Net use Cost escalation feared
The cost of internet services at the consumer end might go up by 40 per cent unless the government reduces VAT on its value-chain services, according to industry insiders. The overall cost has gone up by 36 per cent as the rebate provisions have been dropped and 15 per cent VAT on value chains have been re-introduced in the new VAT law. VAT on internet services for consumers is 5.0 per cent. It is 15 per cent for value-chain services in each of the three layers. The new VAT and Supplementary Duty Act-2012 has scrapped the provision for obtaining rebate, if the VAT rate is lower than the standard rate of 15 per cent on any services. To air concerns over the matter, Internet service providers [ISPs] sit with the National Board of Revenue [NBR] today. In the current fiscal budget, NBR re-imposed 15-per cent VAT on value chains-International Terrestrial Cable, International Internet Gateway, and Nationwide Telecommunication Transmission Network. ISPs are not able to claim rebate of the VAT paid at a rate of 15 per cent in each value chain layer.
Brokers seek Tk 100b Lifeline
Stock brokers are seeking a Tk 100 billion fund from the government to inject new life into the moribund capital market. According to the intermediaries, they are set to submit their proposal to the Finance Minister today seeking the fund as loans. Dhaka Bank Securities and EBL Securities are among the 20 signatories to the proposal to be submitted to the government. All market intermediaries such as stock brokers, Merchant Banks, and asset management companies will be allowed to avail the loan facility. The government can also ask for collaterals against its loans to be provided to the market intermediaries. Asked about the strategy for disbursing the fund, Mr Ali said the Bangladesh Bank will decide on how the money will be disbursed. The Central Bank can engage one or more representatives to disburse and recover the loans. Meanwhile, the state-run Investment Corporation of Bangladesh has also sought a fund of Tk 50 billion from the government to support the market. The state-run corporation has recently submitted its proposal to the finance minister.
IDCOL to mobilize $250m for efficient RMG Sector
Infrastructure Development Company Limited [IDCOL] plans to mobilize US$ 250 million to help make the country’s garment sector energy efficient. Of the total, $150 million will be sought from the Green Climate Fund [GCF] and the rest $100 million will be co-financed by the financial institutions including Banks. It was revealed at a dissemination and stakeholder consultation workshop organized by the IDCOL, a state-run financing company, at a city hotel. IMED secretary Abul Mansur Md Faizullah pointed out that Bangladesh still needs increasing its capacity to get access to the GCF as the process is quite complex. The IDCOL conducted a number of studies under the GCF programme titled “Promoting private sector investment through large-scale adoption of energy saving technologies and equipment for garment sector of Bangladesh”. Concessional loan will be sought from the GCF while local Banks and financial institutions including Southeast Bank, BRAC Bank, IDLC Finance, and City Bank will co-finance the initiative. The garment sector borrowers will also make equity contributions in the project.
US Cotton Traders eye growing Market Share in BD
US cotton traders seek to raise their market share in Bangladesh by 33 per cent in the next five years, buoyed by the growing textile industry, especially the spinning sector, which largely depends on imported cotton. They also urged the Bangladesh government to scrap the age-old fumigation rules on the import of US cotton to save both time and money and to increase the flow of quality cotton supply. The US has grabbed 11 per cent of Bangladesh’s total cotton import last year and the share actually increased three times since 2015, according to executive director of Cotton Council International [CCI] Bruce A Atherley. Bangladesh imported 7,85,000 bales of cotton from the US in 2018, up from 2,26,000 bales in 2015. Mr Atherley is leading a high-level US cotton industry delegation that came to Dhaka on the occasion of fourth Bangladesh Cotton Day. Bangladesh, a market of 2.0 million cotton bales, is very important for the US traders due to the spectacular growth of its textile industry over the last 20 years. Bangladesh imported 8.2 million bales of cotton in 2018, according to Bangladesh Textile Mills Association. Some 37.06 per cent of the total cotton bales was imported from Africa, 26.12 per cent from India, 11.35 per cent from the Commonwealth of Independent States [CIS] countries, 11.14 per cent from the US, 4.65 per cent from Australia, and 9.65 per cent from other countries. The US industry traders noted that the US can supply more reliable and high quality cotton to Bangladesh spinners.
Aromatic Rice Exports rises
Fragrant rice exports from Bangladesh have gradually been increasing thanks to rising demand for such item in the globe, according to traders. The exports could be increased significantly if the government provides necessary incentives like that of competitor countries. However, Bangladesh exported above 22,400 tonnes of rice worth US$ 17.7 million in the last Financial Year [FY’19] of which 100 per cent were fragrant rice, according to the Export Promotion Bureau [EPB] and the Bangladesh Rice Exporters Association [BREA]. It was 11,000 tonnes worth US$ 7.13 million in FY’18, EPB data showed. Exports of fragrant rice increased by 149 per cent in FY’19 than that of FY’18 [in value]. The local traders exported aromatic rice to UAE, KSA, Australia, Brunei Darussalam, Bhutan, Canada, Switzerland, UK, France, Germany, Finland, Greece, Hong Kong, Ireland, Italy, Jordan, Japan, Lebanon, Maldives Nepal, New Zealand, Myanmar, Mauritius, Malaysia, Kuwait, Liberia and South Africa.
Govt readies answer to ILO Complaints
The government has finalized a draft response to the complaints against it over the violation of the International Labour Organization [ILO] conventions, according to officials. A number of countries filed the complaints at the International Labour Conference [ILC] held in Geneva in June this year. Labor and law ministries and stakeholders have jointly finalized the response that includes the recent progress in amending the labor law. The law conforms to the ILO conventions to avert the situation for forming a commission of inquiry against the country. At the concluding ILC session, worker delegates of Italy, Pakistan, South Africa, Brazil and Japan suggesting forming such a commission. Bangladesh was not following ILO convention 87 on freedom of association and right to organize, convention 98 on right to bargain collectively and convention 81 on labor inspection. EPZs workers are more protected and facilitated as well as getting more benefits under existing EPZ laws, rules and regulations and provisions, the draft explained.
Two bodies to work on closing gap with IFRS
The country’s audit watchdog has formed two working groups to set accounting rules in line with the International Financial Reporting Standards [IFRS] to further standardize the accounting practices here. The Financial Reporting Council [FRC] Bangladesh, an independent oversight body, has formed the groups as companies deviate from the accounting standards in preparing their financial statements. Local accountants prepare financial statements by applying different methods of accounting, guided by their ill-motives in many cases. Many follow the direct cash flow method of accounting with some others going by the indirect method. The regulators concerned like the Bangladesh Bank and the Bangladesh Securities and Exchange Commission [BSEC] instruct the companies time to time to include or exclude some financial matters that impact the financial statements. Such instructions also go against the IFRS. The two groups would work on three IFRS principles-9, 15 and 16.The IFRS 9 deals with the accounting for financial instruments. The IFRS 15 provides guidance on accounting for revenue from contracts with customers. The IFRS 16 provides guidance on accounting for leases.
DSE Turnover hits Five-month Low
The turnover on the Dhaka bourse came down to Tk 2.71 billion on Wednesday, hitting five months low, as investors were reluctant to make fresh investment in stocks. Turnover, a crucial indicator of the market, dipped further by 6.0 per cent over previous day’s mark of Tk 2.88 billion. It was the lowest single-day transaction since May 15, this year, when the turnover totaled a record low of Tk 2.56 billion. According to Market analysts, institutional investors mostly followed ‘wait-and-see’ approach amid liquidity crunch while small investors were not confident enough to inject fresh fund, taking the market turnover to five months low. The institutional investors are in hands-off position as they fear of the liquidity pressure in coming days amid soaring interest rates in the Banking sector. The market index ended marginally higher after sharp decline in the previous day as bargain hunters showed their interest in fundamentally sound stocks. DSEX, the prime index of the Dhaka Stock Exchange, went up by 17.94 points or 0.38 per cent to settle at 4,726, after losing 53 points in the previous day. The DSE Shariah Index also gained 3.83 points to close at 1,084. However, the DS30 index, comprising blue chips, fell 1.54 points to finish at 1,659. Among the major sectors, engineering posted the highest gain of 1.40 per cent, followed by power with 0.80 per cent, telecom 0.30 per cent and Banking 0.30 per cent. The Non-Bank Financial Institutions and food sectors lost 1.50 per cent and 0.60 per cent respectively.
Soft launching of EXIM Finance [HK]
Export Import Bank of Bangladesh Limited softly launched its wholly owned subsidiary EXIM Finance [Hong Kong] Limited recently in a program at Holiday Inn Golden Mile Hotel, Kowloon, Hong Kong, according to a statement. EXIM Finance [Hong Kong] Limited will provide LC advice, LC confirmation, export bill collection, financing against accepted import and export bills, discounting of export bills and related services.
Local and Global Stock Indices *
|Index Name||Close Value||Value Change||Percentage Change|
|DSEX||4726.62043||↑ 17.94||↑ 0.38|
|DJIA||26,833.95||↑ 45.85 ||↑ 0.17% |
|FTSE100||7,260.74||↑ 48.25 ||↑ 0.67% |
|Nikkei 225||22,769.58 ||↑144.20 ||↑ 0.64% |
World Commodities *
|Commodity||Close Value||Value Change||Percentage Change|
|Crude Oil (WTI)||$ 55.49 ||↑ 0.48 ||↑ 0.86% |
|Crude Oil (Brent)||$ 60.78 || ↓ 0.39 ||↓ 0.64% |
|Gold Spot||$1,493.22 ||↑ 1.10 ||↑ 0.07% |
Major Currencies Exchange Rates Movement in Last Seven Days *
|USD 1||BDT 83.0862|
|GBP 1||BDT 107.000|
|EUR 1||BDT 92.4146|
|INR 1||BDT 1.17489|
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.<