India may ease terms for $2b credit

Rejaul Karim Byron

India has hinted that it would relax the terms and conditions tagged with its fresh $2-billion credit for Bangladesh, which will mostly be used to further enhance connectivity between the two countries.
When India sent the draft agreement to Bangladesh in August this year, it stipulated that at least 75 percent of the credit must be utilised to import goods and services from India. It even included consultancy services under the project.
But the neighbouring country now considers cutting the size of the import content of the credit line to 65-75 percent of overall procurement. For some cases, India is ready to bring it down further.
“Relaxation on the minimum Indian content may be done on a case-to-case basis and not for the entire line of credit. The same practice is being followed in the first line of credit,” said the Exim Bank of India, which is responsible for disbursing the loan.
The bank agreed to offer the flexibility while commenting on the opinions about the draft agreement from Bangladesh's side.
India also agreed to cede more control to Bangladesh over establishing joint ventures aimed at providing consultancy services. Now, a Bangladeshi firm can have 49 percent stake in a JV, with an Indian firm being the lead partner.
It came after the Economic Relations Division of Bangladesh took opinions from different ministries about the Indian government's plans and forwarded their opinions to Exim Bank.
When contacted, ERD Secretary Mohammad Mejbahuddin said the import content would remain flexible. It will also be possible to increase the use of local content to higher level on a case-to-case basis.
He said locally available goods such as sand and rocks would not be imported.
“The negotiation is almost complete. We hope we would be able to ink the deal this year,” Mejbahuddin said.
He said the projects that would get financing from the second Indian credit line have almost been finalised, with the preparation work for the projects already on way.
As a result, the implementation of the projects would get pace this time, he added.
Exim Bank sent the draft agreement following Indian Prime Minister Narendra Modi's visit to Bangladesh in June this year.
During his visit a preliminary agreement was signed on the new credit.
Under the draft agreement, Bangladesh will have to pay 0.5 percent as commitment fee annually on the amount of the credit that remains undisbursed.
The unutilised portion of the credit will be cancelled at the end of 48 months after the scheduled completion date in case of project exports. It has been set at 72 months in case of other supply contracts.
The credit carries 1 percent interest rate with repayment period of 20 years and a grace period of five years.
Bangladesh has identified 13 projects to be financed by the second Indian loan, said an ERD official. It includes power, rail and port projects.
India lent a $1 billion line of credit in 2010, during Manmohan Singh's tenure as the prime minister. Of the amount, $200 million was later converted to grant and disbursed for the Padma bridge project.
Bangladesh sought $62 million more under the first loan as project costs increased and the Indian side agreed to it as well.

NBR starts drives to curb VAT evasion

Star Business Report

The National Board of Revenue launched drives early this month to rein in the evasion of value-added tax, now the second biggest revenue source for the state.
The audit, intelligence and investigation directorate for value-added has already detected VAT evasion by seven firms since it embarked on its drive on October 8.
The firms are engaged in manufacturing of cement, furniture, ice cream, electric fans, and bicycle parts, according to a statement yesterday.
The investigation team checked goods transport vehicles at Tejgaon, Moghbazar, Doyaganj, Postagola and in the Dhaka-Chittagong road's Signboard area and found that the firms were supplying goods without VAT invoice, said Margoob Ahmed, director general of the directorate.
He however declined to disclose the names of firms that were found evading VAT, an indirect tax that is ultimately paid by consumers.
As per rules, businesses must provide VAT invoice or payment receipts when delivering the goods from factories.
But the VAT intelligence and investigation office has detected eight vehicles transporting goods without VAT invoice, while one was using the same invoice for two different deliveries, said officials.
They recommended the relevant commissionerates to file cases against the firms for VAT evasion of Tk 4.66 lakh.
Ahmed said the firms were repeatedly instructed not to deliver goods without VAT invoice.
“We will continue such drives to prevent tax evasion. And we will go for legal action including filing of cases if we find any vehicle transporting goods without VAT invoice.”
He said the taxpayers are the driving force of the economy.
“We request firms to provide proper VAT invoice while delivering goods from factories. Otherwise, they will fall in an embarrassing situation, which we do not want.”
Other than that, the office also conducted a survey in large shopping malls in Dhaka and found that most of the shops do not have VAT registrations, according to the statement.
VAT compliance by shops in the malls is frustrating, according to Ahmed.
The VAT audit directorate started conducting field drives after the NBR framed the charter of functions for the office and reformed the law to empower the office to take measures to prevent VAT evasion.
Earlier, the directorate was mainly engaged in audit and investigation on the basis of complaints, said officials.
Through audit, the directorate detected Tk 135 crore VAT that was either evaded or avoided in 2014 and the January-July period of the current year, according to the statement.

At least 12 dead in Pakistan after strong quake in Afghanistan

People stand on a road after vacating buildings following an earthquake in Srinagar October 26, 2015. An earthquake measuring 7.6 magnitude struck in northeastern Afghanistan on Monday, the US Geological Survey said, sending tremors that were felt in India and Pakistan. Photo: Reuters

Reuters, Kabul/Peshawar

A powerful earthquake struck a remote area of northeastern Afghanistan on Monday, shaking the capital Kabul and killing at least eight people in neighbouring Pakistan, officials said.
Shockwaves were felt in northern India and in Pakistan's capital, where hundreds of people ran out of buildings as the ground rolled beneath them.
The quake was 213 km (132 miles) deep and centred 254 km (158 miles) northeast of Kabul in a remote area of Afghanistan in the Hindu Kush mountain range.
The US Geological Survey initially measured the quake's intensity at 7.7 then revised it down to 7.6 and later to 7.5.
In northwestern Pakistan, at least 12 people were killed, including one in the city of Peshawar, according to government officials.
Injured people were pouring into Peshawar's Lady Reading Hospital, an official said.
"We received 50 injured and more are being shifted. The injured suffered multiple injuries due to building collapse," said hospital spokesman Syed Jamil Shah.
In the Afghan capital, Kabul, buildings shook violently but there were no immediate reports of damage or injuries.
International aid agencies working in the northern areas of Afghanistan reported that cell phone coverage in the affected areas remained down in the hour after the initial quake.
India's northernmost region of Kashmir experienced intense and prolonged tremors that caused panic in areas that suffered severe flooding last year. Power supplies and most mobile networks were knocked out, and there was structural damage to roads and buildings.
No casualties were reported in Indian Kashmir, however.
The earthquake struck almost exactly six months after Nepal suffered its worst quake on record, on April 25. Including the toll from a major aftershock in May, 9,000 people lost their lives and 900,000 homes were damaged or destroyed.
The mountainous region is seismically active, with earthquakes the result of the Indian subcontinent driving into and under the Eurasian landmass. Sudden tectonic shifts can cause enormous and destructive releases of energy.
A 7.6 magnitude earthquake struck northern Pakistan just over a decade ago, on Oct. 8, 2005, killing about 75,000 people.

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