Awami govt set to destroy backbone of Bangladesh economy

[idune]

Energy supply hiccups mar upbeat economic outlook
Jan-Mar 2010 BB report observes

The Bangladesh Bank (BB) Wednesday recommended ensuring adequate power and gas supplies immediately for achieving a sustainable economic growth, stressing at the same time a curb on inflation.

"For the output potential of exports and domestic consumption to be realised, availability of adequate power and gas supplies must be ensured with utmost urgency," said the central bank in its latest quarterly report.

The economy has continued to be on the steady path of growth in the third quarter of the current fiscal year, well supported by robust domestic demand and gradual recovery of export growth momentum, the BB report added.

"….the slower-than-expected recovery of exports and the disruptions in output activities owing to shortage of power and gas supplies are likely to cause fiscal 2009-10 (FY10) real gross domestic product (GDP) growth to fall somewhat short of the initial projection of around 6 per cent," the report noted.

The central bank said disruptions in normal manufacturing routines caused by shortages of power and gas supplies, if prolonged, may lead to supply shortages and attendant price pressure; new investment activities are also being slowed down by power and gas supply bottlenecks, as evidenced by lower withdrawal of industrial term loans in Q3 than that in Q2.

Disbursement of industrial term loans recorded a fall by nearly 14 per cent in Q3 due mainly to worsening supply of gas and electricity.

The disbursement of industrial term loans dropped to Tk 62.12 billion during the January-March period of FY10 from Tk 72.11 billion the previous quarter, according to the central bank statistics.

The estimate includes disbursement of fresh credit, rescheduling of term loans and fund release for balancing, modernisation, rehabilitation and expansion (BMRE) of industrial units, a BB official said.

As precautionary measures against the various current and likely future pressure on consumer prices, the central bank has put in place intensified surveillance on capital market activities of banks, has prohibited banks from owning account acquisition of the real estate sector without prior BB clearance and from customer lending for land purchase.

It has also raised the cash reserve requirement (CRR) and statutory liquidity ratio (SLR) for scheduled banks by one-half per cent of their demand and time liabilities.

Domestic credit growth in Q3 remained within programme limits at 13.6 per cent against programmed 14.5 per cent and hence does not appear to have caused any significant demand side pressure on consumer prices, the report said.

The 19.5 per cent growth of credit to private sector as of the end of Q3 exceeded programme level of 16.7 per cent, but this was offset by simultaneous major decline in the government's bank borrowing, according to the BB quarterly (BBQ) for the January-March period of 2010.

The central bank has predicted that the 12-month average consumers' price index (CPI) inflation might reach around seven per cent by the end of this fiscal, exceeding the programme projection of 6.5 per cent.

The rate of annual average inflation went up by 0.31 percentage point in March this year over that of the previous month mainly because of the increase in prices of food items.

The inflation rate moved up to 6.26 per cent in March from 5.95 per cent in February on the annual average basis, according to the Bangladesh Bureau of Statistics data.

"The upward pressure on domestic consumer prices originates mainly from rising trends in international prices of major food and non-food commodities feeding in through import and export channels in the open external trade regime," the BB report added.

Also, the price pressure in the real estate and stock markets, sustained by liquidity from continually growing workers' remittance inflows impart second round effects on consumer prices, according to the BBQ.


Energy supply hiccups mar upbeat economic outlook

 

[Justin Joseph]

This is the story of all countries why malign Govt. of Bangladesh.

At least they are doing their best not like BNP and its stooges who do nothing but bark at AL.

 

[eastwatch]

Energy supply hiccups mar upbeat economic outlook
Jan-Mar 2010 BB report observes

BNP should not have stolen Taka13,500 from our poor country's coffer. This money was allocated for energy and Tareq/Kokko stole it. So, the new govt is trying to make up for all those misdeeds.

It will take at least another 2 years before power sector can be vitalized. After this period, no one can stop the development of Bangladesh. Even the razaakar GADDARS cannot harm our country any more.

By the way, has Tareq recovered from the military kicks he had received while in custody? Rumour is widespread that with these military kickings to very sensitive parts, this illiterate has lost his s x al power. Anyway, you are a Jamaati, you may not care about Tareq.

 

[idune]

CHANGE OF GUARDS NEEDED
Increased crime, poverty pull nation towards 'digital disaster'

M. Shahidul Islam

Our Prime Minister has had a dream; as do many who are involved passionately in the craft of politics, leadership and governance. The only difference in our PM's dream is that her thoughts are 'digitized' and she had dreamt of creating a digital Bangladesh since coming to power in early 2009.

Although her vision was timely-though lofty-as days went by, she had slowly but surely crept toward what now seems like a 'digital disaster'. After all, people are groaning under wrenching agonies caused by collapsed buildings, unprecedented tragedy of death from outbreak of fire and arson, chronic power outage, unbearable traffic jam, and the unreasonable rises in prices of the essentials.

Besides, PM's own party youths have turned into her Achilles' heel and enemy within. Chronic infighting among AL's student and youth cadres showed no sign of ebbing from the beginning while the instances of increased crime, poverty and economic miseries had exacerbated an already fragile political climate by igniting further anger lately, following closure of media outlets and censoring the gathering of opposition Jamat-I- Islam in the nation's capital.
Although the much-publicized meeting on May 5 between BNP chairperson and the JI leadership may not translate into anything substantive in terms of fashioning a serious anti-government movement in coming days, that hardly should sound as music to the government. A number of other 'troubles in the plate' may prove enough for the incumbent regime to stay on the defensive, for now.

Crime & poverty

Foremost among them are the increased instances of criminality. In the USA, researchers examined national crime rates between 1979 and 1997 and discovered much of the increased instances of criminality linked with falling wages and rising unemployment among men without college education.

Our circumstances may be different, but the fundamentals are more or less symmetric. We have an estimated 72.5 million labour force, roughly about 6.5 million of which work abroad. Among the rest, 45% work in agriculture, 30% in industry, and 25% in service sector.

A recently released report by Bangladesh Bureau of Statistics (BBS) found the rate of unemployed rising from 4.3 percent in 2006 to 5.1 percent in 2009. During those three years alone, number of unemployed people swelled from 2.1 million to 2.7 million. More alarmingly, numbers of day labourers (marginally poor) increased from 8.6 million to 10.3 million during the same period, indicating the prevalence of surplus manpower in agriculture sector.

That is hardly surprising. What surprised many is the fact that, by Jan 2010, some 68,000 Bangladeshis working in Malaysia and Saudi Arabia returned home, notwithstanding an increase in the remittance inflow, exceeding $10 billion for the first time, thanks to the imposition of tight remittance regulations by overseas governments that had compelled more official transfer of remittance and inflated the data to that level.

Decaying RMG sector

Unlike bad news, good news is few and far between. While the government busied in relishing the pleasure from increased remittance inflow, another bad news began to emerge. A sharp decline in orders for RMG products from abroad, especially since June 2009, had coupled with serious labour unrest and intrusion of market by Indian companies, resulting in the closure of nearly 200 textile and RMG factories.

Not only had another about 80,000 workers lost their job in the process., between July-December 2009, export earning fell 6.2 percent to $7.27 billion, reflecting subdued demand for readymade garments, which accounts for 80 percent of total overseas sales.

Consequently, the instances of heinous crimes were bound to hit a crescendo, as they did since September 2009, compelling Home Minister Sahara Khatun to candidly, but grudgingly, admit in the parliament that "Some 10 people were being killed on average each day" during the first eight months of 2009.

Sources say, roughly about from that time onward, aggrieved ruling party youths started receiving firearms from unknown sources, for unknown reasons. This fact is acknowledged by senior police sources, one of which said, "Although there are only about 25,000 legally permitted firearms in the country, there are over one million illegal firearms being used by misguided youths."

Two weeks ago, police and RAB recovered a huge cache of AK-47 ammunitions from Shilmuri village of Comilla's Barura upozilla, which too are linked with some misguided ruling party stalwarts of the locality, according to one source close to the investigation process.

Some observers claim, illegal arms are being used by armed cadres of other political parties too, and, by an estimated 132 criminal gangs, many of which are patronized by people in power. Recently, police admitted having recovered some 5,000 unauthorized firearms since June 2009.

All these have combined to create an environment which warrants strict law enforcement on one hand, and aggressive and radical public initiative to create employment opportunities for this vast army of unemployed, on the other.

Broken promises

Unfortunately, the reality belied such expectations so far. Despite the Finance Minister's declaration in June 2009 to introduce National Service program at upazila level by 2010, nothing much had happened to facilitate unemployment of the many listed, albeit controversially, from the ruling party's own cadre, to qualify for the perks. This and many other broken promises are piling up to sully government's record of performance further.

And, despite PM's assurance in September 2009 during an investors' gathering in New York's Grant Hyatt hotel that her government 'has set its sights on boosting FDI to $7 billion by 2015,' net FDI inflows came down to US$ 228 million in July-January period of the current fiscal, from $662 million during the same period a year earlier, registering a sharp, unprecedented, fall by 67.33 percent. This precipitous drop surpassed the previous record when FDI was seen dropping by a whopping 41 percent between Jan-June 2009.

In the same gathering, PM also said her government has earmarked $350 million for three public-private partnership (PPP) programs in an effort to draw foreign money. As yet, not a single project of the much vaunted PPP saw light of the day.

Added to the lingering uncertainty relating to having access to gas, electricity and other production inputs, the overall economic growth in the coming fiscal may slip far below 5 percent, sparking off further instability. There are fears of falling revenue earnings from corporate sources while the revenue from export and remittance earnings will certainly fail to meet their targets.

That should not stop the government from pursuing policies that might reverse this dark course through which this nation of 150 million strong is treading now. Governance being a matter of constant juggling and re-adjustment, the PM should digress from her 'failed strategy', change guards, and create a new team that can steer the nation from what seems like looming disasters in all fronts.

HOLIDAY > FRONT PAGE

 

[keyboard]

self delete

 

[idune]

More sign of digital deceptiona and destruction of economy.----------------------------------------------------------------------

Factories to stop during WC matches

Mon, Jun 14th, 2010 7:41 pm BdST


Dhaka, June 14 (bdnews24.com) — The government has requested industrial units in Dhaka to stop production during World Cup matches.

Officials say that the request was made as media reported some incidents of frenzied football fans ransacking power offices, blocking highways and damaging cars in protest at power outage during the matches in South Africa.

"We have sent letters to the factory owners not to consume electricity when the World Cup matches go on," SM Faridul Hoque, the managing director in-charge of of Dhaka Power Distribution Company , told bdnews24.com on Monday.
He said the demand for electricity from 5pm to 11pm was the highest.

The World Cup matches coincide with the peak demand during the evening hours.

"So, we have nothing to do but request factory owners," said the official.

The managing director in-charge said he had already had talks with the energy secretary.

Factories to stop during WC matches | Bangladesh | bdnews24.com

 

[billi]

More sign of digital deceptiona and destruction of economy.----------------------------------------------------------------------

Factories to stop during WC matches

Mon, Jun 14th, 2010 7:41 pm BdST


Dhaka, June 14 (bdnews24.com) — The government has requested industrial units in Dhaka to stop production during World Cup matches.

Officials say that the request was made as media reported some incidents of frenzied football fans ransacking power offices, blocking highways and damaging cars in protest at power outage during the matches in South Africa.

"We have sent letters to the factory owners not to consume electricity when the World Cup matches go on," SM Faridul Hoque, the managing director in-charge of of Dhaka Power Distribution Company , told bdnews24.com on Monday.
He said the demand for electricity from 5pm to 11pm was the highest.

The World Cup matches coincide with the peak demand during the evening hours.

"So, we have nothing to do but request factory owners," said the official.

The managing director in-charge said he had already had talks with the energy secretary.

Factories to stop during WC matches | Bangladesh | bdnews24.com

I saw a program on cnn te other day where they were discussing the next places to invest now that China, India and Brazil have been fully explored. Bangladesh and Nigeria apparently ar the 2 countries which is going to get a lot of attention from global investors. I have heard this from other sources as well. So I think the awami league govt is doing quite well. the other right wing govt would have produced only mullahs

 

[Justin Joseph]

Awami govt. is doing its best for Bangladesh but Jammat, its stooges and Bangla haters are feeling hot coals. Best of luck to Bangladesh.

 

[idune]

Growth without investment

Syed Jamaluddin

THE national budget, placed in parliament on June 10, did not touch on the falling trend of investment in Bangladesh. The Finance Minister simply said that the government would emphasise reducing the cost of doing business by ensuring administrative reforms and making utility services easily available.

It was perhaps necessary to elaborate on the investment situation in the budget.

Foreign investment is declining in the country. According to Bangladesh Bank, foreign investment has gone down by 63 per cent in the current year in nine months. Foreign investment is not flowing to Bangladesh because of power shortage. Inviting foreign investors to Bangladesh is futile when existing factories are facing closure for shortage of energy. Meeting the energy shortage is the biggest challenge for the government at the moment. Most of the businessmen think that the energy crunch is the biggest setback to investment.

The stagnation in investment during the caretaker government still continues. Because investment is not picking up to the desired level in the industrial sector, new industries are not being set up. As a result, employment is not increasing. Many industrial units are being shut down for want of gas and electricity. Businessmen appear to have lost interest in investment. If the present situation does not improve, stagnation is likely in the long run.

Public investment has been in decline during the last five years as the government could not fully implement the annual development programme. Researchers feel that a faster rate of investment is crucial to driving economic growth and creating jobs. A low level of investment has been a major barrier to stimulating economic growth in the recent years.

According to a report by Implementation, Monitoring and Evaluation Division (IMED of the Planning Ministry, in the first ten months of the current fiscal year, only 59 per cent of the revised ADP could be implemented. If the government wants to implement the full revised ADP, it will have to achieve 41 per cent in two months which is nearly impossible, said IMED officials.

To create an investment-friendly environment, the government allocated TK 2.5 billion (2,500 crore) for implementing the projects under public-private partnership (PPP) programmes in this year's budget. But the money could not be spent because of a failure to formulate a policy that will set the dimension of investment under PPP programmes. The allocation for PPP projects has been increased to TK 30 billion (3,000 crore) in the proposed new budget. It will be a big challenge for the government to use this money fruitfully.

Private investment remained subdued because of weak public sector response with regard to investment in power and infrastructure. The CPD report said low levels of private investment were mainly due to an absence of a congenial investment environment rather than availability of funds.

Foreign direct investment was dismally low. In July-March, it fell by 50.9 per cent, according to Bangladesh Bank. However, in the quarterly report presented in Parliament a few days ago, the Finance Minister said stagnancy in the field of investment has started improving. The minister hoped investment would increase in future. It will be interesting to watch how this is going to happen.

The World Bank has projected (19.5.2010) low economic growth for Bangladesh in the next fiscal year, taking into account the fallout from the continuing energy crisis. The WB said GDP could be between 5.5 per cent and 6.1 per cent against the government projection of 6.7 per cent. The shortage of energy poses the biggest threat to Bangladesh's growth recovery. The country's economy would grow by 5.5 per cent in fiscal 09/10 against the government estimate of 6.0 per cent. In fiscal 08/09, Bangladesh recorded 5,9 per cent GDP growth, despite the adverse impact of global recession. The growth outlook for fiscal 2010-11 will depend on domestic supply constraints, particularly energy. Energy shortages will continue to stifle Bangladesh's recovery and growth.

According to World Bank, the estimated demand-supply gap of electricity is currently a third of demand (2,000mw) at peak hours. Shortage of gas accounts for nearly half of this gap. Maintaining growth at its recent 6 per cent average over the medium term will thus be a challenge to Bangladesh, given the current infrastructure and energy deficit. Power and gas crunch remains a major constraint to businesses in Bangladesh. Even factories within the export processing zones experienced power cuts. Many large ready-made garment factories have their own power plants, but have had operations disrupted because of gas shortages. According to World Bank, industrial production in apparels, ceramics, fabrics, steel and particles is particularly hard hit. Many factories in the industrial areas in Dhaka and Chittagong are unable to use more than 50 per cent of their capacity, while small industries, which can not afford diesel generators, are on the brink of closure.

Farm subsidy has increased and contributed to higher agricultural production. Boro and Aman harvest was good. Production of potato has hit a record. The overall situation in agriculture looks good this year. This has made a positive contribution to growth rate.

Economists think that the proposed budget for the next year has set ambitious growth and investment targets. The Executive Director of CPD has said that gross domestic product growth at 6.7 per cent through higher public investment will be tough.

The country's GDP growth has been estimated at just 5.5 per cent by World Bank which is the lowest in seven years. The Bangladesh Bureau of Statistics produced an estimate of only 5.54 per cent growth for the current fiscal. The government is not, however, accepting this estimate. The projected growth rate for next the next fiscal year is achievable provided programmes designed in the budget can be implemented. The main hindrance to growth is the supply shortfall of power and energy. The RMG sector has a lot of orders, but they cannot produce to meet the orders due to power shortage.

Bangladesh is experiencing an interesting situation. The economy is growing, although at a lower rate, while investment remains static. This is growth without any remarkable rise in investment. This trend may not be sustainable in the long run. To reverse this trend, load shedding must go. The budget does not say anything specifically about load shedding.

Growth without investment

 

[afako]

Growth without investment

Syed Jamaluddin

THE national budget, placed in parliament on June 10, did not touch on the falling trend of investment in Bangladesh. The Finance Minister simply said that the government would emphasise reducing the cost of doing business by ensuring administrative reforms and making utility services easily available.

It was perhaps necessary to elaborate on the investment situation in the budget.

Foreign investment is declining in the country. According to Bangladesh Bank, foreign investment has gone down by 63 per cent in the current year in nine months. Foreign investment is not flowing to Bangladesh because of power shortage. Inviting foreign investors to Bangladesh is futile when existing factories are facing closure for shortage of energy. Meeting the energy shortage is the biggest challenge for the government at the moment. Most of the businessmen think that the energy crunch is the biggest setback to investment.

The stagnation in investment during the caretaker government still continues. Because investment is not picking up to the desired level in the industrial sector, new industries are not being set up. As a result, employment is not increasing. Many industrial units are being shut down for want of gas and electricity. Businessmen appear to have lost interest in investment. If the present situation does not improve, stagnation is likely in the long run.

Public investment has been in decline during the last five years as the government could not fully implement the annual development programme. Researchers feel that a faster rate of investment is crucial to driving economic growth and creating jobs. A low level of investment has been a major barrier to stimulating economic growth in the recent years.

According to a report by Implementation, Monitoring and Evaluation Division (IMED of the Planning Ministry, in the first ten months of the current fiscal year, only 59 per cent of the revised ADP could be implemented. If the government wants to implement the full revised ADP, it will have to achieve 41 per cent in two months which is nearly impossible, said IMED officials.

To create an investment-friendly environment, the government allocated TK 2.5 billion (2,500 crore) for implementing the projects under public-private partnership (PPP) programmes in this year's budget. But the money could not be spent because of a failure to formulate a policy that will set the dimension of investment under PPP programmes. The allocation for PPP projects has been increased to TK 30 billion (3,000 crore) in the proposed new budget. It will be a big challenge for the government to use this money fruitfully.

Private investment remained subdued because of weak public sector response with regard to investment in power and infrastructure. The CPD report said low levels of private investment were mainly due to an absence of a congenial investment environment rather than availability of funds.

Foreign direct investment was dismally low. In July-March, it fell by 50.9 per cent, according to Bangladesh Bank. However, in the quarterly report presented in Parliament a few days ago, the Finance Minister said stagnancy in the field of investment has started improving. The minister hoped investment would increase in future. It will be interesting to watch how this is going to happen.

The World Bank has projected (19.5.2010) low economic growth for Bangladesh in the next fiscal year, taking into account the fallout from the continuing energy crisis. The WB said GDP could be between 5.5 per cent and 6.1 per cent against the government projection of 6.7 per cent. The shortage of energy poses the biggest threat to Bangladesh's growth recovery. The country's economy would grow by 5.5 per cent in fiscal 09/10 against the government estimate of 6.0 per cent. In fiscal 08/09, Bangladesh recorded 5,9 per cent GDP growth, despite the adverse impact of global recession. The growth outlook for fiscal 2010-11 will depend on domestic supply constraints, particularly energy. Energy shortages will continue to stifle Bangladesh's recovery and growth.

According to World Bank, the estimated demand-supply gap of electricity is currently a third of demand (2,000mw) at peak hours. Shortage of gas accounts for nearly half of this gap. Maintaining growth at its recent 6 per cent average over the medium term will thus be a challenge to Bangladesh, given the current infrastructure and energy deficit. Power and gas crunch remains a major constraint to businesses in Bangladesh. Even factories within the export processing zones experienced power cuts. Many large ready-made garment factories have their own power plants, but have had operations disrupted because of gas shortages. According to World Bank, industrial production in apparels, ceramics, fabrics, steel and particles is particularly hard hit. Many factories in the industrial areas in Dhaka and Chittagong are unable to use more than 50 per cent of their capacity, while small industries, which can not afford diesel generators, are on the brink of closure.

Farm subsidy has increased and contributed to higher agricultural production. Boro and Aman harvest was good. Production of potato has hit a record. The overall situation in agriculture looks good this year. This has made a positive contribution to growth rate.

Economists think that the proposed budget for the next year has set ambitious growth and investment targets. The Executive Director of CPD has said that gross domestic product growth at 6.7 per cent through higher public investment will be tough.

The country's GDP growth has been estimated at just 5.5 per cent by World Bank which is the lowest in seven years. The Bangladesh Bureau of Statistics produced an estimate of only 5.54 per cent growth for the current fiscal. The government is not, however, accepting this estimate. The projected growth rate for next the next fiscal year is achievable provided programmes designed in the budget can be implemented. The main hindrance to growth is the supply shortfall of power and energy. The RMG sector has a lot of orders, but they cannot produce to meet the orders due to power shortage.

Bangladesh is experiencing an interesting situation. The economy is growing, although at a lower rate, while investment remains static. This is growth without any remarkable rise in investment. This trend may not be sustainable in the long run. To reverse this trend, load shedding must go. The budget does not say anything specifically about load shedding.

Growth without investment

That all FDI is because of Indian Power.

 

[idune]

Experts, trade bodies decry budget as tax-laden, inflation-prone
Special Correspondent

The economists, business groups and trade bodies expressed mixed reactions to the newly announced budget. While some of them described the budget as business-friendly but others feared that the budget would increase tax burden and inflation causing more harassment to businessmen and people.

They, however, offered suggestions and measures to reduce corruption, improve law and order situation, create better business environment, expand the bond market and minimize tax burden on small investors. It would remain a challenge for the government to implement the big budget, they said.

Bangladesh Economic Association (BEA) observed that the budget lacks effective measures to reduce the cost of doing business in the country.

Speaking at a post-budget press briefing, BEA president Abul Barkat said: "The government should take appropriate measures to reduce cost of doing business while finalising the budget." Barkat, who is also the Chairman of the state-owned Janata Bank, said: "We want investment-friendly budget. But it is not possible to be so without reducing the cost of doing business."

The BEA proposed to incorporate measures in the final budget to combat the deteriorating law and order situation. Barkat said corruption is inherent in a free market economy: "We must take proper steps to bring down corruption to a tolerable level." The BEA, however, proposed to expand the country's bond market and said: "This will help diversify portfolios for the financial institutions and solve the long-term financing crisis of the government projects."

Hailing the measures of 'khas' land distribution to the landless people, the BEA said the government should form a land reform commission to hand over lands properly to landless people. The forum of economists recommended formulation of a task-force involving 10 big ministries to monitor the ADP implementation.

FBCCI: 'Pro-growth budget'
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), as expected lauded the budget as "pro-growth and broadly business-friendly" but criticised the new tax proposals which they think would put extra burden on consumers and spike inflation.

Citing specific examples, FBCCI President Annisul Huq said expansion of value added tax would raise prices of all goods and commodities across the board and boosting inflation when it is least wanted. He said, the government should continue with the existing VAT provisions because the proposed hike won't generate more revenue and would only increase shop owners' harassment.

The FBCCI judged the government's budget as "pro-growth and pro-business", and felt proper implementation of ADP as the "biggest challenge".

Although he described the budget as 'business-friendly', but the trade community has some reservations in many areas which need to be addressed to create a win-win situation for the government as well as industry. Huq said SMEs might face troubles as the new budget discourages commercial import of spare parts of capital machinery.
The FBCCI said Bangladesh's corporate taxes are the highest in South Asia, which naturally discourages companies to pay taxes.

The proposed hike in advance income tax from three to five per cent will affect import of all goods and products. Eventually, the consumers will have to bear the additional burden. The 10 per cent tax imposed on institutions trading stocks might also adversely affect the securities market, the apex trade body said.

The federation also demanded withdrawal of five per cent tax slapped on income of sponsor shareholders or directors of companies engaged in trading in the Dhaka and Chittagong stock exchanges and three per cent tax on the shares of companies sold at a premium value.

It said the proposed tax on premium value of shares violates the country's income tax laws, as "the premium value is a part of capital of a company not revenue".

BGMEA: 'Exporters were let down'
The Bangladesh Garment Manufacturers and Exporters Association(BGMEA) said that the government has let down the exporters by increasing taxes and imposing Value Added Tax on the rents of factory floors.

In its reaction, the BGMEA leaders demanded that local entrepreneurs be exempted from tax and provided facilities like factories in the Export Processing Zones.

The BGMEA lauded the increased allocation to the power and energy sector, PPP and infrastructure development, human resources development and social safety nets

The proposed four-fold increase of income tax in the upcoming budget will hinder the regaining of the apparel exporters' competitiveness in the post-recession global market, BGMEA's president Abdus Salam Murshedy said.

BKMEA: 'Disappointing'
In its reaction, the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said increased income tax would disappoint the exporters as the industry was still struggling to recover from the impacts of global economic recession. Leaders of the country's largest export sector, however, lauded the finance minister's proposals for increased budget allocation for the power sector in the fiscal 2010-11 and continuation of a stimulus fund for recession-hit exporters.

Referring to the new budget proposed that existing 0.25 per cent advance income tax on exports should be raised to 1 per cent, BKMEA president Fazlul Haque said that such tax at source will increase cost of production. Energy crisis, other infrastructural bottlenecks and increased price of yarns have already pushed up cost of production. He said exporters were still struggling as global recession had restructured the apparel market with an enhanced competition between the suppliers and a drastic drop in profits.

He also lauded continuation of stimulus package for exporters by providing Tk 2,000 crore fund in the proposed budget which would encourage the exporters. The industry that earned $6,429 million in the last fiscal had seen more than 20 per cent growth in the previous two to three years.

Dhaka Stock Exchange
The budget proposed a ten per cent tax on companies trading shares in the bourses and tax at source on commissions collected by stockbrokers. It also slapped five per cent tax on income of sponsor shareholders or directors of companies engaged in trading in the Dhaka and Chittagong stock exchanges and three per cent tax on the shares of companies sold at a premium value.

However, Dhaka Stock Exchange came down hard on the budget, saying the proposed capital gains tax on institutional investors and tax at source on brokerage commissions would dent the growth of the share market. DSE President Shakil Rizvi said: "These proposals will seriously affect the market and derail its growth."
Rizvi said the fallout of the tax proposals would be "severe" and affect all including the fat cat traders and some 2.5 million individual investors.

"Everyone will have to bear the brunt as the government has hugely increased tax on commissions collected by the brokers. The brokerage houses will pass the tax burden on traders," he said.

Presently, the brokerage houses collect Tk 0.04 as commission from every transaction worth Tk 100. They pay Tk 0.025 to the government exchequer and keep the rest.

DSE president proposed that the government impose five per cent tax on companies' income from share trade, instead of 10 per cent, and fix the tax on brokerage commissions at 0.035 percent instead of 0.1 percent.

CSE: The Chittagong Stock Exchange (CSE) also demanded review of some of the proposals on the capital market laid in the proposed budget for the next financial year.
'In the proposed budget, source tax on turnover of members of the stock exchange has been increased from 0.025 per cent to 0.10 per cent. Also VAT has been imposed on stockbrokers. Such move will hinder the growth of the capital market,' said Fakhor Uddin Ali Ahmed, president of the CSE.

Merchant Bankers: Arif Khan, president of Bangladesh Merchant Bankers' Association, said the market could witness massive sell-offs in the next three weeks, as the proposed taxes may prompt institutional investors to dump their holdings. He said the 10 per cent tax on the company engaged in share trading is also "too high", suggesting that the government instead impose a "two-tier" taxes.

"It can impose maximum five per cent tax if an institution makes profits within a year; but in case of investment for more than a year, the rate should be much lower," he said. Khan, a deputy managing director of IDLC Finance, said the two-tier taxes would "encourage more fundamental or long-term investment" in the market.

REHAB: Real Estate and Housing Association of Bangladesh (REHAB), "strongly protested" the proposed tax measures, saying it would "devastate" the industry. Real Estate businessmen slammed the government's budget proposal that saw up to eight-fold hike in taxes on apartments in Dhaka and Chittagong.

According to the budget proposal, Tk 2,000 would be realized as tax for every square metre of an apartment to be sold in posh areas of Dhaka and Chittagong from the next fiscal year.

REHAB said the tax was hiked at a time when the real estate sector was charting a revival after years of gloom caused by the global meltdown, curbs imposed by the caretaker government and rising prices of construction materials. Due to latest taxes, the prices of all types of flats would go up and the buyers would have to foot the additional bill, it said adding, the realtors would pass the extra cost onto the consumers. "As a result, the house prices will go beyond the reach of the commoners," it said in a statement.

BIA: The Bangladesh Insurance Association (BIA) hailed the budget for FY2010-11 attaching highest priority to Education. It also thanked the Finance Minister for giving serious thought to power, energy sectors and infrastructure development of the country.

BIA thanked the government for introducing "Agriculture Insurance" scheme to assist farmers in case of crop failure due to natural disaster. The Association, however, feels that there should be separate fund for implementing the scheme. Likewise, health sector should have received new impetus through introduction of below the poverty line (BPL) health program.

The Association suggests that capital gain tax on companies should be reduced from 10% to 5% and tax on sponsor directors should be reduced from 5% to 3%.

HOLIDAY > BUSINESS & FINANCE

 

[idune]

When Awami League regime took over the power turnaround time in Chittagong port was 2 days. 18 months into power Awami regime managed to destroy that efficiency and now turnaround time is 5-6 days. This huge burden adding up to exporter cost and eating away export lead time and overall competiveness.

Report in Bangla
http://www.dailynayadiganta.com/fullnews.asp?News_ID=218757&sec=2

 

[Kinetic]

When Awami League regime took over the power turnaround time in Chittagong port was 2 days. 18 months into power Awami regime managed to destroy that efficiency and now turnaround time is 5-6 days. This huge burden adding up to exporter cost and eating away export lead time and overall competiveness.

Report in Bangla
::Welcome to Daily Naya Diganta::

The news is wrong in many ways. During bnp BD was in dangerous situation. But AL is bringing the rule of law. During bnp regime chittagong was being used as personal port of bnp ministers that is no check up nothing. forgot biggest arms haul in the history of BD when ten trucks of arms were loaded by bnp MP Salauddin qader choudhry from chittagong port?

 

[idune]

The news is wrong in many ways. During bnp BD was in dangerous situation. But AL is bringing the rule of law. During bnp regime chittagong was being used as personal port of bnp ministers that is no check up nothing. forgot biggest arms haul in the history of BD when ten trucks of arms were loaded by bnp MP Salauddin qader choudhry from chittagong port?

First: you do not know jack about Bangladesh except the fact Awami regime is indian stooge asset and you are desperately crying for them.

Second: this is economic related discussion not for indians for harping. Port effeciency has nothing to do with indian agenda.

Third: 18 month of fascist rule of Awami regime has been resoundly rejected by people of Bangladesh. Now if you indians are so much fan of your stooges then let Hasina and Awami leaders run in indian election. That way you indians can vote for them and cheer for them.

 

[SpArK]

First: you do not know jack about Bangladesh except the fact Awami regime is indian stooge asset and you are desperately crying for them.

Second: this is economic related discussion not for indians for harping. Port effeciency has nothing to do with indian agenda.

Third: 18 month of fascist rule of Awami regime has been resoundly rejected by people of Bangladesh. Now if you indians are so much fan of your stooges then let Hasina and Awami leaders run in indian election. That way you indians can vote for them and cheer for them.

LOL...

Every post by you have the same sentences..

"stooge" and "hate AL"..

Try something different for a change.

Also give a comparison of this rule and your favorite party's rule with statistics...not with the regular hate words and "stooge... stooogeee.. stooogeee calls"