National News $4.5b credit deal signed with India Interest rates on bank deposits increase City Bank allots equity to IFC

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1 DSEX 6, Gold (Ounce) $1, Dollar (Buy) (Sell) REPO Rate (03/10/2017) 3.59% CSCX 11, Oil (Barrel) $49.97 Euro (Buy) (Sell) REPO Rate (02/10/2017) 3.66% Source: DSE and CSE Source: Yahoo Finance Source: One Bank Limited Source: Bangladesh Bank (W AV) National News $4.5b credit deal signed with India Interest rates on bank deposits increase City Bank allots equity to IFC BD set to pour first concrete into Rooppur N-plant this month Garment makers demand efficient ports, predictable power tariff Mobile Financial Services: Suspend suspicious agents: BB Number of mobile internet users crosses 7 crore BTRC dept for curbing foreign dominance in VAS entity Capital market lacks good scripts: Mashiur International News World Bank raises 2017, 2018 East Asia growth forecasts Japan's economy sees output exceed capacity the most in 9yrs Modi govt s demonetisation was suicide: former minister National News $4.5b credit deal signed with India Bangladesh today signed a massive credit line agreement of USD 4.5 billion with India that will be used in developing infrastructure, health and education. Primarily, 17 development projects have been identified for implementation under the credit line, says a press release of finance ministry issued in this regard this morning. Finance Minister AMA Muhith and his visiting Indian counterpart Arun Jaitley were present during signing of the credit line agreement on behalf of respective countries. The money will be spent in projects of infrastructure, health and education, Finance Minister AMA Muhith told reporters in a short briefing after the signing ceremony. Without specifying, Muhith said Bangladesh identified roads, railways and bridges as the most important sector for implementing the credit. But we ve also included health and education. 1 P a g e

2 Indian Foreign Minister Arun Jaitley said that the 17 development projects for the credit disbursement have been identified beforehand. But, no specifics could be obtained immediately. From what could be learnt, of the $4.5 billion third credit deal, $1b will be spent on the infrastructure development for power evacuation facilities of Rooppur Nuclear Power Plant. This time India will might also be providing credit for upgrading 245km roads -- Benapole-Jessore-Narail-Bhanga (135km), Ramgarh-Baruerhat (35km) and Mainamati-Brahmanbaria-Sarail (75km) -- considering transit and transshipment facilities and the operation of Chittagong and Mongla ports. At least three of the projects involve the development of economic zones, a priority for the Bangladesh government as it looks to ramp up private sector investment. Of the total amount of the credit, about $500 million will be used for setting up new economic zones for Indian and other investors, according to officials of the finance ministry and Bangladesh Economic Zones Authority. Some $100 million will be provided for building a dedicated economic zone spanning 1,005 acres in Mirsarai of Chittagong for the neighbouring country's investors -- a move that has been hailed by Narendra Modi. Another $100 million may be used for developing a special economic zone at Payra or Moheshkhali; $300 million may be allocated for developing infrastructure of different economic zones. Source: Interest rates on bank deposits increase Interest rates on bank deposits increased further following higher credit growth particularly in private sector, officials said, citing latest disclosure. The weighted average interest rate on deposits rose to 4.93 per cent in August 2017 from 4.89 percent in July, according to the central bank's statistics released Tuesday. The rising trend in deposit rates recorded in the last couple of months after the containing of fall since January 2015, when weighted average interest rate on deposits was 7.26 per cent. "We expect that the upward trend in the interest rate on deposits will continue in the coming months," a senior official of the Bangladesh Bank (BB) told the FE. Most banks receive deposits offering higher interest rates to increase their deposit growth more than that of credits, the central banker explained. Currently, bank deposits recorded slower growth than that of credits as depositors feel discouraged from keeping their money with the banks mainly due to rock-bottom interest rates. The growth rate of deposits, on a year-on-year basis, came down to per cent in June 30 last from per cent in December 2016 while the growth in credit rose to per cent from per cent, the BB data showed. Talking to the FE, Managing Director (MD) and Chief Executive Officer (CEO) of Eastern Bank Limited Ali Reza Iftekhar said the interest rates on lending alongside deposit may also rise gradually in the near future. "The banks may raise their interest rates on lending to minimize their cost of funds," the senior banker explained. The weighted average interest rate on lending is likely to reach nearly 10 per cent from the existing level by the end of December this year, he estimated. 2 P a g e

3 In August 2017, the weighted average interest rate on deposits, offered by six state-owned commercial banks (SoCBs), came down to 4.51 per cent from 4.56 per cent a month before. On the other hand, the average interest rate on deposits at the private commercial banks (PCBs) rose to 5.27 per cent in August last from 5.20 per cent in July 2017 while the foreign commercial banks (FCBs) collected deposits at the interest rate of 1.74 per cent against 1.61 per cent. The official data showed that nine new PCBs offered higher interest rates on deposits, ranging between 5.98 per cent and 8.78 per cent. On the other hand, overall spread in the country's banking sector decreased slightly in August as the banks slashed their interest rates on lending more than that of deposits. The weighted average spread between lending and deposit rates offered by the commercial banks came down to 4.53 per cent in August 2017 from 4.62 per cent in the previous month, the BB data showed. The spread was 4.80 per cent in August The spread being maintained by at least nine banks out of 57 still ranges as high as between more than 5.0 per cent and 8.06 per cent. Average spread with the SoCBs was 4.07 per cent, PCBs 4.51 per cent, FCBs 6.15 per cent and specialised banks (SBs) 2.70 per cent in August last. Excluding consumer finance and credit card, the spread of all banks also came down to 4.43 per cent in August 2017 from 4.53 per cent a month before. Source: City Bank allots equity to IFC City Bank has recently issued 5.0 per cent of its outstanding number of common equity to the International Finance Corporation (IFC) as per approval of relevant regulatory authorities. This allotment of shares is in accordance to an agreement signed between City Bank and IFC in February, From now on, IFC will have its representative in the Bank s Board and will actively contribute towards the progressive growth of the Bank. A small ceremony was held to celebrate this milestone where the Bank s MD & CEO, Sohail R. K. Hussain handed over a crest to Vittorio Di Bello, Regional Industry Head, IFC, Asia and welcomed IFC into City Bank. Other senior officials from both the entities were also present, said a statement. Source: BD set to pour first concrete into Rooppur N-plant this month The government is set to pour first nuclear concrete into the Rooppur nuclear power plant (RNPP) project this month after ending the pre-construction phase, said officials. Russian President Vladimir Putin is expected to be present at the event, when other top Russian leaders and top officials from Rosatom would take part, they added. 3 P a g e

4 The first concrete, meaning the construction work, of the 2,400-MW under-implementation project was initially scheduled for August this year, but was later shifted to September followed by October, said a senior official of the Ministry of Science and Technology (MoST). He said Bangladesh Atomic Energy Commission (BAEC) will appoint India's Global Centre for Nuclear Energy Partnership (GCNEP) to act as a consultant for the construction and operation of the RNPP. An agreement between BAEC and GCNEP would be signed soon, he added. The RNPP, the first nuclear power plant in Bangladesh, is being built under a supplier's credit deal with Russia. The BAEC on August 30 signed a deal with Russian state nuclear company Rosatom on the return of spent nuclear fuel from the plant to Russia. The agreement sets out provisions for reprocessing the spent fuel from the Rooppur plant at the Rosatom subsidiaries in Russia. The RNPP will use two generation 3+ power VVER-1200 reactors. Russian contractors are already working on the project site. The first of two units of the plant, having 1,000MW capacity each, is expected to commence operation in 2023, followed by the second in Bangladesh under the agreement is set to ship the spent fuel by sea every five to seven years after the plant's beginning commercial operation, MoST Minister Yeafes Osman told the FE earlier. The Rooppur project has a total cost of Taka 1.13 trillion ($12.65 billion), with Russian financing worth $11.38 billion being provided to Bangladesh for the project. The Russian Bank for Development and Foreign Economic Affairs and Bangladesh's state-owned Sonali Bank Ltd. will work as authorized banks for the state loan. The Bangladesh government will provide Tk billion of its own funding for the project. Source: Garment makers demand efficient ports, predictable power tariff Garment manufacturers yesterday demanded that the government ensure efficient functioning of the Chittagong port and airports and a stable power tariff for continued growth of apparel exports. We want price predictability of electricity and gas so that we can plan for long periods in our business, said Tapan Chowdhury, president of the Bangladesh Textile Mills Association. Incentives to the primary textile sector would help it to supply more raw materials to the garment sector, which typically accounts for 82 percent of the export receipts. Currently, the primary textile sector can supply 85 percent of the raw materials required by the knitwear sector and 40 percent by the woven sector, he said. Chowdhury's comments came at a roundtable styled current situation of the garment industry and a way out, organised by the Bangladesh Garment Manufacturers and Exporters Association at the Westin Dhaka. I agree that the garment sector is passing through a critical time for various reasons, said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue. But the challenge can be viewed as an opportunity too. We have to do some homework to tap in that opportunity. 4 P a g e

5 One such exercise would involve ensuring efficient functioning of the Chittagong, Mongla and Payra ports and airports. The export scenario globally has been recovering at a fast rate, he said, adding that Bangladesh is still the top choice for garment retailers and brands. Bangladesh should also remember that India, China and the Latin American countries import garment items worth billions of dollars every year, so it could target those emerging export destinations. India is in a well advantageous position as it produces plenty of raw cotton, he added. The garment business did not shrink but the profitability did due to an image crisis caused by the Rana Plaza building collapse and a slump in confidence amongst brands, said Anisur Rahman Sinha, chairman of Opex Group and a former BGMEA president. He suggested joint efforts from the government and the BGMEA to address the labour issues that continue to plague Bangladesh's reputation in the Western world. Price stability was a big factor for businesspersons, said M Tamim, head of the department of petroleum and mineral resources engineering at BUET. The growth that the garment sector witnessed over the last five years was possible because the garment manufacturers had invested in attaining efficiency to save the costs of power and energy, he said. The government should formulate a policy determining whether it will allow captive power plants all the time or supply electricity from the national grid as tariff from the two varies a lot, he added. Commerce Minister Tofail Ahmed asked the Accord and the Alliance, the two foreign garment building inspection agencies, to leave the country upon completion of their tenures in May next year. The Accord and the Alliance need not stay here, he said, adding that the government might allow them at most six months' time extension to wrap up their ongoing activities. The two agencies want to extend their tenure to 2021, but the government is yet to respond to their request, the minister said. Ahmed blamed a section of trade union leaders and foreign partners for wrong image of the country's garment sector. The garment sector was hit by conspiracies spun by national and international players since exporters and the government announced a target to earn $50 billion from apparel exports by 2021, he added. The existing crisis for gas would end by April next year as the government was going to import liquefied natural gas, said Nasrul Hamid, state minister for power and energy. By the next three years the government will ensure uninterrupted power to the industrial units. So you can plan in this line. The state minister said the government will not give any power connections to industries if they are not located in economic zones. We have decided that we will give household electricity connections within 21 days and in the industrial sector by 45 days. We will start giving gas connections to industrial units from April next year, Hamid added. Mohammed Nasir, BGMEA vice-president, presented a keynote paper and Siddiqur Rahman, BGMEA president, moderated the roundtable. Shahriar Alam, state minister for foreign affairs; Nojibur Rahman, chairman of the National Board of Revenue; and Shafiul Islam Mohiuddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, also spoke. Source: P a g e

6 Mobile Financial Services: Suspend suspicious agents: BB Bangladesh Bank (BB) has asked 17 banks providing mobile financial services to suspend agents who are suspected of being involved in dubious transactions. The Bangladesh Financial Intelligence Unit (BFIU), the central bank's anti-money laundering wing, gave the order on September 26. A BB official told The Daily Star yesterday that the central bank on September 14 ordered bkash, Brac Bank's mobile financial service provider, to suspend 2,887 of its agents on finding them engaged in money laundering and suspicious transactions. The 17 banks, including Dutch-Bangla Bank, United Commercial Bank, Southeast Bank, NCC Bank and Rupali Bank, have been asked to monitor activities of every agent, including the 2,887 who might be their agents too. The 17 are to inform BB if any agent is found to have breached anti-money laundering rules. The BB official said many non-resident Bangladeshis opted for illegal channels like hundi to send money home because of a lower rate of the US dollar against the taka in legal channels. The latest initiative has been taken with hopes that it would play a positive role in increasing remittance through the banking channel. In July this year the central bank detected several suspicious transactions on the mobile banking platform, especially at late night, which means remittance is being sent home through hundi, BB said. One of the reasons for the slump in official remittance figures is the growing tendency among migrant workers to send money through hundi, according to BB. Source: Number of mobile internet users crosses 7 crore The number of active mobile internet connections in Bangladesh surpassed seven crore in July, Bangladesh Telecommunication Regulatory Commission (BTRC) stated in a report published yesterday. The number of internet connections through mobile operators was 7.02 crore at the end of July and 7.19 crore at the end of August, said the telecom regulator. The six crore mark was crossed in July last year, five crore in August 2015 and four crore in September According to the report, the number of active internet connections at the end of August was 7.71 crore, percent of them in cellphones. BTRC did not mention anything about 3G connections and specify the numbers for each operator. However, a top official informed that Grameenphone is clearly ahead with 2.95 crore connections and Robi coming second with 2.42 crore, followed by Banglalink with 1.67 crore and Teletalk with 16 lakh. Of the total connections, the number of fixed internet connections stood at lakh and WiMAX 89,000, which is continuously declining, says the report. Mobile operators also achieved massive success in attaining new connections, adding about lakh and ending August with crore active SIMs, 6.31 crore being of Grameenphone. Merged operator Robi crossed a new milestone in August with 4.07 crore connections while Banglalink has 3.23 crore and Teletalk lakh active connections. Source: 6 P a g e

7 BTRC dept for curbing foreign dominance in VAS entity The engineering and operations department of Bangladesh Telecommunication Regulatory Commission has proposed that the commission should not allow foreign entities to hold controlling stake in a telecommunication value added service providing entity. The E&O department of the commission came up with the proposal in its observation on the draft guidelines titled Regulatory Guidelines for Issuance of Registration Certificate for Providing Telecommunication Value Added Services in Bangladesh, a senior official of the commission told New Age. Value-added services are provided by a third-party company through the mobile phone networks. The mobile phone companies offer the basic telecom services like voice and data plans, but the other services like missed call alert, welcome tune, and various application-based services are provided by VAS providers. The regulator published the draft guidelines on August 22, 2017 allowing a foreign entity to hold up to 51 per cent stake in a VAS providing entity. BTRC s E&O department in its observation said that it was observed in the past that companies have managed to transfer huge amount of fund from Bangladesh by providing VAS. Considering the consequence, the commission should limit foreign partner s shareholding in a VAS providing entity within 50 per cent, the observation said. In 2017, Bangladesh Bank informed the BTRC that Hungama Bangladesh Pvt Ltd, an Indian entity, had transferred Tk 13 crore from the country as dividend in last couple of years by investing only Tk 2 lakh. Hangama transferred Tk 6.07 crore in 2014 and Tk 6.74 crore from Bangladesh in 2015 to India. Apart from the foreign shareholding issue, a number of singers expressed their dissatisfaction over the guidelines mentioning that it did not address the copyright issue amid extensive use of songs by unauthorised VAS providers for business purpose. The BTRC had taken its first initiative to formulate guidelines on providing VAS in 2012 and the second in None of the initiatives of the regulator became successful amid strong opposition from the mobile phone companies. Source: Capital market lacks good scrips: Mashiur The country s capital market requires good instruments that will draw the funds from pensioners and low-income people to the market, said prime minister s economic adviser Mashiur Rahman. He made the statement while attending World Investor Week-2017 as a chief guest on Wednesday held at Shilpakala Academy in Dhaka. Bangladesh Securities and Exchange Commission organised the seminar. Mashiur said that there was not enough instruments for investing in the market and the deficit of good instruments should be addressed soon to attract more investments to the stock market. He also said that there was no proper arrangement for low-income or mid-income people in the stock market. The middle-income people and pensioners went for investment in government savings tools and bank fixed-deposits where they could get return without any risk, said the PM s economic adviser. Their investments could be pulled to the capital market if various risk free scrips could be added to the market, said Mashiur. Bangladesh Securities and Exchange Commission chairman M Khairul Hossain said that the investors did not get their confidence back after doing many reforms in the market following the market crash in 2010 as investors lacked knowledge to invest in the capital market. BSEC commissioners Swapan Kumar Bala and Amzad Hossain were also present at the event. Source: 7 P a g e

8 ব জ রদরর (প বল ক অথব ব লক ম রক র ) ল ঙ গ র ব রদশ ল লমর র র ১০ খ শশয় র শবর শদয় র শ ষণ লদরয়র শক ম প ল ট র লবরদশ কররপ রর উরদয ক ত লরর ই শহ লড লবরহ ড লব.ল. বর ম র উরদয ক ত প রলর ষ ঠ ট র হ রর ল ঙ গ র ব রদরশর ২ শক ট ৯৩ খ ৭৩ হ জ র ৯৪১ট শশয় র ররয়র ঢ ক স টক এক সর ঞ জ (ল এ ই) র জ শ র, ৩১ অরট বররর মরযয শশয় র লবল র প রল য় ম পন ন হরব এ ব র র র শক ম প ল ট র আরর ৯০ খ ৫০ হ জ র এব র ব র ২০ খ ৪৮ হ জ র ১১০ট শশয় র লবল কররর ২০১৬ র র ৩১ ল র ম বর ম প ত লহ ব ব ররর জ য ৭০ শর শ দ য শ লদরয়র ল ঙ গ র ব রদশ শ লহ ব ব রর শক ম প ল র শশয় রপ রলর আয় (ইলপএ ) হরয়র ৭ ক ১২ পয়, আর র লহ ব ব রর য ল ৪ ক ৮১ পয় ৩১ ল র ম বর প ম য য় লরজ হ এর শশয় রপ রলর ল ম পদম য (এ এল লপএ ) দ ড় য় ২৫ ক ৩৯ পয় য়, প ম য য় লরজ ড় য ১৮ ক লর লহ ব ব ররর প রথম রয (জ য় লর-জ ) ৪ ক ২৩ পয় ইলপএ শদলখরয়র শক ম প ল ট আর র ব র একই মরয় র ল ৩ ক ৪৫ পয় Source: / International News World Bank raises 2017, 2018 East Asia growth forecasts The World Bank raised its economic growth forecasts for developing East Asia and Pacific for this year and 2018, but added the generally positive outlook was clouded by risks such as rising trade protectionism and geopolitical tensions. The Washington-based lender now expects the developing East Asia and Pacific (EAP) region, which includes China, to grow 6.4 percent in 2017 and 6.2 percent in Its previous forecast in April was for 6.2 percent growth in 2017 and 6.1 percent growth in The economic outlook for the region remains positive and will benefit from an improved external environment as well as strong domestic demand, the World Bank said in its latest East Asia and Pacific Economic Update report on Wednesday. The outlook, however, faces risks from rising trade protectionism and economic nationalism, which could dampen global trade, as well as the possible escalation of geopolitical tensions in the region, the bank said. Increasingly hostile statements by US President Donald Trump and North Korean leader Kim Jong Un in recent weeks have raised fears of a miscalculation that could lead to war, particularly since Pyongyang conducted its sixth and most powerful nuclear test on Sept. 3. Because of the region's central role in global shipping and manufacturing supply chains, escalation of these tensions could disrupt global trade flows and economic activity, the World Bank said. That could be accompanied by financial market volatility that would likely hamper economic growth in the region, and there could also be a flight to safety that spurs capital outflows, the bank said. The World Bank said it now expects China's economy to grow 6.7 percent in 2017 and 6.4 percent in Its previous forecasts were for China to grow 6.5 percent in 2017 and 6.3 percent next year. China's economic growth is projected to moderate in as the economy rebalances away from investment and external demand towards domestic consumption, the bank said. The World Bank cut growth forecasts for several countries in Southeast Asia including Myanmar and the Philippines, while raising forecasts for Malaysia and Thailand. 8 P a g e

9 Businesses in Myanmar appear to have delayed investments as they wait for the government's economic agenda to become clearer, said the bank. It cut Myanmar's growth forecasts by 0.5 percentage points for both 2017 and 2018, to 6.4 percent and 6.7 percent, respectively. These projections do not factor in any longer-term impact of the ongoing insecurity in Rakhine State, which if it persists could have significant adverse effects by slowing foreign investment. More than half a million Rohingya have fled from a Myanmar military crackdown in Rakhine State launched in late August that has been denounced by the United Nations as ethnic cleansing. In the Philippines, a delay in a planned government infrastructure programme has softened the economic growth prospects, the World Bank said. It added that Malaysia's growth is gaining a lift from higher investment and a recovery in global trade, while Thailand's growth forecasts have been revised higher due to a stronger recovery in exports and tourism. Japan's economy sees output exceed capacity the most in 9yrs Japan's economy saw output exceed full capacity by the most in nine years in the April-June quarter, a Bank of Japan estimate showed, a positive sign for the central bank as it seeks to accelerate inflation to its elusive 2 percent target. The output gap, which measures the difference between an economy's actual and potential output, stood at plus 1.22 percent in April-June, staying in positive territory for the third straight quarter, the BOJ estimate showed on Wednesday. The positive output gap exceeded 1 percent for the first time since January-March months before the collapse of Lehman Brothers triggered a global financial crisis. The outcome backs up the BOJ's view that Japan's economy is gathering enough momentum for inflation to accelerate toward its 2 percent target, and justifies it from keeping policy steady. But some studies show there can be a lag between achieving a sustained positive output gap and an actual business response, such as a boost in investment and a pick-up in inflation. We've seen a dramatic improvement in Japan's economy, BOJ Deputy Governor Hiroshi Nakaso told Asahi newspaper in an interview. Corporate profits are at record-high levels, the job market is near full employment and wages are rising, albeit moderately. Monetary policy has made huge contributions, he said. Source: Source: Modi govt s demonetisation was suicide: former minister Slamming the Narendra Modi government over sliding economic growth and increasing job losses, former Union minister Arun Shourie has likened demonetisation with suicide, saying the latter is too a bold step, reports Hindustan Times. Economist Shoure, who was a minister in the then BJP-led government in , also called the Narendra Modi government as government of two-and-a-half persons, according to the report which was taken from news agency IANS. 9 P a g e

10 This is a government by ilhaam (revelation). The Prime Minister has the ilhaam one night that demonetisation should be done and he does it. In any case it was a bold step. I have to remind you suicide too is a bold step, Shourie said in an interview to NDTV when asked why in his view, the government went in for demonetisation. Modi announced demonetisation of Rs 500 and Rs 1,000 currency notes on November 8 last year. Which argument (offered by the government in defence of demonetisation) today survives? Black money? All of it turned white. Terrorism? Terrorists are still coming into India. At the end they have nothing to say, he added. Shourie also took a dig at BJP president Amit Shah who has said that current slowdown of economy is due to technical reasons, terming him that famous economist? and underscoring that official figures cannot be brushed under the carpet. He also said those running the government do not seek any advice or hear the facts. This is a government of two-and-a-half persons, that is, Narendra Modi, Amit Shah and one in-house lawyer. They don t have the expertise and they have surrounded themselves by persons who don t have the expertise. They are now in a sealed echo-chamber. They don t hear what is happening. The distress the RBI [Reserve Bank of India] has documented of small and medium enterprise. These poor fellows had been clamouring and shouting. Nobody heard them, he added. He said that persons like Yashwant Sinha, P Chidambaram and several other economists have been talking about facts. And those facts emerge from official reports such as The Economic Survey, the RBI surveys, the SBI s report etc. Is it a fact or not that GDP has collapsed to 3.7 per cent according to the old series? Is it a fact or not that index of industrial production has gone down from about 9 per cent in to about 1.7 per cent in April to July? Is it not a matter of concern? Shourie said. However, he said, despite all the red signals, there was little hope of a course change as it all flows from the nature of the government and the Modi government has a sense of hustings. Their core competence is event management. They are so self-satisfied with it. They are just briefing each other, not listening to others... They are concerned about 300-feet statute, bullet trains etc, he said. On BJP and government functionaries calling former Union minister Yashwant Sinha a frustrated person after he lashed out at the government, Shourie said it was their standard operating procedure. Whenever they are confronted with inconvenient facts, they try to bury it in avalanche of abuse. I have aconstructive suggestion for them. They should publish a list of persons in advance who they think are frustrated, he said. He said that the government s policies must have predictability, stability and credibility -- all of which is totally absent now -- so that investors and industry are sure of what they can expect from the government and not taken by surprise by out of the blue announcements followed by policy flip flops as has happened under the present regime, be it demonetisation or GST implementation. Source: 10 P a g e