Weekly News Clippings (July 11, 2013)

VAT rate to be cut by 2015: Muhith (New Age, July 11, 2013)

The value-added tax rate would be lowered by 2015 to facilitate business expansion in the country, said the finance minister.  VAT is imposed on creation of wealth while income tax is collected on accumulation of wealth, the minister said at a programme where the National Board of Revenue awarded 129 business organisations with crests and certificates in recognition of their paying highest VAT in the financial year 2011-2012.However, the businessmen present at the programme demanded that the government should lower the VAT rate to 10 per cent from the existing 15 per cent. A VAT Week organised by the tax administration has begun and will continue till July 16.

China offers $2.4b again to build Padma Bridge (The Financial Express, July 10, 2013)

China has again offered Bangladesh Tk. 19,200 crore (US$ 2.4 billion) to construct the Padma Bridge. However, the government has recently invited international companies to compete for the work of the bridge. According to the communications minister of Bangladesh, the Chinese financial proposal was now under the scrutiny of the Economic Relations Division (ERD). The minister said that the government had already spent the money on the construction of the approach roads of the Padma Bridge and needed to have foreign funds to construct the bridge to reduce the pressure on local resources.

Political parties, cops most corrupt (The Daily Star, July 10, 2013)

Political parties and the police have been identified as the two most corrupt areas in Bangladesh, according to a survey of the Berlin-based Transparency International. The country's judiciary was listed as the second most corruption-ridden area. According to the survey, around 93 per cent of the surveyed respondents consider political parties and police as the most corrupt while 89 per cent respondents think judiciary is the second most corrupt institution. The survey says about 58 per cent people think that paying bribe is the only way of getting government services, while 76 percent identified graft as a serious hindrance in receiving services from official agencies.

Factories under scanner (The Daily Star, July 9, 2013)

A forum of 70 international retailers and brands has agreed to inspect all garment factories in Bangladesh in nine months to ensure fire and building safety. The signatories which include names such as H&M, Carrefour, Marks & Spencer and PVH, the parent company of Calvin Klein and Tommy Hilfiger, have agreed to provide funds for renovation of any factory if the inspection teams find it risky. The teams with local and international experts will focus on fire exit and evacuation along flaws in the structure of a factory building. According to the plan, an emergency protocol will ensure quick action to protect workers at any factory which imposes immediate threat to life and limb. The signatory company will be notified immediately and the factory owner will be told to stop production until further investigation or repairs.

Biggest solar power plant on BBS rooftop (The Daily Star, July 7, 2013)

The government has installed the biggest solar power plant on the rooftop of the Bangladesh Bureau of Statistics (BBS) building in Dhaka. The 11-storey building requires around 500 kwp (kilowatt peak) electricity a day to run its functions out of which, around 200 kwp will come from the solar plant, according to the director general of the BBS. The plant has the generation capacity equivalent to lighting up 5,000 bulbs of 40 watts, will meet a significant portion of the building’s demand for electricity. The cost of installing the plant is more than Tk 2.93 crore but will save around Tk 2 lakh in monthly electricity bills.

Jute yarn exports see tough time in FY13 for Eurozone crisis (Dhaka Tribune, July 6, 2013)

Despite an increase in the prices of jute yarn and its manufacturing cost in the fiscal 2012-13, the country’s jute yarn exporters are facing losses as the international prices keep falling due to the Eurozone crisis and unrest in the Middle East. Export Promotion Bureau (EPB) data show the export earnings from jute yarn remained Tk 3,720 crore ($465m) as the previous fiscal year. The industry insiders, however, noted that the figure looks high due to an increased export tao India and China at low prices.

Existing labour law better than the proposed draft (The Daily Star, July 5, 2013)

The proposed amendment to the labour law still has some provisions that go against the garment workers’ interests, experts said. A senior legal counselor of the American Centre for International Labour Solidarity (ACILS) said that the existing law was in fact more labour friendly as it does not ask to terminate workers for “arson, vandalism and obstruction to work”.  The revision has also curtailed the service benefits, especially of the garment workers, as factory owners would be able to dismiss workers for any misconduct, he said. These points were discussed at a seminar titled “Creating better environment for garments workers and improving working conditions in the readymade garment sector: reforming the labour law” which was recently organised in the capital by the National Human Rights Commission.

 

GSP suspension may hit FDI flow further: Moody's (The Financial Express, July 5, 2013)

The United States’ move to suspend trade benefits may dampen broader investment flows to Bangladesh, eventually posing risks to its external position, said Moody’s. According to the rating agency, while the direct effect on Bangladesh’s exports to the US would likely be very limited, the move may have negative signaling effects, since it could further deter investors who are already faced with the frequent occurrence of strikes and uncertainty over the future labour environment. On June 27, the US suspended Bangladesh from eligibility for trade benefits under the generalised system of preferences (GSP) programme, due to the country’s insufficient progress towards reforms on worker rights and safety standards.