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Bi-monthly Journal of the ICMAB Contents ISSN 1817-5090 VOLUME XLVIII NUMBER-03, MAY-JUNE 2020 01 Editorial Editor Mr. Ruhul Ameen FCMA 02 Associate Editors w Mr. G M Omar Faruque Chowdhury FCMA From the President’s Desk w Dr. Md. Saiful Alam FCMA Journal Committee 04 Chairman Mr. Md. Touhidul Alam Khan FCMA National Budget 2020-21 Income Tax and Changes in Vice-Chairman Mr. Safiul Azam FCMA the Income Tax Laws: An Overview Members Mr. Abu Bakar Siddique FCMA Mr. Md. Munirul Islam FCMA Mr. Md. Ali Haider Chowdhury FCMA 15 Mr. Abu Sayed Md. Shaykhul Islam FCMA Budgetary Allocation in the Tourism Industry and Mr. A. K. M. Delwer Hussain FCMA GDP Growth in Bangladesh: An Empirical Analysis Mr. Arif Khan FCMA Mr. Md. Kausar Alam FCMA Mr. A.K.M. Kamruzzaman FCMA 25 Mr. Md. Yusuf FCMA The COVID-19 Pandemic Impacts on Manpower Mr. Hamid Monirul Azam FCMA Export: An Econometric Analysis of Survival Syed Sarwar Hussain FCMA Strategies of Mr. Md. Shaifur Rahman Mazumdar FCMA Recruiting Agencies in Bangladesh Mr. Md. Halimur Rashid Khan FCMA Mr. S.M. Elias Amin FCMA Mr. Mohammad Khurshid Alam FCMA 35 Mr. Biswanath Paul FCMA Tax Amnesty Schemes in Bangladesh: Some Mr. Md. Ejajur Rahman Chowdhury FCMA Observations Mr. Jahangir Hossain FCMA Mr. Md. Siddiqur Rahman FCMA Mr. Mohammed Nazmul Hoque FCMA 41 Mr. Md. Nurul Amin FCMA Impact of Advance- Deposit Ratio (ADR) on Financial Mr. Md. Shafiqul Islam FCMA Performance: Panel Evidence from Commercial Mr. Muhammad Shahid Ullah FCMA Banks in Bangladesh SK. A.H. Md. Imtiaz Hossain FCMA Mr. Mohammad Nazrul Islam FCMA 52 Mr. Md. Jahidul Islam FCMA Mr. J. H. Kazal FCMA Review of the Budget of Prominent Citizens Kazi Md. Siddikul Azam FCMA Mr. Tawfiqur Rahman ACMA 56 Mr. Md. Saifullah ACMA Alternative Investments Mr. Md. Qamruzzaman ACMA Mr. Shah Aziz ACMA Mr. Wahid Ullah ACMA 57 Mr. Nur-Alam ACMA IFRS Update Mr. Mohammad Ruhul Amin ACMA Mr. Mohammed Nurul Alam ACMA Mr. Md. Firoz Hossain ACMA 59 Update on Dhaka Stock Market Publisher Mr. Md. Mahbub-Ul-Alam Executive Director, ICMAB 62 All supervision Mr. Md. Abdul Maleque CMA Students’ World Photography Mr. Sami Al Mehedi Design & Graphics Md. Amirul Islam 64 Print Modina Printers & Publishers, 278/3, Elephant Road, Katabon, ICMAB News Dhaka-1205. Ph.: +88 02 9635081, Email: [email protected] Editorial Office The Institute of Cost and Management Accountants of Bangladesh 70 ICMA Bhaban, Nilkhet, Dhaka-1205, GPO Box No. 2629, Tel.: 9615460 & 9611799 We Mourn E-mail: [email protected], [email protected]

All rights reserved. No part of this publication may be reproduced, duplicated or copied by any means without the prior consent of the holder of the copyright, requests for which should be addressed to the publisher. Bi-monthly Journal of the ICMAB ISSN 1817-5090 VOLUME XLVIII NUMBER-03, May-June 2020

EDITORIAL

he National Parliament has approved the 49th payers in consort with business and investment. This TNational Budget of Tk 5,68,000 crore for the is truly a commendable initiative in the development Fiscal Year 2020-2021.However, the discussions journey of Bangladesh. on and before approving the budget was mainly Education is not only the means of freedom and focused on the issue of combating COVID-19. independence; it is also the bedrock anchor of Because, the human civilization has been striving Human civilization. Therefore, adequate investment across the year to keep its progress by adapting in the health and education sectors is desirable with the new normalcy caused by COVID-19. for addressing the ongoing pandemic and reap the Bangladesh wants to achieve Sustainable benefits of the demographic dividend by transforming Development Goals (SDGs) by 2030 and become the population into viable human resource for the a developed economy by 2041. The country has Fourth Industrial Revolution. Accordingly, UNESCO reached outstanding successes in achieving GDP has recommended for allocating 7% of GDP to the growth over last few years under the visionary education sector. But the Government has allocated leadership of Honorable Prime Minister Sheikh only 2.09% of GDP for education sector. In addition, Hasina. But, due to COVID-19 pandemic, various allocation in health sector has been increased from important sectors of the country together with the Tk.25.732 crore to Tk.29,247 crore in the current RMG sector and remittance income are at serious budget. A lump sum of Tk.10,000 crore has also risk, Consequently, poverty and unemployment been provided for emergency COVID-19 outbreak. rate of the country has been increasing. In this We feel that this increase isn’t suitable enough for situation, the revenue collection target has been ensuring health care facilities of the mass people. set at Tk 3,78,000 crore which is nearly the same However, we strongly believe that good governance as last year’s target of Tk 3,77,810 crore which will be ensured in the implementation of the budget might be a difficult task for NBR. Besides, the tax and common people will enjoy its overall benefits. free income has been increased to Tk 3,00,000 Finally, we thank our Hon’ble Finance Minister who is from Tk 2,50,000, which was a precious desire a Professional Accountant, for his timely presentation of the tax payers. Reducing the minimum tax of this year’s budget in a global pandemic situation. rate from 10% to 5% and the maximum tax rate from 30% to 25% will be encouraging for the tax Ruhul Ameen FCMA

THE COST AND MANAGEMENT 1 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 From the President’s Desk

Bismillahir Rahmanir Rahim

ear Members, the role of professional accountant during the DAssalamualaikum. pandemic. I mentioned that though there is a circular issued in 2001 regarding cost audit Hope you are doing well with your family but it is not fully implemented yet in all the members during the pandemic. I pray to listed companies in Bangladesh. I emphasized the Almighty Allah for your sound health on implementation of cost audit immediately and mental happiness. I also pray for all the for all the listed companies. I appreciated the departed souls and the people who are stimulus packages offered by the government affected by the pandemic COVID-19 virus. to support the emergency healthcare services, In the meantime, we have successfully organized to protect jobs and to achieve smooth the international webinar on “Challenges economic recovery. Dr. Md. Jafor Uddin and Role of Professional Accountants amid stated that professional accountants have the and post Covid-19 era” on June 05, 2020. ability to contribute in the recovery process Dr. Md. Jafar Uddin, Secretary, Ministry of to tackle the damages done by COVID-19. Commerce, Government of the People’s He emphasized the importance of cost audit Republic of Bangladesh graced the occasion process and assured to take necessary steps to as the Chief Guest. I believe that global actualize the implementation of cost audit for leaders and professional bodies of accountants all listed public limited companies. Prominent should work together to face the challenges cost and management professionals from India, due to COVID -19. I particularly focused on Sri Lanka, Pakistan, Nepal and Bangladesh

THE COST AND MANAGEMENT 2 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 were present as speakers in the webinar. for the development of the institute as well as Members of SAFA, CAPA and IFAC holding our members. I convey my sincere gratitude responsible positions in different national and to all the Resource Persons and members multinationals companies also attended in the for their active participation and cooperation webinar as participants. in the national and international webinar programs. We are continuing our assistance We also organized a webinar on pre-budget for our beloved members and students by discussion session on national budget 2020- giving financial support and engaging doctor’s 21 on 29 May 2020. It is our moral duty to service when necessary. contribute to the government in budget issues and I hope that CMA professionals will be We are determined to implement cost able to help the government in the process of audit and certification of cost of goods sold revenue collection and ensure transparency statement by the CMA members and we are and accountability in every sector. We gave trying our level best to convey our message to total thirteen proposals on behalf of the the Chairman of the BSEC, Secretary, Ministry institute. We particularly emphasize on cost of Commerce and other related parties of the statement signed by the cost and management Government. Moreover, we are planning to accountant (CMA), implementation of tax and develop our institute in a new height and we vat audit, audit process, increase rebate of the have the plan to reform the existing education deposit pension scheme, increase the income and examination systems, develop the course slab of individual tax return, reduce the tax rate curriculum considering market demand, for the professional accountant including the develop the quality of journal in an international consultant, increase the budget in health and standard, introduce the soft skill development medical, food and agricultural sector, industry programs, creation of job, organize CPD, and capital market development, disaster workshop and training program using online management, garments, transport, and social platforms for our members. I firmly believe protection, etc. in our proposal. I believe that that with your support and blessing, we shall be survival should be the priority in our budget able to implement all our commitment on time and we will recover the economic loss in and uphold the image of the CMA profession near future after the pandemic. Prominent in a new level, inshaallah. government officials, tax officials, researchers, “Keep our distance, wash our hands, think practitioners and professionals were present of others and play our part. All together.” as the discussant in the webinar.

We are consistently organizing series of webinar programs using the online platforms Md. Jasim Uddin Akond FCMA

THE COST AND MANAGEMENT 3 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 National Budget 2020-21 Income Tax and Changes in the Income Tax Laws: An Overview

Md. Abdus Satter Sarkar, FCMA, FCA Partner Mahfel Huq & Co. Chartered Accountants [email protected]

Abstract The national budget for fiscal year (FY) 21 has been announced at a time when the economy has been worst hit by the novel coronavirus (COVID-19) pandemic ever in the history of Bangladesh. In the Budget of 2020-21 and consequently through Finance Act 2020, we observed a lot of changes in Income Tax structure and rates. This paper broadly analyzes all the recent changes and amendments in income tax laws and its effects.

Like previous years, there is a scope for the undisclosed income holder to disclose those income by paying tax in a prescribe rate. Sufficient allocation has been made in the budget to satisfy the needs of all Ministries and Divisions to address the impact of COVID-19 outbreak. Government has started implementing the VAT Act, 2012. However, it seems that due to the impact of the COVID-19 pandemic, revenue income and expenditure will be significantly lower than expected.

1. Introduction On 11 June 2020, present Finance Minister Mr. A. H. M. Mustafa Kamal, FCA, MP, has placed the National Budget 2020-21 in the Parliament in the second budget session of the current government. The budget for the financial year (FY) 2020-21 is the country’s 49th budget and the 21st budget of the Awami League government. The motto of this budget is Economic Transition and Pathway to Progress. The Bangladesh economy, from the very beginning of the ongoing fiscal year, has been grappling with formidable challenges which have been exacerbated by the outbreak of COVID-19. The tax proposals in the budget are directed towards creating trust, bringing in certainty, attracting investments and in reducing litigation. The key

THE COST AND MANAGEMENT 4 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 features of the tax proposals that deserve a special Budget Statement mention are reduction of tax rates for individual Sector Budget Revised taxpayers in lower income range. Besides, the tax- 2020-21 2019-20 free benefit has been reintroduced for the income Revenue and Foreign Grants from investment in zero-coupon bonds against the Tax revenue 345,000 313,067 demand by the businessmen. The government has Non-tax revenue 33,000 35,002 also withdrawn the proposal on rebate against the Foreign Grants 4,013 3,454 payment of VAT in importing raw materials under the Total Revenue and Grants 382,013 351,523 Finance Bill, passed in voice votes. Expenditure The total outlay of budget for FY 2020-21 is Tk. Non-Development Revenue Expenditure 311,190 274,907 568,000 crore. This size is 13.2% higher than the size Development Expenditure 215,043 202,349 of revised budget for FY 2019-20 of Tk. 501,577 Other Expenditure 41,767 24,321 crore. To finance this expenditure, the total revenue Total Expenditure 568,000 501,577 target (excluding foreign grants) for FY2020-21 is Tk. Budget Deficit (Excluding Grants) 190,000 153,508 378,000 crore, which was Tk. 348,069 crore in the External source (Including Grants) 80,017 56,163 revised budget of FY2019-20 (i.e., 8.6% increase). Domestic source 109,983 97,345 About 66.5% of total expenditure will be financed by Financing of deficit 190,000 153,508 the targeted revenue sources, which was only 69.4% Source: Annual Budget Statement, 2020-21 in last year’s according to revised budget. The budget is 17.91% of gross domestic product (GDP) which is Economic Review 2019-20 very much similar comparing to previse year revised budget 17.88% of GDP. In FY 2020-21 total revenue FY 2019-20 VS FY 2020-21 (Revised) excluding foreign grants is 11.9% of GDP, which was Total Expenditure Total Expenditure 12.4% of GDP in the revised budget of FY 2019-20. 501,577 Crore 568,000 Crore The tax-GDP ratio is still far below than expected (8.91% in actual for FY2018-19, 11.16% in revised Total Income Total Income budget of FY2019-20 and 10.88% in original budget 348,069 Crore 378,000 Crore of FY2020-21 against the corresponding planned GDP Growth GDP Growth rates of 13.1% in FY2018-19 and 14.1% FY2019-20 5.2% 8.2% respectively according to the 7th Five-Year Plan). In Inflation Inflation this paper, overall taxes and non-taxes issues of the 5.63% 5.4% budget and the structure of the Finance Act 2020 https://www.bb.org.bd/econdata/inflation.php have been discussed in brief and overall changing of the income tax of the budget have been analyzed 2. Revenue Collection Synthesis and presented. An analytical review of the inclusion, The revenue collection target has been set substitutions, deletions and revisions in the income in the budget for FY2020-21 at Tk. 378,000 tax laws approved as Finance Act 2020 and other crore (excluding grants) and FY2019-20 relevant SROs (statutory rules and orders) has also budget has been revised by Tk. 348,069 crore. The been presented in the paper. revenue collection budget is increased by 8.6% (which was 38.2% in preceding year comparing revised budget of FY 2019-20 and actual budget 2018-19). The NBR has been tasked to collect revenue of Tk. 330,000

crore as tax revenue, the non-NBR tax revenue collection target is Tk. 15,000 crore while the non- tax revenue collection target is Tk. 33,000 crore and Tk. 4,013 crore will come from foreign grants. NBR’s tax collection target has been increased by 10.2% more than previous year revised budget. There is a slight difference between percentage growth in total

THE COST AND MANAGEMENT 5 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 revenue including foreign grants and that excluding foreign grants (8.7% including foreign grants vs. 8.6% excluding foreign grants), although there is a higher target of foreign grants (Tk. 4,013 crore in FY2020-21 against Tk. 3,454 crore in revised budget of FY2019-20, raised by 16.2%). Out of total revenue target (excluding foreign grants) of Tk. 378,000 crore, tax revenue consists of 91.27% and remaining 8.73% is non-tax revenue. Out of total revenue collection target tax revenue target is Tk. 345,000 crore (which is 10.2 percent higher from the revised target of Tk. 313,067 crore). Among the total tax revenue target value added tax (VAT) will contribute the highest 36.3 percent. Then income tax will contribute 30.1 percent, the second highest share of total tax target. Of the other taxes collected by the National Board of Revenue (NBR), supplementary duty will contribute 16.8 percent, customs duty 11 percent, excise duty 1.1 percent, and other taxes and duties 0.4 percent. The non-NBR taxes in total including the Surcharges (Health Development, Environmental Safety and Information Technology Development) will contribute only 8.7 percent of total tax target, where a new line-item has been added in the budget. Total income tax revenue target for FY 2020-21 is Taka 103,945 crore which is only 1.0 percent increase over that of revised budget for FY 2019-20. The amount of income tax target in FY2020-21 is 30.1 percent of the total tax target of Tk. 345,000 crore, 31.5 percent of the NBR’s tax collection target of Tk. 330,000 crore and 27.5 percent of the total revenue (excluding foreign grants) target of Tk. 378,000 crore. In FY2020-21, income tax will finance 18.3 percent of total expenditure of Tk. 568,000 crore. The income tax GDP ratio was 3.28 percent.

3. Structure of the Finance Act 2019 After the presenting the budget for the FY 2020-21 the Finance Minister in consequence placed the Finance Bill 2020 in the Parliament to effect the fiscal measures proposed in the national budget 2020-21. The Finance Bill was passed on 29 June 2020 in the Parliament without major changes and Presidential acceptance was given to it on 30 June 2020 and published in the official Gazette on the same day as the Finance Act 2020 (Act No. 09 of 2020). The summaries structure of the Finance Bill 2020 (FB 20) and the Finance Act 2020 (FA 20) are as follows: Chapter Coverage of the Laws Finance Bill 2020 Finance Act 2020 (placed on 13.6.2019) (passed on 29.6.2019) Range No of Section Range No of Section First Preliminary 1 01 1 01 Second Excises and Salt Act, 1944 2-7 06 2-7 06 (Act No. I of 1944) Third Customs Act, 1969 8-15 08 8-15 08 (Act No. IV of 1969) Fourth Income-tax Ordinance, 1984 16-53 38 16-53 38 (Ord. No. XXXVI of 1984) Fifth Value Added Tax and Supplementary Duty Act 2012 54-81 28 54-81 28 (Act No. 47 of 2012) Sixth Repeal and Custody 82 01 82 01 Seventh Schedules ------Eighth Declaration ------Statement regarding Object and Reason -- -- Total 1-82 82 1-82 82

Sources: The Finance Bill 2020; The Finance Act 2020.

THE COST AND MANAGEMENT 6 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 Government has started implementing the Value Added Tax and Supplementary Duty Act 2012 (VAT-SD Act), the significant changes (about 34%) have been made in the VAT-SD Act considering the number of sections in the Finance Act 2020. Thereafter, major changes (about 46%) have been made in the Income-tax Ordinance 1984 (ITO) under similar comparison. A review of these changes is presented below.

4. Amendments in the Income Tax Ordinance Here we describe the salient structural and other changes in the income tax rates and other changes made in income tax laws.

4.1. Structural changes: According to assessment year 2019-20 there are 23 Chapters, 360 Sections and 7 Schedules. Changes done in IT Ordinance, 1984 by Finance Act, 2020 are: New sections inserted: 6 sections (sections 16H,19AAAA, 19AAAAA, 31A, 32A, and 184G) Existing section deleted: no section deleted; Existing sections substituted: 3 sections (sections 51, 52Q, and 53BBB); Existing sections amended: 26 sections (sections 2, 19BBBBB, 28, 30, 33, 42, 46BB, 52, 52A, 52AA, 52C, 52R, 52U, 53BB, 53BBBB, 53E, 56, 68, 68B, 75, 75A, 80, 82C, 124, 158, and 184A); and Existing Schedule amended: 2 Schedules (First Schedule, and Sixth Schedule). After amendment, for AY 2020-21, there are 23 Chapters, 366 sections and 7 Schedules.

4.2. Income Tax Rates: Tax Rate for Non-Corporate Taxpayers: Rates and slab of income tax for individual (including non-resident Bangladeshi), Hindu undivided family, partnership firm, fund, trust, NGO and every other artificial juridical person (except business of cigarette, bidi, jorda, gul and all tobacco products) are as follows:

Tax Exempted Income Tax Payer Previous Slab (Tk.) Current Slab (Tk.) General Tax Payer 250,000 300,000 Women and senior citizens (65+) 300,000 350,000 Physically challenged persons 400,000 450,000 War-wounded gazette freedom fighters 425,000 475,000 For parents or legal guardians of physically challenged persons, the Nil Tax Limit would be increased by BDT 50,000.

THE COST AND MANAGEMENT 7 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 General Tax Rate Income Slabs Income Slabs Tax Rate Tax Rate (Previously) (Current) (Previously) (Current) Up to Tk. 250,000 Up to Tk. 300,000 Nil Nil Next Tk. 400,000 Next Tk. 100,000 10% 5% Next Tk. 500,000 Next Tk. 300,000 15% 10% Next Tk. 600,000 Next Tk. 400,000 20% 15% Next Tk. 3,000,000 Next Tk. 500,000 25% 20% On balance On balance 30% 25% Tax rate for an association of persons is proposed at the rate of 32.5% previously it was as like as individual tax rate. For an individual who is a non-resident (not non-resident Bangladeshi), the rate of income tax would be 30% on his total income as before. Tax-free limit of income of all female taxpayers, senior male taxpayers aging 65 years and above is revised at Tk. 3,50,000, previously it was Tk. 3,00,000. Tax free limit of individuals with disability is revised at Tk. 4,50,000, previously it was Tk. 4,00,000 and that of gazetted war-wounded freedom fighters is revised at Tk. 4,75,000, previously it was Tk. 4,25,000. Tax-limit of income of the parents or legal guardian of the person with disability will be Tk. 50,000 higher (for each child with disability) as like before. Only one of the parents can avail the benefit. Any person registered under section 31 of the Persons with Disabilities Rights and Protection Act, 2013 would be considered as “person with disability”. Minimum tax for any individual category of taxpayer has been proposed the same as the one in previous year which is shown below:

Sl. No. Location of taxpayer Minimum tax (Taka) 1. Dhaka North City Corporation, Dhaka South City Corporation and 5,000 Chittagong City Corporation 2. Other City Corporations 4,000 3. Areas other than City Corporation 3,000 If an individual taxpayer is the owner of small and cottage industry and is engaged in manufacturing in less or least developed area, he/she shall get tax rebate same as previous year which is shown below:

Particulars Rate of tax rebate Where in the concerned year the volume of 5% of income tax payable on income from the small production is between 15% to 25% more than that of and cottage industry the previous year Where in the concerned year the volume of production 10% of income tax payable on income from the small is more than 25% above of that of the previous year and cottage industry Less and least developed areas have been defined in clauses (b) and (c) of sub- section (2A) of section 45 which are as follows: b) if the undertaking is set up in such areas as the Board may, by notification in the official Gazette, specify to be "Least Developed Areas", for a period of nine years beginning with the month of commencement of commercial production of the undertaking;

THE COST AND MANAGEMENT 8 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 c) if the undertaking is set up in such areas as the Board may, by notification in the official Gazette, specify to be "Less Developed Areas", for a period of seven years beginning with the month of commencement of commercial production of the undertaking. l Additional tax rebate of Tk. 2,000 has been proposed to all the taxpayers who will file their income tax returns online for the first time.

Changes in the Rates of Surcharge: Individuals having net wealth above Tk. 3 crore has to pay surcharge as like before at the following rates on their net tax payable:

Assessment Year 2019-2020 Assessment Year 2020-2021 Total net worth Rate Total net worth Rate Up to Tk. 3 crore Nil Up to Tk. 3 crore Nil More than Tk. 3 crore but not more than 10% More than Tk. 3 crore but not more than 10% Tk. 5 crore; Tk. 5 crore; Or, taxpayer having more than Or, taxpayer having more than 01 motor 01 motor vehicles in his/her own name; vehicles in his/her own name; Or, taxpayer having house property in city Or, taxpayer having house property in city corporation measuring more than 8,000 corporation measuring more than 8,000 square feet square feet More than Tk. 5 crore but not more than 15% More than Tk. 5 crore but not more than 15% Tk. 10 crore Tk. 10 crore More than Tk. 10 crore but not more than 20% More than Tk. 10 crore but not more than 20% Tk. 15 crore Tk. 15 crore More than Tk. 15 crore but not more than 25% More than Tk. 15 crore but not more than 25% Tk. 20 crore Tk. 20 crore More than Tk. 20 crore 30% More than Tk. 20 crore 30% Minimum surcharge, if applicable, for individual taxpayer having net wealth more than Tk. 3 crore but not more than Tk. 10 crore or taxpayer owning more than 01 motor vehicles or taxpayer having house property in city corporation measuring more than 8,000 square feet will be Tk. 3,000 for the assessment year 2020-2021 and for the individual taxpayer having net wealth over Tk. 10 crore the minimum surcharge has been retained same at Tk. 5,000 for the assessment year 2020-2021 as in the assessment year 2019-2020. For assessees having net wealth more than Tk. 50 crore, minimum surcharge will be higher of 0.1% of net worth or 30% of tax payable on total taxable income. Notes: 1) net worth means the demonstrable total net worth, which will be shown in the statement of assets, liabilities, and expenses according to section 80 of Income Tax Ordinance, 1984; and 2) motor vehicles mean the private car, zip or microbus. Manufacturers of cigarette, bidi, jorda, gul and all other tobacco products shall pay 2.5% surcharge on the income earned from the said business.

Corporate Tax Rates: A brief picture of the corporate tax rates proposed for the assessment year 2020- 2021 and previous assessment year 2019-2020 is shown in the table below:

THE COST AND MANAGEMENT 9 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 Sl. Particulars Assessment year No. 2019-2020 2020-2021 a. Publicly traded companies (except banks, insurance companies, 25% 25% financial institutions, merchant banks, mobile phone operators and tobacco-based product manufacturing companies) b. Non-listed companies including branch offices (except banks, insurance 35% 32.5% companies, financial institutions, merchant banks, mobile phone operators and tobacco-based product manufacturing companies)* c. i) Mobile phone operator companies (not publicly traded) * 45% 45% ii) Mobile phone operator companies (publicly traded by transfer 40% 40% of 10% share of paid-up capital through stock exchange of which maximum 5% must be through pre-initial public offering) d. Banks, insurance companies, financial institutions (except merchant 37.5% 37.5% banks) which are publicly traded e. Not publicly traded banks, insurance companies, financial institutions 40% 40% (except merchant banks) f. Merchant banks 37.5% 37.5% g. Manufacturing companies of cigarette, bidi, jorda, gul and all tobacco 45% 45% products h. Any person other than companies engaged in manufacturing of 45% 45% cigarette, bidi, jorda, gul and all tobacco products i. Any dividend received from a Bangladeshi registered company or profit 20% 20% repatriation by a foreign company who is not registered in Bangladesh j. A Co-operative society registered under the Co-operative Society 15% 15% Act, 2001 k. An association of persons Slab rate as like 32.5% as individual tax rate l. Manufacturer & exporter of Knitwear and Woven Garments ** 12% 12% (10% for (10% for factories having factories having ‘Green Building ‘Green Building Certification’) Certification’) m. Manufacturer of yarn related to production of fabrics, (dying, finishing 15% 15% & conning of yarn), (Manufacturing, dying, finishing & printing of fabrics or engagement in any other activity in similar nature) *** n. Manufacturer of Jute Products **** 10% 10%

* Non-listed companies will receive rebate of 10% in the year of listing if they list at least 20% of their paid-up capital through initial public offering. ** The deadlines of SRO No. 217-Law/Income Tax/2019 dated 23 June 2019 has been extended another 2 years. *** Vide SRO No. 218-Law/Income Tax/2019 dated 23 June 2019. **** Vide SRO No. 314-Law/Income Tax/2019 dated 03 August 2019. • School, College, University and NGO would be subject to excess income tax of 5%, if special arrangement facilitating the disabled persons was not made. • If an assessee appoints minimum 10% physically handicraft individual of total employee as an appointment authority then such assessee shall get 5% tax rebate on income tax payable.

THE COST AND MANAGEMENT 10 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 4.3. Submission of Return (Including Withholding 4.5. Exemptions & Rebates: Tax Return) & Obtainment of E-TIN: 1) An Association of Persons will be able to adjust 1) Any person participating in shared economic its business loss against its income from any activities by providing motor vehicle, space, other head. But the proportionate loss cannot be accommodation or any other assets or owning adjusted by its members with their own income, any licensed arms will submit income tax return nor can it be carried forward by the members [Section 75]; for the purpose of setting off [Section 42 (3A) & (3B)]; 2) Any individual, who is required to have 12-digit TIN under section 184A will mandatorily submit 2) Some new industries will be brough under the income tax return (except who has no taxable umbrella of Tax Holiday, e.g. electrical transformer, income but is required to have Etin for selling a artificial fiber, automobile parts or components land or obtaining a credit card) [Section 75]; manufacturing, automation & robotics design, 3) Now, University, English Medium School, local artificial intelligence based design and/or authority, artificial juridical person will be required manufacturing, nanotechnology based products to submit withholding tax return [Section 75A]; manufacturing, aircraft heavy maintenance services including parts manufacturing [Section 4) Limit of gross wealth will be increased to Tk. 40 46BB(2)]; lakh (which was Tk. 25 lakh) for the mandatory submission of statement of assets, liabilities & 3) Pension and gratuity from only approved funds expenses. A person, not being a shareholder will be eligible for exclusion from total income director, may opt not to submit statement of [Para 8 & 20 of 6th Schedule, Part A]; expenses if his total income does not exceed Tk. 4 lakh (previously it was Tk. 3 lakh) [Section 80]; 4) Income earned by alternative investment fund recognized by BSEC will be excluded from 5) Obtainment of e-TIN has been made mandatory total income [Para 54 of 6th Schedule, Part for participants in Zilla Parishad election or shared A]. Previously this exclusion was applicable for economic activities providing motor vehicle, space income earned from alternative investment fund; accommodation or any other assets [Section 184A]; 5) Additional rebate of Tk. 2,000 may be availed in the case of submission of income tax return through online for the first time by the new 4.4. Special Tax Treatment in Respect of Undisclosed assessees [Ref: Salient Features published by Property, Cash etc.: NBR]. 1) Subject to some conditions, no authority including income tax authority will raise question to the source of income for any investment made in 4.6. Relaxation on Submission of AIT and Increase listed securities tradable in capital market, if the in Tax for Motor Car: assessee pays tax @ 10% on the amount to be so 1) For a new assessee, if his total income exceeds invested [Section 19AAAA]; Tk. 6,00,000; then he will be liable to pay advance 2) Subject to paying certain rate of income tax, income tax; which was previously Tk. 4,00,000 no authority including income tax authority will [Section 68]; raise any question on investment in land and/ 2) Advance tax for motor vehicle will be increased. or building and/or cash/bank deposits [Section A comparison between AY 2019-20 tax and AY 19AAAAA]; 2020-21 tax has been outlined below: 3) Special tax treatment for only residential buildings/apartments will now be applicable for any building/apartment [Section 19BBBB].

THE COST AND MANAGEMENT 11 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 Sl. Type and engine capacity Existing Proposed No. amount of tax (BDT) amount of tax (BDT) 1. A car or jeep not exceeding 1500 cc 15,000 25,000 2. A car or jeep exceeding 1500 cc but not 30,000 50,000 exceeding 2000 cc 3. A car or jeep exceeding 2000 cc but not 50,000 75,000 exceeding 2500 cc 4. A car or jeep exceeding 2500 cc but not 75,000 1,25,000 exceeding 3000 cc 5. A car or jeep exceeding 3000 cc but not 1,00,000 1,50,000 exceeding 3500 cc 6. A car or jeep exceeding 3500 cc 1,25,000 2,00,000 7. A microbus 20,000 30,000

4.7. Limiting Allowable Expenditures: 1) In the case of a holding company/group of companies, profit for income of subsidiary or associate or joint venture would be excluded from net profit from business or profession for the computation of allowable limit of royalty, technical service fee, technical knowhow fee, technical assistance fee or any fee of similar nature [Section 30(h)];

2) Overseas travelling will be allowed up to 0.50% of the disclosed turnover instead of 1.25% thereof [Section 30(k)];

3) Promotional expense will be allowed up to 0.50% of the disclosed turnover [Section 30(p)].

4.8. Tax Deducted at Sources (TDS): 1) Deduction at source from discount, interest or profit on securities will be at the time of making payment or credit, whichever is earlier [Section 51];

2) The amount of deduction at source for distributors will be changed from whose tax has already been deducted under section 53E(3) [Section 52];

3) Any sharing economy platform including ride sharing service (though it has already been there), coworking space providing service and accommodation providing service will be subject to deduction of income tax at source [Section 52AA];

4) Deduction at source from compensation against acquisition of property will be increased from 2% to 6% and from 1% to 3% [Section 52C];

5) Any income including revenue sharing from abroad will be subject to deduction of income tax @ 10%, except foreign remittance earned in abroad as per para 48 of 6th Schedule, Part A and IT Enabled Service as per para 33 of 6th Schedule, Part A [Section 52Q];

6) BTRC’s income from international phone call will be subject to deduction of tax @ 7.5% [Section 52R];

7) Food items and other necessary products which were not subject to deduction of income tax under a local letter of credit will now attract 2% tax deduction at source [Section 52U];

8) Export of goods will attract deduction of income tax at source @ 0.5% [Section 53BB & 53BBBB];

9) In the case of transaction of shares and mutual fund in the stock exchange, tax @ 0.05% will be deducted

THE COST AND MANAGEMENT 12 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 at source and in the case of transaction of other securities, 10% tax will be deducted on commission received or receivable [Section 53BBB];

10) Dividend to any non-resident fund or trust would be subject to deduction of income tax @ 20%, instead of 30% [Section 56].

4.9. Minimum Tax: 1) TDS from professional service, technical services fee or technical assistance fee and wheeling charge for electricity transmission would be subject to minimum tax [Section 82C]; 2) Any individual having gross receipt of Tk. 3 crore or more would be subject to minimum tax on gross receipt @ 0.50% [Section 82C].

4.10. Extending Scope of Tax (Capital Gain and Additional Tax on Inconsistence Information): 1) Selling of business or undertaking entirely would 5. Conclusion be now measured with fair market value [Section A significant change in Income Tax 2(30)] and capital gain would be computed Ordinance, 1984 is adopted through the therefrom [Sections 31A and 32A]; Finance Act 2020. Six new sections have 2) Difference between actual and shown/claim been inserted, no sections have been investment, import and export made will be deleted, three sections have fully been substituted subject to income tax of equal to 50% of the and twenty-six other sections and two schedules difference [Section 16H]. have been amended. For individual assessee, there are changes in the income slabs or corresponding tax 4.11. Power of NBR to Extend Time Limit: rates. This changes appear to benefit the lowest and The National Board of Revenue (NBR) will be the highest segments of income earners, leaving out bestowed power upon them in order to extend middle-income group people. Analyzing tax measures, or condone any time limit as per provision of the individuals with a monthly gross salary between Ordinance due to epidemic, pandemic or any other Tk. 60,000 to Tk. 1 lakh would gain the most – a acts of God [Section 184G]. maximum of 62 percent in tax exemption – through this amendment. From a revenue perspective, we need to review which of these taxpayer groups 4.12. Others: will contribute to higher amounts of revenue. If it 1) Failure to submit return under section 103A (air is the people whose salary is between Tk. 60,000 transport business of nonresident) would cause and Tk. 100,000, tax revenue might be adversely to impose penalty under section 124(2); affected due to an increase in the tax-free income 2) If the Commissioner of Taxes agrees to waive the threshold and a decrease in the highest rate of tax. mandatory payment of 10% tax for filing appeal Also, scope of investment of undisclosed income by to Tribunal of an assessee, he will give such order paying taxes at the rate of 10% has been extended to within 30 days from the date of receipt of such invest in securities by an individual assessee. Special application of the assessee [Section 158(2)]; Tax Treatment in respect of undisclosed property, 3) Local authority will be included as employer to be cash, etc. in a prescribe rate. Existing provision on meant for approved provident fund and approved investment of undisclosed income by any person gratuity fund [1st Schedule, Part B in the construction or purchase of any residential

THE COST AND MANAGEMENT 13 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 building or apartment has been revised to any building. Corporate tax rate structure is not changed except the Non-Publicly Traded Company which is reduced by 2.5 percent and fixed at 32.5%. A good number of incentive measures has newly been introduced or the time limit of existing incentives has been extended for one to five years. Applicability of existing reduced rates of 12% to 15% for manufacturer and exporter of readymade garments have been further extended for another two years. Computation of capital gains from the transfer of business or undertaking has been newly decided. Advance Tax on Car or Jeep is increased by Tk. 10,000 to Tk. 75,000 in accordance of engine capacity.

References w Bangladesh Annual Budget 2020-21: Budget in Brief. w Bangladesh Revised Annual Budget 2019-20. w Bangladesh Actual Annual Budget 2018-19. w Bangladesh The Finance Bill 2020. w Bangladesh The Finance Act 2020. w Bangladesh–Budget Speech 2020-21. w Bangladesh Seventh Five-Year Plan.

THE COST AND MANAGEMENT 14 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 Budgetary Allocation in the Tourism Industry and GDP Growth in Bangladesh: An Empirical Analysis

Dr. Mohammad Badruzzaman Bhuiyan Md. Ziaul Haque Professor Assistant Professor Department of Tourism and Hospitality Management Department of Management Information Systems University of Dhaka Noakhali Science and Technology University Email: [email protected] Email: [email protected]

Abstract This study attempts to investigate the impact of the spending from national allocation to the tourism industry on gross domestic product (GDP) growth rate of Bangladesh for the period from FY 1998-99 to 2018-19 as well as the causal relationship between these two elements. Existence of unit root in each of the time-series data is tested by Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests. This study applies the Johansen- Juselius cointegration technique to observe the long-run association between budgetary allocation in the tourism industry and GDP growth. Empirical analysis asserts the existence of a long-run relationship between budgetary allocation in the tourism industry and GDP growth. Moreover, the Granger causality test shows that there is a causal relationship between the budgetary allocation in the tourism industry and GDP growth. Finally, the Vector Autoregression Estimates explores that allocation of the national budget in the tourism industry has a positive effect on GDP growth rate. Keywords: Budgetary Allocation, Tourism Industry, GDP Growth, Long-run Relationship, Granger Causality Test.

THE COST AND MANAGEMENT 15 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 Section two presents the related literature, which is 1. Introduction followed by the methodology section. Afterwards, the Tourism is a growing industry in Bangladesh which analysis of empirical results is presented. Finally, the embraced 4.4% of the total GDP in 2018 (UNWTO, paper ends with implications, recommendation and 2019). The government has allocated Tk 34 billion conclusion. in FY2019-20 in Civil Aviation (Biman) and Tourism Ministry which is more than double allocation of the last fiscal year which specifies that the government of 2. Literature Review Bangladesh is giving importance to the Tourism sector. Since tourism spending is related to the demographic The tourism industry in Bangladesh is exceedingly profile of society and the lifecycles of tourists, studies powered by MSMEs (Micro, Small and Medium have explored the factors that drive decision-making Enterprises), in particular in restaurants, regional about tourism spending. Majority of the scholars hotels, tour operators and recreational activities. propose that budgetary allocation influences travel The tourism sector currently does not enjoy any industry uses significantly. Most observational government financial support such as cash benefits, research also indicates the important effect of income tax holidays and VAT exemptions on imports (Uddin, on holiday decisions. Fredman (2008), Nicolau and 2019). Más (2005), and Wang, et al. (2006) allude to pay as The assessment of public finances is usually defined an intermediary variable for budgetary requirements in terms of their allocation function by 3E criteria; in investigations of the impacts of budgetary such as efficiency, effectiveness and economy. limitations on movement cooperation. The outcomes Inbound tourism can contribute to economic growth demonstrate that budget has a critical, positive impact in several ways: tourism brings new technologies for on the travel industry consumptions. Rudez (2008) the production process that significantly provides finds that GDP has a critical, positive impact on the foreign exchange services (McKinnon,1964). Tourism universal travel industry uses of Slovenians during stimulates the competition, accelerates the investment 1994-2006. The researcher’ outcomes likewise show in production and human capital (Lemmetyinen and that increments in budget or the GDP of the host Go, 2009). Besides, tourism stimulates industrial nation support the number of outbound vacationers development through spillover effect (Cernat and and the travel industry uses. Lim et al. (2009) utilize an Gourdon, 2012). Travel industry creates new job autoregressive moving normal model with illustrative opportunities and promotes earnings in the economy exogenous factors to inspect the global travel industry (Lee and Chang, 2008). Finally, Tourism accelerates demand of Japanese visiting Taiwan and New Zealand favourable economic externalities which supports from the earliest quarter of 1980 through the second the economic growth of the country (Croes, 2006). quarter of 2004. The outcomes show that the number Tourism is considered as an emerging indicator of of voyagers in the past can catch the travel industry economic growth in majorities of the countries of the demand. world comparing other factors of economic growth There is a fantastic correlation between demand for (Shahbaz et al., 2016). Moreover, Ridderstaat and worldwide tourism and the real income of origin Croes (2015) discovered an association between countries. Wang (2009) examines the outcomes of national budget allocation and tourism demand cycle. crises and macroeconomic activities on demand for From our previous discussion, it is evident that there is inbound tourism in Taiwan and finds that both budget a positive association between budgetary allocation in and exchange rate are large explanatory variables. the tourism industry and economic growth, based on Divisekera (2010) investigates the expenditure of this background, the objective of this current study is vacationers from New Zealand, UK, USA, and Japan, to investigate the plausible linkage between economic the four major consumer markets of Australian growth and the allocation of the national budget in the tourism. The outcomes exhibit that price and tourism industry. It also seeks to look empirically at the earnings stages are the key determinants of customer causal link between national budget allocation in the behaviour. Expenditures are notably sensitive to tourism industry and economic growth in Bangladesh. earnings but much less touchy to fee levels. Dolnicar The remaining of this paper organized as follows. et al. (2008) accept as true with that the decision of

THE COST AND MANAGEMENT 16 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 whether or not or no longer to travel, the selection the vast majority of their travel industry uses when of unique holidays and non-vacation expenditures costs increment. are interdependent and concurrent, concern to time Kareem et al (2017) used vector error correction and finances constraints. Alegre et al. (2010) examine model and found a positive association between the financial, social, and demographic variables and economic growth and budgetary allocation in take into account different constraints and household agriculture sector in Nigeria. Chugunov and Makohon characteristics, such as health, education, age, and (2019) explored budgetary allocation particularly unemployment, that is, factors that can affect tourism in tourism industry plays significant role in socio budgets. economic development. Hodzhiyevich et al. (2018) Their empirical analysis finds out that budgetary proposed the mechanism for effective regulation of constraints have full-size binding effects on tourism budgetary allocation and found a fantastic association participation for households in Spain. Household among different allocation items and economic tourism participation is an additional concern to growth. Zeti, and Dragoe (2020) found that effective the influence of monetary variables (e.g., income, budget programming particularly allocation in tourism family financial savings capacities, family member industry which realistically anticipates the concrete unemployment, unemployment benefits), as nicely conditions of economic and social life, is a stimulating as the outcomes of nonfinancial variables (e.g., factor for progress and economic development. education, age, health, the range of minors, get Iddrisu et al. (2020) explored that allocation of budget admission to accommodation). Yap and Allen (2011) in agriculture sector promotes economic growth of use a three-stage least squares method to have a Ghana. look at Australia’s home tourism demand. Their consequences propose that the patron self-assurance Pablo-Romero and Molina (2013), Brida et al., (2016) index has a tremendous impact on the visits to friends and Kumar et al., (2015) have complied different and families, but not on vacation travels. Surprisingly, survey literature for tourism and financial development an extend in family debt boosts demand for tourism. and found a positive association between financial In different words, Australians are inclined to pay for development and tourism allocation. However, home journeys with credit. Matarrita-Cascante (2010), Lee (2012), Ivanov and Webster (2012) and Bouzahzah and Menyari (2013) Hung et al., (2011) analyze Taiwan’s 2006 overview explored that economic growth promotes tourism, not of family pay and consumption and utilize the level of vice-versa. While some other studies (e.g., Seetanah, family unit salary spent on the travel industry as an 2011; Yazdi et al. ,2017) found a feedback type of informative variable in the communication between linkage between tourism and economic growth. On the travel industry uses and different uses. They the other hand, some studies (e.g., Tang & Jang, 2009; convey out a quantile regression analysis to decide the connection between the travel industry applications Katircioglu, 2009) found no relationship between and the travel industry time-series data. Chen and economic growth and tourism. Lanza and Pigliaru Chang (2012) explore the relationship between (2000) and Singh (2008) found that small countries players in the travel industry, and the travel industry are highly influenced by tourism, while Sequeira and uses of vacationers to comprehend the last’s effective Nunes (2008) concluded that country size had not to procedure. They centre around the first-run through effect on the tourism industry. Figini and Vici (2010) and rehash buy/use examples of Taiwanese visitors and Ekanayake and Long (2012) find that tourism to investigate the distinctions in the budgetary levels does not speed up the growth in developing countries and vacationer gatherings. They utilize ordinary least while the association between economic growth squares to evaluate the minor impacts of the travel and tourism is more visible in developed countries industry benefits on the travel industry consumptions. (Cárdenas-Garcíaetal.,2015). Seetanah (2011) and They additionally direct a regression analysis to look Salmani et al. (2014) sharply confirmed that tourism at the heterogeneity effects of the travel industry on positively affects the economic growth in both various degrees of the travel industry uses. In any developing countries and developed countries where case, Chang et al. (2013) recommend that paying little this growth is comparatively higher in developing mind to past movement experience; visitors cut back countries.

THE COST AND MANAGEMENT 17 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 From the literature, it is clearly found that there is no X. If X Granger-causes Y, then the causality from X to study is found regarding the budgetary allocation in the Y and If Y Granger-causes X, then the causality from tourism industry and economic growth in Bangladesh Y to X. In both cases the causality is uni-directional. to the best of our knowledge. Hence it is imperative But when both variables Granger cause each other, to identify the relationship between the allocation then it is called a bi-directional causality. of the national budget in the tourism industry and economic growth in Bangladesh. 3.2.1. Model Specification A Keynesian-macroeconomic position on the link 3. Data and Methodology between government expenditure and economic 3.1 Data growth was adopted in this study; therefore, gross This study attempts to investigate the causal domestic product growth (GPDG) is modelled to be relationship and the effect of national budget a function of budgetary allocation in tourism industry allocation in the tourism industry on GDP growth rate (BATI). The model for the long-term relationship in Bangladesh. We used secondary data published in between the variables was given explicitly as: different organizations. Data for GDP growth rate nGDPGt aoa1 InBATIt collected from World Bank’s World Development In order to estimate the long-term relationship Indicators (WDI) and data for allocation of the between the variables, the corresponding error- national budget in tourism industry obtained from correction equation was estimated as follows: the Bangladesh Bureau of Statistics and Ministry of GDPG= Gross Domestic Product Growth proxied by Finance, bangladesh. We used annual time series data, Real GDP growth (percent) and the sample period consists of fiscal year 1998-99 to 2018-19. We used econometric software Eviews BATI= Budgetary Allocation in Tourism Industry (N 11.0 and Excel for data analysis after compilation of 10million) the data. 4 Findings and Analysis 3.2 Methodology 4.1 Integration Test We tested the causality between the budgetary We performed a unit root test for time series data to allocation and GDP growth in different steps. First, know the status of variables. Unit root test examines we used the Augmented Dickey-Fuller (ADF) test whether the variables are stationary or not. Besides suggested by Dickey and Fuller (1979, 1981) and Philip unit root test determines the order of integration of Perron (PP) proposed by Phillips (1987) and Phillips variables. We utilized both the Augmented Dickey- and Perron (1988) to test for unit roots of time series Fuller (ADF) and Phillips-Perron (PP) tests to discover data. Afterwards, we conducted a cointegration test the presence of unit root in every one of the time- among the variables to determine whether there exists series data. the cointegrating vector(s). Though cointegration Said and dickey (1984) upgrade the basic affirms a stable long-run relationship between the autoregressive unit root test to oblige general ARMA variables, this equilibrium may not exist in the short ( p , q ) models with unidentified orders. Their analysis run. is known as the Augmented Dickey-Fuller (ADF) Moreover, we also performed a linear regression test, which depends on evaluating the accompanying analysis between budgetary allocation and GDP regression. growth. Finally, we tested the causal relationship between budgetary allocation in the tourism industry and GDP growth. Granger causality is a technique for determining whether a one-time series is useful in Where Dt is a vector of deterministic terms (constant, forecasting another. A variable (X) is said to Granger- trend etc.) The r (lagged difference terms) and cause another (Y) if the present value of Y can be ∆yt− j are used to estimate the ARMA arrangement predicted with greater accuracy by using past values of of the errors, and r value is set so that the erroret is successively uncorrelated. The error term is assumed

THE COST AND MANAGEMENT 18 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 to be homoskedastic. Where the ADF tests use a parametric autoregression to estimate the ARMA arrangement of the errors in the test regression, the PP tests disregard any sequential correlation in the test regression. The test regression for the PP tests is given by

Where ut is I(0) and maybe heteroskedastic? The PP tests correctly for any sequential (or serial) correlation and heteroskedasticity in the errors ut of the test regression by directly modifying the test statistics tp =0 andTpˆ . These modified statistics denoted and are given by Zt Zp

The terms sˆ 2 lˆ2 and are consistent estimates of the variance parameters. However, the results of both the ADF and PP tests indicated that all the series are stationary and integrated of order one I(1) as reported in Table 1 and Table2.

Table-1: Test for Integration (Augmented Dickey-Fuller) Augmented Dickey-Fuller Augmented Dickey-Fuller ( Intercept) (Trend and Intercept) Variables Level 1st Diff. Level 1st Diff. GDPG -0.173194 -1.462261*** -0.961009** -1.491141***

BATI 0.722701 -1.414024 -2.557081 -2.844523***

Notes: *** at the 1%, ** at the 5% and * at the 10% level of significance, indicating the rejection of the null (variables are unit root/non-stationary); GDPG; GDP growth rate; BATI: Budgetary Allocation in Tourism Industry

The test upshots of the unit root above show, by and large, the nearness of unit establishes in the first arrangement; for example, I(0) at their levels. The outcomes test, ADF, demonstrate that at first differences of the factors GDP growth rate is measurably significant at 1% significance level and affirms that GDP growth rate is stationary in the first differenced series, i.e., I (1) in all cases. Then again, ADF result demonstrates that budgetary allocation in the travel industry is statistically significant at 1% level and stationary at the 1st difference (Trend and Intercept) test. These give the premise to the trial of the long-run relationship among the factors because the variables are stationary.

THE COST AND MANAGEMENT 19 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 Table-2: Test for Integration (Phillips Perron) Phillips Perron ( Intercept) Phillips-Perron (Trend and Intercept) Level 1st Diff. Level 1st Diff. Variables GDPG -0.173194 -0.918229*** -0.520491** -0.926033***

BATI -1.043947 -0.028407 -1.167136 -0.397527**

From Table 2, it is shown much of the time, the nearness of unit establishes in the first series; for example, I(0) at their levels. The outcomes test, PP, show that at the first difference of the factors GDP growth rate is measurably significant at 1% significance level and furthermore affirms that GDP growth rate is stationary in the first differenced series, i.e., I (1) in all cases. Then again, PP results show the budgetary allocation in the tourism industry is statistically significant at 1% level and stationary at the 1st difference (Trend and Intercept) test. These give the premise to the trial of the long-run relationship among the factors because the variables are stationary.

4.2 Cointegration Test Theoretically, it is suggested that a cointegration relationship in the model share a common trend and long-run equilibrium between GDP growth rate and budgetary allocation in the tourism industry. We apply Johansen- Juselius cointegration technique. Johansen recommends two different likelihood ratio tests of the significance of the canonical correlations and thereby the reduced rank of the matrix: the trace test and maximum eigenvalue test i.e.

Here T is the sample size and lˆ the ith largest canonical association. The trace tests the null hypothesis of r cointegrating vectors against the alternative hypothesis of n cointegrating vectors. The maximum eigenvalue test, in contrast, tests the null hypothesis of r cointegrating vectors against the alternative hypothesis of r +1 cointegrating vectors. The null hypothesis of cointegration test states that variables are not cointegrated. If calculated Trace statistic or Max Eigen Value exceeds the critical value, then we can reject the null hypothesis of no cointegration. The Johansen test statistics show rejection for the null hypothesis of no cointegrating vectors under both the trace and maximal Eigenvalue forms of the test. If there should arise an occurrence of the trace test, the null hypothesis is there is no co-integration between GDP growth rate and budgetary allocation in the tourism industry, and this null hypothesis is dismissed because the test measurements (21.62045) is more prominent than the 5% critical value (15.49471). Proceeding onward to test the null hypothesis considered 1 co-coordinating vectors, the trace measurement is 6.522951, while the 5% critical value is 3.841465, with the goal that the null hypothesis is dismissed at 5% significant level. So the observational outcome demonstrates that there is, in any event, one cointegration among the factors in the series over the long run because there is at least one conintegration among the variables

THE COST AND MANAGEMENT 20 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 Table-3: Unrestricted Cointegration Rank Test (Trace) Hypothesized Trace 0.05 Eigenvalue Prob.** No. of CE (s) Statistic Critical Value None * 0.548240 21.62045 15.49471 0.0053 At most 1 * 0.290584 6.522951 3.841465 0.0106 Trace test indicates 2 cointegrating eqn(s) at the 0.05 level

* denotes rejection of the hypothesis at the 0.05 level

**MacKinnon-Haug-Michelis (1999) p-values

If there should be an occurrence of the most extreme Eigenvalue test, the null hypothesis, “no co-integration among the factor” is dismissed since the test measurement of 15.09750 is more prominent than the 5% basic estimation of 14.26460. Proceeding onward to test the invalid of all things considered 1 co-integrating vectors, the greatest Eigenvalue statistics is 4 6.522951, while the 5% critical value is 3.841465 that the null hypothesis is dismissed at 5% significance level. At long last, max results show the presence of at any rate one cointegrating relationship among the factors in the series.

Table-4: Unrestricted Cointegration Rank Test (Maximum Eigen Value) Hypothesized Max-Eigen 0.05 Eigenvalue Prob.** No. of CE (s) Statistic Critical Value None * 0.548240 15.09750 14.26460 0.0368 At most 1 * 0.290584 6.522951 3.841465 0.0106 Max-eigenvalue test indicates 2 cointegrating eqn(s) at the 0.05 level * denotes rejection of the hypothesis at the 0.05 level **MacKinnon-Haug-Michelis (1999) p-values

The estimations of the standardized co integrating coefficient show that over the long run, the illustrative variable is decidedly identified with the GDP growth rate. Over the long run, 1% expansion in budgetary allocation in tourism industry prompts practically 0.02% increment in GDP growth rate. This long-run harmonious connection between GDP growth rate and budgetary allocation in the tourism industry is measurably significant.

Table-5: Long-run impact of GDPG and TAB of Bangladesh Variables Normalized cointegrating coefficients Standard Error GDPG BATI 0.022365 (0.00405)

Note: GDPG; GDP growth rate; BATI: Budgetary Allocation in Tourism Industry

4.3 Granger causality test In order to find out the causal relationship between GDP growth rate and budgetary allocation in the tourism industry, we used Granger causality approach. Using this analysis, we want to test for causality between these two variables.

THE COST AND MANAGEMENT 21 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 The results are presented in Table 6. Table-6: Granger Causality test Null Hypothesis: F-Statistic p-value Granger Causality

BATI does not Granger Cause GDPG 8.42796 0.0010* Yes GDPG does not Granger Cause BATI 0.52131 0.7730 No

Note: * at the 5% level of significant GDPG; GDP growth rate; BATI: Budgetary Allocation in Tourism Industry The Granger causality result indicates that budgetary allocation in the tourism industry is Granger cause of GDP growth rate. On the other hand, GDP growth rate is not Granger cause of budgetary allocation in the tourism industry. This result suggests that there is a uni-directional causality between the GDP growth rate and budgetary allocation in the tourism industry.

4.4 Vector Autoregression Estimates Johansen Cointegration test indicates the existence of a cointegrating relationship between the dependent an independent variable that establish the long-term dynamics between the variables in the cointegrating equation by estimating the error correction model. The results of the vector error correction as shown in table 7 different estimates and diagnostic statistics. The model is capable of explaining 54.48 per cent of the variation in GPD growth rate as noted by the R-squared of 0.544857. The coefficient value of probability statistics suggests overall significance of the explanatory variable of the model.

Table-7: Vector Autoregression Output Variable Coefficient Std. Error t-Statistic C 3.156274 1.59038 1.98460 GDPG(-1) 0.736217 0.30460 2.41701 BATI(-1) 0.002436 0.00235 1.99477 R-squared 0.705496 Mean dependent var 6.092289 Adjusted R-squared 0.544857 SD dependent var 1.019642 SE of regression 0.687894 Akaike info criterion 2.374937 Sum squared resid 5.205179 Schwarz criterion 2.721193 Log-likelihood -14.37443 F-statistic 4.391819 The estimates show that budgetary allocation in tourism industry is associated with GDP growth in the long run and is therefore conformity with a priori expectation. It indicated that a 1% increase in the budgetary allocation in the tourism industry would increase a 0.24% increase in GDP growth rate, which substantial for the economic growth of a country. The coefficient of budgetary allocation in the tourism industry is positive and statistically significant at the 99% level.

5. Conclusions and Recommendation The central objective of this paper was to recognize whether the allocation of the national budget in the tourism industry affects GDP growth rate depending on the information over the period FY 1998-99 to 2018- 19 of Bangladesh. The paper additionally attempts to investigate the causality connection between budgetary allocation in the tourism industry and GDP growth rate. The observational investigations are done utilizing the time series econometric procedures. The series is tested for unit roots, using the Augmented Dickey-Fuller

THE COST AND MANAGEMENT 22 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 (ADF) and Philip Perron (PP) test indicate that the tourism industry to analyze economic growth. It variables budgetary allocation in the tourism industry proposes an unexpected supposition in comparison to and GDP growth rate are statistically significant. By past writing, which has recommended a fundamentally utilizing the Augmented Dickey-Fuller (ADF) and positive direct impact of budgetary allotment in the Phillips-Perron (PP) tests, it has been discovered that tourism industry on economic growth in Bangladesh. all the factors are non-stationary at their levels, but at This finding is useful to policymaking and the first differences both the budgetary allocation in the advancement of the tourism industry. It is imperative tourism industry and GDP growth rate are stationary. for the tourism industry to comprehend the impact The observational consequence of Johansen of the national financial plan on economic growth in Juselius method uncovers that budgetary allocation Bangladesh. in the tourism industry and GDP growth rate are This paper adds to the knowledge by consolidating cointegrated. It infers that there is for some time worldwide information with national information to run a stable relationship among these two factors. approve the straight connection between budgetary Moreover, findings from the Johansen-Juselius allocation in the tourism industry and economic cointegration technique demonstrate the presence growth by utilizing threshold variables. The impacts of of at any rate one cointegrating relationship among budgetary allocation on economic growth is changed the factors. 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THE COST AND MANAGEMENT 24 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 The COVID-19 Pandemic Impacts on Manpower Export: An Econometric Analysis of Survival Strategies of Recruiting Agencies in Bangladesh

Dr. Kazi Abdul Mannan G.M. Omar Faruque Chowdhury FCMA Adjunct Professor Chief Finance Officer Faculty of Business Studies Elite Paint & Chemical Industries Ltd Green University of Bangladesh Email: [email protected] Email: [email protected]

Dr. Khandaker Mursheda Farhana Assistant Professor Department of Sociology and Anthropology Shanto-Mariam University of Creative Technology Email: [email protected]

Abstract The COVID-19 outbreak led the governments of many countries to impose restrictions on non-essential travel to countries affected by coronavirus, indefinitely suspending tourism travel, work visas and immigrant visas. Some countries placed a complete travel ban on all forms of inward or outward travel, shutting down all airports in the country. In this context, the main purpose of this study is to review the survival strategies by the international recruiting agencies in the country both triggered and prolonged the recession while trying to save the lives of citizens. In this regards, in the random sample selection process 291 recruiting agents were selected out of total 1,189 active members of Bangladesh Association of International Recruiting Agencies (BAIRA). The econometric model developed is used to assess the relationships between COVID-19 sustainability and the exploratory determinant variables. The results delve out that the only five variables out of twenty-four to survive are owner (s) personal reserve fund, shark loan, sale of other assets and properties, probability of bankruptcy and probably closing business soon. This paper contributes to the literature by showing that financial factors and/or non-economic factors can trigger both a financial and economic meltdown in unprecedented ways. This study also propose a model for investigating sustainability of other business sectors in the same way. Finally, it suggest that in order to protect manpower export sector, the Government of Bangladesh needs to bring under a special program and provide financial and strategic assistance to recruiting agencies in overall market research, exploration and creation. Keywords: COVID-19, Pandemic, Sustainability, Labor, Market, Impacts, Manpower, Migration.

THE COST AND MANAGEMENT 25 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 grew by 17.89 per cent against $15.54 billion in 2018 1. Background of the Study (Bangladesh Bank 2020). It contributes around 6-8% of Due to COVID-19 pandemic, initially, as estimated, the country’s GDP, and renders a sizable contribution amid slump with a loss of about $6 billion in export to national income, macroeconomic stability and earnings primarily through RMG, the next big shock poverty reduction (Mannan 2017). Recent survey for the economy of Bangladesh will be its remittance shows that at least around one-third of the country’s inflow, which is considered as the life-line for many rural new labor force take overseas employment each families (Rashid 2020). According to the Bangladesh year which has become a ‘safety valve’ for millions of Bank recent data on March 2020 Remittance Inflow, Bangladeshi migrant workers and their families (BBS shows a clear significant downturn. It is 11.83% less 2019). The emergence of such a vital socio-economic than the March 2019 (Bangladesh Bank 2020). It is sector in Bangladesh is due to the role of about to be noted that it is already informed that many of 1,200 manpower export companies in the private our workers in different countries have started losing sector, although Bangladesh Overseas Employment their jobs, and more people will lose their jobs in the and Services Ltd (BOESL), a state-owned company, coming months. Along with the documented labors, has not been able to play a significant role in market there are also a large number of undocumented expansion. laborers in Europe and other regions, which will be In this paper, we show how the coronavirus outbreak severely impacted due to COVID-19 pandemic. The led to spillovers into manpower export sector of most affected industry of this crisis would be the Bangladesh, and how the survival strategies by the service sector of those countries, where Bangladeshi international recruiting agencies in the country both migrant workers are mostly engaged. triggered and prolonged the recession while trying to The COVID-19 outbreak led the governments of save the lives of citizens. We also propose a model many countries to impose restrictions on non-essential for investigating of other business sectors in the same travel to countries affected by coronavirus, indefinitely way. The discussion in this paper contributes to the suspending tourism travel, work visas and immigrant financial crisis literature. This paper contributes to visas. Some countries placed a complete travel ban the literature by showing that financial factors and/or on all forms of inward or outward travel, shutting non-economic factors can trigger both a financial and down all airports in the country. At the height of the economic meltdown in unprecedented ways. COVID-19 pandemic, most airplanes flew almost empty due to mass passenger cancellations. The travel restrictions imposed by governments subsequently led 1.1 Research objectives to the reduction in the demand for all forms of travel The main purpose of this study is to review the which forced some airlines to temporarily suspend capacity of organizations in the manpower export operations such as Air Baltic, LOT Polish Airlines, La sector in Bangladesh to deal with such situations. Compagnie, and Scandinavian Airlines. Such travel Specifically what are the survival strategies during the restrictions cost the tourism industry alone a loss COVID-19 pandemic period of manpower exporter of over $200 billion globally, excluding other loss agencies in Bangladesh? of revenue for tourism travel, and were forecast to cost the aviation industry a total loss of $113 billion 2. Literature Review according to IATA (2020). US airlines sought a $50bn bailout fund for the US Airline industry alone. According to BMET, around 60,000 Bangladeshis go abroad for occupation every month, the process We know that remittance, as a tangible outcome of overseas employment, has positioned it as the second- of starting the epidemic has stopped completely. In highest foreign exchange earning source which almost addition, if the COVID-19 pandemic lingers, queues estimated 40% after the garments sector in Bangladesh of those waiting to join overseas will grow further and (Mannan 2015). The remittance inflow hits a record also there is no guarantee that all these migrants who $18.32 billion in the just concluded year of 2019 returned in the last three months, can go back to their amid devaluation of the taka and the government respective countries or not. According to BAIRA, move to provide incentives against remittance and it about 1.5-2 lakh migrant workers had completed the

THE COST AND MANAGEMENT 26 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 process for overseas jobs in the last three months was caused by loose monetary policy which created and were waiting to leave the country. However, a bubble, followed by subprime mortgages, weak not only this, the COVID-19 crisis in the wealthier regulatory structures, and high leverage in the banking economies will also restrict our future international sector (Allen & Carletti 2010). The Asian debt crisis labor markets. Recently, IOM (2020) explore that with of 1997 was caused by the collapse of the Thai baht migrant workers highly concentrated in occupations in July 1997, which created panic that caused a region- and sectors expected to be particularly hard hit by wide financial crisis and economic recession in Asia the economic consequences of the COVID-19 crisis, (Radelet & Sachs 1998). inevitably, remittances will also take a hit. According Initially, the perception was that the COVID-19 to the World Bank (2020) global remittances are pandemic would be localized in China only. It later projected to decline sharply by about 20 percent spread across the world through the movement in 2020 due to the economic crisis induced by the of people. The economic pain became severe as COVID-19 pandemic and shutdown. The projected people were asked to stay at home, and the severity fall, which would be the sharpest decline in recent was felt in various sectors of the economy with history, is largely due to a fall in the wages and travel bans affecting the aviation industry, sporting employment of migrant workers, who tend to be more event cancellations affecting the sports industry, the vulnerable to loss of employment and wages during an prohibition of mass gatherings affecting the events economic crisis in a host country. Remittances to low and entertainment industries (Horowit 2020). There and middle-income countries (LMICs) are projected are parallels between the COVID-19 crisis and the to fall by 19.7 percent to $445 billion, representing a events of 2007-2008: as in 2020, many people in the loss of a crucial financing lifeline for many vulnerable earlier recession assumed the impacts would largely households (Ratha et al 2020). The situation will be be localized (Larry 2020). The sudden economic more vulnerable for those countries which particularly disruption caused by COVID-19 is not only destructive dependent on remittances. The World Bank report but also has spillover implications because it created further stated that the countries and communities demand and supply shocks in almost every area of including Bangladesh that reliant on labor migration human endeavor (El-Erian 2020).7 Recent study and remittances will in fact see a double impact from shows that there is considerable indifference among this crisis as, in addition to declining remittances, the general people of Bangladesh about this epidemic these communities will need to absorb an increasing which may take a terrible turn in the future (Farhana number of returning labor migrants, unable to find & Mannan 2020). We do not yet know when and how work in countries of destination (World Bank 2020). this epidemic will end and how much damage will be The literature on the cause of recessions is vast done to trade and the economy. The review of the (see Bentolila et al 2018; Jagannathan et al 2013; national- and international-level literature on recession Gaiotti 2013; Bagliano & Morana 2012; Bezemer and pandemic and of the literature on the macro and 2011; Stiglitz 2010; Mian & Sufi 2010). But the cause micro-level socio-economic impacts, revealed a gap in and consequence of the 2020 global recession was the understanding of significant relationships between novel in modern history. The COVID-19 triggered the COVID-19 sustainability and survival strategies of a new type of recession that was different from the manpower exporter agencies in Bangladesh. past triggers of a recession. For instance, the 2016 recession in Nigeria was caused by the fall in the price of crude oil, balance of payment deficit, adoption of 2.1 Research Ethics a fixed-float exchange rate regime, an increase in the The study asked for consent from participants pump price of petrol, activities of pipeline vandals where we explained the motivation of study to the and infrastructure weaknesses. The 2010 recession in participated respondents. They had the freedom to Greece was caused by the after-effect of the global leave the study at any time or may remain silent to financial crisis, structural weaknesses in the Greek specific questions if they were not comfortable. User economy, and lack of monetary policy flexibility as data was anonymized. All our collected data are a member of the Eurozone (Rady 2012). The 2008 securely stored in a locked drive, and only researchers global financial crisis, which translated to a recession, have access to it.

THE COST AND MANAGEMENT 27 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 value of Cronbach’s Alpha is between 0.7 and 1.0, all 3. Methodology of the statements in the question matrix can be used 3.1 Overview to create the index variable, while statements with a This study is a cross sectional design with quantitative value below 0.7 are discarded. Once the exercise is approach. The study approach is descriptive in nature, satisfactorily completed, the maximum and minimum and primary data has been used in this study. outputs are ascertained by sub-menu descriptive statistics together with their respective frequencies. 3.2 Sample Size and Sampling Techniques The minimum scores are deducted from the maximum The recommendation of Krejcie and Morgan (1970) scores, and the residuals are divided by the number was followed in selecting a representative sample of categories in the index variable. A reliability test size for this research. In the random sample selection provided the value of Cronbach’s Alpha (0.842) that process 291 recruiting agents were selected out of confirmed the availability of consistency components total 1,189 active members of Bangladesh Association in all the statements. Descriptive statistics were used to of International Recruiting Agencies (BAIRA). The ascertain the mean score and the standard deviation, survey was conducted during the period of March- which were 11.0933 and 2.46676 respectively. April, 2020. The data was collected over smart phone and internet supportive apps and devices. Questions 3.4 Econometric model building and multivariate were pre-coded during the survey questionnaire, data analysis processing and analysis. The data were subsequently The econometric model developed is used to assess entered into SPSS version 20.0 for analysis. The the relationships between COVID-19 sustainability definition of variables in the regression equation and the exploratory determinant variables. To enable operationalize is given in Appendix A. a best fit regressions model, variable reduction was undertaken following a method of ‘backward 3.3 Construction COVID-19 sustainability variable elimination’ that begins with the inclusion of all expected independent variables, measuring their The measuring instrument for COVID-19 sustainability statistical significance individually and discarding consisted of questions answered by the questionnaire. those which are highly non-significant. The backward The COVID-19 sustainability variable comprises more regression method was conducted in three steps to than one item and various respondent categories. establish a good fit model that assesses the most From the descriptive or univariate analysis, each influential factors related to COVID-19 sustainability statement is observed by tabulating a frequency table and to examine the hypothesised relationships in this and computing the percentages of the respondents’ study. This complies with the explanation of data answers that were in each category. In bivariate analysis of Slatten, Svensson and Svaeri (2011) and analysis, every single item in the matrix question is Juhdia, Pa’wanb and Hansaramb (2013). cross-tabulated with the respective answer variable which may be long and not significant. To overcome Before beginning the ‘backward elimination’ steps, these challenges, an index variable is commonly the collected data must be checked to test for certain created to study the associated outcomes of whole basic statistical considerations to account for the statements in forecasting the answer variable. In implementation of the good fit regression model this context, all answers in the matrix questions are (Hocking 1976). In this study, there were three major compiled simultaneously to construct the index considerations: the data normality test multicollinearity variable. and autocorrelation as Gujarati (2003) suggests that it is not necessary to carry out all the available As the index variable is developed, consistency assumption tests as some were not relevant to this within all the items in the question matrix has to be study. To build up a best fit regression model, twenty ascertained by a reliability check using Cronbach’s four potential explanatory variables were selected for Alpha, obtainable using SPSS 20.0. As long as the the piloted model given in Equation (i) as follows:

THE COST AND MANAGEMENT 28 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 For the first regression (Equation i), outcomes of the full model are provided in Table 1.1. The empirical results indicate that some of the potential variables are statistically non-significant. For the equation taken as a whole, the R2 (0.623), F value (12.943) and a ‘p’ value nearest to zero. Thus, the results postulate that all independent (explanatory) variables in aggregate affect the COVID-19 sustainability (the dependent variable) by the organization. In the statistical assumption, multicollinearity provides a condition of linear relationships among either all predictor variables or few of them in the regressions equation. The whole procedure usually appears when either all or few of the explanatory variables in the regressions model are strongly significant to each other. As a consequence, the multicollinearity test is very important for selecting the best fit model of regression. Hence, the study used the multicollinearity test for the present analysis. Table-1.1: Regression results of the full model

Source of Finance Dependent Variable COVID-19 sustainability (COVID-19 suS) Collinearity Statistics Unstandardized Standardized t-value p-value Tolerance VIF Coefficients Coefficients CsS -.488 .148 -.310 -3.331 .001 .247 4.020 CreF .048 .167 .018 .296 .003 .757 1.987 CriF -.566 .257 -.420 -4.221 .001 .348 5.020 CpI -.820 .472 -.073 -1.670 .085 .808 1.237 CpA -2.710 .561 -.089 -2.550 .066 .701 2.468 OpreF -4.033 .345 .027 .896 .002 .857 3.987 OpriF 2.546 .238 -.520 -3.201 .001 .448 6.220 GgR -.720 .542 -.173 -2.680 .064 .728 7.247 GiN -3.710 .461 -.077 -3.450 .276 .712 4.487 GIO -1. 820 .572 -.273 -2.670 .185 .628 2.637 GrE -1.576 .357 -.220 -3.241 .002 .448 6.920 CbF -2.624 .552 -.877 -6.450 .876 .912 5.467 OfiF -5.820 .772 -.573 -3.681 .275 .858 1.648 SIO -.476 .247 -.121 -l.232 .001 .456 5.821 IoG -.625 .451 -.867 -4.431 .966 .822 3.487 IoI -5.820 .772 -.573 -3.681 .275 .858 2.657 FsfsC -1.559 .-482 -.321 -2.442 .002 .348 5.121 FsoB .148 .567 .218 .195 .001 .765 2.087 FsfM -.436 .357 -.521 -3.918 .004 .547 8.121 FsfR -2.476 .241 -.321 -1.23] .001 .347 10.120 MoaP .648 .267 .118 .396 .002 .657 5.687 SoaP -.266 .958 -.720 -2.251 .003 .548 9.120 PoB -.338 .-459 -.625 -4.917 .001 .442 7.l33 PcbS -3.270 .347 -.821 -7.231 .002 .557 3.921 Intercept -38.236 R2 0.623 Adjusted R2 0.573 F-statistics 12.943 Sum squared residuals 435.253 Durbin- Watson statistics (d) 1.780

THE COST AND MANAGEMENT 29 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 The regression results are shown in Table 1.1.The multicollinearity for the high R2 =0.623 and nine variables CpI, CpA, GgR, GiN, GlO, CbF, OfiF, IoG and IoI are not statistically significant in the initial regressions model of 13 variables. Since the classical symptoms of multicollinearity – high R2 but few significant t ratios – are found in the first model, clarification is needed of the statistical problem by observing the variance and covariance of the regression estimators. As Gujarati (2003, p.350) states, ‘the OLS estimators and standard error can be sensitive to even the smallest change in the data’. The increase of variance and covariance of coefficients are falsified and this can be observed with ‘variance-inflating factor (VIF)’ and ‘tolerance (TOL)’ also in Table 1.1. The rule-of-thumb states that the closer the value of TOL and VIF is to 1, the greater the evidence that one explanatory variable is not collinear with the other explanatory variable (Gujarati 2003). The values of Tolerance (TOL) and VIF in Table 1.2 indicate that there is no multicollinearity existing among the explanatory variables. As stated earlier, the variables are considered for removal sequentially based on their statistically non-significant ‘p’ value in the equations. For instance, the regression outcomes of the first model (Equation i: long regression) in Table 1.1 shows that R2 =0.623, and adjusted R2 =0.573with an acceptable value of d=1.780. The elimination process was begun by discarding the variable IoG which had the highest p value (0.966), from the first model. This procedure was continued until a best fit model for the explanatory variables was found. The result of the whole backward elimination process is given in Table 1.3. The ultimate outcome is the first best fit model as represented in the following equation:

Table-1.2: Regression results of the second stage

Source of Finance Dependent Variable COVID-19 sustainability (COVID-19 suS) Collinearity Statistics Unstandardized Standardized t-value p-value Tolerance VIF Coefficients Coefficients CsS -.566 .549 -.211 -2.231 .911 .348 3.120 CreF .246 .256 .115 .695 .063 .856 .787 CriF - 1.266 .958 -.521 -3.520 .172 .547 -1.131 OpreF -3.153 .421 .135 .785 .001 .746 5.264 OpriF 1.234 .127 -413 -5.132 .271 .556 3.331 GrE -2.-165 .446 -.333 -2.331 .062 .~38 1.821 SIO -.351 .536 -.225 -.939 .002 .945 6.723 FsfsC -5.552 .381 -.420 -6.413 .068 .446 6.220 FsoB .247 .460 .267 .997 .025 .664 1.187 FsfM -1.-136 .155 -.623 -3.210 .064 .743 7.221 FsfR -3.475 .741 -.720 -2.132 .157 .545 11.130 MoaP .547 .366 .212 .896 .422 .950 3.689 SoaP -.365 .857 -.621 -1.450 .004 .437 8.222 PoB -.437 .358 -.524 -3.816 .003 .541 6A34 PcbS -2.371 .246 -.720 -6.933 .001 .458 2.820 Intercept -29.284 R2 .540 Adjusted R2 .623 F-statistic 39.722 Sum squared residuals 716.225 Durbin-Waston statistics (d) 1.044

THE COST AND MANAGEMENT 30 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 However, the results obtained using Equation (ii) are shown in Table 1.2. They show that R2 is slightly decreased (0.540) compared to the first model (0.623) with fifteen explanatory variables. This was expected as increasing the number of variables increases the value of R2 and vice versa. In this stage, the ‘p’ value of the ten explanatory variables CsS, CreF, CriF, OpriF, GrE, FsfsC, FsoB, FsfM, FsfR and MoaP were statistically insignificant. Therefore, a further backward elimination process was taken to arrive at the best fit model. This procedure was continued until a best fit model for the explanatory variables was obtained. The results of the whole backward elimination process are given in Table 1.3. The ultimate outcome of the best fit model is represented in the following equation:

Table-1.3: Best fit model results

Source of Finance Dependent Variable COVID-19 sustainability (COVID-19 suS) Collinearity Statistics Unstandardized Standardized t-value p-value Tolerance VIF Coefficients Coefficients OpreF -2.251 .520 .331 .684 .002 .647 4.153 SIO -.240 .425 -.114 -.114 .001 .834 5.612 SoaP -.254 .746 -.510 -.510 .001 .327 7.321 PoB -.538 .457 -.623 -.623 .004 .621 3.321 PcbS -.3.472 .155 -.611 -5.843 .003 .647 6.711 Intercept -30.652 R2 .535 Adjusted R2 .598 F-Statistics 47.035 Sun squared residuals 721.220 Durbin-Watson statistics (d) 1.038

The best fit model shown Table 1.3 has only five explanatory variables with statistical significance levels in the range of 1 per cent to 5 per cent. Both regressions, long and short, provide the degree of the direction and strength of causality between the dependent and explanatory variables, which are the OpreF, SlO, SoaP, PoB and PcbS.

4. Discussion In the above model, a total of 24 independent variables have been taken which have been considered as the possible sources of those engaged in this sector. As a result of applying the complete model, the nine variables that are initially insignificant are the following corporate pandemic insurance, corporate pandemic assurance, government grants, government incentives, government loan, commercial bank finance, other financial institute finance, international organization grants and international organization incentives. This means that these companies were not covered by the insurance policies for such adversity from the very beginning. At the beginning of the epidemic, the government of Bangladesh announced special incentives in the readymade garment sector and later came forward for financial assistance in various sectors including agriculture, but no such financial incentives were provided in this sector. Although there are various financial incentives for migrants under the auspices of the United Nations, there is no financial assistance for those providing services in this sector. In the second step, the ten variables namely corporate self-sufficiency, corporate reserve fund, corporate risk fund, owner(s) personal risk fund, government refund, financial support from sister concerns, financial support from other business, financial support from family members, financial support from friends and relatives and mortgage of other assets and properties are insignificant. Perhaps the variables that have been omitted in this

THE COST AND MANAGEMENT 31 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 stage are initially somewhat helpful, but are no longer of sending back the workers working there is going viable due to the prolongation of the epidemic. For on in Bangladesh on various pretexts, in which case instance, as the Bangladesh government has already the possibility of recruitment there in a new way is announced, the agencies will be able to withdraw half uncertain. Therefore, this study feels that in order to of the savings certificates deposited as collateral at the protect this sector, the Government of Bangladesh time of obtaining their licenses. Therefore, probably needs to bring this sector under a special crush all these variables give us a direction that they continue program and provide overall assistance to recruiting to try to survive by collecting money from various agencies in overall market research, exploration and sources to survive. creation. The last five variables to survive are owner (s) personal Declaration of Conflicting Interests reserve fund, shark loan, sale of other assets and The author declared no potential conflicts of interest properties, probability of bankruptcy and probably with respect to the research, authorship, and/or closing business soon. It is worth mentioning here that publication of this article. these five variables are entrepreneurial which we can Funding easily understand. A service provider in this sector is trying to sustain its response life savings. Some are Funded by COVID-19 Pandemic: Ethnography, getting into debt at high interest rates. In the struggle to Observation and Survey for Internal and International survive if necessary, all individuals are preparing to sell Migration Project, Migration Research Development all their assets. Even after all this, if this epidemic lasts and Society of Bangladesh (MRDSB) for a long time, the organization may lose everything at one time and may even go bankrupt. The long- References term situation of service providers in this sector is Allen, F., & Carletti, E. (2010). An overview of the crisis: Causes, probably due to their current investment uncertainty consequences, and solutions. International Review of Finance. and struggling to meet current expenditures. Although 10(1), 1-26. very few companies are financially strong in this Bangladesh Bank. (2020). Wage earners' remittance inflow. Available at: https://www.bb.org.bd/econdata/wageremitance.php. sector, the results show that the overall situation of BBS. (2020). Statistical Year Book 2019. Available at: https://bbs.portal. most companies is like this. gov.bd/site/page/b0b261bd-e68f-4897-9339-517096f38262. Bagliano, F.C., & Morana, C. (2012). The Great Recession: US dynamics and spillovers to the world economy. Journal of Banking & Finance. 5. Conclusion 36(1), 1-13. Bentolila, S., Jansen, M., & Jiménez, G. (2018). When credit dries up: The study found that before the outbreak of Job losses in the great recession. Journal of the European Economic the epidemic in Bangladesh, all activities in the Association. 16(3), 650-695. manpower export sector were suspended, resulting Bezemer, D.J. (2011). The credit crisis and recession as a paradigm test. in uncertainty for their current investment as well as Journal of Economic Issues. 45(1), 1-18. indefinite frustration for service providers. However, El-Erian, M. (2020). The Coming Coronavirus Recession and the Uncharted Territory Beyond. Foreign Affairs, Media this uncertainty and frustration has had some negative Report. Available at: https://www.foreignaffairs.com/ effects not only in this one sector but in almost all articles/2020-03-17/coming-coronavirus-recession. sectors. However, the situation that has arisen in Gaiotti, E. (2013). Credit availability and investment: Lessons from the great recession. European Economic Review, 59(C), 212-227. manpower export has probably not happened in Gujarati, D.N. (2003) Basic econometrics. 4th edn, New York, any other sector. The activities of this sector have McGraw-Hill. been completely stopped since the beginning of the Farhana, K.M., & Mannan, K.A. (2020). Knowledge and Perception epidemic. As the epidemic spreads around the world, Towards Novel Coronavirus (COVID 19) in Bangladesh. International Research Journal of Business and Social Science, 6(2), economies in almost every country in the world 76-88. Available at SSRN: https://ssrn.com/abstract=3576523 or are being severely damaged. Bangladesh's largest http://dx.doi.org/10.2139/ssrn.3576523 destination in the international labor market is the Horowit, J. (2020). The global coronavirus recession is beginning. CNN. Middle East. While the current epidemic is seriously Media report. Available at: https://edition.cnn.com/2020/03/16/ economy/global-recession-coronavirus/index.html. affected the largest economic sector in the Middle Hocking, R.R. (1976). The analysis and selection of variables in linear East, because the fuel market collapse has already regression. Biometrics. 32(1), 1-49. broken previous records. In this situation, the process IATA. (2020) IATA Updates COVID-19 Financial Impacts -Relief Measures Needed. Press Release No: 12. Available at: https://

THE COST AND MANAGEMENT 32 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 www.iata.org/en/pressroom/pr/2020-03-05-01/. Appendix A: Specification of variables for IOM. (2020). Mobility Restrictions COVID-19. Available at: multivariate analysis https://migration.iom.int/reports/impact-points-entry-and- other-key-locations-internal-mobility-weekly-analysis-3-june- 2020?close=true&covid-page=1. Group variables Name of variables Jagannathan, R., Kapoor, M., & Schaumburg, E. (2013). Causes of the Dependent variable COVID-19 sustainability (COVID-19 suS) great recession of 2007–2009: The financial crisis was the symptom Independent Corporate elf- sufficiency (C not the disease. Journal of Financial Intermediation. 22(1), 4-29. variables Juhdia, N., Fatimah, P.F., & Hansaramb, R.M.K. (2013). HR practices Corporate reserve fund (CreF) and turnover intention: the mediating roles of organizational Corporate risk fund (CriF) commitment and organizational engagement in a selected region Corporate pandemic insurance (CpI) in Malaysia. The International Journal of Human Resource Corporate pandemic assurance (CpA) Management. 24(15), 3002-3019. Owner(s) personal reserve fund (OpreF) Krejcie, R.V., & Morgan, D.W. (1970). Determining sample size for research activities. Educational and Psychological Measurement. Owner(s) personal risk fund (OpriF) 30(3), 607-610. Government grants (GgR) Larry, E.L. (2020). Prepare for the coronavirus global recession. The Government incentive (GiN) Guardian. Media report. Available at: https://www.theguardian. Government loan (GIO) com/business/2020/mar/15/prepare-for-the-coronavirus- Government refund (GrE) global-recession Commercial bank finance (CbF) Mannan, K.A. (2015). Determinants and socioeconomic impacts of migrant remittances: a study of rural Bangladeshi migrants in Italy. Other financial institute finance (OtiF) DBA thesis, Southern Cross University, Lismore, NSW. Australia. Shark loan (SIO) Available at: https://epubs.scu.edu.au/theses/555/. International organization grants (loG) Mannan, K.A. (2017). Macro Determinants of Remittance: Relationship International organization incentives (Iol) Between Remittance and Economic Growth in Bangladesh. Financial support from sister concerns (FsfsC) International Research Journal of Business and Social Science. 3(2), Financial support from other business (FsoB) 35-44. Available at SSRN: https://ssrn.com/abstract=3502666 or http://dx.doi.org/10.2139/ssrn.3502666 Financial support from family member (FsfM) Mian, A., & Sufi, A. (2010). The great recession: Lessons from Financial support from friends and relative (FsfR) microeconomic data. American Economic Review. 100(2), 51-56. Mortgage of other assets and properties (MoaP) Rashid, S. (2020). Impacts of COVID-19 on Migrant Workers and Sale of other assets and properties (SoaP) Remittance. Daily Sun. Available at: https://www.daily-sun.com/ Probability of bankruptcy (PoB) post/483443/Impacts-of-COVID19-on-Migrant-Workers-and- Probably closing business soon (PcbS) Remittance. Ratha, D.K., De, S., Kim, E.J., Plaza, S., Seshan, G.K., & Yameogo, N.D. (2020). COVID-19 Crisis Through a Migration Lens (English). Appendix-B: Sample of Research Questionnaire Migration and Development Brief. no. 32, Washington, D.C.: World Bank Group. Available at: http://documents.worldbank. org/curated/en/989721587512418006/COVID-19-Crisis- Through-a-Migration-Lens. Dear Respondent, Rady, D.A.M. (2012). Greece debt crisis: Causes, implications and I am presently working as an Adjunct Professor at the policy options. Academy of Accounting and Financial Studies Journal. 16(SPI), 87-96. Green University of Bangladesh, Dhaka. The title of Radelet, S., & Sachs, J. (1998). The onset of the East Asian financial our proposed research is “The COVID-19 pandemic crisis (No. w6680). National bureau of economic research. 28(1), impacts on manpower export: An econometric 1-74. Sider, A., & Mann, T. (2020). Airlines Seek $50 Billion Coronavirus Aid analysis of survival strategies of recruiting agencies Package. The Wall Street Journal. Available at: https://www.wsj. in Bangladesh” funded by COVID-19 Pandemic: com/articles/airlines-seek-up-to-50-billion-in-government-aid- Ethnography, Observation and Survey for Internal and amid-coronavirus-crisis-11584378242. Slatten, T., Svensson, G., & Svaeri, S. (2011). Service quality and International Migration Project, Migration Research turnover intentions as perceived by employees: Antecedents and Development and Society of Bangladesh (MRDSB). consequences. Personnel Review. 40(2), 205-221. The purpose of this study is to review the capacity Stiglitz, J.E. (2010). Interpreting the Causes of the Great Recession of 2008. Financial system and macroeconomic resilience: revisited, of organizations in the manpower export sector BIS Paper no. 53, Bank for International Settlements. Available at: in Bangladesh to deal with such situations.. For https://www.bis.org/publ/bppdf/bispap53.pdf conducting the study, your cordial help is necessary. World Bank. (2020) World Bank Predicts Sharpest Decline of Remittances in Recent History. Available at: https://www. It is assured that all the data supplied shall be used worldbank.org/en/news/press-release/2020/04/22/world- solely for the purpose of academic research and will bank-predicts-sharpest-decline-of-remittances-in-recent-history. be treated with utmost confidentiality.

THE COST AND MANAGEMENT 33 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 Sincerely yours, Statement Yes No Dr Kazi Abdul Mannan Corporate is self-sufficient Adjunct Professor Corporate has reserve fund Green University of Bangladesh Corporate has risk fund Dhaka Corporate has pandemic insurance Mobile: 01771091953 Corporate has pandemic assurance E-mail: [email protected] From owner(s) personal reserve fund From owner(s) personal risk fund Section A: General Information From government grants From government incentives 1. Name of the respondent: From government loan 2. Name of the organization: From government refund on our security 3. Designation and department: deposit 4. Number of working years with the current Finance from Commercial bank organization: Finance from other financial institute finance 1-3yrs / 4-6yrs/7-9yrs/more than 10yrs Arrange shark loan 5. Highest qualification: Secondary / Graduation / Funding from international organization Masters / Others. grants Date of interview: Funding from international organization incentives Financial support from sister concerns Section B Financial support from other business 6. Has COVID-19 affected your business? Financial SUpp0l1 from family members Financial support from friends and 6.1 If yes please specify relatives Positive or Negative impact. Mortgage of other assets and properties 7. If COVID-19 is long overdue then how you think Sale of other assets and properties that your business will survive, if your answer is Probability of bankruptcy related to the list below, please tick the right place. Probably closing business soon

THE COST AND MANAGEMENT 34 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 Tax Amnesty Schemes in Bangladesh: Some Observations

Dr. Sams Uddin Ahmed Commissioner of Taxes [email protected]

Abstract Ensuring voluntary compliance in the field of direct taxes remains a formidable challenge for Bangladesh tax administration. The problem is not peculiar with Bangladesh. Most developing and transition countries experience the same problem. One of the many means of ensuring voluntary compliance is the use of tax amnesty scheme. Tax amnesty scheme is used by the tax administration around the word to ameliorate compliance in the field of income tax. Bangladesh at times introduce tax amnesty scheme to improve voluntary compliance in the field of income tax. The paper contends that though tax amnesty might temporarily increase revenue collection, in the long turn it shows the other way. Particularly, tax amnesty scheme does not make any contribution in the expansion of tax net which is now a crying need for Bangladesh income tax administration. Keywords: Bangladesh, Tax, Amnesty, Voluntary Compliance, Black Money, Political Purpose.

Part- I: Introduction Currently, Bangladesh is facing a formidable challenge in ensuring voluntary compliance in the field of direct taxes. Though the problem is not peculiar to Bangladesh and most of the developing and transition countries face the same problem, the state of tax compliance in Bangladesh is much worse than the other countries. The truth is revealed when one finds that with a population of 164 million, as of June 2020, the number of TIN (Taxpayers Identification Number) holders is staggeringly low with a total number of around three million. However, tax administration in Bangladesh is persistently trying to improve the poor state of tax compliance and resorting to many tools over the years. One such tool employed by the ITDB (Income Tax Department of Bangladesh) is the tax amnesty scheme. Tax amnesty scheme is used by the developing and the developed countries to

THE COST AND MANAGEMENT 35 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 augment revenue collection and increase voluntary traced back to the ancient Egypt, 2200 hundred years compliance ((Luitel and Tosun, 2013 and Ibrahim when Rosetta stone was written which contained tax et al, 2017). It remains a major part of the political laws of the day. The Rosetta stone, inter alia contained agendas of the states around the world (Torgler, law regarding tax amnesty which was initiated by Shaltegger and Schaffner, 2003). Tax amnesty scheme Ptolemy V (Roth, 1992). Tax amnesty scheme were is allowed as a part of the tax reform process by the offered in Roman Empire 1600 years before and also tax administrations (Hasseldine, 1998 and Ahmed, in the years AD 434, 445, 450 and 458. The purpose 2018). The supporters of tax amnesty schemes argue of those tax amnesty schemes were to target the that tax amnesty increases revenue in the short term accumulated and not the current taxpayers (Adams, and also it might expand the tax net (Alm et al, 2009 1982, 95 cited in Roth, 1992). and Ahmed, 2018). It is argued that tax amnesty might The word amnesty comes from the Greek word accelerate revenue collection in the short term but in ‘amnestia’ which means oblivion. It might mean that the long run it does not and the contribution of tax government forgets the tax crime and forgives the amnesty in expanding tax net is negligible. At least for tax past dodgers and allows them to correct their Bangladesh this is true. mistakes by paying taxes on the amount of income In Bangladesh, tax amnesty schemes are offered not declared before. Borgne and Baer (2008) state, “A frequently in an attempt to curb the problem of tax tax amnesty can be defined as a limited-time offer by evasion in the country and consequently augment the government to a specified group of taxpayers to revenue collection. In the fiscal year 2020-2021, the pay a defined amount, in exchange for forgiveness of ITDB has proposed to launch another tax amnesty a tax liability (including interest and penalties), relating program with a view to collect more revenue against to a previous tax period (s), as well as freedom the backdrop of poor state of projected revenue from legal prosecution. Amnesties generally fall in collection because of COVID-19. However, the two categories: financial and legal. For the former, present article argues that tax amnesty in Bangladesh is a tax amnesty implies a reduction (in real terms) of perceived by the people as a means of ‘whitening black taxpayers’ declared or undeclared tax liabilities as money’ business people and other corrupt sectors of established by law. This reduction can be achieved society. The overall impact of the tax amnesty scheme through a variety of measures: for example, through a is not as tantalizing as is expected. It is argued that tax reduction or cancellation of (1) interest and penalties amnesty in Bangladesh paves the avenue for taxpayers owed on the underreported or undeclared taxes or to be corrupt. Because, it gives an opportunity for (2) tax liabilities (or some combination of these). the recalcitrant tax evaders to escape punishment The latter includes a waiving of civil and criminal by taking advantage of the amnesty (Waris and Lyla, penalties.” Ahmed (2018) states, “Tax amnesty 2014, Ahmed, 2018). It is also contended that tax can be defined as an opportunity offered to a tax amnesty does not have a positive effect on improving payer to rectify past errors or omissions in terms of voluntary compliance (Alm et al, 2007). The article reporting income and the payment of tax thereon. Tax amnesty is a government scheme that allows the is structured as follows: Part I gives an introduction. defaulting taxpayers to declare to the tax authority Part II defines tax amnesty along with a short literature any omissions or errors in calculating tax liability in review. Part III discusses tax amnesty schemes in the the past and disclose any inaccurate, incorrect or field of income tax in Bangladesh as of income tax year incomplete information from past years.” 2020-2021. Part 4 discusses whether the purpose for which tax amnesty in Bangladesh is conducted is being Why tax amnesties are offered by the tax achieved. Finally part 5 offers a conclusion. administrations? Borgne and Baer (2008) identified three reasons for tax amnesty schemes. Firstly, to collect tax quickly; (2) to ensure future tax compliance Part-II: Meaning and History of Tax and (3) to bring back the money hidden offshore. Amnesty Compliance through tax amnesty can be ensured by Although tax amnesty schemes are frequently used by encouraging taxpayers to declare and pay previously the present-day tax administrations around the world, undeclared tax, file tax returns, or receive TIN and it has its antiquity. The history of tax amnesty can be stay up to date by paying their tax liabilities.

THE COST AND MANAGEMENT 36 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 However, research on the effect of tax amnesty on billion was siphoned off from Bangladesh from revenue collection and compliance behavior has 2006 to 2016 (GFI, 2019). The size of the informal flourished after 70s and research on tax compliance economy has increased to an alarming 38.1 per cent has become a cottage industry by now. Some research (Hassan, 2011). However, the rate of black economy found tax amnesty effective in improving compliance is being lowered over the years. For example, the and collection of short-term revenue. Again, some black economy ratio was 36.34% in 1991 and in 2015 it stood at 27.6% (Kibria, 2018). Although declining researches found that in the long run tax amnesty over the years, the rate is still alarming and need to be negatively impacts compliance and revenue collection. curbed. However, the government of Bangladesh has Alm and Beck (1991) find a positive effect of tax so far taken various measures to tackle the problem of amnesty on revenue collection when combined with tax noncompliance in the country. One such measure increased enforcement measures. Parle and Hirlinger is the tax amnesty scheme. Although it is argued (1986) noted that amnesty programs generate that tax amnesty scheme, which is known as a ‘black revenue in low volume. Tax amnesty schemes need money whitening’ scheme and is highly controversial, low cost to implement and it contributes significantly in failed to tackle the problem of tax noncompliance in ensuring compliance and minimizing budget shortfall. Bangladesh (Gani, 2006). On the contrary, it might Ahmed (2018) refers to Rakhmindyarto (2011) who encourage corruption and tax non-compliance (Waris through empirical research identifies factors that lead and Latif, 2914). to a successful tax amnesty program in Indonesia. Over the years, the National Board of Revenue Rechberger et al (2010) found that if the tax amnesty of Bangladesh (the NBR) conducted repeated tax is perceived as just it positively impacts future tax amnesty schemes with not very encouraging result. compliance. Responding to tax amnesty scheme The latest tax amnesty scheme has been proposed largely depend on the fairness of the scheme. Luitel by the NBR for 2020-2021 assessment year with the (2005), Baer and Le Borgne (2008), Saracoglu and hope that the scheme will help taxpayers comply by declaring their unreported money. New sections Kasakurlu (2011), Boise (2007), Lederman (2012), 19AAAA and 19AAAAA have been inserted in the Bose and Jetter (2018), all find tax amnesty schemes Income Tax Ordinance 1984. Section 19AAAA deals as short term revenue generating tool and has the with special tax treatment in respect of investment in effect of ameliorating future tax compliance. Securities. According to section 19AAAA no question However, Alm, Martinez-Vazquez and Wallace’s as to the source of any sum invested in securities by an (2009), Torgler et al (2003), Fisher, Goddeeris and individual assessee during the period between the first Young (1989), Joulfaian (1988), Christian, Gupta and day of July, 2020 and the thirtieth day of June, 2021 Young’s (2002), Uchitelle (1989), Martinez (1991), (both days inclusive) shall be raised by any authority if Alm, McKee and Beck (1990), Alm (1998),Gupta and the assessee pays tax at the rate of ten percent (10%) Mookherjee’s (1995), Luitel and Sobel (2007), they on such investment within thirty days from the date of such investment. A declaration in respect of such all argue that tax amnesty schemes do not ensure investment shall be made in the prescribed form and sustainable tax compliance although in short term submitted to the respective Deputy Commissioner in they might prove successful in pouring to the national the prescribed manner in respect of such investment exchequer. shall be made and submitted to the respective Deputy Commissioner of Taxes. Where any such sum Part-III: Tax Amnesty Scheme in invested is withdrawn from the capital market within Bangladesh three years from the day of such investment, such Every year Bangladesh experiences huge illicit capital sum shall be deemed to be income of the assessee for flight. It is estimated that an amount of $7.53 billion that income year classifiable under the head “Income on average annually is siphoned off from Bangladesh from other sources”. On the other hand, section for the period from 2008 to 2017 due to misinvoicing. 19AAAAA offers amnesty in the form of special tax In 2015, $5.9 billion (about Tk 50,000 crore) was treatment in respect of undisclosed property, cash, laundered from Bangladesh and a total of $81.74 etc. According to the new section, no question as to

THE COST AND MANAGEMENT 37 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 the source of any undisclosed movable property and immovable property shall be raised by any authority if an individual assessee pays, before the submission of return or revised return of income during the period between the first day of July, 2020 and the thirtieth day of June, 2021, tax at a specified rate as contained in the attached table of section 19AAAAA. Movable and immovable properties include land and building or apartment situated in different parts of the country with a varying rate of taxes and also cash, bank deposits, financial schemes and instruments, all kinds of deposits or saving deposits, savings instruments or certificates if ten percent tax of the total amount is paid by the taxpayer. The provisions of this section shall not apply to cases where any proceeding has been drawn under any provision of this Ordinance or any other laws by thirtieth June, 2020. It is to be noted that at the time of writing the article, the tax amnesty provisions were merely proposal contained in the Finance Bill. It will become law if it is passed by the Parliament. In Bangladesh from 1971 to 2019, tax amnesty has been allowed 20 times and if the law is passed the new tax amnesty program will be the 21st tax amnesty program. For the first time Tk 2.75 crore, which was black money, was whitened during the army back government in 1975. Later, Tk 50.76 crore was whiten during the period from 1976 to 1981, Tk 45.89 crore was whitened during the period of time from 1982 t 1990, Tk 150.79 crore was whitened during the time from 1991 to 1996, Tk 950 crore was whitened from 1997 to 2000, Tk 827 crore was whitened from 2001 to 2006, Tk 9,682 crore was whitened from 2007 to 2008, Tk 1,805 crore was whitened from 2009 to 2013 and Tk 856.30 crore was whitened from 2014 to 20017(Bangladesh Post, 2020). However, repeated tax amnesty programs failed to achieve the aims of the programs. The experience speaks for the proposition. Despite the prevalence of black economy in the country, tax amnesty programs could not pour profusely to the treasury (Kar and Freitas, 2012). Byron (2013) noted that from the introduction of the tax amnesty program till 2013, Tk 1,805.01 crore has been whitened, while tax of Tk 230.41 crore has been collected under several tax amnesty programs. This is only a fragment of the estimated amount of black money in the country (Ahmed, 2018). The following table presents an overview of black money whitening under the tax amnesty schemes conducted at different times by the Bangladesh NBR.

Table-5.1: Black Money Whitening under Tax Amnesty Schemes over the Years

Financial Year Disclosed Amount Amount in Revenue Collected (in Bangladesh Tk. Crore (in Bangladesh Tk. Crore 1976-1977 70 10 1987-1988 200 40 1988-1989 250 25 1989-1990 400 40 2000-2001 1,000 100 2002-2005 1,757 No Tax 2005-2006 4,603 345 2006-2007 3,775 687.43 2007-2008 800.03 80.03 2008-2009 70.87 10.08 2009-2010 923 121

Source: NBR Bangladesh The above table discloses that revenue earning through amnesty programs is not particularly high. The percentage of income tax collected as a result of tax amnesty compared to the overall collection in the concerned financial years is not satisfactory. The following table demonstrates the low effect of tax amnesty on overall revenue collection.

THE COST AND MANAGEMENT 38 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 Table 5.2: Collection through Tax Amnesty Program versus Total Collection Financial Year Total Income Tax Collection of Tax Percentage of Collection (in Tk. through Tax Amnesty Amnesty Tax of Total Crore) Program (in Tk Crore Income Tax Collection 1976-1977 114.64 10 8.72 1987-1988 664.29 40 6.02 1988-1989 705.93 25 3.54 1989-1990 782.24 40 5.11 2000-2001 3,500.82 100 2.85 2002-2005 14,520.00 No Tax 0.00 2005-2006 7,162.01 345 4.81 2006-2007 8,721.24 687.43 7.88 2007-2008 11,744.66 800.03 6.81 2008-2009 13,857.74 100.08 0.72 2009-2010 17,042.28 121 0.70

Source: National Board of Revenue (Cited in Ahmed, 2018)

Part-IV: Comments on the Repeated Tax Amnesty Schemes in Bangladesh The statistics furnished in the previous section of the article speak of the redundancy of the tax amnesty schemes in Bangladesh. The proposed new tax amnesty schemes can be considered a broad-based scheme since it covers lands, buildings, shares and securities, cash and movable and immovable properties. Such type of scheme was not offered before. But the question remains whether the present scheme will be able to serve the very purpose of gathering satisfactory amount of revenue and bring a huge number of taxpayers within tax net. Regarding the new tax amnesty schemes the Finance Minister of the country said, “These provisions, when [they] come into effect, will increase the flow of money into the mainstream economy, generate employment and enhance collection of tax revenue. No authority, including the income tax authority, can raise any question on such declarations. Extraordinary times demand extraordinary measures.” So, it is clear from the statement of the Finance Minister that the government is going to implement such tax amnesty schemes with the prime objective of collecting much needed revenue against the back drop of the economic crisis caused by COVID-19. Obviously, there are arguments for and against such schemes. As mentioned earlier, researchers also took opposite stands regarding the impact of tax amnesty schemes. Noman (2020) states, “While the government aims to enhance cash flow and attract more investment, and thereby boost the pandemic-hit economy by allowing a legalising of black money in wholesale manner --- with the business fraternity as a whole appearing to have been cheered by the move --- economists and civil society organisations have raised questions about the legality and ethicality of the decision.” Former economic adviser to the care taker government Mirza Aziz commented that the new tax amnesty schemes will discourage the honest taxpayers will be discouraged and corrupt persons will be encouraged by this move and also previous schemes failed to produce notable amount of tax revenue. Regarding the revenue impact of repeated tax amnesty in Bangladesh and also in other countries encouraging research out comes were not observed. As Ahmed (2018) observes, “Although the repeated tax amnesty conducted by the government at different times during different regimes has failed to curb the underground economy to the expected level, the government of Bangladesh is always eager to conduct tax amnesty programs again. The statistics of tax collected through tax amnesty are not very encouraging—during the last 40 years, Tk 12,996 crore was whitened, and the government received tax of Tk 1,368 crore.” Again, Luitel and Sobel (2005) state, “We find that overall, when a state offers an amnesty for the first time, it produces revenue during the amnesty period but then harms revenue in the long run, which is consistent with the theory proposing that people respond to the amnesty by beginning to evade taxes in anticipation of additional future amnesties. Repeated broad-based amnesties fail to produce even additional short-run revenue, while creating significant long-run revenue losses due to reduced compliance that grow as additional amnesties are offered. Based on our results we suggest that states avoid using tax amnesties on a repeated basis, and even the first offering is not clearly a

THE COST AND MANAGEMENT 39 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 revenue enhancement once the long run compliance Compliance. National Tax Journal.43 (1) 23-37. effects are considered.” Alm, James. Tax Policy Analysis: The Introduction of a Russian Tax Amnesty (Working Paper, 98-6, Georgia State University, 1998). < file:///C:/Users/USER/Desktop/Bek.pdf> . Part- V: Conclusion Baer, Katherine and Borgne, Eric Le, (2008). Tax Amnesties: Theory, Tax amnesty scheme is being used by the administrations Trends, and Some Alternatives, International Monetary Fund. around the world as a short-term revenue raising tool. Bose, Pinaki and Jetter, Michael. A Tax Amnesty in the Context of a Developing Economy, Retrieved from https://research.stlouisfed. It is observed that although tax amnesty enjoys short org/conferences/.../Amnesty_Paper_Feb18.pdf>.000000 term success, in the long run it fails to expand tax net. Byron, Rejaul Karim (2013, June 9). Liberal Act, Little Gain. The Daily It temporarily impacts black economy. But in the hope Star, Retrieved from http://www.thedailystar.net/beta2/news/ liberal-act-little-gain/ of future amnesty, compliance is reduced. At least, Finance Bill, 2020. < http://nbr.gov.bd/uploads/budget/Finance- empirical evidences speak for the truth. Moreover, BILL-2020-2021_Final_Tracing.pdf>. Accessed 21 June 2020. honest taxpayers feel frustrated for being honest. Gani, Asma Dina (2006). Accessing the Underground Economy: A Alm (1998) states, “Tax amnesties are controversial Study of 3 Incentive Programmes of the National Board of Revenue. Master’s Thesis, BRAC University, Dhaka, Bangladesh, Retrieved revenue tool. The obvious purpose of a tax amnesty from http://dspace.bracu.ac.bd:8080/xmlui/handle/10361/254 is to raise short-term revenue. This may or may not Islam, Zyma. Whitening black money now more lucrative than ever, work, and it can bring about expectations of future The Daily Star (June 11, 2020). < https://www.thedailystar.net/ budget-2020-21-turning-black-money-white-made-more-lucrative- amnesties thereby reducing taxpayer compliance after ever-1912781 >. Accessed 21 June, 2020. the amnesty…In addition, citizens must believe and Kar, Dev and Freitas, Sarah (2012). Illicit Financial Flows from Developing must eventually see that the amnesty is accompanied Countries: 2001–2010. Global Financial Integrity, Retrieved from http://iff.gfintegrity.org/documents/dec2012Update/ by enhanced enforcement.” Illicit_Financial_Flows_from_Developing_Countries_2001-2010- In Bangladesh, the tax amnesty scheme faced criticism HighRes.pdf Kibria, Asjadul. Ratio of BD's black economy slipping, says IMF paper, from different corners of the society. The proposed The Financial Express (21 June 2020). . Accessed 21 June, 2020. repeated tax amnesty could not gather revenue to Lederman, Leandra (2012). The Use of Voluntary Disclosure Initiatives in the Battle against Offshore Tax Evasion. Villanova Law Review. the expected level. Rather than domestic tax amnesty 500,499-528, Retrieved from https://www.repository.law.indiana. Bangladesh now can think of offshore tax amnesty to edu/cgi/viewcontent.cgi?article=1799&context=facpub bring back the money siphoned off from Bangladesh Luitel, Harisaran and Rusell L Sobel (2007). The Revenue Impact of Repeated Tax Amnesties. Public Budgeting and Finance. 27(3), 19- (Ahmed, 2019). Countries like Italy, Spain, India, 38. Indonesia are offering offshore tax amnesty rather Noman, Morshed. Govt allows wholesale whitening of black money, than onshore tax amnesty scheme. However, given The Business Standard (11 June, 2020). < https://tbsnews.net/ economy/budget/government-opens-gate-whitening-black- the moribund economic situation of the country, it is money-91747>. Accessed 21 June, 2020. not unwise to go for such scheme for a short term. Roth, Martin F. 1992. An International Perspective on Tax Amnesty: If taxpayers come forward government might collect Formulation a Decisional Model through a Conceptual Model, Tax Administration Review.11, 9-22. < https://www.ciat.org/ the much-needed revenue to face the economic crisis. Biblioteca/Revista/Revista_11/2premio_v_concurso_roth_usa. Given the poor tax culture in Bangladesh (Ahmed, pdf>. Retrieved, 21 June, 2020. 2018), it is however uncertain, to what extent the Saracoglu, Osman Fatih and Kasakurlu, Eren (2011). Tax Amnesty with proposed law will be successful in generating revenue Effects and Effecting Aspects: Tax Compliance, Tax Audits and Enforcements Around: The Turkish Case. International Journal of and improve tax compliance. Business and Social Science 2(7) 95-103, Retrieved from http:// www.ijbssnet.com/journals/Vol._2_No._7%3B_Special_Issue_ Reference April_2011/11.pdf Shah, Nasir Uddin. Black money whitening scope again, The Asian Age Ahmed, Sams Uddin.2018. Role of Tax Amnesty in Ensuring Voluntary (21 June, 2020). < https://dailyasianage.com/>. Compliance: The Case of Income Tax in Bangladesh, Journal of Bangladesh Studies.19 (1-2). Torgler, Benno, et al (2003). Is Forgiveness Divine? A Cross-culture Comparison of Tax Amnesties (2003). Swiss Journal of Economics Ahmed, Sams Uddin.2018. Bringing Back the Money through Offshore and Statistics. 139(3), 375-396. Voluntary Disclosure Programme (OVDP): Bangladesh Perspective. The Cost and Management. 47(1), 57-62. www.icab.org.bd Waris, Attiya and Abdul-Latif, Lyla (2014). The Effect of Tax Amnesty on Anti Money Laundering in Bangladesh. Journal of Money Ahmed, Sams Uddin. 2018. Tax Culture: The Bangladesh perspective. Laundering Control. 17(2):243-255. Journal of Bangladesh Studies.18(L &2), 56. Zahid, Shamsul Huq (2013, June 3). ‘The Renewed Episode Alm, James et al (2007), Do Tax Amnesties Work? The Revenue Effects of Black Money’, The Financial Express (online), Retrieved of Tax Amnesties During the Transition in the Russian Federation, from http://www.thefinancialexpress-bd.com/index. Andrew Young School of Policy Studies, Working Paper 07-18, php?ref=MjBfMDZfMDNfMTNfMV82XzE3MTQ1OA== August, 2007. https://icepp.gsu.edu/files/2015/03/ispwp0718.pdf. Alm, James et al (1990). Amazing Grace, Tax Amnesties and

THE COST AND MANAGEMENT 40 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 Impact of Advance- Deposit Ratio (ADR) on Financial Performance: Panel Evidence from Commercial Banks in Bangladesh

Prahallad Chandra Das FCMA Assistant Professor Department of Accounting and Information Systems Jatiya Kabi Kazi Nazrul Islam University E-mail: [email protected]

Abstract This paper investigates the influence of advance-deposit ratio on the financial performance of commercial banks in Bangladesh for the period of 2000 to 2016. The study included 10 commercial banks (4 SCBs and 6 PCBs) in Bangladesh. Advance-deposit ratio of the banks was the independent variable of the study. The dependent variable was financial performance that measures through Return on Assets (ROA). Data were obtained from the annual reports of the selected commercial banks. The ratio analysis along with descriptive, correlation analysis, paired T- test and regression analysis were used in this study. The result of the study designated that there was a positive and significant influence of advance-deposit ratio on return on assets. The study concluded that the optimum advance-deposit ratio enhances return on assets and that will be the ultimate positive effect on the financial health of banks. Inversely, excessive advance-deposit ratio may create more credit risk that will be negative effect on financial health of the firm and lower advance-deposit ratio may also create ideal fund that enhance the opportunity costs of the firm. Keywords: Advance-deposit ratio, Return on assets, Commercial banks, State-owned commercial banks, and Private commercial banks.

THE COST AND MANAGEMENT 41 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 1.0 Introduction Advance- deposit ratio is an expedient instrument to determine banks’ liquidity, and by addition, it influences the financial performance of the banks. The banks’ main revenue is centred on the interest charged against the loans and advances; it means the profit is generated through the positive difference between interest of loans & advances and interest on deposits. According Borhan & Towpek (2006), profit can be defined as revenue profits or proceeds from an activity, such as companies, businesses and others in excess of capital and all other related expenses. In general banks may not be making optimum return if the advance-deposit ratio is too low. The objective of this research work is to get experimental indication about effect of advance-deposit ratio on return on assets (ROA) in commercial banks in Bangladesh. Among the various factors, advance- deposits ratio is one of the crucial factors for determining the financial performance of the bank. Both loans and deposit are equally significant in the banking operation like two sides of the same coin. The aim of the study is to identify the influence of advance-deposit ratio on the financial performance of the commercial banks in Bangladesh. In universal, the main source of revenue for the banks is interest from loans and advances. The primary task of the bank is to lend money to the borrowers; this is the vital source of revenue for the commercial banks. It is clear that the banks offer more loans and advances to generate high revenue and profit(Abreu and Mendes, 2002). At the same time, it negatively affects the bank financial performance (Rasiah, 2010). The banks offered different types of deposits to its customers and business households. Among the various sources of funds for the bank, deposit is the inexpensive and the calmest way to mobilize. This deposit has association with financial performance of the bank (Rasiah, 2010). Accepting deposits is a liability for the bank, further it is accountable to pay interest to the deposit holders. A study conducted by Husni (2011) stated that there is a significant and positive relation between return on assets and total liabilities to total assets. The aim of the study is to recognize the influence of advance-deposit ratio on the financial performance of commercial banks in Bangladesh. The recognized tools for the study are advance- deposit ratio and return on assets. Most of the preceding studies accompanied on ADR and bank liquescency, bank size and profitability, capital and profitability etc., but the current study predominantly focus on the direct kith and kin between the ADR and ROA of commercial banks in Bangladesh.

1.1 Present Banking and Financial System in Bangladesh After the independence, the banking industry in Bangladesh started its journey with 6 nationalized commercialized banks, 2 state-owned specialized banks, and 3 foreign banks. In 1980s banking industry achieved significant expansion with the entrance of private banks. Bangladesh Bank (BB), as the regulatory authority, oversees the activities of schedule banks and financial institutions (FIs). Currently, there are 6 state-owned commercial banks (SCBs), 2 specialized development banks (SDBs), 40 domestic private commercial banks (PCBs), 9 foreign commercial banks (FCBs), 6 non-scheduled banks, and 33 non-bank financial institutions (NBFIs) operating in Bangladesh. Based on the degree of regulation, the financial system of Bangladesh may be divided into three broad sectors: a) Formal Sector b) Semi-Formal Sector c) Informal Sector

THE COST AND MANAGEMENT 42 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 The financial system of Bangladesh is presented by the following diagram:

The ﬁnancial system of Bangladesh

Formal Sector Semi-Formal Sector Informal Sector

Specialized Financial Institutions

1. House Building Finance Corporation Financial Market Regulators & Institutions 2. Palli Karma Sahayak Foundation

Money Market IDRA Bangladesh Micro- Bangladesh Bank (Banks, NBFIs, (Insurance Security Credit Authority) Exchange Regulatory Primary Dealers) Commission Authority

Capital Market Micro- (Investment Banks, BankNBFIs Finance Stock Exchanges, Institutions Credit Rating

Life General DSE Insurance Insurance Stock Exchange Foreign Exchange Company Company Market (Authorized CSE Dealers) Stock Dealers and Brokers

Scheduled Banks Non-scheduled Banks Merchants Banks

SOCBs SDBs PCBs FCBs Assets Management Companies

Conventional PCBs Islami Sharia Based PCBs Credit Rating Agencies

Chart: Financial system of Bangladesh (Source: Bangladesh Bank) First, the formal sector, all regulated institutions like banks, financial institutions (FIs), insurance companies, capital market intermediaries like brokerage houses, merchant banks etc., and micro-finance institutions (MFIs). Second, the semi-formal sector, the regulated institutions but not under the jurisdiction of the central bank, insurance or securities regulator or any other statutory financial regulator. This category includes specialized financial institutions like House Building Finance Corporation (HBFC), Palli Karma Sahayak Foundation

THE COST AND MANAGEMENT 43 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 (PKSF), Samabay Bank, Grameen Bank etc., Non- the banks which are incorporated in abroad. Governmental Organizations (NGOs) and discrete w There are now six (6) non-scheduled banks in government programs. Third, the informal sector Bangladesh which are: Ansar VDP Unnayan Bank, including shadow banking activities and activities of Karmashangosthan Bank, Grameen Bank, Jubilee other financial intermediaries those are unregulated Bank, Probashi Kollyan Bank, Palli Sanchay Bank. or less regulated. Non-Bank Financial Institutions (NBFIs) are those Banks in Bangladesh are primarily of two types: types of financial institutions which are regulated w Scheduled Banks: The banks which get the license under Financial Institution Act, 1993 and controlled to operate under Bank Company Act, 1991 by Bangladesh Bank. Now, 33 NBFIs are operating in (Amended up to 2013) are termed as Scheduled Bangladesh while the maiden one was established in banks. 1981. Out of the total, 2 is fully government owned, w Non-Scheduled Banks: The banks which are 1 is the subsidiary of a SOCB, 15 were initiated by established for special and definite objective private domestic initiative and 15 were initiated by and operate under the acts that are enacted for joint venture initiative. Major sources of funds of FIs meeting up those objectives are termed as Non- are Term Deposit (at least three months tenure), Scheduled Banks. These banks cannot perform all Credit Facility from Banks and other FIs, Call Money functions of scheduled banks. as well as Bond and Securitization. w There are 57 scheduled banks in Bangladesh 1.2 Advance-Deposit Ratio (ADR): who operate under full control and supervision The advance-deposit ratio is a useful tool to determine of Bangladesh Bank which is empowered to do so bank liquidity, and by extension, it influences the through Bangladesh Bank Order, 1972 and Bank profitability of the banks(Rengasamy, 2014). Company Act, 1991. Advance to Deposit Ratio (ADR) is determined by w Scheduled Banks are classified into following putting Advance in numerator and Liabilities (excluding types: capital) in the denominator (ALM guideline, BB, w State Owned Commercial Banks (SOCBs): There 2017). The ratio should be fixed in such a manner so are six (6) SOCBs which are fully or majorly that there will be no unnecessary liquidity pressure owned by the Government of Bangladesh. on the bank at any point in time. Considering the w Specialized Banks (SDBs): two (2) specialized regulatory liquidity requirements (CRR and SLR), the banks are now operating which were established maximum value of the ratio shall be derived using for specific objectives like agricultural or industrial the formula [100%-CRR*-SLR*] (ALM guideline, development. These banks are also fully or majorly BB, 2017). Depending upon the capital base, owned by the Government of Bangladesh. liquidity condition, NPL status etc. and above all the maintenance of (LCR) Liquidity Coverage Ratio & Net w Private Commercial Banks (PCBs): There are Stable Funding Ratio (NSFR), the board may decide forty (40) private commercial banks which are to add a maximum 4.5% and 2%** (for conventional majorly owned by private entities. PCBs can be banks and Shariah-based banks respectively) with the categorized into two groups: result of the above formula to fix a suitable AD ratio w Conventional PCBs: thirty two (32) conventional (ALM guideline, BB, 2017). Loans and deposits are PCBs are now operating in the industry. They one of the key factors for determining the profitability perform the banking functions in conventional of the bank. It is logical that the banks offer more loans fashion i.e interest-based operations. the more it goes to generate high revenue and profit, w Islami Shariah-based PCBs: There are eight (8) (Abreu and Mendes, 2002). It is true that the banks Islami Shariah-based PCBs in Bangladesh and posing more loans to the customers for the benefit they execute banking activities according to Islami of interest revenue, at the same time there is the Shariah-based principles i.e. Profit-Loss Sharing possibility of risk of liquidity. Concurrently it negatively (PLS) mode. affects the bank profitability(Rasiah, 2010). Another w Foreign Commercial Banks (FCBs): nine (9) FCBs study found that a positive relationship between loan are operating in Bangladesh as the branches of ratio and profitability(Vong et al., 2009). Moreover,

THE COST AND MANAGEMENT 44 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 numerous studies exhibited that there is a positive *Interbank deposit surplus = Deposit from other and significant relationship between the AD ratio banks -Deposit with other banks (if -ve then 0) and banks profitability(Abren & Mends, 2002; Ferdi, Bank should follow the instruction of BB regarding 2005; Fitriani, 2010; and Rasiah, 2010). According to deduction of some items to calculate total loans Rengasamy (2014), the study indicated that there was and advances or Investment while calculating ADR. an admixture relationship (positive and non-significant Total Demand and Time liabilities will be calculated relationship, negative and non-significant relationship, according to DOS Circular No.01/2014. positive and significant relationship) existed between 1.2.1.3 Amendment of BRPD Circular No.2 AD ratio and profitability factors. of 07.03.2016 through BRPD Circular No. 14, Based on the preceding literature, it is acknowledged dated: 26.07.2018 that the advance-deposit ratio is one of the The formula for calculating AD ratio is as follows: momentous factors to determine the profitability of the bank. Thus the following hypothesis was ADR= Total Loans and Advances or Investment (for established to empirically explore in this study on the Shariah based banks)/ (Total Time and Demand basis of the above literature discussion. Liabilities + Interbank Deposit Surplus* + Bond Surplus**) H0: There is no significant influence of advance- deposit ratio on return on assets of commercial banks * Interbank Deposit Surplus = Deposit from other in Bangladesh. banks -Deposit with other banks (if -ve then 0) ** Bond Surplus = Total amount raised from issuing 1.2.1 Guideline regarding Advance-Deposit bond-Total investment in bond of other banks (if Ratio issued by Bangladesh Bank through ALM -ve then 0). Guidelines: 1.2.1.4 ADR for Islamic banking operation of To calculate advance-deposit ratio Bangladesh Bank conventional banks: issued guidance through ALM guidelines dated on Conventional banks having Islamic banking business 07.03.2016, BRPD Circular No.2. The rules regarding have to calculate and maintain ADR separately for ADR which are depicted below: conventional banking and islamic banking operation. 1.2.1.1 Advance to Deposit Ratio (ADR): ADR for islamic banking operation is same as that of Although commonly known as Advance to Deposit Islamic Shariah based banks. Ratio, actually the ratio is determined by putting Advance in numerator and Liabilities (excluding 1.3 Return on Assets (ROA): capital) in denominator. The ratio should be fixed in Return on Assets (ROA) is a ratio that measures such a manner so that there will be no unnecessary banks profitability against its total net assets. The liquidity pressure on the bank in any point of time. ratio is considered an indicator of how efficient a Considering the regulatory liquidity requirements bank is using its assets to generate before contractual (CRR and SLR), the maximum value of the ratio shall obligation must be paid. It is calculated as ROA = be derived using the formula [100%-CRR*-SLR*]. EBIT/ Total Assets. Return on assets gives a sign of Depending upon the capital base, liquidity condition, the capital strength of the banking industry (Appa, NPL status etc. and above all the maintenance of 1996). Return on assets (ROA) is an indicator of how LCR & NSFR, the board may decide adding highest profitable a company is relative to its total assets. 4.5% and 2%** (for conventional banks and Shariah ROA gives a manager, investor, or analyst an idea as based banks respectively) with the result of the above to how efficient a company's management is at using formula to fix a suitable AD ratio. its assets to generate earnings (Investopedia, 2018). 1.2.1.2 The Equation: Return on assets (ROA) is a financial ratio that shows The formula for calculating AD ratio is as follows the percentage of profit a company earns in relation to its overall resources. It is commonly defined as net ADR = Total Loans and Advances or Investment income divided by total assets (Encyclopedia, 2018). (for Shariah based banks)/ (Total Time and Demand ROA is used internally by companies to track asset-use Liabilities + Interbank deposit surplus*) over time, to monitor the company's performance in

THE COST AND MANAGEMENT 45 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 light of industry performance, and to look at different of five Palestinian Commercial Banks by using operations or divisions by comparing them one to ROA, the price-to-book value of equity ratio and the other. For this to be accomplished effectively, economic value added. And his study found a positive however, accounting systems must be in place to correlation between ROA and the size of banks. In allocate assets accurately to different operations. our research, the size of the bank is not considered as ROA can signal both effective uses of assets as well the independent variable. But based on the previous as under-capitalization. If the ROA begins to grow in study, we consider it as control variable which we will relation to the industry as a whole, and management discuss later on. Moreover, in the Tafri et al. (2009) cannot pinpoint the unique efficiencies that produce test of financial risk's influence on the profitability of the profitability, the favorable signal may be negative. Malaysian commercial banks also uses ROA and ROE ROA, which is the ratio of net income to total as indicators of profitability.Ruziqa (2013) developed assets, measure how profitable and efficient a bank' a similar topic to the Indonesian Conventional Banks management is, based on the total assets (Guru et.al, by still using ROA and ROE to represent the financial 1999, p.7). As mentioned in the equation of ROE, performance. Among all the measurements, ROA and in the next step, ROA can be disintegrated into the ROE are the major ones (Ongore & Kusa, 2013, p. following elements. 239; Chirwa, 2003, p.567). As previous studies that ROA = (Net Income/ Total Operating Income) * we list before, ROE and ROA are commonly used as (Total Operating Income/Total Assets) the indicators of profitability. Hence, in our research, we will use ROA as our profitability measures. ROA = PM*AU Where: PM = Net income generated per dollar of total 2.0 Literature Review operating income. The literature review contains the citation of earlier studies done on determinants of financial performance AU = Amount of interest and noninterest income of financial institutions and the synopsis of those generated per dollar of total assets. studies. At first, the study included a summary of the Therefore, a higher value of PM and AU ratios studies that have been made on the determinants generate higher ROA and ROE. PM measures the of financial performance of different countries. And capacity of the bank on the expense controlling. then, it has included the studies done in the context And expense control and bank's profit have a of Bangladesh. positive relationship. AU values the bank's capacity Poudel (2012) carried out study in Nepal and it was to generate income from assets. But high PM and published in the International Journal of Arts and AU value also demonstrate the potential risks. For Commerce. In this study, the researcher examined the example, PM will have an improvement when a bank effect of credit risk management on banks' financial reduces its expense of salaries and profits. While if performance. He used different variables to cover the reduction of expense is due to the loss of highly the study which was; default rate, cost per loan assets skilled employees, the rise of PM and ROA might and capital adequacy ratio called explanatory variable. exist an underlying "labor quality" problem (Saunders He collected data from financial report of 31 banks & Marcia, 2011, p. 25). Chirwa mentions that in the were used to analyze for eleven years (2001-2011) previous studies, various indicators are used, including comparing the profitability ratio to the default rate, ROE, ROA and return on capital (ROC) (2003, p.567). cost of per loan assets and capital adequacy ratio Al- Khouri (2011) assesses the risk and performance which was presented in descriptive, correlation and of Gulf Cooperation Council (GCG) banking sector regression was used to analyze the data. The study which involves ROA and ROE as dependent variables found that all these parameters have an inverse and credit risk, liquidity risk, capital risk and bank size impact on banks' financial performance; however, the as the independent variables. This research found a default rate is the most predictor of bank financial positive relationship between credit risk and ROA. performance. The empirical results showed that And a significant relationship between the size of credit risk management is an important predictor banks and ROA was also founded in the same study. of bank financial performance thus the success of Al Khatib (2009) evaluated the financial performance

THE COST AND MANAGEMENT 46 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 bank performance depends on risk management. He The study also revealed that there is significance and recommended that banks should design and formulate positive relationship between ROE on one hand. strategies that will not only minimize the exposure of Inflation and bank size on the other hand. Moreover, the banks to credit risk but will enhance profitability. there is insignificance but positive relationship between He also recommended that banks should put more ROE and GDP, equity ratio, and liquidity ratio. They emphasis on risk management and need to allocate noted significance and negative relationship between more funds to default rate management and try to ROE and unemployment rate, but ROE is insignificant maintain just optimum level of capital adequacy. and negative relationship with total income to total Ayadi & Boujelbene (2012) carried out study in assets, and debt ratio. Tunisia and it was published in the IBIMA Business Kadira & Gochero (2015) conducted study in Review. In this study, the researcher examined the Zimbabwe and it was published in the European determinants of banks' financial performance. They Journal of Business and Management. In this study, collected data from financial report of 12 Tunisian the researchers examined the determinants and deposit banks to analyze for eleven years (1995- Effect of Commercial Bank Profitability in Zimbabwe 2015). The empirical results showed that the bank during the period 2009-2013. They found that the net capitalization, as well as the size, has a positive and interest income and expenses are highly significant significant effect on the bank profitability. The empirical with positive and negative coefficients respectively results indicate that the variables of financial structure, implying that operational efficiency and product the ratio of the bank assets to the GDP and that of diversification were vital for profitability. They also the stock market capitalization to the banking assets found that Inflation, Liquidity, Financial Structure and have a negative and a statistically significant effect. As Asset Composition were weakly significant at the 10% for the impact of the macroeconomic indicators, the level of significance while Deposit Composition was researchers conclude that the variables do not have a found to be statistically insignificant relationship with significant effect on bank profitability. profitability. Samhan & AL-Khatib (2015) conducted study in Raharjo, et. al., (2014) carried out study in Indonesia Jordan and it was published in the Research Journal of and it was published in the International Journal Finance and Accounting. In this study, the researchers of Economics and Financial Issues. In this study, examined the determinants of banks' financial the researchers examined the determinants of performance in Jordan Islamic Bank during the period Commercial Banks’ Interest Margin in Indonesia during 2000-2012. They used the financial performance the period 2008-2012. The objective of this research (Dependent variable) as measured by Return on work is to investigate the determinant factors of Assets (ROA), Return on Equity (ROE), and Return commercial banks’ interest margin in Indonesia, both on Unrestricted Investment Accounts (ROUIA). internal factors (bank specific factors) and external On the other hand, the Independent variables were factors. The empirical results shows that the net divided to two categories which are macroeconomic interest margin of Indonesian commercial banks were variables and bank specific factors. Macroeconomic affected by the entire internal variables on a different variables were inflation rate, Gross Domestic Product level of significance, meanwhile inflation was the (GDP), and Unemployment rate. Bank specific factors only external factors that effects on interest margins were total income divided by total assets, equity ratio, significantly at 5% level. debt ratio, bank size, and liquidity ratio. Boadi, Li, & Lartey (2016) carried out study in Ghana They found that there is significance and positive and it was published in the International Journal of relationship among ROA Vs. Inflation, equity ratio, and Economics and Financial Issues. In this study, the bank size. They also found that there is insignificant researchers examined the Role of Bank Specific, but positive relationship between ROA and GDP. Macroeconomic and Risk Determinants on Banks On the other hand, there is significance and negative Profitability during the period 2005-2013. In this study, relationship among ROA Vs. unemployment rate, the empirical results shows that capital adequacy, and Debt ratio. Moreover, there is insignificance and asset quality, liquidity management, investment; gross negative relationship among ROA Vs. total income to domestic product growth rate, inflation, funding risk total assets, and liquidity ratio. and bank resilience risk were significant determinants

THE COST AND MANAGEMENT 47 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 of RCBs profitability though with varying degrees. of commercial banks in Bangladesh. This study has On the other hand, the study also exhibited that an extension of the study of previous studies on the management efficiency, and bank size cannot Bangladeshi banking industry. It may contribute to the be considered as positive contributors to RCBs existing financial literature. profitability. The study also indicates that continuous profitability performance of RCBs can curtail shortfall 3.0 Methodology of the study: in funding risk and enhance RCBs stability. The research work has been directed on 10 Hasbi (2010) carried out this study in Indonesia and commercial banks (4 SCBs and 6 PCBs) in Bangladesh it was published in the 3’rd International Conference based on their market share. Those Banks’ financial on Quantitative Methods Used in Economics and data for a period of 17 years from 2000 to 2016 are Business. In this study, the objective of this research is chosen for the study. The financial statements of the to identify the influencing factors of bank on financial annual reports used to collect data. The dependent performance which listed at Indonesia Stock Exchange variable of the study is return on assets (ROA) and to stock prices during the period 2007-2009. The the independent variable of the study is advance- study found from empirical evidences that CAR, deposit ratio (ADR). The secondary data related to RORA, NPM, and OEO! were significant effects on literature of the study were also gathered from the stock price, however ROA and LDR were insignificant. annual reports, books, journals, research articles, Simultaneously obtained by the independent variable etc. The data interpretation was made by ratios and CAR, RORA, NPM, ROA, OEOI, and LOR were also based on mean, standard deviation, skewness, significant on stock prices. kurtosis, paired t –test and correlation. The study also Ayadi & Ellouze (2014) carried out this study in applied ordinary least squares (OLS) technique to test Tunisia and it was published in the International the hypothesis. The advance-deposit ratio and return Journal of Economics and Finance. In this study, the on assets demonstrated in the following regression aim of this research is to investigate the determinants model. The regression model is stated below and the of the Tunisian banking performance for the period following symbols were used to identify the respective 2003–2012. They reveal that the increase of the variables. The general model is as follows: capitalization’s level of their sample banks results in superior performance, quotation in stock exchange 3.1 The regression model: and size positively affect the performance, in addition private banks outperform their public counterparts. Y = a + b1X1 + e Rengasamy (2014) carried out study in Malaysia and it Where a = Intercept was presented in the Third International Conference = Re gression co-efficients; on Global Business, Economics, Finance and Social b1 Sciences, Mumbai, India. In this study, the objective of Dependent Variable, Y= Return on Assets (ROA) this research work is to investigate the impact of loan- Independent Variable, deposit ratio on profitability of commercial banks in X = Advance Deposit Ratio (ADR) Malaysia for the period 2009–2013. The study found 1 that there was a positive and non-significant impact of LDR on ROA is five banks (Bank 1, 2, 3, 4 and 8). The 4.0 Data Analysis and Interpretations: researcher also revealed that only one bank (Bank 5) 4.1 Descriptive Statistics had a negative and non-significant impact of LDR on Overall calculated advance-deposit ratio and return on ROA and bank 7 had positive and significant impact. assets for the study period have been presented in the Although numerous studies are conducted in the area descriptive statistics format in the following table. The of determinants of financial performance of banks, descriptive table includes minimum, maximum, range, and its influence on financial health of commercial mean and standard deviation, variance, skewness and banks in Bangladesh is almost absent. In this study, kurtosis of both independent and dependent variables the researcher focused that is to find out the influence of the study. The descriptive statistics is highlighted in of advance-deposit ratio on financial performance the following table.

THE COST AND MANAGEMENT 48 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 Table-01: Descriptive Statistics

N Range Minimum Maximum Mean Std. Variance Skewness Kurtosis Deviation Statistic Statistic Statistic Statistic Statistic Std. Statistic Statistic Statistic Std. Statistic Std. Error Error Error ROA 170 10.01 -4.92 5.09 .9249 .07909 1.03127 1.064 -.976 .186 9.522 .370 ADR 170 105.65 2.01 107.66 74.9421 .95674 12.47435 155.609 -1.297 .186 6.885 .370 Valid N (listwise) 170

Analysis & Findings: The result of the analysis shows that the highest ROA was 5.09% and the lowest ROA was -4.92% over the seventeen years period. The study also shows that the highest ADR was 107.66% and the least ADR was 2.01%. The general rule stated that the higher value of standard deviation implies greater spread of data, smaller the standard deviation shows the data is focused around mean. In such a case all the selected banks standard deviation is positive as well as higher in case of ADR. The result of the analysis also shows that the skewess of data regarding ROA and ADR were negative.

4.2 Paired t-test Paired t-test is based on distribution and is considering an appropriate test for judging the significance of a sample mean. The paired T–test compares the two samples (ROA and ADR) where in this case the value in one sample has a natural partner in other. The result of the analysis is presented in the following table.

Table-02: Paired Samples Test

Paired Differences t df Sig. (2-tailed) Mean Std. 95% Confidence Interval of the Deviation Difference Std. Error Lower Upper Mean Pair-1 ROA-ADR -74.01718 12.03418 .92298 -75.83923 -72.19512 -80.194 169 .000 The table-02 shows that the mean difference between the two variables is -74.01718, the SE (mean difference) is 0.92298 and the calculated t – value is -80.194. The table value against the calculated t- value is 3.89; the calculated value is more than the table values therefore the hypothesis is accepted i.e. there is significant difference in the mean ratio of ADR and ROA.

4.3 Correlation Analysis: Correlation is to analyze the relationship between two random variables, here the study examine the relationship between ADR and ROA. The result of the analysis is presented in the table.

Table-03: Correlations Return on Asset Advance-Deposit Ratio Return on Asset Pearson Correlation 1 .461** Sig. (2-tailed) .000 N 170 170 Advance-Deposit Ratio Pearson Correlation .461** 1 Sig. (2-tailed) .000 N 170 170 **. Correlation is significant at the 0.01 level (2-tailed). Correlation co-efficient between return on assets and advance-deposit ratio is r= 0.461 which is significant (p value< .01) at 1% level. That means there is significantly positive relationship between return on assets and

THE COST AND MANAGEMENT 49 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 advance-deposit ratio. 4.4 Regression Analysis: In the following table shows the regression results regarding the impact of advance deposit ratio on the profitability of commercial banks. Table-04: Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .461a .212 .207 .91807 a. Predictors: (Constant), Advance-Deposit Ratio The value of R2 is equal to 0.212. It indicates that 21.2% variation of the dependent variable (ROA) can be explained by the selected independent variable i.e. advance -deposit ratio. 4.5 Hypothesis Testing Ho: There is no significant influence of advance-deposit ratio on return on assets of commercial banks in Bangladesh. The hypothesis has been tested by using Analysis of Variance (ANOVA). The results of this analysis are shown by the following table.

Table-05: ANOVA: Single Factor regarding ADR on ROA Model Sum of Squares Df Mean Square F Critical value Sig. Regression 38.135 1 38.135 45.246 3.89 .000b 1 Residual 141.598 168 .843 Total 179.733 169 a. Dependent Variable: Return on Asset b. Predictors: (Constant), Advance-Deposit Ratio The hypothesis for model: Ho: The regression model is not fit for the data. The value of “F” is equal to 45.246 and it is significant at 5% level (p-value < 0.05). So, the null hypothesis can be rejected. That means the model is fit for the data. So, it can be concluded that the selected independent variable (advance -deposit ratio) has a significant influence on the dependent variable (return on assets). Inference: Since the calculated value “F” is greater than the table/critical value i.e.; 45.246 >3.89 with 1, 168 degrees of freedom at 5 percent level of significance. So, Null hypothesis can be rejected. Therefore, it can be concluded that advance-deposit ratio has significant influence on return on assets of commercial banks in Bangladesh.

Table-06: Coefficients Unstandardized Coefficients Standardized t Sig. Coefficients B Std. Error Beta 1 (Constant) -1.929 .430 -4.485 .000 Advance-Deposit Ratio .038 .006 .461 6.726 .000 a. Dependent Variable: Return on Asset The study found the following model from the analysis: ROA = -1.929 + 0.038 ADR

Coefficient β1=0.038 indicates that one unit increase in advance-deposit ratio causes 0.038 unit increase in return on assets. The value of “t” is 6.726 and it is statistically significant at 5% level (p-value<0.05). So it can be concluded that advance-deposit ratio has a positive impact on return on assets, and it is statistically significant. The study found that advance-deposit ratio has a statistically significant impact on return on assets. From the above tests, it can be decided that advance-deposit ratio has significant influence on financial

THE COST AND MANAGEMENT 50 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 performance of commercial banks in Bangladesh. Profitability of the Tunisian Deposit Banks, IBIMA Business Review, Vol. 2012(2012), pp: 1-21. Finally, it can be concluded that the optimum advance- Bangladesh Bank (2017). Managing Core Risks in banking: Asset- deposit ratio enhances return on assets and that will Liability Management (ALM) Guidelines. be the ultimate effect on the financial health of banks. Boadi, E. K., Li, Y., & Lartey, V. C. (2016). Role of Bank Specific, Macroeconomic and Risk Determinants of Banks Profitability: Inversely, excessive advance-deposit ratio may create Empirical Evidence from Ghana’s Rural Banking Industry, more credit risk that will be effect on financial health International Journal of Economics and Financial Issues, Vol. 6(2), pp: 813-823. of the firm and lower advance-deposit ratio may also Borhan, J. T., & Towpek, H. (2006). Theory and concept of Profit in create ideal fund that enhance the opportunity costs Islamic Banking System, Kuala Lumpur: Department of Publication of the firm. University of Malaya. Chirwa, E.W. (2003). Determinants of commercial banks' profitability in Malawi: a cointegration approach. Applied Financial Economics, 5.0 Conclusion and Recommendations: 2003, Vol.13(8), p.565-571. This study has attempted to appraise the influence of Crowe, K. (2009). Liquidity risk management – more important than ever, Harland Financial Solutions. advance deposit ratio on return on assets for state- Fathi, S., Zarei, F., & Esfahani, S. S. (2012). Studying the Role of Financial owned commercial banks and private commercial Risk Management on Return on Equity. International Journal of Business & Management, 7 (9). banks in Bangladesh for the period of seventeen Fatimoh, M. (2012). Impact of Corporate Governance on Banks years from 2000 to 2016. The study opted that there Performance in Nigeria, Journal of Emerging Trends in Economics was a positive and significant impact of advance- and Management Sciences, 3(3), pp. 257-260. Guru, B.K., Staunton, J., & Balashanmugam, B. (1999). Determinants deposit ratio on return on assets of the banks, the of commercial bank profitability in Malaysia. In: Paper presented at findings is also aligning with the previous studies like, the Proceedings of the 12th Annual Australian Finance and Banking Vong et al. (2009), Abreu and Mends (2002), Ferdi Conference, Sydney, Australia, December 16–17, 1999. Hasbi, H. (2010). The Influence of Banking on Financial Performance (2005), Fitriani (2010) and Rasiah (2010). It can to Stock Price in Indonesia, 3'rd International Conference on be supposed that there is an ailment for increase the Quantitative Methods Used in Economics and Business (ICQMEB 20 I0) Universitas MalClhayati BandarlClmpung, pp:206-211. profitability especially return on assets on the basis of Kadira, G., & Gochero, P. (2015). Determinants and Effect of the increase of advance-deposit ratio. But the research Commercial Bank Profitability in Zimbabwe, European Journal of work strongly has faith in that the optimum advance- Business and Management, Vol. 7(30), pp: 78-83. Khrawish, H. A. (2011). Determinants of Commercial Banks deposit ratio enhances return on assets and that will Performance: Evidence from Jordan, International Research Journal be the ultimate effect on the financial health of banks. of Finance and Economics, December. Inversely, excessive advance-deposit ratio may create Ongore, V. O., & Kusa, G. B. (2013). Determinants of Financial Performance of Commercial Banks in Kenya. International Journal more credit risk that will be effect on financial health of Economics & Financial Issues (IJEFI), 3 (1). of the firm and lower advance-deposit ratio may also Poudel, R. P. S. (2012). The Impact of Credit Risk Management on Financial Performance of Commercial Banks in Nepal. International create ideal fund that enhance the opportunity costs Journal of Arts and Commerce, Vol. 1 No. 5, (October), pp: 8-15. of the firm. The present study is not free from the Raharjo, et. al. (2014). The Determinant of Commercial Banks’ Interest limitations, the study mainly considers only the state- Margin in Indonesia: An Analysis of Fixed Effect Panel Regression, International Journal of Economics and Financial Issues, Vol. 4(2), owned commercial banks and private commercial pp.295-308. banks in Bangladesh, and it does not include the Rasiah, D. (2010). Review of Literature and Theories on Determinants of Commercial Bank Profitability, Journal of Performance foreign commercial banks and specialized banks in Management. March, Vol. 23 (1), pp:23-49. Bangladesh. Rengasamy, D. (2014). Impact of Loan Deposit Ratio (LDR) on Profitability: Panel Evidence from Commercial Banks in Malaysia, References Proceedings of the Third International Conference on Global Business, Economics, Finance and Social Sciences, Mumbai, India. Abreu, M., & Mendes, V. (2002). Commercial bank interest margins 19-21 December, Paper ID: MF498. and profitability: evidence from E.U countries. Porto Working paper series. Ruziqa, A. (2013). The impact of credit and liquidity risk on bank financial performance: the case of Indonesian Conventional Bank Al-khatib, A,. & Harsheh, M. (2009). Financial Performance of with total asset above 10 trillion Rupiah. International Journal of Palestinian Commercial Banks. International Journal of Business Economic Policy in Emerging Economies, 6 (2), pp. 93--106. and Social Science, 3(3), pp.175--184. Samhan, H. M., & AL-Khatib, A. Y. (2015). Determinants of Financial Al-Khouri, R. (2011). Assessing the Risk and Performance of the Performance of Jordan Islamic Bank, Research Journal of Finance GCC Banking Sector - Tags: GULF Cooperation Council RISK and Accounting, Vol. 6(8), PP: 37-47. management in business. [online]. Saunders, A., & Cornett, M. M. (2011). Financial Institutions Appa, R. (1996). The Monetary and Financial System. London Bonkers Management: A Risk Management Approach. [e-book] New York: Books Ltd. 3rd Edition. McGraw-Hill Higher Education. Ayadi, I., & Ellouze, A. (2014). The Determinants of the Tunisian Tafri, F. H., Hamid, Z., Meera, A., & Omar, M. A. (2010). The Impact Banking Performance: A Panel Data Analysis, International Journal of Financial Risks on Profitability of Malaysian Commercial Banks: of Economics and Finance; Vol. 7(1), pp:262-272. 1996-2005. Journal of Emerging Market Finance, 11. Ayadi, N., & Boujelbene, Y. (2012). The Determinants of the

THE COST AND MANAGEMENT 51 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 budget commentary

Budget for the Fiscal Year 2020-2021: A humanitarian and people-friendly budget

Masud Ahmed Ex. Comptroller & Auditor General Of The Republic.

Our entire nation, along with the rest of the world, is people lightly than to tax a few people heavily. On struggling to overcome the multi-dimensional problem the other hand, it is a deficit budget like most of the due to ongoing pandemic COVID-19 that has never previous years. However, critics have to understand been seen since our glorious war of independence. that this deficit of 190 thousand crore will actually be Therefore, the present government has placed the much less to be seen at the end of the year, when national budget for the Fiscal Year 2020-2021 under many departments will be unable to spend their a fearful situation. allocations fully. The reasons will be like long lead time The current allocation is 5 lac and 68 thousand crore in tendering process, litigation by creditors or bidders taka. The composition of the sources of this money who failed, annulment of some activities, inclement shows the tax net has been widened gradually from weather conditions and lack of coordination among the previous years. That is a good sign. It is more than stakeholders. During the last year, due to the stalemate 80% of the total resources and so non tax receipt of implementation through the last quarter caused and internal borrowing have been reduced. This is a by the pandemic, a lot of savings out of the budget part of good-governance also. It is better to tax many accrued.

THE COST AND MANAGEMENT 52 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 the prevailing reality, the government allocated 29983 Special crisi -Health Sector crore taka for agriculture which is 5.3% of the total In terms of allocation many observers would like to budget. Subsidy in seeds, fertilizer, power, irrigation, see that the highest should have gone to the health mobile network and soft loans have brought in millions sector. Such an assumption is not well advised. It is not of rural employment, autarky and surplus in food and highest because it is not required to be like that/Why? general economic growth along with improvement If one looks at the figures/indicators, it can be seen in poverty alleviation throughout the country. that there has been a consistent growth in medical Considering the earlier developments, the current education, number of doctors, health technologists, allocation is quite the right amount. The policy makers hospitals, medicine, research institutes and publicity. deserve appreciation for encouraging providers of the These have resulted in decreasing neo-natal, post- nation’s breadbasket. natal, maternal, and child deaths and increasing public health quality, longevity and population size from 75 Transportation million in 1972 to 180 million in 2019. .A number It has got 64587 crores taka (11.4%) which is just the of dangerous diseases like malaria, leprosy, kalazar, right amount. We already have an efficient system for diarhea and chicken pox have gone to the museum. movement of goods and passengers. Given the exigency of corona virus critics are anxious Women And Children to see that a tremendous spiking of allocation should The capacity for utilisation and relationship through have been there. But actually hospital beds, health budget lines are two important drivers to have a personnel and auxiliary materials and management picture of the situation. The allocation of increased processes can’t be produced and increased overnight. resources should be considered after assessing the If that was the case, the nations’ patients at the rate situation. The only and first lady joint-secretary to of 4000 to 4500 per day would not have died in the government was visible in 1985 and the first secretary developed societies of the globe whose financial and appeared only in 2000. Besides, women’s capacity of scientific capacities are astronomically higher than absorption of resources and opportunities also has those of ours. So what has been allocated in this shown a weak trend. Many women quota could not be head of expenditure shall be expendable within the filled in for certain reasons like merit and performance. present year. The COVID management situation in As well, critics who are usually clamorous saying that our country is at satisfactory level though not perfect women are never given enough resources do not have and in the budget there are standing arrangements for a thorough understanding how government functions. meeting disastrous situations. Sceptics not believing in For example, money spent on women ministry does figures issued by authorities may please think about not go only to female recipients as there are male the omnipresent and omnipotent media. And ask recipients also. Critics do not appreciate that in all the themselves how far and how long can window dressing places of the government, women are capturing the be possible under the circumstances? Not a single soul benefits along with their male friends from a unisex has so far died of hunger. What the authorities are head of account approved by male decision makers. giving out may not be too far from truth. If these figures are added to women, the amount will However, considering the 2.2 million net growth of be bigger. However, due to traditional and religious the population per year on top of 180 million in such reasons, the women accepted the fold of modern a small place, the allocation in this sector has not and secular education much later than their male been enough. Publicity for family planning through counterparts. So, the lagging behind will be there the bottom social structure level must be planned and and a level playing ground will continue until equality proportionate resources for that must be allocated. reaches. Meanwhile gender-specific allocations will Agriculture help them in moving forward. This has been done in this budget. Moreover, the strategy of working with 63.37% of our total population lives in rural areas achieving 22 targets for women and children, and and engaged with agricultural activities. Considering

THE COST AND MANAGEMENT 53 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 securing 72nd position out of 144 nations on account Rohingya issue earlier. Now COVID-expatriates issue of achievements are good points in this sector. is also being dealt in the same way. The mountain Defence like trade deficit with world’s 2 biggest markets India and China are proof of its inefficiency. Economic Tk 38427 crore have been allocated under this head. diplomacy has failed. What is the point of keeping a Before assessing accuracy, we need to consider the post of the defence adviser in Moscow, Delhi or at logic of the allocation. After practicing democracy for Washington and missions in Poland, Kenya or Brazil? 33 years since we became sovereign, we should not This is squandering taxpayer’s money. ERD is enough consider our state too young to keep defence issues to deal with locating and negotiating foreign aid. So as crucial. India being on our three sides and Burma allocation to them should be reduced quite a bit. on another verge. So, all citizens must appreciate the Those redundant missions should be closed down. nation's war potentials. After the dark days following 1975 and upto 1991, civil-military relationship has Public Admin become open. The increasing inclusion of civilians At the beginning, the allocation of 32.8% appears like MPs, Secretarys, journalists, NGOs and others in to be big but it serves the whole nation every day. It defence courses have given opportunities to taxpayers provides livelihood to 1.7 million civilians. Relief and have an understanding of nooks and corners of other material were speedily despatched by them defence issues. As a participant and ex Principal during the pandemic and this will be continued by Performance auditor of the republic, I also accordingly them until it dies away. So, the emphasis is reflected feel making some suggestions on reforms. Expenditure through the allocation. on heavy equipment and firepower should be reduced. Law And Justice Eventuality with neighbours diplomacy should be our The allocation is poor.1900 judges are fighting with 3.6 fundamental defence strategy. This consideration must million cases. Allocation must be increased in order to be done under civilian command by consulting with increase the number of judges and Public Prosecutors. top defence personnel. The savings may be used for those departments in need of money. Institutes like Budget And Certain Modus Oprendi military dairy farms, CMH, AFMC, Enggg. Institutes A. Resource allocation and output generation equation may benefit civilian as well. So the actual defence measurement requires to be cited in the consequent expenditures are less than they appear. budget. Education B. Signing of PERFORMANCE AGREEMENT was ------15% of the budget is not enough. It is another useful benchmark for accountability. Results the best investment of any nation. The damage that of this measurement should also be shared to COVID has brought in will require to be taken care of encourage competition. by the government. Teachers and students in private C. The development budget is demonstrating self- institutes must be compensated properly assuming reliance as foreign aid is decreasing. But each year’s the pandemic will continue all through the fiscal year. experience shows that many projects or programmes At least another 2% should be allocated. can implement only partially. More attention is Foreign Service required in this field. ------Forwarding petitions, applications, On the whole, it is a humanitarian and people-friendly pleas and mercy letters can not be the job of the budget. An approximately equitable distribution of diplomatic profession. It has been exactly doing resources has been done in this carefully drafted these acts. It has shown its ineptness in handling the national document.

THE COST AND MANAGEMENT 54 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 Budget amidst the viral havoc of Corona pandemic Md. Shahjahan Mridha Secretary General Bangladesh China Chamber of Commerce & Industry (BCCCI) proposed budget for FY 2020-21. The tax-free income limit A maiden thought on the budget by BCCCI for on individual has been increased from Tk.250,000 to Tk As a whole the budget for this exceptional fiscal year has been 300,000. An individual who earns Tk 300,000 annually will not focused on crisis management for the corona-virus situation. have to pay any tax. The tax-free income regime for female Finance minister AHM Mustafa Kamal in his maiden budget taxpayers and taxpayers above 65 years of age has been fixed at proposal, however, set an ambitious economic growth target Tk. 350,000 up from Tk. 300,000. In the budget, under review, of 8.2 per cent for the next financial year 2020-2021, because the minimum tax rate for individuals has been proposed to be of the corona-virus outbreak ravaged this similar growth target reduced from 10 per cent to 5.0 per cent, and the maximum for the current 2019-20 fiscal year. We believe that it would tax rate for individuals from 30 per cent to 25 per cent. indeed be a multi faceted challenge to achieve the GDP growth Focus has remarkably been shifted on stock market. The budget target as no one knows for sure the extent of economic allowed investment of black money in the capital market flow damage the pandemic would likely to cause to the country like on payment at the rate of 10 per cent. The Budget included the the world at large. government steps to enhance participation of banks and non- Estimating 5.2 per cent GDP growth rate for the current fiscal bank financial institutions in the capital market, ensure easy year 2019-2020, he said that due to a fall in exports and a credit facility for merchant bankers and institutional investors, lower-than-expected growth in remittances as a result of long boost the investment capacity of state-owned Investment and sustained worldwide lockdowns arising from the impact of Corporation of Bangladesh and enhance increase institutional COVID- 19, the GDP growth rate of the current fiscal year investment and ensure listing of multinational companies and had been revised downward from the target of 8.2 per cent. local big corporate houses and state-owned enterprises to The International Monetary Fund, however, projected that increase the depth of the stock market. Bangladesh GDP would grow by 3.8 per cent, while World Bangladesh Bank now allows scheduled banks to invest Tk 2.0 Bank estimated the growth at 1.6 per cent and Centre for billion (200 crore) each in the stock market taking financial Policy Dialogue at up to 2.5 per cent for the current fiscal year. support from the central bank. Banks will be allowed to show Considering the global economic collapse, the WB projected the fund as special investment, which will not fall under the that Bangladesh GDP would grow by 1 per cent in the next purview of the banks' stock market exposure of up to 25 per fiscal year while the IMF made a projection of 5.7 per cent. cent of their capital. The budget activities cannot be brought to normal and if The incentives offered in this budget are: dividend income the corona-virus situation keeps prolonging, it would not be from the listed companies has been made tax-free up to Taka possible to turn the projections into reality. 50,000, and double taxation on dividend from listed companies It is a matter of great crisis response by the Government that has been removed. Declaration of cash dividend for at least an allocation of a significant amount of fund has indeed been 50 per cent of the profit of listed companies has been made proposed in the budget for the fiscal year 2020-21 to face the mandatory. challenges posed by the Covid-19 pandemic. Tk. 100 billion Whitening black money has been made somewhat plausible has been allocated under a stimulus package to fight the deadly indeed. Individual taxpayers between July 1, 2020 and June 30, virus and to re-build the economy and ensure its sustainability 2021, according to the Finance Bill, will be allowed to disclose after the damage done by the pandemic. In terms of the havoc any type of undisclosed property by paying a certain amount created by the virus nationwide, as like as worldwide, it was of tax per square feet; declare valuables like undisclosed cash, wise to grant the allocation particularly for the Health Services bank deposits, savings certificates, shares, bonds or any other Division, Health Education and Family Welfare Division under securities by paying 10 per cent tax; and invest money in the the Ministry of Health in the fiscal year also increased to Tk capital market by paying 10 per cent tax on the value of the 292.47 billion. investment. But now the expensive question is how the Tk. 1.9 trillion But offering the money-whitening facilities has called criticism (1,90,000 crore) deficit would be managed. Out of the total from some quarters as being “discouraging the lawful and deficit, it has been proposed with wisdom, Tk 800.17 billion honest taxpayers.” The budget 2020-21 might, however, (80,017 crore) will be financed from external resources, while be appreciated because the preparation of this budget was Tk 1.09 trillion (1, 09,983 crore) will come from domestic really an arduously difficult task unlike the budgets in a normal sources including Tk 849.83 billion (84,983 crore) will come situation obtaining in other years. This budget has been placed from the banking sector and Tk 250 billion (25,000 crore) from to do a lot to fight the devastating pandemic. savings certificates and other non-banking sources. It would be a great challenge to achieve the target of 8.2 Appropriate focus has, however, been put on the corporate per cent GDP growth due to the world wide economic tax rates to help the economy recover from the unexpected fallout. Achieving revenue target would be a great challenge fallout due to the pandemic. Some positive changes took because collection of tax revenue would be tough due to the place in the corporate tax such as publicly traded cigarette uncertainty posed by the pandemic. Uncertainty looms large manufacturers and a 20% tax on dividend income of companies, over maintaining the target rate of inflation at 5.4 per cent and a supplementary duty (SD) on cigarettes is likely to be because a big risk is associated with the budgeted fund flow increased by 10-15%, while an additional 5% SD would be as the virus goes literally unabated. All challenges as predicted levied on mobile phone talk time. depend to be won on the taming of the prevailing pandemic As far as personal income tax is concerned the tax-free that is challenging the life and economy in Bangladesh like income limit for individual taxpayer has been increased in the everywhere in the world.

THE COST AND MANAGEMENT 55 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 G M Omar Faruque Chowdhury FCMA

Alternative Investments

[After Previous Issue (March-April 2020)] Venture Partners, Grow and SVG Ventures-Thrive. Horizon Ventures and Alpha JWC led USD11.5m Series Sequoia Capital India led USD109m Series A A for Indonesian Capsule Hotel Operator Bobobox, for Indonesian Coffee Chain Kopi Kenangan and IDG Capital and CPE led USD1b Series B for Chinese Sequoia China and Tencent invested USD244m Genetic Sequencer MGI Tech, Indus Valley Capital in Property Management Unit of China’s Shimao led USD1.3m Pre- Round for Pakistani E-Commerce Property, when Sequoia India and Alpha JWC led Marketplace Bazaar Technologies, Inventus Capital USD25.4m Series A for Indonesian B2B e-Commerce led USD2.6m Series A for Indian Electric Automotive Platform GudangAda. SoftBank led USD500m Startup Euler Motors, JAFCO has reached USD67m investment in Didi Chuxing’s Autonomous Driving Final close for Debut Taiwan Venture Fund, Janchor Unit, SummitView Capital led USD99m Series B for Partners, RA Capital, Hillhouse Capital, and Jiashan Chinese AI Developer Enflame, Sunshine Insurance SDIC have invested USD310m Series C for Chinese led USD60m Series C+ for Chinese Finance and Tax Drug Developer Everest Medicines and Jeneration Management Software Developer Huisuanzhang, Capital led USD80m Series E for Chinese Fitness App Gaocheng Capital, Xiaomi, and Swift Join. Taikang Keep and KKR has agreed to invest USD1.5b in Indian Asset Management led a USD113m Series B for Telecom Company Jio Platforms for 2.3% Stake, Chinese Neurology Hospital Chain Sanbo Brain Legend Capital led USD141m Funding Round for Chinese Pharmaceutical Company Novast Holdings Hospital, Tiger Global and Avatar Growth Capital led and China based VC Linear Capital has reacheed USD44m Series C for Indian SaaS Firm SirionLabs and USD110m First close for Fourth Venture Fund. US and Asia focused VC fund Vertex led USD26.5m Series D for Taiwanese Social Media Startup M17. Matrix Partners led USD26.5m Series A for India’s Ola Financial Services, MBK Fund V has reached Vickers Venture Partners, Flint Hills Resources, USD6.5b Final close, Mubadala Investment Company, CPV/CAP Pensionskasse Coop, and International ADIA, and Silver Lake invested USD2.5b in Indian SA co led an USD133m Series B for Biotech RWDC Telecom Company Jio Platforms, Oceanpine Capital Singapore, Vista Equity Partners invested USD1.5b has reached USD200m First close for China Tech- for 2.3% Stake in Indian Telecom Company Jio Focused Fund, Switzerland based Pioneering Platforms, Warburg Pincus and Eight Roads Ventures Ventures has acquired Indian Agtech Lateral Praxis Partially exited Indian Pharmaceutical Company for an undisclosed amount, Rabo Equity left 29.81% Laurus Labs when Warburg Pincus increased stake Stake in India’s Daawat Foods for USD17.23m via in Singapore’s ARA Asset Management to 48.7% a sale to United Farmers Investment Company and and Xiang He Capital led USD30m Series C+ for India focused VC Saama Capital led USD6m Series Chinese Data Company Sensors Data, Morningside A for Indian Agtech Intello Labs, Omnivore, Nexus Capital, DCM Capital, Sequoia, and Warburg Join.

THE COST AND MANAGEMENT 56 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 The Journal is running a series of updates on IFRS, IAS, IFRIC and SIC. In this issue, Mr. Mohammad Samsul Arefin ACMA (UK), CGMA, FCMA has taken the responsibility to update the reflection on some latest pronouncements by IASB in their website. Mr. Arefin has been working as Head of Internal Audit & Compliance in RAK Ceramics (Bangladesh) Limited.

IFRS Update

The International Accounting Standard Board (IASB) issued the following amendments to its respective standards during last 2 months (May – June 2020): Amendments to IFRS17 Insurance Contract: On 25 June 2020, The International Accounting Standards Board issued amendments to IFRS 17 Insurance Contracts aiming to help companies implement the Standard and making it easier for them to explain their financial performance.

The fundamental principles introduced when the Board first issued IFRS 17 in May 2017 remain unaffected. The amendments, which respond to feedback from stakeholders, are designed to:

• reduce costs by simplifying some requirements in the Standard; • make financial performance easier to explain; and • ease transition by deferring the effective date of the Standard to 2023 and by providing additional relief to reduce the effort required when applying IFRS 17 for the first time. The effective date of this amendment is on or after 1st January 2023. Amendments to IFRS16 Leases: On 28th May 2020 the International Accounting Standards Board has issued an amendment to IFRS 16 Leases to make it easier for lessees to account for covid-19-related rent concessions such as rent holidays and temporary rent reductions.

THE COST AND MANAGEMENT 57 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 The amendment exempts lessees from having to means company should include the cost of fulfilling consider individual lease contracts to determine a contract when assessing whether a contract is whether rent concessions occurring as a direct onerous. consequence of the covid-19 pandemic are lease The amendment has been issued on 14th May 2020 modifications and allows lessees to account for and effective on 1 January 2022. such rent concessions as if they were not lease modifications. It applies to covid-19-related rent Annual Improvements: concessions that reduce lease payments due on or It makes minor amendments to IFRS 1 First-time before 30 June 2021. Adoption of International Financial Reporting IFRS 16 specifies how lessees should account for Standards, IFRS 9 Financial Instruments, IAS 41 changes in lease payments, including concessions. Agriculture and the Illustrative Examples accompanying However, applying those requirements to a IFRS 16 Leases potentially large volume of covid-19-related rent The amendment has been issued on 14th May 2020 concessions could be practically difficult, especially and effective on 1 January 2022. in the light of the many challenges stakeholders face during the pandemic. This optional exemption gives Meeting Updates: timely relief to lessees and enables them to continue Apart from issuing amendments on the above providing information about their leases that is useful standard the International Accounting Standard Board to investors. The amendment does not affect lessors. also met remotely during May – June’2020 to discuss on following maters: The amendment is effective 1 June 2020 but, to ensure the relief is available when needed most, lessees can • Amendments to IFRS 17 Insurance Contracts. apply the amendment immediately in any financial • Management Commentary. statements—interim or annual—not yet authorized • Research program update. for issue. • Maintenance and consistent application Amendments to IFRS 3 Business Combinations: • Disclosure Initiative—Accounting Policies IASB updated a reference in IFRS 3 to the Conceptual • Disclosure Initiative—Targeted Standards-level Framework for Financial Reporting without Review of Disclosures changing the accounting requirements for business combinations. • Classification of Liabilities as Current or Non- current The amendment has been issued on 14th May 2020 • Extractive Activities and effective on 1 January 2022. • IBOR Reform and its Effects on Financial Amendments to IAS 16 Property, Plant and Reporting—Phase 2 Equipment: It prohibits a company from deducting from the cost of property, plant and equipment amounts received Source of information from selling items produced while the company is IASB website preparing the asset for its intended use. Instead, IAS Plus a company will recognize such sales proceeds and related cost in profit or loss.

The amendment has been issued on 14th May 2020 and effective on 1 January 2022. Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets: It specifies which costs a company includes when assessing whether a contract will be loss-making. That

THE COST AND MANAGEMENT 58 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 UPDATE ON Financial Market

The Journal is running a series of updates on Financial Market of Bangladesh (i.e. Money Market and Capital Market). In this issue of THE COST & MANAGEMENT, Mr. Mohammad Shamsur Rahman, FCMA has given a reflection of relevant changes and updates on Financial Market. The analysis of the market has been done considering the period from May 01, 2020 to June 30, 2020. Mr. Rahman is currently working as Chief Regulatory Officer (CRO) of Chittagong Stock Exchange Limited.

Bangladesh Economic Outlook w The government has signed a loan agreement of $ 250 million (budget support) with the International Development Association (IDA) of the World Bank Group to finance the ‘Second Jobs Development Policy Credit (DPC-2)’ programme. The credit amount, to be repaid in 30 years (with 5 years grace period), will have an interest rate of 1.25 per cent along with 0.75 per cent service charge on the outstanding amount. This fund will be utilized for emergency health related services and for implementing stimulus packages announced by the prime minister. w Reserve money recorded an increase of Taka 47827.20 crore or 21.25 percent at the end of March, 2020 against the increase of Taka 12839.90 crore or 6.05 percent at the end of March, 2019. Of the sources of reserve money, net foreign assets and net domestic assets of Bangladesh Bank increased by Taka 11723.20 crore and Taka 36104.00 crore respectively at the end of March, 2020 as compared to March, 2019. w The twelve-month average general inflation increased to 5.63 percent in April, 2020 which was 0.13 percentage point higher than the target of 5.50 percent for FY20. w The point to point Food inflation increased sharply at 5.91 percent and non-food inflation fell to 6.04 percent in April, 2020 from 4.87 and 6.45 percent in March, 2020. Therefore, point to point general inflation significantly increased to 5.96 percent in April, 2020 which was 5.48 percent in March, 2020. w Total merchandise commodity export during July-April, 2019-20 fell by USD 4.44 billion or 13.09 percent to USD 29.49 billion compared to USD 33.94 billion during July-April, 2018-19. The export in April, 2020 was also lower by USD 2.21 billion or 80.97 percent and stood at USD 0.52 billion from USD 2.73 billion in March, 2020. w Total receipts of workers’ remittances during July-April, 2019-20 increased by USD 1.56 billion or 11.76 percent and stood at 14.87 billion against 13.30 billion of July-April, 2018-19. Receipts of workers’ remittances in April, 2020 stood lower at USD 1.09 billion against USD 1.28 billion of March, 2020. This was also lower by USD 0.34 billion against USD 1.43 billion of April, 2019. w The weighted average call money rate in the inter-bank money market increased to 4.97 percent in May, 2020 from 4.89 percent in April, 2020, moving in-between the interest rate (Repo & Reverse Repo) corridor. w Bangladesh Taka and Indian Rupee (INR) have depreciated by 0.53 percent and 8.25 percent respectively against the US dollar at the end of April, 2020 as compared to its level of end June, 2019. As per the latest available data, Bangladesh Taka (BDT) has recently been appreciating against the Indian Rupee. w The Bangladesh Bank has reduced the cash reserve ratio for the country’s non-bank financial institutions by one percentage point amid liquidity crisis in the country’s financial sector. The policy relaxation would allow the NBFIs to utilize around Tk 350 crore, kept as CRR with the BB, for income generation purposes.

THE COST AND MANAGEMENT 59 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 The summary of the economic outlook depicted below: Particulars 30 April 2020 30 June 2020 Foreign Exchange Reserve (In million US$) 33109.81 36016.76 Interbank Taka-USD Exchange Rate (Average) 84.9500 84.8500 Call Money Rate (Weighted Average Rate) 4.96 5.02 February 2020 May 2020 Import (C&F) (in million US$) 4723.70 3533.60 Import (f.o.b) (in million US$) 4371.00 3270.00 Export (EPB) (in million US$) April 2020 May 2020 520.01 1465.30 Rate of Inflation on the basis of Consumer Price Index for April 2020 May 2020 National (Base:2005-06=100) a) Twelve Month Average Basis 5.63 5.61 b) Point to Point Basis 5.96 5.35 GDP Growth Rate (in percent, Base: 2005-06=100) 7.86 (2017-18) 8.15 (2018-19) Source: Bangladesh Bank Bangladesh Capital Market Updates w The Bangladesh Securities and Exchange Commission (BSEC) has approved the initial public offering of Walton Hi-Tech Industries, allowing the company to raise Tk 100 crore by issuing 29.28 lakh shares at Tk 252-315 each. The commission on January 7 allowed Walton to conduct IPO bidding by eligible institutional investors under the book building method of public issue rules. The cut-off price of the company’s shares stood at BDT 315 each, but its shares will be allotted to the general investors along with NRB investors at BDT 252 each. The company will use the IPO proceeds in business expansion, paying bank loans and meeting the IPO expenses. AAA Finance and Investment is the issue manager of the company’s IPO. w The market regulator has allowed City Bank and Jamuna Bank to float non-convertible perpetual bonds worth Tk 400 crore each. The banks will float the bonds that include unsecured nonconvertible, Basel III compliant perpetual and floating rate bonds. The face value of each unit of the bonds of the two banks will be Tk 10 lakh and coupon rate will be 11-14 per cent. Only banks, financial institutions, corporate institutions and other eligible investors will be allowed to subscribe the bonds through private placement. IDLC Investment Limited is acting as the trustee while City Bank Capital Resources Limited is the lead arranger for both the bonds. w The BSEC has approved the RACE Special Opportunities Unit Fund, an open-ended mutual fund with a primary target to raise Tk 350 million of which Tk 250 million came from Premier Bank, the sponsor of the fund. The remaining Tk 100 million will be collected through sales of units of Tk 10 each. Bangladesh RACE Management PCL is the fund manager of the unit fund. w The public subscription of Express Insurance Ltd has been extended until July 2, 2020 with the permission of securities regulator. The IPO (initial public offering) subscription of the non-life insurer, which took place between June 14 and June 18, will now continue until July 02, 2020. AAA Finance and Investment, IIDFC Capital, and BLI Capital are working as issue managers of Express Insurance. DSE and CSE Market Updates (from May 31, 2020 to June 30, 2020) w The benchmark index of Dhaka Stock Exchange (DSEX) was 0.48 percent lower than of the beginning of the month. The daily turnover was highest on June 28, 2020. Changes in indices of DSE (from May 31, 2020 to June 30, 2020): Indices Open Close Point Change % change DSEX 4008.29 3989.03 -19.26 -0.48 DSES 920.69 925.08 4.39 0.47 DS30 1330.86 1340.98 10.12 0.76

(*considering 31st May as base)

THE COST AND MANAGEMENT 60 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 w The benchmark index of Chittagong Stock Exchange (CSE50) was 0.15 percent higher than of the beginning of the month. The daily turnover was highest on June 28, 2020. Changes in indices of CSE (from May 31, 2020 to June 30, 2020):

Indices Open Close Point Change % change CASPI (All share index) 11328.00 11332.59 4.59 0.04 CSE-30 9975.51 9925.12 -50.39 -0.50 CSCX 6859.90 6862.14 2.24 0.032 CSE 50 (Benchmark) 815.00 816.29 1.29 0.15 CSI (CSE Shariah Index) 729.30 733.28 3.98 0.54 (*considering 31st May as base) w The total market capitalization of all shares and debentures of the listed securities of DSE stood lower by 1.33 percent at Tk. 3119.67 billion as on June 30, 2020 from Tk. 3316.18 billion on May 31, 2020. On the other hand, the total market capitalization of all shares and debentures of the listed securities of CSE stood lower 1.37 percent at Tk. 2447.57 billion as on June 30, 2020 from Tk. 2481.50 billion on May 31, 2020.

Source: website of BSEC, DSE & CSE

Disclaimer: All information and analysis contained in this article have been complied and analyzed from publicly available information. However, It does not make any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the information and opinions contained in this article or as to any information contained in this article or any other such information or opinions remaining unchanged after the issue thereof. The information contained in this article is not be taken as any recommendation made by the writer or CSE or any other person to enter into any agreement with regard to any investment decision. This article is prepared for general circulation. It does not have regards to the specific person who may receive this article. In considering any investments you should make your own independent assessment and seek your own professional financial and legal advice.

THE COST AND MANAGEMENT 61 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 WorldCMA Students’ This section focuses on reflections from young students of ICMAB and how they have been pursuing their CMA career path and facing challenges in CMA study at the beginning of their career.

Ms. Tanjina Akter is a Management Level Student of ICMAB. She has Completed 1100 marks from ICMAB. Her Home district is Cumilla. Currently She is Studying BBA in Management at Eden Mohila College. She has completed HSC from Farid Uddin Sarkar College and SSC from Jangal Badhsa Mia Ideal Girls High School, Muradnagor, Cumilla. She has got admitted in CMA after her HSC through Intermediate Entry Route.

Why do you pursue CMA education from ICMAB? provide knowledge of the subject matter. Academic Explain in detail? qualifications are research informed and centered Today’s corporate world is becoming wider than on a specific field of study. On the other hand, CMA it’s been ever. It is offering more opportunities to education is a leading professional degree which those who are looking for good corporate jobs. But emphasizes on cost and management accounting competition is also getting tougher because number and offer specialized accounting qualification for of highly qualified candidates are in the race. So, it is a career in business. It would allow us to gain a important for us to be competitive and eligible than competitive advantage through the enhancement others. I believe besides our academic education we of skills, experience, support, training and research. need to have professional degree. Keeping that in my Consequently, we would be able to progress in the mind, I have taken a huge decision in my academic career and embrace managerial responsibilities. career and took admission at ICMAB through intermediate entry route immediately after HSC. I What are the main challenges you faced in believe this would help me to grow professionalism studying for CMA education? which is essential for survival in the corporate world. Without facing proper challenges, one cannot succeed The knowledge, skills and support what I would in life. It is quite natural that we all face challenges in achieve throughout my ICMAB journey would help every aspect of our life. Along with the CMA, I am me in further progress of the career. currently studying in BBA. The combined pressure of academic and professional education makes my time How do you make a comparison between CMA unmanageable. Each professional examination session education and other academic qualifications? comes with the challenge and I put the best efforts to Academic educations are advanced studies in complete each session with desired expectation. an academic discipline, and their purpose is to

THE COST AND MANAGEMENT 62 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 Do you think that CMA qualification will help student of ICMAB, I have few expectations from the you to get added advantage in the job market? institute- Definitely YES. I believe CMA qualification would help 1. ICMAB library should make all recommended to progress in the career and create opportunities in books with latest edition available. the job market. It would also enhance competitive 2. ICMAB should regularly organize job fair, skills and knowledge. A CMA qualified member would seminar, career club, skill development courses get a better recognition in job market both in local and and related workshops. abroad. Throughout the CMA journey, the experience 3. ICMAB should also arrange sessions with that I could gather through intermingling with different learned CMA professionals with an aim to circles would help me in establishing the professional improve the communication skills of the network and understanding the job market. current students.

What are the strategy you are following to Could you remember any memorable event during complete the CMA education on schedule? your study at ICMAB? Without taking proper strategy we cannot accomplish YES, I have some memorable events and I can both our academic and career goals. Similar to my remember all of them. If I have to choose one then I academic endeavor, I follow some strategies but in a take the day when I passed my knowledge level. Truly different way in my professional endeavor. speaking, that is a long cherished feeling. I was little bit At first, I always try to analyze the whole syllabus and nervous about the outcome although my family and go through the CMA’s past question papers which help friends always inspire me. me to understand the course and prepare subject- oriented strategy. I always try my best to attend all the To fulfill your future dream comes true; do you classes of all courses. At times, I consult with teachers think the CMA qualification will be able to fulfill for better explanation of a topic covered in the your Aspirations? lectures. I am attached to a group of friends where we YES, I believe that CMA qualification would help me study certain topics together. Occasionally, I surf the to fulfill my desired dream. Additionally, it would boost internet and watch YouTube for better understanding my career through knowledge, skills and experience the topic. I also try to take suggestions from previously gathered from professional endeavor at ICMAB. In qualified successful CMA professionals. today’s corporate world, the employers are looking for highly confident employees with better skills and What do you expect to get from ICMAB as a knowledge and I proudly can say that CMA provides student? all of these attributes to us. Although ICMAB provides many facilities to its students and I earnestly acknowledge that. Yet, as a [Interviewed By: Sazedul Hoq ACMA]

THE COST AND MANAGEMENT 63 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 NEWS

This year’s budget is survival budget

ICMAB has organized a Webinar on Pre-Budget Discussion on National Budget 2020-2021 on 29 May 2020 at 7:00 p.m. Dr. Atiur Rahman, former Governor, Bangladesh Bank; Mr. Mosharraf Hossain Bhuiyan ndc, former Senior Secretary and Chairman of NBR; Professor Dr. Mustafizur Rahman, Distinguished Fellow, Centre for Policy Dialogue (CPD); Dr. Muhammad Shahadat Hossain Siddiquee, Professor, Department of Economics, University of Dhaka and Mr. Ranjan Kumar Bhowmik FCMA, Member (Tax Survey & Inspection), NBR joined the Webinar as honourable discussants. Prof. Dr. Mahmood Osman Imam FCMA, Professor & Former Chairman, Department of Finance, University of Dhaka moderated the session.

ICMAB President Mr. Md. Jasim Uddin Akond FCMA gave the inaugural speech in the webinar by thanking the honourable discussants for joining the programme. He prayed for the departed souls and the people who are affected by the pandemic COVID-19 virus. The President said that it is a moral duty for the Institute to give proper suggestions to the government on Budget matters. He hoped that CMA professionals would be able to help the government in the process of revenue collection & achieving goals in each sector.

Mr. Md. Mamunur Rashid FCMA, Vice-President of ICMAB presented the paper on proposed National Budget 2020-2021. Emphasizing on strengthening the health sector as much as possible, Mr. Md. Mamunur Rashid FCMA briefly presented 13 core proposals on behalf of the Institute.

Dr. Atiur Rahman evaluated the audit process as the foremost task for ensuring the quality of expenditure in every sector. Considering the present worldwide crisis and future, he highlighted the health and medical sector to be more structured and capable than ever. He also pointed out the importance of social protection in the upcoming budget and suggested a proper database creation to ease the process. The former Governor referred this budget as the surviving budget which should devise strategies of survival in the current situation. He was

THE COST AND MANAGEMENT 64 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 optimistic about the economic recovery in near future through survival of this year. Moreover, he mentioned that Bangladesh Bank could play a vital role in this process through credit guaranty scheme.

Mr. Mosharraf Hossain Bhuiyan ndc suggested to cut down unnecessary costs in various sector as much as possible. He also emphasized on strengthening the health sector and spending more for social security.

Distinguished Fellow of Centre for Policy Dialogue (CPD) Professor Dr. Mustafizur Rahman considered the budget should put more focus on health, humanitarian and economic crisis.

Quoting the speech of Alibaba owner Jack Maa’s speech and Dr. Atiur Rahman’s standpoint, Mr. A K M Kamruzzaman FCMA said that this year’s budget must be focused on our survival. If we can survive this year, the next year will be the golden year for us. Int’l Webinar on “The Challenges and Role of Professional Accountants amid and post COVID-19 era” ‘Cost Audit should be implemented in all public limited companies’– Commerce Secretary

The Institute of Cost and Management Accountants of Bangladesh (ICMAB) has organized an International Webinar on “The Challenges and Role of Professional Accountants amid and post COVID-19 era” on Friday, June 05, 2020. Dr. Md. Jafar Uddin, Secretary, Ministry of Commerce, Government of the People’s Republic of Bangladesh graced the occasion as the Chief Guest.

In his speech, Dr. Md. Jafar Uddin indicated about the stimulus package initiative taken by the government. To tackle the damages done by the COVID-19 situation, professional accountants will be able to help for the recovery process. He highlighted the importance of cost audit process and said he would take necessary steps for the implementation of cost audit for all public limited companies. Commerce Secretary expressed his hope that new conceptual framework would emerge from this COVID-19 situation.

Mr. Zia Ul Mustafa Awan FCMA – President of South Asian Federation of Accountants (SAFA); CA. Atul Kumar Gupta – President of the Institute of Chartered Accountants of India (ICAI); CMA Balwinder Singh – President of Cost Accountants of India (ICAI); Prof. Lakshman R. Watawala – President of the Certified Management

THE COST AND MANAGEMENT 65 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 Accountants of Sri Lanka; CA. Krishna Prasad Acharya -President of the Institute of Chartered Accountants of Nepal; Mr. Sabbir Ahmed FCA – Vice President of the Institute of Chartered Accountants of Bangladesh (ICAB); Ms. Elaine Hong – Executive Director of CAPA and Mr. Md. Shaifur Rahman Mazumdar FCA, FCMA, COO, Dhaka Stock Exchange joined the webinar as Speakers. Members of SAFA, CAPA and IFAC holding responsible positions in different national and multinational organizations at home and abroad participated in the Webinar as participants.

ICMAB President Mr. Md. Jasim Uddin Akond FCMA emphasized in his inaugural speech that global leaders and professional bodies of accountants should work together in a combined platform. Mentioning about the implementation of cost audit, Mr. Akond expressed his concerns for not ensuring Cost Audit in all public listed companies despite there was a 2010 circular with regard to the implementation of cost audit in all listed public limited companies. The post COVID-19 situation will be a different and complicated situation and professional accountants will be able to give big services at that moment, and they’ll need support from relevant sectors also.

Mr. Abu Sayed Md. Shaykhul Islam FCMA, Past President and present Council Member of ICMAB presented the paper as Keynote Speaker. In his paper, Mr. Abu Sayed Md. Shaykhul Islam FCMA said the entire global economy might be far worse than 2008 global economic crisis as almost all organizations of all sizes and all sectors of economy including professional accountants, auditors and consultants had been facing unexpected, unprecedented and extreme challenges to survive amid Covid-19. He identified liquidity shortage and cash management in the corporate world as the main challenges for businesses and professionals. He also expressed the hope that the world human being would overcome the pandemic one day and they would start a fresh journey of growth again. He opined that the agriculture sector had not been affected that much in Bangladesh as the government had been proved very successful in handling the agriculture issues and paddy harvesting. Mr. Shaykhul also identified the issues like business organization’s ability to continuity as going concerns, valuation of assets and inventory under IFRS, physical verification of assets, inventories and cash balances and development of digital platform for providing online and remote professional services as the main challenges for the professional accountants and auditors amid Covid-19. He underscored the need for high standard professional judgement in addition to IFRS to handle the said issues. He also gave emphasis on audit of the proper disbursement of funds of the government’s announced stimulus package. In conclusion, Mr. Shaykhul opined that the Corona virus might be an opportunity for the accounting, auditing and consulting regime to further grow under digital platforms and survive in the changed global socio-economic scenario caused by Covid-19.

Mr. Arif Khan FCMA, Past President and present Council Member of ICMAB and CEO & Managing Director, IDLC Finance Limited acted as Commentator and Mr. Md. Mamunur Rashid FCMA, Vice-President of ICMAB and DMD, Index Group of companies conducted and moderated the Webinar. Mr. Md. Munirul Islam FCMA, Secretary of ICMAB offered the vote of thanks to the honorable speakers and participants.

THE COST AND MANAGEMENT 66 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 BRANCH DBC News COUNCILS activities

Election of DBC office bearers for the year 2020 The following persons have been elected as office bearers of 35th Dhaka Branch Council in the meeting held on May 07, 2020:

Mr. A.K.M. Zakaria Hossain FCMA Mr. Md. Bakhtiar Alam FCMA (F-0539) (F-0723) Chairman Vice-Chairman

Mr. Safiul Azam FCMA Mr. Sudhangsu Kumar Saha ACMA (F-0924) (A-1372) Secretary Treasurer DBC Virtual Program on “Financial Stimulus Package declared by Government to support adverse impact on Economy due to outbreak of Novel Coronavirus (COVID-19)” The Dhaka Branch Council (DBC) of ICMAB organized DBC Virtual Program on “Financial Stimulus Package declared by Government to support adverse impact on Economy due to outbreak of Novel Coronavirus (COVID-19)” for ICMAB Members on May 12, 2020. Mr. A,K.M. Zakaria Hossain, FCMA, Chairman of DBC presided over the session. Mr. Safiul Azam FCMA, Secretary of Dhaka Branch Council offered welcome address and introduced the Resource Person. Mr. Mannan Bapari ACMA, CERM, Vice-President, South Bangla Agriculture and Commerce Bank Ltd. spoke on the session as the Resource Person. A good number of members were present and actively participated in the session. Mr. Md. Bakhtiar Alam FCMA, Vice-Chairman of DBC offered vote of thanks.

THE COST AND MANAGEMENT 67 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 BRANCH COUNCILS activities DBC News

DBC VIRTUAL EID ADDA The Dhaka Branch Council (DBC) of ICMAB organized an EID ADDA of the members named “DBC VIRTUAL EID ADDA” on May 25, 2020. Mr. A.K.M. Zakaria Hossain, FCMA, Chairman of DBC presided over the program. Mr. Safiul Azam FCMA, Secretary of Dhaka Branch Council offered welcome address. A good number of members were present and actively participated in the session. Mr. Md. Bakhtiar Alam FCMA, Vice-Chairman of DBC offered vote of thanks.

DBC Virtual Program on Stress Management & COVID-19 situation handling

The Dhaka Branch Council (DBC) of ICMAB organized Virtual Program on Stress Management & COVID-19 situation handling of the members on June 20, 2020. Mr. A.K.M. Zakaria Hossain, FCMA, Chairman of DBC presided over the program. Dr. Syed Abdulla Al Mamun FCMA, Council member of DBC offered welcome address and introduced the Resource Person. Dr. Abul Kalam Faruq, Mind Trainer, Instructor, Life Couch Director, Silva Method Bangladesh spoke on the session as the Resource Person. ICMAB President Mr. Md. Jasim Uddin Akond FCMA, Vice-President Mr. Md. Mamunur Rashid FCMA, DBC Councilors Mr. Muhammad Nazrul Islam FCMA Mr. S.M. Afjal Uddin FCMA, Mr. Monjur Md. Shaiful Azam FCMA, Mr. Mannan Bapari ACMA and Mr. Rana Protap Ghosh FCMA, program Coordinator also spoke on the occasion. A good number of members were present and actively participated in the session. Mr. Safiul Azam FCMA, Secretary of Dhaka Branch Council offered vote of thanks. DBC Vice-Chairman Mr. Md. Bakhtiar Alam FCMA nicely conducted the program.

THE COST AND MANAGEMENT 68 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 BRANCH COUNCILS activities KBC News

New Office Bearers of KBC 2020 Mr. Abdul Motaleb FCMA has been elected Chairman of Khulna Branch Council (KBC) of the Institute of Cost and Management Accountants of Bangladesh (ICMAB) for the term 2020. Mr. Md. Arifur Rahman FCMA has also been elected as Vice Chairman, Mr. Azizur Rahman ACMA as Secretary and Mr. A. K. M. Nazmul Alam ACMA as Treasurer of KBC. Mr. Abdul Motaleb FCMA, a veteran accountant is currently working as the Company Secretary of West Zone Power Distribution Co. Ltd. & Director (Finance) of Bangladesh Smart Electrical Company Ltd. Mr. Md. Arifur Rahman FCMA is working as the Deputy General Manager & Company Secretary of Bangladesh Cable Shilpa Ltd., a state owned company in Khulna. Mr. Azizur Rahman ACMA is working in Eastern Bank Limited, Khulna Branch as its First Assistant Vice President. Mr. A. K. M. Nazmul Alam ACMA is the Assistant Vice President, Manager & Regional Head of Probashi Kallyan Bank, Khulna Division.

Mr. Abdul Motaleb FCMA Mr. Md. Arifur Rahman FCMA (F-0877) (F-0978) Chairman Vice-Chairman

Mr. Azizur Rahman ACMA Mr. A. K. M. Nazmul Alam ACMA (A-1359) (A-1289) Secretary Treasurer

THE COST AND MANAGEMENT 69 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY- JUNE 2020 We Mourn Mr. Khondaker Mahbubul Haque FCMA (F-0104) passed away on 10 April 2020 at New York, America. He was 61.

Mr. Md. Shams Firoz FCMA (F-0376) passed away on 20 May 2020 at Kurmitola General Hospital, Dhaka. He was 59.

Dr. Saleh Ahmed Bhuiyan FCMA (F-0084) passed away on 01 June 2020 at Mirpur, Dhaka. He was 64.

Mr. Mohammad Majibullah ACMA (A-1185) passed away on 03 June 2020 at Dhaka Medical Hospital, Dhaka. He was 52.

Mr. Nayeem Ali Kadri ACMA (A-0482) passed away on 05 June 2020 at Canada. He was 58.

Mr. Sudhangsu Kumar Saha MBA, ACMA (A-1372) passed away on 08 June 2020 at Dhaka Medical Hospital, Dhaka. He was 40.

Mr. Md. Anwar Husain FCMA (F-0248) passed away on 17 June 2020 at his residence, Uttara, Dhaka. He was 85.

Mr. Fariduddin Ahmed FCMA (F-0063) passed away on 18 June 2020 at Anwer Khan Modern Medical College Hospital, Dhaka. He was 72.

THE COST AND MANAGEMENT 70 ISSN 1817-5090, VOLUME-48, NUMBER-03, MAY-JUNE 2020 The ICMAB Council 2020

Mr. Md. Jasim Uddin Akond FCMA President

Mr. Abu Bakar Siddique FCMA Mr. Md. Mamunur Rashid FCMA Mr. Md. Munirul Islam FCMA Mr. Md. Ali Haider Chowdhury FCMA Vice President Vice President Secretary Treasurer

Mr. Md. Abdul Aziz FCMA Mr. Abu Sayed Md. Shaykhul Islam FCMA Mr. A.K.M. Delwer Hussain FCMA Mr. Mohammed Salim FCMA Member Member Member Member

Mr. Arif Khan FCMA Mr. Md. Abdur Rahman Khan FCMA Mr. Mahtab Uddin Ahmed FCMA Mr. Md. Kausar Alam FCMA Member Member Member Member The ICMAB Council 2020

Mr. A.K.M. Kamruzzaman FCMA Mr. Imtiaz Alam FCMA Kazi Muhammad Ziauddin FCMA Member Member Member

Mr. Md. Shakhawat Hossain Mr. Biswajit Bhattacharya Khokon ndc Member Member

Dr. Mohammad Mohiuddin Mr. Sultan Mahmud Member Member

Mr. Abdullah Al Mamun Member Regd. DA 34/82 ISSN 1817-5090 TK. 200.00 (home) US$ 8.00 (overseas)

ICMA Bhaban, Nilkhet, Dhaka-1205, Bangladesh Tel: 9615460, 9611799, 9615477, Fax: 88-02-58615703 Email: [email protected], Web : www.icmab.org.bd