Important Business News Extracts -September 4, 2017
Banks get a boost from Eid sales thru’ credit cards
Banks are offering discounts on home appliance purchases through credit cards this Eid-ul-Azha as they look to cash in on the shopping frenzy surrounding the religious festival. Typically around the time of Eid-ul-Azha, the demand for refrigerators and freezers soars, as people look to ensure that the meat of the sacrificial animals is well-preserved for long. At present, most home appliance vendors are offering about 5 percent discount, and if the items are bought with credit card then another 7-8 percent discount is applied. Moreover, credit card users have the option of availing equal monthly instalment facility on home appliance purchase, thereby spreading the payment load to a period of 6 months and up to 36 months without having to pay any interest.
People continued to invest heavily in national savings certificates and bonds in the first month of the new fiscal year with net investment rising by 44.45 per cent in July compared with the figures of the same month of last fiscal year because of low bank rates. According to the latest Directorate of National Savings data, the net investment in the savings instruments increased to Tk 5,053.54 crore in July of FY 2017-18 compared with that of Tk 3,498.37 crore in the same month of FY17. The net investment in the national savings tools hit a fresh record of Tk 52,327 crore in the recently concluded fiscal year 2016-17 as rate of interest on the tools is almost double the rate of banks’ fixed deposit schemes. In the budget for FY17, the government aimed to borrow Tk 19,610 crore from the NSCs, but it later revised the figure and set a borrowing target of Tk 45,000 crore. Directorate of National Savings and Bangladesh Bank officials said people had been maintaining a huge investment in recent months as the government earlier hinted at lowering the rate on the tools with a view to reducing the interest rate gap between the NSCs and other rates of deposit products offered by the banks.
The inter-bank call money rate remained stable on Thursday, the last working day before the Eid-ul-Azha holidays, despite a large amount of cash withdrawals from the banks, said treasury officials. Most banks in Motijheel, Dilkusha, Mohammadpur, Gulshan and other commercial areas in Dhaka saw long queues of people waiting mostly to withdraw cash before Eid, the official said. The call money rate ranged between 4.0% and 4.5% on Thursday – significantly small compared to the two years ago, which was 150% on the last working day before Eid. The volume of transactions in the banking sector rose to BDT 150.0 billion on Thursday, according to the central bank’s latest statistics released on the day. On Wednesday, the central bank withdrew BDT 58.1 billion while the bank authorities also put aside BDT 7.3 billion on Monday, BDT 4.5 billion on Sunday, BDT 18.1 billion on August 24.
VISA, MasterCard, Amex take away Tk37cr from Bangladesh in 4 years
International payment services like VISA, MasterCard and American Express (Amex) have earned about Tk37 crore as charges for credit card transactions from Bangladesh between 2013 and 2016, as the country does not have a national payment scheme. It is estimated that they will earn more than Tk12.92 crore by the end of 2017. These charges are not taken from the card users directly; rather, the merchants who use point of sales (POS) machines to receive payments from the customers have to pay them. Finance sector insiders said if Bangladesh had its own payment scheme for local card transactions, these global payment services would not be required here, and the money would stay inside the country. The number of active credit cards in Bangladesh is currently around 1,080,000, while the number of active debit cards are 10,570,000, according to sources at the Bangladesh Bank. For each credit transaction on POS machines, the international payment services charge 0.3% of the purchase amount, while for each debit transaction it is 0.1%. For online transactions via e-commerce platforms, the charges are 0.7% for credit cards and 0.3% for debit cards.
Bonded warehouse registration number to be made mandatory for duty-free imports
The National Board of Revenue has decided to make submission of bonded warehouse licence number mandatory in import-export documents to prevent misuse of bond facility by traders, officials said. They said that customs wing of the NBR had recently asked the Dhaka and Chittagong customs bond commissionerates to provide the updated warehouse numbers and business identification numbers to the Asycuda National Team so that the team can upload the information in the Asycuda server. Customs houses will be able to detect the bonded and non-bonded products while making assessment of products, mainly imported ones, they said. Customs houses will not process bill of entry and bill of export without bonded warehouse numbers, they added. Export-oriented industries, mainly from readymade garment sector and its linkage industries, enjoy bonded warehouse facility under which exporters can avail duty-free import of raw materials with some conditions like they will export finished goods produced using the raw materials as sales of bonded products on local market is prohibited.
Rawhide and skin prices fell by 39 per cent in last four years allegedly due to manipulations by syndicates of tanners and merchants. The government fixes the price just as the two syndicates dictate, leather economists told New Age. The undiminishing influence of the two syndicates deprives fair price to hide and skin sellers during Eid-ul-Adha, when over 50 per cent of supplies reaches the domestic hide market, they said. The syndicates compel the sale of rawhide at throw-away prices, they said. Leather economist and Dhaka University economics teachers Mohammed Helel Uddin said that the government plays in the hands of the influential tanners while fixing rawhide price before Eid-ulAzha each year. Bangladesh Tanners’ Association chairman Shaheen Ahmed, however, refuted the allegation and blamed low leather price in global market for the domestic market situation. He also said that due to negative publicity over compliance issues, relating to workers’ rights and safety at factories as well as pollution, the tanners had been unable to sell finished leather of Bangladesh to the branded leather goods producers abroad.
Bangladesh’s maiden liquefied natural gas (LNG) import is one step closer to fruition after the cabinet gave the green light to the pricing and draft contract for the deal. The government will sign a 15-year contract with Qatar’s RasGas as it makes an earnest push towards addressing Bangladesh’s gas scarcity. For the first five years of the contract, RasGas will supply 1.8 million tonnes of LNG each year, which will go up to 2.5 million tonnes in the following ten years, according to the draft contract approved by the cabinet committee on purchase on Wednesday. The LNG would be supplied at: 12.65 percent of the three-month average price of Brent oil plus $0.50 constant per MMBTu (per 1 million British thermal units). However, during the first five years if Petrobangla has more demand it can increase the volume to 2.5 million tonnes per year. And in the next 10 years Petrobangla has the option to reduce the amount by 10 percent every year. If in any year Bangladesh takes less than the base amount of LNG, it will have to pay the price on a take-or-pay basis. Later, RasGas will supply the LNG. Take-or-pay is a provision written into a contract that binds one party to either taking delivery of goods or paying a specified amount. As financial security, Petrobangla will have to deposit standby letter of credit (SBLC) equivalent of the price of two months LNG on the basis of base annual contract quantity (BACQ) to a first-class international bank.
Social obligation fund from telcos crosses Tk 1,200cr
The social obligation fund from the telecom operators reached Tk 1,206.84 crore as of June this year, but the government is yet to decide how to make best use of the money. Of the amount, Tk 1,019.99 crore came from six mobile operators in the last six years and Tk 186.86 crore is added to the fund as bank interest. Bangladesh Telecommunication Regulatory Commission (BTRC) introduced the fund in November 2011 when four mobile operators renewed their licences. As there is no demand from the government, BTRC has once again opted for depositing the whole amount to a suitable bank and earn interests, said a commissioner of the regulator.
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