Important Business News Extracts – September 28, 2017
BDT rises notably against US$ for importers
The exchange rate of Bangladesh Taka (BDT) appreciated significantly against the US dollar on Wednesday for importers, as the central bank sold US$ 38 million to the banks, market operators said. The local currency appreciated by 0.23 per cent or 19 paisa each against the US currency, as the average bill for collection (BC) rate of the greenback came down to Tk 81.8963 on the day from Tk 82.0892 on the previous working day, according to Bangladesh Foreign Exchange Dealers Association (BAFEDA). The substantial appreciation of BDT took place one day after it witnessed a depreciation of 30 paisa on Tuesday, they added. In case of receiving inward funds, BDT also appreciated slightly against the greenback on the same day. The banks quoted one US dollar at Tk 80.7690 on the day against Tk 80.7721 of the previous working day to the remitters for telegraphic transfer (TT), the BAFEDA data showed. Such appreciation will make imports easier, while the remitters and exporters are expected to be benefitted slightly, according to market insiders.
The central bank has made a move to reduce commercial banks’ cost for agricultural loans and microcredit to encourage lending in the two segments. Banks have been instructed to maintain 1 percent general provisioning against all unclassified farm and micro loans instead of 2.5 percent, said a circular from the central bank yesterday. The step was taken to increase agriculture loan disbursement to farmers hit by the recent floods, said a central bank official. This will make farm loans less expensive compared to consumer loans, especially credit cards. The provisioning requirement for credit card loans, considered the riskiest lending in the banking industry, was brought down to 2 percent last month from 5 percent to promote cashless transaction.
Banks, NBFIs asked to spend more CSR fund for tourism sector dev
Bangladesh Bank on Wednesday suggested that all banks and non-bank financial institutions should increase allocation and financial assistance significantly for the development of the tourism sector in the country from their corporate social responsibility fund. The sustainable finance department of the central bank issued a circular on the day asking the managing directors and chief executives of all scheduled banks and NBFIs operating in the country for taking steps in this connection. In the circular, the BB said that the 2008 guidelines on mainstreaming CSR also prioritised the tourism sector, which said that banks and NBFIs would contribute to the development of the tourism sector through their CSR expenditures.
FSIBL sponsors ‘1st Old Dhaka Girl’s Science Festival 2017’
First Security Islami Bank Limited sponsored the ‘1st Old Dhaka Girl’s Science Festival 2017’ organized by Banglabazar Govt. Girls High School. Syed Waseque Md. Ali, Managing Director, First Security Islami Bank was present as chief guest in the programme. After the inauguration of programme, the guests visited different projects developed by the students.
Five years ago, with forged documents, Bismillah Towels made off with Tk 180 crore from Jamuna Bank — an incident that instigated wholesale changes in the way the third generation lender functions. “Now, there is no chance of a loan scam like that.” Shafiqul Alam, managing director of Jamuna Bank, recently told The Daily Star in an interview. Soon after the loan scam in 2012, Jamuna introduced a centralised banking system, one in which the branch officials do not have the authority to give the green light to loan proposals without the permission of the head office. “Many banks are resisting the switch to centralised system because of manpower cost, but they should, if they want to reduce risks of loan scams.” he added. The bank put in more effort to improving the size of its loan book to overcome the losses caused by the Bismillah scam. Jamuna is now aiming to be among the top banks in the five years, Mr. Alam said.
The Exim Bank of India is going to begin operations in Bangladesh from next month to facilitate smooth implementation of projects under India’s line of credit. Indian Finance Minister Arun Jaitley will inaugurate a representative office of the bank at a function at Sonargaon hotel on October 4, according to the Indian high commission. The bank last year proposed opening the Dhaka office. Indian Prime Minister Narendra Modi committed to give fresh $4.5 billion line of credit to Bangladesh during Prime Minister Sheikh Hasina’s visit to India in April, to take the neighbouring country’s total commitment since 2010 to $7.5 billion. As many as 17 projects have been identified for funding with the new line of credit, all of which got the green light from the Indian Exim Bank. At present, the bank’s approval is required for project selection and associated procurement proposals. Apart from project implementation, the office’s presence will help trade and investment-related activities, said an Economic Relations Division (ERD) official.
Bangladesh has been ranked the 99th most competitive economy in the world, up seven notches from last year’s ranking, on the World Economic Forum’s Global Competitiveness Report 2017-18. This is the highest ranking for Bangladesh since the index was introduced in its current format in 2004. “We have been talking about the potential of Bangladesh to achieve double digit ranking. And for the first time, Bangladesh has entered the club of top 100 competitive countries,” said Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, while unveiling the report. CPD, as a partner of WEF, unveiled the latest report in Bangladesh at a press briefing held at the CIRDAP auditorium. The WEF measures competitiveness by considering 12 factors that would determine the level of productivity in a country, including institutions, infrastructure, macroeconomic environment, health, education, labour market efficiency, financial market development, technological readiness, market size and innovation.
Finance Minister AMA Muhith differed with the growth projections on Bangladesh economy by multilateral lenders, who cut down the government-set 7.4 per cent rate for the current fiscal. “Their (lenders) estimates are always lower than what happens. They do it every year,” he told newsmen after a meeting of the cabinet committee on public procurement at Bangladesh Secretariat. His remarks came in the wake of latest estimation by the Asian Development Bank (ADB) and the World Bank that Bangladesh’s economy will grow by 6.9 per cent 6.4 per cent respectively. They make the estimation with the statistics they can avail through own sources. But by October the final report from Bangladesh statistic department becomes available. And that is always accepted by all, said the finance minister.
The International Finance Corporation has struck an agreement with the National Board of Revenue to provide technical assistance to the tax administrator in order to help improve Bangladesh’s trade competitiveness. Md Nojibur Rahman, chairman of the NBR, and Wendy Jo, IFC’s country manager for Bangladesh, signed the deal at the Pan Pacific Sonargaon hotel in Dhaka on Tuesday. The three-year advisory project titled “Trade competitiveness for export diversification” will be implemented as part of the Bangladesh Investment Climate Fund II, financed by the United Kingdom Department for International Development (DFID) and implemented by the IFC. Bangladesh, with its export-led growth, aims to raise trade-to-GDP ratio from 42 percent to 50 percent, by way of increasing export receipts to $54 billion by 2020, from $34 billion now.
Encouraging investment thru’ economic zones for rapid economic growth
Investment is the prime vehicle for a country’s overall development and progress, especially in the developing countries like Bangladesh. The contribution of Foreign Direct Investment (FDI) and local investment in the economic sector is immense. Investment is inextricably linked to foreign exchange earning, poverty alleviation, employment generation, technology transfer, skill development, export growth, development of backward and forward linkage industries, establishment of satellite town and service-oriented and supportive service industries and overall economic emancipation of the people. So, rapid growth of the private sector through FDI and local investment is the major driving factor for the massive economic development of Bangladesh. Visualising the necessity of FDI and local investment, the government took the decision to set up Export Processing Zones (EPZs) initially. After the astounding success of EPZs, the government has decided to establish 100 Economic Zones (EZs) in the country.
IFC to launch second phase of ‘cleaner textile’ project
The second phase of PaCT (Partnership for Cleaner Textile) will begin from October 1 after the successful completion of the first phase. The new phase will cover the entire textile value chain to adopt efficient technologies and best practices with support of leading apparel brands. Australian government will be partner in the US$7.0 million-second phase, which plans to extend its cleaner textile campaign from wet, dyeing, finishing to weaving, spinning, wet dyeing and finishing in the country’s textile sector,” said Programme Manager of PaCT Bangladesh Nishat Shahid Chowdhury on Wednesday. A programme will be organised on September 30 to end Pact-1 and begin PaCT-2 at a city hotel, Ms Chowdhury said at the International Finance Corporation (IFC) office in Dhaka. President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), a PaCT partner, Siddqur Rahman, IFC’s Energy and Resource Efficiency Advisory Manager Alexios Pantelias, and the IFC Country Manager for Bangladesh, Bhutan and Nepal Wendy Werner will be present at the programme.
Policy support in powering accessories sector ahead
The local accessories makers meet more than 90 per cent of the country’s readymade garment (RMG) sector’s demand and also that of the pharmaceuticals, leather, frozen fish and agro-based industries, especially in the form of packaging products. The sector now imports only 5-10 per cent of the accessories as referred to by the buyers while the rest of the demand is sourced locally. Add to it the 20 per cent of the accessories now directly being exported to the global market. But, for the sake of helping the sector flourish further, the government should come forward with policy support including cash incentive, cut in corporate tax rate and funds at low interest rates, especially for the SMEs (small and medium enterprises). Unless the support is there, it will stunt the growth of the readymade garment (RMG) sector’s very import backward linkage industry, says Abdul Kader Khan, chief of the local accessories trade body, in an interview with the FE.
Chevron may miss target to close sale of Bangladesh gas fields
Chevron Corp may miss its mid-October target for closing the agreed $2-billion sale of its natural gas assets in Bangladesh to a Chinese consortium, as Dhaka weighs the prospect of a counterbid, people with knowledge of the matter said. The U.S. oil major agreed in April to sell its three Bangladesh gas fields to Himalaya Energy, comprising state-run Chinese oil trader Zhenhua Oil and a government investment platform, CNIC Corp. Chevron had planned to close the sale, part of non-core asset disposals, around mid-October. But Bangladesh’s state oil and gas firm Petrobangla says it has the first right of refusal in the sale. A government official who declined to be identified said Dhaka remains undecided on backing a counterbid amid doubts whether Petrobangla has the expertise to run the fields, or the funds to make future investments.
The government indecision over procurement and tax cut in import has contributed to the hike in rice price recently, according to the World Bank. The World Bank lead economist, Zahid Hussain, came up with the remark while addressing a group of journalists at his office in Dhaka on Wednesday. He was delivering speech on The Bangladesh Development Update: Towards more, better and inclusive jobs. “About the recent hike in rice price, there are a series of generalised comments. Some lay blame on the government mismanagement, while others on trader’s syndicate that create artificial shortage.” Flood in haor area and later in other parts of the country had been the key reason for price hike as it hit rice production. The government indecision over procurement to meet the shortage and cut in import tax played a crucial role, observed the economist.
World Bank: Rate of job creation falling in Bangladesh
Stagnant private investment, weaker export growth and declining remittances have hindered quality job creation in Bangladesh despite the country enjoying a sustained rate of Gross Domestic Product (GDP) growth. The observation by the World Bank came in its ‘Bangladesh Development Update September 2017’ unveiled in Dhaka yesterday. “We have witnessed strong GDP growth but it is not reflected in the job market,” said Zahid Hussain, the lead economist at the World Bank’s Dhaka office. “Readymade garments factories – the largest job provider in the private sector – have seen a fall in job creation. Even the participation of women has declined.” He said in the last few years Bangladesh witnessed over 6% GDP growth rate driven by industry and services, and despite a decrease in productivity in the agriculture sector. “Proper contribution of the private investment sector was also not seen in GDP growth,” Zahid Hussain said. The World Bank suggested Bangladesh focuses on micro-financial stability, structural reforms, urban planning and technological advances especially in SMEs, in order to create more jobs, better jobs and inclusive jobs and boost its growth potential.
Lending by eurozone bank to households and companies grew faster in August than the previous month, figures from the European Central Bank showed Wednesday. Overall credit to the private sector grew 2.7 percent year-on-year last month, adjusting for some purely financial transactions.
Major Currency Exchange Rate Movement in Last Seven Days
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