The American Chamber of Commerce in Bangladesh (AmCham) in an instant reaction to the proposed budget on Thursday recommended focusing on a “crisis management contingency approach” in the wake of the global crisis.
Finance Minister AHM Mustafa Kamal proposed a Tk7,61,785 crore (approximately $7.1 billion) national budget for the 2023–24 fiscal year in the parliament.
The size of the budget is Tk1,01,278 crore higher than the revised budget of Tk6,60,507 crore in the outgoing fiscal year.
In the new budget, the government aims to attain a 7.5% growth rate containing inflation. This is also the general elections year.
AmCham recommends focusing on a crisis management contingency approach, prioritizing expenditures and policy continuity on key procedural matters in the following manner:
● Foreign Exchange Reserve: No significant economic growth is conceivable without sustained Foreign Exchange reserve growth.
Hence, instead of a gross import ban, we should speed up the foreign-funded projects' implementation and reconsider self-funded projects having a sizeable import component ensuring a safeguard against economic shocks caused by volatile energy inputs and helping finance balance-of-payments deficits.
● Alternatives to increase export revenue: Instead of the traditional heavily RMG-dependent export basket, policy support should be extended towards business/industry for effective implementation of the existing policy, create a user-friendly process and further allocation of national funds to enhance this potential source.
● Import Duty and minimum tax: Considering the advance tax as the minimum tax paid by an industrial undertaking at the import stage on raw materials in certain industries and the fixed (5%) minimum tax on the gross receipt would be detrimental to the existing investors, hence request to revisit this proposal for the best outcomes for businesses and consumers alike.
● Renewable energy to offload existing supply chain: Investing in renewable energy not only benefits us environmentally but also contributes to economic growth through job creation, and market expansion in related industries supporting clean-energy technologies. We recommend favourable immediate initiatives.
● Income Tax policy diversity: Diverse policies in individual tax rates, exemptions, deductions, and credits affect different taxpayers based on their income levels, types of income sources, and other individual circumstances.
We strongly recommend the National Board of Revenue (NBR) adopt automation at all possible levels at the same time to focus more on expanding the Tax net. We suggest introducing the e-payment and e-TDS system and Digital Payments incentives to ensure accountability and transparency throughout the process.
● Reducing per capita liability: It is a critical issue for developing countries that rely on external borrowing to drive economic growth. We recommend the adoption of prudent debt management strategies that promote transparency, accountability and fiscal discipline.
● Focused project on climate vulnerability: All projects going anti-environment and against the notion of a green economy should be abandoned. We strongly recommend creating budgetary allocations for such projects on climate vulnerability since Bangladesh is already experiencing erratic weather patterns.
"On another note, we truly appreciate and like to show our sincere gratitude for developing new and improved Logistics infrastructure with the support of the Logistics Infrastructure Development Working Committee (LIDWC) from the Prime Minister's Office," the AmCham said in a statement signed by its President Syed Ershad Ahmed.
“We recommend expediting the building of Dhirasram ICD boosting Dhaka-Chittagong railway communication to reduce the pressure on the highway and shift the pressure on Kamalapur ICD, the heart of Dhaka city. The logistics industry holds an important key for our economy attracting domestic and foreign direct investment (FDI), which is growing at a high pace. Investing in a smart Bangladesh is not just an economic imperative, it is a moral one.”
“By prioritizing the right budgetary allocations in infrastructure, education, technology, energy, and social inclusion, we can build a sustainable, better future for all. AmCham believes budget execution is what matters in the end and should be measured for quantity and quality,” read the statement.
Established in 1996, AmCham is an influential business platform for exchanging ideas and assisting in expediting the normalization of business relations between the US and Bangladesh.