SME loan disbursement rises by 24.0% in Q1
SME loan disbursement by banks and non-bank financial institutions increased by 24.4% to BDT 325.2 billion in the first three months of this year compared with that in the same period a year ago, but 63.4% of the loans went to trade or unproductive sectors, the latest BB data showed. According to the Bangladesh Bank data, scheduled banks and NBFIs had disbursed BDT 261.4 billion in loans to small and medium enterprises in the January-March period of 2015. In January-March of 2016, the SME loan disbursement by banks and NBFIs to the trade sector increased by 25.7% to BDT 206.0 billion against BDT 163.9 billion in the same period of 2015. Bangladesh Bank officials said that the key goal of supporting the SMEs could not be achieved due to the higher loan disbursement to the trade sector. Higher loan disbursement to the trade sector usually puts a negative impact on the country’s overall economy as such trend fails to expand the industrial sector and makes a little contribution to employment generation, they said.
Move to make government treasury bonds tradable
The Dhaka Stock Exchange (DSE) has sought regulatory initiatives in expanding the country’s capital market by paving the way of making the government’s treasury bonds tradable, officials said. A delegation of premier bourse has also expressed their optimism in getting the support of the Bangladesh Securities and Exchange Commission (BSEC) in implementing their budget proposals submitted to the revenue board. The plea of the premier bourse came Monday at a meeting held with the BSEC chairman Professor M Khairul Hossain and four commissioners–Professor Helal Uddin Nizami, Md. Amzad Hossain, A Salam Sikder and Dr. Swapan Kumar Bala. The DSE delegation, led by chairman justice Siddiqur Rahman Miah, included director Ruhul Amin, director Wailiul Islam, director Md. Rakbur Rahman, director Mohammad Shahjahan and chief financial officer Abdul Matin Patwary. At the meeting, the BSEC policymakers spokes about their initiatives in introducing different products and amending different rules.
Delta BRAC Housing (DBH) home loan crosses BDT 70.0 billion-mark
Cumulative home loan disbursement of Delta BRAC Housing Finance Corporation Ltd. (DBH) has crossed BDT 70.0 billion, the highest amount of home loans disbursed by a financial institution in country’s housing sector, said a statement. Head of Operations Nasimul Baten handed over the cheque to their clients Nigar Sultana. DBH’s Managing Director & CEO Q. M. Shariful Ala, and other senior officials of DBH were also present. “This amount together with clients’ own equity contribution of approx equivalent amount helped DBH channelize more than BDT140.0 billion investments in housing sector”, said Shariful Ala. Shariful Ala said that “DBH, an international joint venture financial institution, has emerged as the largest and only specialized Housing Finance Institution in the private sector of the country. We have constantly maintained market leadership both in terms of annual home loan disbursements and housing loan portfolio and is making a major impact on the growth of home ownership in the country”. Shariful Ala commented that “the Company has retained the highest ‘AAA’ credit rating for last ten consecutive years which is an exceptional achievement in the Bangladesh financial sector”.
Farm sector’s share may continue to decline
Despite a significant increase in agricultural production, budgetary allocation for agriculture has gradually been declining. Economists and experts have pleaded for increasing the allocation for agriculture in the budget for the financial year (FY) 2016-17 for the sake of food security and employment creation in an overpopulated country like Bangladesh. They observed that if the peasantry did not get fair price for their produce, it would be tough to keep them in agriculture. And this might lead to shortfall in food production, they said. The experts advocated for increasing allocation and ensuring its proper utilisation for a vibrant farm sector. In terms of total budgetary allocations and GDP, share of the agriculture sector in the upcoming budget for FY’17 is likely to decline in line with past three budgets, according to the agriculture ministry. A senior official of the agriculture ministry told the FE that the farm sector is likely to get an allocation of BDT 129.0 billion in the next budget.
Tax collection to miss target for fourth year
The government is likely to miss its tax collection target for the fourth consecutive year, which analysts have already predicted amid slow economic activities and weaknesses in tax policy and administration. Yet, Finance Minister AMA Muhith is expected to set a revenue collection target of nearly BDT 2.0 trillion for the next fiscal year, which is 15.0% higher than the actual target of the outgoing year and 35.0% higher than the revised target. A similar situation may be the case next year as well, and the government may have to trim the target halfway through the year by acknowledging that the goal was too high, analysts said. The Centre for Policy Dialogue has already expressed its doubts over attaining the target. This is yet another uphill task whose success is highly doubtful, said the CPD in its recent analysis on the state of the Bangladesh economy in fiscal 2015-16. Taxmen expect to hit the revised revenue collection target of BDT 1.5 trillion in the outgoing fiscal year, but they are unlikely to log the original target of BDT 1.8 trillion by the end of June 30, though the pace in collection has increased in recent months. In fiscal 2014-15, National Board of Revenue achieved 90.0% of the collection target; a year before that, collection was 89.0% of the target.
Government set to approve another project for REB today
The government is set to approve another electricity line expansion project for the Rural Electrification Board (REB) today (Tuesday) despite the latter’s poor performance in implementing similar types of ongoing projects, officials said Monday. Insiders said the REB has already had nine ongoing distribution line expansion projects and most of them are facing delay in execution over the years. A Planning Commission (PC) official said they are going to place a BDT 12.3 billion project before the Executive Committee of the National Economic Council (ECNEC) meeting on Tuesday. The aim of the project is to connect 2.5 million new customers to the on-grid electricity in rural areas of the country. The Power Division had sent the REB’s project proposal to the PC, seeking approval urgently. A senior PC official said the REB’s proposed project would be a duplication one as such kinds of nine projects are now going on at a total cost of BDT 345.0 billion. Meanwhile, the state-run REB has been implementing nine electricity distribution line expansion projects over the last few years. Power Division officials said the government approved REB’s biggest-ever BDT 69.2 billion “Connecting 1.5 million customers expanding rural electrification project” and another BDT 8.0 billion “Replacement of 70,000 overhead transformer project” in January this year. The state-owned electricity provider undertook BDT 64.3 billion project in rural areas in January 2012 to connect 1.8 million customers across the country which is still facing delay in implementation. Besides, the state-owned rural electricity supplier had undertaken six other projects for expanding its distribution system in Dhaka, Chittagong, Sylhet, Rajshahi, Barisal, Khulna and Rangpur divisions.
Package VAT for small businesses may double
The current provision of paying package VAT (value added tax) by the small businesses is likely to continue during the next financial year. However, the amount of package VAT may go up twofold. The decision on continuation of the package VAT has been taken in response to demand put forward by the small businesses. Finance Minister AMA Muhith is set to propose continuation of the system in his budget speech on June 2 next. Under the package VAT system, small retailers and traders pay a lump sum amount of VAT fixed by the NBR (National Board of Revenue) on their annual value addition instead of paying VAT at the normal rate. Earlier, the government had planned to scrap the package VAT system from July 1, 2016 with the enforcement of the new VAT and Supplementary Duty Act-2012. However, the new law is unlikely to be enforced from July 1, 2016 as the government has decided to retreat from the move in the face of strong protests by the businesses. There are 2.5 million shops throughout the country. There are, however, no data is available with the NBR on the package VAT system. Official sources said shops having BDT 7,720 monthly value addition are entitled to enjoy the package VAT.
NBR turns down MoS plea for waiver of 50.0% duty, charges
The National Board of Revenue (NBR) has turned down a plea from the ministry of shipping (MoS) to waive 50.0% duty and other charges on goods imported through the Paira seaport, officials said. The MoS made the request for waiver for a period of two years with the objective of encouraging the traders to use the newly built anchorage port located in Patuakhali district, they added. Afterwards various development works including land acquisition and installation of navigational aids have been completed. During the last two and half years, the port authority had set several dates for starting operation of the anchorage port, but failed due to procedural delays. Finally, the port authority set January last as the deadline, but there they failed too, officials said. In its proposal for duty reduction the MoS said importers will feel encouraged to use the port if they are given 50.0% duty & charges waiver. Meanwhile, a feasibility study report has said the construction of the full-fledged Paira port may cost USD 20.0 billion. Of the amount, some USD 3.5 billion will be needed for capital dredging to make the port channel navigable.
Duty on import of luxury hotel equipment likely to be doubled
Duty on import of luxury hotel construction materials and equipment will be increased to 10.0% from 5.0% now in the next fiscal year. The government is also likely to increase duty on import of textile machinery and equipment for referral hospitals. However, prices of hybrid cars and security software for the financial sector may see a decline as the duty cut is likely. The tax-free ceiling for the individual taxpayers may remain unchanged at BDT 25.0 million. Announcement of all these decisions are expected as Finance Minister AMA Muhith will place budget in Parliament on Thursday for the next financial year. Investments into tourism and hospitality sector may face setback if customs duty on import of luxury hotel equipment is doubled, said industry people. The hotel equipment include plastic, wood and steel-made materials. Currently, the investors import different materials like exterior-interior decorations, kitchen and cooking equipment, building security equipment, fire-safety tools, electricity substation machinery, lighting and health club materials, by paying 5.0% duty. The price of eco-friendly hybrid vehicles is likely to fall as the government is planning special duty benefits for import of hybrid cars. Officials said the government may raise duty on textile machinery import to 5.0% from 3.0% now. They said price of cheap cigarettes will see a rise due to new duty structure. On the other hand, the government will introduce 1.0% duty on import of medical equipment and machinery from existing zero duty for the referral hospitals in the upcoming budget.
Salaries, allowances of public servants to soar to BDT 509.9 billion
Salaries and allowances of public servants are set to soar to BDT 509.9 billion in the upcoming national budget for 2016-17 fiscal year, up by BDT 86.0 billion from the revised budget of the current year as the government will implement the national pay scale fully from July next. This is believed to be the highest non-development revenue expenditure, followed by interest payment on account of domestic debts. The expenditure earlier used to stand at nearly BDT 260.0 billion before the national pay scale, which has partially been implemented from July this calendar year. This is equivalent to 15.0% of the national budget and more than 3.4% of the gross domestic product (GDP). In the highest grade, basic salary will rise by 95.0% to stand at BDT 78,000 (fixed) and in the lowest grade by 101.0% to be BDT 8,250 with 20 grades. Analysts, however, appeared skeptical about the gains from this fat outlay on account of pay and allowances since productivity of public servants is unlikely to get any boost.
World Stock and Commodities
|Index Name||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)*||$49.57||+0.24||+0.49%|
|Crude Oil (Brent)*||$49.74||(0.02)||(0.04%)|
|Dow Jones Industrial Average||17,873.22||+44.93||+0.25%|
|USD 1||BDT 78.41*|
|GBP 1||BDT 115.25*|
|EUR 1||BDT 87.41*|
|INR 1||BDT 1.17*|
*Currencies and Commodities are taken from Bloomberg.