Hailing the national budget for fiscal year 2018-19, the Metropolitan Chamber of Commerce and Industry (MCCI) on Friday urged the government to put concentration on certain policy reforms, simplification of taxation, ease of doing business, infrastructure as well to materialize the vision.
“Bangladesh’s economy is progressing well, but below its true potential,” opined MCCI, saying inadequate infrastructure and shortage of power and energy are now major impediments to the actual growth of the economy.
In a post budget reaction, the trade body said: “We applaud the Finance Minister for considering the national development goals and vision objectives while preparing the budget and proposing measures to uphold the country’s graduation to a developing country status, boosting economic growth, collect revenue, reduce poverty, provide necessary protection to local industries, and widen the prevailing safety net for freedom fighters and other deserving groups for improving the economic condition of the people.”
It said there is no alternative to raising the level of private investment including foreign direct investment (FDI) if Bangladesh is to confirm the status of developing country by 2021.
MCCI appreciated the 7.65 per cent growth in GDP against targeted 7.40 per cent in this fiscal year and the target of 7.80 per cent in the upcoming fiscal year.
“We feel that as time progresses the GDP growth will rise further as the country has started showing encouraging signs with higher demand for investment credit, increased import of industrial raw materials, better of export performance and remittance earnings.”
Higher GDP growth is necessary for achieving the status of developing country by 2021, added the trade body.
It, however, said special attention will need to be given to taking measures to contain inflation. The proposed budget keeps the inflation target below 5.4 per cent in the new fiscal year.
MCCI said attaining the increased revenue target for FY19 will continue to be a major challenge though the number of tax payers has increased. In order to achieve the revenue target, MCCI strongly suggested that tax compliant enterprises should not be excessively burdened.
The chamber appreciates the allocation of Taka 173,000 crore for the annual development programme (ADP) for FY19, which is 16.59 per cent higher than the revised ADP (Taka 148,381 crore).
“A higher allocation in the ADP is needed to fulfill our development goals, but MCCI would like to urge the government to take necessary measures to ensure efficient and effective spending of the ADP funds.”
The proposed investment in human resources development will help improving the quality of people’s lives and create better employment opportunities, noted MCCI.
It appreciated the continuation of the special supervision of the prime minister for rapid implementation of ten mega projects. However, proper utilization of allocated resources and their timely completion should be ensured.
The proposed reduction of tax rates for banks, insurance and financial institutions by 2.5 per cent was appreciated by the MCCI. It, however, said the long-standing demand of the business community for reducing the corporate tax rate has not been addressed.
The government also has taken some special measures (one stop service, ease of doing business indicator, economic zones) for investors and exporters in the budget for improving the ease of doing business and encouraging investment.
MCCI appreciated all these measures. But it advocated ensuring the benefits of these measures in a timely and effective manner.
The Chamber lauded the special allocation for the advancement of women by allocating Taka 100 crore for “Women Entrepreneurship Fund” and Taka 25 crore for “Women Development Special Fund”, allocating Taka 100 crore for “Skill Development Fund”, allocating Taka 300 crore for managing risks arising out of earthquakes, also allocating Taka 10 crore for NGO Foundation, Taka 250 crore for PKSF, and Taka 10 crore for SME Foundation as these organizations are playing key roles in alleviating poverty.
MCCI said it is disappointed to note that the tax-free threshold for individual income has not been increased and the highest rate of tax for individuals remains unchanged. This threshold has not been changed for the last 3 years. MCCI strongly feels that the threshold should be increased.
MCCI appreciated the tax incentive for green factories in the RMG sector, but it strongly urged the government to extend equal treatment across all industrial sectors.
MCCI also recommended that all similar fiscal and other incentives and facilities should be extended to all industries.