Work hardly got any focus
The proposed budget must have had considerably more focused indications on the recovery of jobs dropped directly and indirectly for the pandemic alongside the generation of new ones, according to a respected business chamber.
The budget must have also focused extra on the retention of existing jobs in the labour market, said the Metropolitan Chamber of Commerce and Industry (MCCI) in its reaction on the proposed cover fiscal 2020-21.
The chamber appreciated the priority the finance minister devote allocations for agriculture, food security and healthcare and expansion of the coverage of interpersonal safety net programmes.
The MCCI also underscored the necessity for measures to create livelihood opportunities for expatriate Bangladeshis who have been forced to come back from abroad. Producing the workforce experienced and low-skilled is significant, the chamber said.
Unfortunately, in an emergency, the weaknesses in governance and operations capacities have already been bluntly brought forward, specifically in the healthcare sector.
Fiscal management will be a challenging job for the government due to a slowdown in business for the pandemic.
Revenue mobilisation will also be a intimidating task, given the many tax concessions and administrative forbearance that will have to be permitted to individuals and establishments in these very hard times.
Ultimately, taxes compliant enterprises will probably face severe pressure from the tax authority, the MCCI said, advocating for structural reforms in the taxes administration.
In light of the disruptions already caused to the economy and practical further more disruptions, the budget deficit risk turning out to be higher than what was targeted.
Tightening of the financial operations will yield a significant amount in cost savings if pointless over-spending, wastage and different leakages of funds could be stopped.
The MCCI also said an ambitious income target may also distract the government's attention from trying to acquire as much low-cost funds as possible from multilateral and bilateral production partners or pursuing impressive solutions such as the issuance of bonds.
The chamber strongly urged the federal government to use its diplomatic strength to pursue every potential way to obtain funding being made available internationally for coronavirus-affected countries to lessen pressure on domestic resource mobilisation and keep carefully the budget deficit duly funded.
Bank borrowing should be very carefully implemented in order that the impact of crowding away does not even more depreciate the already historically low individual sector credit growth.
The finance minister could find it tricky to meet the bank borrowing target unless there is satisfactory money supply in the machine.
It should be recognised that banking institutions would bear a significant burden in rolling out the Tk 101,117 crore-stimulus packages in addition to a possible uptick in default loans due to genuine financial difficulties due to the pandemic.
Bangladesh Bank should function closely with banking institutions, some non-bank financial institutions and effective non-governmental organisations along with other stakeholders to make sure that the allocated cash reach the hands of the cottage, micro and tiny enterprises, for which the current regulations are too cumbersome to comply with.
The chamber appreciated the allocation of Tk 205,145 crore for fiscal 2020-21's gross annual development programme (ADP).
It really is 1.20 per cent higher than the original allocation for the current fiscal year (Tk 202,721 crore) and in addition 6.34 % greater than the revised ADP (Tk 192,921 crore).
The MCCI appreciated the reduction in the corporate tax rate for non-listed businesses from 35 % to 32.50 per cent and said it had been the first move around in the right direction.
The large corporate tax rates for non-listed companies, which will make up the bulk of corporate entities, coupled with the tax on dividends, would make Bangladesh an unattractive business vacation spot compared with neighbours in the region.
"We trust that over another several years, this trend to lessen the organization tax will continue."
The proposed budget, on the other hand, kept the organization tax rate unchanged at 25 % for publicly traded companies.
The MCCI expressed deep concerns about allowing the indiscriminate opportunity of whitening black funds by paying only 10 % tax.
"We have observed in days gone by that such prospects to whiten dark-colored money have certainly not yielded much results while unnecessarily raising queries about the probity of our personal and accounting practices," said Nihad Kabir, president of the MCCI, on the statement.
The cost-benefit analysis will show an increased cost and minimal benefit. This will very seriously discourage compliant taxpayers and, actually, be seen as though to be penalising them.
If at all, it will only have been permitted to those whose income is from legal resources but for some causes remained undisclosed.
Again, the opportunity must have been given to investment in particular sectors simply such as for work creation and boosting social safety net, invention and technology transfer.
Allowing the access of black money into the stock market might start new problems for an already weak capital market place.
More importantly, allowing deposit of such funds into lender accounts may bring Bangladesh's banks into contravention of overseas money laundering regulations and norms, thereby protecting against them from getting together with international banks, which is extremely detrimental to the economy.
The deposit of such funds into bank accounts without the explanation shouldn't be permitted, the country's oldest chamber added.
