Some business leaders and experts have opposed the proposed move in the budget for the next fiscal to allow investment of legally earned undisclosed money in purchase of land and flats saying that it would push up land and flat prices further.
They said the proposed facility, if given finally, would take the prices of land and flats beyond the reach of the people dependent on honest income.
Bangladesh could not utilise foreign investment proposals worth several billion US dollars in the last one year only for inability to provide land
under this circumstances, the provision in the proposed budget would deteriorate the situation," Syed Ershad Ahmed, President of Foreign Investors' Chamber of Commerce and Industry (FICCI) told the FE.
Opposing the provision only for the real estate sector, he said the government should allow undisclosed money in the productive sectors, for setting up industries; rather than in unproductive sectors like real estate.
"We, in general, are against allowing black money in business with payment of only 10 per cent penalty. Real and honest businessmen are discouraged by such provisions," he said.
"Yet the government has allowed black money in the real estate sector. However the penalty should be at least 25 per cent instead of 10 per cent," he said.
Finance Minister AMA Muhith tabled the budget for the fiscal year (FY) 2013-14 in Parliament on June 6, where he proposed to allow investment of undisclosed yet legally earned money in the real estate and housing sector.
At a press conference later on June 07, Muhith defended the move saying that the scope for whitening undisclosed income was a regular phenomenon in Bangladesh.
A recent study titled "Urban Bangladesh: Challenges of transition," conducted by the Power and Participation Research Centre (PPRC) said for most Dhaka dwellers the prospect of being able to buy a house appears to be the poorest among the South Asian cities as the price-income ratio here is 5:1 or more.
Talking to the FE, Dr Mustafa K Mujeri, Director General of Bangladesh Institute of Development Studies (BIDS), said the facility certainly would deteriorate the land and flat price situation.
"The already skyrocketing prices of land would rise further and it could even be impossible for some people to get a piece of land when needed. On the other hand, some people would be able to buy most of the plots and flats," he said.
Mr Mujeri said, "In fact, I am against the provision for whitening black money. If the government allows this, then it should be for some productive or employment generating sectors such as industry, hospital, university etc where most people can be benefited."
However, Policy Research Institute Executive (PRI) Director Ahsan H Mansur felt that there would not be much investment or the scenario would not change radically as a large part of the undisclosed money have already been invested in land and flats.
"The prices of land and flats have already been out of the reach of most of the people of the country. The situation unlikely to worsen further," he said adding that it would be better if the penal tax is fixed at more than 10 per cent.
DCCI (Dhaka Chamber of Commerce and Industry) President Sabur Khan wants the government to allow the undisclosed money in the employment generating, industrial and manufacturing sectors.
He does not support allowing investment of undisclosed money in the real estate sector.
"It seems there would be no new land for setting up industry in the future if the facility continues," he added.
Source: The Financial Express
