Financing a challenge

The Metropolitan Chamber of Commerce and Industry (MCCI) yesterday termed the proposed budget challenging and ambitious reasoning out difficulties in financing and implementing it amid global economic recovery.
In a statement, the trade body said the budget aimed to stimulate local demand, provide protection to selected industries, and deliver a wide range of social safety measures to better the economic conditions of the people.
"Since it is the last budget of the present government, it naturally aims to be ambitious," said the MCCI.
The chamber, however, lauded the extended allocations for transport, energy, rural economy, education, human resources, IT, healthcare, local government and social safety measures.
"In particular, the chamber strongly feels that the coal policy needs to be announced immediately with the appropriate mining process used to harness a valuable resource the country already possesses," said the MCCI statement.
The trade body also praised the proposal for allocating good amount of funds from the Annual Development Programme (ADP), Tk 5,374 crore and Tk 6,852 crore, for the transport sector and construction of Padma bridge respectively.
MCCI feels the allocation of only Tk 3,721 crore for agriculture is disappointing, but the continuation of subsidy for the sector praiseworthy.
The chamber said political stability and implementation of projects were the key factors to achieve the targeted 7.2 percent GDP growth.
MCCI strongly urged the government to limit its borrowing from banks with the projected amount of Tk 25,993 crore, as it could result in crowding out the private sector credit growth.
The trade body welcomed the proposal to extend tax holiday facilities up to June 2015. However, it is worried over not extending the same facility for the power sector after June 30 this year.
MCCI is particularly happy to see that a stimulus package has been announced to strengthen the capital market by withdrawing AIT on premium over face value of shares and on bond sale, 15 percent tax rebate on investment in private mutual fund, and exemption of income tax on dividend up to Tk 10,000.
The statement said the chamber was disappointed on allowing whitening of undisclosed income.
"Such a provision may discourage the tax payers from paying taxes," said MCCI.
The Federation of Bangladesh Chambers and Commerce and Industry (FBCCI) termed the budget business- and investment-friendly.
The apex trade body also said the money flow in private sector would be less due to higher bank borrowing by the government.
The Chittagong Chamber of Commerce and Industry termed the budget ambitious. It suggested that the government be cautious in taking loans from internal sources to fill the budget deficit.
According to Dhaka Chamber of Commerce and Industry (DCCI), the budget lacks visionary investment plan.
It said the flow of investment should be 31 percent of total GDP in accordance with the current per capita income in Bangladesh.
In 2012-13, investment increased to 26.85 percent of the GDP mainly due to government investment. The private investments were not coming largely for gas and power crises and higher bank borrowing by the government, said DCCI.
Welcoming the budget, Bangladesh Knitwear Manufacturers and Exporters Association said GDP growth at 7.2 percent and export growth at 15 percent were a bit ambitious, but the Tk 2,592 crore incentives on export would boost the garment sector.
The Foreign Investors' Chamber of Commerce and Industry termed the proposed budget "somewhat challenging" given the current economic situation.
It appreciated the measures, especially allocation for transport and communication, but expressed concern about relatively lower allocation for education, technology and healthcare sectors.
The projected bank borrowing by the government would impact the private sector credit and might aggravate ongoing liquidity problem, said the body, adding, "However the Chamber feels that it will require strong monitoring to achieve the goals set in the budget."
The Exporters Association of Bangladesh praised the proposal to establish five Special Economic Zones in the country.
Bangladesh Frozen Foods Exporters' Association has termed the budget "industry- and export-friendly".
The trade body welcomed the budget for not increasing the tax at source and retaining cash incentive for the export sector.