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After tax evasion, Foodpanda now charged for depriving delivery staff

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Foodpanda, an online food and grocery delivery platform owned by Berlin-based Delivery Hero, has been charged with a number of problems – from VAT evasion to supplying substandard foods and depriving delivery staff of their due benefits.

Foodpanda collects food and grocery items from around 5,000 restaurants and stores and delivers products to the doorsteps of consumers through riders or delivery workers across the country under an agreement of sharing commission.

Riders, consumers and insiders of Foodpanda have recently shared their bitter experiences.

“Pulling a rickshaw is better than a Foodpanda job,” a rider said to describe how hard work he has to do throughout the week against very poor pay.

Another delivery man said Foodpanda gives him less when a customer gives some tips. Allah blesses the people in the head office,” he says.

“Foodpanda should be sued as it doesn’t fix basic salary for riders,” said a worker.

Just recently, its riders went on a strike in Dhaka, Rajshahi and Sylhet states on an 8-point demand including increasing delivery rates and other benefits. They said they ensured food deliveries defying all adverse situations but the authorities have been denying them rightful demands over the years.

This is not the end of the complaints against Foodpanda. The food and grocery delivery platform is facing numerous complaints from customers because of providing deficient foods and dilly-dallying in refunding the money in case of order cancellation.

Additionally, Foodpanda was charged with overcharging and on September 11, last month the Directorate of National Consumers’ Rights Protection fined the platform in this connection.

Dodges VAT concealing actual sales

The VAT Intelligence Directorate, in October 2020 conducted a drive at Foodpanda’s head office in Gulshan, where they found evidence of evasion of Tk3.4 crore in Value Added Tax (VAT).

A VAT evasion case was filed against Foodpanda Bangladesh Limited by the directorate and the case is still pending.

During the drive, VAT Intelligence authorities smell that Foodpanda has been doing business since 2013 by registering under Code S-099.10, which does not apply to their type of business.

The company was doing it in order to gain the facility of 0pc VAT on rent, the directorate added.

Foodpanda delivers food by using an electronic network (online platform). The code for these sorts of services is S-099.60. According to the law, they were supposed to pay 5pc VAT on the business and 15pc VAT on rent.

During the raid, sales data of Tk27.58 crore was discovered in a computer for the period of July 2019 to January 2020 and April 2020. But Foodpanda only disclosed sales data of Tk15.65 crore during this period.

The VAT directorate also discovered that in 8 months only the company concealed sales data of Tk11.93 crore from the government.

Foodpanda helps restaurants evade VAT

It receives orders through online-based apps like Pathao Food, Sohoj Food and others and delivers them to the doorsteps of the customers. They are supposed to ensure that the government gets due VAT against the sales. But that was not the case.

Foodpanda did not maintain the actual sales data and it does not provide the details in its VAT return statement, according to the VAT intelligence agency.

Hence, the food supply stores also do not show the sales information that comes from the apps in their VAT returns. By doing so Foodpanda is helping hotels and restaurants evade VAT.

“We have recently visited some restaurants from where Foodpanda gets food. We have found that the government is deprived of due VAT,” said an NBR authority.

The NBR has already started verifying electronic fiscal device information of at least 318 hotels and restaurants that supply food to Foodpanda for its customers.

It has already found VAT dodging evidence against Burger Express, Kaderia Cafe, Street Oven, Cheese Restaurant, Ghost House and Pizza King, according to the authority.

Apart from this, the Dhaka North VAT Commissionerate is investigating whether these hotels and restaurants are evading VAT in collaboration with Foodpanda, Pathao Food, Sohoj Food and other online food service providers.

The overall situation could be worrying for Foodpanda, which claims to be Asia’s largest food delivery company, as it is having a tough time in several other Asian countries, including Myanmar, Thailand, and Hong Kong.

After several phone calls and text messages, Ambareen Reza, co-founder and CEO of Foodpanda Bangladesh, replied in a message that one of her relatives survived a heart attack and she could not comment anything now.

 

 

 

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Economy

PM Sheikh Hasina: Plant Trees to Create a Greener Bangladesh

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Prime Minister and Awami League (AL) President Sheikh Hasina urged the nation to create a “Green Bangladesh” through extensive tree planting during an event on June 15.

“We must plant as many trees as possible across the country to make a ‘Green Bangladesh,'” she stated at the launch of the three-month-long tree plantation program by Bangladesh Krishak League (BKL) at her official residence, Ganabhaban.

At the event, the Prime Minister honored several BKL leaders for their efforts in promoting the Awami League’s nationwide tree plantation campaign and distributed saplings among them.

She called on leaders and activists to play a crucial role in transforming the country into a “Green Bangladesh.” Hasina urged BKL leaders to plant saplings along river embankments, coastal belts, roadsides, rooftops, and houses to advance the ‘Green Movement.’

The Prime Minister planted three saplings at Ganabhaban to mark the occasion. “Since assuming office, I have planted over 2,000 trees in Ganabhaban,” she said.

She emphasized that Bangladesh is an agriculture-based country and its economy relies heavily on agriculture. “We will pursue industrialization after strengthening the agriculture sector. We will not bypass agriculture for industrialization,” she added.

However, she warned against the destruction of arable lands in the process of industrial development. “Croplands must not be destroyed in the name of industrialization,” she cautioned.

With significant developments and urbanization taking place across the country, she urged vigilance to prevent damage to arable lands.

BKL President Samir Chanda and Acting General Secretary Bishwanath Sarker Bitu also spoke at the event, which was moderated by BKL Joint General Secretary Shamima Shahriar.

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Smart move. Bangladesh turns to loans in yen to ease repayment pressure

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In a move to manage risks associated with rising interest rates and a volatile US dollar, the government has decided to take some loans from the development partners in Japanese yen instead of dollars.

The yen loans are being taken particularly for scale-up window loans from the World Bank at market-based interest rates, according to officials at the Economic Relations Division (ERD).

Budget support of $300 million and an amount equivalent to $400 million for a project are being taken from the World Bank in the Japanese currency, they said.

After disbursement, the Japanese currency will be used to buy dollars, said the officials. Despite some temporary losses, this will reduce the pressure of interest and principal repayment on implementation loans, they said. The ERD, the Finance Division, and the Bangladesh Bank jointly made the decision.

The ERD officials said if loans are taken in yen instead of dollars, the overall interest rate would be much lower.

This will provide some relief from the current pressure the government faces in paying interest, they said. Besides, since the Japanese currency experiences less fluctuation compared to the dollar, there will be reduced risk in repaying the principal amount of the loan in the future, they said.

Zahid Hossain, a former lead economist of the World Bank office in Dhaka, told the news reporter, “The interest rate on the yen-denominated loan is likely to be lower since it is based on the Tokyo Overnight Average Rate (TONA) which tends to be significantly lower than SOFR (Secured Overnight Financing Rate) or LIBOR (London Interbank Offer Rate). The risk of valuation loss due to exchange rate fluctuations is not that different from borrowing in SDR (Special Drawing Rights) or USD.”

He went on to say, “Using the scale-up window allows Bangladesh to top up the core IDA (International Development Association) financing. Of course, the money from the SUW (scale-up window) is more expensive. But if we fully use up the core IDA, this is the next best option.”

The ERD officials said a proposal for a $500-million budget support loan will be presented at a World Bank’s board meeting to be held on 21 June. Of the amount, an amount equivalent to $300 million will be taken in yen, they said.

The interest rate for this loan will be TONA plus a variable spread, which is determined by the World Bank every three months, said the officials. The repayment period will be 35 years, including a 4-year grace period, and a front-end fee of 0.25% will be charged, they said. Additionally, a commitment fee of 0.25% will be applied to undisbursed funds, said the officials.

According to the ERD officials, the government is taking the remaining $200 million loan from the World Bank’s scale-up window-shorter maturity. The repayment period for the loan will be 12 years, including a 6-year grace period.

Interest on yen loan way cheaper

The ERD officials said if loans are taken in dollars, the overall interest rate would be approximately 7%. On the other hand, loans taken in Japanese currency would require Bangladesh to pay a much lower interest rate (around 2%), they said.

If $300 million is taken in dollars, it will be based on the SOFR. Variable spread will be added to this.

Since the Ukraine-Russia war, the SOFR has increased significantly. Even two years ago, the SOFR was less than 1%. Due to the rise in the SOFR, Bangladesh is facing pressure to repay its debts.

Data released by the Economic Relations Division shows that the government spent nearly $1.15 billion (equivalent to Tk12,626 crore) on interest payments in the first 10 months up to April of the current year, surpassing the annual allocation of Tk12,376 crore. The allocation was increased to Tk15,800 in the revised budget later.

According to the budget document released by the Ministry of Finance, it has been allocated Tk20,500 crore for the repayment of foreign loans in the upcoming fiscal year. The increase in interest payments is mainly due to the rise in the SORF rate in the international market, putting pressure on interest payments.

During his recent budget speech, Finance Minister Abul Hassan Mahmood Ali said, “Secured Overnight Financing Rate (SOFR) which is used as one of the reference rates around the world was only 0.5% in January 2022. To manage the inflationary situation arising from the Ukraine-Russia war, most of the developed countries including the USA increased their interest rates. As a result, the 6-month average of SOFR increased and stood at 5.4% in May 2024. For the same reason, the other developed nations including those in Europe enhanced the interest rate which affected the reference rate of EURIBOR, TONA, etc.”

Project loans to be received in yen

According to the ERD officials, the World Bank has recently increased the amount of loan for the construction of the container terminal in Chittagong. The World Bank announced that it will provide a loan of $650 million for the project, whereas previously it was planned to provide a loan of $350 million.

Out of the $650 million loan, the government has decided to borrow an equivalent of $400 million in Japanese currency. The interest rate for the loan will be based on the Tokyo overnight average rate plus a variable rate.

Besides, a loan equivalent to $150 million will be obtained in SDR, for which no interest will be charged. Furthermore, a loan equivalent to $100 million will be taken in SDR as well, and the interest rate for the loan will be 0.75%.

The decision was made during a high-level meeting at the ministry on 29 May regarding the container terminal project.

According to the minutes of the meeting, a representative from the Bangladesh Bank informed the discussants that they analysed one loan from the Asian Infrastructure Investment Bank (AIIB), where they found that the loan in the yen is more concessional than any other currency right now.

“Now the TONA reference rate is 0.077% and the variable spread is 0.73%. Considering the other options and current situation this blending is a good option,” she said.

AIIB loans in yen too

Apart from the World Bank, the government is also considering borrowing in other currencies instead of dollars for projects financed by the Asian Infrastructure Investment Bank (AIIB), said the ERD officials.

Due to the higher market-based interest rates, the government is not planning to take any loans from the AIIB for any project in the current fiscal year, they said. However, the officials said, they are considering taking a $400 million budget support loan from the lender.

The said borrowing in currencies other than dollars for development projects as well is under consideration.

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Tesla shareholders voting yes for Musk’s $56 bln pay package, CEO says on X

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Tesla shareholders are voting to approve a $56 billion pay package for Elon Musk and to move the electric vehicle maker’s legal home to Texas, Musk said on social media platform X on Wednesday, adding that passage was by wide margins.

Shareholders of the electric-car maker are voting on a proposal to ratify CEO Musk’s 2018 incentive package, valued at up to $56 billion at the time and the largest in US corporate history, after a Delaware judge voided the plan approved by its board “beholden” to Musk.

The result will be announced at a meeting on Thursday.

A person familiar with the preliminary tally confirmed Musk’s post, and said that a combination of big institutional investors and retail investor got the ‘yes’ result over the line.

Shareholders, however, are allowed to change their vote up to the start of the annual meeting.

Tesla shareholders also cast ballots on other proposals including the move of Tesla’s legal headquarters from Delaware to Texas, as well as the re-election of two board members: Musk’s brother Kimbal Musk and James Murdoch.

Musk referred to the resolutions on his pay package and the move in his tweet, thanking shareholders for their support.

Some investors viewed the vote on Musk’s pay as a test of confidence in his leadership. While he is undoubtedly Tesla’s driving force, and is credited with much of its success, the company has recently seen slowing sales and profits.

The board said the world’s richest person deserves the package, because he hit all the ambitious targets on market value, revenue and profitability.

The pay package is also needed to keep Musk devoted to Tesla, the board said, even though the Delaware judge said the 2018 pay plan failed to make sure that Musk committed a substantial amount of time to Tesla.

Musk has threatened to build AI and robotics products outside Tesla, if he fails to gain enough voting control, which requires the 2018 pay package to be approved.

Some large shareholders including Norway’s sovereign wealth fund and California’s two largest pension funds have said they will vote against the compensation, saying the pay is excessive.

Tesla has been drumming up support for Musk’s pay package, especially from retail investors, who make up an unusually high percentage of its ownership base but who often do not vote.

Company executives have posted messages on X, saying Musk is critical to Tesla’s success. Tesla has run social media ads, and Musk has promised a personal tour of Tesla’s factory in Texas to some shareholders who cast votes.

COURT BATTLE

The same package was previously rejected by a Delaware judge who invalidated it as an “unfathomable sum” granted by a conflicted board with close personal and financial ties to its top executive.

The board held the shareholder vote as a way to bolster its appeal of the ruling, in which the judge cited the board’s failure to fully inform shareholders before approving the pay package in 2018.

Musk has to wait months or years to get his pay package restored as appeals wind their way up to Delaware’s Supreme Court.

Tesla could also face more litigation from some shareholders. One of them this month filed a lawsuit challenging the upcoming shareholder vote on Musk’s pay package and the change of domicile.

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