiscal year 2017-18. A substantial quantity of essential items, including foods, was imported in the months of February and March ahead of the holy Ramadan, pushing up the import expenditure. The actual import in terms of settlement of letters of credit (LCs) decreased by 6.42% to USD 3.55 billion in April from USD 3.79 billion in March, according to Bangladesh Bank’s latest statistics. It was USD 3.02 billion in April 2016. On the other hand, opening of LCs, generally known as import orders, dropped by 9.29% to USD 4.02 billion during the month from USD 4.43 billion a month ago. It was USD 3.27 billion in April 2016. The trend may also continue in the month of May, officials said. In March 2017, the actual import jumped by over 15.0% to USD 3.79 billion from USD 3.29 billion in February while the import orders rose by 17.36% to USD 4.43 billion from USD 3.77 billion, according to the BB data. The import of rice came down to USD 7.27 million in April last from USD 9.0 million a month before while wheat import fell to USD 48.35 million from USD 98.97 million. Similarly, sugar import dropped to USD 42.81 million in April 2017 from USD 74.50 million in March last while dry fruits import came down to USD 4.77 million from USD 5.52 million. On the other hand, the import of pulses rose to USD 77.77 million in March from USD 48.29 million a month ago while onion import stood at USD 13.16 million from USD 12.87 million. However, import of capital machinery and scrap vessels increased during the period under review, following implementation of different ongoing infrastructure development projects across the country, according to the BB officials.
Export Promotion Bureau (EPB) to propose USD 38.0 billion export target for FY ’18
The Export Promotion Bureau (EPB) will propose setting the country’s merchandise export target at USD 38.0 billion for the upcoming fiscal year (FY) 2017-18, officials said. The target is 7.82% or USD 1.0 billion higher than that of the current FY’s target of USD 37.0 billion. The EPB would also project an additional USD 3.50 billion in earnings from services export, raising the next FY’s total export target to USD 41.50 billion. The proposals were placed at a meeting of the EPB last week when leaders of major export-earning sectors, including ready-made garment and frozen fish, differed with the projection. Apparel sector leaders opined that the target would be achieved if cash support for new market exploration is continued, political stability ensured and local currency justifiably devalued. The shrimp exporters stressed the need for ensuring smooth supply of raw material for increased production. The EPB expected the export receipts to reach USD 38.60 billion — USD 35.24 billion from goods and USD 3.36 billion from service sectors — by the end of the current FY, reflecting a 3.62% growth over the previous fiscal. In the current fiscal year, all major 10 export items have been projected to grow. Earnings from knitwear export would increase by 8.52%, woven garments 5.77%, home textile 9.77%, leather and leather products 9.02%, medicines 8.32%, jute and jute goods 9.39%, engineering products 25.65% and frozen and live fish 0.14%.
Target tax revenue set to be 34.0% higher than revised one for next fiscal
The government is set to fix for the upcoming fiscal year a tax revenue target that will be respectively 19.0% and 34.0% higher than those of original and revised targets for the current fiscal (2016-17). It expects a substantial boost in Value Added Tax (VAT) collection with the implementation of the new VAT and SD law from July 01 next. The tax collection target for the National Board of Revenue (NBR) is likely to be set at BDT 2.5 trillion for the FY 2017-18. The government is set to fix the highest target for VAT, followed by income tax and customs duty in the upcoming FY. VAT collection target might be set at BDT 878.9 billion for the FY 2017-18 while the original target in the budget for current fiscal was BDT 727.6 billion. Officials said the government has set a target to collect at least 40.0% of total tax revenue from VAT. The new VAT and SD law-2012 would be implemented under the digitized VAT system and the NBR expects to cut revenue dodging to a great extent. Recently, the finance minister backtracked from his move to fix a comfortable rate for VAT and decided to stick to a 15.0% uniform VAT rate. Income tax wing might have to collect BDT 868.7 billion in the upcoming FY. The original target for income tax collection in the outgoing fiscal was BDT 719.4 billion. Tax revenue collection target for customs wing might be set at BDT 734.36 billion in the upcoming FY. In the FY 2016-17, the target for customs wing was fixed at BDT 556.7 billion. Meanwhile, the government revised downward the tax collection target to BDT 1.85 trillion from the original target of BDT 2.03 trillion for the current fiscal year. The normal revenue collection growth was 15.0-16.0% in the last three years. They said new tax measures and new VAT law may help the taxmen tap the potential of revenue collection.
The number of rich people who paid wealth surcharge increased 6.71% year-on-year to 11,661 in 2016-17, but analysts say the number is still very low. The wealth surcharge collected by the tax department also increased 24% year-on-year to BDT 3.6 billion in the outgoing fiscal year, according to the provisional data of the National Board of Revenue (NBR). However, experts said the number of wealthy people having over BDT 22.5 million in net worth would be much higher than those who have filed wealth information in the tax returns. The official attributed to the rise in the number of wealthy people and surcharge collection to the taxpayers’ compliance and growth in their wealth every year. The government introduced wealth surcharge in 2011-12 as an alternative to wealth tax, to ensure equitable distribution of wealth and reduce economic disparity. In the current fiscal year, the NBR revised the slabs of net wealth and corresponding surcharge rates against wealth.
Unemployment rate fell by 0.1%age point in the last fiscal year, although youths, urbanites, female and highly educated remained vulnerable while entering the labor market, according to a new survey. The jobless rate decreased to 4.2% in 2015-16 from 4.3% in 2013, the latest Bangladesh Bureau of Statistics data showed. The labor force participation rate also rose over the past one and a half years reaching 58.5% in 2015-16 from 57.1% in 2013, meaning a total of 62.1 million persons from 106.8 million working age population (15+ years). The number of population outside labor force is 44 million. Of these 62.1 million labor force, 59.5 million were employed and 2.6 million unemployed in 2015-16. The BBS revealed the data at a dissemination seminar on ‘Findings of the Quarterly Labor Force Survey 2015-16’ at its auditorium in the city. Director of BBS Kabir Uddin Ahmed presented the quarterly labor force survey. A total of 123,000 households were surveyed in 2015-16 against 36,000 in 2013. Meanwhile, the number of male labor force increased to 43.1 million until 2016 against 42.5 million in 2013, a small increase in 0.6 million, Kabir Uddin said, adding female labor force increased 0.9 million from 18.1 million in 2013. The male and female ratio in labor force is 81.9 and 35.6% in 2015-16, which was 81.7 and 33.5% in 2013. The report said Bangladesh labor market continued to improve over the years as the rate of unpaid family helpers decreased to 8.6 million in 2015-16 from 106 million in 2013. For female, it decreased 20.2% or 1.7 million from 8.4 million in 2013. But unpaid family helper category is dominated by female, which is 15.0%. The unemployment ratio of male and female is 50:50, while the rate of unemployment among the females went down by 6.8% while the male unemployment rate decreased by 3.0%.
Asian Development Bank (ADB) to provide USD 616.0 million for power sector development
The Asian Development Bank (ADB) will provide US dollar 616.0 million to Bangladesh to help implement a project for enhancing the coverage and reliability of its power system and improving the efficiency of the distribution network. According to a UNB report, a loan agreement to this end will be signed today (Monday afternoon) at the NEC-II conference room at the Economic Relations Division (ERD) in the city’s Sher-e-Bangla Nagar. The proposed project titled ‘Bangladesh Power System Enhancement and Efficiency Improvement Project’ will boost the coverage and improve the reliability and efficiency of the transmission and distribution network to facilitate better utilisation of the expanding power generation capacity to meet the growth in electricity demand across the country. The ADB assistance, which will fund the Bangladesh Power System Enhancement and Efficiency Improvement Project, is comprised of a concessional loan of USD 16 million and a market-based loan of USD 600 million. A USD 2 million grant from the Japan Fund for Poverty Reduction, financed by the government of Japan, is part of the project. The ERD official said the project activities include the construction of a 174-kilometre high-voltage 400 KV transmission link between southern Bangladesh and Dhaka, design and installation of control and automation systems to improve the distribution network in areas serviced by the Dhaka Electricity Supply Company (DESCO), rehabilitation and expansion of over 50,000-km rural distribution network across the country, and support on project design, investment planning, and regulatory compliance in the power sector agencies. The project will contribute to the government’s goal of giving people 100% access to power by 2021 with about 875,000 households benefiting from the distribution investments by 2020. The total cost of the project is USD 1.059 billion, with the government contributing USD 441 million in counterpart funding.
Amid reports of outages in parts of Bangladesh, the Power Development Board or PDB says electricity generation touched a new high on Saturday. PDB spokesperson Saiful Hasan Chowdhury said the power plants fed the national grid 9,471 megawatts at 10pm on Saturday. “Power generation stood at 9,356MW around 9pm, breaking the previous record. An hour later, it surpassed that record too,” Chowdhury, PDB’s director for public relations, told bdnews24.com on Sunday. On June 30 last year, Bangladesh crossed the 9,000MW mark for the first time in history, generating 9,036MW that day.
Mobile operators may share 5.5% of their revenue with the government for their 4G services, officials said. Following the advice of Prime Minister’s ICT Affairs Adviser Sajeeb Wazed Joy, Bangladesh Telecommuni-cation Regulatory Commission has decided to bring down the share to 5.5% from 15.0% proposed earlier. At present, mobile operators share 5.5% of their revenue from 2G and 3G services with the telecom watchdog. In addition, they forward 1.0% of their gross revenue to the social obligation fund. The development will bring a sigh of relief for mobile operators, who were aggrieved by the telecom regulator’s proposal to hike the spectrum prices and revenue sharing percentage for 4G services as it would make the technology commercially unviable. The Global System for Mobile Association, a union of mobile operators worldwide, earlier this month urged the government to reconsider its decision. In its original proposal, the BTRC has recommended BDT 150.0 million as license fees for 15 years and another BDT 75.0 million as annual fees, both of which will remain the same in the amended recommendation that will be sent to the telecom division shortly.
Govt forms body to re-fix land price, registration fee
The government formed a committee on Sunday to re-fix land price and registration fee in the face of huge revenue loss from the sector. The inter-ministerial committee on land price re-fixation took the decision on formation of the committee. Finance Minister A M A Muhith chaired the meeting, held at the ministry’s conference room. Law Minister Anisul Huq, secretaries of finance division, land ministry and housing and public works ministry, and chairman of National Board of Revenue, attended the meeting, among others.
Major Currencies Exchange Rates Movement in Last Seven Days
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.
ABOUT DHAKA BANK
Dhaka Bank has truly cherished and brought into focus the heritage and history of Dhaka and Bangladesh from Mughal outpost to modern metropolis. Most of its presentation, publications, brand initiatives, delivery channels, calendars and financial manifestations bear Bank’s commitment to this attachment.