The country’s business community and economists on Wednesday called for upgrading the tax system to international standards through transparency and automation to attract more foreign direct investment (FDI).
They also recommended focusing on crisis management contingency approach, prioritising expenditures and policy continuity in terms of carbon tax, income tax policy diversity, foreign exchange reserves, energy diversity to offload existing supply chain, import duty and minimum tax, banking sector stability, and logistics infrastructure.
The remarks were made at a post-budget panel discussion organised by American Chamber of Commerce in Bangladesh (AmCham) at Sheraton Hotel in Dhaka. “Bangladesh’s tax and administration system is not business-friendly. We have to focus on compliance, transparency, international tax system, and automation to bring in more FDI,” AmCham President Syed Ershad Ahmed said.
He stated that it is crucial that the government, private sector, and stakeholders concerned find the best way to work together to build a strong and more focused future for Bangladesh.
Presenting the keynote, Executive Director of Policy Research Institute of Bangladesh Ahsan H Mansur said, “Current reserve is a matter of concern. It is a big challenge now.”
“Despite compression of imports due to dollar shortage and the consequent sharp reduction of current account deficit, the negative financial account of the balance of payments (BOP)--for the first time in many decades--is forcing further decline in reserves. Net foreign reserve target set by the IMF is $24.46 billion for end-June, based on the IMF definition (BOP Manual),” he added.
He added that NBR needs to collect Tk 1,113 billion in the last quarter of this fiscal year to meet the IMF target. That will also be a challenge.
PRI-CDRM estimates that the revenue shortfall would be around Tk 546 billion against the budget for FY23, and Tk 214 billion compared to the IMF target, Mansur said, adding that lack of diversity in external and domestic financing instruments makes it difficult to secure the Tk. 2.6 trillion financing requirement envisaged in the FY24 budget.
Mansur also said that the pace of government borrowing from the central bank is likely to accelerate further in FY24 to Tk 1.3-1.4 trillion.
“Bangladesh will need to mobilise about $10 billion in net financing from external sources for budget financing (equivalent to about Tk 1 trillion),” the prominent economist opined.
Speaking at the meeting, Planning Minister MA Mannan said that they are now facing a good number of challenges like inflation, electricity crisis, and reserve shortage. “So, low and middle income segments are under pressure.”
“However, there are bureaucratic problems in the country due to colonial rules. The current government has amended many rules. Actually, we need smart rules to build smart Bangladesh,” he also said.
The minister added: “The government controlled imports due to dollar crisis, but inflation hit us hard due to product shortages in the local market.”
Chairman of Policy Exchange Bangladesh M Masrur Reaz moderated the function while former chairman of National Board of Revenue Muhammad Abdul Mazid and other business leaders also spoke at the programme.