NBR to adopt new technique to increase revenue

The National Board of Revenue is now going to adopt a new technique based
on 'Business- Customs Partnership' trying to increase revenue collection by
preventing tax-dodging tricks. Under the new methodology the NBR will
utilise the existing businessmen and their trade bodies in unearthing the
revenue-dodgers. 'This system is effective and worked in many places
around the world,' NBR member (Customs and VAT Administration) M Farid Uddin
told the news agency on Monday. He said Business-Customs Partnership was
a new idea in the financial world and this has been proved very much
effective in catching the evaders. In this connection, he said the NBR
would sit with the leading businessmen and trade bodies from different
sectors and request them to provide information regarding the culprits, who
are dodging revenue. 'As an example, an importer of a specific item
will know better than the NBR officials about the import of the same item
paying less duty or dodging the duty,' he said about using the decoy to
detect dodgers. He said that the selling price of an item would not be
the same when the item is imported by dodging duty. That means the honest
importer will be incurring loss for the dishonest importer. 'We will take
this kind of incident as our hitting point,' he said. The affected
importer will be our source in this connection and provide information as
he is the most compatible person for giving information. Describing the
reason for taking such technique, the NBR member said that the revenue
authority of the government suspected that due to wrong declaration of the
importers the revenue-collecting agency of the government is losing good
amounts of money. 'According to the new rule we cannot go for 100 per
cent verification of the imported items,' he said about the legal lacking.
After introducing the pre-shipment inspection system, the customs
officials could go for physical verification of only 10 per cent of the
imports. He also said that it would not be viable for the customs
officials to go for cent-per cent physical verification. This will slow down
the release of the imported goods from the port, Farid Uddin added. He
said that the NBR is taking preparation at present to discuss the matter
among the businesses and their trade bodies. The NBR is going to adopt
such technique as the government is apprehending less revenue from import
duty in the coming days. The revenue generation from imports will have
to suffer more as the World Trade Organisation is heading towards a
duty-free world, levelling the frontiers on the economic globe. The
finance minister, who has targeted some Tk 61,000 as revenue income in the
current budget, had emphasised improving the revenue collection by any
means during his visits to the NBR several times. He had also directed
the NBR to find out the pockets from where the government could earn
revenues.

Country to set high octane plant using naphtha

Bangladesh will set up a fuel plant to produce high octane at
Chittagong port city, at a cost of $110 million, by using naphtha, a
leading entrepreneur said on Sunday. 'With the technical assistance
of UOP of the USA and Exxon the plant will be able to produce up to
150,000 tonnes of high octane,' said Azam J Chowdhury, managing
director of Mobil Jamuna Fuels Limited. He told Reuters that MJFL
would use naphtha, a bi-product of the state-run Eastern Refinery
Limited, which exports 100,000 tonnes of naphtha to Singapore
annually. 'We offered ERL to pay more than the price fixed at per
barrel to benchmark spot quotes by price-reporting agency Platts, and
the government agreed to our proposal,' said Azam, also the chairman
of the East Coast Group, a leading oil trading house. Naphtha will
be the principal raw material for producing high octane, or octane 95.
Jamuna Oil Company, a state owned oil distributor, will hold 25 per
cent stake of the MJFL, while IFC, a subsidiary of the World Bank and
DG of Germany and FMO of the Netherlands will hold equal equity in the
plant. 'It will be able to produce octane in the middle of 2011,'
said Azam. He said that if the Bangladesh government did not
procure the octane from them they would export the whole product.
State-run ERL, which has the capacity to produce 1.5 million tonnes of
oil a year, is the only refinery in Bangladesh. Bangladesh imports
up to 3.8 million tonnes of oil a year, including 1.2 million tonnes
of crude oil to meet demand. Bangladesh consumes between 100,000
and 120,000 tonnes of octane. 'The naphtha-based plant will help
save nearly $51 million yearly,' a government official said. Azam
said the firm would also produce liquefied petroleum gas from the
plant by using the same raw materials. 'We will also set up a 5
megawatt power plant by using residual (product) of the plant to meet
our electricity requirements,' he said. Bangladesh imports oil
mainly from Saudi Arabia, Kuwait, United Arab Emirates, India and
Malaysia at a cost of between $2.5 and $3 billion.

China, India may help, not save world economy: Analysts

Fast growing China and India may be important players but the emerging
economic giants alone do not have the clout to drag the global economy
out of its worst slump since the 1930s, analysts say. China, ranked
the world's third largest economy after the United States and Japan,
grew 7.9 per cent in the second quarter this year while India expanded
5.8 per cent in the three months to March. Such rates are
relatively modest by their standards but stand out sharply as the
United States, Japan and Europe are all mired in deep recession as
their economies struggle through the fallout from the global financial
crisis. Chinese and Indian demand has largely kept raw material
prices afloat this year-a key plus for exporting countries such as
Australia and Brazil-while also offering hope against the prevailing
gloom. The two countries 'send out a positive message at a time
when the trend is dark and this can help reassure the markets,' said
Michel Fouquin, international affairs analyst in Paris. But beyond
this psychological comfort, China and India have only a marginal
impact on the wider global economy because they are exporters with
limited domestic demand- ultimately, they are relying on the developed
world to recover first before they too can move ahead once more.
'There is no way that the world economy can get back on its feet again
just through (the efforts of) the emerging giants,' said Eric Chaney,
chief economist with Axa. China and India may drive demand for raw
materials and the other inputs they use in their own exports from
Brazil, Australia and the smaller Asian countries but that is not
enough for recovery in the developed world. 'I'm much less
convinced that either China or India can (provide) a significant boost
to other economies,' said Eswar Prasad of Cornell University.
'India and China can provide an indirect boost . .. by maintaining
domestic demand and providing a sense of confidence to the world
economy that the recovery is in progress ... but their contribution to
the world economy is going to remain modest,' Prasad said. The
United States, Europe and Japan are the key markets for goods and
services sold there by the great exporters such as China which has a
much smaller domestic market despite efforts to boost home
consumption. Richard Herd at the OECD in Paris noted too that in
China, the share of imports in 'total demand is relatively small,
essentially because it's a very large economy and there's a very large
degree of self-sufficiency in many areas.' It has been a
longstanding complaint in Washington that China's economy is
dangerously reliant on exports for growth, leading to huge global
imbalances that can no longer be sustained. US officials said on
Thursday that President Barack Obama's administration will tell China
at an upcoming meeting that the role of consumption as a major driver
of the US economy is diminishing. 'There's been a fundamental
change in the US economy ... US households are raising their savings
rates, so this is going to a less consumption-led recovery than what
they're used to,' a senior official said. 'Our message to the
Chinese is going to be-If you want to achieve your growth objectives,
you're going to have to find a different way of doing it than through
export-led growth,' he said. The bottom line is that 'the global
recovery will only come from a pick up in (consumer) demand in North
America and Europe,' said Chaney. The BRIC four-Brazil, Russia,
India and China-may protest all they want against the dominance of the
dollar-led world trading system but they have no way of opting out of
it given their relatively modest economic strength, said Jean-Paul
Betbeze, economist at French bank Credit Agricole. Longer-term,
their influence will grow but for now they have much more work to do
to meet coming challenges, especially likely changes to their favoured
export-led model of economic development, analysts said. 'The
Chinese have no other alternative but to boost their domestic market,'
said Prasad of Cornell University.

BRTC moves to break monypoly

The telecoms watchdog is set to make ' competition regulations' by
September this year to restrict monopolisation, aiming to ensure a
level-playing field in the rapidly growing Bangladesh telecoms
market. The telecoms regulator has followed the recommendations made
by International Telecommunication Union (ITU), the United Nations
agency for information and communication technology, which recently
reported on Significant Market Power (SMP) of Bangladesh's telecoms
sector. ITU also suggested identifying the operators, who hold SMP,
before finalising the regulations. An operator enjoys market power
when it can unilaterally set and maintain prices and other
commercial terms. ITU recommended setting upper and lower limits of
market dominance for a telecoms operator, to be judged on holding
SMP. In its report, ITU said in the context of Bangladesh, it favours
a market share threshold of 45 percent based on a range of factors,
including revenue, subscriber percentage, and if available, traffic
statistics consistent with global precedents. "If the Bangladesh
Telecommunication Regulatory Commission (BTRC) considers a lower
threshold of 35-40 percent to be set as the presumption threshold
because of a lack of detailed industry statistics, then it would be
supported," said ITU, suggesting a second option. Ever since debut in
Bangladesh, a few operators have dominated the telecoms industry.
Considering this, BTRC sought ITU advice on significant market power
issues. Later ITU undertook a project on SMP and recently submitted
its report to BTRC. Competition regulations are common to markets
around the world. "When a few operators have grabbed significant
market share, regulating competition is a must for all," said a BTRC
official. Competition regulations would apply to all, both private and
state-run operators," said the official. As per telecommunication
laws, BTRC is compelled to break monopolisation and anti- competitive
behaviour by operators. Competition policies may be implemented
through general competition laws or through competition enhancing
rules in specific sectors. The laws aim to promote efficient
competition by penalising or undoing conduct that reduces
competition in a market. BTRC would finalise the regulations after
consulting all telecoms stakeholders. Under regulations, operators
are prohibited from entering into agreements that provide for market
sharing, rate fixing, boycott of another competitor or supplier of
the telecommunications system or equipment, said the ITU. ITU said
the regulator may direct operators in a dominant position to cease a
conduct, which has or may have the effect of substantially lessening
competition in the market. The UN agency also suggested an independent
commission to maintain and promote fair competition, to prevent,
control or eliminate restrictive agreements among enterprises or
abuse of a dominant position. It said although the telecommunications
market in Bangladesh is characterised by a large number of operators
(particularly in the mobile sector), it remains highly concentrated.
In terms of subscriber base, Grameenphone has a 43.9 percent market
share, Banglalink 22.8 percent, AKTEL 18.4 percent, Citycell 4
percent, Warid 5 percent, TeleTalk 3 percent, BTCL 1.8 percent and
Ranks Telecom 0.3 percent, according to statistics updated at the
end of April 2009. BTRC sources said big operators are reluctant to
adopt such regulations in the market. "The big operator does pose a
predatory nature and it is already becoming imminent that the very
existence of small operators is in question because of this issue,"
said Ashraful H Chowdhury, general manager of Warid Telecom. He said
the regulator must enforce a level- playing field for the sake of fair
competition and existence in the long run. "Big operators in the
market enjoy advantages because of size and potential
anti-competitive nature," he said. However, Grameenphone, the market's
biggest operator, refused to comment in this regard at the moment.

BP profits slump 53pc

BP PLC, Europe's second largest oil company, said Tuesday that lower
world oil prices drove second-quarter profit down by 53 per cent
compared with a year earlier and saw little sign of growing demand in
the months ahead. Net profit for the period was $4.39 billion,
down from $9.36 billion in the second quarter of last year but better
than market forecasts. It was better than the $2.56 billion profit
reported in the first quarter, when oil prices were in a deep slump.
Oil prices rose off those lows during the second quarter, with
Brent Blend oil averaging $59.13 a barrel in the second quarter
compared to $44.46 in the first quarter - and $121.18 in the second
quarter of 2008. Oil prices sagged early in the year as economies
around the world went into recession, but have risen amid
expectations of at least limited economic recovery later this year.
Chief executive Tony Hayward offered a subdued outlook, saying he
expected energy demand to be sluggish in the near term. 'The
overall picture is of energy demand now stabilizing following
significant falls in the first half of the year,' Hayward said. 'We
see little evidence of any growth in demand and expect the recovery
to be long and drawn out.' Daily production was up 4 per cent
compared to the second quarter last year, with production ramping up
in the Thunder Horse and Dorado fields in the Gulf of Mexico.
Thunder Horse, operated by BP and partly owned by Exxon Mobil, began
producing oil and gas last year, nine years after the field's
discovery. It's designed to produce 250,000 barrels of oil and 200
million cubic feet of natural gas each day, which would make it the
Gulf's largest producer. Replacement cost profit - a key measure
for oil companies which values crude oil and fuel inventories at
current prices - was $3.14 billion in the second quarter, up from $2.4
billion in the first quarter and far below the year-earlier result of
$6.7 billion.