Important Business News Extracts – October 09, 2017
Government earnings from DSE soar 174.0% in Q1
The government revenue earnings from the Dhaka bourse marked a 174.0% rise in first quarter (Q1) for July-September period of the current fiscal year compared to the same quarter a year ago as trading volume was on the rise. Market insiders said the government earnings from the premier bourse jumped as trading volume increased substantially in the first three months of the FY 2017-18, which helped higher tax collection, as earnings is related to trading volume. The government bagged revenue worth about BDT 831.0 million in July-September period of FY 2017-18, which was only BDT 303.0 million in the same quarter a year ago, according to statistics from the Dhaka Stock Exchange (DSE). Of the total earnings in July-September period of FY 2017-18, BDT 604.0 million came from the TREC holders’ commission, popularly known as brokerage commission while BDT 227.0 million came from the share sales by sponsor-directors and placement holders, the DSE data shows. The month-on-month the government earnings from DSE also rose nearly 14.0% in September as total revenue collection stood at BDT 308 million in September which was BDT 271.0 million in August 2017, the DSE data shows.
The central bank fined seven commercial banks for their recent share-market activities by violating the legal sanction, officials said. “We’ve imposed the fines with substantial amount of money on the banks for violating the rules of the existing Banking Companies Act and the central bank’s instructions on share-market investment,” a senior official of the Bangladesh Bank (BB) told the FE Sunday. He wouldn’t name the names of the errant banks and the amount of money which will be deducted from their accounts as penalty. Sources, however, said the central bank has already informed the banks concerned about the punitive action. One bank or two had exceeded their share-market-exposure limits on consolidated basis, they said, adding that the rest of the banks had provided fake information on their investment in stocks to the BB on weekly and monthly basis. Besides, the banks invested their funds further in the share market while having total investments above the prescribed limits, they added.
Provash Chandra Mallick, a general manger of the central bank, has defaulted on loans from 11 banks in a stunning case of misuse of position of power over a three-year period. He took out loans amounting to Tk 82.43 lakh from 15 banks, Tk 53.39 lakh of which has already become classified, according to central bank data. Not only that, he borrowed money, amounting to about Tk 1 crore, from several of his colleagues on an informal arrangement and never paid them back, said a BB official who preferred to remain anonymous due to the sensitivity of the matter in hand. The incident has tarnished the image of many central bank officials who work with integrity to regulate the banking sector such that depositors’ interests are safeguarded.
Bangladesh counted a US$1.81 billion worth of merchandise trade gap with the rest of the world in the very first two months of this fiscal, for hugely higher import payments than export earnings. Statistics released by the central bank Sunday also showed that trade gap widened almost threefold and a half from the same period of the past fiscal year when it had amounted to $525 million. Huge jump in import payments against modest export earnings led to the ballooning of the volume of trade deficit. Import, in free-on-board (FoB) terms, registered almost 34 per cent growth while the export (in FoB value) posted 14.57 per cent growth in the July-August period of the current fiscal year (FY) 2017-18. Trade gap in services also widened to $778 million during the period as against $551 million.
No board meeting at Grameen Bank in two and a half years
Nobel Prize-winning microcredit lender Grameen Bank has been operating without holding any board meetings for past 30 months. Several bank officials have confirmed that the board of directors has not officially convened since mid-2014. The Grameen Bank board of directors is a 12-member body with three government-appointed directors and nine borrower-directors, who are selected from the bank’s shareholders and borrowers. When the government took over the bank by implementing the Grameen Bank Act 2013, the nine borrowers were removed from their positions, which remain vacant to this day. However, the borrowers now demand to be reinstated since the bank did not announce the election schedule after amending the bank’s regulatory rules.
Businesses want predictable policy for stable investment
Foreign and local businesses in the country on Sunday urged the government to formulate a stable and predictable regulatory and tax policy for a stable investment environment. They also called for initiating a comprehensive development and investment plan for quality power, energy and infrastructure to attract investors. The country, according to them, should extend tax base instead of imposing heavy taxes on a small group. The businesses came up with the observations at a programme titled ‘CanCham Bangladesh’s 3rd Joint Chambers’ Meet-Up’ the CanCham Bangladesh organised in association with the Bangladesh Investment Development Authority (BIDA) at a city hotel. Addressing the programme, Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Shafiul Islam Mohiuddin said that as a sovereign country, Bangladesh would not accept any instructions from the International Monetary Fund (IMF) or any other international organisations.
Rethink multiple, package VAT rates, tariff value before switch
The government should rethink merits of the existing VAT law 1991, including multiple rates and package VAT and tariff value, before the pending switch. Business leaders and economists came up with the latest suggestion Sunday, stressing a comparative analysis of impacts of the old and the deferred new VAT law on the economy and the consumer market. They said impact analysis of the new VAT and Supplementary Duty (SD) Act on the national economy should be conducted by an independent and local research body to find its positive and negative impacts before enforcing the new law from July 01, 2019. Representatives from the Centre for Policy Dialogue (CPD), Policy Research Institute (PRI), Bangladesh Economic Association (BEA), BRAC University, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) made their respective recommendations on impact analysis of the new VAT law in an opinion-exchange meeting.
The country’s export earnings shot up to $8.66 billion in the first quarter of the current fiscal year, a 7.23% up compared to $8.07 billion of the corresponding period last year. However, in the last month alone export earnings fell by 9.83% to $2.03 billion compared to $2.25 billion in the same period last year. The earnings are 26.72% less than the target of $2.77 billion set for the month. Trade analysts and officials cited holidays during the Eid-ul-Azha as a reason for the fall in the earnings. According to the latest data of Export Promotion Bureau (EPB), export earnings in the first quarter are 2.84% less than the target of $8.91 billion set for the period. The data reveals that the RMG sector earned $7.14 billion, which is 7.17% higher compared to $6.66 billion in the same period a year ago.
Mobile operator Robi Axiata Limited on Sunday deposited in the Bangladesh Telecommunication Regulatory Commission Tk 20,400 as penalty imposed by the commission for the operator’s delay in blocking four SIM cards, BTRC officials said. Robi deposited the money after the BTRC had taken a tough stance against the mobile phone company for non-payment of the penalty that was slapped by the commission last year. The telecom regulator on September 28 initiated a move to refrain from supporting and giving approval to any application of the mobile phone operator for the delay in paying the penalty, forcing the operator to pay the fine.
Local ICT service provider Aamra Holdings plans to start test production of smartphones in its assembly plant in the capital’s Mirpur in the first week of December. The company has completed more than half of the plant’s construction work and hopes to get it ready by December, said AM Ehasan-ul Haque, chief operation officer of the smart solutions division at Aamra Holdings Ltd. Commercial assembling will start in the middle of the last month in 2017 and exports from the plant will begin in the middle of next year, he said. Aamra initially targets assembling around 30 lakh 3G and 4G enabled mobile phones every year to meet the local demand, Haque said. “Currently, Aamra exports WE branded handsets to UAE and Doha directly from its Chinese factory and we are working to start exporting to Sri Lanka as well.”
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