Important Business News Extracts – October 02, 2017
Govt to put caps on cash transactions to curb illegal money flow
The government may tighten restrictions on cash transactions in banks in an effort to curb terror financing and money laundering in Bangladesh. According to sources, a report prepared by the central bank to this end is going to be tabled at the next meeting of the National Coordination Council on Combating Terrorist Financing. The possible caps on cash transactions in financial institutions are to be based on a fresh analysis of various issues related to the economy, the sources said. The report is likely to shed light on five aspects of the economy, including the availability and actual requirement of cash flow in Bangladesh, the relationship between cash flow and crime, the types of transactions and holdings by people and the steps taken for financial inclusion and its impact on cash flow. Meanwhile, Bangladesh Bank (BB) recently instructed all private banks of the country to install necessary equipment for conducting electronic money transactions for bank-to-bank dealings. The central bank fixed December 31 as deadline for the installations, with the aim of starting full-fledged electronic bank-to-bank transactions from the first day of next year, the instruction read. Financial Institutions Division Secretary Md Eunusur Rahman told the Dhaka Tribune that the government has already taken several initiatives for making transactions in banks and financial institutions cashless.
Bad loans ate up 51 percent of the operating profits of banks in the first half of the year — a development that will not only bring down the dividends that shareholders get but will also have an impact on the interest rate. Between January and June this year, the banks’ operating profit edged up 11 percent but net profit slumped about 33 percent, according to central bank statistics. As per central bank rules, banks have to keep provisioning for their classified loans from their operating profits. Thus, if banks’ classified loans increase, their net profits fall proportionately. In the first half of 2017, banks logged in operating profit of Tk 10,355 crore, up from Tk 9,325 crore a year earlier. However, their net profits altogether came to Tk 1,845 crore, down from Tk 2,741 crore in the first six months of 2016. The banks’ net profit is calculated after deducting provisioning against bad debt and tax.
Bangladesh Bank finds problem with Bangladesh Krishi Bank financials
A central bank inspection team has detected ‘window dressing’ in the balance sheet of Bangladesh Krishi Bank (BKB) to show its higher earnings and conceal provision shortfall to lower its net loss, officials said. The team had inspected 42 branches and head office of the bank to check the balance sheet until June 30 last and found the mismatch, they added. However, the bank authority has denied deliberately hiding the information and rather said junior officials might have done mistake which caused the difference in reckonings. According to a quick summary report the BKB management showed Tk 5.86 billion as loss incurred by the bank until June 2017. Until then (June 2017), the bank’s total loans and advances amounted to Tk 183.11 billion against which the requisite provision was Tk 24.35 billion. The bank kept Tk 25.26 billion which is higher by Tk 903 million than the required provision. The team inspected 43 branches so far, but found that the bank kept Tk 290 million less than required provision against the loans and advances handed out from those branches.
United Commercial Bank Limited (UCB) signed a Memorandum of Understanding (MoU) with Baridhara Society recently at the corporate office of the Bank. Director of UCB Nurul Islam Chowdhury graced the event as Chief Guest. Mr. Mohammed Shawkat Jamil, Additional Managing Director of UCB and Mr. Monzur Uddin Ahmed, Secretary General of Baridhara Society signed the MoU on behalf of respective organizations. As per the MoU, UCB will work on beautification of Baridhara society park.
Government bags bountiful taxes at fiscal year’s beginning
Government’s tax-revenue collection saw a 27.05% growth in the first month of this fiscal largely for a surge in imports and steady growth in exports. Officials said domestic value-added tax (VAT) and customs duties contributed largely to the July tax-revenue growth surpassing the set target. Customs department pulled a 50.62% growth in revenue collection in the first month of the current Fiscal Year (FY) 2017-18 while VAT collection grew by 18.83%, according to official statistics. Officials attributed such “impressive” revenue growth at the outset of the fiscal year to significant increases in domestic demand and import of products. Collection of excise duty also posted a remarkable growth of 47.21%.
July-Aug import payments up 31pc as rice import, oil price rise
Import payments in the first two months of the current fiscal year (2017-2018) increased by 31.55 per cent year-on-year due mainly to surge in rice import, increase in the prices of crude oil in the international market and substantial depreciation of the taka against all major currencies. According to the latest data of Bangladesh Bank, the overall import bill payments stood at $9.42 billion in July-August of FY18 against $7.16 billion in the same period of FY17. According to the central bank data, import settlements for food grains mainly rice and wheat rose by 168.17 per cent to $316.66 million in July-August of the year from that of $118.08 million in the same period of last fiscal year. Food grains import had increased by only 2.78 per cent in July-August of FY17. A higher growth in petroleum product import also contributed to the rise in import payments as petroleum product import grew by 29 per cent in the period due mainly to a price hike of the commodity in the international markets.
A spot survey finds some 90 per cent service-providing businesses non- compliant with the legal requirement for mandatory display of TIN certificates in front of their premises. And around 10 to 15 per cent of the businesses run without obtaining TIN (Taxpayer Identification Number) although it is compulsory for business operations. During the special survey on the city hotels, restaurants, fast-food shops, guesthouses and beauty parlours, the income-tax authorities also discovered a significant number of businesses operating sans tax files. The survey officials said majority of the businesses are unaware of the legal obligation for displaying TIN certificates at visible places on their premises. There are some businesses that have TIN or tax files which are scattered in different tax zones. The tax-men recently intensified their effort to ensure compliance, provide e-TIN and make businesses tax-compliant through motivation as part of government move to raise the number of taxpayers.
The government is set to award contracts for building two major onshore oil pipelines to army and navy for smooth and cost-effective implementation of the projects, said officials. An aggregate cost of Tk 27 billion has been estimated for the two pipeline projects. Bangladesh Navy will build a 17-kilometre A-1 jet fuel-carrying pipeline from Pitloganj in Narayanganj to Kurmitola aviation depot of Hazrat Shahjalal International Airport (HSIA). And Bangladesh Army is going to be assigned to the task of building a 237-km-long pipeline to carry diesel from the port city of Chittagong to the capital, Dhaka. The cabinet committee on government purchase has already approved issuance of notification of award (NOA) to the navy for setting up the jet-fuel carrying pipeline. The defence service will build the pipeline as an engineering, procurement and construction (EPC) contractor, said a senior official of Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR). A final deal between the state-run Bangladesh Petroleum Corporation (BPC), the implementing authority of the pipeline project, and Bangladesh Navy will be inked soon to start the project work, he added. For building the 237-km Dhaka-Chittagong pipeline, the BPC is in final round of negotiations with the Bangladesh Army, he added.
The much-hyped Padma Bridge is now a visible reality as the first span (superstructure) of the bridge was placed on pillars on Saturday morning. The 150-metre long span was installed on the pillar nos. 37 and 38 that took two hours, starting from 8:00 am. “Through the installation of first span, the Padma Bridge is now a visible reality, removing all uncertainties”, said Road Transport and Bridges Minister Obaidul Quader. The long-cherished Padma Bridge construction progressed one step forward through this span installation, he added. Munshiganj-2 constituency MP Shagufta Yasmin Emily, Bridge secretary Anwarul Islam, Padma Bridge Project Director Shafiqul Islam, engineers concerned of the Bridge, Bangladesh Army’s General Abu Sayeed and representatives from China Major Bridge, among others, were present. The construction work was going on in full swing to implement the project on time, said Quader. The second span will be installed on the pillar nos. 38 and 39 in late October, he said. The construction work on the pillar no. 39 will end soon.
Primary textile industry reels from high gas prices, uncertainty over LNG import
Uncertainty over the prices of imported liquefied natural gas (LNG) and the ongoing gas shortage in the industrial sector have severely jeopardised investments in the country’s primary textile industry. Uninterrupted supply of gas and electricity is a must for the textile industry, as blackouts significantly degrade the quality of spin, sources from the industry told the Dhaka Tribune. However, the government has halted new gas connections indefinitely, and is preventing the factories from setting up generators to produce captive power to ensure electricity supply during the power cuts, said sources from the factories. As a result, new investors are losing interest in the primary textile sector, while existing businesses are facing hardship due to the hike in prices of gas and electricity. Moreover, a proposal for a further 14.78% rise in power prices has been submitted for the government’s approval. According to Bangladesh Textile Mills Association (BTMA), only 17 new companies have started production in the last five years. Of the 17 mills, 10 are spinning mills, five are weaving mills, and the remaining two are dying units.
IDB planning meeting in Dhaka in Jan to discuss cross-border investment, trade
Islamic Development Bank (IDB) is planning to host an international investment conference in Dhaka in January next to boost cross-border investment among its members. The event is expected to bring potential investors from IDB’s 57 member countries as well as its non-borrowing members like the United States, China and Japan. IDB Business Forum (THIQAH), a newly formed business and investment platform of the Jeddah-based multilateral development agency, will organise the conference. Finance Minister AMA Muhith has already given his consent to organise the conference while the final date of the event will be fixed depending on the schedule of the Prime Minister, according to sources at the Economic Relations Division of the government. A high-level IDB delegation recently met with the chairman of Bangladesh Investment Development Authority (BIDA) to discuss issues related to the timing and nature of the event.
The International Finance Corporation yesterday signed an agreement with the Bangladesh Garment Manufacturers and Exporters Association to implement the second Partnership for Cleaner Textile (PaCT) in the garment and textile sector. Under the PaCT programme, which was launched in 2013, garment and textile makers are advised to adopt modern technologies in factories and changing attitudes to reduce water and energy consumption in the next four years. Wendy Jo Werner, IFC’s country manager, and Siddiqur Rahman, BGMEA’s president, signed the agreement on behalf of their respective sides at the Radisson Hotel in Dhaka to implement the PaCT in 250 spinning, dyeing and finishing units. The IFC will spend $7 million for implementing the second phase of the programme. The first one was implemented in 215 factories at a cost of $11 million.
Businesses eye bonanza as government waives 15.0% VAT on LPG cylinder import
The government has waived the 15.0% value-added tax (VAT) on LPG-cylinder import, prompting businesspeople to eye a boost in consumption and business of the gas. Chief Executive Officer (CEO) of privately owned LPG- distribution-company Laugfs Gas Bangladesh told the FE cost of import of LPG cylinder will drop as a result, which in turn will help distributors sell the gas to consumers at lower prices. A 12.0 kg LPG cylinder will cost BDT 250.0 (USD 3.12) less due to the VAT waiver, he added. Bangladesh’s LPG market is import-dominated as more than 60.0% of cylinders and 90.0% LPG of the country’s total requirement are met with imports, Mr Islam said. The country currently rolls with around 10.0 million pieces of 12-kg cylinders on the domestic market, which is increasing by around 16-18% annually, he added.
Rice prices slip in India, Thailand; exporters eye Bangladesh
Rice prices dipped this week in the Asian hubs of India and Thailand, but prospects of new deals with flood-ravaged Bangladesh could reinvigorate sluggish markets for the staple grain amongst top exporters in the region. Bangladesh, which has emerged as a major importer this year to try to shore up stocks in the country, is looking to buy more rice in government-to-government deals to combat high domestic prices, a food ministry official said, said a report by www.moneycontrol.com. “We can buy from India, Thailand and Vietnam,” he said, without elaborating.
Wheat imports soar as consumers cut costly rice intake
Wheat imports soared as a section of people has switched to flour in the face of high prices of staple rice, said importers. Wheat imports grew 28 percent year-on-year to 9.41 lakh tonnes from July to mid-September, according to data compiled by the food ministry. “Many people have started eating wheat flour as a substitute of rice as prices of flour are much lower than the prices of the staple,” said Bishwajit Saha, general manager of the City Group of Industries, one of the leading commodity importers and processors. Rice prices hit a record high mid-August, triggered by a rumour of India banning export, by a drop production owing to crop damage caused by recurrent floods, depleting public stocks and inadequate supply from millers and traders.
22-day Hilsa ban begins: Bangladesh contributes 65pc of total global output
22-day ban on hilsa fishing begins in Chandpur Sunday. The government every year takes the move to increase the production of the popular fish species. The government has imposed a ban on catching, selling, hoarding and transportation of hilsa in different rivers across the country for 22 days from Sunday to protect hilsa breeding, local fisheries department officials said, adding as per the government decision, the banning also came into effect in the rivers here Sunday. The ban covers 100 kilometres of river waters from Shatnal Upazila in Chandpur district to Char Alekjhander in Lakshmipur district, reports BSS.
Major Currency Exchange Rate 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.