Expand, redesign stimulus for SMEs

The stimulus packages for small and medium enterprises (SMEs) and the agriculture sector should be expanded and redesigned in the next budget considering the Covid-19 fallout, experts said at a webinar held yesterday.

The implementation of the annual development programme (ADP) is also a big challenge as many projects cannot be completed on time while their allocations remain unused by the end of the fiscal year, they said.

The webinar styled, "The National Budget for 2021-22: Private Sector Perspective", was jointly organised by the International Business Forum of Bangladesh (IBFB) and Bangladesh Enterprise Institute (BEI).

While presenting the keynote paper, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue (CPD), said there remains a big concern that most SMEs cannot avail stimulus funds.

"So, the stimulus packages need to be expanded and redesigned in view of past experiences," he said, adding that SMEs should be given special attention.

Khan went on to say that the budget documents do not provide a consolidated and comprehensive update in the number of critical areas for stimulus packages.

There is no mention of how much money has been set aside to implement stimulus packages in fiscal 2021-22.

Besides, there is no mention of whether there will be any changes to the implementation modality despite the experiences of the past year, he said.

Expressing concern over the implementation of the ADP, speakers said the kind of stagnation seen in government spending is the biggest concern in terms of budget implementation.

The pace of public expenditure does not support the government's policy of going ahead from the next fiscal year, they added.

Khan also highlighted some areas of concern for the tax measures.

"The corporate income tax (CIT) for mobile financial services (MFS) has been increased to 40 per cent from 32.5 per cent, which will discourage the sector as a majority of MFS providers are making a loss now," he said.

This burden will likely pass onto the end-users who mostly tend to be marginalised people, he added.

Citing the CIT imposed on private universities and private medical colleges, Hosne Ara Begum, founding executive director of TMSS Bangladesh, said non-profit entities and educational institutions should not be brought under such taxes.

Lutfunnisa Saudia Khan, vice president of the IBFB, echoed the same and said the government should withdraw the CIP on educational institutions.

While discussing the tax deducted at source (TDS) on suppliers, some speakers said a 15 per cent hike in TDS on the suppliers' total income tax revenue will be a burden for both businesses and consumers.

Muhammad Abdul Mazid, former secretary and ex-chairman of the National Board of Revenue (NBR) and current chairman of the finance committee at IBFB, urged the government to spend the country's forex reserve properly rather than keep it idle.

Highlighting the limitation of allocations in the health sector, M Masrur Reaz, chairman of the Policy Exchange of Bangladesh, said the budget allocation was far less than the amount of investment required to increase the sector's implementation capacity.

Lt Gen M Harun-Ar-Rashid (retd), chairman of the governmental relation and advocacy committee at IBFB, urged the government to launch an insurance policy for farmers.

Addressing the event as chief guest, Planning Minister MA Mannan summarised some points of the discussion and assured the panelists that he would convey the key messages to the authorities concerned.

Mohammad Mahfuz Kabir, research director of the Bangladesh Institute of International and Strategic Studies; M Humayun Kabir, president of BEI; Hafizur Rahman Khan, the preceding IBFB president; MS Siddiqui, vice president of the IBFB; and Md Ali Afzal, director of the IBFB, also spoke.