Improve fiscal health by slashing classified loans
The central bank has asked the four state-owned commercial banks (SoCBs) to improve their financial health immediately through reducing the volume of classified loans. The instructions were given at a meeting, held at the Bangladesh Bank (BB) headquarters in the capital on Thursday with BB Governor Fazle Kabir in the chair. The meeting was convened to review the progress of implementing memorandums of understanding (MoUs) and key financial indicators of the four SoCBs — Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank. The central bank’s latest instructions came against the backdrop of the rising trend of overall non-performing loans (NPLs) in the banking sector, particularly in the SoCBs in the first half (H1) of this calendar year. During the period, the total amount of NPLs with six SoCBs rose to BDT 300.8 billion from BDT 237.45 billion as on December 31 last. It was 272.89 billion in the first quarter (Q1) of this calendar year. However, the SoCBs also faced capital shortfall during the second quarter (Q2) of 2016 mainly due to the higher volume of their classified loans, according to the central bankers. The aggregated capital shortfall of the four SoCBs increased by more than 41% or BDT 13.3 billion to BDT 45.22 billion in the Q2 of 2016 from BDT 31.95 billion three months ago, the BB data showed. The central banker also said higher NPLs have led to a rise in the banks’ provisioning requirements, which ultimately prompted their capital shortfall.
Foreign investors are continuously losing their interest in the Bangladesh bonds with their holdings in government borrowing tools taking a downturn, market-insiders said. Many believe such lukewarm state of foreign portfolios is largely consequent upon lower yields on the instruments government employs for borrowing from the money market. The proceeds from investments in Bangladesh bonds remained subdued for lesser government needs for development spending as the execution of the annual development program remained ostensibly low. The monthly outstanding held by the foreign investors in bonds stood at BDT 1.5 billion in September 2016, in August BDT 1.7 billion, in July BDT 2.9 billion, in June BDT 4.4 billion, and in May it stood at BDT 4.4 billion by Bangladesh Bank count. Such outstanding holdings amounted to BDT 4.7 billion in April, BDT 4.8 billion March, BDT 5.1 billion in February and BDT 6.3 billion in January. The curves show even it was BDT 7.0 billion in December and over BDT 14 billion in June 2015.
BSEC to publish gazette of venture capital norms soon
Bangladesh Securities and Exchange Commission (BSEC) will publish its official gazette of venture capital norms soon, which was unveiled more than a year earlier. The rules came into force immediately after publication in the official gazette. Over the past several years, venture capital firms that are relatively new in the country have been operating their businesses in absence of such rules. Under some excerpts from the slew of new norms, venture capital fund could be invested primarily in non-listed equity and equity-linked securities of startups with less than two years of operational history or green field companies or emerging early-stage undertakings mainly involved in new products, services, technologies or intellectual property rights based activities or new business models. For operational eligibility, a local venture capital firm needs to have a paid-up capital of at least BDT 50.0 million. For a fully-owned subsidiary foreign venture capital firm, it needs to have a paid-up capital of at least BDT 150.0 million for application of registration, and for a partially-owned subsidiary foreign firm, the paid-up capital will be at least BDT 100.0 million. The applicant firm must have a minimum net worth of 75% of its total paid-up capital. About on formation of an alternative investment fund, such fund size will be minimum BDT10 crore and subscription by the sponsor is not less than 10% of the fund provided that the sponsor will subscribe at least 20% of its total subscription to the fund before registration of the fund. India has more than 200 such types of companies after promulgation of rules and regulations in 1996. A large number of venture capital companies have been formed in Pakistan after proclaiming rules in 2001.
The Bangladesh Securities and Exchange Commission has initiated a move to streamline a commission order as part of its decision to provide policy support to the private entities in investing in public private partnership projects. The capital market regulator took the decision to streamline its orders at a commission meeting presided over by its chairman M Khairul Hossain in September, BSEC officials told New Age last week. Under the initiative, private entities which will invest in the PPP projects would not require to get BSEC’s approval in increasing their paid-up capital above BDT 100.0 million. At present getting approval from the commission is a must for all private companies in raising their capital above the limit. Besides, the commission also waived another mandatory provision, for the same ventures, that made conversion of a private limited entity into a public limited company mandatory once their paid-up capital exceeds BDT 400.0 million. BSEC officials also expect that the exemptions will make it easier for the present and potential investors to invest in the PPP projects. As the government has initiated to implement a number of mega projects under PPP, such waiver will help in availing more response from investors, they said.
Half a million workers get jobs overseas in last 9 months
More than half a million Bangladeshi workers went abroad with jobs in nine months of current calendar year. This reflected a 45 % growth compared to that of corresponding period of last year, the manpower bureau statistics said. A total of 546,275 Bangladeshi workers went to job destination countries during the January- September period of 2016. Of them, 91,484 are women who mainly found jobs in Saudi Arabia, Lebanon, Jordan, and the United Arab Emirates (UAE). The number of overseas jobs secured by Bangladeshi workers was 376,477 during the nine months of 2015, Bureau of Manpower, Employment and Training (BMET) data showed. Despite restrictions on some important job markets like Malaysia, Saudi Arabia and the United Arab Emirates (UAE), overseas job was on the rise as other traditional markets recruited significant number of workers from Bangladesh, according to sector insiders.
Bangladesh’s apparel exports to some emerging and traditional markets declined during the first quarter of the current fiscal year (FY) 2016-17 over that of the corresponding period of the last fiscal, due to sluggish demand worldwide. Garment exports fell by 12.30% to Australia, 56.11% to Brazil, 2.04% to India, 23.3% to Mexico, 24.5% to South Africa and 10.63% to Turkey during July-September of the current fiscal year compared to that of the corresponding period of the last fiscal, according to official data. Canada, France, Germany, Italy, Spain, the UK and the USA are traditional and major destinations for the locally-made apparels. Exports witnessed a negative trend during the period except for France, Germany and Spain. Exporters and observers attributed the decline in apparel exports to the sluggish demand worldwide while the formers considered long Eid vacation as one of the reasons for the downtrend. Regarding the emerging markets, they blamed high duty there and continuation in effective efforts to explore the full potentials in the markets. The country’s apparel exports to Canada dropped by 11.53% to USD 225.82 million during the first quarter of the current fiscal year compared to that of the corresponding period of the fiscal 2015-16, according to official data. The country fetched USD 255.24 million in the same period of FY 2015-16.
The government has decided to set up an 800-megawatt (MW) power plant using liquefied natural gas (LNG) as part of its move to create an alternative fuel-based power generation, officials said Saturday. The state-run North-West Power Generation Company Limited (NWPGCL) will install the Bangladesh’s first LNG-based power station in south-western Khulna region investing nearly USD 1.0 billion. A Power Division official said they have already completed a preliminary deal with an Indian energy company — H-Energy Private Limited — to get supply of LNG for the proposed power plant. Meanwhile, the NWPGCL has received a positive response from the Asian Development Bank (ADB) for building the power station with alternative fuel in Bangladesh. According to the plan of the company, necessary LNG will be imported from India for operating the proposed power plant. “Some 125 million cubic feet (MMCF) of gas will be necessary for running the plant. We hope the LNG will be available from India,” the Power Division official added.
Telcos oppose BTRC bar on fiber optic connectivity
Country’s mobile phone operators have opposed the telecom regulator’s move to bar them from laying and maintaining fiber optic connectivity and from sharing the connectivity among them (mobile operators). The Bangladesh Telecommunication Regulatory Commission on September 18 issued a directive, saying ‘the telecom operators have to take all type of fiber optic connectivity, both primary and secondary, from the National Telecommunication Transmission Network operators’. BTRC officials said the provision that allows mobile phone operators to provide secondary fiber connection was misused in many ways. Last week, the Association of Mobile Telecom Operators of Bangladesh in a letter to the BTRC said that the NTTN operators failed to provide quality service, which was impacting the performance quality of the mobile operators. It also said that although technically there were five NTTN licensees, only two of them were active and the others were not in competition. The letter said that the mobile operators had several times asked NTTN operators to maintain the quality of service but the effort went in vain as there was a lack of competition in the area.
State Minister for Posts and Telecommunications Tarana Halim on Thursday said Teletalk, the state-owned mobile phone operator, will emerge as a strong competitor in the country’s telecom market within a year with its improved network and services, reports UNB. “Different projects have been taken since March this year to turn Teletalk as a vibrant operator. If the projects are implemented with quick fund release, it’ll be able to strongly compete with other operators within a year, at least in terms of network,” she said. Tarana said nearly half of the work on a BDT 7.0 billion project for network extension of the state-owned mobile phone operator will be completed by January next.
Telecoms operator Robi plans to float shares in the capital market as soon as it merges business with Airtel, said Axiata Group Chief Financial Officer Chari TVT. Axiata Group, Robi’s Malaysia-based parent company, organized a three-day According to the merger proposal made last year, Robi’s paid-up capital was BDT 53.35 billion and Airtel’s BDT 45.98 billion. Among the mobile-phone operators in Bangladesh, only Grameenphone is publically listed. Their 10% share is the biggest investment share among the operators in the country. With a customer base of over 55 million, Grameenphone accounts for more than half of the total mobile-phone customers. After the merger, the new entity will operate as Robi and its total customer base will stand at over 36 million, accounting for 30% of the total users. Airtel is owned by India’s Bharati Airtel. The latter had forayed into Bangladesh by acquiring Warid Telecom. The planned joint venture recently received the High Court go-ahead. If no other hindrance crops up, it is up to regulators BTRC to finalise the merger.
Bangladesh Petroleum Corporation (BPC) invites bids to import 1.175 million tons of fuel oil
Bangladesh Petroleum Corporation (BPC) floated again a tender Thursday, inviting bids by the end of this month to supply around 1.175 million tons of refined petroleum oil, said officials. Of the quantity, 965,000 mts of 0.05% sulfur gasoil (diesel), 120,000 mts of 180 centistoke (CST) high sulfur fuel oil (furnace oil) and 90,000 mts of jet A-1 fuel. The state-owned corporation intends to import the fuel oil under three groups, said the officials. The suppliers will be able to submit bids for any one of the three, two or all the groups. Under group A, a selected international oil supplier would provide 490,000 mts of diesel and 50,000 mts of jet A-1 fuel. Around 475,000 mts of diesel and 40,000 mts of jet A-1 fuel would be imported from a selected international supplier under group B. Under group C, 120,000 mts of furnace oil would be imported from a selected bidder. The bid submission deadline is October 31 and the offer validity is for 75 days until January 13 next. This is the BPC’s second tender to import refined petroleum products through open tendering in nine months. It had floated similar tender in February, after a hiatus of 15 years, under which it bought a total 1.32 million mts of diesel and 180,000 mts of jet A-1 fuel from Emirates National Oil Company (ENOC), and Unipec Singapore for supplying over a period between June and December this year.
Shrimp exports picked up in the first quarter of fiscal 2016-17 after remaining on the downturn over the past two fiscal years thanks to lower production in the major producing countries, said industry operators. Export earnings from shrimp rose 14% year-on-year to USD 124.0 million in the July-September period of the fiscal year, according to data from the Export Promotion Bureau. “We have been seeing higher demand for black tiger shrimps in the last couple of months,” said Kazi Belayet Hossain, managing director of Sobi Fish Processing. The demand for black tiger, locally known as Bagda, has particularly increased in the EU and the US, said Hossain, also a former president of the Bangladesh Frozen Foods Exporters Association. In its recent market report on shrimp, Globefish, a unit of Food and Agriculture Organisation, said production was lower in the major shrimp-producing countries, particularly China, India and Vietnam. Exports from China and India declined in the first quarter of 2016, the report said, adding that Chinese imports rose in the January-February period.
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