Morning Newsflash Thursday, April 18, 2019

Transcription

1 Economy Tax benefits for manufacturers to go up in budget: NBR Manufacturers of mobile handset, refrigerator and other electrical and electronic products will get higher tax benefits compared with assemblers of the products in the budget for fiscal year, National Board of Revenue chairman Md Mosharraf Hossain Bhuiyan said on Wednesday. At a pre-budget discussion with manufacturing sector leaders held at NBR conference room, he said that NBR would keep a difference in duty benefits and incentives between manufacturers and assemblers to encourage the latter to enter into manufacturing. He made the comment following demand of manufacturers from various sectors including mobile sets, refrigerator and other products to keep a margin to encourage manufacturing in the country. NBR became aware that many large brands, as assemblers, were obtaining tax benefits equal to manufacturers, Mosharraf said, adding that manufacturers should get benefits at higher rate than others. NBR will also provide tax benefits equal to readymade garment sectors to all other export-oriented industries to promote export diversification, he said. Exporters should increase the quality of products to tap the export potential, he added. Bangladesh Mobile Manufacturers Association president, also chairman of Fair Group, Ruhul Alam Al Mahbub said that NBR should recognise those who would be able to manufacture motherboard as mobile phone manufacturers. Economy Currency swaps rule forex mkt, cushion reserve Interbank currency swaps under agreements to exchange cash flows at later dates dominate the country's foreign exchange market shielding the forex reserve to a great extent from any pressure. Bangladesh Bank, the central bank of the country, recently prepared a note on it elaborating the nature of the forex market. It said currency swaps, a kind of derivatives, accounted for around 86 per cent of the forex market. The spot market derivatives accounted for 11 per cent with the forward derivatives grabbing the remaining 3.0 per cent. People at different commercial banks familiar with the matter have told the FE that this dominance helps fend off pressure from the country's foreign exchange reserve to a great extent. Otherwise, the banks in need of dollars could turn to the central bank to meet their requirements putting pressure on the foreign currency reserve. The people mostly acting as treasury heads at the commercial banks have said the state-owned banks usually face dollar shortfalls and they meet the demand through such currency swaps

2 Economy Japan set to give largest-ever loan to BD for five ongoing projects Japan is set to provide the highest-ever amount of loan to Bangladesh under a new loan package to facilitate implementation of five large ongoing projects in the port, communications, and energy and power sectors. Officials said a negotiation team of the Japan International Cooperation Agency (JICA) has confirmed the funding for the five projects under its 40th Official Development Assistance (ODA). The JICA mission visited the country last week and sat with all the ministries concerned, including the Economic Relations Division (ERD), to finalise the projects. However, no new project has been listed for the funding. The officials, in this regard, said no demand was placed for new projects during the negotiation, as the existing projects have huge work volume. Banks & NBFIs Sonali, Agrani, Janata, Rupali major customers of US dollar from Bangladesh Bank Four state-owned commercial banks are the major clients of US dollar sold by the Bangladesh Bank, as the public sector banks alone bought nearly 95% of the total $1.87 billion in the July-March period. To meet the growing demand of greenbacks and stabilize the foreign exchange market, the central bank has been pumping the US dollar in the banking system for long, a top central banker said. The need for buy and sell of US dollar became obvious, given that the dealing of greenbacks in the public sector banks rose abnormally in the recent period, as significant large infrastructure projects are being implemented through the banks concerned, he added. Agrani Bank bought $763 million or 40.63% of the total amount sold by the central bank, followed by Sonali Bank with $566 million or 30.14%, Rupali Bank $225 million or 11.98% and Janata Bank with $211 million or 11.24%, according to latest data from Bangladesh Bank. In the previous fiscal year the central bank sold $2.31 billion to the scheduled banks. Capital Market DSE board okays IPO process amendment proposal Dhaka Stock Exchange on Wednesday approved a set of proposals on restructuring initial public offering process as the bourse detected a number of lapses in the process that continued shattering investors confidence over the market. The DSE s board of directors at a meeting approved the proposals and decided to send those to market regulator Bangladesh Securities and Exchange Commission today for the commission s approval. DSE officials said that the bourse wanted amendment to the current book building method and would urge the commission to introduce Dutch Auction system where the bidders must take the amount of shares at his/her quoted prices. The bourse backtracked on its previous position in favour of a three-year lock-in period for placement shares and would now propose one year lock-in after the first day of trading at the stock exchange. DSE officials said that a threeyear lock-in could prevent flow of new IPOs.

3 Capital Market Speculative stocks sap investor confidence Stocks that rose abnormally at the beginning of the year upon speculation were the ones to crash and burn in the ongoing downtrend of the capital market, leaving their investors devastated. For instance, between the months of January and February, Sonarbangla Insurance rose 346 percent, United Insurance 245 percent, Asia Insurance 117 percent, and United Power Generation 45 percent -- for no apparent reason. During the period, DESX, the benchmark index of the Dhaka Stock Exchange, rose 4.72 percent, or 258 points. All the companies had conveyed then that there was no reason behind their stocks' rise. But last month, when the DSEX's descent started, United Insurance dropped 42 percent, Asia Insurance 40 percent, Sonarbangla Insurance 27 percent and United Power Generation 26 percent. DSEX plummeted 3.84 percent in March. BTRC initiates move to encash Robi bank guarantee Bangladesh Telecommunication Regulatory Commission has initiated a move to collect Tk crore in valueadded tax claim on merger fees from mobile phone operator Robi Axiata Limited through encashing the operator s performance bank guarantee. As part of the move, the telecom regulator at a recent commission meeting decided to issue a letter to Robi asking the operator why the amount would not be collected by encashing its bank guarantee that the operator had submitted to the commission in November, 2016 when it merged with Airtel. It took almost a year to complete the Robi-Airtel merger after the signing of deal between the parent companies of both the companies in January, BTRC received around Tk 500 crore in fees and charges from the mobile phone operator. Later, in July, 2017, the commission issued Order of Merger of Licence to Robi upon issuance of the performance bank guarantee by the operator against the disputed VAT amount. The commission will issue the notice within a few days giving the operator 10 days to reply, an official of the commission told New Age on Wednesday Fuel & Power Dhaka households burn Tk 3.32b of gas to boil water: TIB About 91 per cent of households in Dhaka burn gas worth Tk 3.32 billion in order to boil the water supplied by the Water Supply and Sewerage Authority, or WASA, says a new study. The study released by anti-graft watchdog Transparency International Bangladesh, or TIB, on Wednesday found numerous irregularities at WASA. According to the study, 51.5 per cent of consumers in Dhaka said that the water supplied by the state-run utility company is contaminated, reports bdnews24.com. Furthermore, 41.4 per cent said the water was stinking while 34.5 per cent said the water was both contaminated and stinking throughout the year. The study was carried out using samples collected between April last year and March of this year from residential, commercial, industrial and slum areas under 10 WASA zones. According to the study, 51.5 per cent of consumers in Dhaka said that the water supplied by the state-run utility company is contaminated. Furthermore, 41.4 per cent said the water was stinking while 34.5%. Telecommunication

4 Telecommunication GP users set to pay more Grameenphone subscribers can brace themselves for higher charges thanks to a set of decisions taken at a telecom division meeting yesterday -- a baffling move that ends up penalising customers in the government's bid to punish the dominant operator. It was decided at the meeting, which was attended by Prime Minister's ICT Advisor Sajeeb Wazed Joy, that Grameenphone's minimum call rate will be increased as part of the restrictions of being declared a significant market power (SMP) operator. Present in many countries in the world, including neighbouring India and Pakistan, SMP is a regulation that imposes restrictions on an operator once it corners a major share of the market. In Bangladesh, the SMP rule is triggered once an operator attains 40 percent of the subscribers, revenues and spectrum. Earlier on February 11, the Bangladesh Telecommunication Regulatory Commission has declared Grameenphone as the country's first SMP operator considering its revenue share is more than 50 percent and customer share is about 47 percent. Without restricting the price none can check them. But we have not finalised how much the charge will increase, Telecom Minister Mustafa Jabbar told The Daily Star. Currently, the minimum call rate for operators is Tk 0.45 for each minute and after adding the value-added tax and other duties the charge goes up to Tk 0.54 for a minute to any operator. RMG Buyers offer low prices for image crisis The main job of the incoming BGMEA board of directors would be to brighten the image of Bangladesh's garment industry, said Siddiqur Rahman, the outgoing president of the sector's apex trade body. Bangladeshi garment manufacturers are not getting proper prices as the Western retailers are reluctant to hike the prices using the excuse of image crisis, he said at a press conference held at the under-construction office complex of the trade body in Uttara. For instance, a shirt made in Italy is sold at $200, but the same shirt of the same quality but made in Bangladesh is sold at only $20 a piece, according to the president of the Bangladesh Garment Manufacturers and Exporters Association. It happens only because of the image crisis of the garment sector. So, the prime job of the upcoming committee will be to brighten the image of the country such that retailers pay fair prices. The cost of production in the garment sector increased 30 percent between 2014 and 2018, but the prices of Bangladeshimade garment items decreased 7.04 percent during the period

5 RMG Massive investment in RMG accessories boosts exports Bangladeshi garments accessories and packaging makers have made a massive new investment year-on-year of around Tk. 1,000 crore to push up export earnings and meet the demand of the apparel sector. Accessibility of the workforce at reasonable wages, duty-free market access in major export destinations, preferential location in the heart of the Asia-Pacific region acted as a pivotal player to lure foreign investment in the textile and apparel industry, said an industry insider. Abdul Kader Khan, president of the Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA), told The Independent that every year around 100 factories are coming up with new investment to manufacture accessory products. Last year, investments worth Tk. 1,200-1,500 crore were made in this sector, and more projects are waiting in the pipeline. Talking about the reason behind the investment, he said as Bangladesh is the second largest exporter of apparel products in the world after China, there is a huge investment opportunity in the textile and garment industry. IT BASIS seeks tax exemption until 2024 The Bangladesh Association of Software and Information Services (BASIS) has sought tax exemption on the earnings of information technology and information technology enabled services (ITES) companies until The association made the demand at a pre-budget meeting of FY with the National Board of Revenue (NBR) on Wednesday. NBR Chairman Mosharraf Hossain Bhuiyan presided over the meeting while Vice President (Finance) of BASIS Mushfiqur Rahman presented the budget proposal on behalf of BASIS. The BASIS vice president also alleged that they have to face difficulties in collecting tax exemption certificate and it takes up to 2-3 months to get the certificate. Mushfiqur Rahman proposed inclusion of some new services; such as, IT training, annual software maintenance contacts, audit services; in the definition of ITES. BASIS proposed NBR to regulate digital marketing payment system, banking and payment channel in a easier way, adding that the process of monitoring has been proposed in BASIS Digital Marketing Payment Proposal. Others Bangla Trac launches Yes Parking app ICT service provider Bangla Trac, on Wednesday, launched a digital vehicle parking application to help people find suitable parking places in Dhaka, hoping the app would ease traffic congestion caused by haphazard parking in the city. The mobile phone app, Yes Parking, will also help people earn money renting out garages or parking spaces. For now, the app is only available in the capital. Bangla Trac, which developed the app, said the system will digitally locate an open parking space rented out on an hourly basis by companies and individuals registered and listed with the ICT firm. Suppose you went to a market in Gulshan and failed to find a parking space for your car. The app will help you to easily find and rent a garage or parking space, Md Rokib Mahmud, head of Bangla Trac s Corporate and Regulatory Affairs, told Dhaka tribune. The person renting a garage or a parking space will be charged Tk30 per hour. However, first time users will be able to enjoy the services for free for a limited time.

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