National News Eligibility for raising fund from capital market eased

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1 DSEX 5, Gold (Ounce) $1, Dollar (Buy) (Sell) REPO Rate (12/06/2017) 3.61% CSCX 10, Oil (Barrel) $46.02 Euro (Buy) (Sell) REPO Rate (11/06/2017) 3.57% Source: DSE and CSE Source: Yahoo Finance Source: One Bank Limited Source: Bangladesh Bank (W AV) National News Eligibility for raising fund from capital market eased Cotton import on the rise Dhaka air cargo drops after EU steps Bangladesh to import 250,000 tonnes of rice from Vietnam at raised prices Current account deficit continues to widen Export to Germany crosses $5 billion Govt to review excise duty on bank accounts Govt submits to ILC time-bound action plan on labour rights Internet banking transaction increases by 41pc in FY17 International News GE begins testing drones to inspect refineries, factories Saudi to limit July oil volumes to Asia, slash US supply National News Eligibility for raising fund from capital market eased The Bangladesh Securities and Exchange Commission has eased rules related to enterprises eligibility to raise fund from the capital market under the fixed price method of initial public offering. Under the relaxed rules, an entity would be eligible to raise fund from the capital market under the fixed price method with net profit after tax and positive net operating cash flow in the immediate preceding one year. The relaxation has been incorporated in the amended Bangladesh Securities and Exchange Commission (public issue) Rules, 2015, a BSEC press release said. The amendments to the public issue rules were finalised at a commission meeting held on Tuesday. BSEC chairman M Khairul Hossain presided over the meeting. A BSEC official said that the move was taken with a view to making it easier for companies to enter into the capital market for finance. Under the book building method, the profitability requirement for the companies, however, will remain unchanged net profit after tax and positive net operating cash flow in the immediate preceding two years. For the IPO-seeking companies under the book building method, entities will have to float shares worth at least Tk 50 crore along with pre-ipo paid-up capital of Tk 30 crore. Earlier, pre-ipo paid-up capital requirement for the IPO-seeking companies under book-building method was Tk 15 crore. 1 P a g e

2 On the other hand, in case of the fixed price method, pre-ipo paid-up capital of a company must have to be Tk 15 crore, while an entity s IPO size would be worth Tk 15 crore or at least equivalent to 10 per cent of its paid-up capital. Besides, the market regulator tightened a provision in the public issue rules with a view to containing syndication in determining cut-off price under the book building method. Under the latest amendment, eligible investors would be allowed to offer highest 2 per cent of a company s issue size instead of the existing 10 per cent. The previous amendment allowed syndication of IPO cut-off price under the book-building method as only 10 bids of eligible institutional investors could exhaust full offer size of an entity. The latest amendment also asked eligible institutional investors to submit IPO application through the stock exchange directly. Source: Cotton import on the rise Bangladesh's cotton import will creep up to 7.1 million bales in , further consolidating its position as the world's largest importer of the fibre, according to the United States Department of Agriculture. In , 7 million bales are expected to be imported. One bale equals 480 pounds or 218 kg, and the cotton year begins on August 1 and ends on July 31. Local growers can only supply less than 3 percent of yearly demand, leading to the imports worth over $3 billion. Bangladesh has overtaken China after the latter stopped sourcing for having ample stocks of its own. The demand for the natural fibre is on the rise in Bangladesh as it is the only country that is still mainly dependent on raw cotton for making yarns and fabrics. The other countries have shifted to other manmade fibres like filament, polyesters and viscose, as a result of which the global consumption of cotton is on the decline in recent years. Currently, the ratio of cotton and manmade fibre use is 28:72 worldwide, with a pronounced tilt towards artificial fibres, due to its lower price, improved functionality and ease of use, according to International Textile Manufacturers Federation. However, the ratio is not applicable in Bangladesh yet as more than 90 percent of the yarns and fabrics are made from natural cotton in the country. We are upbeat about the future trend as cotton consumption is rising from the spinners' end, said Mehdi Ali, general secretary of the Bangladesh Cotton Association, adding that the demand for both yarn and fabrics is increasing every year. The over 430 local spinning mills can supply nearly 90 percent of the yarn for the knitwear sector and 40 percent of the fabrics needed by the woven sector for higher consumption of cotton. Many may think that the recent slowdown in garment export will have a negative impact on cotton consumption but that is not true. Garment shipments have been declining in value but the volumes are increasing, he said. Since the volume is increasing, so is cotton consumption. By the end of 2020, cotton consumption in Bangladesh will hit 7.9 million bales, Ali said. Currently, Bangladesh imports 55 percent of its demand for cotton from India, thanks to favourable prices, geographical proximity, shorter lead time and the quality of the fibre. 2 P a g e

3 We are also looking for alternative destinations as it is not right to depend too much on one country, Ali said, citing Africa, Australia and the US as the other options that are being looked at. This month's USDA report mentioned of higher forecasts for both global production and mill use in the upcoming crop year. There would be additional harvest of 1.5 million bales from previously forecasted to million, according to Cotton Incorporated. The rise in the global production figure was primarily a result of heightened expectations of Pakistan, China and Mexico. Last week, cotton traded between 72 cents per pound and 73.2 cents per pound in the future market. Source: Dhaka air cargo drops after EU steps Biman has incurred a loss of over Tk70 crore since the UK imposed a temporary ban on direct air cargo flights Air freight from Dhaka to the European Union destinations has reportedly dropped one-third as the bloc, worried about security, requires Bangladesh to put goods under additional screening before loaded. The EU, on June 1, put Bangladesh on the list of the high-risk countries, which, officials said, contributed to the decline of the air cargo. It also asked Bangladesh to introduce explosive detection system (EDS) machines to ensure the security of cargo flights. Official sources said Turkish Airlines carried 42,175 kg of cargo on the Dhaka-to-EU routes during June 1-6 compared to 1,25,577 kg during May During the period, Etihad cargo carrying dropped to 64,934 kg from 345,610 kg, Qatar Airways 537,586 kg from 568,250 kg, Saudi Arabian Airlines 425,481 kg from 114,325 kg and Emirates 144,518 kg from 360,079 kg. Mizanur Rahman, a clearing and forwarding agent at Shahjalal airport, said he had forwarded 400,000 kg air cargo from Dhaka last month. But the scenario of the current month is not good at all due to screening complexities, he told Dhaka Tribune. He feared that the air cargo forwarding in Dhaka would drop by 50% in June. An official of a foreign airlines, seeking anonymity, said as the EU asked the Bangladesh authorities to launch doublescreening system for air cargo, the volumes declined. He said this has created massive troubles for Bangladeshi exporters due to lack of EDS machines for double-screening of cargo. Bangladesh has introduced double-screening system using dog squads, but the process is a lengthy one. A trained dog can work up to 20 minutes, then it needs to take rest. So, until the EDS machines are installed, the air cargo from Dhaka won t be normal, the official said. Civil Aviation Association of Bangladesh (Caab) sources said the Armed Police Battalion (APBn) has taken initiative to form a dog squad while the force has been allotted space for the dog squad. Caab is expected to float an international tender to install double-screening system at the Shahjalal airport. Civil Aviation Minister Rashed Khan Menon said the government has given the order to purchase two EDS machines which are expected to arrive in Dhaka in next month. Two more EDS machines will be bought from Japan. 3 P a g e

4 The people concerned hope that the current crisis will be resolved after installation of the EDS machines at the Shahjalal airport. He said until the system is in place, the cargo will be screened by trained dogs. Source: Biman Bangladesh Airlines said it has incurred a loss of over Tk70 crore since the UK imposed a temporary ban on direct air cargo flights from Dhaka to London in March 2016, followed by the same decisions of Australia and Germany. The situation worsened after the EU threatened to take similar punitive measures against the country s major airport. Bangladesh to import 250,000 tonnes of rice from Vietnam at raised prices Bangladesh is set to buy 250,000 tonnes of white and parboiled rice from Vietnam at prices $50-$90 higher per ton than the previous month, to maintain immediate availability of stock in the market, as well as reserves. According to the food ministry proposal, the government will be importing 200,000 tonnes of white rice at $430 per ton, though the price per ton was $380 in the last month. The ministry is also planning on procuring 50,000 tonnes of parboiled rice at a cost of $470 per ton, while the price had been less than $450 just a week ago. In addition, in a recent international tender by the food ministry, parboiled rice was listed at $ per tonne and white rice was at $ The country s rice stock has hit a 5 year low, at 193,000 tonnes. The food ministry s proposal to import the specified amount of rice will be placed before the cabinet committee for public purchase on Wednesday, requesting Tk crore in funds. Finance minister AMA Muhith will preside over the meeting, according to a procurement official. Vietnamese rice prices in May hit their highest in over a year on expectations of strong demand from top importing countries such as Bangladesh and the Philippines. Cost per kg of the parboiled rice imported from Vietnam will stand at Tk39.01, while it will be Tk35.69 for white rice. An official of the Finance Division said that the government allocation to procure wheat and rice from domestic sources was not utilised as high prices were demanded by farmers and rice millers. The situation arose as the government had set the price of rice at Tk37.40 per kilogram, at a time when coarse rice was selling at between Tk45 and Tk50 per kilogram. During a question and answer session at Jatiya Sangsad last week, Food Minister Qamrul Islam had said rice reserves were slightly lower compared to the same time last year. The government has already planned to import 600,000 metric tonnes of rice from abroad to meet the shortfall in the crop due to premature flooding in the Haor region, he said. The minister had also said that, as per the plan, the government has already called for international tenders for the import of 300,000 metric tonnes of rice. Earlier in the year, on May 23, the food minister had signed an MoU to finalise the rice imports with Vietnamese Industry and Trade Minister Tran Tuan Anh in a government-to-government deal, during a Bangladeshi delegation s visit to the country. Source: 4 P a g e

5 Current account deficit continues to widen The current account deficit reached $1.8 billion in the first ten months of the fiscal year on the back of the sliding remittance inflow and the slow export growth. In contrast, it was $3.53 billion in the surplus a year earlier, according to the central bank's balance of payments data. The current account balance set foot into the negative territory for the first time in four years in the first quarter of fiscal : the deficit was $504 million and it has been on the rise every month since. The last time the current account was in the deficit -- of $447 million -- was way back in fiscal Since then there had been no deficit in the current account balance at any point in time. A major source of foreign currency for the country in the last 10 to 12 years has been remittance sent by expatriate Bangladeshis, which also keeps the external balance sheet in a strong position. Strong import growth coupled with a moderate rise in export and a slowdown in remittance inflow contributed to the deficit, said a Bangladesh Bank official. During the July-April period of fiscal , imports rose percent while exports grew 3.93 percent, both of which resulted in further widening of the trade deficit. Trade deficit stood at $8.18 billion during the period in contrast to $5.4 billion a year earlier. However, the BB predicts that at the end of the fiscal year the current account deficit will come down to within $600 million on the back of a pick-up in remittance and export. Export is expected to pick up, with improving growth outlook in some advanced economies, said the latest monetary policy statement of the BB. But this outlook is subject to substantial geopolitical risks and policy uncertainties in the US, the UK and the euro area. There is no sign yet of an acceleration in export growth, according to the government data. In this regard, the International Monetary Fund last week said there is a risk of export slowing down further. Since the US, Germany and the UK are the three main export destinations of Bangladesh, a risk of slowdown in the EU may hurt shipments, mainly of garments. For example, British garment importers have already started putting price pressures on Bangladeshi manufacturers following the announcement of Brexit. In the short term the impact may not be a major concern, but in the long term rising inflation expectations in the UK from the possible depreciation of the pound will affect exports, the IMF said. However, a strong capital and financial account performance underpinned by net foreign direct, portfolio and other investments led to an overall balance surplus of $2.3 billion during the July-April period of the fiscal year. A year earlier, it was $3.97 billion. The overall surplus also decreased due to the widening trade deficit and declining remittance. After a prolonged spell of appreciation pressure on the taka, it has started to depreciate, although slowly, since October 2016, in line with the gradual erosion of the current account surplus. On June 7, the average taka-dollar exchange rate stood at Tk 80.60, which was Tk a year ago, according to central bank statistics. 5 P a g e

6 Source: Export to Germany crosses $5 billion Country s merchandise export to Germany crossed $5 billion level during the first 11 months of the current fiscal year (FY17). Official statistics, released by the Export Promotion Bureau (EPB), showed that total export to Germany stood at $5.04 billion in July-May period of the current fiscal year. The amount was $4.44 billion in the same period of the past fiscal year (FY16). Thus export earnings from Germany registered 13.5 per cent growth during the period under review. The EPB data also showed that annual export to Germany stood at $4.98 billion in FY16. As a result, total export to Germany in 11 months crossed the past fiscal year s annual export. Source: Govt to review excise duty on bank accounts MA Mannan, state minister for finance and planning, yesterday hinted that the finance ministry may reconsider its proposal to hike the excise duty on account balance of more than Tk 1 lakh from fiscal There is scope for the government to reconsider the proposal of increasing excise duty on bank accounts, Mannan told the parliament during a discussion on the proposed budget for the upcoming fiscal year.the development comes following constant criticism on the proposed move. Finance Minister AMA Muhith while placing budget for fiscal on June 1 proposed raising the excise duty from Tk 500 to Tk 800 on accounts where the balance -- whether debit or credit -- exceeds Tk 1 lakh but stays less than Tk 10 lakh at any point of time during a year. Mannan told the parliament that the excise duty has been Tk 500 since There have been discussions on the excise duty at the parliament for several days. I hope that we would be able to reach an acceptable solution regarding this. Lawmakers also demanded that the finance minister reconsider the proposal of implementing a uniform 15 percent value-added tax rate, saying it would cause price hike of essentials. Mannan, however, disagreed: all the necessary items in one's daily life have been kept out of the purview of VAT. I want to ask why everybody is saying we are imposing VAT on necessary items, he added. Minutes before Mannan's address, opposition chief whip Tajul Islam termed the list of keeping 1,043 products out of the VAT net is nothing but 'a jugglery of words'. Islam said the uniform VAT of 15 percent and increased excise duty would have a negative effect on general consumers and small investors and fuel inflation. 6 P a g e

7 Earlier, while taking part in the budget discussion, Workers Party lawmaker Mustafa Lutfullah said the proposed budget would increase burden on the middle and lower income people. The proposed budget does not say anything about reducing the gap between the rich and the poor, he said. Source: Govt submits to ILC time-bound action plan on labour rights The government has promised to produce the draft of the revised EPZ law before an International Labour Organisation committee by the end of November and that of the revised labour law by the end of December this year with necessary changes in the laws in line with the recommendations of the ILO. The government submitted the time-bound action plan to the two-day 106th International Labour Conference (ILC), which began Tuesday in Geneva of Switzerland in response to the call of the European Union regarding labour rights issues. Bangladesh promised that a draft of the new EPZ legislation would be shared by November 2017 after consultation with the ILO. Regarding the Bangladesh Labour Act, the government said that it was determined to take necessary steps to review the BLA to accommodate the observations made by the ILO Committee of Experts on the Applications of Conventions and Recommendations and an advance draft would be shared with the ILO by the end of December this year. Recently, the EU asked Bangladesh to present tangible progress on fundamental labour rights issues in line with the recommendations of the ILO by August 31 this year. The EU, in a letter on May 31, provided a timeframe and asked Bangladesh to make changes to the Bangladesh Labour Act and the implementing rules and the Export Processing Zones law and to present the drafts of revised laws to the ILO Committee of Experts by August 31. The letter was issued in the wake of the third review meeting of Sustainability Compact held on May 18 in Dhaka. The economic bloc also said that making tangible progress in time was essential for Bangladesh to remain eligible for the Everything But Arms regime in the economic bloc. Expressing dissatisfaction, the EU had said that Bangladesh did not give any reply to its previous letter issued on March 16 that asked Bangladesh to show tangible progress on labour rights issues before 106th ILC. In the ILC submission, Bangladesh has promised that further changes in the implementation rules would be made in line with the revised labour act. Following the review meeting of Sustainability Compact in Dhaka in May 18, where Bangladesh failed to provide any time-bound action plan to address ILO recommendations, some of the European Parliament members criticised the poor labour rights situation in the country and called for punitive measures. In response to the call, a draft resolution on implementation of the Sustainability Compact in Bangladesh has recently been placed before the EP, calling for extension of the Accord on Fire and Building Safety in Bangladesh, a platform of EU buyers and brands working for RMG factory safety in Bangladesh, for five years, formation of wage board immediately and ensuring labour rights issues. The Committee on International Trade of the EP proposed the draft, which is scheduled for voting in the plenary today. Clean Clothes Campaign, the largest alliance of labour unions in the garment industry, on Tuesday called upon the members of the EP to call for a trade investigation into labour rights abuses as part of a resolution on Bangladesh that would be debated today. The CCC said that such an investigation would be carried out by the EU in order to assess whether the ongoing and systematic repression of trade union rights in Bangladesh should disqualify it from accessing preferential trading terms with the EU. Source: 7 P a g e

8 Internet banking transaction increases by 41pc in FY17 Financial transaction through the country s internet banking jumped by 41 per cent during the first nine months of the current fiscal year (FY17). Statistics available with Bangladesh Bank revealed that the value of internet banking transaction stood at Tk billion in July-March period of the current fiscal year. The value was recorded at Tk billion in the same period of the past fiscal year. Internet banking, also dubbed as web banking or online banking, basically offers customers almost every service traditionally available at a local branch through online. Central bank statistics also showed that on quarterly basis, transaction in the latest quarter (January-March) reached at Tk billion which was the higher amount in any quarter. Source: International News GE begins testing drones to inspect refineries, factories General Electric Co has begun testing autonomous drones and robotic "crawlers" to inspect refineries, factories, railroads and other industrial equipment with an eye on capturing a bigger slice of the $40 billion companies around the globe spend annually on inspections. In trials with customers, aerial drones and robots are able to move around and inside remote or dangerous facilities while photographing corrosion or taking temperature, vibration or gas readings that can be analyzed by computer algorithms and artificial intelligence, Alex Tepper, head of business development at Avitas Systems, a startup GE formed for this business, told Reuters. GE is expected to announce the new business, which is focused on the oil and gas, transportation and power sectors, as early as Tuesday at a conference in Berlin, Germany. GE is not the first to combine artificial intelligence with robots to inspect industrial facilities or processes. IBM Corp said it has been working on systems connected to its Watson artificial intelligence capability for about a year and launched some projects March. Tests IBM have been conducting include coupling cameras to Watson so they can recognize defects in electronic components zipping through assembly lines in China and Taiwan. Other projects involve acoustic sensors, or training Watson-enabled drones to spot frayed power lines on remote electrical towers. IBM and partner ABB Ltd, the Swedish- Swiss conglomerate, are combining visual inspection with ABB robots. "This is one of the hottest areas within IoT (Internet of Things) manufacturing," said Bret Greenstein, vice president of IBM Watson internet of things. He declined to cite a potential market size. GE said its Avitas business will combine computer analytics and artificial intelligence with its knowledge of the industrial systems it builds and its existing inspection business. 8 P a g e

9 "We know this equipment very well so we can program the robots, regardless of type, to gather the information we need for an inspection," Tepper said. Companies spend about $40 billion annually inspecting plants and equipment within the oil and gas, transportation and power generation sectors, Tepper said. He expects robots will not replace humans, but will extend their reach and lower costs. Automated crawlers and drones also address shifting demographics. Many inspection engineers are nearing retirement, and few young workers are interested in the field, he said. Source: Saudi to limit July oil volumes to Asia, slash US supply Saudi Arabia, the world's top oil exporter, will limit volumes of crude to some Asian buyers in July and deepen cuts in allocations to the United States, industry sources with knowledge of the matter said on Monday. State-run oil firm Saudi Aramco would supply full contracted crude volumes to at least five Asian buyers mainly in North Asia and lower volumes for some customers in India, China and South Korea, the sources told Reuters on condition of anonymity. Cuts in crude allocations to Asia in July would be slightly deeper than in June, the sources said. Aramco notified Asian refiners last month that it would reduce oil supplies to Asia by about 7 million barrels in June, its first cuts for that region since Opec-led output reductions took effect in January. Elsewhere, crude allocations to the United States have been lowered significantly but Aramco kept volumes steady to Europe compared to June, two sources said. One source said volumes to the United States would be cut by about 35 percent in July. One of Aramco's main buyers in China opted for lower nominations in July due to planned refinery maintenance and the more expensive Dubai benchmark, one of the sources said. Another North Asian customer said Aramco would supply full volumes of heavy crude for a third straight month. According to the July plans, Aramco would cut supplies to India by close to 200,000 barrels per day (bpd) and China by about 110,000 bpd, while supplying full volumes to buyers in Japan and Taiwan, said one source with knowledge of the nominations. Supplies to one South Korean refiner were also reduced, two sources said. Saudi Arabia, de facto leader of the Organisation of the Petroleum Exporting Countries, has cut oil output as part of a global supply pact and trimmed exports to meet rising domestic demand for power during the hot summer months. An Opec-led agreement to curb global oil supplies was extended last month until March The initial agreement, which includes Non-Opec nations such as Russia, had been due to run during the first half of When Opec announced the curbs last year, Saudi Arabia told its customers in Europe and the United States that they would receive lower volumes but shielded most of Asia from the cuts. However, power demand peaks during summer as residents turn up air conditioners in the desert kingdom where temperatures can reach as high as 50 degrees Celsius. This year is likely to see an earlier spike in demand as the Muslim fasting month of Ramadan started in late May. Under the supply pact, Opec states, Russia and other major producers agreed to cut output by about 1.8 million bpd. Saudi Arabia accounts for about 40 percent of the cuts pledged by Opec. It has reduced output by more than 500,000 bpd so its total production now runs slightly below 10 million bpd. 9 P a g e

10 Industry sources told Reuters in April that higher domestic demand for oil in the summer would weigh on exports especially if Saudi Arabia kept output at about 10 million bpd. Saudi Arabia usually burns about 700,000 bpd of oil for power generation in the hottest months from May to August. This summer, the country may reduce domestic oil consumption as it plans to use more natural gas in power stations. Source: P a g e