pharma sector records phenomenal growth · pharma sector records phenomenal growth ... "during good...

Daily News Flash, 16th April, 2017

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PHARMA SECTOR RECORDS PHENOMENAL GROWTH ......................................................................... 1

BANKS, NBIS LEND TK 580B IN GREEN FINANCING ................................................................................. 2

STOCKS FACE MAJOR CORRECTION WITH LOW TURNOVER ............................................................ 3

LANKABANGLA DOMINATES WEEK'S TURNOVER CHART .................................................................. 4

SMES CONTRIBUTE 11PC TO GDP, BUT SHARE LOW IN SOUTH ASIA ............................................... 6

DSE TURNOVER DIPS BELOW TK 6.0 BILLION-MARK ............................................................................. 6

DSE ENDS FLAT AMID CHOPPY TRADING .................................................................................................. 8

BSEC SETS NEW CLAUSES FOR COS' USE OF RAISED FUNDS............................................................... 8

DUTCH-BANGLA JV FIRM GETS LPG LICENCE ......................................................................................... 9

BSEC INITIATES FRESH MOVE TO FINALISE MF RULE CHANGE ..................................................... 10

GARMENT MAKERS LINE UP TO HIT $500M IN EXPORTS .................................................................... 11

MUHITH PLANS AN AMBITIOUS BUDGET ................................................................................................. 12

HSBC: POWERING BANGLADESH ................................................................................................................ 13

BTRC TO RUN COST MODEL ANALYSIS FOR DATA PRICES ............................................................... 16

LOSS-MAKING EXCHANGE HOUSES BEING TURNED INTO AGENT BANKS .................................. 16

US BANKS REPORT SOLID EARNINGS ........................................................................................................ 18

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PHARMA SECTOR RECORDS PHENOMENAL GROWTH Bangladesh's pharmaceutical market marked a phenomenal growth with its annual turnover reaching US$ 2.25 billion at the end of December last. Some analysts attributed the advances partly to hike in prices of most medicines. Drug-manufacturers, however, equate the pharmaceutical sector's growth with the country's economic performance. US-based health-intelligence IMS Health has diagnosed the health of Bangladesh's medicine industry on the basis of its retail sales figures. The size of the market, in terms of value, has nearly doubled over the past five years since 2011 from approximately $1.3 billion.

DSEX -0.52 Gold (Ounce) $1290.10 Dollar 79.78 (Buy) 79.78 (Sell) CSCX -14.78 Oil (Barrel) $52.91 Euro 85.08 (Buy) 85.11 (Sell)


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The increase in the prices of drugs is seen by many as a prime reason for such rapid expansion. The US pharma intelligence audit found Square Pharma having maintained its lead position on the domestic market with its share at 18.19 per cent, followed by Incepta at 10.38 per cent. Beximco stands third with a share of 8.35 per cent, as of 2016. Opsonin's share stands at 5.6 per cent and Renata Limited booked 4.96 per cent. Industry-insiders told the FE that the top 20 pharmaceutical companies expanded tremendously over the time under review. Syed Kaiser Kabir, managing director and CEO at Renata Limited, presented a proportional arithmetic of the growth in pharmaceutical industry and the country's economy. "The economy is expanding, the market is also expanding," he told the FE. He said there is a rule of thumb applied to the least-developed countries that if GDP rises 1.0 per cent, then pharma market will rise at least 2.0 per cent. It in some instances expands even 3.0 per cent against 1.0 per cent GDP growth. Syed Kabir sees increase in people's purchasing power also as an important factor behind the phenomenal growth in the domestic pharmaceutical market. And such growth, he says, will continue over few more years. Dr Sayeed Ahmed, head of sales and marketing at Zisca, told the FE that the launch of new products also plays a key role in expanding the country's drug market. "In my view, new products are important to the market along with aggressive marketing by the drug-manufacturers," Dr Ahmed said. He said Bangladesh's drug producers now use the latest molecules to manufacture their products -- and this is one of the reasons for high prices of some of the drugs. If agricultural production expands, then the sales of the pharmaceutical products also increase. "During good harvests our sales rise sharply and Bangladesh's major crops and fruit products have been rising in last good number of years," said the company sales boss. Some top pharma executives said production of import-substituting drugs by the local companies is resulting in a surge of their sales. AM Faruque, managing director and CEO at the newly-established Sunman- BIRDEM Pharma, told the FE that the import-dependence dropped drastically as the local firms produce quality drugs at 'low' costs. "We're now producing various import-substituting drugs at low costs, which are also boosting the sales." He mentioned lifesaving drugs like insulin, new-generation antibiotics and anti-cancer products being produced by local companies. He further said health-awareness has increased in the country and "the health- awareness is one of the key factors". On the other hand, some top executives said approach of the local companies to the drugstores has changed and sales to them have increased manifold in recent times, helping the local companies to expand their reach to the retail market. The companies are now offering different incentives to their sales teams and other stakeholders to boost their retail sales. There are nearly 250 pharmaceutical companies in Bangladesh, and about 30 of them are dominant on the market. Source: http://print.thefinancialexpress-bd.com/2017/04/16/170064

BANKS, NBIS LEND TK 580B IN GREEN FINANCING Country's banks and non-bank financial institutions have so far lent out around Tk 580 billion in green financing, as project funding assumes a fresh focus.


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Bangladesh Bank Governor Fazle Kabir made the disclosure Saturday while speaking at the Green Award ceremony organised by Southeast Bank Limited in the capital. "This has been possible due to increased emphasis given on green financing by both the regulator and financial institutions of the country," the central bank governor told his audience. Southeast Bank-The Financial Express-Policy Research Institute Green Award Trust has honoured various entrepreneurs and organisations for their contribution towards environment-friendly business operations, sustainable community development and poverty reduction through this award-giving initiative since 2013. Highlighting recent regulatory initiatives taken by the Bangladesh Bank to promote green banking, the central bank governor mentioned that BB had instructed all the banks and financial institutions to disburse a specific portion of their loan portfolios for green projects. "Recently, Bangladesh Bank has also introduced 'Green Transformation Fund' in foreign currency to support green transformation of manufacturing processes in the export- orientated sectors like textiles and leather," Mr. Kabir said. Chairman of the SEBL-FE-PRI Green Award Trust Initiative Dr Mohammed Farashuddin in his speech said apart from providing loans in green financing initiatives, the banks should also provide a specific portion of their green financing as grants as part of corporate social responsibility. Speaking on the occasion, Chairman of Southeast Bank Alamgir Kabir expressed his hope that the SEBL-FE-PRI Green Award Trust would get an institutional shape in the near future. "I hope that the Trust would not be only limited to award-giving in the near future, but also would make some real impact in various environment-friendly initiatives," he told the function. Editor of The Financial Express A H M Moazzem Hossain said the SEBL-FE-PRI Green Award Trust initiative is in line with the Sustainable Development Goals adopted by the United Nations back in 2015. "The Goal numbers 14 and 15 of SDGs have clearly underlined the need for involvement of media and civil-society organisations for sustainable development," he said. Managing Director (Current Charge) of Southeast Bank M Kamal Hossain also spoke on the occasion. Later, a total of eight entities were bestowed with Green Awards in two categories for their environment-friendly initiatives. In the category of Leadership in Sustainable Green Business and Operations, the awardees are Yunusco (BD) Limited, AKH Eco Apparels Limited, SQ Birichina Limited, Snowtex Outerwear Limited. In the category of Leadership in Sustainable Community Development and Poverty Reduction, the winners of the award are Shaymol Bangla Krishi Khamar, Nature Conservation Management (NACOM), Wave Foundation and SKS Foundation. Source: http://print.thefinancialexpress-bd.com/2017/04/16/170065

STOCKS FACE MAJOR CORRECTION WITH LOW TURNOVER Stocks faced major correction last week that ended Thursday, after single-week break, as risk-averse investors released their holdings throughout the week to avoid further loss. Analysts said the market fell as selling pressure intensified on continuous fall of almost all the large-cap stocks like Grameenphone, Square Pharma, BRAC Bank, Islami Bank, Beximco Pharma, City Bank and BSRM Steel. The week featured five trading sessions as usual and all the sessions closed lower amid thin participation from the investors. Week-on-week, DSEX, the prime index of the Dhaka Stock Exchange (DSE), went down by 90.54 points or 1.58 per cent to settle the week at 5,646.

http://print.thefinancialexpress-bd.com/2017/04/16/170065


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International Leasing Securities, a stockbroker, said, "The shaky investors opted to liquidate their holding of shares to escape from further losses while some adopted "wait-and-see" approach amid ongoing market movement". The stockbroker noted that several issues from textile, IT and food sector enjoyed buoyancy. However, selling of shares was observed mostly from bank, engineering and financial institution sectors. LankaBangla Securities, a stockbroker, noted that price fall of large-cap stocks is responsible for this huge fall in index. Among the top 20 large cap stocks, all except two experienced major price fall last week. The two other indices also closed lower. The DS30 index, comprising blue chips, saw a sharp loss of 46.86 points or 2.20 per cent to finish at 2,087. The DSE Shariah Index fell 17.83 points or 1.36 per cent to close at 1,295. The port city bourse, Chittagong Stock Exchange (CSE), also closed lower with its Selective Categories Index, CSCX, losing 194 points or 1.79 per cent to close at 10,593. Sheltech Brokerage said, "Sell-off in large-cap tumbled the DSEX from the beginning of the week and ended red in every session due to lack of confidence among investors". The total turnover for the week stood at Tk 36 billion against Tk 48 billion the week before. The daily turnover averaged at Tk 7.18 billion, which was 25 per cent lower than the previous week's average of Tk 9.58 billion. The bank sector kept its dominance in turnover chart for the third straight week, capturing 21 per cent of the day's total turnover value, followed by textile 17 per cent and financial institutions 13 per cent. City Bank Capital Resources, a merchant bank, said, The bearish sentiment was reflected on turnover activity. The losers took a strong lead over the gainers as out of 332 issues traded, 201 closed lower, 100 closed higher and 31 remained unchanged on the DSE trading floor. The total market capitalisation of the DSE also fell 1.05 per cent last week as it was Tk 3,823 billion on the opening day of the week, while it came down to Tk 3,783 billion on closing day of the week. LankaBangla Finance dominated the week's turnover chart with about 26.60 million shares of Tk 1.68 billion changing hands, followed by IDLC Finance, Ratanpur Steel, City Bank and Brac Bank. Regent Textile Mills was the week's biggest gainer, posting a 33.73 per cent gain, while Brac Bank was the worst loser, slumping by 18.83 per cent following its price adjustment after record date. Source: http://print.thefinancialexpress-bd.com/2017/04/16/170031

LANKABANGLA DOMINATES WEEK'S TURNOVER CHART LankaBangla Finance dominated the transaction chart of Dhaka Stock Exchange (DSE) last week that ended on Thursday as investors were active on its shares throughout the week. According to the statistics available with the DSE, about 26.60 million shares of LankaBangla were traded, generating a turnover of Tk 1.68 billion during the week. It was 4.69 per cent of the week's total turnover value. The non-bank financial institution's daily average turnover stood at Tk 336 million on the premier bourse last week. The company's share price closed at Tk 62.40 each on Thursday, the last trading session of the week, losing 2.95 per cent over the over previous week. Shareholders of the company recently approved 15 per cent cash and 15 per cent stock dividend for the year ended on December 31, 2016 at its 20th annual general meeting (AGM).


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The company also reported consolidated earnings per share (EPS) of Tk 2.87, consolidated net asset value (NAV) per share of Tk 24.16 for the year ended on December 31, 2016 as against Tk 1.53 (restated) and Tk 22.63 (restated) for the same period of the previous year. LankaBangla Finance, which was listed on the Dhaka bourse in 2006, also disbursed 15 per cent cash and 15 per cent stocks dividend for the year ended on December 31, 2015. The company's paid-up capital is Tk 3.18 billion and authorised capital is Tk 10 billion, while the total number of securities is 318.25 million. The company's total market cap stood at Tk 19.89 billion as on Thursday. Sponsor-directors own 34.63 per cent stake in LankaBangla, while institutional investors own 26.69 per cent, foreign investors 5.08 per cent and the general public 33.60 per cent as on March 31, 2017, the DSE data shows. LankaBangla was, closely followed IDLC Finance with about 14.66 million shares of Tk 1.12 billion changing hands. The company's share price closed at Tk 75 each, falling 3.23 per cent. Ratanpur Steel Re-rolling Mills emerged as the third, with about 11.16 million shares of Tk 1.04 billion changing hands. The steel maker's share price closed at Tk 92.70, remaining unchanged over the previous week. City Bank notched the fourth spot, with 23.98 million shares worth Tk 981 million changing hands. The bank's share price fell 8.53 per cent to close at Tk 38.60 each. Brac Bank was the fifth on the DSE's turnover list, with 12 million shares of Tk 977 million changing hands. The bank's share price closed at Tk 75, plunging by 18.73 per cent over the previous week. It was also the week's top loser following its price adjustment after record date last week.

Beximco was the sixth with 26.41 million shares worth Tk 943 million changing hands. The company's share price closed at Tk 35.30 each, losing 3.29 per cent. Beximco Pharma was the seventh with 7.66 million shares of Tk 878 million changing hands. The company's share price fell 4.14 per cent to close at Tk 113.60 each. Evince Textile was the eighth with 35.78 million shares of Tk 841 million changing hands. The textile company's share price closed at Tk 24.80 each, advancing 10.71 per cent. Regent Textile was the ninth with about 34.10 million shares of Tk 834 million changing hands. The company's share price soared 33.73 per cent to close at Tk 34.10 each. Saif Powertec was also included in the top ten turnover chart with 18.93 million shares of Tk 798 million changing hands. The company's share closed at Tk 40.90 each, losing 6.41 per cent over the week before. Source: http://print.thefinancialexpress-bd.com/2017/04/16/170036


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SMES CONTRIBUTE 11PC TO GDP, BUT SHARE LOW IN SOUTH ASIA SMEs' contribution to GDP is 11 per cent, which is "very low" compared to other countries including neighbouring nations, said planning minister AHM Mustafa Kamal. "We need to increase the participation of this large segment in the economy", he said. He made the remarks while addressing an award ceremony Saturday as the chief guest. Citi Foundation, the philanthropic arm of Citigroup, awarded 12 individual micro-entrepreneurs and two microfinance institution to recognise their contribution to the economy. State minister for planning and finance Abdul Mannan, deputy governor of Bangladesh Bank SK Sur Chowdhury distributed crests, certificates and cheques of the 12th Citi Microentrepreneurship Awards to the awardees in a city hotel. The planning minister said the central bank, SME Foundation and NGOs should work together to promote the sector. He also emphasised developing an independent research wing for SMEs. The selected micro entrepreneurs were picked from remote areas across the country through a long selection procedure to recognise their contribution to the GDP, said Professor Wahiduddin Mahmud, chairperson of the award's advisory council. "The awardees were selected for their innovative product and branding activities that are really adding value to growth," said Prof Mahmud. He said the winning micro-entrepreneurs started innovative business and branded their products in their respective areas, which were sustainable as well. "Such micro-entrepreneurs are growing fast in terms of size and contributing to the country's growth," he said. The awards were given in four categories including best micro-entrepreneurs, best women micro-entrepreneurs, best youth micro-entrepreneurs and best micro-entrepreneurs in agriculture. Four were awarded in every category with prize money from Tk 100,000 to Tk 450,000. The best micro-entrepreneur received Tk 450,000, while the best woman micro-entrepreneur, agriculture micro-entrepreneur, and youth micro-entrepreneur were awarded with Tk 350,000 each. The runner-up in each category received Tk 150,000 as prize money, while the second runner-up got Tk 100,000. The two microfinance institutions-Peoples Oriented Program Implementation (POPI) was awarded in the best microfinance institutions category and Village Education Resource Center (VERC) received award in most innovative category with no prize money. SK Sur Chowdhury said Bangladesh Bank was working to make cheaper finance available for the country's micro-entrepreneurs. "Banks are also showing interest to micro-entrepreneurs as investing involves very low risk," he said. The Citi Microentrepreneurship Awards was supported by Citi Foundation and implemented by Citibank, N.A. Bangladesh with support from Sajida Foundation as the local partner and with the strategic partnership of Credit Development Forum (CDF). James Morrow, sub-cluster head of Citi Bangladesh and Sri Lanka, Rashed Maqsood, managing director and country officer of Citi Bangladesh, Zahida Fizza Kabir, executive director of Sajida Foundation, and Abdul Awal, executive director of Credit and Development Forum, were, among others, present in the function. Source: http://print.thefinancialexpress-bd.com/2017/04/16/170027

DSE TURNOVER DIPS BELOW TK 6.0 BILLION-MARK Turnover on the Dhaka Stock Exchange (DSE) dipped below Tk 6.0 billion-mark on Thursday after more than two months as investors were reluctant to take fresh exposure in the market.


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Turnover, the most important indicator of the market, fell 16.67 per cent to Tk 5.95 billion as compared to the previous day. It was also the lowest single-day transaction since February 06 this year when the turnover totalled Tk 5.76 billion. "The ongoing pessimism has made investors mostly inactive, bringing the turnover to a five-month low," said an analyst of a leading brokerage firm. The market started with a positive note and the key index of the premier bourse rose about 22 points within first 30 minutes of trading, but could not sustain the momentum as the session progressed, finally closed almost flat. DSEX, the prime index of the DSE, finished at 5,645.86, losing 0.51 point over the previous session. DSEX lost about 132 points in the past seven consecutive sessions after reaching a record high of 5,777 points on April 04 since its introduction in January 2013. LankaBangla Securities, a stockbroker, said, "The key index remained flat with a loss of 0.52 points, with turnover falling below Tk 6.0 billion once again." The stockbroker noted that index moved upward at the beginning of the trading session reaching 5,668-level until around 11:00 am. But from 11:00 am, index sharply moved downwards and fell as low as 5,639-level. The two other indices also closed lower. The DS30 comprising blue chips fell 6.26 points or 0.29 per cent to finish at 2,087.34. The DSE Shariah Index (DSES) lost 3.66 points or 0.28 per cent to settle at 1294.88. International Leasing Securities, a stockbroker said, "The market observed yet another bearish trading session, extending the losing spell for the seventh consecutive sessions, as risk-averse investors continued their selling spree." The stockbroker noted that the market started with an upward trend, but it failed to continue till the closure due to sales pressure of the cautious investors. "Investors' selling spree was observed in different sectors, especially in telecom and financial institution sectors while the bargain hunters were active with the bank, textile and food sector stocks," said the stockbroker. IDLC Investments, a merchant bank, said, "The market underwent reshuffling by investors, with small-cap classes emerging as gainers and large-cap classes declining." A total number of 0.104 million trades were executed in the day's trading session with a trading volume of 182.43 million securities. The total market capitalisation of DSE came down to Tk 3,783 billion which was Tk 3,787 billion in the previous day. Large-cap sectors showed mixed performance. Telecommunication witnessed the highest loss of 1.10 per cent, followed by financial institutions 0.99 per cent and pharmaceuticals 0.27 per cent. Food and allied sectors posted the highest gain of 0.89 per cent, followed by engineering 0.21 per cent, fuel and power 0.05 per cent, bank 0.01 per cent. Losers took a strong lead over the gainers, as prices of 157 securities declined, 121 advanced and 46 remained unchanged out of the 324 issues that were traded on the DSE floor. LankaBangla Finance topped the DSE turnover chart for the fourth day in a row with about 3.41 million shares worth Tk 214 million changing hands, closely followed by Paramount Textile, Tung Hai Knitting and Dyeing, IDLC Finance and Doreen Power. Regent Textile was the day's highest gainer, posting 8.60 per cent gain, while Phoenix Insurance Company was the worst loser, shedding 6.98 per cent. The port city bourse, the Chittagong Stock Exchange (CSE), also closed lower with its Selective Categories Index - CSCX - losing 14.75 points to settle at 10,594 points.


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Gainers beat losers as 106 issues closed higher, 94 closed lower and 36 remained unchanged on the CSE. The port city bourse traded 19.52 million shares and mutual fund units' worth over Tk 478 million in turnover. Source: http://print.thefinancialexpress-bd.com/2017/04/14/169946

DSE ENDS FLAT AMID CHOPPY TRADING The Dhaka bourse on Thursday closed almost flat amid see-saw movements, observed throughout the session. On the day, the indices declined marginally while the turnover witnessed a moderate loss due to the investors' low participation. At the end of the session, the DSE broad index - DSEX - lost 0.51 point to close at 5,645.86 points. According to AT Capital Partners, after gaining 22 points in first 30 minutes, DSEX declined steadily in next two hours, shedding 40 points. The shariah-based index - DSES - declined 0.28 per cent or 3.66 points to close at 1,294.87 points, while blue chip index - DS30 - went down by 0.29 per cent or 6.26 points to close at 2,087.33 points. According to EBL Securities, the premier bourse of the country ended in red amid see-saw movements. Thursday's session started with an optimistic tune that remained for a short period, while the opportunistic investors showed their optimism in sector-specific stocks, majority from food & allied and textile sectors, said EBL Securities. It also said the wining spell reversed within a short jump, as selling pressure was observed in different sectors, especially in telecommunication and financial institutions (FI). Of the total issues traded, 157 advanced, 121 declined and 46 remained unchanged on the premier bourse. According to LankaBangla Securities, a total of above 0.10 million trades were executed in Thursday's trading session, generating a turnover of above Tk 5.95 billion with trading volume of 182.43 million securities. The day's turnover was 16.66 per cent lower than the turnover of the previous session. Of the total turnover, Tk 121 million came from transactions executed in spot market. Among the declining sectors, financial institutions lost 0.8 per cent, pharmaceuticals & chemicals 0.2 per cent, and telecommunication 1.1 per cent. Investors' activities were concentrated mostly on textile, which contributed to 21.90 per cent in market turnover, followed by bank 18 per cent, FI 11.1 per cent, and engineering 10.20 per cent. LankaBangla Finance topped the turnover chart with a value of Tk 214 million, followed by Paramount Textile Tk 210 million, Tung Hai Knitting & Dyeing Tk 205 million, IDLC Tk 182 million, and Doreen Power Tk 156 million. Regent Textile Mills witnessed the highest price hike of 8.59 per cent to close at Tk 34.10 per share, whereas Phoenix Insurance topped the losers chart after declining 6.67 per cent to close at Tk 29.30 per share. Source: http://print.thefinancialexpress-bd.com/2017/04/14/169951

BSEC SETS NEW CLAUSES FOR COS' USE OF RAISED FUNDS The listed companies will have to take prior approval of at least 51 per cent public shareholders, if they want to bring any 'deviation' in the conditions, set for use of funds raised through public issue and rights issue. Bangladesh Securities and Exchange Commission (BSEC) at a meeting on Thursday set this new condition along with the existing ones for use of funds raised from the shareholders.


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The regulatory decision came, as a number of companies were found changing use of fund proceeds, leaving their shareholders in darkness. Under Section 2CC of the Securities and Exchange Ordinance 1969, the securities regulator sets some conditions in prospectus for use of funds, raised through public issue and rights issue. On Thursday, BSEC set the condition of taking prior approval of shareholders in case of any deviation in use of public fund. "Any deviation in this regard must have prior approval of at least 51 per cent of public shareholders, other than sponsors and directors, in a general meeting," said the securities regulator. BSEC also mentioned that before the said general meeting, such deviation as recommended by the board of directors will have to be published as price sensitive information with detailed description and reasons for the deviation. "If approved by the shareholders, the meeting resolution will be submitted to the commission along with reasonable explanations for approval." After such approval, such decision will be published as price sensitive information, added the securities regulator. Mohammad Saifur Rahman, BSEC executive director, said the condition of taking the shareholders' approval has been imposed, so that the companies cannot change use of fund proceeds without their shareholders' approval. "From now on no company will be able to bring any deviation in use of fund proceeds without taking approval from the shareholders," Mr Rahman further said. Meanwhile, at the meeting on Thursday, BSEC approved the IPO (initial public offering) proposal of BBS Cables, which will raise Tk 200 million fund under fixed price method. BBS Cables will offload 20 million shares at an offer price of Tk 10 each to raise Tk 200 million fund. The fund will be used for acquisition of plant and machineries, building and other civil works, partial loan repayment and bearing IPO expenses. As per the financial statement for the year ending on June 30, 2016, the company's earnings per share (EPS) and net asset value (NAV) are Tk 2.46 and Tk 16.87 respectively without revaluation. Banco Finance and Investment and ICB Capital Management are working as managers of BBS Cables. BSEC also approved Tk 5.0 billion subordinate bond, to be issued by Dutch-Bangla Bank Limited (DBBL). The tenure of the non-convertible subordinate bond will be seven years. The bank will raise the fund through issuing bond to strengthen its capital base. Source: http://print.thefinancialexpress-bd.com/2017/04/14/169952

DUTCH-BANGLA JV FIRM GETS LPG LICENCE BM Energy (BD) Ltd, a private joint-venture (JV) firm of the Netherlands and Bangladesh, has secured licence to install around 400 LPG (liquefied petroleum gas) filling stations across the country, said officials. The company has got the first licence from the government under the newly -adopted policy 'LP Gas Operational Licensing Policy, 2017, said Md Akramuzzaman, a deputy secretary of the Energy and Mineral Resources Division (EMRD) of the Ministry of Power, Energy and Mineral Resources (MPEMR). The firm would also have the authority to import, produce, store, transport and supply of LPG to households, commercial and industrial clients by appointing dealers or franchises. The JV firm would also be able to set up LPG terminals, auto-gas conversion plants and LPG bottling plants. It would also be able to export bottled LPG or LPG in bulk quantity after attaining no objection certificate (NOC) from the energy ministry and necessary approval from the commerce ministry. "We have awarded BM Energy the licence following its application to help meet the country's rising LPG demand in vehicles," said Mr Akramuzzaman.


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"We got the licence from the government and will start soon building new LPG filling stations across the country," Mohammed Nurul Alam, chief executive officer of BM Energy (BD) Ltd, told the FE Thursday. He said the company would build the auto-gas filling stations across the country in phases. "Currently, we don't have any LPG filling stations. But we provide LPG to households and industries," he said. "Actually, we shall appoint franchisees who will build the LPG-filling stations. We shall provide them with LPG," he said. "Currently, we are the largest importer of LPG in Bangladesh and import around 10,000 tonnes of LPG a month," he said. BM Energy imports LPG from spot markets of different countries including Singapore, Vietnam and the Maldives, he said. The firm has a 6,500-tonne LPG storage capacity, which is 1,500 tonnes more than the government requirement for doing the LPG business, said Mr Alam. Officials said in 2016, Bangladesh's LPG demand was around 400,000tonnes, up 33 per cent from 300,000 tonne a year earlier, and the government forecasts consumption would increase another 25 per cent to 500,000 tonne in 2017. Interest in the use of LPG as an auto fuel is also increasing due to the growing competitiveness of the fuel compared to CNG and gasoline. LPG, also known as auto-gas, is not cheaper than CNG despite last month's hike, but people are increasingly interested in running their vehicles on LPG to keep their engines protected, said Saidul Islam, director and CEO of LPG distributor Laugfs Gas Bangladesh. LPG now sells at Tk 54 a liter on Bangladesh's domestic retail market. The domestic diesel price in Bangladesh is Tk 65 a litre, while petrol and octane prices are at Tk 86 per litre and Tk 89 per litre respectively. Demand for LPG in Bangladesh has seen strong growth since 2016 owing to the increasing suspension of natural gas connections and growth in the use of LPG as an auto fuel. The energy ministry estimates that the actual demand could surpass 500,000 tonnes a year, with consumers using kerosene and wood as alternatives to LPG due to the lack of availability. Currently, LPG is available only in cities and their adjacent areas in the country, but with the operations of new licencees, LPG will reach rural areas and will be available in most areas across the country, which in turn will raise consumption substantially, market insiders said. Source: http://print.thefinancialexpress-bd.com/2017/04/14/169958

BSEC INITIATES FRESH MOVE TO FINALISE MF RULE CHANGE Bangladesh Securities and Exchange Commission has initiated a fresh move to publish the draft rules on mutual fund that were stuck up for almost one-and-a-half-year after finalising the draft. A BSEC official told New Age that the commission recently took the initiative as part of its move to clear a number issues which were remaining pending for long. After disclosing the draft rules in national dailies, those would be finalised for publishing in government gazette notification based on public opinion, the official said. Once the gazette notification is published, asset management companies will have to follow the rules to operate mutual funds, he said. The stock market regulator at a meeting on December 7, 2015 finalised the draft Securities and Exchange Commission (Mutual Fund) Rules, 2001. The BSEC in an amendment to the mutual fund rules in 2013 allowed mutual funds to issue re-investment units besides cash dividend. In 2015, the commission initiated a move to amend the rules mainly to close the scope for issuing re-investment units or stock dividend as issuance of such dividend caused heavy losses for investors.

http://print.thefinancialexpress-bd.com/2017/04/14/169958


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Besides the losses, prices of the units of 13 mutual funds which had declared RIUs in 2015 depreciated after the announcement of the dividend and before their respective record dates. Under the proposed amendment, the BSEC will specify the circumstances when RIUs can be issued to investors so that no loss is caused for the unit holders. The BSECs delay in finalising the amended rules gave a number of mutual funds opportunity to issue RIUs or stock dividend again in 2016. According to the finalised draft rules, the BSEC will set the time when a mutual fund will be allowed to invest its dividend as re-investment. A mutual fund will be allowed to declare interim dividend only when there is no provisioning required, while keeping more than 20 per cent of a mutual fund in fixed deposit will be barred. The finalised draft rules also said that asset manage ment companies would get their fee as per their performance. If the AMCs fail to pay dividend, their fees will be reduced, but for better performance the AMCs will get bonuses. The BSEC said the highest tenure of close-ended mutual funds would be 10 years and in order to extend that the mutual funds would have to go for unit-wise voting system. It also said the mutual funds would have to disclose their NAV on daily basis instead of weekly basis. The AMCs have to publish their stock market and other investment details on monthly basis on their web sites. After the market crash in 2010-2011, most of the mutual funds failed to offer dividend to their unit holders that put a negative impact on the overall mutual fund sector. Source: http://www.newagebd.net/article/13565/bsec-initiates-fresh-move-to-finalise-mf-rule-change

GARMENT MAKERS LINE UP TO HIT $500M IN EXPORTS

Only one Bangladeshi garment manufacturer could hit $500 million in exports in a year -- a puzzling statistic for a country that is the second largest apparel supplier in the world.

http://www.newagebd.net/article/13565/bsec-initiates-fresh-move-to-finalise-mf-rule-changehttp://www.newagebd.net/article/13565/bsec-initiates-fresh-move-to-finalise-mf-rule-change


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There are a bunch of companies whose export receipts amount to more than $400 million but less than $500 million, said Mohammed Nasir, vice-president of the Bangladesh Garment Manufacturers and Exporters Association. Ha-Meem Group, which counts retail giants like Gap, H&M, Mango and Zara as its major buyers, is the only company to have managed to break out from that bracket, according to data from the BGMEA. Established in 1984 on a small scale, the company's annual export receipt stood at $535 million in 2015-16. I have a target to reach $1 billion in annual exports in the next six to seven years, said AK Azad, managing director of Ha-Meem Group. It is not an impracticable target as the future export trend is positive, he said. All we need is political stability in the country. To achieve that goal, Azad has been strengthening Ha-Meem's capacity, especially to manufacture the denim and woven products. Currently, Ha-Meem Group has 23 units and employs around 50,000 workers. Export receipts of less than $500 million do not mean that the other companies are performing poorly, Nasir said. Many companies are performing very well and their turnover will even cross the $1-billion mark soon, he added. One such company that is on the cusp of hitting the milestone of $500 million in export receipts is Nassa Group. The export growth trend is good. I am very much hopeful that we will reach $500 million in exports very soon, said Nazrul Islam Mazumder, chairman of Nassa Group. DBL Group is on the same boat as Nassa. I hope my group can cross the $500-million mark next year, said MA Jabbar, managing director of DBL Group. He went on to state that it will not be long before the other big garment companies hit the milestone like Ha-Meem, as they have the production capacity and the support from international retailers.Bangladesh exported garment items worth $28.06 billion last fiscal year and is chasing a target of $30.37 billion this year. China has a 37.50 percent share of the $450 billion global apparel trade, followed by Bangladesh that has a 6 percent share. Source: http://www.thedailystar.net/business/garment-makers-line-hit-500m-exports-1391746

MUHITH PLANS AN AMBITIOUS BUDGET Budget deficit may exceed 5 percent of GDP in fiscal 2017-18, breaking out from years-long practice with the view to wooing the electorate ahead of the next national election. It will most definitely be about 6 percent of GDP, said a finance ministry official. The finance division is due to present the preliminary budget projection for the next year at a meeting today of the fiscal coordination council and resource committee. There is no clause in the budget management act specifying an upper bound on the deficit. But in the last several years the budget was diligently prepared such that the deficit stayed within 5 percent; but, in the course of the fiscal year the deficit would come to below 4 percent. One of the reasons for the budget deficit to settle on the 5 percent of GDP mark was that the International Monetary Fund put it as a condition for the Extended Credit Facility programme. The tenure of the IMF's ECF programme tenure ended at the beginning of last year, meaning there is no condition that the deficit be kept within 5 percent. But Finance Minister AMA Muhith wants the next budget to cross the Tk 400,000 crore-mark. In that scenario, it would not be possible to contain the deficit within 5 percent. If the deficit has to be kept within 5 percent, an abnormal revenue growth target has to be set, which would be unworkable.

http://www.thedailystar.net/business/garment-makers-line-hit-500m-exports-1391746


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We tried to keep the revenue growth somewhat realistic and also to keep the deficit close to the earlier practice, said the finance ministry official. Muhith is giving more emphasis on the upcoming budget as he wants to accommodate all his plans. The budget will be completed before the next national election. After a pre-budget meeting recently, the finance minister said: At first I decided to keep the size within Tk 400,000 crore, but later I increased the size to implement my plans properly. The size of next fiscal year's budget may be Tk 400,200 crore -- the highest in the country's history and yet another milestone for the current Awami League government. When the government assumed power in 2009, it set a record by setting a budget of Tk 110,524 crore in fiscal 2009-10 -- the highest then. As per the medium-term budgetary framework, the size of the next budget should be about Tk 390,000 crore, so the Tk 400,200 crore-figure is not overly ambitious. The size of the current year's budget is Tk 340,605 crore, but it is going to be downsized to less than Tk 310,000 crore in the revised budget, the official added. The revenue collection target for next fiscal year may be more than Tk 282,000 crore, of which the National Board of Revenue will have to contribute Tk 236,000 crore. The NBR's target this fiscal year is Tk 180,000 crore, which means the revenue authority would be working with a 24 percent higher clout. In the first eight months of the fiscal year, the NBR's collection grew around 20 percent, which is still satisfactory when viewed in the historical context. But as per the target set at the beginning of fiscal 2016-17, the growth should be 43.89 percent from the previous year's actual collection. Chasing a revenue growth target of more than 40 percent is absurd, said a former NBR official. When the budget was placed in June last year, many economists had said the revenue growth target would not be met as it was overly ambitious. The finance ministry official said they have been trying to keep the growth target for next fiscal year at a realistic level. The GDP growth target for fiscal 2017-18 may be set at 7.4 percent, up from current fiscal year's 7.2 percent. Muhith on various occasions said the GDP growth this fiscal year will be higher than the target. However, the World Bank, Asian Development Bank and the IMF have projected that the growth this year would be below 7 percent. Source: http://www.thedailystar.net/business/muhith-plans-ambitious-budget-1391743

HSBC: POWERING BANGLADESH

The government of Bangladesh has set a target to bring the whole country under electricity coverage by 2021. To achieve this target, the country requires multibillion dollar investments in the power sector. As a result, the government is increasingly diversifying the sources of investment.

http://www.thedailystar.net/business/muhith-plans-ambitious-budget-1391743


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We are attracting innovative funds. One of the big innovative ways is Export Credit Agency (ECA) financing, Nasrul Hamid, state minister for power, energy and mineral resources, told reporters at the Dhaka Reporters Unity on January 21. Under the ECA arrangement, the agencies involved in the project implementation will mobilise finances, said the minister. Small power projects are attracting private sector investment while the government is seeking innovative financing through joint venture and the ECA backed financing for large power projects. The Hongkong and Shanghai Banking Corporation (HSBC) had pioneered the ECA financing in the country's power sector in 2012 arranging $420 million credit facility for Ashuganj Power Station Company Ltd. Since then, HSBC has arranged about $1.14 billion of financing to implement five major power projects in the country. Other international banks followed the suit. About $4.5 billion has been invested in the power sector of the country under the ECA arrangement in the last five years, establishing ECA as an alternative financing mode. Under the arrangement, power plants get a grace period in the first two to three years while the unit is under construction. The loans are repaid in instalments in the next 10 years. ECAs are government departments or government-sponsored institutions with sovereign status in developed countries, established to support the export of capital goods and services from its country to the developing nations. Some ECAs have direct lending programmes which can increase the competitiveness of the funding to the project. It follows a common set of guidelines and characteristics known as the OECD Consensus. ECA funding is not only a matter of credit risk mitigation, it also enables projects to access a much larger pool of liquidity. What is popularly known as suppliers' credit in Bangladesh is basically a form of export credit in the international financial market. A total of $6.9 billion ($3.1 billion in the public sector and $3.8 billion in the private sector) of investment has been made for setting up power plants in the country for generating 7,200 megawatts (MW), according to Bangladesh Power Development Board (BPDB). To implement the proposed ongoing power projects which will generate about 10,700MW electricity, the country will require a total investment of $15.5 billion, out of which the public sector is investing $8.2 billion and the private sector investment will be $7.3 billion. The government also has a plan to generate 60,000MW of electricity by 2041 - a move that will require further investment worth $20 billion. The investment opportunities are not restricted to generation of power: the country will require another $20 billion of investment in transmission and distribution, said Tawfiq-e-Elahi Chowdhury, the prime minister's adviser on power, energy and mineral resources, last year. The government, which has trebled the installed power generation capacity as well as the actual generation in the last six years, has also enabled and created the environment for international financiers and arrangements to become part of the effort. In 2013, Bangladesh Institute of Development Studies carried out a study to find out the average cost of unserved energy, which was calculated using the share of energy consumed by different sectors. It showed a weighted average of Tk 26.73 per kWh. The average bulk tariff on electricity in the country at present is less than Tk 5 per kWh which indicates that the cost of unserved energy was more than five times the country's average electricity tariff. According to the World Economic Forum's Global Competitiveness Report 2014-2015, inadequate and unreliable energy and power supply appears to be the most binding constraint on the country's competitiveness. The cost of power outages has been estimated to equal 0.5 percent of gross domestic product.


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Bangladesh has one of the lowest per capita power consumptions in the region which stands at roughly 350kWh compared to 1,075 kWh in India, 527 kWh in Sri Lanka, and 495 kWh in Pakistan. Bangladesh needs more credible power supply to bring the remaining one-third population under its electricity coverage. Electricity demand in Bangladesh is growing due to underlying economic growth which averaged more than 6 percent over the last decade and climbed above 7 percent in the last fiscal year. Being the leading trade finance bank in the globe, HSBC has been facilitating international trade in Bangladesh. To note, HSBC has worked as the trade bank for the first cross-border electricity trade of the country. In 2013, the prime minister of Bangladesh inaugurated the first electricity import of 250MW from India. HSBC has also arranged low cost foreign financing for the state-owned electricity transmission authority to implement a 61-kilometer inter-district electricity transmission line and substation project. The bank sees infrastructure as the backbone of development for a country. HSBC's expertise and international network give the bank the capability to help support the Bangladesh government's infrastructure development plans, Tawfiq-e-Elahi Chowdhury added. HSBC has one of the largest global export and specialised finance teams and has arranged ECA supported facilities across diverse business sectors worldwide, with almost all the ECAs globally. Today, HSBC is in a leading position in arranging ECA financing around the world, raising $5.23 trillion in ECA-backed financing with more than fifty deals in 2015. HSBC Bangladesh believes that the investment gives a very positive message to international investors about Bangladesh, which is very important. Experts, however, said, when projects such as public infrastructure are funded with external finance concessional or non-concessional, such as export credits, suppliers' credits and buyer credits, it is absolutely essential to focus on cost recovery-related issues. This article is reprinted to bring some changes in graphical representation. The second part appears Tuesday. Source: http://www.thedailystar.net/business/hsbc-powering-bangladesh-1391728

http://www.thedailystar.net/business/hsbc-powering-bangladesh-1391728


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BTRC TO RUN COST MODEL ANALYSIS FOR DATA PRICES The executive committee of the government's Digital Bangladesh Taskforce has asked the telecom regulator to run a separate cost model analysis to formulate the data pricing guideline within a month. The committee took the decision in a recent meeting presided over by Kamal Abdul Naser Chowdhury, principal secretary to the Prime Minister's Office. The Digital Bangladesh Taskforce, which consists of senior ministers and different top experts from the sector, is the highest policymaking body on digitisation headed by the prime minister. Its executive committee assists the taskforce and supervises implementation of the taskforce's decisions. We have been working on it for the last few months and we hope to complete it soon, said Shahjahan Mahmood, chairman of Bangladesh Telecommunication Regulatory Commission, who attended the meeting. The regulator plans to fix the upper and lower price limit for mobile operators' data packages, added Mahmood, who is also a member of the committee. For regular voice calls, there is a Tk 2 ceiling and a floor price of Tk 0.25 for each minute, which the regulator fixed in 2008 after a cost modelling analysis supported by International Telecommunication Union. The ITU gave the service for free for Bangladesh's least developed country status. After a few years, the BTRC set the ceiling for short message services (SMS) at Tk 0.50 for each local SMS and Tk 2 for international SMS. There is no lower price limit in this segment, said an official of the regulator. However, value added services in SMS and voice could be priced differently, with prior approval from the regulator. A senior consultant of the ITU will soon join the BTRC to do the cost modelling analysis, he added. At present, data service prices are set by the operators, with the regulator having no benchmark to check the rationality of the pricing. That's why different operators are charging as they wish. The government reduced the internet bandwidth price to as low as Tk 625 a megabyte last year, which was Tk 72,000 eight years back. However, there are allegations that data prices did not fall in line with the deduction in bandwidth prices. We understand that bandwidth is one of the components of the total cost, but it is a pricey one and there should be some impact at the end user level when we reduce it. But the telecom companies seem to disagree. So we decided to do a cost modelling for that, said Mahmood. In the meantime, the regulator also organised its first public hearing in November last year on mobile operators' service quality, where users also raised the issue of both data and voice costs. The regulator also plans to reset the ceiling and floor price for voice services. Since the BTRC has a cost modelling method for the voice segment, they can change some of the benchmarks and revise the charges from time to time as per demand, said Mahmood. The meeting also discussed reducing or withdrawing the VAT from internet use, which the regulator will finalise after a meeting with the National Board of Revenue, said a committee member. Currently, there are 6.67 crore internet users in the country, and of the number, 57 percent are using internet through their mobile phones, according to the BTRC. Source: http://www.thedailystar.net/business/btrc-run-cost-model-analysis-data-prices-1391740

LOSS-MAKING EXCHANGE HOUSES BEING TURNED INTO AGENT BANKS Banks are working to turn their exchange houses into agent banks as their overseas operations have largely flopped.

http://www.thedailystar.net/business/btrc-run-cost-model-analysis-data-prices-1391740


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The central bank has so far allowed banks to open 67 exchange houses overseas to facilitate remittance sent to Bangladesh. Of them, 35 are now in operation while 10 closed and 22 did not start the operation at all, according to data from Bangladesh Bank. As the most exchange houses have flopped, banks are now concentrating their focus on a business model similar to agent banking, bankers said. BB is allowing banks to go for agency agreement for opening exchange houses to serve non-resident Bangladeshis, moving away from its earlier stance which barred banks to appoint agents for running such branches. Under the agency agreement model, a bank starts an exchange house in partnership with a local agency in the host country. The model is similar to the agent banking now flourishing in Bangladesh. A local resident who runs businesses and has infrastructure in place will be appointed as agent to collect remittance. Currently, 36 banks have exchange houses in 13 countries and most of which are unprofitable, according to the central bank data. Higher operational cost is blamed for the loss incurred by banks, which prompted them to adopt alternative business model like appointment of agents, said Selim RF Hussain, managing director of Brac Bank. Banks are mostly facing setback in London for higher operational cost and strict regulation, said a senior executive of BB. Of the 10 closed exchange houses, three were in the UK, two in Australia, two in Canada, two in the US and one in Singapore. The UK is the most competitive market where most Bangladeshi banks are doing business. Alone in London, 10 banks have exchange houses to serve remitters. The banks are: Bank Asia, Brac, Exim, IFIC, Mercantile, Prime, Pubali, Southeast, Mutual Trust and Standard bank. State-run Sonali Bank also has a company in the UK which runs as a full-fledged bank. Among the exchange houses, only that of Brac Bank is making profits thanks to its agency arrangement business model. The exchange company logged a profit of Tk 30 lakh in 2016. The bank formed a company named Brac Saajan Exchange Ltd jointly with local partners. The exchange company provides remittance service to Bangladeshi communities across the country through agents. The operational expenditure of Brac Bank is low because of the agency agreement, said Hussain. The UK-based partners have equity participation in Brac Saajan and get share of the profit. Brac Bank holds 85 percent share into the exchange company while the rest is owned by local agents. This is a cost-effective model, which has made the exchange company profitable, said Hussain. Hussain said although the agent model poses some challenges including reputational risk but they are manageable. Banks are incurring losses in the UK as they spent huge amount of money to rent offices from the very beginning of their operation, according to Hussain. A senior executive of BB said Brac had started the agency agreement model without prior approval from the central bank and later took the post-facto approval. The post-facto approval is taken after a project has already begun. Prime Bank's exchange house in the UK only made profit for the first time in 2016. Until last year, it had been incurring losses since its opening in 2010. The bank has received approval from BB to remodel its business in line with that of Brac Saajan. Hasanul Zahed, head of the international division for Prime Bank, said Brac Bank's business model has become successful as it has been able to reach the remitters with minimum cost through the agents. So, we have started to follow the similar model.


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Banks however are making good business in Singapore and Malaysia as the countries are relatively small in size, allowing the licencees to cover the markets through only one or two branches. Among all banks, National Bank has the highest number of exchange houses abroad. It has offices in Greece, Oman, South Africa, Singapore, Malaysia, the Maldives and the US. The bank had sought permission from the central bank to shift to the agency agreement model in the UK, but the attempt was unsuccessful. ASM Bulbul, deputy managing director of National Bank, said the bank wants to roll out the agency agreement model as it is cost-effective. The bank will apply again to the central bank seeking the permission, he said. Source: http://www.thedailystar.net/business/loss-making-exchange-houses-being-turned-agent-banks-1391737

US BANKS REPORT SOLID EARNINGS Strong trading results, rather than lending, was the driving force behind solid earnings reported by large US banks, as executives expressed measured optimism about the prospects for President Donald Trump's pro-growth agenda. JPMorgan Chase and Citigroup reported big jumps in first-quarter net income compared with the same period of last year, while Wells Fargo continued to feel the effects of a fake accounts scandal and reported flat profits, missing analyst estimates for revenues. Source: http://www.thedailystar.net/business/us-banks-report-solid-earnings-1391734 ,

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