M Shahjahan Bhuiyan, Managing Director of UCBL and Alihussain Akberali, Chairman of BSRM Group, exchange documents after signing a term sheet at a hotel in Dhaka recently.

Bangladesh Steel Re-Rolling Mills Limited (BSRM) is going to get Tk 2785.77 million syndicated term loan for its BMRE project.

The company in this regard signed an agreement with United Commercial Bank Limited (UCBL) and 16 financial institutions recently.

UCBL will act as lead arranger for raising the fund for expansion of the production capacity of the company, said a press release.

M Shahjahan Bhuiyan, Managing Director of UCBL and Alihussain Akberali, Chairman of BSRM Group and signatories of respective institutions signed the term sheet on behalf of their respective organisations.

The Daily Sun/Bangladesh/ 24th June 2012

The Dhaka Stock Exchange (DSE) ended the week in the red amid price volatility and street protests by the investors while a tense situation prevailed in the market over the legal battle on the Securities and Exchange Commission’s special power of imposing conditions on listed companies.

The market witnessed a downturn over the week as the investors were confused and took a 'wait-and-see' policy since a writ petition challenging the legality of Section 2CC of SEC Ordinance of 1969 was pending with the High Court till Thursday, said a stock broker.

Low participation of institutional investors quickened the downtrend, he added. Groups of retail investors staged demonstration in front of the DSE building throughout the week protesting continuous price falls. They even demanded resignation of Finance Minister AMA Muhith for terming the stock market as ‘evil’ market.

Meanwhile, the High Court on Thursday upheld the regulator’s special power by rejecting all the five writ petitions filed by 24 sponsors and directors of five listed firms challenging the legality of Section 2CC of SEC Ordinance, 1969.

Market stakeholders and experts hailed the HC verdict and viewed that the judgment would help restore investors’ confidence in the market.

During the week, the benchmark general index of the DSE---DGEN, the yardstick of the market, went down by 325 points or 6.94 percent to close at 4300.

The broader All Shares Price Index (DSI) plunged 269 points or 6.85 percent to 3,654 points while the DSE-20 Index comprising blue chips also declined 191 points or 5.39 percent to 3349.

The total turnover on the prime bourse stood at Tk 7.14 billion at the end of the week, down from Tk 7.57 billion in the previous week.

The average daily turnover also came down to Tk 1.42 billion in the week, 5.63 percent lower compared to Tk 1.51 billion in the previous week.

During the week, all the major sectors went down on the trading board with banks falling the most 8.34 percent followed by non-banking financial institutions 7.87 percent, fuel and power 6.23 percent, pharmaceuticals 4.33 percent and telecommunications 2.22 per cent.

Bangladesh Submarine Cable Company continued to top the weekly turnover chart with shares worth Tk 596.10 million.

The other turnover leaders of the week were--Lafarge Surma Cement, Grameenphone, LankaBangla Finance, Meghna Petroleum, Social Islami Bank Ltd (SIBL), Square Pharma, Beximco Limited, Jamuna Oil and Titas Gas.

Fifth ICB was the week's top gainer, posting a rise of 8.90 percent followed by Third ICB, Rekitt Benckiser, First Bangladesh Fixed Income Fund, AMCL (Pran), BATBC, National Tea, United Insurance, Bata Shoe and Stylecraft.

The Daily Sun/Bangladesh/ 24th June 2012

Finance Minister AMA Muhith receives a crest during an award-giving ceremony of the HBFC in Dhaka Saturday.

Finance Minister AMA Muhith on Saturday asked the state-owned House Building Finance Corporation (HBFC) to adopt a long-term policy to expand its financial coverage in rural areas and to improve its service quality.

The minister was addressing an award-giving ceremony organised by the housing finance institution in Dhaka yesterday.

He said the housing industry poses immense potential to grow, as income of different groups of people is increasing day by day.

“Only 18 percent of houses in the country were buildings 27 years back, which has gone up to 30-32 percent now. Thus, the sector has a huge scope to grow further in the days to come,” he said.

He said more investment in the sector could also contribute to the economy.

The minister said he himself felt harassed by the HBFC officials and employees when he borrowed Tk 210,000 from it in the early 80s to construct a building on his wife’s land in Gulshan area.

“I had to come to HBFC physically for over 20 times. Those days were full of bitter experiences. What I like to emphasise is that the management of this organisation should improve quality of its financial services so that people from middle-class bracket can get loan without any hassle,” Muhith said while delivering a speech at the HBFC function.

Speaking on the occasion, Banking Division Secretary Safiqur Rahman Patwary also expressed his anger for the harassments by the HBFC staff to its clients and loan seekers.

“People who need financial support from you (HBFC) often put complaints to me against you. This situation is not expected to continue anymore,” Patwary said.

He also criticised the HBFC management’s decision to waive Tk 0.8 million against loans.

“The HBFC board cannot waive any interest against loans,” he said.

“Stop acting such things again and improve your service quality. Otherwise, you would not obtain trust from the stakeholders,” he said.

He also asked the HBFC management to put on display the citizen charter of the corporation and provide all information regarding financial products on its web site.

HBFC Chairman M Yasin Ali, who chaired programme, said sufferings of HBFC clients are usually caused due to absence of proper correspondence between banks and HBFC regarding loan disbursement and repayments.

“HBFC cannot disburse loan as it has no approval for banking. It depends on Sonali Bank for loan disbursement and to realise installments,” he said.

The HBFC board Chairman proposed to the finance minister to raise the ceiling of maximum loan disbursement to a client from Tk 5 million at present.

He said that a housing loan of Tk 5 million is not sufficient given the current market prices.

HBFC Managing Director Nurul Alam Talukder said the corporation’s annual disbursement target is only between Tk 2.50 billion to Tk 3 billion, which is not adequate to cover wide range of loan-seeking people in the rural areas.

He said the corporation has applied to the Bangladesh bank for a special fund worth Tk 2 billion which now remains pending.

He said more fund is needed to improve both the manpower skill and service quality of HBFC.

“HBFC is a profitable institute of the government and it can do better, if funds are available,” he said.

In the function, the HBFC management accorded crests to five best clients for regular repayment

The Daily Sun/Bangladesh/ 24th June 2012

The National Board of Revenue (NBR) is going to take various measures to bring more taxpayers under its scanner in the coming fiscal year.

Under the initiative, a trade licence holder having business in any divisional city or any pourashava will have to show his tax identification number (TIN) during the renewal of trade licence.

Operators of water vessels, including launch, steamer, fishing trawler, cargo and coaster and dump-barge, will also need to submit TIN to get survey or fitness certificate from the government agencies.

Also, agents of insurance companies will need to show TIN during registration or renewal.

In addition, the tax administrator looks to issue temporary registration number (TRN) to people who have taxable incomes but are yet to open TIN.

The introduction of the TRN, the first-ever initiative by the revenue body, will help the earners of taxable income get TIN and comply with rules, according to NBR officials.

The tax administrator will issue TRN through its surveys to bring more people within its net.

These steps will take place side by side the tax collector's bid to hunt for more taxpayers through bank accounts.

From the next fiscal year, savers in banks who have no TINs are likely to face 15 percent tax on their interest earnings. But those who have TINs will require to pay 10 percent on their incomes.

"All our efforts are meant for expanding the tax network," said Syed Md Aminul Karim, member in charge of income tax policy of the NBR.

Officials said these initiatives are likely to become effective from the next fiscal year, beginning from next month.

The NBR move comes in the backdrop of growing pressure to accelerate tax to finance the soaring national budget.

Over the past five years, the NBR's tax collection almost tripled to Tk 92,390 crore in the outgoing fiscal year due mainly to a sharp spike in collection of value added tax and income tax.

However, income tax holds the second position after VAT in the NBR's total tax receipts.

Currently, 35 lakh people hold TINs. But only 11.5 lakh TIN holders pay taxes, said NBR member Karim.

He hoped that around one crore TIN holders will come within the NBR network through these new measures in the next two years and thus will allow the revenue administrator to ensure compliance by more taxpayers.

He said the NBR has expanded its reach and increased its manpower to ensure better compliance by the taxpayers.

"We have opened offices in 85 upazilas to reach the doorstep of the taxpayers," said Karim.

Works for automation of the revenue body are also going on to ease the hassles of the taxpayers in getting TIN and submitting tax returns, he said.

By December, one can get TIN online, said Karim, adding that people will also be able to submit tax returns via internet within 2013.

The Daily Star/Bangladesh/ 24th June 2012

The National Board of Revenue (NBR) wants the readymade garments sector to pay taxes in line with others in coming years, and not the modest rates it has been up to now.

The readymade garment sector has grown to an annual $18 billion export industry in recent times, accounting for about 75 percent of the nation's total shipments, but its tax contribution, compared to other corporate sectors, is low.

As part of the government's efforts to develop the sector, a tax-exempt status was granted in the 1980s, which went on to last for two decades.

A small tax of 0.25 percent was imposed in fiscal 2004-05 on the sector's export receipts, which was increased to 0.4 percent in fiscal 2010-11 and finally to the 0.6 percent it currently enjoys. The government plans to raise it to 1.2 percent in fiscal 2012-13.

In contrast, other corporate sectors pay 37.5 percent taxes on profits. The NBR feels the tax rate and tax revenue from the sector should be much higher and in keeping with its earning potential.

A study conducted by the NBR found there is room to raise taxes by 5-6 times the current rate on the RMG sector's earnings.

On the basis of the study's findings, and taking other factors into consideration, the tax administering authority plans small tax increments of 0.3 to 0.4 percent every year to ultimately raise the rate to 2 percent.

This arrangement has been inveighed by the sector, which argues that the tax rise would hurt its growth.

NBR counters the argument by bringing the 40 percent growth enjoyed by the sector despite a tax rise to 0.4 percent in fiscal 2010-11 from 0.25 percent.

The sector currently comprises 5,000-odd apparel units and employs over 35 lakh people in direct jobs.

The Daily Star/Bangladesh/ 24th June 2012