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.