Budget has no direction to sustain current industry: BCI

Bangladesh Chamber of Industries (BCI) President Anwar-ul Alam Chowdhury (Parvez) said that the country’s industrial sector is currently passing through a challenging period, saying that I do not see any direction in the budget to sustain the current industries.

He said this in the initial response given by BCI on Saturday (June 8) on the proposed budget for the financial year 2024-25.

He said, I do not see any direction in the budget to sustain the existing industries. The country’s industry is currently going through a challenging time. Industrial establishments in the country are running at 60-70 percent of their capacity, sales of all establishments have dropped due to high inflation, gas and electricity prices are increasing and industries are not getting regular but uninterrupted service.

Parvez said, due to the government’s contraction policy and Bangladesh Bank’s dry up policy, investment in bank bonds is being encouraged and the government is also taking money from banks. Bank interest rate is high and it is constantly increasing. As a result, there is a liquidity crisis in the bank. New investment has slowed to just 6.6 percent growth this year.

He said, about 120,000 people have become unemployed in the country. As a result, the current industry’s cost of doing business is increasing. As a result inflation control will not be possible. If the economy of the country is to be sustained, there is no direction in the proposed budget to focus on import substitution industries and how to sustain the capacity of the factories.

The BCI president said that the title of this year’s budget proposal has been set as ‘Dream of Smart Bangladesh in the cycle of sustainable development’. The budget was presented with the promise of building a happy, prosperous, developed and smart Bangladesh.

He said that budget preparation is a very difficult task for the government in the current economic situation of high inflation, increase in government expenditure, non-increase in tax GDP ratio and depletion of reserves. In this situation, restoring economic stability is the most important thing.

He further said that the proposed budget mentions keeping inflation within 6.5 percent and the GDP growth target for the next financial year has been fixed at 6.75 percent, which will be challenging to implement. Although inflation control is said to be the main goal in the budget, the proposed budget does not show sufficient steps to meet the inflation control target which has been above 9 percent for 14 consecutive months.

Parvez said, according to the data of EPB, there is growth in the export sector, but there is no growth in the data of Bangladesh Bank and Customs. Analyzing the data of BGMEA and BKME, it can be seen that the condition of the export sector is not as expected.

He said 1% duty has been levied on import of raw materials and capital equipment in the industries of EPZ. On the one hand, exports are not growing as expected, the flow of remittances is low, such a decision will put more pressure on the economy in the absence of reserves. We demand reconsideration of this proposal.

He also said, we expected a direction to increase the capacity of the export sector in this budget. The growth of micro, cottage and small industries of the country depends on large and medium industries. In such a situation, the micro, cottage and small scale industry sectors are the most affected. No direction is observed in the proposed budget to sustain micro, cottage and small scale industries.

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We talk about environment and energy saving but in this budget I see that LED lights have been taxed. Again, taxes have been levied on domestically produced ACs and refrigerators, as a result of which the industry will suffer and above all pressure will come on the consumer, said the BCI president.

He said, the proposed budget is undoubtedly not ambitious. The budget deficit target has been brought down to 4.6 percent of GDP which is promising. After that 1 lakh 60 thousand 900 crores of deficit will be collected from internal sources. We think that the government should focus on bridging the deficit by cutting spending and borrowing from foreign sources, requiring relatively low rates of borrowing from the banking system.

If this huge amount is taken from banks and other domestic sources, it will create pressure on private sector investment. In order to control inflation, sustain the economy and employment, it is very important to maintain the normal flow of money to sustain the current industry even if new investment does not come.

He also said that in the proposed budget, the provision of 15 percent income tax has been made to whiten black money, which BCI does not support in any way. This will discourage legitimate money earners and is a punishment for them. Moreover, this black money has been allowed to be used in non-productive sectors like buying land, plots, flats which is not rational.

Parvez said that if black money is used in the purchase of land and flats, the price of land will increase and there will be obstacles in industrialization. If black money is to be included in the country’s economy, it should be invested in industrial and productive sectors. This results in opportunities for increased economic activity and employment.

He said that the National Board of Revenue has done relatively well in revenue collection despite the existing dollar crisis, various restrictions on imports, lack of growth in investment and production. In the proposed budget, the revenue collection target of the National Board of Revenue has been set at Tk 4 lakh 80 thousand crores. It is not possible to achieve the desired tax GDP ratio by simply increasing the tax rate of existing taxpayers without increasing the number of taxpayers i.e. increasing the tax rate.

He also said that the number of TIN holders in the country is a little over 1 crore, out of which 39 lakhs are filing returns and 26 lakhs are paying taxes. We think the number of taxpayers should be above 1 crore. We feel that the proposed budget should contain specific directions for the increase of the cornet.

The BCI president said that more than 80 percent of the total tax is collected from Dhaka and Chittagong, while about 45 percent of Bangladesh’s GDP is located in other districts. By hiring the necessary manpower in these areas and approaching the people with a positive attitude, tax collection will increase and the cornet will expand. Businessmen and NBR should take responsibility and come forward in this crisis of the country.

He said that the limit of tax-free income of individuals was 3.5 lakh taka, which has been kept unchanged. Reiterating the proposal to raise the tax limit to 5 lakhs considering the current economic situation and inflation. The tax rate has been conditionally reduced by 2.5 per cent for the company which is apparently positive but this condition is not feasible in the context of Bangladesh as it is impossible for an organization to meet the condition of cash expenditure of Tk 36 lakh per annum. We are reiterating the proposal to reduce the tax rate by 2.5 percent without any conditions. This will help in attracting investment. This conditional tax exemption is nothing but a diversion of goodwill.