The Financial Express

An opportunity of integration

| Updated: October 19, 2017 09:27:56

An opportunity of integration

Ambitious budgets have been a major feature of the government over the past eight years and the ninth one promises to be even more so. These have been essentially achieved, despite the usual scaling down of Annual Development Programme (ADP) for inefficient utilisation of funds. The scramble for pouring in money towards the end of the fiscal year (FY) isn't a good practice and frowned on by all and sundry and raises suspicion of significant leakage for all the wrong reasons. Half-way through this year, donor-pledged funds haven't been used as effectively compared to domestic resources (read taxation). The Finance Minister isn't mincing words in preparing for a whopping Tk 420 billion outlay.
Regulation, taxation and infrastructure are the three themes harped on by businesses to turbo-speed the economy and in the penultimate year to general elections, a business friendly integrated budget could be considered the final thrust towards achieving the Vision 2021. Businesses have always insisted on a 'certainty' of environment to aid their planning and forecasting process. Multiple-year import and export policies based on requirements of consumers and revenue are difficult but not unachievable. The National Board of Revenue (NBR) has, essentially bent backwards to achieve targets that keep getting stretched but sadly the complaints of harassment and graft are rising as well. A further drive to rake in more of the informal economy takings into the mainstream and concentration on small increments in volume transactions should reduce the impact on consumers. Instead of a straight 22 per cent gas price hike, there could have been less ire in half yearly adjustments of five per cent, in line with inflation. But big budgets need big financing and the massive subsidies have had to be addressed. A huge chunk of change from charging consumers more even when oil prices are down, is available for utilisation.
As banks clamour for interest rate revision on savings instruments, and the government responds, it works in the opposite direction to introduce sovereign bonds to bring in further liquidity. Economists don't like the concept of debt becoming unsustainable, given that the forex reserves could be used for development as well. With liquidity flush, the concept of further debt for liquidity doesn't make too much sense. It is in the integration where the real issue lies.
The government has a pretty good idea of its FY 2017-18 targets in line with the five-year plan. If it takes into consideration the main bottlenecks for businesses inclusive of labour costs, policies become smarter and regulation simpler. Especially in the garments sector a pivotal question will have to be asked quite soon. How much should the salaries and wages bill go up in the wake of static or declining prices and growing costs. Compliance costs don't come cheap but buyers emphasising on such investments must know the money has to come from profits or new investment that is worthwhile in terms of returns.
Each year, established companies earmark a portion of their cost increases for salary and wages increments. It's because something similar isn't in place for the garments industries that workers ask for such big increases. Starting pay at present is around Tk 5,900 even for a freshman. According to one established owner, overtime and others can take it up to Tk 9,000. A section of worker representatives are gunning for Tk 15,000 to be the minimum wage. In dollar terms that's nearly $ 200. Simply calculated cost of living has never really been looked at in setting wages, whatever the sector is. No one asks or really wants to know how the gap is filled, though everyone acknowledges that a gap exists and grows.
Integration is why city corporation chiefs can't implement what are needed, why there's inefficiency in spending and why, in spite of impressive gross domestic product (GDP) growth the general citizen finds it so difficult to make both ends meet.
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