Finance adviser turns down plea to withdraw duties on raw materials
Wednesday, 20 June 2007
FE Report
Finance and Planning Adviser Mirza Azizul Islam voiced Monday his frustration over the fact that prices continued to go up, notwithstanding the cutback on import duties.
"Who is responsible for the price hike?" the adviser posed the question before a business audience in the city.
Islam's frustration became more evident when he added: "If we raise tariffs, the prices go up. But if we reduce tariffs, prices do not go down. The predicaments of the general public are mounting," he said as he spoke at a budget analysis meeting, organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
The finance adviser asked the business leaders to analyse why the BDR was deployed to intervene the commodity market.
Moderated by the FBCCI president Mir Nasir Hossain, the meeting was also addressed by various associations of the apex trade body.
Islam turned down a plea of businesses to withdraw duties on raw materials, saying local industrial units should be competitive.
"How long can an industry enjoy protection? Protection cannot be continued in the changed world context," he maintained.
If subsidies are given for an unlimited period or protection is not time-bound, it is sure to have a negative impact on the economy as a whole, the adviser said.
Islam defended the tide of trade liberalisation embraced by Bangladesh in the early 1990s, saying dismantling of trade barriers has paid dividends to Bangladesh, thereby accelerating the pace of the country's economic growth.
"Trade liberalisation destroys industries-the notion has not proved internationally," he said, citing the examples of South Korea and Thailand that gave protection to their local industries in the past.
"South Korea and Thailand protected their industries 30 years ago. Now things have changed," he said, reminding the business leaders of the country's obligation as a member of the World Trade Organisation to phase out subsidies.
On the protection, the finance adviser further noted: "People die, trees die, and so will do the industries. It's natural. So, subsidies cannot go for a long."
In his intervention, chairman of the National Board of Revenue Badiur Rahman said any businessman could obtain a new tax identification number within July 31.
But he made it clear that there would be no time extension to get a new tax file.
"If you pay taxes within July 31, you will be as innocent as a new-born baby," he said, adding that tax men would intensify their drives to collect taxes after the timeline.
Rahman said no ordinary businessman should be worried about opening a tax file, as they should not bother about the high-profile tax evasion cases.
Talking to newsmen, the NBR chief said the board could levy as high as 250 per cent taxes on delinquent businessmen who will fail to clear taxes within July 31.
The FBCCI chief said although the Consumers' Protection Ordinance is set to be finalised within a day or two, the government is yet to consult with the trade bodies.
"It (Ordinance) needs to be reviewed. The government should consult with us before finalising it," Hossain said.
Earlier, the FBCCI chief presented a paper elaborating on the potential impact on the budgetary measures, particularly the proposed tariff structure on local industries and businesses.
The paper said the average tax rate would increase by 4.18 per cent due to upward adjustment of tariff for 291 tariff items.
In the paper, the FBCCI noted that the tax rate for 121 raw materials would increase to 22.5 per cent from 5.0 per cent due to the proposed fiscal measure. The average tax on those items is now 7.94 per cent.
The FBCCI leader urged the government to consider some issues like higher production cost due to power shortage, power tariff hike, increased rate of interest on bank loans, fluctuation of foreign exchange rate, trend of price hike of raw materials and oil, and rise in freight premium in the international market.
The FBCCI said the government's proposal on withdrawal of IDSC (Infrastructural Development Surcharge) will help reduce the prices of imported finished products, but it might affect the local industries.
The trade body has also suggested a ban on import of sugar, if the government feels it necessary, so that it can apply the option of specific duty on sugar to prevent misuse of the tariff facility and protect local industries.
Among others, ERD secretary Aminul Islam Bhuiyan, planning secretary Jafar Ahmed Chowdhury and FBCCI directors A Rouf Chowdhury and Mohammad Ali were present at the meeting.
Finance and Planning Adviser Mirza Azizul Islam voiced Monday his frustration over the fact that prices continued to go up, notwithstanding the cutback on import duties.
"Who is responsible for the price hike?" the adviser posed the question before a business audience in the city.
Islam's frustration became more evident when he added: "If we raise tariffs, the prices go up. But if we reduce tariffs, prices do not go down. The predicaments of the general public are mounting," he said as he spoke at a budget analysis meeting, organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
The finance adviser asked the business leaders to analyse why the BDR was deployed to intervene the commodity market.
Moderated by the FBCCI president Mir Nasir Hossain, the meeting was also addressed by various associations of the apex trade body.
Islam turned down a plea of businesses to withdraw duties on raw materials, saying local industrial units should be competitive.
"How long can an industry enjoy protection? Protection cannot be continued in the changed world context," he maintained.
If subsidies are given for an unlimited period or protection is not time-bound, it is sure to have a negative impact on the economy as a whole, the adviser said.
Islam defended the tide of trade liberalisation embraced by Bangladesh in the early 1990s, saying dismantling of trade barriers has paid dividends to Bangladesh, thereby accelerating the pace of the country's economic growth.
"Trade liberalisation destroys industries-the notion has not proved internationally," he said, citing the examples of South Korea and Thailand that gave protection to their local industries in the past.
"South Korea and Thailand protected their industries 30 years ago. Now things have changed," he said, reminding the business leaders of the country's obligation as a member of the World Trade Organisation to phase out subsidies.
On the protection, the finance adviser further noted: "People die, trees die, and so will do the industries. It's natural. So, subsidies cannot go for a long."
In his intervention, chairman of the National Board of Revenue Badiur Rahman said any businessman could obtain a new tax identification number within July 31.
But he made it clear that there would be no time extension to get a new tax file.
"If you pay taxes within July 31, you will be as innocent as a new-born baby," he said, adding that tax men would intensify their drives to collect taxes after the timeline.
Rahman said no ordinary businessman should be worried about opening a tax file, as they should not bother about the high-profile tax evasion cases.
Talking to newsmen, the NBR chief said the board could levy as high as 250 per cent taxes on delinquent businessmen who will fail to clear taxes within July 31.
The FBCCI chief said although the Consumers' Protection Ordinance is set to be finalised within a day or two, the government is yet to consult with the trade bodies.
"It (Ordinance) needs to be reviewed. The government should consult with us before finalising it," Hossain said.
Earlier, the FBCCI chief presented a paper elaborating on the potential impact on the budgetary measures, particularly the proposed tariff structure on local industries and businesses.
The paper said the average tax rate would increase by 4.18 per cent due to upward adjustment of tariff for 291 tariff items.
In the paper, the FBCCI noted that the tax rate for 121 raw materials would increase to 22.5 per cent from 5.0 per cent due to the proposed fiscal measure. The average tax on those items is now 7.94 per cent.
The FBCCI leader urged the government to consider some issues like higher production cost due to power shortage, power tariff hike, increased rate of interest on bank loans, fluctuation of foreign exchange rate, trend of price hike of raw materials and oil, and rise in freight premium in the international market.
The FBCCI said the government's proposal on withdrawal of IDSC (Infrastructural Development Surcharge) will help reduce the prices of imported finished products, but it might affect the local industries.
The trade body has also suggested a ban on import of sugar, if the government feels it necessary, so that it can apply the option of specific duty on sugar to prevent misuse of the tariff facility and protect local industries.
Among others, ERD secretary Aminul Islam Bhuiyan, planning secretary Jafar Ahmed Chowdhury and FBCCI directors A Rouf Chowdhury and Mohammad Ali were present at the meeting.