Bangladesh's initial economic growth came through utilising the country's essential assets, namely its human capital and strategic use - whether by design or not - of specific industries. As the country looks forward to higher growth, the established industries like the ready-made garment sector continues to be its backbone.
But a country cannot heavily and merely rely on a single business sector, rather the policymakers now have major roles to play to diversify the business sectors for reinvigorated economic growth.
For that purpose, there must be proper policy support, business incentives and other facilities towards new and emerging sectors, viewed experts.
The roles of the National Board of Revenue (NBR), the country's apex body for tax administration, continue to be enacting business-friendly tax policies. Stakeholders and experts have repeatedly called the policy support, particularly given that 80 percent of the country's gross domestic product (GDP) comes from the private sector.
Bangladesh, recently, created provisions for various fiscal and non-fiscal privileges and facilities. Eligible sectors include computer hardware, leather goods, agriculture machineries, textile machineries, and mobile phones among others.
Experts say that policymakers should explore other innovative and targeted incentives to emerging industries - such as the shipbuilding industry, hotel and restaurant, beverage. These sectors can potentially become economic powerhouses with the right policy support, contributing much more to the country's economy.
Dr Ahsan H Mansur, a former economist with the International Monetary Fund, says that government can leverage the potential of the emerging sectors by helping them grow through policy support.
"Some of the ways the government can provide facilities", said the former IMF economist, "could be by providing central bonded warehouses, from where small exporters and importers can buy raw materials."
He said that emerging industries should not have to deal with complex rules and the government should also think about providing loans with lower interest rates.
For instance, the shipbuilding industry, which has one of the highest economic multiplier effects among all industries, can benefit immensely from lower interest loans.
Dr Mansur said that planning for sustainable national economic growth should be straight forward and that so will eventually help achieve Sustainable Development Goals as well.
Business sector insider said that clean water ensuring is a major SDG target and there drinking water industry play a significant role.
The industry insiders advocated that supplementary duties (SD) on bottled water is something the government should strongly consider waiving, given its ubiquitous use and people relying on it for everyday drinking water.
Instead, beverage industry has experienced erratic measures in the form of shocking increase of supplementary duties. There was no SD on beverage before FY 1999-2000 when a 5 percent SD was imposed. It jumped to 10 percent in FY 2002-2003, 15 percent in 2009-10 fiscal year and, finally, in 2014 the SD for soft drinks was made 25 percent.
Another stumbling block for businesses is the absence of a predictable tax policy. Tax policy should be announced well in advance of the budget, said Dr Mansur.
Currently the unpredictability of tax structure can often put whole industries on the back foot, giving no time to prepare for upcoming changes, added Mansur.
Former chairman of the NBR BadiurRahman says that growing industries should get incentives. "This can be in the form of VAT or Tax. But prices of raw materials in the local market should be taken into account when providing these incentives," he said.
Industry insiders have long floated the idea that allowing for a 100 percent tax credit for transport of goods will help lower prices for essential commodities.
Badiur thinks that the idea makes a sense given the rising prices of daily commodities, but with certain caveats.
Currently, laws allow for as much as 90% tax exemption, for which the eligibility is location-based, on which district or Division a company is located.
Sectors like the food and beverage industry, reliant heavily on storage and transport of goods between warehouses and other areas, can benefit immensely from a 100 percent credit, for instance, said experts and traders.
The government's concern with revenue and any potential drop is clearly the motivator for driving up duties. But experts and observers have argued that policy support like allowing 100% credit on goods transportation may have an impact in the short term on revenue, but it will allow the emerging industries to grow, which will increase volume, eventually increasing income for the government.
Former NBR Chairman MdNojiburRahman says that policies adopted by the relevant bodies should be a win-win for all parties involved.
"The beverage industry is a medium sized industry. Policies for an industry like this should be created so that the industries can make profit as well as grow. It should be a win-win situation," said the former NBR chairman, who was also the Principal Secretary to the prime minister.
"The right policies will help revenue collection and support these industries to grow at the same time," he added.
With a need to revitalize the pandemic-stricken economy, policymakers now need to seriously consider adopting policies that can help emerging industries reach their potential.
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