Daffodil International University
Faculties and Departments => Business Administration => Business & Entrepreneurship => BBA Discussion Forum => Topic started by: Rozina Akter on June 10, 2014, 11:32:12 AM
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Finance Minister AMA Muhith has largely been true to his words. In one of his pre-budget discussions, he said the private sector has been contributing about 80 per cent to the country's gross domestic product (GDP). That is why he has proposed new fiscal measures for its further buoyancy. He has done this to a fair extent. And the response from different chambers of commerce and industry to the proposed budget for the fiscal year (FY) 2014-15 has been more or less quite positive. The chambers, which represent the economic actors in the private sector, have welcomed the proposed budget for the next fiscal as business-friendly. The proposed fiscal measures indicate that the finance minister has been quite keen on facilitating a faster growth of industry leading to its greater contribution to the GDP.
Domestic industries have thus been promised to be given special supportive measures this time in the new budget in a more pronounced manner than before to ensure a level-playing field for them. Duties on import of several raw materials used in local industries are therefore to be reduced and those on many finished products increased. The budget has focused on shifting of factories from cities and proposed extended tax holiday facility for the relocated units. The finance minister also hinted at the possibility of reducing the lending rates and increasing credit flow to support new investment in the private sector. Duties on import of raw materials as well as finished goods where paper, glass, ceramic, rubber, pharmaceutical, manufacturing of bus tyres, bicycle tubes, liquefied petroleum gas (LPG) cylinders, furniture, paint, electric, plastic etc., are concerned are either to be lowered or increased, depending on sector-specific needs and circumstances. The proposed new fiscal measures are quite pro-active about promoting private-sector growth. Particularly notable is the budget's stated goals about harnessing the growth potential of some priority industrial sectors where Bangladesh does otherwise enjoy some comparative advantage.
The new fiscal proposals to lower rates of duty on imported equipment in order to reduce the fire and other hazards at workplaces are purported to making the readymade garment industry responsive to the global clients' demand for safety of factory workers. Likewise, the proposed imposition of surcharge of 1.0 per cent on industrial units which will fail to set up effluent treatment plant (ETP), will be considered environment-friendly.
However, the biggest challenge for the finance minister in the forthcoming fiscal will be in the area of instilling a sense of confidence among private investors, both actual and potential ones. If that happens, they will then come forward to make investments in different productive sectors. Without investment rising beyond 30 per cent, the aim of attaining the targeted middle-income status for Bangladesh will only remain a dream.
Mere duty reductions will not, however, help as the private sector will not be interested to make investment in new ventures in a difficult business environment. Difficulties here relate to fears about policy instability, deteriorating law and order situation, lax enforcement of property rights, political uncertainty (on real or perceived grounds), high costs of doing business, persistence of infrastructural deficit, malfunctioning institutions etc. All these factors are governance-related issues. Such issues will need to be addressed effectively by the political leadership at the highest level. Without this, the proposed national budget and new fiscal measures will not be of much consequence to deal with most of them in a befitting manner, matching the practical needs, requirements and expectations of the investors.
Source: The financial express
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Informative sharing. Thank you :)