Business News Flash:

A Fortnightly Update
9 July 2020

Research & Strategy Division

 Inside Story
Global economy has been struggling since the beginning of Coronavirus pandemic. IMF predicted that global economy could shrink by 4.9% in 2020 as COVID-19
is coercing the global trade & supply chain. GDP prediction of many giant economies are becoming illusive and worsening day by day that includes USA, China,
Editorial Panel: Saudi Arabia, Australia, Canada, Germany, Greek, etc. Reflecting the same scenario of global economy, UK economy experienced a sharp decline in 40 years in
early 2020. Vietnam has been seen exceptional performance - GDP rose by 0.36% in Q2’2020 compared to the same period last year.
• S M Anisuzzaman
EVP, Company Secretary & Likewise the global economy, Bangladesh government has revised down the GDP growth for the outgoing fiscal year at 5.2% from previously predicted 8.2%
Head of R&SD due to the rampage of the coronavirus on the economy. Unemployment, drop of export and import, drop of FDI are impacting economy severely. However,
some shining glimpses are also visible in remittance inflow, foreign exchange reserve and private sector credit growth. In the meantime, Government approved
• Md. Tanvir Omar Chowdhury Tk 5.68 trillion budget for the FY 2020-21 focusing on economic recovery.
FAVP, R&SD
Similar to the local economy, Banking & Financial Industry (FI) is also struggling. Loan collection has become slow and fresh loan opportunity is shrinking day by
day. Shrinking interest rate spread has tighten the banks’ profitability in Q2’2020. Besides, lowest capital base and increasing default loan for the banks and
• Mohammad Omar Faruk NBFI have become a major concern. Amid this cloudy atmosphere, some of the rays of hope are:(i) VAT returns not mandatory for loans, (ii) Govt to set up
SO, R&SD company to salvage soured loans, (iii) BB provides NBFIs’ Tk 2,000 cr pre-finance scheme under stimulus fund and (iv) Agent banking posts marked growth in all
dimensions.
• Md. Ahasan Sayem
SO, R&SD Bank Asia plans to set a fully digital bank, which will replace traditional branch-based banking and pave a way forward for internet-based banking system. It will
provide digital and mobile-first financial solutions payments and money transfers, lending and different other banking services. Besides, highest ever remittance
inflow in a single month by foreign remittance department of Bank Asia and opening of new branch of Bank Asia at Payra Bondor, Pautakhali have been
captioned in this newsletter. Several competition banks’ news items are also highlighted in this newsletter, such as (i) BRAC Bank brings Visa contactless credit
cards for safer payments, (ii) EBL signs MoU with Tradewind, (iii) SIBL offers instant cash back on new account opening and (iv) Prime Bank, ISPAB alliance on
financing solutions to ISP companies.

Among the news of local industries, most concerning news are RMG’s earnings declined by 18.45% in FY 19-20, slow disbursement of government stimulus &
too many borrowing conditions hurting SME businesses and 50% turnover crash of cable manufacturers. Besides, many other businesses like Real Estate Sector,
Restaurant business, Airline industry, Shrimp Exports, Leather industry etc, are in trouble due to the pandemic. However, amid gloomy outlook, PPE export
seems to be a sunshine for the apparel industry of Bangladesh and bicycle industry has been also bringing hope.

Banking regulator is trying to tackle the devastating situation by simplify repatriation of foreign investment, relaxing stimulus loans tenor to three years,
introduction payment guarantee for exporters, forcing the banks to disburse all stimulus funds by August etc.
The news presented in the ‘flash’ are deemed to be relevant for the bank to form and modify its strategies to combat this economic downturn. Besides, the aim
of this newsletter is to increase knowledge domain of the readers for the sake of taking informed decision.

Wishing all a happy reading experience. Suggestions and feedback are welcomed through email to “[email protected]”.
What’s Inside Bangladesh Economy

Global Economy
Approved Budget for FY 20-21……7 Export & Import………………..9
• Trade Deficit Widens Further
General News…………....………….8
• EPB Moots $37b Export Target
• 13pc People Lost Jobs Due to COVID-19
Pandemic: BIDS Remittance…………….………10
Global Economic Phenomenon………………..…...…2
• Private Sector Credit Growth Picks Up in May - • Remittance Inflow Sees 11% Growth in
• Global Economy Could Shrink 4.9pc This Year On Paper FY20
• Coronavirus Rekindles Global Trade Disputes • FDI Drops 14pc in 11 Months

Country Specific Insights………………...……................3-5 Local Banking & Finance

• Canada's Natural Resources Real GDP Declines In First Quarter
Bank Asia Corner……………………12
• Vietnam Economy Unexpectedly Expands, Bucking Global Plunge
• Bank Asia Ushering in the Future of Banking
• Saudi Economy Contracts 1% in Q1 Amid Oil Plunge this Year
• Australia's Golden Economy Faces Long Road to Virus Recovery • Highest Ever Remittance Inflow in A Single
• Greek Economy to Fall by 5.8pc in 2020: BoG Month by Foreign Remittance Department!!
• UK Economy Shows Biggest Drop in 40 Years in Early 2020 • Opening of New Branch of Bank Asia Limited
at Payra Bondor, Pautakhali
Local Banking & Finance (contd)….
General News…………....……..…17-23
• Withdraw SoE Deposits from Banks Unwilling
to Disburse Stimulus
• Six PFIs to Finance Meghna Industrial
Economic Zone (MIEZL)
What’s Inside
• Banking Industry is in Crisis due to Outbreak Local Industries/Sectors
of COVID-19
• Interest Rate Spread Drops in April
• MRA also Extends Loan Default Facility Until
September
• VAT Returns Not Mandatory for Loans: NBR
• When Banks Need Cash Most They Give Cash
Dividend to Avoid Tax
• Attempts to Reduce Spending in the Banking
Sector in Alternative Ways
• Banks in Bangladesh Have the Lowest Capital
Competition News…………..…...13-14 Base in South Asia
• Tk 1,021cr in Suspicious Transactions
• BRAC Bank Brings Visa Contactless Credit
Reported to BFIU in FY19
Cards for Safer Payments
• Govt to Set Up Company to Salvage Soured
• EBL Signs MoU with Tradewind Loans
• 2020 Has Been Very Kind to IBBL • Agent Banking Posts Marked Growth in All
Dimensions
• Prime Bank, ISPAB Alliance on Financing • BB Injects Tk 7,386 cr into Banking System
Solutions to ISP Companies
Apparel…………………………………………....…27-28
against Dollars in 4 Months
• PPE Exports Give Lifeline to Apparel Manufacturers
NBFI…………………….…………………….24
Regulator’s Guidelines………..….15-16 • For NBFIs, 2019 was a Terrible Year & 2020 is
• Apparel Owners Want More Incentives
• Pandemic Downs Garment Shipments to a Decade-Low
• BB Eases FC Rules to Lure More FDI Poised to be Even Worse
• There will be Rebound of Apparel Shipment to US
• Banks Asked to Lend Stimulus Loans in Three • BB Provides NBFIs’ Tk 2,000 cr Pre-finance
Years Scheme Under Stimulus Fund
SME …………………………………………………..………29
• BB Introduces Payment Guarantee for Exporters Stock Market……………………...….…25 • Slow Loan Disbursement, too Many Conditions Frustrate SMEs
• Conditions Relaxed for Black Money Holders • SME Foundation to Expand Its Online Programme to Help SME
• Bangladesh Bank Asks Banks to Disburse All
• Banks Ready to Invest Tk 1,650 cr in Stocks Entrepreneurs
Stimulus Funds by August
Once Floor Price is Lifted
Local Industries/Sectors (contd..) What’s Inside
Real Estate………………………..…33 Restaurant………………………..…...34
• Real Estate Sector Braces for Turnaround • Restaurant Owners Seek Tk. 10,000 cr.
Support

Cable Manufacturer…..….……...35 Jute & LPG..…………………..………...36

• Cable Manufacturers’ Turnover to Crash
• BD Plans to Revive Jute Sector under PPP
50pc This Year
• Beximco, Indian Oil team up to grab a slice of
fast-growing LPG pie
Airline & Hotel …..………...……...37
• With Few Flyers, Airlines Continue to Lose
Money Bi-Cycle & Electronics Business..38
• Covid Brings Hotel, Resort Business to a • Bicycle Industry Shining
Standstill • Electronics Business Feels Pandemic Pinch
Despite Huge Washing Machine Sales

Leather Goods & Tanning.……...39

• Leather Goods, Footwear Producers
Shrimp..…..….……………….……….....40
Downhearted By Decline in Sales • COVID-19 Eats Away Shrimp Exports
ICT………………………………………………………..…….30 • BB’s Facility for Tanners
• Japan, the Land of Rising Promise for Bangladesh’s ICT Sector

Ceramic Industry……………..…………………………31
• Ceramic Industry in a Fix Due to Fiscal Measures

Dairy and Live Stock……………………………...……32

• BDDF Seeks Tk 50 b for Fisheries, Livestock
Global Economy
 Global Economy Could Shrink 4.9pc This Year
Global Economic Phenomenon
• Global economy could shrink by 4.9% in 2020 due to COVID-19 pandemic which is 1.9% lower
than its previous forecast by IMF.
• The recovery from the impacts of the outbreak is projected to be more gradual than previous
forecast.
• In April 2020, IMF predicted that a longer pandemic could cause a 3% contraction of global
economy in 2020.

https://thefinancialexpress.com.bd/economy/global-economy-could-shrink-49pc-this-year-imf-1593011738

Coronavirus Rekindles Global Trade Disputes

• Before the stroke of Coronavirus, US-China tensions were easing after their Phase-I trade deal.
• Countries across the world imposed 222 exports curbs on medical supplies and medicines and in
some cases food. For medical products, it was more than 20 times the usual level.
• US President Donald Trump has said he wants to cut ties with China.
• The European Union is planning to put barriers to state-backed investment from China and
elsewhere.
• China is demanding declarations that food imports are virus-free.
• China offered deeper cooperation on COVID-19 and urged the EU to relax export controls.

https://thefinancialexpress.com.bd/public/trade/coronavirus-rekindles-global-trade-disputes-1593415213

2
 Canada's Natural Resources Real GDP Declines in First Quarter
Country Specific News
• Real GDP of Canada's natural resources sector was down by 0.4% in Q1’2020.
• The drop in the natural resources sector was modest compared to the sharp decline in the economy-
wide real GDP fell by 2.1%.
• Decline of real GDP of different sectors are as follows:
• Energy subsector edged down by 0.3%.
• Mineral and mining subsector down by 0.4%.
• Non-metallic minerals dropped by 8.8%.
• Real GDP of the forestry subsector edged down by 0.2%.

https://thefinancialexpress.com.bd/economy/canadas-natural-resources-real-gdp-declines-in-first-quarter-1593071464

Vietnam Economy Unexpectedly Expands, Bucking Global Plunge

• Economy of Vietnam expanded in Q2’2020 in spite of global outbreak of COVID-19, although it was still
the country's slowest growth in nearly three decades.
• GDP rose by 0.36% in Q2’2020 compared to the same period last year.
• It's the lowest ever GDP growth since Vietnam started publishing GDP figures in 1991.
• The country's economy is heavily reliant on exports, particularly after reaping the benefits of a trade spat
between Washington and Beijing over the last two years.

https://www.thedailystar.net/business/news/vietnam-economy-unexpectedly-expands-bucking-global-plunge-1923257

3
Country Specific News Saudi Economy Contracts 1% in Q1 amid Oil Plunge
• World’s one of the richest economy, Saudi Arabia economy contracted by 1% in Q1’2020, as oil sector
declined by 4.6% mainly due to COVID-19.
• In Q1’2020, value of Saudi Arabia’s oil exports plunged by about US$11 billion on year on year basis.
• In April the drop was of about US$12 billion.
• In Q1’2020, non-oil sector recorded a positive growth rate of 1.6%.
• Profits for the banking sector posted an annual decline of nearly 40% in May and points of sale
transactions were down by nearly 16%.
• Consumer spending fell by 32% on year on year basis in May after a 35% decline in April.
• To lift oil prices, sharp production cuts in May and June was observed but to increase non-oil revenue
government has ordered an increase in value-added tax.

https://saudigazette.com.sa/article/594910/SAUDI-ARABIA/Saudi-economy-contracts-1-in-Q1-amid-oil-plunge

Australia's Golden Economy Faces Long Road to Virus Recovery

• Australia ended its golden growth run and now is in a deep recession which would take long time to recover.
• Service depended economy sector [accounts for almost two-thirds of Australia’s A$2 trillion (US$1.4 trillion)
economy] was hit hard as three key growth drivers - tourism, education and immigration experienced a
nosedive.
• In Q1’2020, Australia’s economy contracted by 0.3%.
• Unemployment rate is 7.1% triggered by female work force.
• Sinking economy around the globe has posed severe threat for Australia’s tourism industry.
• Reserve Bank of Australia has pledged to keep its benchmark cash rate at a record low 0.25% until there is
progress in achieving its employment and inflation goals.
• Experts view L-shaped recovery of Australian economy which means it is long road ahead.
https://thefinancialexpress.com.bd/economy/lucky-no-more-australias-golden-economy-faces-long-road-to-virus-recovery-
1593405019
4
Greek Economy to Fall by 5.8pc in 2020: BoG Country Specific News
• Bank of Greece (BoG) predicts that the country's economy will shrink by 5.8% to 9.4% depending on the
impact of COVID-19.
• The baseline scenario sees a 5.8% contraction this year followed by 5.6% in 2021 and a 3.7% expansion
in 2022.
• As per the "favorable" scenario predicted by BoG, GDP shrinking 4.4% in 2020, registering a 5.8%
recovery in 2021 and a 3.8% growth in the following year.
• As per the opposite predication by BoG, 9.4% decline of GDP in 2020, a 5.7% advance in 2021, and a
4.5% expansion in 2022.
• The European Commission has predicted a 9.7% contraction this year in Greece.

https://thefinancialexpress.com.bd/economy/global/greek-economy-to-fall-by-58pc-in-2020-bog-1593512545

UK Economy Shows Biggest Drop in 40 Years in Early 2020

, Britain on February 14, 2019 — Reuters/Files
• In Q1’2020, UK’s GDP dropped by 2.2% as households slashed their spending, due to coronavirus.
• To foster economic recovery, govt. promised to invest fast-track 5 billion pounds.
• Britain’s economy may have contracted by 20% in the first half of 2020.
• The household savings ratio shot up to 8.6% in Q1’2020 from 6.6% at the end of 2019.
• The balance of payments deficit grew to 21.1 billion pounds in Q1’2020, compared with a median
forecast of 15.4 billion pounds.

https://thefinancialexpress.com.bd/economy/uk-economy-shows-biggest-drop-in-40-years-in-early-2020-
1593503468

5
Bangladesh Economy
 Approved Budget for FY 20-21
Glimpse of Final Budget (in BDT)
VAT on non-AC hotels retained @ 7.5%
7.6 Trillion Plan to impose 5% source tax on
5.68 Trillion profits of investments in treasury
Budget Size Allowed from the consolidated bill, bonds scrapped
fund for meeting development
and other expenditures for
fiscal year 2021
8.2%
One-off 20%
31.7 Trillion 3.63 trillion deposit for revision
Cap on promotional expenses
Predicted
Operating & Other of VAT claims
Predicted Size of the growth rate of firms unchanged
Economy in FY 20-21 Expenditures of GDP in FY retained
20-21
Businesses can claim tax rebates on value
of inputs as in fiscal 2019-20
2.05 trillion 3.8 trillion
Allocated for ADP Collection target from NBR,
non-NBR and non-tax revenue Lock-in period on
5.2% investment of untaxed
money in stock market 15% SD on
100 billion 955.74 billion shortened to 1 year telecom services
The growth rate continues
For Combating COVID-19 Social Security Sector of outgoing fiscal
year
https://today.thefinancialexpress.com.bd/first-page/js-passes-budget-for-fy-20-21-
1593541253
7
 13pc People Lost Jobs Due to COVID-19 Pandemic: BIDS
General News • BIDS has conducted a survey titled "Coping with COVID-19 and Individual Responses: Findings from a Large Online
Survey" among 30,000 people covering all divisions and districts.
• Research findings unveiled the impact of COVID-19 on employment, income and expenditures of people,
especially those are from low-income groups.
• Key findings of the report were:
o About 13% people have become unemployed,
o SMEs’ revenue has dropped by 67% in 2020 compared to the previous year,
o 76% goods produced by the entrepreneurs remain unsold and the value of unsold goods is Tk 675,000 lac
each.
o 16.4 million new poor emerges in 2020 as the income of working class in urban and rural areas have fallen
sharply.
o The country's overall poverty to increase by 25.13%, where rural poverty to be 24.23% and urban poverty
to be 27.52%.
https://en.prothomalo.com/business/local/13pc-people-lost-jobs-due-to-covid-19-pandemic-bids

Private Sector Credit Growth Picks Up in May - On Paper

• After 24 months continuous decline of credit growth, in May, it edged up to 8.86% from 8.83% a month earlier as
economic activities started on a limited scale and both the central bank and the government began to release
funds from the stimulus packages for businesses.
• Banks started disbursing loans and opening and settling the letters of credit on a limited scale since May which
also pushed the credit growth.
• Credit growth will increase in the true sense once the country gets relief from the pandemic after the vaccine for
COVID-19 is invented.
• According to industry experts, May’s credit growth is triggered by interest capitalization in response to the central
bank order not to classify any types of loan until September but they showed concern about govt. decision to
borrow from banks as it will have negative impact on private sector growth.

https://www.thedailystar.net/business/news/private-sector-credit-growth-picks-may-paper-1921545 8
 Trade Deficit Widens Further
Export & Import
• Country's trade deficit rose by US$1.09 billion on year-on-year basis during 10 months of FY 2019-20 as export
earnings took a hit from COVID-19.
• In May, Bangladesh's export earnings dropped by 61.57% to US$1.46 billion from US$3.81 billion lead to increase in
deficit. At the same time, imports also fell by US$5.60 billion to US$46.24 billion during July to May of FY19-20 from
US$51.84 billion in the same period of FY18-19.
• Account deficit, however, fell by 15.13% to US$4.37 billion in the first eleven months of the current fiscal year from
US$5.15 billion in the same period of FY19.
• The country's overall balance stood at a surplus of US$1.63 billion during July to May of FY20.
• During July to May of FY20, net foreign direct investment dropped by 19.04 % to US$1.96 billion from US$2.42 billion
in the same period of FY19.

https://tbsnews.net/economy/trade/trade-deficit-widens-further-99289

EPB Moots $37b Export Target

• Export Promotion Bureau (EPB) proposed to set export target at US$37.44-billion for FY 2020-21 relying on RMG
sector (82%).
• It projected an additional US$7.6 billion in earnings from the export of services.
• The target is 13% higher than the US$33 billion expected to be earned this FY.
• In April and May, exports stood at only US$520.01 million and US$1.46 billion respectively.
• The overall export earnings during the July-May period fell by 17.99% to US$30.95 billion against US$37.75 billion in
the corresponding period of last fiscal.
• Bangladesh fetched US$34.13 billion from RMG export in FY‘18 marking 11.49% growth over that in FY-18.
• RMG sector lost US$4.8 billion worth of export just in three months from April to June 2020, due to COVID's impact.

https://today.thefinancialexpress.com.bd/first-page/epb-moots-37b-export-target-1593367203

9
 Remittance Inflow Sees 11% Growth in FY20
Remittance • Bangladesh received US$18.20 billion remittance in FY19-20 with handsome growth rate of 11% in spite of trauma caused by COVID-19
around the globe.
• US$1.83 billon single-month highest remittance was received in June.
• Strong remittance inflow significantly contributed to the foreign exchange reserve of the nation, taking it to a record US$36.14 billion.
• Pandemic could affect remittance in coming months as oil price shocks might cause volatility in our middle east driven remittance
inflows.
• Despite all economic indicators being in a downwards trend, remittance inflow has kept its strong pace backed by the 2% cash incentive
by the govt.

https://tbsnews.net/economy/remittance-inflow-sees-11-growth-fy20-101068

FDI

FDI Drops 14pc in 11 Months

• Foreign direct investment (FDI) in Bangladesh in the 11 months of the fiscal 2019-20 dropped by 14% year on
year to US$3.73 billion caused by the ongoing pandemic.
• FDI has remained between 31% and 33% of the GDP over a few years. Government investment has increased a
little, but private investment declined.
• FDI in Bangladesh jumped to record US$4.5 billion in 2018-19; thanks to Japan Tobacco's investment in Akij
Group.
• The amount started dropping afterwards and has not bounced back.

https://today.thefinancialexpress.com.bd/trade-market/fdi-drops-14pc-in-11-months-1593792099
10
Local Banking & Finance
Bank Asia Ushering in the Future of Banking this Year
• Within December, Bank Asia plans to set a fully digital bank where no branch will be required to provide
Bank Asia Corner
service as all services to be provided online.
• As a neo-bank, it will provide digital and mobile-first financial solutions payments and money transfers,
lending and different other banking services.
• The customers of the platform will settle all transactions through apps and online modules.
• The platform will accomplish all types of microcredit and small lending, deposit, fund transfer and card
payments.
• Such initiatives of Bank Asia will attract the tech-savvy youths and encourage cashless society to every
part of the country.
• Bank Asia will hold 51% shares of the company and the rest will be controlled by the foreign companies.

https://www.thedailystar.net/business/news/bank-asia-ushering-the-future-banking-year-1923333

Highest Ever Remittance Inflow in a Single Month by Foreign

Remittance Department!!
• Foreign Remittance Department has successfully drew inward remittance worth US$ 81.40 Million in
June 2020, the highest ever collected in a single month since the inception of the bank.
• This is indeed a result of combined effort of Bank Asia remittance partners, distribution channels,
processing team, and all others involved.
• Bank Asia have also crossed US$ 390 Million from January to June’ 2020, this is another new height
and year on year growth is 13%.
BA Internal
Opening of New Branch of Bank Asia Limited at Payra Bondor,
Pautakhali
• Bank Asia Limited has opened its 129th Branch "Payra Bandar Branch" at Multipurpose Bhaban, 1st Floor,
Payra Port, Kolapara, Pautakhali on 29th June, 2020.
BA Internal
12
 BRAC Bank Brings Visa Contactless Credit Cards for Safer
Competition News Payments
• BRAC Bank has announced launch of Visa contactless credit cards to expedite cashless payments.
• The contactless Visa credit cards come with NFC technology.
• Features of this card are:
o Faster, as the cardholder does not need to swipe or dip the card or enter the PIN;
o Safer, as the card remains in the cardholder's hands while making a transaction;
o Convenient, as the contactless cards are widely accepted across the world.

https://today.thefinancialexpress.com.bd/stock-corporate/brac-bank-brings-visa-contactless-credit-cards-for-safer-
payments-1593627181

EBL Signs MoU with Tradewind

• EBL has signed an MoU with Germany-based trade finance provider Tradewind GmbH.
• Under this joint venture, EBL will collaborate with Tradewind for export factoring by offering secure and
innovative trade finance solutions to Bangladeshi manufacturers and traders involved in foreign trade on
sales contract terms.
• EBL presently is providing trade finance solutions at home and abroad from EBL Finance (HK) Ltd and having
its representative offices in Myanmar and Guangzhou in China.
• Tradewind has over 20 offices across 13 countries in 4 continents.

https://today.thefinancialexpress.com.bd/stock-corporate/ebl-signs-mou-with-tradewind-1593626874

13
2020 Has Been Very Kind to IBBL
• Bank’s deposit crossed Tk 1 trillion mark on June 30. Competition News
• During this turmoil of COVID-19, the bank received new deposits worth Tk 5,500 crore.
• Three of the main reasons behind the bank's success in securing deposits are:
• Considerable inflow of remittance;
• Uninterrupted customer service and expanding agent banking network;
• Significantly widened reach.
• Foreign remittance collection is their another highlights.
• In May, the total value of remittance received by IBBL was US$461 million which is the highest ever in
IBBL’s history. In June, remittance collection jumped by 116% year-on-year to US$575 million.
• IBBL market share in remittance collection is 32% while it was 19%-22% before April.

https://www.thedailystar.net/business/news/2020-has-been-very-kind-islami-bank-1923825

Prime Bank, ISPAB Alliance on Financing Solutions to ISP

Companies
• Prime Bank Limited and Internet Service Providers Association of Bangladesh (ISPAB) signed a
contract to facilitate financing for entrepreneurs in internet service.
• Loan limit to be provided up to Tk. 5 million in the form of working capital, term loans for fixed
asset purchase and capital expenditures, international trade solution - LC, LTR, IDBP etc., bank
guarantee and work Order. Moreover, the loan to be collateral free.
• Two-year business experience and introduction letter from ISPAB are two (2) most important
criteria to get loan.
• ISPAB members will also avail a wide range of deposit products and free Internet Banking for
conducting broad range of e-transaction.

https://today.thefinancialexpress.com.bd/stock-corporate/prime-bank-ispab-alliance-on-financing-solutions-to-
isp-companies-1594073770

14
Regulator’s Guidelines BB Eases FC Rules to Lure More FDI
• BB has relaxed relevant rules to attract more foreign direct investment (FDI).
• Foreign investors will be able to receive their dividend income in foreign currency (FC) accounts in
Bangladesh.
• Purchase of shares with funds available with the FC accounts will be treated as foreign investment.
• Funds from declared dividends will be treated as inward remittance for reinvestment in Bangladesh.
• The net inflow of FDI to Bangladesh dropped by more than 19% to US$1.96 billion in July-May period of
last FY, 2019-20, from US$2.43 billion in the same period of FY 19.

https://today.thefinancialexpress.com.bd/first-page/bb-eases-fc-rules-to-lure-more-edi-1594144618

Banks Asked to Lend Stimulus Loans in Three Years

• BB asked scheduled banks to lend stimulus loan to affected businesses in three years, instead of one
year with an aim to ensure that low-cost loan facilities lent to more affected businesses.
• The loans or investment must be within 30% of the existing working capital loans of borrowers as of
December 31, 2019.
• Besides, banks are given authority to set loan limits for the new borrowers.

https://www.dhakatribune.com/business/banks/2020/06/25/banks-asked-to-lend-stimulus-loans-in-three-years

15
 Regulator’s Guidelines
BB Introduces Payment Guarantee for Exporters
• Bangladesh Bank introduced international factoring, a development that can be viewed as a mode
of accelerating the country's exports and reduce exporters' risk of collecting their products' worth.
• This new method is a form of payment guarantee for exporters.
• The country's exporters currently have to undertake sales contracts without payment guarantees
from foreign importers. As a result, exporters face the risk of payment defaults by importers.
• From now on, exports will be executed against payment undertaking or payment risk coverage by
international factoring companies or foreign banks for settlement of export bills.
• The costs by exporters against payment undertaking or payment risk coverage and interest with
relevant charges for early payment shall not exceed a 6-month LIBOR plus 3.50% annually.

https://www.thedailystar.net/business/news/bb-introduces-payment-guarantee-exporters-1923837

Bangladesh Bank Asks Banks to Disburse All Stimulus Funds by

August
• Government announced stimulus packages over Tk 1 lac crore to tackle the economic impact of
COVID-19.
• Banks have been asked to complete the disbursement process of Tk 30,000 crore for industries and
service sectors, and Tk 20,000 crore for CMSME sector between July and August this year.
• BB also issued a letter to the Chief Executives of all banks regarding the instructions.
• Banks are disbursing the stimulus funds in time as per central bank instructions.
https://www.dhakatribune.com/business/banks/2020/07/03/bb-asks-banks-to-disburse-all-stimulus-funds-by-august

16
 Withdraw SoE Deposits from Banks Unwilling to Disburse Stimulus
General News • To pressurize banks implementing stimulus packages, FBCCI requested government to withdraw deposits of
state-owned enterprises from banks those who are unwilling to implement stimulus packages.
• As per the association, banks are showing unwillingness to implement the stimulus announced for SMEs.
• The association claimed that by implementing the stimulus package, 84% of the country’s informal economy can
be brought under the formal sector.
• According to the trade body they will not back any willful defaulters in receiving loans from the fiscal stimulus.
• They also urged the government to implement the VAT online project as it will lower tariff, widen the collection
net and eliminate corruption to a greater extent.
• They also urged for abolishing advance tax gradually over a period of three years, reduction of customer tariff
etc.

https://www.newagebd.net/article/109598/withdraw-soe-deposits-from-banks-unwilling-to-disburse-stimulus

Six PFIs to Finance Meghna Industrial Economic Zone (MIEZL)

• 6 private financial institutions (PFIs) got approval from BB to finance MIEZL in Narayanganj.
• A total of BDT 2.82 billion under investment has been extended to a syndication of six PFIs.
• Six PFIs are Bank Asia, Industrial & Infrastructure Development Finance Company, Infrastructure
Development Company, Midland Bank, Trust Bank and UCBL.
• MIEZL is the first BEZA-approved private economic zone that got long-term loan from IPFF-II project.

https://today.thefinancialexpress.com.bd/last-page/six-pfis-to-finance-meghna-industrial-economic-zone-1593452452

17
 Banking Industry is in Crisis Due to Outbreak of COVID-19
• As per the financial stability report published by BB, economic activities down turn due to Coronavirus has General News
negatively impacted banking industry.
• Loan collection has become slow as client’s financial capabilities have declined which would impact the bottom line
of the banks.
• As per the report, 10 banks account 63.3% of total bad loan.
• Besides, decline of oil price will impact the economies of middle east countries and it would have negative impact
on our remittance inflow in future.
• To role the economy and banking industry out of this trauma, BB has arranged for refinance schemes, focusing on
giving new loans and offering interest subsidies.

https://www.jugantor.com/todayspaper/secondedition/321152/%E0%A6%95%E0%A6%B0%E0%A7%8B%E0%A6%A8%E0%A6%BE%
E0%A6%B0-%E0%A6%AA%E0%A7%8D%E0%A6%B0%E0%A6%AD%E0%A6%BE%E0%A6%AC%E0%A7%87-
%E0%A6%B8%E0%A6%82%E0%A6%95%E0%A6%9F%E0%A7%87%E0%A6%AC%E0%A7%8D%E0%A6%AF%E0%A6%BE%E0%A6%82
%E0%A6%95%E0%A6%BF%E0%A6%82-%E0%A6%96%E0%A6%BE%E0%A6%A4

Year wise Loan Rescheduling in Bil. % of different sectors in Loan Rescheduling

BDT
520 Others 11.4
Agriculture 5.6
Infrastucture 5.8
Working capital 6.9
230
190 190 Commercial loan 10
150
Foreign trade 11.7
Apparel 18.5

2019 2018 2017 2016 2015 Service 30.1

18
 Interest Rate Spread Drops in April
General News • Implementation of single digit interest rate has dropped interest spread in April by 1.15% on month on month
(MoM) basis.
• On February, March and April interest rate spread was 4.09%, 4.07% and 2.92% respectively.
• Weighted average (WA) deposit interest rate of March and April was 5.51% and 5.37% respectively, at the
same WA lending rate were 9.58% and 8.29% respectively.
• Such decline in spread will impact the bottom-line of the banks. Besides, economic suspension due to
lockdown and higher amount of default loan will increase misery further.
https://thefinancialexpress.com.bd/trade/interest-rate-spread-drops-in-april-1593575828

MRA also Extends Loan Default Facility Until September

• Microcredit Regulatory Authority (MRA) asked MFIs to refrain from classifying any loans adversely until
September 30 effective from January 01, this year.
• Bangladesh Bank extended the loan default facility for bank defaulters until the same period.
• On March 22, The MRA suspended loan classification till June 30, this year.
• 758 registered MFIs were in operation in the country, as of December, 2019.

https://www.dhakatribune.com/business/regulations/2020/06/25/mra-also-extends-loan-default-facility-until-september

19
 VAT Returns Not Mandatory for Loans: NBR
• VAT intelligence unit of the NBR withdrew its decision of making submission of VAT returns mandatory for getting
General News
loans from commercial banks.
• Earlier on June 18, the central bank instructed commercial banks to cross-check financial reports with VAT returns
before approving loan application.
• Bank officials concerned would be considered responsible if they do not bring the inconsistency between the VAT
returns and financial reports to the notice of VAT intelligence.
• Now, it cancelled the move to keep economic activities smooth and activate amid the coronavirus outbreak and
resolve hassle of the taxpayers.

https://www.newagebd.net/article/109895/vat-returns-not-mandatory-for-loans-nbr

When Banks Need Cash Most They Give Cash Dividend to Avoid Tax
• Most of the banks have declared cash dividends for last year to avoid additional taxes on stock dividends imposed
in the FY20 budget.
• Although the government had imposed the additional taxes on stock dividends for the sake of capital market
investors.
• In order to prepare for challenges arising from the coronavirus outbreak, banks were supposed to declare more
stock dividends to strengthen their capital bases, but the new law has forced them to declare more cash dividends
instead.
• As of last week, 26 listed banks declared dividends, of them, 22 declared cash dividends for last year.
• However, in the previous year, only 12 banks had announced cash dividends.
• Out of the 26, dividend declarations of 52% banks remained unchanged, declined for 24%, and increased for 16% of
the banks.
• Banks need to declare more stock dividends to improve their capital bases, but the government has put a penalty
on it to increase revenues through the additional tax.

https://tbsnews.net/economy/banking/when-banks-need-cash-most-they-give-cash-dividend-avoid-tax-100699

20
 Attempts to Reduce Spending in the Banking Sector in Alternative Ways
General News • To uphold the motivation of bankers, most banks have decided not to reduce salary rather focusing on reducing
expenditure to boost the bottom-line.
• Most of the bank entrepreneurs are willing to accept marginally lower profit compared to the previous year.
• Different operating cost will be under control including the rent of premises, utility & stationary and various
conferences of the banks.

https://www.dailynayadiganta.com/economics/512189/%E0%A6%AC%E0%A6%BF%E0%A6%95%E0%A6%B2%E0%A7%8D%E0%A6%
AA-%E0%A6%89%E0%A6%AA%E0%A6%BE%E0%A7%9F%E0%A7%87-
%E0%A6%AC%E0%A7%8D%E0%A6%AF%E0%A6%BE%E0%A6%82%E0%A6%95-%E0%A6%96%E0%A6%BE%E0%A6%A4%E0%A7%87-
%E0%A6%AC%E0%A7%8D%E0%A6%AF%E0%A7%9F-%E0%A6%95%E0%A6%AE%E0%A6%BE%E0%A6%A8%E0%A7%8B%E0%A6%B0-
%E0%A6%9A%E0%A7%87%E0%A6%B7%E0%A7%8D%E0%A6%9F%E0%A6%BE

Banks in Bangladesh Have the Lowest Capital Base in South Asia

• Capital base of Bangladesh's banking sector is much weaker than the peer countries. Bangladesh, Pakistan, Sri
Lanka and India’s capital adequacy ratio (CAR) are 11.6%, 17%, 16.5% and 15.1% respectively
• The high volume of defaulted loans is the main reason behind the lower CAR in Bangladesh. Last year, a record Tk
52,770 crore was rescheduled. Of them, Tk 13,284 crore has turned sour again. Defaulted loans stood at Tk
94,313 crore at the end of 2019, up 0.42% year-on-year basis.
• BB took initiatives to implement the Basel-III guidelines by 2019 as part of its effort to bolster the banks' capital
base.
• Amid 58 banks, 43 met the standard by the deadline. As of December, the CAR of foreign banks was 24.45%
where as private bank and state bank’s are 13.62% and 4.99% respectively.
• The CAR would have been 15-16% if the state banks could maintain the requirement.

https://www.thedailystar.net/business/news/banks-bangladesh-have-the-lowest-capital-base-south-asia-1925365

21
Tk 1,021 cr in Suspicious Transactions Reported to BFIU in FY19
• Reporting agencies lodged 5,036 suspicious transactions involving Tk 1,021 crore in FY19. General News
• BFIU received 3,573 suspicious STRs and SARs from reporting agencies in the 12-month period from banks, NBFI,
remittance agencies and other resources.
• Suspicious transaction and activity in Bangladesh fell by 7.9% year-on-year in 2018-19.
• Apart from the STRs and SARs, the BFIU received 561 requests from other resources in FY2018-19, up from 490 in
previous years.

https://www.thedailystar.net/business/news/tk-1021cr-suspicious-transactions-reported-bfiu-fy19-1925797

Govt to Set Up Company to Salvage Soured Loans

• Government had initially planned to set up a company to deal with the mounting default loans in the financial
sector. Defaulted loans stood at Tk 94,313 crore as of Dec’19.
• Financial Institutions Division has prepared a draft of the Bangladesh Asset Management Corporation Act 2020
(BAMCO) to this effect.
• Authorized capital would be Tk 5,000 crore and the paid-up capital would be Tk 3,000 crore.
• A 15-member board led by a Chairman would run the company.
• The corporation would set up a trading platform to buy and sell default loans and create a competitive market to
trade distressed assets.
• It would be able to raise funds from the capital market by issuing bonds.
• The status of the BAMCO chairman would be equal to a deputy governor of the central bank.
• The incomes or profits of the corporation would enjoy the tax holiday initially for 10 years.
https://www.thedailystar.net/business/news/govt-set-company-salvage-soured-loans-1925845

22
 Agent Banking Posts Marked Growth in All Dimensions
General News • In the first quarter of 2020, two banks got licenses to operate agent banking. Now 26 banks are providing agent
banking service.
• The y-o-y growth, from Mar’19 to Mar’20, in terms of the number of agents, outlets, and accounts was 69.75%,
51.51% and 123.54% respectively.
• Moreover, the amount of deposit, loans disbursed, and inward remittances grew by 128.55%, 220.33% and
171.98% respectively in the same period.
• At the end of the first quarter of 2020, the number of accounts opened through agent banking was 6.497 million.
Deposit and loan disbursement stood at Tk. 8,535 crore and Tk. 674 crore respectively
• Around 86% of the account holders are from rural areas.
• Bank Asia has the highest number of A/C followed by DBBL. Bank Asia and DBBL’s market share of A/C are 38% and
36% respectively. Bank Asia’s performance peaked during Q1’2020. In this period, it has opened 0.5 million plus
A/Cs.
https://tbsnews.net/economy/banking/agent-banking-posts-marked-growth-all-dimensions-102640

BB Injects Tk 7,386 cr into Banking System against Dollars in 4 Months

• BB has injected around Tk 7,386 crore in the country’s banking system during the coronavirus pandemic by
purchasing dollars from the banks.
• To keep dollar rate stable BB has purposively done it.
• Central bank injected US$835 million into the banking sector mostly before the pandemic began in the country in
March.
• BB pulled Tk 4,151.61 crore from the banking sector before the outbreak of coronavirus and another Tk 2,937.54
crore during the outbreak.
• From March to June, the central bank’s net local currency injection into the banking sector stood at Tk 4,448.76
crore given the BB’s injection of Tk 7,386 crore during March-June period of FY20.
• Interbank exchange rate of the dollar was Tk 84.95 in March but it dropped to Tk 84.8 on June 23. On July 2, the
exchange rate increased a bit to Tk 84.9.

https://www.newagebd.net/article/110630/bb-injects-tk-7386cr-into-banking-system-against-dollars-in-4-months

23
For NBFIs, 2019 was a Terrible Year & 2020 is Poised to be Even NBFI
Worse NBFI’s Default Loan Trend (In Crore
BDT)
• As of Q4’19, the NBFI industry's default loans stood at Tk 6,399 crore (NPL 9.53%) and total outstanding 8,000 7,490
was 67,177 crore.
7,500 7,221 7,320
• NBFIs failed to repay the depositors money and default loans and net losses were spiraling out of control. 6,838
• Key reasons for such high default loans are the following: 7,000
6,399
o BB’s decision to lower AD ratios of the banks to reduce lending to NBFIs. As a result, good number 6,500 5,920
of NBFI clients, who were not extended fresh credit for want of funds and subsequently became
6,000 5,560
defaulters
o Some of the NBFIs violated banking norms while disbursing loans 5,500
• According to the experts, defaulted loans will not increase too much until September this year as the 5,000 5,460
central bank has asked NBFIs not to classify any loans during the period but situation will be worsen after 4,520
4,500
that due to suspension of economic activities caused by Covid-19.
4,000
https://www.thedailystar.net/business/news/nbfis-2019-was-terrible-year-and-2020-poised-be-even-worse-1922033 Q4'17Q1'18Q2'18Q3'18Q4'18Q1'19Q2'19Q3'19Q4'19

BB Provides NBFIs’ Tk 2,000 cr Pre-finance Scheme Under Stimulus Fund

• BB has agreed to provide Tk 2,000 crore for NBFI sector as a pre-finance scheme under the existing two stimulus packages (e.g., Tk 30,000
crore fund for large industries and service sectors and the Tk 20,000 crore funds for small and medium enterprises) with an aim to improve
liquidity situation.
• From the fund, NBFIs can lend businesses with 100% liquidity for the lending.
• NBFIs also asked central bank's help to instruct banks not to withdraw deposit from the NBFIs until December this year.
• It is to be noted that, BB has recently reduced the cash reserve ratio (CRR) by 100 basis points to 1.5% for NBFIs with an aim to ease liquidity
pressure during the COVID-19 pandemic. Due to this measure, NBFIs are now able to use more than Tk 3.0-billion loanable fund.

https://tbsnews.net/economy/banking/bb-provides-nbfis-tk2000cr-pre-finance-scheme-under-stimulus-fund-100210

24
 Conditions Relaxed for Black Money Holders Stock Market
• Government has relaxed the rules for investing untaxed money in the stock markets with a revision
of lock-in period to one year from the proposed three years.
• This decision has been taken to boost the stock market.
• Tax on individuals' income from zero coupon bonds has been withdrawn in order to make the bond
market vibrant.
• However, banks, insurances and financial institutions will have to pay taxes on zero coupon bond.
• The submission of a declaration statement to the tax authority before the disclosure of undisclosed
investment, deposit or cash will be required.

https://today.thefinancialexpress.com.bd/first-page/conditions-relaxed-for-black-money-holders-1593451767

Banks Ready to Invest Tk 1,650 cr in Stocks Once Floor Price

is Lifted
• 14 banks have together formed a Tk 1,650 crore fund to invest in the stock market but they are now
waiting for the lifting of the floor price.
• BSEC sets the floor price for all stocks based on the average price of the past five days on March 19
• The aim was to stop the market slump amid the coronavirus pandemic.
• The banks are Sonali, Janata, Agrani, Rupali, NCC, Shahjalal, One, United Commercial, Mercantile,
Pubali, City, Exim and two other scheduled banks.
• When a potential company's price to earnings ratio falls under 10, then it is considered as a safe
investment.

https://www.thedailystar.net/business/news/banks-ready-invest-tk-1650cr-stocks-once-floor-price-lifted-1922757

25
Local Industries/Sectors
PPE Exports Give Lifeline to Apparel Manufacturers Apparel
• COVID-19 has adversely impacted the RMG sector as orders kept on cancelling, buyers are looking for hefty
discount and there is almost no new orders. In this moment of disarray, personal protective equipment (PPE)
seems to be a sunshine for the apparel industry of Bangladesh.
• According to Export Promotion Bureau (EPB), PPEs, including masks, gloves, and gowns, have fetched US$11.58
million earnings between July 2019 and May 2020 with the help of 33 manufacturers.
• Beximco is the largest exporter of the said item so far as it exported 6.5 million medical gowns to US brand Hanes.
• According to the experts, Bangladesh is well positioned to become a new hub for PPE manufacturing and from
September Bangladesh will export more PPEs, including masks, gloves, and gowns to European buyers.

https://www.dhakatribune.com/business/2020/06/27/ppe-exports-provide-new-opportunity-for-bangladesh

Apparel Owners Want More Incentives

• Apparel owners have called upon the government to create another fund to pay workers’ wages for three more
months and also urged the government to increase cash incentives against apparel exports by more than double
the present amount.
• RMG exporters demand increasing rate of cash assistance to 10% from current 4% for 2 years.
• BGMEA and BKMEA have sought disbursement of 80% of cash incentives before audit.
• BGMEA and BKMEA have demanded workers' wages for next 3 months at 2% service charge from the government.
• Govt may curtail existing facilities on RMG exports to arrange fund for paying wages to workers.

https://tbsnews.net/economy/rmg/apparel-owners-want-more-incentives-98527

27
Apparel Pandemic Downs Garment Shipments to a Decade-Low
• RMG’s earning declined by 18.45% on year-on-year basis to US$27.83 billion in FY 19-20.
• This is US$6.3 billion less than that of fiscal 2018-19 and falls US$10.37 billion short of the target set for FY 19-20.
• Bangladesh exported US$34.13 billion-worth apparel in fiscal 2018-19 which was 11.49% higher than the
preceding year.
• June's earnings were 11.43% lower than a year earlier but up 72.4% from the previous month.
• The compound annual growth rate of apparel exports during the past five years was 6.86%. The rate is even
higher for the past 10 years at 10.70%.
• The receipts from apparel were lower mainly because of two reasons fuelled by the pandemic coronavirus.
• Primarily, thousands of retail stores were shut in the Western world and secondly, factories were shut in
Bangladesh.
https://www.thedailystar.net/business/news/pandemic-downs-garment-shipments-decade-low-1924421

There will be Rebound of Apparel Shipment to US

• Bangladesh's garment exporters expect a slow rebound of shipment to the US market.
• Garment export to the US plunged 12.50% year-on-year to US$2.32 billion in the January-May period of this year
due to the pandemic.
• Retail stores in the US have started opening up gradually, but the market will take a lot of time for normalcy to
return.
• New orders from the existing customers have dropped by almost 60%.
• The US market will rebound strongly in 2021 as American buyers and importers are looking for an alternative to
China because of the political conflict between the two economic powerhouses.

https://www.thedailystar.net/business/news/there-will-be-rebound-apparel-shipment-us-it-will-be-slow-and-steady-1925841

28
 Slow Loan Disbursement, too Many Conditions Frustrate SMEs SME
• Slow disbursement of government stimulus and too many borrowing conditions are frustrating SMEs.
• 41% small and medium enterprises were closed during the pandemic shutdown.
• SME sector has already lost nearly Tk 92,000 crores in the pandemic crisis.
• Around 70% SMEs are positive to avail stimulus packages announced by the government.
• Tk 200 crore low-cost loans have been distributed among entrepreneurs until mid-June.
• As per BB, lending in this segment will speed up from July’2020 as proposals are underway for BB’s approval.

https://tbsnews.net/economy/rmg/apparel-owners-want-more-incentives-98527

SME Foundation to Expand Its Online Programme to Help SME

Entrepreneurs
• SME Foundation is planning to expand its online programme to help SME entrepreneurs during the COVID-
19 pandemic.
• 10,498 entrepreneurs (55% of them were female) have benefited from the various activities of SME
Foundation related to product marketing, skill development and market expansion of products made at
home and abroad in the FY 18-19.
• Around 308 SME entrepreneurs, who participated in the 8th National SME Products Fair in 2019, sold
products worth Tk 5.7 crore and received orders worth Tk 9.6 crore.
• Besides, in the 2018-19 financial year, a total of 1,072 SME companies sold products worth Tk 9.16 crore
and received orders worth Tk 6.44 crore.

https://tbsnews.net/economy/sme-foundation-expand-its-online-programme-help-sme-entrepreneurs-98872

29
 Japan, The Land of Rising Promise for Bangladesh’s ICT Sector
ICT
• Bangladesh's annual exports of ICT products to Japan worth Tk 100 crore and experts predict that the
country can generate the lion's share of the government's 2023 export target of US$5 billion.
• Within the next three to five years, Bangladesh might become the main driver of Japan's ICT market if
the local companies can grab the opportunities.
• Data Soft Systems was one of the first local companies to focus on Japan.
• Japanese government has already decided to move its companies from China to other destinations
and for that, they have declared a stimulus package of US$2.43 billion.
• This prompted 24 companies to move to Vietnam, 11 to Hong Kong, 3 to India and only 2 to
Bangladesh.
• To grab these opportunities, the BASIS, opened a special "BASIS Japan Desk".

https://www.thedailystar.net/business/news/japan-the-land-rising-promise-bangladeshs-ict-sector-1922789

Bangladesh’s ICT Players’ Expedition to Japan

50 Tk. 100 Crore

Bangladeshi Companies doing Bangladesh's annual exports of information and
business with different communications technology (ICT) products to
Japanese ICT companies Japan

4.25 lac 20,000

By 2025, Japan’s
It engineer's churn from
scarcity of IT engineer
Bangladesh every year

30
 Ceramic Industry in a Fix Due to Fiscal Measures Ceramic
• Govt. decisions to reduce the tariff rates on imported ceramic tiles and 10% supplementary duty on locally
made sanitary ware have put the local ceramic manufacturers in a fix.
• As per the experts, such decision will hinder the growth of industry and create uneven competition.
• Export earnings from the sector declined by 60.57% in the July-May period of the outgoing (2019-20)
fiscal year mainly due to COVID-19.

https://thefinancialexpress.com.bd/trade/ceramic-industry-in-a-fix-due-to-fiscal-measures-1593323219

Industry Highlights

Tk. 90 Billion 61 205 Million

Investment Size Local ceramic manufacturers square meters of tile are
produced by local
manufacturers

80%
14.35 Million
32.8%
pieces of sanitary ware are
produced by local
manufacturers
local demand for Growth in FY 18-19
ceramics products are compared to previous FY
257 million
met by local producers
pieces of tableware are
produced by local
manufacturers

31
 BDDF Seeks Tk 50b for Fisheries, Livestock
Dairy and Livestock • Bangladesh Dairy Development Forum (BDDF) has demanded Tk 50-billion allocation for fisheries and livestock from the
proposed Tk 31.93 billion.
• Dairy farmers and processors suffered nearly Tk 4,000 crore in losses, as they could not market milk in the last three
months due to countrywide lockdown for coronavirus.
• It wanted collateral-free loans for marginal cattle farmers, subsidy for fodder and farm machinery, and tax exemptions
on local dairy products to offset the COVID-19 shock on the sector.
• They demand for at least 25% duty on all types of imported dairy products in the next fiscal to save the local industry.

https://today.thefinancialexpress.com.bd/trade-market/bddf-seeks-tk-50b-for-fisheries-livestock-1593099885

Industry Highlights

15.20 Mil. 9.9 mil

Demand for dairy products in Tonnes are locally produced
tonnes

63% 37%

Demands are met by local Demands are met through

production import

32
 Real Estate Sector Braces for Turnaround
• Due to outbreak of COVID-19, real state sector is facing a great bump. Realtors and client relationship are getting worse Real Estate
as many of the clients are unable to pay installments, while the house builders cannot hand over flats within the
stipulated time.
• Besides, the lockdown has created unemployment of a huge number of people including linkage industries like steel rod,
cement, ceramic ware and bricks etc. and created uncertainty over massive investments.
• To overcome this odd, REHAB had formally requested the government for getting fund from the stimulus package.
• Before the COVID-19, the sector’s performance looked promising. Loan and advance was recorded at Tk 800 billion in FY
2019 which was almost half in FY 2013-14.
• From 2012, the industry’s performance starting to get better for the following reasons:
• Low-cost loan facility for the government employees;
• Healthy national economic growth;
• Reduction of registration fee to 11% from 14-16% of the property's price;
• BB’s policy to raise the home loan ceiling to Tk 20 million from Tk 10 million and also allowing banks to provide
loans up to 70% of the property price.
• It is to be noted that, real estate and housing sector accounts for 7.8% or Tk 1.415 trillion of the country's GDP
https://thefinancialexpress.com.bd/views/real-estate-sector-braces-for-turnaround-1593274144

Industry Highlights

Tk. 800 Billion Tk. 408 Billion

Loans as of FY 19-20 Loans as on FY 13-14

9.0% 7.8%

Growth rate in FY 19 Contribution to GDP

33
Restaurant Restaurant Owners Seek Tk. 10,000 cr. Support
• Like other service industries, restaurant business also took a severe blow due to outbreak of Coronavirus.
• All the restaurants closed their business after March 22 amid the outbreak.
• Only 1% restaurants reopened after the COVID-19 shutdown with a limited business hour from 10:00 am to
4:00 pm as per the restaurant association.
• Sales have been severely slumped due to the following reasons:
o Shortened business hours
o Less demand
o Focusing on only takeaway service
o Reducing capacity to accommodate in the restaurant due to social distancing
• Restaurant owners demanded that the government should ensure emergency cash assistance for hotel-
restaurant workers before Eid-Ul-Azha. They also sought low-cost bank loans and an opportunity to pay the
utility bills of the current year to next year.
• They have also urged government to allocate Tk 10,000 cr of FY 20-21 budget to this industry and extend
business hour from 6:00 am to 12:00 am.
https://tbsnews.net/economy/industry/restaurant-sector-seeks-govt-support-stay-afloat-99199

Industry Highlights

60,000 8,000
Total number of restaurants No. of restaurants in Dhaka

1.2 Million
Employment in the industry

34
 Cable Manufacturers’ Turnover to Crash 50pc This Year
• Cable manufacturers are fearing a 50% year-on-year slash in revenue this year due to the coronavirus outbreak.
Cable Manufacturer
• The industry lost Tk 23 crore in revenue every day during the countrywide closure for coronavirus.
• There is no possibility of getting back the pre-coronavirus environment soon for the sector.
• In 2019, about Tk 7,000 crore worth of cables were sold, up from Tk 2,000 crore 11 years earlier.
• The sector has been growing at about 15% - 20% on an average.
• There are 120 cable manufacturers in the market where Eastern holds 15% share, BBS 13%, Paradise, Partex and
Bizli 6.5% each, SQ 5.3% and the others the rest.
• The cable manufacturers are dependent on raw materials imported from Chile, China, India, Oman, Malaysia,
South Korea and Singapore.
https://www.thedailystar.net/business/news/cable-manufacturers-turnover-crash-50pc-year-1923797

Industry Highlights (in BDT)

200 Bil. 7 Bil.

Total Investment Market Size

120 25,000
Total no. of players No of employment

230 Mil.
Per day sales 15.0%

Annual Growth
35
 BD Plans to Revive Jute Sector under PPP
Jute
• Government is planning to focus on public private partnership (PPP) to modernize the mills.
• This decision came after announcing the decision to shut production at all state-owned jute mills which incurred losses for years
• Government is now promising to reopen the jute mills in six months time.
• 26 government owned jute mills incurred a cumulative loss of Tk 106.74 billion over the last 48 years and govt. had to provide subsidy of
the same amount to keep these mills ruining.
• Past experiences of PPP in this sector is also not very promising, with many having closed down due to heavy financial losses.
• As per the experts, government can modernize the state-owned jute mills without bringing them under the purview of PPP.

https://today.thefinancialexpress.com.bd/trade-market/bd-plans-to-revive-jute-sector-under-ppp-1593973971

Beximco, Indian Oil team up to grab a slice of fast-growing LPG pie LPG
• Beximco and Indian Oil has formed a joint venture with the following objectives:
• Drawing strength from the core competencies of Indian Oil and the local expertise of Beximco
• Setting up a large LPG terminal at a deep-water port in Bangladesh to reduce in the cost of imports
• Ensuring affordable price for the local users
• To diversify into other downstream oil and gas businesses like lube blending plants, liquefied natural gas, petrochemicals,
LPG export to northeast India
• The LPG market in Bangladesh has seen a five-fold growth in the past five years and it is expected to grow at a compound annual
growth rate of 12-13%.
• There are about 20 importers and bottlers of LPG in Bangladesh and their combined production capacity is nearly 20 lac tons
against a demand of only 9 lac tones. As their capacity is hugely underutilized, exports to India will help them become
commercially viable.

https://www.thedailystar.net/business/news/beximco-indian-oil-team-grab-slice-fast-growing-lpg-pie-1923337

36
 With Few Flyers, Airlines Continue to Lose Money
Airline & Hotel

TK 1,000 crore
Biman borrowed from the TK 30,000 crore stimulus package

83%
people would not travel if Countries with mandatory quarantine
quarantined see 90% decrease in arrivals
COVID-19 Brings Hotel, Resort Business to a Standstill
• With rapid economic growth – 6.5% on average – for the past one decade, hundreds of
hotels and resorts were built in different parts of the country.
• Entrepreneurs built the hotels and resorts with 60% - 70% bank borrowing and the
remaining part was their equity.
Biman loses TK 400 crore • Owners are on a double-edged sword – they do not have business but the interest on
in revenues till March, but it US-Bangla Airlines lost their bank loans is accumulating for non-payment.
• Dhaka Regency Hotel and Resort has Tk 90 crore bank loan and pay a monthly installment
almost quadrupled to Tk TK 400 crore till of around Tk 1.5 crore. Its monthly revenue was nearly Tk 8 crore, but it has now come
June
1,527 crore in May down to only Tk 15 lac.
• Hotel Inter-Continental has a loan of around Tk 767.79 crore till March 31.
• Unique Hotel and Resorts Limited has a bank loan of Tk 311 crore.
https://tbsnews.net/economy/aviation/few-flyers-airlines-continue-lose-money-101155 • The country has 17 five star hotels while a minimum of 12 hotels are in the pipeline to
open within a few years. There are also four 4 star and 17 three-star hotels.
• All the hotels had to send at least 50% of their staff on leave.
• Total loss of the hotels would be around Tk 4,000 crore till July this year.

37 https://tbsnews.net/economy/covid-brings-hotel-resort-business-standstill-101317
 Bicycle Industry Shining
Bi-Cycle & Electronics Business
• In the first 11 months in FY 2019-20, bicycle export earned US$73.22 million. It was US$70.59 million in the same period of FY
2018-19.
• Bangladesh is currently exporting more than 0.8 million units of bicycles annually.
• The industry might have seen at least 6.0% growth in the just-ended fiscal.
• The global bicycle market is expected to expand by 37.5% within 2016-24 and the market size would reach US$62 billion by
2024.
• Bangladesh is now the third-largest non-European Union (EU) exporter of bicycle after Taiwan and Cambodia.
• RFL has received export orders for more than 130,000 units in the past five months.
• In FY’18, the bicycle export industry earned US$85 million with 3.97% growth compared to the previous fiscal's.
• The domestic market of bicycles is estimated at Tk 12 billion a year and its demand has been rising constantly. Yet, this market is
dominated by imports from China and India.
https://today.thefinancialexpress.com.bd/first-page/bicycle-industry-shining-1593798051

Electronics Business Feels Pandemic Pinch Despite Huge Washing

Machine Sales
• Except washing machines, trimmers, shavers and other electric appliances, business plummeted severely due to
COVID-19.
• Washing machine sales is triggered by absence of maid.
• Trimmers and shavers sales are boosted as people are frightened to go to barbers.
• Summer and Eid festival are the peak season for selling refrigerators, air conditioners, microwaves, and televisions
but, this year the scenario has completely changed.
• As per the industry experts, sales reduction are caused by lower purchasing power of the consumers due to
income reduction and unemployment; and electronic products are not deemed to be ‘must have products’.
• Online sales of products have gradually been increasing as customers are now more interested in online platform
amid the pandemic.
https://www.newagebd.net/article/110144/electronics-business-feels-pandemic-pinch-despite-huge-washing-machine-sales

38
 Leather Goods & Tanning
Leather Goods, Footwear Producers Downhearted by Decline in Sales
• The export of various leather products fetched about US$998 million in fiscal 2019-20 registering a 22% decline compared to
previous FY triggered by COVID-19.
• Among total exports, leather footwear earned US$779 million while other leather goods accounted for US$221 million and
rawhide sales registered US$98.31 million.
• Government has set a target to earn US$5 billion in 2021 through the export of leather goods which seems to be over
ambitious considering recessions around the world.
• The sector enjoys a 15% cash incentive on shipments.
• Total footwear & leather factories is 165, amid, 60 local firms that export various leather goods to mainly Japan, the EU and
to some extent, the US.
• Only 30% of the finished leather is consumed locally while the remaining 70% is exported, mostly to China.
• Global leather footwear market was valued at US$246 billion in 2017 and is expected to reach US$320 billion by 2021.

https://www.thedailystar.net/business/news/leather-goods-footwear-producers-downhearted-decline-sales-1926377

BB’s Facility for Tanners

• The tanners who became defaulters unwillingly and whose business remained operational at present can
reschedule loans with 2.0% down payment.
• Such loan rescheduling option has been taken so that the tanners could take fresh loans for buying rawhides
during the Eid.
• Banks will be able to reschedule the demand loans for up to 6 years and term loans for up to 8 years with one-
year grace period, on a case-to-case basis.
• The borrowers will have to apply to the banks by July 30 to avail the facility.
• The tannery owners demanded Tk 6.0 billion in fresh loans, keeping their dues in a block account for three years.

https://today.thefinancialexpress.com.bd/first-page/bbs-spl-facility-for-tanners-1593971677
39
 Shrimp
COVID-19 Eats Away Shrimp Exports
• Shrimp exports declined by 10% to Tk 2,554 crore in the first 11 months of the 2019-20 financial year instigated by last month’s
drop of 47%.
• BFFEA claimed that they have faced order cancellations of shrimp exports amounting to more than Tk 600 crore in the last 20
days.
• Apex Foods Limited, one of the leading frozen food exporter incurred a net loss of Tk 2.98 crore and its loss per share was Tk
5.24.
• Gemini Sea Food Limited, another local exporter of shrimp, experienced exports dropped by 74% to Tk 5.13 crore in Q3 FY 19-20.
It faced a net loss of Tk 2.50 crore and its loss per share was Tk 5.34.

https://tbsnews.net/economy/agriculture/covid-19-eats-away-shrimp-exports-101830

40
 “No thief, however skillful, can rob one of
knowledge, and that is why knowledge is
the best and safest treasure to acquire”—
L. Frank Baum
Corporate Office
Bank Asia Tower,
32, Kazi Nazrul Islam Avenue
Karwan Bazar, Dhaka
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