The Financial Express

FICCI for research-based sound policy changes

Mashiur stresses rationalisation of tax structure

| Updated: September 04, 2019 10:54:31

File Photo (Collected) File Photo (Collected)

Raising concern over unpredictable policymaking, foreign investors on Sunday said any change in the policy should be based on comprehensive research.

They said any policy change made through wrong analysis could hamper government's revenue mobilisation while creating unfavourable business climate.

The observations came at the luncheon meeting of the Foreign Investors' Chamber of Commerce and Industry (FICCI) held at a city hotel.

Economic affairs adviser to the Prime Minister Dr Mashiur Rahman was present as the chief guest.

FICCI president Shehzad Munim said there have been lots of changes, including the introduction of new VAT law in the national budget, and high tax rate remains one of the issues.

He posed a series of questions, "Do we have a comprehensive research that gives us the risk- benefit ratio for informed decision-making? Do we really know whether the approach will deliver any results the following year?" "If not, what needs to be done? Is that based on sound research?"

Mr. Munim said all businesses are used to making short to medium term investment plans.

"If we don't have the clarity on 3-5 years' horizon, it's very difficult to prepare investment proposals for our companies," he said.

The FICCI president raised the issue of the continuity of officials in the key government positions and said the appointment should be made for at least 3 to 5 years so that medium term planning approach can be incorporated into the system.

Talking about the focus on the potential industries, he said there are many sectors that have enough prospects to grow like the readymade garment.

Giving the example of leather industry, he said Bangladesh fetched around US$ 1.0 billion through shipments of leather goods, but the figure is around US$ 4.0 billion in Vietnam, one of Bangladesh's main competitors.

"Why are we lagging behind? What are they doing right and what we're not? That analysis needs to be made," he added.

Speaking as the chief guest, Dr Rahman did not back tariff protection, saying that it did not encourage the industries in improving their efficiency and productivity.

He said Vietnam's demographic dividend in terms of age started at the same time like Bangladesh, but the Southeast Asian economy is well ahead of Dhaka in terms of quality education and skill development.

"We need to be in a position to compete with these countries through improving skills of our working-age population," he said.

Giving several examples of the existing tax-related problems, the Prime Minister's economic adviser said the taxation system has a problem with the tax structure.

"Unless the structure is rationalised with reasonable protection for local industries, the anomalies could continue," he noted.

The FICCI is key platform that has more than 200 members and contributes one-third of the government revenue and 80 per cent of foreign direct investment flowing into Bangladesh.

Members of the diplomatic corps, senior government officials and foreign investors were present at the meeting.



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