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Daily News Recap
Thursday
October 16, 2014
Analyst:
Faiza Farah Tuba
faiza.farah@lbsbd.com
Industry
Global denim suppliers eye Bangladesh for expansion
Vicunha, one of the largest denim fabric suppliers in Latin America, seeks to increase its business with Bangladesh as buyers are shifting business to the country from Europe and China.
“Our main focus is to boost business here for Bangladesh's strong potential in the garment industry,” Julien Eickelmann, commercial manager of Vicunha, said at the launch of an exposition
on denim and jeans at Radisson Hotel in Dhaka yesterday. Vicunha that supplies denim fabrics
to Bangladesh customers has a capacity to produce 17 million metres of fabric a month. “The
market is important to us as we have a number of Bangladeshi clients. We have a warehouse in
Sri Lanka that helps us provide quick service to our Bangladeshi clients.” Eickelmann said his
firm is taking part in the expo as it is keen on expanding its business in a growing market like
Bangladesh. A website dedicated to the world's denim industry, denimsandjeans.com, organised the two-day expo. KG Fabriks, an Indian denim maker, has joined the fair to gain international exposure, said K Srinivasa Raghavan, its assistant general manger. “We are working to
increase business with Bangladesh.”
HR Corporation, a unit of Aziz Group, that imports chemicals from Germany for local denim
makers, joined the fair to market its products, said Fazle Rabbi, its assistant executive for marketing. “We are also displaying an environment-friendly machine that washes jeans without water and chemicals,” said Rabbi. “We are focusing on green technology in the denim segment.”
This is a platform to showcase products and designs for this sector, said Asikul Hoque Khan,
marketing manager at Envoy Textiles, which exports denim to Sri Lanka, Turkey, Kenya, China
and Vietnam. Bangladeshi firms need around 30 million metres of denim a month; Envoy produces 3.6 million metres of denim a month out of its capacity of four million metres, he added.
Appreciating Bangladesh's growth in the apparel sector, Pankaj Saran, Indian high commissioner in Dhaka, said: “Bangladesh, today, is a serious player and can't be ignored.” The exhibition
is a shining example of Bangladesh's emergence as a global garment manufacturer and exporter, Saran added. The Indian envoy appreciated Bangladesh's progress in meeting the highest
standards in its products for the global consumers. Bangladesh is addressing three issues -workplace safety, eco-friendly products and building better infrastructure -- to grab more business, said Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association. Bangladesh has 28 green factories, he said. “We have gained a positive image through
the Alliance and the Accord.”
He urged the media to send a positive message that Bangladesh is the best in the global garment market. “I must say there is no need to go to the East or West for high quality garment.”
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Expressing satisfaction over positive responses from the participants, Islam said Bangladesh
has proved that all the factories are not substandard. Referring to the Rana Plaza building collapse, he said this is a unique example of how a country can re-emerge as a vibrant sector after
experiencing a disaster that tarnished its image in the global market. In the first such expo in
March, Saran had inaugurated the event and visited each of the stalls and interacted with the
participants. This edition of the expo is focusing on industry growth and luring in buyers to
Bangladesh for quality jeans and related apparel. “Bangladesh is the second largest denim apparel maker country in the world after China. Bangladesh has been introduced worldwide as a
denim and jeans maker,” said Sandeep Agarwal, founder of denimsandjeans.com. Bangladesh
exported about 74 million pieces of denim apparel to the US market in 2013 and around 140
million to Europe, according to denimsandjeans.com. The country was also the largest exporter
of men's jeans to Europe in 2013 with 89 million pieces compared to 65 million from China.
Denim apparel exports from Bangladesh to America surged 11.48 percent year-on-year in 2013
and to the EU by over 19.65 percent. Twenty-four companies from Bangladesh, India, Pakistan,
Sri Lanka, Germany, China and Brazil are taking part in the show.
News Source: http://www.thedailystar.net/business/global-denim-suppliers-eye-bangladesh-forexpansion-45849
Banks' CDR falls
below 70pc
The credit-deposit ratio (CDR) of all banks that came down again to below 70 per cent in the
last week of August indicates lower business activities in the country's banking sector, bankers
said. All banks' CDR came down to 69.91 per cent, as of August 28 last, from 70.42 per cent as
of July 24, 2014. It was 69.92 per cent on March 27 last, according to the central bank statistics.
"Higher deposit growth than that of credits influenced the overall credit-deposit ratio," a senior
official of a leading private commercial bank (PCB) explained. The Bangladesh Bank (BB) earlier set the safe limit of CDR at 85 per cent for conventional banks and at 90 per cent for Shariabased Islamic banks. The private banker also said the core business of banks witnessed a stagnated situation in the recent months due mainly to lower credit growth, particularly in private
sector. The overall growth in credits from the country's banking sector came down to 11.08 per
cent as of August 28 last from 11.74 per cent as of July 24, 2014 while the deposit growth fell to
14.48 per cent from 16.13 per cent. "Most of the entrepreneurs still maintain a 'go-slow policy'
for setting up new industries or expansion of their business operations due mainly to lack of
adequate infrastructural facilities," the PCB official observed.
He also said the investment situation is yet to improve at satisfactory level even after nine
months of the national elections, held on January 5. "Actually, we are now investing in trade
financing along with the risk-free government securities," the banker noted. Talking to the FE, a
senior official of the BB said the credit demand would rise in the coming months if the declining
trend of interest rates on lending, particularly for corporate entities, continues. "The credit
growth is still at a satisfactory level if we consider the foreign currency loans, taken by the corporate entities," the central banker said. Currently, outstanding total foreign currency loan stood
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at more than US$3.5 billion, he added. He also said outstanding deposit balance and credit are
increasing continuously in terms of volume but the deposit growth is comparatively higher than
that of credit. All banks' deposit balance rose to Tk 6,721.50 billion as of August 28 last from Tk
6655.44 billion as of July 24, 2014 while outstanding loan stood at Tk 4,906.29 billion from Tk
4,896.54 billion, the BB data showed. The BB earlier advised the banks to take necessary
measures for boosting disbursement of credits to the private sector in line with the current Monetary Policy Statement (MPS). The central bank has set the private sector credit growth target
at 16.5 per cent for the July-December period of the current fiscal year (FY) 2014-15.
News Source: http://www.thefinancialexpress-bd.com/2014/10/16/61347
Power outage, gas
shortage damage
rawhides and skins
Frequent power outages, shortage of gas supply and hot weather are taking its toll on rawhides
and skins of sacrificial animals, industry insiders said. According to them, around 15 per cent of
the rawhides have already been affected due to inadequate supply of power and gas. They also
fear that if the present problem persists, the extent of damage could reach 20-25 per cent due
to load-shedding for up to 6-8 hours while no gas is available. Due to hot weather and energy
shortage, smooth processing of rawhides is being hampered as within 12-14 hours, the processing has to be completed. Otherwise, raw hides will be completely damaged. According to
insiders, around 15 million pieces of hides and skins of sacrificial animals including cows, buffaloes, goats and sheep worth more than Tk 150 billion were collected by retail buyers during the
Eid-ul Azha. "Due to the damage this year, the leather industry's direct loss will be around 15
per cent of rawhides and skins worth Tk 10 billion", Belal Hossain, former chairman of the Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLLGFEA) told
the FE. He said uninterrupted supply of electricity and gas is needed for processing rawhides
and skins as these are perishable and cannot be stored for long without processing.
He said tanneries are being supplied with very limited electricity and gas as power suspension
remains for 6-7 hours there. This is taking its toll on rawhide and skin processing. He demanded
uninterrupted gas and power supply to the tanneries. He said during the Eid-ul Azha, tanneries
collected more than 80 per cent raw hides and skins which are the basic raw materials for leather industry to make leather garments, bags, footwear, ballets and gloves. Tipu Sultan, general
secretary of the Bangladesh Hide and Skin Merchants Association (BHSMA), said Eid-ul-Azha
is the peak season for leather industry but the sector is facing great problems in processing
rawhides and skins due to power and energy shortage. Shaheen Ahmed, chairman of the Bangladesh Tanners Association (BTA) said one worker can process more than 300 rawhides a day
but for power shortage, he can not go beyond 200. He said moreover, unskilled butchers damage more than 5-7 per cent of rawhides and skins every year. He said this year about 1.5 million cattle were sacrificed across the country. Almost 0.2 million rawhides are damaged just
because of the incompetence of butchers.
He said unskilled butchers this year have caused damage to the tune of Tk 2 billion. Each
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square foot of rawhide is priced at Tk 65-Tk 70. A leader of the BFLLGFEA said, at the same
time more than 10 per cent rawhides and skins have been smuggled to the neighbouring country through border areas. He said there are more than 1,000 people involved in rawhide smuggling to India. The Indian agents are aggressively buying rawhides from the local market. They
have been appointed before Eid to pay advance money.
News Source: http://www.thefinancialexpress-bd.com/2014/10/16/61304
PDB proposes
BERC to raise bulk
power tariff
State-owned Power Development Board (PDB) has submitted a proposal to the Bangladesh
Energy Regulatory Commission (BERC) seeking a hike in the bulk tariff of electricity, reports
UNB. According to official sources, the PDB has appealed to the regulator to raise the bulk
power tariff to Tk 5.51 per kilowatt hour (each unit) from the existing rate of Tk 4.70 per unit.
The proposal, sent recently to the BERC, also urged the watchdog body to give effect to the
proposed hike from January next year. It said that if the bulk power tariff is not raised, the government subsidy to the power sector will go up to Tk 70 billion (7000 crore). But once the bulk
power tariff is raised, the subsidy will come down to Tk 40 billion. Official sources said that the
PDB would have to incur a loss of Tk 1.85 per unit as the electricity is being sold to distribution
companies and other bulk consumers at Tk 4.70 per unit while the production cost is Tk 6.54
per unit. The BERC raised the power tariff by 6.96 per cent at the retail consumer level on
March 13 this year giving effect from March 1. BERC officials said after examining the proposal
of the PDB on bulk power tariff hike, the regulatory body will hold open discussion and public
hearing. The law dictates that such proposal for power tariff hike be resolved within 90 days
from its receipt. After assuming office, the Awami League government raised power tariff in retail and bulk on six occasions since 2009.
News Source: http://www.thefinancialexpress-bd.com/2014/10/16/61348
Thrust on Ins sector's role in easing
risks for banking
Bangladesh Bank (BB) Deputy Governor S K Sur Chowdhury emphasized Wednesday the role
of the insurance sector in mitigating risks and ensuring higher safety for the banking business,
as new financial crisis and challenges are emerging worldwide. "Though, these are new in
Bangladesh, insurance companies across the world are offering new and innovative products to
encounter the emerging financial crisis and challenges," he said while inaugurating a seminar.
Prime Insurance Company Limited (PICL) organised the seminar on 'Banking Business Protection and Insurance' at a city hotel. He said the insurance sector in Bangladesh has a long history of evolution, and at present the insurance companies have vast prosperity of business expansion. After introduction of BASEL-III, the banks have to insure Bankers Blanket Bond Policy
(BBB Policy) that provides protection against direct financial loss caused by various financial
crimes, which are not covered now, he added. The seminar started with the welcome speech of
PICL advisor Md. Ezhar Hossain, while managing director Mohammodi Khanam focused on
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importance of the programme in her speech. S K Sur Chowdhury and noted actor Ilias Kanchan launched the PICL-published Traffic Guide Book (second edition) on this occasion. The
Financial Express (FE) and Ekattor TV were the media partners of the programme. Three
papers were presented in the seminar. Simon Hogg, international broker of the UK-based
Tysers was the keynote speaker of the seminar on 'Bankers Blanket Bond Policy'. Executive
director of India-based J B Boda Reinsurance Brokers Pvt. Ltd Chandrakant R. Vaidya presented paper on 'Professional Indemnity and Computer Crime'. Besides, general manager of
General Insurance Corporation of India Parijat Dutta presented paper on 'Directors & Officers
Liability Insurance'. Chairman of Financial Excellence Ltd. Abu Naser Bukhtear Ahmed, head
of legal & compliance of Standard Chartered Bank Chowdhury MAQ Sarwar, and director general of Bangladesh Institute of Bank Management Dr. Toufic Ahmed Chowdhury moderated
the three sessions respectively. Simon Hogg said the BBB Policy will cover insurance losses
from employee infidelity, physical loss of property on premises and in transit, forgery and alteration of monetary instruments and other documents of value and computer, and cyber fraud
as well as fraudulent electronic transfer.
He said all these risks are modern-day risks, and the banks must be ready to mitigate these.
"Crime is a reality, and criminals ignore laws. So we have to prepare for that." He said every
financial institution is exposed to the risk of criminal activities, both from within the organisation and from outside. Losses can have a devastating impact on a financial institution's annual
report. "Insurance offers financial institutions high-level protection against the effects of potentially catastrophic criminal loss, specifically for the risks of employee dishonesty, forgery,
cyber liability and computer crime," he added. Chandrakant R. Vaidya in his paper mentioned
that professional indemnity insurance provides protection against legal liability to third parties.
"These liabilities can result from the negligent acts, errors or omissions, committed by an organisation's officers or employees." He said computer crime insurance covers loss, arising
from fraudulent input, modification or destruction of electronic data in the bank's computer
system, electronic fund transfer system or customer communication system. PICL chairman
Ferdous Amin said it is very important for the financial institutions to take the proper risk management strategy through insurance policies to safeguard their property under the insurance
coverage. At the same time it is the duty of the banks to protect depositors' money and bank
properties.
"Insurance coverage under the policies will cover any forgery or fraudulency by employees/
third parties, cyber crime, professional indemnity of the bankers and directors, and employers'
liability." "All insurance coverage will come under one umbrella. Banks need not take coverage separately for cash-in-transit, cash-in-counter, cash-in-safe, and cash-in-locker policy
etc," he further said. PICL MD Mohammodi Khanam said Prime Insurance Company Limited
has made its foot prints in the insurance industry to provide economic guarantee to the people
of Bangladesh. PICL will be taking the risks on behalf of its clients to provide them safety and
security. The company is the pioneer in launching many new products, such as - Shipbuilders
Liability Coverage, Hajj & Umrah Policy and Health Plan Insurance Coverage, she added.
News Source: http://www.thefinancialexpress-bd.com/2014/10/16/61361
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Economy
Consumers in Bangladesh have a largely
Consumer confidence jumps
optimistic economic outlook despite the continued uncertainty in the global economy,
MasterCard said in a report. The country
recorded the biggest improvement among
the 27 countries from the Asia Pacific, Middle
East and Africa region covered in the study.
In Bangladesh, consumer confidence jumped
a whopping 25.9 points in the first half of
2014 to 66.4 points from the previous six
months, according to the MasterCard Worldwide Index of Consumer Confidence. The
findings of the study, released on Tuesday,
were the second acknowledgement of the
government's sound economic management
in the last one month. The MasterCard report
mirrors Washington-based research organisation Pew Research Centre's findings released on September 9 that showed 71 percent of the Bangladeshis are happy with the
economic health of the country. MasterCard,
a New-York-based technology company in
global payments, first included Bangladesh in its survey in the second half of 2012, when the
country's index points were 61.7. It however came down to 22.2 points in the first half of 2013.
The index is based on a survey conducted between July and August 2014 on 12,574 respondents aged 18-64.
The respondents were asked to give a six-month outlook on five economic factors: the economy, stockmarket, employment prospects, regular income prospects and their quality of life.
The index is calculated with zero as the most pessimistic, 100 the most optimistic and 50 as
neutral. The survey showed that Asia Pacific largely remains optimistic on their economic outlook with the exception of Australia. The region recorded the highest consumer confidence
score in more than 10 years, of 68.3 index points. Compared to six months ago, twelve out of
the 16 Asia Pacific markets surveyed recorded both positive sentiment and experienced either
some or significant improvement in consumer confidence. Only Australia and South Korea
were the only markets out of the 16 to remain below the 50 point neutral mark. Taiwan's consumer confidence also grew by a large percentage, up 24.6 points (from 33 points in H2 2013
to 57.6 points in H1 2014). Other significant, double-digit improvements in consumer
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confidence were recorded by Thailand, which went up 14.6 points, Singapore 13.2, Indonesia
11.3 and New Zealand 10.8. Myanmar, Indonesia and India recorded the Asia Pacific region's
highest consumer confidence scores of 94.1 points, 94.0 points and 89.1 points respectively.
Meanwhile, Australia recorded the largest dip in consumer confidence, down to 37.2 points in
the first half of 2014 from 49.2 in the second half of 2013. “Markets like Bangladesh and Taiwan are showing strong increases in consumer sentiment, bolstered by key influences such
as a perception of better employment prospects and of an improving economy,” said Pierre
Burret, head of delivery, quality and resource management for Europe, Asia Pacific, Middle
East and Africa, MasterCard Advisors. “The region's overall optimism for the future is an encouraging sign, and demonstrates the importance of continuing to innovate with partners in
emerging markets like Myanmar, India and Indonesia, in efforts to drive economic growth.”
This is the 43rd survey of Consumer Confidence conducted since 1993.
News Source: http://www.thedailystar.net/business/consumer-confidence-jumps-45847
People are deprived of the benefit of a recurrent fall
Oil price fall on
world market cuts
import cost
in the oil prices on the international market as domestic rates of the fuels are not readjusted in keeping with the cut-down import costs, observers
said. The country has to make lower import payments and, thus, spend less as subsidies on account
of marketing the energy products for the price slide.
Brent, the international oil market, sank to US$88 a barrel--a level seen in December 2010.
According to international media, fear about weakening global growth is the main reason behind the four-year low. Energy ministry sources told the FE that they have no immediate plans
for adjusting the domestic prices with the international market rates-unlike the situation in other countries. Many economies, including the neighbouring India, have readjusted their fuel
prices at retail level. Now the gap between the domestic and the international market prices
has narrowed down, resulting in lower marketing cost at home. According to International
Monetary Fund (IMF) conditionalities applied for Bangladesh, the difference should be Tk 10
per litre until June, according to the finance division. After June, the gap has been much lower
following the international market fall by 20 per cent since. Mosleh Uddin, director (operations
and planning) at Bangladesh Petroleum Corporation (BPC), told the FE that local buyers have
been paying much as per the older international rates. BPC, the country's lone oil procuring
entity, used to purchase the petroleum fuels at a cost ranging between $105 and $107 a barrel few months back.
The petroleum corporation last opened letter of credit at $97 a barrel a few weeks back-much
lower than the June rate of $115. Mr Mosleh Uddin said he was not in a position to comment
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on the matter of higher retail rates as it is linked to government policies. "This is not my cup of
tea. I want to say that this sharp fall will help trim the import bills down," he said. According to
a rough estimate, if the fall sustained at least a year, Bangladesh will save at least $50-$60
million. Bangladesh imports more than 5.0 million tonnes of fuel oils, including 1.3 million
tonnes of crude for the country's lone refinery-Eastern Refinery Ltd--in Chittagong. More than
400,000 tonnes of oils, including 100,000 crude, arrive in the port each month. Bangladesh
mainly procures gas oil or diesel followed by furnace oil to feed expensive power plants. The
International Energy Agency, the wealthy nations' energy watchdog, says global demand for
oil is still weighed heavily by weak economic growth. And this, together with a supply glut, is
pushing down prices. The price indices may fall further. Eunusur Rahman, chairman of the
BPC, told the FE that it be good for Bangladesh if it cashes in on the falling prices as the prices are too low. But, he said, this is not possible at this moment as the BPC has cash crisis
and limited storage capacity.
BPC's director (operations and planning) Mr Mosleh Uddin said Bangladesh cannot procure
beyond its annual target. International Islamic Trade Finance Corporation (ITFC), an autonomous entity of the Islamic Development Bank Group, funds both cash and deferred payments
for procurement of fuel oils. "Actually, we cannot raise the volume of fuel oils avoiding the
ITFC to cash in on the falling prices," Mr Mosleh Uddin said. He also said BPC has limited
storage capacity that will shoot up to 1.0 million tonnes at the end of December 2014. A senior
official at the BPC's finance department said Bangladesh's subsidy cost will fall for the falling
prices. The government has earmarked for the current fiscal year a total of Tk 260.53 billion
for subsidy. Of the amount, Tk 24 billion will go to the BPC. And Bangladesh Power Development Board will get Tk 70 billion.
News Source: http://www.thefinancialexpress-bd.com/2014/10/16/61356
Green tax tangled
in complexities
Complexities impede enforcing the newly introduced 'Green Tax' and thereby hold back government drive to penalise non-compliant industries which are polluting the environment. The
Department of Environment (DoE) and the National Board of Revenue (NBR) have yet to prepare themselves to list out the polluting industries and enforce the tax, official sources said.
The first quarter of the current fiscal year (FY) has gone by amid such procrastination. In the
budget for FY 2014-15, the government imposed one-percent surcharge on the prices of the
goods produced by polluting factories. The government is losing the non-tax revenue due to
the lingering process although the Green Tax was scheduled to come into force from July 1,
2014. Officials said the preparedness of the government was not sufficient before levying the
tax. The DoE compiled the names of companies and industries that have faced penal action
for being non-compliant on environment issues. The industries include tanneries, washing and
dyeing plants of garments, brick fields, auto-rice mills, chemical factories, ship- breaking etc.
The DoE selected the industries division-wise. However, the revenue board could not proceed
on a list of some 2,500 industries, sent by DoE, as the department said the list had been
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prepared hurriedly and needed further review, the officials said. A senior NBR official said the
authorities have found some complexities over imposition of the tax as the law mentioned
'polluting industry' for green tax, not any company or organisation. "Brickfields, polluting hospitals and diagnostic centres and some other service sectors will be excluded initially from the
list of surcharge," he said. The VAT wing has delayed its move to issue a gazette notification
with the names of the companies after it found the major problems. "Initially, the NBR would
start with the polluting industries and later expand the net of green tax to companies with necessary amendments," the official said. The government is losing revenue from green tax since
July 1, 2014. The tax authority would expedite the process, he said. To enforce the tax, the
NBR will have to issue a gazette with the names of the polluting industries after the DoE provides a fresh list. The NBR official also found problem in the process as it will have to remove
names of companies frequently after being compliant. The names of the industries would be
updated after a certain period of time by excluding those which become complaint and including new non-complaints. An NBR official, preferring anonymity, said there is also concern over
tarnishing image of the export-oriented industries after publishing the list of non-compliant
industries. Many of the exporters, unofficially, requested the government to be cautious over
selecting the names of the industries and consider sustainability of their businesses.
Officials said the DoE listed the industries that had faced penal action so far for violating the
Environment Conservation Act 1995. The industries have polluted environment by not installing Effluent Treatment Plant (ETP) and other ways. The green tax will be imposed under
the Environment Protection Surcharge Collection Rules 2014 issued by the VAT wing earlier.
According to the law, the VAT wing will collect the 1.0 percent surcharge-non-tax revenuefrom the industries after issuance of a gazette notification. The amount of surcharge would be
spent on protection of the environment. The surcharges would be imposed on the revenue
board-approved prices of the manufactured products. The tax authority would consider the
price-base under which they are collecting VAT. VAT officials will impose punitive measures
and penal taxes in case of non-compliance with the rules by the industries. Talking to the FE
Wednesday, Md. Nojibur Rahman, Secretary of the Ministry of Environment and Forests
(MoEF), said the department concerned is reviewing the law to enforce the green tax. "We
have initiated move to impose the tax. NBR and DOE are working on it. The process is taking
some time," he said.
News Source: http://www.thefinancialexpress-bd.com/2014/10/16/61358
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Bangladesh's trade deficit with India has swelled
Trade gap with India widens to $5.58
billion
in recent years with import continuously rising
while export hitting rock bottom for barriers created on the neighbouring market. The gap
amounted to US$5.579 billion in the last fiscal
year. As per official data, the year-on-year increase in the bilateral trade deficit, against
Bangladesh, was 33.58 per cent or USD 1.402
billion in the FY 2013-14. The data, released by the Export Promotion Bureau (EPB) and
Bangladesh Bank, show that the country's trade with India marked incremental imbalances in
the last one decade. In the last six years, the deficit has more than doubled--from $1.978 billion in 2006-07 to $5.579 billion in 2013-14. According to Bangladesh Bank statistics, the
country imported goods worth about US$ 6.036 billion from India in the last fiscal as against
total exports worth $456.633 million. It leaves an import-export gap amounting to $5.579 billion in favour of the mighty neighbour. In the previous fiscal, the gap was US$ 4.176 billion. In
the just-concluded fiscal year, Bangladesh exported goods worth about US$ 456.633 million
to India as against US$ 563.960 million in the previous fiscal, registering a negative growth of
19.03 per cent.
On the other hand, import from India increased by 27.34 percent over the previous fiscal. The
import amount was about $ 6.036 billion in the last fiscal as against $ 4.740 billion in the previous fiscal. India emerged as one of the largest sources of raw materials for Bangladeshi manufacturing industries, resulting in the import surge. At the same time, Bangladeshi exports hit
various non-tariff barriers to enter the Indian market. This disparity contributes to the widening
of the trade deficit, said an exporter. Analysts and businessmen attributed the imbalance
mainly to appreciation of the local currency against the Indian rupee and various non-tariff
barriers (NTBs). The NTBs include testing and certification and weak border infrastructure.
Some of the exporters also blamed "diplomatic failure" for the uneven two-way trade. Even
after allowing duty-free access of Bangladeshi-made apparels to India, Bangladesh could not
make any significant growth in export mainly because of the non-tariff barriers and government's lack of initiative in negotiation with the counterpart on different trade-related issues.
Business leaders and experts are continuously demanding that India remove non-tariff and
para-tariff barriers to help Bangladesh in increasing exports to the country to reduce the galloping trade gap between the two next-door neighbours. Such issues were also discussed
threadbare at a recent business meeting titled 'Bangladesh-India business conclave' in Dhaka.
News Source: http://www.thefinancialexpress-bd.com/2014/10/16/61346
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Company
Rupali Bank capital
at stake for lending
beyond capacity
Rupali Bank runs a capital risk through providing credit beyond its absorbing capacity, according to a Bangladesh Bank report. The bank has already been suffering from capital shortfall of
about Tk217 crore as in June this year from its surplus capital of about Tk20 crore in December last. Orion Power khulna owed Tk1,706 crore to Rupali Bank which was 70% more than
the bank’s capital of Tk1,008 crore at the end of June this year. The capital of the bank will
become negative if Orion Power crashes at any reason. The client was very risky for the lender, but the central bank executives have been asked to treat the case as risk-free since there
is no certain loan limit specified for financing the power sector, said a senior executive of
Bangladesh Bank. “They have been provided with the loan considering their business performance,” Rupali Bank Managing Director Farid Uddin told the Dhaka Tribune. According to the
central bank report, the loan status of Orion Power Khulna, a client of local office in Dhaka of
Rupali Bank, was Tk916.62 crore against the approved loan limit of Tk1060.42 crore as of
June this year. The loan status was already beyond the single borrower exposure limit of
Tk151.18 crore. The company owed an excess loan of Tk765.44 crore to the Rupali Bank
while the central bank loan department did not provide any NOC for the Rupali Bank.
Besides, the client further proposed for a loan of Tk945.87 crore to the bank and the board of
directors of Rupali Bank approved the loan proposal at its 944th meeting. As a result the total
loan status against the client stood at Tk1,862.49 crore which is Tk1,711.31 crore more than
the limit. Of the total loan, the funded amount was Tk1,705.17 crore. According to section 26
(kha) of the amended bank company act 2013, all kinds of loan facilities given to an individual
or any group will not exceed 25% of the bank’s capital. The highest loan limit for the Orion
Power was Tk252 crore in accordance with the rule. But the company has been allowed to
hold an excess loan of Tk1,453 crore from the certain limit which is a violation of the law. The
report said it was not clear to the central bank authorities why Rupali Bank issued the big
chunk of loans without going through a formal syndication process. The Rupali Bank board
approved loan to nine more institutions, violating the single borrower exposure limit from January to June this year. Bangladesh Bank has found huge irregularities in loan approval process
of the bank board and marked the bank as more risky in its report. The classified loan ratio of
the bank, however, dropped to 15.60% in June this year from 17.48% in December last year
due to regularisation of huge classified loan through rescheduling process. Among the stateowned banks, Rupali Bank rescheduled the highest amount of loan of Tk3,137 crore from
December last year to June this year through taking advantages of relaxed policy given by the
Bangladesh Bank.
News Source: http://www.dhakatribune.com/banks/2014/oct/16/rupali-bank-capital-stakelending-beyond-capacity
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Daily News Recap
BTRC rejects device locking proposal of GP, Banglalink
The Bangladesh Telecommunication Regulatory Commission has recently turned down a proposal of mobile phone operators Grameenphone and Banglalink to introduce device locking
system in the mobile handsets. The telecom regulator, however, allowed the mobile companies to put their logos along with the manufacturers’ logos on the handsets under agreement
with the importers or manufacturers. BTRC officials said the two mobile phone operators had
recently sought regulator’s permission to offer high-priced handsets along with packages of
the respective companies with lower prices where users would be allowed to pay the amount
in instalment.
‘But those handsets will only run by the SIM cards of the respective operators as the operators
will use device locking technology,’ a senior BTRC official told New Age on Wednesday. ‘But
we didn’t approve the proposal as we think this will affect the small handset importers who
import low-priced handsets. If we allow this, then the mobile phone operators will only bring
high-priced sets to attract customers,’ Through this the mobile phone companies want to bring
more 3G and long-term evaluation technology-enabled handsets to the market at cheaper
prices to increase the penetration of mobile internet service, he said. He, however, said that in
developed countries such device locking was a standard practice.
Another BTRC official said the commission approved that the mobile phone companies could
use their logos in the handsets if they had agreement with the importers. ‘This decision came
following a request of Robi to use its logo on handset but the commission decided that all operators will be allowed the facility under partnership agreement,’ he said. A senior official of
GP told New Age on Tuesday that device locking would have helped increase the internet
penetration with quality handsets. ‘The BTRC denied giving approval considering the interest
of small importers, but it is the right of the consumers to have such a benefit. By prioritising
the importers’ interest the BTRC is hampering the interest of the consumers,’ he said.
News Source: http://newagebd.net/57849/btrc-rejects-device-locking-proposal-of-gpbanglalink/#sthash.peZo0GLX.dpbs
12
Daily News Recap
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