Budget sends positive signal to foreign investors, but implementation key: Ficci

The Foreign Investors' Chamber of Commerce and Industry (Ficci) has welcomed the proposed national budget, saying its focus on improving the ease of doing business and reducing business costs has sent a positive signal to investors, but the success of the measures will depend on effective implementation.

The chamber, which represents foreign investors in Bangladesh, noted that businesses often do not receive the intended benefits of policy reforms at the operational level, stressing the need for stronger monitoring and execution.

Infographics: TBS

"It is an investment-friendly budget, but the impact of these positive signals will depend on how smoothly and effectively the measures are implemented on the ground," Ficci Vice President Mohammad Iqbal Chowdhury said at a press briefing on the proposed budget at the chamber's office in Gulshan, Dhaka, today (18 June).

"A lot of initiatives have been taken for ease of doing business, including deregulation. However, in many cases, the business environment on the ground remains challenging. We need to see how these initiatives are executed in practice, and how effectively the government monitors their implementation," he added.

To ensure the effectiveness of the government's reform initiatives, Iqbal proposed forming a task force with representatives from both the public and private sectors, or appointing an ombudsman, to conduct quarterly reviews of reform implementation and suggest corrective measures where needed.

An ombudsman is an independent official tasked with receiving, investigating, and resolving complaints from the public regarding the actions or decisions of government bodies, public institutions, or private organisations.

Speaking at the briefing, Ficci President Rupali Haque Chowdhury described the proposed budget as positive and relatively predictable. She expressed optimism, noting that Bangladesh continues to receive encouraging responses from potential investors in some countries.

However, she stressed that fiscal and revenue policies alone would not be enough to attract investment.

"Investment will not come through revenue policy alone. To attract investment, the gas supply problems in the existing economic zones must be resolved," she said.

She also raised concerns over the 5% surcharge imposed on utility services within economic zones. "If operating costs inside the zones are higher than outside, then why would investors choose to invest there?" she asked.

Rupali, who is also managing director of Berger Paints Bangladesh Limited, further noted that the government's efforts to maintain economic stability amid global and domestic challenges were commendable.

However, as Bangladesh prepares for graduation from least developed country (LDC) status, she stressed the need for structural tax reforms, policy consistency and a level playing field for businesses to attract investment and maintain competitiveness.

She also highlighted the importance of strengthening revenue mobilisation, improving tax compliance, facilitating trade and boosting investor confidence.

Ficci also called for customs reforms to improve trade competitiveness. 

Its recommendations included assessing import duties based on actual transaction values or internationally accepted reference values, ensuring proper classification of raw materials and intermediate goods, facilitating smoother customs clearance for capital machinery, and gradually removing non-tariff barriers ahead of LDC graduation.

The chamber also stressed the need for a fair and competitive business environment. As a quick-win measure to improve Bangladesh's tax-to-GDP ratio, it proposed establishing a dedicated data and analytics unit within the NBR to analyse market share against revenue contributions across industries.

In addition, Ficci recommended moving towards a unified VAT rate, gradually removing restrictions on input tax credits and the VAT Deducted at Source (VDS) system, and creating a more standardised VAT regime.

Presenting the chamber's detailed observations, Ficci Tax Consultant Snehasish Barua urged the NBR to adopt a comprehensive automation roadmap integrating customs, VAT and income tax systems while ensuring interoperability with relevant government agencies.

He also called for continuous improvement of existing digital platforms to strengthen revenue mobilisation and improve fiscal transparency.

Ficci Director Habibur Rahman Bhuiyan, Executive Director TIM Nurul Kabir, and members of the chamber's Tax Committee were also present at the briefing.