Important Business News Extracts September 22 2016
Forex reserves cross USD 31.0 billion mark again
Country’s foreign exchange (forex) reserves crossed USD 31.0-billion mark again Tuesday as export earnings tipped the balance against import-payment pressures on the economy, officials said. The forex reserves rose to USD 31.1 billion on the day from USD 30.97 billion of the previous working day. It was USD 31.2 billion on September 01. The reserves came down to USD 30.8 billion on September 15 after a routine payment of USD 815.0 million to the Asian Clearing Union (ACU) against imports during the July-August period of the current calendar year from USD 31.5 billion of the previous working day. The overall import dropped by 18.4% to USD 2.8 billion in July, the first month of the current fiscal year (FY), 2016-17, from USD 3.4 billion during the same period of the previous fiscal mainly due to lower imports of capital machinery.
Government plans to use forex reserves in mega projects
The government plans to use the central bank’s foreign currency reserves for implementing mega development projects, Finance Minister AMA Muhith said yesterday The minister hinted this after a meeting with Bangladesh Bank Governor Fazle Kabir on the use of foreign exchange reserves and improvement of financial system at the secretariat. Muhith said: “We do not need assistance from World Bank and International Monetary Fund as our foreign exchange reserves are huge.” Acording to Bangladesh Bank, the present forex reserve is USD 31.16 billion. In 2014, the government had tried to use a portion of its foreign currency reserves for constructing Padma Bridge—the largest infrastructure project in Bangladesh—but the idea was not work out.
Dhaka Stock Exchange (DSE) seeks BSEC guidelines on merger procedure
The Dhaka Stock Exchange, embarrassed in connection with SPPCL merger and delisting fiasco, has issued a letter to the capital market regulator seeking guidelines on merger procedure. The country’s premier bourse sent the letter to the regulator on Monday as merger procedure of another listed company, Bengal Windsor Thermoplastics Limited, with two of its associate companies— Bengal Petrochem Ltd and Synthetic Textiles Limited— was under process. On August 18 this year, the board of directors of BWTL took the merger decision and got approval on draft scheme of amalgamation on August 29. The extraordinary general meeting of shareholders of BWTL will be held on October 30 to approve the draft scheme of amalgamation, a web-post of the company said on September 4 after the court approval. Following the BWTL declaration, DSE chief regulatory officer AKM Ziaul Hasan Khan issued the letter to the commission as the bourse observed that there was no securities rules or regulations in place to determine the course of actions of the bourse. The DSE letter came after the Bangladesh Securities and Exchange Commission on August 26 formed an inquiry committee after the regulator found that the bourse had failed to follow due procedure in delisting Summit Purbanchol Power Company Limited in connection with a merger procedure.
Non-life insurance premium growth in the country virtually stagnated, falling below 1.0% in 2015 from over 10.0% the previous year, according to an official count. Industry-insiders, explaining the lacklustre performance, said a few economic factors were largely responsible for keeping the insurance market depressed in the year under review. The non-life or general underwritings are closely linked with country’s trade and commerce, implying that the investment and other economic activities had remained almost stagnant in 2015. Industry people said they had less-than-expected business in 2015, leading to fall in their underwriting profits. They also were not that optimistic that the ongoing year will make any difference by way of strengthening of the market in view of different signs of slow economic activities. According to the Insurance Development and Regulatory Authority (IDRA), country’s 45 non-life insurance firms earned in the past calendar year BDT 32.3 billion in premium, including that of the state-owned Sadharan Bima Corporation (SBC). In 2014, it was BDT 31.95 billion and in 2013 BDT 28.9 billion.
Summit Power buys 64.0% stake in Ace Alliance Power
The local power generator became a leading operating member of 149MW duel fuel-fired project. Summit Power Limited, a subsidiary of Summit Group and the first Bangladeshi Independent Power Producer in Bangladesh in private sector, has bought 64.0% stake in Ace Alliance Power Limited. After purchasing shares of Ace Alliance from Sri Lankan firm AiBDTen Spence PLC, the local power generator became a leading operating member of 149 MW duel fuel (HFO/Gas)-fired project, said the company in a filing with the Dhaka Stock Exchange yesterday. Another local firm Alliance Holdings Ltd, which accounted for 36.0% of Ace Alliance is another consortium member of the power project to be implemented at Kodda in Gazipur. On September 8, 2016, Bangladesh Power Development Board and Board of Directors of the Summit Power gave consent to incorporating the changes of ownership of the project. The facility will be implemented on build, own and operate basis for a period of 15 years from the commercial operation date.
Government considers tax rate cut on local biscuits after push from lobbyist gr
The government is reviewing a proposal to reduce tax rate on biscuit after a push from local manufacturers. Economic affairs adviser to the Prime Minister Dr. Mashiur Rahman recently sent the proposal of the domestic companies to cut back on Value Added Tax (VAT), income tax and tariff value of locally -produced biscuits. Industry insiders said due to tax measure in the fiscal year 2015-16 and 2016-17, imported biscuits became cheaper than those of locally-made products. In the current fiscal year, the government reduced SD on imported biscuits, but kept higher tariff value on locally-produced biscuits unchanged. The association leaders proposed to set tariff value of local biscuits to BDT 100 per kg for crackers, digestive, chocolate biscuit, BDT 80 for cream biscuit and BDT 65.0 for normal biscuit same as the rates of FY 2014-15. In the FY 16 and 17, the government raised the rate to BDT 120, BDT 100.0 and BDT 85.0 for a kg biscuit respectively. The association also requested the government to reduce the rate of advance income tax on distributors’ commission to 3.0% from existing 5.0 per cent. Distributors are normally getting 4.0% to 6.0% as commission, it said. The association also called for bringing down the rate of VAT at source from the bill of transport contractors, which was initially 4.5%. The rate was increased to 7.5%t in FY 16 and to 10.0% in the budget for FY 17.
Major Currencies Exchange Rates Movement in Last Seven Days
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