Category Archives: Economic, Fiscal and National Policy/Taxation

Budget industry friendly, growth supportive: EAB

Budget industry friendly, growth supportive: EAB
It put forward 5-point proposals for Govt consideration
B&F Report

Exporters Association of Bangladesh (EAB) has termed the proposed budget for 2012-13 fiscal as growth-oriented and industry friendly and has welcomed the government for prioritising key sectors like power and energy, agriculture, communication and physical infrastructure.

Giving its post-budget reaction at a press conference in Sonargaon Hotel in the capital on Sunday, the leaders of the EAB, the apex trade body of export sector, also hailed the government initiative to protect the local industry as well as support the export-oriented sectors.

“All these would have a positive impact on the country’s industrialisation as a whole,” they said.
EAB belives the proposed budget is ‘a pro-people and growth-oriented’ one which will also help to accelerate growth of the export sector.

“A higher export growth will help to attain the key budgetary goal of achieving GDP growth to 7.2 per cent and inflation within 7.5 per cent for the next fiscal,” it added.

Reading out a written statement, the EAB President Abdus Salam Murshedy said steps like reducing tax on capital machinery imports for export sector and for Effluent Treatment Plant (ETP), withdrawal of VAT from the rented factory premises and continuation of incentive package for exploring new markets will certainly boost up export earnings.

Besides, emphasising on human resources development, block allocation for employment generation, incentive package for capital market, setting up a hi-tech park in Gazipur and API park in Munshiganj and incentive for ship building industry are also some bold steps proposed in the budget for the upcoming fiscal, he said.

Murshedy, however, expressed dismay over the budgetary provision of hiking tax at source on export proceed and put forward 5-point recommendations to the government “for its kind consideration”.

He also urged the government to consider some proposals for the interest of the export sector. The proposals are withdrawal of 1.2 per cent tax at soucre on exports uninterrupted power and gas supply to the export-oriented industries, cut in bank interest rate to single digit, unified exchange rate for exporters and a enhance rate of cash incentive (tax free).

“Hike in tax at source fro, 0.6 per cent to 1.2 per cent will adversely impact the export sector by reducing competitive edge of local goods in the international market. It will also hurt profitability of the entrepreneurs,” Murshedy added.

He pointed out that export sector is passing through a critical time influenced largely by various external and internal threats. On the other hand, he said a significant hike in power and fuel prices hit hard the industry by rising cost of production.

“In such a situation, the industry cannot afford a leap of tax at source because it will be an extra burden for it,” he noted.

How to bring in more FDI

How to bring in more FDI

Fahmida Khatun

Foreign direct investment (FDI) has made enormous leaps since the 1990s in terms of its growth in the global economic landscape. Due to paucity of resources in developing and least developed countries, FDI has become an important component of their development strategies and in many cases it proved to be a win-win situation to both host and home countries. Host countries want to gain from FDI in multiple ways such as through having capital, technology and knowledge. Home countries also benefit through investing as they can penetrate into markets, gain access to raw materials and diversify business activities. They can also overcome trade barriers and reduce transport costs.

Bangladesh is considered to be one of the potential economies despite being besieged by multi-faceted adversities such as frequent natural disasters, high density of population, political turmoil and a low production capacity. The resilience and inherent strength of the economy, mainly due to its robust sectors such as agriculture, readymade garments and remittances, have been the basis of such optimism. However, in order to make its graduation to the next level of growth and fully exploit the growth potential, the country’s investment scenario has to be improved. The lack of adequate investment is one of the important reasons for the growth below the potential of the economy. The domestic investment rate has been stagnant at around 24 percent to 25 percent of the country’s gross domestic product (GDP) for the last ten years which is far below the level required for a country aiming to be become a middle-income country by 2021 with a growth rate of 10 percent. The sixth five-year plan (2011-15) of Bangladesh targets a GDP growth of 8 percent by the end of the plan period. This requires that the total investment has to grow by 8.1 percent per year and the share of investment in GDP has to be 32.5 percent by fiscal 2015. Low domestic investment has been a matter of concern as it holds back foreign investment as well.

Even though Bangladesh has been trying to bring in FDI since its independence and put in place FDI friendly policies in the early 1980s (Foreign Investment Promotion and Protection Act 1980 was such an attempt) much before some of its neighbours, it has been unable to accelerate FDI at the expected level. In the 1990s, there was an attraction for the East Asian and European investors to invest in the readymade garments industry of Bangladesh, thanks to the Generalised System of Preferences (GSP) and the availability of labour at a competitive price. Currently, the concentration of FDI is mainly on transport, storage and communication, manufacturing and power, gas and petroleum. Other sectors such as agriculture, trade and commerce and, services receive nominal FDI. In 2010, manufacturing sector was the highest recipient at 27.82 percent of total FDI, while the construction sector received the lowest with a share of 0.01 percent. The growth of FDI in Bangladesh has, however, been very inconsistent. A major inflow of FDI was observed in the mid 2000s and rose to $913.32 million in 2010.

While discussing the impediments to bringing FDI into the country, a host of issues have been raised ranging from infrastructural constraints to bureaucratic complexities to image building. However, the crux of the problem does, in fact, lie in three broad areas. First is the limited access to physical infrastructure, particularly supply of gas and electricity. This has emerged as a binding constraint on investment promotion in Bangladesh. For example, the supply of gas between December 2008 and December 2011 has increased only marginally from 1,606 million cubic feet to 1,960 million cubic feet, indicating an average growth of 7.4 percent. On the other hand, the demand for gas rose by 12.3 percent during this period, leading to a wide gap between demand and supply. At present, the demand for power in Bangladesh is around 6,500 megawatt, while the supply is 4,699 megawatt. In the recent times, the FDI rise has been observed mainly in the export processing zones (EPZ) as there is little or no gas and electricity supply constraint like the domestic tariff area. In order to overcome infrastructural bottlenecks, aid for productive capacity needs to be enhanced significantly. However, effective use of these funds has to be ensured. Public-private infrastructure development policy can also be a powerful tool to tackle the supply side constraints.

The second bottleneck is the culture of confrontational politics, which poses a serious threat for the safety of property and resources of prospective investors. Acrimony and bitterness among political parties often lead to destruction and affect lives and properties of people which in turn deter not only foreign investment but also local private investment. Many investors are even willing to spend on infrastructure to facilitate their investment in other sectors, only if there are political stability and predictability of return on their investment.

The third constraint is the lack of good governance and prevalence of corruption, which have put a scar on the reputation of the country at the global level. Because of advantages such as competitive prices for labour and other services, investors may find Bangladesh a lucrative investment destination. However, predicaments such as delay and a lack of transparency in decision making process, a dearth of effective implementation of regulations and policies, and discriminatory incentive packages act as stumbling blocks in bringing in FDI to the country.

FDI is not a panacea for slow growth, and it has several negative implications too. These include capital flight and repatriation of profit, dependency on technologies and limited transfer of technology and transfer pricing. With effective regulatory and oversight mechanism such issues can be addressed. FDI can supplement the local effort to produce goods and services and create jobs. If local businesses flourish, foreign investors will have confidence to bring their resources. Promotion of local businesses through access to adequate finance and creation of an enabling environment should also be a key target. Economic diplomacy is vital at this day and age to attract foreign resources. This has to be accompanied by good marketing skill which in other words is called ‘branding’. Such image building task has to be done primarily by the government but complemented by the private sector and all citizens of the country.

The writer is an economist and head of research at the Centre for Policy Dialogue.

Dressed to impress

Dressed to impress

The readymade garments sector is vital for Bangladesh's regional commerce, which will increase by more than 9 percent annually through to 2016. Photo: HSBC

Noel Quinn

When I tell people in Hong Kong, London or New York that Bangladesh is a land of untapped business opportunities, there are usually some who’ll raise their eyebrows in incredulity or admiration. For those who haven’t visited in person, it’s a country they only know from media headlines as a place of natural calamities and social pressures as the population expands.

Fortunately, I’m finding that the sceptics and uninformed are increasingly in the minority. As the global business community focuses its attention on Asia, there’s mounting interest in Bangladesh for its skilled workforce, its thriving economy and the impressive export industry it’s built in just over 40 years.

While acknowledging that Bangladesh still has much to do to realise the government’s long-term vision, I believe the prospects here are quite bright. So does HSBC Commercial Banking, which handles over 8 percent of the country’s international trade, and which recently showed Bangladesh to be the Asia-Pacific’s second fastest-growing trade partner after Vietnam. In fact, our research indicates that Bangladesh’s regional commerce will increase by more than 9 percent annually through to 2016.

Our confidence stems from what we see on the ground, in the cities and in the export processing zones, and from our expectations that Asia will increasingly sit at the heart of the global economy. Bangladesh now ranks higher than India, Indonesia and the Philippines in the World Bank’s ‘Doing Business’ report, and it has nurtured companies producing goods for household brands including Levis, Nike, Raleigh and Sony.

Some have suggested that Bangladesh could become like Mexico, which has established itself as a low-cost manufacturing hub for its enormous neighbour to the north. In some ways the analogy is insufficient in that Bangladesh borders India and is also close to China – two economies HSBC thinks will become the world’s third-largest and largest respectively by 2050. In other ways, the analogy exaggerates because by 2050, even after a seven-fold increase, we expect China’s income per capita will only be 32 percent of that in the US.

What we know today is that Bangladesh is a competitive place to do business when benchmarked against its emerging market peers. It has clear cost advantages, and a committed young workforce that’s keen to learn. With an increasing number of international companies relying on Bangladesh for the timely delivery of quality garments, the country has a medium-term opportunity to win manufacturing investment in this vital export sector. With economic austerity in the West making consumers there more cost-conscious, companies here have an opportunity to promote sales of affordable clothing while investing to rise up the value chain.

The challenge, of course, is that Bangladeshis want to increase their earning power. They want economic diversification that will bring new job opportunities while reducing the nation’s reliance on apparel and expatriate remittances. This will require effort to build the infrastructure businesses need to capitalise on Bangladesh’s location, and it will require effort to attract new industries and the skills transfer that comes with them.

Though the garment industry is likely to provide the backbone of the economy for some time to come, it’s encouraging to see that companies making goods as diverse as camera lenses, shoes, mobile phone components and car parts have chosen to set up plants in the EPZs. Local entrepreneurs and investors from Canada to Taiwan are starting to recognise Bangladesh’s potential as a location for light engineering, shipbuilding, agro-processing, pharmaceuticals and ICT. Samsung’s recent opening of a research and development centre in Dhaka is a good case in point.

Like many local businesspeople, HSBC is watching with great interest as the governments of India and Bangladesh negotiate greater access to each other’s road, rail, sea and air transport networks. For India, a deal will improve domestic links to its north-eastern states. For Bangladesh, it could help the country become a regional centre for trade and manufacturing, a gateway to the sea for Nepal and Bhutan, and the hub of a trans-Asia highway connecting India to China and South-East Asia.

Looking eastwards, Bangladesh is positioning itself to boost trade with China as China rebalances its economy from exports to sustainable domestic demand. Last year, HSBC helped a customer in the Dhaka EPZ to buy yarn from China in Chinese Renminbi. This deal was another sign of things to come, as Bangladeshi firms seek to cement relationships with Chinese partners, cut transaction costs and hedge foreign exchange risk in what is set to be the next global currency.

Clearly, I have to be balanced in my conversations with overseas companies. Bangladesh must ensure power supplies and communications networks are robust, for example, and it must recognise the competitive strengths of neighbours such as Vietnam, Cambodia and Pakistan.

As I also tell them, however, it’s clear to me that there are few people who can match Bangladeshis for their resilience in the face of a challenge. If this country continues to reinforce its links with the developed world, while deepening relationships in the emerging markets, it has every reason to demand attention in biggest corporate boardrooms.

Noel Quinn is the head of commercial banking for HSBC Asia-Pacific and group general manager for HSBC Holdings.

Govt to lease out lands to private firms

Govt to lease out lands to private firms
Entrepreneurs will build 257 industrial units on unused lands of state enterprises
Rejaul Karim Byron

The government will allow private entrepreneurs to build 257 industrial units on lands owned but unused by state companies.

The cabinet committee on economic affairs yesterday approved a proposal of the Privatisation Commission — the first such move in Bangladesh.

The government will lease out the public lands to the private entrepreneurs initially for 35 years.

Mashiur Rahman, economic affairs adviser to the prime minister, will lead an 11-member committee to deal with the issue.

The committee will mark out unused lands of different state-owned enterprises and commercial institutions.

The committee will submit its recommendations to the cabinet committee in two months.

The committee members include the executive chairman of the Board of Investment, chairman of the Privatisation Commission, governor of Bangladesh Bank, Prime Minister’s principal secretary, and secretaries of Finance Division, textile and jute ministry, commerce ministry and industries ministry.

The Privatisation Commission has already conducted a survey on 39 state enterprises that have 1,288 acres as surplus lands.

If the government parcels out five acres of land to one industrial unit, about 257 new industrial units can be set up on 1,288 acres, the commission said in its proposal.

The new industrial units will see more than Tk 5,000 crore in investment in the next two years if the average investment per unit is Tk 20 crore, the commission said.

If each industrial unit creates employment for 200 persons, a total of 50,000 jobs may be generated, the commission estimated.

The commission also said, if the proposal is implemented, scope for more industrialisation will be created without affecting the existing state enterprises.

The government may also increase revenue collection without losing its lands.

The commission said gas, power and other infrastructures may be given to the new industrial units on the basis of lease or sub-lease from the existing government enterprises without creating new infrastructures.

Meanwhile, the cabinet committee on purchase gave a go-ahead to another proposal for purchasing 20,500 laptops at a total cost of around Tk 109.32 crore.

The laptops will be used in opening multi-media classrooms in 20,500 educational institutions at secondary and higher secondary levels. Each of the laptops will be purchased at Tk 48,527 from state-owned enterprise Telephone Shilpa Sangstha. The laptops will carry a three-year warranty.

Besides, the purchase committee approved a proposal for procuring 50,000 tonnes of wheat. An Indian trader, LMJ International Ltd, will supply wheat at $303.90 a tonne.

Industrial projects go full steam ahead

Industrial projects go full steam ahead
Author / Source : Jasim Uddin Khan

Dhaka, Jan 6: The government has woken up, after three years of its tenure, to the bleak investment scenario and is taking steps to implement Tk 1600 crore worth of projects involving five specialised industrial zones and four BSCIC estates, by 2014. In 2011, the overall flow of investment (as percentage of GDP) came down to a standstill, compared to the first two years of the government, due mainly to shortage of industrial plots, liquidity crisis and inadequacy of gas and power, sources said.

The large specialised industrial projects including the Tk 550-crore Savar Leather Industry Park, Tk 235-crore Munshiganj Active Pharmaceuticals Industrial Park, Tk 200-crore Automobile Park at Amin Bazar, Tk 400-crore Sirajganj Specialized Industrial Zone and the Tk-150 crore Mirershari Special Economic Zone had long been facing manifold problems including legal tangle, availability of funds, land acquisition and complex bureaucracy. All the projects have got the Cabinet nod.

Industries minister Dilip Barua on Wednesday told The Independent that the government was set to launch all the mentioned industrial projects between 2013 and 2014. He hoped that the ongoing industrial projects would accommodate over 2,500 entrepreneurs with projected employment for five lakh people.

The government has projected a major investment boom that is slated to see the investment-to-GDP ratio rise by over six percentage points by 2014-15.

Barua said work order for the much-awaited Savar Leather Industry Park would be issued within the next couple of months after completing a legal process. He said land acquisition, earth filling, construction, training and loan disbursement for the project had already been completed.

The minister hoped that construction of the industrial park for manufacturing pharmaceutical ingredients at Munshigonj would be completed this year.

The Active Pharmaceutical Ingredients (API) Park project will reduce dependency on imported raw materials for this industry from next year.

The project faced a land acquisition problem and now the government has asked the implementing agency, Bangladesh Small and Cottage Industries Corporation (BSCIC). to complete the construction work by this year itself. The proposed readymade garment (RMG) industrial park worth Tk 438 crore is set to be completed by 2013.

The minister said both the BEPZA and BSCIC had received applications seeking 350 industrial plots which the RMG Park could honour.

The BSCIC is putting up an automobile estate at Amin Bazar in the capital aiming to rehabilitate the automobile engineering workshops, which are scattered all over Dhaka, in a healthy and safe environment.

The industrial estate will have 187 plots of different sizes under the project and after establishment it will create employment opportunities for 20,000 people directly and for many more indirectly, the minister said.

Besides the BSCIC is constructing the largest ever industrial park in Sirajgonj worth Tk 400 crore to boost industrialisation and invigorate the rural economy. There will be 801 industrial plots and, of them, 570 will be reserved for private industrial entrepreneurs.

The project, covering 400 acres at Saidabad and Kalia Haripur in the district town, also received the go-ahead from the economic council, he added.

The Tk 384-crore project, which will have around 801 industrial plots, is expected to be completed by mid-2014. A total of 570 export-oriented, import-substitute and domestic mills and factories will be set up in the industrial park, officials said.

Another industrial plot is coming up at Mirsarai on 25 acres. According to the profile of the project which will be implemented by this year, the town will have 186 industrial plots where 125 small and medium units could be set up.

Once implemented, the project would create 6,000 direct jobs apart from several thousand indirect ones, the minister said.

Besides land acquisition for Gopalganj, Comilla, Kustia and Rangpur industrial estates under BSCIC is going on and is expected to be completed by 2013.

ECNEC approves Tk 5,068 crore for seven development projects

ECNEC approves Tk 5,068 crore for seven development projects

DHAKA, Jan 3 (BSS) – The Executive Committee of the National Economic Council (ECNEC) today approved seven development projects involving Taka 5,068 crore.

Of the projects, the major one is the Taka 3,912-crore Second Local Governance Support Project (LGSP-II), which will provide better services to people by strengthening the capacity of union parishads (UPs).

The approval was given at a meeting of the ECNEC, held in the NEC Conference room in city’s Sher-e- Bangla Nagar with ECNEC Chairperson and Prime Minister Sheikh Hasina in the chair.

“Of the total project cost, Taka 2,995 crore will come from the national exchequer while Taka 2,073 crore as project assistance,” said Planning Division Secretary Bhuiyan Shafiqul Islam while briefing reporters after the meeting. He said the Local Government Division will implement the project by July 2016.

Planning Ministry sources said World Bank (WB) would provide Taka 2,073 crore for the LGSP-II project when the rest would come from the national exchequer.

He said the project aims at ensuring an efficient, accountable and transparent local government system so people can be provided with need-based and better services. The first phase of the project was successfully completed in July 2006-June 2011 period.

During the second phase of the project, the UPs will get equal amount of fund from both the government and the WB, which will also be spent for developing rural communication and hat-bazar infrastructure, water supply and sanitation, education, health and agriculture.

Besides, massive training programmes will be arranged for organizational capacity building of the union parishad, involving social services departments of the government.

The ECNEC also approved the construction of 19 regional passport offices’ project with Taka 104 crore to make it convenient for the people to have their machine readable passport (MRP) from the nearby passport offices.

The committee also approved the construction of the Union Parishad Complex Bhaban (2nd phase) project with a cost of Taka 780 crore.

The other projects approved in the meeting are: Construction of Aviation Refueling Facilities at Sylhet Osmani International Airport (Revised) project (Taka 51 crore-GOB); Construction of Liquid Fuel System for Sirajganj 150 MW Peaking Power Plant (Revised) project (Taka 60 crore-GOB); Emergency rehabilitation & Expansion of Urban Areas Power Distribution system Under Rajshahi Zone (Revised) project (Taka 110 crore-GOB) and Construction of connecting road between Buriganga embankment and Mohammadpur Bus Stand under Dhaka City Corporation project (Taka 51 crore-GOB).

Ministers, advisers to the Prime Minister, members of the Planning Commission, secretaries and officials concerned were present at the meeting.

‘Provide infrastructures, see expats’ investments’,-see-expats%E2%80%99-investments%E2%80%99_440_1_3_1_5.html

‘Provide infrastructures, see expats’ investments’
Staff Correspondent

The Bangladesh government needs to provide sufficient infrastructures, utility services and land to see a good chunk of UK investment coming in the country’s industrial sector, said a visiting speaker of a London borough council.

Mizanur Rahman Chaudhury, Tower Hemlets Speaker of Council, also stressed the need to build special industrial zones and develop good governance to attract the Bangladeshi expatriates in London to invest in their own country.

The Speaker of Council came up with these suggestions when he met Industries Minister Dilip Barua in Dhaka on Sunday.

“Bangladeshi expatriates will be attracted to invest here in industrial sector if they find sufficient infrastructural supports along with special industrial zones,” Mizanur Rahman Chaudhury said, adding that the country has made significanct progress in overall economic condition.

He emphasised construction of special industrial zones, particularly in Sylhet, where the Bangladeshi expatriates in London could invest under public-private partnership.

Dilip Barua said the government prioritised the development of modern technology industries in the country. “Special industrial zones are being set up to attract the foreign investors.”

Dilip Barua highlighted the package incentives for the both local and foreign investors, saying that the government was offering facilities like tax holiday, freedom to use profit and residence permit for them.

“Both local and foreign investors can enjoy facilities equally,” he said, adding that a congenial atmosphere for investment prevailed in the country.

Dilip Barua urged the Bangladeshi expatriates in London to come up with industrial investments and contribute to economic development of their own country.

Five-year plan targets monitoring, evaluation

Five-year plan targets monitoring, evaluation
Star Business Report

The government yesterday formally unveiled the sixth five-year plan with focus on result-based monitoring and evaluation of performances against the targets.

The government aims to attain more than 7 percent growth of the economy a year and limit inflation within 7 percent during the execution period until fiscal 2015.

With the goal of ensuring inclusive economic growth, the document has set a target of bringing down poverty to 22 percent by fiscal 2015 from 31.5 percent at present and create ten million new jobs.

To monitor the results and performances of ministries and various priority sectors against targets set in the plan, yardsticks of evaluation have been included in the plan. The government approved the plan in June this year.

“The plan offers scope to evaluate its targets and achievements in the backdrop of changing reality,” said economist Wahiduddin Mahmud, chair of a 16-member panel of economists who suggested priorities in the framing of the plan.

Mahmud shared it at the ceremony organised to unveil the documents of the plan at the Planning Commission in Dhaka.

Finance Minister AMA Muhith and Planning Minister AK Khandker also spoke on the occasion.

In line with the plan, performances of various sectors and ministries will be measured on the basis of 25-30 yardsticks. General Economic Division of the Planning Commission will publish the monitoring reports based on these indices.

“It is not going to be left in the shelf,” said Prof Shamsul Alam, a member of the Planning Commission, citing the scope of result-based monitoring.

The document, which comes after a decade following donor-prescribed Poverty Reduction Strategy Paper to realise development goals, targets an investment of Tk 13.5 trillion in five years.

Of the total investment, 77.2 percent is expected from the private sector, while the rest from the public sector.

Setting strategies for 10 priority sectors, the plan stressed the need for achieving self-sufficiency in food, accelerating industrialisation for increased exports, address power and energy crunch and upgrade infrastructure.

It also emphasises developing human resources through education, focusing on planned urbanisation and improving people’s health and nutrition condition.

“One of the main goals of the plan is to eliminate regional disparity in income and distribute the benefit of growth to all,” said Planning Minister AK Khandker.

The plan, drafted on the basis of consultation with various stakeholders, focuses on expansion of the manufacturing sector to create new jobs.

Finance Minister AMA Muhith said the plan is different from the past plans that focused more on investment. “It is an indicative document,” he said.

The plan is also reviewable in line with the changes in the context of domestic and global economy, he said.

Govt plans big on Ctg port: PM

Govt plans big on Ctg port: PM
Hasina opens computerised container terminal management

Prime Minister Sheikh Hasina speaks at the launch of a computerised container terminal management system and a radiation detection system at Chittagong Port yesterday.Photo: STAR

Unb, Chittagong

Prime Minister Sheikh Hasina said yesterday the government is working to make Chittagong Port a gateway of South Asia’s commercial hub.

“Steps are being taken to remove all the hassles facing by port users and ensure import-export activities with transparency,” Hasina said while inaugurating the computerised container terminal management system (CTMS) and radiation detection system at the port building in Chittagong.

Currently, more than 90 percent of the country’s export and import is done through the Chittagong Port.

The prime minister said bulk cargo handling has increased by 12 percent and the number of ship arrivals at the port went up by 8 percent during the last fiscal year.

She said the government has undertaken the task of constructing a deep-sea port at Sonadia in Cox’s Bazar to expand commercial activities in South Asia.

On completion of the deep-sea port, the lifestyle of the people of this region, including India, China and Myanmar, will improve, she added.

Hasina said dredging in the channel of the Pashur river will start soon to develop Mongla Port.

She said with the inauguration of the computerised CTMS and the radiation detector, the premier port has been digitalised replacing the manual management operation.

The prime minister said the Chittagong Port has been turned into a safe port in the world with the installation of the radiation detector with financial and technical cooperation from the US.

Prime Minister Sheikh Hasina said illegal transportation of goods will be prevented through radiation pronunciation.

The Chittagong Port through its Mega Port Initiative has joined the international terrorism prevention activities.

Hasina said the Awami League-led government wants to root out terrorism and terrorists at any cost.

She said the improvement of service at the Chittagong Port to international standard will attract increased overseas investment and help expand trade and business.

“We want to become a maritime force in combination with Bangladesh Navy, Bangladesh Coastguard, and Bangladesh Shipping Corporation.”

The Prime Minister said the work on installing Global Maritime Distress and Safety System already began to ensure the protection of mariners and ships.

Besides, International Ship and Port Facility Security (ISPS) Code has already been implemented.

According to the IMO Convention, she said, shipping and maritime culture has been built up in Bangladesh, which has emerged as a shipbuilding nation.

Bangladesh has been building and exporting oceangoing vessels to different countries, including Germany, Finland and Denmark, she added.

“The government has been able to build a peaceful and disciplined image of Bangladesh,” Hasina said, adding that those who were in power in the past had turned Bangladesh into a militant and extremist nation.

Mentioning the government’s firm commitment to turn Chittagong into the commercial capital of the country, Hasina said a tunnel would be built beneath the Karnaphuli river.

Shipping Minister Shahjahan Khan and Chairman of Chittagong Port Authority Commodore Anwarul Islam also spoke on the occasion.

Port officials said container handling capacity of the port will double with the new system introduced that is sure to help ease the complete container handling process and make the stakeholders anxiety-free while tracing out their containers at the yard.

With the implementation of the CTMS, the operational activities of the import and export containers and payment of charges and dues will come under online networking system.

Under the new system, loading and unloading activities of the container ships at the port, shifting of containers in the yard, stacking, tracking, delivery and gate control will be conducted through online billing.

Partial operation of the CTMS system began at the port’s Chittagong Container Terminal and New Mooring Container Terminal on October 10 and at the general cargo berths on October 12 last.

The equipment that will be added to the handling capacity of the port include six straddle carriers, three container movers, 10 low-mast fork lifts and four rubber-tyred gantry cranes worth Tk 117 crore.

The import consignments from Finland, Germany, South Korea, Japan and the USA include equipment for bulk cargo handling as well.

Tax payment goes online in March

Tax payment goes online in March

Star Business Report

The National Board of Revenue (NBR) will introduce an e-payment system in March with an objective of reducing taxpayers’ hassles in paying taxes.

After the introduction of the e-payment method, people will be able to pay taxes through ATM booth, or online by debit or credit card from anywhere.

Taxpayers will need to use tax identification numbers (TINs) to log on to the website of the NBR and will get acknowledgement receipts as a proof to their payments.

“It will be a revolutionary step,” said NBR Chairman Nasiruddin Ahmed at a press meet at his office, organsied to share various achievements and future initiatives taken to boost revenue collection.

Revenue collection by the tax administrator rose 17 percent to Tk 31,605 crore in the July-November period of the current fiscal year from Tk 27,035 crore during the same period a year ago.

The latest collection is higher than the target of the tax administrator.

To boost collection further, the tax collector has already established 13 new income tax zones and four VAT (value added tax) commissionerates.

The NBR chief said the collection in the first five months is 35 percent of the total revenue collection target for fiscal 2011-12.

“We hope to collect the remaining 65 percent in the next seven months,” he said.

Ahmed said Sonali Bank is carrying out a trial run for the introduction of the e-payment system.

“We will get enough revenue once the method is introduced,” he said.

He said the NBR will launch alternative dispute resolution (ADR) in February to speed up the settlement of 25,000 pending cases involving Tk 20,000 crore.

Ahmed said the NBR will launch ASYCUDA World, a customs data software, in February for full automation of customs.

As per the initiative, the tax administrator has already inked an agreement with United Nations Conference on Trade and Development.

“The use of the technology (ASYCUDA World) will help prevent leakage in duty collection through various means such as under invoicing,” said Ahmed.

“From January we are starting an intensive monitoring to ensure tax compliance. We will begin a massive drive in the field level in this regard,” the NBR chief said.

The tax administrator has also taken steps to keep Chittagong Customs House open round the clock in a bid to facilitate overseas trade.

Beginning from February next year, the Chittagong customs office will initially remain open till 10pm instead of 5pm now. Banks will also remain open, he said.

Ahmed said the tax administrator has also taken steps to set up an Integrity Unit at the NBR to ensure accountability and transparency of tax officials.

“The Integrity Unit will work as an independent unit. We are now working on the framework,” he said.

For automation, the World Bank has given assurance to finance under its Program for Results arm.

Ahmed said the WB will provide $200-300 million for the automation of the NBR.

NBR receives Tk 31,650 cr revenue in first five months

NBR receives Tk 31,650 cr revenue in first five months

DHAKA, Dec 27 (BSS)- Revenue collection witnessed a rise during the first five months (July-November) of the current fiscal as National Board of Revenue (NBR) received Tk 31,650 crore, up 382 crore from its target of Tk 31, 213.40 crore.

“The growth of revenue collection is about 17 percent and if we are able to maintain this growth we will easily be able to achieve the revenue collection target of the current fiscal,” said NBR Chairman Dr Nasiruddin Ahmed at a press conference here today.

The government has fixed Tk 91,000 crore revenue collection target in the fiscal 2011-12.

Of Tk 31,650 crore, the NBR received Tk 11,877.76 crore from VAT, Tk 11,733.10 crore from customs and Tk 7804.19 crore from income tax.

NBR members Sayed Aminul Karim, MA Kader Sarker, Mohammad Alauddin and Jahanara Siddiqui, among others, were present at the press conference.

New policy fires up solar energy business

New policy fires up solar energy business
Sohel Parvez

A government policy to promote renewable energy has lured a large number of new entrants into the business, particularly for solar panel installations, sector people said.

In the last two years, nearly 100 firms and NGOs have appeared on the scene to sell technologies including solar home systems, irrigation pumps, water heaters, street lights and their accessories and batteries.

“We have taken it as an emerging business,” said Taskin Choudhury, head of business development of Allied Solar Energy Ltd, which entered the trade a year ago to supply solar technologies, panels and accessories.

The government has taken a policy to meet 5 percent of the country’s energy demand through green energy by 2015 and 10 percent by 2020.

In the last seven years, more than 10 lakh rural homes in off-grid areas have got lights through solar home systems (SHS), while millions still live without electricity.

“It is a big market. Only one crore homes have come under solar power,” said Md Akhtar Hamid Khan, chief operating officer of InGen Technology Ltd.

Some 80,000 SHSs are installed a month, said Choudhury of Allied Solar. Installation of SHSs will also require accessories such as battery and inverter.

Nearly half a dozen firms, including Rahimafrooz Renewable Energy and Electro Solar Power, stepped in to assemble panels.

The government had earlier set conditions that newly built buildings will have to meet a portion of their electricity requirements through solar energy in order to get fresh electricity connection.

The requirement for producing green energy is 3 percent and 7 percent of the total electricity demand in the residential and commercial buildings respectively.

Syed Istiaque Ahmed, head of sales of Rahimafrooz Renewable Energy, however, said many are assembling panels, targeting mainly the off-grid areas.

“There is a huge prospect of solar irrigation pump,” said the official.

Noting a recent rise in the installation of solar panels in the grid areas, he said a business opportunity has been created suddenly. But only 25 percent of the buyers are conscious about quality, he said.

Choudhury of Allied said his company works with around 20 realtors to set up solar panels in new buildings. “This segment of the market is also big.”

Choudhury also cited the potential of business of solar street lights, industrial water heaters, solar power plants and supplying solar power to the national grid.

“We have already won a government contract to install solar street lights from Notre Dame College gate to Kakrail Mosque,” he said.

Farming subsidy for 10 districts

Farming subsidy for 10 districts
Author / Source : UNB

Dhaka, Dec 25: Some 30,000 farmers of 10 more districts willget 25 percent subsidy in purchasing farm machinery this year.

Official sources said the subsidy will be provided among farmers inthe 10 districts, including Gaibandha, Nilphamari, Barisal, Magura and Bandarban for buying 2,400 power tillers, 200 tractors and 256 power threshers. The government introduced the subsidy in January 2010 in 15 districts. It has already decided to provide it in 10 more districts this year.

Sheikh Md Nazim Uddin, project director of Enhancement of Crop Production through Farm Mechanisation at DAE, said the government hasalready subsidised the purchase of 19,800 power tillers, 8 combined harvesters, 860 tractors, 200 sprayers and 1088 power threshers worth Tk 680 million in 15 since January 2010.

Standard Chartered official ‘bullish’ on B’desh

Standard Chartered official ‘bullish’ on B’desh
Bank seeking to mobilise funds for power sector
A Z M Anas

Bangladesh will see a surge in capital from advanced and emerging economies in the next five years, lured by cheaper stocks and tax incentives, a senior Standard Chartered Bank official says.

Harinder Singh, a managing director of the UK-based but emerging markets-focused bank, has said institutional investors, mutual funds, private equity firms, and wealth management groups from the Organisation for Economic Cooperation and Development (OECD) countries would come to Bangladesh in droves to invest.

OECD is a 34-member bloc of the world’s most advanced and emerging economies.

“This is a time of great opportunity,” said the Mumbai-based banker, even if he is aware of the risks associated with euro-zone crisis and a stuttering global recovery. He has no estimates of the potential flow.

His comments came as the average stock price-to-earnings ratio in the capital market hovered below 15 while the government waived a 10 per cent tax on income from mutual funds.

Although Dhaka Stock Exchange, the premier bourse, is one of the worst-performers in Asia this year, its market capitalisation is still as high as $33 billion.

Cheaper stocks have provided rooms for bargain hunting by foreign portfolio investors whose participation in Bangladesh’s equity market is negligible.

Mr Singh said his bank is also seeking to mobilise funds for Bangladesh’s power sector, which requires an investment of US$9.0 billion to produce 9,426 megawatts of electricity by 2015.

“We’re trying to raise Bangladesh’s profile abroad. Investments will be flowing in power and telecommunications sectors,” he said.

Foreign direct investment climbed by 30 per cent in 2010 to US$913.32 million, up from $700.16 million a year ago, the United Nations Conference Trade and Development (UNCTAD) data showed.

Mr. Singh, whose career with Standard Chartered spans as long as 17 years, said international capital should be harnessed in a way, making sure that it adds maximum value and trickles in useful and productive sectors.

Although liquidity crisis has engulfed the local banking industry, he said Bangladesh operations of Standard Chartered remain unscathed, because “we’re disciplined in balance sheets.”

However, the bank’s profit after tax plunged by Tk 350 million to Tk 4.5 billion in 2010, down from Tk 4.8 billion the year before, according to figures available with the bank.

Mr Singh, a business graduate of Delhi University, said positive demographics and domestic demand would propel Bangladesh’s growth in the coming years.

“We’re bullish about (Bangladesh’s) prospects,” he said, insisting that young people who make up two-thirds of Bangladesh’s 160 million population would prop up growth.

The country’s internal demand is driven mainly by its 3.0 million-odd middle class with considerable spending habit, say economists.

Despite the debt crisis in the euro-zone and US economic woes, the Bangladesh economy expanded at 6.6 per cent in the last financial year, its highest since the early 1970s.

“Lots of countries wouldn’t have growth at all during the time,” Mr Singh said.

He didn’t say whether it was a “right step” to allow more private banks to operate in the country — a move that has already sparked nationwide controversy.

But he said market forces would determine whether it is good or bad to issue new licenses for private lenders in what is otherwise Bangladesh’s crowded banking sector.

Excluding state banks, a total of 39 private banks are operating in Bangladesh and the central bank is now reviewing applications of 37 sponsors who are seeking new banking licenses.

Mr Singh noted that attracting clients would be the biggest hurdle for new banks, making it challenging for them to stay afloat.

The depreciation of Bangladesh Taka doesn’t worry the banking professional who said India’s Rupee declined by 16 per cent this year — the worst performing currency in Asia in 2011.

Asked whether his bank planned to be listed in Bangladesh’s stock markets in near future, Mr Singh said he is not aware of any such move.

“Bangladesh is a key market for us. We feel that we’re a local bank and we bring in cross-border expertise,” he said. “We’re here for 107 years and not focused on short-term profitability.”

BB set to implement Basel-III from 2014

BB set to implement Basel-III from 2014
Siddique Islam

Bangladesh has started preparations to implement the Basel-III framework for bank companies from 2014 in line with the global standard, a top central bank official said Monday.

“We’ve started the ground work to implement the Basel-III for bank companies by 2014,” Executive Director of the Bangladesh Bank (BB) SK Sur Chowdhury told the FE.

The Basel-III is a new global regulatory standard on bank capital adequacy and liquidity agreed upon by the members of the Basel Committee on Banking Supervision.

The third of the Basel Accords was developed in response to the deficiencies in financial regulation revealed by the late-2000s financial crisis.

The Basel-III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage.

“Liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) are pros and cons of the Basel-III framework,” Mr Sur said, adding that the central bank is providing training to the commercial bankers about the LCR and NSFR.

The LCR is a new liquidity standard introduced by the Basel Committee to ensure that a bank maintain an adequate level of unencumbered, high-quality liquid assets that can be converted into cash to meet its liquidity needs for 30 calendar days.

The NSFR is a new standard introduced by the Basel Committee aiming to limit over-reliance on short-term wholesale funding assessment of liquidity risk across all on and off-balance sheet items.

As part of the preparations, the central bank has been organising a three-day-long training programme on liquidity risk management tools since Sunday. It will continue today (Tuesday), he added.

“We’re organising the training programme aiming to improve efficiency of the commercial bank officials about measuring, identifying and controlling of liquidity risks in line with the existing Basel-II and Basel-III frameworks,” Mr Sur noted.

He also said the central bank advises the bankers for taking necessary measures to submit liquidity profile reports in line with the BB’s prescribed formats.

Liquidity profile is a snapshot of a bank’s overall liquidity position in different time buckets.

“We need accurate liquidity profile reports for taking proper measures to keep the country’s money market stable,” the central banker said.

The training programme has been discussing implication of the credit-deposit ratio (CDR) to avoid liquidity risk.

The CDR is the proportion of loan-assets (investment-assets) created by the banks from the deposits received.

“Excessive credit growth, that is, when the credit growth is higher than the deposit growth, causes higher interest rates,” the BB said in a document, adding that this is simple, because banks are borrowing for a short term for credit expansion.

“When the payment is due they again borrow. But when most of the banks have the similar situation in their books, scarcity of fund arises which causes higher interest rates,” it noted.

Bangladesh is now implementing the Basel-II accord to consolidate capital base of the banks in line with the international standard.

It has been prepared on the basis of three pillars: minimum capital requirement, supervisory review process and market discipline.

Three types of risks – credit risk, market risk and operational risk – have to be considered under the minimum capital requirement.