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Export Data Errors Linked to Coordination Issues: Salman F Rahman

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Salman F Rahman, the private industry and investment adviser to the prime minister, highlighted coordination issues among the Export Processing Bureau (EPB), the National Board of Revenue (NBR), and the Bangladesh Bank as the cause of discrepancies in the country’s export data. He made this statement at a roundtable discussion titled “Digitalising International Trade in Bangladesh,” organized by the International Chamber of Commerce (ICC) at Hotel Sheraton.

Rahman explained that Bangladesh exports products in two ways. One method involves using back-to-back letters of credit (LCs) to import fabric and yarn, which are then processed and exported as finished goods, with the entire value being recorded as exports. The other method sees buyers supplying the fabric and yarn for free, with payments made solely for the cost and making (CMT) charges. Here, the EPB reports the full export value, which Rahman noted is accurate but causes discrepancies with the Bangladesh Bank.

“The EPB’s reporting of the full value while only CMT payments are received creates inconsistencies that need reconciliation with the Bangladesh Bank,” Rahman emphasized. He pointed out that the EPB had previously double-counted exports from Export Processing Zones (EPZs), once when exported from EPZs and again when shipped from factories. This issue has now been rectified to prevent future discrepancies.

AK Azad, vice president of the ICC and managing director of Ha-meem Group, underscored the need for accurate calculations by the EPB, which can be achieved through better coordination with Customs and the Bangladesh Bank.

This issue came to the forefront after it was revealed that export data contained a $10 billion overstatement, which the NBR corrected on July 2, addressing a longstanding problem. Exporters had been raising concerns over the unrealistic monthly export figures released by the EPB.

The roundtable was presided over by Mahbubur Rahman, president of ICC Bangladesh, and featured a keynote presentation by Pamela Mar, managing director of the Digital Standard Initiative (DSI) at ICC. Other notable attendees included Muhammad A (Rumee) Ali, chairman of ICC Bangladesh Banking Commission; Iftekhar Alam, regional head for South and South East Asia at the International Islamic Trade Finance Corporation (ITFC); Rupa Chanda, director of Trade, Investment, and Innovation Division at UNESCAP; and Edimon Ginting, country director for Bangladesh Resident Mission at the Asian Development Bank.

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UK inflation holds at 2% in June: official data

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Britain’s inflation rate held steady in June after returning to the Bank of England’s target the previous month, official data showed Wednesday, confounding expectations for another modest slowdown.

The Consumer Prices Index was unchanged at 2.0 percent in June from the same level in May, the Office for National Statistics said in a statement, compared with market forecasts of 1.9 percent.

“Hotel prices rose strongly, while second-hand car costs fell but by less than this time last year,” said ONS chief executive Grant Fitzner.
“However, these were offset by falling clothing prices, with widespread sales driving down their cost.

“Meanwhile, the cost of both raw materials and goods leaving factories fell on the month, though factory gate prices remain above where they were a year ago.”

Analysts said the data could cause the Bank of England to sit tight for a while longer before starting to cut interest rates.

“The chances of an interest rate cut in August have diminished a bit more,” said Paul Dales, chief UK economist at research consultancy Capital Economics.

Last month, the BoE kept its key interest rate at a 16-year high of 5.25 percent, despite slowing inflation in May.

Britain’s newly elected Labour government welcomed news that inflation remained at the BoE’s target level.

“It is welcome that inflation is at target,” said Darren Jones, Chief Secretary to the Treasury, in a statement.

“But we know that for families across Britain prices remain high… (which) is why this government is taking the tough decisions now to fix the foundations” of the UK economy, he said.

Labour, led by new Prime Minister Keir Starmer, has pledged immediate action to grow the economy after the centre-left party won a landslide general election victory to end 14 years of Conservative rule.

Later on Wednesday, King Charles III will read out Labour’s first programme for government in a decade and a half, when the UK parliament formally reopens following the July 4 election.
Elevated interest rates have worsened a UK cost-of-living squeeze because they increase borrowing repayments, thereby cutting disposable incomes and crimping economic activity.

The BoE began a series of rate hikes in late 2021 to combat inflation, which rose after countries emerged from Covid lockdowns and accelerated after the invasion of Ukraine by key oil and gas producer Russia.

 

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China’s economy grew less than expected in second quarter: official data

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China’s economy grew 4.7 percent year-on-year in the second quarter of 2024, official data showed Monday, less than analysts had expected.

“By quarter, the GDP for the first quarter increased by 5.3 percent year on year and for the second quarter 4.7 percent,” Beijing’s National Bureau of Statistics (NBS) said in a statement.

The figures were much lower than the 5.1 percent predicted by analysts polled by Bloomberg.

Retail sales — a key gauge of consumption — also slowed to just two percent in June, the NBS said, down from 3.7 percent in May.

The world’s second-largest economy is grappling with a real estate debt crisis, weakening consumption, an ageing population and trade tensions with Western rivals.

Top officials are meeting in Beijing on Monday for a key plenum, with all eyes on how they might kickstart lacklustre growth.

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Concerns Mount Over Revenue Loss as South Asia’s Largest Land Port Curtails Operations

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Bangladeshi officials are grappling with fears of revenue loss as the largest land port in South Asia, situated along the India-Bangladesh border, has ceased operations for 10 hours each day since July 11.

The Petrapole Land Port in India, crucial for trade between the two nations, has been shutting down from 6 PM to 8 AM daily, without providing any explanation for the closure, according to officials from the Benapole Land Authority in Bangladesh. This unexpected halt has left Bangladeshi authorities and traders in a state of uncertainty, as there is no indication of when the operations might resume to normalcy.

Industry insiders warn that this disruption could lead to a significant revenue shortfall at Benapole port due to decreased imports, adversely affecting Bangladeshi importers with delayed product deliveries.

Rezaul Karim, Director of Traffic at Benapole Land Port Authority, emphasized that while Benapole has been maintaining 24-hour operations, Petrapole’s recent restrictions are hindering cargo truck movements after evening.

“We have inquired with the Petrapole port authority about the reasons for halting trade services after evening. They responded that the matter is under discussion with relevant authorities,” Karim said.

Sultan Mahmud Bipul, Secretary of Benapole C&F Agent Association International Checkpost Affairs, highlighted the fiscal implications of this disruption. “Benapole port has set a revenue target of Tk6,705 crore from imported goods for the fiscal year 2024-25. If the 24-hour import facility remains discontinued, it will severely impact our revenue targets,” he noted.

Ziaur Rahman, General Secretary of Benapole Landport Importers and Exporters Association, pointed out the severe impact on trade, particularly with perishable goods. “Traders dealing with perishable food products are incurring the biggest losses due to this halt. The inability of goods trucks to enter after evening will widen the trade deficit,” Rahman remarked.

As the situation unfolds, the Benapole Land Port Authority and associated trade bodies continue to seek clarity and resolution from their Indian counterparts to mitigate the economic repercussions of this operational disruption.

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