Wholesale protection of local industries no more

FE Team | Published: May 17, 2014 00:00:00 | Updated: May 16, 2014 22:36:12

FE Report     
Finance Minister AMA Muhith Friday said the government would avoid wholesale protection of the local industries as it needs enhanced revenue to cope with growing expenditure.
There are now 1400 types of tax exemption and the number will be reduced to only 140, the finance minister said.
"Government's revenue has to be increased in line with its increased expenditure," the finance minister said while speaking at a pre-budget discussion organised by the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) jointly with Maasranga TV channel.
The finance minister said the country's private investment declined drastically mainly due to 'destruction of infrastructures.'
"It is true that private sector investment did not grow as expected and it was due to destruction of infrastructure [by certain quarters],"
Mr. Muhith said: "How investors will invest in the country when there are no infrastructural facilities like electricity and gas?"
The finance minister said the government increased the public investment to restore the infrastructure in the country. He said the investors were attracted to invest in the country but they were refraining from doing so due to the political turbulence last year.
"As normal outcome of terrorist acts, the investors fled away," the finance minister said.
He said killings during the period of political turbulence eroded confidence of the investors.
He however said the public sector lacked efficiency to distribute gas and power.
He said the government would give the highest priority to the implementation of the economic zones in the next budget.
He said: "We've failed to implement the economic zones but this year we will give our best effort to implement it,"
On the other hand, former commerce minister Amir Khosru Mahmud Chowdhury said the government raised the volume of public investment to make up for the slow private investment.
He said public investment was always associated with corruption. "For this reason, this type of investment did not do anything good for the economy," Mr. Khosru said.
He said the economy did not grow as expected as there was no private investment for long.
He said political terrorism or state terrorism was the main reason behind the poor private investment, slow economic growth.
Former adviser to caretaker government Mirza Azizul Islam said the highest borrowing from the banking sector led to the rise in the rate of inflation.
He said the government borrowed the highest part in the fiscal year 2010-11 from the banking sector and it led to the highest inflation in 2011-12 fiscal year.
He suggested borrowing more from the external sources.
Mr. Islam was critical of the government's move to fix a minimum income tax threshold for the next 10 years.
 "It is not realistic without considering the inflationary pressure," Mr. Islam said.
"Fixation of minimum tax threshold for ten years at a time is outrageous," he said.
Moazzem Hossain, editor of the Financial Express (FE), observed the corporate tax in the country was one of the highest in South Asia saying the rate should be rationalised.
He said the government should devise ways to mobilise revenue from the shadow economic activities.
He said there were investments coming from the shadow economy.
Syed Manzur Elahi, a renowned industrialist, said the private investment was not growing mainly due to political reason.
Mr Elahi, chairman of Apex Group, said local investment was very much important in the context of attracting foreign investment.
He said the crisis of land was also one of the key reasons for slow investment.
Mr Elahi, who was an adviser to the caretaker government, however, expressed the hope that the next budget would be investment-friendly.
GM Quader, presidium member of Jatiya Party said political instability was the main reason for slow investment.
He said investors want to see political stability before making investment.
 "If 10 people come to me while I visit my hometown, nine of them want jobs," he said.
He said jobs would be created only after big investments.
Tapan Chowdhury, chairman of Square Group, said there was a lack of confidence among the investors and it was the main reason for slow private investments.
He however stressed a level playing field for business groups.
 "Loan defaulters are getting benefit always. And this is affecting investment also," he noted.