Dhaka, August 15, 2014 (New Age): Term loan disbursement for opening of new industries and expanding existing ones registered a negative growth of 0.51 per cent in the recently concluded financial year compared with that of 19.93 per cent growth in the FY 2012-13 due to political unrest and uncertainty. According to the Bangladesh Bank data released on Thursday, scheduled banks and non-bank financial institutions disbursed Tk 42,311.32 crore in industrial term loans in the FY14 against Tk 42,528.31crore in the FY13. Industrial term loan disbursement in the FY12 was Tk 35,278.10 crore. BB officials said that the businesspeople had adopted a ‘wait and see’ approach to expansion of their industrial units amid the political unrest centring the January 5 general elections. The trend put an adverse impact on the industrial sector, they said. Four state-owned commercial banks — Sonali, Janata, Agrani and Rupali — and four specialised banks — Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Development Bank and BASIC Bank — disbursed Tk 1,393.65 crore and Tk 1,317.34 crore respectively in industrial term loans in the FY14 against Tk 5,723.75 crore and Tk 1,455.50 crore in the FY13. Industrial term loan disbursement by the foreign banks also decreased to Tk 1,281.10 crore in the FY14 from Tk 1,746.42 crore in the FY13. Term loan disbursement by the private commercial banks, however, increased to Tk 32,519.19 crore in the FY14 from Tk 28,719.74 crore in the FY13. A credit is treated as term loan tenure of which crosses one year while the loan with less than one year of tenure is treated as working capital, said a BB official. The businesspeople usually take the industrial term loans to set up new industrial units or to expand their existing industrial units, he said. The country’s industrialisation process has recently faced a stagnant situation due to the political unrest resulting that the term loan disbursement posted the negative growth in the first nine months of the FY14, he said. Industrial term loan disbursement may decline further in this financial year if the present political uncertainty persists, the official said. Besides, a number of industries have been facing production crisis for long due to the prevailing power crisis and gas shortage. ‘For this reason, entrepreneurs have failed to expand their business. As a result, they are reluctant to apply for bank loans,’ he said. Against the backdrop, the year-on-year private sector credit growth declined to 11.39 per cent in May from 11.86 per cent in April of this year. Such type of slow pace in industrial term loan disbursement will also impact negatively on the GDP growth, the official said. The BB data, however, showed that the overall industrial loan disbursement posted a 15.59-per cent growth in the FY14 compared with that of 30.13 per cent growth in the FY13 due to a higher growth in the working capital. Banks and NBFIs disbursed Tk 1,68,413.91 crore in industrial loans in the FY14 against Tk 1,45,693.87 crore in the FY13. Industrial loan disbursement in the FY12 was Tk 1,11,953.08 crore. The defaulted loans in the industrial sector also declined by 2.10 per cent to Tk 15,225.90 crore in the FY14 from Tk 15,553.05 crore, according to the BB data.
Bangladesh: Exports to US plunge, China surge, India rebound in July
Dhaka, August 15, 2014 (New Age): Country’s export to the US fell significantly but to China it continued to skyrocket and to India it rebounded in July, the first month of the financial year 2014-15. Export earnings from the US in July of the FY15 fell by 14.22 per cent to $501.04 million from $588.11 million in the same period of the FY14 due mainly to compliance issue in the readymade garment sector, experts and exporters said. According to the Export Promotion Bureau data, export to China in July grew by 53.88 per cent to $79.47 million from $51.64 million in the same period of the last financial year, maintaining the upward trend of FY14. Export to India rebounded and grew by 13.32 per cent to $39.17 million in the first month of FY15 from $34.57 million in the same period of the FY14, EPB data showed. ‘The key reason for the fall in export to the US market is that the market has lost its lucrativeness to some extent to the Bangladeshi exporters due to tough compliance issue,’ Nazneen Ahmed, senior research fellow of Bangladesh Institute of Development Studies told New Age on Thursday. She said that the exporters were no longer eager to export to the US market as the US did not provide trade benefits for Bangladesh ignoring long-standing demand for the facility from the exporters. Alternative markets rather than US are comfortable for the exporters and a number of manufacturers concentrated on new markets, Nazneen said. She said that the rise of export to China was expected as the country shifted its industry to hi-tech and decided to import basic products from other countries. ‘Despite having duty-free access the export to India had maintained a decreasing trend in the last few years but recently the Indian government eased non-tariff barriers and export increased,’ Nazeen said. The export of RMG products to the US decreased to $468.19 million in July in the FY15 from $548.58 million in the same period of the FY14, the EPB data showed. The export of RMG products to China grew to $34.01 million in July in the FY15 from $22.79 million in the same period of the FY14 while the RMG export to India increased to $14.28 million from $12.89 million. The recent US data showed that Bangladesh’s apparel export to the US fell by 1.39 per cent to $2.45 billion in the first six months of 2014 from $2.48 billion in January-June of 2013. The export earnings from India fell by 19.03 per cent to $456.63 million in the financial year 2013-14 from $563.96 million of the FY 2012-2013 and the earnings figure was four-year low. The export earnings from China increased to $746.19 million in the FY14 from $458.18 million in the FY13, the EPB data showed. Echoing Nazeen Ahmed, Bangladesh Garment Manufacturers and Exporters Association vice-president Shahidullah Azim said that a number of US buyers pulled out their business from the Bangladeshi factories as the factories were located in shared buildings and failed to meet tough US compliance issue. He said that the buyers from China and India were flexible over the compliance standard. So the exports to the countries increased, he said.
Bangladesh: DSE suspends GM Asad over share trading allegations
Dhaka, August 15, 2014 (New Age): The board of directors of Dhaka Stock Exchange on Thursday suspended the bourse’s general manager Khandaker Asad Ullah as per a regulatory order over the allegations of share trading violating rules. The DSE board on the day also formed a two-member investigation committee as part of the Bangladesh Securities and Exchange Commission’s order for taking departmental action against Asad, DSE officials told New Age after the board meeting. DSE GMs Jiban Chandra Das and Md Samiul Islam were made members of the committee. The committee was asked to submit its report in 10 days. The bourse will take its next course of action against Asad based on the investigation report, the DSE officials said. The investigation committee was also asked to interrogate DSE senior executive Bimal Chandra Mondal as the BSEC found that he had cooperated Asad in different ways, they said. DSE chairman former justice Siddiqur Rahman Miah presided over the board meeting where other DSE directors were present. The BSEC on Wednesday evening issued a letter asking the DSE to suspend Asad based on the commission’s decision made on Tuesday. The commission following an investigation against the DSE GM decided to ask the bourse to suspend Asad. The commission made the decision after conducting a probe against Asad based on a complaint that there were shares worth over Tk 6 crore in the beneficiary owners account of his wife, BSEC sources said. As per the service rules of the DSE, no DSE official and his or her family members can open BO account and trade shares. BSEC sources said that they thought Asad’s money was basically invested through his wife’s account. A BSEC press release said that the BSEC investigation found that the alleged irregularities of Asad were proved. The press release, however, did not mention the irregularities while BSEC officials declined to give details to reporters. The release said following the BSEC findings the commission decided to ask the DSE to suspend Asad from his post and take departmental actions for the ‘greater interest of the capital market’. As per the complaint filed with the BSEC in 2013, Tk 6.90 crore was withdrawn from three BO accounts of his wife at different merchant banks. The accounts of his wife were with AB Investment, Prime Bank Investment and NCC Securities and Financial Services Limited. The commission in October 2013 had formed a three-member committee to probe the allegation.
Bangladesh: 3 SOEs deposit Tk 69.56cr dividend to govt
Dhaka, August 15, 2014 (New Age): Three state-owned enterprises have handed over dividend in together of Tk 69.56 crore to the national exchequer for the fiscal year 2012-13. Investment Corporation of Bangladesh, Infrastructure Development Company Limited and Bangladesh Development Bank Limited on Thursday handed over cheques for the money to the finance minister separately at his ministry office. The ICB handed over a cheque for over Tk 45.56 crore for the fiscal year 2012-13. ICB director, Kazi Shofiqul Azam, who is also ERD additional secretary, and ICB managing director M Faequzzaman handed over the cheque for Tk 45,56,25,000 as dividend to Muhith on behalf of the ICB board of directors at a simple ceremony. The ICB in its 37th AGM had declared cash dividend of Tk 40 for per share for the fiscal year 2012-13. The government got Tk 45,56,25,000 as dividend for holding 1,13,90,625 ICB shares. Besides, Infrastructure Development Company Limited handed over a cheque for Tk 14 crore to the government as dividend for the fiscal year 2012-13. ERD secretary and IDCOL chairman Mohammad Mejbahuddin handed over the cheque. He informed that the company’s performance was even better in FY14 as the company has generated total revenue of Tk 384 crore including net profit after tax and provision of Tk 145 crore. IDCOL finances large and medium infrastructure projects as well as renewable energy technologies, especially solar home systems, solar irrigation pump, solar mini-grid, bio gas plants and improved cook stoves programmes. Bangladesh Development Bank Limited handed over a cheque for Tk 10 crore as dividend to the government for the FY13. BDBL chairman Shanti Narayan Ghosh and managing director M Zillur Rahman handed over the cheque for the dividend to Muhith at a simple ceremony at the same venue. In the FY13, the BDBL made a net profit of Tk 102.01 crore while the total capital of the company stood at Tk 1,193.43 crore on December 31, 2013. The bank has now no deficit of capital and provision, according to the bank sources. Speaking on the occasions, finance minister AMA Muhith stressed the need for diversification of foreign direct investment in the country as he thinks that foreign investment in the country now only concentrates in two sectors — power and communication. ‘There is a need for diversification to this end,’ he added. He said more foreign investment in the manufacturing sector is needed considering the country’s domestic market. Muhith opined that the country’s economy is gradually becoming sophisticated and the sophisticated sectors should get more investment. Talking about the allegations that government institutions often incur losses rather do business, the finance minister said earning profit and providing dividends by IDCOL and two others companies today showed that the government institutions could also do business and earn profit. Finance Division secretary Mahbub Ahmed, Bank and Financial Institution Division secretary M Aslam Alam, ICB director Zillur Rahman, IDCOL chief executive officer Mahmood Malik, the board of directors of the BDBL and high officials of ministry and concern organisations were present, among others, on the occasions.
Dhaka stocks gain as investors bet on political situation
Dhaka, August 15, 2014 (New Age): Dhaka stocks gained on Thursday amid increasing turnover as they were expecting an improved business environment in next few months depending on the ‘stable’ political situation. The key index of Dhaka Stock Exchange, DSEX, gained 0.60 per cent or 27.30 points, to close at 4,554.51 points. Turnover of the bourse increased to Tk 632.12 crore on Thursday from previous day’s Tk 493.21 crore. Market operators said investors continued their active participation on the trading floor in an expectation that the business situation may witness a positive trend for short term as the political situation remained calm. Improved corporate declarations by the listed companies as well as mutual funds also played an important role behind investors’ enthusiastic participation on the trading floor, they said. Decline in banks’ interest on deposit also made investors hopeful that the fund flow from the banking sector to the capital market may increase, they said. DS30, the blue-chip index of the DSE, increased by 0.76 per cent, or 12.90 points, to close at 1,705.92 points on the day. The Shariah index of DSE, DSES, finished at 1,060.44 points, increasing by 0.92 per cent or 9.68 points. Of the 298 issues traded on the day, 178 advanced, 80 declined and 38 remained unchanged. Among the major sectors, telecommunication gained 1.31 per cent on Thursday, follwed by power that gained 0.42 per cent. Non-bank financial institutions declined by 0.72 per cent, banks 0.16 per cent and food and allied lost 0.60 per cent on the day. ‘Holding its momentum, DSEX stayed above psychological level of 4,500.00 points, this week and amplified investors’ confidence,’ IDLC Investments said in its daily market commentary. ‘The bourse added another 27.30 points, keeping investors much active on hunting lucrative spreads,’ it said. ‘Besides, growing businesses amid calm political scenario continued strengthening investors’ buoyancy as well as their participation in the market,’ IDLC said. Grameenphone led the turnover leaders’ list on Thursday with its shares worth Tk 42.38 crore changing hands. The other turnover leaders of the day were MJLBD, Lafarge Surma Cement, Square Pharmaceuticals, Matin Spinning, Beximco, Makson Spinning, Appollo Ispat, Familytex and BSC.
Foreign loan influx in pvt sector to affect financial sector: economists
(New Age, August 15, 2014): The central bank’s move to encourage foreign loans for the private sector under the monetary policy for July-December 2014 could affect the country’s financial sector, economists at a discussion meeting on Thursday observed. At the seminar, organised by Bangladesh Institute of Development Studies, they said the monetary policy was highly focused on tackling inflation which will again reduce private sector credit growth when the investment is sluggish. Bangladesh Bank officials, however, said allowing foreign loans will help to reduce the local interest rate and will also give competitive advantage to the local businessmen. ‘BB should not encourage foreign loans in private sector rather it should take initiative to lower interest rate in local market,’ former BB governor Salehuddin Ahmed said at the meeting held at the BIDS auditorium. He said that the local banks’ profitability could face a dent if the businessmen continue taking loans from foreign sources. He said the monetary policy was highly focused on tackling inflation which hinders the private sector credit flow. Former finance adviser to the caretaker government Mirza Azizul Islam said that in case of foreign loans to private sector, the BB should be very careful. ‘Only the export-oriented businesses could get facilities like this and the central bank should monitor those very carefully,’ he said. He said the BB can take contractionary monetary policy, but there is huge idle liquidity in the commercial banks. ‘Even having such excess liquidity the interest rates are not lowering. The monetary policy should also address the issue,’ he said. He also said that inflation target was not met because of the current depressed situation in the country caused by political uncertainty. World Bank’s lead economist Zahid Hussain said that monetary policy is not a foolproof tool to tackle all the issues. ‘It has its own limitation. But the private sector credit growth is a must for economic growth,’ he said. Centre for Policy Dialogue executive director Mustafizur Rahman said that the monetary policy should have put more emphasise on private sector credit growth. ‘There is a sluggish investment scenario and huge scams in the financial sector also made the market situation stagnant,’ he said. He said that although BB said that allowing new banks in the market would increase competition and lower interest rate, ‘but we have not seen any such sign yet.’ He also said non-performing loans are becoming serious concern for the banks. BIDS research director Zaid Bakht said that the BB move to increase the cash reserve ratio just before announcing the monetary policy was not a good idea. ‘It will not help. The banks may still go for reverse repo if the private sector dose not becomes vibrant,’ he said. He also said after the Hallmark scandal, banks are very sceptical about inland bills purchase which is creating another stagnancy. BIDS senior research fellow Monzur Hossain in his keynote presentation said that BB move to formulate monetary policy focusing on inflation could harm the private credit growth. ‘The previous monetary policy was also aimed to check inflation but that only got little success as food inflation, which is the major portion of the overall inflation, is still high,’ he said. He also said the broad money declined but inflation remained the same which indicated that the policy objective was unfulfilled. ‘The private sector credit growth will be affected if such policy continues,’ he said. BB governor Atiur Rahman, however, said allowing foreign loans in private sector will help the financial sector. ‘If our businessmen get loans at lower rate it will help them to become more competitive in the international market. We are now only allowing foreign loans in export or import subsidy sector,’ he said. He said that tackling inflation will solve the problem in other areas. ‘We are hoping that as the local banks have excess liquidity they will go for lending in SME sector and rural market which will make the real economy more vibrant,’ he said. He also said that BB will take tough action against the involved banks related to Hallmark scams which are creating problems in IBP.
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