Business experts question the target for private investment to GDP ratio in the proposed budget
The proposed budget for FY2020-21 should have had more focused indications for the recovery of jobs lost directly and indirectly because of the Covid-19 pandemic, alongside generation of new employments, said Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry (MCCI).
"The budget should have also focused more on allocations for agriculture, food security and healthcare, and expansion of the coverage of social safety net programmes," she said.
The proposed budget is more focused on growth than tackling the onslaught of the Covid-19 pandemic.
Finance Minister AHM Mustafa Kamal placed the budget for the Fiscal Year 2020-21 normally, instead of properly addressing the ongoing situation caused by the deadly coronavirus, she added.
Nihad was giving her introductory speech at a post-budget discussion titled "Budget 2020-21: What is the take away for the business community," held in Dhaka on Thursday.
She said, "I am not an economist, but in my humble opinion the unrealistic GDP growth and revenue target is not really necessary for the budget financing. There are many side effects as well, including the fact that we will not be able to get funds from development partners.
"At this time, the first priority of the government must be ensuring health and economic security of its citizens by any means possible. Secondly, the government must make sure that the wheels of economy keep turning to boost domestic demand."
She added, "If for that reason the budget deficit has to go up 8 or 9 percent, it would be acceptable. Proper implementation of the budget will depend on timely execution of all initiatives, good management and reducing redundancy."
Dr Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), said, "The target for private investment to GDP ratio in the proposed budget is questionable.
"Due to the Covid-19 crisis, the target has been set at 12 percent in the current fiscal year. But it is around 25 percent in the next fiscal year. There are questions regarding how this is achievable."
He also raised questions about the budget financing, and termed management and monitoring as the most important issues during this time.
Meanwhile, Business Initiative Leading Development (BUILD) Trustee Board's Chairperson Abul Kasem Khan raised questions about the private investment target.
Kashem said, "The target for private investment to GDP ratio is quite high. There were some good announcements such as reducing the corporate tax in the proposed budget, but no clear directives on increasing investments were given.
"Fast implementation of the stimulus package announced by Prime Minister Sheikh Hasina is crucial."
Syed Almas Kabir, former president of Bangladesh Association of Software and Information Services (BASIS), criticised the decision of increasing supplementary duty on balance recharge for mobile phones as a barrier to the Digital Bangladesh initiative.
"Among the 10 crore internet users in our country, 95 percent use it on their mobile phones. The people will suffer because of the duty increase, along with online platforms such as e-commerce companies," he added.
Rupali Chowdhury, president of the Foreign Investor's Chamber of Commerce and Industry (FICCI), said, "The reduction of corporate tax is a good initiative, but it did not meet the demands of the business community."
She also criticised several provisions of the VAT (value added tax) law.
Chattogram Stock Exchange's Chairman Asif Ibrahim said, "The government offers a 10 percent incentive in corporate tax to listed companies to bring them into compliance and to encourage them into entering the stock market.
"However, by reducing the corporate tax only on non-listed companies, the government is discouraging them into being listed."
Addressing the event as special guest, Prime Minister's Adviser on Private Sector and Investment Salman F Rahman said, "Amid the coronavirus pandemic, the biggest importance has been put on saving the lives of the people."
He also advised business organisations such as the MCCI to meet the finance minister and resolve their issues as soon as possible.
Planning Minister MA Mannan, chief guest at the event, said, "After listening to today's discussion, it seems that the budget is business-friendly. The prime minister has described it as a recovery budget.
"The agriculture and health sectors have been prioritised. We are facing challenges in financing the budget. But efforts should be made to resolve the challenges by increasing the tax net."
The minister continued, "Questions have been raised over the increase of tax on mobile phone balance recharging and unrestricted opportunities to invest black money. There have been discussions about the effectiveness of this opportunity given by the government.
"But there is also an opportunity to discuss the matter further before the budget is passed."
Earlier, Dr MA Razzaque, research director of the Policy Research Institute, and Adib H Khan, chairman of MCCI's Tariff and Taxation Sub-Committee, presented two keynotes on the proposed budget.
Mashiur Rahman, economic affairs adviser to the prime minister, also attended the event among others.