Business leaders and Finance and Planning Adviser Mirza Azizul Islam Saturday took opposing stands on the liquidity situation of the country's commercial banks.
Business leaders alleged that liquidity crisis in banking sector was preventing them from investing in new projects while the finance minister dismissed the allegation saying that banks had more than Tk. 120 billion in idle funds.
Expressing concern at the prevailing shortage of liquidity in the banking system, the leader of the country's apex trade body stressed the need for carrying out a study on whether or not such a crisis was the result of a large scale hoarding of currency notes of Tk 500 denomination.
"Banks are now unable to fund our investment projects due to their liquidity shortfall. And the Bangladesh Bank (BB) should check whether large scale hoarding of 500-taka notes has been taking place at certain levels, especially in the border areas," President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Annisul Haq said.
The FBCCI leader was speaking at a 'post-budget roundtable discussion', organised by the Economic Reporters' Forum at the National Press Club in the city with the ERF President Nazmul Ahsan in the chair.
Mr. Annisul also observed that the government's enhanced volume of borrowing from the banking system for financing its nearly Tk 300-billion deficit budget for the fiscal year 2008-09 would further limit the private sector's access to credit.
Finance Adviser Mirza Azizul Islam was also present at the discussion as the chief guest, which was also participated by representatives from the country's leading trade bodies and Chairman of Board of Revenue (NBR) Muhammad Abdul Mazid.
Diferring with the FBCCI President's observation that banks are suffering from fund shortfalls, the finance adviser said: "I don't see any reason behind such crisis as excess liquidity amounting to over Tk 120-billion remains idle with the country's banking systems."
Dr. Azizul Islam, however, advised the entrepreneurs to raise funds from the capital market for financing their new projects if there was any shortfall in bank liquidity.
About the tax-holiday facility, the finance adviser said new industries will be deprived of the fiscal benefit if the government continues to provide the same to the existing ones for too long.
"Special privilege for industries cannot be extended for an indefinite period," said the adviser.
"No budget could satisfy all," he said, adding the nature of demands that are made by various stakeholders is at times contradictory.
The government has prepared the FY 2008-09 budget, taking some major issues like mobilisation of revenue earnings, promotion of local industries, ensuring food security and widening of social safety-net into consideration.
Speaking on the occasion, most of the business leaders observed that the prevailing scarcity of electricity and natural gas was badly affecting the growth of local industries. They said the government should have taken necessary steps to resolve the problem for the sake of boosting the country's economic development through generating more employment.
President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Anwar-UI-Alam Chowdhury Parvez stressed the need for continuation of the tax holiday and cash subsidy facilities for helping the local industries compete with the global market.
Mentioning that the local textile sector still lacks adequate skilled manpower, the BGMEA leader urged the government to build a private-public partnership for the development of quality human resources for the sector.
President of the Real Estate and Housing Association of Bangladesh (REHAB) suggested that the government should reduce the existing apartment registration fee to 5.0 per cent from the existing 16.5 per cent to help the middle and lower middle classes buy their own apartment.
Golam Dostagir Gazi, Chairman of the Gazi Group, demanded of the government to reduce the existing duty on imported raw materials in order to help the locally manufactured plastic products compete with the foreign goods.
Amjad Khan Chowdhury of the PRAN Group urged the government to provide necessary fiscal incentive to the local agriculture and dairy sub-sectors for creating more employment and ensuring the country's food security.
Secretary General of the Bangladesh Association of Pharmaceutical Industry said that the government should provide necessary fiscal support so that the local entrepreneurs are encouraged to set up active pharmaceuticals ingredients (API) units in the country.
Sabbir Yousuf of the Bangladesh Jute Spinners Association (BJSA) also sought necessary steps from the government for early release of working capital from banks so that the local jute industries could buy raw jute in time.
General Secretary of Breeders Association of Bangladesh also demanded of the government to ensure low cost fund for the local poultry industry for helping recoup the losses faced by them because of deadly bird-flu virus.
