Bangladesh: Banks' lending rates dip to a record low

Dhaka, June 30 (The Daily Star): Commercial banks' lending rates have gone down to a three-year low due to a poor demand for money and a decline in their cost of funds, bankers said.

The trend is also evident in the money market, which has been in a high degree of liquidity.

“Our lending rates fell drastically and are still on a declining trend,” said Helal Ahmed Chowdhury, managing director of Pubali Bank.

Pubali's lending rate went down 1-1.5 percentage points on average in one year and stands at 13 percent now.

“Businesses are still shy of making investments; their confidence should be restored,” said Anis A Khan, managing director of Mutual Trust Bank.

Khan said lending rates for commercial loans of Mutual Trust Bank fell to 13.5 percent now, from 16.5 percent a year ago.

The weighted average lending rates of private commercial banks stood at 13.87 percent in April this year, which was 14.42 percent and 14.66 percent in April 2013 and April 2012 respectively, according to Bangladesh Bank data.

Foreign commercial banks' weighted average lending rates fell to 13 percent in April this year from 14.31 percent in the same month a year ago. Similarly, state-owned commercial banks' lending rates also declined and stood at 11.12 percent in April 2014, down from 11.19 percent a year ago.

Some banks are now offering as low as 8 percent interest for fixed deposit receipts of different tenures, a decline from 12.5 percent a year ago.

Overall, the banks' lending rates declined to 13-14 percent now from 15-16 percent a year ago. Premium borrowers are offered 11-13 percent.

The demand for loans has started to decline since the beginning of 2013, due to a wait-and-see approach of investors centring the national elections.

However, investor confidence is yet to return even after six months of the elections. As a result, the banking sector is now sitting on an excess liquidity of around Tk 110,000 crore.

Bankers said a scarcity of gas and electricity and poor infrastructure, including roads, are some of the reasons behind the declining demand for loans.

“The government's policies are not bad and the new budget looks relatively positive. Yet, businesses are not coming up with investments due to a lack of energy and infrastructure,” said Khan of Mutual Trust Bank.

Jamuna Bank's average lending rates fell to 13-14 percent now from 15-16 percent last year.

“Amid the sluggish demand, the banks are competing with each other for good clients,” said Shafiqul Alam, managing director of Jamuna Bank.

“Borrowers are cashing in on the situation and negotiating rates with a number of banks at a time,” he said.

Non-bank financial institutions (NBFIs) are also feeling the pinch of the sluggish investment demand. On an average, their lending rates fell 1-2 percentage points between 2013 and 2014, market players said.

“Corporate borrowing has witnessed a drastic fall in recent months,” said Selim RF Hussain, managing director of IDLC Finance.

He said massive investments are required in infrastructure, gas and electricity to boost investor confidence.

Bangladesh: Budget passed without opposition

Dhaka, June 30 (The Daily Star): The parliament yesterday passed the national budget for fiscal 2014-15 without any opposition from the Jatiya Party and independent members, a rare occurrence in the nation's history.

The budget outlines a gross expenditure of Tk 382,340 crore and net expenditure of Tk 250,506 crore. Like every year, the defence ministry received the highest allocation, of Tk 16,492 crore, among the 56 ministries and divisions.

The education ministry received the second highest allocation of Tk 15,550 crore, followed by the local government division at Tk 15,468 crore and the primary and mass education ministry Tk 13,676 crore.

Some Tk 12,396 crore has been allocated to the agriculture ministry, Tk 11,370 crore to the home ministry and Tk 11,176 crore to the health and family welfare ministry.

The GDP growth target has been fixed at 7.3 percent, and Finance Minister AMA Muhith said he is hopeful of achieving the figure as the political situation has returned to normal after the January 5 polls and credit to the private sector is rising.

Muhith said the country's budget has consistently been the smallest among its South Asian peers. In the last several years, the size of the budget has been increased gradually, with the upcoming fiscal year's budget coming to 18.7 percent of GDP.

“With such a small-sized budget, a hunger- and poverty-free middle-income country cannot be built by 2021.”

Bangladesh: United Airways free to operate flights after HC rule

Dhaka, June 30 (The Daily Star): The High Court yesterday cleared the way for United Airways to operate flights for the next one month, after the civil aviation authority allegedly refused to renew the private airline's licence.

In a letter on June 26, the Civil Aviation Authority of Bangladesh (Caab) said it would not renew United Airways' Air Operator's Licence (AOC), due to expire on June 29, due to arrears of Tk 84.19 crore and detection of safety flaws during inspections.

In response, Tasbirul Ahmed Chowdhury, the airline's managing director, filed a writ petition with the court challenging the legality of Caab's decision.

The court directed Caab not to create any obstacle in operating flights of the airline and ordered the renewal of its AOC and Approved Maintenance Organisation (AMO), two licences required for flight operation.

Justice Quazi Reza-Ul Hoque and Justice Akram Hossain Chowdhury also issued a rule upon the government to explain in four weeks why Caab's decision should not be declared illegal.

The civil aviation secretary, Caab chairman and its director (flight safety) have been made respondents to the rule, the petitioner's lawyer Ragib Rouf Chowdhury told The Daily Star. 

Caab at a meeting on April 6 instructed the carrier to pay Tk 5 crore outstanding charges in three instalments along with all current dues by June 15.

The regulator had also ordered United to submit a plan with payment dates and amounts to pay the rest of the dues by June next year.

The airline did not fully comply with the conditions, according to Caab.

United on different occasions, however, disagreed the amount of outstanding arrears.

The petitioner's lawyer said the airport charge and interest imposed by Caab in its June 26 letter is “unreasonable”, since the airline has been requesting Caab to wave the interest rate.

“United Airways operates 11 aircrafts to 18 destinations and the passengers of the flights have already bought tickets for their journey. If the flights are suspended, the passengers will suffer,” he added in the petition.

Bangladesh: BTRC to submit same plan to fin min for 3rd time for rate cut for IGWs

Dhaka, June 30 (New Age): Even after the finance ministry rejected twice, the telecom regulator is set to send the same proposal again to lower international call termination charges to 1.5 US cents from the existing 3 cents for the operators, ignoring the ministry suggestion for a baseline study.

The ministry last week rejected the BTRC proposal for the second time for lowering the call charge for the international gateway operators and reducing the government revenue sharing to 40 per cent from the existing 51.75 per cent.

Bangladesh Telecommunication Regulatory Commission officials said the finance ministry had asked the BTRC to send a comprehensive report after conducting a baseline study considering the impact on stakeholders.

‘Our previous proposal covered position of all the stakeholders except VSP operators. This time we have prepared a proposal including the impact of rate cut on VSP operators,’ a senior BTRC official told New Age on Sunday.

He said nothing else will be changed in the previous proposal but with this inclusion the proposal will be a comprehensive one.

He said that the proposal will be sent again to the finance ministry within this week.

The BTRC took the move in July last by sending a proposal to the telecom ministry apparently to give benefits to the new IGW operators who got licences on political backing.

The BTRC in the proposal admitted that the proposed plan would slash the government revenue to Tk 777 crore from Tk 1,851 crore – the government’s annual income from IGW and ICX operators in 2012 for an average of 35 million calls per day.

After the finance ministry rejected the proposal in March 2014, the BTRC sent a second proposal twisting the first proposal, said sources in the telecom ministry.

This time, the regulator said that the government revenue after the tariff cut would be Tk 1,778 crore considering total international call at 80 million

minutes per day instead of 35 million minutes per day, they said.

‘We hope if the tariff cut comes into effect then it will stop illegal call termination and the average call per day will increase to 80 million minutes,’ said the second proposal of BTRC.

BTRC’s projected calculation, however, would also cause a government loss of Tk 73 crore.

The BTRC second proposal also said the government should approve the proposal on a test basis for one year period.

The proposal said the market turned dull because too many IGW licences had been issued and lowering the rates would make new IGWs sustainable.

Only four companies were given licences through an auction when IGW service was introduced in Bangladesh in 2008.

The Awami League-led government in 2012 awarded 25 more licences – mostly to people linked to the ruling party.

The regulator had proposed at best 10 more licences, but the government awarded 25 IGW and 23 ICX licences.

The BTRC is already facing trouble to realise the revenue share form the IGW operators because of their strong political links.

The telecom regulator has also initiated legal proceedings to realise the dues from the IGW operators.

Bangladesh: NBR preparing list of polluting industries

Dhaka, June 30 (New Age): The National Board of Revenue has taken an initiative to prepare a list of polluting industries for imposing and collecting newly introduced green tax, officials said.

The list will be prepared with the help of Department of Environment of the environment and forest ministry, they said.

DoE has already been asked to provide such list, if it has any.

The government in the finance bill approved by the parliament on June 28 included a provision of imposing one per cent environment protection surcharge or green tax on the prices of products manufactured by the industries which pollute environment.

Green tax, first of its kind in the country, will be effective from July 1.

NBR has already started preliminary work to implement the new budgetary initiative to protect the country’s environment.

But the response from the environment department is not satisfactory at all, NBR officials blamed.

‘Till now, we have requested the DoE to provide the list of polluting industries, but we are yet to get any response,’ a high official of the NBR told New Age on Saturday.

In last week, DoE informed us that they have some confusion about the issue, he said.

Now, value-added tax wing of the NBR has taken an initiative to sit with the DoE officials to prepare the list, he said, adding that the meeting might be held in a day or two.

The revenue board has already requested the Internal Resources Division of the finance ministry for creating a separate code to deposit the collected green tax in the government exchequer.

It will also prepare a rule describing the procedures of imposing and collecting green tax which will be collected with VAT.

The tax has been imposed to encourage the owners of the industries which cause pollution to set up effluent treatment plants in their industries.

Many industries from leather, dying, printing, chemical, and textile sectors pollute air, soil and water through discharging untreated industrial wastage.

Bangladesh needs rapid transport, energy sector development: economists

Dhaka, June 30 (New Age): The country needs a rapid development of its transport and energy sectors, said economists on Sunday. Otherwise, it will fail to become a developed country by 2041 as targeted by the government, they said.

The government should take initiative to make vibrant the private sector as a significant number of industries have recently been closed in different parts of the country due to absence of adequate support from the policy makers, they said at a post news briefing of the newly-established Bangladesh Economists’ Forum’s first conference.

The government should also take measures to increase the skilfulness of the country’s human resource to boost up the production, they said at the briefing held at the central bank headquarters in the capital.

Former Bangladesh Economic Association president Mohiuddin Alamgir said the Padma Multipurpose Bridge should have been constructed earlier, but the authorities concerned failed to do it.

The Mongla Port is still neglected, although the country could generate huge benefit from the port, he said. The government should take immediate measure to develop the port in the interest of the economy, Alamgir said.

‘Some local and foreign contractors have recently secured the country’s large infrastructure-related projects. Some of them failed to complete the projects like Dhaka-Chittagong four-lane highway in due time’, he said.

The companies, which won the bids by placing lower amount, proved that they are not capable of availing the construction work, Alamgir said. The government should select the proper contractors to complete its large projects, he said.

Alamgir said fresh investment in the country virtually stalled while the existing investors were withdrawing their investment. The government should take measures to save the investors from a loss-making situation, he said.

Policy Research Institute vice-chairman Sadiq Ahmed said that the country needed political stability along with good public institutions in a bid to ensure long-term development.

The country needs good governance for its public institutions if it wants consecutive GDP growth in the coming years, he said.

Bangladesh Institute of Development Studies director general Mustafa K Mujeri said it was important to make a roadmap of democratic values if the country wanted to achieve its desirable goal.

He said the Bangladesh Economists’ Forum would try to make the roadmap in the interest of the nation and the country.

When asked why the BEF received sponsorship only from

scheduled banks to organise its conference, Bangladesh Bank deputy governor SK Sur Chowdhury said the banks usually provided 90 per cent fund of corporate social responsibility in the private sector. For this reason, the BEF took the sponsorship from the banks, he said.

The BEF will take fund from other corners in the coming days when it will organise the next programmes, Sur said.

The BEF organised its first conference between June 21 and June 22 at a city hotel in the capital while economists, experts and politicians attended.

Bangladesh: Banks need not to pay VAT on fees for audit of govt cash incentives, subsidies

Dhaka, June 30 (New Age): Bangladesh Bank on Sunday said scheduled banks would not have to pay value-added tax on fee for audit of cash incentive and subsidy offered by the government to the export items.

The BB issued a circular to authorised dealer branches of all banks saying that the VAT on audit fee would be paid from the government’s account from July 1, 2014.

A BB official told New Age on Sunday that the banks were now paying the VAT on the audit fee, but it was not logical as the banks conducted the audit against the government’s cash incentive and subsidy for export items.

The government pays around 5-20 per cent cash incentives for exports of various products like garments, jute, frozen fish and potatoes.

Bangladesh: Aid disbursement up, commitment down

Dhaka, June 30 (New Age): External aid management showed a mixed picture amid a fair rise in the foreign aid disbursement but significant fall in aid commitment, indicating a slow development outlook for the country.

The aid disbursement during the first 11 months of the outgoing fiscal year saw nearly 14 per cent rise year on year, while the commitments made by the multilateral and bilateral lenders dipped by around 38 per cent during the period, according to the latest data of the finance ministry.

The officials at the Economic Relations Division of the finance ministry said higher disbursement means the government ministries and divisions have enhanced their aid utilising capacity.

On the other hand, they said a drastic fall in the commitment suggests the country might receive lower than expected foreign aid in coming years as lenders and donors remained shy in signing loan agreements with the government.

The foreign aid made available during July-May period of the outgoing 2013-14 fiscal year was US$ 2.61 billion, while the commitment fell to US$ 3.46 billion, reveals the ERD figure.

The situation during the same period of the previous fiscal year was positive on aid commitment as loan agreements for US$ 5.56 billion between lenders and the government were signed during the period.

However, foreign aid to the tune of only US$ 2.29 billion was disbursed during the first 11 months of the previous financial year, reveals the data of the ERD.

An additional secretary of ERD said they concentrated more on aid commitments from the lenders as enhanced amount of commitments boosts hope for the government to get more aid disbursed.

‘The picture of aid commitment has been discouraging till May… but it will improve once the in the current month,’ the additional secretary told New Age on Sunday.

He said a sort aid-fatigue among a number of major lenders acted negatively on the country’s development efforts.

Bangladesh: Latifur Rahman elected executive member of ICC

Dhaka, June 30 (New Age): Latifur Rahman, vice-president of the International Chamber of Commerce-Bangladesh and chairman and chief executive officer Transcom Group, has been elected member of the executive board of the Paris-based ICC for a three-year term starting from July 2014.

ICC, the global business organisation, during its 202nd council held in Geneva on June 27 unanimously elected Latifur and five others as executive board members, said a news release on Sunday.

Latifur has served in many national bodies in various capacities including president of the Metropolitan Chamber of Commerce and Industry, Dhaka for several terms, president of the Bangladesh Employers’ Federation for two terms and member of executive committee of the Federation of Bangladesh Chambers of Commerce and Industry, the Bangladesh Jute Mills Association and the Bangladesh Tea Association.

He was member of the executive board of Bangladesh Bank. He has been closely involved with fiscal and trade policy making bodies of the government as chairman of Trade Body Reforms Committee, Advisory Committee on WTO, and National Committee on Export Promotion and Consultative Committee on Jute.

Latifur is also the chairman of Nestlé Bangladesh, Holcim Cement Bangladesh and National Housing Finance and Investments, director of Linde Bangladesh (formerly British Oxygen) and member of governing body of BRAC.

Bangladesh: HSBC Bangladesh gets new head of commercial banking

Dhaka, June 30 (New Age): The Hongkong and Shanghai Banking Corporation has announced the appointment of Bhuvnesh Khanna as the head of commercial banking in Bangladesh.

In his new role, Bhuvnesh will be responsible for managing the commercial banking business in Bangladesh including award winning payments and cash management and global trade and receivables finance, said a news release on Sunday.

Immediately before joining HSBC Bangladesh, Bhuvnesh was head of business management, commercial banking in HSBC China. He joined the HSBC group in 2004 in India.

Commenting on his appointment, HSBC Bangladesh chief executive officer Andrew Tilke said, ‘We are delighted to welcome Bhuvnesh to our team in Bangladesh. He is a seasoned banker with a diverse range of experiences gained in numerous different roles and countries. I am confident that HSBC customers will benefit from his new perspectives as well as continue to enjoy the ongoing support of our team in effectively growing their businesses.’

Bhuvnesh replaces Md Mahbub-ur Rahman, who is moving to take on his new role as the head of commercial banking in HSBC Malaysia, subject to regulatory approvals.

Bangladesh: Two deals involving $94mn signed with ADB

Dhaka, June 30 (New Age): The government on Sunday signed agreements with the Asian Development Bank (ADB) for $82 million in loans and $12 million in grants to protect coastal towns from natural disasters and climate change.

Economic Relations Division (ERD) joint secretary Saifuddin Ahmed and country director of ADB’s Bangladesh resident mission Kazuhiko Higuchi signed the deals on behalf of their respective sides at a ceremony at ERD in city’s Sher-e-Bangla Nagar.

The assistance will support eight vulnerable secondary coastal towns in building up their climate resilience and disaster preparedness, UNB reported.

The towns are Amtali, Galachipa, Mathbaria, Pirojpur, Barguna, Bhola, Daulat Khan and Kalapara, which have been selected based on their needs, population size and density, and the level of past investments.

Of the $82 million ADB loan, $52 million is from the concessional Asian Development Fund (ADF) resources while the rest $30 million from the ADB Strategic Climate Fund (SCF).

The ADF loan will have a 25-year term, including a grace period of 5 years, and an interest rate of 2.0 per cent per annum during the grace period and thereafter, while the ADB-SCF loan to have a 40-year term, including a grace period of 10 years and an annual service charge of 0.10 per cent.

The ADB-SCF is also providing $10.4 million in grant for the project. The Sanitation Financing Partnership Trust Fund (the Bill & Melinda Gates Foundation) under the Water Financing Partnership Facility will provide another grant equivalent to $1.6 million.

The government will provide $23.1 million equivalent for the project. The project is estimated to cost a total of $117.1 million, and scheduled to be completed by 2020.

The Ministry of Local Government, Rural Development and Cooperatives (MLGRDC) acting through its Local Government Engineering Department (LGED) and the Department of Public Health Engineering (DPHE) will be the Executing Agencies for the project.

‘The project supports towns in need of assistance as identified under the government’s Coastal Development Strategy and Strategic Program for Climate Resilience,’ said country director Kazuhiko Higuchi.

He further said, ‘The support will be in two stages — for infrastructure required for climate resilience, and economic infrastructure; the pace of these supports will be aligned with the progress in various municipal planning and services.’

The project takes a holistic and integrated approach to urban development. It will help improve drainage, water supply, sanitation, cyclone shelters, and other municipal infrastructure including emergency access roads and bridges, solid waste management, bus terminals, slum improvements, boat landings, and markets.

Bangladesh: FY14 export to India heading to be four-year low

Dhaka, June 30 (New Age): Export earnings from India are set to hit four-year low in the outgoing financial year 2013-14 despite Bangladesh’s call to its neighbouring country to reduce trade barriers.

Earnings from India in first 11months of the FY14 accounted for $396.82 million which is 26 per cent lower than the earnings of $536.09 million in July-May of FY 2012-13, the Export Promotion Bureau data showed.

As per the monthly trend of export earnings of around $60 million in last few months the total export in the FY14 might be around $450million-$470 million, which would be lowest in four years.

Export earnings from India were $563.96 million in FY 2012-2013, $498.4 million in FY 2011-12, $512.50 million in 2010-2011 and $304.62 million in 2009-2010.

Former interim government finance adviser Mirza Azizul Islam told New Age on Sunday that if the export in the outgoing FY hit four-year low it would be sad. ‘The government needs to look into whether there was any non-tariff barrier on the part of India,’ he said.

Although Bangladesh has been urging India to reduce massive trade gap with Bangladesh by importing more products from the country, the gap might hit $5 billion at the end of the current FY.

The annual trade gap came slightly down to $4.17 billion in FY 2012-13 from $4.24 billion in FY 2011-12.

Bangladesh Bank is yet to compile trade data with India for July-May, but available data till December showed that the country’s trade gap with India swelled to$ 2.59 billion in the first half of the current FY as the country’s export to India was only $182.48 million against import of $2.78 billion during the period.

EPB data showed that although the garment export increased slightly to $84.47 million in July-May in FY14 against around $67 million during the same period of FY 13, the decline in jute, fish and fruit exports pulled down the overall export figure in the FY14.

Exports of jute and jute-related products fell to only $ 67.51 million in July-May from $128.32 million during the same period last year while exports of fruits and related items fell to $50.10 million from $65.74 million and fish to $4 million from $13.54 million.

EPB vice-chairman Shubhashish Bose attributed the fall in export to India to the currency devaluation of the country against the US dollar. ‘Because of devaluation of rupee many of the Indian importers stopped taking products from Bangladesh because of rise in cost there,’ he said.

Commerce ministry officials, however, said that Bangladeshi products continued to face non-tariff barriers while entering into India despite repeated assurance by the policymakers of the country over the years.

‘We are yet to get full benefits of duty-free access to India. We have been urging the Indian side to facilitate the trade of Bangladeshi products. The issue was also raised during recent visit to Indian foreign minister Sushma Swaraj,’ said an official.

Sushama at a programme in Dhaka on Thursday assured Bangladesh that India would address the trade imbalance between the two countries.

‘We will work with Bangladesh to move beyond the quota-free and duty-free regime to facilitate trade and address the trade imbalance,’ Sushma said at Bangladesh Institute of International and Strategic Studies.

Bangladesh: NBR finalises rules for house rent collection thru banks today

Dhaka, June 30 (New Age): The National Board of Revenue is going to finalise by today rules for the house owners having income more than Tk 25,000 from their house property to deposit house rent through banks, officials said.

The rules will describe the procedure how the house owners will maintain bank accounts for receiving house rent through banks, they said.

The revenue board has recently introduced a system under which a landlord will have to receive house rent through banks if his or her total income from house property crosses above Tk 25,000 a month.

The provision which will be effective from July 1 has been introduced to ensure transparency in the process of house rent collection in order to widen tax net and prevent tax evasion by the house owners.

According to the proposed rule, a house owner will have to maintain a separate bank account to deposit his/her income from house property.

Tenants can directly deposit the house rent to the dedicated account or the house owner will deposit the money collected in cash or cheques, officials said.

According to the Finance Bill-2014 approved by parliament on Saturday, the revenue board will impose penalty on the house owners at the rate of 50 per cent of taxes payable on income derived from house property or Tk 5,000, whichever is higher, for not transacting the house rent through banks.

‘The responsibility of depositing house rent to the account will go to the house owners and if they do not do so, the NBR will impose the penalty,’ a high official said.

Initially, the revenue board had planned to include a provision authorising banks to deduct tax at source on income derived from house rent before making payment to the house owners.

But the idea was dropped later considering issues like the house owners may not have taxable income after payment of bank interest on loan taken for construction of the house.

Now, house owners will pay the tax during submission of their income tax returns.

Bangladesh: Stocks bounce back as capital gain tax withdrawn

Dhaka, June 30 (New Age): Dhaka stocks advanced sharply on Sunday, first trading session of the week, after the government had scrapped the proposal of slapping 3-5 per cent gain tax on capital market investors from the approved Finance Bill 2014.

The finance bill for the next fiscal year was approved by parliament on Saturday, scrapping also some other capital market-related proposals that had dejected investors.

The key index of the Dhaka Stock Exchange, DSEX, gained 1.76 per cent, or 77.64 points, to close at 4,487.07 points.

The DSEX on the day increased to its one and a half months high after it was 4,497.12 points on May 12.

The government’s decision of withdrawing proposed taxes on the capital market and its investors was the main reason for the bouncy trend in the stock prices throughout the session, market operators said.

DSE managing director Swapan Kumar Bala on Sunday told New Age, ‘The market trend suggests that the withdrawal of capital gain tax on individual investors has made investors happy.’

‘The change in decision following our request also refers that the government is cordial to the capital market which might be another reason for investors’ optimism,’ he said.

The approved finance bill also restored 10 per cent tax rebate for the listed companies, increasing the dividend payment limit by 10 per cent to 30 per cent.

For the outgoing fiscal year the tax rebate was against 20 per cent dividend disbursement.

The new finance bill also increased the tax-free dividend income to Tk 20,000 from the existing Tk 10,000.

DS30, the blue-chip index of the DSE, closed at 1,638.90 points, increasing by 1.38 per cent or 22.32 points.

The Shariah index of the bourse, DSES, closed at 1,017.17 points, gaining 1.08 per cent or 10.95 points.

Of the 296 shares and mutual funds traded, 236 advanced, 44 declined and 16 remained unchanged.

The turnover of the bourse increased to Tk 390.12 crore on Sunday from Tk 302.78 crore in the previous trading session.

‘Leaving a bundle of opportunities for capital market, especially for investors, Finance Bill 2014 was passed last day [Saturday],’ IDLC Investments said in its daily market commentary.

‘Withdrawal of proposed capital gain tax stimulated investors very positively,’ it said.

Besides, tax rebate seekers’ investment continued flowing to the market, adding an additional boost to market activities, it said.

Lafarge Surma Cement traded most on the day with its shares worth Tk 34.43 crore changing hands.

BEXIMCO, Grameenphone, United Airways, Square Pharma, BSCCL, EHL, BSRM Steels and Appollo Ispat were among the other turnover leaders.

Fine Foods gained the most with a 9.92-per cent increase in its share price, while Active Fine Chemicals was the worst loser, shedding 4.09 per cent.

Bangladesh: ADB focuses on regional trade, cooperation: country director

Dhaka, June 27 (The Daily Star): The Asian Development Bank aims to finance infrastructure projects in Bangladesh that help boost regional cooperation, Kazuhiko Higuchi, the ADB's newly appointed country director, said yesterday.

Regional cooperation can bring annual benefits of $12-$15 billion among the member countries, he said at the monthly luncheon meeting of American Chamber of Commerce in Bangladesh (AmCham) at Ruposhi Bangla Hotel in Dhaka yesterday.

The Manila-based lender focuses on the South Asia Sub-regional Economic Cooperation (SASEC) Programme to finance key infrastructure projects in Bangladesh, such as roads, railways, information communication technology, tourism and energy.

ADB has so far financed nine projects worth $816.77 million in Bangladesh under the SASEC programme since 2001, Higuchi added.

The SASEC programme, set up in 2001, brings together Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka in a project-based partnership to promote regional prosperity.

The programme seeks to strengthen cross-border connectivity by creating multi-modal transport networks to boost intraregional trade, and open up trade opportunities in Asia.

Higuchi stressed dialogue among the member countries to foster regional cooperation. “Continuing dialogue is a must to promote regional integration.”

Aftab ul Islam, president of AmCham, said regional cooperation does not get a momentum in South Asia mainly due to mistrust among neighbouring countries.

He stressed the need for enhancing people-to-people contact in the region with more exchanges between businesspersons and civil society members.

Islam urged ADB to finance mega-hydro power projects in Nepal to address electricity shortage in the region, as the country's potential stands at more than 83,000 megawatts.

Mohammad Zahid Hossain, principal economist of ADB's Dhaka office, also spoke.

Bangladesh: Commodity imports see a big jump

Dhaka, June 27 (The Daily Star):

Imports of five commodities that see high demand during the month of Ramadan rose between 23 percent and 82 percent year-on-year in the first 10 months of the fiscal year.

In the same period, imports of various types of pulse, including gram, increased by 23 percent, according to the central bank statistics. Annual demand for gram is 8 lakh tonnes, 70,000 tonnes of which is consumed during Ramadan, data from the commerce ministry shows.

Bangladesh has produced 10,000 tonnes of gram and imported 1.18 lakh tones this year, Commerce Secretary Mahbub Hossain told reporters yesterday. Letters of credit have been opened for importing another 60,000 tonnes of gram.

Prices of the popular iftar items will not increase during Ramadan though its demand has gone up, Hossain said.

Gram prices fell 15 percent to Tk 55-60 a kg yesterday from a year ago, according to a report of the Trading Corporation of Bangladesh.

The central bank data shows that imports of dates shot up 62 percent in the first 10 months of the fiscal year, while LCs opened for imports rose 82 percent.

Onion imports went up 76 percent in the same period and onion worth $153 million was brought in, according to the LC settlement statistics.

Besides, LCs opened for importing onion increased by 78 percent and LCs have been opened for $165 million for importing the spice used for preparing iftar items.

Annual demand for onion is 22 lakh tones. In the last season, the country produced 13.58 lakh tonnes of onion. Onion is imported mainly from India through land ports.

On average, 200 tonnes of onion are imported a day, the ministry officials said.

Local onions were selling at 3.85 percent lower than in the previous year, while the prices of the imported variety marked a rise of 4.84 percent yesterday, according to the TCB report.

In the first 10 months of the current fiscal year, sugar import was 1.77 percent higher from the corresponding period last year, but the LC opening  increased by around 36 percent and LCs were opened for around $665 million.

LC opening for import of sugar soared on the eve of Ramadan, a commerce ministry official said.

Annual demand for sugar is 14.5 lakh tonnes. Sugar prices fell 4 percent to Tk 46-48 a kg yesterday from the previous year.

LCs opened for refined edible oil went up about 30 percent in the first 10 months of 2013-14 from the same period last year, and LCs worth $455 million were opened for importing different varieties of edible oil, according to the central bank.

However, LCs opened for crude edible oil amounted to $700 million though it was about 22 percent lower than in the same period last fiscal year.

Hossain said prices of essentials would not increase in Ramadan.

The items people consume in large quantities are adequate in supply, he said. “If the businessmen artificially increase the prices, the government will intervene in the market through the TCB,” he said.

Necessary steps have been taken so that commodity prices do not shoot up during Ramadan, he said.

An intelligence agency has already identified the spots where extortion takes place, he said. “The list has been sent to the home ministry for taking necessary action.”

Bangladesh: New company to get telecom transmission licence

Dhaka, June 27 (The Daily Star):

The telecom ministry plans to award the third transmission licence to Bahon Ltd among four companies that sought permissions.

Bahon will join two other national telecommunication transmission network (NTTN) companies Fiber@Home and Summit Communications.

Abubakar Siddique, telecom secretary, said Bahon is the only eligible company to get the transmission licence among the four applicants.

NTTN companies rent out their optical fibre cable capacity to the voice, internet or data service providers. The ministry is preparing the paperwork for the new licensee.

In February, Bangladesh Telecommunication Regulatory Commission (BTRC) sent the applications of four applicants -- Bangla Phone, Mango Teleservices, B-Connect and Bahon -- to the ministry to consider for NTTN licences.

The telecom ministry has been the licence approving authority for any telecom licence since 2010, when the Telecom Regulatory Act was amended.

Before that, the regulator used to issue licences.

 “Our target is to lay the optical fibre cable network in 64 districts within the next three to five years so that the mobile, WiMax or internet service providers can get connectivity,” said Syed Samiul Huq, managing director of Bahon. 

The other shareholders of Bahon are Syed Ruhul Huq, chairman, Salma Islam, a director, and Farzana Lucky Ali, a director, according to its application.

Bangladesh: Remittance eludes productive sectors

Dhaka, June 27 (The Daily Star): Only 25 percent of the remittance-receiving households invest in productive sectors after paying for livelihood necessities, while others do not, the statistical agency said in a survey yesterday.

Remittance receivers spend 39 percent of funds on food and non-food items, according to the survey by Bangladesh Bureau of Statistics.

BBS surveyed 9,961 households between January 2013 and June 2014.

The main purpose of the survey is to identify the different uses of inward remittance, said Dilder Hossain, programme director of the survey, Use of Remittance 2013.

Almost 8.6 million Bangladeshis are currently working abroad.

Nearly two million additional young people join the labour force every year and the outflow of workers will continue in the future due to the country's lack of ability to create jobs at home, Hossain said.

People from Rangpur invest the highest—36.63 percent of remittance, while those of Sylhet invest only 16.33 percent. In the last year, homebuilding takes the largest share of remittance—72.05 percent, followed by flat purchase standing at 15.89 percent, Hossain added.

Barisal as a division spends 81.84 percent of remittance on home construction, followed by Khulna at 80.47 percent, Rangpur at 79.96 percent and Rajshahi at 78.92 percent.

Dhaka spends the lowest in home construction, while topping the list of flat buyers with 68.30 percent. 

Nationally, 56.96 percent of households receiving remittance save from the income. Banks are the biggest custodians of savings from remittance income, Hossain said.

About 84.01 percent of total savers kept their savings in banks in different forms: savings accounts, savings bonds and timed deposits. 

Banks are the main saving destinations in all divisions, he added.

Among the major expenditures from remittance: 77.99 percent is spent on land purchase, especially on the divisional level.

Remittance receiving households of Barisal, Dhaka, Khulna, Rajshahi and Rangpur spend the majority of their income to purchase land.

Remittance receivers in Chittagong scored lowest with 56.06 percent of funds spent on land purchases, followed by 62.70 percent in Sylhet, the survey showed. Most migrant workers lack higher education, with very few professionals, like doctors and engineers, in the mix, Hossain said. 

The majority, 62 percent, are below secondary school certificate level, while only 2.41 percent have professional education, the survey revealed.

Banking is the most popular and widely used system for sending remittance, Hossain said. 

Two-thirds of remitters use proper banking channels to send money home, and 6.87 percent use Western Union. 'Hundi', an illegal system of sending money, is used by 10.04 percent of remitters, data showed. Around 96 percent of remittance is transferred as cash.  

The BBS survey aimed to estimate the share of investment, savings, and consumption as part of total inward remittances and to identify the socio-economic conditions of the remittance receiving households and to provide supplementary information for national income accounting.

Bangladesh: Tax-free limit of stock capital gain to be raised to Tk 20 lakh

Dhaka, June 27 (New Age): The government is likely to increase the limit of tax-free capital gains from stock investment for individual investors to Tk 20 lakh from the proposed Tk 10 lakh amid protest from the investors, officials of the National Board of Revenue said.

The government may also reduce the proposed tax on realised capital gains and increase the slabs of gains bowing down the tremendous pressure from the stock market players, they said.

In the last moment, the revenue officials on Thursday prepared an amendment proposal of the Finance Bill-2014 following the instruction from the finance minister Abul Maal Abdul Muhith.

According to the proposal, individual investors will have to pay tax at the rate of 2 per cent on capital gains from Tk 20 lakh to Tk 50 lakh in the coming fiscal year of 2014-15.

Tax will be imposed at the rate of 3 per cent on capital gains above Tk 50 lakh, officials said.

Earlier on June 5, Muhith proposed in the finance bill to impose tax on capital gains for the first time in the country.

The proposed tax rate was 3 per cent on capital gains above Tk 10 lakh but less than 20 lakh, 5 per cent for above Tk 20 lakh.

Tax-free limit of capital gains was proposed at Tk 10 lakh.

Earlier this week, finance minister in a meeting with the NBR officials organised for finanlising amendment of the finance bill categorically instructed for not to change the proposed tax rate and tax-free limit.

By this time, Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange and Chittagong Stock Exchange mounted pressure on the NBR and lobbied with the government high-ups to withdraw the proposed tax.

The country’s two bourses also reacted sharply to the ups and downs in the capital market.

Experts also criticised the decision saying that though the imposition of tax on higher capital gain was right but it was not the right time to do so and the decision would put a negative impact on the already volatile market.

Muhith, returning from Jeddah on Thursday morning, asked the revenue officials for changing the tax rate and tax-free threshold, officials said.

By the evening, the amendment was sent to the law ministry for vetting, they said.

The proposed amendment is final and it will not be changed unless the prime minister instructs otherwise, officials said.

The NBR also finalised an upward revision of the proposed tax exemption limit on dividend income increasing the amount to Tk 20,000 from the proposed Tk 15,000.

Currently, stock investors enjoy tax exemption on dividend up to Tk 10,000.

NBR officials said that the government imposed tax on realised gains to boost revenue collection from the sector.

The initiative was just and fair taking the amount of realised gains into consideration.

‘An investor who has high capital gains from the capital market should pay tax and the proposed slab at Tk 10 lakh capital gains in a year for imposing tax was reasonable,’ an official said.

Small investors who are dominating in the market would not be affected by the decision, he said.

Finance minister was also convinced and decided to not to change the proposal till Sunday, but he has to bow down to the pressure from beneficiaries to review the proposal, he said.

There are approximately 29.79 lakh beneficiary owner’s accounts in the country.

The revenue board expected to collect nearly Tk 200 crore from tax on capital gains. Now the amount will be significantly low.

Bangladesh: Insurers say govt neglects insurance sector

Dhaka, June 27 (New Age): Financial sector experts at a seminar on Thursday said that the government’s negligence was the major impediment to the development of the country’s insurance sector.

They also said that the members of the Insurance Development and Regulatory Authority were not equipped with enough knowledge about the insurance industry to serve the sector.

They made the allegations while speaking at a seminar on ‘role of insurance sector in developing economy’ organised by the Bangladesh Insurance Association at its office in the city.

BIA president Sheikh Kabir Hossain said, ‘The insurance sector is very much neglected by the government in our country. The trend is reverse in the developed countries.’

Insurance policy is almost everywhere mandatory in the developed countries and that has helped the sector to grow there, he said.

‘Though the government has constituted a regulatory body for the sector, but the regulatory body is yet to be strengthened with proper manpower and regulations,’ he said.

‘We have requested the government several times to open a separate department for the insurance sector under the finance ministry, but no response is yet to be found,’ said the BIA president.

Federation of Bangladesh Chambers of Commerce and Industry president Kazi Akram Uddin Ahmed said that the government should take necessary steps to empower the regulator as soon as possible.

He also requested the government to scrap 5 per cent source tax on premium and commission earning.

Eastland Insurance chairman Mahbubur Rahman said, ‘Insurance sector is the most neglected sector by the government.’

He also said that the some of the members of the IDRA were not properly equipped with knowledge to serve the sector properly to boost the growth of the sector.

State minister for finance MA Mannan said, ‘If there is any negligence, it is not intentional.’

The main motto of the government is to facilitate the businesspeople as they play the key role in driving country’s economy, Mannan said.

IDRA acting chairman Kuddus Khan said that along with facilitating the insurance sector the regulator would always try to stop irregularities in doing business.

‘Every company should try to prevent irregularities on their own to ensure good governance.’

Companies should take steps to dispose claims promptly which will help to restore clients’ confidence over the insurance companies, he said.

BIA vice-president Ahsanul Islam Titu also spoke on occasion.

Bangladesh: Investment in NSCs soars to Tk 10,000cr

Dhaka, June 27 (New Age): The net investment in the national savings certificates and bonds crossed Tk 10,000 crore in the first 11 months of financial year 2013-14 as the clients invested heavily in the savings tools due to lower rate of interest in scheduled banks’ deposit products.

According to the Directorate of National Savings data, the net investment in the savings instruments was Tk 10,018.25 crore in July-May of the FY14 while it was Tk 735.19 crore in the same period of the FY13.

A DNS official told New Age on Thursday that the premature cashing by clients also declined in the period as the five-year savings tools, which were sold hugely in the FY10, would mature in the next financial year.

He said that previously clients had made huge premature cashing of their savings tools, but the trend (premature cashing) changed significantly this fiscal year.

The DNS data showed that sales of the national savings certificates and bonds increased by 1.26 per cent in the first 11 months of the FY14 compared with that in the same period of the FY13.

The savings instruments worth Tk 21,656.12 crore were sold through banks, national savings bureaus and post offices in July-May of the FY14 whereas the total sales of NSCs in the same period in the FY13 were worth Tk 21,384.59 crore.

The premature cashing of savings tools by clients declined by 43.64 per cent in July-May of the FY14 compared with that in the same period of the FY13.

Clients cashed prematurely savings instruments worth Tk 11,637.37 crore in the first 11 months of the FY14 while the figure was Tk 20,649.49 crore during the same period of the FY13.

The official said that the scheduled banks had recently cut the interest rate of their savings products due to the increasing trend in excess liquidity amid sluggish business.

The business people are yet to start their business expansion by receiving loans from the banks due to political uncertainty which pushed up the idle fund of the banks, he said.

The banks are now reluctant to take deposit from the clients, so they cut the interest rate on their deposit products, he said.

The banks are now giving maximum 11 per cent to 12 per cent rate of interest to the clients for the fixed deposit schemes while the interest rate on the savings tools is between 12.59 per cent and 13.45 per cent.

Against the backdrop, the clients have made investment heavily in the savings certificates and bonds this financial year, the DNS official said.

The official said that the net investment in the savings tools might cross Tk 11,000 crore in the FY14 if the trend of lower premature cashing continues in the last month of the outgoing  financial year.

The government in the last financial year collected only Tk 772.84 crore or 10.44 per cent of its annual target of Tk 7,400 crore in investment in the national savings certificates and bonds.

For this reason, the government set a lower net investment target of Tk 4,971 crore for the FY14.

Another DNS official said that the net investment might plunge in the coming financial year if the clients cashed their investment prematurely like the recent fiscal years.

Besides, the banks will increase the rate of interest on their deposit products in the coming months when the businesspeople will go to banks to receive loans, he said.

Bangladesh: BB launches Tk 100cr refinance scheme for new entrepreneurs

Dhaka, June 27 (New Age): Bangladesh Bank on Thursday introduced a refinance scheme worth Tk 100 crore for the new entrepreneurs to encourage self-employment.

The BB in a circular to banks and non-bank financial institutes said that the entrepreneurs, who had not accumulated any business experiences earlier, would be able to receive the loans from the refinance fund.

The maximum tenure of the loan is five years with an interest rate of 10 per cent.

The entrepreneurs will avail a grace period of six months to repay the loan, the BB circular said.

Each of the clients will get a maximum amount of Tk 10 lakh in loan without any mortgage but the banks and the NBFIs will be able to take

personal guarantee or third party guarantee from the clients.

The clients will get a maximum Tk 25 lakh from the scheme by giving mortgage to the banks and the NBFIs, the circular said.

The entrepreneurs, however, will have to arrange 20 per cent of the total costs of any project. They have to attain technical education about their proposed projects.

The entrepreneurs must hold training certificates from government and non-government institutions which are recognised by the central bank.

The BB asked the banks and the NBFIs to give priority to women entrepreneurs and projects on import alternative products, export-oriented businesses, innovative and creative enterprises and ICT related businesses in disbursing the loan under the refinance fund.

Bangladesh: BSEC rejects IFIC Bank’s time extension plea on rights offer

Dhaka, June 27 (New Age): The Bangladesh Securities and Exchange Commission has rejected the time extension application of IFIC Bank for submitting rights offer documents to the commission after getting shareholders’ approval, a Dhaka Stock Exchange web post said on Thursday.

As per the rule 7(1) of the Securities and Exchange Commission (Rights Issue) Rules 2006, companies have to file offer documents of rights shares to the commission within 15 working days after getting shareholders’ approval in a general meeting.

The BSEC rejected IFIC Bank’s application as it has failed to comply with the rule.

A BSEC senior official told New Age on Thursday, ‘As the commission denied to extend time for filing offer

documents of rights shares, there is no chance for the bank to file the documents this time and get approval from the commission to the rights offer as well.’

‘The rights offer of IFIC Bank may be considered in the next time if the company files offer documents to the commission within 15 working days after getting shareholders’ approval in general meeting and comply with other rules related in this regard,’ he said.

The board of directors of the bank on April 27 decided to issue one rights share against its existing one share at an issue price of Tk 20 including premium of Tk 10 each share to meet the future capital requirement of the bank.

The board at the meeting also decided to hold annual general meeting on June 1 in this regard.

The paid-up capital of IFIC Bank is Tk 437.70 crore with earning per share and net asset value of Tk 3.60 and Tk 24.29 respectively.

The shares of the company traded at Tk 23.7 on Thursday.

Bangladesh: GP re-launches service centre in Ctg

Dhaka, June 27 (The Daily Star): Bangladesh cricket team all-rounder Nasir Hossain yesterday re-launched Grameenphone Centre at GEC in Chittagong city.

The outlet is one of the most preferred GP service experience zones for local customers.

Shah Mohammad Ibrahim Azad, GP's Chittagong regional head, and Mohammad Ziaul Huda, head of GEC centre, also attended the event in Nasirabad.

Customers met Nasir during the daylong event and 10 lucky customers had dinner with Nasir at Peninsula Hotel in the city. Nasir is a brand ambassador of Grameenphone.

Bangladesh: Dhaka stocks end positive

Dhaka, June 27 (New Age): Dhaka stocks ended positive on Thursday, last trading session of the week, but turnover at the bourse dropped as some investors remained cautious ahead of the budget approval.

The benchmark general index of the Dhaka Stock Exchange, DSEX, finished at 4,409.42 points, adding 0.13 per cent or 5.77 points.

Turnover of the bourse declined to Tk 302.78 crore on the day from Tk 337.72 crore in the previous trading session.

Market operators said investors were little-bit cautious ahead of the final approval to the proposed budget for the fiscal year 2014-2015.

The government in the proposed finance bill imposed 3-5 per cent gain tax on individual investors and scrapped 10 per cent tax rebate for the listed companies that had kept investors pessimistic for two weeks after the budget proposals.

Investors became hopeful after the Bangladesh Securities and Exchange Commission and the bourses had requested the finance minister, AMA Muhith, to scrap capital market unfriendly proposals from the budget, they said.

Operators also said that investors were hoping that the proposals would be reviewed by the government.

DS30, the blue-chip index of the DSE, however, closed negative at 1,616.57 points, shedding 0.16 per cent or 2.74 points.

The Shariah index of the bourse, DSES, slipped by 0.10 per cent, or 1.01 points, to close at 1,006.22 points.

Of the 294 shares and mutual funds traded on the day, 152 advanced, 104 declined and 38 remained unchanged.

‘FY 2013-14 is close to its end and the bourse observed June-impact, lately,’ IDLC Investors said in its daily market commentary.

Most of the individual investors started positioning on the hope of getting tax rebate on their income, it said.

‘Accordingly, they preferred selective lucrative scrips, fundamentally as their safe investment,’ it said.

‘Meanwhile, budgetary hopes still prevailed,’ said IDLC.

But, this rebate seeking money flow was out-weighted by the inactivity of large investors, it also said.

Bangladesh Export Import Company traded the most with its shares worth Tk 24.08 crore changing hands, while share prices of the company advanced by 7.90 per cent on the day.

Bangladesh: BGMEA demands action against trade union for US letter with ‘false’ info

Dhaka, June 24 (New Age): The Bangladesh Garment Manufacturers and Exporters Association on Monday demanded action against some trade union leaders accusing them of acting against country’s readymade garment industry by sending letters to the US congressmen with false information about labour standard. BGMEA president Md Atiqul Islam alleged that a trade union federation, the National Garment Workers Federation, recently wrote a letter to the US congressmen mentioning that workers have been repressed in the work place in Bangladesh’s RMG factories. Atiqul made the allegation against the federation affiliated with the IndustriALL Bangladesh at a programme in presence of commerce minister Tofail Ahmed. Tofail on Sunday labelled same accusation against IndustriALL but the leaders of the Bangladesh chapter of the global trade union federation denied the charges. Amirul Haque Amin, president of the National Garment Workers Federation, however, told New Age that they had not sent such letter to the US administration directly but they had submitted a report on torture on a worker leader to the labour and home ministries of Bangladesh, BGMEA, Inspector General of Police, director general of industrial police and superintendent of police of the Mymensingh district. He said that tortured worker leader Moniruzzaman, whose name was mentioned in the letter, was still staying in the capital with serious injuries. Atiqul at the programme on BGMEA-BUFT Journalism Fellowship 2014 said, ‘I urge the commerce minister to take necessary actions against them who have taken stand against the largest foreign currency earning sector of the country and against four million people who are employed in the sector.’ Handing over the copy of the letter to the commerce minister, the BGMEA president said that those who were acting against the country in the name of trade unions should be punished. As the president and the secretary of IndustriALL Bangladesh council, Nazrul Islam Khan and Roy Ramesh Chandra, could not avoid the responsibility of such kind of letter that has been sent to the US administration with false information about labour situation, said Atiqul. Nazrul is a senor BNP leader while Ramesh is an Awami League leader. Amirul, however, told New Age, ‘The allegation on torture on labour leader Monir was not false and we have documents. We submitted those in several ministries and government agencies.’ ‘If anyone wants to talk to the assaulted worker, Monir, to prove the issue, he/she can contact the NGWF,’ Amirul said. Tofail Ahmed said that some trade union leaders, who were not involved with work in any establishment, were giving negative message about the labour standards in Bangladesh across the world. Tofail, however, slightly backtracked from his remarks made on Sunday that Nazrul Islam and Roy Ramesh sent the letter to US congressmen. ‘I don’t have any grudge against Nazrul as he is a nice person. But the letter was sent by the NGWF to the US using the official pad of IndustriALL and Nazrul is the president of the IndustriALL Bangladesh,’ he said. The minister urged the trade union leaders to uphold the interest of country and said that despite ideological difference no one can take stand against the dignity of the nation. Dhaka University vice-chancellor AASM Arefin Siddique, Continued on Boishakhi Television chief executive officer Manjurul Ahsan Bulbul, the Bhorer Kagoj editor Shyamal Dutta and the Financial Express advisory editor Jaglul Ahmed Chowdhury attended the programme. In the programme, the BGMEA announced the names of six journalists who have been elected for the BGMEA-BUFT Journalism Fellowship 2014 in different categories.

Bangladesh: Govt unlikely to withdraw tax on stock investors’ capital gains

Dhaka, June 24 (New Age): Tax on realised gains from stock investment is likely to remain unchanged in the next budget as the government decided not to change the provision in the proposed Finance Bill-2014, officials of the finance ministry said. On the other hand, the government may increase the tax exemption on dividend income up to Tk 20,000 that the investors get from the listed companies from the proposed Tk 15,000, they said. The government may also offer tax rebate for the companies listed in the share market. The companies which will pay dividend more than 40 per cent will get 10 per cent tax rebate on their income tax, according to the proposed amendment. Earlier, companies would get 10 per cent rebate if they gave 20 per cent dividend but the provision was scraped in the proposed finance bill. The government may also exclude from the finance bill a provision that proposed to allow cost and management accountants to conduct audit and certify financial reports under the tremendous pressure from the Institute of Chartered Accountants of Bangladesh. It may also scrap a provision making mandatory for partnership, enterprises and professionals with income exceeding Tk 5 crore a year to submit audited account statements to the NBR. Finance minister AMA Muhith on June 5 placed the finance bill in parliament proposing 3 per cent tax on individual investors with more than Tk 10 lakh but less than Tk 20 lakh capital gain in a year from the stock market and 5 per cent tax on capital gain above Tk 20 lakh. Investors protested against the decision and demanded withdrawal of imposition of gain tax. The country’s two bourses also reacted sharply with ups and downs in the market. Experts also criticised the decision saying that though the imposition of tax on higher capital gain was right but it was not the right time to do so and the decision would put a negative impact on the already volatile market. The National Board of Revenue officials said that the finance minister on Sunday instructed them to keep the provision unchanged in a bid to bring people with more income under tax net and collect revenue from the sector. The government thinks that those who earn above Tk 10 lakh a year from share market should pay tax, they said. Small and medium investors will not be affected due to the imposition of gain tax, they said. Earlier, capital gain from the stock market was tax-free. Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange and Chittagong Stock Exchange were demanding to scrape the new provision saying that the imposition of gain tax would create significant effect on the market. On the other hand, investors get tax exemption on dividend up to Tk 10,000 and they have to pay tax at the rate of 10 per cent on the amount above Tk 10,000. In the proposed finance bill, the government proposes to increase the tax-free dividend to Tk 15,000 which now will be Tk 20,000. Demutualised DSE and CSE will enjoy tax holiday for the next five years until in a way the finance minister proposed in the finance bill. Finance minister proposed tax holiday in a graduated rate for the exchanges but they demanded for absolute tax holiday for next 5 years.

Draft finance company act allows BB to dissolve leasing company boards

Dhaka, June 24 (New Age): Bangladesh Bank will be empowered with the authority to dissolve the boards of non-bank financial institutions in a proposed Finance Company Act that has put stringent restriction on lending by the financial entities, commonly known as leasing companies. BB has drafted the Finance Company Act-2014 to place the existing Financial Institution Act-1993 to regulate the country’s leasing companies more strictly. The proposed act, now being scrutinised by finance ministry, said BB could dissolve the boards of finance companies, its chairman, directors and chief executive officer if the central bank finds any gross irregularities harmful to its depositors. The current provision lying in the FIA stipulates that BB only could fire chairman, director or CEO of any leasing company for valid ground, but not the board of such company. Both the acts, existing and the proposed ones, however, have provisions for seeking clarifications from the persons in questions, before BB applies its ultimate powers. Presently, the country has 30 leasing companies. The proposed act has put restriction on holding more than 10 per cent share of a finance company by any individuals or any company or members of a family. Restricting investment, the act said no finance company is authorised to invest more than 25 per cent of its paid-up capital in a single subsidiary organisation that belongs to the finance company concerned. The current provision under the FIA allows 50 per cent investment by a leasing company of its total paid-up capital. The number of board of directors of such finance companies will be as high as 16, according to the new act. The maximum number of directors to be appointed from a family having shares above five per cent on the finance company could be only two, while one director can be appointed from a family having less than five per cent stake in a finance company, the proposed act said. Presently, no capping on board members applies to a leasing company as the companies concerned generally decide on the numbers of their board members. The tenure of office of a director has been proposed for three years with limiting their terms for maximum two consecutive times. Any finance company director will be disqualified to become director of a bank company or other finance company simultaneously. The current provision disqualifies a leasing company director from becoming a director of an insurance company along with directors for bank and other leasing company at a time. An executive director of BB said they had finalised the draft act in consultation with different stakeholders including that of association of leasing companies. He said the current FIA has lost relevance on many counts as that was enacted more than two decades ago. The finance officials said they would submit the draft act to cabinet division next month with minor changes for approval.

Stock Refinance Scheme: Application deadline extended again for 3 months

Dhaka, June 24 (New Age): The supervision committee on the Tk 900-crore government refinance scheme for the small-scale investors affected by the 2010-11 capital market crash on Monday extended the deadline again for receiving applications from merchant banks and brokerage houses. This time the application deadline, which was to expire on June 30, has been extended by another three months. The committee at a meeting also decided to suggest the ICB for filing application with the central bank to get Tk 300 crore as the second tranche from the refinance scheme, BSEC executive director Saifur Rahman told New Age after the meeting. Saifur, also the convener of the committee, said, ‘Considering the gradual improvement in loan disbursement of the fund, we have decided to extend the deadline for another three months to get loan applications from the merchant banks and brokers on behalf of the affected small investors.’ As per the latest report provided by the Investment Corporation of Bangladesh, loans worth Tk 239 crore have so far been disbursed among the investors and applications for Tk 111 crore loans are in progress for disbursement, he said. Bangladesh Bank on August 26, 2013 released Tk 300 crore to the ICB as the first tranche of the refinance scheme. More than 9 lakh affected investors are yet to file applications to the loan approval committee to get the loans from the government fund. The supervision committee for the first time had set November 30 as deadline to receive applications from the merchant banks and brokerage houses in favour of affected small investors. Since then, it has extended the deadline for four times due to slow response from the merchant banks and stockbrokers. Merchant banks and brokerage houses have time and again demanded that the BSEC should take steps in obtaining a directive from the National Board of Revenue allowing the amount of loans waived for the affected small-scale investors as allowable expenses. The stock market intermediaries also requested for waiver of some conditions out of the 18 conditions set by the government to apply for the loans. As per a Bangladesh Securities and Exchange Commission report sent to the finance ministry in April 2013, only 7,413 small-scale investors out of the 9,53,849 affected by the 2010-11 stock market crash got interest waiver. The loan benefit was announced as part of government-set compensation package for the investors who had investment below Tk 10 lakh during the market crash.