ARCHIVES
Law Digest September 2024
bangladesh
Banking and Finance
MPD Circular No. 04 dated 24 September 2024 issued by the Monetary Policy Department of the Bangladesh Bank on“Refixing the Interest Rate Corridor”
As outlined in a recent circular, the Bangladesh Bank has raised the policy rate, also known as the repo rate, by 50 basis points to 9.50%, in an effort to curb double-digit inflation. This new rate took effect on Wednesday, 25 September 2024.
Consequently, the cost of borrowing for banks from the central bank will increase, leading to a corresponding rise in interest rates on bank loans and deposits.
Additionally, the circular mentions that the upper limit of the policy rate corridor for Standing Lending Facilities has been increased from 10.50% to 11%, while the lower limit for Standing Deposit Facilities has been raised from 7.50% to 8%.
FEPD Circular No. 14 dated 25 September 2024 issued by the Foreign Exchange Policy Department of the Bangladesh Bank on “Settlement of Payments for Current Account Transactions under the ACU Mechanism”
Aiming to streamline payment processes, the Bangladesh Bank has instructed banks to refrain from using traditional methods for making direct payments to lenders in countries that are members of the Asian Clearing Union (“ACU”). The ACU mechanism is a payment arrangement for settling intraregional transactions among eight countries—Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka—that requires that payment transactions be conducted through central banks.
FEPD Circular No. 41 dated 5 September 2024 issued by the Foreign Exchange Policy Department of the Bangladesh Bank on “Letter of Credit Margin on Import Financing”
To enhance stability in the foreign exchange rate and streamline transactions while facilitating import trade, boosting business, industry, and commerce, and ensuring the supply of essential consumer goods in the domestic market, guidelines have been issued for determining the cash margin rate when opening import credit letters for almost all products—with a few exceptions as noted in the circular based on the banker-customer relationship.
Notably, a 100% cash margin is required for the establishment of import credit for the following luxury goods and domestically-produced import substitutes:
- Automobiles (sedans, SUVs, minivans, etc.)
- Cosmetics
- Electrical and electronic home/office appliances
- Furniture and decorations
- Gold and gold ornaments
- Fruits and flowers
- Precious metals and pearls
- Non-cereal food products
- Ready-made garments
- Processed food and beverages, such as canned food, chocolate, biscuits, juice, coffee, soft drinks, etc.
- Leather products
- Alcoholic beverages
- Jute products
- Tobacco, tobacco products, or substitute products
This circular entered into effect on the date of issuance, i.e. 5 September 2024. The instructions outlined in BRPD Circular Letter No-25/2022, BRPD Circular Letter No. 54/2022, and BRPD Circular Letter No. 19/2023 are hereby revoked. However, any activities initiated before the issuance of this latest circular that are in accordance with the instructions of the revoked circular letters, will remain valid.
laos
Environment
Notice No. 4565/DF dated 6 September 2024 issued by the Ministry of Agriculture and Forestry on “Forest Carbon Management”
This notice outlines the framework for forest carbon activities in the Lao PDR and specifies two key components:
- Cooperation between the government and development partners
- Forest carbon investment
A summary of the rules around forest carbon investment provided in the notice are set out below.
Conditions for forest carbon investors:
- Must be a legally registered entity
- Must hold a business operation license from the Ministry of Agriculture and Forestry to sell forest carbon
- Must ensure that any consulting companies involved also possess a business operation license in the Lao PDR
- Must have experience or be active in the natural resources sector and demonstrate the ability to work with local communities
- Must have a history of prior investments in forest management
- Must have qualified technical staff and the ability to enter the carbon market
- Must have sufficient capital resources
- For tree planting investments, must possess a land certificate
- Must ensure that the investment area does not overlap with national projects
- Must have the investment area approved by the Forestry Department or Ministry of Agriculture and Forestry
Required documentation to apply for approval of a forest carbon investment:
- Completed application to the Ministry of Agriculture and Forestry
- Concept note about the project
- Enterprise registration certificate related to forest carbon investing
- Full history of all of the investor’s previous business operations
- Investor’s financial reports for the previous three years
Registration of the forest carbon project
Documents required for registration:
- Application form for forest carbon project
- Documents certifying the location and area issued by the Forestry Department
- Enterprise registration certificate
- Business operation license from the Ministry of Agriculture and Forestry
- Feasibility report
- Social and environmental protection plan
- Investor’s financial reports for the previous three years
If the application is incomplete or inaccurate, the authorities will notify the applicant within five working days. If approved, a forest carbon project certificate will be issued within 30 days.
Forest carbon trading
- Forest carbon trading involves an agreement between a buyer (either a legal entity or government) and a seller (the forest carbon project owner).
- The project investor may directly purchase carbon credits from the government by deducting a portion of their initial investment from the project’s carbon credit production.
- After completing the transaction, the project investor is required to pay a percentage of the total value of the carbon credits produced by the project to the government
- For carbon credits generated by natural forests, the Ministry of Agriculture and Forestry is responsible for proposing the trade to the government for consideration and approval.
- For carbon credits generated by plantation forests, the project owner directly proposes the trade to the Ministry of Agriculture and Forestry, which then considers and approves the transaction.
Income from forest carbon activities
The income from forest carbon activities is the total revenue generated from carbon credit trading, minus profit tax, official fees, and service fees.
This notice is effective from 29 October 2024 onwards.
Labor
Notice No. 3534/LSW dated 27 September 2024 issued by the Ministry of Labor and Social Welfare on the “Increase in the Minimum Wage for Low Income Workers”
In response to the rising cost of living, the government of the Lao PDR, through the Ministry of Labor and Social Welfare, announced an increase in the minimum wage. Effective from 1 October 2024, the minimum wage will increase LAK900,000, from LAK1.6 million to LAK2.5 million per month.