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“Investment Summit in Japan Today, Highlights Bangladesh’s Economic Potential to Attract Investment”

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Japan

Today, Thursday (27th April) an investment Summit is being held in Japan to showcase the economic potential of Bangladesh and strengthen the economic ties between the both countries, as they mark the 50th anniversary of their relationship. The event will commence at 10 am local time at the Westin Tokyo Hotel, with the Bangladesh Prime Minister Sheikh Hasina as the chief guest. The program will highlight Bangladesh’s economic capabilities, investment opportunities, trade, Bangladeshi products and services, stock exchange, and bond market.

The Bangladesh Securities and Exchange Commission (BSEC) and the Bangladesh Investment Development Authority (BIDA) have jointly organized the event, along with the Japan External Trade Organization as co-organizer.

The organizers say that Japan is the most influential country in Asia in terms of economic and technological considerations. Therefore, the main objective of this event is to attract foreign and non-resident Bangladeshis’ investment by highlighting Bangladesh’s potential in the economy, investments, trade, Bangladeshi products and services, stock market and bond market. Especially, emphasis is being given to encourage expatriates to invest in Bangladesh. The event is named “Rise of Bengal Tiger”.

Through this initiative, several messages are being conveyed to investors, one of which is that Bangladesh is a country with a promising and growing economy in both the economic and social spheres. In the past decade, there has been progress in both these areas, with an expanding domestic market and infrastructure development. Labor is cost-effective, the legal framework is favorable, and investing in the country presents an opportunity for easy profits. Previously, the BSEC organized four similar programs outside the country, including in the United Arab Emirates, the United States, Switzerland, and the United Kingdom.

The organizers reveal that the focus of this event is on attracting investments from Japanese entrepreneurs and expatriates by highlighting various aspects of Bangladesh’s economy. The main presentation will touch upon the bilateral relations between Bangladesh and Japan, as according to the World Bank’s projections, Bangladesh will become the 23rd largest economy in the world by 2050. Moreover, the organization’s data suggests that it will also be one of the rapidly growing economies in South Asia. This same projection has been given by another international institution, the Hong Kong and Shanghai Banking Corporation (HSBC).

In addition, the International Monetary Fund (IMF) also provides indicative forecasts for Bangladesh’s economy, which are being reported by major global media outlets. These indicative aspects of Bangladesh’s economy will also be highlighted in the presentation. It will also be mentioned that Bangladesh’s bilateral relationship with Japan began in February 10, 1972, and in 2022, the 50th anniversary of the economic relationship between the both countries was celebrated. The relationship between Bangladesh and Japan is historical.

Presently, there are 324 Japanese companies operating in Bangladesh. In the latest fiscal year (2020-2021), Bangladesh received direct foreign investment (FDI) worth 41 crore 15 lakh dollars from Japan. During the same period, Bangladesh exported goods worth 118 crore 36 lakh dollars to Japan, while receiving remittances of 7 crore 95 lakh dollars. Over the last four years, Bangladesh has received development assistance worth 6 billion dollars from Japan, which is equivalent to the cost of constructing the Padma Bridge. In 2020, a deal worth 3.2 billion dollars was signed between Japan and Bangladesh, and as of now, five projects are ongoing under this agreement. Among these, Japan’s assistance is currently supporting the construction of the metro rail in Bangladesh. Additionally, Bangladesh also received assistance from Japan for the construction of the Meghna Bridge in 1991 and the Bangabandhu Bridge over the Jamuna River in 1998.

The government of Bangladesh has already invested 45 billion dollars in infrastructure development. During the pandemic, Bangladesh had the highest foreign currency reserve in South Asia. To combat economic problems, the government announced a 4% GDP stimulus package, which is the highest in South Asia. According to Japanese entrepreneurs, there is a huge potential for Bangladesh’s blue economy in the Bay of Bengal, which could play a vital role in the region.

Bangladesh has a massive workforce with around 5 and a half crore youth. The country ranks second in the world in terms of online workforce supply, which is not just based on numbers but also on quality. Additionally, Bangladesh has undertaken the largest solar energy project in the world. The country needs to provide all types of support to its economic entrepreneurs.

Entrepreneurs will be further informed that Bangladesh is a highly commendable model for development in the world. In the past decade, the GDP growth rate has been over 7%

The per capita income is $2,824. Bangladeshi expatriates have made significant contributions to the country’s development. The manufacturing sector contributes 31% to the GDP, with the majority coming from small and medium-sized enterprises (SMEs). Furthermore, the country is not lagging behind in agriculture, as it is currently the third-largest producer of rice and the third or fourth-largest producer of vegetables and fish. American media outlets CNN and Bloomberg have also covered Bangladesh’s economic development and progress.

There are several promising sectors for investment in Bangladesh, including leather and leather goods, light engineering, electronics, plastics, automobile and motorcycle parts, shipbuilding, construction materials, infrastructure, healthcare, information technology, ready-made garments, pharmaceuticals, medical equipment, agriculture-based industries, and jute and jute-based products. To support investment and development in these areas, various initiatives and programs have been launched by the Bangladesh government and its One-Stop Service for investors in the country’s one hundred economic zones.

Representatives from institutions such as the Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE), Japan Commerce and Industry Association in Dhaka, Chittagong Chamber of Commerce and Industries, and other organizations are expected to participate in these efforts.

Japan is regarded as the third largest economy in the world when it comes to economic considerations. It is a completely industrialized country famous for producing automobiles, electronics, machinery, steel, and chemically processed food. The current population of this Asian country is 12 crore 43 lakh, with a labor force of 6 crore 70 lakh people who are highly skilled. However, women constitute 40% of the total workforce. With advanced technology and investment, the country’s Gross Domestic Product (GDP) is $4.3 trillion, which is 11 times more than that of Bangladesh.

Services contribute 72% to the country’s economy, while industry accounts for 25% and agriculture only 3%. The GDP growth rate is 1.7%. The per capita income of each citizen is $34,357. As a result, it can be concluded that if entrepreneurs invest here, it will be beneficial for Bangladesh’s economy.

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Market Woes Drive Investors Away as Dhaka Bourse Sees Significant Decline

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By June 20 this year, approximately 102,000 beneficiary owners’ (BO) accounts were emptied, and market capitalization plummeted by Tk 1.37 lakh crore due to prolonged poor returns, frustrating investors and prompting them to exit the market.

Data from the Central Depository Bangladesh Limited (CDBL) reveals that in the six months leading up to June 20, the total number of BO accounts with zero share balance surged by 34% to 398,000, while BO accounts with share balances fell by 91,651 to 1.312 million.

During this period, the benchmark index DSEX of the Dhaka Stock Exchange (DSE) dropped over 1,000 points, closing at 5,244, while the blue-chip index DS30 fell by 218 points, settling at 1,875. The market capitalization at DSE also declined by over 17%, ending at Tk 6.43 lakh crore on June 20.

Rising interest rates, taxes on individual investors’ capital gains from listed securities, and a severe confidence crisis due to regulatory interventions are collectively impacting stock market performance, according to stockbrokers and market experts.

The capital market has been grappling with economic uncertainty, exacerbated by the Russia-Ukraine war. In response to the crisis, the Bangladesh Securities and Exchange Commission (BSEC) imposed a floor price in 2022 to prevent a freefall in share prices. Despite lifting the restriction after more than two years, the bearish trend persisted. Consequently, BSEC reintroduced protective measures, including reducing the circuit breaker limit from 10% to 3%.

Abu Ahmed, former economics professor at the University of Dhaka, explained that unprecedentedly high interest rates, especially on treasury bonds, have driven large investors to shift their funds from the stock market to bonds. “With treasury bond rates steady at around 12%, it’s a risk-free, preferred choice for many investors,” he said. This shift has resulted in a fund crisis in the market, he added.

Ahmed also highlighted a decline in the number of reputable companies entering the market and underperformance in key sectors like banks, insurance, non-bank financial institutions, and manufacturing companies. He pointed out that a lack of good governance and long-term policy support has eroded investor confidence. Additionally, the government is withdrawing previously granted investment benefits.

Md Saiful Islam, president of the DSE Brokers Association of Bangladesh (DBA), stated in a June 11 press conference that factors such as the absence of high-quality initial public offerings (IPOs), governance issues among stakeholders, and the proposed capital gains tax are diminishing investor confidence. He urged the government to withdraw the capital gains tax, asserting that it exacerbates an already bleak market.

Finance Minister AH Mahmood Ali proposed a 15% tax on individual investors’ capital gains exceeding Tk 50 lakh from listed securities in the upcoming fiscal year budget, amid a market downturn. However, Abu Hena Md Rahmatul Muneem, chairman of the National Board of Revenue, argued in a post-budget press conference that taxation was not the root cause of the market’s issues, citing that long-standing tax incentives had not spurred market growth.

Despite these challenges, the benchmark index of the DSE has risen over the last four trading sessions, recovering 174 points to close at 5,244 last Thursday. Stockbrokers attribute this uptick to investor optimism about a potential rationalization of the capital gains tax proposal and a concessional salvage fund for the state-owned Investment Corporation of Bangladesh (ICB).

EBL Securities noted in their daily market commentary that rumors about the possible withdrawal of the proposed capital gains tax have instilled some confidence among cautious investors.

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Dhaka Bourse Skyrockets, Achieving 4-Day Gaining Streak

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Dhaka Stock Exchange DSE, Bourse on the last working day of the week, 20th June, ended with a hike in Indices and Turnover from the previous working session. This information is known from DSE sources.

452 crore 94 lakh taka shares were traded on this day. 206 crore 50 lakh more tradings were done in DSE today compared to the previous workday, June 19th, Shares worth Tk 246 crores 44 lakh shares were traded last time, Wednesday

The benchmark DSEX increased 82.74 points or 5,244 The Shariah-based index DSES added 24.78 points or 1,146, and the blue-chip index DS30 gained by 31.34 points or 1,875.

Of the issues traded, 288 advanced, 55 declined and 50 remained unchanged.

Linde Bangladesh Limited ranked top gainer on DSE, the share price increased by Tk 424.10 paisa or 43.04 percent. On this day, the share was last traded at Tk 1409.40 paisa.

Global Heavy Chemicals Limited ranked top loser on the DSE, the share price dropped by Tk 1.20 paisa or 3.00 percent. On this day, the share was last traded at Tk 38.90 paisa.

DSE topped on trade is Asiatic Laboratories Limited 14 crore 63 lakh takas of company shares have been traded.

A total of 45 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 1 crore 71 lakh 39 thousand 978 shares of the companies were traded. The financial value of which is 113 crore 38 lakh taka.

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National Tea Sets New Subscription Date for Tk279.7cr Placement Shares

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National Tea Company Limited, a publicly traded entity, has announced new subscription dates for its Tk279.7 crore placement shares. Originally slated for nearly a year ago, the subscription had been postponed by regulatory authorities but is now set to proceed following a recent court directive.

According to the company’s disclosure, the subscription period will run from June 19 to August 19 during banking hours. This follows a letter from the Bangladesh Securities and Exchange Commission (BSEC) instructing the resumption of the capital-raising initiative, in compliance with a High Court order.

The primary objective of issuing these placement shares is to fuel business growth, finance working capital, and repay bank loans. However, due to a funding shortfall, the company has been unable to complete its modernization projects and other initiatives, resulting in decreased turnover caused by declining average sale prices in the auction market for its products.

Following the court’s directive, significant progress has been made in implementing the state-owned company’s plans.

In July of the previous year, Jakir Hossain Sarkar, a minor shareholder with just 10 National Tea shares, filed a writ petition with the High Court opposing the company’s scheme to issue fresh shares as approved by the BSEC, alleging unequal treatment of existing shareholders. The court later upheld the BSEC’s approval. Upon a petition by the market regulator, the Appellate Division’s chamber judge temporarily stayed the High Court’s order.

Shareholders have borne the brunt of these legal battles. After the record date, the price of National Tea shares dropped in anticipation of the increased number of shares, and the issuance of placement shares remained uncertain.

In April last year, National Tea received BSEC approval to raise its paid-up capital by issuing 2.34 crore shares at Tk119.53 each, inclusive of a Tk109.53 premium per share. The distribution plan allocated 1.24 crore shares to the government, Investment Corporation of Bangladesh, and Sadharan Bima Corporation at an average ratio of 4.43 new shares for each existing share. Sponsor-directors were allocated 13.8 lakh shares at a ratio of 3.21:1, and general shareholders were to receive nearly 96 lakh shares at a 2.85:1 ratio.

As of Wednesday, National Tea shares closed at Tk388.60 each on the Dhaka Stock Exchange. Founded in 1978 and listed on the capital market in 1979, National Tea cultivates, manufactures, and sells tea and rubber in the local market. The company’s average annual production is about 52 lakh kg of tea, most of which is sold through the Chattogram auction market.

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