Projection of external financing to the extent of 2 pc of GDP looks ambitious, says DCCI
Thursday, 13 August 2009
The Dhaka Chamber of Commerce and Industry (DCCI) has hailed the national budget, 2009-10.
“DCCI welcomes the maximum allocation of budget funds for food and disaster management sectors but then the government should have accorded top priority to agriculture, education and energy because of its roles in faster economic development,’ the DCCI said in the editorial of DCCI Review of July, 2009 issue.
It said subsidies for farmers have been reduced from Taka 57.85 billion to Taka 36.00 billion.
The finance minister needs to readjust the allocations in view of the enhanced needs that might be felt anytime to support agriculture and farmers. Farming may shrink next year as a result of disincentive of lower farm produce prices to farmers this year.
The projection of external financing to the extent of 2 percent of GDP looks ambitious and if it is not possible to rope in such a huge amount of foreign financing, the government's domestic financing will turn high. In times of recession, domestic savings growth is likely to slow down because of lower 5.5 GDP growth. This will lead to difficulty in non-bank borrowing that has been projected to increase by about 9 percent. In such a situation, bank borrowing will increase. DCCI feels this may increase inflationary pressure and lower private investment opportunities. Already, non-food inflation is again on the rise.
DCCI welcomes the new budgetary window called public-private partnership but then the government should enact law or at least formulate rules in the next three moths in the light of best practices in counties such as India and the Philippines.
The budget has undertaken several SME development policies, but in case of assembling of TV and other assembling units, the imposition of tax is same for both commercial importers and industrial importers, e.g., import duty of loaded PCB(HS 85229030) is 25 per cent while duty for commercial importers (HS 85229040) is also 25 per cent. There should be at least 20 per cent tax difference in favour of assembling industries.
Tax exemption limit for individual tax payers should be increased considering their present economic hardship.
The budget aims at creating 77 lakh employment opportunities next year. This will require massive industrialization. But for industrialization, basic requirement is infrastructure development. There is a need for immediate implementation of power and energy projects and full and timely implementation of ADP.
“DCCI welcomes the maximum allocation of budget funds for food and disaster management sectors but then the government should have accorded top priority to agriculture, education and energy because of its roles in faster economic development,’ the DCCI said in the editorial of DCCI Review of July, 2009 issue.
It said subsidies for farmers have been reduced from Taka 57.85 billion to Taka 36.00 billion.
The finance minister needs to readjust the allocations in view of the enhanced needs that might be felt anytime to support agriculture and farmers. Farming may shrink next year as a result of disincentive of lower farm produce prices to farmers this year.
The projection of external financing to the extent of 2 percent of GDP looks ambitious and if it is not possible to rope in such a huge amount of foreign financing, the government's domestic financing will turn high. In times of recession, domestic savings growth is likely to slow down because of lower 5.5 GDP growth. This will lead to difficulty in non-bank borrowing that has been projected to increase by about 9 percent. In such a situation, bank borrowing will increase. DCCI feels this may increase inflationary pressure and lower private investment opportunities. Already, non-food inflation is again on the rise.
DCCI welcomes the new budgetary window called public-private partnership but then the government should enact law or at least formulate rules in the next three moths in the light of best practices in counties such as India and the Philippines.
The budget has undertaken several SME development policies, but in case of assembling of TV and other assembling units, the imposition of tax is same for both commercial importers and industrial importers, e.g., import duty of loaded PCB(HS 85229030) is 25 per cent while duty for commercial importers (HS 85229040) is also 25 per cent. There should be at least 20 per cent tax difference in favour of assembling industries.
Tax exemption limit for individual tax payers should be increased considering their present economic hardship.
The budget aims at creating 77 lakh employment opportunities next year. This will require massive industrialization. But for industrialization, basic requirement is infrastructure development. There is a need for immediate implementation of power and energy projects and full and timely implementation of ADP.