‘The budget should mobilize more resources for supporting cottage, micro, small and medium enterprise (CMSME) sector, infrastructure development, and public health’
As government unveils the upcoming budget for fiscal year 2020-2021, here are some of the expectations of the country’s business leaders from the budget.
Special incentives to upgrade technology and new products
Dr Rubana Huq, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA)
As fashion lovers and consumers' taste changes fast, product diversification and technology upgradation is crucial for the global apparel industry. So in the upcoming national budget for fiscal year 2021, special incentives are needed to upgrade technology, as well as new items such as recycled, non-cotton based clothing goods and circular products.
Product diversification is very crucial for the industry to survive as the demands of recycled, non-cotton based clothing goods and circular products items are on the rise. To this end, technology and infrastructure upgradation is imperative.
In addition, joint ventures help to share technical knowhow and diversify products goods. So the government should provide special incentives on these items and on JVs in new product categories.
On top of that, government has to incentivize and provide duty free capital machinery importation while opting for sector diversification particularly in areas such as recycled yarn, personal protective equipments (PPEs), polyester staple fiber (PSF), Solar PV Module Assembly, light engineering such as manufacturing spare parts for industrial washing machine, sewing machine, vacuum pump, gas compressor, centrifuges, boilers, etc.
In creating jobs, it would need concerted and coordinated efforts with the private stakeholders on board, identify the priorities and be efficient in action.
We need to find alternative markets and alternative products. We need more investments in the economy. We need the mega projects to keep going and be completed on time, and most of all it needs to ensure an environment where businesses can operate with less hassle and greater efficiency.
Exempt income tax for SMEs and revise VAT
Sheikh Fazle Fahim, president of Federation of Bangladesh Chambers of Commerce and Industries (FBCCI)
Advance income tax (AIT) rate should be revised from 5% to 3%, while advance tax (AT) should be withdrawn on industrial raw materials. Rebatable VAT needs to be revised from 15% to 10% while other non-rebatable multiple VAT rates need to be revised as it adds inflationary pressure to end users. VAT on turnover of Tk3 crore and above should be revised from 4% to 2%. We also proposed a reduction of corporate tax to 25% over the next three years.
VAT should be exempted on goods manufactured in export processing zones (EPZs) as per earlier policies. Policy consistency for an investment-friendly environment will only support the measures of the government. Custom duties should be adjusted to facilitate further industrial growth. Export source tax should be revised considering export shrinkage due to Covid-19 for next one year.
We proposed to consider offering moratorium, discount or exemption from payment of income tax and VAT for SMEs, particularly for agriculture, retail, women entrepreneurs, restaurants, local retail fashion, light engineering, services sector, media, hospitality, tourism and logistics for next one year. Although these sections are not revenue targets, they create jobs, assist in consumer spending and help in money circulation.
Reduce VAT for SMEs to combat Covid-19 fallout'
Mirza Nurul Ghani Shovon, president of the National Association of Small Cottage Industries of Bangladesh (NASCIB)
Cottage, micro, small, and medium enterprises (CMSMEs) are hit hard by the Covid-19 pandemic. For CMSMEs to survive the Covid-19 fallout, the government should reduce VAT from 15% to 5% for the sector in the upcoming national budget.
On the other hand, for existing SMEs, we urge the government to create a fund within the budget at low interest rates for at least three years. From that fund, both new and existing SME entrepreneurs could manage to get working capital.
In addition, the government should keep allocation for human resource development and entrepreneur capacity building through training.
Budget should focus on V-shaped recovery of economy
Shams Mahmud, president of Dhaka Chamber of Commerce and Industry (DCCI)
The coronavirus pandemic is affecting both in a number of ways: supply chain disruption, cash flow problem, closure of businesses, feeble private investment, drastic fall of export earnings and remittance inflow, devastating impact on jobs, livelihoods, and public health.
The government is preparing the national budget for fiscal Year 2020-21 amid the pandemic. The budget should reinforce its focus on a "V-shaped recovery" of the economy, mobilizing more resources for supporting cottage, micro, small and medium enterprise (CMSME) sector, infrastructure development and public health.
Moreover, the next budget should have sufficient fiscal and non-fiscal incentives for the manufacturing sector to generate more employment.