Economy
Investors’ financial literacy must to boost capital market: Commerce Minister
Commerce Minister Tipu Munshi today said that both financial literacy and good business organizations are must to boost investment in the capital market.
The stock market is a crucial sector for the country’s economy, so knowledgeable investors can drive the capital market to be sustainable, he said.
The minister said this while speaking as the chief guest at the inaugural session of the Arthosuchak Capital Market Expo-2023, held at Institute of Diploma Engineers’ Bangladesh (IDEB) in Dhaka.
Tipu Munshi said that more than 50 percent of money is taken from the capital market in developed economies.
“We don’t have that situation in our country. Loans are taken from banks, which is creating several problems in the banking sector. If even 50 percent of the money came from the capital market, business and trade in our country are bound to improve,” the minister said.
A group with vest interest is cleverly defining the country’s political and economic development – spreading rumours and lies and trying to mislead people, the minister said.
Read more: BSEC working to enhance financial literacy for capital market investors: Prof Shibli
“The country has progressed so much, and they say, it is not right. But they can no longer deny the visible improvement. Those who are doing this, they do not want development of this country,” Munshi said.
Professor Shibli Rubayat-Ul-Islam, chairman of BSEC, attend the function as special guest, while Ziaur Rahman, editor of Arthya Suchak presided over the program.
Chairman of Dhaka Stock Exchange (DSE) Md Eunusur Rahman, Chittagong Stock Exchange (CSE) Chairman Asif Ibrahim, Bangladesh Publicly Listed Companies Association (BAPLC) President Anis Ud Dowla, Bangladesh Merchant Bankers Association (BMBA) President Sayedur Rahman and Dhaka Brokers Association (DBA) President Richard De Rosario, among other, spoke in the function.
Read more: IMF for capacity building of capital market in Bangladesh
Economy offers reasons for optimism, even as chronic problems persist
Economists are hopeful that Bangladesh’s economy will regain the growth momentum while reducing inflation and stabilising the exchange rate in the New Year.
Despite higher inflation and fluctuating currency exchange rate, record defaulted loans, they are optimistic about the overall growth of the domestic economy, which is predicted by the IMF and World Bank to be over 6 percent still in FY23.
Major challenges including capital flight ahead of the national election, persistent loan default culture, and lack of good governance in the banking sector will however remain.
Also read: Bangladesh performing well in 3 major economic indicators, data shows
Former adviser on finance and planning to a caretaker government Dr ABM Mirza Azizul Islam told UNB that Bangladesh’s economy remains in a good position compared to many other Asian countries - including Indonesia and Singapore.
The trade deficit is widening due to the sharp rise in import demand, which should be tackled by discouraging unnecessary imports and increasing domestic agriculture production. Huge import payments have eaten away at the foreign exchange reserve, he said.
Mirza Aziz said the pace of reducing the poverty rate (proportion of population under the poverty line) has slowed down. Inflation over 8 percent is pinching people’s pockets, as it creates an imbalance in the earnings and expenditure of marginal people.
Read More: Keep wheels of economy running amid global crisis: PM urges industrialists
He also suggested cutting additional facilities for loan defaulters as it is not good for the economy and the loan default culture could be reduced if the defaulters face legal action.
Former governor of Bangladesh Bank Dr Atiur Rahman said the economy in the New Year will face both opportunities and challenges, depending mostly on developments in the global economy.
“If the war in Ukraine comes to an end the global supply chains will improve and the shipping and fuel costs will come down. This will have some positive impact in terms of reducing the level of imported inflation with a huge impact on our overall inflation as well,” he said.
Read More: Investment projection spelled out to counter hurdles for growth
“However, we also need to do more on our domestic fronts to reduce this inflation,” Dr Atiur added. Inflation is certainly the biggest problem for middle and low-income people.
On the other hand, if the Fed (US Federal Reserve, America’s central bank) stops tightening its monetary policy, it would have some positive impact on the Taka-Dollar exchange rate. On the whole, the geopolitical tensions will continue to determine the pace of Bangladesh’s economic growth and the level of inflation.
“Yet, we must continue to support agriculture, remittances, and export sectors to contribute positively from within towards better gains of our economic growth. The monetary policy should continue to move towards market-determined conditions to help stabilise inflation from the demand side,” the former governor of Bangladesh Bank said.
Read More: Green Economy in Bangladesh: Prospects and Challenges
On the whole, the challenges will remain, but the economy of Bangladesh may stabilise with a robust foundation if the global situation turns favourable and austerity measures remain in place.
Faridpur woman earning Tk 1 lakh per month from vermicompost
Once Tania Parvin, and her four-member family, had to struggle to make ends meet. One day she saw a video on YouTube on how to make vermicompost at home, and her journey to economic emancipation started.
With the help of the local Department of Agriculture Extension (DAE), she began her production with a three-ring slab in 2017 after receiving training. Gradually her production expanded.
“Twelve to 15 tons of fertilizer is produced from my 36 units every month. I had only 12 units in the beginning. The retail price per kg is Tk 15 and the wholesale price is TK12,” she said.
Read more: Jute sticks: A new source of income for Faridpur farmers
She now earns Tk 100,000 per month by producing the organic fertilizer.
Tania is now selling this fertilizer in various parts of the country. She said, the demand for this fertilizer is increasing by the day.
FBCCI urges policy support in tourism development
Leaders of the Federation of Bangladesh Chamber of Commerce and Industries (FBCCI) said the tourism sector is frustrated as it is not in the list of the top ten sectors of Bangladesh, though the sector has 100 percent value addition to the country's economy.
They urged for the government's support in national and international branding besides increasing policy support for the development of this potential sector, they said.
Read more: FBCCI seeks dollars from reserves to import commodities for Ramadan
They said this in the second meeting of the standing committee on Hotel, Motel, Resort and Guest House Development held at FBCCI on Tuesday.
The businessmen said that the tourism industry in Bangladesh has developed. But the development is far behind compared to that of the neighboring countries. Businessmen believe that the tourism sector will be at top if government policy support increases.
Speaking as the chief guest FBCCI Vice President Md Amin Helaly said, “Tourism sector has made a lot of progress in the past years. Modern facilities, equipment, and technology are being used in our hotels, motels, and resorts like in developed countries. But still, the industry faces the lack of infrastructure, skilled manpower, and transport facilities.”
Read more: FBCCI seeks partnership with UK in technology transfer, supply chain development
He said, “Seven Sisters of India could be the potential market for Bangladesh’s tourism sector.
Helaly urged for taking the integrated initiative to tie up with the tourists of seven sisters region of India.
The other speakers demanded the simplification of license or clearance, more development of the communication system, bringing all tourism in the country under the license, and a government funding system for training of tourist guides.
FBCCI Director MGR Nasir Majumder, Hafez Harun, Abu Hussain Bhuiyan (Ranu), Akkas Mahmood, Secretary General Mohammad Mahfuzul Hoque, Committee Co-Chairman Khandaker Ruhul Amin, AHM Aminul Islam Bhuiyan, Irfan Ahmed, Jalal Uddin Tipu, and others also spoke in the meeting.
Keep wheels of economy running amid global crisis: PM urges industrialists
Prime Minister Sheikh Hasina on Sunday asked the industrialists to keep their factories running to ensure that the people of Bangladesh don’t suffer amid the global economic recession.
“Many countries have announced that they are suffering from economic recession. But I can say that Bangladesh is still not in such a bad condition,” she said. The government is taking measures to keep the wheels of the country’s economy running.
The premier said this while inaugurating and laying foundation stones of 50 industrial units and commercial infrastructures in different economic zones on the occasion of the golden jubilee of the country’s independence.
She unveiled the plaques at an event arranged by Bangladesh Economic Zone Authority (BEZA) at 'Bangabandhu Sheikh Mujib Shilpa Nagar' in Mirsarai of Chattogram, joining it through a videoconference from her official residence Ganabhaban.
“I would like to request the industrialists to continue efforts to meet the demands of the country’s people by running their industries,” she said.
She reminded the industrialists of the days of corruption and the harassments they used to suffer during the rule of Bangladesh Nationalist Party (BNP) during 2001-2006.
“Now there is no Hawa Bhaban anymore. You don’t have to make payments of Hawa Bhaban or run from door to door to get your work done,” she said.
Hawa Bhavan, better known as a second centre of power during then premier Khaleda Zia’s rule, used to be run by her son BNP leader Tarique Rahman.
said her government has been able to bring the country under all sorts of rules and disciplines. The government is developing a business-friendly atmosphere and providing all sorts of scopes and facilities for businesses, she said.“You should work for the wellbeing of the country’s people. We will extend support as much as you work for the welfare of the people. But don’t do anything that would lead the people to suffer,” she said.
The PM said the prices of commodities in the international markets and transport costs soared due to the Ukraine-Russia war, sanctions and counter-sanctions.
Read more: Engage people to enhance capacity: PM Hasina to Firefighters
PM Hasina referred to Vision-2021 (the political manifesto of the Bangladesh Awami League to develop Bangladesh). “Bangladesh is a changed Bangladesh now. Those who have eyes can see it,” she added.
Calling her Awami League government a business-friendly one, the PM said her party is putting importance to the private sector, industrialization and increasing agricultural production for the country’s development.
She urged the entrepreneurs, particularly the youth, to come forward to new sectors like agricultural and food-processing industries as Bangladesh has potential to export processed food items.
The PM also briefly cited the opportunities created by her government for the youths and women to develop as entrepreneurs.
She said all including the youths and women would have to work together to transform Bangladesh into a developed and prosperous country by 2041.
“I would like to ask our young generation not to run after for only. Rather you develop your own industries and businesses,” she added.
The prime minister stressed the need for a planned industrialisation by protecting the arable lands to ensure economic prosperity.
“We’ll have to continue the food production and also develop industrial zones at the same time…. No industry can be developed indiscriminately…. the arable lands and triple-crop lands can in no way be destroyed,” she said.
Read more: Grow more food, keep enough stock to avert any crisis: PM Hasina
The premier said her government is setting up 100 economic zones in different parts of the country and has already approved 97 economic zones. Of them, 28 economic zones are currently under development.
She said some 10 million people would be directly and indirectly employed in the economic zones. The government has set a target of goods production and export earnings worth around US$ 40 billion from the zones, she added.
In the economic zones, 29 industrial establishments are already in commercial production and 61 others are under construction. So far, some 45,000 jobs have been created in the economic zones and about US$ 4 billion have been invested in the private economic zones.
Besides, the proposed investment in all economic zones is more than US$ 26 billion.
Read more: Shun luxury and serve the people: PM Hasina tells elected Zila Parishads
Among the 50 industrial or business establishments, four industrial units have started production at Bangabandhu Sheikh Mujib Shilpa Nagar while eight others at different privately-run Economic zones.
Besides, Karnaphuli Drydock Special Economic Zone, the administrative buildings of Bangabandhu Sheikh Mujib Shilpa Nagar (BSMSN), Jamalpur Economic Zone, Srihatta Economic Zone and Sabrang Tourism Park, 20-kilometre Sheikh Hasina Sarani, 230-KVA gridline and substation at BSMSN were opened.
Moreover, the foundation stones of 29 industrial units in different economic zones and a water treatment plant having 50 million litres per day (MLD) capacity in the BSMSN were laid.
Land Minister Saifuzzaman Chowdhury, PM’s Private Industry and Investment Adviser Salman F Rahman, Chattogram-1 MP Engineer Mosharraf Hossain and President of Bangladesh Economic Zone Investors Association and also vice chairman of Bashundhara Group Safwan Sobhan also spoke at the function.
BEZA Executive Chairman Sheikh Yusuf Haroon delivered the welcome speech.
Speakers urge to increase direct tax net
Speakers at a discussion emphasised increasing direct income tax to reduce increasing inequality in taxation system.
They came up with the remarks in seminar titled 'Combating Inequality and Direct Application to Increase Revenue Income' organized jointly by Policy Integration for Development (RAPID) and Economic Reporters’ Forum (ERF) at ERF auditorium on Saturday.
If all the taxable persons pay tax according to the income tax slab, it will be possible to achieve 3.1 percent by increasing the current 1 percent personal income tax as a proportion of GDP, they added.
Read more: Digital infrastructure key to attracting more remittance through legal channels, speakers say
For this, the number of registered taxpayers should be increased. At the same time, if tax exemptions are removed, it is possible to increase taxes by 2 percent of GDP, they opined.
Rapid chairman Dr. Mohammad Abdur Razzaque presented a keynote paper on the topic. He said Bangladesh's tax-GDP ratio is 9 percent, which is the lowest in the world. The main reason for this is that there are very few direct tax.
It should increase. Currently indirect tax 65 percent indirect and direct tax 35 percent. However, the initiative taken by the government to bring direct tax to 70 percent and indirect tax to 30 percent in the coming days is the right decision, Razzaq said. He said the two problems in Bangladesh are growing inequality and low government spending as a share of GDP. The main reason for this is the lack of direct tax. Although the number of direct tax has increased more than before.
However, in terms of GDP ratio and quantity, it is much lower in almost all countries of the world, including India, Bhutan, Malaysia, the government's income is more than that of Bangladesh.
Although the poor people of the country pay the highest VAT in proportion to their income. And people with higher income pay the least VAT.
Read more: ERF honoured with WCO Certificate of Merit 2022
He suggested to introduce social insurance system, by which evry person income will be counted and it will be easy collection tax.
Former NBR chairman Dr Nasir Uddin Ahmed, additional secretary of finance ministry Kabirul Ezdani Khan, professor development studies of DU and Executive Director, RAPID Dr. Abu Eusuf, among others, spoke in the seminar.
NBR works to impose additional duty on 330 goods
The National Board of Revenue (NBR) is working to impose additional duty on 330 products which are not essential goods, said commerce secretary Tapan Kanti Gosh.
He said no essential goods were imported in the country spending foreign exchange, Bangladesh Trade and Tariff Commission and NBR are assessing how much duty can be increased to discourage imports.
Read more: NBR supports Made in Bangladesh brand: Chairman
The commerce secretary told reporters around $1 billion can be saved by controlling those goods.
The government of Bangladesh had increased the duty on 135 products last May to discourage imports.
But even then the trade deficit has not reduced much. As a result, the Ministry of Commerce requested the Bangladesh Trade and Tariff Commission to verify that the duty can be increased on any other products, sources said.
Read more: NBR counting losses for rampant tax evasion
Following that request, the commission prepared a list of 330 products and sent it to the Ministry of Commerce.
Later the ministry sent it to the National Board of Revenue (NBR).
Read more: 20% year-on-year growth: NBR collected record Tk 8,733cr VAT in Aug
Mainly luxuries and less important national products dominate the list.
HBL President & CEO Aurangzeb visits Bangladesh on Nov 22-23
Muhammad Aurangzeb, President & CEO of Habib Bank Limited, a seasoned banker with over 30 years of experience, will visit Dhaka on November 22-23.
During his visit he will engage with government, regulatory bodies, clients and partners to focus on technology-driven, client-centric banking solutions and foster foreign direct investment in the country, said a media release on Saturday.
Faisal Lalani, Head of International Banking - HBL, will accompany him.
HBL, a bank of regional relevance with operations spread across multiple geographies, has been serving clients in Bangladesh for more than 45 years.
Aurangzeb joined HBL on 30 April 2018 as the President & CEO.
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Prior to this responsibility at HBL, Aurangzeb was the CEO for JP Morgan’s Global Corporate Bank based in Asia, with a rich international banking experience of over 30 years in other senior management roles at ABN AMRO and RBS based in Amsterdam and Singapore.
He received his BS and MBA degrees from the Wharton School (University of Pennsylvania).
During his meetings with key stakeholders in Bangladesh, Aurangzeb will draw attention to the fact that HBL Bangladesh offers RMB/CNY (Renminbi) denominated account to its respected clients and how HBL's presence in China is enabling the bank to conduct business with state-owned firms and prominent financial institutions in China.
HBL will continue to play its part in the transformation of the banking system in Bangladesh, consistent with its vision of becoming a technology company with a banking licence.
Read more: HSBC introduces domestic foreign currency transaction through RTGS
The Aga Khan Fund for Economic Development (AKFED) owns 51% shareholding and the management control of HBL while the remaining shareholding is held by individuals, local and foreign institutions and funds including CDC Group Plc and International Finance Corporation.
Investment projection spelled out to counter hurdles for growth
The government of Bangladesh has projected to upgrade total investment in the country to 33.6 percent of the total GDP on a mid-term basis (in the 2024-25 fiscal year) aiming to overturn the economic shock from the COVID-19 pandemic and the Russia-Ukraine war.
In this investment, the private sector will contribute 26.65 percent of the GDP while the public sector will contribute 7.0 percent.
According to an official document, to attain the gradual acceleration of the GDP, private investment expansion is necessary along with public investment.
The estimated investment target for 2023-24 fiscal year is 32.8 percent with 25.91 percent from the private sector and 6.9 percent from the public sector.
Read more: Lack of financing, policy support causes of weak startup growth in Bangladesh: Speakers
For the running 2022-23 fiscal year, the investment target is 31.5 percent with the private sector contributing 24.81 percent and the public sector adding 6.7 percent.
The estimated GDP target for the current 2022-23 fiscal year is 7.5 percent while the target for 2023-24 and 2024-25 is 7.8 percent and 8.0 percent respectively.
The document stated that the GDP of the last 2021-22 fiscal year was 7.25 percent while in 2020-21 it was 6.94 percent.
The growth in agriculture, industry and service sectors have been estimated at 5.0 percent, 8.8 percent and 7.9 percent respectively for the 2024-25 fiscal year.
Read more: Bangladesh's strong growth could be at risk without urgent climate action: World Bank
The official document said that About 7-8 percent real GDP growth is targeted over the medium term based on the assumptions of the gradual recovery of the world economy from the impacts of the COVID-19 pandemic and the early resolution of the Russia-Ukraine conflict.
The document put emphasis on private investment, saying that it needs to be boosted along with public investment to increase capital accumulation.
Total investment in fiscal 2020-21 stands at 31.0 percent of the GDP where the contributions of private and public sectors are 23.7 percent and 7.3 percent respectively.
“But this level of investment is not adequate to achieve around 8.0 percent growth over the medium term,” the document said.
Read more: Tier-2 cities like Gazipur, Narayanganj must promote urban growth outside Dhaka: World Bank
It also mentioned that public investment could not be increased to an expected level due to the lack of capacity in implementing the annual development programme.
Recognising this, the document stated the government has taken steps to bring about some structural changes at both project design and implementation levels.
It mentioned that a potentially huge global supply shock that may reduce growth and push up inflation is affecting the post-COVID-19 recovery.
“Russia’s invasion of Ukraine and the economic sanctions on Russia that followed put global energy supplies at risk,” it said.
Read More: More development projects planned to support trade, investment
The document said that Russia supplies around 10 percent of the world’s energy, including 17 percent of its natural gas and 12 percent of its oil.
The jump in oil and gas prices will add to industry costs and reduce consumers’ real income, it added, saying that record-high inflation is currently evident, which also affects Bangladesh.
The total investment in 2018-19 fiscal year was 31.6 percent of the GDP where the share of private and public sector were 23.5 percent and 8 percent respectively.
The investment in 2019-20 fiscal year was 20.8 percent of the GDP (private sector 12.7 percent and public sector 8.1 percent).
Read More: “Bangladesh can be the right place for investment from Brunei”
"But to attain 8 percent GDP in the mid-term basis” such investment is not adequate, it said.
The document mentioned that the government has taken various reforms measures like simplification of the fund release process for accelerating the rate of ADP implementation.
It mentioned that the overall agriculture sector, especially foodgrain, vegetables, livestock and forest resources was less affected due to coronavirus.
It said that disbursement of agriculture loans played an important role in the satisfactory growth of the agriculture sector in Bangladesh.
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Falling exports-remittances: Double blow to Bangladesh economy
The two major foreign exchange earning sources of Bangladesh- exports and remittances - fell in October due to slowdown in the global economy, which economists feared may pose new challenges for the country’s economy.
They said drop in exports means imports will be down at the same time. Though less imports may bring some slightly lessen the pressure on foreign currency reserves, the overall impact on economy won’t be good.
Professor Mustafijur Rahman, a distinguished fellow of think tank Centre for Policy Dialogue (CPD) told UNB that the domestic economy is closely related to the ups and downs of the global economy. So Bangladesh’s economy will definitely be affected by the new recession in the US and EU countries.
Read more:Remittances fall again in Oct, this time to 8-month low
Bangladesh should focus on increasing the flow of inward remittance as it will be a good source of foreign exchange earnings at this time.
Mustafij suggested increasing domestic resource mobilization and focusing on food production, which will help the economy to be resilient during the recession.
Dr Mohammad Abdur Razzaque, an economist specializing in applied international trade, told UNB said export earnings will not grow as the recession prevails in the US and EU markets.
He hinted that the domestic economy, including export and remittance targets would not be achieved considering the present situation.
“Our foreign exchange would not be affected severely as the demand for import is falling in the line of export, and the government should focus policy to save forex by cutting projects expenditure,” he added.
Bangladesh exported goods and services worth USD $4.356 billion in October due to the slowdown in the global economy and for adverse impact Ukraine-Russia war.
It shows the export earnings fell by 7.85 percent to USD $4.356 billion year-on-year in October. The export volume of October, in last fiscal year was $4.727 billion. It means the export income fell by 7.65 percent.
The export promotion bureau (EPB) published the export data of October on Wednesday (November 2).
Read more:Remittance: Bangladesh Bank tells banks to provide Tk 107 per dollar
As a result, after the last 13 consecutive months of growth in export earnings, in September and October this year, export earnings decreased for two consecutive months compared to the previous year.
Meanwhile, 12.87 percent of export income decreased in October 2022 beyond the target of the government.
The government's target for export earnings this month was USD $5 billion, whereas the country exported $4.356 billion. That is a fall by $64.33 crore. It is about a 12.87 percent fall.
People familiar with the development said that the export income of Bangladesh has started to decrease due to the shock of the Russia-Ukraine war.
Inflation has increased abnormally in the United States and European countries. Because of this, they have reduced the purchase of clothes. They have to spend a lot on food, which impacted Bangladesh’s export income.
However, traders, including ready-made garment owners, were already expressing apprehensions that purchase orders from the US and European markets would decrease for the new recession that was caused by the Russia-Ukraine war.
The inward remittance inflow to Bangladesh declined by 7.4 percent in October to USD $1.52 billion compared to the same month of last year. It is the lowest in last 8 months.