Real estate sector growth to face barriers: REHAB

The Real Estate and Housing Association of Bangladesh (REHAB) has claimed that the proposed budget for the next fiscal year will impede the growth of the real estate sector as the new tax measures will raise raw material prices.

To avoid the growth impediment, REHAB President Alamgir Shamsul Alamin urged the government to continue allowing the investment of undisclosed money in the sector.

He made the request at a press conference on the budget proposal for FY 2022-23 at the hotel Pan Pacific Sonargaon in Dhaka on Saturday.

“We made several suggestions before announcing the budget proposal, but they were largely ignored. Furthermore, measures to raise construction material prices have been proposed,” he added.

Alamin said they had asked the government to lower the value-added tax (VAT) on steel raw materials in the new budget.

“However, the finance minister proposed raising VAT on billets and rods by Tk 200 per tonne at the retail level. As a result, the rod prices will further go up amid the global market volatility,” he said.

In the FY23 budget, the minister also proposed raising import duties on tubes, plates, electrodes, and similar products from 10 per cent to 15 per cent. In addition, 20 per cent supplementary duty on aluminium foils and GI fittings have been proposed, he added.

The import duty on various types of pipes has been proposed to be raised from 15 per cent to 25 per cent, and the import duty on various wires has been proposed to be raised from 5 per cent to 10 per cent, according to REHAB president.

He went on to say that import duties and taxes on complete lifts and skip hoists are being proposed to be raised from 11 per cent to 30 per cent.

Alamin added, “As a result, flat prices could rise even higher. As such, we urge the government to provide adequate policy support for the development of the real estate sector.

“The government should reduce land and flat registration costs, and create policies to boost the secondary market in the country. Also, in the next budget, we request that Bangladesh Bank set up a Tk 20,000 crore refinancing fund for housing loans.”

The REHAB president estimates that around Tk 50,000 crore could be invested in the real estate sector by 2024 if the government continues to allow undisclosed money to be invested in the sector.

He also urged the government to take the necessary initiatives to reduce construction material prices.

However, the government, in the budget proposal, withdrew the clause allowing the investment of undisclosed funds in real estate, which was introduced in FY 2020-21 to encourage more investment in this sector. According to REHAB’s president, the new clause resulted in a Tk 20,000 crore investment in FY21. Speaking on the matter, Dr M Masrur Reaz, chairman of the Policy Exchange of Bangladesh, an independent think tank, said, “The trend of black money whitening will discourage and dishonour honest taxpayers. We must now establish a tax-paying culture. The trend of whitening black money will stand in the way of developing the taxpaying culture in the country.”