JAKARTA: Bank Indonesia (BI) has supported the governments order to ban transactions in US dollar at Jakartas Tanjung Priok Port, Senior Deputy Governor Mirza Adityaswara said here on Friday.

He noted that domestic transactions must be carried out using the countrys currency in line with currency law number 7 of 2011.

“The law must be adhered to because it was formulated by the government and the parliament (DPR),” he said. Article 21 of the law states that financial transactions carried out within the Unitary State of Indonesia must use the countrys currency, he explained.

“The law states that all transactions both cash and noncash must be carried out using rupiah,” he said.

Mirza admitted that the US dollar continued to be often used in commercial transactions in Indonesia, such as in property leasing, gas trading, and port cost payments, although they were not export-import transactions or foreign debt payments.

He noted that the situation still continued because of a lack of understanding of the people involved about the essence of the law.

Based on that he said BI and the government will continue coordinating to inform about the law.

“BI and the government will bring the law to the knowledge of the people because its violation could lead to a criminal sanction. So, we will continue to promote the law,” he affirmed.

Coordinating minister for economic affairs Chairul Tanjung during a visit to Tanjung Priok on Thursday had ordered the use of the rupiah currency in transactions at the port.

“Transactions within the Indonesian territory must be carried out using the rupiah currency. We have asked Pelindo II (the port operator) to assure that all companies at the port implement the law,” he said.

The minister pointed out that various transactions in port areas in Indonesia have often been carried out using US dollar and the rupiah currency has not been fully used. 

WASHINGTON: World Bank President Jim Yong Kim said Friday that the bank welcomes China’s proposal of setting up the Asian Infrastructure Investment Bank (AIIB), underscoring that the two agencies should be complimentary partners other than competitors.

The Chinese leaders put forward the idea to build the AIIB Last October, which aims to boost limited funding for Asian countries to improve their backward infrastructure facilities.

The initiative has been applauded by many countries, but is also surmised as a rival project with other lenders such as the World Bank and the Asian Development Bank.

China’s Finance Minister Lou Jiwei said that the proposed new bank and the existing multilateral development banks will be complimentary and cooperative, and the World Bank agree completely, Kim said at a media roundtable ahead of his visit to five Asian countries in early July.

“It would be foolish, in my mind, for us to think of the AIIB as a competitor, because there’s no way that the money we provide for infrastructure is going to be enough for us to reach the goal of ending extreme poverty. So, we very strongly welcome all the other participants,” he said.

The needs for infrastructure are enormous, as the World Bank estimated that South Asia needs to invest about 250 billion U.S. dollars a year to bridge the infrastructure gap over the next ten years, while East Asia needs about 600 billion dollars a year.

Developing and emerging countries invest about one trillion dollars a year now. In order to meet the demands, Kim said the World Bank is going to double that spending.

“With the one trillion a year extra that’s needed, even if all the banks that have been proposed come online, we still won’t be able to meet the need. So, we welcome all these efforts to increase infrastructure financing and look forward to working closely with any of the new institutions,” he said, adding “there is more than enough business for everybody.”

In terms of advice for the AIIB, Kim said the only advice that he would give is that the AIIB should see the World Bank as very willing and open partners.

“We would say, please, take advantage of our 70 years of experience in doing this kind of business, and let’s see how we can work even more closely together,” he said.

With a preliminary capital scale of 50 billion dollars, the AIIB is expected to be funded by its members in installments and may grow following future business expansion.

The final capital sizes and shares of various parties shall be settled by the AIIB founding members through consultation and negotiations, Lou Jiwei told Xinhua in early March. “If conditions become ripe, it may also expand its business beyond the region,” he said.

In April, Chinese Premier Li Keqiang said at the 2014 Boao Forum for Asia that China is ready to intensify consultations with relevant parties in and outside Asia on the preparations for the AIIB and hopes that the bank can be officially launched at an early date. —Xinhua

Developing economies are increasingly hurt by the way global corporations exploit taxation differences and move profits to low-tax locations, according to an International Monetary Fund report Wednesday.

But few countries can protect themselves in a competition for direct investment that increasingly appears like a “race to the bottom” in setting corporate tax rates, the IMF said.

Moreover, companies are increasingly able to shift and relocate more intangible assets - like intellectual property - to avoid taxes.

The IMF said that the more countries give in to investors’ requirements on taxes, the more they are hurting the global community.

In addition, tax-cutting and legal tax avoidance by corporations are having an impact on countries’ fiscal strength, undermining their ability to fund government just at a time when many are fighting deficits.

Incentives are “significantly undermining revenue in developing countries,” the IMF said, noting that “overall fiscal performance is more vulnerable to pressures on these receipts.”

“The amounts at stake in a single tax-planning case now quite routinely run into tens or hundreds of millions of dollars. These sums may be small relative to total tax revenue in sizable advanced economies, but are large for the developing countries,” the report said.

That is especially the case in countries reliant on extractive industries like mining. Mining companies frequently load up on debt to reduce the tax they pay to the host country.

As important in denying countries tax receipts are corporate schemes like transfer pricing.

“Identifying the country that is the ‘source’ of income... is increasingly problematic,” the report said. “It has been made more difficult, conceptually and practically, by the increased importance of intra-firm transactions.”

It also said that companies increasingly exploit intangible assets like patents, trademarks, and other intellectual property “which can be much more easily relocated than can the bricks-and-mortar facilities of the world.”

The report showed how foreign direct investment is handled through low-tax locations as a strategy.

Half of outgoing direct investment from Brazil goes to havens like Austria, the Cayman Islands, and the British Virgin Islands, before it goes to the final destination. Two-thirds of outgoing direct investment from Russia goes first to havens like Cyprus and the Netherlands.

The IMF spelled out the need for a “global architecture” for taxation in the way that trade is increasingly governed by international treaties.

But it warned that fixes can bring their own difficulties in how taxable income might be apportioned.

The IMF report comes at a time when the issue of tax avoidance is strong even in the most advanced countries.

Some of the largest US companies, including Apple, Google, and IBM, have come under attack for stashing global profits in havens like Ireland to avoid higher taxes elsewhere.

News: Dhaka Tribune /June 29, 2014

Major (Retd) Dr. Md. Rezaul Haque has been re-elected Chairman of the Board of Directors of Social Islami Bank Limited.

The board of the bank in its 314th meeting unanimously extended the tenure of the current chairman for his dynamic and pragmatic leadership for visible growth of the bank, said a press release.

Major (Retd) Dr. Md. Rezaul Haque, a veteran freedom fighter actively participated in the liberation war as medical officer under sector head quarter No-1 at Harina Army Camp at Subroom in India. He received M.B.B.S degree from Chittagong Medical College under Dhaka University. After returning from liberation war he had served different units of Bangladesh Army as Army Medical Officer till 1978.

He also participated in Arab-Israel War at the Golan Heights of Syria in 1973 as a young captain of Bangladesh Army. On deputation from the Army, Reza also worked at Family Planning Directorate under Ministry of Health. In 1978, he went to the Kingdom of Saudi Arabia and served Ministry of Health of KSA for 22 years. While he was the Director of Chest Disease Hospital, Jeddah, he voluntarily retired from the service in 2002 and engaged himself in various social development and employment generating activities at home.

News: Daily Sun/June 29, 2014

Islami Bank Bangladesh Limited on Tuesday officially introduced Shariah compliant credit card ‘Khidmah’ at a local hotel in the capital. Md. Abul Quasem, deputy governor of Bangladesh Bank unveiled the card as chief guest. Islami Bank introduced this credit card with a view to providing investment facilities, fulfilling daily needs and enriching living standard to the limited income people. The card holders will be facilitated to purchase from all VISA bearing outlets, clear utility bill payment, traveling and e-ticketing.
Family members of the Khidmah card holders would be eligible for supplementary card without any additional fee.
The card has been classified into three categories- Silver, Gold and Platinum. The annual fee will be deducted for those Khidmah card holders who will consume up to two lakh taka annually.  
Deputy governor of Bangladesh Bank Md. Abul Quasem said, “Bangladesh Bank came up with a secured payment system to make transaction easier, faster and tech-dependent. Through this Khidmah card the circulation of the secured payment system will be heightened and popularized. ”
“Such types of cards are gaining popularity amongst the users, as such plastic money lessens the difficulty of carrying liquid cash. On top of that, the price charged will be less if the payment made via this card,” he added.
Congratulating IBBL Abul Quasem said, “Via this Khidmah card the banking services can reach the doorsteps of (more) the people. Khidmah card will play an important role in the fulfillment of general people’s needs.”
On the event executive director of Bangladesh Bank Dashgupta Asim Kumar, expressed his high hopes regarding the success of the Khidmah card.
Managing director of IBBL, Mohammad Abdul Mannan said, “Having more than 90 lakh customers IBBL is more concerned in the welfare of people rather than making profit”.