The new budget provides that black money when invested in the purchase of land, apartments and cars will be eligible for tax concessions, an MCCI press release said.

"Investments in industrial projects have been deleted. In other words, whitening of black money will be allowed for only non-productive investments. Retention of the scheme is contrary to the popular demand, particularly from our chamber," said the release signed by MCCI President Latifur Rahman.

"The MCCI is also distressed that the provision in the budget with regard to improvement of tax governance system does not reflect the taxpayers' submission as discretionary powers have been retained in spite of their complaints about their misuse.

"There is also not adequate indication in the budget about widening of the tax net, which is so essential for higher tax-GDP ratio."

The MCCI supported the budget's emphasis on poverty reduction and its desire to achieve the millennium development goals and welcomed the provisions with regard to tax treatment of perquisites, reduction of import duty on raw materials and components, the assurance for appointment of tax Ombudsman.

The chamber also welcomed the finance minister's announcement that 56.3 per cent of the total resources will be spent, directly or indirectly, for poverty reduction.

The chamber, however, observed that since agriculture sector has already have over-dependence of employable people, sustainable reduction of poverty will be difficult to achieve unless opportunities are created for job creation in the industrial and service sectors.

"In fact, in the recent years, new jobs have been created in the industrial and service sectors. The dynamism of the industrial sector, which has achieved a double-digit (10.45%) growth, should have been supported by fiscal monetary and infrastructural policies. This is conspicuously missing in the new budget," the MCCI press release said.

"Nothing has been mentioned about the interest rate structure ignoring the fact that the interest rates in the neighbouring countries are lower than that of Bangladesh. With higher cost of funds, it is becoming difficult for our industries to remain competitive both within the domestic market and in the neighbouring countries.

"On the fiscal front, the tax structure in the corporate sector remains unchanged. It is common knowledge that the effective tax rate on business is much higher as legitimate expenditures are disallowed under the discretionary powers given to the tax administration.

"Besides, our chamber showed example as to how the impact of tax on imported raw materials and components becomes 100% higher than the announced import tariff rate. The cascading effect of tax, we strongly feel, should not remain unaddressed in the context of tax integration of our economy in the international and regional markets.

"We also feel that 1% reduction in import duties on raw materials and components is inadequate. Import tariff structure should be 3-tier with 2.5% duty on basic raw materials, 7.5% duty on intermediate raw materials and 20% -- 25% on finished products.

"In the larger interest of the industrial sector's competitiveness, it is also essential that the finance ministry withdraws immediately import surcharges, advance income tax, IDSC and LCA fees, which inflate the duty structure of raw materials and components by 30% to 40%," the press release said.

The restriction on overseas visits of company directors is totally impractical, the release said, adding, "The provision that expenses for the first two trips will only be allowed as admissible expenditures ignores the fact that in business, particularly export business, overseas travelling is part of the genuine business activities."

"Besides, the other provision that expenditure for overseas travelling exceeding 1% of the disclosed turn-over will not be allowable expenditure will affect export promotion and will cause harassment to the business community.

"In addition, the provision for 5 per cent deduction of tax at source on the cash incentives given to export oriented industries will cause hardship and discourage exports.

"The provision for payment of Tk 5,000 or 0.5 per cent of the turnover, whichever is higher, as tax for companies whether there is any profit or not, is misuse of a fundamental principle that income tax is on income. It may even affect genuine business enterprise as 0.5 per cent of the turnover can be a huge amount."

Under-implementation of the ADP led to inadequate development of infrastructural facilities in the recent years for which the private sector found it extremely difficult to play its due role, the chamber release said, adding, "We expect that highest priority should be given to electricity generation.

To reach the target of over 7 per cent GDP growth in the next year as announced by the finance minister, investment-GDP ratio will need to be raised to at least 30 to 35 per cent from the current 24 per cent, the release said.

"The additional amount of savings needed to meet higher investment needs must come in the form of public savings, i.e. through the reduction of the government's current expenditure.

"This year being the election year, it is unrealistic to expect that the government will go for reduction of any expenses. However, some savings can be achieved by improving the performance of the public sector enterprises, reducing their losses, phasing out implicit subsidies, which they are now enjoying.

"Finally, we emphasize that to consolidate the present strength of the economy, ensure macro-economic stability, check the inflationary pressure, and achieve social progress, it is essential to maintain fiscal discipline and contain inflation. The Government needs to be prudent to cut down revenue expenditures. The inflation situation should be kept under constant watch by a non-government national monitoring committee. It should also keep a track on the Government's borrowings from the banking sector."