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1
Economics in Business / Bank graft biggest risk to economy
« on: May 14, 2019, 11:26:13 AM »
The corruption-ridden banking sector is the biggest downside risk to the country’s economic growth, requiring the central bank’s vigilance so that discipline can be restored to the industry, said the MCCI yesterday.

There are other downside risks such as poor implementation of public investment programmes, exemplified by only 47.22 percent of the Annual Development Programme reportedly being implemented in the first nine months of the current fiscal year, it said.

The views came in the third quarterly economic review of the Metropolitan Chamber of Commerce and Industry (MCCI).

The country’s growing requirement for subsidy payments to different sectors, uncertainty in the availability of foreign aid, and growing income inequalities are some other impediments to the development, said the chamber.

“Inadequate infrastructure, a lack of investor confidence in the economy that discourages making fresh investment, and the shortage of power and energy are now major impediments to the country’s accelerated economic development.”


Power and gas shortages, insufficiency of investment and weak infrastructure were also major obstacles as they disrupted industrial production and discouraged new investment, according to the review.

Improvements in the country’s GDP growth so far are the outcome of steady progress in the agriculture sector and food security and moderately good growth in industry despite the shortage in the power sector, it said.

Bangladesh economy has achieved a lot of successes in recent times. As per an estimate of the Bangladesh Bureau of Statistics, the country’s GDP growth in the present fiscal year was likely to be 8.13 percent, up from 7.86 percent in the last fiscal year.

The review’s executive summary echoed that Bangladesh’s economy was progressing well albeit below its true potential.

“Despite the impediments to growth, however, the economy has done exceptionally well over the past two decades. Internationally accepted indicators of both economic and social progress have placed Bangladesh at the forefront of the developing world,” it read.

“Poverty has fallen and people’s living standard improved significantly,” the review said.

The agriculture sector performed well in the third quarter. The sector grew at a robust rate of 4.19 percent compared to a moderate growth of 2.97 percent in the previous one.

The power supply situation also improved but the demand too shot up.

Total installed capacity rose to 18,242 megawatts in April from 17,965MW in January, but production remained low because of gas shortages and maintenance-related shutdowns of some power stations.

Domestic credit, on the other hand, grew 13.74 percent in February this year whereas it was 14.22 percent in February in 2018.

The credit growth in February was also lower than the credit growth target of 15.90 percent set in the monetary policy for the second half of the present fiscal year.

In the July-February period of 2018-19, net foreign direct investment (FDI) increased by 24.79 percent to $1.183 billion from $948 million in the corresponding eight months of the previous fiscal year.

In comparison, the net inflow of the FDI in 2018 increased by 67.91 percent to $3.61 billion from $2.15 billion in the previous year.

“The amount is still very low in terms of the country’s development needs. It is also low compared to the FDI inflow to many countries at a similar level of development,” the review said.

Overall, trade deficit narrowed by 8.43 percent in July-February of FY19, thanks to a steady growth of exports and a slowdown in imports.

The deficit in trade in services, too, shrank year-on-year by 0.94 percent in the same period. Lower trade and service deficit led to a significant improvement in the current account balance during July-February of FY19.

The current account deficit narrowed to $4.27 billion during the period under review from $5.899 billion in the corresponding period of the previous fiscal.

The financial account surplus has, however, shrunk by 30.75 percent from $5.376 billion to $3.723 billion during this period, despite an increasing trend in the net FDI.

Due to a significant improvement in the current account balance, the deficit in the overall balance improved to $499 million in July-February of FY19 from a deficit of $978 million during the corresponding months of FY18.


2
Finance / Savings certificates become a headache: BIBM
« on: April 17, 2019, 11:29:48 AM »
Astronomical sales of national savings certificates has become a grave concern for policymakers and bankers, as their high interest means the government's interest burden is soaring and banks are being deprived of deposits, said the Bangladesh Institute of Bank Management.

The government's savings tools are now offering interest rates between 11.04 and 11.76 percent in contrast to 5 to 8 percent rate given by banks.

This has prompted savers to flock to NSCs, so much that the government's target of borrowing Tk 26,197 crore from the tool this fiscal year was met in just the first seven months.

Between July and February, the net sales of the savings tools stood at Tk 35,602.49 crore, up 7.49 percent year-on-year, according to data from the Department of National Savings.

Total outstanding sales of NSCs stood at Tk 262,760 crore as of December last year, up 193 percent from four years earlier.


The above market interest rate on NSCs may make government borrowing from the channel unsustainable, said the BIBM report. It is also impacting the growth of bank deposits, which in turn may create liquidity problem for the banking sector.

The report, which was unveiled yesterday at a seminar, went on to suggest a floating rate based on the average interest rate of government securities (treasury bills and bonds) along with some additional basis points for the savings instruments.

“The high volume of savings tools has some important implications for fiscal-monetary management,” said SM Moniruzzaman, deputy governor of the central bank, at the seminar held at the BIBM auditorium.

The sales of savings tools increased beyond the budgetary target by a sizeable margin in the last couple of years.

As a result, the government borrowing from banks has reduced, cutting down the interest rate on treasury bills and bonds, he said. To compete with the government savings tools, banks need to collect deposits at higher interest rates.

“Thus, the existing administered interest rate of the government tools appears to be a challenge for fiscal-monetary coordination.”

The difference between the government tools and the bank deposit or treasury securities rates, among others, is generally seen as responsible for the recent rise in the NSC issuance.

A portion of wealthy people may be parking their money heavily in the instruments, forcing the government to borrow more from the tools than its budgetary target, Moniruzzaman said.

At present, there is no database of the savings instruments to verify which segments of the society are investing the maximum amount of money in the tools, he added.

Barkat-e-khuda, Dr Muzaffer Ahmad chair professor of the BIBM; Helal Ahmed Chowdhury, supernumerary professor of the BIBM; Md Ali Hossain Prodhania, managing director of Bangladesh Krishi Bank; and Yasin Ali, supernumerary professor of the BIBM, also spoke.

Prashanta Kumar Banerjee, director and professor of the BIBM, presented the findings of the report.

3
Uber Technologies Inc has 91 million users, but growth is slowing and it may never make a profit, the ride-hailing company said on Thursday in its IPO filing.

The document gave the first comprehensive financial picture of the decade-old company which was started after its founders struggled to get a cab on a snowy night and has changed the way much of the world travels.

The S-1 filing underscores Uber’s rapid growth in the last three years but also how a string of public scandals and increased competition from rivals have weighed on its plans to attract and retain riders.

The disclosure also highlighted how far Uber remains from turning a profit, with the company cautioning it expects operating expenses to “increase significantly in the foreseeable future” and it “may not achieve profitability.”

Uber lost $3.03 billion in 2018 from operations.

https://www.thedailystar.net/business/news/uber-unveils-ipo-warning-it-may-never-make-profit-1728904

4
Finance / Swap getting popular in local financial market
« on: April 11, 2019, 06:55:00 PM »
Interest rate swap is gradually becoming popular in the country's financial market, as many firms are showing interest on such type of derivative to avoid interest rate volatility.

Swap is the exchange of one set of cash flows for another, floating to fixed rate or vice versa.

Usually taking place over the counter (OTC), the contracts are between two or more parties according to their desired specifications, and can be customised in many different ways.


 
For example, if a party borrows from overseas at a floating rate, swap will happen when the party wants to convert the loan into a fixed rate one, considering its long-term uncertainly.

There are three different types of interest rate swap: fixed-to-floating, floating-to-fixed, and float-to-float.

Bankers said in recent period, two big swap deals have been signed, one by the Eastern Bank Limited and other by the BRAC Bank Limited, amounting to US$ 140 million.

The Eastern Bank inked an interest rate swap deal with the Summit Group, the first-of-its-kind agreement for a local bank, in October 2018.

The deal struck up pertains to the interest payment on $ 71.25 million loans taken by the two Summit Group concerns-Summit Barisal Power Limited and Summit Narayanganj Power Unit II Limited-in December 2016.

On the other hand, the BRAC Bank signed a swap deal with the Ace Alliance Power Limited (AAPL) in March.

The BRAC Bank provided hedging for the AAPL's exposure to the London Inter-Bank Offered Rate (LIBOR) against its borrowing of $ 68.60 million for 10.3 years.

BRAC said its deal is the highest-tenor interest rate derivative for any private commercial bank in the country.

The AAPL, a 149-MW independent power project situated at Kodda in Gazipur, is jointly owned by the Summit Corporation Limited and the Summit Power Limited.

Md Shaheen Iqbal, head of treasury at the BRAC Bank, told the FE that the power company wanted to convert its loan into a fixed-rate one following global market volatility.

"We offered a fixed rate to the company for over 10 years."

With increased volatility in interest rates, such types of derivatives are becoming very popular nowadays, he also said.

In current volatile global market scenario, the AAPL found it imperative to hedge against the loss arising from floating rate loan.

"The BRAC Bank was able to provide the most effective derivative solution - interest rate swap - to convert the LIBOR-based loan into a fixed-rate one," he added.

Anis A Khan, CEO and Managing Director of the Mutual Trust Bank Limited, told the FE that product like swap is now surfacing here, as the country's financial market is becoming matured.

"We should encourage the situation, as it is too common a product, even in India," he opined.


https://thefinancialexpress.com.bd/economy/bangladesh/swap-getting-popular-in-local-financial-market-1554953104

5
National Board of Revenue (NBR) chairman Md Mosharraf Hossain Bhuiyan said on Tuesday the capital and bond markets have still to attract 'educated investors'.

There are speculators who remain mostly active staking and betting on the markets, he added.

"Educated investors couldn't be attracted to stock and bond markets, rather speculators are more active and they want to become rich within a short period."


 
Price indices at the bourses often fall even after making simple comments on the market, Mr Bhuiyan said.

He said this at a pre-budget discussion with the Foreign Investors' Chamber of Commerce and Industry (FICCI) held at the NBR's Segunbagicha headquarters.

Mr Bhuiyan urged the multi-national companies (MNCs) to invest in the domestic share market.

In reply, FICCI member Mahtab Uddin Ahmed said the MNCs' compliance cost to go to the stock market is very high.

"The MNCs aren't coming to the stock market as it hasn't reached a stable position," said Mr Ahmed, also managing director and CEO of Robi Axiata Ltd.

FICCI president Shehzad Munim placed the chamber's budget proposals for fiscal year 2019-2020 at the programme presided over by the NBR chief.

The chamber placed a set of proposals, including a reduction in corporate tax rates in phases, raising tax-free income limit and clarifying complexities in the new VAT act.

FICCI members also proposed to cut customs duty and supplementary duty (SD) on raw materials and introduce uniform duty rates for capital machinery and spare parts for local manufacturers.

Terming corporate tax rates very high and uncompetitive for MNCs, Mr Munim said the rates could be reduced in phases by framing a plan of five years.

https://thefinancialexpress.com.bd/stock/stock-bond-mkts-cant-woo-educated-investors-1554871381

6

Regulatory uncertainty has become a major bottleneck for investment in Bangladesh, where private sector investments remain weak, said the World Bank in its latest report.

At present, foreign direct investment is less than 1 percent of the GDP.

Businesses, particularly the medium-sized ones, suffer from the inconsistencies in policy implementation, said the Washington based-multilateral lender in the Spring 2019 edition of the Bangladesh Development Update.

The report, which puts special focus on regulatory predictability, was unveiled yesterday at the WB's office in Dhaka.

“Regulatory uncertainty makes property rights insecure, which is a deterrent to investment,” the report said.

More

https://www.thedailystar.net/business/news/fix-regulatory-uncertainty-boost-investment-1725265

8
The pace of recovery of banks' nonperforming loans (NPL) was much lower than the rate at which their NPL increased last year -- an ominous development for the sector.

In 2018, banks recovered Tk 13,392 crore of NPLs, up 5.86 percent from a year earlier, while delinquent loans in the sector soared 26.38 percent to Tk 93,911 crore, according to data from the sector.

Given the trend, the latest government move to amend the existing loan rules to extend more facilities to defaulters will only exacerbate the situation, said Khondkar Ibrahim Khaled, former deputy governor of the central bank.

Last week, the government announced that defaulters would be allowed to reschedule their loans for 12 years after furnishing 2 percent down payment under a special package.

At present, defaulters can reschedule their loans for at most 3 years by providing 10 to 15 percent down payment.

https://www.thedailystar.net/business/news/recovery-fails-keep-pace-default-loan-spike-1722655

9
Business Administration / Novel e-commerce store Deligram goes live
« on: March 30, 2019, 06:46:37 PM »
Shopping is set to become even more convenient with the arrival of Deligram, an omni-channel e-commerce company that promises to harness existing corner shops in neighbourhoods to act as their collection points.

Customers can order at www.deligram.com or the mobile app, which will go live today, and have their desired products delivered to their homes within 24 to 96 hours.

They can also choose to pick up their Deligram orders from their nearest corner shops. In that case there will not be any delivery charge.

The Deligram partner corner shops will be provided with a tablet computer and product catalogue, so customers would also be able to place orders from there -- a facility that would come in handy for those who do not own a smart device or are not comfortable placing orders online.

This will save customers from the countless incoming phone calls from delivery personnel to schedule a delivery time and locate the address, said Waiz Rahim, the chief executive officer of Deligram, which officially started its journey yesterday.

More
https://www.thedailystar.net/business/news/novel-e-commerce-store-deligram-goes-live-1721842

10
Economics in Business / Budget to be realistic
« on: March 29, 2019, 01:03:20 PM »
The budget for the next fiscal year will be realistic, meaning the government will be able to attain both the revenue and expenditure targets, said Finance Minister AHM Mustafa Kamal yesterday.

“We will not set any target for the ministries. Rather, they will set their own targets that they can achieve,” he said at a pre-budget meeting with secretaries of all the ministries at the auditorium of National Economic Council.

The minister also said the National Board of Revenue (NBR) had set a revenue generation target of more than Tk 296,000 crore for the current fiscal year.

But the target will not be achieved, so it should be revised down, he said.

“In the next budget, we will not set the target for the NBR. The NBR will set its own target on the basis of how much revenue it will be able to generate, so that the goal does not need to be revised.”

For more-
https://www.thedailystar.net/business/news/budget-be-realistic-1721836

12
Finance / MFS market to heat up as PM opens Nagad
« on: March 27, 2019, 01:35:41 PM »
Prime Minister Sheikh Hasina yesterday inaugurated digital financial service provider Nagad, a product developed by Bangladesh Post Office with a private company in a bid to deepen financial inclusion in the most rural corners of the country.

“Currently, 66 percent of the population are unbanked and our target is to bring them under the cashless net,” said Mohammad Solaiman, head of corporate and regulatory affairs of Nagad.

People can transact safely and quickly at a low cost through Nagad, he said.

Nagad, which started its service on a trial basis in September in all the districts headquarters, has amassed 7 lakh active customers.

Within the next one and a half years the joint venture between the BPO and Third Wave Technologies will expand its coverage area, said Solaiman.

More-
https://www.thedailystar.net/business/news/mfs-market-heat-pm-opens-nagad-1720801

13
Teaching & Research Forum / 7 Skills Students Will Always Need
« on: March 26, 2019, 03:55:06 PM »
As educators, we constantly strive to prepare our students for the ‘real world’ that exists around them. We teach them how to read, write, and calculate. Then, of course, there are the less tangible skills we teach; such as how to work in a team, think critically, and be curious about the things they encounter each day.

We want to prepare them to lead productive and successful lives once they leave us and enter into the realm of adulthood. But what lies ahead for our students in the future? Did educators of twenty years ago know that so much of our world would be based on computers and technology now? Could they have known what skills would be needed in the job market today? Unlikely, but yet they had to do their best to prepare their students for this world anyhow. Nowadays, educators are still charged with the same complicated task – preparing students for the unknown.

More

https://www.teachthought.com/the-future-of-learning/how-to-prepare-student-for-21st-century-survival/

14
Economics in Business / Bangladesh to attain 8% growth by 2019
« on: March 26, 2019, 03:41:35 PM »

Expressing optimism, Planning Minister AHM Mustafa Kamal on Thursday said 2018 will be a “good and happy” one for the country’s economy while Bangladesh would attain 8% growth by the next fiscal (FY19).
“Earlier, we set our target to attain 8% growth by 2020 (FY2020) in line with the 7th Five Year Plan. But, it’s my belief that we’ll be able to attain 8% growth by 2019 ahead of that target and there is no reason for not attaining that,” he said.

More-
https://www.dhakatribune.com/business/2018/01/05/bangladesh-attain-8-growth-2019

15
Finance / Trade war threat to global stability: IMF
« on: March 26, 2019, 12:29:03 PM »
The US-China trade war poses the biggest risk to global stability and fiscal stabilisation is needed to respond to economic shocks in Europe, IMF First Deputy Managing Director David Lipton said on Monday.

“Obviously, this is not a matter for Europe alone. The United States needs to get its fiscal house in order as well. US-China trade tensions pose the largest risk to global stability,” Lipton said during a conference in Lisbon.

The trade dispute, which began some eight months ago, has affected the flow of billions of dollars of goods between the biggest and second biggest economies in the world.

Lipton said he believed fiscal-stabilisation capacity must be at the heart of risk reduction in Europe.

“In its absence, the euro area will remain over-reliant on monetary policy for stabilisation and too much of the burden of crisis response will fall on individual countries, with their ability to respond depending on each country's fiscal space.”


For details
https://www.thedailystar.net/business/news/trade-war-threat-global-stability-imf-1720519

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