Budget execution is what matters in the end: AmCham
The central bank must work with govt and policymakers to tame inflation, the chamber hopes
FE REPORT | Friday, 7 June 2024
The American Chamber of Commerce in Bangladesh (AmCham) has said it believes budget execution is what matters in the end and should be measured for quantity and quality.
Responding to the proposed budget for the fiscal year 2024-25, the bilateral chamber body observed that the budget formulation and implementation should be handled by separate entities to maintain the sanctity and address the key challenges that include declining foreign exchange reserves, the balance of payment deficit, energy sector demand-supply imbalances and the struggling banking sector.
The chamber said it also believes the central bank must work together with the government and policymakers to implement effective measures to control inflation and a stabilise macroeconomy.
Addressing these requires a holistic approach that entails monetary policy adjustment, fiscal discipline, promoting FDI and exports, and fostering long-term structural changes with stakeholder engagement and collaboration, it viewed.
It also said accelerating foreign-funded projects and focusing primarily on own-funded projects may elevate pressure on the foreign exchange reserves.
The chamber recommended policy reforms and more allocation of funds for the SME sector.
It also recommended revising individuals' tax-free income limits in response to rising inflation.
The National Board of Revenue (NBR) proposed a 15% standard VAT rate for the fiscal year 2024-25, potentially impacting imported goods.
AmCham said it is crucial to regulate this to exempt essential products. Foreign investors would be affected as turnover tax and SD increased in a few sectors.
Extending the tax holiday for Bangladesh's ICT sector is poised to attract investors and fuel further growth, it said.
It also said the sudden reduction in existing duty and tax facilities by imposing a 1 per cent duty on capital machinery, parts, etc imported into EPZs and high-tech parks could prompt foreign investors to reconsider their commitments, undermining their confidence and that of local investors.
AmCham expected expedited implementation of the policy so as to reap a competitive advantage during the post-LDC period.
"We should focus more on demographic dividend by developing potential human capital ensuring quality STEM and vocational education to enhance remittance by sending skilled manpower overseas," it said.