Important Business News Extracts – October 16, 2017
B’desh becomes 21st most attractive global offshoring destination
Bangladesh becomes the twenty-first most attractive offshoring destination in the world and the ninth best-outsourcing hub in Asia as per a global rating of skilled services location. Such grading of nations came in the latest edition of the Global Services Location Index done by global management-consulting-firm A. T. Kearney. Bangladesh attained a total score of 5.37 in this year’s GSL index, slightly up from the aggregate score of 5.31 it got in the same index last year-largely due the country’s increased score in ‘People skills and availability’. Consequently, the country has also moved one notch up from the 22nd place it attained in last year’s GSL index. Now in its eighth edition, the Global Service Location Index is considered premier ranking of location amenability for companies looking to relocate functions such as financial services, accounting, and customer service.
A new securities instrument styled ‘muni bond’ may hit the country’s capital market with a twin objective: fundraising for urban local-government bodies and stimulating economic activity. Sources said a UN agency concerned is assisting in devising the long-term bond meant for strengthening financial bases of the local government for spending the funds on rural-development projects. Proceeds from such municipal bond, commonly known as a muni bond, which is issued by local-government bodies, are generally used for financing public projects such as roads, schools, markets, and other infrastructure-related schemes and repairs. Such type of borrowing will help diversify and aggregate municipalities’ financial base beyond the drip feeds of annual grants provided by the government. The Bangladesh government in collaboration with the UN agency has been working on the shaping up of the financial tool, expected to be attractive to investors and help spur economic activity and spending. People familiar with the development at the Financial Institutions Division of the Ministry of Finance told the FE that the work has progressed much and ratings of some municipalities have also been completed. They said local governments often fail to take major infrastructure projects for lack funds and issuance of such bond helps them take development and income-generating projects.
Islami Bank’s new management has taken on a spirited approach to lending, with its loan-deposit ratio sitting dangerously close to the limit of 90 percent set by the central bank. The new management took over at the beginning of the year, and in the following seven months, the bank’s loan-deposit ratio surged 3.54 percentage points to 89.97 percent, according to data from the Bangladesh Bank. The loan-deposit ratio is a commonly used statistic for assessing a bank’s liquidity by dividing its total loans by its total deposits. The spike in ratio has prompted the central bank to send a notice to Islami Bank, said a BB official.
HSBC has been voted “Best Domestic Cash Manager” for corporates in Bangladesh in the Euromoney Cash Management Survey 2017, the bank said in a statement yesterday. HSBC also retained “Best Global Cash Manager” in context of both Corporates and Financial Institutions in the survey. “We are honoured to be recognised as the best domestic cash manager in the country,” said Francois de Maricourt, chief executive officer of HSBC Bangladesh. “This recognition reaffirms our commitment to deliver unparalleled cash management solutions to corporates in Bangladesh by leveraging our global network.” The Euromoney customer survey annually recognises leadership in cash management across a range of markets and criteria.
Small fish farmers pay high interest for loans: study
Small fish farmers have to pay a higher interest rate on credit than their larger peers as they have to borrow from NGOs and microfinance institutions (MFIs) owing to bankers’ reluctance to provide finance without collateral, according to a study on aquaculture unveiled yesterday. Carried out by the Bangladesh Shrimp and Fish Foundation (BSFF), the study finds that more than 70 percent of small farmers borrow from relatives, NGOs and MFIs. Only 24 percent of them could get loans from state-owned and private banks. On the other hand, banks were sources of finance for a total of 65 percent of large and 48 percent of midsize aquaculture farmers, according to the study on “supports received by the aquaculture sector in Bangladesh: existing reality and scope for improvements”. “Small farmers remain in a disadvantageous position in terms of credit,” said Bazlul Haque Khondker, a professor at the department of economics at the University of Dhaka, while presenting the findings of the study at a workshop at the Pan Pacific Sonargaon hotel in Dhaka.
Submission of income tax returns online has yet to get momentum after the introduction of the facility on November 1 last year due mainly to a lukewarm response from taxpayers and failure of the National Board of Revenue in building awareness about the facility among taxpayers. Field-level tax officials have so far received very negligible number of tax returns online while a few hundred taxpayers obtained user IDs and passwords to get the access to the e-filing platform of the NBR to file tax returns in the current fiscal year 2017-2018. There are only one and a half months left for taxpayers to file income tax returns this year as the deadline for returns submission is set to expire on November 30 as per the income tax law. Now, the NBR is planning to launch intensive campaign activities to encourage taxpayers to file tax returns online, officials said. They said that the revenue board had already asked its field offices to take various steps to make people aware about the system and help them to get user ID and password as soon as possible.
Move to mobilise $190 billion to fund mega transport projects
A massive fundraising campaign got underway for mobilising over US $190 billion to elegantly improve Dhaka’s transport network with metro rails, expressways and bus-franchise services. Dhaka Transport Coordination Authority (DTCA) has taken up the step to raise the fund from development partners to finance such mega-projects over next 20 years. Sources said only six per cent of the total investment plans, proposed in the 20-year transport plan known as strategic transport plan (STP), are now in the implementation stage as only three development partners have so far come forward to invest in four projects with an involvement of around $ 12 billion. The STP, which was revised and approved in August 2016, proposed development of various infrastructures and transport services, like metro rails and expressways, for managing 35 million trips to be generated in and around the greater Dhaka city by 2035. Officials said three metro projects or mass rapid transit line (MRT) are now in implementation stage with the support of Japan International Cooperation Agency (JICA). Besides, the Asian Development Bank (ADB) has invested in development of dedicated bus-service project known bus rapid transit or BRT. Though World Bank has also provided technical support for conducting feasibility study on BRT (bus rapid transit) line-3 project, its engagement in implementation stage of the same project is now underway.
Wartsila to supply engines for United’s 200MW power plant
Wartsila, a complete lifecycle solutions provider for the marine and energy markets, will supply engine for a 200-megawatt power plant of United Group being set up in Mymensingh. The new plant will use the Finnish company’s 21 engines that run on heavy fuel oil. The equipment is scheduled to be delivered in January 2018, Wartsila Bangladesh said in a statement. Moinuddin Hasan Rashid, managing director of United Group, and Jillur Rahim, managing director of Wartsila Bangladesh, signed an agreement to this effect at an event recently. “We have an implementation time for this project of just nine months, so having an equipment partner who we can trust to deliver on schedule is of immense value to us,” said Rashid. He said United Group already has three other plants that run on Wartsila’s equipment. “So, we have good experience with the company and know that we can rely on their high quality engines.” The plant is expected to start commercial production of electricity in June 2018.
The government has taken an initiative to allocate 500 acres of land to the country’s readymade garment exporters for setting up an ‘RMG Block’ in the Mirsarai Special Economic Zone of Chittagong. The Bangladesh Garment Manufacturers and Exporters Association on Saturday asked its members to inform the trade body within seven days about their interest in buying industrial plots in the SEZ. In a circular, BGMEA president Md Siddiqur Rahman said that the trade body started talks with the Bangladesh Economic Zone Authority over allocating an area of 500 acres of land in the Mirsarai SEZ exclusively to the RMG factory owners. In the circular, he said that strategically the Mirsarai economic zone was important for the export-oriented industries as the zone is being developed near to the country’s biggest seaport. The zone has already drawn the attention of local and foreign investors and many of them expressed their interest for plots in the zone, Siddiq said. ‘The government is always positive about allocating plots to the RMG factory owners in the economic zone and now we will have to be prepared to get the facility,’ the BGMEA president told New Age on Sunday.
Fifty digital campaigns won the country’s first Digital Marketing Award in recognition of their creative marketing and branding communication methods in businesses. Bangladesh Brand Forum (BBF) honoured the winners in 13 categories for their last year’s successful digital campaigns after the fourth Digital Marketing Summit, at Le Méridien Dhaka on Saturday. At the event, 12 campaigns won the highest award Grand Prix, 22 won Gold and 16 received Silver awards. The Grand Prix for Best Integrated Digital Campaign was awarded to “Aynabazi the Movie” executed by Melonades. An initiative of BBF, the summit was presented by Meghna Group and was organised in association with The Daily Star, where experts from home and abroad shared their knowledge, innovative ideas and technology on how to do marketing with the help of digital platforms.
Bangladesh has not had a food year so bad since 2008. That was a year now well marked in history books as the year of global economic meltdown, the worst since the Great Depression in the 1930s. In 2007-08, Bangladesh had a bad crop year, and some of its neighbours were jittery about providing any support. This year’s World Food Day observation today comes as a watershed, with Bangladesh sourcing food grains from every possible country, including Myanmar, to offset a record domestic production shortfall. All of this comes into play when the country has to play host to one of history’s largest refugee populations amid an ethnic cleansing taking place in its backyard. Dr Sue Lautze, who represents the United Nations Food and Agriculture Organisation (FAO) in Bangladesh, reckons Bangladesh is in “dire straits”. “Rice import has increased significantly. There are macro-economic pressures. Such a huge influx of Rohingyas in a short span of time — this is really admirable that Bangladesh is tackling this humanitarian crises,” Lautze said in all appreciation.
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.