Provide soft loans to importers, cut duties

A leading trade body on Saturday called for providing loan facilities to the importers of daily essentials at easy terms and reducing import duties for holding back the rising rate of inflation.

The Dhaka Chamber of Commerce and Industry (DCCI) put forward the demand amid rising inflation rate in the country that stood at 6.05 per cent in December last.

It also urged the authorities concerned to lower the cost of doing business, remove discriminatory policies between local and foreign investors and frame a national roadmap for foreign investment.

Its other demands included rationalising corporate tax structure, equipping economic zones and, readying and diversifying sectors for attracting foreign direct investment (FDI).

The demands and suggestions came at the chamber's biannual programme styled "Economic State and Future outlook of Bangladesh Economy: Private Sector Perspective". DCCI President Rizwan Rahman presented a keynote paper on the issue.

Bangladesh Bank Governor Fazle Kabir joined the virtual programme as the chief guest while FBCCI President Md. Jashim Uddin was the special guest.

In his presentation, Mr Rizwan Rahman suggested going for full automation of tax, VAT, customs assessment, return and credit for ensuring revenue growth.

He said continuation of introducing SUKUK bond and other securitised assets in the local market and sovereign bonds for international borrowing would help reduce dependence on banking sector-led borrowing.

He stressed the need for a central bonded warehouse facility and a separate food industrial zone for overall development of the agro-and agro-processing sector.

He said that about 7.8 million CMSMEs in Bangladesh constitute over 97 per cent of the total industrial units and contribute 45 per cent to manufacturing value addition while the contribution of SMEs is around 25 per cent to the GDP (Gross Domestic Product).

"For this sector, collateral-free and cash flow-based loans are needed," the DCCI noted, stressing the need for establishing a dedicated SME bank.

The DCCI said that the unemployment rate among the educated population is huge and stressed on skills development and industry-academia collaboration.

BB Governor Fazle Kabir said the GDP and total size of the economy have increased which is a good sign and reflects that the country is on board.

Regarding the financial sector, he said the government has declared a stimulus package at the right time and there are no liquidity shortages in the banks right now.

He also informed that the central bank is closely monitoring the inflationary pressure on the economy.

In terms of export diversification, he reiterated that light engineering, jute, leather, ICT and pharmaceutical sectors are doing better beside the RMG sector. "We need to nurture these sectors for better diversification."

The Governor said that the EDF facilities have been widened considering the export competitiveness. Moreover, few of the mega projects will be accomplished soon and that will help expedite FDI inflow, he mentioned.

He also called upon all to enhance soft and hard skills development of our manpower considering the challenges of the LDC graduation.

FBCCI President Md. Jashim Uddin said that the import cost of commodities has increased due to price hike in the international market due to disruption in the global supply chain.

He suggested redesigning the duty structure for the time being to control inflation.

He termed agro-based sector as a potential one and suggested incentivising the producers and helping develop their skills with modern equipment and technology.

He said that the energy price hike at this moment will affect the inflation as the country is still in the pandemic situation.

He noted that the CMSMEs are the lifeline of the economy and the non-performing loans (NPLs) in the CMSMEs sector are relatively lower than the large and medium sectors.

He also noted that the next budget should give priority to the private sector, issues related to LDC graduation, revenue collection, ADP, increasing tax net, etc.

Taking part in the discussion, Mr. Naser Ezaz Bijoy, president at the FICCI (Foreign Investors' Chamber of Commerce and Industry), said the real estate sector is a large one which has various positive implications on other related sectors.

"If we can securitize the portfolio through issuing bonds, we will be able to reduce the rate of defaults," he said.

He also stressed on improving the business conditions not only for the foreign investors, but also for the domestic ones.

He stressed on the predictability of regulations and ASEAN integration of Bangladesh that, he added, could play a vital role for attracting foreign investors.

Md. Saiful Islam, president at the MCCI (Metropolitan Chamber and Commerce and Industry), said Bangladesh is a success story in the South Asia due to having its economic strength.

Stimulus package announced by the government was the game changer, he mentioned.

"Our exports increased by 28 per cent and if this trend continues, by the end of this year, it will be hovering around US$50 billion," he mentioned.

He said that due to lack of enriched research and development work, Bangladesh is deprived of proper diversification of products.

He also said that the CETP (Central Effluent Treatment Plant) constructed in the Savar Tannery Estate is not an international standard one and it may cause the industry to become non-compliant.

"This is a national problem. So, it should be solved soon to make it workable."

Dr. Zaidi Sattar, chairman at the Policy Research Institute of Bangladesh (PRI), said Bangladesh is a highly integrated market and stressed on the development of the domestic market.

He also emphasised on strengthening export of services and diversification of products.

He, however, said that Bangladesh in recent days is doing much better in diversification.

In the last 20-30 years, Bangladesh's economy has become more integrated with the global economy.

DCCI Senior Vice President Arman Haque gave the introductory remarks.

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