Budget for FY 2010 and issues waiting long for addressing
Thursday, 11 June 2009
Karar Mahmudul Hassan
"THE budget is an important medium to implement the ruling party's electoral pledges since the government implements all its programmes through the budget" said Speaker Abdul Hamid Advocate in his inaugural address on June 04, 2009 to the second session of the 9th Parliament of Bangladesh. Mentioning the main electoral pledges of the ruling party, he further said that checking the increasing prices of essentials, ensuring economic stability amid the global recession, taking effective steps to fight corruption, establishing good governance and reduction of poverty, establishment of digital Bangladesh, are among the top electoral pledges of the party in power, the speaker added.
The budget for the fiscal year (FY) 2009-2010 is likely to be placed to the Parliament today (June 11, 2009), for perusal, consideration, examination, suggestions of the Parliament Members and possibly it will be passed on the last day of current FY. It is not the size of the budget, particularly the Development Budget - which is to be the main focus of the nation/country people, but the main concern is as to how efficiently and effectively and timely the budget-allocated money will be utilised honestly -which is supposed to bring benefit to the people in general, facilitate economic emancipation, help business and industrial growth, agriculture development of the country and so on. But unfortunately, it is being observed for the last few years with concern that during first six months of each financial year, not even 20 per cent of the development budget could be utilised by the different government machinery (ministries, etc.) and it is also being observed with equal concern that during the last two months of each FY almost 50 to 60 per cent budget allocated money is shown utilised/spent by the concerned quarters of the government. Nowhere or in no country of the world including Myanmar or Nepal -- our next-door neighbours in the context of their respective population size and budget allocation, this poor nature of budget fund utilisation scenario can be made available. The nation, the tax payers - big and small -- do not know as to when and how this unfortunate, unwelcome, possibly unthinkable poor state of implementation status of development budget money, development projects etc., would see the ray of light for timely utilisation of funds for the country's common interests.
There are many financial giants, economists, analysts and even diplomats of different embassies and representatives of development partners stationed at Dhaka- who possess wide expertise, knowledge and capacity to give comments on the budget, its different facets, implementation mechanism etc. In the present write-up, this scribe will try to give more focus on fiscal and investment management system that exists in the country in particular -- with 'extracts' of news, comments, suggestions, diagnosis etc. to address different problematic economic (including investment /fiscal matters) issues along with suggestions as well, for efficient/effective improvement of those through overcoming the hurdles to utilising implementable mechanism as published in different newspapers of Dhaka during last few years, as newspapers are considered as the mirror of the society.
"The economic development of Bangladesh is substantially dependent on the sound fiscal management systems and their appropriate, efficient and timely application by both the Private and Public sector organisations. For many reasons, the Fiscal Management issues did not get appropriate and reasonable attention from the concerned quarters till in the recent past. The industry, commerce or business world has transited to an era of remarkable fast changes towards the free market economy with establishment of the WTO with effect from January 1, 1995. With this, the free economy has heralded in greater force, brought about new opportunities along with challenges as well, creating the requirement for a new and progressive set of laws, rules and regulations to govern trade, business, and industries. Recently an organisation(non-profit and non-political) named 'Centre for Sustainable National Development (CSND)' has emerged in the country with a view to creating awareness about the above scenario in both public and private sector key players, through organising seminars ,symposiums, workshops, consultations, dialogues with stakeholders including publication of subject based research articles in different newspapers, organising meetings with concerned high officials of NBR, Bangladesh Banks, Board of Investment, BEPZA, EPB, TCB, FBCCI, DCCI, MCCI, ICCI, Ministry of Finance, Ministry of Commerce, Ministry of Industry, Ministry of Law and Parliamentary Affairs and so on. CSND will also organise discussions with representatives of different business and industrial bodies associations and others mainly in the private sector and make liaison with different training institutes under the concerned Ministries. CSND will also look into the existing working and procedural arrangements of business activities pertaining to different trading houses, commercial and industrial organisations in the private sector and government /semi government organisations, corporations, authorities etc., and examine and evaluate them with the help and assistance of experts from both public and private sectors and then suggest appropriate reforms/revisions and improvements in the relevant Acts, Ordinances, Rules etc., as and where necessary from time to time.
In the process of the above specific jobs and activities, the CSND will also take initiatives to collect information on the existing hurdles, bottlenecks and complexities etc., relating to relevant fiscal and investment issues, along with reforms, improvements etc., made on the relevant fiscal matters during recent years in neighbouring countries, like India, Pakistan, Sri Lanka, Thailand, Malaysia etc., and then examine those for recommending application as and where necessary (in the Bangladesh context)to the government and other relevant bodies with follow up reminders at regular intervals."
l Sound Fiscal Management System and its appropriate application always play very crucial role in the national economy. Side by side, progressive industrialization and export growth are critical factors which can facilitate sustainable economic development of a country substantially. In the present globalization/free trade regime, domestic market of the local products could only survive on the competitive abilities of both private and public sector key players. But most of the industrial and commercial undertakings/entrepreneurship lack financial and organisational management and delivery capabilities for various reasons. Besides, existing rules & regulations plus procedures relating to setting up of industries and exporting commodities are still complicated, cumbersome and time consuming and most of the entrepreneurs are not equipped enough with the (fast changing) systems and practices which are adversely affecting this sector.
l In case of Bangladesh, due to many reasons which include almost continuous political turmoil, lawlessness, extortions of serious magnitude and grafts etc., almost all over the country which were found party suspended during 2007 and 2008, which unlawful activities are now seriously threatening different industrial and business sectors, garments sector in particular at increasing rate. The concerned machineries, law and order authority could not or did not give appropriate, effective and instant attention to address these kinds of anti-development crimes and non-development climate as well. And for this poor state of affairs, successive government's failure was no doubt paramount, but the responsibilities of the different commerce and industrial associations in the Private sector including banking sector operators, no doubt, were also substantial. Besides, lack of appropriate knowledge, ideas, expertise and proper understanding of fast changing fiscal and investment issues, the country's economic or fiscal backbone is yet to be put on sound and efficient footing. We have still a long way to go.
l Effective and planned endeavours are in process for forming a 'Think-Tank' within the CSND with distinguished persons (in service and retired,) belonging to both public and private sectors, along with academics and scholars, professionals, bureaucrats and others who possess wide and updated knowledge and expertise in fiscal and related fields and at the same time, who are capable to contribute effectively for equipping the CSND with their valuable, pragmatic, implementable and progressive suggestions/advice on fiscal, investment and related matters from time to time. The CSND has planned to make appropriate arrangements soon to create training facilities on different laws, rules & regulations, ordinances etc., pertaining to relevant fiscal, investment etc., matters of different organs of the government on daily, weekly, fortnightly and monthly basis. CSND will also conduct research, surveys, reviews on issues which are considered to be of vital importance to the private sector in particular including different other issues of public and national interests from the fiscal, commercial and business point of view.
During recent years, news on different economic and fiscal issues in Bangladesh context along with anomalies both in public and private sectors, were being published in different newspapers of the country almost regularly, sometimes with valuable and appropriate suggestions for addressing related hurdles standing on the way of smooth operational works in different fiscal and investment management sectors. The organisers of the CSND were meticulously going through these news items regularly for last two-three years and discussing among themselves on related issues along with possible and implementable solutions through some kind of institutionalised process. As newspapers are regarded as the mirror of a society, the organisers thought it more pertinent and as well to get overall scenario of the fiscal and economic condition of the country through perusal of the concerned news items etc. with careful attention A few news items on economic, industrial, commercial, trading and general fiscal issues, problems, complexities etc., relating to Bangladesh context published in different national dailies during last three or four years, are stated below (extracts) chronologically year-wise which speak for themselves about the urgency of taking initiatives in finding out some kind of institutional mechanism to address those issues with positive and pragmatic approach for getting acceptable redress through organised and progressive process.
Extracts from different newspapers, weeklies etc. of Bangladesh:
l "External indicators satisfactory, but problems exist in internal sector: Finance Adviser" captioned news item states: "Finance and Planning Ministry Advisor Mr. A B Mirzza Azizul Islam said 'most of the external economic indicators are at satisfactory level, but there are problems existing in the internal sector. Export, remittance and foreign currency reserve are in good shape. At the same time, there remain some problems in the internal sector like poor revenue growth, inflationary pressure and a higher trend in the public borrowing.' The Adviser further said, 'one of the main objectives of the coming national budget (2007-2008) would be to enhance the GDP ratio through expanding tax net instead of raising its rate. Simplification of tax payment procedures and reduction of discriminatory power of taxmen will also be high on reforms agenda in the coming budget" he added. The Financial Express - 20/04/2007.
l "Bangladesh needs to study market access promises" captioned news item was: "The permanent representative of Bangladesh to the WTO has said Bangladesh needs to conduct a study as to how it can reap benefit from the changed scenario following the resumption of Doha round of WTO talks. Developed countries are promising to wider market access, while some developing countries have come forward to allow a duty-free access of their markets to the least developed countries (LDCs). We need to analyze how we can utilise the promises." The Daily Star dated 20.04.07.
l "54 pc businesses still outside tax net: NBR" captioned news item published in newspaper states: The National Board of Revenue (NBR) said 54 per cent of the businesses surveyed have remained outside the tax net depriving the government of a large amount of revenues. The central tax survey zone of the board found this during its on-going drive to bring the professionals and their businesses under the tax net of the government. Eight survey teams, each comprising three members found 1761 business houses without having tax identification number (TIN) out of 3250 surveyed in the city until 17th April 2007. The drive began on March 29, 2007 aiming to bring all business houses and professionals under the tax net. The tax survey teams of the board are trying their best to bring the business houses under the tax net by motivating and creating awareness. NBR officials have been conducting a series of meetings with the shop owners of big shopping malls in the city's posh areas like Gulshan and Banani to motivate and create awareness among them for payment of tax. NBR officials have called upon the shop owners at meetings to remove the misconception about the taxmen and gave them survey forms for furnishing necessary information. The teams are conducting the survey carefully to avoid all sorts of harassment of taxpayers during the survey time". The Financial Express - 19/04/07
l "Corruption thrives on taxman's discretionary power - MCCI" captioned news item published in an English weekly states: "The Metropolitan Chamber of Commerce and Industry (MCCI) while suggesting measures to be taken in the next budget for FY 2007-2008 suggested that the discretionary powers being enjoyed by tax officials are a major cause of corruption and should be scrapped'.
The chamber body in its pre-budget observation said that such discretionary powers of the tax officials have provided opportunities for corruption and unless the system discontinued, budget distortions would continue.
The MCCI observed: 'Year after year, we have pointed out to the finance ministry as to how the tax payers are harassed by the discretionary powers given to the tax officials. The discretionary powers were withdrawn briefly for two years but the same have been restored for reasons not known to us.
The writer is former secretary to the government. He can be reached at e-mail: karar.hassan@gmail.com
"THE budget is an important medium to implement the ruling party's electoral pledges since the government implements all its programmes through the budget" said Speaker Abdul Hamid Advocate in his inaugural address on June 04, 2009 to the second session of the 9th Parliament of Bangladesh. Mentioning the main electoral pledges of the ruling party, he further said that checking the increasing prices of essentials, ensuring economic stability amid the global recession, taking effective steps to fight corruption, establishing good governance and reduction of poverty, establishment of digital Bangladesh, are among the top electoral pledges of the party in power, the speaker added.
The budget for the fiscal year (FY) 2009-2010 is likely to be placed to the Parliament today (June 11, 2009), for perusal, consideration, examination, suggestions of the Parliament Members and possibly it will be passed on the last day of current FY. It is not the size of the budget, particularly the Development Budget - which is to be the main focus of the nation/country people, but the main concern is as to how efficiently and effectively and timely the budget-allocated money will be utilised honestly -which is supposed to bring benefit to the people in general, facilitate economic emancipation, help business and industrial growth, agriculture development of the country and so on. But unfortunately, it is being observed for the last few years with concern that during first six months of each financial year, not even 20 per cent of the development budget could be utilised by the different government machinery (ministries, etc.) and it is also being observed with equal concern that during the last two months of each FY almost 50 to 60 per cent budget allocated money is shown utilised/spent by the concerned quarters of the government. Nowhere or in no country of the world including Myanmar or Nepal -- our next-door neighbours in the context of their respective population size and budget allocation, this poor nature of budget fund utilisation scenario can be made available. The nation, the tax payers - big and small -- do not know as to when and how this unfortunate, unwelcome, possibly unthinkable poor state of implementation status of development budget money, development projects etc., would see the ray of light for timely utilisation of funds for the country's common interests.
There are many financial giants, economists, analysts and even diplomats of different embassies and representatives of development partners stationed at Dhaka- who possess wide expertise, knowledge and capacity to give comments on the budget, its different facets, implementation mechanism etc. In the present write-up, this scribe will try to give more focus on fiscal and investment management system that exists in the country in particular -- with 'extracts' of news, comments, suggestions, diagnosis etc. to address different problematic economic (including investment /fiscal matters) issues along with suggestions as well, for efficient/effective improvement of those through overcoming the hurdles to utilising implementable mechanism as published in different newspapers of Dhaka during last few years, as newspapers are considered as the mirror of the society.
"The economic development of Bangladesh is substantially dependent on the sound fiscal management systems and their appropriate, efficient and timely application by both the Private and Public sector organisations. For many reasons, the Fiscal Management issues did not get appropriate and reasonable attention from the concerned quarters till in the recent past. The industry, commerce or business world has transited to an era of remarkable fast changes towards the free market economy with establishment of the WTO with effect from January 1, 1995. With this, the free economy has heralded in greater force, brought about new opportunities along with challenges as well, creating the requirement for a new and progressive set of laws, rules and regulations to govern trade, business, and industries. Recently an organisation(non-profit and non-political) named 'Centre for Sustainable National Development (CSND)' has emerged in the country with a view to creating awareness about the above scenario in both public and private sector key players, through organising seminars ,symposiums, workshops, consultations, dialogues with stakeholders including publication of subject based research articles in different newspapers, organising meetings with concerned high officials of NBR, Bangladesh Banks, Board of Investment, BEPZA, EPB, TCB, FBCCI, DCCI, MCCI, ICCI, Ministry of Finance, Ministry of Commerce, Ministry of Industry, Ministry of Law and Parliamentary Affairs and so on. CSND will also organise discussions with representatives of different business and industrial bodies associations and others mainly in the private sector and make liaison with different training institutes under the concerned Ministries. CSND will also look into the existing working and procedural arrangements of business activities pertaining to different trading houses, commercial and industrial organisations in the private sector and government /semi government organisations, corporations, authorities etc., and examine and evaluate them with the help and assistance of experts from both public and private sectors and then suggest appropriate reforms/revisions and improvements in the relevant Acts, Ordinances, Rules etc., as and where necessary from time to time.
In the process of the above specific jobs and activities, the CSND will also take initiatives to collect information on the existing hurdles, bottlenecks and complexities etc., relating to relevant fiscal and investment issues, along with reforms, improvements etc., made on the relevant fiscal matters during recent years in neighbouring countries, like India, Pakistan, Sri Lanka, Thailand, Malaysia etc., and then examine those for recommending application as and where necessary (in the Bangladesh context)to the government and other relevant bodies with follow up reminders at regular intervals."
l Sound Fiscal Management System and its appropriate application always play very crucial role in the national economy. Side by side, progressive industrialization and export growth are critical factors which can facilitate sustainable economic development of a country substantially. In the present globalization/free trade regime, domestic market of the local products could only survive on the competitive abilities of both private and public sector key players. But most of the industrial and commercial undertakings/entrepreneurship lack financial and organisational management and delivery capabilities for various reasons. Besides, existing rules & regulations plus procedures relating to setting up of industries and exporting commodities are still complicated, cumbersome and time consuming and most of the entrepreneurs are not equipped enough with the (fast changing) systems and practices which are adversely affecting this sector.
l In case of Bangladesh, due to many reasons which include almost continuous political turmoil, lawlessness, extortions of serious magnitude and grafts etc., almost all over the country which were found party suspended during 2007 and 2008, which unlawful activities are now seriously threatening different industrial and business sectors, garments sector in particular at increasing rate. The concerned machineries, law and order authority could not or did not give appropriate, effective and instant attention to address these kinds of anti-development crimes and non-development climate as well. And for this poor state of affairs, successive government's failure was no doubt paramount, but the responsibilities of the different commerce and industrial associations in the Private sector including banking sector operators, no doubt, were also substantial. Besides, lack of appropriate knowledge, ideas, expertise and proper understanding of fast changing fiscal and investment issues, the country's economic or fiscal backbone is yet to be put on sound and efficient footing. We have still a long way to go.
l Effective and planned endeavours are in process for forming a 'Think-Tank' within the CSND with distinguished persons (in service and retired,) belonging to both public and private sectors, along with academics and scholars, professionals, bureaucrats and others who possess wide and updated knowledge and expertise in fiscal and related fields and at the same time, who are capable to contribute effectively for equipping the CSND with their valuable, pragmatic, implementable and progressive suggestions/advice on fiscal, investment and related matters from time to time. The CSND has planned to make appropriate arrangements soon to create training facilities on different laws, rules & regulations, ordinances etc., pertaining to relevant fiscal, investment etc., matters of different organs of the government on daily, weekly, fortnightly and monthly basis. CSND will also conduct research, surveys, reviews on issues which are considered to be of vital importance to the private sector in particular including different other issues of public and national interests from the fiscal, commercial and business point of view.
During recent years, news on different economic and fiscal issues in Bangladesh context along with anomalies both in public and private sectors, were being published in different newspapers of the country almost regularly, sometimes with valuable and appropriate suggestions for addressing related hurdles standing on the way of smooth operational works in different fiscal and investment management sectors. The organisers of the CSND were meticulously going through these news items regularly for last two-three years and discussing among themselves on related issues along with possible and implementable solutions through some kind of institutionalised process. As newspapers are regarded as the mirror of a society, the organisers thought it more pertinent and as well to get overall scenario of the fiscal and economic condition of the country through perusal of the concerned news items etc. with careful attention A few news items on economic, industrial, commercial, trading and general fiscal issues, problems, complexities etc., relating to Bangladesh context published in different national dailies during last three or four years, are stated below (extracts) chronologically year-wise which speak for themselves about the urgency of taking initiatives in finding out some kind of institutional mechanism to address those issues with positive and pragmatic approach for getting acceptable redress through organised and progressive process.
Extracts from different newspapers, weeklies etc. of Bangladesh:
l "External indicators satisfactory, but problems exist in internal sector: Finance Adviser" captioned news item states: "Finance and Planning Ministry Advisor Mr. A B Mirzza Azizul Islam said 'most of the external economic indicators are at satisfactory level, but there are problems existing in the internal sector. Export, remittance and foreign currency reserve are in good shape. At the same time, there remain some problems in the internal sector like poor revenue growth, inflationary pressure and a higher trend in the public borrowing.' The Adviser further said, 'one of the main objectives of the coming national budget (2007-2008) would be to enhance the GDP ratio through expanding tax net instead of raising its rate. Simplification of tax payment procedures and reduction of discriminatory power of taxmen will also be high on reforms agenda in the coming budget" he added. The Financial Express - 20/04/2007.
l "Bangladesh needs to study market access promises" captioned news item was: "The permanent representative of Bangladesh to the WTO has said Bangladesh needs to conduct a study as to how it can reap benefit from the changed scenario following the resumption of Doha round of WTO talks. Developed countries are promising to wider market access, while some developing countries have come forward to allow a duty-free access of their markets to the least developed countries (LDCs). We need to analyze how we can utilise the promises." The Daily Star dated 20.04.07.
l "54 pc businesses still outside tax net: NBR" captioned news item published in newspaper states: The National Board of Revenue (NBR) said 54 per cent of the businesses surveyed have remained outside the tax net depriving the government of a large amount of revenues. The central tax survey zone of the board found this during its on-going drive to bring the professionals and their businesses under the tax net of the government. Eight survey teams, each comprising three members found 1761 business houses without having tax identification number (TIN) out of 3250 surveyed in the city until 17th April 2007. The drive began on March 29, 2007 aiming to bring all business houses and professionals under the tax net. The tax survey teams of the board are trying their best to bring the business houses under the tax net by motivating and creating awareness. NBR officials have been conducting a series of meetings with the shop owners of big shopping malls in the city's posh areas like Gulshan and Banani to motivate and create awareness among them for payment of tax. NBR officials have called upon the shop owners at meetings to remove the misconception about the taxmen and gave them survey forms for furnishing necessary information. The teams are conducting the survey carefully to avoid all sorts of harassment of taxpayers during the survey time". The Financial Express - 19/04/07
l "Corruption thrives on taxman's discretionary power - MCCI" captioned news item published in an English weekly states: "The Metropolitan Chamber of Commerce and Industry (MCCI) while suggesting measures to be taken in the next budget for FY 2007-2008 suggested that the discretionary powers being enjoyed by tax officials are a major cause of corruption and should be scrapped'.
The chamber body in its pre-budget observation said that such discretionary powers of the tax officials have provided opportunities for corruption and unless the system discontinued, budget distortions would continue.
The MCCI observed: 'Year after year, we have pointed out to the finance ministry as to how the tax payers are harassed by the discretionary powers given to the tax officials. The discretionary powers were withdrawn briefly for two years but the same have been restored for reasons not known to us.
The writer is former secretary to the government. He can be reached at e-mail: karar.hassan@gmail.com