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Thailand has agreed to export up to 1.0 million tonnes of rice to Bangladesh in the next five years under government-to-government (G2G) arrangement. Of the total quantity, some 150,000 tonnes of rice will be available this year. A memorandum of understanding (MoU) to this effect is expected to be signed today (Thursday). The agreement came on Wednesday, the first day of the two-day 4th Joint Trade Committee (JTC) meeting between Bangladesh and Thailand, which is being held at a city hotel after a gap of four years. Sources close to the meeting said the Commerce Minister of Thailand and the Food Minister of Bangladesh will sign the MoU. They said though the rice will be supplied every time on the basis of prevailing market price, the MoU will help Bangladesh import rice at fair price under G2G arrangement. "The MoU will actually be a political understanding between the governments of the two countries to get rice timely," said Bangladesh Ambassador to Thailand Saida Tasneem, who attended the senior official level JTC meeting on Wednesday. Commerce Secretary Shubhashish Bose and Director General of the Department of Trade Negotiation Boonyarit Kalayanamit led Bangladesh and Thailand sides respectively at the first day's of JTC meeting. The ministerial level JTC meeting will be held on the concluding day today (Thursday) with Bangladesh Commerce Minister Tofail Ahmed and Thai Commerce Minister Apiradi Tantraporn leading their respective teams. High-level delegations comprising representatives of different ministries and private sectors of both the countries attended Wednesday's meeting that also discussed the scopes of increasing trade and investment between the two countries. Sources said the meeting discussed about the scope of signing a comprehensive free trade agreement (FTA), but agreed to set new target of doubling trade between the two countries by 2021 from US $ 995 million to $ 1.8 billion. The Bangladesh ambassador to Thailand said though bilateral trade between Dhaka and Bangkok increased during the last two years, Bangladesh's export to Thailand dropped significantly after 2012. Ms Tasneem said the 4th JTC meeting is likely to help reach the bilateral trade target set by the two countries by focusing on trade-related issues, including comprehensive FTA. "We are looking towards more intensive trade and investment cooperation with Thailand," she told the FE. A Commerce Ministry official, attending the meeting, said the Thai side has shown more interest in FTA, but the Bangladesh side was for conducting a feasibility study first in this regard. As Bangladesh enjoys duty-free facilities as a Least Developed Country, he said a study is needed first to assess benefits of FTA with Thailand, he added. The Bangladesh side, however, placed a list of 36 products to get duty-free quota-free (DFQF) facility from Thailand. Besides, the two sides agreed to set a common standard of certification and will sign an MoU between two agencies concerned. Though Bangladesh's share in the $ 995 million trade recorded last year is insignificant, the country was able to export new products including seeds, pharmaceutical items, readymade garments and fertilisers to Thailand following a trade expo last year. Both Bangladesh and Thailand are the 3rd largest bilateral trade partners among countries of the Association of South-East Asian Nations (ASEAN) and South Asia. Thailand exports mainly poly-raising, clinkers, machineries and cosmetics, toiletry and food items to Bangladesh. Thailand provides DFQF access to nearly 5,000 products of Bangladesh. But the latter has hardly any of those to export. Bangladesh's fresh list of DFQF items was placed as the Thai government had announced revision of its list this year. smunima@yahoo.com....

Published at: 2017-08-10 00:00:03

Bangladesh's gross domestic product (GDP) now stands at US$686.59 billion in terms of purchasing power parity (PPP), making it the 32nd largest economy in the world in 2017. Bangladesh's GDP, in terms of PPP, is expected to cross $1,000 billion, making the country the 30th largest economy of the world in 2022. The Review of Economic Situation in Bangladesh for April-June 2017 (Q4 of FY17), prepared by the Metropolitan Chamber of Commerce and Industry (MCCI), included the estimate. The leading chamber mentioned the size of the Bangladesh's GDP on the basis of the World Economic Outlook of the IMF (International Monetary Fund), released in April, 2017. However, in nominal terms, the size of the GDP will turn Bangladesh into the 38th largest economy in 2022. The GDP of the country is now the 45th largest. The MCCI said remittance inflow in the last financial year up to June 30 was the lowest in six years, declining by 14.48 per cent to US$12.769 billion from US$14.931 billion in the previous fiscal year. It said the decline in remittance was indirectly linked to the fall in prices of petroleum products in the global market. While analysing the banking sector, the chamber noted that banks increased their lending rates after a long pause due to an increased credit demand from the businessmen in the last few months. "Interest rates on bank lending increased to 9.66 per cent in May 2017 from 9.62 per cent in April 2017," it noted. However, the weighted average interest rate on deposits decreased to 4.93 per cent in May 2017 from 4.97 per cent in April this year. The overall interest rate spread stood at 4.73 per cent in May 2017, compared to 4.65 per cent in the previous month (April), the MCCI said. It said total liquid assets of scheduled banks increased by 0.96 per cent and stood higher at Tk.2.647 trillion as of end-May, 2017. The minimum required liquid asset of the scheduled banks was Tk.1.615 trillion as of end-May, 2017, it said. The disbursement of industrial term loans during January-March period of FY17 stood at 19.4 per cent lower at Tk.157.83 billion compared to Tk.195.75 billion during the immediate previous quarter (October-December) of FY17. The recovery of industrial term loans increased by 6.3 per cent during this period. On deficiency in major infrastructures, the MCCI said: "Inadequate infrastructure, lack of investors' confidence in the economy that discourages making fresh investments and shortage of power and energy are now major impediments to the country's development." It said these impediments must be removed to restore the confidence of the country's business and investor community. The power supply situation improved in the quarter under review but the demand for power too shot up. "Unofficial estimates put the current demand for electricity at around 10,000 megawatt (MW), while the maximum generation in 2017 was 9,479 MW (as of June 7)," it said. In July, 2017, total installed capacity rose to 13,179 MW, but production remained low because of gas shortage and also because of closure of some power stations for maintenance. The MCCI said export earnings in FY17 grew by only 1.69 per cent to US$34.835 billion from US$34.257 billion in the previous fiscal year. Export earnings were also 5.85 per cent short of the strategic target at US$37 billion. "The slow growth in apparel exports was mainly responsible for the failure to meet the target," it noted. Import payments (C&F) in the first 11 months (July-May) of FY17 rose by 10.69 per cent to US$43.508 billion from US$39.307 billion in the corresponding period of the previous fiscal. It said import payments increased mainly due to higher imports of capital machinery. The disbursement of foreign aid in FY17 fell by 12.32 per cent to US$3.56 billion from US$4.06 billion in the previous fiscal year. "The disbursement declined mainly due to slower project execution and lower fund disbursement by a few development partners, including Japan," it observed. On the other hand, the commitments of foreign aid increased to a record high of US$17.86 billion in FY17, 153.33 per cent higher than that of the corresponding period of the previous fiscal year (US$7.05 billion). The increase was mainly due to the single largest US$11.36 billion state credit commitment by the Russian government for the Rooppur nuclear power plant project. In July-May period of FY17, the net FDI inflow was US$1.625 billion, which was 27.75 per cent higher than the FDI inflow in the corresponding period of FY16.   Between end-June of 2016 and 2017, the Taka depreciated by 2.80 per cent in terms of US dollar. In June, 2017, the general point-to-point inflation increased by 0.18 percentage point to 5.94 per cent from 5.76 per cent in the previous month due to an increase in prices of some food and essential items. The food inflation increased by 0.14 percentage point to 7.51 per cent in June 2017 from 7.37 per cent in the immediate past month (May). At the same time, non-food inflation too increased by 0.23 percentage point to 3.67 per cent in June 2017 from 3.44 per cent in the previous month. A comparison of inflation data for urban and rural areas showed that the inflation rate in June of FY17 was higher in urban areas than in rural areas. jasimharoon@yahoo.com....

Published at: 2017-08-10 00:00:03

The inflation (point-to-point) went up by 0.17 percentage points to 5.57 per cent in July this year as compared to 5.40 per cent in the same month last year, according to the latest BBS statistics released Wednesday. The inflation was 5.94 per cent in June this year. Bangladesh Bureau of Statistics (BBS) calculates the inflation on the basis of consumer price index (CPI), which went up by 1.17 per cent to 236.61 in July, the first month of the current fiscal year, as compared to 233.86 in the previous month (June). It said the inflation went up in July due to increase in prices of some food and non-food items over the period.   It added that the prices of fish and meats, vegetables, fruits, milk and milk products, spices, fuel, house rent, treatment, transport and other items, and services rose in the last month compared to the previous month June, boosting the CPI in July. After a meeting of the Executive Committee of the National Economic Council (ECNEC) Wednesday, Planning Minister AHM Mustafa Kamal unveiled the monthly inflation data, reverting from his earlier stance of releasing quarterly data. In last two occasions, he released quarterly inflation data amid criticism by media and experts. According to BBS figures, the month-on-month inflation of food items increased by 1.54 per cent in July while 0.62 per cent in cases of non-food items. On point-to-point basis, the food inflation boosted significantly to 6.95 per cent in July this year as compared to 4.35 per cent in July last year. However, the non-food inflation dropped to 3.53 per cent in July this year as compared to 6.98 per cent in the same period last year.  The month-on-month CPI in urban areas also rose by 0.99 per cent in July as compared to 0.69 per cent growth in the previous month (June), the BBS showed. The CPI in the urban areas increased to 238.59 in July from that of 236.24 in June. On the point-to-point basis, the inflation in July at urban areas was recorded at 5.86 per cent compared to 7.0 per cent in the same period last year. In June 2017, the inflation on point-to-point basis in rural areas was 6.49 per cent. The BBS showed that the CPI on month-on-month basis in rural areas went up by 1.27 per cent in July as compared to 0.31 per cent growth in June. The CPI in rural areas rose to 235.53 in July from that of 232.58 in June this year. On point-to-point basis, the inflation in the rural areas was recorded higher at 5.41 per cent in July as compared to 4.54 per cent in the same month last year. Besides, the point-to-point inflation in the previous month (June) was recorded at 5.65 per cent. Meanwhile, the Wage Rate Index (WRI) on month-on-month basis in July increased to 145.69, a 0.28 percentage points higher than that of 145.39 recorded in the previous month (June). The WRI boosted more at industrial sector with a 0.35 per cent growth. The WRI growth in the agriculture was recorded at 0.28 per cent and in services sector at 0.20 per cent in July. kabirhumayan10@gmail.com....

Published at: 2017-08-10 00:00:03

Overall excess liquidity with country's commercial banks increased, as of June, for a lending downturn. Sources in banking circles find two cardinal causes --- lower credit growth, particularly in the private sector, and lesser government borrowing from the banking system --- for the rise in excess liquidity. They said suspension of government borrowing from the banking system partly contributed to the surge in excess liquidity with the banks. The volume of excess liquidity rose to Tk 1.06 trillion in the last week of June from below Tk 1.0 trillion in May, officials said. It was Tk 1.23 trillion in the last week of December 2016, according to statistics with the Bangladesh Bank (BB). "Most of the excess liquidity has already been invested in the government-approved securities and BB bills as a risk-free investment for the banks," a senior official of the central bank told the FE. He also said the banks may use the invested liquidity in BB bills as loan-able funds after maturity of the short-term security. Total outstanding amount of the BB bills stood over Tk 250 billion as on August 06, according to BB's confidential report on the financial front. Currently, three BB bills are transacted on auction as monetary-policy instruments to adjust money supply to the market. The BB bills have 07-day, 14-day and 30-day maturity periods. Under the existing provisions, the auction of BB bills will be held each working day in line with the central bank's requirement. However, excess reserves, generally known as excess over daily minimum cash reserve requirement (CRR) with the central bank, rose to around Tk 46 billion during the period under review from Tk 42 billion, according to the central banker. The official believes that the overall excess liquidity may increase further in the country's banking system in the months ahead if the suspension of government bank borrowing continues. The government has made a pause in fresh borrowing from the banking system through cancelling auctions of its securities since July 23 to ensure proper cash management. The suspension will continue until August 31. Such latest move of the government came against the backdrop of accumulation of liquidity in hand of late, the central banker explained. Currently, the government is holding around Tk 40 billion in excess liquidity in its coffers. Talking to the FE, another BB official said higher sales of savings instruments alongside a rising trend in revenue collection pushed up government's surplus liquidity balance. Such excess liquidity has also prompted the government to cut down borrowings from the banking system, the central banker said. Meanwhile, private-sector credit growth decreased further in June owing to lower trade financing for settling import-payment obligations, according to bankers. The growth in credit flow to private sector came down to 15.66 per cent in June 2017 on a year-on-year basis, lower than the target set by the BB earlier, from 16.03 per cent last May, the BB data showed. The credit-growth was 16.21 per cent in April. "Demand for credits decreased slightly in the months of May and June mainly due to the national budget for the next fiscal year," a senior executive of a leading private commercial bank told the FE. Businesspeople normally maintain a 'go-slow' policy ahead of the budget, he said, adding that the private-sector-credit growth might have taken an upturn in July. The central bank had projected in its second half-yearly (H2) monetary-policy statement for the fiscal year (FY), 2016-17 that the private credit would grow at 16.50 per cent in June 2017. However, the total outstanding loans with the private sector rose to Tk 7760.59 billion in June 2017 from Tk 7588.50 billion a month ago. It was Tk 6710.09 billion in June 2016. "Nothing to worry about lower private-sector-credit growth than that of the ceiling for June," another BB official said while explaining the main objective of the credit-growth ceiling. He also said the central bank estimates the ceiling of the private- sector credit considering country's overall economic growth, set by the government each year. The central banker expects that the country will be able to achieve 7.4 per cent gross domestic product (GDP) growth by the end of this fiscal with the private-sector-credit growth ceiling set by the BB in its latest monetary policy. The BB had projected in its first half-yearly (H1) monetary- policy statement for the FY18 that the private-sector credit would grow at 16.2 per cent in December 2017 and 16.3 per cent in June 2018 respectively. "It's a temporary phenomenon. We have to wait another one or two months for knowing actual causes of the lowering of private-sector-credit growth," Syed Mahbubur Rahman, managing director and chief executive officer of Dhaka Bank Ltd, told the FE Monday. He also said the money market may see a tight situation by the end of this month due to the upcoming Eid-ul-Azha festival despite a rising trend in excess liquidity. Echoing Dhaka Bank CEO's predictions on the money market, another BB official said the central bank may use its monetary instruments to keep the market stable before the holy fiesta. Normally, short-term borrowings increase before Eid amid a growing demand for money from the banks, as festivals and seasonal trade are associated with the occasion. siddique.islam@gmail.com....

Published at: 2017-08-10 00:00:03

Oil futures fell slightly on Thursday despite official figures showing US crude inventories dropped more than expected, with an analyst saying the market had settled into a range. Brent crude, LCOc1 the global benchmark, was down 4 cents, or 0.1 per cent, at $52.66 at around 0232 GMT, after earlier trading as high as $52.80. It closed up 1.1 per cent on Wednesday, snapping two days of declines. US West Texas Intermediate (WTI) crude CLc1 was down 3 cents at $49.52, after rising to $49.69 earlier. The contract gained 0.8 per cent in the previous session. US crude stockpiles fell last week as refineries boosted output to the highest percentage of capacity in 12 years, the Energy Information Administration said on Wednesday. US oil inventories USOILC=ECI dropped by 6.5 million barrels last week, the government data showed, steeper than the expected decrease of 2.7 million barrels. Russia and other producers are cutting output by about 1.8 million barrels per day (bpd) under an agreement set to run until March 2018. The deal has supported prices but a recovery in output in Libya and Nigeria, OPEC members exempt from the cut, has also complicated the initiative, reports Reuters.....

Published at: 2017-08-10 00:00:03