Business leaders and economists have said that they are unsure whether the proposed national budget for FY2024-25 is business-friendly as there is no water supply in the economic zones (EZs) and there is comparatively more VAT in these special areas.
Besides, the proposed budget also raises import duty to 1 per cent from zero on capital machinery for establishments situated in the EZs.
“While neighbouring nations raised cash incentives for exporters, our country reduced the incentive. While a subsidised electricity connection is needed for the textile and backward linkage industry, we cannot avail of this facility.
“Also, there is a 15 per cent VAT for EZ establishments while 4 per cent for investments in other areas. Is that a business-friendly policy?” asked Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon on Thursday.
He made the remarks at a post-budget discussion organised by the Economic Reporters' Forum (ERF) at its office in Dhaka on Thursday. ERF President Refayet Ullah Mirdha chaired the event.
“There is nothing in the budget that is pro-people and pro-business,” said former Bangladesh Bank governor Salehuddin Ahmed while addressing the event as chief guest. “There is still scope. The government should make the budget people and business-friendly.”
He said that there is nothing for the poor to be happy as the tax burden on them has increased in the budget amidst soaring inflation. There is also nothing for employment generation initiative for this group.
There is nothing for businesses too. The government raised duty on internet and mobile calls. Meanwhile, internet speed and bandwidth are not that good in comparison. “Then how does the country can be made as smart?” he asked.
Salehuddin also wondered that if the government borrows Tk 1.37 lakh crore from commercial banks in line with the proposed budget, where will the investment come from, how will jobs be created and from where the government will collect such a huge amount of revenue in FY25?
“The speciality of the National Board of Revenue (NBR) is collecting revenue through shortcuts. So, they raised taxes in places from where they can easily collect,” he added.
He recommended tax rationalisation, rationalising government expenditure, institutional reforms, and macroeconomic stability, ensuring transparency and accountability, implementing the budget with proper monitoring and making the budget reflect the expectations of people and businesses.
In the keynote presentation, Centre for Policy Dialogue (CPD) Executive Director Fahmida Khatun said, “The budget deficit for FY25 was supposed to be kept less than 4 per cent of the GDP as we have a liquidity shortage.”
“The first target of the upcoming fiscal year should be controlling inflation and less growth of the GDP. With this tightened policy, the government should focus on economic stability first, then the country’s economic growth,” she said.
She said, “Giving amnesty towards illegal earners through 15 per cent tax on black money, while honest taxpayers are subject to pay up to 30 per cent is economically and politically unethical. Such state-offered unethical provision will discourage honest taxpayers.”
Bangladesh Institute of Development Studies (BIDS) Research Director Monzur Hossain said, “We are taking contractionary policy on one hand and reducing subsidy on fuel on the other amidst rising inflation. Inflation will not decrease through this.
“Because higher prices in fuel increase inflation and affect every sector in the country. So, without raising oil, gas and electricity as well as fuel prices, the government should increase energy efficiency, reduce capacity payment and increase geopolitical negotiation to import fuel at a lesser price.”
Economics Professor at East West University AKM Enamul Haque said, “Electricity price has been increased drastically, which fuels inflation. So, the government should reduce the price to make the market stable.”
He also called for institutional reforms and recommended making the country more liveable. The country should be made in such a way that people invest within the country instead of laundering money and investing in Singapore and Dubai. Also, it will encourage foreign investors to invest here instead of those countries.
