The real estate and housing sector leaders have welcomed the government’s decision to allow undisclosed income to be “legalised” through investments in the real estate and housing sector.
Leaders of Real Estate and Housing Association of Bangladesh (REHAB) and high officials of different real estate companies welcomed the provision, which was announced by the finance minister during his speech on the budget for 2013-14 fiscal year.
“We are very happy with the decision. It is very important for the sector, and also for the economy,” REHAB general secretary Md Wahiduzzaman told the Dhaka Tribune.
“Different construction material industries are linked to real estate sector. If this industry falls, its impact will hit the other sectors too,” he said.
Japan Garden City managing director Wahiduzzaman said, “Now that opportunities have been created to develop the industry, the government will also earn extra revenue.”
When asked about a possible hike in flat and plot prices due to the move, the REHAB secretary said, “Since this is the election year, I think every company will try to keep prices down. I think there is no possibility of flat or plot prices going up, although every company has their own strategy.”
Sheltech managing director Toufiq M Seraj said, “Undisclosed income causes many difficulties for the economy. So any initiative to encourage investing this money in productive sectors is appreciable.”
“It’s not that I support the move out of personal interest. I support it from a moral standpoint as it will reduce the ill effect of the situation as it stands now in the real estate and housing industry, and should be supported in the interest of economic growth,” said Seraj, whose company is the oldest real estate company in Bangladesh.
Shaikh Aftab Ahmed, chief operating officer of Shanta Properties Limited, said, “We welcome the government’s decision. In the last two years the real estate and housing sector has been undergoing a crisis.”
“About Tk100bn is invested in the sector and some 5m people are directly or indirectly involved. So the government has taken an appropriate decision,” he added.
Ahmed however, said it would be difficult to predict whether prices would go up or not. “The new tax rate for over 200sqm in the new budget will pose difficulties for us. However, we will also try to avoid the pressure falling on the customers,” he explained.
“We also hope that the government will consider re-evaluating the new tax rate,” he added.
Finance Minister AMA Muhith tabled the budget for 2013-14 fiscal in parliament on Thursday, where he proposed to allow investing undisclosed income in real estate and housing sector. At a press conference on Friday Muhith defended the move saying the scope for whitening undisclosed income was a regular method in Bangladesh.
“We said that undisclosed income would be used after the payment of a certain amount of tax,” he emphasised.
Before the budget REHAB strongly recommended that the government ratify purchasing flats with undisclosed income without conditions, and sent a recommendation letter to the finance ministry requesting to include it in the budget.