‘Budget should focus on V-shaped recovery of economy’

Dhaka Chamber of Commerce and Industry (DCCI) President Shams Mahmud discusses the upcoming national budget for fiscal year 2020-21 and issues related to the ongoing Covid-19 crisis. Shams is also Managing Director of Shasha Denims, Shasha Garments, Shasha Spinning and Shasha Textiles Limited. The business leader is also honorary consul for Ethiopia in Bangladesh.

How can the upcoming budget help the economy and businesses to survive?

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.

What would the business community’s three major demands for the national budget be?

The major demands from business people in the upcoming budget should include a reduction of corporate tax rates for both listed and non-listed companies, imposition of VAT based on the value addition of product, rather than on the nature of the business, and reduction of minimum corporate tax to 3% from 6%.

Can the budget help retain jobs in the industrial sector?

To retain jobs in the industrial sector, an investment friendly policy environment, improving the business environment, simplification of VAT return submission, corporate tax reduction and income tax waiver for whitening undisclosed money by investing in productive economic activities, economic zones, jobs creation, real estate, health infrastructure and value-adding manufacturing sectors need to be ensured.

Do you think the announced stimulus packages will help tackle Covid-19?

The Prime Minister has so far announced about 18 stimulus packages worth more than Tk1 lakh crore to sustain the economy. It is a timely decision which will help businesses. Export-oriented industries, especially the RMG sector, are already utilizing the funds from the announced Tk 5000 crore for this sector.

2020/05/online-news-1590681370362.jpg

Do you also think the effects of coronavirus will hamper our prospects of becoming a middle-income country?

Bangladesh has an impressive track record of economic growth. However, the current focus of the government should be on an early recovery of business and the economy. Businesses need to be supported with short term, midterm and long term economic policy responses in order to address the current economic disruption.

What budgetary measures are needed to turn the SME industry around?

Due to Covid-19, SMEs have been affected with business closure, dried up cash flow, lower market access because of lower demand and longer procedure of VAT refund. To help the affected SMEs with additional market access, we propose to provide protectionist measures like additional regulatory duty imposed against the products on which local SMEs have expertise.

Meanwhile, to meet the dire need of financing, special support needs to be allocated in the national budget for SMEs under refinancing scheme where government scheduled banks can be engaged in disbursing loans and DCCI may provide support for it.

Similarly, we propose quarterly VAT return submissions for SMEs and refunding the decreasing adjustment of VAT and SD for 2 months instead of 9 months and making AIT at 3% until August 2020 and then bringing it to 5% when business is stabilized.

Do you have any suggestions on containing corruption in implementing the development budget?

Bangladesh is a country where the cost of per km development work is the highest in the world. Strengthening the Monitoring and Evaluation department of the Planning Ministry can ensure a robust monitoring and evaluation of each development project. A year ago, the prime minister took stern actions against corruption. We want such strong political commitments against corruption to continue. Moreover, the institutional capacities of the various ministries and agencies need to be improved to check corrupt elements throughout the lifecycle of the projects.

The formation of a high performing monitoring authority, National Infrastructure Development and Monitoring Advisory Authority (NIDMAA), with the participation of public and private sector representatives headed by the prime minister will help contain corruption in implementing the development budget. Besides, strengthening the Anti-Corruption Commission with the required degree of autonomy can help contain corruption in the implementation of the development budget.

Source:Dhaka Tribune