Thursday, May 19 2022

Financially weak banks should consider mergers in an attempt to ease the pressure on defaulting lending, according to Salman F Rahman, the prime minister’s adviser on private industry and investment.

“There are systematic problems in our banking industry as borrowers are allowed to take short-term loans for long-term investments, resulting in a lot of bad debts,” he said at a conference press release at Dhaka Reporters Unity yesterday.

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Rahman then suggested that the creation of more specialized investment banks could help ease the country’s financial constraints in this regard.

In addition, the economic impact of Covid-19 has increased the amount of Non-Performing Loans (NPLs) around the world and Bangladesh is no exception as borrowers have struggled to repay installments amid the economic downturn induced by the coronavirus.

The adviser also focused on widening the tax net to increase government revenue, as the tax-to-gross domestic product (GDP) ratio in Bangladesh is among the lowest in the world.

“Yet the size of the national budget is about 10 times the size of what it was in 2009, when the current government took office,” Rahman said, adding that ordinary taxpayers bear the brunt of the expense because of many people stay out of the tax net. .

He added that the Bangladesh Investment Development Authority (Bida) would provide the necessary support to facilitate foreign direct investment through its One Stop Service (OSS) platform from next year.

Prospective clients can already benefit from over 40 services from OSS, an online platform integrating relevant government agencies to streamline the investment process in Bangladesh.

“However, the complexities regarding certain National Board of Revenue policies are still raised by foreign and domestic investors,” Rahman said.

Regarding the recent rise in fuel prices, Rahman said it was difficult for the government to afford the huge amount of subsidies needed to keep costs low.

And although fuel prices have recently fallen in the international market, demand is increasing as the global economy reopens.

Responding to a question on the capital market, he said there was weakness in the market as 80% of all investment comes from retail investors and institutional investors make up the rest.

The case should be the opposite, he said, adding that the market relies quite a bit on stocks rather than bonds.

“We are working to improve the bond market. The Bangladesh Securities Commission is also sincere in this regard.”

Explaining the reasons for the remittances, Rahman said local businesses often hire foreign experts for managerial positions due to the lack of skilled domestic workers.

And although more local experts are employed by the garment industry, its emerging segment of man-made fibers requires foreign expertise.

But since these foreign employees spend a large portion of their income while in Bangladesh, outgoing remittances do not exceed $ 300 million per year.

Regarding developments in the health sector, Rahman said that treatment for all diseases would eventually be available in Bangladesh. Additionally, local pharmaceutical companies are preparing to manufacture Covid-19 vaccines next year.

“Beximco Pharmaceuticals will set up a dedicated facility for Covid-19 vaccines within the next six weeks while Incepta Pharmaceuticals has signed an agreement with Chinese companies to manufacture vaccines,” said the vice president of Beximco Ltd.

Beximco is in talks with the Serum Institute of India, Pfizer, Moderna and other global vaccine manufacturers to make Covid-19 vaccines in Bangladesh.

Vaccines will also be needed in the future as there is a possibility that the Covid-19 pandemic will continue indefinitely.

“So local manufacture of vaccines is necessary,” he added.

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