A leading chamber yesterday praised the government's big allocation for infrastructure saying the implementation of some mega projects would improve the country's investment climate.
The Metropolitan Chamber of Commerce and Industry (MCCI) in its budget reaction lauded the allocation of Tk 8,100 crore made for the Padma Bridge project. It also commended the allocations made for metro rail, transport and human resources development.
“The MCCI strongly feels that the increased investment in physical and social infrastructure will help improve the quality of investment climate, people's lives, develop human resources and create better employment opportunities,” the chamber said in a statement.
The chamber also said the widening and deepening of social safety net programmes were fully justified.
“MCCI is particularly happy to see that special attention has been given to transport and vocational education.”
In utilising the allocation, higher priority should be given to primary and secondary education and skills development, the trade body said.
“MCCI is pleased to note that GDP growth target has been raised to 7.3 percent,” it said, adding that as the time progresses, the rate should be raised to 8 percent as the economy has started showing encouraging signs.
The chamber also described financing and implementation as two major challenges in the budget. The government had not achieved the target revenue set for the current fiscal year.
The government's projected bank borrowing, which was the main source of financing the development plans, would be significantly higher compared to the last year's budget, the MCCI maintained.
There must be a cap on the government's bank borrowing; and the concept of public private partnership remains under-utilised, through its proper utilisation, private sector investment could be mobilised, it stated.
The imposition of one percent surcharge on industrial units failing to set up an effluent treatment plant was a good step, the chamber said. “It will encourage establishment of green industries in our country.”
It said special attention was needed to contain inflation.
“Increase of national savings is a pre-requisite for investment and development of trade and industry. We have not seen adequate measures in the budget for encouraging savings,” the statement mentioned.
It also applauded the proposal to reduce corporate tax rate for companies non-publicly traded.
Withdrawal of tax rebate of 10 percent for listed companies, which declared more than 20 percent dividend, was disappointing, the chamber said, demanding restoration of the facility.
The MCCI, however, welcomed the reduction of tax rate from 0.5 percent to 0.3 percent of turnover and the proposal to enact the new VAT Act and Supplementary Duty Act from July, 2015.
The trade body expressed its concerns on the implementation mechanism and monitoring, which it said needed significant strengthening and enhancing to achieve the proposed economic growth.
It welcomed the extension of tax holiday up to June 30, 2019, but was disappointed with the budget allowing the legalisation of undisclosed money, which might discourage honest taxpayers from paying tax.
The MCCI was disappointed with the allocation for agriculture, only Tk 19,100 crore or 7.6 percent of the total budget.