More focus needs to be given on sourcing funds from external sources, reducing dependency on bank borrowing, to mitigate the budget deficit, according to the experts and stakeholders.
Suggesting reduction of source tax for export oriented sectors to 0.25 per cent, they also said agriculture and agro processing industries need to be supported and remain functional with strong local-supply chain system to ensure low-cost food security.
They made the remarks at a Dhaka Chamber of Commerce & Industry (DCCI) webinar titled ‘Current State & Future Outlook of Bangladesh Economy’ on Saturday.
The DCCI President Shams Mahmud said due to COVID-19 impact, private investment slid down to 12.72 per cent in FY20 compared to 23.54 per cent in FY19. FDI inflow fell sharply.
“In that context, to seize the opportunity of investment relocation from China, Bangladesh needs to frame sector specific investment road-map with strategic action plans. Corporate tax needs to be rationalised as well”, he said.
Due to COVID-19 outbreak, the country’s trade sector got weakened. In FY20, total export was $33.67 billion which is 25.99 per cent less than export target and 16.93 per cent less than that of FY19.
In order to boost international trade, the DCCI president emphasised restoring GSP facility in USA, eliminating non-tariff barriers with partners through strong diplomatic initiatives, FTA and PTA with potential partners.
According to different international organisations, around 15-20 million people are at risk of being unemployed due to the pandemic, he pointed.
Thousands of migrants may lose their jobs and will repatriate to Bangladesh. To tackle the situation, Mahmud emphasised ensuring stimulus packages to the labour intensive industries and informal sector.
Moreover, through re-skilling and up-skilling, unemployed migrants can be employed in the agriculture and other local industries.
Due to COVID-19, international buyers cancelled work order of $3.18 billion from Bangladesh. In FY20, RMG export declined by 18.12 per cent to $27.95 billion which was $34.13 billion in FY19.
On this ground, Mr Shams recommended reducing source tax from 0.5 per cent to 0.25 per cent.
Besides, cash incentives need to be rationalised and given in terms of value addition.
Chairman, Policy Exchange Dr. M. Masrur Reaz emphasised on survival, resilience and revival for economic recovery. Global Demand and supply have declined due to COVID-19.
He suggested taking short and mid-term strategy to bring economy back from the fallout of the pandemic.
Reaz also urged to reduce corporate tax, turn-over tax, modernise Companies Act, form policy considering coronavirus outbreak, and create a vibrant bond market for long term financing.
Hossain Khaled, managing director, Anwar Group of Industries and former president, DCCI said government’s high bank borrowing may slow down credit flow to the private sector.
He also said that we should take more green projects. “We have surplus electricity now, introducing electric vehicles may reduce extensive fuel dependency”.
Abul Kasem Khan, chairman, BUILD & former president, DCCI said the prime focus now should be how to retain economy to full pace.
He also urged for a regionally competitive tax structure for better performance of businesses.
Emphasising stimulating the informal sector as well MSMEs ensuring stimulus packages, he said “We need to be connected with ASEAN and the FTAs should be effective”.
Investment for research and development in industries should be tax free, Khan mentioned.
Asif Ibrahim, chairman, Chittagong Stock Exchange Ltd. & former president, DCCI said in Bangladesh GDP-market capitalisation is mere 11.1 per cent which is not up to the expected level, whereas it is quite high in our neighbouring countries.
“For long term project financing, an effective bond market will be a key player”, he suggested.
Mr Asif also requested all commercial banks to inject at least Tk 2.0 billion to the stock market complying with the directives of Bangladesh Bank.
“But we have shortages of good IPOs in the market. BSEC, DSE and CSE should strengthen their monitoring”, he said.
In the open discussion session DCCI’s former president RM Khan said leather sector is a promising sector so we should promote it.
MH Rahman, former president, DCCI, said due to the pandemic, unemployment will affect the economy and hamper demand trend.
Aftab-ul Islam, former president, DCCI, stressed widening tax net and introducing bond market.
Benajir Ahmed, former president, DCCI, said that service sector and MSMEs are largely affected by COVID-19. 15 million people will lose their jobs.
He strongly recommended automation of licensing renewal system.
“In this crisis moment, we should point focus on reducing cost of doing business for our own competitiveness”.
Sayeeful Islam, former president, DCCI said that we should get the geo-political advantages.
“We need to emphasise re-skilling and up-skilling of returnee migrant”.
Sabur Khan, former president, DCCI, said COVID-19 has given us an opportunity to do better in technological advancement.
Planning Minister MA Mannan said that all the sectors should be compliant like RMG sector. Good governance is a fruit of long term output, he added.
He said government is giving priority to the agriculture sector. To get observer status in the ASEAN, government is working, he informed.
“In line with RMG and textile a new avenue, medical textile has been emerged worldwide”.
He called upon the private sector to grab this opportunities.
For infrastructure development, he also invited private sector to come forward and government will facilitate them.
DCCI Senior Vice President NKA Mobin FCA, FCS and Vice President Mohammad Bashirduddin were also present on the occasion.