Interim govt won’t undertake any 'monumental project': Finance adviser

The interim government will refrain from undertaking any "monumental projects" but will prioritize ongoing infrastructure development, including port expansion, and aim to create more employment opportunities, said Financial Adviser Salehuddin Ahmed.

At a dialogue organised by the American Chamber of Commerce in Bangladesh, he acknowledged the challenges faced by the interim government, including inflation, and discussed the impact of the contractionary monetary policy on banks and the private sector. 

Md Abdur Rahman Khan, chairman of the National Board of Revenue, spoke, and Fahmida Khatun, executive director of the Centre for Policy Dialogue, presented the keynote speech, with top business executives in attendance.

Salehuddin urged the private sector to improve governance, competitiveness, and productivity, warning that failure to do so would lead to difficulties, citing Beximco Group as an example of financial struggles. 

He also called for a single VAT system in the country, emphasising its potential effectiveness and announcing a decision on this matter in the coming weeks, while requesting no new VAT reduction demands. 

He highlighted the issue of high prices of junk stocks, sharing an anecdote about a company with a closed factory still seeing its share price rise.

The adviser acknowledged that a business-friendly environment has not yet been fully established in terms of exchange rates, customs, taxes, and policies, but efforts are underway. 

He said previously, stakeholders were consulted at the last minute on the budget, but now their opinions will be prioritised earlier in the process.

The NBR chairman highlighted the mistrust between taxpayers and tax collectors, with taxpayers fearing excessive charges for full disclosure and collectors doubting the accuracy of information. He emphasised the need to overcome this mistrust. 

He also revealed plans to allow year-round tax collection, with online return submission continuing after Tax Day, though taxpayers will incur a 2% interest rate on late payments.

Syed Nasim Manzur, president of Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh, said, "I want to start by saying that the obsession recently with the tax-to-GDP ratio needs to be tempered with a new ratio that I would like to table today, called the trade-to-GDP ratio."

He noted that in 2022, Vietnam's trade-to-GDP ratio was 186%, Sri Lanka, which recently almost went bankrupt, had a 47% ratio, India had 49%, Indonesia 445%, and Bangladesh stood at 34%.

He emphasised the need to focus on business growth, pointing out that tariffs are a significant obstacle. While Bangladesh's average MFN tariff decreased slightly from 14.57% in 2007 to 14.14% in 2022, Vietnam's tariff dropped from 16.81% to 9.62%. 

He suggested that the NBR should prioritise not only tax collection but also investment and employment growth. Additionally, he called for reducing loan interest rates to single digits, offering duty-free facilities for raw material imports across all sectors, and forming a strong investment agency to boost efficiency and cost-effectiveness in government spending.