Bangladesh has to pay close attention to its macroeconomic management for attracting more and new foreign direct investment (FDI) from countries, including Japan, the Japanese Ambassador to Bangladesh said on Wednesday.
Mr IWAMA Kiminori pointed out key challenges like cumbersome approval procedures, delays in customs clearance and restrictions on customs duties, and complexities in sending remittances abroad from Bangladesh.
"In particular, delays in letter of credit (L/C) payments are often encountered in Bangladesh, which increases the cost and time of companies, and thus require immediate action," he added.
The Japanese Ambassador raised the concerns at a seminar on the proposed national budget for fiscal year 2023-24, focusing on "Investment Prospects & Key Tax Proposals Highlights with Business Impact' at a city hotel.
Japan Bangladesh Chamber of Commerce and Industry (JBCCI) organised the seminar, supported by Japan External Trade Organisation (JETRO) Dhaka Office and powered by KOBELCO and Howlader Maria & Co. Chartered Accountants (HmAC).
Dr Muhammad Abdul Mazid, former chairman to the National Board of Revenue (NBR), delivered the introductory speech while JBCCI President Myungho Lee delivered the welcome speech in the programme.
Ms Maria Howlader, Chief Executive Officer of HmAC and director of JBCCI, made the keynote presentation on changes in the income tax, VAT and customs measures in the proposed budget and its impact on the businesses.
Dr Selim Raihan, Professor of Department of Economics, University of Dhaka and Executive Director of SANEM, gave a presentation on 'Macroeconomic Perspective and Challenges'.
Syed Samiul Huq, director of Japan Solartech Bangladesh Ltd. and director of JBCCI, moderated a panel discussion.
Yuji Ando, JETRO country representative and past president of JBCCI, Dr Zahid Hossain, former principal economist of Asian Development Bank (ADB), GM Khurshid Alam, former private sector specialist of the World Bank, Md Aminur Rahman, former income tax member of the NBR and Md Humayun Kabir, council member and past president of the Institute of Chartered Accountants of Bangladesh (ICAB) were the panel discussants.
Dr Abdul Mazid said the sudden imposition of taxes jeopardised the planning of investors, discouraging them to go for further investment.
The tax measures should not distort the economic activities, investment or other productive activities, he added.
While presenting the keynote paper, Ms Maria Howlader said the proposed tax measures in the budget may leave adverse impacts on some industries including tobacco, cement, software, cable and elevator.
Dr Selim Raihan said the rising debt-to-GDP ratio is a concern and the government has to manage it judiciously through ensuring effective use of the resources.
He said the inflation increased to 10 per cent but it feels like 50 per cent, considering the impact on common people.
Japanese Ambassador Kiminori said a reduction of the reliance on customs duties in the tax revenue collection is extremely essential, not only from the viewpoint of formulation of a sound budget, but also decreasing the burden on the business community.
Especially since 2022, after the Russian invasion of Ukraine, the foreign reserves of Bangladesh are falling along with other challenges, he said.
"The world businesses, including Japan, are closely watching how Bangladesh will overcome this difficult situation and recover from the macroeconomic challenges."
He stressed the need for tax reform to improve revenue collection by breaking away from dependence on indirect taxes, and recovering foreign reserves and containing inflation.
Mentioning Japan's assurance for budgetary support as pledged by the Japanese Prime Minister to the Bangladesh PM in April last, he said that both the countries are currently working hard to make necessary arrangements.
"….I cannot say concrete dates or figures, but I hope optimistically that the final decision will be made in due course," he said.
He expressed the hope that the proposed Economic Partnership Agreement (EPA) between Japan and Bangladesh will be accomplished before Bangladesh graduates to the middle-income country status so that the investors could enjoy existing privileges on trade and investment.
He said that it is important to implement the budget which the government has framed in a challenging situation.
Anwar Shahid, Chief Executive of Mas Consultants and Secretary General of JBCCI, delivered the closing remarks at the seminar.
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