The Dhaka Stock Exchange and small investors yesterday protested the finance minister's comment that the stockmarket is an 'evil market'.

“It's an evil market. I won't comment on it,” said Finance Minister AMA Muhith, on Monday in parliament, during the passage of the supplementary budget for the outgoing fiscal year.

But Muhith did not explain why it is an evil market.

The minister made the comment three days after he proposed the budget for fiscal 2012-13.

Reacting to Muhith's remark, DSE President Rakibur Rahman said: “It seems that the honorable finance minister has grown impatient."

It remains to be seen whether the incentives announced by Muhith for the stockmarket are being implemented, Rahman said.

The stockmarket is a sensitive market, so any negative comment will influence the market negatively, Rahman said.

During his speech, Muhith had also mentioned that there would be no great impact on the economy if he did not give much attention to the stockmarket.

Referring to the observation, the DSE chief commented, "Economic development will never be possible if the stockmarket is ignored."

The DSE chief urged the minister to consider the stockmarket as an alternative source of funds to develop infrastructure and undertake development projects.

Speaking on investments made by banks in the stockmarket, Rahman said the investments are below 2 percent of the banks' liabilities.

Presently, commercial banks are allowed to invest 10 percent of their liabilities, according to Bangladesh Bank directive.

Ahmed Rashid, senior vice-president of DSE, also protested Muhith's comment that he said might transmit bad signals to the economy.

Small investors, under the banner of Bangladesh Share Investors' Association (BSIA), also protested the minister's remark.

They staged a demonstration in front of DSE and shouted slogans against Muhith.

Mizanur Rashid Chowdhury, president of BSIA, said: “The minister's comment has upset us, as he is our guardian.”

The Daily Star/Bangladesh/ 13th June 2012

The government has formed a high-powered committee to tackle a fund crisis in the power sector.

The government has also decided to continue tax breaks for the power plants that will come into operation after 2013.

The committee led by Finance Minister AMA Muhith will also examine various proposals of the power, energy and mineral resources ministry including that of imposing surcharge on mobile phone calls to build up an energy fund.

The committee was formed at a meeting with Prime Minister Sheikh Hasina in the chair at her office yesterday.

Secretaries of the finance ministry, energy division, power division and the National Board of Revenue will be the members of the committee.

The power and energy ministry in its proposal said 14 independent power plants have not been getting loans from banks as the banks are suffering from a liquidity crisis.

The power plants have also not been getting necessary loans from a Tk 1600 crore Bangladesh Infrastructure Finance Fund (BIFF), which was formed two years ago.

Muhith said the fund was created for all infrastructure projects and so far none from the power sector applied for the fund.

The power ministry proposed granting loans quickly from the BIFF.

The ministry also suggested the government issue directives to the Bangladesh Bank and commercial banks to give loans and open letters of credit (LCs) quickly in favour of the sponsors of the power plants.

The ministry placed a nine-point proposal for the power and energy sector at the meeting through a presentation.

It proposed imposition of surcharge on mobile phone calls at the rate of Tk 0.15 to 0.20 per call and a hike in gas prices to build up the energy fund.

The ministry recommended releasing a tax-free bond to finance the big power plants.

However, a senior official who attended the meeting said many of the power ministry proposals are complicated.

He said those proposals will be scrutinised further by the committee before taking a final decision.

The prime minister at the meeting issued directives to the authorities concerned to take necessary steps for speedy implementation of the ongoing power projects.

Another official who also attended the meeting said some sponsors are failing to implement the projects due to huge loads as a single entrepreneur was awarded many projects.

The premier asked the authorities concerned not to award too many power projects to a single company, according to officials.

UNB adds: For the independent power producer, it is needed to waive income tax, duty, VAT, supplementary tax and infrastructure development tax as the production cost of these plants will be higher, according to the meeting.

If the waiver is not given, the subsidy of the government will also increase. That is why the government has decided to implement the SRO of 1999 for the under-construction power plants.

In 1999, the government through a statutory regulatory order (SRO) gave the tax break facility for power plants for 15 years.

Later, through another SRO in the same year the tax holiday facility was limited for those plants that will begin power generation by 2013.

PM's Press Secretary Abul Kalam Azad briefed reporters after the meeting.

He said the prime minister gave some specific decisions to ease the implementation of power generation projects.

The decisions include simplifying of LC opening for importing necessary equipment for power plants, continuation of a 15-year tax holiday facility and previous SRO on the issue.

The meeting also decided to fill the land of the proposed coal based power plant in Bagerhat through dredging the Pashur and Maidhora rivers.

Law Minister Barrister Shafique Ahmed, Water Resources Minister Ramesh Chandra Sen, Prime Minister's advisers Tawfiq-e-Elahi Chowdhury and Mashiur Rahman, State Minister for Power, Energy and Mineral Resources Md Enamul Haque also attended the meeting along with the secretaries concerned.

The Daily Star/Bangladesh/ 13th June 2012

Banking business of cooperative societies brought under the tax net in the proposed budget aims at maintaining discipline in operations of the entities.

Cooperative societies will have to pay tax at 42.5 per cent rates from July 1 next if they run any banking business along with their cooperative activities.

"We have noticed that majority of the cooperative societies are doing banking business, like scheduled banks. But they are enjoying tax exemption facility as cooperatives while banks are paying corporate tax at highest rate," said a senior revenue board official.

Recently, banking businesses by Destiny cooperative societies came under close scrutiny of the government law enforcing agencies including National Board of Revenue (NBR), Anti-Corruption Commission (ACC) and Bangladesh Bank.

Bangladesh Bank (BB) in an investigation has found Tk 7.06 billion embezzled and Tk 700 million siphoned off by Destiny Multipurpose Cooperative Society Limited.

In the Finance Bill-2012, the revenue board has withdrawn the tax-exemption facilities for banking activities of cooperative societies. The cooperatives are enjoying tax exemption facility on their banking activities under sub-section (1) of section 47 of Income tax ordinance, 1984.

The government amended the section by excluding the statement 'including a co-operative society carrying on the business of banking' in the Finance Bill-2012, from the list of tax exemption.

The official said illegal banking business in the name of cooperative activities is now under strict surveillance of the government. Tax authority amended the rule with an aim to check these irregularities.

Many cooperatives are operating in the country using the word 'bank' after their names to attract public confidence in them.

The cooperatives which collect deposits from persons other than their members will have to pay 42.5 per cent tax from the next fiscal, the official said.

People who are involved in cooperatives often start banking taking advantage of the existing weakness of law.

Earlier, a number of cooperatives -- Unipay2, ITCL, Jubok -- pocketed millions of taka of general people through illegal banking in the name of Multilevel Marketing business as cooperatives.

Former adviser and economist Hossain Zilliur Rahman said the move might have taken to bring the cooperatives under a discipline rather than revenue generation.

It can be called a 'protective step' to thwart financial irregularities of cooperative societies, he added.

"The cooperatives have a glorious past, but it is widely abused due to loopholes in law and bureaucratic complexities," he added.

There is no statistics on how many cooperatives are running their activities in the country.

Dr. Rahman, who is also founder of Power and Participation Research Centre (PPRC), said there is no study on this sector to find out the number of cooperatives.

The Financial Express/Bangladesh/ 12th June 2012

Finance Minister AMA Muhith on Monday said he was still optimistic about getting the $1.2 billion committed fund from the World Bank (WB) to construct the Padma multi-purpose bridge.

"I am still hopeful. I have never lost hope," Muhith told reporters responding to a query whether any hope is still left in getting the promised fund from the WB.

The finance minister was talking to reporters at his secretariat office after a meeting with the US Ambassador Dan W Mozena. Muhith said again that the government will be able to make a final decision on Padma Bridge by July.

"We are still negotiating with the WB," Muhith said.

Besides, a number of countries including the US, India, Japan and the United Kingdom also talked to the WB to settle the problems concerning the Padma Bridge Project financing, he added.

The finance minister said he would soon respond to a WB's letter on the entire issue to remove misunderstanding and help get the fund released.

Country's biggest infrastructural project ran into trouble when the WB suspended disbursement of its $1.2-billion loan to the government for the $2.9-billion project on graft allegations in bidding process in October last year.

Apart from the WB, Asian Development Bank (ADB) had pledged $610 million, Japan International Cooperation Agency (JICA) $400 million and Islamic Development Bank (IDB) $140 million as loan for the $2.9-billion bridge project.

After the WB suspended the release of its committed fund for the project, the government signed a memorandum of understanding (MoU) with Malaysia on February 21 last to construct the 6.15-kilometre-long bridge, following a formal proposal that Dhaka had received from Kuala Lumpur.

The US Ambassador said they talked about their shared aspirations about Padma Bridge and expressed the hope that a way could be found in enabling the lending organisations including the WB to work together to construct the most important bridge. Bangladesh cannot be a 'Bengal Tiger' if 25 per cent of its population living in its 19 southwestern districts remain cut off from the development process, he said.

"We have taken up the case with due importance and will continue to discuss it with the management of the World Bank," the US Ambassador said.

The Ambassador expressed the hope that the Trade and Investment Cooperation Framework Agreement (TICFA) would be signed very soon.

"I discussed the issue with the foreign secretary and shared information I have from Washington," he said. "The issue is with the government. I hope for a timely response."

Bangladesh and the US are engaged in TICFA negotiations for the last two years and the only unresolved issue remains to be the one concerning labour standards.

Mozena said the US buyers are much concerned about the reputation as the image of Bangladesh was being tarnished over the issue of labour rights and safety in the garment factories of Bangladesh.

The US envoy expressed the fear that it would have negative impact on the Bangladesh export to the US market if the killer of Aminul Islam, a labour leader, is not arrested and brought to justice.

The Financial Express/Bangladesh/ 12th June 2012

Bangladesh Bank Governor Dr Atiur Rahman, and Chief Representative of JICA Bangladesh Office Dr. Takao Toda seen at an agreement signing ceremony at the BB office in Dhaka Monday.

Bangladesh Bank (BB) on Monday opened a Tk 5 billion fund to provide financing facilities to the country's small and medium enterprises (SMEs).

Under the two-step fund, provided by Japan International Cooperation Agency (JICA), 41 banks and financial institutions (FIs) will be provided with re-finance or pre-finance for lending to SMEs.

The fund will be disbursed to the participatory Banks and FIs at a maximum interest rate of 5 percent for medium (2-year) and long term (8-year) period. The Banks and FIs may charge the market rate in case of lending.

BB has signed separate agreements with 22 participatory banks and 19 FIs to this effect.

BB Governor Dr Atiur Rahman and Chief Representative of JICA Bangladesh Office Dr. Takao Toda were present while the deals were signed during a function at BB headquarters on Monday.

While speaking at the function, Dr Atiur said the central bank has identified that there is a huge gap in the country’s financial market for the SMEs to get for mid-term and long-term funding for investment in technology and other productive areas.

Bangladesh Bank signed an agreement with JICA in 2010 for a fund worth 5000 million Japanese Yen as Overseas Development Assistance (ODA). Of the total fund, JICA has released 1000 million Yen (Tk 1 billion) in March this year, the BB governor informed the function.

He said the fund aims to develop a medium to long-term credit market to support the SMEs to meet their investment requirements.

JICA chief represen-tative in Bangladesh Takao Toda observed that Bangladesh would be able to create more job opportunities by financing the SME sector, which also has a huge potential to grow further like those in other Asian countries.

The Daily Sun/Bangladesh/ 12th June 2012