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Tax Receipts in 9 Months: Tk 50,500cr short of target
19 May 2019
Source: The Daily Star

Revenue collection is poised to fall short of target by a big margin this fiscal year, with receipts growing the lowest in five years in the first nine months due to sluggish collection of customs tariff and value-added tax.

Between July last year and March this year, the National Board of Revenue managed about Tk 153,419 crore in collections, up 7 percent from a year earlier, as per its provisional data.

The amount missed the periodic target by nearly Tk 50,500 crore.

The government has assigned the NBR to collect a total of Tk 296,201 crore in 2018-19 and the revenue authorities will have to collect more than Tk 142,000 crore in the remaining three months to meet the target -- an unfeasible option.

In an analysis last month, the Centre for Policy Dialogue, citing finance ministry data, said the total revenue shortfall, comprising both tax and non-tax revenue, might reach about Tk 85,000 crore towards the end of the fiscal year if the current trend in revenue mobilisation continues.

Even if the revenue collector is able to achieve the highest annual growth recorded in the last ten years, the revenue shortfall is going to be Tk 72,000 crore, it said.

“The revenue mobilisation scenario in 2018-19 appears to be even more dismal,” said the think-tank.

Officials blamed the VAT waiver on various goods and services -- including the exemption of VAT, supplementary duty and advance trade VAT on the import of liquefied natural gas -- and the reduction of the indirect tax on internet usage for the low collections.

As per NBR estimates, the two sources would cause a revenue loss of Tk 12,000 crore. During the nine-month period, revenue collectors logged in Tk 56,438 crore as VAT, up 6.52 percent year-on-year.

Collection of customs tariff, mainly from imports, grew only 1 percent, reflecting the slowing trend of import. 

Imports grew 5.13 percent to $45.79 billion in the first nine months, according to data from the Bangladesh Bank.

Despite the slow growth of collection of indirect tax, direct tax receipts increased 12 percent year-on-year to Tk 46,317 crore during the period.

An official of the NBR said the results of various tax measures that were taken in the budget are yet to come through in full.

The interest on bank deposits is one of the main sources of tax. But the low growth in deposits has affected collection from this area too, he added.

Defaulters have the last laugh
19 May 2019
Source: The Daily Star

Instantly is doing the same thing over and over again and expecting different results, the influential physicist Albert Einstein once said.

And this quote comes to mind when one glances through the Bangladesh Bank’s latest policy for defaulters.

Issued on May 16, the notice is an extended version of the generosity it had handed out to large loan defaulters in 2015 -- which yielded no results.

Eleven large business groups got their loans of nearly Tk 15,000 crore restructured then at discounted interest rates (cost of fund plus one percent) and longer repayment period. For loans amounting to more than Tk 1,000 crore, the down payment was just 1 percent.

After a year’s grace period the loans were due in September 2016. But most of them failed to pay even their first instalment and half of them even applied to get their loans restructured -- again

Despite this experience, the BB came up with bigger and better offers for defaulters.

Until August 16, defaulters have the opportunity to reschedule their loans by giving only 2 percent down payment of their outstanding amount -- down from 10 percent to 50 percent in the existing policy.

They will get 10 years to pay back their loans, including a year’s grace period.

The interest rate would be the bank’s cost of fund plus 3 percent but in no way can it exceed 9 percent.

What is more incredulous is that banks can waive the interest accrued on defaulted loans -- as if the defaulters’ transgressions have no consequence.

Not only that, the defaulters can get fresh loans.

And, this set of instructions comes after the central bank bended a couple more rules in the past one month in favour of defaulters.

Earlier on April 22, the central bank relaxed the rules for loan classification.

Banks will now treat term loans as sub-standard if no instalments were made for nine straight months, up from three months at present.

The term loans will come with a six-month grace period, meaning non-payment of instalments, which tend to be monthly or quarterly, for six months would not land the accounts in the overdue category.

Previously, skipping one instalment would send the account to the overdue territory, the repercussion of which is that the borrowers would face difficulty in getting loans from another bank.

This was followed by relaxation of the loan write-off policy.

Repetitive rescheduling of loans without analysing the root causes of default would not yield any benefit, said analysts.

At the end of last year, default loans in the banking sector stood at 10.33 percent of all outstanding loans. And if the rescheduled and written-off loans are taken into account, the amount would be about 20 percent, according to industry insiders.

Bafflingly, the government has not come up with any measures to punish the wilful defaulters and improve the governance system in banks.

Even the men who led the looting of state banks, particularly BASIC Bank, were not brought to the book.

More strikingly, the present government that took power in January for the third consecutive term has been working to show the default loans to be lower than what they are.

“Rescheduling loans of habitual defaulters at 9 percent or less is an incentive for them. Other borrowers who pay regularly will also get encouraged not to pay back banks,” said a managing director of a private bank.

However, he doubts whether the banks would be able to reschedule the loans as per the BB’s latest notice given the tight liquidity situation.

Banks are now facing severe liquidity crisis and around a dozen banks have been hunting deposits at double digit interest rate.

The interest rate on lending rates hover between 12 to 16 percent depending on the types of loans and clients.

“We cannot charge a defaulter less than our cost of funds,” said another bank’s chief.

Plus, allowing such lengthy grace periods for term loans will lead to build-up of overdue loans and the liquidity scenario will be tightened further.

“This is a very sad move to save habitual defaulters,” he added.

The malaise of default loans is not just limited to Bangladesh. Though the symptom, diagnosis and prescription may vary from country to country, the damage caused to the economy by default loans is similar.

A rise in default loans tightens banks’ liquidity, eats up profitability, increases cost of funds, reduces investment capacity and disturbs the transmission mechanism of monetary policy and overall macroeconomic stability.

Different studies show default loans can also lead to banking and financial crisis.

So, how did other countries manage their default loan problem to avoid any adverse effect on the economy?

In 1998, both Indonesia and Thailand had default loan ratios of upwards of 40 percent, which came down to only 3 percent in 2016.

Vietnam is another example that brought down its default loan ratio to only 2.34 percent in 2017 from 17.2 percent five years earlier. South Korea also faced the menace, but tackled the situation deftly.

The trick most used was to form an asset management company (AMC) with government funds. The AMCs’ task was to manage the distressed assets to clean up the banks.

Among others, special laws were enacted to empower AMCs such that they could acquire and dispose of default loans faster. They also restructured troubled banks and strengthened measures to protect depositors.

China though went one step further, enforcing wholesale austerity on the part of defaulters.

It barred nearly 10 million loan defaulters from travelling by plane, purchasing bullet train tickets, staying at luxury hotels, enrolling their children at expensive schools, applying for fresh loans and credit cards or even from getting promotions at work.

The Chinese government took the initiatives after its default loans hit a 10-year high of just 1.89 percent at the end of last year, after quadrupling in four years.

Analysts and bankers said forming an AMC like in the Southeast Asian nations could be the best option to deal with Bangladesh’s default loan situation before it gets worse. 

Apparel export to US thrives on trade war
19 May 2019
Source: The Daily Star

Apparel exports to the US, Bangladesh’s single largest export destination, jumped 15.57 percent to $1.63 billion in the first three months of the year, which the exporters and experts attributed to the ongoing trade war between the US and China.

Apparel was not in the list of the items subjected to US President Donald Trump’s retaliatory 25 percent duty last year, but in the updated list that came out recently garment was included.

Garment shipment from Bangladesh to the US has been increasing over the last few months because of shifting of work orders from China to Bangladesh and other garment manufacturing countries, said MA Jabbar, managing director of DBL Group, a leading local garment exporter.

“Even the day before yesterday a major American retailer came to place a bulk quantity of work orders in my factory.”

Previously, the company sourced apparel  products from China.

The entrepreneur is hopeful of nurturing a longstanding relationship with his new American buyer.

Echoing Jabbar, Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said no retailer wants to do business in uncertainty.

“The rising export to the US means we have started to get the benefits of the trade war between the US and China.”

A 25 percent tariff for low-end garment items is too steep for retailers.

“So, we need to improve our capacity as the buyers are starting to come to Bangladesh to place increased volume of work orders,” he added.

If the new American buyers leave satisfied it will be a start of a long-term relationship as they will not shift the work orders soon to other destinations.

“If we can catch even 2 percent of Chinese work orders, it would be a very big volume for us,” Mansur said, adding that China may lose 5 to 10 percent of its work orders due to the trade war.

However, the shifting of work orders from China to other destinations is not a source of major concern for the country as it is hankering to shift its manufacturing base from apparel to technological items.

Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), acknowledged the recent spike in work orders.

“We need to optimise our capacities, not enhance them. And in case of enhancement, we must carefully study all the possible options of value addition and product diversification. Stress should be on efficiency,” she added.

US-China trade war could be risk for world economic outlook: Lagarde
19 May 2019
Source: The Daily Star

The trade war between the United States and China could be a risk to the world economic outlook if it is not resolved, International Monetary Fund Managing Director Christine Lagarde told Reuters on Friday during a visit to Uzbekistan.

“Obviously, the downside risk that we have is continued trade tensions between the United States and China,” Lagarde said, referring to the IMF’s world economic outlook.

“And if these tensions are not resolved, that clearly is a risk going forward.”  The IMF last month cut its growth forecast for 2019 to 3.3 percent, down from the 3.5 percent it had previously predicted.

It warned at the time that growth could slow further due to trade tensions and a potentially disorderly British exit from the European Union.

“But we expect that at the end of 2019 and in 2020 it will bounce back,” Lagarde said of the world economic outlook on Friday.

On Friday Beijing suggested a resumption of talks between the world’s two largest economies would be meaningless unless Washington changes course.

NBR revenue receipts Tk 50,425cr short of July-March target
19 May 2019
Source: The New Age

Deficit in revenue earnings by National Board of Revenue stood at Tk 50,425 crore in the first nine months (July-March) of the current fiscal year 2018-2019 due to slow growth in overall revenue collection in the period compared with that of the same period of the previous last fiscal year.
Income tax, value-added tax and customs wings of NBR managed to collect only Tk 1,53,419 crore in July-March of the current FY 2019 against the target of Tk 2,03,844 crore set for the period, according to provisional data of NBR. 
Revenue collection grew only by 7.11 per cent in the period, the poorest growth in recent years, against the same period of last FY 2017 when NBR had collected Tk 1,43,236 crore, the data showed.
Revenue earnings grew on an average 14 per cent in last five years. 
NBR will have to collect Tk 1,42,782 crore, which is 51.8 per cent of total collection target of Tk 2,96,201 crore set for the entire fiscal year, in the last three months of the fiscal year. 
According to NBR data, VAT wing of NBR collected the highest 60,118 crore followed by customs duty at Tk 46,930 crore and income tax at Tk 46,317 crore in July-March of FY 2019.
Income tax collection, however, grew by highest 12.06 per cent while VAT collection by 6.52 per cent and customs duty collection grew only by 1 per cent in the period. 
VAT, customs duty and income tax collection was Tk 56,438 crore, Tk 46,467 crore and Tk 41,330 crore respectively in July-March of FY18.
Government has set VAT collection target at highest Tk 1.10 lakh crore followed by income tax collection target at Tk 1,00,201 crore and customs duty at Tk 84,000 crore for FY19.
The government, however, is likely to cut the revenue collection target for the ongoing fiscal year following sluggish trend in revenue mobilisation and huge and growing deficit between the target and collection. 
NBR requested the government to slash the target by Tk 50,000 crore while finance ministry hinted that the target would be cut down only by Tk 16,000 crore. 
The shortfall was Tk 41,139 crore in the first eight months (July-February), Tk  34,425 crore in seven months (July-January) and Tk 29,000 crore in six months or July-December of the fiscal year. 
NBR chairman Md Mosharraf Hossain Bhuiyan last week during a meeting between NBR and finance minister said that revenue collection always remained sluggish in the first three quarter of any fiscal year. 
Revenue collection gets pace in last two-three months, particularly May and June when taxpayers pay advance income tax, the government disburses bills for development works and traders settle more import payments, he said.
Officials, however, said that NBR would obviously fail to achieve the target as the target itself a very high ambitious.
NBR also offered huge tax exemption in the current fiscal year while import of commercial products and domestic consumption grew slow in the period, they said. 
They said that the government’s estimated GDP growth and inflation was not reflected in revenue mobilisation due to unknown reasons.

1,120 Accord-listed RMG units behind schedule in remediation
19 May 2019
Source: The Daily Star

Some 1,120 out of 1,610 Accord-listed readymade garment factories remained behind the schedule in remediating safety hazards, according to a quarterly aggregate report of Accord on Fire and Building Safety in Bangladesh published on Friday.
The report showed that the factories inspected under the Accord, a platform of European buyers and retailers, made overall 90 per cent progress in fixing fire, electrical and structural safety faults.
As per the statistics of the platform, a total of 231 factories completed 100 per cent remediation while 135 units loosed their business as they failed to implement workplace safety measures provided by the Accord.
The buyers’ platform claimed that about 50 per cent of factories still lacked adequate fire detection and alarm system.
According to the report, Accord found inadequate fire detection and alarm system in 1,294 factories during the initial inspection and 621 units address the issues up to April this year.
The report said that non-compliant exit stair openings were identified in 1,233 factories during initial inspection and the problem still outstanding in 337 units. 
The platform also claimed that the findings of discrepancy in building plan and drawings still remained in nearly 22 per cent factories while lack of fire separation in hazardous areas in 16 per cent factories.
Currently, the total Accord covered RMG factories are 1,674, 0f which 1,610 are inspected and 64 others are recently listed for inspection, the report said.
It also showed that out of 1,674 factories, 1,403 are active 59 factories are inactive and 212 factories are no-brand.
Accord has so far 274 factories handed over to the government, of them 114 factories were relocated and 109 were closed, the report showed.
It said that to support factories, Accord arranged remediation fund and a total of 141 remediation finance requests had so far been received from the factories, of which 52 were resolved.
The Accord steering committee also agreed to develop a factory remediation fund to support Accord factories that no longer have any Accord signatory companies as customers and received 31 applications, the report said.
After the Rana Plaza building collapse on April 24, 2013, that killed more than 1,100 people, mostly garments workers, EU retailers formed the Accord undertaking a five-year plan, which set timeframes and accountability for inspections and training and workers empowerment programmes.
At the same time, North American brands and retailers formed Alliance for Bangladesh Worker Safety and the platform inspected some 700 factories.
The five-year timeframe of Accord will end on May 31, 2018 and the platform which is pressing the government to allow its activities for three more years in Bangladesh.
The issue remained sub judice.
On the other hand Alliance left Bangladesh on December 31, 2018 year after the ending of its tenure.

India, Poland become new billion-dollar export markets for Bangladesh
19 May 2019
Source: The New Age

Bangladesh has achieved two new billion-dollar export markets in the current 2018-19 financial year in addition to the existing nine such markets. 
The export earnings from India and Poland topped one billion US dollars in the first 10 months of the FY 19 because of the extraordinary performance of the country’s apparel sector. 
The export income from India in the July-April period of the FY 19 totalled $1.07 billion, 52.98 per cent higher from $701.56 million posted in the same period of the FY 18, while that from Poland in the period grew 29.80 per cent to $1.02 billion from $787.91million, according to Export Promotion Bureau data.
According to EPB statistics, Bangladesh’s export to India in the 2017-18 financial year fetched $873.27 million while the earnings from Poland stood at $965.22 million in the period. 
The country’s hitherto billion-dollar markets were: the United States, Germany, the United Kingdom, Canada, Spain, France, Italy, the Netherlands and Japan.
Along with Bangladesh’s exports to Japan, its exports to Belgium had also reached the billion-dollar mark in the FY 16 but later as Bangladesh’s export growth to that country went down it slipped from the position.
Exporters and experts said that it was a good sign that Bangladesh’s exports to India and Poland exceeded one billion dollars, adding that the country had the opportunity to export goods worth billion dollars or more to more countries in coming days.
‘Our business ties with India have been strengthened in the last few years and the export earnings from that country have significantly increased. We have more scope to grow in the market,’ Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association, told New Age on Thursday.
He said that Bangladesh’s readymade garment export to India increased significantly as the local demand of that country increased and many global retailers opened their outlets in India.
‘If the non-tariff barriers are removed, Bangladesh’s export to India will grow more,’ Fazlul said.
He also said that it was encouraging that Bangladesh’s share had increased in Poland’s market, which was earlier dominated by Turkey and China.
Some of Bangladesh’s apparel products go to Germany and Russia through Poland, which is itself a strong economy to consume a significant quantity of fashion items from Bangladesh, Fazlul Hoque said.
‘It’s a positive thing for Bangladesh that the export earnings from India and Poland topped one billion dollars in the first 10 months of the current financial year but we have scope to increase our exports to one billion dollars or beyond in many other non-traditional market,’ Khondoker Golam Moazzem, research director of the Centre for Policy Dialogue, said.
Although, Bangladesh’s exports have topped one billion dollars in both India and Poland, there are some differences in the two markets. 
There are huge opportunities for Bangladesh to export non-traditional products to India and policy makers and exporters should take that advantage to export non-RMG products to that market, 
he said.
Some other new destinations, including China and Russia, could also be billion-dollar markets for Bangladesh and the government and exporters should devise policies to gain greater shares in those markets, Moazzem said. 
EPB data show that the export earnings from the United States, the largest export market for Bangladesh, in the July-April period of the FY 19 grew by 16.17 per cent to $5.71 billion from $4.92 billion in the same period of the FY 18.
The country’s exports to Germany, the second largest destination for its goods, grew by 7.10 per cent to $5.26 billion in the July-April period of the current fiscal year from $4.91 billion in the same period of the previous fiscal year.
The income from the exports to the United Kingdom, the third largest export market for Bangladesh, grew by 3.77 per cent to $3.50 billion in the period.
The exports to Japan in the July-April of the ongoing fiscal year went up by 22.57 per cent to $1.17 billion from $956.03 million in the corresponding period of the earlier fiscal 
year.
The export revenue from China in the first 10 months of this fiscal year increased by 26.14 per cent to $709.06 million from $562.11 million in the same period of the last fiscal year.

Stocks drop for second week on liquidity crisis
19 May 2019
Source: The New Age

Dhaka stocks in the past week fell for the second week with poor turnover as investors remained worried about the liquidity shortage in the financial market.
DSEX, the key index of Dhaka Stock Exchange, shed 0.85 per cent, or 45.05 points, over the week to close at 5,230.79 points on Thursday, the last trading session of the week after losing 10.92 points in the previous week.
The core index lost 720 points in the last 16 weeks with just one week of gains.
The market witnessed fall in four trading sessions out of five in the week as investors continued cautious share sales amid concern over the liquidity crisis in the financial sectors, market operators said.
They said that the liquidity crisis was getting worse day by day as the banks, which were plagued with scams and huge bad loans, were struggling to get enough funds from the depositors. 
The crisis also affected the capital market.
The government’s initiatives to revive the banking sector went in vain as the banks failed to recover the bad loans from the large loan defaulters. 
A huge amount of funds flow to the national savings certificates as they provide lucrative interest and security. 
Investors also took cautious stance as the month of Ramadan began and ahead of the national budget when market typically remains slow.
The daily average turnover on DSE plunged to Tk 292.30 crore in the past week from Tk 428.96 crore in the previous week.
EBL Securities in its weekly market review said ‘DSE index has plunged for straight four sessions from Sunday to Wednesday due to reports on liquidity short age in the financial sector.’ 
‘Typical slow trading in Ramadan along with investors being extra cautious has resulted in the lowest turnover in 14 months in Tuesday,’ it said.
‘Investors took “lie low” stance and were not injecting fresh capital before the budget announcement,’ the brokerage house said.
Average share prices of telecommunication, pharmaceutical, textile and non-bank financial institutions sectors dropped by 2.6 per cent, 2.2 per cent, 1.5 per cent and 0.4 per cent respectively.
On the other hand, some investors went for bargain hunting from the bearish market with an expectation of possible regulatory measures to revive the market.
The market gained in the last session on Thursday following the media reports that the Bangladesh Bank was going to increase banks investment limit in the capital market.
BB issued circular on Thursday day excluding banks’ investment at a number of unlisted securities from banks’ capital market investment exposure calculation.
Therefore, share prices of general insurance, bank and energy sectors advanced by 2.1 per cent, 1.1 per cent and 0.3 per cent respectively.
Out of the 350 issues traded, 195 declined, 122 advanced and 33 remained unchanged.
DS30, the blue-chip index of DSE, dropped 1.79 per cent, or 33.14 points, to close at 1,818.21 points.
Shariah index DSES also declined 1.86 per cent, or 22.74 points, to finish at 1,197.56 points.
Fortune Shoes led the turnover chart with its shares worth Tk 73.34 crore changing hands in the week.
BRAC Bank, Bangladesh Shipping Corporations, Power Grid Bangladesh, Oimex Electrode, Monno Ceramic Industries, Esquire Knit Composite, Square Pharmaceuticals, IFIC Bank and Indo-Bangla Pharmaceuticals were the other turnover leaders.
United Insurance Company gained the most in the week with a 13.93-per cent increase in its share prices while SS Steel was the worst loser, shedding 10.18 per cent.

Five projects to eat up half of outlay
19 May 2019
Source: The Financial Express

Five large road transport projects will alone eat up nearly half the sub-sector's outlay, which officials say will affect the implementation of other projects in the next fiscal year (FY).

The road transport sub-sector has a total of 171 projects.

The Planning Commission (PC) proposed Tk 160.22 billion funds, or 48 per cent of the total Tk 337.24 billion outlay for the transport sector, in the upcoming Annual Development Programme (ADP) for the five projects.

According to the proposed allocation, the five ongoing projects will get Tk 160.22 billion funds while the remaining 166 will get only Tk 177.03 billion in the upcoming ADP.

Experts said this type of allocation could affect the execution of other projects due to their fund shortage in the fiscal year, 2019-20.

Among the five, the construction of metro rail line-6 from Uttara to Motijheel is going to get the highest Tk 72.13 billion allocation, followed by the Padma bridge project's Tk 53.71 billion.

Besides, the Karnaphuli tunnel construction project in Chittagong will get Tk 13.50 billion, SASEC-II (road construction from Hatikamrul-Rangpur) project Tk 10.50 billion, and the Dhaka elevated expressway project Tk 10.38 billion funds.

In the current fiscal, these projects received Tk 94.74 billion funds-over one-third of the total Tk 261.59 billion allocation-for the 194 ongoing projects.

A senior Commission official said they had been forced to allocate inadequate money to some priority projects in the upcoming fiscal since the mega projects would get the lion's share.

"We've got Tk 337.24 billion ceiling for funds from the ministry of finance (MoF) to allocate against 171 total ongoing projects in the FY2020. But implementing agencies for the large projects have sought half the money," he said.

"If we give adequate fund allocation to other projects, some Tk 384.61 billion will be required. But the Finance Ministry has allocated Tk 337.24 billion for other schemes," the official said.

The implementation of some projects, which asked for higher funds than the proposed allocations, could be delayed, feared the Commission official.

Launch of co to ensure easy settlement of equities soon
19 May 2019
Source: The Financial Express

The process of establishing a central counterparty clearing house (CCP) has been accelerated, as the authorities concerned are going to appoint its CEO and deploy necessary technologies.

CCP is a separate institution, initiated by bourses and financial institutions for clearing of securities. Its operation makes the settlement of equities and derivatives easier.

In most cases, CCP is jointly operated by stock exchanges and major banks to ensure efficiency and stability of the financial markets in which they operate.

CCP also guarantees the settlement of trades and provides netting facility, which ease foreign investors' concerns.

After the operations of the planned CCP, the present exchange-based settlement will no longer exist.

The Central Counterparty Bangladesh Limited (CCPBL) -- was formed to this end after the Bangladesh Securities and Exchange Commission promulgated rules pertaining to it in 2017.

Officials at the Dhaka Stock Exchange (DSE) told the FE they are progressing fast to set up the CCP by June 2020.

K A M Majedur Rahman, Managing Director (MD) of the DSE, told the FE: "We've formed the company much earlier as per the Companies Act 1994, and now we expect to launch its operations in time."

He said the prime bourse, having controlling stakes in the CCP, will shortly appoint its CEO.

"A committee is also searching the technological solutions to the CCP." he noted.

The headquarters of the CCP will be located in Nikunja area in the city.

The DSE MD also said the launch of the CCP is important for the country's capital market development, as the introduction of multiple-netting and derivatives is not possible without such a clearing house.

The neighbouring India launched this in 2007, and subsequently it caused exponential growth in the equity market and derivatives products.

"The equity market in India almost doubled between 2007 and 2018 as a result of launching the CCP," an official at the DSE told the FE.

M Shaifur Rahman Mazumdar, Managing Director at the Chittagong Stock Exchange (CSE), said establishing the CCP will facilitate further growth and product expansion of the capital market by strengthening post-trade infrastructure.

He said it will reduce risk, enhance financial stability, and attract foreign investment.

The use of CCP will give trading firms the much-needed assurance that they are protected regardless of which counterparty the electronic trading system matched them with. Then the stock exchange will provide IT and regulatory platforms only.

The global index provider -- MSCI -- may upgrade Bangladesh's status from frontier to emerging market following the launch of the CCP, the CSE MD added.

The Tk 3.0-billion worth CCP's main stakeholders are the DSE and the CSE, having 45 per cent and 20 per cent stakes respectively.

Besides, some 12 banks jointly have 15 per cent stakes in it, each having 1.25 per cent shares, and the Central Depository Bangladesh Limited (CDBL) has 10 per cent stakes.

Cash use costs Bangladesh Tk 9,000cr every year
16 May 2019
Source: The Daily Star

The country has to count more than Tk 9,000 crore a year because of its heavy dependence on cash, further depicting the necessity to move towards a cashless society.

The maintenance cost of the printed money is nearly 0.50 percent of the country’s GDP, according to the central bank report styled ‘Reducing the Cash Transaction’. The Bangladesh Bank calculated the cost based on a survey by US consultancy firm McKinsey & Company.

Shops and banks have to bear most of the cost for the use of cash at 33 percent each, followed by corporate entities at 13 percent, the government at 10 percent and individuals at 6 percent, according to the report.

Banks have to take insurance coverage for their vault as well as the transportation of cash in order to secure the money, adding a large amount to their operating costs, said Md Mustafizur Rahman, head of alternate delivery channel of City Bank.

They have to appoint dedicated manpower to manage both their cash and counter. Armed guard and specialised vehicles have to be hired frequently when banks transport their cash from one branch to another, he said.

“Huge time is wasted because of transportation of cash. The shoppers and distributors of the corporate entities are also facing the same difficulties,” he added.

Meanwhile, the central bank’s expenditure on printing and circulation of cash has been on the rise for years with the growth of the economy. For instance, in fiscal 2016-17 the BB spent Tk 450 crore for this end, up 22 percent from four years earlier.

This indicates the existing transformation process to digital banking from the manual one is not adequate, said a BB official, adding that the banking sector will have to run at a faster pace to embrace the cashless society.

At present, 8 percent of the utility bills and 2.6 percent of the salaries are paid through the digital platforms, meaning the country has a long way to go to become a cashless society, said the central bank report.

Only 6 percent of the total transactions are now settled through the electronic mode, it said.

A majority of the employers, ranging from industrial units to owners of retail stores, are still paying their employees’ wages in the form of cash, which wastes time and fuels costs, said Anwar Hossain, head of Mutual Trust Bank’s card division.

“We have recently rolled out a salary debit card for the industrial workers who receive their salary and wage through our bank. This initiative is now helping both employers and employees settle their transactions smoothly,” he said.

Economic activities will spiral three to four folds if transactions can be made in a digitised manner, Rahman added.

Quoting an analysis of Moody’s Investors Service, the central bank report said that the rise in the use of credit and debit cards, which are considered major components of a cashless society, gives momentum to GDP growth.

The American credit rating agency made the analysis based on the use of cards in 70 countries between 2010 and 2015.

If the use of cards increases by 1 percent, the GDP growth would be 0.02 percent more in developing countries and 0.04 percent more in the developed ones, according to the Moody’s report.

Develop stock, bond markets to meet infrastructure financing needs
16 May 2019
Source: The Daily Star

Bangladesh must develop its capital and bond markets to meet the long-term financing needs of infrastructure projects as bank loans are not viable for mega initiatives worth billions of dollars, said a top official of a state-run non-bank financial institution.

“Funds will have to come from the stock market or the financial sector. So, if we can’t develop the stock and bond markets, we will not have access to funds,” said SM Formanul Islam, executive director and CEO of Bangladesh Infrastructure Finance Fund.

He said a country could not implement infrastructure projects relying on bank borrowing.

Even if all banks in Bangladesh become one single entity, they will still not be able to bankroll a project like that of the Padma bridge or Dhaka-Chattogram expressway, said Islam.

“Investment is taking place in various sectors but we need more,” he said.

He said Bangladesh’s credit rating was not of investment grade, for which local businesses had to pay more if they wanted to borrow from international sources because the lenders take into account all factors, including risks, while fixing margins.

“If we could mobilise funds domestically, then the margins will be less and infrastructure projects would be more viable,” said Islam.

Islam is heading an organisation set up just a couple of years ago in 2011 to address the importance of infrastructure development and insufficient investment in the sector and to promote an attractive environment for sustainable private investment.

It is the biggest NBFI in the country with authorised capital and paid-up capital of Tk 10,000 crore and Tk 2,010 crore respectively.

Of the paid-up capital, the government has provided Tk 1,600 crore and the rest came in the form of profits from its investment in various projects. 

It has invested in the elevated expressway project, three special economic zones, the Cox’s Bazar-Chittagong railway and Rooppur nuclear power plant.

It also has investment in liquefied petroleum gas projects, hospitals, hotels, energy efficiency projects, flyovers, textile mills and an electronics products maker.

The company is supporting projects aimed at producing green construction materials as part of efforts to protect the environment.

“Our pipeline is also very robust. There are 70 projects under our consideration,” Islam said.   

The NBFI has disbursed Tk 3,400 crore as of May 2019 but it will require at least Tk 5,000 crore in the next few years to meet the minimum financing need of prospective borrowers, prompting it to explore various avenues to source funds.

Its board has approved a proposal to raise Tk 500 crore through issuing a bond. Since the rate is very high, the company is going slow, Islam said. 

The board has also approved another plan to raise Tk 1,000 crore from the stock market.

Bangladesh Infrastructure Finance Fund has received funds from World Bank, Asian Development Bank, Japan International Cooperation Agency (Jica) and Bangladesh Bank.

It has a target to disburse Tk 13,751 crore under its five-year plan that spans from 2017 through 2021.

“Our investment plan is a drop in the ocean since Bangladesh requires at least $10 billion a year to meet its infrastructure financing need,” Islam said. 

Islam, who attained a master of public management degree from the National University of Singapore, a master of laws from Bond University in Australia, and an LLB from the University of Calcutta, has been working in his current post since June 2015.

Previously, he worked as deputy CEO of Infrastructure Development Company, another NBFI owned by the government. He had also worked with PricewaterhouseCoopers Securities LLC.

According to Islam, Bangladesh’s lack of deep integration with the international markets was depriving the country from availing funds available there.

“The positive side of it is that Bangladesh remains unaffected when there is a collapse in the global market. But the downside is we are failing to put the opportunities available in the international financial markets to good use,” he said.

Islam said there were only a handful foreign banks operating in Bangladesh but those operated like local banks and could not raise huge funds overnight from their international operations.

There is no Chinese bank in Bangladesh although China is its biggest trading partner and is engaged in billions of dollars of two-way trade. Also, there is no Japanese bank, he said.

“As a result, when a letter of credit is opened, the involved party has to incur additional costs at every stage, raising the cost of doing business,” he added.

Islam talked about improving legal infrastructure to draw in foreign direct investment (FDI).

He said if an investor invests in Bangladesh, there should be legal remedy for anything that might go wrong. It takes many years to get the remedy in Bangladesh, he said.

“We, the local people, don’t feel it that way because we are used to it. But foreign investors will not want to drag an issue for even two years. They want instant results. Getting immediate results is also not impossible,” he said.

He gave the example of the National Board of Revenue’s assertion that thousands of crores of taka were stuck because of court cases.

According to Islam, the legal infrastructure would have to be investment-worthy.

“Our legal infrastructure is not that investor-friendly. It takes two to three years to get a court decision and then appeal is made against the verdict. Can you continue with that?” he said.

He said investors preferred to put a provision in agreements to settle disputes in courts in Singapore or the UK. There has to be a lot of scopes for alternative dispute resolution.

“We should look into this side given the level of development we are aspiring.”

According to Islam, international investors were increasingly getting interested in Bangladesh.

In the past, foreign investors were not much interested in Bangladesh for long-term investment because of political instability and a lack of investment-grade credit rating, but now they have a change of heart and are coming to Bangladesh, he said.

“Countries that had never thought of investing in Bangladesh are now looking at the country as an investment destination because of a steady economic growth and the huge local market.”

He said if Bangladesh could successfully implement five to 10 special economic zones, those would draw in FDI, export and create a huge number of jobs.

Despite being a new company, Bangladesh Infrastructure Finance Fund posted a Tk 83 crore profit last year. There is also no non-performing loan, a problem that is affecting all lenders in the country.

“This is largely because it carries out due diligence properly. Besides, as all of the board directors are senior government officials and they don’t have business motive, the loan decisions are merit-based,” Islam said.

Bangladesh Infrastructure Finance Fund has put in place a dedicated team comprising experienced professionals, such as environmentalists, legal experts, investment people, chartered accountants, and engineers.

“You will not find this type of professional team in many banks,” said Islam.

Islamic banks’ profitability shrinks in 2018
16 May 2019
Source: The Daily Star

Shariah-based banks’ net profit margin declined to 2.2 percent in 2018 from 3 percent a year earlier at a time when the banking sector’s rose, found a recent study.

The banking sector’s net profit margin improved to 3 percent from 2 percent last year, according to the study titled “Islamic Banking Operation of Banks-2018”.

The findings of the study, which was carried out by the Bangladesh Institute of Bank Management (BIBM), were disclosed at a workshop yesterday. Md Alamgir, an associate professor of the BIBM, presented the research paper.

There are eight Islamic banks in Bangladesh. Besides, many banks have Shariah-based branches or windows. Together, they had a combined deposit base of Tk 237,366 crore on December 2018. Of the deposits and investments, the full-fledged Islamic banks accounted for about 95 percent.

Among other key financial indicators, the return on asset of the Islamic banks came down to 0.56 percent last year from 0.7 percent a year earlier. The return on equity fell to 10.7 percent from 13.1 percent during the period, the study showed.

On the other hand, classified loans increased to 4.79 percent from 4.2 percent in 2017, weakening the health of Islamic banks.

The Islamic banks seemed to have been involved in aggressive lending as their advance deposit ratio climbed to 90.8 percent in 2018 -- which is beyond the authorised limit of 90 percent -- from 87.8 percent the previous year.

Though the overall banking sector was going through a tight liquidity, the market share of the Islamic banks improved to 8.54 percent in 2018 from 7.47 percent in 2017 in terms of excess liquidity.

The rising NPL was identified as a serious problem for the Islamic banking industry as well.

A lack of investment products for land purchase and home loan is hindering the investment of the industry, the report said.

“The Islamic banks should redesign their products to bring in more diversification.”

The Bangladesh Bank is working to strengthen the Islamic banking industry, said SM Moniruzzaman, a deputy governor of the central bank.

Shah Md Ahsan Habib, a director of the BIBM, urged the Islamic banks to put emphasis on compliance instead of growth.

The Islamic banks should operate under a central Shariah council, said Helal Ahmed Chowdhury, a supernumerary professor of the institute.

He emphasized on product diversification to make the Islamic banking popular among customers.

One Year of DSE’s Share Sale: Chinese consortium yet to impress investors
16 May 2019
Source: The Daily Star

One year has passed by since the Chinese consortium agreed to come on board as a strategic partner of the Dhaka Stock Exchange (DSE) but investors are still waiting for the two Chinese bourses to deliver on their promises.

 One of the big promises made by the Shenzhen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE) was that they would bring in technological upgrades to the country’s premier bourse. including an electronic information disclosure platform of the listed companies.

 The platform would provide corporate information of the issuing companies, simple analytical tools, interactive question and answer facility and online complaint portal with a view to enhancing transparency and corporate governance.

 “It is yet to fulfil this expectation,” said Shakil Rizvi, president of the DSE Brokers’ Association (DBA).

 The general investors also expects higher foreign investment in the market through the Chinese Consortium. An investor named Munim Raihan said the stock market regulator and all the analysts expected that market will get higher foreign investment after getting the strategic partner.

But in reality, the market lost foreign investment in the time, he added. Since May 14 last year, when the agreement was signed, the DSE witnessed negative net foreign investment, according to data from the bourse.

The Chinese consortium offered to assist the DSE in developing index-based products, bonds and asset-backed securities to diversify products in the DSE.

 It also offered to assist in designing, promoting and showcasing Bangladeshi indices in China as well as developing the DSE’s derivatives market.

 The formal processing of the agreement took longer than expected, so in reality the consortium become the DSE’s partner only in September, said a top official of the bourse requesting not to be named.

 So far, the consortium appointed a director in the DSE board and launched the Bangladesh window on the V-Next Platform on May 6 under the strategic investor agreement.

 As a result, Bangladeshi listed and non-listed companies can explore equity and strategic partnership, seek business collaboration and diversify business and technology channels in China.

V-Next Alliance Platform is designed to facilitate Chinese investment into prospective companies in Bangladesh through information dissemination, online live road shows and face-to-face business seminars. Around 20 Bangladesh enterprises from many sectors such as information, communication and modern manufacturing conducted road shows on the V-Next Platform on its inauguration day.

14 listed banks suffer negative cash flow in Jan-Mar
16 May 2019
Source: The New Age

Fourteen listed banks suffered significant liquidity shortage in the January-March quarter of the year of 2019 even though the entities managed to attain profits in the period.
According to the first quarterly reports of listed banks published through the stock exchanges, the net operating cash flow per share (NOCFPS) of Rupali Bank was the worst — negative Tk 79.51.
Negative cash flow means a bank has borrowed money from other financial institutions or from Bangladesh Bank to meet day-to-day cash requirements.
High amount of defaulted loans that has resulted in high provisioning requirements and poor deposit growth in the country’s banking sector are the major reasons for the current liquidity crisis in the banking sector, bank officials said.
They also said that huge sales of national savings certificates due to their higher returns compared with the returns from the bank deposits had also worsened the liquidity crisis in banks.
Association of Bankers, Bangladesh chairman and Dhaka Bank managing director Syed Mahbubur Rahman told New Age, ‘Despite the liquidity crisis, we have managed to do better in the first quarter of 2019.’
Mahbubur, however, said that he was uncertain whether his bank would be able to maintain the performance or not in the coming days.
Asked about the reasons for the negative cash flow of banks, he said when a section of banks managed to collect fund, the other section suffered crisis due to the scarcity of deposits.
The liquidity crisis in banks has been intensifying in last couple of months due to poor loan recovery situation following the finance minister AHM Mustafa Kamal’s announcement over providing loan rescheduling facility again to loan defaulters, bankers said.
They said that the defaulters were waiting for the formal announcement from the government to take the facility instead of paying instalments that caused more liquidity crisis in banks.
Deposit growth in the country’s banking sector was above 10 per cent in 2017.
The situation deteriorated in 2018 and the deposit growth was around 9 per cent in January and February of the year of 2018.
On the other hand, the defaulted loans in the country¬ís banking sector stood at Tk 93,911.4 crore at the end of December, 2018 from Tk 74,303 crore a year ago.
Apart from Rupali Bank, NOCFPS of Uttara Bank was negative Tk 18.96 in January-March this year against negative Tk 3.07 in the same period a year ago.
City Bank¬ís NOCFPS was Tk 11.56 in the quarter this year against negative Tk 0.32 in the same period last year.
Cash flow per share of Trust Bank was negative Tk 12.41, that of Mutual Trust Bank negative Tk 8.65, that of Social Islami Bank negative Tk 7.92, that of Jamuna Bank negative Tk 6.83 and that of Exim Bank negative Tk 4.
NOCFPS of IFIC Bank was negative Tk 3.30 in the quarter, that of UCB negative Tk 5.78, that of AB Bank negative Tk 5.68, that of NBL negative Tk 2.76, that of First Security Islami Bank negative Tk 1.83 and that of NCC Bank negative Tk 0.56.
As banks went for borrowing to meet liquidity crisis, the interbank call money rate increased to 4.53 per cent on May 14 this year. The rate of call money was 2.77 per cent in June last year.
Besides, banks borrowed Tk 13,475.8 crore from the central bank through repurchase agreement (REPO) in the period between July, 2018 and March 5, 2019. The entities borrowed Tk 572.86 crore in the entire 2017-2018 fiscal year.
In the fiscal year of 2016-2017, banks’ borrowing through REPO was Tk 115.67 crore.

Stocks fall for 4th day on liquidity crunch
16 May 2019
Source: The New Age

Dhaka stocks on Tuesday kept falling for the fourth session as liquidity shortage in the financial sector along with typical slow trading during Ramadan and ahead of the national budget announcement continued affecting trading on the bourse.
DSEX, the key index of Dhaka Stock Exchange, dropped by 0.42 per cent, or 21.88 points, to close at 5,196.03 points on Wednesday.
The index lost 79.88 points in last four trading sessions.
In identical trading pattern like that of Tuesday, DSEX briefly gained at the beginning of Wednesday’s trading session and fell afterwards to finish the session in the negative zone, said market operators.
Like the previous two sessions, shares on the bourse were traded at a snail’s pace on Wednesday as most of the investors were reluctant to trade or inject fresh funds, they said.
They said some of the investors, however, continued selling shares fearing further fall in the share prices.
Market operators said that the ongoing liquidity shortage in the financial market had dented the capacity of institutional investors like the merchant banks to invest at the market.
Besides, many investors were reluctant to inject fresh funds during Ramadan and before the national budget, they said.
Typically the market remains slow during Ramadan as people’s expenditure rise for Ramadan commodities and Eid shopping and before the budget as investors wait to see fiscal measures, they said.
The total number of executed trades fell further to 71,072 on Wednesday from 72,470 on Tuesday, which was the lowest number of total trades after March 28, 2018 when it was 69,725.
The turnover on bourse remained at 14-month low at Tk 256 crore on Wednesday although it rose slightly compared with that of Tuesday when it was Tk 251.36 crore.
‘The capital bourse of the country extended their losing streak for the fourth straight session as risk-average investors continued their selling pressure,’ said EBL Securities Ltd in daily market update.
‘The market experienced a sluggish session as investors were reluctant to make fresh investment amid lack of confidence and ongoing liquidity crunch,’ it said.
‘Moreover, investors’ sentiment regarding the market remained shaky and they adopted “lie low” approach following recent earnings declarations,’ said the brokerage house.
Out of the 341 issues traded on Wednesday, 173 declined, 103 advanced and 65 remained unchanged.
The average share prices of most of the sectors dropped on the day with pharmaceutical sector leading the chart.
Among the losing sectors, shares prices of pharma, paper, textile, cement and food fell by 1.1 per cent, 1.1 per cent, 0.8 per cent, 0.6 per cent and 0.6 per cent respectively.
The share prices of life insurance, jute, bank and non-bank financial institution sectors, however, rose by 1.2 per cent, 0.8 per cent, 0.2 per cent and 0.1 per cent respectively.
DSE blue-chip index DS30 fell by 0.69 per cent, or 12.69 points, to close at 1,812.82 points.
Shariah index DSES shed 0.76 per cent, or 9.15 points, to finish at 1,194.21 points.
BRAC Bank led the chart of turnover leaders with its shares worth Tk 17.07 crore changing hands on the day.
Fortune Shoes, Square Pharmaceuticals, Premier Bank, IFIC Bank, FAS Finance and Investment, Monno Ceramic Industries, Oimex Electrodes, Legacy Footwear and SS Steels Ltd were the other turnover leaders.
United Insurance gained the most on the day with a 9.9-per cent increase in its share prices while Daffodil Computers was the worst loser, shedding 4.64 per cent.

Govt may seek WTO panel advice on India, Pakistan anti-dumping duties
16 May 2019
Source: The New Age

The government may seek advice from the Advisory Centre on WTO Law on the merits of its plan to file petition against imposition of anti-dumping duty by India and Pakistan on import of hydrogen peroxide and Jute goods from Bangladesh with the dispute settlement body of the World Trade Organisation.
Earlier, the commerce ministry decided to go to the WTO’s dispute settlement body against India and Pakistan. India imposed anti-dumping duty on import of hydrogen peroxide and Jute goods while Pakistan imposed the duty on import of hydrogen peroxide from Bangladesh.
Trade officials now mull obtaining advice from ACWL, an independent body of WTO, on the merits of Bangladesh’s position on the three cases before moving to the DSB. 
Bangladesh Tariff Commission is now preparing three separate position papers on imposition of the duty on hydrogen peroxide by the both countries, officials said. 
They said that the commission was scrutinising details of the verdicts made by India and Pakistani authorities on the issues to identify points favorable to Bangladesh.
They have already identified some weaknesses related to both procedural and calculation process of the cases. 
Stakeholders have also requested the commission to go to ACWL to evaluate the country’s strengths and weaknesses. 
A senior trade official told New Age that Bangladesh would get the service from ACWL free of cost as a least developed country. 
The centre will assess the documents and arguments prepared by the government and suggest whether it has merits to file case to DSB, he said. 
The commission will soon finalise the position papers and will send to commerce ministry for seeking opinion of ACWL, established in 2001 to give legal advice and training on WTO law and provide support in WTO dispute settlement proceedings to its member countries. 
Jute and hydrogen peroxide exporters, private law firms appointed by commerce ministry, experts and trade officials recommended the ministry to move forward with the decision of filing petition at DSB as there are some substantial flaws related to procedural and duty calculation process in three cases. 
Both the countries imposed the duty on the products on faulty allegations, exporters claimed. 
Directorate General of Anti- Dumping and Allied Duties of India on April 2017 imposed the duty ranging from $27.81 to $91.47 per tonne of hydrogen peroxide while National Tariff Commission of Pakistan on March 2016 imposed the duty between 10.67 per cent and 12.14 per cent on export of the product by Bangladesh companies. 
India on January 5, 2017 imposed the duty ranging from $19 to $351.72 a tonne on import of jute products from Bangladesh for five years.

Mustafa Kamal eyes one crore taxpayers, next fiscal
16 May 2019
Source: The New Age

Finance minister AHM Mustafa Kamal on Wednesday hoped that the number of taxpayers would jump to 1 crore in the next fiscal from 22 lakh in the current fiscal.
He said the national board of revenue would follow the strategy of widening the tax net and not increasing the tax rate to expand the number of taxpayers almost five times higher.
Mustafa Kamal was talking to reporters following a meeting with the present and former Bangladesh Bank governors and former caretaker adviser Mirza Azizul Islam at his planning commission office in the evening.
Beside current governor Fazle Kabir, former governor Mohammed Farashuddin also attended the meeting that was convened, according to the finance minister, to get suggestions about the implementation of the new VAT act from July. 
Kamal also said to make the strategy on expansion of taxpayers’ net successful manpower would be outsourced by the NBR.
At present, the NBR is facing a shortfall in manpower while it is geared towards expansion of the tax net.

Trump expected to sign order paving way for US telecoms ban on Huawei
16 May 2019
Source: The New Age

US President Donald Trump is expected to sign an executive order this week barring US companies from using telecommunications equipment made by firms posing a national security risk, paving the way for a ban on doing business with China’s Huawei, three US officials familiar with the plan told Reuters.
The order, which will not name specific countries or companies, has been under consideration for more than a year but has repeatedly been delayed, the sources said, asking not to be named because the preparations remain confidential. It could be delayed again, they said.
The executive order would invoke the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce in response to a national emergency that threatens the United States. The order will direct the Commerce Department, working with other government agencies, to draw up a plan for enforcement, the sources said.
If signed, the executive order would come at a delicate time in relations between China and the United States as the world’s two largest economies ratchet up tariffs in a battle over what US officials call China’s unfair trade practices.
Washington believes equipment made by Huawei Technologies Co Ltd, the world’s third largest smartphone maker, could be used by the Chinese state to spy. Huawei, which has repeatedly denied the allegations, did not immediately comment.
The White House and Commerce Department declined to comment.
Chinese Foreign Ministry spokesman Geng Shuang said during a daily briefing in Beijing on Wednesday that the United States had been ‘abusing its national power’ to ‘deliberately smear’ and suppress certain Chinese companies.
‘This is not honourable, nor is it just,’ he said.
‘We urge the United States to stop using the excuse of security issues to unreasonably suppress Chinese companies, and provide a fair, just, non-discriminatory environment for Chinese companies carrying out normal investments and operations in the United States.’
The United States has been actively pushing other countries not to use Huawei’s equipment in next-generation 5G networks that it calls ‘untrustworthy.’ In August, Trump signed a bill that barred the US government itself from using equipment from Huawei and another Chinese provider, ZTE Corp.
In January, US prosecutors charged two Huawei units in Washington state saying they conspired to steal T-Mobile US Inc trade secrets, and also charged Huawei and its chief financial officer with bank and wire fraud on allegations that the company violated sanctions against Iran.
The Federal Communications Commission in April 2018 voted to advance a proposal to bar the use of funds from a $9 billion government fund to buy equipment or services from companies that pose a security threat to US communications networks.
Federal Communications Commission chairman Ajit Pai said last week he was waiting for the Commerce Department to express views on how to ‘define the list of companies’ that would be prohibited under the FCC proposal.
The FCC voted unanimously to deny China Mobile Ltd’s bid to provide US telecommunications services last week and said it was reviewing similar prior approvals held by China Unicom and China Telecom Corp.
The issue has taken on new urgency as US wireless carriers look for partners as they rollout 5G networks.
While the big wireless companies have already cut ties with Huawei, small rural carriers continue to rely on both Huawei and ZTE switches and other equipment because they tend to be cheaper.
The Rural Wireless Association, which represents carriers with fewer than 100,000 subscribers, estimated that 25 per cent of its members had Huawei or ZTE equipment in their networks, it said in an FCC filing in December.
At a hearing Tuesday, US senators raised the alarm about allies using Chinese equipment in 5G networks.
The Wall Street Journal first reported in May 2018 that the executive order was under review. Reuters reported in December that Trump was still considering issuing the order and other media reported in February that the order was imminent.

Bangladeshis will be richer than Indians by 2030: StanChart
15 May 2019
Source: The Daily Star

Bangladeshis will be richer than Indians by 2030 as the country’s per capita income will grow nearly four times throughout the 2020s, according to Standard Chartered -- in yet another endorsement of its tremendous growth momentum.

The per capita income of Bangladesh will rise to $5,734.6 in 2030. India’s will edge up to $5,423.4 after growing less than three times, according to a research note from Madhur Jha, Standard Chartered India’s head of thematic research, and David Mann, the bank’s global chief economist.

Last year, Bangladesh’s per capita income stood at $1,599.8 and India’s $1,913.2.

The note highlights the economies around the world that are likely to grow the fastest in the 2020s.

The threshold for the list is 7 percent, the approximate growth rate at which an economy can double in size every 10 years.

The note expects seven countries to do this in the 2020s: India, Bangladesh, Vietnam, the Philippines, Myanmar, Ethiopia and Ivory Coast.

“We think seven countries have the potential to be members of this club in the 2020s. Of these, Bangladesh and India hold the most promise.”

Speaking to The Daily Star, Naser Ezaz Bijoy, chief executive officer of Standard Chartered Bangladesh, said the country is experiencing a decade of strong and inclusive growth.

“With the tailwind of demographic dividend, healthy domestic consumption, rising investment, and successful export-oriented industrialisation, we have every confidence that our nation will continue on this high-growth trajectory in the 2020s and establish itself firmly in the 7 percent club.”

China was a member of the 7 percent club for nearly 40 years but has recently exited as its growth naturally slowed down. Ethiopia and India joined the club over the last decade, while countries such as Vietnam and Bangladesh came close.

“Young labour forces and accelerating structural reforms are likely to help both Bangladesh and India achieve growth well more than 7 percent in the coming decade.”

Within the 7 percent list, Bangladesh’s per capita income will be less than that of Vietnam and the Philippines in 2030, while it will be ahead of Ivory Coast, Ethiopia and Myanmar -- apart from India.

Bangladesh has seen a growth acceleration since 2010, to an average of 6.4 percent, as a stable government, infrastructure investment and improved energy supply have boosted productivity gains.

The country posted more than 7 percent GDP growth in the last three fiscal years and is estimated to go past the 8 percent mark this fiscal year.

Its demographic profile is favourable, and investments in education and health have paid off.

“All of this has helped improve productivity. Low levels of public and external debt give the government room for counter-cyclical fiscal stimulus to support growth if needed.”

By 2030, the note expects India to become the world’s fourth largest economy (measured by market exchange rates) and Bangladesh to become the 23rd largest. The two countries together will account for about 20 percent of the global population by 2030, according to the United Nations.

Faster growth brings many benefits, including pulling large swathes of the population out of abject poverty, the research note said.

It, however, says faster growth does not make economies immune to periodic major downturns. Almost all of the countries that have been members of the 7 percent club since the 1960s have seen one or more major recession at some point.

Some emerged from recession and re-joined the club (like South Korea in the 1970s), while others dropped out and struggled to find their way back (like Thailand since 1997).

“The quality of growth matters as well as the quantity,” the note said.

The bank said the ability to tap external market demand and import skills, know-how and technology from the rest of the world has formed the basis of growth for all countries that have industrialised since the World War II.

Increasing globalisation and trade integration have been critical in this process.

“The recent rise of anti-globalisation sentiment and nationalist policies, especially in developed countries, poses a threat to sustained gains for both emerging markets and the global economy.”

The research note says increasing worries about climate change and sustainability could also curb emerging markets’ growth potential.

The urgency of addressing climate change concerns could usher in policy reforms across the globe, constraining the ability of some emerging markets to pursue fast-growth strategies.

“However, support from multilateral institutions and technology transfers from advanced economies could help achieve the opposite outcome -- with infrastructure upgrades resulting in cutting-edge and environmentally sustainable capital stock.”

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