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INCOMELESS EMPLOYMENT SITUATION
Real income declines, Banking sector orphan, capital flight fears in election year: CPD

Business Report

The Center for Policy Dialogue (CPD) at a pre-budget briefing on Tuesday in the city criticized the government’s handling of the banking sector saying this sector has become an orphan.
Those responsible to act as its guardians are abusing it like anything to achieve their targets. It has also warned of massive capital flight in the election year when money circulation is posed to become too much.
CPD Distinguish Fellow Dr Debapriya Bhattachariya said the year 20117 was a year of banking scam. A handicapped banking system is building up. Fearing the possibility of money laundering before the upcoming national elections he said the banking sector has been plagued by financial scams, non-performing loans, inefficiency, and slack monitoring and supervision.
He mentioned that, “Every time before election, the remittance increases but more money gets laundered. Money laundering happens through banking sector, besides unstable capital market and high import payments.”
It has also disagreed with the government projected GDP growth at 7.65 percent saying it is too much on high side. Like the WB and ADB projections, CPD also believes it may be between 6.56 percent to around 7 percent.
In its recommendations from the meeting held at CIRDAP Auditorium, CPD also doubted the outcome of the government projected GDP growth saying in a year when it did not contribute in employment growth such high projection is controversial. It said, during FY 2016-17, the growth resulted in an increase in job growth in comparison to 2015-16; but at the same time it reduced the average real income of the people.
“The growth has been fueled mainly by public sector investment,” said Towfiqul Islam Khan, a research fellow at CPD. “Credit growth increased in the private sector, but investment did not increase. So, where did all the money go?”
Issuing a note of caution that there is always a tendency of capital flight ahead of election, he called on the government and the National Board of Revenue (NBR) to keep a close watch to avert such attempts.
CPD pitched for an increase in allocation for education, health and social safety net in the budget of FY 2018-19. It has recommended for raising the tax-free ceiling on individual income to Tk 3 lakh, and keeping the corporate income tax unchanged for the moment.
CPD said last year real income of working people fell towards a ‘income less employment’ situation. The independent think tank came up with remark after analysing the state of the Bangladesh Economy in 2017-18.
Dr. Debapriya Bhattacharya, presenting CPD’s recommendations for fiscal 2018-19 budget, said, though employment generation marked some increase in FY2017, the real income has declined.
He said, “Female workers and rural workers are facing more decline in their real monthly income while the unemployment rate among the youth with higher education is increasing. Regional discrimination is also there as the decline is higher among the people from North Bengal and South-East Bengal.”
The real monthly income of female suffered 3.8 per cent erosion, while that of man suffered 1.9 per cent erosion, and in urban area, male workers monthly income increased 0.9 per cent while in rural area male workers face 4.1 per cent erosion.
He said, “More than one-third of the total youth labour force with higher education is unemployed. He also termed the current state of banking sector as an ominous sign for the country’s economy.
Dr Khondaker Golam Moazzem emphasized on proper monitoring of the stock market and effective steps to design the budget for keeping macro-economy stable. It also recommended increased allocation for social security and to keep the Rohingya crisis in mind while preparing the budget.
According to CPD, around US$1.1 billion will be required to cover the expenditure for the Rohingya on account of food security, sanitation, shelter, site management and health.
CPD has called for reducing personal income tax rate for the first slab to 7.5 per cent from the prevailing rate of 10 per cent, adjustments of corporate tax rates should be done in a staggered way over the medium term to absorb any revenue shock.

Comment

Business Report

The Center for Policy Dialogue (CPD) at a pre-budget briefing on Tuesday in the city criticized the government’s handling of the banking sector saying this sector has become an orphan.
Those responsible to act as its guardians are abusing it like anything to achieve their targets. It has also warned of massive capital flight in the election year when money circulation is posed to become too much.
CPD Distinguish Fellow Dr Debapriya Bhattachariya said the year 20117 was a year of banking scam. A handicapped banking system is building up. Fearing the possibility of money laundering before the upcoming national elections he said the banking sector has been plagued by financial scams, non-performing loans, inefficiency, and slack monitoring and supervision.
He mentioned that, “Every time before election, the remittance increases but more money gets laundered. Money laundering happens through banking sector, besides unstable capital market and high import payments.”
It has also disagreed with the government projected GDP growth at 7.65 percent saying it is too much on high side. Like the WB and ADB projections, CPD also believes it may be between 6.56 percent to around 7 percent.
In its recommendations from the meeting held at CIRDAP Auditorium, CPD also doubted the outcome of the government projected GDP growth saying in a year when it did not contribute in employment growth such high projection is controversial. It said, during FY 2016-17, the growth resulted in an increase in job growth in comparison to 2015-16; but at the same time it reduced the average real income of the people.
“The growth has been fueled mainly by public sector investment,” said Towfiqul Islam Khan, a research fellow at CPD. “Credit growth increased in the private sector, but investment did not increase. So, where did all the money go?”
Issuing a note of caution that there is always a tendency of capital flight ahead of election, he called on the government and the National Board of Revenue (NBR) to keep a close watch to avert such attempts.
CPD pitched for an increase in allocation for education, health and social safety net in the budget of FY 2018-19. It has recommended for raising the tax-free ceiling on individual income to Tk 3 lakh, and keeping the corporate income tax unchanged for the moment.
CPD said last year real income of working people fell towards a ‘income less employment’ situation. The independent think tank came up with remark after analysing the state of the Bangladesh Economy in 2017-18.
Dr. Debapriya Bhattacharya, presenting CPD’s recommendations for fiscal 2018-19 budget, said, though employment generation marked some increase in FY2017, the real income has declined.
He said, “Female workers and rural workers are facing more decline in their real monthly income while the unemployment rate among the youth with higher education is increasing. Regional discrimination is also there as the decline is higher among the people from North Bengal and South-East Bengal.”
The real monthly income of female suffered 3.8 per cent erosion, while that of man suffered 1.9 per cent erosion, and in urban area, male workers monthly income increased 0.9 per cent while in rural area male workers face 4.1 per cent erosion.
He said, “More than one-third of the total youth labour force with higher education is unemployed. He also termed the current state of banking sector as an ominous sign for the country’s economy.
Dr Khondaker Golam Moazzem emphasized on proper monitoring of the stock market and effective steps to design the budget for keeping macro-economy stable. It also recommended increased allocation for social security and to keep the Rohingya crisis in mind while preparing the budget.
According to CPD, around US$1.1 billion will be required to cover the expenditure for the Rohingya on account of food security, sanitation, shelter, site management and health.
CPD has called for reducing personal income tax rate for the first slab to 7.5 per cent from the prevailing rate of 10 per cent, adjustments of corporate tax rates should be done in a staggered way over the medium term to absorb any revenue shock.


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ARASTOO KHAN RESIGNS
IBBL appoints Nazmul Hasan as new chairman

Business Report

In a surprise move Chairman of Islami Bank Bangladesh Ltd (IBBL) Arastoo Khan today resigned on personal ground last week. He told media that he was unable to bear the work loan. Prof Nazmul Hasan of Dhaka University has replaced him in the post.
IBBL held a board meeting on Tuesday afternoon in which board members accepted his (Arastoo) resignation and confirmed the appointment of the new chairman, the sources said.
A former additional secretary at the Economic Relations Division, Arastoo became a director of the bank as representative of Armada Spinning Mills - a hitherto unknown company and became IBBL chairman on January 5, 2017. Like his deperture his arrival was equally dramatic.
He was scheduled to continue as IBBL chairman for three years, but the resigned after 15 months of his joining came as a big surprise.
Chairman of Islami Bank Foundation—-the Shariah-based bank’s CSR wing, also being changed. Shamim Mohammad Afzal, an independent director has replaced Syed Manjurul Islam.
Arastoo’s sudden departure has left other directors and employees scratching their head in surprise as indications suggest more changes are afoot.
He declined to say whether or not he was forced to quit. “I am not interested to talk about this right now,” he said.
Directors and a number of senior executives of the bank said they were completely in the dark about the development. “I had no idea about the changes,” a daily quoted a director as saying, requesting to be named.
“I don’t know who are bringing the changes and why,” he said.
A Bangladesh Bank official said Islami Bank had been facing liquidity crunch over the past few months because of its aggressive lending.
The advance-deposit ratio of the bank has recently crossed 92 percent, in violation of the permissible limit of 90 percent set by the BB for Shariah-based banks, the official added.
In some cases, the Islami Bank even faced crisis in disbursing large-scale loans in recent months, BB official said.
The Islami Bank board also appointed Prof Selim Uddin of Chittagong University, as a board member and executive committee chairman of the bank yesterday. He replaced Maj Gen (retd) Abdul Matin who has been named as new chairman of the bank’s risk management committee.
Selim said that the bank management recently requested him to serve the board as a director. “I don’t know yet whether I will be an independent director or a representative of a company in the bank’s board,” the daily quoted him as saying.
In January last year, the bank saw some major changes. At the time, its chairman, several directors, managing director and heads of different committees were changed.
The bank started witnessing the changes after several little-known companies bought shares of the bank.
S Alam Group - a Chittagong-based conglomerate, is allegedly linked to these companies.
Arastoo, who became a director of the bank as a representative of Armada Spinning Mills, another little known company of S Alam Group.
He had replaced Mustafa Anwar, who had represented Ibn Sina Trust, which is believed to have connections with the Jamaat-e-Islami.
The bank had also brought changes in the executive committee, audit committee and risk management committee at that time.
Some were removed from the board within a few months. Then on May 20 last year, a group of seven directors threatened to step down if a single of them come under pressure to resign.
They made the threat following disclosure by Syed Ahsanul Alam, former vice-chairman of the bank, that he was being asked by some quarters to resign. Ahsanul was finally removed from his executive post on May 23. A few days later, he was also removed from the board of directors.
Earlier this month, five top officials of the bank, including an additional managing director and three deputy-managing directors quit. “More changes in the top management isa also expected soon,” another director said yesterday.

Comment

Business Report

In a surprise move Chairman of Islami Bank Bangladesh Ltd (IBBL) Arastoo Khan today resigned on personal ground last week. He told media that he was unable to bear the work loan. Prof Nazmul Hasan of Dhaka University has replaced him in the post.
IBBL held a board meeting on Tuesday afternoon in which board members accepted his (Arastoo) resignation and confirmed the appointment of the new chairman, the sources said.
A former additional secretary at the Economic Relations Division, Arastoo became a director of the bank as representative of Armada Spinning Mills - a hitherto unknown company and became IBBL chairman on January 5, 2017. Like his deperture his arrival was equally dramatic.
He was scheduled to continue as IBBL chairman for three years, but the resigned after 15 months of his joining came as a big surprise.
Chairman of Islami Bank Foundation—-the Shariah-based bank’s CSR wing, also being changed. Shamim Mohammad Afzal, an independent director has replaced Syed Manjurul Islam.
Arastoo’s sudden departure has left other directors and employees scratching their head in surprise as indications suggest more changes are afoot.
He declined to say whether or not he was forced to quit. “I am not interested to talk about this right now,” he said.
Directors and a number of senior executives of the bank said they were completely in the dark about the development. “I had no idea about the changes,” a daily quoted a director as saying, requesting to be named.
“I don’t know who are bringing the changes and why,” he said.
A Bangladesh Bank official said Islami Bank had been facing liquidity crunch over the past few months because of its aggressive lending.
The advance-deposit ratio of the bank has recently crossed 92 percent, in violation of the permissible limit of 90 percent set by the BB for Shariah-based banks, the official added.
In some cases, the Islami Bank even faced crisis in disbursing large-scale loans in recent months, BB official said.
The Islami Bank board also appointed Prof Selim Uddin of Chittagong University, as a board member and executive committee chairman of the bank yesterday. He replaced Maj Gen (retd) Abdul Matin who has been named as new chairman of the bank’s risk management committee.
Selim said that the bank management recently requested him to serve the board as a director. “I don’t know yet whether I will be an independent director or a representative of a company in the bank’s board,” the daily quoted him as saying.
In January last year, the bank saw some major changes. At the time, its chairman, several directors, managing director and heads of different committees were changed.
The bank started witnessing the changes after several little-known companies bought shares of the bank.
S Alam Group - a Chittagong-based conglomerate, is allegedly linked to these companies.
Arastoo, who became a director of the bank as a representative of Armada Spinning Mills, another little known company of S Alam Group.
He had replaced Mustafa Anwar, who had represented Ibn Sina Trust, which is believed to have connections with the Jamaat-e-Islami.
The bank had also brought changes in the executive committee, audit committee and risk management committee at that time.
Some were removed from the board within a few months. Then on May 20 last year, a group of seven directors threatened to step down if a single of them come under pressure to resign.
They made the threat following disclosure by Syed Ahsanul Alam, former vice-chairman of the bank, that he was being asked by some quarters to resign. Ahsanul was finally removed from his executive post on May 23. A few days later, he was also removed from the board of directors.
Earlier this month, five top officials of the bank, including an additional managing director and three deputy-managing directors quit. “More changes in the top management isa also expected soon,” another director said yesterday.


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Midland Bank raises syndicated loan of Tk 598m

Business Report

Midland Bank Limited and Infrastructure Development Company Limited successfully raised syndicated term laon of BDT 598 million for Kushiyara Auto Bricks Limited; located at Beani Bazar in Sylhet.  
The financial closing ceremony of loan syndication amounting to BDT 598.0 Million to finance the debt portion for setting up a modern environment friendly auto brick manufacturing plant named “Kushiyara Auto Bricks Limited” (KABL), was held at Hotel Sarina on April 12.
Midland Bank Limited (MDB) and Infrastructure Development Company Limited (IDCOL) were the joint Lead Arrangers for this transaction. Participants in this loan syndication were IDCOL, Midland Bank and Union Capital Limited (UCL). Bangladesh Bank is considering this project under “Financing Brick Kiln Energy Improvement Project” which is funded by Asian Development Bank (ADB).  
KABL will be using “Automated Tunnel Kiln” (ATK) technology with a production capacity of 180,000 pieces of bricks per day. The project will be located at Beani Bazar of Sylhet. Mr. M Motiur Rahman, Managing Director of KABL, Mr. Md. Ahsan-uz Zaman, Managing Director & CEO of MDB, Mr. Nazmul Haque, Director (Investment) & Head of Advisory, IDCOL, Mr. Mahmudul Alam, Managing Director & CEO of UCL, Mr. Rathin Kumar Paul, Deputy General Manager, Sustainable Finance Department were among others present.
Mr. Tika R. Limbu, Unit Head, Project Administration Unit, ADB, Mr. Zhou Yong Xu, Managing Director, Huanggang Huayao Zhongyang Kiln Company Ltd. Mr. Mohammad Masoom, Additional Managing Director, MDB, Mr. Md. Zahid Hossain, SEVP & Head of Corporate Banking Division, MDB, Mr. Nazmul Alam, Asian Development Bank and Mr. Mohammed Zahidul Haque, Head of  IEEF, IDCOL were also present, said a press release.

Comment

Business Report

Midland Bank Limited and Infrastructure Development Company Limited successfully raised syndicated term laon of BDT 598 million for Kushiyara Auto Bricks Limited; located at Beani Bazar in Sylhet.  
The financial closing ceremony of loan syndication amounting to BDT 598.0 Million to finance the debt portion for setting up a modern environment friendly auto brick manufacturing plant named “Kushiyara Auto Bricks Limited” (KABL), was held at Hotel Sarina on April 12.
Midland Bank Limited (MDB) and Infrastructure Development Company Limited (IDCOL) were the joint Lead Arrangers for this transaction. Participants in this loan syndication were IDCOL, Midland Bank and Union Capital Limited (UCL). Bangladesh Bank is considering this project under “Financing Brick Kiln Energy Improvement Project” which is funded by Asian Development Bank (ADB).  
KABL will be using “Automated Tunnel Kiln” (ATK) technology with a production capacity of 180,000 pieces of bricks per day. The project will be located at Beani Bazar of Sylhet. Mr. M Motiur Rahman, Managing Director of KABL, Mr. Md. Ahsan-uz Zaman, Managing Director & CEO of MDB, Mr. Nazmul Haque, Director (Investment) & Head of Advisory, IDCOL, Mr. Mahmudul Alam, Managing Director & CEO of UCL, Mr. Rathin Kumar Paul, Deputy General Manager, Sustainable Finance Department were among others present.
Mr. Tika R. Limbu, Unit Head, Project Administration Unit, ADB, Mr. Zhou Yong Xu, Managing Director, Huanggang Huayao Zhongyang Kiln Company Ltd. Mr. Mohammad Masoom, Additional Managing Director, MDB, Mr. Md. Zahid Hossain, SEVP & Head of Corporate Banking Division, MDB, Mr. Nazmul Alam, Asian Development Bank and Mr. Mohammed Zahidul Haque, Head of  IEEF, IDCOL were also present, said a press release.


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Banks donate Tk 163cr to PM’s relief fund

Business Report

Prime Minister’s Relief and Welfare Fund has become the biggest recipient of donations from commercial banks outmaneuvering all other recipients from the banks’ corporate social responsibility fund. However such regular donations are being made voluntarily or on request from political quarters is not known.  
The banks spent Tk 744 crore from their CSR funds in 2017, Tk 496 crore in 2016 and Tk 527 crore in 2015.
They had also provided Tk 85 crore to the prime minister in August last year as support for flood victims on humanitarian ground.
The Bangladesh Association of Banks, a forum of private banks’ directors, has donated Tk 163 crore to Prime Minister’s Relief and Welfare Fund last week. The chairmen and managing directors of all private banks handed over cheques separately to Prime Minister Sheikh Hasina at an event on Friday at Gono Bhavan, according to banking sources.
Earlier on April 3, the banks’ directors and chief executive officers along with their spouses attended a function at Gono Bhaban upon the prime minister’s invitation.
The BAB circulated a letter to all private banks last month asking the 30 old banks to donate at least Tk 5 crore each and the 10 new banks Tk 1 crore each to the PM’s Relief and Welfare Fund.
The amounts were given from the banks’ corporate social responsibility funds, according to various banks’ chief executives.
Exim Bank, whose chairman is Mazumder, donated Tk 11 crore to the relief fund, the highest, while Islami Bank, the country’s largest private bank, gave Tk 5 crore.

Comment

Business Report

Prime Minister’s Relief and Welfare Fund has become the biggest recipient of donations from commercial banks outmaneuvering all other recipients from the banks’ corporate social responsibility fund. However such regular donations are being made voluntarily or on request from political quarters is not known.  
The banks spent Tk 744 crore from their CSR funds in 2017, Tk 496 crore in 2016 and Tk 527 crore in 2015.
They had also provided Tk 85 crore to the prime minister in August last year as support for flood victims on humanitarian ground.
The Bangladesh Association of Banks, a forum of private banks’ directors, has donated Tk 163 crore to Prime Minister’s Relief and Welfare Fund last week. The chairmen and managing directors of all private banks handed over cheques separately to Prime Minister Sheikh Hasina at an event on Friday at Gono Bhavan, according to banking sources.
Earlier on April 3, the banks’ directors and chief executive officers along with their spouses attended a function at Gono Bhaban upon the prime minister’s invitation.
The BAB circulated a letter to all private banks last month asking the 30 old banks to donate at least Tk 5 crore each and the 10 new banks Tk 1 crore each to the PM’s Relief and Welfare Fund.
The amounts were given from the banks’ corporate social responsibility funds, according to various banks’ chief executives.
Exim Bank, whose chairman is Mazumder, donated Tk 11 crore to the relief fund, the highest, while Islami Bank, the country’s largest private bank, gave Tk 5 crore.


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EU complains to WTO over US high tariffs

AFP, Geneva

The European Union on Monday followed China in complaining to the World Trade Organization (WTO) over US tariffs on steel and aluminium imports.
“Having a substantial interest as an exporter in this case, the European Union requests consultations with the United States,” the EU said in a statement published on the world trade body’s website.
US President Donald Trump sparked fears of a trade war in March when he decided to impose steep tariffs on steel and aluminium imports, primarily to target China, but also EU countries.
Brussels said in the document the aim of the discussions would be to “exchange views and seek clarification regarding the proposed measures” and to reach “an understanding on ways to achieve” protection, as set out in the WTO’s Agreement on Safeguards.
The EU said it wanted to hold the consultations “as soon as possible”.
A European Commission source told AFP: “The discussions between the EU and the US are currently ongoing. Contacts continue at several levels, notably on the issue of global overcapacity in the steel and aluminium sectors.
“In these discussions, the European Commission is insisting on getting a full and unconditional exemption from the announced steel and aluminium tariffs.” On April 5 China also filed a complaint with the WTO, but Beijing went through its Dispute Settlement Body.

Comment

AFP, Geneva

The European Union on Monday followed China in complaining to the World Trade Organization (WTO) over US tariffs on steel and aluminium imports.
“Having a substantial interest as an exporter in this case, the European Union requests consultations with the United States,” the EU said in a statement published on the world trade body’s website.
US President Donald Trump sparked fears of a trade war in March when he decided to impose steep tariffs on steel and aluminium imports, primarily to target China, but also EU countries.
Brussels said in the document the aim of the discussions would be to “exchange views and seek clarification regarding the proposed measures” and to reach “an understanding on ways to achieve” protection, as set out in the WTO’s Agreement on Safeguards.
The EU said it wanted to hold the consultations “as soon as possible”.
A European Commission source told AFP: “The discussions between the EU and the US are currently ongoing. Contacts continue at several levels, notably on the issue of global overcapacity in the steel and aluminium sectors.
“In these discussions, the European Commission is insisting on getting a full and unconditional exemption from the announced steel and aluminium tariffs.” On April 5 China also filed a complaint with the WTO, but Beijing went through its Dispute Settlement Body.


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Blacklisted millers to supply rice again to govt stock

Business Report

Budging to pressure from dishonest traders belonging to the ruling party, the government has decided to buy rice from blacklisted millers along with regular suppliers in the coming boro season to meet the procurement target
Food Minister Qamrul Islam made the disclosure last week in the city saying this year’s target to buy 9 lakh tonnes of rice and 1.5 lakh tonnes of paddy in the boro season is too big and cooperation is needed from all to fulfill it.
In 2017, the government blacklisted some millers for two years as they had broken contracts to supply rice in time to make quick bucks by creating a false crisis after a flood-hit crop loss.      
The government did not purchase anything from the blacklisted millers in the last
Aus and Aman seasons, the minister said. “But this time, he said the government don’t want to frustrate anybody and agree to buy from them as well.
A decision in principle has been taken in this regard.
Qamrul spoke at a meeting with the food officials at the Directorate General of Food, the food ministry said in a statement.
During the procurement drive from May 2 to August 31, the government will pay Tk 38 for each kilogram of rice, a 12 percent year-on-year rise. The food reserve has hit 12 lakh tonnes, a 20-year high by now he said in this connection. It was very poor last year.

Comment

Business Report

Budging to pressure from dishonest traders belonging to the ruling party, the government has decided to buy rice from blacklisted millers along with regular suppliers in the coming boro season to meet the procurement target
Food Minister Qamrul Islam made the disclosure last week in the city saying this year’s target to buy 9 lakh tonnes of rice and 1.5 lakh tonnes of paddy in the boro season is too big and cooperation is needed from all to fulfill it.
In 2017, the government blacklisted some millers for two years as they had broken contracts to supply rice in time to make quick bucks by creating a false crisis after a flood-hit crop loss.      
The government did not purchase anything from the blacklisted millers in the last
Aus and Aman seasons, the minister said. “But this time, he said the government don’t want to frustrate anybody and agree to buy from them as well.
A decision in principle has been taken in this regard.
Qamrul spoke at a meeting with the food officials at the Directorate General of Food, the food ministry said in a statement.
During the procurement drive from May 2 to August 31, the government will pay Tk 38 for each kilogram of rice, a 12 percent year-on-year rise. The food reserve has hit 12 lakh tonnes, a 20-year high by now he said in this connection. It was very poor last year.


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