The country’s apex trade body yesterday suggested that the government should float public-private partnership (PPP) bonds on the stock market to raise funds to cover a deficit budget.
Raising funds through PPP bonds will help the government reduce its dependency on bank borrowing and foreign aid to meet the deficit in the budget, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said in its reaction to the proposed budget.
Finance Minister AMA Muhith in his budget speech proposed Tk 2,500 crore for PPP funds for developing the country’s weak infrastructure and power sector.
The budget deficit runs into more than Tk 34,000 crore of which Tk 16,755 crore would be borrowed from the banking system, Tk 3,800 crore from the non-banking system and the rest to be managed from foreign and other sources.
In their reactions to the proposed budget, businessmen, chamber and trade body leaders observed that the private sector may face fund dearth if the government depends heavily on banking system to meet the budget deficit.
FBCCI President Annisul Huq urged the government to reduce corporate tax to attract both domestic and international investment, which he said is most important for employment generation in the time of global recession.
Huq suggested 25 percent corporate tax for listed manufacturing companies, and non-listed companies whose net income is Tk 1 crore, 30 percent for the companies whose net income is above 1 crore and 35 percent for trading limited companies.
Huq proposed the government reduce corporate tax for banks and financial institutions to 30 percent from the existing 45 percent.
The FBCCI chief also called upon the government to make it clear soon through circulating an SRO (statutory regulatory order) what would be the rate of duty on import of capital machinery for export-oriented industries. Muhith proposed a 3 percent duty on import of capital machinery in his budget speech.
Now the duty on import of export-oriented capital machinery is 1 percent and 3 percent for capital machinery for the local industries. The minister did not clarify such duty in his budget speech, which raised confusion in the business community.
The government should give a specific definition of luxury goods, Huq said, adding that cars are not luxury items as the economic activities have changed a lot.
“Cars are now a near-essential item as we need a constant communication for personal and business purposes,” he said.
Terming the proposed budget a reflection of the government’s election pledges, Huq said: “It’s not very difficult to achieve an 8 percent GDP growth from the existing 5.5 percent. It needs only Tk 66,000 crore additional allocation in the budget.”
Huq urged the government to appoint the chief of Board of Investment (BoI) from the private sector to bring dynamism in the activities of the state-run investment promotion agency.
The FBCCI chief hailed the government for taking initiatives for developing the country’s power and energy sector. He said if the government can implement the proposals of the budget, an additional 750-megawatt electricity will be added to the national grid by the year end.
Published in: The Daily Star, June 14, 2009
