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.