Bank borrowing to make industrial funding costlier

The Foreign Investors' Chamber of Commerce and Industry has feared a costlier funding for trade, commerce and industries, as the proposed budget is heavily dependent on bank borrowings.
In a reaction yesterday to the Tk 1321.70 billion new budget placed in parliament Thursday, the trade body for foreign entrepreneurs said the government's bank borrowing on a large scale is likely to tighten the liquidity situation and cause upward trend in deposit rates with consequent effects on lending rates, according to a Ficci press release.
It, however, lauded the initiatives for reforms in procedures of VAT price declaration and issuing tax card for top ranking taxpayers.
The chamber also expressed its concern over the proposal of imposing supplementary duty on locally manufactured construction materials like paints, mosaics, tiles, particleboard and fittings. It opposed imposition of any taxes on the gains by different institutions in the capital market, and also on share premium.
Enhancing discretionary authority of the VAT officials is also a matter of concern, the chamber further said.
Meanwhile, the Dhaka Chamber of Commerce and Industry pointed out that the 2010-11 budget did not earmark any fund to improve the capital city's transportation and traffic system, though traffic congestion is a serious concern for the private sector.
Praising the initiatives to construct a 32-kilometre elevated expressway from Uttara to Jatrabari besides a few flyovers and overpasses, the DCCI said it thinks these measures are too inadequate to cope with the situation.
“DCCI feels that these will not be enough in managing the ever-increasing traffic load of Dhaka city, which is considered a factor that has contributed to the high cost of doing business in Bangladesh and to the huge loss of working hour," it said in a press statement following a meeting of its directors and other business representatives at its office yesterday.
The Dhaka chamber proposed introduction of congestion taxes on the movement of vehicles within the city and allocation of a Tk 5,000 crore exclusive fund to improve the traffic system. It also urged the government to establish a separate railway ministry for better railways, which may reduce the load on roads.
It lauded the government for prioritising the power and energy sector, but stressed timely execution of the development projects meant for the sector.
The business body hailed the Tk 3,000 crore allocation on public-private partnership initiatives. The chamber insisted on finalisation of the PPP legal framework at the earliest.
"In order to promote Digital Bangladesh, we proposed reduction in SIM tax and withdrawal of all types of duties from telecom equipment, but this has not been reflected in the budget," the DCCI said.
It asked for raising the individual taxable income ceiling to at least Tk 2 lakh a year.
The Chittagong Chamber of Commerce and Industry President MA Latif MP lauded the budget saying it will help the local industries, agriculture and social safety nets.
However, he requested the government to reconsider the proposed rise in the import duty on non-refined or refined sugar, and to waive duty on microbus and mini trucks of up to 1500 CC, as these are used to transport essential commodities.