Wednesday, May 1, 2013

Weekly News Clippings (2 May 2013)



 

Savar tragedy: EU considers trade action (Dhaka Tribune, May 1, 2013)

Garments from Bangladesh currently enjoy preferential access to EU markets; however, in order to pressure Bangladesh to improve safety standards in the wake of the Savar tragedy, the European Union is threatening to reconsider this preferential trade status.  A statement issued by the EU foreign policy chief implored Bangladesh to comply with international labor standards.  Bangladesh exports an estimated $3.4 billion in garments to Germany, $2.13 billion to the UK, $1.71 billion to Spain, and $1.27 billion to France.

 

Govt not to lower revenue target despite NBR plea (New Age, May 1, 2013)

The National Board of Revenue (NBR) has vehemently objected the government’s move to set tax revenue collection target at Tk 1,36,000 crore for the upcoming 2013-2014 fiscal year. The NBR recommended to set it at Tk 1,25,000 crore as it considered the government’s target as “unrealistic and unachievable” amid the ongoing political unrest and global recession. The NBR chairman said that overall macroeconomic factors along with political tension are not in favour of higher growth target for revenue collection as export, import and business activities are on the decline and because of the depreciating value of the dollar against the taka.

 

Govt likely to take $800m in hard-term loan (New Age, April 30, 2013)

The government is going to borrow more than $800 million from the overseas banks to pay the oil import bills due to costly rental power plants. The annual bill for the fuel oils import hit close to $5 billion last year with Bangladesh’s oil imports mounting up to 5.2 million tonnes. According to the Energy Division officials, the state-owned Philippine oil producer (PNOC) agreed to provide $328 million credit at 4.5 percent interest while, Standard Chartered Bank, HSBC and Citibank NA will lend $250 million at 5.03 interest rate.

 

ICT policy reforms come into focus (The Daily Star, April 29, 2013)

Bangladesh should take initiatives and develop long-term plans to boost the Information, Communications and Technology (ICT) sector, which has the potential to become a billion dollar industry, according to experts. Bangladesh Association of Software and Information Services (BASIS) and The Asia Foundation organized a roundtable titled “Facilitating policy reforms to encourage private sector investment in ICT,” where speakers said that negative policies and regulatory issues are denting the confidence of Bangladeshi expatriates in the USA who would otherwise be willing to invest in the local ICT sector. Policy reforms for software export and import, easy regulation, content development efforts by the government, tax waiver for internet use, and easy bank loans can uplift the ICT sector in a major way.

BB goes tough on lending to buyers of buildings, floors  (The Daily Star, April 29, 2013)   

The central bank has cautioned all commercial banks financing projects related to construction and land development. The banks will be required to verify whether the credit applicant has adhered to the Building Construction Act 1952, Bangladesh National Building Code 2006, Bangladesh Environment Protection Act 1995, Fire Prevention and Extinguishing Act 2003 and other applicable laws and rules before financing such projects. Bangladesh Bank made the decision after a non-compliant building, Rana Plaza, collapsed in Savar on April 24, 2013, killing more than 350 people and injuring thousands.

Political intervention, weak governance dog state banks (The Daily Star, April 28, 2013) 

Policy Research Institute (PRI), a leading think-tank has urged the government to privatize state-owned banks, which currently operate in an adverse environment of political intervention and weak governance. In a paper titled “Banking Sector in Bangladesh: Progress, Challenges and Agenda for Reforms”, Sadiq Ahmed, vice-chairman of Policy Research Institute (PRI), pointed out plenty of international evidence showing that publicly-owned banks do not perform well in an environment of weak governance.

 

ADR in banks decreases further in March (New Age, April 27, 2013)

The advance-deposit ratio (ADR) in banks has decreased further as the credit demand in the private sector dropped in the last few months because businessmen are unwilling to risk news investments in the current climate of political unrest. According to Bangladesh Bank officials, the ADR in the banking sector will decline further if the ongoing political instability persists. Banks are now focusing their investments on government securities, like treasury bills and bonds with lower rates of interest. The credit growth in the private sector has dropped to 13.96 per cent in February, the lowest since the FY 2009-10. The BB data showed that the ADR in 33 banks had gone down sharply between January 10 and March 14 of this year.

 

Central database for microfinance (The Daily Star, April 26, 2013)

The government has plans to develop a central database for the microfinance sector in Bangladesh to ensure proper regulation, transparency and accountability for the lenders. The new database will help the government, Non-Government Organizations (NGOs), Microfinance Institutions (MFIs), researchers and stakeholders said the secretary to the Bank and Financial Institution Division of the finance ministry. The new database will also reduce the operating cost of NGOs and MFIs, he said. Bangladesh Telecommunication Regulatory Commission and Bangladesh University of Engineering and Technology have been assigned to conduct a study and design an appropriate system for the proposed database.

 

Moody's rates B’desh outlook 'stable' again (The Financial Express, April 26, 2013)

Moody's Investors Service rated Bangladesh's outlook as stable although it indicated some financial and political risks. According to the global credit rating agency, rising political turmoil due to the upcoming elections-- due between October 2013 and January 2014-- is deterring investment and are disruptive to economic growth. From Moody's viewpoint, although political tension is unlikely to spiral out of control, any prolonged unrest will be “credit negative”.

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