Haque Specialized Group's News

DCCI has proposed the government to increase the tax-free ceiling for individual taxpayers, allow higher investment rebate, and fix higher tax slab of 25 per cent in the budget for the upcoming fiscal year (FY), 2017-18. Dhaka Chamber of Commerce and Industry (DCCI) President Abul Kasem Khan proposed an upward revision of the income tax-free threshold for individual taxpayers to Tk 3,50,000 from the existing Tk 2,50,000. He also recommended allowing 15 per cent rebate on 30 per cent investment or investment worth Tk 30 million, whichever is lower, as investment rebate. The DCCI leader made these proposals in a pre-budget meeting with National Board of Revenue (NBR) on Monday. A group of the chamber leaders met NBR Chairman Md Nojibur Rahman to place various budget proposals, relating to income tax, Value Added Tax and customs duty. The DCCI president proposed to increase the ceiling of perquisite to Tk 6,00,000 from Tk 4,50,000 for avoiding double taxation, and cut corporate tax rate for mobile phone companies to facilitate development in technological sector. He suggested NBR to allow up to Tk 1,00,000 for transaction in non-banking channels, up to Tk 60,000 transport allowance for individual taxpayers as tax-free, and permission for depositing 5.0 per cent of admitted tax liability before going to appellate tribunal and 10 per cent in High Court (HC). DCCI also urged the government to exempt all income of chambers and trade associations from payment of tax as non-profit service providing organisations. It also proposed to exclude the chambers from the purview of mandatory taxpayers identification number (TIN). The DCCI president proposed for an upward revision of the minimum ceiling of total net wealth surcharge to Tk 50 million from the existing Tk 2.25 million. The chamber body also proposed to raise tax-free ceiling of allowable expense of house rent on repairing to 30 per cent, exempt research and development sector from payment of tax and VAT, and allow duty-free and VAT-free import of mobile, telecommunication and ICT machinery. Mr Khan suggested expanding tax net, and upgrading tax card to electronic smart card for providing better services to the taxpayers. The DCCI leaders proposed NBR to frame a long-term duty-structure for three to five years for ensuring smooth industrialisation in the country. On the new VAT law, to be implemented from July 1, the chamber urged the government to slash the uniform VAT rate to 7.0 per cent from the existing 15 per cent. DCCI also proposed to raise turnover tax limit to Tk 12 million from Tk 8.0 million. For small businesses, it suggested 'no VAT' up to Tk 5.0 million and 3.0 per cent VAT from Tk 5.0 million to Tk 12 million. The DCCI president urged the government to bear the cost of installing Electronic Cash Register (ECR) and supply VAT smart card to them. He also demanded to cut discretionary power of VAT officials in investigation in the new VAT and supplementary duty act 2012. He said taxmen should come out from the traditional concept that income of a taxpayer will gradually go up, as in reality it can go down also. Speaking at the pre-budget meeting, NBR Chairman Md Nojibur Rahman said the revenue board has launched country-wide campaign to create awareness among people on tax payment. "NBR has also planned to set up tax camps in remote areas. The revenue board will need cooperation of the chambers to materialize its innovative plans," he added.     doulot_akter@yahoo.com....

Published at: 2017-03-14 00:00:05

All of the seven state-owned banks (SoBs) are facing capital shortages worth a total of Tk 150 billion, landing them in problem in operating business at home and abroad, sources said. As of last December, Sonali Bank had a capital shortfall of Tk 26 billion, Janatal Bank Tk 6.64 billion, Agrani Bank Tk 2.0 billion, Rupali Bank Tk 10 billion, BASIC Bank Tk 22 billion, Bangladesh Krishi Bank Tk 74.85 billion and Rajshahi Krishi Unnayan Bank Tk 7.05 billion.   Official sources said Janata Bank, Rupali Bank and BASIC Bank had applied to the Ministry of Finance (MoF) for permission to issue bond to make up for capital shortages. Issuance of bond against BASIC Bank's capital shortage is now under scrutiny of the Finance Division while the central bank's opinion has been sought about the plea of Rupali and Janata Banks.   To take decision on ways of resolving the capital shortage of the SoBs, Finance Minister AMA Muhith will sit next Sunday with chief executives of the banks, the central bank governor, the finance secretary and the secretary of the Banks and Financial Institutions Division. According to a Banking Division memo, the capital shortages of the banks can be recouped through four ways---injecting cash directly or issuing shares, by issuing bonus shares after earning net profit, reducing provision shortfall by lowering classified loans, and by issuing bonds. Officials said in each fiscal budget the government keeps Tk 20 billion for recapitalisation of banks. So, the Tk 150 billion shortage cannot be met from the budgetary allocation. They said meeting capital shortage through issuing bonus shares after earning net profit is a most rational process. But the SoBs are not making net profit for a long period. So, this process, too, is not applicable. Classified loans are one of the main reasons of capital shortage. A bank can reduce provision shortfall by lowering classified loans, which helps in reducing capital shortage. But the SoBs are now reeling from burdens of classified loans having risen to Tk 621.72 billion in December last, they pointed out. The other option the officials suggested is issuing bond by the government for recapitalizing the capital-deficient banks. If bond is issued, said one finance official, the government wouldn't have to make any cash payment to the banks. But if the banks fail to pay back the money to the bond buyers on their maturity, the ultimate responsibility will go to the government. Talking to the FE Monday, Banking division secretary Eunusur Rahman acknowledged that banks are facing large capital shortages. He said a meeting will be convened soon where decision will be taken how to meet the shortages. Asked whether the BASIC Bank is getting permission to issue bonds to meet capital shortage, he said: "It is not clear yet. The meeting will take decision in this regard."     syful-islam@outlook.com....

Published at: 2017-03-14 00:00:05

Street vendors have returned to the footpaths and roadsides of the capital's Gulistan and adjacent areas with new techniques to dodge eviction drives often being conducted by the Dhaka South City Corporation (DSCC) mobile courts. This time they occupied the footpaths keeping their goods in baskets, plastic sheets or movable steel structures so that those could be moved on bearing wheels, according to a spot account. The hawkers made the arrangement to flee as fast as possible during any eviction drive. Defying the city corporation directives to do business in alternative places, the hawkers apparently remain determined to continue with their businesses on the footpaths that affect free movement of the city dwellers. Though the DSCC offered the listed hawkers to run alternative holiday market within stipulated time frames, the hawkers opposed the idea since the very beginning and demanded full rehabilitation before evicting them. Bangladesh Hawkers' Union President Abdul Hashem Kabir told the FE that the city corporation moves were very much inhuman as the hawkers have no place to go while the alternative would not work for them. About the holiday markets, he said the hawkers found very few customers in the holiday markets. As such, after office hours, they return to the spots again. Mr Kabir said thousands of hawkers have already counted losses worth over a couple of millions of taka due to the frequent drives and demolition of the valuables. A vendor, Abdur Rouf, sells apples and grapes containing in baskets. "Whoever first sees police or mobile courts arriving in the area, he informs us for leaving the place," he said. The hawkers open up their businesses again after the eviction team's leaving the place, he added. However, the vendors of the area said some of them have already moved their businesses to the other parts of the city amid regular eviction drives being conducted by the DSCC. The hawkers' leaders said further that they would stage a big demonstration programme under the banner of Bangladesh Hawker Sangram Parishad on March 29, protesting the ongoing DSCC move without rehabilitation plan. DSCC Chief Estate Officer Mohammad Kamrul Islam Chowdhury said the hawkers have come up with new techniques to dodge the ongoing drives and confirm their illegal occupation of the footpaths again. He said the authorities will conduct more drives on regular basis to free the footpaths for easy movement of the pedestrians. On January 11, DSCC Mayor Sayeed Khokon had announced that the city corporation would not allow any hawker on footpaths and roadsides of the city's Gulistan and surrounding areas from January 15 to facilitate free movements of pedestrians during the office hours. Following the announcement, three DSCC mobile courts with support from Dhaka Metropolitan Police (DMP) started conducting frequent eviction drives against the hawkers. As part of a rehabilitation plan, the DSCC has made a list of 2,502 hawkers to give them permission to continue business on one side of the footpaths in Gulistan area on working days from 6:30 pm and full day at DSCC-designated holiday markets on Friday and Saturday. Meanwhile, the footpaths of Motijheel to Paltan via Baitul Mukarram Mosque have seen relatively free of hawkers due to eviction drives being conducted more frequently than that in Gulistan and Zero Point areas. According to DSCC authority, the mobile courts have evicted and demolished illegal establishments of nearly five to six thousand hawkers on the footpaths in Gulistan and adjacent areas up until now.     ahb_mcj2009@yahoo.com....

Published at: 2017-03-14 00:00:05

Bangladesh ought to develop its own 'Ease of Doing Business' index accommodating needs of informal sectors and small and medium entrepreneurs, a prominent economist said at a pre-budget meet that recommended job-generating economic growth. "We need to develop our own Index to measure the business-friendliness issues in line with the needs and context of our country," said Prof Wahududdin Mahmud at the function in the capital Monday. Centre for Development and Employment Research (CDER) organised the seminar on 'Development and Employment: Selected Issues for Budget 2017-18' at Bangladesh Institute of Development Studies (BIDS). "The present 'Ease of Doing Business Index' of the World Bank is only taking into account the issues of formal sector," Prof Mahmud said. "However, there is a huge informal sector as well as numerous Small and Medium Entrepreneurs in the country whose needs and concerns are not covered by this index." Professor Mahmud also noted that the imposition of VAT on necessary utilities like gas as well as the import of goods creates extra burden on general people and SMEs. "VAT should be imposed on finished goods only at the final stage of business chain," he said in disapproval of the current practice, adding: "Imposing it at every stage of the chain or imposing it on basic utilities like gas acts as a burden for small businesses and consumers." The economist also noted that currently most of the budget discussions in the country are usually centered on the proposed budget and tax policy while there is a lack of analysis on the final or implemented budget or tax policy. "For example, we need to analyse whether there are enough incentives for productive sectors or sectors that create employment." "At the same time," Prof Mahmud said, "there should be incentives for the sectors that generate investment, like infrastructure." Earlier in the seminar, experts noted that despite the constant economic growth, the employment-generating ability of the economy has been declining over time. "During the years between 2005 and 2010, GDP growth at a rate of 1.8 per cent could generate one per cent growth in employment," said Rizwanul Islam, Senior Visiting Fellow of CDER. "But between the year 2010 and 2013, 2.6 per cent GDP growth was needed to produce the same outcome," he added. Islam also noted that despite positive output growth, employment in the construction sector has declined while growth in employment and services was also very low. He proposed that each ministry and agency should have cell working on the employment implication of the policies and programmes in their respective fields. "Appropriate methodologies have to be developed and needed capacity have to be built while the results of their work should be used in formulating budget proposals," he added. Executive Director of the Center for Policy Dialogue Fahmida Khatun in her speech noted that in recent times there has been a negative trend in export growth, which, in the long run, can have a detrimental impact on employment. She also blamed the economic downturn in the Middle East and an increased use of informal channels for decline in remittance in recent times. Noting the lack of updated labour and employment statistics with the government, Executive Director of the Policy Research Institute Dr Ahsan H Mansur said currently, the labour-related statistics are updated only once in three years. "The government should move to publish the labour statistics on an annual basis, and in the long run, it should be available on a quarterly and monthly basis," he told the meet. Director-General of BIDS KAS Murshid in his speech called for tax exemption for the SME sector to encourage small-scale investment in the country. He also called for mainstreaming technical and vocational education to encourage students in such training schemes. Noting the recent slowdown in labour demand in the country, Executive Chairman of CDER Rushidan Islam Rahman said incentives for readymade garment sector should be linked to labour intensity. President of the Consumers Association of Bangladesh Ghulam Rahman, and Senior Fellows of CDER Quazi Shahabuddin and ATM Nurual Amin, among others, also spoke at the pre-budget discussion meet. mehdi.finexpress@gmail.com....

Published at: 2017-03-14 00:00:05

Bank deposits had a slower growth than that of credits in 2016 as depositors these days feel discouraged from putting money in banks for lower interest rates, sources said. According to central bank statistics, the growth in deposits, on a year-on-year basis, rose to 13.13 per cent in the last calendar year from 13.08 per cent a year before while the credit growth increased to 15.32 per cent from 12.58per cent. Deposit growth has been on a gradual decrease mainly due to lower interest rates, offered by the banks, according to the central bankers. The growth rate of deposits came down to 13.5 per cent in September 2016 from 14.46 per cent at the end of June in the past year. It further came down to 13.13 per cent in December. On the other hand, the credit growth climbed to 15.32 per cent in December from 14.5 per cent in September 2016. The rate was 15.42 in June. Bankers and experts said depositors now feel encouraged to invest their money in government savings schemes and stock market for getting higher returns on their investments. Some depositors also prefer non-banking financial institutions (NBFIs) to banks in depositing their money because the NBFIs rather offer higher interests on term deposits, they added. The NBFIs are now offering interest rates on term deposits ranging between around 6.0 per cent and 16 per cent while the banks offer a near-negative 0.10 per cent to maximum 9.50 per cent. The NBFIs are now allowed to collect fixed deposit from individuals and organisations for three months instead of previous term of six months. The banks, however, offer interest rates on savings deposits ranging between 0.40 per cent and 6.0 per cent, according to the BB's latest monitoring report. "Such falling trend in interest rates has pushed far down the overall deposit growth than credit growth in the banking sector," a senior official of the Bangladesh Bank (BB) explained. He also said the deposit-growth rate fell slightly in the recent months following adjustment of loans with loans and 'push loans' particularly in small and medium enterprise (SME) sector. Such comparative trends between deposits and credits had continued until February last, according to the central banker. All banks' deposits, excluding inter-bank balance, rose to Tk 9088.64 billion as of last December from Tk 8583.31 billion as of June 30, 2016. The aggregate deposit amounted to Tk 8033billion as of December 2015. On the other hand, their outstanding loans, excluding inter-bank balance, rose to Tk 6864.80 billion as of December 2016 from Tk 6421.74 billion. The amount was Tk 5953 billion in December 2015. "Depositors, particularly small ones, are now losing interest in making further deposit with the banks mainly due to lower interest rates on deposits," former BB governor Salehuddin Ahmed told the FE. Besides, such lower interest rates on deposits cast an adverse impact on people's savings habit, particularly in the banking system, Dr. Ahmed explained. "Such discouraging savings tendency has also pushed up currency outside banks," the former governor said while explaining the impact on the financial front. The overall currency outside banks (money kept in traditional caches instead of depositing into bank account) jumped by 22.27 per cent or Tk 206.08 billion to Tk 1131.53 billion in December 2016 from Tk 925.45 billion a year ago, the BB data showed.    Contacted for his remark on such a situation with savings, SK Sur Chowdhury, deputy governor of the BB, said the central bank had already issued a directive to the managing directors and chief executive officers (CEOs) of all the scheduled banks to remain proactive and help check the falling interest rates on deposits. The latest BB move came against the backdrop of a faster decline in deposit rates than that of the lending rates. The weighted average interest rates on deposits came down to 5.22 per cent in December 2016 from 5.39 per cent three months ago. It was paid at 5.54 per cent by the banks last June. The weighted average deposit rate at more than 20 banks slipped below 5.0 per cent in December 2016, according to findings in the BB report. On the other hand, the weighted average interest rates on lending came down to 9.93 per cent in December 2016 from 10.15 per cent three months before. It was 10.39 per cent in June last. In January 2017, the weighted average interest rates on deposits came down to 5.13 per cent from 5.22 per cent a month before while the weighted average interest rates on lending fell to 9.85 per cent from 9.93 per cent. "We've taken the latest measures to protect the interests of depositors," Mr. Sur Chowdhury told the FE while explaining the main objective of the moves. It will also help discourage expenses in the less-productive sectors, the deputy noted. He also said the falling trend in the interest rates on deposits affected the saving habit of the people, prompting them to spend on wasteful consumption and unproductive sectors. However, the credit-deposit ratio (CDR) -- officially known as advance-deposit ratio (ADR) -- of all banks reached 71.85 as of December last from 71.59 per cent as of June 30. It was 70.98 per cent as of December 31, 2015. The central bank of Bangladesh had earlier set the safe limit of CDR at 85 per cent for conventional banks and at 90 per cent for Sharia-based Islamic banks. Talking to the FE, Syed Mahbubur Rahman, managing director (MD) and chief executive officer (CEO) of Dhaka Bank Limited, said: "Higher interest rates on savings instruments, offered by the government, have encouraged depositors to purchase the high-yielding instruments by withdrawing their bank deposits." Currently, average interest rate on deposit, offered by the commercial banks, is more than 5.00 per cent, while the rate for savings instruments is paid on average 11 per cent, according to the senior banker. "The banks may face problem to manage their funds in future if the existing trend in deposit growth continues," Mr. Rahman said, without elaborating on their possible cash position. siddique.islam@gmail.com....

Published at: 2017-03-14 00:00:05