Businesses happy, suggest tweaks
Businesses yesterday welcomed the budget as the government proposed some new initiatives which would aid growth, give rise to new entrepreneurs and enable more people to enjoy benefits of social safety net programmes.
Terming the budget business friendly, they also praised the government for increasing alloca-tion in areas of social safety net, education, communication and physical infrastructures, power and energy and health sector and subsidy for capital market investors.
The government's allocation of Tk 100 crore for start-ups will help create new entrepreneurs which will ultimately reduce challenges of unemployment, said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
In a written statement, she expressed satisfaction as the government proposed full waiver of value added tax on garment exporters' use of electricity, natural gas and water.
She said the apparel industry would also be benefited as the government reduced duty on import of workplace safety equipment. The government's initiative for formulation of a bankruptcy and insolvency law will help protect business enterprises, she added.
Huq said increasing cash incentive on export of garment items by 1 percent was too little as the exporters had demanded 5 percent. The government proposed an allocation of Tk 2,825 crore as cash incentive on garment export receipts.
She also said there was a scope for reviewing corporate tax as they earlier had demanded lowering the rate.
"It is a continuity of sixth and seventh five-year plan," said Sheikh Fazle Fahim, president of the Federation of Bangladesh Chambers of Commerce and Industry, in a text message.
"Government will take about Tk 47,364 crore from the banks to mitigate this shortage which is not unfriendly for the business but because of this borrowing private sector credit flow should not be hampered," said Osama Taseer, president of the Dhaka Chamber of Commerce and Industry (DCCI).
"ADP will be Tk 202,721 crore which is appreciable. It will expedite infrastructure development in the country," he said.
To ensure transparency, quality and effective monitoring, the DCCI requested to strengthen the Implementation, Monitoring and Evaluation Division and proposed formation of a National Infrastructure Development and Monitoring Advisory.
Private sector credit flow last fiscal year was 12.5 percent though, according to the monetary policy, 16.5 percent was targeted.
According to Bangladesh Bank, the amount of non-performing loans (NPL) is currently Tk 110,873 crore. Of it, 48 percent arose from government banks.
But the budget indicates that from now on the NPL figure will not grow at an accelerated rate, which is very much appreciable, said the DCCI.
"Implementation of the new VAT Act 2012 is a timely initiative. The DCCI hopes that this new VAT act would play an important role in doing business. But there should be a provision of input credit tax under VAT Act 2012 otherwise the extra burden might be borne by the consumers," Taseer said.
Salim Osman, president of the Bangladesh Knitwear Manufacturers and Exporters Association, also welcomed the budget.
He said the 1 percent cash incentive would help export growth of garment items.
However, he urged the government for continuation of source tax at 0.25 percent instead of the proposed 1 percent. He also demanded timely release of cash incentives.
Mohammed Hatem, senior vice-president of the Exporters Association of Bangladesh, said the 1 percent cash incentive was too little for garment exporters. This should be at least 3 percent, he said.
Mohammad Ali Khokon, president of Bangladesh Textile Mills Association, said 5 percent VAT on sales of local yarn would hamper the growth of the local handloom industry. As a result, prices of lungi will increase in the domestic markets, he said.
Abul Kasem Khan, immediate past president of the DCCI, said the proposed borrowing of Tk 47,364 crore from the banking sector by the government would put pressure on private sector credit growth.
Anwar-Ul-Alam Chowdhury, president of the Bangladesh Chamber of Industries, opined that corporate tax should be reduced for attracting more investment.
Syed Jamal Ahmed, vice-president of the Chittagong Chamber of Commerce and Industry, welcomed the government proposal to launch construction of Dhaka-Chattogram high speed train services and construction of bay terminals at the port areas.
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