Important Business News Extracts – October 19, 2017
Bangladesh spends Tk 500cr on printing currency
Bangladesh has to spend around Tk 500 crore to print new currency notes and coins a year, a figure that may puzzle many people including policymakers. The expenses include costs of printing materials, paper, ink, colour and security thread. The costs have been increasing fast and have doubled in the last five years to keep up with the demand amid the rising economic growth. “We are encouraging electronic payments so that the dependence on cash goes down,” a BB official said. As part of the effort, the banking regulator is now offering licences to the electronic payment gateways. The BB move has also encouraged commercial banks, as they are introducing mobile apps to promote cashless transactions.
General imports drop despite higher food importation
Country’s overall imports dropped by over 8.0 per cent or US$315.20 million in September despite higher import of food-grains to cool an overheated market. Officials believe a slowdown in the import of fuels and intermediate goods tipped the scale down in the trade. The settlement of letters of credit (LC), generally known as actual import, in terms of value came down to $3.44 billion in September 2017 from $3.75 billion a month before, according to the central bank’s latest statistics. The actual imports were worth $2.98 billion in September 2016. “The overall imports decreased slightly during the period under review mainly due to lower back-to-back imports for readymade garment (RMG) products and fuel oils,” a senior official of the Bangladesh Bank (BB) told the FE Wednesday. The imports of rice and wheat increased significantly during the period for the urgency of catering a growing demand for the food items on the local market, the central banker explained. The rice import increased by nearly 133per cent or $112.19 million to $196.61 million during the period under review from $84.42 million a month ago. It was only $0.82 million in September 2016. On the other hand, the import of wheat rose by 28.88 per cent or $18.66 million to $83.27 million in September from $64.61 million a month before. In September, rice imports through private sector amounted to $130.16 million while public-sector import of the staple was worth $66.45 million, the BB data showed. “The upward trend in import of food-grains covering rice and wheat may continue in the coming months to ensure the prices of main staple stable in the local markets through boosting its supply,” the BB official noted. The government along with the central bank had taken different measures to encourage the importers to import more rice to meet the growing demand. The overall import may fall in the coming months as the opening of fresh LCs dropped significantly in the month of September, according to the central banker.
The government is expected to provide Bangladesh House Building Finance Corporation (BHBFC) with a fund of Tk 1.50 billion to facilitate the state-run housing loan agency expand its coverage down to the rural areas across the country, officials said. “We’re considering giving the fund. The division concerned is working on it,” a high official of the Ministry of Finance (MoF) told the FE. The fund will be the last installment of a total fund of Tk 5.0 billion, which the government had earlier decided to provide the organisation for increasing its activities. The government has already provided Tk 3.50 billion in the fiscal years (FYs) 2015-16 and 2016-17. “We need adequate funds to extend housing finance in the district and sub-district levels,” a high official at the BHBFC said. Presently, BHBFC’s annual demand for loan will be over Tk 10 billion. But the corporation could not meet the demand due to fund shortage, he said. It provides housing and flat loans in Dhaka and Chittagong metropolitan cities.
PayPal, a global online payment system, will start its service in Bangladesh today. Sajeeb Wazed Joy, prime minister’s adviser for information and communication technology, is scheduled to launch the international gateway at a function at Bangabandhu International Conference Centre in Dhaka. People can now receive the service from nine commercial banks, including Sonali, Rupali and Social Islami Bank, and the service will be extended gradually, an official of the ICT Division told the news agency yesterday. “The PayPal authorities have taken the decision after reviewing the potential and market of Bangladesh,” he added. The official said the ICT adviser has provided all sorts of cooperation to launch PayPal to provide the country’s people with the world’s most popular online money transfer service.
BRAC Bank, Bagdoom partner to launch SME loan for e-merchants
BRAC Bank Limited and leading lifestyle e-commerce platform, Bagdoom.com, have introduced the country’s first ever SME loan product for the e-commerce entrepreneurs, said a statement. The product styled “BRAC Bank – Bagdoom Merchant Financing Platform: eMPOWER”, an SME loan programme to financially empower the merchants of Bagdoom.com and assist in their business expansion, was launched at a press conference at the BRAC Bank Head Office in Dhaka Wednesday. Under the agreement between BRAC Bank and Bagdoom to launch the financing programme, the merchants exclusively associated with Bagdoom.com can now avail loan facilities with the minimum of collaterals and lowest of interest rates from BRAC Bank. Managing Director & CEO of BRAC Bank, Selim R. F. Hussain, Executive Chairman of eGeneration Group & Bagdoom.com, Shameem Ahsan, CEO of Bagdoom.com, Mirajul Huq, Head of SME Banking Division of BRAC Bank, Syed Abdul Momen were present at the event along with the high officials of both the organisations.
Japan to help improve Bangladesh investment environment, security
Japan’s new ambassador, Hiroyasu Izumi, says his government wants to work actively with Bangladesh government and the country’s private sector for further improving investment environment and ensuring security. “I would like to reiterate my sincere desire to further develop the cordial relations in a wide range of areas including development cooperation, trade and investment, and cultural and people exchange,” he said in a statement issued on the occasion of assumption of his office as the Ambassador of Japan to Bangladesh. The new Japanese envoy presented Tuesday his letter of credence to President Md Abdul Hamid to begin his diplomatic mission in Dhaka. He noted that Bangladesh is located at the center of a triangle formed by three growing markets–India, South-East Asian countries, and China–and has achieved about 7.0 per cent economic growth steadily under the political stability in recent years. In addition to this geographical advantage and cultural diversity, a large young population endows Bangladesh with good and abundant labour. Besides, he mentioned the country’s tremendous potential for development with its young and vibrant population.
Japanese automobile giant Honda is going to set up a motorcycle assembling and manufacturing plant early next month in the country. The company will lay foundation stone of the unit in November in the in privately-owned Abdul Monem Economic Zone at Gazaria in Munshiganj. But the size of the investment has not been disclosed by the authorities yet. Talking to the FE, executive chairman of the BEZA Paban Chowdhury said that Honda is expected to lay the foundation stone on November 5. “It is one of the large investments in the country’s economic zones,” he said. Currently, the company has a joint-venture assembling plant in Gazipur with the state-owned Bangladesh Steel and Engineering Corporation (BSEC). The industry will be shifted to the zone with its manufacturing plant. Abdul Monem has allocated 25 acres of land to the company for establishing the plant. Japan has selected Abdul Monem zone as its suitable investment location. BEZA has been working to develop a separate special zone for Japanese investors in the light of a commitment by the Bangladesh government, said Mr Chowdhury. The authority has already selected 500 acres of land at Araihazar in Narayanganj for a special zone dedicated to Japanese investors.
Packaging materials of imported goods to face customs duty
Packets and packaging materials which are integral part of imported goods will face customs duty, according to a ruling of the National Board of Revenue. Customs wing of the NBR on October 9 issued the ruling to its field level offices for calculating the prices of packets and packaging materials for determining the customs valuation of those imported goods which are sold to consumers intact. The ruling also asked the customs houses and land customs stations for recognising the compliant businesses as trusted traders and completing customs procedures of their consignments within minimum time to facilitate honest traders. The ruling will be applicable for those packaged products like cosmetics, perfume, shampoo, toys, auto parts, pencil, nail polish, chocolate, chips, biscuits, coffee and other goods which are placed to customs authorities as single item without separating the goods and packaging materials and sold to consumers in the same way. Customs officials will now determine the dutiable value of the main goods calculating the weight-based prices of packing container or packing materials, it said. Officials of the revenue board said that in some cases the prices of packet and packing materials of the goods remained included within the value declared by the importers.
The government is on course to amending the labour law within the stipulated timeframe of November, although a coalition of rights groups yesterday claimed the progress was very slow. At the International Labour Conference in June, Bangladesh committed to amend the labour law by the end of November. The amended labour law is expected to be passed by the parliament in the next session, said Mujibul Haque Chunnu, state minister for labour and employment. The draft of the amendment to the labour law was prepared in consultation with the stakeholders of the tripartite council that was formed for the garment sector in April, the minister said.
Noman Group’s production hit by gas crisis in Tongi
Noman Group, the first Bangladeshi garment exporter to cross the $1 billion-mark, is staring at losses of more than Tk 20 crore thanks to the gas crisis in Tongi area over the last one month. Production in the company’s factories, which are set up on 125 bighas of land at Tongi, slumped more than 40 percent due to the gas crisis, Mohammad Abdullah Zaber, deputy managing director of Noman Group, said yesterday. For running the factories in full capacity gas pressure of 8 pounds per square inch is required, but the pressure has lowered to about 2 PSI now, he said. “The other factories in Tongi are also facing the same problem.” Noman Group exports home textile and linen fabrics worth $480 million a year from the Tongi units alone, according to Zaber. Mir Mashiur Rahman, managing director of the state-owned Titas Gas Transmission & Distribution Co. Ltd, which supplies gas to the belt, acknowledged that the current gas pressure in Tongi is low.
The government is set to import 1 lakh tonnes of parboiled rice from neighbouring India under a state-to-state arrangement as part of its aggressive push to boost stocks. The development comes after the cabinet committees on economic affairs and purchase yesterday approved the proposal for import of rice for $455 per tonne — $15 less than what the government paid to bring in the food grain from Vietnam earlier. This comes after the committees last week approved the import of 1 lakh tonne of white rice from Myanmar for $442 per tonne under a similar arrangement. Earlier in June, the government imported 50,000 tonnes of parboiled rice for $470 per tonne from Vietnam under a government-to-government arrangement. Another 1.5 lakh tonnes of rice will soon be brought in from Thailand for $465 per tonne, said food ministry officials.
The government should revisit its recently-approved 4G guidelines to make them more investment-friendly and help operators roll out the fourth-generation technology, said the president of the Association of Mobile Telecom Operators of Bangladesh. Erik Aas said all the major operators have expressed willingness to embrace 4G technology. “The industry believes the guidelines, as they are now, are not investment-friendly because there are many conditions that are not pragmatic at all,” he told The Daily Star in an interview on Sunday. He said the operators will only participate in the process if all of their concerns are addressed and the guidelines are made favourable for further investment.
Major Currency Exchange Rate Movement in Last Seven Days
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