Important Business News Extracts September 28 2016
Banks’ capital rises
Banks’ overall capital rose 1.6 percent in the April-June quarter but the capital base of state banks shrank further though they were provided with funds from the state coffer. On June 30, the total capital in the banking system was Tk 76,884 crore, up from Tk 75,612 crore on March 31, according to Bangladesh Bank. Most of the private and foreign commercial banks succeeded in maintaining the new international standard for capital adequacy ratio. But as the state banks’ capital situation deteriorated, the ratio fell slightly in June compared to that in March. On June 30, the banks’ average capital to risk weighted assets ratio or CRAR was 10.34 percent. This was 10.62 percent three months back, similar to the latest requirement.
Non-performing loans (NPLs) with industries rise in last fiscal year
Classified loans belonging to the industries increased by more than 32.0% to BDT 250.68 billion in the fiscal year (FY) 2015-16 for lax repayment by the debtors. Official sources also pointed out slower recovery drives by banks and financial institutions were responsible for substantial rise in their non-performing assets. The non-performing loans (NPLs) of industrial sector rose to BDT 250.68 billion in the FY 16 from BDT 189.01 billion in the previous fiscal, according to the central bank’s latest statistics. “We’ve asked the banks and non-banking financial institutions (NBFIs) to reduce the amount of classified loans in the industrial sector through strengthening their recovery drives across the country,” Nirmal Chandra Bhakta, executive director of the Bangladesh Bank (BB), told the FE Tuesday. He also said the BB had already expedited monitoring and supervision to ensure proper use of industrial credits. The central bank earlier issued letters to the banks and non-banking financial institutions (NBFIs) which have over 10.0% NPLs out of their total outstanding industrial loans, advising them to expedite their recovery drives.
BSEC seeks public opinion on financial literacy program
The Bangladesh Securities and Exchange Commission yesterday has sought public opinion on its proposals for launching nationwide financial literacy program. The market regulator has published on its website a request for public comment on financial literacy by October 2. The securities regulator has undertaken the initiative for launching financial literacy program as part of its master plan to make people literate on financial instruments In the light of recommendations of a steering committee and technical committee formed earlier, the BSEC proposed guidelines on financial literacy program Under the proposed guidelines, a national advisory committee will be formed and a a separate department will be established for expansion of financial literacy across the country.
Bangladesh GDP grows by 7.1% in FY16, says Asian Development Bank
Bangladesh economy grew by 7.1%, 0.05 percentage points higher than the government’s estimation, in the last fiscal year 2015-16 on sustained consumption, increased public investment, and revived exports, according to the Asian Development Bank The government estimated that the country’s GDP grew by 7.05% in the last year. The Manila-Based multilateral lending agency on Tuesday revised the GDP growth for the year for Bangladesh up from its previous projection of 6.7% made in the Asian Development Outlook released in last March. The ADB released the ADO Update titled ‘meeting the low-carbon growth challenge’ on the day. ‘In Bangladesh, estimated growth in the FY 2016 exceeded the forecasts because robust performance in manufacturing and services more than compensated for unexpected weakness in agriculture,’ said that report. Increased consumption and public investment contributed to the better performance in Bangladesh in 2016, it said. Inflation was lower than projected, while larger exports and modest imports kept the current account in a larger surplus, it added. The ADB in its ADO Update, however, retained its 6.9% growth projection for the current fiscal year for Bangladesh saying that a slower growth forecast for the year is retained as agriculture growth is expected to be moderate.
Fuel oil import goes up in August to feed power plants
Bangladesh imported about 300,000 metric tons (mts) of diesel and jet fuel in August at lower premium rate from three international suppliers, up 11.11% from July imports, said officials. State-run Bangladesh Petroleum Corporation (BPC) imported the refined petroleum products from the Kuwait Petroleum Corporation (KPC), the Emirates National Oil Company (ENOC) and the Unipec Singapore, said a senior BPC official. Of the imported petroleum products, around 150,000 mts are of 0.05% sulfur diesel, 60,000 mts of 0.20% sulfur diesel and 90,000 mts of jet fuel, he said. The BPC took delivery of the fuel through seven cargoes of diesel and three cargoes of jet fuel, having 30,000 mt capacity each, in August, which was one gasoil cargo more than July’s delivery. Previously, the BPC had imported 270,000 mts of diesel and jet fuel in July, up from 210,000 mts of June imports, he said. The BPC is the sole designated importer of diesel and jet fuel for Bangladesh. Bangladesh consumed more gasoil in August mainly to keep running some gasoil-fired power plants operational in extra hours, said the BPC official.
FBCCI seeks permanent restoration of package VAT system in law
The Federation of Bangladesh Chambers of Commerce and Industry has again placed a set of demands related to value-added tax, customs duty and income tax to finance minister for consideration. The apex trade body claimed that regular trade and business activities of small and medium entrepreneurs and traders were being affected as the National Board of Revenue did not consider the major and sensitive budgetary proposals of the trade body during the budget for the current fiscal year passed in parliament in June. The demands include inclusion of package VAT system and previous rate permanently in the new VAT and Supplementary Duty Act with annual increase and fixing the limit of annual turnover between BDT 3.6 million and BDT 50.0 million for small and medium enterprises and services sector for imposing 3.0% turnover tax. The revenue board in the budget for the current FY 2016-17 scrapped the turnover facility for manufacturers in Dhaka and Chittagong metropolitan areas and fixed package VAT at BDT 28,000 for businesses having annual turnover below BDT 80 lakh. Now, the package VAT and turnover facility has become ineffective even for shopkeepers in the metropolitan areas because of the changes, the trade body claimed.
Bangladesh’s booming Information and Communication Technology (ICT) market has marked a 23 times growth over the period of last seven years, reports state-owned BSS. In 2008, the total size of the market was merely USD 26.0 million, but within a span of seven years a massive growth in the industry has taken place setting its appearance on the global stage hitting an unthinkable figure of USD 600.0 million. A manifold rise in the budgetary allocation has also been made that resulted in further boost. This year, about BDT 16 billion has been allocated in the national budget, up from BDT 2 billion seven years back. The people of the country have been enjoying the internet bandwidth at a price which is very low. Now, it costs Taka 400 to subscribe each megabyte per second (Mbps) of bandwidth, while, in 2008, one had to spend Taka 27,000 to avail of the same facility.
The government has decided to withdraw the tax imposed on the Workers’ Profit Participation Fund (WPPF) in response to an urge from the Foreign Investors’ Chamber of Commerce and Industry (FICCI). FICCI feared labor unrest due to imposition of the tax on the WPPF. A Finance Division official said finance secretary has signed the summary paper of the tax withdrawal from the WPPF. On his return from abroad, Finance Minister will sign the summary. FICCI President Rupali Chowdhury in last February urged the government to withdraw the tax imposed on the WPPF.
Bangladesh earned $547.28 million in the previous fiscal by exporting 75,338 tonnes of fish and fish products, said Commerce Minister Tofail Ahmed on Tuesday. The minister said this in reply to a written question of treasury bench member Nurunnabi Chowdhury in the parliament, reports BSS. The country has earned $459 million by exporting 40,726 tonnes of frozen shrimp in the 2015-2016 fiscal. Tofail said different steps have been taken in the last five years to overcome compliance risks of exporting shrimp.
KDS Accessories, a unit of Chittagong-based KDS Group, aims to earn an additional Tk 100 crore in sales revenue a year, as it started commercial production at its new packaging unit in Gazipur last week. The company will reach the revenue target, if the new packaging line can utilise its full capacity and sell the produces, the company said in a statement on the website of Dhaka Stock Exchange yesterday.The company’s revenue in 2015 was Tk 169.08 crore, according to its latest annual report. Additional production capacity at the new packaging unit, which is third for the company, will be increased by 45,000 pieces of cartons a day, KDS Accessories said. The previous two units are also engaged in manufacturing corrugated boxes, cartons and other packaging materials. These two units can produce 2.24 crore pieces of cartons a year. The third unit has been set up with investments of Tk 28 crore, of which Tk 15 crore came from initial public offering and the rest from equity and bank loans.
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