Trade deficit more than doubled in the first quarter of the current fiscal mainly as the value of country’s imports far outstripped its export earnings, officials said. The trade gap widened by nearly 111.0% or USD 1.2 billion to USD 2.4 billion during the July-September period of the financial year 2016-17 from USD 1.12 billion in the same period of last fiscal, according to the central bank’s latest statistics, released Tuesday. During the period, the current-account balance entered a negative territory after two years following wider trade deficit alongside a downturn in inward remittance. The overall import payments, including by export-processing zones, grew by 17.3% to USD 10.3 billion in the Q1 of the FY 17 from the corresponding figure of USD 8.8 billion, the BB data showed. The country’s imports increased significantly during the period under review mainly due to higher import of capital machinery along with back-to-back import made by the readymade garment (RMG) sector, the central banker explained. The overall export earnings, including that of export-processing zones, grew by 3.5% to USD 7.9 billion in the first three months of the FY 17 from USD 7.6 billion in the same period of the FY 16.
Government moves to bring foreign companies in bourses
The government has initiated a move to motivate the foreign companies operating in the country to be listed in the bourses. The Ministry of Finance (MoF) would sit sometime next week with all the agencies and stakeholders concerned to devise a time-bound plan of action for listing the companies with the stock exchanges. Enlistment of several new foreign companies would help enhance the depth of the stock market, he said. Currently, some 13 foreign companies are listed in the country’s stock market. A good number of profit-making companies have long been operating in the country. Meanwhile, the authorities were considering a fresh initiative to offload shares of state-owned enterprises, officials said. The initial initiative kept on hold since the market setback in late 2010 and early 2011.
The securities’ regulator has approved the prospectus of Prime Finance Second Mutual Fund, an open-end mutual fund. The approval came at a commission meeting held at the office of the Bangladesh Securities and Exchange Commission (BSEC) Tuesday. For breaching securities’ rules, the regulator also imposed penalty of BDT 0.7 million on two brokerage firms along with taking the decision of issuing warning letters to two another brokerage firms. As per the BSEC approval, the size of the Prime Finance Second Mutual Fund will be BDT 500 million. Out of this amount, BDT 200.0 million and BDT 300.0 million will come from sponsors and unit holders respectively. The face value of the units of Prime Finance Second Mutual Fund will be BDT 10.0 each. Prime Finance and Investment is the sponsor of the fund, while Prime Finance Asset Management Company is the fund manager. Investment Corporation of Bangladesh is the trustee and custodian of the Prime Finance Second Mutual Fund. According to BSEC decision, CMSL Securities will have to pay a penalty of BDT 0.2 million for breaching securities rules by providing margin loans to purchase ‘non-marginable’ securities.
NBR issues rules to implement new VAT act from July
The government has issued the Value-Added Tax and Supplementary Duty Rules-2016 to pave the way to implement the new VAT act from July next year. The National Board of Revenue on November 3 issued the gazette notification of the rules containing 119 articles and 70 forms consistent with the new VAT and Supplementary Duty Act-2012. Though the VAT rules have given priority on automated procedures related to registration for VAT identification number, VAT payment and other business operations, they have also kept the option of manual procedures considering the existing development of the country’s business community in automation The NBR has failed to implement the law since 2012 in the face of strong opposition from the business community on various issues mainly imposition of single VAT rate at 15 per cent for all sectors instead of multiple VAT rates and withdrawal of package VAT system for shop owners. The new rules, however, did not consider the demands. The new rules have kept a provision of online connections of integrated VAT administration system with automated systems of customs and income tax wings of the NBR, controller general of accounts and Bangladesh Bank for smooth implementation of the online VAT system. According to the new VAT rules, large businesses will be able to run their operations with only one business identification number (BIN), known as VAT registration
Apparel export growth hinges on long-term strategies
Bangladesh should set marketing strategies for its goods now, as the country will no longer enjoy the duty benefit once it leaves the least-developed country status by 2021, a European diplomat said yesterday. International buyers will also take long-term strategies in line with Bangladesh’s plans, said Johan Frishell, Swedish ambassador to Bangladesh. Frishell was speaking at a discussion on “USD 50.0 billion by 2021: innovation, the strategic business driver”, on the sidelines of the fifth Bangladesh Denim Expo at International Convention City Bashundhara in Dhaka. Currently, Bangladesh has been enjoying zero-duty benefit to the EU under its Everything But Arms scheme and Generalized System of Preferences to some other countries as a least-developed country, but the trade benefit will not be in place once it is declared a developing country. As a result, Bangladeshi garment items to the EU will face 12.5% duty after 2021. Marketing is very important for reaching the target of exporting USD 50.0 billion worth of apparel items by the end of 2021, said Najeeb Sayed, country manager and dress director of PVH Bangladesh. Sayed suggested increasing the efficiency level as the prices of garment items did not rise over the years.
Demand for liquefied petroleum gas (LPG) is growing fast following its growing use in rural areas as an alternative to firewood and government moratorium on natural gas connection. Sector-insiders say a wide demand-supply gap fuels the LPG prices, and the government, as such, is thinking about fixing its rates and licencing more companies in the business. The alternative fuel is mostly imported as the country has got only two plants in public sector. The sources also attributed the significant demand hike to a gradual rise in use of LPG by hotels and restaurants in all areas of the country as they are switching to the liquefied gas from kerosene and other fuelling options. According to them, demand for LPG in the country has been growing around 12-15% over the last four to five years and may grow more than 15.0% in upcoming years. Currently, head of marketing of Bangladesh Petroleum Corporation (BPC) said, more than 80.0% of the LPG demand is met with imports while the state-owned BPC supplies the rest 15-20%.
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