Bangladesh
5 years ago

Five more sectors likely to get incentives under PPP

Picture used for illustrative purpose only — Collected
Picture used for illustrative purpose only — Collected

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Projects under five more sectors are likely to be made eligible for government incentives under the public-private partnership (PPP) initiative, officials said.

The finance minister has recently asked the authority concerned to take necessary steps in response to a proposal put forward by the PPP Authority (PPPA) under the Prime Minister's Office (PMO) in this regard.

"It's a good proposal. What need to be done should be done with regard to the proposal," Finance Minister AMA Muhith wrote on the proposal.

The new sectors including, urban development, utilities, multi-modal transport hub, logistics and health, may get incentives like existing 14 other sectors.

Currently, companies engaged in the implementation of PPP projects enjoy various incentives, including tax waivers.

To this effect, the income-tax wing of the NBR issued three separate statutory regulatory orders (SROs) last year.

Tax exemption would be valid on capital gains derived from transfer of share capital of the companies, royalty, technical know-how and technical-assistance fees for foreign technicians.

The waiver has been offered to PPP projects, including national highways or expressways and related service roads, flyovers, elevated and at-grade expressways, river-bridges, tunnels, river ports, seaports, airports, subways, monorails, railways, bus terminals, bus depots and elderly care homes.

The companies will be able to enjoy tax-benefit on capital gains derived from transfer of share capital raised for operation of any PPP project in the first 10 years of commercial operation.

Royalty, technical know-how and technical-assistance fees to be paid by the companies for operation of the PPP projects will also be tax-free for 10 years from the date of commercial operation of the company.

According to the SROs, foreign technicians in the PPP projects will enjoy income-tax waiver at the rate of 50 per cent of total applicable tax for three years of his/her appointment.

When contacted, Chief Executive Officer of the Public-Private Partnership Authority Syed Afsor H. Uddin said the National Board of Revenue (NBR) offered various incentives to the companies that would implement the projects under PPP. But some important sectors were not included in the incentives basket then.

"We have made a proposal for inclusion of new five sectors for getting incentives facility like existing 14 categories."

He, however, said there is no integrated township and also multi-modal transport hub in the country. "These are very important for the country."

The government has enacted the Public-Private Partnership Act-2015 to provide legal framework for creation of PPPs by involving the private sector participation along with the public sector and attracting local and foreign investments in different sectors as well as other service delivery, according to the draft guidelines.

Currently, a total of 52 projects are being implemented in various sectors including railway, telecommunication and power under the PPP in the country, according to the PPPA.

The government earmarks Tk 20-30 billion for PPP projects every fiscal year. But funds are not used fully due to lack of private sector investors.

In his 2009 budget when the PPP initiative was introduced, the finance minister said the PPP initiatives were taken as the country needed Tk 390 billion each year for infrastructure development.

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