Expectations unmet in budget

The expectations of businesses in Bangladesh have grossly remained unmet in the proposed budget for fiscal year 2023-24 at a critical juncture of the country's macroeconomic turmoil, according to various businesses. 

Moreover, the panacea for curing the macroeconomic ills is also largely absent in the proposed budget, raising questions among economists over whether it can be implemented or not.

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Besides, some proposals in the budget will not aid economic growth, rather hinder it if left in place when the budget is passed in parliament, they said.

For instance, there is an option to create posts for tax collectors empowered by the National Board of Revenue (NBR), which reminds of the colonial era, said Nihad Kabir, chairperson of Business Initiative Leading Development (BUILD).

This means that if businesses cannot pay their taxes, the tax agents can strip the enterprise to collect the dues, added Kabir, also former president of the Metropolitan Chamber of Commerce and Industry (MCCI).

She then urged for the withdrawal of the proposed measure to collect a minimum of Tk 2,000 as tax from each individual with a Taxpayer Identification Number (TIN) regardless of whether they have taxable income.

Kabir also suggested that "leakages" in the spending of government revenue should be stopped.

She was speaking at a discussion on the proposed budget and expectations of businesses, organised by Md Siddiqur Rahman, industries and commerce secretary to the Awami League, at Lakeshore Hotel Gulshan in Dhaka yesterday.

Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said availability of energy is now a major concern for businesses.

This is because even though energy prices have been doubled, the pressure of gas in the supply lines for industrial units is still very low.

Similarly, the duty on the import of sugar is still 62 per cent and as a result, consumers have been buying the sweetener at a high cost. "Here, the NBR wants to show its performance in tax collection," he added.

Uddin then reiterated his complaint that a taskforce formed by the FBCCI and NBR have yet to hold any consultations for fixing these problems.

The chief of the country's apex trade body also said allocation for energy should have been increased in the proposed budget even if it meant deducting funds from the Tk 87,000 crore allocated for developing roads, highways and public transport.

He went on to say that implementing a market-oriented bank interest rate will not help reduce the inflationary pressure.

Mohammad Fazlul Haque, acting president of Bangladesh Textile Mills Association (BTMA), said not a single demand of theirs was incorporated in the proposed budget.

Almost all the spinning mills have stockpiles of unsold yarn but the government still allowed imports, he added.

The government could have saved a lot of US dollars amid the ongoing shortage had local garment exports been made to buy yarn from the domestic market, he said.

Additionally, many mills have already stopped production because of low gas pressure even though the gas price was hiked by 86 per cent, he added.

The demand of textile millers for withdrawing the duty on import of recycled fibre has not been addressed in the proposed budget either, Haque said.

Md Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association, said simply providing allocations for a sector does not guarantee that it will perform better as the funds need to be used efficiently.

"The government did not hold consultations before formulating the income tax law," he added.

Fazle Fahim, former president of the FBCCI, said the depletion of US dollars started with the purchase of Covid-19 vaccines and payments for foodstuff from different international suppliers and the freight charge of logistics companies.

Global logistics companies made a net profit of $350 billion by hiking freight rates abnormally during the Covid-19 period and Bangladesh was one of the major payers of such exorbitant charges as the country is import reliant, he said.

Moreover, the US Fed printed $8 trillion to meet the demand, which also exported inflation worldwide, he added.

While chairing the discussion, Md Siddiqur Rahman said everybody agrees that reforms are needed.

Also, the confidence of businesspeople in the NBR needs to be restored, he said.

Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue, said the proposed budget did not address the crisis in the economy at all.

But at the same time, the budget proposals indicate that the government is acknowledging the crisis, he said.

For instance, achieving the 7.5 per cent GDP growth target and attracting Tk 4 lakh crore investment is almost impossible, he said, asking why the government is bypassing the crisis.

Shyamol Dutta, general secretary to Jatiya Press Club, said it is impossible to build a non-communal country with an allocation of only Tk 600 crore for the cultural sector.

Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank Limited, said the recent sovereign rating downgrade by Moody's Investors Service will lower the country's foreign direct investment and increase the cost of doing business.

He suggested quick reforms in the banking sector for brightening the country's image and strongly addressing the issue of non-performing loans.

Ahsan H Mansur, executive director of Policy Research Institute (PRI), said excessive borrowing by the government from the banking system will affect the money flow to the private sector.

He also raised questions on how the government will address the high inflationary pressure.

Planning Minister MA Mannan said International Monetary Fund did not put pressure on the country to take a $4.7 billion loan a couple of months ago.

However, the global lending agency did consult with the government on reforms in the financial sector, he added.

Regarding recruiting agents for collecting revenue, Mannan said a good number of unemployed youths will get jobs for the government move.