B3 The robot is ready – so when will deep sea mining start?
B4 Zynga seeks new harvest with mobile FarmVille game
MONDAY, APRIL 21, 2014 www.dhakatribune.com/business
Fund shortage forces HBFC to suspend home loans n
Asif Showkat Kallol
Bangladesh House Building Finance Corporation (BHBFC) has suspended its lending programme for last two months due to shortage of fund. The management instructed verbally the staffs not to process loan applications, officials of the Banking and Financial Institutions Division of the finance ministry said. They said the state-run financial institution for providing housing loans would not be able to resume the credit programme within a short period of time without recapitalisation by the government. In February, BHBFC had sought a budgetary allocation of Tk500 crore for the current fiscal year as well as Tk500 crore every fiscal year beginning from fiscal 2014-15 to continue its lending programmes. In a recent letter to the financial institutions division, BHBFC Managing Director Dr Nurul Alam Talukder said the corporation could not invest commensurate with the demand for loans because of fund shortage. “We need adequate funds to provide financing at district and sub-district levels to follow the directives of President Abdul Hamid and Prime Minister Sheikh Hasina. Presently, BHBFC’s annual demand for loan is about Tk10bn,” he noted. He said the institution is not capable of expanding its activities to upazila and district levels due to fund crisis as
A view of the houses at a neighbourhood in the capital demands for housing loans are there in Kishoreganj, Gopalganj, Sirajganj and Srimangal after opening branch offices in these towns. “But we are unable to disburse loans in these areas due to severe fund shortage.” Banking Secretary Dr Aslam Alam told the Dhaka Tribune the corporation has already exhausted all the funds, resulting in the suspension of the programmes. “Now they would not be able to disburse loans for the clients without realisation of previous loans,” he said. He said: “Sovereign guarantee could have been given to BHBFC for borrowing fund from the development
SYED ZAKIR HOSSAIN
partners like World Bank, Asian Development Bank and other international lending agencies.” The finance ministry, however, refused giving the guarantee, he said. Finance ministry sources said the BHBFC received only Tk40 crore as loan from the government in the fiscal 2012-13. It could not mobilise any other fund for lending purposes. The BHBFC provides house building loans in Dhaka and Chittagong metropolitan cities at a rate of 12% while it is 10% for other cities and towns. There are plans by BHBFC to expand its activities through setting up offices in every district gradually. Now the or-
ganisation is operating 29 offices across the country. During July-December period of 2013, the amounts of loan sanctioned, disbursed and recovered were Tk222 crore, Tk226 crore and Tk200 crore respectively. The total loan balance was around Tk2,930 crore. During the same period, the amount of classified loans stood at Tk233 crore, only about 8% of the total disbursement. BHBFC has increased the individual loan ceiling to Tk50 lakh two years ago. The corporation’s lending had earlier remained suspended from 1988 to 1992 due to fund shortage, sources said. l
Import rises 13% n
FIs demand corporate tax cut n Syed Samiul Basher Anik
The country’s leading associations of financial institutions (FIs) has demanded the National Board of Revenue to reduce corporate taxes to the level most other listed companies are now paying. They said the FIs are listed companies and their taxes should be set at 37.5%. Bangladesh Insurance Association representative G K Roy said the tax on life insurance and non-life insurance companies are same, which is not justified. “In the neighboring country India, life insurance companies are paying 12.50% taxes and 2.50% additional surcharge. So, the income tax rate for the life insurance companies here should be set at 15%.” The association leader made the demand at a meeting with National Board of Revenue at the NBR headquarters in Dhaka yesterday. NBR Chairman Md. Ghulam Hussain chaired the pre-budget meeting with the representatives from financial institutions. Roy pointed out that the insurance
agents have to pay 5% tax at source if they earn over Tk40,000. Now they have to pay 5% tax on their entire commission. As the tax-free ceiling for the individual taxpayers has been set at Tk220,000, he urged NBR to set a tax limit on agents’ incomes. Bangladesh Leasing and Finance Companies Association has demanded including the name of ‘financial institutions’ with the section 23 (6) of Income Tax Ordinance 1984. The section says the income of the institutions, mentioned at the section by way of interest in relation to such categories of bad or doubtful debts as the Bangladesh Bank may classify in the income year in which it is credited to its profit and loss account for that year or, as the case may be, in which it is actually received, whichever is earlier. “Though the tax rates for banks or financial institutions are set at 42.5%, sometimes we are paying 55% taxes due to doubtful taxes. Currently, we are paying same duties as paid by the bank, leasing or insurance companies, which needs to be reduced and should be set at 37.5%,” said Md Ziaul Hoque Khan of the association.
He also proposed for allowing banks, insurance companies and financial institutions to avail of the tax exemption on the income derived from zero coupon bonds. Bangladesh Merchant Bankers Association Vice President Md Akter Hossain Sannamat proposed the NBR to reduce corporate tax of merchant banks to 27.50%. “The merchant banks are making losses from 2010 due to the instability in the stock market whereas corporate tax of merchant banks is higher than the asset management companies or the stock brokers. We think the corporate tax for the merchant banks should be set at 27.50%,” he said. He requested NBR to publish statutory regulatory order for initiating incentive package for the merchant banks to cover up the losses which these institutions are making from 2010. The association’s other proposals includes treating 1% general provision and specific provision as tax deductable, treating write off losses of merchant banks as tax deductable, and avoid double taxation on dividend income of the banks. l
NBR chair for MCCI wants tax-free income rationalising tariff raised to Tk2.75 lakh to stop spice in the import level. In response, NBR n Tribune Report chief said the government has to face smuggling The Metropolitan Chamber of Com- revenue loss as the pending amounts of disputed tax are huge. merce and Industry (MCCI) urged the n Tribune Report Citing a loss of Tk26,000 crore revgovernment to raise tax-free income Importers claimed high duty for spice and glass products unlike in any other neighbouring countries has been resulting in peril of the customers and alluring smugglers to make the best out of such supposedly irrational tariff structure. They made the call at a pre-budget meeting with National Board of Revenue yesterday. The NBR chair Md Ghulam Hussain presided over the meeting and said the revenue authority will assess the current tariff structure to rationalise.
Spice Importers
The spice importers said three-fourth of hot spices in the local market come through smuggling and therefore B 3 COLUMN 4
ceiling for individual taxpayers to Tk275,000. It also proposed increasing the limit to Tk3,00,000 for female and senior citizens aged over 65 years and to Tk3,50,000 for physically challenged people. MCCI president Rokia Afzal Rahman submitted the proposals at a pre-budget meeting with National Board of Revenue (NBR) yesterday. The meeting was presided over by NBR Chairman Md Ghulam Hussain. MCCI also proposed reduction of corporate duties on banks, insurance and financial institutions as the organisations have to pay 42.5% tax which is “very high compared to the neighboring countries.” The chamber asked for reducing Advance Income Tax to 3% from 5%
enue loss from this situation, he urged the businessmen to “do something which could benefit both business and government.” Ghulam Hussain alleged the businessmen have a tendency to go for appeals in the tribunal whenever they need to pay a big amount of tax. The demands of MCCI, among others, also include allowing financial institutions, banks and insurances to invest in the form of fixed deposit like savings deposit in post office, deduction of duties on software imports and reduction of Vat from import of services by the export-oriented companies. Information and Communication Technology (ICT) firms have been enjoying tax exemption since 1999, but the facility is renewed every year. B 3 COLUMN 1
Jebun Nesa Alo
The country’s import expenditure rose by 13.49% in the first eight months of the current fiscal year as compared to the same period of last fiscal year. The overall import continued to increase at a time when the country had plunged into a political turbulence centering January 5 general polls. Increased import of capital machineries has led the overall import to a positive growth, said a senior executive of Bangladesh Bank. Capital machinery import increased during the period of July-February due to the increased inflow of foreign direct investment mainly in the garment sector, he also added. According to the central bank data, capital machinery import witnessed 8.61% rise in the first eight months from the negative growth of 18.46% in fiscal year 2012-13. The growth was also negative by 15.85% in the previous fiscal year 2011-12. The value of LCs (letter of credits) settlement stood at US$2.4bn in the period of July to February of the current fiscal year compared to $2.12bn in the same period of the last fiscal year. Although the import growth remained positive, it was slower compared to the export growth, the trade deficit during the period reduced to $3.56bn from $4.59bn. The export earnings increased by 13.96% in July-February of the current fiscal year from 9.36% growth recorded in the same period of the last fiscal year. B 3 COLUMN 5
Government to award two more NTTN licences soon n Muhammad Zahidul Islam
The government would soon award two more licences of Nationwide Telecommunication Transmission Network (NTTN) to get total four operators for strengthening the transmission system. It would also consider awarding licences of NIX – a functional package manager which maintains the local data within the territory of Bangladesh without using international internet bandwidth. Post, Telecommunication and ICT Minister Abdul Latif Siddique announced the measure in a spontaneous response to concerns that experts raised at a high-level policy dialogue in Dhaka yesterday. Experts said the transmission system in the country’s telecommunication sector is hardly improved – a sorry state that runs counter to significant improvement in the country’s telecom and ICT industry in last couple of years. “I am assuring you to award licence,” Siddique told the meeting, inviting proposals. “Try to convince me and educate me about the technology, I will do for the best of the industry and my country, and my people will get the highest priority.” Professor Jamilur Reza Choudhury conducted the dialogue jointly organised by the Asia Foundation and Bangladesh Association of Software and Information Services (BASIS). Sunil Kanti Bose, chairman of Bangladesh Telecommunication Regulatory Commission, said: “In last seven years,
there has been tremendous progress in the telecom sector but infrastructure was the least developed among all.” He said the government is working to provide more NTTN licences to ensure the competition in telecom transmission. Presenting a paper, North South University teacher M Rokonnuzzaman said: “The bandwidth which cost Tk400 in Singapore is Tk2,800 in Dhaka at the end user level. If the same bandwidth transmits to other districts of the country, the cost increases substantially.” LIRNEasia’s senior policy fellow Abu Saeed Khan said the government should allow the foreign bandwidth carriers to enter into Bangladesh to reduce the price. “The uncertainty of the regulatory regime often discourages foreign investors. The government should be more open about licence and other fees,” he said. BASIS Senior Vice President Syed Almas Kabir said the bandwidth price is one tiny fraction of the entire cost of the internet. “There is different type of transportation cost in many levels which should be reduced if we want to reduce the price at the user level,” he said. He said that there are too many middlemen in the transmission side which is increasing the cost. Fiber@Home Limited’s Chief Strategic Officer Sumon Ahmed Sabir said the government have to either take the market driven pricing policy of internet or they can take the responsibility in its hand. B 3 COLUMN 4
Hero plans motorcycle manufacturing in Bangladesh n Kayes Sohel Hero Motor, a leading Indian automobile company, is set to manufacture motorcycles in Bangladesh to share the growing local market. The company plans to launch operations immediately in collaboration with a local automobile company Niloy Motor, a concern of Nitol-Niloy Group. After expiry of the deal with Japanese automaker Honda in 2011 and state-owned automobile company Atlas Bangladesh in 2013, Hero now joins hands with Nitol-Niloy Group for marketing motorcycle in Bangladesh. The two companies will ink the deal in Dhaka today. “Bangladesh has enough potential market for motorcycles as demand for bikes is growing in tandem with the expanding economy,” Abdul Matlub Ahmad told The Dhaka Tribune yesterday. His company is set to manufacture the two-wheeler vehicles locally as soon as possible. “Hero with Niloy is ready to begin operation in Bangladesh.” The assembling plant costing more than Tk234 crore is expected to produce 1.5 lakh pieces of motorbikes annually, company sources said. They said prices will come down below Tk1 lakh per piece if assem-
bled here. At present, the price of an imported motorbike is Tk170,000 depending on varieties. According to an estimate, the country’s annual motorcycle sales might hit around 14 lakh units in the near future from around 500,000 units at present. The announcement of the collaboration comes at a time when Honda Motor Corp is taking preparations to launch a full-scale motorcycle assembling plant in the country in partnership with the state-owned Bangladesh Steel and Engineering Corporation and Suzuki Motor, a leading Japanese two-wheeler brand, with local Rancon Motor Bikes Ltd, a concern of Rangs Group. Hero MotoCorp Limited, formerly Hero Honda Motors Limited, is engaged in manufacturing of two wheelers and its parts and ancillary services. The company’s bikes are manufactured across three manufacturing facilities. Two of these are based at Gurgaon and Dharuhera, which are located in the state of Haryana in northern India. The third manufacturing plant is based at Haridwar, in the hill state of Uttrakhand. The company offers a range of bikes which include CD Dawn, CD Deluxe, Splendor Plus, Splendor NXG, super splendor and Passion Pro. Hero brand accounts for 50% of the total motorcycle market in India. l
BGMEA forms body to scrutinise Rana Plaza victims n Ibrahim Hossain Ovi Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has formed a committee to bring all the Rana Plaza victims under a same umbrella to compensate them following proper scrutiny. BGMEA Vice President SM Mannan Kochi has been made the convener of the committee, which is comprised of the representatives from the Prime Minister’s Office, Labor and Employment Ministry and two other board members of the BGMEA. The decision to forma such a committee was made at a BGMEA board meeting held on April 13 at its Karwan Bazaar office.
The main task of the committee is to bring all the victims under a common umbrella to compensate through reviewing their claims as a worker of those factories housed in Rana Plaza
that collapsed, killing 1,135 workers and injured over 2,500 on April 24, last year. “The committee with the help of the local administration will scan the B 3 COLUMN 2